Here it is

Taking a quick break from studying for exams I notice one of my short setups significantly (first noted here: http://ibankcoin.com/tjwp/2011/11/16/is-cmg-a-short-here/) outperformed the market to the downside today which may signal the start of a potential longer term short trade:

Daily

Weekly with notes:

Longer term I think this could unravel to the point of it’s primary breakout around 190.

No position.

TJWP

Newt – with a campaign that is in debt and leading the poles – decides to take time out of campaigning to sell books to enrich himself. Other politicians guilty of this shit include Obama, Cain, Palin.

9% unemployment, troubled times ahead but there is no reason for people aspiring to be president to work on real plans. Until the electorate wakes up America will continue to be ruled by self-serving clowns who rally support by polarizing issues.

http://www.nytimes.com/2011/12/09/us/politics/gingrich-the-front-runner-is-still-selling-books.html?_r=1&hpw

Great bloomberg radio interview with Marc Faber on bonds, gold, equities, Eurozone and monetary policy.

Proposes Euro as a pan-Europe reserve currency with individual countries having their own currencies as well.

Q: “Marc what keeps you up at night, between the US government debt, all government debt, a slowdown in china?”
A: “Well what keeps me up at night is nightclubs”

http://www.youtube.com/watch?v=87Ke1fotVIY

Also foresees electorate imposing higher taxes on the electorate, a middle east in flames and an attack on Iran.

LIBOR continues to rise despite injecting liquidity into the system. A cancelled POMO is a good indicator of how fragile the system is right now.

Additionally TED (h/t @gappingandyapping) continues to rise despite central bank intervention. From the definition of TED spreads: “A rising TED spread often presages a downturn in the U.S. stock market, as it indicates that liquidity is being withdrawn.”

However put this into the context, the elastic was stretched very far to the downside, mean revision favored a rally. Now that central banks have stepped in and implicitly guaranteed the bottom isn’t falling out yet stocks may rally all the way into Christmas as burlap clad people relearn their fear of the Great Bearded One and everyone else gets in the holiday spirit but the underlying situation continues to deteriorate.

Futures gap up massively and everyone feels great. The bull is back, at least in the short term. Easy monetary policy has made stocks rise yet again, however there is a decreasing marginal return to bailouts.

I think the intraday trends in $USO $FXE $TLT $JJC and $UUP are tell the tale here, there isn’t much conviction here in my opinion, at least in the longer term. I think many people who were still long will use this opportunity as a chance to reduce exposure, meaning for us to go higher we really need to see conviction on the part of buyers. The close will be a good gauge of the short term conviction.

Looking at the longer term affects of this latest monetary intervention we turn to yields. Italian yields are almost unchanged, rallying intraday from a low of around 7.1% which is still unsustainable for the government. Italy simply cannot afford to refinance their short term debt at this interest rate.

Spanish yields are down, but certainly not massively at 1.9%. French yields are stabilizing at down just over 2.1%. This is hardly a massive help to Spain or France, but at least yields are moving in the right direction for now, although this is a drop in the bucket within the context of the recent spikes.

Most tellingly, German yields are rising (up about 1.9%) which is causing spread between German and other Euro countries bonds to close. The market telling us that they are beginning to view the risk attached to German debt as more similar to the rest of Europes, suggesting there may be some substance to this latest guarantee. How long the German government and people will bear the burden of higher interest and paying for the rest of Europe’s spend-free attitude is anyones guess.

However LIBOR is up another 1% today continuing its parabolic rise. Clearly banks don’t think this has made an improvement to financial stability. The willingness of banks to lend to other banks will be the true measure of if we can escape a liquidity contraction, and so far the market is telling us that an increase in financial stability is not being priced in.

However, the elastic is stretched very far and none of this precludes a one to two week face ripping rally in stocks as fear is still high and people are very short.

Edit: As espoused by the benevolent dictator of IBC and one of our most revered senators gold and silver look poised to benefit. Loose monetary policy may have an ambiguous effect on equities but is certainly beneficial for PM’s as people seek to preserve their purchasing power.

This basically sums up how to effectively trade the EU bailout – http://www.youtube.com/watch?v=4YyEdny5rh8

On another note, learning from history, what happened the last time Europe took a lot of money from Germans?

Hilarious survey data portraying just how terrible fox news is. Fox viewers were 16% less likely to know a regime change had occurred in Egypt than someone who watched no news.

Surprisingly right wing talk radio does quite well, an outlier or the real right wing news?

http://publicmind.fdu.edu/2011/knowless/

Edit: It has been brought to my attention claiming that: ” Fox viewers were 16% less likely to know Mubarak had been overthrown than someone who watched no news” is misleading. 

I humbly apologies and have ammended the sentence to read “Fox viewers were 16% less likely to know a regime change had occurred in Egypt than someone who watched no news.”

So the IAEA report that came out and was so hyped may not actually be a neo-conservatives wet dream.

Via the New Yorker – http://www.newyorker.com/online/blogs/comment/2011/11/iran-and-the-iaea.html

Explained in video – http://www.youtube.com/user/TheYoungTurks#p/u/3/N2w7J59FPmQ

I feel when I say I am fiscally conservative I am often misunderstood. People take that to mean I am conservative. Likewise, when I say things like “no one should starve in a modern society” or “people should have access to free healthcare”  I am mistaken as a spend-free liberal (likened to some form of Nancy Polosi supporter from SanFran). To examine what fiscally conservative there are a few things we need to acknowledge, ground rules if you will.

First, all government spending is inherently wasteful as there is a cost attached to collecting tax revenue, planning to spend it and the bureaucracy associated with this process. Some of this is recovered via multiplier effects, assuming that the spending is directed to areas where these are realized.

Second, some level of government spending is required for society to function. This spending is generally directed to public goods. Here is where the conflict generally arrises as people have widely different ideas on what sort of public goods should be provided, for example publicly provided verses privately provided education. Both ideas have merit and both have drawbacks.

If you don’t believe the first you live in the land of fantasy accounting, and if you don’t believe the second then you are one of those people waiting  for the collapse of society so you can go loot and pillage.

So ultimately we arrive at the conclusion that it is a matter of where should direct that limited government spending. I define being fiscally conservative as wanting to reduce waste rather than the overall level of spending. Granted in many cases those two things are the same. For those ‘fiscally conservative’ Americans who claim there is no money for welfare programs or universal healthcare, that these are simply so wasteful, I suggest you look no further than your military budget which could be the definition of wasteful government spending. From retarded things like constantly running over budget on projects, to building air superiority fighters that make the pilots pass out when you already have air superiority, to deciding the best place to cut cost is veterans benefits your military is a black hole for taxpayer money.

Yet the vast majority of you clamor for cuts to social security, medicare and medicade, claiming they are massively inefficient. I concur, they certainly are, but here is where the similarity ends. You see, I can do simple math and so realize that the percentage decrease in military spending would need to be MUCH smaller than the percentage decrease in these programs to achieve the same level of cuts. Incidentally, I also believe helping sick people and people who are down on their luck, unemployed or struggling to feed their families is a better use of money than fighting wars in countries that the vast majority of your country (and probably presidential candidates, republican at least) couldn’t locate on a fucking map. Wanting to support things like welfare programs, universal healthcare, and research into alternative energy sources at the expense of military spending doesn’t make you liberal, or conservative. It makes you a person who can acknowledge the difference between productive and unproductive spending. I defy anyone to illustrate any point where war has raised the net wealth of the globe without resorting to the Keynesian “a broken window stimulates the economy” defense.

As Tupac said “got money for war, but can’t feed the poor.” Shame on you America, and get your priorities sorted out.

Edit: Incidentally many of you are the same people who espouse “free-market” mentality while supporting the war on drugs which is government intervention in the free-market on a massive scale. You are supporters of a program that charges the taxpayer money to deny consumers goods they want, imprison your own people, create environments in which criminal organizations reap massive profits and then spend money fighting them all while passing up a massive tax stream. Apparently irony is lost on you.