Archive - Sep 16, 2010

madhedgefundtrader's picture

Is Copper the New Red Gold?





“Dr. Copper”, the only commodity with a PhD in economics, is predicting a decent economic recovery. While demand for American home construction remains in the basement, demand from China is surging, whose own construction industry remains on a tear. Global production has fallen 12% during the first half of this year. The new “monetization” of the red metal. Stashing copper bars in warehouses around the country, expecting the red metal to hit $6/pound within the next three years. (JJC), (DBB), (ECH), (FCX).

 

George Washington's picture

What's Going On In The Gulf?





Roundup of current events ...

 

Tyler Durden's picture

Guest Post: Atlas Just Shrugged





On September 15 former Federal Reserve Chairman Alan Greenspan made a speech to the Council on Foreign Relations. Some very interesting comments he made with respect to gold in response to a question were reported in an editorial in yesterday's New York Sun, "Greenspan's Warning on Gold": On this occasion Greenspan, who has been famous for gobbledygook that leaves the audience guessing what he meant, did not mince his words. He said, "Fiat money has no place to go but gold."

 

Tyler Durden's picture

Why The Mutual Assured Destruction Of Global Protectionism Could Very Well Be Upon Us





We are at a point in the September beta ramp, when the market seems to go up on all news: good, bad, worse, worst, and completely irrelevant. After all there are just 10 more trading days in which funds needs a market rise of at least another 5% before they can sleep confident that tomorrow their largest LP won't send in that dreaded redemption notice. Yet there is still one potential gray swan that the market appears to not have factored in - the emergence of full blown protectionism, which will impact the core game theory relationship between the US and China at its very foundation, and begin a process of ever-escalating defection between the two fiat system dilemmatic prisoners. What could bring this disastrous development to the fore? Why Washington, D.C. of course. And if you are about to say that there is no chance of something like that happening in the nearest term, especially before the mid-terms, not so fast. Here is Goldman's Alec Phillips explaining why the passage of a protectionist law in the next few weeks is not only possible but probable.

 

Tyler Durden's picture

M1+M2 Update, Or Does The Deflation/Hyperinflation Debate Hinge On The Propping Of Shadow Monetary Aggregates?





Together with the Fed's balance sheet, we are now convinced that the second most important developing metric for the economy is a granular analysis of the key public monetary aggregates: M1+M2. Within a month we also hope to develop our own definition of M3, to supplement such work elsewhere, in order to provide an independent opinion on what the true monetary growth is, now that increasingly more people are discussing the threat of outright hyperinflation. But before we get there, here is our first breakdown of M1 and M2 data. As a reminder, M1, or the monetary base, consists of the i) Currency in Circulation, ii) Demand Deposits, and iii) Other Checkable Deposits (technically it also includes roughly $5 billion worth of Travellers Checks each week, but this is merely a remnant of a bygone era and it rarely if ever changes). In the most recent week, total M1 was $1,700.7 billion, a modest decline from the prior week mostly due to a $12 billion drop in Other Checkable Deposits. Beyond pure M1, there are also i) Savings Deposits at Commercial Banks, ii) Savings Deposits at Thrifts, iii) Total Small Denomination Time Deposits and iv) Retail Money Funds. All these, in addition to the items listed under M1, make up M2, which closed the week ended September 8 at just over $8.7 trillion for the first time in history. For those who look at M2 as an indication of just how much liquidity is sloshing in the system, and use it as a proxy for inflation, the attached chart must be rather troubling.

 

Phoenix Capital Research's picture

The US Does Not Own Or Control Its Money System





Graham’s note: the following is an excerpt from my latest issue of The Phoenix World Views Digest, my monthly newsletter devoted to dissecting how the socio-economic-political structures of the world REALLY work.

 

Tyler Durden's picture

Federal Reserve Balance Sheet Update: Week Of September 16





Stocks may rise and stocks may fall (not likely) but one thing is certain: the Fed's $2.3 trillion balance sheet will never stop growing. Time for the weekly update.

 

asiablues's picture

Soros: Nothing Is Very Safe, Including Gold





Spot gold Tuesday hit a record $1,274.75 an ounce,drifted lower on Wednesday partly weighed down by fresh comments from billionaire financier George Soros that gold is the ''ultimate bubble,' and that "this is a period of great uncertainty so nothing is very safe."

 

Tyler Durden's picture

JPMorgan Brings Foreclosure Case In Mortgage In Which It Was Just A Servicer, Court Finds Bank Committed Fraud





An interesting development out of Jean Johnson, Circuit Judge in Duval Country, Florida, where in a case filed by JPMorgan/WaMu, as Plaintiff, and law firm of Shapiro and Fishman, attempted to evict defendants Hank and Marilyn Pocopanni. As basis for the legal case, WaMu had submitted an assignment of mortgage, which however the court just found never actually belonged to WaMu, and instead was carried on the books of Fannie Mae. Once this was uncovered is where this case gets really interesting: In point 5 of the filing we read that the "plaintiff predecessor counsel made "clerical errors" when it represented to the Court that the plaintiff was the owner and holder of the note and mortgage rather than the servicer for the owner."  Which means that only Fannie had the right to foreclose upon the Pocopannis, yet JPM, as servicer, decided to take that liberty itself. And here the Judge got really angry: "The court finds WAMU, with the assistance of its previous counsel, Shapiro and Fishman, submitted the assignment when [they] knew that only Fannie Mae was entitled to foreclose on the Mortgage, and that WAMU never owned or held the note and Mortgage." And, oops, "the Court finds by clear and convincing evidence that WAMU, Chase and Shapiro & Fishman committed fraud on this Court" and that these "acts committed by WAMU, Chase and Shapiro amount to a "knowing deception intended to prevent the defendants from discovery essential to defending the claim" and are therefore fraud. While the Judge in this case did not also find declaratory damages against the plaintiff, and while the case of the defendants is unclear (we would expect Fannie to file a foreclosure act on its own soon enough), the question of just how pervasive this form of "fraud" in the judicial system is certainly relevant. Because if JPM takes the liberty of foreclosing on mortgages as merely servicer, when it has no legal ground for such an action, who knows how many such cases the legal system is currently clogged up with. The implications for the REO and foreclosures track for banks could be dire as a result of this ruling, as this could severely impact the ongoing attempt by banks to hide as much excess inventory in their books in the quietest way possible.

 

Leo Kolivakis's picture

A More Skeptical View of Greek Reforms





A buddy of mine in Athens is a lot less optimistic on Greece's economic prospects...

 

Tyler Durden's picture

Guest Post: Was Stagflation In '79 Really Hyperinflation?





In his new post, Gonzalo Lira analyzes the Oil Shock of '79, and the subsequent run up in inflation. He comes to some interesting conclusions about 1979, and how those conclusions might apply to today, if and when there is a run on Treasuries. "In both 1979 and today, dollars were poised to chase after commodities, following a triggering event. In ‘79, it was the fall of the Shah. In 2010, we are waiting for our moment to exit Treasuries. Therefore, one can look at the events of ’79–’82 as a dress rehearsal for what I think will happen today, and in the immediate future, if and when the Treasury bond bubble pops." — Gonzalo Lira

 

Tyler Durden's picture

Sprott Raises Capital To Buy Another 6 Tons ($250 Million Worth) Of Gold





The wholesale demand for physical gold continues without reprieve, as the Sprott Physical Gold Trust (PHYS) has just announced it will sell another 22 million units. Use of proceeds: "The Trust will use the net proceeds of this offering to acquire London Good Delivery physical gold bullion in accordance with its objective and subject to the investment and operating restrictions described in the Preliminary Base Prep Prospectus." Somehow we are confident that Sprott, when determining the pent up demand for this trust, is fully aware that gold is not very edible, if at all.

 

RANSquawk Video's picture

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 16/09/10





RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 16/09/10

 

Tyler Durden's picture

Roubini Turns Bearish On Gold (Again), Suggests Taking Profits And Buying Puts... Much Like He Did In December 2009





Rouibini has never been much of a fan of gold. Which is why we were not too surprised when we read RGE's latest recommendation on the precious metal, which, as expected was to take profits. Doctor Realist says: "September may be a good month to take partial or full profits for an
investor with a long gold position. Alternatively an interested investor
could buy December put options." Of course, had RGE clients followed the good Doctor's advice back from December 2009, there would have been no profits to be had. To wit: "Investors should thus be wary of getting the gold bug and being stuck with this barbarous relic. The recent swings in gold price—up 10 percent one month, down 10 percent the next—prove  the point that gold has little intrinsic value and that most of its price movements are based on beliefs and bubbles. As an insurance policy against the tail risk of eventual inflation, it may be useful to hold a small amount of gold in one’s portfolio, but stocking up portfolios with a fiat currency that has marginal practical use, a zero nominal interest rate, high storage costs, and the price of which is subject to volatile whims and bubbles is totally irrational. If you want to hedge against inflation, stock up on Spam or other canned food or buy futures on commodities that have more physical uses and consumer demand....Unlike other commodities, it has little intrinsic value. Much like a fiat currency, gold’s value is based largely on the irrational beliefs of investors. In a depression or near depression, one would be better off stockpiling canned food and other commodities like oil that are useful for riding out Armageddon. You cannot eat gold or burn gold." Ah yes, the good ole "can't eat gold" argument. Yet somehow, despite gold's indigestible qualities, it is precisely gold which today hit an all time high once again, despite RGE's December note and a chorus of other infidels screaming for gold's metaphoric blood. We expect to hear ever more pundits to attempt to top tick the market. Will they succeed? Sure, if the starting sample is a few thousand, one will always be spot on. Pure statistics.

 

Tyler Durden's picture

Guest Post: Treasury Is Re-writing History – Literally





Once upon a time in America $100 Billion dollar errors were considered a “big deal.” Not so much anymore. So if you are one of those confused souls who has no idea who the fuck is buying US Treasuries, take heart. You are not alone. Tim Geithner has catapulted himself to tops on that list by revising a few numbers on the “ Treasury’s Estimated Ownership of U.S. Treasury Securities” report.

 
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