Archive - Nov 2010
November 28th
Euro Sells Off Following Comments By Banque De France Governor Noyer
Submitted by Tyler Durden on 11/28/2010 22:27 -0500...But did traders pick the wrong currency to sell? Tonight's prompt sell off in the Euro is now being attributed to comments by Banque de France Governor Christian Noyer who said monetary easing creates the potential for global imbalances. While it is true that Noyer stated that The European Central Bank will keep its emergency measures as long as needed, this is not news. Obviously all of Europe is now reliant solely on the ECB's bidding of last resort for each and every failed bond auction and to prevent bond routs in the secondary market. Again: this is not news. Yet what is interesting is that instead of selling off the EUR, traders may have picked the wrong currency. To wit: Noyer was actually blasting the pegged CNY, which means that the CNY-derivative currencies, the AUD and the NZD should have taken the brunt of tonight's action, and in the wrong direction at that. And, ultimately, the target was the USD. The moment this became clear (9pm Eastern) is when gold took off.
Investor Sentiment: Smells Like A Top
Submitted by thetechnicaltake on 11/28/2010 22:06 -0500It was only 2 weeks ago that the "dumb money" indicator and Rydex market timers were bullish to an extreme degree and company insiders were selling shares at a clip that had not been seen in 4 years.
Play China’s Yuan From the Long Side
Submitted by madhedgefundtrader on 11/28/2010 21:46 -0500As long as the Chinese government hates foreign hedge funds and speculators, no one will make a killing buying the yuan. (CYB).
The Definitive Unwrapping Of The "Irish Package"
Submitted by Tyler Durden on 11/28/2010 21:25 -0500Everything you desired to know about the "Irish Package" and then some, dissected with clinical post-mortem precision by Goldman's Francesco U. Garzarelli. We can only hope the Spanish, Italian and French packages are deemed more satisfactory by the market.
Weekly Recap, And Upcoming Calendar - $39 Billion In Monetizations In The Next Week
Submitted by Tyler Durden on 11/28/2010 21:06 -0500The upcoming week will be dominated by the same key themes as last week. News on the European sovereign debt crisis, China tightening, the Korean conflict and macro data will remain in the limelight. However, with key US releases including Chigaco PMI, ISM and payrolls data watching may become relatively more important in the coming week. Then again, there is always the trust old FRBNY, which kicks off the reflation trade with not one but two POMOs tomorrow: altogether $39 billion in monetizations coming up in the next week.
Guest Post: Ireland, Please Do the World a Favor and Default
Submitted by Tyler Durden on 11/28/2010 20:57 -0500
The alternative title for today entry is: Ireland, please drive a stake through the heart of the vampire banks which have the world by the throat. The entire controlled demolition of the Eurozone's finances can be summed up in one phrase: privatize leverage and profits, socialize losses and risk. The basic deal is this: protect the bank's managers, shareholders and bondholders from any losses, while heaping the socialized losses and risks on the taxpayers and citizens. While there are murmurings of "forcing bondholders to share the pain," any future haircut will undoubtedly be just for show, while the Irish pension funds are gutted to bail out the banks.
Following Hungary And Ireland, France Is Next To Seize Pension Funds
Submitted by Tyler Durden on 11/28/2010 20:19 -0500If the recent Hungarian "appropriation" of pension funds, and today's laughable Irish bailout courtesy of domestic pension funds sourcing 20% of the "new" money was not enough to convince the world just how bankrupt the entire European experiment has become, enter France. Financial News explains how France has "seized" €36 billion worth of pension assets: "Asset managers will have the chance to get billions of euros in mandates in the next few months for the €36bn Fonds de Réserve pour les Retraites (FRR), the French reserve pension fund, after the French parliament last week passed a law to use its assets to pay off the debts of France’s welfare system. The assets have been transferred into the state’s social debt sinking fund Cades. The FRR will continue to control the assets, but as a third-party manager on behalf of Cades." FN condemns the action as follows: "The move reflects a willingness by governments to use long-term assets to fill short-term deficits, including Ireland’s announcement last week that it would use the country’s €24bn National Pensions Reserve Fund “to support the exchequer’s funding programme” and Hungary’s bid to claw $15bn of private pension funds back to the state system." In other words, with the ECB still unwilling to go into full fiat printing overdrive mode, insolvent governments, France most certainly included, are resorting to whatever piggybanks they can find. Hopefully this is not a harbinger of what Tim Geithner plans to do with the trillions in various 401(k) funds on this side of the Atlantic.
As Sliding EURUSD Takes Out Friday Lows, Market Response To Bailout Is "Concerning"
Submitted by Tyler Durden on 11/28/2010 19:43 -0500
Despite its illiquidity, The FX market has been the first and earliest indicator of how the market is taking the Irish bailout. So far it has been a complete abortion, and after opening in the mid 1.33 in the interbank market, the EURUSD has just touched on 1.3196, and is about to take out Friday support. The vigilantes refuse to go away. In addition to LCH margin hikes on Portugal and Spanish bonds tomorrow which now appears inevitable, we continue to expect that FX margin requirements will be hiked over the next few days across the board. Lastly, expect to hear rumors of secret service chasing any and all bond shorts/CDS longs. The war for the Eurozone's survival is now on in earnest.
Drop Dead in the Future? What About Today?
Submitted by Bruce Krasting on 11/28/2010 18:20 -0500The EU did something that I think is going to backfire.
The Euro Has Become Schrodinger's Money: Goldman Sees European Currency As Both Alive And Dead
Submitted by Tyler Durden on 11/28/2010 18:16 -0500
It's time for a shirt: "Irish bondholders got a bailout and all the EURUSD managed was a measly 35 pips higher." It seems the currency vigilantes are calling the bluff in JC Trichet, and tomorrow Portuguese bonds will be next on the bidless brigade, further validating that the IMF's, just like the Fed's, primary mandate is to rescue insolvent bankers everywhere there is a taxpayer population that can be raped. But back to the EUR: at last check the currency was trading well inside 1.33, and only about 2.2k pips from Thomas Stolper's 12 month target of 1.55. Not to begrudge anything to Tom: after all, post QE4 he will certainly be spot on (the only question is how long it take Blackhawk Ben to get us there), but we wonder if another Goldman luminary got the memo. To wit: in an interview with the Telegraph, Jim "BRIC" O'Neill told Kamal Ahmad that "the eurozone must embark on a significant round of fiscal and political harmonisation if the euro is to survive...there are elements of the black swan concept that seem rather applicable
to the EMU story" and if that wasn't clear enough, he added that the "euro should carry a "risk premium" and that it was over-valued by at least 10pc." Bottom line, according to O'Neill the "fair value for the euro is €1.20 against the dollar and anyone buying it 10pc above that is not very sensible." Uh.... What? Did Wikileaks intercept the memo from Thomas Stolper sent out just this November 25, in which the chief currency strategist said: "Overall, we believe the EUR/$ remains very much on track for the projected trajectory of 1.40 in 3mths as well as 1.50 and 1.55 in 6 and 12 months." And like that, Goldman has all bases covered. Of course, seeing how the outcome is binary, Goldman has just discovered the Schrodinger currency: per the bank that rules the world, the euro is now both alive and dead at the same time.
Guest Post by Zero Hedge's Cougar_w - “Not Even Work”
Submitted by Cognitive Dissonance on 11/28/2010 17:39 -0500Suddenly your world is out of control and you’re desperate for money. What do you do? Zero Hedge’s Cougar_w presents us with this fictional situation, only this time with an interesting twist. What would happen if two extraordinary creatures trying to coexist in a world of ordinary humans are overcome by money madness and walk into a bank to rob it? In this humorous, thought provoking and poignant excerpt of a larger story, we find out who has more humanity when put to the test.
Europe Goes "Completely Mad" At Suggestion Of Irish Default Demanded By 57% Of Irish Population
Submitted by Tyler Durden on 11/28/2010 16:19 -0500Today the myth of a popular, democratic government in Ireland collapsed for good. After an impromptu poll of 500 people nationwide found that a "substantial majority" of the people, or 57%, wants the State to default on debts to bondholder, what it ended up getting was precisely the opposite. Why? "Last night that the Irish delegation
negotiating with the EU-IMF last week raised the issue of default. "The Europeans went completely mad," a senior government source said." Of course, this is a reason for the Europeans not to want an Irish default, not for the Irish. And last time we checked, the Irish government represented its people, not the interests of Brussels. As America showed all too well, we expect every banker in the world to threaten perpetual damnation for Ireland should they decide on doing what is right for its people (and so very wrong for another year of record banker bonuses). Then again, with elections in Ireland imminent, it is almost certain that there will be a massive popular overhaul of the government, and all bets at that point will be off whether the ECB can dictate terms to a brand new, and far more loyal, government. To quote to Independent: "In Dublin, there is barely concealed outrage at the interventions of Ms Merkel
and at the position adopted recently by the European Central Bank, which
precipitated the arrival of the EU-IMF team in Ireland."The ECB f**ked us," one government official in Dublin was reported
yesterday to have said." We wonder how soon before rhetoric finally shifts to action.
It's Not Just the "Peripheral" European Countries ... Financial Contagion Could Spread to "Core" Eurozone Countries and the U.S.
Submitted by George Washington on 11/28/2010 14:59 -0500D'oh!
Is US Foreign Policy Crippled Following Latest Wikileaks Dump?
Submitted by Tyler Durden on 11/28/2010 14:36 -0500
The latest Wikileaks data dump has been released and it is about to make the world hate the US just that little bit more: it represents a massive sampling of the daily traffic between the State Department and some 270 embassies and consulates. And as the attached front page of tomorrow's Der Spiegel shows, according to the unclassified US embassy cables, America had something quite unpleasant to say about virtually everyone, culminating with Ahmadinejad, who was called "Hitler." But aside from the unpleasantries which may or may not be buried (and don't expect a prompt burial: Der Spiegel is already on the case and has this to say, "251,000 State Department documents, many of them secret embassy reports from around the world, show how the US seeks to safeguard its influence around the world. It is nothing short of a political meltdown for US foreign policy") the far bigger question will be how the once great American superpower could have allowed such a huge oversight in traditionally classified diplomacy. Very soon the once legendary US foreign service department will be butt of all jokes. Perhaps it is time for someone within the administration to finally take some blame for this fiasco, although we most certainly are not holding our breath for a Hillary Clinton resignation.
Of Fake "Bogeymen" And Artificial "Security"
Submitted by Tyler Durden on 11/28/2010 14:15 -0500"The federal government is subsidising state and local debt servicing costs with their BAB program. The Fed is subsidising the federal government’s debt servicing costs with “security purchases” (aka QE2). While the US political and financial establishment is desperately trying to distract Americans with as many overseas “crises” as they can contribute to, the fiscal situation in the US careens towards the cliff." William Buckler, with his Privateer report, once again establishes that in the pantheon of newsletters, he and Kiril Sokoloff are untouchable at the very top. In his latest piece, Buckler deconstructs geopolitics, finance, economics and explains the plutocrats' behavioral modeling in a way fre else seem capable of doing. For anyone confused what all the recent events out of Korea, China, Europe, and the US mean, read the following.







