just cleared from e-mail tray
From: A
Sent: Sat, November 27, 2010 4:47:41 PM
Subject: RE: Comments - Week of November 29
J did you have withdrawal symptoms after being in Jakarta so long and do something after hours?? :)
Surge Of Inexplicable After Hours Selling Takes Gold Volatility Index To All Time Low
In addition to the rout in the ES, VIX and GC which we pointed out earlier, there were some additional fireworks behind the scenes in today's after hours session. The CBOE Gold Volatility Index, the ^GVZ plunged by the most in over a year, as the index hit an all time low of 15.92 without the underlying making much of a notable move. The most curious aspect of the trade was that the entire dump occured in the AH session. Many were left scratching their heads over what caused this monstrous unwind in long vol positions: was this the unwind of a massive long ES/short GC arb? We don't know, although if rumors that a major fund is planning to stand for delivery of Dec gold turn out to be true, then obviously someone got confirmation today. Keep a close eye out on the GVZ. Should this price level persist on Monday, then the front futures contract will likely surge.
A trader whom we managed to reach late in the day had this to say on this stunning move:
Typical course of action for HFT and other commodity pranksters is to shake out new contract holders. They did it with absolute gusto today, shorting thousand of contracts into thin markets. That didn't work. Gold held up. Now, taking into account that peripheral EU spreads are hitting new highs, hedge funds are getting redemption requests etc, why would you go home long ES and short GC? So what they did is they sold ES into and after the close. After that ES/SPY close they can't run these 'start arb' HFT strategies any more that go long S&P and short Gold as well. Gold's closing time is 1:45pm. They had to cover shorts.
If the short covering in paper persists, perhaps the world won't even need the Krieger/Keiser physical PM campaign to destroy Blythe Masters.
And a bonus observation of the gold curve is the Gold February contract, where in the last minute someone bought 2k contracts, which represents 200,000 ounces or about $272MM worth of gold. Not a bad purchase for the last trade on the slowest day of the year.
From: M
Sent: 27 November 2010 03:05
Subject: Comments - Week of November 29
Gold closes the week at new highs!
In Euro terms anyway......
From: M
Sent: Sat, November 27, 2010 1:57:22 PM
Subject: Re: Comments - Week of November 29
More bad news from California.....
biggovernment.com
SNIP:
Much has been written about The California Public Employees’
Retirement System (CalPERS) being underfunded by $500 billion due to massive investment losses over the last decade, but now we have video of a CalPERS Senior Pension Actuary, Kung-pei Hwang, describing how they intend to change basic assumptions in their financial model to (please allow me to mix my metaphors) Hide The Decline in their assets held for municipal, county, and state employee’s retirement.
Through this statistical gimmickry, CalPERS can push the loss into later years and appear solvent today. Of course, at some point in the future it will need to raise funds from state and local governments to compensate for these losses. But for now, they seem content to hide the disastrous condition of their fund.
From: M
Sent: Sat, November 27, 2010 10:10:11 AM
Subject: Re: Observations - Week of November 22
Correction - Spain is double the size of the PIG - Portugal, Ireland, Greece, not 3 times the size.
On Sat, Nov 27, 2010 at 10:03 AM, M wrote:
Okay, if this is a fiscal budget item, that means:
When Greece hit the wall, Spain had to cough up money.
When Ireland bailed out its banks and hit the wall, Spain had to cough up money.
When Portugal hits the wall, Spain will have to cough up more money.
When Spain's banks need to be bailed out, Spain will have to cough up more money.
And when Spain, which is 3 times larger than Greece, Ireland & Portugal combined needs money, who will pony up?
Why does this remind me of Credit Anstalt in 1931? Rather than let the weaker fail, you simply merge into to a larger entity so that when it busts, the entire thing collapses.....
They really ought to print instead.....
Or am I missing something once again? (wouldn't be the first time!)
From: A
Sent: Sat, November 27, 2010 3:11:33 AM
Subject: RE: Observations - Week of November 22
But where are they withdrawing liquidity?
Are you bullish Japanese equities or currency? Or neither?
I must admit I have heard so many conflicting and convincing opinions in Japan , so do nothing?
UK funds only to protect UK banks, perhaps € really dies after Belgium goes…
From personal experience Ireland was in a bubble 1990 wrt property onwards – never had a productive base, just European subsidies and low tax – look at the tiny population and the lending.
From: H
Sent: Sat, November 27, 2010 12:51:23 AM
Subject: Re: Observations - Week of November 22
not really. the bailout if financed as a fiscal budget item. the ECB only prints insofar as it buys bonds of the beleaguered countries (however, these buys are partially sterilized by withdrawing liquidity elsewhere in the system) and by lending copiously to the banks all over the euro area. however, it has in the meantime actually lowered its monetary base considerably by withdrawing a good portion of the emergency lending. so all in all, the answer at this point is, no, the ECB doesn't print - not yet, anyway.
as to Japan, its money supply growth is still the by far lowest among the major currency blocs. the $60 bn. in BoJ 'QE' is chickenfeed and won't change that materially. The big printers are China and the Fed (in that order).
All of these bailouts and refusal to allow debt holders to take haircuts is simply to protect the German / French banks isn't it?
exactly, except you forgot to mention UK bank exposure. . see attached chart detailing the inteconnectedness w.r.t. Ireland alone
again, UK banks are the biggest lenders to Ireland. they are the reason why the UK chipped in 7 bn. pounds to the 'rescue'.
On Thu, Nov 25, 2010 at 4:12 AM, M wrote:
Doesn't this simply imply more money-printing by the ECB?
Isn't the euro rescue program by definition "money printing?"
Or am I confused as to how this operation works?
US printing, China printing, Japan printing (a little) and the ECB printing...
I'm surprised gold has been so restrained.....
"Germany's leading central banker, Axel Weber, said he believed European countries would be willing to increase their share of a 750 billion euro rescue program if it is depleted by further bailouts."
All of these bailouts and refusal to allow debt holders to take haircuts is simply to protect the German / French banks isn't it?
How on earth are the people of Ireland, Spain, etc. going to react when they finally get it?
Or am I off base?
From Martin Wolf:
Ireland is nothing like Greece. Back in 2007, Ireland’s net public debt was just 12 per cent of gross domestic product. This compares with 50 per cent in Germany and 80 per cent in Greece. Spain, too, had net public debt in 2007 at just 27 per cent of GDP.
– the Irish private sector will run a financial surplus of 15 per cent of GDP this year, according to the International Monetary Fund –
So in essence, rather than letting the Irish Banks fail and the equity holders being wiped out and the debt holders being the new equity holders with their debt severely chopped, all the losses are now held by the Irish Government and people? So that German and French Banks are made whole? Is this right? If I am an Irish citizen, I would be very pissed..... |
