Archive - Mar 27, 2013

Tyler Durden's picture

Marc Faber: "I Am Sure Governments Will One Day Take Away 20-30% Of My Wealth"





We cautioned readers in 2011 that in a broke world in which the ridiculously named "muddle-through" has miserably failed, a global wealth tax seeking to expropriate some 30% of all financial assets is coming. Few took it seriously, and why should they - after all the market has been blissfully rising before and ever since then, which implies everything was ok, right? Wrong, as those who are lining up right now in the Cyprus late of night not to buy a shiny new iTrinket, but to access a measly €300 of their own money would promptly admit. Naturally, if more of our Cypriot readers had paid attention, they would have far more of their own money at their disposal right now, instead of having to beg Merkel's emissaries for a €300 handout tomorrow. Now, a year and a half later, the realization that the global wealth tax is not only coming but is inevitable in practically every developed country, is finally sinking in, as this interview with Marc Faber confirms: "Until now, the bailouts in Europe and the U.S. were at the expense of the taxpayer. And from now onwards, in my view, the bailouts will also be at the expense of the asset holders, the well-to-do people. So if you have money I am sure the governments will one day take away 20-30% of my wealth."

He is correct, but probably optimstic.

 

Tyler Durden's picture

That Physical Gold You Thought You Owned? You Didn't





"The Order finds that the Respondents’ customers thus never owned, possessed, or received title to the physical commodities that they believed they purchased."

 

Tyler Durden's picture

Guest Post: Second LNG Super Tanker Arrives In UK To Help With Natural Gas Shortage





Due to unseasonably cold weather the UK has seen high demand for natural gas, far higher than anything expected, and the truth is that the country was not prepared. The dwindling supplies form the North Sea were unable to meet the high demand, and storage reserves reached dangerously low levels, leading some to suggest that the UK may run out of gas altogether within days. The government denied these reports and began frantically searching for alternative supplies to meet the demand. Supplies were not hard to come by as the shortage had caused spot prices in the UK increase to some of the highest in the world, attracting tankers from around the world. A giant tanker, the Zarga, has docked at Milford Haven in Pembrokeshire to unload its cargo of LNG. It is the second such tanker to have been diverted to Britain in the last couple of days in search of the high prices that can be charged there. The Mekaines docked at Kent on Sunday. The vessels carried a combined total of more than 500,000 cubic metres of LNG, enough to meet the entire UKs demand for 12 hours.

 

Phoenix Capital Research's picture

The ECB Has Two Potential Hail Mary Passes... Neither Will Work





So, one has to ask one’s self… if the ECB (along with the IMF and Germany) has thus far failed to manage, let alone solve, Greece’s problems (a country which comprises only 2% of EU GDP and whose bond market was just €350 billion), how is it now going to solve those of Greece, Spain, Ireland, Portugal, Cyprus, and Slovenia all at once?

 

Tyler Durden's picture

Flash Crash Mystery Solved





Below are portions of a comment letter submitted by R.T. Leuchtkafer to the SEC on April 16, 2010, just 3 weeks before flash crash. The second paragraph in the excerpt below, unknowingly describes exactly how the flash crash was started. The letter goes on to alert the SEC on the dangers of High Frequency Trading (HFT), phantom liquidity and other concerns.

 

Burkhardt's picture

Cyprus Brings the Pain: Sparks Ignite





What once was a distant noise is now ringing loudly through the streets of Europe. The pain of Cyprus is being felt throughout the Euro-Zone as their inability to curb the current crises is wreaking havoc on the value of the Euro.

 

Tyler Durden's picture

Pair Trade Opportunity Of The Year: Long European, Short Chinese Caterers





It has been a recurrent joke that in addition to Germany (see chart), the only winners out of the slow-motion trainwreck that is the Eurozone, are the Belgian caterers who in 2010, 2011 and 2012 had an absolute record profit year following what was a weekly summit after summit in which we learned, without fail, that Europe is fine, couldn't be finer, and to "believe" Draghi that he would crush and mangle anyone who dared to short the EURUSD (ironic when every other central bank is literally paying FX traders to short their currency). But while caterers were literally swimming in money in the past three years, charging European taxpayers hundreds of thousands of euros per hour for either sturgeon eggs and pâté, or boxed lunches depending on the amount of austerity imposed, so far 2013 has been rather dry. All that of course is about to change, following the epic fiasco with the Cyprus "bail-in", which courtesy of Diesel-BOOM's subsequent clarification, is a unique template that will never be repeated... until the next PIIG finds itself in the same trough, which now that the dominoes are dropping once more, shouldn't be too long. Which is why the best levered derivative trade on the European "positive contagion" mutating back into its "negative" wilde-type is to go long European caterers. However, to offset as much non-catering risk as possible, it would be ideal to have a pair trade opportunity, whereby to go short an offsetting catering exposure. Luckily, we have found just that. Luckily we have just the trade.

 

Tyler Durden's picture

Moody's: Cyprus Euro Exit Risk Substantial





Though it may seem a little like stating the obvious to many, Moody's comments:

While the risk of a euro exit by Cyprus is substantial... ...following the economic dislocation that will be caused by the restructuring of the island's two largest banks and the imposition of capital controls in the country, it is possible that the risk of euro exit will increase further.

And so while the talking heads discuss Cyprus as a unique situation and too small to care about, it seems the reality of the last two weeks has actually raised their chance of Euro exit as opposed to bailed them into the Euro.

 

Tyler Durden's picture

Guest Post: A Sane Person Ought To Consider These Important Lessons





One would think that certain truths are obvious by now. It should be obvious, for example, that there are consequences to living beyond your means. It should be obvious that there are consequences to a long history of spending unsustainably and accumulating mountains of debt. And it should be obvious that there are consequences to dealing with such problems by spending more and accumulating even more debt. It should be obvious. But it’s not. Hyperinflation always starts with a surge in asset prices. And as I see stock markets at new highs, property prices posting big increases, and bond yields of the greatest debtor nations in the world hover at just over ZERO, a sane person ought to consider these important lessons from history.

 

Tyler Durden's picture

Phrase Of The Day: "Irrational Divergences"





Deja Deja... oh forget it. S&P failed to make its all-time highs. We dipped (on heavy volume) and wiggled all the way back on no volume in stocks. Healthcare and Utilities lead the week but high-beta momo-monkeys chased homebuilders on the day. Wherever you looked today - apart from stocks - risk assets were being sold. VIX is higher on the day (and 2.5 vols disconnected from stocks); high-yield and investment-grade credit markets are ending near their worst level of the week - suggesting the S&P is 20 points rich; Treasuries ended off their low yields but stil down 7bps on the week and notably more post-Cyprus (with stocks in the green post Cyprus). The USD strengthened further during the EU session and flatlined in the US afternoon (with EURJPY leading the way down and not supportive at all of the equity rally). Apple lost its 50DMA again, dropping 2.2%. Equity volume was extremely low (cash and futures) and average trade size the lowest of the year. The phrase of the day is - irrational divergence.

 

Tyler Durden's picture

Santelli On The End Of Paper Gold's Reign





Central Banks remain aggressive accumulators of the precious metal as we noted last night, as their actions outweigh their words; but as CNBC's Rick Santelli notes today, there is a big difference between the physical bullion they are buying and the 'gold bug' trading currently going on in our markets:

I don't even look at gold as gold anymore since they securitized it. If things [went] badly in the world that I used to observe (as a gold bug); the gold would end up in the hands of the gold bugs. If things go badly now, they're going to end up with checks from ETFs! Sorry, it's not the same. The reign of [paper] gold as the Ayn Rand endgame, to me, that's over. Game, Set, Match.

Which likely explains the incessant demand for precious metals from the US Mint over the past few months - as the other great rotation (from paper to physical) proceeds.

 

Tyler Durden's picture

Egan-Jones Downgrades UK From AA- To A+





Thought you could shut up Egan-Jones? Sure, you could... as a NRSRO: the same worthless designation that is carried by Moodys and S&P. However, that does not prevent them to act, and provide their ratings opinion, as a non-NRSRO. Which is exactly in what capacity the infamous firm, which was targeted by the SEC for daring to downgrade the US (the same reason S&P was sued by the DOJ later), just downgraded the UK from AA- to A+.

 

Tyler Durden's picture

Cypriot EUR Price Parity





As we noted earlier, a Cypriot Euro is implictly worth less than a non-Cypriot Euro thanks to the capital controls being put in place. It appears the exact relative worth, based on prices of restaurants, drinks, food, transportation, utilities, and rent that a Cypriot Euro is worth 91% of a German Euro. But under the surface, the cost of living is notably higher (in common currency units).

 
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