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Sudden Crude Backwardation Telegraphing Imminent Easing Episode By Fed

Tyler Durden's picture





 

Commodity prices have certainly been volatile in the last few days with near-record-breaking upside shifts in some. Copper's extravaganza in the last two days was discussed earlier but it is the huge shift in the whole WTI crude complex that is perhaps more fascinating. For the first time since May 2011, Dec 11 WTI is more expensive than Dec 12 and in the last three trading days alone, the entire curve has shifted to backwardation very aggressively. This inflation-prone signal, and much chatter among Fed talking heads on 'helping' the Europeans, could perhaps help explain the strange 'strength' in the EUR as it and the USD circle the drain of fiat currencies. Gold has obviously yet to get going, but today has broken $1660 (up over $50 in the last few days).

The Dec11 WTI future trades higher than the Dec12 WTI future for the first time since May11...

...As the entire WTI curve has inverted in only the last 3 trading days!!

Does this explain the notable outperformance of stocks (relative to credit and sense), suspiciously good performance of EUR relative to the USD given the underlying tail risks, and the drop in vol (that has been the other QE signal of the past as 'normal' risk is removed thanks to Bernanke's shifting the strike on his put a little higher).

Charts: Bloomberg

h/t Taro

 


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Mon, 10/24/2011 - 14:24 | Link to Comment firstdivision
firstdivision's picture

So let's call QE3 for what it really is, Bank Asset Reflation Fund, or BARF for short.

Not just gold, but silver is looking cheap now.  Already short copper and long AUD.

Mon, 10/24/2011 - 14:24 | Link to Comment Cassandra Syndrome
Cassandra Syndrome's picture

BARF, Bitchez....

Its got a ring to it. Sweet find firstdivision 

Mon, 10/24/2011 - 14:49 | Link to Comment eisley79
eisley79's picture

Banker's be BARFing ALL DAY, ER'E DAY, BIOTCHES

Mon, 10/24/2011 - 14:56 | Link to Comment machineh
machineh's picture

It's driven by the central banksters' SUCK program -- Sudden Uptrend in Check Kiting.

Leveraged EFSF, bitchezs!

Mon, 10/24/2011 - 14:42 | Link to Comment Sudden Debt
Sudden Debt's picture

Yeah, I also think about buying a 1K short on copper just for the fun of it.

It's like a no lose bet right now.

 

Mon, 10/24/2011 - 14:53 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

@ firstdivision,

+ 1

Just wait until GOLD goes into backwardation.  When the world says they want their gold NOW, not a promise for delivery later.  ANtal Fekete explores this topic thoroughly.  When gold goes into backwardation, the physical will disappear...

Yes, get your PMs now.

Mon, 10/24/2011 - 15:26 | Link to Comment pupton
pupton's picture

The "BARF" could be brought about by the "Fraudulent Asset Reflation Trigger", or FART for short.

Mon, 10/24/2011 - 15:43 | Link to Comment DaveyJones
DaveyJones's picture

a binge then purge economy

Mon, 10/24/2011 - 14:22 | Link to Comment FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Those scum filth bankers have ruined the 'free markets' for ever. If this was a casino (and it is), no one would ever return after spending an everning there.

As history shows, it's time for some hanging...

Mon, 10/24/2011 - 14:28 | Link to Comment pupton
pupton's picture

No free drinks served by half naked cocktail waitresses...I'm out.

Mon, 10/24/2011 - 14:36 | Link to Comment FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Would a glass of banker's blood with vodka mixer suit your palate sir?

Mon, 10/24/2011 - 14:46 | Link to Comment buzzsaw99
buzzsaw99's picture

jagerdagger - one part jager, two parts blood

Mon, 10/24/2011 - 14:40 | Link to Comment Lets Hang Parliament
Lets Hang Parliament's picture

The problem is a la Eagles

You can checkout any time you like,
But you can never leave!

Mon, 10/24/2011 - 14:41 | Link to Comment Little John
Little John's picture

Call me mean spirited but I say hangin's too good fer em, gut shot em and use em fer buzzard bait.

Mon, 10/24/2011 - 14:45 | Link to Comment I Got Worms
I Got Worms's picture

"Buzzards got to eat, same as the worms."

Mon, 10/24/2011 - 14:58 | Link to Comment HardlyZero
HardlyZero's picture

New Rome has the special Bankster Moneychanger eradication role to play.

The Pope has it under control.

That is really why the markets are up again...new Pope in town...and he won't put up with any guff.

So everone else can go back to "business" until the clearout begins.

Mon, 10/24/2011 - 17:42 | Link to Comment reload
reload's picture

The Vatican is just jealous of what our current crop of banksters is getting away with.

The Vatican Bank is no slouch in the arts of Insider trading, price fixing and front running,

but lateley they have been missing out and need to get a lot closer to the trough.

Mon, 10/24/2011 - 14:23 | Link to Comment jdelano
jdelano's picture

Nope.  Headfake.  Just like the last "QE 3 is coming" run up.  Bloodbath in the works.  

Mon, 10/24/2011 - 14:30 | Link to Comment Everybodys All ...
Everybodys All American's picture

We find out in ten days or so after the Nov1-2 meeting. I'm inclined to think LSAP of mortgage backed securities is coming, but I'm not convinced it will matter much overall.

Mon, 10/24/2011 - 14:30 | Link to Comment WonderDawg
WonderDawg's picture

Absolutely. Getting ready to load up on puts. Three weeks ago I called for a relatively short but enthusiastic rally, 1250-1270 on S&P, to be followed by rollover into the next leg down. I might have underestimated the strength of the rally, but it's damn sure not a new bull market. This is exactly the kind of mindset that this rally was expected to create, so everything is falling into place. Bloodbath looming, and I'm lining up my puts.

Mon, 10/24/2011 - 14:36 | Link to Comment slaughterer
slaughterer's picture

In 2008 we rallied to the upper Bollinger Band before we crashed.  Upper BB right now is 1380. 

Mon, 10/24/2011 - 15:10 | Link to Comment WonderDawg
WonderDawg's picture

Could happen, I guess, but it's not the scenario I see unfolding. Wouldn't be the first time I was wrong. I'm not placing my bets until I feel in my gut that this rally has topped, and I'm not there quite yet. That's why I said I may have underestimated. The rally has been more enthusiastic than I expected, so maybe it carries much higher than I originally thought. My strategy is to stay nimble but be ready to play the downside quickly. We'll see.

Mon, 10/24/2011 - 16:08 | Link to Comment WonderDawg
WonderDawg's picture

Okay, I couldn't stop myself, I bought some Mar CMG puts right before the close. The stock is trading about 1% below the 52 week high, and there is so much downside potential, I just couldn't wait. Way out of the money, but if my scenario proves correct, they'll be in the money well before March. Time will tell.

Mon, 10/24/2011 - 14:34 | Link to Comment broke433
broke433's picture

They are giving hints that QE3 might be in the way... Maybe not in November but December?

Mon, 10/24/2011 - 14:44 | Link to Comment Spaceman Spiff
Spaceman Spiff's picture

If not December, then probably January.

Don't worry QE3 is still an option.    We got room with the latest inflation numbers.

If not January, then probably February.

Don't worry QE3 is still an option.   We got room with the latest inflation numbers.

If not February, then definitely in March.

Don't worry QE3 is still an option.    We got room with the latest inflation numbers.

and the beat goes on...

 

(kinda works for the european bail out plan if you substitute the right words and do the timeline in days.)

Mon, 10/24/2011 - 14:44 | Link to Comment jdelano
jdelano's picture

Broke433 in August

"They are giving hints that Qe3 might be in [sic] the way...Maybe not this month but in September?"

Mon, 10/24/2011 - 16:40 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Smoked 'im out, nicely, Mr. Back to the Future.  Prolly Ben's bro.  :D

Mon, 10/24/2011 - 14:42 | Link to Comment CPL
CPL's picture

QE3 is the Euro bailout fund.  Regardless of where it's being dumped, when currencies are nearly at parity with one another.  Print in Europe or the US...shit even Canada or Australia.  Now all FIAT is equal and the powers that be may do as they please regardless of the country of the bailout residence.

 

I wouldnt bet against oil for all the tea in china.  Far too important and too large to ignore.

Mon, 10/24/2011 - 15:54 | Link to Comment LawsofPhysics
LawsofPhysics's picture

"I wouldnt bet against oil for all the tea in china.  Far too important and too large to ignore."  And the understatement of the year goes too...

Mon, 10/24/2011 - 14:23 | Link to Comment bigwavedave
bigwavedave's picture

Here comes some fresh green bitchez

Mon, 10/24/2011 - 14:26 | Link to Comment PAPA ROACH
PAPA ROACH's picture

Is it '420' already?

Mon, 10/24/2011 - 14:58 | Link to Comment machineh
machineh's picture

It better be!

Cuz if I'm not baked, then I've fallen through a wormhole into a bizarre alternate universe.

Mon, 10/24/2011 - 15:34 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

It's time to spark up the hopium hookah, bro.

 

Mon, 10/24/2011 - 14:25 | Link to Comment buzzsaw99
buzzsaw99's picture

okay china, get ready for the big green american wienie. #WINNING!

Mon, 10/24/2011 - 14:26 | Link to Comment bob_dabolina
bob_dabolina's picture

I wouldn't read too much into it

Mon, 10/24/2011 - 15:33 | Link to Comment junkyardjack
junkyardjack's picture

NFLX is up, I bet they blow out earnings

Mon, 10/24/2011 - 14:27 | Link to Comment slaughterer
slaughterer's picture

Seems like a stupid time to begin QE3 prep work.  Game theory would require for the European experiment to first crash so as to bring down asset prices and sky-rocket the USD before the Fed would step in. 

Mon, 10/24/2011 - 14:59 | Link to Comment TooBearish
TooBearish's picture

The other side of game theory, rational expectations says SHIT IS SO BAD IN EUROPE THEY GOTTA PULL THE TRIGGER NOW>...

Mon, 10/24/2011 - 14:28 | Link to Comment PAPA ROACH
PAPA ROACH's picture

How long until the OWS crowd realizes not only are more bank propping events coming up here, but WE are about to do alot more Euro bank propping? Will this be the point at which the movement goes rogue and starts buring shit down?

Mon, 10/24/2011 - 14:38 | Link to Comment MsCreant
MsCreant's picture

I am afraid most of them don't understand what is going on with enough depth to be as pissed as we are.

Mon, 10/24/2011 - 14:52 | Link to Comment Hearst
Hearst's picture

That's true.  QE# will be embraced by OWS with open arms as they thank their overlords for bailing them out of their school debt.  

Mon, 10/24/2011 - 14:57 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Yes, MsCreant and Hearst.

OWS apparently has no idea of what QE3 will bring.  QE4, etc.  Maybe their student debts will be bailed out, but then with hyperinflation and no jobs, they will still be SOL.

Mon, 10/24/2011 - 14:30 | Link to Comment Thunder Dome
Thunder Dome's picture

RALLY!!! 

(As usual permabears licking their wounds)

ZH has become a fade.

Mon, 10/24/2011 - 14:30 | Link to Comment jdelano
jdelano's picture

As usual  my returns are kicking the shit out of every bull hedge fund in the country.  Guess you were napping through august...

Mon, 10/24/2011 - 14:36 | Link to Comment jdelano
jdelano's picture

And just a little reminder:


Ray Dalio, founder of the largest hedge fund in the world (Bridgewater Associates), said the world debt is so large it will take 10 years to de-leverage it — and “there are no more tools in the tool kit” to postpone the inevitable reckoning. He gave the world the bad news on Friday night on the Charlie Rose Show. The world is divided into debtors and creditors — emerging nations — and the end is near.

We should listen because Ray Dalio is the 55th richest man in the world with a net worth of $6 billion. His company manages $125 billion in global investments, and as Charlie Rose, “Over the last two years, Bridgewater ranked as the largest and best-performing hedge fund in the world. In 2010, his returns were greater than the profits of Google, Amazon and eBay combined.”

Mon, 10/24/2011 - 14:45 | Link to Comment Belarus
Belarus's picture

This is just an interesting window where the markets have totally forgotten one simple fact: debts matter. If the Fed QE's on Nov. 1-2 with economic data literally picking up, the WTI over 90, then I said it before and I'll say it again:

WE SO FUCKED.

 

Mon, 10/24/2011 - 14:49 | Link to Comment lizzy36
lizzy36's picture

With your astute observations and vast contributions I for one will really miss you.

I have a feeling that the Yahoo boards will greet you with open arms.

Have a nice voyage to mean reversion.

Mon, 10/24/2011 - 15:00 | Link to Comment jdelano
jdelano's picture

Mean reversion?! Oh, snap, this gal knows her shit!

Mean reversion meet Shiller PE.  

Don't worry your pretty little head so much.     

Mon, 10/24/2011 - 15:05 | Link to Comment jdelano
jdelano's picture

Retracted.  

Mon, 10/24/2011 - 14:58 | Link to Comment homersimpson
homersimpson's picture

More like your comments will fade by the next Tyler post.

Mon, 10/24/2011 - 14:29 | Link to Comment LongSoupLine
LongSoupLine's picture

Fed POMO bank ponzi-boy and eternal Goldman Sacks loyalist, Dudley, just gave an algo soundbyte saying, "More QE possible."  The shilltards at CNBS are running this quote as a "Breaking News" headline every 5 minutes.

We're fucked...buy silver.

 

Mon, 10/24/2011 - 18:25 | Link to Comment Jack Napier
Jack Napier's picture

Goldman's Hatzius is also calling for QE3 in 6 to 9 months. If the movie "Casino" is any indication of how the mafia works, then he is actually saying in 3 to 6 months. I doubt "The Nothing" (steaming debt pile) will wait that long anyway.

Mon, 10/24/2011 - 14:29 | Link to Comment ZeroPower
ZeroPower's picture

Hedges unwinding. Quite common after a period of market turmoil comes to an end.

Lots of dealers that were taking big hits on their core positions due to overall market conditions used crude as a basic hedge (i.e. long cash bonds, but shorting with a corresponding CDS index is never 1:1 and so a poor short at best - the better hedge was short oil).

Now that 'all is fine', short crude unwind is showing up, hence, you bid up the front contracts - probably even moreso than required.

Mon, 10/24/2011 - 15:04 | Link to Comment jm
jm's picture

+ a large whole number

Mon, 10/24/2011 - 14:30 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Tyler,  I presume that you will comment on the "variable rate treasuries" that CNBC is reporting?  Crap, looks like the sub-prime boondoogle taught us nothing and the entire country will get a sub-prime floating mortgage.  Yikes.

Mon, 10/24/2011 - 14:30 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Blah blah blah.  Evidence of China growth maintaining = evidence of oil consumption.

Oil is everything.  Debt is second fiddle.  Huge news last week from the UK.  Their drilling rig count down 36% from equivalent period last year.  All kinds of hand waiving to avoid saying the critical reality: The North Sea is running out of promising geological structures to drill, so when each well is double digit millions, guess what . . . YOU DON'T DRILL WHEN THE TARGETS ARE NOT PROMISING.

This means the right side of the curve's slope for North Sea is going to steepen.  Remember, it is only new wells that gradualize the production total slope as old wells produce less and less.  

Steepness looms.

Mon, 10/24/2011 - 14:46 | Link to Comment zerozam
zerozam's picture

Dude - did u miss the news of Lundin Oil? They just struck one of the largest oil wells EVER in the north sea.

http://www.lundin-petroleum.com/Press/pr_norway_21-10-11_e.html

Mon, 10/24/2011 - 14:53 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Hype house.  Want to see if it's there?  Wait to see them put up their own money to produce, vs sell the lease to some dupe, err, some more experienced developer.

Worse, it's only 1 billion barrels.  Such a field won't do more than 200K/day at peak production.  The total North Sea is falling by more than that per year.

Mon, 10/24/2011 - 15:19 | Link to Comment tmosley
tmosley's picture

That's only 10-20 days worth of world oil consumption.  Abundant natural resources aren't going to make up for the current and future levels of capital misallocation.

Mon, 10/24/2011 - 15:58 | Link to Comment LawsofPhysics
LawsofPhysics's picture

And that is really the crux of the whole thing.  Capital misallocation resulting in ultimately the destruction of what could have been even more productive capital, including your fiat "savings".  Get physical and wait.

Mon, 10/24/2011 - 23:22 | Link to Comment tsx500
tsx500's picture

well, apparently the market missed that news ...........

Mon, 10/24/2011 - 14:30 | Link to Comment Caviar Emptor
Caviar Emptor's picture

All part of the Biflation Conundrum: when we're not in near-recession (economic contraction), we're on the brink of killer inflation. 

 

Lotsa Luck!

Mon, 10/24/2011 - 15:54 | Link to Comment larynx
larynx's picture

Yes, left or right cheek. But imho it will be inflation, because deflation does the reset too violently - which would destroy this wonderfull web.

Mon, 10/24/2011 - 14:32 | Link to Comment PulauHantu29
PulauHantu29's picture

We'll see $220 oil as Nomura predicted for a number of reasons---printing, MENA instability, etc.

Mon, 10/24/2011 - 14:43 | Link to Comment PAPA ROACH
PAPA ROACH's picture

And who will be able to pay $6.50/$7.00 gallon at the pump on the $220 oil price in this environment? Talk about the start of a bloody bout of civil unrest...

Mon, 10/24/2011 - 14:49 | Link to Comment Caviar Emptor
Caviar Emptor's picture

First despair, then unrest 

Mon, 10/24/2011 - 17:20 | Link to Comment paulbain
paulbain's picture

Papa Roach wrote:

 

And who will be able to pay $6.50/$7.00 gallon at the pump on the $220 oil price in this environment?

 

Only the rich. But the federal government will probably impose fuel price controls before the price breaches $6 per gallon. Count on it. And after such imposition, there will be profound shortages of fuel at the LEGAL price.

 

-- Paul D. Bain

paulbain@PObox.com

 

Mon, 10/24/2011 - 20:58 | Link to Comment o2sd
o2sd's picture

Hate to break it to you kiddo, but most of the world already pays that, many parts of the world much more, and have done so for almost 10 years.

Australia -> AUD 1.5 per litre == USD 5.45 per US gallon

France -> EUR 1.56 per litre == USD 8.30 per US gallon

Germany -> EUR 1.6 per litre == USD 8.51 per US gallon

Hong Kong -> HKD 16.55 per litre == USD 8.04 per US gallon

Singapore -> SGD 2.10 per litre == USD 6.27 per US gallon

 

Of course, the most of the world stopped driving SUVs and Hummers 15 years ago, but thats probably because they dont have the Oil Protection Marine Corp to secure the supply with blood and iron.

Mon, 10/24/2011 - 14:32 | Link to Comment Josh Randall
Josh Randall's picture

Hey Hey! just in time for Winter! Not to mention eventual strike on Iran - getting bullish for the Bakkens right about now myself as well as Burlington Coat Factory.

Allright kids, get out those moth eaten sweaters and electric blankets, because Papa won't be able afford heating oil in New England soon unless they accept SNAP cards

Mon, 10/24/2011 - 15:06 | Link to Comment stirners_ghost
stirners_ghost's picture

Funny you should mention Iran. This change in the term structure might reflect front-running of an oil shock. I've heard rumors of Iran's oil production suddenly becoming unavailable to the market (I'll leave it at that).

Mon, 10/24/2011 - 14:33 | Link to Comment ZeroPoint
ZeroPoint's picture

And there you have it folks.

It's not about investment any more. It's about inflation survival. Unless you are earning 20% year on year, you're losing.

 

Guns, gold, water, and food.

 

 

Mon, 10/24/2011 - 14:43 | Link to Comment MsCreant
MsCreant's picture

This is a hard point to get across. Water, Food, Guns, Gold. I like that order better. They think we are kidding or nuts. Do it!

Tue, 10/25/2011 - 11:09 | Link to Comment DaveyJones
DaveyJones's picture

Good to see you MsC

Tue, 10/25/2011 - 12:33 | Link to Comment MsCreant
MsCreant's picture

I liked your binge and purge economy above. The purging may well do permanent harm.

Mon, 10/24/2011 - 14:33 | Link to Comment bernorange
bernorange's picture

Looks like I picked the wrong week to give up on "tradition".

www.pmbug.com

Mon, 10/24/2011 - 14:40 | Link to Comment DoctoRx
DoctoRx's picture

The Fed stopped easing after mid-2003.  Crude was frequently in backwardation between then and the start of the next (unexpected) easing in August 2007, I seem to recall.  Does that change the point of this post? 

Is it possible that anything from trading techniques to the expected advent of Libyan oil coming onstream is more relevant to this sudden backwardation?

Mon, 10/24/2011 - 17:04 | Link to Comment kaiserhoff
kaiserhoff's picture

Oddly enough, everything is not caused by alien abductions;)  This is not unusual in grains or the oil complex in times of low interest rates.  In my experience, it means that producers are worried about prices and selling heavily into the future months, but that doesn't mean the Martians won't get you.

Mon, 10/24/2011 - 14:41 | Link to Comment kaiserhoff
kaiserhoff's picture

Now that's a reach.  Oil is the new gold, and somehow a predictor of madman Ben?

More likely hedging by producers.  Libya coming back on line, nat gas dropping like a rock.  European depression coming.  The Saudi's aren't idiots.  They should be locking in prices here.

Mon, 10/24/2011 - 14:45 | Link to Comment Johnny Lawrence
Johnny Lawrence's picture

How is the Fed going to unleash QE3 with the Dow nearly 12k?  Politically, I don't think it can be done either.  There will be riots in the street.

Mon, 10/24/2011 - 14:55 | Link to Comment anony
anony's picture

Riots?  You're dreaming.

As long as the masses are ignorant and have food on the table, cable, and most of them their jobs, don't expect any riots.

If, on the other hand, "Kim Kardashian", disappears from TV, my wife will be among the first to hit the streets. I imagine other cancellations of Ellen DeGenerate, Phil Maher, Monday Night Football, would also result in riots.

But economic policy is a yawn to the proles.

Mon, 10/24/2011 - 15:05 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

CORRECT.  

Hardly anyone I know have any idea of QEs.  OK, they do know about the bailouts and feel left behind (because they have been), but the MSM will cheerlead any QEs.  The markets will go up (until all of this no longer works).

I have been predicting that GOLD will not be bought by many until the price is $5000.  They will have LOST their chance to buy it cheap.

Mon, 10/24/2011 - 15:06 | Link to Comment Johnny Lawrence
Johnny Lawrence's picture

All good points.  Maybe it was wishful thinking on my part.

Mon, 10/24/2011 - 14:56 | Link to Comment Caviar Emptor
Caviar Emptor's picture

They're scared to death of QE3 and yet it's the only trick they know. That's why they were hoping for some Fiscal Stimulus to tide the economy over for a while. The mortgage refi deal which is coming is the stim. Fed laid the groundwork for it with Op Twist, lowering mortage rates even further so people would refi (and pay fees to banks). But even if the .gov pays for the loss on underwater mortgages it's only a stall. People still won't be able to afford the houses they're in and the cost structure of the economy they live in. 

Mon, 10/24/2011 - 15:17 | Link to Comment Mark123
Mark123's picture

I don't get it.  So now people who are heavily underwater can refi their loans....so 2 possibilities:

 

1. person is underwater and not even paying mortgage (will not refi - ever) so no impact

2. person is underwater but still paying mortgage - they will refi if it save money (duh!)....so now they pay less and SOMEONE ELSE LOSES.  Who loses....banks, Fannie, Freddie....oh, but that is OK we will bail them out or just let them report made up numbers and simply provide them with liquidity to keep the transactions going.  Can we make it to the next election?

 

Short term - party on.  Long term - we are hosed.

 

Is there an adult left among our leaders (other than the lonely, aging voice of Ron Paul)?

Mon, 10/24/2011 - 15:19 | Link to Comment junkyardjack
junkyardjack's picture

Politically the people don't matter, hell there are already articles about how Occupy Wall Street consists of ex cons and people from shelters.  The 99% are crabs in a barrell, corporations are all that matter if you want to get elected.  I'm leveraging my first born to buy into the rally, Ben's about to make it thunderstorm in this biz-natch, weeeee

Mon, 10/24/2011 - 14:47 | Link to Comment Gubbmint Cheese
Gubbmint Cheese's picture

The fed made the call, "Blue Horseshoe loves QE3"

 

Mon, 10/24/2011 - 15:04 | Link to Comment HardlyZero
HardlyZero's picture

The Pope does not like QEx.

Moneychangers will be thrown out in 3...2...1

Mon, 10/24/2011 - 16:33 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

The Vatican and the Catholic Church are so corrupt that they are inviting in the biggest one of all.  Who would control the Worldwide Bank?  Hmm, probably not who the Vatican would want...

Mon, 10/24/2011 - 14:48 | Link to Comment Uncle Sam
Uncle Sam's picture

A little math (not FASB or IASB math - they were castrated).

BofA has 1 Trillion dollars in deposits, with 20:1 leverage, that's 20 Trillion dollars in, well, lets say 'Risk'.

Add 53 Trillion in derivative risk, for a total of 73 Trillion dollars in 'Risk'.

That's leverage of 73:1.

JPMorgueChase is about 1 Trillion in deposits, so 20 Trillion dollars in 'Risk'.

Add 75 Trillion in derivatives, for a total of 95 Trillion dollars in 'Risk'.

That's leverage of 95:1.

Two US banks, with 168 Trillion dollars in 'Risk', covered by 2 Trillion in deposits.

European banks are advertised as double the leverage of US banks.

Hmmm.

Mon, 10/24/2011 - 15:30 | Link to Comment jm
jm's picture

Net those exposures then get back to us.

Mon, 10/24/2011 - 17:21 | Link to Comment Uncle Sam
Uncle Sam's picture

As an investor, I would be interested in net exposure.

As a taxpayer, I'm interested in gross exposure.

Mon, 10/24/2011 - 17:59 | Link to Comment Bring the Gold
Bring the Gold's picture

How did that netting work out when Lehman was allowed to go bankrupt? Oh right. Do you really think there is enough opacity in balance sheets, off balance sheets, dark pools, the innumerable interconnected counterparties and the financial system in general to truly net out risk? You're dreaming. Netting is a fucking scam, wake up.

Mon, 10/24/2011 - 18:37 | Link to Comment jm
jm's picture

If you want the truth, then you need to at least figure in the difference between net and gross exposure.

If you want to dwell on a load of crap just so you can rant about stuff, then carry on gentlemen.

 

Mon, 10/24/2011 - 14:49 | Link to Comment totem
totem's picture

Yeah, to save Europe and the TBTFs, let's drive the price of gasoline & heating oil into the stratosphere as we head into Winter.

Of course, if you earn what Ben and the other Fed governors make, it's a no-brainer.  They should be good at making that kind of decision, actually...

Mon, 10/24/2011 - 18:15 | Link to Comment Raging Debate
Raging Debate's picture

Totem, you might not be considering there is a lag time before higher prices reach the pumps. 2012 is gonna be dull. 2013 is when the real fun starts. By 2021 it will be over. Mental preparation to do whatever you must (outside of killing people) to survive is what is most important, but having three months of basics is recommended in at any and all times. It is a chaotic universe.

Mon, 10/24/2011 - 14:50 | Link to Comment High Plains Drifter
High Plains Drifter's picture

http://www.youtube.com/watch?feature=player_embedded&v=cCul2D8bog8

and now a word about black folk and niggers........

Mon, 10/24/2011 - 14:50 | Link to Comment YesWeKahn
YesWeKahn's picture

Is there any evidence that QEn helped creating jobs? If yes, there are the numbers? If not, fire the idiot chairman for wasting 2.5 trillion.

Mon, 10/24/2011 - 15:03 | Link to Comment Tsar Pointless
Tsar Pointless's picture

Well, to your question, in March 2009, the BLS said there were 139,833,000 employed Americans.

In September 2011, the BLS claimed we have 140,502,000 employed Americans.

However, every February the BLS usually deducts 1.5 million jobs in its annual rejiggering of the numbers. So, the September 2011 number likely is somewhere around 139,000,000.

So, in essence, we've probably LOST jobs since QE1 was fully implemented in March 2009. Or, at the very least, it's a push.

Mon, 10/24/2011 - 15:16 | Link to Comment YesWeKahn
YesWeKahn's picture

Wait, the shameless Chairman works for a private entity, can't be fired.

Mon, 10/24/2011 - 14:52 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Remember : your tax dollars still subsidize Exxon-Mobil. You pay them taxes to produce and make a profit off you and then get taxed a second time at the pump for them to sell it to you. Got you coming and going. 

Oh and they export some of that oil too :-)

Mon, 10/24/2011 - 14:57 | Link to Comment kito
kito's picture

sprott is buying up energy stocks because they are valued based on fear. a quote from one of his fund managers:

“It has everything to do with fear and little to do with actual fundamentals,” Sprott Inc.’s Eric Nuttall, whose Sprott Energy Fund is up 16 percent this month, said of oil stocks. “When people are in a fear-driven mode, fundamentals can be irrelevant in the short term. Eventually, the stock market will always be fundamentals-driven.”

so sprott, who has been hammering the pm community about silver being the investment of choice due to a worldwide bank meltdown and sovereign crisis, now feels that the fear is unjustified and that the stock market will be more fundamentally driven going forward (i.e. bullish) anybody find a bit of hypocrisy here? after all, wouldnt a debt derived global meltdown destroy demand, and therefore commodities?



Mon, 10/24/2011 - 15:01 | Link to Comment Belarus
Belarus's picture

Sprott is 100% out of sync with the market right now, and should heed the wise words of Will Rogers: if you're in a hole, stop digging. He is also short financials and retailers. He's been crushed this month. 

Mon, 10/24/2011 - 15:14 | Link to Comment SWCroaker
SWCroaker's picture

Does being "in sync" entail momentum chasing the rest of the crowd and doing what all of the kool kids r doing?  I seem to recollect that the best plays are made by those who go counter-trend when others look and barf; I'm gonna have to check this Sprott guy out.

Thanks for the tip!

Mon, 10/24/2011 - 15:06 | Link to Comment Mark123
Mark123's picture

I have no idea how all this intervention will end up, but overall I think Sprott has 100% more credibility than the rest of wall street whores.

Remember - there is a big difference between taking a long term position and trading short term to take advantage of swings in sentiment.

Mon, 10/24/2011 - 15:12 | Link to Comment Belarus
Belarus's picture

I generally agree, Mark. He's got AUM that make it impossible for him to be a trader. But he made the fatal mistake: he got too giddy and led many people right off the cliff at highs at exactly the wrong moment. 

Mon, 10/24/2011 - 15:13 | Link to Comment Bumblebee Tuna
Bumblebee Tuna's picture

He's probably taking advantage of the market upswing to talk up his beaten down funds, so investors pour in and he collects MER.  Win or loose, it's what he shaves off the top that makes him money from these funds.  

16% in a month is enough to pull in some performance chasers... How about the last 3 months?  -10%... or 6 months?  -20%.  Did he mention that?

 

Mon, 10/24/2011 - 15:00 | Link to Comment sheeple2012
sheeple2012's picture

Hurricane Rina - and seems like they really don't know where this one's going to go

Mon, 10/24/2011 - 15:03 | Link to Comment Mark123
Mark123's picture

oil up 4.5% today....but gold hardly at all.

 

I guess this would make sense if there was some evidence that the economy is taking off like a rocket ship, and NOT due to money printing.  I don't get it. 

 

Cynical thought - the big guys are running up the market using 0% fed money and HFT in anticipation of some big drop that is on its way.

 

 

Mon, 10/24/2011 - 15:05 | Link to Comment Tsar Pointless
Tsar Pointless's picture

Your cynicism is duly noted.

I see it as being realistic, not cynical.

Mon, 10/24/2011 - 15:07 | Link to Comment kito
kito's picture

didnt you hear, europes debt problems were solved today...for the 20th time.....

Mon, 10/24/2011 - 15:28 | Link to Comment tickhound
tickhound's picture

Oh good.  One less thing.

Mon, 10/24/2011 - 15:46 | Link to Comment NotApplicable
NotApplicable's picture

...creating the 21st problem...

Mon, 10/24/2011 - 15:12 | Link to Comment campag
campag's picture

when are people going to learn WTI contract is not worth looking at .Brent has been  in backwardation for ever ! at expiry of the November contract the back. went to a huge $2.50 plus . today Brent / WTI  narrowed , think this is the  unwinding of the Libya play where Brent has been squeezed. 

Mon, 10/24/2011 - 15:14 | Link to Comment sabra1
sabra1's picture

if QE3 is the european bailout, then that means all monies is being transfered out of the US. hmmmmm, i wonder why?

Mon, 10/24/2011 - 15:14 | Link to Comment jmcadg
jmcadg's picture

No QE until WTI and S&P are at least in three digit territory.

Mon, 10/24/2011 - 15:16 | Link to Comment SheepDog-One
SheepDog-One's picture

I dont think its 'QE3 signs' at all I think its mid east war kickoff.

Mon, 10/24/2011 - 15:24 | Link to Comment Mark123
Mark123's picture

I heard a rumor that Iran is going to blow up the entire planet.

 

Must invade and bomb country into oblivion....need new Shah in control to ensure democracy, freedom, love and McDonalds.

Mon, 10/24/2011 - 15:26 | Link to Comment tickhound
tickhound's picture

I agree... QE3 seems to be just another carrot for the msm.  Besides, why declare when you can QE Stealth and pillage for resources?

Mon, 10/24/2011 - 15:17 | Link to Comment Catullus
Catullus's picture

Waiting on gold backwardation. Then the Fed will be forced to peg the euro to the dollar. Then it's full on currency crisis time. Inching ever so closer to event horizon.

Mon, 10/24/2011 - 15:27 | Link to Comment junkyardjack
junkyardjack's picture

It will be great when everyone pegs to each other and then tries to print their way free, it'll probably look like the 3 stooges 

Mon, 10/24/2011 - 15:28 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Gold backwardation will be a BIG deal.

Mon, 10/24/2011 - 15:44 | Link to Comment defn8Dog
defn8Dog's picture

 

QE3 is underway.   In my humble opinion.   Bitchez. 

 

 http://research.stlouisfed.org/fred2/series/M2 

Mon, 10/24/2011 - 16:01 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Maybe Bill Dudley is spouting about QE3 because he knows that Wednesday will be underwhelming on the European BS front, so they jawbone.

Hilsenrath usually does a good job as sock puppet for the Bernank, so there is as yet no free money ready to roll in given the time table presented. The Administration is also doing its part with the "we don't care if you have negative equity at whatever level, we're going to refi you" play.

Ramp it up into overbought, let some puts come back into the market, a couple of days set up now for the fast money and then we find out Wednesday that the Euros are still as confused and undecided as can be.

Whoosh, test the 1150 level. That may take us into November. Perfect setup to push through the MBS deal, right on Hilsenrath's timetable.

THEN we see David Tepper on CNBC again and if you don't buy the ponzi at that re-discounted point, may the lord have mercy upon your P&L.

Markets that go straight up are oh so passe?

Mon, 10/24/2011 - 16:32 | Link to Comment Zymurguy
Zymurguy's picture

Crude at $91 today.... yeah, that's good times at teh pump tomorrow.

Mon, 10/24/2011 - 16:57 | Link to Comment JW n FL
JW n FL's picture

 

 

Survey: UCITS Investors Want CTA Strategies

Oct 24 2011 | 10:36am ET

The market for CTA strategies within the UCITS wrapper is growing, according to a recent survey from ML Capital.

The firm polled 51 investors who together manage €80 billion and invest upwards of €30 billion into Alternative UCITS strategies.

ML Capital says it observed a “dramatic increase in demand for CTAs” with 57% of respondents committed to the sector.

The survey found that the largest increase in allocations were to global macro systematic and CTA strategies, both of which saw demand almost double over the last quarter from 30% of polled investors to almost 60%

http://www.finalternatives.com/node/18513

 

Europe is DEMANDING exposure to Commodities.. MORE, Gold! and / or other Tangibles.. as a nice basket of risk adjusted for paper (any kind) becoming less and less safe.

Mon, 10/24/2011 - 18:31 | Link to Comment deebee
deebee's picture

time for another SPR release. Blame it on tensions in Burkina Faso.. or something

Mon, 10/24/2011 - 18:37 | Link to Comment chump666
chump666's picture

Awesome! Just in time for winter, lets see who will riot/protest first out of the two European backstops. Germany or France?  I say France first with major industrial strikes, then the Occupy influenced protests turn violent, next Germany.  The whole world will riot at the same time, going to be very interesting.

 

Tue, 10/25/2011 - 06:30 | Link to Comment Sathington Willougby
Sathington Willougby's picture

 

Look no further than the land of the fleeced, home of the slave for the backstop.

Do NOT follow this link or you will be banned from the site!