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CME Hikes Intraproduct Crude, RBOB Margins, Lowers Gold, Silver And Copper Interproduct Margins

Tyler Durden's picture




 

Following various outright margin hikes in commodities such as precious metals and crude, the CME is now moving on to swaps and other interproduct and intraproduct contract pairs. As of a few minutes ago, the CME just hiked the CL intraproduct spreads Tier 1 through 6 for both New and Initial Margins by about 33.3%, and assorted other CL pairings by a lower amount. It also did the same for a variety of RBOB contract intraproduct spreads by a comparable amount. Curiously, intercommodity spreads actually declined between gold, silver and copper pairings by anywhere from 10% and 20%. For now the market appears not to be reacting to this latest margin move by the CME.

Margins 5.18

 

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Wed, 05/18/2011 - 18:52 | 1289237 NOTW777
NOTW777's picture

state exchange

Wed, 05/18/2011 - 21:50 | 1289945 Bay of Pigs
Bay of Pigs's picture

That's a great link. TD might want to do a post on it.

Thanks...

Wed, 05/18/2011 - 22:30 | 1290065 Hugh G Rection
Hugh G Rection's picture

JP troller junked him for it.

 

Great link, that conference call gives me a silver hard-on.

 

Fuck investigating the raid, just liquidate more useless shit and buy physical with the discount.  Thanks for the sale you corrupt fucks!!

Thu, 05/19/2011 - 02:54 | 1290502 Fiat2Zero
Fiat2Zero's picture

My exact same thought. One of the few tangible benefits my US tax dollars have brought me in recent memory, "the Great Silver Fire Sale".

COMEX, I thank you.

Wed, 05/18/2011 - 18:56 | 1289239 swissinv
swissinv's picture

margin bitchez!

Wed, 05/18/2011 - 20:09 | 1289547 Vagabond
Vagabond's picture

They have to lower the margins so they can raise them again at inopportune times.

Wed, 05/18/2011 - 22:15 | 1290003 wirtschaftswunder
wirtschaftswunder's picture

Does Bernake know this secret formula?

Thu, 05/19/2011 - 01:05 | 1290404 ZeroPower
ZeroPower's picture

But they raise them at the MOST inopportune times too, right?

Man some of the posts here are absolute jokes. I think a 6th grade who sat down and understood why the CME, as a CLEARINGHOUSE, deals with margin issues has to actively manage their risk by raising the margin put up merely due to volatility. I.e. 10% margin on silver but it moves >10% in a day - who do you think the sucker becomes? The clearinghouse. And they manage risk so that they never have to become the sucker.

Thu, 05/19/2011 - 01:51 | 1290455 traderjoe
traderjoe's picture

Perhaps...but that's a relatively incomplete answer, and ignores a variety of factors. Principally, the exchange should evaluate how much the margin hikes impact volatility. So, are they creating more risk for themselves by hiking margins? Very likely yes.

Secondly, they should be looking at the composition of shorts and longs. If, in a physical crop or product, most shorts are commercials or hedgers, and longs are speculators, then a rise of the commodity does not have the same margin risk as a decline...all other things being equal. The commercials can deliver the product against a rising contract and therefore represent little risk. A decline would wipe out the speculators, which would impact the clearinghouse in a greater fashion. 

Third, you have to look at the context of the 5 margin raises in one week, but an INTRA-day lifting of the oil downside circuit breaker.

IMHO, your post was far too simplistic to level a similar argument against someone else. 

Wed, 05/18/2011 - 18:55 | 1289250 augie
augie's picture

Everytime they raise margins, you take a drink.

Wed, 05/18/2011 - 19:07 | 1289298 topcallingtroll
topcallingtroll's picture

the third millenium version of "Hi Bob"

Wed, 05/18/2011 - 19:29 | 1289379 camaro68ss
camaro68ss's picture

I would get fucked up on this game at the rate they are going

Wed, 05/18/2011 - 18:58 | 1289265 NOTW777
Wed, 05/18/2011 - 19:54 | 1289487 narapoiddyslexia
narapoiddyslexia's picture

Good news? Cheney is a foolish dickwad. But for him we would not be in the mess we are in. Turrerists are criminals, not soldiers. Cheney should have been drowned at birth.

Wed, 05/18/2011 - 20:00 | 1289519 Alex Kintner
Alex Kintner's picture

+10 => Cheney should have been drowned at birth.

Wed, 05/18/2011 - 20:59 | 1289531 tmosley
tmosley's picture

No, he should have been hung from the neck until dead after the first of his many deadly crimes.

Wed, 05/18/2011 - 22:18 | 1290011 wirtschaftswunder
wirtschaftswunder's picture

I knew you were a commie homo 

Wed, 05/18/2011 - 22:23 | 1290031 tmosley
tmosley's picture

As if he were summoned, we talk about the absence of PM trolls, and you show up.

Also, funny that you think that people are "commie homos" for wanting to enforce the law.  Also funny that being against fascism is equivalent to being a commie homo.  What exactly are you saying about the greatest generation, huh?

Go smoke some more crack.

Wed, 05/18/2011 - 22:23 | 1290047 knowless
knowless's picture

stupid socialist faggots. always hating on freedom loving human skin lamp makers.

god i must be geting played hard.

http://www.youtube.com/watch?v=JBfjU3_XOaA

i love you economic miracle, you are a god among men.

Thu, 05/19/2011 - 02:56 | 1290505 Fiat2Zero
Fiat2Zero's picture

Dick, is that you?

Wed, 05/18/2011 - 21:14 | 1289779 NOTW777
NOTW777's picture

well, that should relieve some of your froth and foam

Wed, 05/18/2011 - 21:37 | 1289887 PenGun
PenGun's picture

  Oooo  ...  Santorumed!

Wed, 05/18/2011 - 18:59 | 1289269 NOTW777
Wed, 05/18/2011 - 20:07 | 1289538 john39
john39's picture

zion news is also reporting that Iran will now play a bigger role in al-CIA-Duh.  wake up people, msm is total bs, news from israel is even worse.

Wed, 05/18/2011 - 19:00 | 1289271 legal eagle
legal eagle's picture

Central Committee Planning, USSA style

Wed, 05/18/2011 - 19:06 | 1289280 vast-dom
vast-dom's picture


By MarketWatch

CHAPEL HILL, N.C. (MarketWatch) — Evidence is growing that gold has formed at least a short-term bottom around $1,480.

 

GCM11 1,496.10+0.30+0.02%

1,600 1,550 1,500 1,450 A M

 

Tuesday’s close at that level, for example, now appears to have been the second half of a double bottom, with the first half having been formed by May 5’s close of $1,481.50 an ounce. (Both prices reflect the June gold contract on the COMEXGCM11 +0.02%  .)

This area therefore represents support, according to technical analysts, since there evidently are buyers on the sidelines ready to buy whenever gold drops to this area.

Sentiment data provide confirmation: The gold timers on balance have remained almost completely out of the market, despite gold’s successful test of the $1,480 bottom.

http://i4.marketwatch.com/MW5/content/images/video-play-icon-overlay.png); background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; text-indent: -99999px; position: absolute; bottom: 0px; background-position: 0px 95px; background-repeat: no-repeat no-repeat; padding: 0px; margin: 0px; border: 0px initial initial;">Click to Play Fixed-Income outlook

Kathy Jones, fixed-income strategist at Schwab Center for Financial Research talks about the outlook for the fixed-income market.

Consider the average recommended gold market exposure among a subset of the gold market timers tracked by the Hulbert Financial Digest (as measured by the Hulbert Gold Newsletter Sentiment Index, or HGNSI). The day after the first half of gold’s double bottom, for example, this average stood at 40.3%. It today stands at just 7.0%.

In other words, while gold is patiently doing the technical work to form a bottom, the average gold timer is building a wall of worry that bullion will be able to climb.

The situation could change quickly, of course. If the gold timers over the next couple of days change their tune and decide to jump on the bullish bandwagon, then at least the contrarians would argue that gold has even more work to do before a more endurable bottom was in place.

For now, though, the stars appear to be aligning in favor of the yellow metal.

Wed, 05/18/2011 - 19:06 | 1289294 topcallingtroll
topcallingtroll's picture

agreed.  The same seems to be happening in silver.

Sentiment has sure been cynical and depressed on zero hedge.

People can hardly gather the energy to junk the PM bears anymore.

Wed, 05/18/2011 - 19:42 | 1289425 AUD
AUD's picture

Your top calls stink. Just because the CME is manipulating the silver price upwards by lowering margins you think the $ is done?

Wed, 05/18/2011 - 21:13 | 1289773 Raynja
Raynja's picture

actually cme reduced margins so JPMorgue doesnt have to tie up as much money on margins

Thu, 05/19/2011 - 01:06 | 1290401 ZeroPower
ZeroPower's picture

LOL

Get a clue - original increase was for the retail sheep who went in overlevered at $49 thinking 'SILVERRR TO $100!!1!11'. And now, those same sheep will buy back in before seeing any sort of decent support in silver. 

You really think JPM goes balls to the wall on anything? That's not how banks work, they have capital on hand for any inopportune moments.

Thu, 05/19/2011 - 00:10 | 1290333 topcallingtroll
topcallingtroll's picture

Actually i have tentatively called a top in risk assets. The dollar seems safe for the time being.

Wed, 05/18/2011 - 19:42 | 1289437 tmosley
tmosley's picture

What PM bears?  Have hardly seen a peep from them today.

Wed, 05/18/2011 - 21:08 | 1289764 Teamtc321
Teamtc321's picture

Sure is funny, the PM bears only come around on red day's to tell everyone how's stupid they are lol.

 

 

Thu, 05/19/2011 - 02:57 | 1290509 Fiat2Zero
Fiat2Zero's picture

No, it's just pointless. The 50% of the bears who are paid shills went ape shit synchronized with the bullshit CME takedown.

Robo was working Zing's mouth so fucking fast, his jaw popped a hinge (not that he says much beyond "+1 robo, yeah yeah").

Let's face it, COMEX lost its shit, and so did the sh(r)ills.

Sure, there were some people that got butt hurt that $50 didn't hold, but c'mon, the PANIC was palpable (with the shills and the PM newbies).

It gets fucking tiresome.

Wed, 05/18/2011 - 22:41 | 1290111 plata pura
plata pura's picture

The precious and gold; I made trade this day receiving 1,500 war nickels for a 1ozt .999 Au round. Found a special one and will inquire as to it's rarity with a numasmatik bloke; a double SS over the dome of Jefferson's crib. Never have seen one with double mint marks; it be not stamp'd twice either.

Wed, 05/18/2011 - 19:04 | 1289283 topcallingtroll
topcallingtroll's picture

They are just trying to cover their trail and muddy the waters a bit.

 

If they really wanted to end the possibility of manipulation and frontrunning they would develop a formula that takes into account total product price and volatility 200 day 100 day 50 day 10 day and 5 day volatility.  It would be only moderately complex, but anybody trading on the comex would be able to understand it, and there would no longer be any surprises or market mischief by COMEX insiders.

Wed, 05/18/2011 - 19:13 | 1289300 Franken_Stein
Franken_Stein's picture

 

Does Ben Bernanke already think in 5 year plans ?

Where the newspaper is announcing new records in fulfilling and over-fulfilling the plan set out by the Politburo, totally detached from reality ?

 

None of you Americans ever had to live under socialist rule, but I did.

We had supply scarcity in a lot of products and commodities.

Our cities were grey and environmental protection didn't exist.

 

Yet societal cohesion and compassion among people to help each other out under adverse conditions was better than in capitalism.

 

Wed, 05/18/2011 - 19:24 | 1289352 NidStyles
NidStyles's picture

The funny thing is that you think there's only one form of Socialist rule, while you sit here and negate our point's until our version becomes just as bad, or even worse than the one you used to know.

 

I call that ignorance through arrogance. You may have some experience with dealing with Socialism, but that doesn't mean you know a damn thing about Fascism.

 

There's nothing Capitalist about anything in US, and there hasn't been since 1913.

Wed, 05/18/2011 - 19:11 | 1289315 Rynak
Rynak's picture

So, are they just reloading on anti-PM fire, or do they let them off the hook for this month?

If it were about me, just keep the PM margins as they are, and implement rules to stop JPM and those fuckers from messing with the market - everything else will sort itself out, 50% margin or not.

Wed, 05/18/2011 - 19:57 | 1289498 Raymond Reason
Raymond Reason's picture

They are obviously topping up their clip.  They've spent their entire adult lives pursuing power, and now they get to wield it, and they're pretty good at it.   

Wed, 05/18/2011 - 19:27 | 1289358 AgShaman
AgShaman's picture

Burnt Offerings

I hope they continue to keep all parties in a state of confusion...even if they only desire to 'copycat' the Asian market in margin movements.

I'm not asking for alot....just beyond believable volatility would be nice for a year or two....soze all the economists can continue to sit on their hands and argue inflation/deflation semantics....and pay no mind to the 'wizard' changing the reel behind the curtains. 

Wed, 05/18/2011 - 19:29 | 1289364 Jim B
Jim B's picture

The CME margins hikes had little effect on Gold.  Silver was probably over extended and the correction will probably be healthy in the long term.

Wed, 05/18/2011 - 19:33 | 1289382 Rynak
Rynak's picture

Thats because IIRC they didn't do much regarding hikes on gold. Flashcrashes on the other hand....

Wed, 05/18/2011 - 19:28 | 1289376 Smartie37
Smartie37's picture

The reduction in inter-product margins seems to me to be in-line with the recent propaganda blitz to abandon silver in Favor of gold.

If TPTB can't completely destroy the interest in silver by outright bashing, it seems they have resorted to "Plan B" to make gold seem more attractive in comparison (at least temporarily, to relieve the buying pressure on Ag).

Wed, 05/18/2011 - 19:38 | 1289390 Rynak
Rynak's picture

Yup, also has been the message of the sockpuppets here recently. My opinion is that someone desperately has a lot to lose regarding silver, or a lot to gain. And i mean really desperate.

As for me, i reloaded on 34$. Now waiting and holding again.

Wed, 05/18/2011 - 22:33 | 1290078 Jim B
Jim B's picture

Have some, want more, but maybe around $30....

Thu, 05/19/2011 - 03:06 | 1290513 Fiat2Zero
Fiat2Zero's picture

Yep that's been the sock puppet strategy lately.

Evidently the Rothschild Masters clued Robo/Zing/Etc. that they should try to convert some of those fuckers who are spending "as many dollars on silver as on gold," that gold wasn't so volatile and wery wery scarey.

Then came a coordinated shit storm of troll-niceness in the form of, yeah silver is scary, but I really think gold is nice.

Nice fucking try fuck-tards.

KEEP BUYING THE PHYSICAL SILVER THE VISE IS CLOSING ON THE ROTHSCHILD MASTERS BALLS!

Even buying physical at $36 my very connected coin dealer pulls out a miserable, junk drawer of silver odds and ends (I picked up a tiffany sterling sugar dish at melt for chrissakes).

Inventory seems mighty thin...

Wed, 05/18/2011 - 19:33 | 1289389 tmosley
tmosley's picture

Speaking of silver, I noted this morning that the premium on "Random Year" ASEs at APMEX had gone down some 40 cents.  Since I noted that, they have sold 6000 of them, 2/3rds of their inventory in that category.

The premiums also fell slightly on 2011s, but the inventory on that remains above 10000, so I can't see how fast they are selling.  

Something makes me think they were a bit premature bringing down those premiums.

Wed, 05/18/2011 - 20:08 | 1289530 Long-John-Silver
Long-John-Silver's picture

You can't check 2011 ASE inventory because they have a direct line to the US mint. If you ever see less than 9999 2011 ASE's it because the US Mint has stopped minting them.

Wed, 05/18/2011 - 20:06 | 1289535 tmosley
tmosley's picture

I don't think so.  They only display what they have in stock and ready to ship.

Wed, 05/18/2011 - 20:08 | 1289539 Vagabond
Vagabond's picture

 

They have 117599.  If you use firebug in firefox or chrome's html editor (cntrl shift j) you can change the maxlength of that input box.  Edit the html in the editor, change the maxlength on the input from 4 to something like 10, and type into the box.

 

Wed, 05/18/2011 - 21:03 | 1289731 tmosley
tmosley's picture

Haha, oh wow.

Care to update us on a semi-regular basis?

Wed, 05/18/2011 - 22:14 | 1290001 Vagabond
Vagabond's picture

Will do my man, keep up the good fight.  115638

Wed, 05/18/2011 - 22:22 | 1290038 tmosley
tmosley's picture

Wow, moving about 1000oz an hour ATM.  That's about 50X faster than any of the products I have been tracking.

Too bad we couldn't track this earlier.  I'd like to have a baseline to compare this to.

Wed, 05/18/2011 - 22:27 | 1290066 Vagabond
Vagabond's picture

I just realized I overcomplicated it.  If you view source for the page it is the last number in the onkeyup javascript function on the input element.  You don't even have to edit the html...

Wed, 05/18/2011 - 22:55 | 1290157 tmosley
tmosley's picture

Well, I have no idea what that is, so you keep doing what you're doing :)

Wed, 05/18/2011 - 23:01 | 1290168 Rynak
Rynak's picture

View webpage source, search for "onkeyup". There may be multiple matches.

Thu, 05/19/2011 - 01:05 | 1290403 JohnG
JohnG's picture

Javascript bitchezz!

Thu, 05/19/2011 - 03:07 | 1290516 Fiat2Zero
Fiat2Zero's picture

The premiums tend to come down fairly fast when the metal is going up rapidly. It's very sticky on the way down though. You are right though, there was a premium low of average $3.30 at about 2:00 GMT (this is a web average of many dealers). Bitch bounced back up to $3.60 (which has been a major bottom for avg premiums for the last week).

Wed, 05/18/2011 - 19:44 | 1289430 Confucious 222
Confucious 222's picture

So Hong Kong gold was in effect 1 day and then the CME thinks it should lower their margin requirement. Just a coinky-dink.

Wed, 05/18/2011 - 20:00 | 1289500 outamyeffinway
outamyeffinway's picture

Right? Funny what a little competition will do!

Wed, 05/18/2011 - 19:49 | 1289456 slewie the pi-rat
slewie the pi-rat's picture

off-topic MENA margin adjustments for 5.18.11

Tunisian radio channel Mosaiqu announced Wednesday that Libyan leader Muammar Al Qathafi’s wife (second wife in fact) Safiya, together with their only daughter, Ayesha, and one of the leader’s sons, Mohammad, have crossed over to Tunisia

short tripoli = margin of safety

lower margin on NATO bombs = bear (in the air) raid

interproduct pair:  long bombs, short libyan oil

intraproduct pair:  long flip-flops on ground/short libyans

Wed, 05/18/2011 - 19:52 | 1289481 silberblick
silberblick's picture

Belarus currency crisis and crackdown. Is this what awaits us? Read here: http://thesilvergoldhedge.blogspot.com/2011/05/belarus-currency-crisis-a...

Wed, 05/18/2011 - 20:55 | 1289696 Waterman Jim
Waterman Jim's picture

wow good one,

thanks

Wed, 05/18/2011 - 19:57 | 1289502 Stoploss
Stoploss's picture

So, it took only one day for CME to drop margins to get competitive with China. The PM bashers are going to hate this. I smell margin war. Hope you BTFD.

Wed, 05/18/2011 - 20:30 | 1289602 SwingForce
SwingForce's picture

Wonderful, when will you people show STUFF adj. DXY? huh? 

Wed, 05/18/2011 - 21:28 | 1289844 Teamtc321
Teamtc321's picture

This is about the strongest bullish new's for PM I have heard IMO.

"Iran president to chair next OPEC meeting"

http://www.forbes.com/feeds/ap/2011/05/18/general-ml-iran-opec_8472067.html

 

Wed, 05/18/2011 - 22:29 | 1290073 plata pura
plata pura's picture

The strange ugly bumpins of the rbob and the precious.

Thu, 05/19/2011 - 04:21 | 1290558 owensdrillin
owensdrillin's picture

 

I believe that gold/silver are going to make a monumental rise in the next month. Things ain't lining up too well right now.

The talk on the street is wierd and business doesn't like it either. I think a little cover never hurts.

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