hello hm, today's report:
just executed buys of papers
- 1/6 strength pt @ 1780
- 1/3 strength ag @ 38.53 (hkd at 7.76 rate to usd for conversion)
- 1/3 strength au @ 1,582
just cleared from tray
From: J
Sent: Thu, July 14, 2011 11:56:41 AM
Subject: Re: Comments - Week of July 11
still have greater than zero and therefore too much idle cash and
it all feels i am still short the three primary macro investment groups ag, au, and pt
very uncomfortable
must get more long, to get risk-off
snip ...
Subject: FX after Bernanke
FED’s Bernanke has brought another round of quantitative easing into play. The criteria for the FED to spring into action are the following: First, the recent economic weakness must prove to be more persistent than expected. Secondly, deflationary risks re-emerge. Our economics team suggest that both events are unlikely to trigger FED easing in the near future. However, the message the market has received is clear: The FED will not tolerate another economic decline without reacting to slowing economic conditions. The ‘Bernnake put’ has been re-established, which will support asset prices.
The US economy runs a very low asset liability ratio despite the stock market rally witnessed over the past couple of years. The reason is housing, which accounts for roughly two-thirds of the private sector asset base. The FED will have to ensure the asset liability ratio rebounds. Asset price weakness is the last thing the FED needs.
Bernanke has laid out the instruments the FED could use if it was required to ease rates again. One option would be to pledge to hold rates at record lows and the Fed’s balance sheet at a record high (close to USD 3trn) for a longer period of time. Another option is to embark on a third round of government bond purchases or to increase the average maturity of the Fed’s current securities holdings. The Fed also could reduce the interest rate it pays banks on excess reserves parked at the central bank.
The content of the testimony is a big plus for risk appetite. This morning’s strong release of Chinese GDP data and indicators suggest that the PBOC may delay its own monetary tightening intentions in light of the EMU crisis working in the same direction.
That does not mean that markets now have a free run to the upside. EMU remains an issue and can derail the rally anytime. However, with equity market risk now steered to the European side it means trading currencies accordingly. In our last edition of the FX Pulse, we recommended EURCAD, EURMXN and EURNZD shorts. These trades will prosper within the current environment as US monetary policy and Chinese growth both reassure markets while EMU policy makers appear to be asleep at the wheel.
Morgan Stanley | Research
From: J
Sent: Thu, July 14, 2011 11:51:11 AM
Subject: Re: Comments - Week of July 11
...
now paper pt at 1/3 + 1/6
paper ag at 2/3
paper gold at full strength
am sensing a perturbation in the force
maybe tomorrow the almighty shall offer opportunity to average down on any / all three primary investment groups (like food groups veggie, meat, dairy, etc) to overweight position
between the independence movement of south california, impending / defining vote on immigration tyranny in arizona, downgrades of t-bills, qe stealth, qe italy, qe japan reconstruction, qe china growth, qe ad infinitum, qe ad nauseaum ...
and the sure-to-happen usa august 2nd x-day
where is the safe haven?
sure as heck illogical for safety to be in usd this time as was during lehman crisis
what an awful game we are force to play, with murky rules changed at will, where most cannot win, few are allowed to keep winnings, many shall fall, so that a very few could rise
what fun
From: J
Sent: Thu, July 14, 2011 9:19:57 AM
Subject: Re: Comments - Week of July 11
... shall add 1/3 more silver this day
on top of what was bought Message 27476241 last week
because Message 27476235
the force may turn out to be strong
and in line w/ my motto, "front run the chinese", especially the 200 mil with icbc youtube.com (beautiful traditional design shown near end on video) bank accounts stuffed full of paper
more silver porn youtube.com
am mindful that the eventual interim high could easily be 60-120/oz w/i 24-48 months and cannot think of anything else that might similarly reward, except t-bills which i do not like to hold alongside the global banks, strategic competitors, and such and also because t-bills are not shiny
i cannot yet fathom how bad events would go for the french and italians and the americans, all so busy minding unproductive undertakings in various deserts, and so i cannot call the top in silver
am in platinum to 1/3 of eventual position size Message 27464707
had always been in 2/3 of max paper gold position
cheers, j
p.s. ... but am ever cognizant that should capitol hill manage to stuff up debt ceiling, may have to seriously average down amid planetary screaming before all goes deadly quiet
imo the usa congress cretins have not a clue that they are smoking cigars next to a natural gas depot
From: R
Sent: Thu, July 14, 2011 7:38:46 AM
Subject: Re: Comments - Week of July 11
I watched the whole show also, with great difficulty trying to stay awake.
The questions were so miserable that the best question might have been from Maxine Waters regarding the Rolling Stones article. rollingstone.com
Bernanke was clearly flustered and claimed the article to be incorrect. I would have pressed and demand that he responses in writing about why he thinks the article is incorrect.
On Wed, Jul 13, 2011 at 11:52 AM, T wrote:
I watched the exchange, as well as all of Paul's ramblings. Now that Paul is not seeking reelection (so he can make a failed attempt for President), you might think the gloves would come off. But they don't. Some of the questions from Congress today were pathetic.
Per Bernanke, the bottom line is that gold is up because of worldwide systemic concern with the financial system and it has NOTHING to do with Fed policy (that last part was only implied).
On 7/13/2011 2:22 PM, B wrote:
RP cat & mouse w/ Bernak today.
"is gold money"
"No."
"Why do you hold it then?"
"Tradition."
youtube.com
=======================
Heck of a tradition, I would say...
Sent from my iPad
On Jul 13, 2011, at 8:59 AM, B wrote:
Simon Johnson, 7/4/11:
bloomberg.com
<snip>
Less obvious, but no less worrisome, is Italy. With a precarious fiscal picture, it could be the next to come under pressure. And this time, U.S. banks are in the line of fire, with about $35 billion in loans to Italy and potentially more exposure to risk through derivatives markets.
<snip>
How could that happen? Investors are just beginning to understand that they will soon face losses on loans to Greece. Until recently, the presumption had been that German, Dutch and other northern European taxpayers would bail out failing governments in peripheral eurozone countries, at least to the extent necessary to protect creditors against losses.
This logic made some sense for smaller countries like Greece. It has about 360 billion euros in debt outstanding and the potential credit losses in any restructuring are in the range of 100 billion to 200 billion euros. The amounts are small relative to the EU’s 12 trillion-euro economy.
Inconceivable Rescue
Italy, though, has close to 2 trillion euros in debt outstanding. It’s inconceivable that Germany or the IMF could provide a rescue to protect its creditors. Such a package would have to involve loans and guarantees of at least 500 billion, and possibly 1 trillion, euros to impress the markets. This would be a significant fraction of Germany’s gross domestic product of about 2.5 trillion euros. With a debt-to-GDP ratio of about 80 percent, Germany’s ability to take on new debt is limited.
The Netherlands, Finland and Austria, combined with Germany, have a GDP of about 3.5 trillion euros. France adds 2 trillion more, but its debt, already 85 percent of output, is expected to grow over the next several years.
It all adds up to one sobering fact: Europe does not have enough fiscal firepower to handle an Italian crisis -- at least in such a way as to protect creditors completely. Beyond the difficult numbers, why would Germany or other EU countries lend to Italy, particularly when its politicians show no sign of coming to grips with their new reality?
<snip>
Italian banks will be able to draw on substantial credit from the European Central Bank, especially once Mario Draghi, former head of the Bank of Italy, becomes the ECB president in November. But the entire euro system -- the ECB plus the 17 central banks sharing the euro -- has a combined balance sheet of only about 1.9 trillion euros. It’s unlikely that ECB credit can do more than postpone sovereign-debt problems on an Italian scale.
What are the implications for the U.S.? Think about the market turbulence that questions over Greece, Ireland and Portugal caused in the last year, and multiply. And think about an endgame in which moral hazard is really over -- meaning creditors that bet big on bailouts are allowed to suffer losses.
Previous bank stress tests did not factor in such difficult events, so the private sector and policy makers have no information to guide them. They are just guessing. All of this means the U.S. needs another round of stress tests for systemically important institutions. It would be wise for U.S. banks to raise enough capital now to withstand any trans- Atlantic storms.
(Simon Johnson, who served as chief economist at the International Monetary Fund in 2007 and 2008, and is now a Massachusetts Institute of Technology professor and a senior fellow at the Peterson Institute for International Economics, is a Bloomberg View columnist. The opinions expressed are his own.) |
