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Brent Over $118, Crude Passes $107, EURUSD Above $1.40, Futures Up, Silver And Gold At Highs, Dollar In Flight To Safety Freefall

Tyler Durden's picture




 

It is one of those days when the flight to new reserve currency is on, with gold and silver trading near overnight highs, same for the oil complex, yet futures are also at the highs of the premarket session, purely on the ongoing monkeyhammering in the dollar, which has now completely given up the ghost as the reserve currency on yet another bout of QE3 concerns, following last night's very cautious note from Jan Hatzius.  At last check the DXY was at 76.135 and plunging. As for why oil will continue whacking bits and pieces of Q1 GDP, and why Goldman will have no choice but to push for another round of dollar rape, here is Reuters with the skinny: "Brent crude rose to $118 a barrel and U.S. oil hit the highest since September 2008 on Monday as fighting in Libya disrupted its supplies and renewed concern of wider disruptions in the Middle East. While the Libyan crisis has cut supply from a country that normally provides almost 2 percent of world output, the prospect of unrest spreading to larger producers such as Saudi Arabia is a far more bullish scenario for oil markets. "The major risk remains the prospect of the
political unrest spreading to the Gulf producing region," said Caroline
Bain, economist at the Economist Intelligence Unit. "However, even if
there is civil unrest in Saudi Arabia, it is not a given that oil
production will be affected." Wrong: it is a given.

More:

In Saudi Arabia, security forces have detained at least 22 minority Shi'ites who protested last week against discrimination, activists said on Sunday, as the kingdom tried to keep the wave of Arab unrest outside its borders.

Citigroup and Commerzbank raised their oil price forecasts on Monday and the latter is now looking for a Brent price of $120 in the second quarter, citing the risk that disruption could spread in the Middle East. Brent's highest this year is $119.79 reached on Feb. 24.

 "Not only actual production losses but above all the threat of contagion spreading to neighbouring regions will keep the geopolitical risk premium at a high level for the time being," Commerzbank said in a report.

The rally in prices has prompted the Obama administration to consider releasing emergency oil stockpiles as policymakers seek ways to contain a negative spillover to the world's biggest economy.

Oh yes, the strategic reserve. As we predicted, this latest escalation of government central planning would only send oil prices to fresh highs. Once again, we were not all that far off.

And a snapshot of a humiliated former reserve currency:

 

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Mon, 03/07/2011 - 08:21 | 1025588 Racer
Racer's picture

and guess where US futures are will all this wonderfuel news...up of course!

Mon, 03/07/2011 - 08:24 | 1025591 Backspin
Backspin's picture

Of course!  That's because of the news that we might tap the strategic oil reserve.  Yeah, that should take care of it.  Problem solved, stocks up.

Mon, 03/07/2011 - 08:33 | 1025601 Boilermaker
Boilermaker's picture

The bullshit of hijacking the futures during the wee hourse will, literally, never fucking stop...ever.  I went to bed at midnight when the futures were dropping at -41 DOW.  By the time I woke up 7 hours later and dropped a turd in the porcelain, it was +40. 

It's just a propoganda tool, period.  Most people are watching the news in the morning and the opportunity to dupe them won't be missed.

It's so fucking bogus now that it literally makes you enraged and sick to even see it anymore.  But, don't be naive of the shit-eating morons that don't know that it's being jacked.  They are 'out there' by the tens of millions. 

Mon, 03/07/2011 - 09:08 | 1025660 D1eeeeeNAHHHHH
D1eeeeeNAHHHHH's picture

Boilermaker don't forget to add, don't let the reality it sink into you so hard that your stomach turns.  That will only make it harder for you or anyone to look at the opportunities that lie ahead. 

If we focus on being mad that the market has changed for the bad, it won't allow us position ourselves to make it our good.

Mon, 03/07/2011 - 10:19 | 1025831 barkingbill
barkingbill's picture

well with the dollar falling. just about anything should go up...so stocks too. cash is the big loser. 

Tue, 03/08/2011 - 00:50 | 1028722 BlakeFelix
BlakeFelix's picture

Is there some reliable way to arbitrage that garbage?  It annoys the crap out of me, and it seems predictable, and doesn't predictable mean vulnerable to arbitrage?

Mon, 03/07/2011 - 08:42 | 1025611 John Law Lives
John Law Lives's picture

Drawing oil from the strategic reserve is not a solution to anything.  It is a pathetic demonstration of how bankrupt our national energy policy really is.  If the mess in MENA rages on for several months and spreads to Saudi Arabia, the oil in the strategic reserve could be sucked down in a matter of a few months.  What then?  Probably a war.  The Republicans might just love that.

The very idea that stocks should get a bounce from this is sickening.  The stock market is a goddam joke.

Mon, 03/07/2011 - 09:19 | 1025685 SilverRhino
SilverRhino's picture

>>The Republicans might just love that.

Check your facts asshat.  Which party starts more wars again?  (Hint: WWI, WWII, Korea, Vietnam) It's not Left/Right it's people / banks.

Mon, 03/07/2011 - 09:59 | 1025773 John Law Lives
John Law Lives's picture

Spare me the history lecture, nimrod.  Since you brought it up, you might know from history that the US did not start WWI or WWII.  The Korean War was actually authorized by a United Nations Security Council Resolution.  The US did not start the Korean War, and it did not ever declare war against North Korea.  Learn some history. 

Gulf War  = G.H.W. Bush (Republican)

Afghanistan = G.W. Bush (Republican)

Iraq War = G.W. Bush (Republican)

Speaking of banks, if you don't realize the Republicans are, by and large, the bigger friends of TBTF banks, your head is up your arse.

Mon, 03/07/2011 - 10:16 | 1025824 High Plains Drifter
High Plains Drifter's picture

Republican , Democrat?  What difference does it make?

Mon, 03/07/2011 - 10:31 | 1025875 John Law Lives
John Law Lives's picture

I don't consider myself one or the other.  Both parties are contaminated by lobbyists and special interest groups.  I happen to believe Republicans are the bigger friends to TBTF banks and the military-industrial complex.

Mon, 03/07/2011 - 11:41 | 1026124 overmedicatedun...
overmedicatedundersexed's picture

so the John says:"I happen to believe Republicans are the bigger friends to TBTF banks and the military-industrial complex."

well then it must be so!!

deep thinking in a tea cup.

I know Ron Paul (R) would take that as gospel.

Tea party wants less gov and gov debt, they run on the R side. 

I hate both parties because they are ONE..

 your R vs D is a waste of your time and ours.

hang with Snowball she is open to your blindness. 

 

Mon, 03/07/2011 - 17:54 | 1027551 John Law Lives
John Law Lives's picture

I am not waging a R vs. D debate.

Ron Paul is a Libertarian in Republican clothing.

Mon, 03/07/2011 - 12:26 | 1026272 LowProfile
LowProfile's picture

FYI... belief in the Red Team vs. Blue Team bullshit will be promptly beaten out of you here so if you are married to it you best keep it well hidden.

Oh, and if you actually still believe in it at this point you're a kool-aide drinkin dipshit.  Just sayin.

Mon, 03/07/2011 - 12:37 | 1026334 New_Meat
New_Meat's picture

y'know, LowProfile, ya gotta' keep your head down, cuz when you get up on the skyline you can get a round through the ... oh ...,

never mind.

- Ned

Mon, 03/07/2011 - 13:02 | 1026462 Bay of Pigs
Bay of Pigs's picture

Yes. I junked him for his bad "history lesson". Swiss Cheese...

Mon, 03/07/2011 - 17:58 | 1027565 John Law Lives
John Law Lives's picture

I did not produce a bad history lesson to anyone.

Mon, 03/07/2011 - 17:56 | 1027560 John Law Lives
John Law Lives's picture

I am not waging a R vs. D debate.  I clearly stated I am not aligned with either party.

If you had watched when Paul Volcker and the Goldman execs etc. were each grilled by the US Senate, you would know if Republicans, as a whole, were more "friendly" than their Democrat counterparts.

Spare me the ad hominem attacks, LP.  They are beneath the process.

Mon, 03/07/2011 - 08:40 | 1025609 Sudden Debt
Sudden Debt's picture

It's only a matter of time before the banks start to pull the indexes down.

The only reason why haven't crashed yet is because the FED is buying.

 

Historically, banks always drop when silver and gold go up. That means every bank that doesn't offer a 10% div. minimum is doomed to drop.

Mon, 03/07/2011 - 09:29 | 1025704 D1eeeeeNAHHHHH
D1eeeeeNAHHHHH's picture

Kind of like what happened with US Bank a few years ago.  Too bad the shareholders only got to see the dividend get cut to next to nothing shortly after the yield passed 10%.

Mon, 03/07/2011 - 09:13 | 1025670 stormsailor
stormsailor's picture

well you see,  barry shot a 3 under on the back 9 at andrews.

 

thats why the /es is up

Mon, 03/07/2011 - 08:23 | 1025589 H. Perowne
H. Perowne's picture

But when will we tap the strategic hopium reserve?

Mon, 03/07/2011 - 08:35 | 1025604 whoopsing
whoopsing's picture

The drain line on the hopium reserve is sucking air-sorry,all out of hopium! I mean,really,what can they point to and say "look how well we are doing". All indication's are for stormy weather ahead

Mon, 03/07/2011 - 08:26 | 1025592 Jake3463
Jake3463's picture

Going to party like it is 2008!

 

So how long to the inevitable margin compression on corporate profits, consumer spending hitting the wall, and real estate crash.  In that order.  

 

I mean subprime and the idiotic mortgages underwritten in the 2000s were a big part of the financial blow-up in 2008, but the match that lit the fuel for the fire was when bubba saw his mortgage payment increase at the same-time he was paying twice as much to fill his SUV and his company was seeing their profits destroyed by fuel cost. 

Mon, 03/07/2011 - 08:28 | 1025594 triplenegative
triplenegative's picture

You're bitter because you failed to BTFD.

Mon, 03/07/2011 - 08:30 | 1025595 Josephine29
Josephine29's picture

I read earlier about the impact of the rising oil price since 2009 on the major currencies. An yes you have guessed it those in the US look like they are most affected. But do not worry as Ben Bernanke promises us he can deal with it!

 

For those interested "The rise in the oil price since the beginning of 2009 in different currencies" was written by the economist Shaun Richards and can be found on http://t.co/IzRVQN5

Mon, 03/07/2011 - 08:30 | 1025596 Doubleguns
Doubleguns's picture

The silver fairy came again last night. I love it.

Mon, 03/07/2011 - 08:34 | 1025598 BrocilyBeef
BrocilyBeef's picture

So, the global flight to quality might not be a global flight to the dollar this time? Could it be a global flight FROM the dollar? I've on the silver train "a little late" but all this means is that I got a crappy seat on the flight to safety... which is still safety.

 

I'm still worried about deflation though... biflation sounds even worse... triflation OMG!

Mon, 03/07/2011 - 08:33 | 1025599 THE DORK OF CORK
THE DORK OF CORK's picture

Maybe the euro masters need a upward revaluation of their Gold reserves this coming quarter - they seem unwilling to expand their balance sheet by more unconventional means.

After the entry the dollar can rally again.

And on and on it goes......... where it stops nobody knows.

Mon, 03/07/2011 - 09:37 | 1025723 Max Hunter
Max Hunter's picture

I'm watching this closely.. (2) things happening.

1. The DXY is at a very strong trend line support

2. Fiber (EUR/USD) is at a weekly resistance line.

These two could halt the USD slide and we should see in the next day or so if the USD had a bounce left in it..

I still the PM's and Commodities will rally against both (or all) currencies if need be..

Mon, 03/07/2011 - 11:02 | 1026009 tsx500
tsx500's picture

"... if the USD has a bounce left in it..."   =    S T F B

Mon, 03/07/2011 - 08:34 | 1025600 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Judge Judy is itching to play the nob spread today.

Mon, 03/07/2011 - 08:33 | 1025602 slow_roast
slow_roast's picture

I'm beginning to cheer for a release of strategic reserves and S&P to 2,000...I'd love to BTFD in oil and really see the last gasp of Fed-induced oxygen being squeezed out of the S&P before going short.

Mon, 03/07/2011 - 09:47 | 1025747 Saxxon
Saxxon's picture

+1

Mon, 03/07/2011 - 08:34 | 1025605 John Law Lives
John Law Lives's picture

Great job, The Ben Bernank.  You are well on your way to destroying the US Dollar and starving people all over the world... just so fools in Washington DC can rack up even more crippling debt.

Louis Cyphre looks forward to meeting you.  You are getting the VIP suite.

Mon, 03/07/2011 - 08:35 | 1025606 Boilermaker
Boilermaker's picture

I wonder if Ben had to wipe his chin this morning after blowing the futures all night, again.

Look, I love head...don't get me wrong.  But even I would probably take a break every once in a while.

This is <again> fucking absurd.  Another +90 point future swing in the wee hours based on...uh...uhhh....

Mon, 03/07/2011 - 08:37 | 1025607 Lone Mad Minute...
Lone Mad Minute Medic's picture

I want 4 more years of Ob-Mao! I never would have believed I could make so much money on incopetence. Stupid uninformed voters hanging themselves over a usurper posing stump jumper. I'm actuallt torn by making money in PM and watching my country burn from the roots up. Some how I don't feel very well inside.

Mon, 03/07/2011 - 08:45 | 1025616 John Law Lives
John Law Lives's picture

Be careful what you wish for.  If that great RESET button gets pressed in the next 4 years, the wealth you think you accrued might just get taken from you.

Mon, 03/07/2011 - 11:05 | 1026016 tsx500
tsx500's picture

... explain  ?

Mon, 03/07/2011 - 17:57 | 1027570 John Law Lives
John Law Lives's picture

Use your imagination.

Mon, 03/07/2011 - 08:44 | 1025617 johnnymustardseed
johnnymustardseed's picture

"incopetence" is that how you spell George Bush?

Mon, 03/07/2011 - 12:08 | 1026220 SilverFiend
SilverFiend's picture

Hilarious.  You spelled incompetence wrong in your name calling.  Keep fighting the same tired political battles.  That is what they want you focused on while they steal everything not nailed down.

Mon, 03/07/2011 - 09:55 | 1025760 Saxxon
Saxxon's picture

No matter who we get we will make money; but yes, this had been a good run for me with all the handouts.  Barry & Co. has been good to me.

Funny though, some people see Uncle Sugar walking to the market, know that his pockets are filled with goodies, and don't take them.  Then they stand to the side and get angry and frustrated about futures manipulation. 

Yes, some people are in this to lose because it justifies their world view.

I recommend the work of Alexander Elder M.D., a psych turned full-time trader.  He points out that many traders are not here to make money; i.e., they literally sub-consciously are gratified by losing, or merely by the thrill.  Interesting thesis.

 

Mon, 03/07/2011 - 08:42 | 1025612 Oh regional Indian
Oh regional Indian's picture

Dollear in flight to safety free-fall. Haaaah!

Such crazy times. Looking at the Kitco toolbars is a little nutty-making.

The infinitely inflating balloon is ripppppping.....shredding....

Quite the blessing to be alive in this time.....

ORI

http://aadivaahan.wordpress.com/2011/03/04/astrological-and-other-deep-insights-from-ca/

Mon, 03/07/2011 - 09:11 | 1025663 Blankman
Blankman's picture

ORI - I second that motion.  It is a blessing to be alive during these times (perhaps you were being sarc).  I am in my mid thirties and we are going through more chaos and turmoil than our parents had.  Sure they had their ups and downs but nothing to the extent that we are seeing as everything is blowing up in the faces of our masters all at once, worldwide.  Thank you global economy.  I keep telling people that these are really fantastic times but most people do not even see a blip on the radar.  They are too tuned out and too braindead due to conditioning (thnak you msm).  30 years from now I can tell my grandkids I was there when the whole thing blew up.    

Mon, 03/07/2011 - 09:59 | 1025768 Saxxon
Saxxon's picture

Agreed ORI and Blankman.  I just wish I was 20 years younger to deal with what I see coming.  The patience of old(er) age will be useful though, in dealing with the White Theocracy that will rise in the U.S.  Yes, we will divide ourselves sharply along racial lines (like a prison) and it will not be pretty nor very intelligent. 

Those still free mentally will have to work with it, like an intelligent monk in the dark ages had to deal with the Church.

Mon, 03/07/2011 - 08:44 | 1025614 37FullHedge
37FullHedge's picture

If anyone with connections to the FED Wise up and announce an early end to QE II  and put a bid under the US$ This is no joke the DXY is on the brink of freefall and $200 for oil in the next few months will happen if the US% goes to 65 which looks odds on now.

Mon, 03/07/2011 - 08:45 | 1025618 The Axe
The Axe's picture

Give me Lawyers, Guns and Money.....bitch

Mon, 03/07/2011 - 08:46 | 1025622 overmedicatedun...
overmedicatedundersexed's picture

Wynter Benton "you magnificent bastard!!"

Mon, 03/07/2011 - 08:51 | 1025628 Forgiven
Forgiven's picture

We've seen +$0.50 days become +$1.00 days become +$1.50 days in SILVER.  The step changes seem to be accelerating.  Ebay buyers are paying over $41/oz for SAEs.  Those days are imminent in the 'market.'

Mon, 03/07/2011 - 09:08 | 1025655 Long-John-Silver
Long-John-Silver's picture

No more waiting for the dip. You exchange fiat dollars for Silver and when that runs out you buy Gold. Soon no one will want to trade Silver and Gold for Fiat Dollars. We will see trash cans overflowing with old fiat paper replaced by a new currency. The sheep will be happy to get 25 cents on worthless electronic dollars sitting in bank accounts when the currency swap happens. Silver and Gold will immediately jump 75%. The end of a 50 state union is over. 14 states are prepared to leave now. Texas and the 13 Confederate States. At the end of the civil war the renegade 13 Confederate States never officially rejoined the Union or even surrendered. Only a cease fire was signed. Texas already has authority to simply leave the union any time it likes with a simple vote by Texans. Texas is now very close to secession and the 13 Confederate States will quickly follow. The number of mid-west states leaving the union will be shocking to all.

Mon, 03/07/2011 - 10:02 | 1025782 overmedicatedun...
overmedicatedundersexed's picture

"a 50 state union is over. 14 states are prepared to leave now"

don't see much evidence to support this.

but I can see that we have divided populations..the tapeworms and the producers. if a state did leave I would move there in a heart beat..the socialist are too good at gov that is the god they live for...let them ,for me and mine give me freedom.

freedom is the gold of men's heart.

Mon, 03/07/2011 - 09:08 | 1025656 malikai
malikai's picture

The only question now is how long until a retrace. Us silver+gold dip buyers out here are having a hard time with this situation.

Mon, 03/07/2011 - 10:02 | 1025776 Saxxon
Saxxon's picture

+1 malikai.  Our fearless leader has to step in and right soon.

Mon, 03/07/2011 - 08:52 | 1025632 letsgetreadytorumble
letsgetreadytorumble's picture

Dollar is droping faster then anticipated!! 

Mon, 03/07/2011 - 09:02 | 1025644 D1eeeeeNAHHHHH
D1eeeeeNAHHHHH's picture

Thank you for sharing this Tyler.  To anyone who wants to learn why we are no where near the bottom read this:

http://www.delanion.com/main/dom.htm

Mon, 03/07/2011 - 11:52 | 1026160 37FullHedge
37FullHedge's picture

Thats a nice inflation book, Shame its 1973

If The Us government dosnt get its fiscal house inorder Dow 36K very soon.

Mon, 03/07/2011 - 09:17 | 1025684 waldocktrades
waldocktrades's picture

The question we shoudl be asking ourselves is why we spend 50 -100 billion protecting the 35 billion (15%) worth of our crude imports.

http://blog.commodityandderivativeadv.com/2011/03/03/over-priced-crude--...

Mon, 03/07/2011 - 09:24 | 1025693 j.darkness
j.darkness's picture

haha "Economist Intelligence Unit" straight out of G-Force!

Mon, 03/07/2011 - 09:51 | 1025753 monopoly
monopoly's picture

If we can just get close to when the market collapses, shorts will be a bonanza. But so far. No dice.

Mon, 03/07/2011 - 11:22 | 1026068 Franken_Stein
Franken_Stein's picture

Mon, 03/07/2011 - 13:52 | 1026625 Grand Supercycle
Grand Supercycle's picture

I'm sticking to my call on Feb 22 that the DOW topped @ 12,391 on Feb 18 2011 and thus signals the end of the rally.

This will affect PM's and commodities ...

http://stockmarket618.wordpress.com

Mon, 03/07/2011 - 13:56 | 1026652 glenlloyd
glenlloyd's picture

The SPR is prolly like Ft. Knox.......empty.

 

Mon, 03/07/2011 - 18:40 | 1027721 Ye Ye
Ye Ye's picture

Is a weak dollar that bad?  We have a negative current account, trade deficit, and high unemployment; all of which would be helped by weaker currency.  If it has to happen, why not have it happen as soon as possible?  As a bonus, the CNY-USD peg gets harder to maintain.  #WINNING

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