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The New Flight To Safety Normal?
Treasuries and equities now being bought together, the only driving factor is the continued crashing of the dollar. Apparently every asset class is now a safe haven from the continued pillaging of the US currency.
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Although gold is down. Is anyone here old enough to remember what free markets look like? I'm afraid my entire generation will live and die without getting to see a free market function.
The market is entirely free as long as you agree to pay the prices that are set on the menu.
Nothing in life is ever free.
You either learn how to adapt to the circumstances or learn how to write blogs.
(with apologies to TD...)
as it does
As a member of the Politboro, I will definitely arrange a whipsaw soon. Of course, I will give inside info to fellow Party members, so they could make significant amounts of money on illegal trades -- based on knowledge of our upcoming CB activity. Either way, Comrade Tyler, we definitely can't let the serfs hang onto their computer pixels...
How much does membership cost (denominated in gold or USD)?
Membership fees are calculated in a weighted basket of cocaine, hookers, and gold.
I think you just came up with a new ETF.
Wouldn't add the hookers in there, their market value is plunging as an inverse to unemployment. However cocaine might offset that plunge as we'll all be needing it just to digest the daily news.
Deficient Market, that's known as diversification. One asset class takes care of the other. Sorry couldn't help myself. :-)
Very true. The coke even takes care of the impact of depreciation on the hooker assets. On second thought, does sound like a pretty well balanced ETF, sign me up!
can i still pay with lawyers, guns, and money, or was that last year's special?
On June 24, 2009, Lehman Brothers Holdings Inc. (LBH) filed a motion in the United States Bankruptcy Court in the Southern District of New York requesting that the court compel Metavante Corporation to perform its obligations under a swap agreement it had entered with Lehman Brothers Special Financing Inc. (LBSF). LBH claims that Metavante’s attempt to suspend its regularly scheduled contractual payments violates the automatic stay provisions of the Bankruptcy Code. Metavante responds that the Bankruptcy Code does not dictate a specific timeframe in which a non-debtor party must terminate a swap contract to preserve the protections afforded by the Code’s safe harbor provisions. Also, it asserts that their swap agreement specifically permits a swap counterparty to suspend its payment obligations under swap transactions if an “event of default,” such as a bankruptcy, has occurred and is continuing with respect to its counterparty. We discuss the factual background of the case and the court’s legal analysis. The case is particularly important in offering guidance to hedge funds about the law that will govern the increasingly important intersection of bankruptcy and derivatives laws.
All true, and Lehman (which has a decent legal argument, but is 100% on the wrong side of what the marketplace understood the law to be) has asserted that same argument twice subsequently. If it gets a good ruling on Metavane, it will use it as a hammer to go after thousands of counterparties that are withholding $9B of payments.
But that said, WTF are you talking about with this OT blurb? It looks like a cut-and-paste from a legal alert or a teaser for a conference.... This belongs on the side bar, with the mail order brides.
Just like late 2007 as Rosie said and we all know who was right then, yeap Mr Bond. Since when has equity money ever been bright. In 1999 they were all buying dot.coms on a zillion times earnings. When this crisis started, what did Wall Street do? It rallied to new all time highs because the FED was going to cut rates (laughable). Post Bear Stearns it was rally rally rally. Wrong yet again Mr Equity. At 670 on the SPX they were all bearish looking for 450. Yeap Wall Street is full of geniuses, no wonder the place would be bankrupt without all the bailouts!
It is bull/bear polarization at its best.
With Natural Gas heading to late 90s prices of $2.93 the disconnect between recovery and the fuel for recovery is quite wide.
wow Natgas at $2.93? yikes. haven't looked at that price in like a year. last time I checked were were at $10. lol. this is what i get for only watching currencies, gold and oil.
This will change tomorrow once the Oct contract moves in.
What's going on in Natural Gas is quite a drama and is well worth watching. It is a replay (at least so far) of the WTI drama in the winter, it brought us from $37 to $73 in 6 months.
too much supply and nat gas not as storable. in industry it is well known that if mkt provides $5+ spot, North america will provide a near infinite amount of nat gas. only 40% of available rigs are currently drilling= huge excess capacity on sidelines. these mkts are not the same as WTI.
Have been buying and holding for the last few months - great price - one of the few longer term buys - it will still get cold - at least in the north
Have been buying and holding nat gas for the last few months - great price - one of the few longer term buys - it will still get cold - at least in the north
Gents, shorting Oil and buying Nat. Gas is the common sense trade. However common sense is not making dollars right now, so as per Sherlock Holmes, whatever else is left must be the logical course of action...
... short Natural Gas to the low 2's handle.
Please don't follow up by calling me names, I am just making an observation here given that many people who even bothered with the "$4" is the cost price crap so it's heading up up and away from here crap. No one says a short-term upward breather bounce is not in the books though.
The common sense position is exactly my position, long NG and short WTI, it will take a few months for the green shoots to show. Regarding the $1 handle, while I seriously doubt we will get there the key is to have the cash if we do get there! Time is too short to get there, but the strides have been quickening, and unless made by the next contract expiry, the $2.0 is out of range. The key is to survive the next 4 weeks until Nov contract kicks in.
Worth noting the massive short on UNG, when the squeeze comes, we have seen how fast rockets fly.
Noted YY. These are historic times.
except gold and silver. they are still under the "guiding hand" of our friends at JPM......
what is the Comex going to do next about deliveries?
Of course, it doesn't seem to occur to any of the "regulating" boneheads at the CTFC that the government is going to end up covering JPM's massive silver short when this all explodes......
this is insanity.
From what I understand from FOFOA, volume on comex is negligable compared to LBMA paper. Agreed though, this whole thing is a disaster in the making, whatever the outcome...
good point
The head of CFTC right now is Gary Gensler - ex-Goldman guy.
Tyler do you agree that there is a possibility of a hyperinflationary depression?
Gotta finish up the deflation first.
wonder when gold will rip ?
bernanke has till 72 on the index after which could be a black hole
unbelievable bar getting painted on teh weekly SPY ...
the only way this kind of bar gets painted is during a shake out with demand clearly in control .......
GS will survive, the USD may not. Simple as that. In case they hit the reset button someday, we all get 1 Amero for every 100 USD but a share of GS at 165 USD will be worth 4 Amero. Something like that.
As a general rule, all living thing (organic or not) will fight back with all its might before demise (ie, before the reset botton is hit). That said, expect the interest rate implosion which will, in all likelihood, implode all those top 5 big guys, certainly including GS, via derivative of derivatives before the reset botton resets.
Think the unthinkable or black swan of black swan. GS down to zero, while old us dollar will be worth 1 cent of new new dollar.
Not quite. Living things will put up a fight when first facing a demise, but the vast majority eventually give up before the end. It is politely called dying with dignity.
Td Pretcher said dollar up and market down, it´s ok.
Bernanke is chaperoning the junior high dance and he spiked the punch.
We'll never see it coming. It'll just be like watching a corpse for a while and then all of a sudden maggots come crawling out of it turn into flies and fly away.
My vote for "most digusting but accurate metaphor" on the day. Maybe on the week.
Yuck. Now I can't get the stink out of my head.
cougar
Not all Treasuries did well today, just the longer dated ones. And considering the sharp drop in duration for US Treasuries outstanding, its that short-term rate we need to be most worried about.
I wouldn't call it a movement into Treasuries a real flight to safety trade until the 2yr is testing 75bps again.
At the very least it indicates a bond market that doesn't quite trust the nominal growth assumptions priced in commoquities.
TD, Dr. Rand Paul, Dr. Ron Paul's soon is doing a fundraiser online today. He is all for auditing the Federal Reserve as well was against the bailout of the financial sector indenturing generations to follow.
Any fans of liberty and disclosure and honesty should throw some change to Dr. Rand Paul.
http://www.randpaul2010.com/
Done!
If indeed "every asset class is now a safe haven", and if by that you mean USD-denominated assets, that is a flight from foreign currency. Are we expecting a world war?
edit: But, I'll confess that wouldn't explain a falling dollar.
Yes.
Commodities look cashed. Dollar dump not moving them this afternoon.
OT: Did anyone actually read that Bloomberg article on AIG and Benmosche?
'Benmosche told employees that he “had the luxury to say to the government, I’m not going to rush to do this. I’m appalled at how much pressure has been put on all of you to just sell it no matter what, because the Fed wants out, or the Treasury wants out. If they want out in a hurry, they shouldn’t have come in in the first place.”'
Note to R Benmosche: You're playing around with $160 billion of OUR money
Note to Timmy Geithner and the rest of the stooges: You are responsible for allowing this kind of behavior
Dollar trap. Dollar Trap. Treasury is in the AIG dollar trap. Call chinese, hurry.
!!!!! Thanks I needed a good laugh!
Flight to safety, look at this for an understanding of deflation relative to asset classes:
http://www.silverbearcafe.com/private/08.09/deflation.html
It explains a lot and you can see that when the top classes deflate assets flow into the safer classes below. As they deflate it should blow up t-bills, the dollar, and gold if orderly - if not currency crisis.
Yes, agreed... that chart is excellent. As FOFOA has said, capital is ultimately moving down Exter's inverse pyramid.
But it's moving down too slowly goddammit!!!
How many central banks are selling gold? They are all selling paper but stock piling gold.
The scenario that makes sense to me is the elites will bring in a new world currency based in part on gold, devalue paper & debt, revalue gold to a much higher value and therefore re-capitalize the world wide financial (WWF) system with their newly appreciated reserves.
Einstein waited years for his theory of relativity to be physically proven by observation of the predicted arc shift of rays of light due to gravitational forces during an eclipse. Originally, he was frustrated and agitated, but that soon faded to a level of comfort knowing intuitively that his formula was correct.
I would agree, the fundamentals and fundamentalists on this site can see beyond the horizon, but life is a journey not a destination and we need our fearless leaders to exhaust their options to turn into comic book heros and save the world. They are just buying time, but it's frustrating knowing you are right and getting stopped out on short term movements.
I for one would love for the dollar to strengthen and gold manipulation to drop the price, and buy more gold (GDX or physical). Let's not stampede to the clitoris like it's our first time.
Well put.
Stock piling gold by selling less of it than previous year by 20%? That's not stock piling is it?
I'd like to see the physical receipts for warehouse movements between countries. The $600 trillion in derivatives includes shorts on gold and interest rate swaps.
Read about the Arabs pricing oil in gold with back room deals and demanding their gold in their own vaults. If you missed this, the ETF's don't have physical custody or access to inventory the gold (it's paper, and is actually supressing the price - because supply magically increased).
Comex changed delivery to include "gold equivalents" which will be used some day when they run out of physical despite selling certificates for physical metal. They will then deliver a certificate for the ETF instead (GLD).
There are more paper receipts for gold than gold itself, why? Because the amount of paper gold traded per day in London makes no sense relative to the entire amount of gold known to exist in the world including in the ground.
And to the IMF, go ahead and sell your remaining 400 tons of gold.
But how exactly is (or why should) the central bank responsible for companies selling theoretically redeemable gold scrips? Are you saying that central banks are making purchases of Papercharade gold? Or are in fact issuing scrip to the ETF providers who reissue it with a .15% expense cost?
Read this on conflict of interest: Is it not a huge conflict of interest that JP Morgan, a bank that perpetually ranks among the largest short positions against silver on the COMEX, is the custodian for the iShares Silver Trust (SLV)? According to silver analyst Ted Butler, JP Morgan is consistently among the one or two U.S. banks that hold more than 80% to 90% of the entire commercial net short position in COMEX silver futures. If you have positioned yourself to make huge profits from drops in the price of silver, is it reasonable for you to simultaneously desire investors to buy more physical silver (if indeed the SLV holds the amount of physical silver it claims)?
Is it also not a conflict of interest that HSBC bank, a bank that allegedly holds some of the largest short positions against gold on the COMEX, is the custodian for the SPDR Gold Trust (GLD)? If these banks profit when gold and silver drop, and they manage the largest ETFs in the US regarding these respective metals, is it unreasonable to state that these two banks should be barred from acting as custodians of the GLD and SLV? In fact how is this situation any different than Goldman Sachs’s actions in the past when they originated CDOs and then made a fortune by shorting them, actions that back then, were apparently unknown even to the firm’s own traders?
The Fed (non government) works on behalf of its owners including owners of the big banks (JPM & GS included). Larry Summers wrote a paper on the paradox of gold in which he stated the government could just about do anything as long as interest rates and gold did not go up too high. That made him famous and started a government policy of capping those. He is the current economic advisor.
There are multiple loans and ownership on the same bars of gold is what I am saying. Just like the problems today regarding CRE refinancing efforts - nobody knows who actually owns the tranches because they were sliced and diced and levered so many ways that nobody seems to understand who owns what so they don't have anyone to renegotiate with. Many problems recently when the same bar serial numbers were listed for separate ETFs. Red flags - where there is smoke there is fire.
Gold ETFs are just another fiat currency at this point.
Edit: this is why gold is not going up as the gold bugs expect. they're just printing more to meet demand.
Excellent link Colonel Kurtz. The reverse pyramid is much appreciated. :-)
Cable seems to be a little stagnant right now. Stuck in a +/- 30 pip zone. We shall see what the Asian noon session does to the damn thing. Same with GBP/JPY. If Shanghai takes a dive again, things could get interesting.
However, I get the feeling that tomorrows Existing Home Sales numbers out of the US will possibly give people further reason to drink the Kool Aid. Even though most of them will probably be Foreclosures Sales. And Bernanke opening his mouth is another wild card.
I am surprised sterling is holding up so well given that the official rationale for dollar weakness is currency debasement/QE. After all, BoE is "only" going to own 1/3 of the gilt market.
On top of that King and company want to induce further cheddar into the Asset Purchase Scheme (APS); though they got ruled out by 6 other members (out of 9) in the last meeting. I fully expect King to signal further bearishness to the market in his public appearances and notices, in order to sway the market.
Then by the next two meetings we will "magically" see more members agreeing to further infusion of stringy mozarella into the APS.
Alas, time will tell. Sterling has got issues ladies and gents, they're just being swept under the proverbial carpet right now.
100% agreed
If anything, you could argue that Bernanke "caved in" to the bond vigilantes and maybe, maybe realized that QE is totally counterproductive (that is, if the real goal was to send rates lower, not to re-inflate CCC loans and chinese stocks) because of the feedback loop via inflation expectations.
Mervyn King on the other hand looks like on a mission totally destroy the currency so that the nominal value of central London flats stays at half a million for the coming decade.
People mentioning CHF as a potential safe haven vs the dollar are also bringing the lulz. SNB is never going to allow excessive CHF appreciation, they've been pretty vocal about that. Add to that the natural outflows now that the IRS is on the swiss banks' case, and really, I don't see how CHF makes any sense from a FX rate point of view.
Gordon,
CHF is stuck in a range since early June, if you look at the 4H or even 1H charts. Breakout is going to happen one of these days and its likely going to be CHF negative. That pair has taken enough prisoners in the past 6 months. Jimmied myself in there a few times.
I think King is stuck between a rock and a hard place right now. The Government probably has its own agendas on where the currency should be and what monetary policy should look like and King is just obeying. Poor guy is old and on his way out to retirement and does not want to rock the boat. If you remember back in very late 2007 and early 2008, King was pretty vocally defiant of stimulus and all sorts of monetary easing and suddenly he changed his stance. Anyone who thinks that the BoE is independent has not spent time on Earth lately or has isolated themselves in the Scottish highlands.
As I was saying earlier on in some other thread - someone has got to buy the expensive silverware from the likes of BAE, Rolls-Royce et. al. Only way to do that is to decimate the Pound and make UK more "trade friendly" and to make imports "harder".
Not only that, but another MAJOR factor given that Tax receipts are falling at a rapid clip in UK is that they need to attract foreign interest in future debt auctions which is not going to happen if Sterling just auto pilots its way back to the 1.8 or 1.9 handle.
In other words, many things at play here which are Sterling negative in the medium term fundamentally or technically, but we shall see what the markets make out of it in the next few weeks. Common sense (relatively speaking) is not making money right now.
Perfect point.
UK domestic demand is shot and they have to boost manufacturing, so surprise surprise here comes Alistair Darling creaming his pants at the thought of cable $1.30. UK is basically a reverse China in that regard.
Common sense is not making money on the ST but for your savings' sake you still have to look at the big picture, not the noise, and given that my company pays me in sterling, I am doing my best to diversify at these levels.
I know dollar has major tail risk, but I like my odds given what I think is huge deflationary background. Plus some euros, even though I hate it, because retarded EM reserve managers will keep bidding on Axel Weber until they die.
If you mean by Dollar having major tail risk as a rapid depreciation, I do not expect that scenario to occur just like that. In the event of a major shake up in the financial markets, the only place to absorb all the unwinding will be into the Dollar i.e. either through actual cash or Institutionals moving into various ends of the treasury curve, mostly concentrated in the short end I would presume.
For anyone who wants an example of this, just ask any businessman who has done business in African countries. Risk of political coups and election time issues is regular and causes flight to dollar pretty much like clockwork. Sure having some gold is not bad but it's not easily convertible, ala Food, Clothing, getting transport out of the fleeing country. Converting to Gold at that point will result in loosing your anal virginity metaphorically speaking.
The day the Dollar is known to have an issue, there will be many other currencies to go bust first so literally the only lesser evil left will be to move into the Dollar or your second best option the Euro. The latter I am not so sure about.
Look at all the people who got burnt in mid-year 2008 for shorting the Dollar and being long Gold because the world was "coming to an end". The proof is in the pudding. Regardless, this is just idle speculation on the fate of the Dollar.
I mostly agree with all this. See my earlier point in another thread on how the inflationistas are going to pay for bread with their electronic GLD certificates.
That's why I said tail risk. I don't think it will happen, but if, God forbid, I am wrong on my deflationary beliefs / one-eyed fiat in the land of the blind theory, I'll probably get reamed pretty badly. I assign a much lower probability to any scenario of the type than I do to cable 1.30 so 1.65ish looks like a pretty good exit price. Again, with some (but not too much) euro reluctantly mixed in.
Most importantly, regarding the trigger everyone seems to be worried about China dumping $-assets in one go), I just don't see how this is not even worse for China than it is for the US: CNY to the sky, bye bye manufacturing, hello riots. And I mean, RIOTS.
I have said this before, but USD really is like Rorschach: "Im not trapped in here with you. Youre trapped? in here with me."
Seconded Gordon. Dollar going bust will seriously rim pretty much anything and everything with it and with major potential for causing serious financial, political and war-type calamities. On a lighter and more practical note, I like my chances on Sterling going back to the 1.40 handle but it all depends on how long irrationality continues.
China is not stupid to dump Dollar assets in such a manner, that's a pipe dream. Certain influential agencies will get other processes in place before such event happens. Hint hint. :-)
question that fundamentals have bearing whatsoever in this market and momentum drives all
God can you imagine what will happen if the USD collapses? I don't think we're ready for that yet.
What type of market machinations will we have to endure if they try to push it through too soon?
I am sooooooo goddamn ready for it. Can't come soon enough for me.
I was thinking about this on my way back from dinner. I figured big ben is buying treasuries and getting money to wall street banks so they can pump the market. this has happened before. it keeps yields down, is quant easing, and hurts the dollar. that is the only connection I can thing of
You are correct.
Ben could be pumping the market up to suck in the Foreign investors with USD so GS could pull the plug sucking foreign investors dry...
hear ye hear ye
HEAD FAKE & SHAKE - don't trade it - at your peril