Wow. It's certainly an eye opener when you see someone from the mainstream media telling Congress to fuck off.
Kudos to Dylan for writing this letter. I frickin love it. In fact, I wouldn't change a word of it I had written it myself and that includes the "fuck you" park.
I am ready to sacrifice like Dylan is but I am not willing to do it without the banks doing the same.
We are being EXTORTED by Wall St people.
My friend "the credit trader" told me today that the banks were caught taking loan loss reserves that were put away for future losses on home loans and reporting them as profits this past quarter so that they could increase their bonuses.
These people are disgusting and they need to be stopped. In the immortal words of Dylan Ratigan: "Fuck You" Wall St.
Enjoy his letter to Congress below:
"Dear Esteemed Chairmen:
No huge surprise here. What’s unfortunate for you is that for years, even decades – going back to Ross Perot – the American people have been prepared for and willing to accept changes (cuts) to Social Security. You, the politicians never gained the courage to ask, but I think for the most part the general public has been ready. And since I’ve been screaming about these issues my entire adult life, and have always pushed the concept of shared sacrifice as a means to budget sanity and limited government, I’m not comfortable with what I’m about to write, but it’s inescapable after watching and recording a 32-month orgy of fiscal mayhem dominated by trillion-dollar bailouts, trillions in wasted stimulus, and trillions gifted to the military-industrial killing machine.
Fast forward from the Perot deficit awakening 20 years ago, and finally, you, the generationally-irresponsible political class seem to be facing up to the unfunded entitlement budget nightmare of your own creation – or at least you’re in the discussion phase of ‘facing it’ – and what is the societal backdrop? Seething anger over the recession, the wars, multiple failed stimulus, dollar destruction, QE, and the government bailouts of favored industries.
So against this backdrop, your Commission now recommends cuts to Social Security and a hike in the retirement age to help us on our merry way to a fiscally sane future.
Here’s my recommendation for you.
The American people are willing to sacrifice as part of a shared effort at righting our budgetary path, but they are not prepared to be sacrificial lambs led to the ‘benefits and promises slaughterhouse’ while the Wall Street Banker Pigs gorge on trillions in stealth FED and FDIC bailouts, ZIRP giveaways and a record $144 billion in bonuses – an amount equivalent to the 49th largest GDP in the world - $144 billion in bonuses being paid by criminally insolvent banks that are only still operating due to a Wall Street financed K-Street lobbying tsunami that forced FASB to change the accounting rules that now allow these same insolvent institutions of usury and arrogance to apply Faustian valuations to complete shit assets all over their lying, godforsaken, Enron resembling, off-balanced, imbalanced, bs-balanced, sheets.
Banks exist in the lala land of leveraged deferred tax assets representing most of tier-1 capital at Citigroup, of hundreds of billions of helocs at Wells Fargo worth pennies, but marked at dollars, of hundreds of billions of fraudulent MBS pumped out by Countrywide, whose liability now sits with Bank of America. This is a mere glimpse of the great banking lie that provides cover for the $144 billion insolvent bonus river that bathes the Street, all supported and paid for by taxpayers, Treasury and the Federal Reserve. Therefore, ultimately, taxpayers.
In this environment, selling ‘cuts to social security’ is not going to work, and considering the role you both played in creating the irresponsible federal spending machine that now controls Washington and has bankrupted future unborn generations, fuck you for even bringing it up.
Signed,
The Daily Bail"
Saturday, November 13, 2010
Friday, November 12, 2010
Tension Heighten as the G-20 Approaches
Been awhile since I did 3 posts. Anyways, I wanted to put this pic up that I got from a friend as we approach the G-20 summit:
Let me be the first to apologize if I offended anyone with this pic! However, I must admit it made me laugh out loud.
I started thinking about our crazy world after looking at this, and it left me wondering how the G-20 could possibly could go well given the variety of cultures and economic problems.
Tensions between the US and China at the meeting are already leaking out:
"UK sources say that officials from the UK, France and Russia had to be called in the early hours of this morning after "fractious" negotiations between China and the US broke down in "acrimony".
My Take:
I expect the tension is much worse behind the scenes than we'll ever know. After all, the world economy and financial supremacy hang in the balance. When the meeting ends they will put some lipstick on this G-20 pig and claim that they made great strides in balancing out the global economy.
This will be a bunch of bull of course. As this economic catastrophe plays out, everyone will look out for themselves in the end. The problem is everyone has different self interests and in other instances the SAME interests.
China needs a cheap currency and strong demand from the US consumer in order to drive their economy. The US on the other hand needs the same because their consumer is toast. Therefore, we need to turn the tables and start selling to their consumers. China no likey on that idea. They want it all ala Scarface.
In other words, the USA needs stronger exports, and will try and cheapen it's currency in order to try and turn the economy around. This is a direct conflict with China's interests.
Europe has the same interests as the US because their consumers are dead as well. One difference is they are also attempting severe austerity which appears to be stirring up the masses as they tire of being broke and jobless. This is putting severe pressure on the European leaders to turn things around fast.
The bottom lin here I don't see how this ends well. As things deteriorate and countries become more desperate for jobs and growth, andthey will become more aggressive towards other nations in order to save themselves.
I can see the blame game talking points already:
The US will start to complain that they are tired of "carrying" the world on it's financial shoulders.
China will complain about the cheapening dollar because it creates crippling inflation for them and the rest of the world.
Europe will tire of our quantitative easing because they already understand from experience that it's a failed policy. They will start sable rattling with negative rhetoric aimed at the Fed to stop the insane spending.
Japan will rapidly start complaining about China's currency manipulations as the Yen continues to rise. This is crippling their export based economy and it puts them at risk of default as a result of their debt to GDP of 200%.
Japan will not be alone when it comes to debt problems. The US, and Europe will both have to deal with severe debt crisis that will eventually force a slashing of spending. this will then trigger another worldwide slowdown.
BTW
Don't think that the spending will stop over here? Just wait. The Fed took it on the chin in treasuries today, and if the bond market continues to fight QE then they will eventually be forced to stop because higher rates would destroy their ability to spend.
Austerity is coming folks. Start saving. NOW. We may have to suffer through QE 3,4, and 5 before we get there but the "easy money" days will end at some point. After seeing the bond markets reaction today to QE2, it may be a lot sooner then we think especially with the Republicans now controlling the house.
The Bottom Line
The G-20 should be interesting. I expect a giant hand holding smiley fest on worldwide TV on Sunday as they tell us how well they are working together in response to the financial crisis.
Meanwhile, behind closed doors, they are having bare knuckled fist fights as they blame each other for creating this mess.
I bet some huge finance minister from Germany has already picked up Turbo Timmy by his ears and threatened to throw him out the window if he doesn't stop spending!
Pay attention to the news this weekend. Also, watch out for a Chinese rate hike. I sold 40% of my silver today as I said earlier. If China hikes I expect to see a sell off in commodities and treasuries.
Stocks are also very vulnerable here especially if Ireland becomes the newest Iceland.
Let me be the first to apologize if I offended anyone with this pic! However, I must admit it made me laugh out loud.
I started thinking about our crazy world after looking at this, and it left me wondering how the G-20 could possibly could go well given the variety of cultures and economic problems.
Tensions between the US and China at the meeting are already leaking out:
"UK sources say that officials from the UK, France and Russia had to be called in the early hours of this morning after "fractious" negotiations between China and the US broke down in "acrimony".
My Take:
I expect the tension is much worse behind the scenes than we'll ever know. After all, the world economy and financial supremacy hang in the balance. When the meeting ends they will put some lipstick on this G-20 pig and claim that they made great strides in balancing out the global economy.
This will be a bunch of bull of course. As this economic catastrophe plays out, everyone will look out for themselves in the end. The problem is everyone has different self interests and in other instances the SAME interests.
China needs a cheap currency and strong demand from the US consumer in order to drive their economy. The US on the other hand needs the same because their consumer is toast. Therefore, we need to turn the tables and start selling to their consumers. China no likey on that idea. They want it all ala Scarface.
In other words, the USA needs stronger exports, and will try and cheapen it's currency in order to try and turn the economy around. This is a direct conflict with China's interests.
Europe has the same interests as the US because their consumers are dead as well. One difference is they are also attempting severe austerity which appears to be stirring up the masses as they tire of being broke and jobless. This is putting severe pressure on the European leaders to turn things around fast.
The bottom lin here I don't see how this ends well. As things deteriorate and countries become more desperate for jobs and growth, andthey will become more aggressive towards other nations in order to save themselves.
I can see the blame game talking points already:
The US will start to complain that they are tired of "carrying" the world on it's financial shoulders.
China will complain about the cheapening dollar because it creates crippling inflation for them and the rest of the world.
Europe will tire of our quantitative easing because they already understand from experience that it's a failed policy. They will start sable rattling with negative rhetoric aimed at the Fed to stop the insane spending.
Japan will rapidly start complaining about China's currency manipulations as the Yen continues to rise. This is crippling their export based economy and it puts them at risk of default as a result of their debt to GDP of 200%.
Japan will not be alone when it comes to debt problems. The US, and Europe will both have to deal with severe debt crisis that will eventually force a slashing of spending. this will then trigger another worldwide slowdown.
BTW
Don't think that the spending will stop over here? Just wait. The Fed took it on the chin in treasuries today, and if the bond market continues to fight QE then they will eventually be forced to stop because higher rates would destroy their ability to spend.
Austerity is coming folks. Start saving. NOW. We may have to suffer through QE 3,4, and 5 before we get there but the "easy money" days will end at some point. After seeing the bond markets reaction today to QE2, it may be a lot sooner then we think especially with the Republicans now controlling the house.
The Bottom Line
The G-20 should be interesting. I expect a giant hand holding smiley fest on worldwide TV on Sunday as they tell us how well they are working together in response to the financial crisis.
Meanwhile, behind closed doors, they are having bare knuckled fist fights as they blame each other for creating this mess.
I bet some huge finance minister from Germany has already picked up Turbo Timmy by his ears and threatened to throw him out the window if he doesn't stop spending!
Pay attention to the news this weekend. Also, watch out for a Chinese rate hike. I sold 40% of my silver today as I said earlier. If China hikes I expect to see a sell off in commodities and treasuries.
Stocks are also very vulnerable here especially if Ireland becomes the newest Iceland.
The Bond Market Sends Ben a Message
I can only imagine what it's like inside the Fed right now. Bernanke must sweating his beard off as the bond market shoves it up his A$$:
The 10 year bond is collapsing:
I love seeing Ben get rectally probed on this whole QE2 thing. It's insane and I think the bond market is finally waking up!
Additionally:
Irish yields dropped today which is fueling speculation of an EU bailout over the weekend. I don't think this will sit well with the markets.
The boat is filled with too many holes at this point. It's becoming impossible to hide this disaster as the central bankers scramble to hide their "debt" skeletons that sit in their closets.
If China raises rates this weekend on top of the issues above we could see a real shit show on Monday.
Nice job with QE Ben. This is a one way road and U-turns are not allowed:
The 10 year bond is collapsing:
I love seeing Ben get rectally probed on this whole QE2 thing. It's insane and I think the bond market is finally waking up!
Additionally:
Irish yields dropped today which is fueling speculation of an EU bailout over the weekend. I don't think this will sit well with the markets.
The boat is filled with too many holes at this point. It's becoming impossible to hide this disaster as the central bankers scramble to hide their "debt" skeletons that sit in their closets.
If China raises rates this weekend on top of the issues above we could see a real shit show on Monday.
Nice job with QE Ben. This is a one way road and U-turns are not allowed:
Stocks and Bonds Trade Lower as QE2 Begins
I had to laugh when I looked at bonds this morning after the Fed announced it had bought $7.2 billion of treasuries as they initiated their QE2 program:
Here is the 10 year bond as I type:
The 30 year bond on the other hand has held up pretty well:
Interesting price action. I am guessing the market might not be happy with the amount of 10 years that were purchased. This is just speculation based on what I see in the price action.
Mr. Market is also selling off today which is surprising given all of the funny money that was spent by the Fed today.
The DOW is down about 100:
Commodities are selling off sharply. I have a feeling this is in response to the proposed margin requirement change in the commodities market. Still looking for details on this info so stay tuned.
I might either sell some metals today or buy some PUT protection. Interesting day so far to say the least.
China's potential rate hike isn't helping the commodities either.
So far the market has rejected QE2. Let's see if this is an aberration or the beginning of the trend.
The way I see it: Selling this news has the perfect makings for a top in the market.
Until later.
Update:
Locked in profits and sold 40% of my silver position in SLV. Held onto all gold positions.
Here is the 10 year bond as I type:
The 30 year bond on the other hand has held up pretty well:
Interesting price action. I am guessing the market might not be happy with the amount of 10 years that were purchased. This is just speculation based on what I see in the price action.
Mr. Market is also selling off today which is surprising given all of the funny money that was spent by the Fed today.
The DOW is down about 100:
Commodities are selling off sharply. I have a feeling this is in response to the proposed margin requirement change in the commodities market. Still looking for details on this info so stay tuned.
I might either sell some metals today or buy some PUT protection. Interesting day so far to say the least.
China's potential rate hike isn't helping the commodities either.
So far the market has rejected QE2. Let's see if this is an aberration or the beginning of the trend.
The way I see it: Selling this news has the perfect makings for a top in the market.
Until later.
Update:
Locked in profits and sold 40% of my silver position in SLV. Held onto all gold positions.
Thursday, November 11, 2010
The Market That Never Drops
I think this video explains a lot of the sentiment right now among invetors(just listen to the first 5 minutes):
My Take:
I had to laugh watching this. I think Wall St is now filled with a bunch robots that are throwing darts at this point. Buy everything: Stocks, bonds, gold. It doesn't matter. They all go up.
I am starting to think that the market will never ever have another correction. We have finally created a market that NEVER goes down. It took us awhile to figure it out None of the price action makes sense anymore. Did we dump a little today? Yea but who cares. Our new enternally bullish market will make up the losses tomorrow!
Ok..Sarcasm off.
I'll tell ya....This all reminds me a lot of the tech bubble. People just jumped into stocks back then without doing any research. Like houses back in 2003-2004, stocks "only went up" during those times. Anything with a .com at the end of it hit triple digits.
I hate to say it, but I see a lot of the same things going on again today that remind me of 1999. They bulls all believe the market is teflon right now. Ben's got our back via QE. They believe the market is now the Incredible Hulk on a triple dose of steroids!
The confidence of the bulls was clearly evident today given the tape following awful news both here and abroad.
Let's highlight the news from last night and this morning:
- Cisco's offered horrific guidance moving forward and blamed poor consumer behaviour as the key reason as to why they expect slower growth ahead.
- Ireland's situation continues to worsen. An EU bailout is now being considered.
- Chinese inflation numbers came in higher than expected. Annualized their inflation rate was about 8.5%. Not good when the majority of your country lives in poverty.
- The world is ripping apart the Fed ahead of the G-20 summit because the cheap dollar is creating inflation around the world since we are the world's currency.
- Government debt issues are popping up everywhere from Europe to pension funds.
I could go on and on but you get the point. The fact that we were only down 73 points today was ridiculous. The NASDAQ should have been slaughtered today. CISCO is a bellweather stock. It's one of the most powerful companies in the tech world and their take on the consumer will keep many money mangers wide awake tonight.
The fact that they saw huge drops in their consumer related items should have sent shockwaves throughout the market.
Maybe Krull is right and we head to 20,000. I don't think there is a chance in hell. I am kidding of course.
I do find it interesting that the Fed has basically admitted that they are trying to create a wealth effect by pumping up the stock market. The skeptic in me wonders if there is some type of even deeper manipulation going on with the markets.
Nothing would surprise me at this point.
The problem(and Jeremy's video that I posted this morning touched on this) is that the Fed can only create these bubbles for a few short years before they fall apart.
We all know this is going to end the way all of the previous bubbles have: Painfully.
Just look at how the commodity bubble of 2008, the housing bubble, and the tech bubble all ended in the past 10 years. Everyone is left holding the bag in tears except for Wall St of course. They cash out as they pump the markets one more time in order to create another round of suckers to sell too.
The bigger problem this go around is there is no money left to blow anymore bubbles after this series ends. The Fed has shot it's wad with this last one. Rates are at zero and their pockets are now empty. Congress has told them that under no circumstances will there ever be another bailout. The people won't stand for it.
This leaves the Fed with basically zero options.
The Bottom Line:
I'll wrap it up by using the words of the famous Alan Greenspan from 1996:
"Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?"
My my how history repeats itself. How ironic is it that the same doofus that warned us about "irrational exuberance) is the same guy that kept rates too low for too long in the early 2000's which was was the fuel that triggered the housing bubble.
If you think these guys at the Fed don't know what they are doing with their bubble making low interest rate/QE machine you are nuts. Alan already admitted to you above that he knows this isn't healthy and can create irrational exuberance which is a nice way of saying bubbles.
The markets tanked shortly after this famous speech by the way. I know I know... shocker eh?
Remember folks: Cheap easy QE money is like crack, it feels great right after you take it but it sucks when you are forced to come off the high.
The way I see it, the only shot Ben thinks he has to get out of this is by creating an environment of temporary "financial panacea" that tricks people into acting stupid via speculation. He wants you to max out the credit card and speculate on everything from stocks to real estate and anything else in between.
He doesn't care that you will lose everything down the road when it all comes crashing down. All he is looking to do is use your money to kick the can a little further down the road. The status quo is fine for these guys because they live like kings.
He also knows this is a lot easier then facing the reality that we are broke and must slash all entitlements.
All I can say is: Don't take the bait and I'll say it again: Bubbles end the same painful way EVERYTYIME. It's even more important to remember this lesson this go around because this country will have no money left to take care of you when this series of bubbles all explode because there is no money left to pick up the pieces.
My Take:
I had to laugh watching this. I think Wall St is now filled with a bunch robots that are throwing darts at this point. Buy everything: Stocks, bonds, gold. It doesn't matter. They all go up.
I am starting to think that the market will never ever have another correction. We have finally created a market that NEVER goes down. It took us awhile to figure it out None of the price action makes sense anymore. Did we dump a little today? Yea but who cares. Our new enternally bullish market will make up the losses tomorrow!
Ok..Sarcasm off.
I'll tell ya....This all reminds me a lot of the tech bubble. People just jumped into stocks back then without doing any research. Like houses back in 2003-2004, stocks "only went up" during those times. Anything with a .com at the end of it hit triple digits.
I hate to say it, but I see a lot of the same things going on again today that remind me of 1999. They bulls all believe the market is teflon right now. Ben's got our back via QE. They believe the market is now the Incredible Hulk on a triple dose of steroids!
The confidence of the bulls was clearly evident today given the tape following awful news both here and abroad.
Let's highlight the news from last night and this morning:
- Cisco's offered horrific guidance moving forward and blamed poor consumer behaviour as the key reason as to why they expect slower growth ahead.
- Ireland's situation continues to worsen. An EU bailout is now being considered.
- Chinese inflation numbers came in higher than expected. Annualized their inflation rate was about 8.5%. Not good when the majority of your country lives in poverty.
- The world is ripping apart the Fed ahead of the G-20 summit because the cheap dollar is creating inflation around the world since we are the world's currency.
- Government debt issues are popping up everywhere from Europe to pension funds.
I could go on and on but you get the point. The fact that we were only down 73 points today was ridiculous. The NASDAQ should have been slaughtered today. CISCO is a bellweather stock. It's one of the most powerful companies in the tech world and their take on the consumer will keep many money mangers wide awake tonight.
The fact that they saw huge drops in their consumer related items should have sent shockwaves throughout the market.
Maybe Krull is right and we head to 20,000. I don't think there is a chance in hell. I am kidding of course.
I do find it interesting that the Fed has basically admitted that they are trying to create a wealth effect by pumping up the stock market. The skeptic in me wonders if there is some type of even deeper manipulation going on with the markets.
Nothing would surprise me at this point.
The problem(and Jeremy's video that I posted this morning touched on this) is that the Fed can only create these bubbles for a few short years before they fall apart.
We all know this is going to end the way all of the previous bubbles have: Painfully.
Just look at how the commodity bubble of 2008, the housing bubble, and the tech bubble all ended in the past 10 years. Everyone is left holding the bag in tears except for Wall St of course. They cash out as they pump the markets one more time in order to create another round of suckers to sell too.
The bigger problem this go around is there is no money left to blow anymore bubbles after this series ends. The Fed has shot it's wad with this last one. Rates are at zero and their pockets are now empty. Congress has told them that under no circumstances will there ever be another bailout. The people won't stand for it.
This leaves the Fed with basically zero options.
The Bottom Line:
I'll wrap it up by using the words of the famous Alan Greenspan from 1996:
"Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?"
My my how history repeats itself. How ironic is it that the same doofus that warned us about "irrational exuberance) is the same guy that kept rates too low for too long in the early 2000's which was was the fuel that triggered the housing bubble.
If you think these guys at the Fed don't know what they are doing with their bubble making low interest rate/QE machine you are nuts. Alan already admitted to you above that he knows this isn't healthy and can create irrational exuberance which is a nice way of saying bubbles.
The markets tanked shortly after this famous speech by the way. I know I know... shocker eh?
Remember folks: Cheap easy QE money is like crack, it feels great right after you take it but it sucks when you are forced to come off the high.
The way I see it, the only shot Ben thinks he has to get out of this is by creating an environment of temporary "financial panacea" that tricks people into acting stupid via speculation. He wants you to max out the credit card and speculate on everything from stocks to real estate and anything else in between.
He doesn't care that you will lose everything down the road when it all comes crashing down. All he is looking to do is use your money to kick the can a little further down the road. The status quo is fine for these guys because they live like kings.
He also knows this is a lot easier then facing the reality that we are broke and must slash all entitlements.
All I can say is: Don't take the bait and I'll say it again: Bubbles end the same painful way EVERYTYIME. It's even more important to remember this lesson this go around because this country will have no money left to take care of you when this series of bubbles all explode because there is no money left to pick up the pieces.
Jeremy Grantham Speaks!
Great stuff here from investing legend for Jeremy Grantham.
It's a long one but clearly a must watch:
It's a long one but clearly a must watch:
Wednesday, November 10, 2010
Bondsanity!!!
Long day. Finally back home. I had to laugh watching the credit markets today. They played the old school/1970's style bond game today that I talk about on here often.
Let's look at the 10 year trading this week:
Meanwhile, the European debt markets were crashing as it appears Ireland is rapidly turning into another Iceland as their banks implode. Irish 10 year debt yields rose to 8.5%:
Quick Take:
The bond boys made a fortune in the US treasury market. They sold off the bond yields all week as the world prepared for a potential 30 year bond sale disaster.
The auction got done(albeit not impressively) as the primary dealers loaded up on the 30 year bonds to complete the auction.
News of the completed auction was announced with great relief to the world. 10 and 30 year bonds rallied hard as a result. The primary dealers were then able to dump these bonds(as well as others that they bought heading into the auction) at a huge profit after the jump following the "good" auction news.
Folks, we saw a 1.5 point trading spread on the 10 year today.
This price action today in treasuries was beyond crazy! It was BONDSANITY!
The traders are laughing all the way to the bank tonight as they once again played their bond game to perfection. This is why I didn't get involved in TBT heading into the auction today. I was not surprised to see how things went down.
That being said, TBT is now looking much more attractive after the huge rally in bonds. I'll sit back for a few more days and watch.
The reason I'll be patient here is because Europe's debt markets are on the cusp of a major blow up. A detonation of one of the PIIGS would trigger a huge capital flight to safety from Europe into the US bond markets as well as the US dollar. This is an easy way to get gutted shorting T's.
The Euro could very well sell off versus the USD if they can't gain control of this situation.
Unprecedented times my friends. I will be back to more normal postings now that I am back.
Best,
J
Let's look at the 10 year trading this week:
Meanwhile, the European debt markets were crashing as it appears Ireland is rapidly turning into another Iceland as their banks implode. Irish 10 year debt yields rose to 8.5%:
Quick Take:
The bond boys made a fortune in the US treasury market. They sold off the bond yields all week as the world prepared for a potential 30 year bond sale disaster.
The auction got done(albeit not impressively) as the primary dealers loaded up on the 30 year bonds to complete the auction.
News of the completed auction was announced with great relief to the world. 10 and 30 year bonds rallied hard as a result. The primary dealers were then able to dump these bonds(as well as others that they bought heading into the auction) at a huge profit after the jump following the "good" auction news.
Folks, we saw a 1.5 point trading spread on the 10 year today.
This price action today in treasuries was beyond crazy! It was BONDSANITY!
The traders are laughing all the way to the bank tonight as they once again played their bond game to perfection. This is why I didn't get involved in TBT heading into the auction today. I was not surprised to see how things went down.
That being said, TBT is now looking much more attractive after the huge rally in bonds. I'll sit back for a few more days and watch.
The reason I'll be patient here is because Europe's debt markets are on the cusp of a major blow up. A detonation of one of the PIIGS would trigger a huge capital flight to safety from Europe into the US bond markets as well as the US dollar. This is an easy way to get gutted shorting T's.
The Euro could very well sell off versus the USD if they can't gain control of this situation.
Unprecedented times my friends. I will be back to more normal postings now that I am back.
Best,
J
Monday, November 8, 2010
Gold and Silver Continue to Soar
Just a few tidbits today. I have another crazy week business wise so I will get on and post when I can.
Gold and silver continue to soar as the world continues to lose faith in currencies. When you look at the chart below why wouldn't they?:
As you can see above, our financing needs vs. GDP are now worse than Greece. If it wasn't for the Fed buying treasuries we probably would be seeing near double digit interest rates over here.
Japan's debt issues are startling to say the least. What's crazy is their currency continues to soar despite their awful balance sheet. Sometimes things just don't make any sense. There is a lot of hedge fund action that's driving the JPY/USD currency trades according to what I have read.
However, with $4 trillion a day in volume, the FX markets are not easily manipulated so there are other forces at work here other than the hedgies.
I wanted to throw up a chart on silver:
Quite an amazing run isn't it? Glad I have had the opportunity to enjoy this. I have sold some on the way up but I gotta be honest: I have a hard time getting away from metals right now given the money printing.
I think if stocks begin to wallow around like they are today it's only going to increase the money flows into gold and other commodities.
Owning something hard is increasingly looking like the best thing to do as we all continue to drownin trillions of dollars of debt.
The Bottom Line
I don't know what to tell you here folks. I am holding onto metals, a few shorts, and cash(including bonds) and praying the financial system can stay in one piece.
With every passing day I lose more and more hope that we can actually find away out of this.
IMO, there is 1 data point everyone needs to watch this week. There is a 30 year bond auction on Wednesday. Pay CLOSE attention to this. The Fed is going to avoid buying 30 years like the plague because they realize they could take a bath on them as they attempt to create inflation.
The Fed is helpless when it comes to protecting the 30 year auctions. With all of the money printing going on it's going to be fascinating to see how this auction goes. The last 30 year sale was awful.
This could definately be a huge market mover. Other than that it's a fairly quiet week relative to last week's insanity.
I am anxiously waiting to buy a huge chunk of TBT which shorts the long end of the treasury curve. I wan't see how Wednesday's 30 year auction goes before I make this trade.
This is the one trade I continue to drool over, but I need to see what effect last weeks QE announcement has on treasuries before I pull the trigger.
Bonds still might have one more move higher thanks to the Fed.
Until next time!
Gold and silver continue to soar as the world continues to lose faith in currencies. When you look at the chart below why wouldn't they?:
As you can see above, our financing needs vs. GDP are now worse than Greece. If it wasn't for the Fed buying treasuries we probably would be seeing near double digit interest rates over here.
Japan's debt issues are startling to say the least. What's crazy is their currency continues to soar despite their awful balance sheet. Sometimes things just don't make any sense. There is a lot of hedge fund action that's driving the JPY/USD currency trades according to what I have read.
However, with $4 trillion a day in volume, the FX markets are not easily manipulated so there are other forces at work here other than the hedgies.
I wanted to throw up a chart on silver:
Quite an amazing run isn't it? Glad I have had the opportunity to enjoy this. I have sold some on the way up but I gotta be honest: I have a hard time getting away from metals right now given the money printing.
I think if stocks begin to wallow around like they are today it's only going to increase the money flows into gold and other commodities.
Owning something hard is increasingly looking like the best thing to do as we all continue to drownin trillions of dollars of debt.
The Bottom Line
I don't know what to tell you here folks. I am holding onto metals, a few shorts, and cash(including bonds) and praying the financial system can stay in one piece.
With every passing day I lose more and more hope that we can actually find away out of this.
IMO, there is 1 data point everyone needs to watch this week. There is a 30 year bond auction on Wednesday. Pay CLOSE attention to this. The Fed is going to avoid buying 30 years like the plague because they realize they could take a bath on them as they attempt to create inflation.
The Fed is helpless when it comes to protecting the 30 year auctions. With all of the money printing going on it's going to be fascinating to see how this auction goes. The last 30 year sale was awful.
This could definately be a huge market mover. Other than that it's a fairly quiet week relative to last week's insanity.
I am anxiously waiting to buy a huge chunk of TBT which shorts the long end of the treasury curve. I wan't see how Wednesday's 30 year auction goes before I make this trade.
This is the one trade I continue to drool over, but I need to see what effect last weeks QE announcement has on treasuries before I pull the trigger.
Bonds still might have one more move higher thanks to the Fed.
Until next time!
Sunday, November 7, 2010
Take it from Someone Who Knows
Well, the movie about QE is now in theatres. Make sure you check it out:
I had a good laugh after catching this. I thought a lot about our decision to officially money print last week. The blogosphere has been on fire since the QE announcement. The Fed is getting brutalized by pretty much everyone except for a few Paul Krugman fans.
It's been interesting to watch the reaction of the financial world to Ben Bernanke's decision to start money printing. I was curious to see what Germany would have to say about this because they have seen this show before...Wiemar anyone?
Needless to say they were not happy:
"German Finance Minister Wolfgang Schäuble has sharply criticized the US Federal Reserve's decision to pump a further $600 billion into the country's ailing economy. He says the move could create problems for the global economy. Others have joined in the condemnation.
"I don't think they are going to solve their problems that way," Schäuble told German public broadcaster ZDF in a Thursday evening interview. "They have already pumped an endless amount of money into the economy via taking on extremely high public debt and through a Fed policy that has already pumped a lot of money into the economy. The results are horrendous."
German Economics Minister Rainer Brüderle, of the business-friendly Free Democratic Party, Chancellor Angela Merkel's junior coalition partners, is likewise skeptical that the Fed's path is the correct one. "I view the move with concern," he told reporters in Berlin on Thursday, adding that he doesn't think that a more liberal monetary policy will necessarily boost the economy. "It isn't enough to set out the water. The horses have to drink too."
My Take:
Ummm.....You can't get anymore direct then that. The money quote above is the last sentence. Essentially what he is saying is you can lead a potential borrower to money but you can't make them borrow.
This is essentially the whole problem in a nutshell. The Fed is providing trillions of dollars that no one wants. America has decided that they have borrowed enough(they are up to their eyeballs in debt) and they don't want to borrow anymore.
The Fed continues to sit here and try and shove it down our throats. They have been trying this now for 3 years. I't hasn't WORKED.
What's Einstein's definition of insanity again?:
"Insanity is doing the same thing over and over again and expecting different results."
Is it a stretch to say that Bernanke is now officially insane according to Einstein's definition?
I don't think so: How many rate drops and QE's have we done so far? I've lost count. Have any of them worked? No. It's kept a few things artificially propped up. Overall, it's clearly been a horrendous failure according to Germany's Financial experts above.
It's clearly obvious that Ben has run out of options. This is a desperate move by the Fed. They realize that there is no demand in the economy for over priced assets. No one wants to spend $500,000 for a house in a nice suburb anymore. No one wants to buy treasuries that are owned by an insolvent country that yield nothing.
Anyone with a brain realizes that this will not end well. Ben knows it too but he doesn't seem to have enough character to end this ridiculous QE idea. He looks more and more like an academic who is obsessed with stopping deflation.
He has been called the leading expert on the depression. My retort to that is who in the hell made him the expert? He wrote a paper on it. Big deal, I have written lots of papers too....Does that make me an expert on anything? Hell no.
He obviously didn't spend enough time reading about hyperinflation. This guy has to be stopped because inflation is going to hit and when it does it's lights out.
It's time to put away the printing machines and let the markets decide valuations instead of the Fed. People want to buy houses but they have no desire to overpay for them.
By keeping rates at zero they are guaranteeing that we see an inflation crisis. It's already starting. Gas is now back over $3. They are also robbing savers with these easing policies as yields on treasuries and CD's have dropped down to practically nothing. This has paralyzed millions(especially the retirees).
As a result, the savers are beng forced into the stock market and other risky assets in an attempt to find yield that the elderly depend on in order to live. The problem is the are jumping into stocks at over inflated prices.
When inflation hits it will be a double whammy for the markets which means many savers who never wanted to own stocks in the first place will get wiped out as earnings collapse:
The "double whammy" is:
1. Corporate profits will get crushed because input costs will rise due to inflation.
2. This catastrophic inflation will drain discretionary spending by the consumers because they will be forced to spend more money on essentials like food and gas.
This will set the markets up for a devastating crash which will leave millions in this country owning with empty 401k's and over priced houses that they won't ever be able to sell.
Ben, put the helicopter away and take the banks into receivership before you destroy this country.
It's time to pay the piper. If you don't stop you will force me to buy calls on wheelbarrow manufacturers.
Germany obviously hasn't forgotten what happened to them as you can see above. Bernanke apparantly has:
I had a good laugh after catching this. I thought a lot about our decision to officially money print last week. The blogosphere has been on fire since the QE announcement. The Fed is getting brutalized by pretty much everyone except for a few Paul Krugman fans.
It's been interesting to watch the reaction of the financial world to Ben Bernanke's decision to start money printing. I was curious to see what Germany would have to say about this because they have seen this show before...Wiemar anyone?
Needless to say they were not happy:
"German Finance Minister Wolfgang Schäuble has sharply criticized the US Federal Reserve's decision to pump a further $600 billion into the country's ailing economy. He says the move could create problems for the global economy. Others have joined in the condemnation.
"I don't think they are going to solve their problems that way," Schäuble told German public broadcaster ZDF in a Thursday evening interview. "They have already pumped an endless amount of money into the economy via taking on extremely high public debt and through a Fed policy that has already pumped a lot of money into the economy. The results are horrendous."
German Economics Minister Rainer Brüderle, of the business-friendly Free Democratic Party, Chancellor Angela Merkel's junior coalition partners, is likewise skeptical that the Fed's path is the correct one. "I view the move with concern," he told reporters in Berlin on Thursday, adding that he doesn't think that a more liberal monetary policy will necessarily boost the economy. "It isn't enough to set out the water. The horses have to drink too."
My Take:
Ummm.....You can't get anymore direct then that. The money quote above is the last sentence. Essentially what he is saying is you can lead a potential borrower to money but you can't make them borrow.
This is essentially the whole problem in a nutshell. The Fed is providing trillions of dollars that no one wants. America has decided that they have borrowed enough(they are up to their eyeballs in debt) and they don't want to borrow anymore.
The Fed continues to sit here and try and shove it down our throats. They have been trying this now for 3 years. I't hasn't WORKED.
What's Einstein's definition of insanity again?:
"Insanity is doing the same thing over and over again and expecting different results."
Is it a stretch to say that Bernanke is now officially insane according to Einstein's definition?
I don't think so: How many rate drops and QE's have we done so far? I've lost count. Have any of them worked? No. It's kept a few things artificially propped up. Overall, it's clearly been a horrendous failure according to Germany's Financial experts above.
It's clearly obvious that Ben has run out of options. This is a desperate move by the Fed. They realize that there is no demand in the economy for over priced assets. No one wants to spend $500,000 for a house in a nice suburb anymore. No one wants to buy treasuries that are owned by an insolvent country that yield nothing.
Anyone with a brain realizes that this will not end well. Ben knows it too but he doesn't seem to have enough character to end this ridiculous QE idea. He looks more and more like an academic who is obsessed with stopping deflation.
He has been called the leading expert on the depression. My retort to that is who in the hell made him the expert? He wrote a paper on it. Big deal, I have written lots of papers too....Does that make me an expert on anything? Hell no.
He obviously didn't spend enough time reading about hyperinflation. This guy has to be stopped because inflation is going to hit and when it does it's lights out.
It's time to put away the printing machines and let the markets decide valuations instead of the Fed. People want to buy houses but they have no desire to overpay for them.
By keeping rates at zero they are guaranteeing that we see an inflation crisis. It's already starting. Gas is now back over $3. They are also robbing savers with these easing policies as yields on treasuries and CD's have dropped down to practically nothing. This has paralyzed millions(especially the retirees).
As a result, the savers are beng forced into the stock market and other risky assets in an attempt to find yield that the elderly depend on in order to live. The problem is the are jumping into stocks at over inflated prices.
When inflation hits it will be a double whammy for the markets which means many savers who never wanted to own stocks in the first place will get wiped out as earnings collapse:
The "double whammy" is:
1. Corporate profits will get crushed because input costs will rise due to inflation.
2. This catastrophic inflation will drain discretionary spending by the consumers because they will be forced to spend more money on essentials like food and gas.
This will set the markets up for a devastating crash which will leave millions in this country owning with empty 401k's and over priced houses that they won't ever be able to sell.
Ben, put the helicopter away and take the banks into receivership before you destroy this country.
It's time to pay the piper. If you don't stop you will force me to buy calls on wheelbarrow manufacturers.
Germany obviously hasn't forgotten what happened to them as you can see above. Bernanke apparantly has:
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