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Sandelman Needed the Research Edge...

The Wall Street Journal broke a story today on Sandelman Partners $3.2B hedge fund putting a freeze on withdrawals. I do not have edge on the this being fact or fiction - but that's not the point. The point is an industry one.

Obviously the banks are grabbing plenty of the headlines this morning. I would not underestimate the tail risk (on the US market in particular) associated with the hedge fund cycle rolling over.

There are way too many funds who do not understand how to make money in a down tape.

Liquidations and redemptions will be stories you'll hear about after they occur.

KM

EYE ON Commodities - Corn

CORN - Friday's USDA report showed an increase in U.S. inventories before the 2009 harvest and there is speculation that ideal crop weather will help the U.S. crop recover from the flood. About 833 million bushels of unsold corn will be on hand before next year's harvest, up from 673 million forecast a month ago, the U.S. Department of Agriculture said July 11.

The surplus for the year ending Aug. 31 will be 1.598 billion bushels, up 12 percent from last month's estimate as ethanol-plant construction delays and falling demand for animal feed lifts this year's corn supply, the government said.

SOY BEANS - A shift to hot, dry weather will reduce yields after record Midwest rains last month stunted root development, leaving U.S. crops vulnerable to heat stress.

The Beginning Of The End Of The Nonsense...

There is a great post that our friend and editor of "Footnoted.org", Michelle Leder, put up this morning titled "The SEC wants to put an end to false rumors"...

Michelle clipped the following from the SEC release:

The examinations we are undertaking with FINRA and NYSE Regulation are aimed at ensuring that investors continue to get reliable, accurate information about public companies in the marketplace, said SEC Chairman Christopher Cox. They will also provide an opportunity to double-check that broker-dealers and investment advisers have appropriate training for their employees and sturdy controls in place to prevent intentionally false information from harming investors.

This nonsense of unethical business practice is not going to end well for the perpetrators.

KM

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Pakistan Getting Pounded...

Despite Hank Paulson's call for confidence in global markets, the Karachi Index in Pakistan got crushed again, closing down -4.4% on the day.

Since June 26, Pakistan has lost another -10.2% of it's value, and this begs the simple question as to why?

The reality is that geopolitical risk in this increasingly interconnected global economy does not go away because it is ignored.

Pakistan is dealing with their worst crisis of stagflation in modern history, and the confidence in their domestic political leadership is gone.

These pictures are scary. It is global this time, indeed.

KM

(picture: http://img.dailymail.co.uk/i/pix/2007/12_04/bhuttoflameES_468x355.jpg)

Euro 1.59 Is Not Fun For Everyone...

Importantly, this morning's nasty slowdown in European Industrial Production growth was the May #, not that which is likely worse here in July.

The Euro Zone reported their largest month over month decline in Industrial Production growth since 1992, and at -0.6% year over year this marks the 1st negative growth report in 3 years.

European inflation continues to accelerate, despite the Euro strengthening, and this equates to more of the same. Global Stagflation is here.

KM

Does This Picture Make You Less Scared?

"Sen Banking Committee Chairman Dodd to call Paulson and Bernanke to Senate hearing Tuesday" -- AP (Dow Jones)

At every turn now, we have a circus of government led intervention...

Where are the capitalists?
KM

(picture: http://media.washingtonpost.com/wp-dyn/content/photo/2008/02/26/PH2008022601396.jpg)

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