Monday, January 23, 2012

Can you say MARGIN CALL...

Today, as with the whole ride up…we got more deleveraging. This time not only were we dealing with margin calls in equities but also in rates. EuroDollar rates contracts indicate lower yields yet 30 year treasuries indicated higher yields…that my friends translates to quite a lot of stress for people who manage their portfolios with these instruments…and that equals MARGIN CALL in rates and the end of hedged/pair based margin calls/deleveraging in equities that have been perpetually driving prices higher - specifically this has been an unwind of the trading books of insolvent European Banks. Next we will get to find out who they are. Say hello to 2008 Part 2.

Other things of note, the Dollar held a higher low and the Australian Dollar over threw to secondary resistance, Oil barely budged and Silver and Gold are doing nothing…there is a lot of info out there that is precisely targeting these markets - yet they are relatively motionless.

The target of 1,318 has been hit and the top for Equities is in and now people will have to start to get used to significantly negative yielding TBills as they break down out of their declining triangle.
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