Archive - Jul 2010

Updates as they come in...

It’s true that GLD’s assets just passed the $50 billion mark, and that it’s the second largest U.S. ETF. Yes, mints had difficulty filling orders when the Greek crisis broke. And yes, the gold price is up nine years in a row. But those who look at statistics like these are missing the other side of the equation. I think it’s less about how much money is already invested in gold and more about what’s available to invest. After all, one could be impressed that China, for example, invested $14.6 billion in gold over the past few years – until you realize they have $2.45 trillion sitting in reserves. So, how much is invested in gold, and how much is available?

The CFTC reports that in the week ended July 13, speculative EUR net positions dropped once again, this time to -27k, the lowest since mid-January, and the fastest plunge every recorded since the all time biggest net short position recorded in May. In other non-EUR pairs, net spec positions in the Yen spiked to a 2010 high at 47k, while the CHF posted its first net bullish spec exposure since January at 15k. Lastly, the decline in GBP bearishness continues dropping to the lowest since January at 35k positions. Obviously, the speculators are aggressively betting against the dollar and in favor of other crosses. Then again, with even Goldman joining the EURUSD bull crowd, we are now fairly certain the bullish trade is heavy.

Once again the actual value of accumulation volume can be seen today: after a 10 days short covering rally on fumes pushed the market higher by nearly 7%, one day alone was sufficient to cut the rally almost in half. The bounce is now back to the half way point of the most recent decline, and just above the half way point of the bounce, at just under 1,060. It appears Goldman's technical charting on the 55/200 DMA cross was spot on. Lastly, note not only the Lower Highs, Lower Lows, but that the market is repeating the identical drop regime as was seen during the last plunge.

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 16/07/10

Another slapdown in equities where 6 days worth of longs were wiped out in one fell swoop. Instead of a killer weekend at The Hamptons, now the hedge fund managers will head to the Jersey shore and pick up some low grade hookers. And after failing to unload all their holdings at the 200-day for the second time in a row, many managers are likely to "Go Gibson" on their weekend escorts.

With the topic of Keynesian stimulus now so prevalent, that for some reason everyone, even economic Ph.D.'s feel entitled to chime in with their useless opinions on whether or not it is appropriate for your overleveraged economy, we would like to present this very educational anecdote about the Obamanomic version of Keynesianism as it pertains to jobs, explained by Daniel Mitchell of the Cato Institute. The kicker - Victoria's Secret models. If after this one still doesn't understand the wonderbra approach to pushing up our economy, one is hopeless.

In September 2009 it appeared like there may be some hope for CNBC yet. The channel had just received its latest import in the face of one Simon Hobbs, whose first appearance on the station involved him making a total mockery of the ridiculous momentum chasers on Fast Lost Money. Unfortunately, in the subsequent 9 months, it appears the GE Goebbels crew visited Mr. Hobbs in the deep of the night, resulting in an ideological and propaganda transformation that makes Dr. Jeckyll and Mr. Hyde look tame by comparison, and is more reminiscent of Jeff Goldblum walking through a teleport device. Luckily, today Delta Advisors' Michael Pento proceeded to provide a smackdown of the currently unrecognizable Simon Hobbs that only rivals his own friendo treatment of TV's best-tanned man, Joe Terranova, back in 2009. We hope, for Simon's sake, that he takes this opportunity, to finally get his act straight.

See Oil Pressure Stopping Short of Target ... Does that Mean the Well Integrity Test Is Failing? for update.

A chart from Bespoke Investment Group demonstrates why Steve Jobs better pick his words very, very carefully. As AAPL accounts for a 20.1% weight in the Nasdaq, and is an HFT darling, as well as having every analyst on Wall Street loving it, should this stock tumble, we expect an 80 point ES drop in the market by EOD.

As S&P 500 futures gently probe the other side of 1070, a look under the hood at [1] how far US equity indices have fallen from their recent peak, [2] mid-day market internals and [3] an egregious intra-second iteration of HFT-induced stop-hunting (i.e. electronic rape).

And now the one you've all been waiting for. Legendary painter Geoffrey Raymond has just completed his Annotated Cramer, suggestively titled "Naked Short." If the annotation on the painting and its sheer brilliance alone does not fetch millions of dollars in a few years time (in today's dollars, not in post QE2.0 hyperdevalued greenbacks), the third Fibonacci nipple will surely do it. Here is your chance to get the only Cramer-associated asset that will continue to grow in value.

Earlier, we pointed out that Euribor is surging, despite continuing verbal assault by European bureaucrats that all is well, indicating that the European overnight funding market is structurally broken even as the ECB has become lender of first, last and every resort. The problem, however, is that when it comes to currency liability mismatches, nobody, not even all the central banks in the world, have enough capital to satisfy demand. Which is what seems to be happening with the EUR right now, as the EURUSD surges each day by an unprecedented 100 pips (will someone please advise when in history has the pair been ever so volatile?). Nic Lenoir explains.

There are some crocodile tears over at the 50th floor of 1251 Avenue of the Americas this morning. With a holding of 168 million shares of BAC and 506 million in Citi, Paulson and Co. is down nearly $300 million on just its top two positions alone. When one adds the other top ten positions, which include $3.5 billion worth of GLD, as well as massive positions in ANG, CMCSA, STI, TRE, RIO, BSC, COF, WFC, MGM and many others, it is not surprising that the market is rife with rumors that the once vaunted bearish and now very much bullish hedge fund manager (who according to Goldman's carefully crafted settlement press release yesterday, only achieved his subprime-related wealth due to prospectus misrepresentations by Goldman, which is now permanently in the public record) is down about $1 billion for the day so far. Of course, on a NAV of $31 billion this is not all that big, but likely will not help with the recent surge in redemption requests.... Or the need for liquidations. Gold is plunging, and according to market rumors the primary culprit is once again JP, whose GLD holdings that are merely a type of share class (which needs to be indexed lower as the AUM drops) are getting liquidated, pushing spot far lower. 

The clear message that has come out of the BP oil spill is that onshore energy resources are now more valuable than offshore ones. The company’s stock has been trashed with the rest of the industry. OXY has minimal offshore presence, nothing in deep water, and huge operations in the Middle East and South America. Oh, and please sell your BP. (OXY), (BP)