Wednesday, September 26, 2012 - A Funny Thing Happened on the Way to the Forum - Not Funny HaHa

A Funny Thing Happened on the Way to the Forum - Not Funny HaHa

by Sinclair Noe

DOW – 44= 13,413
SPX – 8 = 1433
NAS – 24 = 3093
10 YR YLD - .06 = 1.62%
OIL +.23 = 90.21
GOLD – 7.30 = 1754.30
SILV +.25 = 34.09
PLAT+9.00 = 1641.00

Did you hear the one about the bank's prop trading desk. This will have you laughing out loud, it is a real side-splitter.Well, not so much a slap your knee kind of joke, not a real hearty guffaw, but more like a giggle, more like a hahahaha kind of joke.

So this trader for Morgan Stanley, just a tyro, he walks onto the trading floor and he's talking to his more experienced colleagues. They told him the banks misreported the Libor rates in away that would generally bring them profits. The kid said he was unaware of that, as he was relatively new to financial trading. The old, battle scarred traders laughed the kid off the trading floor.

Libor fraud: More fun than a barrel of monkeys.

And then Bloomberg reports on new emails from RBS traders reading: “Our six-month fixing moved the entire fixing, hahahah.”

Haha, haha indeed. Libor fraud: Grins and giggles since the turn of the millennium.

We keep getting all this information that Libor fraud was an ongoing and well-known, in your face fraud. And yet, nobody goes to jail. It is funny. Not in a laughing funny kind of way, but in a strange, nauseating, disgusting funny kind of way.

I don't normally jump into politics with you. How you vote is your business. How I vote is my business. I don't think you're going to base your vote on my opinions, and vice versa, so I try to focus on more pragmatic concerns. This does not mean we live in an apolitical world. And so, the time has come to look at where we stand. The polls are no longer showing a statistical tie.

According to the latest Quinnipiac Poll, Barack Obama leads Mitt Romney by about ten points in three crucial swing states — Florida, Pennsylvania and Ohio. Obama leads Romney 53% to 44% in Florida, 54% to 42% in Pennsylvania, and 53% to 43% in Ohio. No candidate has been able to win the presidency without two of these three states since 1960, and no Republican candidate has ever lost Ohio and won the presidency.

On individual issues, voters in these states — averaged together — trust Obama will do a better job on immigration than Romney (50% to 42%), international crises (54.3% to 40%), national security (53.3% to 41.6%), Medicare (55% to 39%), health care (54% to 40.6%), and the ever-important economy (51% to 45%). Romney ties or slightly leads Obama on whether he is better suited to deal with the budget deficit.

According to the Gallup daily tracking poll President Obama has stretched his lead over Mitt Romney to 6 percentage points nationally. A Washington Post poll released late Monday showed Obama with leads in Ohio and Florida. Obama led Romney by 8 points in Ohio, 52-44 percent, and by 51-47 percent in Florida.

While every state matters in the 2012 presidential election, in all honesty some matter more than others. President Obama will certainly win New York, for example, and Mitt Romney will certainly win Texas. Let's review the swing states:

Obama leads Romney in Virginia by 46% to 43%.

In North Carolina, Obama leads 49-45.
Obama leads in Colorado 51-45.

In Iowa and Nevada, Obama leads 51-44.

In Paul Ryan's home state of Wisconsin, Obama has a 12 percentage point lead.

In Michigan, Obama leads 54-42.

Some of you are now sighing deeply, others are cheering softly. This is what the polls are telling us. And I've heard some who would disparage the polls, but that's just personal bias. These polls are pretty accurate. That does not mean the election is over. We still have about 40 days to election day, even though early voting has started in about half the states. A lot can happen over the next few weeks. Next week, there will be the first presidential debate. There are still billions of dollars that will be poured into the races. There is still the chance that votes will not be counted in a forthright manner. There is always the chance of an October surprise.

Iran's president Mahmoud Ahmadinejad addressed the United Nations General Assembly this morning. The guy is crazy. He could start something. Netanyahu might do something. The Egyptians situation might flare up. Syria might unravel. We've been paying all this attention to the Middle East and you've quietly forgotten about the Euro-zone

Earlier today, demonstrators clashed with police on the streets of Athens and Madrid in an upsurge of popular anger at new austerity measures being imposed on two of the euro zone's most vulnerable economies.

In some of the most violent confrontations, Greek police fired tear gas at hooded rioters hurling petrol bombs as thousands joined the country's biggest protest in more than a year. The unrest erupted after nearly 70,000 people marched to the Greek parliament. There is a general strike in Greece. Ships stayed in port, museums and monuments were shut and air traffic controllers walked off the job. Trains and flights were suspended, public offices and shops were shut, and hospitals provided a reduced service.

Greece may be the weakest country in the Euro-zone but a chain is only as strong as its weakest link. If Greece goes into default, there is nothing to prevent Portugal, Ireland, Spain and Italy from following.

In Madrid, Prime Minister Mariano Rajoy faced violence on the streets of the capital and growing talk of secession in Catalonia as he moves cautiously closer to asking Europe for a bailout. The Spanish people do not want a EU, IMF bailout. They know the consequences. In public, Rajoy has been resisting calls to move quickly to request assistance, but behind the scenes he is putting together the pieces to meet the stringent conditions that will accompany rescue funds.

Spanish bond yields approached 6 percent for the first time in months, while European shares and the euro fell sharply. Just in case you were wondering why QE to Infinity and Beyond hasn't been pushing the price of oil and commodities and precious metals higher; the reason is because the ugly situation in Euro-land is pushing the dollar higher. The dollar index inched back up to 79.9, not a level of strength, but not the breakdown you might anticipate with the announcement of open-ended bond buying and an acknowledgment that the US economy isn't strong enough to get a job. Yes we are in bad shape, but you should see the other guy.

Yesterday, Federal Reserve Bank of Philadelphia President Charles Plosser said the central bank's latest round of monetary easing was unlikely to help growth. Today, Charles Evans, president of the Federal Reserve Bank of Chicago, said he wholeheartedly supported the Fed's plans to buy $40 billion in mortgage-backed securities every month in an effort to drive interest rates lower and stimulate economic growth.

Plosser is among a minority group of Fed officials who have argued that the central bank has done all it can to help the economy and going any further in terms of pumping more money into the financial system through bond purchases runs the risk of triggering higher inflation in the future.

Evans took issue with those who have warned that the Fed's efforts could have unintended adverse consequences. Evans said: "Being timid and unduly passive can also lead to unintended consequences. If we continue to take only modest, cautious, safe policy actions, we risk suffering a lost decade similar to that which Japan experienced in the 1990s."