Archive - Oct 10, 2010

The Commitment of Traders Report is created by the CFTC – The Commodity Futures Trading Commission and is published weekly every Friday. This body gathers and publishes the open futures positions on all publicly traded US futures contracts as well as the corresponding options. The data consists of 3 main categories.

Today, we have three headlines of relevance. The first one comes from BusinessWeek as of October 9, "Finance Chiefs Warn Currency ‘War’ Is Risk to Growth" in which we read: "As the International Monetary Fund’s annual meeting began in Washington, policy makers warned that efforts to boost exports by embracing weaker currencies threatened to provoke protectionism and trade imbalances at a time when economic growth is already slowing. China was again the target of criticism as foreign officials called the yuan undervalued and pushed for its appreciation to be accelerated." This was promptly followed by the Telegraph's "IMF fails to strike deal over currency frictions", in which we learn part two of the weekend's key festivities: "The International Monetary Fund on Saturday night failed to reach agreement on tackling mounting global "frictions" over exchange rate policies despite US calls to deal with the issue more forcefully." Which brings us to today's game of 'date the headline', which comes, somewhere in time, from the New York Times: "US said to allow decline of dollar against the mark" in which we read a paraphrase of a quote by then Treasury Secretary James Baker III, together with some additional commentary: "'I think if you look at the underlying economic fundamentals in this country, they're very, very good,' he said. But he added that the stock market appeared to be reacting to prospects of tax increases by Congress, the enactment of protectionist legislation to reduce foreign imports, and to fears of rising interest rates and inflation. He also said growth of computer-generated ''program trading'' of securities had contributed to the size of the daily sell-offs." Oddly enough, the situation described in the New York Times was identical, if not better, to what is transpiring right about now. As to what happened 24 hours after the original NYT article appeared, well, we all know that...

As more people realize that the fake title transfer aspect of foreclosure fraud is just the tip of the iceberg which runs, via MERS (Mortgage Electronic Registration Systems) conduits all the way to the core of the securitization system, and thus $10 trillion in first level debt (and who knows how much in 3^rd and 4^th level layering of debt on top of this: think CDO-squared and cubed), we expect an increasing number of denials from the enablers in the explosion of securitization over the past ten years. Such as MERS. Which is why it is not surprising that late last night, it was precisely MERS who not only acknowledged for the first time its involvement in this whole fiasco (by a press release and a "fact and rebuttal" session), but has made it all too clear just how deep the problem truly runs. We would like to highlight just how very alike is the defense prepared by the High Frequency Signing Lobby to that by the High Frequency Traders out there: it is all just technological advancement, and if you want to blame it on someone, blame it on Intel and their fast fast chips: "What we're seeing now is that the
foreclosure process itself was not designed to withstand the extraordinary
volume of foreclosures that the mortgage industry and local governments must now
handle." Obviously the volume only exploded once failed systems such as MERS appeared on the scene: it is precisely in this aspect that MERS served as an enabling catalyst to let loose the wave of exponential re-re-securitization. It continues: "The MERS process of
tracking mortgages and holding title provides clarity, transparency and
efficiency to the housing finance system." And here is where MERS basically puts the ball back in the corrupt legal system's court: "We are committed to continually
ensuring that everyone who has responsibilities in the mortgage and foreclosure
process follows local and state laws, as well as our own training and rules." Because why not blame the entire judicial system, when one could just acknowledge the burden of having failed at doing their own job properly... One thing is certain: someone is going down for this biggest snafu in the history of mortgages/securitization.

A number of short term technical and momentum models start flashing red lights that gold is entering extremely overbought levels. Is the momentum waning?