Archive - Sep 2009

The thinking of the so-called gold bug often takes on a variation of this form: While in the bunker (or any other variance of the “world-falling-apart” scenario), you cannot pay for food with paper money or a stock or bond certificate.

Project Mayhem reviews the most important financial and geopolitical news of the past week and takes a look at the week ahead.

Given that the open thread on the main page got out of control---impossible to navigate---there you go.

There is little follow through on either side of the equity markets. Outsize bets in either direction are not warranted.

This is the first in a series of what some may consider as “gold bashing” articles. I am not short gold in any shape or form. I am simply presenting the other side of the argument in response to what I deem to be dishonest, gold-pimping commercials that we are subjected to all day long on TV. I may be wrong, but I am honest.

In the opinion of many, the growing severity of recent financial, economic and military crises suggests that this ability has been greatly reduced and that U.S. hegemony is now coming to an end. The highly publicized nature of these imperial misgivings makes this latest version of the nexus seem persuasive.

Recently, we have had a rally in the bond market, a rally in the stock market, and a rally in gold bullion with tame currency moves. What gives?

The first week of historically the worst month in stocks showed big volume come in early in the week on the sell-side in equities and big volume on the buy-side in gold the very next two days. Insiders are selling at record levels, volume is expanding as stocks contract, and gold and bonds are rallying. Green shoots?

It's been another one of those weeks.  The good news is, the next one is shorter.

Get ready.  Radio Zero is going into labor (day).

URL to emerge 6:30 (ish) ET.  Guests arrive at Studio Zero around 8:00 ET, so expect things to start getting wild then.

Meanwhile, chat up the DJ / make requests / send mp3s (to which you own the rights): here.

Update: Get your audio epidural here: http://cdo.zerohedge.com:8000/listen.pls

Our rates, reach and potential.

The long weekend is upon us. Please use this space to discuss anything that is relevant, or that may need our focused attention.

Also, a reminder that there is a forum for extended threads.

The soapbox is yours.

China is exploring the use of "regulatory tools" to pull some capital out after a record H1 of lending.

If you ever needed to see a formalized definition of what momos are and why they believe chasing momentum is actually a credible strategy instead of a self-perpetuating bubble that sucks many of their kind in, until the musical chairs game stops and then you have a mad dash for the fire exits, read the below press release by AQR, issued when Cliff Asness' fund decided to go pedal to the metal in momoism. And keep in mind Cliff is not alone - these are the same "strategies" that gun up the market every day at 9:45 am, noon and 3:30 pm, simply because "it has worked in the past." Then again, the question, just like in the RenTec case, is who is on the other side of the trade that recurs like clockwork each and every day and where just 60 minutes of trading accounts for over 70% of the entire intraday stock market movement over the past 6 months. Another key question to consider as more and more momos pile into the momentum trade is what happens when it fails and all the previously natural buyers become very unnatural sellers. Will be a sight to behold when the momentum flips. But for now, someone is very happy to keep feeding the momos, who, with Pavlovian regularity, keep coming back, until one day the Skinner box fails.

We have two choices for what to do with our savings: 1) we can “park it” in existing assets (stocks, bonds, mattresses), or 2) we can invest it in new capital formation. What makes us choose one over the other?

A doubling of the pension rate is terrible news? I got a better idea, why don't we also cap public sector pensions in North America? Any politician courageous enough to propose this idea here? Of course, that means a cut in their own gold plated pensions.