While focus has shifted away from the Us Economy, to only focus on the great second rescue of Greece, we also note gas prices surged today again. The Debt Ceiling debate seem to have vanished from the trading desks. Thetrader would like to remind our readers, Mr Geithner has 20 billion (14294-14274) slack, and then the debt ceiling is (B)reached. Emergency measures won’t offset the coming days auctions. Debt ceiling here we come.

Full details of Treasuries accounting, https://www.fms.treas.gov/fmsweb/viewDTSFiles?dir=w&fname=11050900.pdf

A report emerged today in the Iranian press that a group of humanitarian activists would take part in a flotilla that would set sail May 16. Now this scenario should sound familiar. Last June when a group of Turkish humanitarian activists attempted to send a flotilla to Gaza, Israeli commandos boarded the ship, killing nine civilians and sparking a major diplomatic crisis.

A similar scenario playing out in energy-vital Persian Gulf region would carry much more severe implications. In the Gaza situation you had the receiving party, the Hamas-controlled Gaza Strip, welcoming the flotilla. In this case you would have the Bahraini government, the GCC [Gulf Cooperation Council], not to mention the U.S. Fifth Fleet highly resistant to an Iranian ship trying to dock on Bahraini shores. So why would Iran be supporting this aid flotilla? We have to remember that Iran is facing a historic opportunity in the region, specifically in the Persian Gulf region. While Iran’s focus remains on filling a power vacuum in Iraq once U.S. forces withdraw from there, the North African unrest provided Iran with a very useful opportunity to create a destabilization campaign against its Sunni Arab rivals in the eastern Arabian region. Iran of course ran into a lot of constraints in this process and this is not exactly something new.

http://www.stratfor.com?video_uuid=byrs6oim&v=byrs6oim&aid=680621

Read more: Dispatch: Iranian Power Projection in the Persian Gulf | STRATFOR

Bill Gross, running the world’s greatest bond fund, is now getting company by Jim Rogers, co founder of Quantum,  the guys that crushed the Pound. Jim is supposedly joining Gross in the shorting US Treasuries. With PIMCO’s latest disclosure we presented earlier today, where short US Treasuries have been added to, and now being 4% of total assets, they are surely getting some smart company by Jim Rogers. After QE2, we will face a new era, so better start preparing for the risk off trade. From Reuters,

Influential investment veteran Jim Rogers said on Tuesday he plans to short U.S. Treasuries as soon as this afternoon as he expects the end of quantitative easing to pressure government bonds.

Rogers said he expects the U.S. dollar to rally when the Federal Reserve’s unconventional monetary measure ends in June.

“I’m not short bonds yet but I plan to short bonds – maybe this afternoon if I get around to it,” Rogers told Reuters Insider television.

Rogers rose to prominence after co-founding the now defunct Quantum Fund with billionaire investor George Soros some four decades ago.

Teflon market is back. No volume melt up again. The higher we go, the less volume there is. Vol crushed again. With Eurozone in a total chaos, people are fighting over selling volatility. No problems on the horizon, quants will once again sell too much vol at too low levels, and get the vol explosion in the face, within a couple of weeks, just like we saw only some days ago. The Printers are still in control, killing volume, vol and market dynamics. Welcome to Printomania.

Trading is a zero sum game. Many hedge funds suffered big losses in the commodities space. We’ve been told by the press of several big hedge funds down app 10% during last weeks extreme volatility in the oil and silver trading. WSJ reports today of the biggest losses at the major hedge funds, Bluegold, AUM 2,4 billion Usd. The firm is according to WSJ down 20% in May, and now minus for the year. That’s all cool, they probably didn’t sell out any oil at rockbottom, but then we ask ourselves, where is the hedge in the hedge fund?

While the Algos seem to have taken time off, markets not moving at all we present some interesting on Bin Laden, and the one person who could possibly be America’s New Public Enemy No1. Courtesey of  The Trends Journal. 

“In a sentence: There were no practical consequences whatsoever attending the death of Osama Bin Laden. It would do nothing to:

• Help America win losing wars in Afghanistan and Iraq.
• Lower the unemployment rate.
• Stop the US or European nations from sinking deeper into recessions and depression.
• Revive failing real estate markets or solve the debt and deficit crises.
• Lower oil and food prices.
• Reverse the damage or stop the radioactive fallout from Fukushima.

On Wednesday, April 27th, just four days before Bin Laden was killed, a new Public Enemy No.1 held his organization’s first ever press conference. Federal Reserve Chairman Ben Bernanke told the world that the United States would continue its low interest rate polices and, in effect, continue to flood the world with cheap money.

The global equity markets immediately responded to the predictably destructive consequences. Before Bernanke ended the press conference, gold prices shot up $20 an ounce, silver $2, and the dollar fell to a 3 year low against a trade-weighted basket of currencies. Despite the Chairman’s claims to the contrary, the US dollar would continue to devalue and subsequently dollar based commodity prices would soar.

Meanwhile, back in DC, the Chairman of the Fed, Public Enemy No.1, “Osama” Ben Bernanke, will mastermind the destruction of the American dollar, the US economy and the purchasing power of the American people.” (Trends)

Full article; trendmay .

It is great to watch market focus from one issue, and totally forget other issues. Oil is back, sniffing 120 Usd. Inflation fears aren’t to be seen anywhere. Market has only Eurozone in focus for the time being. This old chart has been around for a while. It is always good to refresh the below. Currency crisis next….

Chart, Gordon T Long

EUR: LCH INCREASES EXTRA MARGIN CHARGE FOR PORTUGUESE BONDS TO 45%

“For the past year the Greek government has been playing the population off against the European creditors. But just as a teenager will promise his mum he has stopped smoking in order to collect the $100 promised for doing so, while just sucking on mints to cover the smell, Greece hasn’t stopped the rot at all and the wafts of peppermint no longer shroud the stink of smoke from the utterly horrendous data out recently from Greece (Nominal GDP -2.1% vs 5%+ financing rates, Real GDP -6%).

So the European debt collectors have started knocking on the door but have arrived to be greeted by a debtor threatening to trigger the suicide belt of leaving the Euro, causing collateral damage that threatens the very foudantions of the building.”

The path that ends with Lions;

Courtesey, http://macro-man.blogspot.com/

What could possibly go wrong?

“Europe’s debt crisis has returned full-circle to where it seemed to have peaked almost a year ago, when the euro zone agreed to a €110 billion ($158 billion) bailout of Greece and the creation, together with the International Monetary Fund, of a €750 billion safety net for other struggling euro nations.

Portugal is currently negotiating the third such aid package, following Ireland’s bailout agreement last fall. But Greece’s deepening woes show that weaning countries off aid, and restoring investors’ trust in them, is proving far harder than expected.” (WSJ)

http://online.wsj.com/article/SB10001424052748703864204576312883521075492.html?mod=WSJEurope_hpp_LEFTTopStories

Spain had a “buy a villa in Spain” road show event last week, where Ministers tried persuading countries to invest in the “cheap” Spanish real estate market. Without going into too much discussion, thetrader believes prices are heading lower again. For holiday home buyers, who might as well take the flight to Florida, your money will buy twice the house, closer to the beach and properly built houses, compared to popular destinations in Spain.

Barclays notes from the above mentioned roadshow.

“So far for April two private sector agencies have released estimates for Spanish house prices. Cotizalia recorded a 0.9% m/m drop (-4.3% y/y) and Fotocasa recorded a 0.7% m/m decline (-5.4% y/y). The third private sector agency which we monitor, Tinsa, has yet to release April data. Our aggregate of the three agencies’ indices is therefore currently -0.8% m/m in April, down 4.7% y/y. This is the sharpest pace of annual decrease since March 2010. As well, the monthly averages signal a slightly stronger deceleration in prices … In our view, the recent apparent intensification of house price declines can be attributable to three factors. First is the end of a tax allowance for mortgage interest payments for those on higher incomes which happened at the end of last year (and which had therefore brought forward some demand). Second is the rise in 12m Euribor rates, which is by far the dominant mortgage interest reference rate in Spain. 12m Euribor continues to rise and today was at 2.157%, up from 1.2% during March 2010.  Third is the ongoing prevalence of excess supply. In a roadshow today in London the deputy housing ministry said that the excess inventory of unsold homes was 700k (though various private sector estimates have previously put the number at more like 1mn. The RR de Acuna consultancy last November estimated that the excess inventory was 1.5mn. This includes 200k owned by financial institutions, 683k new homes, and an estimated 620-720k that are existing, suggesting that with a pace of transactions of 240-280k per year it will take six years to clear).“ (Alphaville)

We are still amazed by the total denial of over 1 million empty properties in the country. For the full report, click the link and enjoy with the Sangria…..

http://www.fomento.gob.es/NR/rdonlyres/105BDA4A-9266-4FE1-9D0C-06CA1C8A53B7/101815/110504Reuni%F3nFomentoLondresPressKit.pdf