Jim Grant on Bernanke’s Continuing “Grand Manipulation”

Thursday, June 7th, 2012

In preparation for what we are about to receive from the Charmain of the Fed, may we be truly grateful, Jim Grant offered CNBC’s Maria B the forthright advice last night “prepare for platitudes but watch what they are doing not what they are saying”. The ever outspoken Grant notes that the Fed’s balance sheet has been contracting (unlike Maria’s mainstream perspective); for the past three months the Fed’s balance sheet has contracted at an annualized rate of 10% – even as Fed-head after Fed-head talk up QE and so on. So unless they continue buying securities – since the short-dated positions will continue to roll off – the Fed’s balance sheet will continue to contract and therefore the stimulative effect will fall. Grant does expect QE3 since it is the fun-drug that we have been using for 4 or 5 years and that Bernanke will need little pushing to continue the Grand Manipulation. He ends on a rather interesting note that the Wisconsin win and the potential for an Obama loss in November may be more of a positive driver for stocks since markets begin to revert to a free market once again – we suspect this is not the case given the donors/beneficiaries under Romney’s wing. But rest assured – the bespectacled bear ends on the chilling note that ‘the long-term implications are bad’ for the ongoing manipulation that is now the status quo.

and from Goldman, if there was any doubt of Grant’s comments on the implicit tightening – or inverse flow – as they present the embedded tightening opportunity cost for the Fed it does nothing.

The bottom line here is that if the Fed does nothing then there is an implicit 5-10bps of rate-hike tightening per quarter implicit in the balance sheet roll-down (50bps in next 3 years) – so when considering the Fed’s actions, discount the effect of this automatic tightening before buying the S&P at 2000…

Tags: 3 Years, Amp, Balance Sheet, Beneficiaries, Bernanke, Bottom Line, Charmain, Cnbc, Donors, ETF, ETFs, Fed Head, Gold, Goldman, Jim Grant, Mainstream, Manipulation, Opportunity Cost, Platitudes, Qe, Rate Hike, Term Implications, Three Months
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Catching the “Silver Crusher” Algorithm in the Act

Thursday, March 22nd, 2012

There was a time when catching the silver “whack-a-mole” algo, or process, or intervention, or manipulation, or whatever one wants to call it, in action was a myth: an urban legend, perpetuated by silver conspiracy theorists. Until today that is. Courtesy of Nanex we now have direct evidence of just what the reflexive market (in which derivative products such as ETFs influence underlying assets) goes to town by taking silver to the woodshed at a whopping 75,000 times per second! From the broken market sleuths at Nanex:  “On March 20, 2012 at 13:22:33, the quote rate in the ETF symbol SLV sustained a rate exceeding 75,000/sec (75/ms) for 25 milliseconds. Nasdaq quotes lagged other exchanges by about 50 milliseconds. Nasdaq quotes even lagged their own trades – a condition we have jokingly referred to as fantaseconds.” Translation: so desperate was the desire to crush silver at precisely 13:22;33, that the Nasdaq order flow directive ended up moving faster than light. Frankly, we don’t know about you, but when someone is willing to bend the laws of relativity, just to get a cheaper price in silver, to perpetuate a failing monetary system or for any other reason, we quietly step aside…

From Nanex:

SLV 1 second interval chart showing trades colored by reporting exchange.

SLV 1 second interval chart showing the NBBO
Shaded black if normal, yellow if locked (bid = ask) or red if crossed (bid > ask).

SLV 1 millisecond interval chart showing trades colored by reporting exchange.
Chart shows about 200 milliseconds of time.

SLV 1 millisecond interval chart showing the NBBO
Shaded black if normal, yellow if locked (bid = ask) or red if crossed (bid > ask). Note the insanely high quote rate in the bottom panel. Chart shows about 200 milliseconds of time.

SLV 1 millisecond interval chart showing the quotes and trades from ARCA (red) and Nasdaq (black).
You can clearly see the delay in Nasdaq quotes, yet their trades aren’t delayed at all. Chart shows about 200 milliseconds of time.

SLV 1 millisecond interval chart showing the quotes and trades from BATS (purple) and Nasdaq (black).
You can clearly see the delay in Nasdaq quotes, yet their trades aren’t delayed at all. Chart shows about 200 milliseconds of time.

SLV 1 millisecond interval chart showing trades colored by reporting exchange.
This chart shows approximately 150 milliseconds of time.

SLV 1 millisecond interval chart showing the NBBO.
This chart shows approximately 150 milliseconds of time.

Tags: Algorithm, Arca, bottom panel, Conspiracy Theorists, Crusher, Derivative Products, Direct Evidence, ETF, ETFs, Faster Than Light, Interval, Laws Of Relativity, Manipulation, Milliseconds, Monetary System, Nasdaq Quotes, Nbbo, Sleuths, Urban Legend, Whack A Mole, Woodshed
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LinkedIn (LNKD) Earnings Not Enough to Maintain Lofty Valutaion

Friday, November 4th, 2011

LinkedIn (LNKD) Earnings Not Enough to Maintain Lofty Valutaion
Company Already is Doing a Stock Offering

It is ironic that we had LinkedIn’s (LNKD) earnings last night just ahead of the frenzy that will be Groupon (GRPN) today.  LinkedIn set the model on how to float a TINY amount of your shares in the IPO therefore causing a manipulation of the supply / demand dynamic.  Anyone who took Econ 101 knows price is based on supply v demand – and if you supply the marketplace with a tiny amount of shares, the price will be artificially high.  Groupon is following that tact with LESS than 5% of its shares to be available for trading….

Anyhow, not 6 months after IPO LinkedIn is already coming back to the marketplace with a NEW share offering – a bit humorous if you ask me.  Maybe if they had actually sold more shares in the IPO they wouldn’t need to be raising new money!!  But with the above mentioned plot and massive valuation of >$8B, $100M (with potential of up to $500M) is a mere pittance I suppose.

As for earnings, LinkedIn fell back into the red after last month’s positive earnings.  And if you exclude those nasty one time items (that happen each quarter but for some reason Wall Street tells us should be ignored as they are one time in nature) the company earned 6 cents.  Like many companies of this ilk it is spending for revenue growth with the idea that profits come later.  Revenue growth was very good but even if you annualize the $139M, to $556M – the price sales ratio is 15.  (I won’t even bother with the traditional trailing price to sales ratio) Extreme – but it all goes back to that tiny float.

Via Reuters:

• Professional networking company LinkedIn posted quarterly results that beat estimates and raised its full-year outlook, but margin expectations and plans for a share offer drew scrutiny from investors.
• LinkedIn, which went public in May, said on Thursday that it expects to report adjusted earnings before interest, tax, depreciation and amortization (EBITDA) for the year of $83 million to $85 million on revenue of $508 million to $512 million.  It had previously targeted a full-year adjusted EBITDA profit of $65 million to $70 million and revenue of $475 million to 485 million.
• The company, started in the living room of ex-PayPal executive Reid Hoffman in 2002 and launched in May 2003, also gave an outlook for the current quarter, which some analysts said was too cautious.  “The results were good, other than fourth quarter EBITDA guidance seeming a little conservative,” Ken Sana of Evercore said.
• “Stock trading where it is, it has to be a perfect quarter,” Herman Leung of Susquehanna Financial Group said, adding that company margin expectations of 12.8 percent on average were somewhat below estimates of 13.4 percent.
• In addition, a proposal to sell up to $500 million in stock raised concerns that it would dilute company shares.  LinkedIn said it wanted to raise capital for the company but also “facilitate an orderly distribution of shares.“  A 180-day lock-up period — agreed to after its listing in May — prohibits employees and others from selling their stock. Come Nov. 21 the restrictions will be lifted, potentially resulting in a massive sell-off.
• LinkedIn’s third-quarter revenue rose 126 percent to $139.5 million, above Wall Street expectations of $127.6 million, according to Thomson Reuters I/B/E/S.  Net loss was $1.6 million, or $0.02 per share, compared with a profit of $4.0 million a year earlier. Wall Street had expected a loss of $0.04.
• LinkedIn added 15.4 million more accounts in the quarter to end September with 131.2 million members.
• LinkedIn added 282 employees during the quarter to end September with nearly 1,800.
• The Mountain View, California-based company makes money by selling premium subscriptions to its members and by helping companies with hiring and marketing.

Tags: Amortization, Earnings, Ebitda, Estimates, Frenzy, Ilk, Interest Tax, Investors, Ipo, Linkedin, Manipulation, Marketplace, Networking Company, New Money, Outlook, Pittance, Professional Networking, Profits, Quarterly Results, Reuters, Scrutiny, Tact, Tax Depreciation, Wall Street
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What Could Trip Gold Up?

Thursday, November 18th, 2010

Submitted by David Galland of The Casey Report

What Could Trip Gold Up?

Can you visualize a possible scenario that could put a sudden end to the secular rise now underway in gold and silver?

In a recent conference call with the research team of The Casey Report, we once again collectively tried to imagine what situation… what scheme… what government manipulation… might finally put a stake through the heart of gold.

Setting the stage, I think it’s safe to assume that in order for the gold bull to decisively reverse direction, the following general conditions would have to be precedent in the economy:

1. The financial crisis will have to have ended. Which is to say that…

1. Unemployment would have to begin falling by significant numbers – with 300,000 jobs or more being added month after month, instead of being lost.

2. The housing markets will be stabilizing. Foreclosure rates would have to fall to more normal levels (and not because banks are forced to postpone the process for legal reasons, which is the case now), and sales would have to accelerate in the right direction.

3. Government deficits would have to be sharply curtailed and heading lower.

4. All quantitative easing will have ended.

5. GDP will have to be on sound footing and rise based on sustainable, private-sector growth – not based on the activities of government, which loom so large today in the calculation.

2. Real interest rates – the yields you earn over the actual rate of inflation (not the fabricated numbers ginned up by the government) – will have to be solidly positive. Which, of course, is a big problem given the sheer magnitude of the outstanding debt. Rising rates will only beget more debt.

3. The monetary base of the country will have to be contracting, not soaring as it has been in recent years. The following chart from The Casey Report a few months ago tells the story of runaway printing, and of why gold is so strong by comparison.

Inherent in the list just above are other conditions that will have to be precedent for gold’s run to end.

For example, politicians around the world will have to find the uncharacteristic courage to act in ways that are deeply unpopular with the very voters that brought them to office. Namely by slashing the scale and cost of government, with all the many cutbacks in subsidies and services that such a Great Downsizing must entail. And this rare new breed of politician would have to retain their jobs long enough to see through the reduction in government that must occur if stability is to be regained.

Tags: BRIC, BRICs, Casey, Conference Call, Financial Crisis, Foreclosure Rates, Galland, GDP, Gold And Silver, Government Deficits, Heart Of Gold, interest rates, Manipulation, Monetary Base, Private Sector Growth, Rate Of Inflation, Right Direction, Russia, Sheer Magnitude, Significant Numbers, Silver, Sound Footing, Stake, Unemployment
Posted in Emerging Markets, Energy & Natural Resources, Gold, Markets, Oil and Gas, Silver | Comments Off

PIMCO Hunkers Down, Not Buying Much Of Anything Anymore In Anticipation Of “Disinflation”

Monday, January 4th, 2010

This article is a guest contribution by Tyler Durden, ZeroHedge.com.

PIMCO is cutting its exposure to all asset classes, confirming what all but equity chasers (yes, futures are up massively as the futures manipulation scam continues unabated) seem to know – the Fed buffet is now closed:

This all leaves us with portfolios that appear, more than at other times, to be hugging the benchmarks with no bold positioning. Some might suggest we’ve become closet indexers, but, on the contrary, we’re making a very active decision to run light on risk. At this point, we know this is not going to be a particularly high-yielding portfolio. You can only eat what’s in the cafeteria, and right now the cafeteria doesn’t have anything particularly appetizing in it.

We expect the next monthly set of data from the Total Return Fund to indicate that the fund is now in aggressive cash retention mode, taking advantage of the last few months of unbridled Fed generosity.

Tags: Advantage, Advertisement, Anticipation, Asset Classes, Benchmarks, Cafeteria, Chasers, Contrary, Cutting, Disinflation, Futures, Generosity, Guest Contribution, Indexers, Manipulation, PIMCO, Portfolios, risk, Tyler Durden
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