This is a must see analysis of what I have been discusing adnauseum on my blog regarding money amplification and the crazy cronyist behavior of the Fed, Banks and the Government:
35 minutes ago
Friday, December 2, 2011
While the masses are talking about desperate need to buy physical Gold and Silver
The central banks are preparing to have to sell most of their physical and paper Gold and Silver reserves to raise cash to try to manage the dollar funding issues facing them and their failed policies. Those needs are ravenous and insatiable. They are not satisfiable with either means of printing or asset sales - so selling assets/collateral like Gold and Silver or printing will only be like using a pea shooter against an aircraft carrier. Not only that, banks all over the world will have to do the same…this WILL NOT BE A MARKET FOR PHYSICAL commodities for quite some time to come.
Today’s action in the dollar indicates the level of failure and panic (see my previous post: Fed panics, ECB panics, China panics…) at the Central Banks via their recent manipulations and policies. They have failed before they have even gone more than a few days. BURNanke has burned the money once again before it even hit the ground. Now they will have to resort to other means.
Today is prime short territory for these commodities and many others as well. The margin call paused for a few days only to become bigger in the process and more dangerous when it requires satisfaction. Has anyone noticed that the events in Iran have had no impact on Oil? There is a reason why…
…and that funding that europe so desperately needs from the IMF…well…
Today’s action in the dollar indicates the level of failure and panic (see my previous post: Fed panics, ECB panics, China panics…) at the Central Banks via their recent manipulations and policies. They have failed before they have even gone more than a few days. BURNanke has burned the money once again before it even hit the ground. Now they will have to resort to other means.
Today is prime short territory for these commodities and many others as well. The margin call paused for a few days only to become bigger in the process and more dangerous when it requires satisfaction. Has anyone noticed that the events in Iran have had no impact on Oil? There is a reason why…
…and that funding that europe so desperately needs from the IMF…well…
“I’m adamantly against the IMF being involved in this,” Coburn said. “We’re throwing good money after bad down a hole that I think is not a solvable problem,” he said. “Europe is going to default eventually, so why would you socialize their profligate spending,” he added. Coburn estimates the U.S. could be liable for as much as $176 billion if the IMF shores up Italy and Spain and the European Union collapses
War, War, what is it good for?…all I have to say is IRAN
Apparently, for covering up ponzi scheme economics and failing financial engineering…I wonder how this happened in iran today?
All Risk Off Markets ready to rally...
Treasuries and Dollar are done with their consolidations (see this previous post Bank of the United States of America is approaching critical mass)…SP500 resistance WALL held this attempt solidly so far. Lots of long wicks on currency candles over the last few days. EURO basis swap reversed and is even more negative again today.
The dollar action is VERY damaging to the continued health of any bullish action in risk assets. What’s more is that all the US Treasuries have completed the consolidations that I posted earlier in the week…that is also very bad for Risk assets…with all the interest in getting dinosaurs out on TV touting dollar debasement and real assets…you could not get a much more inverse signal.
Peter Schiff has never gotten anything right when it comes to a trading call or the Dollar. He has made one or two macro calls that setup his reputation…but when we have major dollar liquidity issues and the guy still promotes a crash of the dollar despite it being clear that credit is being destroyed at a much faster pace than any central bank can print or replenish, he is clearly out of touch with reality or has written one too many books and is not allowed to change his thesis publicly.
Also, please reread this post: Black Friday…Black Monday…either way the Jig is up… Things have gone pretty much as expected. Actions by the our financial engineering team and central bankers have demonstrated that things are much worse than they are admitting publicly and also that they are not in control.
Why don’t they use unemployment to population ratio for the rate calculation? What kind of BS is it to use the unemployment to workforce as the ratio? I guess its easy to understand really, WORKFORCE is an engineered number and can easily be changed at a whim to facilitate achieving a particular target. Without this movable variable, the government numbers might actually have to stand up to close inpsection and we certainly would NOT want that. At this rate, the workforce can shrink by anoher 5 million jobs, the population can increase and the unemployment rate will actually continue to drop dramatically. What a scam!
I also suggest that everyone hear this interview: Ann Barnhardt
The dollar action is VERY damaging to the continued health of any bullish action in risk assets. What’s more is that all the US Treasuries have completed the consolidations that I posted earlier in the week…that is also very bad for Risk assets…with all the interest in getting dinosaurs out on TV touting dollar debasement and real assets…you could not get a much more inverse signal.
Peter Schiff has never gotten anything right when it comes to a trading call or the Dollar. He has made one or two macro calls that setup his reputation…but when we have major dollar liquidity issues and the guy still promotes a crash of the dollar despite it being clear that credit is being destroyed at a much faster pace than any central bank can print or replenish, he is clearly out of touch with reality or has written one too many books and is not allowed to change his thesis publicly.
Also, please reread this post: Black Friday…Black Monday…either way the Jig is up… Things have gone pretty much as expected. Actions by the our financial engineering team and central bankers have demonstrated that things are much worse than they are admitting publicly and also that they are not in control.
Why don’t they use unemployment to population ratio for the rate calculation? What kind of BS is it to use the unemployment to workforce as the ratio? I guess its easy to understand really, WORKFORCE is an engineered number and can easily be changed at a whim to facilitate achieving a particular target. Without this movable variable, the government numbers might actually have to stand up to close inpsection and we certainly would NOT want that. At this rate, the workforce can shrink by anoher 5 million jobs, the population can increase and the unemployment rate will actually continue to drop dramatically. What a scam!
I also suggest that everyone hear this interview: Ann Barnhardt
The Brick Wall or Wrecking ball?
I remind of over the MAJOR overhead resistance that we are appoaching here…getting interesting and dollar is behaving nicely, given the new 270 billion emergency lending from ECB to IMF…something looks like it is afoot…resistance comes in at 1265 to 1271 on the ES futures.
Thursday, December 1, 2011
Wednesday, November 30, 2011
A general comment…I post a single view and risk perspective...
Given that I also keep my trading approach similar, the more options you have the worse you trade. I would like my readers to know that I am short…yes, indeed I am, and today was not my favorite day of all time...however, I am very happy with the gifts that I get and today was likely one. Additionally, my performance for the month, this month alone, for pools ended up double digits positive…Ofcourse, the numbers would have been better without today but I think next month will not be a snoozer for anyone and I am prepared.
Yes, I am quite pessimistic here and I think history has a precedent for being extremely pessimistic when these types of things happen. The Australian Dollar has made an epic move today (multi sigma)...one that usually is reversed highly dramatically. The euro could not get follow through on its ramp...we will see how it continues to play out - I am not optimstic. The markets are at major resistance. I can be early, but usually my trades are successful and often very highly so…I have no waffle room in the way I do things…either it works or it does not.
One thing we know for sure, December will not likely make it easy for most market participants.
I would like to make another comment, I make no apologies for laying it on the line…on a day like today, it is easy for the pot to call the kettle black…so, indeed, I had been the recipient of such messages. However, as I have said many times before, I can manage being wrong much better than flipping my view or taking a bunch of unnecessary losses. What is going on in this economy and with the powers that be in the system is something that I take very personally, I do use my blog to talk about it. I depise the abundance of misinformation and the distortions propogated by the mass media and populists that get people setup in just the wrong position at just the wrong time, over and over again. What is happening in this system is beyond trading, it is much more dangerous and I seek to discuss those issues on these pages. I do not pretend to be perfect, nor do I aim to sell a trading information service. I simply provide my best views (what are often wrong) to you. I appreciate your readership and I enjoy writing on this blog even when things are challenging. For me those moment are the most important because is then that you can learn something and also then that you can see the character of all. I seek to be humble and I base my views and trading systems on the premise that I will be wrong, in doing so, I believe that successful results are and have been much easier to attain.
I encourage all in the trading business to do the same. Don’t have a wishywashy approach - take a stand. It is much easier to adjust when one does so. This trade and my view is now much higher probability of playing out that at any point previously…it takes work to make sure that you are aligning yourself and views in that manner…Though I will not be championing the success of my view (which I have high confidence in, incidentally) on this blog, I am confortable humbly addressing the challenges of it so far, and wanted to do so publically.
Yes, I am quite pessimistic here and I think history has a precedent for being extremely pessimistic when these types of things happen. The Australian Dollar has made an epic move today (multi sigma)...one that usually is reversed highly dramatically. The euro could not get follow through on its ramp...we will see how it continues to play out - I am not optimstic. The markets are at major resistance. I can be early, but usually my trades are successful and often very highly so…I have no waffle room in the way I do things…either it works or it does not.
One thing we know for sure, December will not likely make it easy for most market participants.
I would like to make another comment, I make no apologies for laying it on the line…on a day like today, it is easy for the pot to call the kettle black…so, indeed, I had been the recipient of such messages. However, as I have said many times before, I can manage being wrong much better than flipping my view or taking a bunch of unnecessary losses. What is going on in this economy and with the powers that be in the system is something that I take very personally, I do use my blog to talk about it. I depise the abundance of misinformation and the distortions propogated by the mass media and populists that get people setup in just the wrong position at just the wrong time, over and over again. What is happening in this system is beyond trading, it is much more dangerous and I seek to discuss those issues on these pages. I do not pretend to be perfect, nor do I aim to sell a trading information service. I simply provide my best views (what are often wrong) to you. I appreciate your readership and I enjoy writing on this blog even when things are challenging. For me those moment are the most important because is then that you can learn something and also then that you can see the character of all. I seek to be humble and I base my views and trading systems on the premise that I will be wrong, in doing so, I believe that successful results are and have been much easier to attain.
I encourage all in the trading business to do the same. Don’t have a wishywashy approach - take a stand. It is much easier to adjust when one does so. This trade and my view is now much higher probability of playing out that at any point previously…it takes work to make sure that you are aligning yourself and views in that manner…Though I will not be championing the success of my view (which I have high confidence in, incidentally) on this blog, I am confortable humbly addressing the challenges of it so far, and wanted to do so publically.
The height of blasphemy, idiocy and financial alchemy
The fact is that the Fed and their minions are at it again...desperately pushing their drugs on a string trying to facilitate their bankrupt cronies at the expense of the markets, the taxpayers and the financial system. It seems hard to imagine that an effort supposedly engineered to provide stability could be so stupidly engineered as accomplish exactly the opposite. Essentially today the Fed is doing EXACTLY what it did to accelerate the panic in the markets in 2008. They did not save the markets at all really because what they did do, however, was make the next problem...yes the one we are having now, 10X (10 times bigger) than the one they supposedly attempted to cure. So, if you were a normal human being and realized that your efforts resulted in a significantly greater problem than the one you would probably look at what you did that exacerbated it. Well, in the case of the Fed, what exacerbated the 2008 debacle was trying to cure credit problems with lots more credit. The fed is doing it again once again in replay mode, only this time in 3D. So, the result will be a total catastrophe. There is no other option.
Here is a press release:
What is happening here is that the entities whose way over leveraged balance sheets have grown even bigger and more obtuse over the last 2.5 years are now getting a handout from the central banks, who are all going to tell us that they are only taking pristine collateral for such access. Do you believe them? The Fed is buying third rate mortgages and has been buying bankrupt hotel debt...yeah right!
So, if we were to examine what occurred in the above press release, you would realize that the only thing missing is the dates. And they would be: Release Date: September 18, 2008, For release at 3:00 a.m. EDT.
What happened next? Well clearly for these institutions to panic to this degree, their actions had the exact opposite effect than intended...Everyone was left asking "just how much worse are the problems than we were being told?" Recognize the similarity? The market dropped 350 points on the S&P500 thereafter in less than a month. The Fed could not print or inject enough dollars in then, they most certainly will not be able to now. Will the same thing happen this time? My opinion is that probabilities favor the same type of result and will likely be part of an even bigger decline than 2008 because this time the Fed and its buddies are going in much bigger and they are seeking to give money to even more stretched and insolvent bankers and once again reward incompetence. They themselves are incompetent, so, I guess I can not blame them for not being able to recognize it in others...especially their cronies.
If the Fed was a poker player, they showed their hand...we now know they are scared...and now its the market's turn. I, somehow thing the market is a better poker player.
Here is a press release:
Today, the Bank of Canada, the Bank of England, the European Central Bank
(ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank
are announcing coordinated measures designed to address the continued
elevated pressures in U.S. dollar short-term funding markets. These
measures, together with other actions taken in the last few days by
individual central banks, are designed to improve the liquidity conditions
in global financial markets. The central banks continue to work together
closely and will take appropriate steps to address the ongoing pressures.
Federal Reserve Actions
The Federal Open Market Committee has authorized a $180 billion expansion
of its temporary reciprocal currency arrangements (swap lines). This
increased capacity will be available to provide dollar funding for both
term and overnight liquidity operations by the other central banks.
The FOMC has authorized increases in the existing swap lines with the ECB
and the Swiss National Bank. These larger facilities will now support the
provision of U.S. dollar liquidity in amounts of up to $110 billion by the
ECB, an increase of $55 billion, and up to $27 billion by the Swiss
National Bank, an increase of $15 billion.
In addition, new swap facilities have been authorized with the Bank of
Japan, the Bank of England, and the Bank of Canada. These facilities will
support the provision of U.S. dollar liquidity in amounts of up to $60
billion by the Bank of Japan, $40 billion by the Bank of England, and $10
billion by the Bank of Canada.
All of these reciprocal currency arrangements have been authorized through January 30.Examining this press release, one can see that this essentially describes the liquidity action that the Fed took today. What's more the objectives are stated to provide short-term and overnight funding, what they omit is the "for our ponzi scheme" part. Moreover, the objective here really is to provide dollars to intermediates to make available for insolvent and dubious counterparties that would go broke with out them. What this means it that in order to allow operations say for Society Generale they required access to a certain amount of dollars, that they lacked the capability or credibility to purchase those dollars. As we know, everything is available for a price, however, when you are not a particularly good risk and desperately need a particular security/asset to ensure you can meet basic obligations and need desperatey to remain credible...the price goes up. That also happens when the natural result of too much credit defaulting creates an accute shortage in supply of NON IOU dollars.
What is happening here is that the entities whose way over leveraged balance sheets have grown even bigger and more obtuse over the last 2.5 years are now getting a handout from the central banks, who are all going to tell us that they are only taking pristine collateral for such access. Do you believe them? The Fed is buying third rate mortgages and has been buying bankrupt hotel debt...yeah right!
So, if we were to examine what occurred in the above press release, you would realize that the only thing missing is the dates. And they would be: Release Date: September 18, 2008, For release at 3:00 a.m. EDT.
What happened next? Well clearly for these institutions to panic to this degree, their actions had the exact opposite effect than intended...Everyone was left asking "just how much worse are the problems than we were being told?" Recognize the similarity? The market dropped 350 points on the S&P500 thereafter in less than a month. The Fed could not print or inject enough dollars in then, they most certainly will not be able to now. Will the same thing happen this time? My opinion is that probabilities favor the same type of result and will likely be part of an even bigger decline than 2008 because this time the Fed and its buddies are going in much bigger and they are seeking to give money to even more stretched and insolvent bankers and once again reward incompetence. They themselves are incompetent, so, I guess I can not blame them for not being able to recognize it in others...especially their cronies.
If the Fed was a poker player, they showed their hand...we now know they are scared...and now its the market's turn. I, somehow thing the market is a better poker player.
Bank of the United States of America is approaching critical mass
If anyone is curious as to where the markets go next…go look at other sovereign bonds for comparison. I think there is only one way this resolves: the other sovereigns sell off and get higher yields, the US bonds get lower yields and rally…and incidentally, the dollar shortage intensifies.
Fed panics, ECB panics, China panics...
It won’t work and the spike won’t last long...
What I am thinking at this point is that the downgrades of the US banks (especially certain ones like BAC) and stress on the European banks triggered an emergency reaction…the implications are that the wound will still be there after the bandaid is put on…this will not heal so fast…the blood is in the water…yet now a large contingent of the market is now long or stopped out of their shorts yet again…perfect conditions for a signficant reversal.
All is not what it seems…and, moreover, the government seems now to be in the business of instigating economic data that allways comes in a few standard deviations above expectations for every announcement. I wonder what the real numbers look like?
If China is on drugs…many western markets are apparently taking meth
China’s announcement this morning is just plain NOT good news. China is in the middle of record defaults…it is in the middle of a clear recession and reducing reserve requirements is just plain not bullish. Who does China think they are JP MOREgan or Bank of Merrill Lynch Countrywide in America. Just what we need now in China, even more loans people can not repay. In china people commit suicide over their inability to repay loans because they have no bankruptcy statues there and the consequences for not paying your obligations are so high. The only answer I can come up with regarding the Chinese action is that they are on drugs…and they must be in a panic not to mention a heap of trouble.
People apparnetly just don’t want to pay the piper…they want to offer the piper more money than they can afford to pay him.
I have never seen such bad excuses for people to be optimistic. This is certainly absolutely not a reason to be optimistic…its one to be pessimistic. China’s policy action is a prime example of the lure money amplification and failure of modern financial engineering...this changes nothing other than the magnitude of the drop in the markets to come and demonsrates the sheer panic with in leadership.
People apparnetly just don’t want to pay the piper…they want to offer the piper more money than they can afford to pay him.
I have never seen such bad excuses for people to be optimistic. This is certainly absolutely not a reason to be optimistic…its one to be pessimistic. China’s policy action is a prime example of the lure money amplification and failure of modern financial engineering...this changes nothing other than the magnitude of the drop in the markets to come and demonsrates the sheer panic with in leadership.
Tuesday, November 29, 2011
Very bearish action as stops are blasted...
We can see in the charts below that these very highly watched patterns have resulted in yet another highly frustrating result. In an era where people are continuously focused on managing losses rather than profits, this behavior is should be expected. The action in the euro was especially unhealthy…I have often referred to the over use or reliance on stops as a driver of sub par performance…people who are trading in this style are producing absolutely horrid results…which I have shown a sub sample of below. The managers in the list are trading systematically and are struggling mightily because they are approaching the problem entire from the wrong direction. Meanwhile, for this month alone, I am up significant double digits…I think this points to that when everyone trades the same and additionally when everyone wants to avoid risk…the create new risks.
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