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And Here They Go For Round Two: CME Hikes Brent, Crude Margins By 25%, First Of Many Such Moves

Tyler Durden's picture




 

Some brilliant Chicago-based exchange apparatchik just ask himself this simple question: "If it worked so well with silver, why not do it with crude?" The answer is here: the CME, as we predicted last week, just hiked initial and maintenance margins on Crude and Brent by 25%, as well as FX, and other petrochemicals. And, oh yes, this is prudent risk management, because while the CME kept margins flat when WTI was at $115, the massive spike from $97 to $102 is unbearably destabilizing. At this point one can only stand back and watch as the CME proceeds with hike after hike, in an absolute vacuum from the administration, which certainly had nothing to do with this decision. And really who cares: free capital markets died on March 18, 2009.

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Mon, 05/09/2011 - 17:22 | 1256953 tmosley
tmosley's picture

I'm amazed no-one seemed to have advanced notice of this. The market didn't move down, but strongly up all day today.

Mon, 05/09/2011 - 17:25 | 1256979 Rainman
Rainman's picture

double down hand before the casino bus leaves.

Mon, 05/09/2011 - 17:31 | 1257008 dark pools of soros
dark pools of soros's picture

+X2

Mon, 05/09/2011 - 17:38 | 1257051 SobaYobonay
SobaYobonay's picture

+ 2.88M barrels/day.

Mon, 05/09/2011 - 19:32 | 1257376 camaro68ss
camaro68ss's picture

I thought you could dig oil out of the ground for $5?

Mon, 05/09/2011 - 19:41 | 1257410 Dr. Porkchop
Dr. Porkchop's picture

No, that's silver. Oil comes out of the creamy caramel center of the earth.

Mon, 05/09/2011 - 19:59 | 1257447 camaro68ss
camaro68ss's picture

o thats right. thanks for the correction

Mon, 05/09/2011 - 20:04 | 1257464 akak
akak's picture

No, Porkchop, Hell is at the center of the earth --- all the oil lies in a thick layer between us and the eternally damned.  That is what keeps the fires stoked, all that oil dripping from Hell's ceiling.

Mon, 05/09/2011 - 17:32 | 1257031 Spaghetti Monster
Spaghetti Monster's picture

Well, actually; On Oslo Stock Exchange (which is all about the oil, in fact the whole friggin' country is) unusually large short positions were established in the previous week, with total short interest about twice the size of the rest of European exchanges. Also specific rumorus about some brokerage house trying to find a counterparty for an unusually large short on the OBX. Maybe somebody knew...

Source (Google Translate it!): http://e24.no/boers-og-finans/investorer-vedder-milliarder-paa-oslo-boer...

Mon, 05/09/2011 - 17:36 | 1257053 Turd Ferguson
Turd Ferguson's picture

Anyone reading this thread without first reading this one:

http://www.zerohedge.com/article/guest-post-anatomy-silver-manipulation-...

does not understand the context of this hike in crude margins.

Mon, 05/09/2011 - 19:01 | 1257287 Zer0henge
Zer0henge's picture

What happened to that silver margin hike that was suppoed to happen today?  Maybe tomorrow...

Mon, 05/09/2011 - 19:20 | 1257342 Quintus
Quintus's picture

It happened.  Why do you ask?

Mon, 05/09/2011 - 19:26 | 1257353 speconomist
speconomist's picture

Probably waiting to BTFD, but that couldn't be as this hike was announced last week.

Mon, 05/09/2011 - 19:45 | 1257420 randocalrissian
randocalrissian's picture

Second margin was priced in with the first as both announced concurrently... it just gave more flexibility to liquidate positions, so any additional margin hike-related liquidation today was quite a bit less than Thursday.

Mon, 05/09/2011 - 19:52 | 1257435 tmosley
tmosley's picture

It was already announced and priced in, dipshit.

Keep up, troll boy.

Mon, 05/09/2011 - 17:53 | 1257112 1100-TACTICAL-12
1100-TACTICAL-12's picture

seems to me as they keep raising margins , and the shit recovers in a few days like gold,silver & oil did today. It just shows how little faith there is in the dollar..

Mon, 05/09/2011 - 19:39 | 1257399 CPL
CPL's picture

That's because PM's don't behave like stocks.  Eventually they have to make good on their delivery of the physical PM.

 

Fucked if I've heard of anyone worrying about more paper being delivered if a company goes bust.

Mon, 05/09/2011 - 17:22 | 1256959 surfsup
surfsup's picture

Those dang speculators... 

Mon, 05/09/2011 - 17:47 | 1257094 Cleanclog
Cleanclog's picture

Airline ticket prices up - cost of hedging (margin expenses) another add on fee.

Mon, 05/09/2011 - 17:21 | 1256965 Turd Ferguson
Turd Ferguson's picture

This is simply unmitigated bullshit. 

The goons hike margins to "cover" "volatility" that they themselves created.

An absolute sham, farce and joke.

Mon, 05/09/2011 - 17:26 | 1256994 Math Man
Math Man's picture

So, what would you do if volatility had picked up and you owned the exchange?

You HAVE to raise margins...  it is the only way to protect yourself.

Unfortunately, every time vol moves, you have to do it again.

The thing is, if you are truely a long term holder, like all the ZH readers claim to be,  you should welcome this - it removes speculative froth from the market.

Mon, 05/09/2011 - 17:26 | 1256998 Turd Ferguson
Turd Ferguson's picture

chicken or egg?

Mon, 05/09/2011 - 17:34 | 1257012 Math Man
Math Man's picture

Exactly.  Problem is right now is the vol picked up, but the reaction is causing more vol...

It will pass eventually, but my guess is we'll be lower across the board for commoditites.  Too much speculative long money in there right now.  As it stands, you can still take on massive amounts of leverage in the commodities markets...  even w/ the new numbers, you can lever massively

 

Mon, 05/09/2011 - 18:09 | 1257146 Ratscam
Ratscam's picture

I'd prefer 100% margin, hence no margin.

End with the fractional reserve system.

True value of all goods to all the people.

Mon, 05/09/2011 - 18:12 | 1257154 Rynak
Rynak's picture

CME: "Dammit, why are you always making me beat you? It's all your fault!"

Mon, 05/09/2011 - 18:20 | 1257176 Teamtc321
Teamtc321's picture

Volume was low all day on slv Meth........

Mon, 05/09/2011 - 19:02 | 1257280 Math Man
Math Man's picture

Sorry vol = volatility in trader speak.

 

Mon, 05/09/2011 - 19:05 | 1257290 Bicycle Repairman
Bicycle Repairman's picture

We all know why the margins were raised, you trifling a$$hole.

Mon, 05/09/2011 - 18:21 | 1257180 BigJim
BigJim's picture

 

Forgive my ignorance, but I'm just beginning to see the ramifications of this.

When you expand the money supply broadly, you increase the (nominal) prices of everything. But when you make money cheaper (or more expensive) for specific things, it will be the prices of those specific things that will be bid up/down... and the difference will not be nominal at all, but real, relative to everything else. And the difference will be the result of credit-rate distortions, rather than the market's perception of relative value per se, ie, if all these items had to be bought with money that cost the same.

So by changing margin rates on different items bought on credit, the PTB can engender (and pop) bubbles of any specific commodity at will.

Can anyone point me in the direction of someone who's done more analysis of this?

 

Mon, 05/09/2011 - 18:19 | 1257181 BigJim
BigJim's picture

A graph showing prices of various commodities vs margin rates vs time would be quite interesting.

Mon, 05/09/2011 - 18:42 | 1257231 Burnbright
Burnbright's picture

That would be interesting to see, however correct you may be it is really only correct about the paper market as that is where and how the bubble is formed. If they raise margin on paper markets and collapse the difference between dealing with the risk of holding a piece of paper that says you own something and holding the real thing then they will reach the threshold where a majority say it isn't worth holding paper over the real thing a divergence will occur between paper and physical. 

You can tell it has already begun to happen in silver premiums. I am going to guess that the threshold I am refering to happens at less than 50% of the cost of the real thing or slightly less than 2x leverage. 

Mon, 05/09/2011 - 21:26 | 1257673 BigJim
BigJim's picture

I hear what you're saying... but even with silver, for a long time, physical price has followed paper, and will only stop once the paper price is clearly disconnected from reality - ie, we have a comex default, or are within nine yards of one.

Housing is a good example here, I think, of a physical market that's prices have been determined entirely by cheap money. When the cheap money ends, prices have to drop...

Mon, 05/09/2011 - 19:30 | 1257320 michigan independant
michigan independant's picture

Keynes’s aggregative analysis not formally wrong, but empty, redundant.

Keynes denied the existence of a liquidity trap. So they are fixated on wage.

 

For in 1986 Samuelson was still claiming that “we [Keynesians] always assumed that the Keynesian underemployment equilibrium floated on a substructure of administered prices and imperfect competition” [C-L, 1996, p.160]. When pushed by Colander and Landreth as to whether this requirement of rigidity was ever formalized in his work, Samuelson’s response was “There was no need to” Keynes explicitly demonstrated that even if perfectly flexible money wages and prices existed (“conceding a little to the other side”), there was no automatic mechanism that could restore the full employment level of effective demand . In other words, Keynes’s general theory could show that, as a matter of logic, less than full employment equilibrium could exist in a purely competitive economy with freely flexible wages and prices. Obviously Samuelson, who became the premier American Keynesian of his time, had either not read, or not comprehended, (1) Keynes’s response to Dunlop and Tarshis or even (2) chapter 19 The General Theory which was entitled “Changes in Money Wages”.

 The point is Mr. Market wants "poking" you to be bag holder only again and margin calls will do just that. When shit really the fan in the GD remember what classes "products" managed to survive? The point is top thinking can solve some sticky wages issues, and the manufacuring class wants to eliminate signal noise to supply chain reality's in there quest to mop up loose ends. These monsters 10 feet tall wish the 5 foot  no harm but total annilation. Remember this first and foremost, Governments tolerate innovation since Statist have what purpose only than there survival and interests directed only. The days on getting it done are over and have been. You are allowed to survive only. Many are finding that market cap "property rights" is deemed nationalized assets are filtering back it appears. IMO Vanilla money may never come back since inflated base mop that up to welfare equilibruim.

 

 

 

Mon, 05/09/2011 - 19:36 | 1257375 akak
akak's picture

MI, the trick lies in putting your words together in a logical order which conveys a coherent thought, or thoughts.  Your posts, instead, consistently read like a crowded Scrabble board.

In other words, when your neurosurgeon reconnects your hemispheres via your corpus collosum, get back to us, and not a minute before.

Mon, 05/09/2011 - 21:31 | 1257680 BigJim
BigJim's picture

I appreciate your taking the time to answer my question, and I'm pretty sure you're saying something very interesting here... but I can't for the life of me work out what it is. Sorry :-(

Would you mind editing it into a format that other (and, admittedly, possibly lesser) human beings can understand, and re-posting?

Tue, 05/10/2011 - 09:47 | 1258914 schizo321437
schizo321437's picture

MI, is a 1 percenter I think. You forgot that the US isn`t the only country on the planet. Self interest is the problem. Solve that and you`ll get equilibrium maybe, social engineering hasn`t worked up till now though, so skeptics abound, which is why you get there in an oblique fashion.

Mon, 05/09/2011 - 17:32 | 1257029 AbandonShip
AbandonShip's picture

And how/when do the margins go down? 

I think the lack of transparency of all this is what bothers everyone. Sure, the casino cannot die, but moving the goal posts w/o warning is irksome.   Nice to see HKMex launching gold futures shortly.  Maybe CME will reconsider their longs-assault with some global competition (unless they go ahead and buy HKMex to regain monopoly status).

Mon, 05/09/2011 - 17:56 | 1257120 pitz
pitz's picture

Margin hikes hurt shorts as well.  ie: producers will have to devote more of their capital to margin payments, and less to production. 

Mon, 05/09/2011 - 18:23 | 1257185 BigJim
BigJim's picture

If most of the big shorts are TBTF banks (as in the case of PMs) then the margin changes are irrelevant to them, as they have unlimited 'free' money courtesy of the Fed.

Tue, 05/10/2011 - 02:32 | 1258244 pitz
pitz's picture

Are the 'big shorts' not firms such as miners, oil companies, etc., who want to hedge their production for financing purposes?  If they are forced to tie up their retained earnings in US treasuries, then many new mines and oil wells simply do not get drilled, and prices spiral up even further.  Hedged commodity producers could even go bankrupt if commodity prices exploded high enough as they might be unable to pull the stuff out of the ground fast enough to cover the increased margin requirements of the forward sales/shorts.

Mon, 05/09/2011 - 17:54 | 1257105 traderjoe
traderjoe's picture

So why did they expand the circuit breakers intra-day when crude was down $10?

Mon, 05/09/2011 - 20:04 | 1257384 Jason Bourne
Jason Bourne's picture

Math Man - It's not about fucking PROTECTING yourself, that is NOT what the fucking market is about, its about being a place where the Market decides the fucking market price, not PRICKS who own the exchange.

 

FUCK i can't stand it when people change the rules when it doesn't suit them!  The CME is an organization that needs to be removed from ownership of the exchange.  They are pricks too and you are obviously a shill for them so maybe get another user name so you can keep shilling without being identified as easily.

 

Mon, 05/09/2011 - 19:53 | 1257437 I am a Man I am...
I am a Man I am Forty's picture

not sure why you are junked so much for this, i am heavily invested in energy companies and I don't care if they hike margins, it will build a new base and may give me a chance to buy at better prices, i'm not invested because i'm worried about people having to put more money up to purchase oil

Mon, 05/09/2011 - 17:26 | 1257000 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Whats up Turdman....Do we have silver resistance at $50, or are we caught in a range below there?

Mon, 05/09/2011 - 17:32 | 1257014 Turd Ferguson
Turd Ferguson's picture

Hi, Jimi! Here's an uneducated guess for you.

Up to 39 or so. Back down to 35. Then buy, buy, buy late next week.

http://tfmetalsreport.blogspot.com/2011/05/1520-3950.html

Mon, 05/09/2011 - 18:15 | 1257167 Rynak
Rynak's picture

Then afterwards, desperate firing squad? Or are they out of .... oh wait.... paper..... shit.

Mon, 05/09/2011 - 18:32 | 1257209 Hephasteus
Hephasteus's picture

The trolls have outted what they need. They need silver under 26 to cover shorts. I don't know what they got going on with oil but I guess there's similar problems. My guess is they will do another massive spook job. From there they'll label everybody terrorists and start liquidating the US.

Mon, 05/09/2011 - 19:02 | 1257278 Rynak
Rynak's picture

I'd rather go long flying pigs, than take advice from psyops.

If i were to use them to gain any information, i would instead analyze what they attempted to make us do.

What was that?

Do

Not

Buy

Now

How did they communicate this message? In the following ways:

- Fear mongering about retaliation (you have no chance against us, give up and go away!)

- Indicating that the PM market is a ruined wasteland and uninteresting (better buy stocks!)

- This is the interesting one: Pulling random bottom prices out of their ass, which seemed unprobable to be reached, and then telling one that they WILL be reached and that one should wait (ergo:: not buy). The interesting part, is that those prices were all below 30$

If there is a shortage, and the psyops folks actually wanted us to believe what they said, and they are not incompetent, then blythe does not plan for prices to go below 30$ nearterm. Considering that they probably added some headroom, that would make the lower limit 33-35$...... which so far precisely is the new bottom.

Mon, 05/09/2011 - 19:51 | 1257430 Hephasteus
Hephasteus's picture

Seems like a good analysis. Just going over frequencies of numbers they throw out. 9 was their lowball but they concentrated mostly on 40 35 30 25. I wonder what the date is for the short covering.

Mon, 05/09/2011 - 20:24 | 1257502 Rynak
Rynak's picture

err, they really mentioned 40 and 35? I mean, 40 was already almost reached during the OBL attack (i think spot was 42 at that point)..... not disagreeing that some said this, i just cannot remember them. I remember 9, 15, 24 ... i think 28 was the highest that i saw, and if i recall correctly, the 28 target AND the 9 target, was both posted by bothsidesnowy (and both values in a matter of 5 minutes in the same thread.... hilarious multi-personality disorder))

Mon, 05/09/2011 - 17:21 | 1256966 Xibalba
Xibalba's picture

.

Mon, 05/09/2011 - 17:22 | 1256967 Xibalba
Xibalba's picture

It's a WAR on 'speculators'....and it's gonna smell like napalm in the mornin'

Mon, 05/09/2011 - 17:27 | 1257003 Turd Ferguson
Turd Ferguson's picture

No, more precisely, its a "war" on any boogeyman they can create in order to distract attention from the real cause of price increases...their disastrously failing monetary policies.

Mon, 05/09/2011 - 17:57 | 1257115 Confucious 222
Confucious 222's picture

Distraction, misdirection, disinformation

Mon, 05/09/2011 - 18:06 | 1257145 cossack55
cossack55's picture

There ya go Turd. Spot on.

+54.21

Mon, 05/09/2011 - 18:07 | 1257149 Bay of Pigs
Bay of Pigs's picture

Exactly Turd,

That is why Chris Powell of GATA should be listened to and not treated like some conspiracy stooge over at Mish's board. I'll never understand why Mish attacks these fine people. TD was good enough to post this earlier today and it's on point to what you are saying yourself.

http://www.journalinquirer.com/articles/2011/05/08/chris_powell/doc4dc41fbe6bab9239324621.txt

Mon, 05/09/2011 - 18:40 | 1257232 Turd Ferguson
Turd Ferguson's picture

I've never once checked his site or read his stuff but, from what I've heard it's same to say: Mish is a douchebag.

Mon, 05/09/2011 - 19:23 | 1257303 akak
akak's picture

If Mish is a douchbag (and I am not arguing against the premise), then Turd, you would just LOVE Karl Denninger, who is literally a Saturn V-sized douche, no, make that an ocean of douche, an entire planet of douchebaggery, nay, his very own universe composed of doucheons, banions and stupidos, in which the douche-time continuum is warped not by gravity, but by the incredibly dense discontinuities of logic generated by the sheer maniacal hysteria, hypocrisy, contradictions and incoherence of Karl's rants.

Note: While there is no possible arrangement of doucheons, banions and stupidos that can combine to form the element gold, there are an almost infinite number of combinations of those Denningerian subrational particles which can combine to form anti-gold --- and which often do.

Mon, 05/09/2011 - 19:26 | 1257351 Quintus
Quintus's picture

"...douche-time continuum"...

Fucking classic!

Mon, 05/09/2011 - 21:07 | 1257613 TraderTimm
TraderTimm's picture

@ akak

Hahahahaha. Thanks for the laugh, over-the-top really hits the spot.

Nicely done.

 

Mon, 05/09/2011 - 19:37 | 1257389 Canucklehead
Canucklehead's picture

So you write here so people can read you?

Mon, 05/09/2011 - 17:24 | 1256974 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

This is very bullish for silver which is why they got the silver hikes out of the way.  Why you ask?  Simple:  silver delivery trumps oil delivery.

Mon, 05/09/2011 - 18:06 | 1257138 strannick
strannick's picture

+1

Mon, 05/09/2011 - 17:24 | 1256975 Gubbmint Cheese
Gubbmint Cheese's picture

Where are the ES hikes?

*crickets*

 

 

 

Mon, 05/09/2011 - 19:00 | 1257284 JenkinsLane
JenkinsLane's picture

+ 1

 

Mon, 05/09/2011 - 17:22 | 1256977 Hushups
Hushups's picture

This is bullish for re-election.

Mon, 05/09/2011 - 18:03 | 1257136 Long-John-Silver
Long-John-Silver's picture

Just the opposite. Obama will have gasoline rationing and long lines at the few service stations that will remain open by election time.

Mon, 05/09/2011 - 18:36 | 1257215 NotApplicable
NotApplicable's picture

Five gallons per voter id card, is what I hear. But if you have an Obama bumper sticker, you might be able to get six.

And if you have a Ron Paul sticker, your car will be impounded and destroyed.

Mon, 05/09/2011 - 17:25 | 1256981 Jim B
Jim B's picture

CST.... Commodity Suppression Team.....

They can manipulate and suppress the trend, but the market laughs last! 

Mon, 05/09/2011 - 17:23 | 1256984 rsi1
rsi1's picture

Headline incorrect? Doesnt the big'liquid Brent contract trade on ISE and not CME? WTI increase ouch.. 

Mon, 05/09/2011 - 17:29 | 1257010 Tyler Durden
Tyler Durden's picture

Doesn't prevent CME from hiking across the board. 33 pages of hiking goodness.

Mon, 05/09/2011 - 17:26 | 1256985 Sophist Economicus
Sophist Economicus's picture

If somebody is that levered-up that this upsets their oil investment strategy, they wouldn't be in the game for long anyway.   The volatility would kill them.

Mon, 05/09/2011 - 17:24 | 1256987 Roy Bush
Roy Bush's picture

Seems to me like the FX market is going to be the next big bubble....Those requirements are the only ones decreasing.  No volume with equities, commodities tougher, but FX is easy!  Am I wrong?

Mon, 05/09/2011 - 17:59 | 1257119 SDRII
SDRII's picture

Banks got exempted

Mon, 05/09/2011 - 17:29 | 1257002 Apocalicious
Apocalicious's picture

Um, free capital markets died well before March 18, 2009.

Mon, 05/09/2011 - 18:10 | 1257151 cossack55
cossack55's picture

Glad someone else caught that.

Mon, 05/09/2011 - 18:29 | 1257207 NotApplicable
NotApplicable's picture

They just got tired of staring at its corpse and decided to throw a TARP over it.

Mon, 05/09/2011 - 18:44 | 1257237 BillyTheBlade
Mon, 05/09/2011 - 17:31 | 1257011 user2011
user2011's picture

IMHO.

They will hiking the margin on everything except the copper, which JPM is betting long on. 

I think they will continue to hike on oil to suppress it for Obama's re-election.

And they want to force people to put money on stock market instead of options, fx and future.  Another move to make economy look strong and healthy.     Stock market ties to the consumer confidence.   If the stock market goes down, then Obama will go down.

 

Mon, 05/09/2011 - 17:32 | 1257013 Tail Dogging The Wag
Tail Dogging The Wag's picture

Can Obama bin Lyin' kill Osama one more time?

Maybe resurrecting him and chasin' a dead man and his dialysis machine for the next ten years will solve our problems. Raise that debt ceiling, Timmy.

Mon, 05/09/2011 - 18:11 | 1257155 cossack55
cossack55's picture

LOL

+23

Mon, 05/09/2011 - 17:32 | 1257016 legal eagle
legal eagle's picture

The fact that the margin hike came after crude come down significantly demonstrates that the hikes have nothing to do with manipulating the price.  LMFAO~!

Mon, 05/09/2011 - 17:33 | 1257021 Jack Mehoff
Jack Mehoff's picture

Fuck this I know trading futures is supposed to be risky, but this just takes it to a whole new level. 

Mon, 05/09/2011 - 17:35 | 1257034 Turd Ferguson
Turd Ferguson's picture

Nothing quite like playing games where your opponent keeps changing the rules in his favor.

Mon, 05/09/2011 - 17:45 | 1257091 topcallingtroll
topcallingtroll's picture

And the friends of comex insiders know about the rule changes ahead of time.

But the government would rather go after an Amish man, selling raw milk, with a massive sting operation.

Mon, 05/09/2011 - 18:36 | 1257223 NotApplicable
NotApplicable's picture

Yet the shills keep lining up, knowing that this time it's a sure thing. Why? Well see, my brother know this guy who knows...

Mon, 05/09/2011 - 17:34 | 1257023 ProdigyofZen
ProdigyofZen's picture

So my first post on the site and I would like to ask you guys, "who wants blythe masters personal phone number?"  Because really I have it unless she changed it in the last 3 years. So who wants it?

Mon, 05/09/2011 - 17:51 | 1257064 topcallingtroll
topcallingtroll's picture

.

Mon, 05/09/2011 - 17:41 | 1257071 topcallingtroll
topcallingtroll's picture

I do.
I will call her and take the chance this is a hoax.

Mon, 05/09/2011 - 18:32 | 1257214 Rynak
Rynak's picture

You may want to consider, that the one on the other end, will be able to identify you :)

Mon, 05/09/2011 - 17:46 | 1257084 Rainman
Rainman's picture

nice try; I used to pull that shit with every girl who dumped me in college. Memories.

Mon, 05/09/2011 - 20:30 | 1257527 Captain Benny
Captain Benny's picture

Her manhattan # is 212 834-5677 ... 

 

Mon, 05/09/2011 - 21:29 | 1257674 ProdigyofZen
ProdigyofZen's picture

who cares about her work number? anybody can get that

Mon, 05/09/2011 - 17:40 | 1257030 Jack Mehoff
Jack Mehoff's picture

Double Post Deleted

Mon, 05/09/2011 - 17:35 | 1257033 Pete15
Pete15's picture

A little bump in the road, it buys them time till the shit storm comes 

Mon, 05/09/2011 - 17:33 | 1257036 mt paul
mt paul's picture


CME Hikes Brent, Crude Margins By 25%, 

 

if you pay in silver...

Mon, 05/09/2011 - 17:33 | 1257037 legal eagle
legal eagle's picture

no one wants that number

Mon, 05/09/2011 - 18:10 | 1257158 cossack55
cossack55's picture

Pretty much everyone on ZH already has her fuckin number.

Mon, 05/09/2011 - 17:37 | 1257047 Misean
Misean's picture

Tricky Dick did price controls to win an election. Obumble's throwing a spin on that play book apparently.

Mon, 05/09/2011 - 17:42 | 1257078 Burnbright
Burnbright's picture

Exactly, only now we're talking world wide price controls with the dollar being world reserve currency and all. The end will follow if they keep this shit up. 

Mon, 05/09/2011 - 18:08 | 1257152 Long-John-Silver
Long-John-Silver's picture

I hope so. 57 states are too hard to control when the cat Herder's money goes bad.

Mon, 05/09/2011 - 17:37 | 1257054 Bartanist
Bartanist's picture

Two predictions:

1. This will scare some people, who are not on the inside, out of oil speculation.

2. Oil prices will still go up because the plan is $200/bbl in 2012

 

No free rides on the varsity bus.

Tue, 05/10/2011 - 01:24 | 1258193 Urban Redneck
Urban Redneck's picture

Some people may find the notion of the CME banging the oil price down concurrently when the FED banging the dollar price down wholly unacceptable.  No one cares, until it is some guy who controls a NOC and is being paid increasingly smaller quantities of increasingly worthless paper, for his oil.  Then the difference between oil and silver becomes glaringly apparent, very few people can live without PHYSICAL oil. 

Mon, 05/09/2011 - 17:37 | 1257055 Al89
Al89's picture

A lot of weak players will have been removed from the market by the crash last Thursday. Saying that these hikes won't help risk trades in commodities of any kind, particularly as people know QE2 is ending (Yes, sure QE3 will likely be announced, but I don't think it will come in June). 

JJust gotta wait for equities to go.

 

 

Mon, 05/09/2011 - 17:45 | 1257060 The Real McCoy
The Real McCoy's picture

.

Mon, 05/09/2011 - 17:45 | 1257063 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Looks like fascism. Smells like fascism. Hey, i think it's fascism.

Yes folks, fascism is here to stay in the good old USA... enjoy what you've created cattle.

Mon, 05/09/2011 - 17:43 | 1257065 ProdigyofZen
ProdigyofZen's picture

So my first post on the site and I would like to ask you guys, "who wants blythe masters personal phone number?"  Because really I have it unless she changed it in the last 3 years. So who wants it?

Mon, 05/09/2011 - 17:46 | 1257086 Spaghetti Monster
Spaghetti Monster's picture

So - did you, or didn't you?

Mon, 05/09/2011 - 17:53 | 1257104 ProdigyofZen
ProdigyofZen's picture

Well I now know this is the right number, wow this is fantastic

Mon, 05/09/2011 - 17:59 | 1257121 topcallingtroll
topcallingtroll's picture

I would like the number. I think this is a hoax but i know how to find out. I will call immediately and report back if this is a hoax.

Mon, 05/09/2011 - 17:59 | 1257128 Quinvarius
Quinvarius's picture

I want it.  I think she has some Prince Albert in a can.

Mon, 05/09/2011 - 18:17 | 1257177 Sophist Economicus
Sophist Economicus's picture

LOL!

Mon, 05/09/2011 - 17:41 | 1257070 The Real McCoy
The Real McCoy's picture

Bring it! 

Hoping for 85 WTI on leg 2 down, then up...  violently.

Mon, 05/09/2011 - 18:09 | 1257156 cosmictrainwreck
cosmictrainwreck's picture

ten-four.... brain-surgeon on teevee other day sez $80 to $85. The latter sends UCO down to 35-36... a steal down there!

Mon, 05/09/2011 - 17:48 | 1257080 johny2
johny2's picture

I see no problem with these margin increases at all. If it means I can spend less on the petrol and buy physical silver cheaper, that is a good news for me. I do not think the markets have been free in my lifetime, and this has not changed in recent years, just became more obvious. 

 

 

Mon, 05/09/2011 - 17:50 | 1257101 Quinvarius
Quinvarius's picture

What it means is you will pay the same at the pump as refiners now have to cover the cost of their losing hedges.

Mon, 05/09/2011 - 17:55 | 1257117 johny2
johny2's picture

That is probably right, and I do not think the physical silver is going to be any cheaper either... 

Mon, 05/09/2011 - 17:48 | 1257096 Quinvarius
Quinvarius's picture

I wonder if they know it is the hedgefund turned bank holding companies they are giving 0% money to that are doing most of the oil speculating.

Mon, 05/09/2011 - 17:49 | 1257098 NoTTD
NoTTD's picture

"March 18, 2009"?   Hit me with the clue bat.

Mon, 05/09/2011 - 21:16 | 1257628 Eternal Complainer
Eternal Complainer's picture

That was the start of the bull.

 

also it was the day before the 27 year anniversary of Randy Rhodes plane crash

Mon, 05/09/2011 - 21:37 | 1257694 Rusty Shorts
Rusty Shorts's picture

what's supposed to happen May 18, 2011? guess i'm out of the loop.

Mon, 05/09/2011 - 17:52 | 1257108 topcallingtroll
topcallingtroll's picture

Give me the phone number prodigy.

I will report back if it is legitimate.

Mon, 05/09/2011 - 17:59 | 1257127 ProdigyofZen
ProdigyofZen's picture

hum how do i get it to you without posting it all over the internet. I think i would rather not have my name connected to this shitstorm more than it already would be haha

Mon, 05/09/2011 - 18:08 | 1257134 topcallingtroll
topcallingtroll's picture

kprice1670 at gmail dot com

There will not be a shitstorm. I am going to ask her to let a high school newspaper interview one of her traders to learn about how commodity exchanges work.

I should be able to.confirm veracity then i will report back.

Mon, 05/09/2011 - 18:06 | 1257144 Gene Parmesan
Gene Parmesan's picture

The suspense is killing me.

Mon, 05/09/2011 - 19:12 | 1257322 ProdigyofZen
ProdigyofZen's picture

FYI I get mad props for this on this site. :)

Mon, 05/09/2011 - 18:14 | 1257161 ProdigyofZen
ProdigyofZen's picture

i sent you an email

Mon, 05/09/2011 - 18:45 | 1257239 ProdigyofZen
ProdigyofZen's picture

waiting for response to the email i sent you

Mon, 05/09/2011 - 17:55 | 1257109 Cleanclog
Cleanclog's picture

Why did they reduce margin on Hungarian Florint and Polish zloty FX contracts (and I didn't even know they had those contracts on the CME until today.)?

Mon, 05/09/2011 - 17:53 | 1257113 Rainman
Rainman's picture

FAS 157

Mon, 05/09/2011 - 18:02 | 1257126 Pepe
Pepe's picture

JPM and GOLDMAN ready to load up on oil again, as the CME sets up the game.

Mon, 05/09/2011 - 18:01 | 1257131 Everybodys All ...
Everybodys All American's picture

Price Controls never work and inevitably this will fail just as Nixon's attempts failed and inflation raged. Make no mistake these margin increases are really price controls and like the 1970's we will have inflation in spades. Bernanke will imo be run out of this country in shame in the not to distant future.

Mon, 05/09/2011 - 18:04 | 1257133 Quinvarius
Quinvarius's picture

They made so many changes to encourge FX speculation and discourage oil speculation.  I really have no idea what is going to happen here.

Mon, 05/09/2011 - 18:05 | 1257135 FunkyOldGeezer
FunkyOldGeezer's picture

Markets are disintegrating, or they realise they are about to, pure and simple.

What I fail to understand is why they just don't do away with the crap and offer lower leverage rates to investors/speculators across the board. Why give anyone amazing leverage in the first place? All that is ever going to do is welcome speculators with open arms and invite them to speculate...unless that is their end game, knowing they hold all the best cards and they can change the rules whenever they like to shake 'em out.

Oh! wait a minute.

I'm sure this hike isn't collusive in any way, shape or form.

Mon, 05/09/2011 - 18:05 | 1257142 JPDG
JPDG's picture

Ah, election season!  

Mon, 05/09/2011 - 18:14 | 1257165 sabra1
sabra1's picture

like Obama Bin Lyin is going to last another 18 months? i dooooon't think soooo!

Mon, 05/09/2011 - 18:11 | 1257153 Pepe
Pepe's picture

And the next part of the puzzle: Who lit the fuse in the Middle East?

and Why? Who is going to lit the fuse in the Magreb? Why? 

Whoever gets it right gets an A+

Mon, 05/09/2011 - 18:14 | 1257166 cossack55
cossack55's picture

All three:

ICG

CFR

Brookings Institute

Mon, 05/09/2011 - 18:13 | 1257159 buzzsaw99
buzzsaw99's picture

Cheap gas for everyone. WOOHOO!

Mon, 05/09/2011 - 18:13 | 1257163 Iceobar
Iceobar's picture

Did they lower the margin requirements on bonds, the Russell 2000 and AAPL??......;>)

Mon, 05/09/2011 - 18:14 | 1257168 fellatio is not...
fellatio is not fattening's picture

Seeing as we are all here to make money as priority 1 (and 2) and we all saw what margin req. hikes did to silver, wouldn't it make sense to buy puts on crude and short the crude ETF rather than watch crude go from $102 to $90 and not benefit from our experience?  But I do need to ask which ETF would best be shorted, I don't think it's the OIH, suggestions please....Thanks much

Mon, 05/09/2011 - 18:25 | 1257191 Stares straight...
Stares straight ahead's picture

I was thinking the same thing.  But I would feel more comfortable doing this if I understood exactly why the hikes seem to crash the commodity of interest. 

And how in the world is it justified to increase margins despite recent declines in prices of said commodity. 

Someone send me a link-o-lurnin', please!

(See my question below.)

Mon, 05/09/2011 - 18:36 | 1257218 fellatio is not...
fellatio is not fattening's picture

Don't overthink it, higher rates = higher cost to trade, take crude oil (CL) each contract = 1000 barrels, if crude is $102 a barrel the value of a contract = $102,000, the min req. is $12,150, each $1.00 crude moves is a change of $1,000 and if someone must maintain the $12k if crude drops $3 they need to come up with $3,000 well there are those who don't have much extra $$$ and when they get a margin call aren't able to bring in $3k thus they must sell, multiply that by 1000's of people and 1000's of contracts and you can see why all those contracts being sold causes a drop, especially when the brokerage firms KNOW there is forced selling, they drop their bids to buy cheaper which forces more margin which causes more selling....so a drop is unavoidable unless something happens to cause crude to spike and offset the higher requirements, otherwise $90-$95 here we come.  I hope that helps

Mon, 05/09/2011 - 19:45 | 1257423 ejhickey
ejhickey's picture

Question:  suppose i have $100K to invest.  Can I just buy a contract for 1000 barrels of oil and take delivery and have a certificate held by my broker?  Yes I know there is risk the price of oil might drop but it also might go up as well.  How long can I hold the oil and wait for the price to go up?  How much would the storage charges be? Am I nuts for thinking this might be a good place to put $100K for 1-2 years? any thought you have on this issue would be appreciated.

Mon, 05/09/2011 - 20:53 | 1257568 Goldenhands57
Goldenhands57's picture

Yes and no. You may indeed accept delivery of 1000 Barrels of oil..or a truckload of Wheat, Corn, Oats, Beans, Sugar, Rice...ect. The "certificate" you mention does not make sense. You accept delivery..it will be delivered if that is what you want. That is why Brokers will get a bit curious if you still hold up to Last Trade Day!! The storage, shipment, and insurance to cover the transport fall on your shoulders, no one else. You can also do the same with Silver, Gold, Platinum, Palladium...which "concentrate" the same physical wealth in a much smaller package. They are also traded in US Dollars (for now anyway). The EPA will not be on your case for the Metals..they WILL be all over your case in a heartbeat if your oil barrels start to leak. Just so you'll know, you may also be specific in the type of Metals delivery. In other words..lets say you wish to accept your 1 Contract in May 2011 Silver. You may have delivery made in Eagles, Maple Leaf, Libertad, or even pre 64 90% so called "junk Silver" if you so desire. Be aware..it may take a little while to deliver (I say with a bit of sarcasm) A word to the wise..ONLY the Silver Eagle is exempt from reporting this transaction to Treasury (that is supposed to be the case anyway!). It is the only .999 Bullion coin I know of that Congress exempted at the levels you mention. 

Mon, 05/09/2011 - 21:24 | 1257657 ejhickey
ejhickey's picture

thanks for the info, especially about the Silver Eagles.

Mon, 05/09/2011 - 23:09 | 1257922 Stares straight...
Stares straight ahead's picture

Imagine the shipping fees associated with delivery of that much oil...

And the size of the  refrigerator you would have to store it in to keep it fresh.

Mon, 05/09/2011 - 20:32 | 1257531 Stares straight...
Stares straight ahead's picture

Thanks, got it!

 

Mon, 05/09/2011 - 18:30 | 1257202 Lets_Eat_Ben
Lets_Eat_Ben's picture

I'm here to save the world. That's why i'm shorting SD and OIL.

Mon, 05/09/2011 - 18:15 | 1257169 Stares straight...
Stares straight ahead's picture

Can someone describe why margin hikes reduce demand? What are the mechanics involved?

It is interesting that these hikes are being applied to commodities in decline...

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