Another round of the Crisis is coming and the Powers That Be know it. This is why they’re preparing by buying up Gold bullion.
- Developed-Country Growth Slows, OECD Says (WSJ)
- Charter Agrees to Buy Time Warner Cable for About $55 Billion (BBG)
- Dollar hits one-month high as periphery woes weigh on Europe (Reuters)
- IMF Says Yuan No Longer Undervalued Amid Reserve-Status Push (BBG)
- Hanergy secured $200m loan ahead of solar group stock tumble (FT)
- Congressional Inaction Threatens NSA Spy Program (WSJ)
- Germany sees progress on Greece, EU officials to confer on Thursday (Reuters)
- Hayes ‘motivated by greed’, prosecutor says in Libor case (FT)
- Whistleblowers Find SEC Rewards Slow and Scarce (WSJ)
With HFT algos now firmly entrenched in FX markets we weren't surprised to learn that volatility is rising, bid-ask spreads are blowing out, and liquidity is vanishing. Expect things like last October's algo-driven, Fed-assisted Treasury flash crash to become par for the course in FX markets as well, with harrowing USD, EUR, JPY, [fill in the blank] ramps and flash crashs becoming the norm and leaving panicked central bankers desperately trying to figure out what happened after the fact.
One year ago, we explained "How The Market Is Like CYNK." Earlier this week, China's richest man found out how right we were, in the hardest way possible
Gold topped $1230 this morning - breaking to 3-month highs and up over 4% year-to-date - up 5 days in a row for the best run in 4 months. The surge comes causally or correlatedly coincidental with China's explicit shift into extraordinary measures (LTROs) but, as The FT reports, market participants are concerned that algo-based funds have created a "frenetic liquidity" environment as everyone from real money to central banks "aren’t trading the gold market the way they used to."
We need to wake up....and FAST!!!
Gen. Wesley Clark has been a busy man since retiring from public service with a plan to make $40 million. In addition to chairing notorious investment bank Rodman & Renshaw, the former NATO allied commander and one-time Presidential hopeful has thrown his face and fame behind a plethora of OTC-listed companies, Bloomberg reports. From grilled cheese sandwich trucks to hydroponic lettuce companies run by the real-life Bud Fox, Clark's name has become so synonymous with doomed penny stocks that one fund manager calls his very appearance on a company board "a red flag."
We have called this a tale of two graphs. But what it really describes is a clear and present danger to American capitalism fostered by an unelected monetary politburo in thrall to its own lust for power and mesmerized by its own doctrinaire group think. The tragedy is that nothing can stop them except the thundering crash of the gargantuan bubble they have single handedly enabled.
China, the world’s largest gold producer and buyer, feels its market weight should entitle it to be a price setter for gold bullion. It is asserting itself at a time when the established benchmark, the century-old London ‘gold fix’, is under scrutiny because of long-running allegations of price manipulation.
Take note, Gold is officially money for the most powerful entities in the world. They are not only accepting Gold as collateral but are openly trying to insure that they have their own Gold in safe custody.
While sentiment towards gold in the West is abysmal - even as gold languishes at record lows when adjusted for inflation - Asian demand remains insatiable. It would be wise for investors to inform themselves as to why this should be so. Demand for gold in Asia is often written off by Westerners as an irrational impulse of uneducated Asian peasant farmers and workers.
Just as China was closing for trade and Europe was opening, something previously unseen happened: no, not another another GPIF or Virtu inspired marketwide stop squeeze, those are quite recurring these days. It was virtually every Bloomberg terminal around the globe suddenly going dark.
This is why Bernanke said rates won’t normalize in his lifetime: any normalization means a crisis magnitudes larger than the 2008 crash.
As noted earlier, with equities now a barren wasteland of volume (and liquidity), the last remaining HFT master (of whale order frontrunning) has been forced to go to those asset classes where organic flow is still abundant such as FX, courtesy of central banks engaged in global currency wars. However, HFTs realize it is only a matter of time before FX order flow also dries up as central banks take their trade away from public venues (and dark pools) and as such are always looking for new, untapped markets. One place where they are about to land according to the WSJ, with hilarious consequences sure to follow, will be the one place that HFTs should have felt at home from the very beginning: bitcoin.
We're just a little over two weeks into PSPP and signs are already beginning to show that the ECB is effectively breaking the market. "The soaring cost of borrowing government bonds in secured lending markets highlights the distortions caused by the ECB's asset-purchase scheme, which analysts say could clog up Europe's financial system," Reuters notes.