RANsquawk European Morning Briefing - 06/09/11

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GoldMeUp's picture

CHF peg, bitchez.

trav7777's picture

yeah..is TD asleep?  I am seeing the CHF down eight freaking percent against the USD

Snidley Whipsnae's picture

Swissy to be defended ~ 1.20 to the Euro... European stock mkts interpret this as good news... My morning reading of goat entrails leaves me uncertain...  Am going to roll the chicken bones for confirmation...


Ratscam's picture

funny SNB does not mention how many USD and EUROS they bought. Just mass psychology caused this 7 sigma event? Thanks to brilliant mr. hildebrand my gold and silver bars are up in swissies

Snidley Whipsnae's picture

"funny SNB does not mention how many USD and EUROS they bought."

Numbers are scary so they didn't release them...

Mkts are reacting to rumor... SOS

Ratscam's picture

from a statistical view point the last time a 7 sigma event happened was before the big bang of the universe!

Snidley Whipsnae's picture

I don't buy the big bang theory... but my beliefs don't affect the price of bananas... and the discussion is about Swiss bananas... :)

Scientists understand propaganda almost as well as Gobbels... Get on topic and stay there... and make it simple enough for the dumbest to understand... if it is repeated enough times... IOWs don't try to feed them anything that a 2nd grader couldn't understand = there is a simple explanation for the universe, it was caused by the 'big bang'... never mind that we don't have a clue what existed prior to the 'big bang' or what takes place at singularity! Duh...


Ratscam's picture

i think the discussion is about the Swiss banana federation.
Wait a minute, the swiss can vote on every public toilet installed but not on billions invested in eurobonds?
Even direct " democrazy" helps primarily the banksters

Ottone's picture

PEG  EURCHF => print CHF... official start currencies war! GOLD? Only a direction. Long bond of SNB...opposite direction!!

Global Hunter's picture

CHF peg will work out great, nothing to see here crisis averted.

Snidley Whipsnae's picture

Chicken bone reading = long physical gold... Be right and sit tight.

Every soverign wants a currency weaker than all other soverigns = impossible

--Freedom--'s picture

Anyone knw what caused the drop in gold overnight? Went to bed it was at 1912, woke up 5 hours later, was down to 1883. Back up some now, but still curious. Would the SNB announcement have caused the drop?

Global Hunter's picture

I think so, causes the USD and EUR to strengthen, check back in 2 weeks.  As Snidley commented above they can't all weaken their currencies at the same time

Snidley Whipsnae's picture

Freedom... Shanghai announced a small margin hike in gold... about 1%...

"SHANGHAI (Commodity Online) : China’s largest Gold exchange, The Shanghai Gold Exchange will raise trading limits and margin requirements on its gold and Silver forward contracts on Sept. 9 to prevent excessive volatility."

"In a statement, SGC said it will temporarily raise trade margins and daily trading limits for both its gold and silver forward contracts ahead of a long weekend to allow traders more latitude to adjust to overseas price movements.
Chinese exchanges are closed Sept 10-12 for the Mid-Autumn Festival.
Trading margins for the gold forward contract, Au(T+D) , will be raised starting Sept 9 to 13 percent from 12 percent, while the daily circuit breaker would be lifted to 10 percent from 9 percent.
The Silver Gold forward contract, Ag(T+D) , will also see its trading margin raised by one percentage point to 16 percent, while daily movement will be raised to 12 percent, from 10 percent.
The SGE said the collateral and daily price limits for both contracts would revert back to their pre-holiday levels on Sept. 14 if those limits were not breached on the first day of market re-opening on Sept 13."



Global Hunter's picture

raise margins on assets going up, custodians/banks use the extra margin to buy bonds and equities...or is my tinfoil hat too tight?

Snidley Whipsnae's picture

Certainly possible... Unless custodians/banks are stuffing the fiat into mattresses, and I don't buy that.

trav7777's picture

yeah...Kitco is showing the CHF off 8.5% now against the USD.  These types of moves in major currencies happen all the time, go back to sleep man

Mediocritas's picture

So all the safe haven swissie buyers now have to buy gold instead. Guess I'm not going to get that pullback I wanted :-/

--Freedom--'s picture

That's what I would have thought, too, so I was surprised to see gold pull back after the announcement.

Global Hunter's picture

USD gained about 8% on CHF at 2am EST, gold priced in USD moves lower, agree with you though a lot of safe haven CHF buyers have now lost another "asset" class to store wealth while gold of course still remains.  They're attempting to bring all the currencies down in unison which longer term is good for gold. Give it a few hours unless they have more tricks up their sleeves.

--Freedom--'s picture

Thanks. Makes sense. It does seem that, long term, this news ought to be very good for gold, since the Swiss Franc and gold have been the two biggest safety zones lately.

Mediocritas's picture

Some short term volatility could be expected as I'd imagine there were a few franc denominated positions that suddenly found themselves needing to get liquid. That's my explanation for now. I was hoping for something more significant in the pullback but once the volatility caused by the peg has shaken out, probably won't get it now.

Still dreaming of 2008 when everything tanked, even the PMs. Loaded up on PMs at that time, would love to get another shot at it. Thought my OTM puts in my strangle would trigger, maybe it will be the calls afterall.

--Freedom--'s picture

Yes, a pullback like that would be nice. I loaded up on ugl during the pullback to 1700ish a little while ago. Spent the proceeds on physical over the weekend. Seems like we may not see a really big pullback unless there are some major changes in policies, which seems unlikely.

Byte Me's picture

Message from SNB to speculators :- "We just clipped you for owning our currency, have a nice stay."

Message from SNB to ECB :- "Keep on buying all of that toxic sovereign trash, have fun turning yourself into a Bad Bank, we're watching your back buddy, have a nice day.

My question is -- who's footing the bill for this? The FED through a swap-line of unlimited proportions? Someone has to pay.

Global Hunter's picture

Exactly no currency trades in isolation, it demands a little more capital than just lifting some offers on an illiquid mining stock at the close.

Mediocritas's picture

Correction, they *were* watching the ECBs back. Now they just dumped it on the ECB and said, "your problem guys, we're sick of taking it for you".

Actually, you may be right after all, they're watching the ECBs back through a scope.

Global Hunter's picture

good point, weak EUR was at least good for exporters, this could get fugly fast.

trav7777's picture

CHF exposure in PIIGS must be incredibly deflationary right now for them to make a move this drastic..dayum

Mediocritas's picture

Tick, tick, tick on the UBS clock. That'd probably do it.

DefiantSurf's picture

is it me or does the EU markets always seem to be slow on the uptake for news? Everything is good at first then after a few hours "wait...thats not good" and they start selling off...


Mitzibitzi's picture

Give them a break, they have to finish up their 4 Euro latte and read the funny pages, sport, restaurant reviews and TV guide before they get down to any actual work.

Or nip out for a quick cigarette and throw some Alka-Seltzer to the pigeons, if they're British traders. Sets the tone for the day. Self harm balanced by greater harm to a dumb animal.

Oh regional Indian's picture

Nice how Eurozone out-liers will now be used and/or abused to keep the Euro where it is needed. Basically keeping the Dollar where it is needed (on life support but alive, barely).  

But everything is pointing to crack up and BOOM!



boffster's picture

Blame the algos for the drop in au. Normally CHF and au move roughly in unison as both were safe havens. When the CHF shit itself au took a corresponding but irrational drop as well. I believe that was entirely algo led.
*first post bitchez - yay*

Moneyswirth's picture

Yes, a 10% move in a currency within minutes, is usually a sign that um...something's not right.