Fukushima....what's that...situation normal and not news worthy

"fuel rods are fully exposed in the No. 1 reactor at its stricken Fukushima Dai-Ichi nuclear plant, setting back the utility’s plan to resolve the crisis. The water level is 1 meter (3.3 feet) below the base of the fuel assembly, Junichi Matsumoto, a general manager at the utility known as Tepco, told reporters at a briefing in Tokyo. Melted fuel has dropped to the bottom of the pressure vessel and is still being cooled, Matsumoto said. The company doesn’t know how long the rods have been exposed." from zerohedge.com

Looks like a spent "Spent Fuel Pool"...why is this not getting the worldwide attention is needs...this is a global issue at this point.

Matt Taibbi's must read...

Click this link for the article:
The People versus GoldmanTax

This article is a must read. I have some commentary as we implode in another cronyist experiment gone awry - front and Center Goldman Sachs and JP Morgan. It must be understood that the conflicts in our system are now so big...so absolutely dreadfully big that the leverage ratios of both Goldman and JPMorgan are allowed to be at the highest ever...that's EVER and this while they represent the greatest threat to the stability of the financial system after a period in which we learned that a leverage ratio of 30 to 35 was enough to cause nuclear fusion for the financial system. These assholes are at it again with leverage ratios far in excess of that...and whats worse is that all their hold-to-maturity debt is accounted for on their books at 90 to 100% of its par value. The consequences of that are not factored into their leverage assessments...and even without that consideration these instituations are the highest leveraged ever!

WHY...WHY...WHY...WHY is this ok. Well, we will find out the consequences in a "GIANT thunderbolt of truth" margin call that will implode the orgy of excess that Fed driven/induced leverage, fraud, lies, misrepresentations and balance sheet bloating, not just of itself, but of its cohorts can do. Double and triple theft has been the result it will be revealted ofr all to see.

The Fed's QE program supposedly created new money out of thin air...the program did do that...but it use that money as fuel to light the incendiary sparks of financial destruction. It has destroyed far more money than it has created and I venture to say that the $600 billion QE program has created well north of $1.2 trillion on monetary contraction...and they accomplished this task through their overleveraged, cronyist cohorts...of which JPM and GoldmanTax ar but two. Howver, the damage is most likely double that number...I will get into that at another time.

In any case...this is not the first time that Wall Street deception has used leverage and pyramiding to facilitate conflict of interest and cronyism at the highest levels that ultimately passes the rewards to the few and losses to the many...below are two notable quotes from Taibbi's article I find outrageous given the wreckage these guys are creating with their deplorable antics and motivations:

in the 1930's:

...The trusts, were a major cause of the market's historic crash; in today's dollars, the losses the bank suffered totaled $475 billion. "It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity," Galbraith observed

Now:

Converting to a bank-holding company has other benefits as well: Goldman's primary supervisor is now the New York Fed, whose chairman at the time of its announcement was Stephen Friedman, a former co-chairman of Goldman Sachs. Friedman was technically in violation of Federal Reserve policy by remaining on the board of Goldman even as he was supposedly regulating the bank; in order to rectify the problem, he applied for, and got, a conflict of interest waiver from the government. Friedman was also supposed to divest himself of his Goldman stock after Goldman became a bank holding company, but thanks to the waiver, he was allowed to go out and buy 52,000 additional shares in his old bank, leaving him $3 million richer. Friedman stepped down in May, but the man now in charge of supervising Goldman — New York Fed president William Dudley — is yet another former Goldmanite.

One GIANT Margin Call

In defence of Warren Buffett, what would you do if you were at risk of a margin call? Most likely you would try to talk yourself and anyone else that would listen into all the reasons that your position was bonafide and the trade worth the risk. The reality is that the markets are now in a GIANT margin call funded by dollar short carry tradesand the fed - both of which are exhausted. The dollar daily chart looks far from done and as the margin call extends the collapse in liquidity will also. Many funds that were down 20% as of last week and now likely down 30% as a result of trying to defend their trades and fight the dollar.

The reality is that if Mr. Buffett can not see that the biggest risk to the recovery (if there were actually one) is structural and that its not a risk - its a certainty that the structure will be unstable if not totally collapse - then I would be astonished. But then again many things in the world lately are astonishing...the Fukushima news black out...the scientific community refusing to get within hundreds (even thousands) of miles of the accident for marine projects, the every increasing and violent social unrest, the curious timing of the Osama Obama-rama...and the stupendously pyramided trades and transactions that are supposed to be able to support our markets and economic mechanisims. This is why for me the more money I can get out of the leveraged financial system the better I feel. The trick that most people have not figured out is that allocation is everything. So, many are significantly over-leveraged...they have also not figured out how to trade with less than 10% of their liquidity and generate a good return on their net worth.

Tomorrow could provide more unwinding of this fruitcake system of over leveraged and overvalued securities. I do not think it will be pretty. Everyone and their mother has been supporting investments with carry assumptions on the dollar...too many over leveraged firms with drawdowns are approaching levels at which the business viability comes into question are in these carry trades based on short dollar positions...this effectively doubles their leverage and will be the source of many fund closures and liquidations in the near future.

Warren "No Big Risk to the Economy" Buffett - disinformation once again...

Whatever he is smoking I will take some. How can anyone take Buffett at his word when we know what is really doing is talking his book.
Mr. Buffett again encourages complacency as he did in his moody's testimony - conflicts of interest abound...he can not possibly be a ridiculous as he comes accross with this statement in real life...or can he?

Update...

I will likely be posting quite a few charts tonight. I added dollar on today's pullback, added index shorts and will likely look to take metals short again once silver converts the people who sold and lost - that its a buy again. This is a similar situation for energy. Even funds who got hammered are very bullish. Liquidity is the problem...fundamentals have nothing to do with that, so, most people are dreaming about what may happen in a vacuum.

I am working on several charts which demonstrates exactly how silver trades and why its not just realistic but likely that we have a complete retracement of the parabolic rise and then some. The reality is that there are already posts referring to the silver crash that wasn't...and when I see a few more of those I am quite sure that my system will be taking the opposite side of that trade for another 12 to 16 points down...but I may miss the trade as I am not sure that any of the prognosticators are going to get much of a chance to prognosticate.

It is very clear that the naked short from the 1920's on the dollar has to be and will be covered...in the near future. The retracement in the dollar is nearly a complete a-b-c. The c wave has a little bit lower it can go...but its a very shallow retracement and we have broken key levels to the upside and into a trend move on according to my system. I an not expecting the dollar to let the shorts out nor the longs in conveniently.

As to whether rates rise or fall here...the 30 year bond is looking a little a-b-c ish and that may be a clue that indeed rates may be rising if the impulse up can not get more momentum due to weak inflation asset trading. For me its a first come first served issue. If inflation assets weaken first, rates will be under pressure and bonds will rally. If the debt ceiling issue blows up, then rates will rally and bonds will be under pressure. Either way inflation assets will be sold and the dollar will rally. I am not on the rates trade - I will leave that to Bill Gross and friends...and I give favor to the bond rally rather than rates rally.

The election hinges on finance...

The Federal Reserve has blown it and Ben BURNanke will stand a very good shot of being out of a job beofre year's end...if the market decides, as I anticipate it will, then the country will decide accordingly...though I think the country is actually ahead of the market at this point because the Fed is still meddling there with some influence in the near-term. The country has had it with lies from BURNanke and a Wall Street inhabited executive branch.

I guess T. Boone Pickens was not telling us the truth about natural gas...

For the first time, a scientific study has linked natural gas drilling and hydraulic fracturing with a pattern of drinking water contamination so severe that some faucets can be lit on fire.

A peer-reviewed study, published today in the Proceedings of the National Academy of Sciences, stands to shape the contentious debate over whether drilling is safe and begins to fill an information gap that has made it difficult for lawmakers and the public to understand the risks.

For more info: click here

Apple will be the world’s first $2 trillion company...brainiac is spewing thoughless goo everywhere

I have no grudge against James Altucher...but he has worked for the Street.com peddling one rediculous idea after the next. Certainly, this has to top the list...People came out with Silver $150 at the top when it was trading near 48 yo 50 per ounce...very few people shorted it there...I was one...and even fewer will tell you that silver is going below 4.39 while it is still trading near the 40's or 50's. I suggest that the mania is a little overheated here regarding the potential for companies to earn and earn and earn - in a vaccum of course.

The exonential extrapolation is so attractive that most don't even notice what they are doing when they make rediculous extrapolations...not even our illustrious Mr. Ben BURNanke can grasp the significance...so why should anyone else. That of course, was the reason that Warren Buffett gave as to why Moody's did not warn about the housing crisis.

Altucher is rather amusing and should probably get a hair cut soon to avoid looking like the caricature that he seems to be...back in your box James!

The top is apparently in!

Questioning...why? ...and when?

Questioning the desperate rebuttal of Greece...

Fukushima...its still there?

The funny thing about our absolutely ridiculous media, is that when the story gets nielsen ratings its important...after that who cares. If ever there was a story that required constant monitoring and demand for accountable and reliable reporting and information - it is Fukushima. There has been NO news. I watch the story everyday, since I view this type of manipulation as just as disgraceful as the outright theft that is being allowed to be perpetrated before our eyes by the Fed and its minions. Disinformation is everywhere and efforts to quell the masses are too.

Well, FYI, the fukushima issue is NOT gone and infact it appears to be in no more control or stability than it was when it was last in the headlines...however, you do not see one major media outlet covering Fukushima and you will not until there is another unavoidable need to report and opportunity to get nielsen ratings. Though apparently there was interest in reporting the good news robot report recently...

Apparently, there is a very large fire going on right now at the plant as you can see from the photo below...additionally there is rather disturbing evidence that the hydrogen explosions ejected ton's of fuel from the bottom of the containment vessels and distributed it over large residential area...why is there a news blackout?

Fukushima Groundwater Contamination Worst in Nuclear History from Fairewinds Associates on Vimeo.

What happened to the live fuel af fukushima...this is a must watch video:

Nuclear engineer Arnie Gundersen demonstrates how Fukushima's fuel rods melted and shattered from Fairewinds Associates on Vimeo.

Stampede for fiat cash...

When this whole inflation, hyperinflation, fiat currency debasement scam started getting legs, I NEVER thought that the level of hysteria and disinformation could ever reach the proportions that it has. I have been surprised. Mania is mania and I guess we are about to start another one...however this mania should have much stronger legs than the hyper inflation fad has had.

Don't get me wrong, I have a lot of respect for some of the blogs that I link to and for a good reason - the authors are very smart guys and the blogs are very good resources. I have high regard for them. However, the problem is that many smart people and investors have married economic theories. Bill Gross and his minions are among those. Warren "Please print me some money Ben cause I can't see anything to derail the recovery  and don't ever buy Treasuries" Buffett is another one. As we know the market trades based on liquidity, and theories and fantasies, especially economic ones, seldom perform in harmony with said liquidity.

To see just how deeply wrong and misguided the thinking is and powerful the disinformation is you need only look at a few charts. Below is a chart of the T-Bill Yield, the shortest duration bond issued by the US government. What we can see in this chart is just how wrong people have it. The yield is collapsing...and yes it CAN go below zero.

To illustrate what is going on, I will use an analogy, Pictet, it is an unleveraged bank. A personal objective for me is to stay away from the leveraged financial system with as many assets as possible exposing as few assets as possible to the leveraged system for alpha generation and risk management. Pictet one option that is available to park assets in relative safety, there are others. However, the system works like this - you pay them 1% to custody your cash. It appears that this is the same thing that is occurring with Treasuries. Market participants will apparently be willing to PAY not receive yield, as it appears according to this chart, to give custody of cash to the US Government as opposed to the banking system. Damn...the Fed did a good job. Ben should really be proud of himself, though I am quite sure that he is very fearful right now. The guy gets everything wrong, makes everything worse and now he has to look into the abyss! Again, Ben...nice job and do you see this chart?

I think that this chart says it all and that I don't even need to add any other. However, the bull market that is playing out in the long bond that I have shown in previous articles is also telling. It certainly has not confirmed the highs of inflationary assets like junk bonds, commodities or equities - something that many people have been happy to overlook - rather powerfully. Mania is an amazing thing and people have nearly entirely disconnected from reality during this one. It is fitting that the mania started its final craze with the real-estate lending debacle in 2001 when Bin Laden struck the World Trade Center and the credit fueled commodity mania ran its course culminating on his assassination.

Of Silver and Gold Black Gold we think...and re-think...

I am well aware that some smart people have been long silver (hyperinflationary metaphor) for quite a while. However, I must point out that these longs were dangerous and a tedious slog upwards - the shorts will likely be far more efficient - though less popular. The reality is, that for me, silver has a price tag that will likely ultimately wind up reaching the $1's and $2's. Yes, you heard me correctly - my target for silver is $1.50. One dollar and fifty cents. Below the low that triggered the breakout of this parabolic fake out mania. So anything below 4.39 is will do...I think we will get to $1.50 over the longer term but I will give myself some berth as far as prices go...anything reasonably below 4.39 will full fill the next capitulation. This will be brought about by severe economic contraction triggering very weak end-demand for products that require silver, large amounts of overhead supply that will provide copious amounts of available silver (paper or otherwise) to be offered to any willing buyer and a general need to convert a whole gamut of deflating inflationary assets into cash.

For gold, I am a little more optimistic as I believe that gold will fare better and hold the $400 to $600 range simply as a fear price. What one needs to keep in mind here, however, is that the dollar's purchasing power will increase dramatically over the next years and that the $500 you get for an ounce of gold in the future will likely buy the same or more house, food, clothing or stocks as it does now. In fact, I believe that it will actually buy significantly more of many of these things than it does now. But the more desirable asset will be cash for the foreseeable future and gold will suffer due to that.

The inverted chart of oil could not breakdown out of its bull flag and has remained neatly inside the patten until last week when it officially reject the bottom of the flag and appears to be off and running for a breakout to complete wave 5 of a major bull pattern which should ultimately take Oil to below $10 a barrel. Remember, I am referring to an inverted chart...I will post an update later today. But Oil has behaved very very technically and will likely rally hard on the inverted chart which means sell down hard in real life.

Of Fiat we sing...

I find it truly stunning than the concept of the death of a system would be associated by so many professionals and very smart people, including Jim Rogers, with a collapse of the currency of the system. This represents a grave miscalculation of the human animal and the nature of our debt based currency and its economics. The reality is that the dollar will likely retrace a sizable amount of the naked short that began in the early 1900's. After that, the likelihood does favor an official devaluation which will create another round of bankruptcy when it happens...but till then people are going to go broke trying to understand why the collapse of a fiat system will result in a dramatic strengthening of the purchasing power of that system's currency. If you hold Gold through the whole episode, I think that this is a reasonable and a relatively safe approach...it will be rather volatile, but so too will official debasement. At least holding old will alleviate the timing risk of trying get in front of official debasemnt...tough there are better ways to go about that.

Though I have explained this story adnauseum...I understand that its a very difficult story to understand. That Ben BURNanke, Tim G-HEIST-ner and the Government as a whole, would commit suicide by creating the foundation for the crisis that we are now beginning and makes it impossible for them to repay the national debt, is beyond difficult to imagine. Everyone thinks these guys are doing everything they can to facilitate what appears to be currency debasement, so that its remotely plausible for the US to actually settle its national debt and its obligations. Significant debasement, of course, sounds logical but its time has not come yet - it will. But again from my chart above, what we see is a totally different story than the obvious hyper inflation, fiat currency and dollar to zero stories that appear absolutely everywhere...the obvious trade is almost never the right one and this time appears to be no exception.

I see, rising taxes, austerity, budget cuts, deflation, unemployment, municipal and corporate bond defaults and general financial destruction. We probably need to throw in a few wars and a few more revolutions for good measure...but as I said, this will not be pretty. Nor is it going to be kind to those who have it wrong. There is not an abundance of unencumbered liquidity out there, so really big trades being caught wrong footed in commodities, stocks and bonds will likely have dramatic consequences.  

For the record, below is the two year bond which broke out after a 5 month bull flag. If one would have thought that the credit outlook for US debt would demand higher rates...this chart does not show it. What is DOES show is that market participants are not feeling great about risky assets and will put up inordinately low yield and even a dimmed outlook for Treasuries rather than hold more risky assets.

Market dislocation coming to a computer near you...Swan Dive part deux

...very likely early next week...Bill Gross's metal (aswell as many others metal) will be tested...there is a chance that the metal will not be able to hold without capitulation...we are at the point where certain markets need to BOUNCE hard here and now...or risk an acceleration to the downside. At this point, the risks of that acceleration have increased dramatically. Bill Gross, for example, now has 18% (strike that 23% is now the number) of their in assets under management short treasuries. Covering their $240 billion in treasury shorts is not a simple matter and will take some time - unless, of course, they are blown out - which I think is a distinct probability. The results of a capitulation in that position would cause a dramatic bond rally further deepening the current liquidity stress on the risk asset classes. The liquidity contraction is further compounded for our friends at PIMCO because of the issue of the debt ceiling...if the Treasury can not issue copius amounts of new Treasury bills then, of course, there will be a supply problem for Treasuries. This will reveal itself in the market as higher bond prices due to natural demand...Though everyone seems to be focused on China, Japan (among others) selling our good ole US Treasuries there has been an all out stampede into them...and I wonder why? If you want to understand why, I suggest a reread of my previous post: Swan Dive...the real picture...

The picture is getting very interesting and BURNanke will be toast soon enough...of course, I am long the dollar in size in the low 73's on the DX contract (that's upper 72's on the index) and short the equity indexes. Extremely, dangerous chart patterns here and lots of credit contraction and portfolio stress among market participants building for a crescendo.  I will post details on the weekend...but I would be very concerned to have long positions without insurance going into next week...Nothing may happen...but certainly the odds of some significant market event look much higher than one should ignore at this point. And the most important question is how much upside is there really here if you are long? Not very much with the Russell holding a 100+ PE ratio.

This chart is looking right on target...so far we have most likely completed wave b of an a-b-c for the red "a" wave down..."c" of "a" targets 780 on the TF. (This chart has not been updated, its the one from the other day...I will post updates on the weekend.)

Have a great weekend.

Pimco trade on the rocks...

Pimco's Bll Gross says will change his mind on shorting us treasuries if there is potential for another recession...

The main question is when will he force himself to make the switch and how badly will his "cover" curdle the markets? Remember PIMCO has 18% of their entire portfolio currently short Treasuries. I hate to remind Bill Gross - "There is no NEW NORMAL". This whole mess that BURNanke and his cohorts have made really smells bad, there is NOTHING normal about it...and the results are not going to be pretty...but this is what happens when you give a bunch of fools who get everything wrong promotions and power.

Rewarding failure is never proper and the results are never good.

THIS IS NOT GOING TO BE PRETTY!

I suggest a reread of my previous post: Swan Dive...the real picture...

And of course, another recession will mean more QE, which means more debt monetization, which means that naturally, the first and last buyer for Treasury bonds, the Fed, will be there for ever and ever, which means more fiat printing, which means $5+ trillion in Fed "assets", which means more inflation expectations, etc, etc. - Tyler Durden Zerohedge.com

I could not disagree with the complaceny of Tyler's assumptions more. Tyler is a smart guy...but his post represents a complete misunderstanding of the financial reprocusions that are on the table in my opinion. The fed just destroyed ton's of freshly printed dollars by inducing people into malinvestments...further efforts will yield the same results which will end up forcing the dollar shortage to new extremes...of course that would also be represented in the dollar prices too.

Magic numbers are as effective as magic money printed by uncle BURNanke

Today, the Labor Department reported that nonfarm payrolls (jobs) increased in April for an eighth consecutive monthly gain. Today's chart provides some perspective on the US job market. Note how the number of jobs steadily increased from 1961 to 2001 (top chart). During the last economic recovery (i.e. the end of 2001 to the end of 2007), job growth was unable to get back up to its long-term trend (first time since 1961). More recently, nonfarm payrolls have pulled away from its 40-year trend (1961-2001) by a record percentage (bottom chart). In fact, the current number of US jobs was first reached in early 2000.

The reality is that most of the mysterious jobs reported today are Birth and Death model estimates and only exist in the realm or fantasy. Not only that, another flaw in the Birth and Death model is that the model does not seem to understand that a the birth of a new business produces a much lower quality job than the death of an established business. Additionally, most birth company jobs are part time - often they are contracted through Kelly Temporary Services or similar firms. The reality is that the model has almost no basis in samples or fact to claim their 175,000 jobs...but I am quite sure that BURNanke will once again use this factoid to market the concept that the 600 billion QE program that has to date destoyed over $1 trillon in new money was actually successful in creating investment in the job space. BURNanke statements to that effect are about as convincing as supply and demand being the drivers of Oil, Cotten, Sugar, Coffee, Copper and Silver.

Speaking of magic numbers:

...the problem has always been the reliability of the reports, since their version of history often undergoes dramatic rewrites long after the fact. In this particular case a 7.6% year-over-year gain becomes a 0.9% year-over-year gain, and a 0.8% year-over-year growth was admittedly actually a 2.4% contraction -- all done quietly and without media scrutiny. In short, retail sales were not as good as previously purported -- for all the reasons previously described -- and hardly anyone noticed. - from Charles Hugh Smith from Of Two Minds

The money supply and Quantitative Easing - an uncontrolled Nuclear Meltdown

Quantitative Easing according to the fed is a panacea. It works every time and does exactly what it was intended...as long as you are allowed to adjust your stated intentions, on the record and post history, as Mr. BURNanke is allowed to do. But lets take a closer look at what is going on as the QE program implodes in a nuclear fashion.

QE was designed or one reason...as a way to give banks and interested parties more money to use to inflate their mark-to-market assets as they reflected on their balance sheets. I think you can easily rest assured that if I gave someone $100,000, which I would need back at some point, and instructed them to invest it - most would much prefer to put into some sort of stock, commodity or other easily liquifiable instrument rather than starting or funding a business which requires real commitment and non-rented money. Its no different in this case, the big banks and dealers like JP Morgan used the program to buy up 70% of the entire copper market and GoldmanTax used it manipulate nearly every market that they touched with a flood of rented liquidity. In the process, third world countries, oppressive regimes who thrive by stealing from their constituents in even more incredible ways than the Central Banking Cartel and the Western Governments have...were unable to manage citizens who could not afford to eat. These are direct effects of crazy central planning policies that are designed only to prop up the culprits of malinvestment and financial malfeasance. Burnanke can say whatever he wants, but when the fed went to study foreclosure efficacy and documentation, the could not find ONE, not a single one, case that was improper and that he did not like...and we expect the FED to be able to identify inflation or risks that I setforth in this post...Their credibility is ZERO...and BURNanke should be charged.

Now lets look at what has been occurring...and the money process. The fed gives new cash to institutions via QE, they leverage it up 10x to 20x in their derivatives trades and then the exchanges raise the margin requirements so that all that rented cash now simply disappears. Perhaps that puts into perspective why bankers and officials prefer a non-regulated derivative markets where deals can be struck without objective parameters and risk management - the whole thing is based on accounting control fraud - a leveraged banker's best friend. There are two side effects going on here...

1. The process is duplicitous and ends up dragging in people stressed by the economic ecosystem and think they desperately need to try to prevent what they see as an impending total personal catastrophe...
2. Amature speculators who get killed playing the last part of the charade thinking they can get rich on others misfortune

In our case, 2 trillion dollars has been created by the FED recently...nearly a trillion of losses will likely be materializing near-to-mid-term in commodities speculation rife markets. More money will be destroyed by even tighter margin and credit policy by brokerages and FCM's through out the system and other markets. So, the pressure on all inflationary assets will increase and available liquidity will decrease. The one thing to keep in mind is that liquidity shortages effect both longs and shorts because traders on both sides of transactions have the capability to use leverage. Therefore, the sideeffect will be more volatility and deceptive volatility at that...up moves will be powerful, however, the downs moves will likely be even more powerful. The fed will have accomplished the feat of creating 2 trillion dollars that not only vanish entirely (as I indicated in quite a few posts last year)...but then subsequently turn into a deficit of 1 trillion or more. The fact that the new 2 trillion that the Fed recently created simply offset money destruction in real-estate, the economy as a whole and other credit instruments is not taken into account. Certainly the Fed will not take it into account and will seek to obfuscate their failures once more. Right now we are looking at the potential results of Fed money creation efforts in this case resulting in a net destruction of money to the tune of 5 trillion dollars over the last 8 months and into the near future if their 2 trillion turns into zero as the probabilities suggest it will. This of course does not include money destruction from the US debt debacle...the great money collapse scenario, if it plays out, will be clearly visible in the dollar which will rally to 30 year highs against most other currencies in my opinion. It will also be visible in the markets where a short of cash will be unable to drive asset prices higher - just as has happened in real-estate. It will be visible in the jobs markets where the effects of disasterous central planning and government policy will constrain the real economy and job engine.