25,000 Barrels of Oil Per Day Could Be Spilling Into Gulf Coast (#OilSpill UPDATE, 4/30/2010)

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This could be the worst oil spill in history after the "Deepwater Horizon" oil rig exploded in the Gulf of Mexico. 5,000 25,000 barrels of oil per day could be spilling into the Louisiana coastline. Eleven people remain unaccounted for after the explosion. It will impact fisheries, seafood prices, bird population and could take up to 3-months to plug the leak. Below are video updates from France24, AP and KXAN Austin-NBC along with an Aerial photo from NASA and recent articles.

Check Out Price Volatility In EuroBancshares (EUBK), FDIC Closes Three Puerto Rican Banks: Eurobank, Westernbank, R-G Premier Bank

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Three Puerto Rican banks closed down today, Eurobank, Westernbank and R-G Premier. They were pretty big. Westernbank had $11.9 billion in assets and $8.6 billion in deposits.  Look at the chart of EuroBancshares (EUBK), it went from $0.30 to $1.30 and hit 0.19 during after hours today, all during the month April.  Oriental Bank ended up buying the assets.  Below are press releases from the FDIC.

Goldman Implied Volatility Up 49% to 51.66, ISEE Ratio Up 139% to 223

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$GS Implied Volatility,
ISEE value snapshot at ISE.com 
Continued from my previous post, here is info on GS implied volatility and ISE put/call data today. GS implied volatility (wikipedia) spiked 49% to 51.03 which is a new 52 week high. What's interesting is the ISEE ratio (customers on the ISE opening calls vs. puts) had big volume on the call side, 31,000 calls vs. 13,900 puts which netted an ISEE ratio of 223 (up 130 or 139%) (calls/puts*100). 721,000 options traded way above average (121,000). Just like a severe weather alert, implied volatilty using option premiums change. It will be interesting to see what catalyst peaks out GS volatility.

Oklahoma Teachers Retirement System Puts Goldman On 90-Day Alert, $GS -9.4% to $145 on Criminal Probe, Channel Support Violated (Charts)

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James Wilbanks of the Oklahoma Teachers Retirement System put Goldman Sachs Asset Management on alert for 90-days as it reviews the fraud allegation.  GSAM manages $500 million for them so there's definitely client withdrawal risk if sh-- hits the fan, not saying it will. Dick Bove thinks their clients are a non-issue and thought it was a buy after the charge (video).

SecondMarket CEO Barry Silbert Interview Video at "Rising Stars" Executive Council Event

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Could this mark the end to non-transparent OTC transactions on Wall Street?  SecondMarket is a global platform for trading illiquid assets.  The auction-rate securities freeze in 2008 put them on the map, CEO Barry Silbert he said.  You can trade just about anything, from private company stock, LLP interests, mortgage back securities to collateralized debt obligations.  Below Barry Silbert spoke with Walter Kiechel at the "Rising Stars" Executive Council event in New York.  I just signed up and see RMBS and CDOs for sale!  I don't see any CDS (credit default swaps) available though.  There should be an insurance subsidiary....

"As the marketplace for illiquid assets, SecondMarket's mission is to not only provide sellers with increased liquidity and qualified buyers with unique investment opportunities, but also to keep them informed on public issues regarding illiquid assets."

Bob Janjuah Sees $2,000 Gold, $100 Oil (Chief Credit Strategist at RBS)

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Bob Janjuah, the Chief Credit Strategist at RBS (Royal Bank of Scotland) put out an interesting note giving his views on the Greek credit crisis, US/UK/Euro-zone/Japanese debt and currencies, the ultimate bubble forming in Government debt/fiat currencies and how he likes gold, oil, and prime property.  Here are quotes from the note, read it in full at Zero Hedge.
"10 - What I really want to own in a world of reckless policy, debasement, more debt, inflation etc, are PHYSICAL ASSETS like Gold, Oil and PRIME PROPERTY. I can see GOLD @$2k/oz in the next yr or so, Oil north of $100, and when I say Prime, I really mean SUPER PRIME - location and quality are key."

In the end he thinks we're screwed if we don't change policies.
"We seem to be stuck in an era where policymakers only understand more debt, more deficits, & more debasement. This IS gonna come back and savage (forget 'bite') us real hard unless our policymakers turn abruptly towards Voluntary Austerity/Deflation. As I've said before, we do NOT have the luxury of time here - it is simply not feasible to continue on the current policy paths for much more than a few qtrs. We do NOT HAVE years. And the longer we wait, the worse the unwind will be."

In the short term he thinks a breakout in the 10-year yield could knock 10% off global markets.

Oil Spill in Gulf, $USO Trading at $41 Ceiling (Oil ETF Charts, Pentagon Video)

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USO (US Oil ETF) is bumping up against ceiling resistance again, up 2.68% to $41.04.  Also an offshore oil rig exploded in the Gulf of Mexico, see the news clip below from the Pentagon. If $USO breaks out here it will rally to at least $47, which is resistance from 2007. IF there's a forceful breakdown to the 38.2/50% retracement level, a volatility hedge in some form would protect long positions (shorts, USO puts, watch oil volatility index OVX). There's also a multi-year trend decision approaching.  Charts below are courtesy of FreeStockCharts.com.  For recent posts on USO and oil click the labels.

Goldman Sachs Congressional Hearing Video 2 [CFO, CRO]

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Below is the second video from the Goldman hearings featuring CFO David Viniar and CRO (Chief Risk Officer) Craig Broderick.

Goldman Sachs Congressional Hearing Video 3 (Lloyd Blankfein CEO)

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Below is CEO of Goldman Sachs, Lloyd Blankfein, before Congress on April 27, 2010. See Video #1 featuring Goldman employees Tourre, Sparks, Swenson, Birnbaum.

S&P Downgrades Spain to AA, 10Y-Note Yields 4.12%, CDS Tightens to 187bps and $EWP Testing $37.5 Support

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Along with Greece (to junk) and Portugal (A-), S&P downgraded Spain's credit rating to AA from AA+.  The market reaction wasn't very extreme. The Spanish 2 Year Note hit 2.09% (which is still below the February high), the 10 Year Note hit 4.12% and Spain's credit default swaps (CDS) tightened 10.53% to 187 basis points (1.87% insurance premium on debt).  Off topic, why did Saudi Arabia's CDS widen by 17% today?  Here is the S&P release and below that an Associated Press video. 

Milken Institute Panel On Financial Journalism, Bloggers (4/2010)

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The Milken Institute Global Conference had a panel on financial journalism featuring well known journalists/bloggers John Carney, Heidi Moore, Stacy-Marie Ishmael (FT Alphaville) and Felix Simon (Reuters). The funny part is I first found out about this at Zero Hedge and they all dissed the blog! There's way too much player-hation going on. They all make interesting points. Find the full video here or click the picture.

Goldman Sachs Congressional Hearing Video 1 [Tourre, Birnbaum, Sparks, Swenson]

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This hearing was actually very boring. The Goldman Sachs employees (former) managed risk pretty well though during the hearing. Here is the video with CEO Lloyd Blankfein, CFO David Viniar and Chief Risk Officer Craig Broderick. Goldman should start a reality show.

Joshua Birnbaum: Former Goldman Sachs Managing Director, Structured Products Trading
Daniel Sparks: Former Goldman Sachs Department Head, Mortgages
Michael Swenson: Goldman Sachs Managing Director, Structured Products Trading
Fabrice Tourre: Goldman Sachs Executive Director, Structured Products Trading

E-Mini S&P Large Speculators Net Short, ES Breaks Down During Goldman Hearing, VXX Spikes (Videos of Chartcast, COT Chart, SPY)

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I remember a week ago Zero Hedge wrote about the E-mini S&P commitment of traders (COT) report for April 20.  Every week the CFTC (Commodity Futures Trading Commission) reports net holdings of large speculators, commercials and small speculators in the futures market.  The next one should be coming out soon.  For free commitment of traders charts visit cotpricecharts.com.  Remember this is backward looking data.

Portugal Bond Yields, CDS Spike on S&P Downgrade, Fighting Greek Contagion Risk (Charts)

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Portugal is trying to fight off Greek debt contagion risk.  Today Greece and the National Bank of Greece (NBG) were both downgraded and Government yields/CDS spiked while equities took a hit (see post).  As many have said, including Pimco's Mohammed El-Erian recently on  CNBC, sovereign and corporate credit risk could spread into other European countries which is putting a bid under the US Dollar and Gold, and killing the Euro. I'll post charts out later.

S&P Downgrades Greece to Junk, Greek 2Y-Bond at 15%, CDS at 787bps, National Bank of Greece -14.24% (NBG)

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S&P downgraded Greece to junk.  The Greek 2-year bond yields 15.07%, Greek 10-year bond yields 9.76%, CDS (credit default swaps) are at 787 basis points (highest default probability on CMA Datavision sovereign monitor), the Dow Jones Greek Equity Index is -6.65% (below support) and NBG (National Bank of Greece) is -14.24% to $2.66.
"Greece's debt has been downgraded to junk status by Standard & Poor's amid concern it was not able to take steps needed to tackle its economic crisis." [source: BBC]
Looks a lot like the pattern of Lehman Brothers.  Who will bail this country out... or is a default actually coming.

Moody's Downgrades Greece, 10Y Bond Yield 8.84%, CDS 633bps, Greek Shares Testing February Low, Euro Needs Help (Charts) (April 23, 2010)

Pricing of Greek CDS, 10Y Bond Yields Sense Risk (CDS 399bps, 10Y 6.85%) (January 31, 2010)

 NBG (National Bank of Greece (Courtesy of Stockcharts.com)

$GRDOW (Dow Jones Greece Stock Index)

Citadel's Ken Griffin, Marc Lasry and Mohamed El-Erian at Milken Conference on 4/26/2010 (Video Link)

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Must see video featuring Ken Griffin of Citadel Investment Group, Marc Lasry of Avenue Capital, Mohamed El-Erian of Pimco and Steve Forbes at the Milken Institute Global Conference (from April 26).  They talk about trade, unemployment, fiscal policy, bank reform, recent credit card regulation, manufacturing base, education and give short and long term outlooks.

 Click here or the picture

Time For Oil ETN, ETF to Make a Decision (USO, OIL, OVX, USD/CAD Charts)

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The oil exchange traded note ($OIL) and oil exchange traded fund ($USO) are both in a boring battle with resistance, while oil volatility ($OVX) is sleeping at multi-year lows (28 v. 100 in late 2008).  Dullness could flip at any moment though.  The June oil future is at $83.75 testing the 50 day moving average.  Is the Goldman hearing tomorrow and Greece scaring everyone away? USD/CAD is below support but rallied back to 1.  Protect yourself from the oil volatility monster with a cheap Kevlar vest.

Peter Schiff vs. James Galbraith on US Government Debt (CNBC)

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h/t Business Insider

Here is Peter Schiff and Professor James Galbraith debating about our Federal debt and interest rates going forward.
  • James Galbraith:  "The United States Government does not have and is not going to have a problem financing its public expenditures and its deficits. It's simply not an issue that should be on our list of things that we really care about right now". 
  • Peter Schiff:  "The US Government is making the same mistakes that sub-prime borrowers did when they were using teaser rates on their mortgages".

      Gizmodo Exclusive of iPhone 4, Jason Chen's Computers Seized (PBS Video)

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      I remember coming across Gizmodo's site (link: This Is Apple's Next iPhone) when Jason Chen found Apple's next iPhone lost in a bar in Redwood City, CA, which he said was camouflaged to look like an iPhone 3GS. I thought it was some kind of joke or a fake. Today on Gizmodo they said "California's Rapid Enforcement Allied Computer Team" seized his computers and two servers in his home. Crazy stuff going down... I guess Gizmodo paid $5,000 for the device. Well here's a video of supposedly the next iPhone via PBS Newshour and Gizmodo.

      Mary Schapiro, Larry Tabb on SEC Large Trader Reporting Proposal Videos (Tabb Group)

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      Larry Tabb, the CEO of Tabb Group talked about the new "Large Trader" reporting proposal by the SEC.  If you remember back in 2009, high frequency trading, flash orders and dark pools were all big topics for regulation.  In my previous posts (click links above) I linked to interesting Zero Hedge articles you should read.   First is a video link to the proposal by SEC Chairman Mary Schapiro and then the Tabb Group video.

      I See XLE Made New Highs Last Week, Will It Lead USO? (Oil ETF/Energy Sector SPDR)

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      This is an addition to my previous post on the June Oil Future and before that the post revisiting XLE vs. USO (Oil ETF) at the 2008 peak. I'll send you straight to the source, at the 2008 oil peak ($147) I saw that XLE led USO to the downside. Will the same thing happen this time on the upside? XLE broke out on Friday.... H/T Iron100.

      XLE (Energy Select SPDR ETF) - Courtesy of Stockcharts.com

      XLE Short Term

      USO (US Oil Fund ETF)

      June Oil Future at $85 Resistance, Rig Count Down 9 to 1482 On Week, Up 524 Annually, Watching Spreads (WTIC, USO, CLM10, UNG)

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      June Crude Oil (courtesy of optionsxpress)
      June oil (CLM10) looks cautiously decent here in my opinion, if hedged with volatility.  It could fail again and hit channel support aka continue trading in this long sideways channel. See INO's recent video on my previous post, we could continue sideways.  The June oil future tonight will feed into ETF action tomorrow ($USO, $OIL) if it holds up (+0.39% at $85.48).  RSI is at the mid-point and the future is testing resistance again after a failed break-out.  Not sure how high oil can go here before the big "income" squeeze.  The US Dollar, oil, gold and S&P relationship will be interesting next week.  Add the Euro to that.  I'm going to mainly look at the oil ETFs tomorrow and perhaps the options.  I actually looked at XLE's chart the other day when revisiting the USO/XLE correlation during the 2008 oil peak.  The Goldman charge could throw oil prices a curve ball....

      Goldman Executives, "Fabulous-Fab" Emails (Released By Senate)

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      Find the 100 page document at New York Times featuring e-mail exchanges among Goldman executives, CDO banker Fabrice Tourre and Exhibits 101-104 released by the Senate Permanent Subcommittee on Investigations (link). Goldman CEO Lloyd Blankfein and Fabrice Tourre, the former VP who constructed the $2 Billion ABACUS CDO in early 2007, which was recently part of Goldman's fraud charge, will appear before Congress on Tuesday (Cspan.org).  I'll embed that video after the hearing.  For recent information on the Goldman case click the labels at the bottom.  Where the hell was the Fed during all of this?  Seems like this Fab dude was just doing his job for the squid.  Read this interesting article from Roubini.com on 1/20/2010:  Credit Derivatives, Hedge Funds and Leverage Ratios of 50: The Credit House of Cards (h/t Business Insider).

      New Home Sales Up a Whopping 27% In March, November BZH Call Rips 59%, Stock Testing Resistance, Beazer Downgraded To Hold By Citigroup Citing Valuation

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      Someone positioned well buying those 3,000 BZH 7.50 Calls on Thursday for $0.63 before this release.  On Friday it closed up 59% to $1.0 (chart below) with positive volatility from the new home sales release and BZH rip.  The trader also sold the $5 BZH puts.  Watch daily option activity at crimsonmind.com.  Here is the new home sales release from census.gov.  *Update: It appears that Citigroup downgraded Beazer Homes on 4/22 to "hold" (from buy) citing valuation. It reached Citi's price target of $6.25. For proof I embedded the update from Market News Video.

      Speech By Kiyohiko Nishimura on Japan's Economy, Monetary Policy (Bank of Japan, 4/21/2010)

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      Below is a speech on 4/21/2010 made by Kiyohiko Nishimura, Bank of Japan's Deputy Governor on Japan's economy and monetary policy.  It was a meeting with business leaders in Miyagi.  I quoted below the paragraph on recent price developments but find his outlook on current economic conditions in the PDF.
      "Price Developments in Japan

      I will now talk about price developments.

      The year-on-year rate of change in consumer prices has been declining, while the pace has been moderating since last August to around -1 percent recently.

      We hear from firms that it is difficult to raise sales prices as consumers are sensitive to prices due to their tight purse strings, and as competition is harsh among firms. The Tankan showed that output prices have not risen, compared with the improvement in business sentiment and the rise in input prices.

      Nevertheless, it can be said that some beams of light are starting to break through a thick cloud of deflation.

      First, there is a subtle change in firms' price-setting behavior and consumers' purchase behavior. With your cooperation, the Bank conducted a survey on firms' price-setting behavior at the beginning of this year. The results, which were published in our January Regional Economic Report, showed that there were signs in some firms to avoid endless price competition and try to differentiate in aspects other than prices. The impression obtained through various surveys and interviews is that there are subtle and gradual signs on the consumers' front to purchase quality products by paying reasonable prices.

      Lionsgate vs. Icahn, Video of Live 13D War On CNBC, Icahn Owns 19%, Mark Cuban Owns 5.4% and Technical Analysis ($LGF, $IEP)

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      It's been an interesting few months for Carl Icahn and Lions Gate Entertainment. The televised 13D war on CNBC made history. 13Ds must be filed with the SEC within 10 days of owning 5% or more of a company. Carl is trying to buy Lionsgate for $7 and remove management but there's a poison pill potentially blocking him. The Icahn entities own about 19% of the company. You know what else is interesting, Mark Cuban just scooped up a 5.4% position and sold 20,000 puts to counterparties at $7.50 expiring January 2011 (he'll buy 2 million shares if they exercise). For more information on poison pills see the recent Stock Wars episode (7 minutes in). Enjoy the Icahn fight vs. Michael Burns below on CNBC and the LGF chart.  Along with chart break outs and option activity, 13Ds, takeovers and value plays are also interesting to watch. If you didn't already know, "Lionsgate is the leading next generation studio with a major presence in the production and distribution of motion pictures, television programming, home entertainment, family entertainment, video-on-demand and digitally delivered content." (Lionsgate).

      Lions Gate to allow Icahn vote on poison pill - April 23, 2010/Reuters
      Icahn Lifts Lions Gate Bid to $7, Says Management Should Go - April 15, 2010/Bloomberg
      Lions Gate drops out of bidding for MGM - March 25, 2010/LA Times
      Lions Gate drops bid for MGM: report - March 25, 2010/MarketWatch
      Lions Gate Exec Michael Burns vs. Carl Icahn March 24, 2010/CNBC

      Pimco's El-Erian On Greece Debt Contagion Risk (CNBC Video)

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      Pimco's El-Erian thinks the Greek debt / Euro Zone crisis could mimic the sub-prime mortgage crisis in the US.  He said there's contagion risk, meaning credit/interest rate risk could spread into other European credits.  See my previous post showing charts of Greek CDS, 10 Year Yield, Greek equities and the Euro.  Watch them.

      $3 Million Jacked From Detroit Pension Funds (Fire, Police and General Retirement)

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      Updates on more financial shadiness in the D. Three Detroit Pension Funds (Fire, Police and General Retirement funds according to Detroit News) had $3 million jacked by private equity firm Onyx Capital Advisors with help from friend Mike Farr.  Below is part of the SEC press release and a few local articles.

      Mike Farr, firm accused of bilking local pension funds - Detroit News
      Ex-Lion, money manager stole $3M from Detroit, Pontiac pensions, U.S. says - Detroit Free Press
      Asset freeze ordered in pension fund case - Detroit News
      SEC: Former Lion Mike Farr, partner stole more than $3M from Detroit-area pension funds - MLive

      SEC Charges Private Equity Firm and Money Manager for Defrauding Detroit-Area Public Pension Funds

      Washington, D.C., April 22, 2010 — The Securities and Exchange Commission today charged a private equity firm, a money manager and his friend with participating in a fraudulent scheme through which they stole more than $3 million invested by three Detroit-area public pension funds.

      Abacus 2007 CDO Pitch Book Referenced Securities One Notch Above Junk Four Months Before Two Bear Stearns Credit Funds Blew Up

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      Look at the securities or reference entities in the Abacus 2007-ACI $2 Billion Synthetic CDO. Every underlying residential mortgage-backed security in the CDO was rated Baa2 by Moody's or one notch above junk (high yield status) at the time. The mortgages were securitized in 2006 to early 2007 (see initial reference entities on page 56-57). You have to admit this was an amazing trade by Paulson & Co, shorting a pool of RMBS one notch above junk four months before two Bear Stearns credit funds blew up! These subprime RMBS and CDOs trading over-the-counter were ultimately backed by......Confessions of a Former Mortgage Broker: What We Did Was Criminal - Tech Ticker. Not that it matters now, but I find it funny that there's still zero price transparency with OTC debt securities and derivatives after what happened.

      U.S. Housing Data Spurs Late Gains in Oil Prices after Mixed Week (Oil Market Summary) - Guest Post

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      Guest post by Darrell Delamaide originally for oilprice.com.

      U.S. Housing Data Spurs Late Gains in Oil Prices after Mixed Week

      OilPrice.com Oil Market Summary for 04/19/2010 to 04/23/2010

      After languishing most of the week, crude oil prices galloped to the finish line on Friday, tacking on 1.7% and recouping most of last week’s losses as positive new-housing sale data spurred most markets forward.

      The decision by the Greek government on Friday to activate a bailout plan from the European Union and the International Monetary Fund eased pressure on the euro, contributing to oil price gains as the dollar slipped against the joint European currency.

      The benchmark West Texas Intermediate contract gained $1.42 Friday to end the week at $85.12 a barrel, compared with the benchmark’s finish of $83.24 in the previous week.

      Moody's Downgrades Greece, 10Y Bond Yield 8.84%, CDS 633bps, Greek Shares Testing February Low, Euro Needs Help (Charts)

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      Moody's downgraded Greece's credit rating to A3 from A2 on higher debt servicing costs and the revised budget deficit. They need to refinance an $8.5 billion bond by May 19.  Hard money bridge loan?  Read these articles:
      Greece’s Credit Rating Lowered One Step by Moody’s - BusinessWeek
      Greece May Seek Bridge Loan as Bond Redemption Looms - Bloomberg
      Greece seen with little choice other than to activate aid plan - MarketWatch
      Moody's cuts Greece's sovereign ratings to 'A3' - MarketWatch
      Greece faces tight timeline before May debt crunch - Reuters
      Greece Problems Spreading on Credit-Risk Selloff, El-Erian Says - Bloomberg
      The Greek 10-Year Bond yield hit a new high of 8.84% and 5-Year Greek CDS (credit default swaps or default insurance) on Greek debt hit 633 basis points according to CMA Datavision.  Remember my post from January [Pricing of Greek CDS, 10Y Bond Yields Sense Risk (CDS 399bps, 10Y 6.85%)].  You can see how important this data is.  In 2.5 months the Greek 10-Year yield is up 200 basis points (2%) and CDS is up 234 basis points (2.34%).  Market participants are pricing the risk of default.  The ultimate bailout event or default risk reversal will be interesting to watch.

      Greek equities are testing the February low.  If Greek shares don't hold support here I don't see support until the early 2009 bottom (see chart below).  The Euro Index is also testing lows.  Judgment day is near but someone will bail them out. Click charts for larger view.

      President Obama's Speech On Wall Street Reform (Video, Cooper Union)

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      I'm going to find the full financial reform bill and also look at the "Large Trader" proposal by the SEC. Below is Obama's speech on Wall Street reform at Cooper Union (New York).
      "The President speaks at Cooper Union in New York City, where he spoke on the need for reform two years earlier, and tells Wall Street and Republicans to support these common sense reforms to end bailouts, close loopholes and protect consumers." [Whitehouse.gov]

      Options Active In Homebuilders $XHB, $BZH, $HOV, Existing Home Sales Up 6.8% In March, Inventories At 8-Months

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      Options were active in XHB (Homebuilders ETF), BZH (Beazer Homes) and HOV (Hovnanian) today. This comes a day after hedge fund manager John Paulson said in a conference call that home prices will increase 8-10% in 2011.  His $30 billion hedge has been involved in distressed real estate since early 2009 (or earlier) through a real estate recovery fund.  His firm was also bidding on bankrupt TOUSA land in February (Reuters). If you can scoop up decent bankrupt land for 20 cents and sell it to a homebuilder for 40 cents it's a decent play. I also posted a chart of lumber yesterday which is up 93% over the year, see my previous post with a chart. Here's the existing home sales press release, BZH, HOV and XHB simple technical analysis and the option action. *I embedded a video with Lawrence Yun (NAR chief economist) explaining the existing home sales data in depth.

      Lumber Contract In I-Shaped Recovery, Up 91% On Year (Chart)

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      The Lumber contract is up 91% on the year, outperforming the S&P, Nasdaq and Gold. John Paulson said in a conference call today that housing prices could increase 8-10% in 2011.  Yale's Robert Shiller said there's a 50/50 chance of another housing downturn.  Who is bidding up lumber futures?

      1-Year Lumber Continuous Contract (Courtesy of Stockcharts.com)

      Lumber vs. SPY, GLD and QQQQ

      Will Gold and Oil Continue Trading Sideways In 2010? (Videos)

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      Adam Hewison of Market Club thinks oil and gold trade sideways for a while. I embedded videos below from their Youtube channel. I posted a few days ago that oil and $USO failed to break above resistance in a sideways channel. Is there pent up demand or pent up supply forming in this channel? I'm watching soporte y resistencia. Find updated videos at their trading blog (http://club.ino.com/trading).

      Anton Valukas, Dick Fuld, William Black Congressional Testimony On 2008 Lehman Failure (Videos)

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      Here is Lehman Brothers bankruptcy examiner/Attorney Anton Valukas, former Lehman Brothers CEO Dick Fuld and Professor/former bank regulator William Black at the 2008 Lehman Brothers Failure House Financial Services Committee hearing. The videos are from Cspan.org. Here is the Lehman bankruptcy examiner's report featuring the famous "Repo-105" transaction. William Black was also on Tech Ticker recently.

      Miami Businessman Charged With $900 Million Ponzi Scheme

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      The Madoff aftershocks continue...  Not quite $50 billion but it's up there.
      "SEC Charges Prominent Miami Beach Businessman in $900 Million Ponzi Scheme

      Washington, D.C., April 21, 2010 — The Securities and Exchange Commission today charged a prominent Miami Beach-based businessman and philanthropist with fraud for orchestrating a $900 million offering fraud and Ponzi scheme.

      The SEC alleges that Nevin K. Shapiro, the founder and president of Capitol Investments USA, Inc., sold investors securities that he claimed would fund Capitol’s grocery diverting business. Shapiro told investors that the securities were risk-free with rates of return as high as 26 percent annually. Instead, Shapiro was actually conducting a Ponzi scheme and illegally using investor money to pay for other unrelated business ventures and fund his own lavish lifestyle. When investors questioned Capitol’s business, Shapiro showed them fabricated invoices and purchase orders for nonexistent sales."

      [read full at SEC.gov]

      Paulson Sees V-Shaped Recovery, Housing Recovery in 2011 (Video)

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      This is interesting, John Paulson (Paulson & Co.) during a conference call today said he saw a v-shaped recovery and that housing prices could rise 8-10% in 2011. Read his quotes at MarketWatch and watch the WSJ video below. Remember in December 2009 he said he had the "highest net long exposure ever? He's riding the wave... Not sure why $TLT broke out today if the v-shaped reflationary recovery has legs. Perhaps it will be a technical fail. Also here is the letter he sent to investors regarding the Abacus CDO (PDF at Big Picture).

      TLT (20+ Treasury ETF) Chart Broke Out Of Downtrend From October 2009

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      TLT (20 Year + Treasury ETF) broke out of the downtrend from October, 2009. There's congressional hearing volatility going on (financial regulation, Lehman bankruptcy hearings) and I'll embed a bunch of CSPAN videos in a bit. The next area of resistance on $TLT is around $92.23 (November 2009 lows/Februrary highs). It is trading at 90.74.  The ultimate level of support on $TLT is $87.42 which would be a short in size below that level (imho).  Watch $92.23 resistance.

      CDS 101 By Goldman Sachs (Education on Credit Default Swaps)

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      For those who want to learn about credit default swaps, Goldman explains it in this document from October 2009 [CDS 101].  The PDF file was in this press release when responding to a New York Times article.  Goldman, when will I see an exchange traded CDS index fund? We have $VXX to hedge volatility, why not CDS ETFs to hedge the next credit crisis? Aren't there futures on the CBOT CDR LIQUID 50 NAIG Index and HY? Put some options on that ETF as well, derivatives of derivatives of derivatives. UPDATE: The document got removed from Scribd, as well as the press release. See it here: http://www2.goldmansachs.com/media-relations/comments-and-responses/archive/state-of-the-market-cds-101.pdf

      Goldman Sachs Initial Defense From SEC Wells Notice (9/2009)

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      Here is Goldman's initial defense or response to the Wells Notice (potential charge) in September 2009. Below I quoted the first page of the Preliminary Statement for an introduction. I found the documents at NYT DealBook. Sullivan & Cromwell is Goldman's law firm.

      In early 2007, Goldman Sachs acted as the underwriter of privately-placed notes issued in a synthetic CDO transaction known as ABACUS 2007-AC1 (“2007-AC1”). There was nothing unusual or remarkable about the transaction or the portfolio of assets it referenced. Like countless similar transactions during that period, the synthetic portfolio consisted of dozens of Baa2-rated subprime residential mortgage-backed securities (“RMBS”) issued in 2006 and early 2007 that were identified in the offering materials (the “Reference Portfolio”). As in other synthetic CDO transactions, by definition someone had to assume the opposite side of the portfolio risk, and the offering documents made clear that Goldman Sachs, which took on that risk in the first instance, might transfer some or all of it through a hedging and trading strategies using derivatives. Like other transactions of this type, all participants were highly sophisticated institutions that were knowledgeable about subprime securitization products and had both the resources and the expertise to perform due diligence, demand any information that was important to them, analyze the portfolio, form their own market views and negotiate forcefully at arm‟s length. And like other transactions with similar lower-rated subprime portfolios, 2007-AC1‟s performance was battered by the unprecedented subprime market meltdown, which has impaired cashflow to countless noteholders in such transactions and caused many participants in the market to fail altogether.

      Now, with the benefit of perfect hindsight about the magnitude of the market downturn, the Staff proposes to charge Goldman Sachs with misrepresenting material facts relating to the offering. Notably, the Staff does not contend that anything about the Reference Portfolio itself was incorrectly disclosed. Rather, the Staff‟s theory relates exclusively to the role of Paulson & Co., Inc. (“Paulson”) – now recognized as a heavy bettor against the subprime market but at the time a relatively unknown hedge fund manager – in making suggestions to the" [........] 
      Continue reading at NYT Dealbook.

      Iran Shows Off Shahab-3 Missile at Army Day, Ahmadinejad at Tehran Nuclear Conference and Middle East News Links (4/19/2010)

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      Here's a geopolitical update from last night. Iran showed off their Shahab-3 Missile during National Army Day and Ahmadinejad Spoke at their own nuclear conference. Iran wasn't invited to the US nuclear conference.  The Shahab-3 variant can travel 1,200 miles and according to an unclassified report from the US Defense Department a missile could hit the US by 2015 (Reuters).  I embedded a Nightly News Report and Russia Today video below and threw up a bunch of Middle East news links. It's a mess.  Hopefully nothing dumb happens in the Middle East because oil and gasoline could spike again for US consumers based solely on risk premium (remember $147 oil?).  I'm still watching the charts of $USO, oil futures, USD/CAD and the Strait of Hormuz [Iran Could Block Oil-Transit Strait of Hormuz, Pentagon Says - SF Gate/Bloomberg].  Also this is interesting.. Iran Adds Four More Supertankers to Crude Oil Storage - BusinessWeek.  Videos below are courtesy of NBC and RussiaToday.

      $USO ETF Failed Ceiling Test, May, June Oil Future Below Support, Traders Grab Volatility (USO, CLK10, CLM10, CLN10, $WTIC, $USD, $OVX Charts on 4/16/2010)

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      The risk trade (stocks, commodities) rolled over on Friday using the Goldman fraud charge as a catalyst. I looked at $USO (Oil ETF) and the May, June and July oil futures on 4/14 and it was interesting that USO failed at ceiling resistance while May, June and July oil futures broke out and failed on Friday (July looks better). Traders dumped risk or de-risked their portfolios, grabbing volatility, US Dollars and Treasuries.  I'm continuing from my original oil post with new charts.  I'm waiting to see when USO and near-term oil break out of this channel or at least re-test resistance. 

      While tweaking off Turkish coffee I cooked up a bunch of oil charts on the fly. Check out USO and West Texas Intermediate Crude (WTIC) from the close on Friday.  $USO did NOT break through ceiling resistance while WTIC (oil continuous contract) did and it's sitting right on top of support.  You can also see the clear uptrend channel from October 2009 and the 50 and 200 day moving average not far behind.  The dotted line is currently support which will probably break tomorrow since futures are down.  We shall see though.  If you're on the index page, I also charted out May, June and July oil, the oil volatility index, US Dollar and the recent USD/WTIC correlation. 

      $WTIC - West Texas Intermediate Contract  (Courtesy of Stockcharts.com)

      USO sold off at ceiling resistance and still in this dang channel.  It's also in an ascending triangle from the March low.  The 50DMA and 200DMA are close by.  See the second chart for closer view.

      $USO Long Term Chart

      $USO Short Term Chart

      China Property Prices, FX Concepts, Simon Johnson on Paulson, Goldman Sachs, Mostly The Media Gang Beating CDO Fraud Allegations

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      News and Market Update at 9:16est:  E-Mini S&P Future -0.25%,  E-Mini Dow -0.28%, E-Mini Nasdaq -0.20%, June Oil -0.95%, Gold Spot +0.28%, US Dollar (DX) +0.20%.

      FX Concepts' John Taylor: "2011 Will Be Worse Than 2008 - Zero Hedge
      China's central bank to curb property prices - CCTV Video
      China Developers Fall on Latest Moves to Damp Property Prices - BusinessWeek
      Iranian VLCCs back on storage duty - Lloyds List
      Top Goldman Leaders Said to Have Overseen Mortgage Unit - New York Times
      Simon Johnson On John Paulson on Bill Maher (Video)- Zero Hedge
      The One Last Ethical Bank?  Bear Stearns - Zero Hedge
      Paulson May Face Litigation Following Goldman Suit, Whalen Says - BusinessWeek (but hes MVP)
      Merrill Used Same Alleged Fraud as Goldman, Bank Says (Update1) - Bloomberg
      SEC Investigating Other Soured Deals - WSJ
      RBS may sue over 'Goldman fraud' - DailyMail
      Goldman Sachs: Brown attacks firm's 'moral bankruptcy' - BBC
      IMF to raise global growth forecast to 4 percent: report - Reuters
      U.K., Germany Plan to Seek Information on Goldman - WSJ
      Gordon Brown and Angela Merkel attack Goldman Sachs - Guardian
      Gasoline Makes Crude Oil a Buy on Any Pullback - Asiablues via ZeroHedge
      Europe Cuts 77% of Flights; Relief May Come April 22 (Update5) - Bloomberg
      Volcano casts shadow on 1st-quarter airline earning reports - USA Today
      British Airways completes 'perfect' volcanic ash test flight - News.com.au
      Bin Laden, a secret fan of footie and Monty - Telegraph
      Illinois bank-owned foreclosures double in first quarter (4/14) - Tribune

      Dick Bove: Goldman Sachs is a Buy After Charges ($GS Chart Channel Now $150-190)

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      Dick Bove of Rochdale Securities thinks Goldman is a buy after the SEC fraud charge on Friday (video courtesy of FoxBusiness). He said clients will not stop trading with Goldman. Careful though, Bove said Lehman was a "buy" in August 2008 a month before it went bankrupt. Look how GS stabbed through the 50 day (166.96) and 200 day moving average (167.41). $150-$190 looks like the new trading channel for now. GS closed at 160.70 (-12.79%) on 101 million shares, the most since the 2008 banking crisis. The GS knife wound needs to heal but I'll keep watching it.

      Buyers Of May 27 $KBE Puts Up 150-percent On Goldman Charge, Unrealized Of Course (KBW Bank ETF)

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      Whoever made these trades deserves a medal in timing.  Remember on Thursday I reported via CrimsonMind that someone sold 28,260 May 29 calls of $KBE (SPDR KBW Bank ETF) for $0.58 and purchased 28,260 May 27 puts for $0.40?  If I'm calculating this correctly, that's $1,639,080 collected upfront on the call sale and $1,130,400 used to buy puts.  So the calls were used to finance the put buy with $500,000 left over.  The May 27 put closed at $1.00 on Friday, up $0.60 or 150%!  So the put contracts are now worth $2,826,000 (-1,130,400 purchase) = $1,695,600 net.  Add on to that the $1,639,080 collected from the call sale (assuming KBE expires in May below 29) and the trader made $3,334,680 in less than 24 hours.  The problem is profits are unrealized until the trader unloads all the contracts or exercises them below $26.60 before May 21.  KBE closed at 27.26 (-3.23%).  If volatility really picks up here this trade could be up 200-300% by expiration.  If it was a levered hedge on long KBE positions, it was a hedge with dividends.  That's why you watch option volume people!  If you followed the puts with 2 naked contracts you turned $80 into $200 (less commissions) or just protected your KBE shares.  I'm not recommending you do this, it's very risky on the downside if naked (.40 could turn into .30 pretty quickly).

      From post on 4/15/2010:  Retail, KBW Bank ETF Protection, ISE Sentiment Index Volatility (ISEE, KBE, XRT, IWM)

      $SPY, $DIA Sell Off at 61.8% Retracement Level (Charts)

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      The charts say SPY and DIA (S&P and Dow-30 ETF) are testing the 61.8% retracement level from 2007-2009 peak to trough.  Perhaps the reason why we sold off so hard on Friday (along with the Goldman fraud charge).  Adam Hewison of MarketClub warned about this level a few days ago in a chart video.  If you click on the charts below you can see critical support levels that need to hold and see 61.8% retracement levels, uptrend channels from the March 2009 low and February 2010 low, which was pierced by SPY on Friday.  The Dow held up a little better.  Did you notice that SPY lost 1.59% while DIA only lost 1.24% on Friday?  It's also interesting that SPY and DIA volume are at multi-year lows, matching 2006 and early 2007.  By the way the buyers of XRT, KBE (KBW Bank Index) put protection on Thursday are up big.  Charts are courtesy of FreeStockCharts.com.

      Hussman: Haven't Seen Final Uncomfortable Valuation Trough, Sees Overbought Conditions With Upward Yield Pressure [Extend and Pretend Note]

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      John Hussman of Hussman Funds released a note on April 12 titled "Extend and Pretend". He thinks we are overbought and haven't seen the "final and uncomfortable valuation trough" that usually precludes a secular bull market. He thinks "perhaps 6-8 years from now".

      "Secular bull market periods tend to begin with quite low multiples to normalized earnings (historically, on the order of 7), which is what provides the platform for a very long period of subsequent gains. It would not be surprising to observe a sequence of cyclical movements comprising a bear-bull-bear series, ending with a final and uncomfortable valuation trough (perhaps 6-8 years from now) before the market is finally priced to deliver that sort of sustained "secular" period of long-term gains. Current valuations provide no such platform.

      Again, at this point it does not matter whether we anticipate further credit strains or not. Wholly on the basis of current valuations, stocks are priced to deliver unsatisfactory returns in the coming years - a situation that is worsened by strenuous overbought conditions and upward yield pressures here."
      [full report is here]

      Barry Ritholtz, William Black On Goldman Fraud Allegation

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      Barry Ritholtz of FusionIQ and the Big Picture blog and Professor William Black ("federal prosecutor during the S&L crisis and associate professor of economics and law at the University of Missouri-Kansas City") were on Tech Ticker this morning talking about Goldman's fraud allegation.  For more information on what's going on, here it is in order:

      Goldman Sachs Charged With Fraud By SEC Over Shady CDO Dealings (ABACUS) - link
      Goldman Responds To SEC Complaint - link
      Paulson & Co. Responds to SEC Complaint Against Goldman Sachs - link

      SEC Charge Against Goldman has Volcanic Impact on Energy Markets - Guest Post

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      Guest post by OilPrice.com

      SEC Charge Against Goldman has Volcanic Impact on Energy Markets

      Oil Market Summary for 04/12/2010 to 04/16/2010

      Oil prices plunged on Friday after the U.S. Securities and Exchange Commission charged Goldman Sachs with fraud in its marketing of certain subprime mortgage securities, amid a general sell-off in financial and commodity markets.

      The allegations against one of the biggest market makers in virtually every markets dampened speculation heading into the weekend. Much like the volcanic eruption in Iceland spewed a cloud of dust over northern Europe that grounded all air travel, the SEC charge cast a pall over financial markets.

      Paulson & Co. Responds to SEC Complaint Against Goldman Sachs

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      Paulson & Co. Inc. Responds to SEC Complaint Against Goldman Sachs

      NEW YORK, April 16 /PRNewswire/ -- Paulson & Co. Inc. has the following statement in response to the SEC's complaint against Goldman Sachs & Co. announced today:

      As the SEC said at its press conference, Paulson is not the subject of this complaint, made no misrepresentations and is not the subject of any charges.

      While Paulson purchased credit protection from Goldman Sachs on securities issued under the ABACUS ABS CDO program, we were not involved in the marketing of any ABACUS products to any third parties.

      ACA as collateral manager had sole authority over the selection of all collateral in the CDO, securities of which were subsequently rated AAA by both S&P and Moody's.

      Paulson did not sponsor or initiate Goldman's ABACUS program, which involved at least 20 transactions other than that described in the SEC's complaint.

      SOURCE Paulson & Co. Inc.

      Source:  Paulson & Co. Inc. Responds to SEC Complaint Against Goldman Sachs -- NEW YORK, April 16 /PRNewswire/ --

      Goldman Responds To SEC Complaint

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      It's a jungle out here today. May crude oil -2.65%, SPY closed -1.51%, the SEC charged Goldman with Subprime CDO fraud, and Goldman responded.
      Goldman Sachs Makes Further Comments on SEC Complaint
      April 16, 2010

      New York, April 16, 2010 - The Goldman Sachs Group, Inc. (NYSE: GS) said today:We are disappointed that the SEC would bring this action related to a single transaction in the face of an extensive record which establishes that the accusations are unfounded in law and fact.

      We want to emphasize the following four critical points which were missing from the SEC’s complaint... [continue reading here].

      From the initial release.
      "The SEC’s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation" [read full release at goldmansachs.com]

      Eurocontrol Volcanic Ash Cloud Press Conference, Aviation Industry Could See $1 Billion Hit (Videos)

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      This volcanic ash cloud out of Iceland is affecting the Euro aviation industry. Shares of European airlines took a hit. Below is the Eurocontrol press conference on 4/16/2010 and news.

      Goldman Sachs Charged With Fraud By SEC Over Shady CDO Dealings (ABACUS CDO Tied To Subprime Mortgages)

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      Goldman is getting charged with fraud by the SEC over conflicts of interest when structuring and marketing (for hedge funds to short) collateralized debt obligations tied to subprime mortgages right when the housing market was showing signs of distress.  This is shady over-the-counter financial crack dealing at its best.

      SEC Charges Goldman Sachs With Fraud in Structuring and Marketing of CDO Tied to Subprime Mortgages


      Washington, D.C., April 16, 2010 — The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.

      The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.

      "The product was new and complex but the deception and conflicts are old and simple," said Robert Khuzami, Director of the Division of Enforcement. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party."

      Yale's Robert Shiller: 50% Chance Of Another Housing Downturn, Don't Bet Farm On Housing Recovery (BloombergTV and NYT)

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      Yale Professor Robert Shiller recently wrote piece in the New York Times titled Don’t Bet the Farm on the Housing Recovery - April 9, 2010 NYT. Shiller co-founded the S&P/Case Shiller Home Price Index (see chart below). He remains cautious on the recent housing recovery.
      "On March 31, the Federal Reserve ended its program of buying more than $1 trillion of mortgage-backed securities, and the homebuyer tax credit expires on April 30.

      Recent polls show that economic forecasters are largely bullish about the housing market for the next year or two. But one wonders about the basis for such a positive forecast.

      Momentum may be on the forecasts’ side. But until there is evidence that the fundamental thinking about housing has shifted in an optimistic direction, we cannot trust that momentum to continue." [NYT]

      On Bloomberg TV today he said there's a 50-50 chance of another housing downturn. For the full video click here.

      Israel/Hezbollah Warning, Goldman on $99 Oil, Greece Taxing Higher Income, China Increases Crude Production, Markets Could Derail Again -Soros, Credit Card Delinquencies Fell In March

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      Important news for April 13-15, 2010

      War between Israel and Hezbollah 'imminent', US warned - Telegraph
      "A war between #Israel and #Hizbollah that could spread across the Middle East is "imminent", King Abdullah of Jordan has warned the US." ..(hopefully not)
      Israel accuses Syria of arming Hezbollah - AFP
      Syria Gave Scuds to Hezbollah, U.S. Says - Wall Street Journal
      Syria denies it gave Hezbollah Scud missiles - Associated Press
      Syria denies arming Hezbollah with Scud missiles - Reuters India
      Goldman Sachs:  Oil Is Going To $99 - Pragmatic Capitalist (USO, $WTIC)
      Rail Traffic Continues To Surge (Chart) - Pragmatic Capitalist
      Goldman Sachs:  Good Q1 Earnings Priced In - Pragmatic Capitalist
      Greece asks for IMF-EU rescue talks - Guardian (ht edwardnh)
      Greece Closer to Aid Request; IMF, EU Due in Athens - Bloomberg
      Morgan Stanley fears German exit from EMU - Telegraph (ht alaidi)
      Markets could be derailed again, warns Soros - Reuters Blogs (ht Zerohedge blog)
      Soros, Chanos Blast Banks - FinAlternatives 
      Greece poised to pass key tax bill to slash budget gap - Reuters
      Credit card delinquencies fell in March - Reuters
      Capital One credit card defaults rise in March, annualized net charge-off rate 10.87% - Reuters
      Defaults Rise in Federal Loan Modification Program - New York Times (4/14)
      Batista Plans to Sell 20% of OGX Oil Company - Bloomberg
      Nearly 600 dead, 10,000 hurt in China earthquake - UPI via Xinhua
      Factory production grew 0.9%, labor Market Struggles - Bloomberg
      China domestic crude production rose 4.6% on year to 380.7 million barrels - UpstreamOnline
      With Oil Deals, Merger Advisers Rejoice (China 40% of deals outside US) - NY Times
      JP Morgan Chase & Co. Q1 2010 Earnings Call Transcript - Seeking Alpha (ht enoehtoen)
      Argentina annual inflation rate at 40% based on March inflation - Lanacion (ht edwardnh)
      Continental Air, United Said to Resume Merger Talks - Bloomberg
      Lehman wins OK to create asset management company - Reuters (ht alea)
      last but not least..  Gmail Adds Drag-and-Drop to File Attachments - Mashable

      Retail, KBW Bank ETF Protection, ISE Sentiment Index Volatility (ISEE, KBE, XRT, IWM)

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      As the market keeps running after breaking above that 115 (SPY) ceiling resistance level (remember on 2/21/2010 Goldman strategist Abby Cohen said S&P fair value was between 1250-1300?), once $SPX crossed above 1,150 resistance it welcomed 1200+ where it's trading at today (1,212). Since we are near "fair value" according to Goldman, I'm watching the stock insurance market aka put options.

      Courtesy of the Options Activity Watch at CrimsonMind.com, there appears to be protective positioning in the Retail ETF (XRT) and KBW Bank ETF (KBE).  At 3:00p XRT is at 44 and KBE is at 28.32.
      "SPDR KBW Bank (SPDR_Series_Trust/Specialty-Financial) - KBE:  "One options strategist sold 28,260 May 29 calls for $0.58 per contract (bid:0.55 ask:0.70) and purchased 28,260 May 27 puts for $0.40 per contract (bid:0.30 ask:0.40)"
      "SPDR S P Retail (SPDR_Series_Trust/SPDR_Series_Trust) - XRT:  32,500 Sep 40 puts were purchased for an average premium of $1.40 per contract against the sale of 32,500 Sep 34 puts for $0.40, a net cost of $1.00 per spread."

      On my International Stock Exchange (ISE) widget on the right sidebar, XRT had the lowest ISEE ratio (call/puts opened) and IWM was second with 84,406 calls and 2,806 puts as of 1:30pm est.  Who knows why the IWM puts were opened, if insurance or speculative.

      The full ISE Sentiment Index (ISEE Index), which measures call/put data on all securities on the ISE, has been volatile.  On 4/13/2010 the ISEE ratio was at 78 and the next day it hit 165.  "ISEE is computed by dividing opening long call options bought by customers by opening long put options bought by customers".  Last year I analyzed how the S&P traded off the ISEE index here.

      ISEE Index Chart courtesy of ISE.com

      Click the labels below for recent posts.

      Oil Update, Revisiting 2008 Oil Peak, S&P/Oil Divergence, Inventories Down (Charts: Oil Futures, USO, $USD, XLE)

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      Remember in early 2008 when oil diverged with the S&P?  The S&P peaked in October 2007 just as oil was building momentum.  Crude went from $100 to $147 where it peaked in mid 2008 right before the banking crisis (see post on 7/11/2008: Oil touches $147: USO/XLE Charts/Options Analysis).  It was interesting that the divergence between USO and XLE tipped off the oil peak.

      Today the S&P just about doubled from the March low and crude oil securities have either pierced through multi-month ceiling resistance levels or are battling them as we speak.  Light Sweet Crude (continuous contract) closed today at $86.80.  It is close to the 50% retracement level (91.42) using the 2008 peak and 2009 trough and pierced through January resistance.  I'll zoom in on $WTIC below.

      $WTIC (Light Crude Oil Contract - courtesy of Stockcharts.com)

      Check out the May (CLK10), June (CLM10) and July (CLN10) crude oil futures.  They all pierced through ceiling resistance and are riding an upward triangle in a point of serious inflection.  It looks like January is the new floor (for now) to hedge or stop a failed upside bet, like SPX $1,150 currently (imh opinion).

      CLK10 Crude Oil May 2010 Future (courtesy of optionsxpress)

      Interesting Options Action: SLV, EEM, PG, USO, VIX, XHB (4/13/2010)

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      $PG (Procter & Gamble), 15,800 May $65 Calls (closed at $63) - OptionsInsider
      $USO (Oil ETF), 2,000 July $43-48 Call spread (closed at $40.89) - OptionsInsider
      $EEM (Emerging Markets ETF), 50,000 May $43-$40 Put spread (closed at 43.34) - CrimsonMind
      $XHB (Homebuilders ETF), 5,000 June $18 straddle (appears) (closed at 17.76) -  CrimsonMind
      $VIX (Volatility Index), 5K x 7.5K May $20-$26 Call spread (closed at 16.20) - OptionMonsterTV
      $SLV (Silver ETF), 16,711 July $16 Put (20,800 total with 5,619 open) (closed at $17.84) hedge?

      (Courtesy of ISE.com, saw on widget)

      Click the links for more info on the ticks.

      China Small-Cap 500 Index At 5,000 Resistance, Up 224% From 2008 Low

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      The China Small-Cap 500 Index is testing 5,000-5,500 resistance after running up 224% from the September, 2008 low. Read this article at Bloomberg.com [China’s Small-Cap Stocks Fall Most in Three Months]. You can find the chart here.  Look at the insane move. Does this index have an ETF and volatility index? Watch that uptrend line.

      CSI Smallcap 500 Index (SH000905:IND, screenshots from Bloomberg.com)

      Zoomed in, the uptrend structure needs to break for a downside move...

      This continues from my post on Jim Chanos on Charlie Rose.

      Chanos on Charlie Rose: China Property Bubble, RMB Devaluation? (FXI Analysis)

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      Hedge fund manager, short seller, Jim Chanos was on Charlie Rose tonight giving his view on China.  If you didn't already know (see presentation video), Chanos believes China has a huge real estate bubble and thinks the RMB could depreciate, taking the other side of the consensus view that China should de-peg the Yuan from the US Dollar to set global trade free. This is just a preview.
      "So supply will equal demand at some point, it always does and then there's this precarious tipping point where suddenly you can't sell a project and then it's just as if everyone from the port side of the cruise ship goes to the starboard side of the cruise ship all at once. You get a tipping point. You get this sort of light bulb moment, 'I got to get out while I can', and the buyers dry up"....

      "One of the most obvious trades of the world right now is that the RMB, the Yuan, is undervalued"... "Everyone is assuming that China needs to peg its currency higher to avoid the export deflation that's going on. Well Chinese exports aren't the problem here and what if it turns out that by having to nationalize lots and lots of real estate bad debts, the RMB is DEVALUED. That's something nobody is expecting, particularly all the hot money that's going into China".

      Interesting about the RMB. Is he trying to play China's real estate market like the U.S in 2005? (AAA debt turned sub-prime). For recent posts on Jim Chanos click the link.  I also provided a chart of $FXI  (iShares China 25 Index Fund) below the video. Click here for recent posts on Chinese real estate stocks and the Hang Seng Property Index a few months ago. There were record breaking deals going on at that time.

      EUR/USD Pierced Downtrend On 45 Billion Euro Greek Aid Offering, German Ministry of Finance Says It's Not An ACTUAL Decision

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      EUR/USD initially broke above the 50 day moving average and downtrend resistance when it opened tonight.  Watching to see if there's a retest.  EUR/USD is currently up 0.92% at 1.36239.  Charts below courtesy of FreeStockCharts.com.  For previous posts on the Euro click EUR/USD or FXE and watch it stream live on the real-time quote widget to your left.

      Here's what is going on from Bloomberg:
      "The euro rallied after European governments offered debt-burdened Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates as they try to end its fiscal crisis and restore confidence in the currency." [read full article].
      "The euro zone's agreement Sunday about details on an aid plan for Greece must not be misunderstood as an actual decision to provide aid, but it does justify hopes that the country will be able to refinance its debt on its own, the German Finance Ministry said Sunday." [read full DJ article at Nasdaq.com]

      EUR/USD (Euro/US Dollar)

      EUR/USD (zoomed in)

      How Goldman Won the Over-the-counter Derivatives Poker Game Against All Investment Banks (CBS Videos)

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      There was a CBS exclusive the other day titled "Is Goldman Sachs Playing Fair" by Armen Keteyian. Below are the video segments: The Power of Goldman Sachs and Insight into Goldman Sachs. Basically how Goldman won the trillion dollar over-the-counter derivatives poker game against Bear Stearns, Lehman Brothers, Merrill Lynch et al, and the gap between Wall Street and Main Street.

      Peak Oil Alert, Soros On Pound Devaluation, Chanos on Charlie Rose, China Iron Ore Imports Rise With Rare Trade Deficit, Greece Needs 80 Billion Euros Over 3 Years, Magazine Ads Decline, Shiller On Housing Recovery...

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      From DV LinkFest LLC, mostly from Twitter stream.

      Update:  Greek official: 80 bln euros "logical" aid amount for next 3 yrs - Reuters
      Eurozone nations offer Greece euro30 billion in loans - AP
      *Full Text Of EMU Statement - Zero Hedge
      Greece Hints It Might Need Aid If Markets Remain Skeptical - Reuters/CNBC
      Soros Says Pound Devaluation Is Option for Next U.K. Government - Bloomberg
      April 9 Soros Interview on Greece, haven't yet corrected imbalances from 2008 - Bloomberg
      Magazine Advertising Pages Declined 9.4% in Quarter - NY Times
      China’s March Iron Ore Imports Rise on Steel Demand - BusinessWeek
      Yuan rise still on cards despite rare trade deficit - Reuters
      UK stops 'vulture funds' picking on poor - BBC News
      Poland ETF (PLND) In Focus After President’s Death - ETFdb
      Short-Seller Jim Chanos: Red Flag Over China (on Charlie Rose) - BusinessWeek
      More Banker Outrage: Protesters Plan Marches on Wall Street Banks - ABC
      Ex-Lehman Officials, Auditor Sued Over Repo 105 Transactions - BusinessWeek
      China Sees First Trade Deficit in Years - New York Times
      China records rare $7.2bn trade deficit, questioning exchange rate- Financial Times (sub)
      Florida 90-Day Delinquency Rate Hits 19.39 Percent, US Rate is 8.78 Percent - Mish
      US military: Oil output may dip causing massive shortages by 2015 - Guardian (@edwardnh)
      Shiller: "Don’t Bet the Farm on the Housing Recovery" 3/9/2010 - New York Times
      Do rising oil prices threaten the economic recovery? - Econbrowser
      San Francisco Office Vacancy Rate at 17.7% up from 14.7% - SFGate
      Spring on the Tracks - Gregor.us
      Hong Kong foreign reserves rise to US$258.8B - ChineseStock.org
      Kyrgyz interim leader asks for Moscow aid - FT.com
      Trader blows whistle on gold & silver price manipulation - New York Post

      USO (Oil ETF) Chart Artistry, Trends, Targets and Bull Put Spread

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      I'm watching $USO and did some chart artistry (USO LavaChart™) on the oil exchange traded fund at FreeStockCharts.com. I'm watching $42 resistance and the recent trend break just above $40, which could act as support.  You can see it's testing the uptrend from February which hits that support level.  What will happen?  Will USO slide slowly through the uptrend to $40, break out to hit (1) or breakdown at (2).  I think USO is very interesting here because it's been in a sideways channel for months.  If oil spot spikes it could tip the oil futures curve into steep backwardation and yield dividends for the USO roll.  There's definitely a risk the US Dollar spikes and commodities take a hit, we shall see.  I'll break down oil, gold, silver, dxy and e-mini S&P futures in part 2, continuing from part 1 on ETFs. I added interesting USO headlines below the chart.

      Greenspan: Overseas Savings Glut Kept Long Term Rates Low, Fed Funds Rate Was Ineffective In Controlling Housing Inflation (Financial Crisis Inquiry Commission Testimony)

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      Continuing from my previous post on Michael Burry vs. Greenspan vs. Peter Schiff, I thought I'd provide deep thoughts by Alan Greenspan at the Financial Crisis Inquiry Commission hearing a few days ago.

      He made an interesting case that the Fed Funds rate between 2002-2005 was ineffective in controlling long term interest rates which mortgage rates are priced on ("the conundrum"). He found that a savings glut in the developing markets, or lack of investment, kept long term rates down and had no effect on home price inflation at that time. Remember he was so confused about the yield curve in 2005? The curve started to invert in March 2006 if you remember.

      Treasury Yield Curve March 2006 (Courtesy of StockCharts.com)

      Below I embedded Alan Greenspan answering questions from U.S House Rep. Bill Thomas below and the PDF of his testimony. Should he have forced rates significantly higher even with the inversion? Here is Greenspan's Brookings Institute paper titled "The Crisis" if interested.

      Gas Producers Go to the Dark Side (Oil Exploration) - Guest Post

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      Guest post by OilPrice.com.

      Gas Producers Go to the Dark Side

      It's finally happening. Gas producers are starting to crack.

      With the natural gas to oil price ratio running at a nearly-unprecedented 21-to-1 ($86.80 per barrel for crude versus $4.12 per mcf for gas), gas producers are throwing in the towel. And switching over to the "dark side". Oil exploration.

      Up until now, many die-hard gas producers had been sticking to their guns and continuing to drill gas plays. Particularly shale gas, where producers claimed economics are still attractive. Even at current depressed gas prices.