Saturday, March 2, 2013

Where is all Mr. BURNanke’s money hiding?...

This chart is showing that people have been borrowing more and more money but generating less and less return with it. It is also showing that, predominantly, borrowings used for trading have gone into long positions without dramatic increases in short interest. Additionally, the balances in trading accounts has setup a bear flag and overall has already started turning down. Short interest has setup a continuation flag that looks like it will breakout soon.

According to officials, what you see before you is just what the doctor ordered: Greater risk taking, lower reward and black swan susceptible deleveraging just a sneeze away. Cough, cough..

Interestingly, 82% of investors think March will be up and 60% think next week will be up...I am guessing they are at 120% margin...
Click on chart to see in more detail…

as a note: I have upto-date short interest numbers and margin numbers as of Jan and Feb…most of the NYSE margin charts are still showing December data.

Friday, March 1, 2013

High Yields telling a different story...

The S&P500 has closed up for 9 out of the last 10 weeks - a herculean task. Today Apple Computer was down $11.00+ and the NASDAQ 100 was on up smartly. Whats up with the push? Well, Treasuries have played out exactly as expected in my previous posts and the dollar too…yet equities think both no longer matter. A little closer to equities, High Yield Corporate Bonds, were not too thrilled today and appear to be continuing to setup a solid head and shoulders pattern…hmmm.

Its clear people like beating up on J.C. Penny…but its bigger than them

It clear that people enjoy the Ichan versus Ackman saga…and for the record I think Ichan is playing a more dangerous game than Ackman. Trading done in contempt always results in disasters that pale compared to what one may gain at some point. However, there is much more competition than the J.C. Penny Ichan/Acman story. Its about time that people start realizing that while the has to be an execution problem at Penny, there is a bigger one at U.S. Penny - a totally tapped out, weak, tired and creditless consumer who does not trust the economy or the government and does not want to buy more than he needs from Walmart, Target, J.C. Penny, Sears or Amazon for that matter. Its really quite hard for me to imagine that Ben BURNanke actually thought that his leveraging of risk assets would accomplish anything but increasing wealth for bankers and the already wealthy and some illusionary balance sheet improvement for banks or statistical data upon which he likes to contrive his support of his conflicts of interest for his Fed stakeholder banks. And that again blows me away, how is it legal that a bank can be a shareholder of the Fed? That just seems wrong, wrong, wrong…but it is always ignored and certainly protects the banks agendas as opposed to the J.C. Penny shopper’s agenda.

Thursday, February 28, 2013

Sequestration…what’s that? The media prefers the Fiscal Cliff...

I am not sure, but I AM certain, (???) that the media has a preference for fiscal cliffs as opposed to sequestrations. The funny thing is the sequestration issue in a way is much more significant than the fiscal cliff issue in December…BUT have you heard much about it anyway, anywhere or anyhow? Essentially, sequestration has been sequestered, while fiscal cliffs get catapulted from the smallest recesses of the media centrifuge. I wonder why that is? Could it possibly be because of collaboration between media and government or media and politicians to promote only contentious morphisms that have the capability to embolden some while trampling others? The media has clearly blacked out the sequestration for some reason…perhaps that is because neither party has an advantage to gain or a solution to offer or agree on.

In any case, I have heard next to nothing in CNBC (even though I don’t really like to watch them) other than their ridiculous DOW breakout party. Ohh, and indicentally, has anyone noticed that their parties always come near major tops? …and their mortuary sessions near cataclysmic bottoms?

Well here we are ladies and gentlemen…the sequestration is upon us but the media is not there and its about time to ask why they missed it? Especially when the market is about to fall off a cliff…could not that be a fiscal cliff? CNBC will be right on it…don't worry.

Treasury Breakout…on highest volume since 2004

Lets be realistic, not only are central bank balance sheets in utter disarray but banks in general are in greater disarray than ever before. Price manipulation takes on many forms, if you happen to be one of the rare market participants that is able push around a price in one market to offset losses in another…then there is little chance you will not do it. However, just because you can do that does not change the nature of the margin call. Attempting to create gains in one asset to grant you equity to hold another is still a margin call in my book. And margin calls, usually end up with losses - FOR EVERYONE. Bad trade management and complacency are the death nail of any one holding or trading assets. What this treasury chart says, is that though the market seems complacent…someone knows that something is about to rip heads off. When central banks sell because they will be forced to disclose losses as they get too large to obfuscate - its not going to be a pretty thing…hence the very very real possibility that risk markets could end up in a total freefall…each central bank and institution trying to jump in front of the other to preempt greater losses and unwind their assorted manipulations.

Wednesday, February 27, 2013

Central Banks on the verge of a margin call...

Lets face it, if you can print money you can’t get a margin call…right? WRONG. The central banking cartel have expanded their tool sets dramatically to now include the operation of huge hedge funds. These hedge funds are investing in many of the same assets that legitimate hedge funds invest in. What’s more, they are not disclosing GARGANTUAN LOSSES.

For example, the Israel Central bank has openly acknowledged that it has invested a significant sum directly in global equities…not to mention the Swiss Central Bank, which has 12% or more of its entire 800 billion invested in equities - that is roughly a 96 billion CHF equity portfolio…these are NOT safe assets or short-term government debts. Additionally, we know the ECB (European Central Bank) is sitting on billions of losses in Greek bonds, all marked as par and showing profits…The FED has bought lots of assets of dubious quality - Red Roof Inn bonds anyone? These SAFE central banks are operating risky portfolios/hedgefunds.

Not to focus just on equities, central banks are investing heavily in gold and other pseudo currency securities aggressively attempting to manipulate each other’s currencies. The reality of these machinations is that the least worst of these bad portfolios is the Fed’s due to the fact that they have issued less currency relative to the other central banks in order to generate buying power and manipulate asset prices.

The fact is that many of these central banks are buying securities on the open market and ARE sustaining huge losses that are NOT disclosed. Those losses and the artificial leveraging are manifesting themselves in our markets where relationships have been breaking down for sometime now. The huge and ever increasing amount of central bank malfeasance going on outside the US has made the dollar’s reserve status look more desirable than ever and its shortage greater than ever - hence the huge divergence between the dollar and various assets and strength against nearly all currencies.

This continuous structural demand for dollars by central banks is furthering their own financial stress. The Swiss Central Bank does not want to buy dollars - they MUST. Its all part of the impending margin call. All we need is a shock to set off a chain reaction of these “Central Bank Hedgefunds” into a panic.

The beauty of being a central bank is that you are essentially above the law and full disclosure. Gold, for example, has dropped by nearly 25% and central banks were and have been purchasing more gold than ever as we rose to the highs and have been dropping. The reason that we will continue to have dollar strength is that central banks can not continue to sustain and obfuscate losses. The Fed is not being forthright either, they have bought an abundance of assets in which they are sustaining huge losses. Moreover, I am not at all sure that any of these institutions have really thought about what will be required for them to exit given that they seem to think that they can simply make side deals with each other to make things look copacetic…the persistent strength of the dollar, however, is a serious problem and a very ominous sign for them and representative that things are not going well. As long as virtually unmanaged losses continue to build on central bank balance sheets, there will be greater and greater demand for the dollar and greater and greater losses and stresses for them to deal with…in turn exacerbating the cycle till we sustain a parabolic result.

It is absolutely ridiculous to believe Mr. Bernanke or any central bank chairman talking about the strength of their balance sheets when they are all tied together and grossly short of buying power. The patterns in the dollar currently, the EURO and the risk asset markets are all demonstrating internal stress. Abundant megaphone and broadening patterns are symbols of unwinding of leverage and stressed positions…from the looks of things we are about to complete yet another broadening pattern much to the dismay of our central bank chairmen.

Central Bank buying power is limited by the capabilities of its economy and its ability to be viewed as a champion of its causes. Balance sheet losses are a very bad way to convey championing your economies causes and will lead to forced unwinding of positions when they can no longer be obfuscated.

When history judges, I believe that the malfeasance and deception of the Central Banking cartel will be judged with dismay and disgust.
Apparently, even a central banker is not very interested in banks...

Extreme market volatility setting the trap…


Tuesday, February 26, 2013

"Equities are cheap…” - Ben B.

Its supposedly the Italians…NOT

Supposedly today’s sell off is related to the Italian elections. If you believe that I have a bridge I can turn you on to. The driver of this action has little to do with Italy and everything to do with US. Yes, the U.S. The implications are horrid, and as in the dollar/SP500 chart I posted a few days ago - the patterns suggested a very strong dollar move…which implies strong asset moves as well. Things have started to play out, though still in the very early stages, exactly as would be expected from that chart.

Gold bugs are bearish, I agree, however, with such a powerful bearishness we will need divergence between sentiment and price to trigger anything lasting in Gold…and, if that is the case, the above chart sets up what looks like a very nasty break that is emerging. One in which the VIX has begun showing us that it wants to go MUCH MUCH higher and do so urgently. Its a very rare ocurrence for the VIX to trigger back to back bollinger signals and its not likely to trigger another single day signal for a while. This means - fireworks are to come. The S&P500 targets arodun 1420 or so and a break there sets up a waterfall decline which certainly would go a long way to trapping many of those bullish borrow money to buy stocks type guru money managers.

Sunday, February 24, 2013

Dollar Closes the Week Extremely strong despite equity bounce...

There was NO pullback in the US dollar last week as equities attempted their ramps. This is a very interesting omen. While the Yen looks very extended, how low can it go? I think to answer that we need to figure out how to price the unwind of a ponzi scheme. Japanese central bankers tried and failed to get the Nikkei to 13,000 but they did make a big mess…and the UK and Europe are waiting in the wings.

Let me say it clearly, Ben BURNanke took a problem of malinvestment and incentivised fools making silly gambles and reserved no trick or no ante to prevent any of these amatures from accounting for their failures with losses, bankruptcy and/or justice. In the process, he expanded his (and by osmosis most other central bank balance sheets) to untenable positions in order to protect the malinvestments of these fools. In the process, he has converted a relatively small (in comparison) mortgage problem into a full scale sovereign and now a central bank solvency issue. As everyone must be aware at this time, central banks have been buying literally ton’s of gold at the highest prices ever. While it sounds bullish its NOT. They will be forces to sell it at the lows, most likely hundreds and hundreds of dollars lower if the below chart of the dollar has anything to do with it.

The unwinding of the BURNanke put will be painful indeed...and to think people think 2008 was bad...when it was really just the prelude to a much more significant crisis.
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