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Navigating the Global Rumor Mill
Testy Tuesday - Navigating the Global Rumor Mill
What insanity!
300 points up in the Dow yesterday (as predicted - thank you very much!) then a 200-point drop early this morning at the EU open (3am) then back to yesterday's close (up 200) and now (8am) kind of in between.
Yesterday's big rumor was Italy, which had a terrible Bond Auction that went off at 4.15% vs 2.96% a month earlier (up 35% in 30 days), would be bailed out by China - which seems to be tired of waiting for the EU to get their act together and seems willing to deploy their $3.2Tn in foreign exchange funds through CIC and SAFE (China's State Administrator of Foreign Exchange) to make, according to the Financial Times, "significant purchases of Italian Bonds and investments in strategic companies."
That drove the markets higher yesterday afternoon even though the actual meeting was over 2 weeks ago and Italy just, in FACT, had a tragic bond auction just hours before this "news" popped the markets back up - MADNESS! As I said to Members just before the close:
This market is just ridiculous at this point – jumping up and down 100 points because China will or won’t buy $8Bn worth of bonds in a $60,000Bn global economy. People are just out of their minds…
This morning's market-dropping rumor was started in Uncle Rupert's Journal where an Op-Ed piece published this morning began with this shocker:
'We can no longer borrow dollars. U.S. money-market funds are not lending to us anymore," a bank executive for BNP Paribas, who declines to be named, told me last week. "Since we don't have access to dollars anymore, we're creating a market in euros. This is a first. . . . We hope it will work, otherwise the downward spiral will be hell. We will no longer be trusted at all and no one will lend to us anymore."
Apparently, Rupert isn't done unwinding his Euro short position yet. That's why he taps the Director of the Conservative French Institute for Economic and Fiscal Research, Nick Lecaussin - a man who Iconomie calls "France's Worst Enemy" to write about high-level but anonymous sources at BNP who tell him the Bank can't access Dollars anymore - a ridiculous statement that was immediately denied by the Bank but - TOO LATE - the Damage is done and Uncle Rupert made another $100M on his Euro shorts (coincidentally, I'm sure!). The Bank (who lost $3Bn of market cap this morning) stated:
BNP Paribas categorically denies the statements made by this anonymous source and confirms that it is fully able to obtain USD funding in the normal course of business, either directly or through swaps (see attached document (46 ko)).
BNP Paribas is surprised that the Wall Street Journal published this opinion containing both statements from an anonymous source, and a large number of unverified assertions and technical errors, without contacting the bank for verification.
Surprised? I guess BNP is in trouble if they don't know how the game of Capitalism is being played these days! As we discussed in yesterday's post, EVERYBODY is lying to us these days and it's creating market turmoil on a daily (and intra-day) basis. Much like in 2008 - unscrupulous investors can make a fortune in a single day by floating a rumor like the one above and there is just as much money to be made on the way back up as the rumor is denied and the stock recovers.
This is the kind of market where my many years of media cynicism really pay off. What we all need to be aware of when we hear a "market-moving" rumor is what venue is releasing the information (who owns them?), who is the person reporting (who owns them or what do they have to gain) as well as whether or not the rumor makes sense as well as whether or not the reaction makes sense. As I pointed out to Members yesterday - whether or not China buys $8Bn out of 60,000Bn worth of global debt from Italy is really not something that should move the US Dow Jones Industrial Average (also owned by Uncle Rupert!) over 1% 20 minutes, is it?
The game this fall is rumors and innuendo and that game can be played through earnings in October when facts will, for however brief a moment, once again rule the day. For now, we need to do our best to cut through the BS and simply find good companies to invest in.
It's not that complicated really - will BNPs credit issues stop someone from buying a McDonald's Shrimpburger in downtown Tokyo? Will Greece leaving the EU stop 3Bn Asians from buying cell phones this decade? Will Italy's credit woes get the World off fossil fuels any sooner? No, there are certain Global fundamentals that will not change and when a ridiculous rumor-driven market drives good companies, especially blue-chip stalwarts like MCD, KO, AA, XOM, MMM, PFE, etc. down to bargain-basement prices - that's when we do BUYBUYBUY, no matter what idiot Cramer is saying.
We are, at the moment, staying the course but we do need to make progress back over our Big Chart levels in order to maintain our bullish stance (which we flipped to yesterday morning). We still expect a string of announcements from the G7 nations in the form of stimulus and bailouts to mark the second half of the month and it's just one week until the Fed Meeting where it will literally be QE3 or bust! This week we have August PPI and Retail Sales tomorrow, followed by August CPI and the usual job losses on Thursday. We also have Empire Manufacturing, where anything better than negative will be an upside surprise as well as CPI, Industrial Production, Capacity Utilization and the Philly Fed (also with negative expectations) - all on Thursday morning! Friday will seem anti-climatic with TIC Flows and Michigan Sentiment.
Data trumps rumors and QE3 or whatever stimulus we get trumps everything else so we'll simply keep our eye on the Big Chart and hopefully we can hold those -5% lines on the Dow (11,011) and the Nasdaq (2,473) while waiting for the S&P to hit 1,173. As for the NYSE - we'll be thrilled to see a 50-point gain to take the -10% line at 7,079 and the same goes for the Russell, which needs 697 and deserves it if the Dollar is strong as that's good for smaller companies so no reason for them to be lagging like they are.
If the S&P breaks over 1,173, then the TNA Sept $40/43 bull call spread at $1.30 becomes an interesting play and that can be offset by the sale of the RUT Sept $610 puts at $1.22 for net .08 on the $3 spread. The Russell is currently at 680 so it would take a 10% drop in the RUT by Friday for those puts to take a loss so that's the bet with a massive upside bonus. We'll discuss other potential offsets in Member Chat but it's time to get to work.
Be careful out there!
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I guess you could invest in Blue Chips now, but I'd rather wait for the upcoming Fire Sale.
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Someone please delete this spamming idiot, and delete my post too.
Also, is there a place where we can apply to delete spam posts to help out the website admins/contributors?
Anyone want to explain the whack job head and shoulders pattern at 2:00-3:00 that happened in the market today that was duplicated from 3:30-4:00 only in just about exactly half scale?
Or how the S&P could ocillate between one point for fifteen minutes straight three seperate times?
Can we even say one trade was made by a human today? I almost think we can't. I don't think I've ever seen charts like this, it was unbelievable.
Not to be a alarmist. But this morning, for thirty minutes not one trade went off on 22 of 30 stocks on my commodity board.
I have never seen this before. Some did not go off for one hour. The Market is Broken. Hello People.
“China is a poor country with only $4,000 per capita income. To talk and think about China to rescue countries with $40,000 per capita incomes is ridiculous.”
-Yu Yongding, a Chinese top economist and former member of the central bank’s monetary policy committee
Oh gees Phil, give it a rest will ya'?
Obama bitchez
Dylan Ratigan is blowing the whistle on The Bernanke. Just like I have said. The plan is for the Bernanke to bail out Greece.
What most people do not understand is that it is not Greece we, (the U.S.), will bail out. It is the bankers again.
The people get nothing. It is the bankers they want to bail out.
Hello, just like in 2008 when the Bernanke gave all that money to foreign banks, here we go again.
Bail Out Americans, No Way say Tea Party. Bail Out the Banksters of another land. Yes, says the Tea Party.
Do they have their heads up their asses or are they just against Americans period. Deutsche Bank, and the French Banks
are the ones that need to be bailed out the most. And yes, there will be contagion to our banks if the Bernanke does not
betray America again and bail them out. Thanks for the great show Dylan Ratigan.
Nobody on CNBC, Bloomberg or Fox will tell this story. Although Bloomberg did sue the gov and get the info that
revealed this is what the Bernanke did in the past.
Who the hell is the "Tea Party" anymore. I for one sure don't know. If I hear a MSM talking-head allude to the "Tea Party" this or the "Tea Party" that -- at best I'm skeptical.
The name of the game is always "bailout", usually by the magic "mandrake mechanism" of creating money out of nothing-the role of central bankers. See "the creature from Jeckyl island", the history of the Federal Reserve, if you want to understand the men behind the curtain, those banksters and their debt addicted clients, the politicians. A cartel (i.e. the federal reserve) is anthema to competition but only Ron Paul seems to understand this. Thus, his complete boycott by the MSM. Ron Paul is the banksters worse nightmare, he wants to destroy the unholy connection between war, politics, debt and serfdom.
If you do one thing of importance make it supporting Ron Paul and his ideas in every available forum-friends, neighbors etr. His election is secondary, his ideas are central if we are ever to restore freedom to this country.
The Tea Party supports bailing out foreign banks? That's news to me.
Did anyone with the Tea Party even raise a mild public objection? NO. If you ain't against it, you're for it.
Last time I checked Ron Paul and the tea party were trying to get a real time audit of the FED passed-I believe his bill is supported by nearly the entire republican congress. The effect of such real time balance sheet info on the FED would be the complete inability of the FED to loan funds to foreign banks as such action would lead to the elimination of their charter and the end of the banking cartel. Therefore, anyone supporting a real time auditi of the FED essentially supports its eliimination as an institution. As we say in mathematical proof.
QED
<P>
The President, Obama, has supplied direct and indirect military, financial, and personnel (out country) assistance to the Libya rebels who oppose Qaddafi. In the last couple of weeks these rebels have been rounding up and detaining-putting in jail - Africans who have dark colored skin. They have been arrested and held without charges for simply having the wrong color of skin.</p><P>
Using your criteria, President Obama supports profiling, race based arresting, and the imprisonment of Africans because their skin color is wrong..</p>
imprisoning? obama claims the right to assassinate american citizens, far from a battlefield, for, essentially, exercising protected free speech in opposition to his wars. this right to kill citizens, in obama's stated position, litigated by his doj, is secret (though targets, typically, are announced on occasion as publicity needs dictate) and without appeal to or review by anyone. think we need ron paul or similar person yet?
Yes!!!...and clearly CNN must be raaacist because it partnered with them last night in presenting the debate..lol.
As if Rupert is the only one dispensig propoganda. LOL. I think Phil is in for a rude awakening.
I think if Bernanke bails out Greece, Spain, Italy and Germany we are really fucked.
If the Bernanke is allowed to use currency swap lines to funnel money as he has done in the past. This is where the real crimes are.
There is a difference between bailing out Americans and bailing out the elitist banksters and bondholders of foreigners countries.
why do you say bailing out "americans" then distinguish elitist banksters and bondholders of foreigners countries? the only americans bailed out here have been the elitist banksters and bondholders (and their camp followers)? not only is this bailout (domestic or foreign) unjust, it is impractical -- it doesn't help at all. the japanese tried it for decades and failed (and not during a global deflationary depression, at that). for better policy suggestions see john hussman's current post (and many prior).
Actually , now it's Germany that seems to be saying that they abhore the notion of bailing out foreigners - the Fed did not hesitate to do so. I think the bankster-captured pols are playing out the same "we hate TARP but we have to do it" bullshit in Europa that they did over here. So I say: Greece defaults, and the banks are rescued via some kind of Euro TARP - totally bullish for 2 years straight, gang.
You have to stop thinking rationally and start thinking like a criminal.
The problem is the U.S. Taxpayer, (with no clue), will be footing the bill again. You know, the Germans have this notion that if they just ignore it, somebody else will take the garbage out. They really don't care how big it piles up until they can't open the door to get out. Too Late !!! We be Fucked Again.
Actually. That is all wrong. Just like 2009, when this thing flushes, everything will go down again. How are you able to forget something that happened two years ago? We aren't talking an event that happened 1000 years ago.
just because people will still buy cell phones and gasoline doesn't mean there can't be a major panic in financial markets.
Read Oblama's bill here if you care to:
http://www.speaker.gov/blog/?postid=259729
It's crap from my POV. Skimmed it. If it passes we're fucked.
"If it passes we're fucked."
Yep! And if it doesn't pass, we're fucked.