FOMC Statement April 28, Expects Low Rate For Extended Period, Closed All Special Liquidity Facilities Except CMBS TALF (Federal Reserve)

Release Date: April 28, 2010
For immediate release

Private Greece Bailout?, Chicago Pensions Lack Assets, Buffett Defends Goldman, Pensioenfonds Vervoer Dumps Goldman, Housing Recovery vs. Tax Credit End

Interesting news for 4/30-5/2/2010

SOME CRACKS IN THE FOUNDATION? (David Rosenberg Market Update) - PragCap
Aust unveils mining tax, cuts company rates - NZHerald
Update: Greece poised to sign rescue deal with EU, IMF - Reuters
Germany sees private sector helping Greece - Reuters
Greece sees rescue deal on Saturday, thousands protest - Reuters
Why SEC Has Strong Case Against Goldman, Part 1 - Suna Reyent
Greece Faces `Unprecedented' Cuts as $159B Rescue Nears - Bloomberg
Buffett strongly defends Goldman; Berkshire net up - Reuters
Chicago Pensions Lack Assets to Ensure Payment, Commission Says - Bloomberg
Faber Says Greece Needs Debt Writedown of as Much as 50% - Bloomberg
Euro Falls Versus Dollar for Fifth Month as Greece's Budget Crisis Spreads - Bloomberg
Paulson Saw Trading Risk At Goldman, Other Brokers in 2007 - Forbes
Housing Recovery Won't Be Derailed by End of U.S. Tax Credit, Agents Say - Bloomberg
FDIC concerned with swaps rules in Democrats' bill - Reuters
Pension fund set aside Goldman Sachs - Telegraaf.nl (translated to English)
Dutch plan dumps Goldman Sachs from €7 billion portfolio - Pensions & Investments
16 Crafar-owned farms receivership sale ($100M) attracting buyer interest in Asia - NZHerald

Video of Greeks protesting Government measures (via Reuters).

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

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.

Economic Data, Oil Spill Push Crude Prices Higher at End of Week, Oil Market Summary 04/26/2010 to 04/30/2010 - Guest Post

Guest post by Darrell Delamaide originally for OilPrice.com.

Economic Data, Oil Spill Push Crude Prices Higher at End of Week

Oil Market Summary for: 04/26/2010 to 04/30/2010

Stubbornly high crude oil inventories continued to stymie bulls through the middle of the week, but the market seized on positive economic data to push prices higher toward the end of the week.

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

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

$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)

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

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)

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)

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]

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)

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


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)

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]

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)

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.

Amid Push For Renewable Energy, Saudi Arabia Cautiously Turns Over Green Leaf - Guest Post

Guest post by Fawzia Sheikh for oilprice.com.

Amid Push For Renewable Energy, Saudi Arabia Cautiously Turns Over Green Leaf

The promise of green energy has intrigued the Middle East, where concern about future reserves runs deep, but Saudi Arabia's recent plan for a multibillion-dollar investment in traditional oil projects underscores lingering concern about betting on renewables.

Riyadh plans to spend $170 billon over the next five years on energy and oil refining efforts; the country's state-owned oil company, Saudi Aramco, will bankroll little more than half this endeavor, according to the Saudi Gazette. The energy giant called it unrealistic for Saudi Arabia to plow into alternative energy sources when the No. 1 cash crop of oil has built its wealth, the report states.

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

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)

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)

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)

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)

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)

      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)

      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)

      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)

      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)

      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).