Celente goes “calm” aggressive. Must watch video;

http://www.youtube.com/watch?v=O3nAVN2UhIs&feature=player_detailpage

Stock in Hewlett-Packard Co. dropped Monday evening after the tech company’s chief reportedly warned of a “tough” current quarter. H-P shares slumped 4.8% to $37.90 in heavy volume after Bloomberg News ran a story citing a memo from H-P’s Chief Executive Leo Apotheker that warned of “another tough quarter” for the high-tech firm. A representative for H-P told MarketWatch the company would have no comment on the report. (marketwatch)

Now, predictably, the hostage-takers are back: blackmail worked well last December, so why not try it again? This time House Republicans say they will refuse to raise the debt ceiling — a step that could inflict major economic damage — unless Mr. Obama agrees to large spending cuts, even as they rule out any tax increase whatsoever. And the question becomes what, if anything, will get the president to say no. (NYT)

http://www.nytimes.com/2011/05/16/opinion/16krugman.html?_r=1&hp

Below is a chart where/how Treasury can find some extra money. Everything is possible, but one understands the logic behind PIMCO’s averison to Us treasuries. Source, Morgan Stanley research.

A somewhat old post, but a good reminder, as we are to breach the debt ceiling, once again….

The coming debt ceiling battle is the topic du jour in Washington right now. Republicans argue that simply raising the ceiling over and over again is an unsustainable policy, so they’re demanding budget cuts. Many democrats agree that the U.S. has a deficit problem, but they stress the necessity of raising the ceiling promptly, to prevent default or problems funding other U.S. obligations. When assessing the need for fiscal reform, it helps to look back at the past.

http://www.theatlantic.com/business/archive/2011/04/the-us-debt-ceiling-a-historical-look/238061/

Quick intraday update of the groupthink crowded trades premium.Oil is loosing steam, -2,5% and Silver -3,5%. If we get these two a little lower, we will be facing the same flash crash we experienced not too long ago, although majority have forgotten about it.

And for another route of some more bizarre news, or maybe not so;

• You Kahn’t get a Bail out, even if you are Mr Bail Out
• EUR: Pimco’s Bill Gross on the wires

  *GREECE DEBT HOLDERS WILL HAVE TO BEAR SOME BURDEN, GROSS SAYS

  *GREECE NO. 1 CANDIDATE FOR DEFAULT IN EUROPE, BILL GROSS SAYS

and finally we get some chatter regarding all those hedged funds….not confirmed;

• BlueGold Capital Management LLP’s
  commodity hedge fund, which managed $2.3 billion at the end of
  last month, lost 26 percent in the first week of May amid a rout
  in commodities, according to two people with direct knowledge.

But it is all fine, bull is back. We suggest, load up on vol, and watch the black swans unfold.

From Reuters;

Shi’ite-ruled Iran sent a flotilla to Bahrain on Monday to show solidarity with mainly Shi’ite Muslim protesters, escalating tensions with the island kingdom that is home to the U.S. Navy’s Fifth Fleet.

It was not clear when the convoy might reach Bahrain, which has a majority Shi’ite population but is ruled by a Sunni king.

Bahrain, which has cracked down on pro-democracy protesters in recent weeks, has criticised the decision to send the flotilla and accused non-Arab Iran of interfering its affairs.

Iran’s English-language Press TV said 120 activists, including professors, students and clerics, were aboard the convoy, sent to condemn the killing of Bahraini protesters.

“The convoy will seek to get permission to get inside Bahraini waters. However, it is very unlikely that at this point in time the Bahraini government would allow this,” it said.

In an interview with Al Arabiya television, the head of Bahrain’s Information Affairs Authority, Sheikh Fawaz bin Mohammed al-Khalifa, said the move was unacceptable.

http://af.reuters.com/article/energyOilNews/idAFHOS65135220110516

BREAKING NEWS: TEPCO plans to book group net loss of over 800 bil. yen for FY 2010

Meltdown may have occurred also at Nos. 2, 3 reactors

Strauss Kahn accused of rape

Debt Ceiling in Us (B)reached today

Thetrader has written extensively on the market liquidity subject over tha past months. Today Reuters has a story worth reading. Below from Reuters;

If the great commodity selloff of 2011 shows nothing else, it is that markets are undergoing serious structural changes that need to be followed closely. Our commodities analyst John Kemp has compared the oil plunge with the May 2010 flash crash in U.S. shares, and rightfully so. Four standard deviation moves in oil futures are not normal, even if Gaussian distributions underestimate the chance of such a move. The rise of high-speed electronic trading appears to be creating imbalances between buyers and sellers in nanoseconds that lead to outsized moves. It would probably be manageable if these problems were tied to smaller markets not so correlated with the rest of the world. But in this age of highly correlated global markets, these changes matter and need to be better understood — both by market participants and regulators.

One curious outcome about the rise of algo-driven trading is the volume is not leading to better liquidity, especially in these flash crashes. Liquidity — defined as the ease with which trades can take place without causing a major price  impact (and not referring here to overall bank liquidity/funding risk) — appears to suddenly vanish in some of these big market moves, leading to massive swings.

More on the subject taht could cause the market big headache going forward.

http://blogs.reuters.com/eric-burroughs/2011/05/15/warning-signs-on-market-liquidity-risks/