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Here Is What Just Happaned
From Peter Tchir of TF Market Advisors
Much Ado About Nothing
What just happened? The Central Banks have agreed to either create programs to lend in $'s or in the case of the ECB, expand their existing 7 day program. It is definitely globally co-ordinated, but for any central bank to offer a USD program, they need to work with the Fed, so assuming the ECB decided to work with the Fed, it seems like a no brainer to involve the other central banks. Bank of England is an obvious candidate - look at the share price declines of Barclay's and RBS. The Swiss Central Bank was likely to join already, but a day with UBS announcing a $2 billion loss, they had extra reason to go along. Japan always seems to be up for a good intervention. So it is globally co-ordinated, that is important, but it was also and easy and obvious co-ordination.
How do banks borrow in USD? In good times they call the short term lending desks of other banks and borrow dollars. Simple. They can also post $ assets in repo agreements to fund them. Lately some banks weren't lending or were willing to lend at rates that the borrowers felt was too high. They could then finance themselves in their home currency, Euro's for example. They could get that money relatively cheaply - possibly from depositors or even going to the ECB and entering repo agreements on their Euro assets to get Euros. Then they could do basis swaps to convert the Euro borrowings into dollars. EUBSC <crncy> <go> is the basis swap level. That had increased as banks chose to borrow in Euros and swap into dollars. As that got expensive, they weren't getting any savings. Along comes the Fed/ECB and decide to intervene and ensure that European banks don't have to pay too much for their dollar borrowings. Notice the instant reaction in the basis swap.
Chart: Bloomberg
It will ensure that banks can borrow in $'s. Their own central banks take the credit risk (as they already do) and provide the $ funding at attractive levels. Yes, it should be clear to all that the people who do interbank lending for a living are charging the wrong price. This is helpful in that it keeps costs of $ funds more in line with cost of funding in their home currency, but isn't a game changer. That reduction in cost is minimal, and in the case of the ECB this is an extension of the 7 day program they already have in place.
If the central bankers are going to throw spaghetti against the wall and see what sticks, it is good to have a lot of spaghetti.
What is the next action? I suspect we will see some effort to push sovereign CDS spreads tighter. Would it be something as intelligent as immediately forcing all sovereign and bank cds to be cleared? Heck no, that might annoy someone. It is more likely to be announcement of banning naked shorts, increased margins, and the ability for the EFSF if not central banks themselves to sell protection. CDS would gap tighter and bonds are unlikely to react much. When the ECB intervened in the Spanish and Italian bond markets, the initial reaction in the bond market was big. Over 1% in yield terms across the board in a very short time frame. The CDS never reacted as positively. In any case, the market remained dubious of the effectiveness and we have seen yields rise in spite of continued buying. CDS shorts will be painful if this occurs, but it won't fix anything long term. There is nothing about the budget problems in various countries that are affected by CDS. It also means that auctions are likely to do less well as the short covering bid dries up and that moves down will be exaggerated, just like the moves up.
To the extent there is still anything left that can be construed as a "market" it seems that the fundamentals all point at market being too high. Data is weak and sovereign defaults and bank write-downs are not fully priced in, but with governments and central banks willing to do and say anything to try and prop up the market, it is very hard to go down. Yesterday's head scratching move higher waiting for the conference call, and then the even more curious march higher after the benign headlines, followed by an equally inexplicable 1.5% drop into the close, is a sign of how broken the market is.
My best guess right now is that so many shorts were set yesterday at 1200, that if we break above that again and hold it, 1230 is an easy target. On other hand, one good default headline could be enough to take us to 1150 in a heartbeat (we were at 1160 yesterday briefly). The economic data was weak, and this action by the central banks is not a game changer.
If you think that Greece is going to default, as I do, and that the individual governments and central bankers are going to do all they can to prevent the problems getting out of control, this is a consistent step. They may as well put in place as many things as possible in advance of a default. Rather than scrambling and reacting to an announcement, they will put a lot in place in advance, and then, when the default occurs all they have to do is implement a few new and exceptional programs.
On a side note, any chance the jobs bill is causing layoffs to increase? If cash for clunkers can change the timing of car purchases, why can't layoffs be tied to this bill? Lay someone off and if the jobs bill gets passed, you can hire them back and get some government kickers to subisidize the "new hire".
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WHAT
JUST
POPPED
IN
THERE
?
Tom Keene "this is NOT a bailout, it's liquidity assistance"
he got that wrong it is actually a kinetic banking action
This coordinated action by central banks is becoming unnecessarily complicated. Why not just amalgamate these central banks to create a WORLD central bank with a global currency. This will achieve multiple goals including the following:
1. Facilitate larger liquidity operations on a global scale
2. Eliminate these destructive currency wars by doing away with national currencies
3. Create a sense of unity among the world's populations by eliminating national identities and racism
4. Give third world countries access to the economic guidance of world class academics from Ivy league colleges
they are waiting for soros and buffett to get properly positioned before they announce it
Are you fucking serious? Just announce that you are cheering outwardly for a NWO and a totalitarian world government why don't you? Soros is that you? I hope this was a joke.. especially the bit about Ivy league colleges lecturing on economics.. seriously hope that was a joke.
Don't you see. That is where we are headed. I don't agree with it.
We are no longer a Free America. We the People does not exist.
We are buy and for the corporations of the World, not even, just America.
Look at what our supreme court did against us.
Corporations can buy elections this year, a first, with Millions of contributions to anyone.
Worst, they do not even have to be American Corporations.
While the average american can only date a few grand. We are so screwed.
Daddy Bush and his baby both mentioned how great the NWO would be for us.
Yes because those world class academics from ivy league colleges were so helpful in preventing the current state our economy is in.
That is pure unadulterated horseshit.
I have a better idea.
1. Eliminate the concept of liquidity altogether as money can only be mined, not printed
2. Allow constructive currency wars as this is only a function of free market economies, survival of the fittest
3. Create a sense of unity among the world's population by creating a common enemy in the guy who gets off the plane in a pin-stripe suit
4. Get out of the business of invading, manipulating and micro-managing third world countries and give them access to guillotines for Ivy League graduates visiting
Long guillotines
+4
3. Create a sense of unity among the world's population by having martians invade.
Milliondollarbonus is obviously a troll/jokester. That or the worst sort of traitor to everything decent. I'm assuming though that his CONSTANT over the top push for one world government and pro-banker propaganda stuff is meant to merely highlight how sick and insane that sort of thinking is.
<- MillionDollarBonus is a jokester
<- MillionDollarBonus is a brainwashed moron
@ million dollar....
What so the whole world can become the Eurozone...? That just may be the dumbest post I've seen on Zerohedge.
You haven't been here long enough to have seen the really dumb stuff. Ask around about Johnny Bravo (AKA MasterBates). Now there was a real moron!
Ze drem vil finali kum tru!
I know that's sarcasm, but we already have an international currency: Gold.
thats excatly whats happening, thats why its in dollars
there is only one central bank now
am i right to be freaked out when the BoE says "unlimited quantities"
this seems to be much bigger than it first looks
"kinetic banking action"
That's funny! I really wish I had thought of that first.
i liked that, too
i think hyper-kinetic might have been more accurate, tho
this is no surpriZe the slewie and i knew when lagarde showed up @ j. hole and was so chanel-fuking happy upon returning to gallia-in-europa that the banksters were gonna give the EU an offer they couldn't refuse
Even without that observation, we have seen several years of can kicking at ANY cost. Did anyone think they would stop kicking?????
USA is all good, the gov/mil working on a new project.
Barrier Interposed Terawatt Countermeasures against High-powered Specialist Lightning Attack Pulses
For those wondering what these central bank fx actions mean here is a guide to them
http://www.mindfulmoney.co.uk/wp/mmexplainer/a-guide-to-central-bank-foreign-exchange-liquidity-swaps/It's the Stay Puft Marshmallow Man.
"i thought of the one thing that would never destroy us" -- yeah, currency interventions by central banks. what could go wrong?
http://www.youtube.com/watch?v=d-sALU_hveA
Ghostbusters Stay Puft Man
so absolutely nothing has changed
I politely disagree! It would be too easy, too simple! Sorry!
SPY now approaching the "Do or Die" line: 50-day EMA
http://stockcharts.com/h-sc/ui?s=SPY&p=D&yr=0&mn=9&dy=0&id=p19366877656
That is going to be the next place to short.
Back up the truck, and scream "BUY, BUY, BUY THE MOTHERFUCKER."
right! short stocks, buy gold -- asshole!!
SPX is still 50 points away from the 50 DMA though no?
Hey how is NFLX?
"so absolutely nothing has changed"
Almost nothing, except Markets rising and GOLD tanking.
While gold is "tanking" Chine gets its first vending machine that dispenses gold in 5 LB bricks.
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/09/14/bloomberg137...
I'm sure that's why gold is tanking.
Where is 14.5 IQ? We need him to come and tell us that gold is never manipulated.
Some say gold is tanking because banks sell it in need of liquidity.
They desperately try to boost the markets before options expire tomorrow.
"14.5 IQ" LMAO. Too funny. You made my day, thanks.
For now. Once again we have to remind some that money printing never works. Stay tuned!!!!
So Greece is still broke, right? And the condition of all those sovereign bonds hasn't changed? The global recession is still biting.
So why is this BIG NEWS?
funny (or not) how these are are the same players that got our loads of TARP money (that they didn't want you to know about)
Are you insinuating that we live in a three tiered world of bankers, politicos and serfs? I haven't seen ANY evidence of double standards in regards to bankers/politicians and the rest of us. Certainly the MSM has had nothing but the most even handed treatment of banker debts vs PIIGS or mortgage holder debt. Right...RIGHT?!!?
MSM....even handed....hmmmm....forked tongued: check, back-handed:check, Slimey: Check, even handed?
Meet the Press
ORI
This site is in desperate need of green font: http://bit.ly/nniubA
BAC lays off 30,000 today and hires them back tomorrow on an Obummer subsidy. In a free marke you wouldn't want it any other way.
Brilliant! What are the odds that bill actually passes congress?
Buy eurobank common stock or be poor forever. [/sick puppy]
Anglo Gold is green while GLD getting slammed. That means the run in gold is not over yet.
GDX/GLD ratio still way near the bottom of the range, now turning back up today as the stocks are outperforming again.
http://stockcharts.com/h-sc/ui?s=GDX:GLD&p=D&yr=1&mn=0&dy=0&id=p77775107615
Hands down, the greediest guys on the planet right now are the infamous "Ratio Traders"
Ratio(gdx:gld) is getting pretty near the top of a steep downtrending channel, so I suppose it's possible that gdx rolls over in the near term. But if the shorter-term uptrend takes hold and those ratio traders switch to long-gold-stocks/short-gold its going to be a pretty good time to be long the miners.
Already long the miners...don't know what the hell people (not you) are waiting for.
Today's "liquidity" action is obviously very shockingly inflationary long term. Still not sure why anyone would choose now to short gold. Long term, the only thing that matters anymore is how anyone thinks the interventions will end or be unwound. Picture the endgame, position for it, and stay loose.
Regarding today's injections: was there ever any doubt? Did anyone ever truly believe the CBs wouldn't step in and rescue the banks?
+1... look out if (when?) QE3 is confirmed
You're still looking for QE3? The central bank repo liquidity thing they just did was it. Can kicked for another 3 months. Greece can now default without triggering a global banking crisis.
dup
You would think this would be bullish for gold considering "They may as well put in place as many things as possible in advance of a default. "
hmm, Goldman 1250 End of the Year S$P target, they
should come out and raise it in few hours so they don't look
like sh*t in couple of days ahead :)))
someone at goldman is getting yelled at today....he was supposed to scare the market down so they could buy on the cheap but he got the report out too late so now they have to buy into a rising market....their moles at the central banks will also be in trouble, they understood the policy wasn't going into effect until next week
Sounds about right.
Where does this bullshit end?
The deaths of billions of people.
Yup. Populations boom and populations crash, just like lemmings. Only lemmings don't search for political and monetary explanations for historical events brought about by their inner nature. Only we do that.
At options expiration.
Of course it starts again then too.
Marc Faber May 2009- "2008 we had a financial crisis, next train stop will be when government go bust. And I think in the western world they all go bust. Before they go bust THEY WILL PRINT MONEY, then we go to war and then all of us will be doomed". Marc is correct so far.
Well, I think thats correct; however, I don't think everyone in the whole world will die - so there's some hope
Faber was one of many (including myself). The historical pattern is clear. Read This Time Is Different.
I don't agree with "Then all of us will be doomed." With 7 billion lives on the planet, major wars involve major numbers. Don't succumb to despair because the scale is larger. What's the alternative? Holding it all together until there are 14 billion mouths to feed? History is history, not something to ignore or be upset about. It is our nature.
I don't think we will ever get to 14billion people on earth, after watching Professor Bartlett's videos. Mother Nature will find a way to depopulate us, unless we do it on our own.
Just like dollars, like silver, like gold... I believe there's double counting in humans.
Let's say I have several estates around the world. Does each country count me as part of its population?
If so, it's more likely that there are only 3 billion people walking this earth.
Moreover, could there also be some dead people still being counted?
What will THAT do to real estate prices?!
-Gold will have an Explosive leg up, but not NOW.
-Rates will flatten on the Wings, but at a higher yield level & as this occurs, we'll see gold grind down to 1300 with the expectation that rising rates are stabilizing the world with reduced inflation. WRONG!
-GOLD will then begin its beloved parabolic catapult to some beautful level as Central banks aggressively increase rates and are seen as too little too late.
-Gold = 1 DOW point anyone?
Sounds right to me. Timing is everything.
Lay someone off and if the jobs bill gets passed, you can hire them back and get some government kickers to subisidize the "new hire".
Perfect gig.... You can bet on it.
The top few hundred bucks are spec money in the gold market. Who cares if they get shaken out. See if gold does a "flash crash". And keep waiting. Gold shares and gold will rise once the market digests this new round of central bank bullshit. How many times to do you have to watch this movie to figure out the plot??? Any guesses on what the euro-tards will label their buying of shit??? "Le Tarp?"
'The top few hundred bucks are spec money in the gold market.'
Agreed. Therefore they will be shaken out.
That's just the way the market works -- punishing the weak hands, so the strong hands can load up cheaply.
And they are loading up, in bulk. The problem with a gold crash scenario is that it ignores the rogue states like China with plenty of cash being willing to jump in and snap up all the available gold it can. Suppression of gold prices requires cooperation. So far, the Fed/ECB, along with all their central bank vassels, have been very successful in suppressing gold prices, but to knock them down and keep them down in the face of central banks buying on the sly, or in defiance like China, isn't possible unless the Fed/ECB led conspiracy stops buying completely. That isn't going to happen.
Gold is going down because something is about to happen and we were too close to $2000 for comfort. It is a preemptive strike.
Awesome....I sink Le Tarp will be very beeeg, wis more monnay we stopsis silly games and go to luch. Vive La France.
The empire strikes back....
And the Jedi will return!
Bernanke: "Join me Ron Paul and together we will bring order to the galaxy"
RP: "No...NEVER!!!!" **Jumps off political abyss sticking to his guns**
Good thinking central banks! Now you need to peg EUR USD JPY abd GBP. Next you need to adopt SEPA-like payment system for the EUR USD JPY and GBP. This will make a predictable ground for businesses and we will start hiring again.
Is that you, milliondollarbonus???
Interesting day today, watching the market decide which is bigger: the hosepipe of dirt the CBs are releasing to fill the hole; or the hole which that hosepipe is designed to fill. My 2¢ is that the fact the market hasn't jumped higher and is still hestitating says people are still betting that the EU hole is going to take all that dirt and more. If any of that dirt ever escapes the banking system, it'll be hyperinflation for sure, and those betting on the "hosepipe effect" win. If banks hoard their dirt in anticipation of their losses, prices crash, no matter how much is printed. A razor's edge, with no good way to fall.
Ah, but the central banks have shown skill at walking that razor's edge, and a clear will to do so. Therefore, arguing about deflation or hyperinflation becomes a waste of time. The central banks won't allow either. They will continue to kick the can and buy cheap gold until they can't. Then, wham! Anybody without physical at that point is a loser.
Good Article
Wrong, short bonds buy gold and stocks.
Governments and banks putting the cuffs on personal gold buying.
Banks, Governments Move To Restrict Personal Gold Bullion Purchases
Not my suprise face. We are entering all out manipualtion/ currency war/ desperatio.n phase. Prepare accordingly.
I thought that was interesting, but it also underscores what we already know:
1. Central banks want access to cheap gold
2. They want confidence in paper, not gold
3. For reasons of setting up a more balanced trade economy, they want a lower std of living in the West and higher in the East, so people in China are being encouraged to buy gold.
1. They might be facing future shortages on supplying physical demand and heading off the panic in advance.
2. Slowing physical acquisition makes it more likely that potential buyers will park money in the banks. What bank doesn't want more deposits?
Just some thoughts...
IF I were in charge and wanted to get to a NWO/one world currency/soverign debt forgiveness situation; I would co-ordinate a central bank intervention just exactly like this one.
Half life reached. Sell programs engaged, of course. Moron algos that chased the S&P tape up to 1200 in that monument to stupidity rally yesterday are now bailed out.
Cramer has hyperventilated and declared his undying allegiance to central bank intervention again. What a free market guy.
If I'm wrong, and they want to continue this absurd upward move, gold must get the long knives treatment and front running in the 30 year has to change its mind and discover less conviction in QE3 [Operation Twist being just about the only thing that I can see as "priced in" anyway]...this with inflation readings rising??????????
Economic data......blows again.
WTI chart looks like a heart attack about to happen...
Copper still has pneumonia.
Larry Fink still needs to resign.
Thomas Lee of JP Morgan AGAIN makes the comparison of today to 1998?????????????????? Yeah...exactly like 1998. One wonders what type of inducements would compell such a comment...or what kind of meds he's on.
CNBC is giddy...
Bizarro squared!
"we will start hiring again"
If Obama reelected then US will go bust even faster
So much he can do to spur growth without even spending one penny,
but instead trowing 480 billion $ into the window ones again.
Paper Gold can go to ZZZZzero for all I care. We are the strong hands. We are the Silver Liberation Army!
Deleted
EUR/USD sitting at 61.8% retracement of the spike. Break or hold?
EDIT: Broke
Commercial traders knew that the old boys network would pull them through for an opportunity make even more money off of the general public's lack of access to information. Close attention to the Commitment of Traders reports would've put you on the right side of this morning's ECB intervention.
See Tuesday's trade call - http://www.commodityandderivativeadv.com/andyftp/euro%20currency%20rally...
Isn't this like QE3 but on a global level?
Won't this eventually kill the USD?
Is killing the dollar their intention?
Hmmmmm. European banks saved.....Dow up a whole 50 ....and heading to red. Again........ Hmmmmmmmmmmmmm.
Dead right Tyler..... Only it s more like 45 minutes.....
I disagree with this article. This was about central banks buying trash from banks because no one else will. This version of buying is 'temporary' for a little longer than the last version of the 'temporary' program. By calling this 'lending' or a 'repo' the banks don't have to mark down the asset to where it is being sold on the market. The bank gets cash and the central bank holds the asset; continuously roll the loan and it becomes a 'temporary' version of a permanent sale, without the mark down. The central banks are printing and buying crap from banks again.
you got it
all those piigs bonds will be redeemed at face value and the program will be extended to infinity
Fed prints trillions more in dollars which causes greater rally in Treasuries. Where's the news here?
"They may as well put in place as many things as possible in advance of a default" Reminds me of what i think Operation Twist really is. Twist isn't stimulus, its a SHTF pressure relief valve for when US banks, who are loaded to the gills with USTs, want to fund redemptions, in accordance with a momentous dip to facilitate political QE3 creaminess, putting said long term USTs to the fed and even in liquidation mode get fed paid 100C in the dollar, no devaluation for liquidation, get out of jail free.
I'm not surprised by today's move, I even predicted it a few weeks ago, I thought. Bernanke has QE and Europe has money and gets rid of its balanced crap.
gold at 1776...time?
Lay someone off and if the jobs bill gets passed, you can hire them back and get some government kickers to subisidize the "new hire"
we've got to the point where we're shorting jobs. the next thing will be "fractional reserve" system in job market and the advent of job derivatives.
I wish I could junk a comment more than once.
MillionDollarBonus.......Would be getting a plenty....
Fucking Government troll....Fuck Off.
It don't take much to fool retards.
We'll demand gold as collateral, right?
What's good enough for The Donald is good enough for me. He's really smart.
Oh, some silver too. Something about making rocket ships?
Here is what just happened: The engine's pistons are cracked. The engine block is destroyed. The symptoms of the engine dying are felt as a series of shudders and siezures (in credit markets ). SInce the system only exists now courtesy of short-term liquidity that keeps it alive day to day, this is unacceptable.
The coordinated central banks all agreed to pour in another can of STP.
So, you're saying it's all about oil? I'll agree.
Ok. We now see the central bankers all holding hands and closing their eyes. Fine idea. Will this make the problem go away?
??
Central Bankers must have an acceptans to do what they are doing by the FED.
To me, it seems like a QE3 move.
QE3 !!