Bill Cara’s Blog for Mar 8, 2012

CTA Trading Desk Morning Report

[7:00am ET] Good morning.

The numbers of attendees (well over 30,000), exhibitors (over 1,100) and countries represented (over 120) at Toronto’s PDAC 2012 mining convention, trade show and investors exchange add up to another outstanding success for the mining industry.

So big has this event become that the cavernous south building of the Metro Toronto Convention Centre as well as the convention facilities of the adjacent InterContinental and Fairmont Royal York hotels are now inadequate. Next year’s affair will require expansion to MTCC’s huge north building as well, where I’m told the country exhibits will be displayed.

http://www.mtccc.com/imapdata/mtcc.html

If there is one word I hear from first-time attendees it’s “awesome!” and it truly is. You cannot come here and not be impressed. If you come to learn, you will be overwhelmed with information. If you come to network, you will leave with friends from every part of the world, many of them government and corporate leaders. If you come to do business, you will get business done.

Usually I try to convey impressions of some of these exhibiting companies for your benefit. That was my intention again this year, but, unfortunately, I found myself hosting a large VIP delegation from China. One and likely two very significant professional services agreements will be the result of those meetings, but I cannot say more at this time.

Every year at PDAC, it seems, the Interventionists try to break the spirit of this group by crashing the price of precious metals. You’d hope that markets are void of these games, but we know better. We also know that metals are increasingly in demand and the discoveries less frequent and more costly as time moves on. At the same time, we know that governments throughout the world have lost control of their spending and that central banks are forced to help them meet their financial obligations, which devalues their paper currency, and lifts the prices of “real” assets, including metal. Hence, the spirit cannot be broken. These people are a force to be reckoned with.

The convention is an exhausting four day event, but this year there will be two additional days added on for me. Then I get to write the Week In Review!

I told you I needed to rest up.

As for the market; now that PDAC is over, watch the prices of metals and metals related stocks rally.

Enjoy your day.


Good morning, Geoff here.

This morning, markets are moving higher on a stronger euro. Greece moved one step closer to restructuring its debt as 60% of private holders have agreed to the offer on the table.

The Bank of England and the ECB held interest rates steady.

Both of those stories are being viewed as positive for Europe and the markets this morning.

Boy, things can really change in 48 hours….not.

Like I said yesterday, sometimes the market doesn’t need a fundamental reason to move. Sure, you can call any news story a catalyst, but the drop 2 days ago was more about traders taking gains with stops being executed than any story.

Today should be interesting. The buys I mentioned yesterday all look really good this morning with new buy signals popping up today so it will be tough to sell any of them. However, I don’t like going into a big number like unemployment leaning too far one way or the other. We shall see how the day goes but after an initial pop, I wouldn’t be surprised if we track sideways for most of the day.

Have a great trading day!


Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.

Symbol Name Last Trade Change Related Info
^ATX ATX 2,155.90 6:44AM EST Up 29.18 (1.37%) Components, Chart, More
^BFX BEL-20 2,268.77 6:58AM EST Up 28.81 (1.29%) Components, Chart, More
^FCHI CAC 40 3,464.95 6:58AM EST Up 72.62 (2.14%) Components, Chart, More
^GDAXI DAX 6,808.73 6:44AM EST Up 137.62 (2.06%) Components, Chart, More
^AEX AEX General 324.75 6:44AM EST Up 5.11 (1.60%) Components, Chart, More
^OSEAX OSE All Share 482.50 6:44AM EST Up 8.30 (1.75%) Components, Chart, More
^OMXSPI Stockholm General 341.04 6:59AM EST Up 7.40 (2.22%) Components, Chart, More
^SSMI Swiss Market 6,133.79 6:44AM EST Up 31.25 (0.51%) Components, Chart, More
^FTSE FTSE 100 5,867.83 6:44AM EST Up 76.42 (1.32%) Components, Chart, More
FPXAA.PR PX Index 1,000.60 6:58AM EST Up 10.10 (1.02%) Chart, More
MICEXINDEXCF.ME MICEX Index 1,571.66 Mar 7 Up 20.37 (1.31%) Chart, More
GD.AT Athex Composite Share Price Index 753.83 6:44AM EST Up 8.60 (1.15%) Chart, More

http://finviz.com/futures.ashx

http://finviz.com/fut_chart.ashx?p=m5&t=ES

http://finviz.com/fut_chart.ashx?p=m5&t=ZB

http://finviz.com/fut_chart.ashx?p=m5&t=DX

http://finviz.com/fut_chart.ashx?p=m5&t=GC

http://finviz.com/fut_chart.ashx?p=m5&t=SI

http://finviz.com/fut_chart.ashx?p=m5&t=CL

The team will check in during the day, reporting in the Discourse when there is a new entry.

Enjoy your day.


Cara on Trends & Cycles


Vad’s Catch of the Day


Kaimu’s Sound Money


CTA Trading Desk Mid-Day Report


CTA Trading Desk Post-Close Report


  1. Bill, It was good to see to you at PDAC, even though it... [#106033]
    By: c2ski (94 comments) Go to top ↑

    Bill,

    It was good to see to you at PDAC, even though it was briefly.

    As you wrote before, PDAC is definitely a four day marathon. I came away with wealth of information and potential job prospects. It was because of you, that I attended PDAC.

    I encourage the community to attend next year’s event, especially the McEwen Mining party.

    • For some more post PDAC picks on the web I notice that... [#106065]
      By: Juniorgoldminerseeker (228 comments) Go to top ↑

      For some more post PDAC picks on the web I notice that Brent Cook was on BNN. For those who don’t have time to sit through the interview I find stockchase are very useful to browse through some quick opinions.
      Cook is a newsletter writer so make of it what you will, I believe he is well regarded as a working economic geologist.

      Cook discusses cash costs doubling in the past 5 years and again emphasises the need for the majors to replace production ounces and the likeliehood of takeovers, Bill’s theme, so he wants to find the good projects.

      Again identifies many of the “prospect/project generator model” for a less dilutive investment in “knowledge” in exploration. There is a long list of these companies on the blog. Identifies some with a great deal of cash and indeed enormous likely royalties, leaving the exploration potential for low values or nil. One is his top pick.
      A few companies he rates are common with Rick Rule who he has worked with in the past.

      Identifies another large low grade company, Vista, with an investment stake kicker in Midas and a potential emerging consolidator, Richmont, now headed by Buchan ex Kinross now at Allied Nevada and several others.

      His views on PDAC, too many companies, too many “sub-average” projects, too much paper. 190 IPOs, 2000 financings last year.

      http://www.bnn.ca/Shows/Market-Call-Tonight.aspx
      http://www.stockchase.com/Expert-sl–slq-ID-slv-Br

      A bit more action on the PDAC Coreshack board today, and a few large low grade deposits doing well. Some Nevada stocks doing well.

      Also Tommy Humphreys at PDAC and linked interviews here.
      http://tommyhumphreys.com/

  2. Bill said:"As for the market; now that PDAC is over, watch... [#106034]
    By: Les (7233 comments) Go to top ↑

    Bill said:“As for the market; now that PDAC is over, watch the prices of metals and metals related stocks rally”.

    LOL Bill surely you jest… well maybe not. I do note on the otherwise green futures board today two important caveats to a continued rally in the PM’s.

    JPY weakening in relation to USD:

    http://www.finviz.com/forex_charts.ashx?t=USDJPY&t

    Looks like the beginning of trend change there. A couple more higher lows would confirm it.

    Respect of 80 resistance in Uncle Buck would imply tests of support at lower levels.

    http://www.finviz.com/futures_charts.ashx?t=DX

    With this market news driven by events in Europe, this could make out for a drawn out affair, but as Flickenstein pointed in the link someone provided, bull markets can be vicious affairs.

    JGM, in relation to the bearish scenario I provided through Armstrong’s musing, it is useful to point out that Armstrong is the only analyst I listen to pointing to potential significant downside potential in precious metals. Bill just listed the fundamentals for increasing prices. I can go with that.

    But I also keep my emotions checked at the door as Fleckenstein remarked, and the analysis for a potential vicious downside to screw everyone who had gotten on board reminded me yesterday that it takes two to make a market. Everyone I hear around me is singing a pretty bullish song at present.

    Robert Sinn had an interesting point to make on the precious metal charts yesterday:

    http://www.robertsinn.com/2012/03/07/whats-your-ti

    And he is right, one could ideally wait for a test of the rising support trend line before committing. Who knows what will happen when price meets that support – hold it or break it? I don’t dare attempt an answer in advance of the event actually happening.

    That is my market reality.

    • Les, I have read two fairly convincing views on Japan... [#106051]
      By: Juniorgoldminerseeker (228 comments) Go to top ↑

      Les,

      I have read two fairly convincing views on Japan recently

      1) That they have finally bitten the bullet in full-blown QE to buy long dated bonds from the market thus pumping the banking system with newly printed money. This will have a dramatic effect on the Yen, some moves and then the Nikkei, and it has done, as the operational gearing to a weaker yen will transform quality export companies who have become increasingly efficienct against the long punishment of an over-valued currency. Real estate at 1970 valuations will soar. Japan the place to be invested if the yen is weakening (precie of James Ferguson UK Moneyweek). He made a similar call in July and was early/wrong. Logically if the Yen is falling that element of the dollar index will be strengthening.
      http://www.moneyweek.com/about-us/the-moneyweek-te

      2) Chris Martenson sees many issues we face revolving around energy supplies. The weakening yen and QE is a desparate attempt to counter the problems of a country left without energy supply after the earthquake in 2011. Balance of payments deficits are a big change as Japan imports Natgas and exports less due to a severely damaged industrial base. His conclusions Japan is desparate and without trade surplus will be selling US treasury bonds to keep going. In his view the Fed will be forced to buy treasuries. Dollar down pressure. Gold up (Martenson)
      http://news.goldseek.com/GoldSeek/1330969228.php

      A full commitment to QE from Japan, which many expected after the earthquake would imply a weaker yen, but of course Europe and US and UK for that matter are pretty busy on their own QE / QE-like fronts. It is hard to see this as anything other than a race to devalue by the “old” economies.
      A revived Japanese economy and consumer would be a significant force.

  3. on cnbc saying returns on foreclosure purchase/rent-outs... [#106035]
    By: baz22 (2875 comments) Go to top ↑

    on cnbc saying returns on foreclosure purchase/rent-outs are around 10%… says Fannie should fix up their closures and rent… couldn’t agree more, as they usually sell at a good 30 – 50 % below loan value on open market, and you and I get stuck for the difference down the road.

    • baz22 In some markets (I hear in Virginia) some Fannie Mae... [#106063]
      By: loannetter (1298 comments) Go to top ↑

      baz22

      In some markets (I hear in Virginia) some Fannie Mae lenders have fixed up those shop worn foreclosures with new kitchens and baths, windows, flooring etc: hiring local contractors/realtors (creating jobs) and selling homes.

      • Good evening, Ms. Netter !... betting you have been busy... [#106067]
        By: baz22 (2875 comments) Go to top ↑

        Good evening, Ms. Netter !… betting you have been busy this past year, as we don’t see you much here anymore.. getting ready to probably get another closure that is close to mnts. where I am building… will save travel time and rent till project is complete.. Any views on Honda Fit vs. Ford Fiesta vs. Ford Focus ( all hatchbacks )? … ( thought about new Prius C, but has expensive replacement parts )…

  4. Good morning. 07:30 Challenger Job Cuts (2.0%) 08:30... [#106036]
    By: Bull Hunter (3552 comments) Go to top ↑

    Good morning.

    07:30 Challenger Job Cuts (2.0%)
    08:30 Initial Claims (362K) Full phony report here: http://is.gd/unHFuU

    ——

    ABT – target raised at Jefferies to $76, Jefferies said. Market significantly undervalues breakup valuation. Buy rating.

    ——

    “Government is actually the worst failure of civilized man. There has never been a really good one, and even those that are most tolerable are arbitrary, cruel, grasping, and unintelligent.” ~ H. L. Mencken

  5. ... [#106037]
    By: Les (7233 comments) Go to top ↑
  6. There were a few comments on sterilised QE yesterday. I... [#106039]
    By: Juniorgoldminerseeker (228 comments) Go to top ↑

    There were a few comments on sterilised QE yesterday.

    I saw Sinclair’s predictable reaction which I won’t link as I know he divides opinion.
    Basically why do you need to QE if you’re immediatley undoing that QE? Nothing so outrageous there?

    Here is my other, controversially, favourite place FT Alphaville, (I think readable without subscriptions?) with a piece which brings together a couple of things I’ve talked about recently,
    1) Hussman’s – recently linked – economist’s view of why the Fed raising interest rates while holding assets is actually inflationary?
    2) Izabella Kaminsky’s (Izzy in the attached, early early views on all this) look at why the zero bound can damage liquidity and money market funds. Bill Gross has also written on this and I recently linked why he sees this driving stores of value.

    I don’t think my brain is big enough for even half of this but there is a view that sterilsed QE sounds more innocuous and less inflationary than previous versions but may in fact be equally or more stimulative.
    A “Jedi mind trick” to recognise inflationary concerns but press on with QE.

    If sterilised QE3 unjams mountains of Mortgage backed paper from bank balance sheets might it actually stimulate bank lending and money market velocity in a way previous QE has not?
    Any stimulus to housing and asset values repairs a lot of bank balance sheets?

    I guess all that matters is the market’s reaction to whatever any QE3 actually looks like….but it would be nice to have some idea of what this might be in a risk on / risk off culture.
    Anything that can get played as tightening is surely not what the FED is about here?
    Is the market priced for classic QE3, would the Fed dare to grossly disappoint?
    A reference to Trimtabs saying it looks like 1987 on the last link?

    http://ftalphaville.ft.com/blog/2012/03/08/913481/

    http://ftalphaville.ft.com/blog/2012/03/07/912861/

  7. U.S. Unemployment Up in February Underemployment is 19.1%... [#106041]
    By: NYUGrad (4750 comments) Go to top ↑

    U.S. Unemployment Up in February
    Underemployment is 19.1%, up from 18.7% in January

    Per Gallup. too bad we all have to trade off the BS BLS numbers tomorrow.

    http://bit.ly/zH8IvJ

    Which do you trust. polling of 20,000 random people or govt stats?

  8. Sold calls, will let this one rest for a... [#106042]
    By: ea32da32 (2362 comments) Go to top ↑

    Sold calls, will let this one rest for a bit.
    Earl

  9. ... [#106044]
    By: ea32da32 (2362 comments) Go to top ↑
  10. We can live with a nuclear-armed Iran, according to the... [#106045]
    By: davefairtex (5215 comments) Go to top ↑

    We can live with a nuclear-armed Iran, according to the former National Intelligence Officer under GWB for the Near East and South Asia regions. Of course I like the article – the man agrees with my views entirely. However, his comments fly in the face of literally generations of CIA (and DoD) threat exaggerations: bomber gaps, missile gaps, russian economic success, mine shaft gaps…oops, that last one was fictional, sorry. And there is a LOT of money to be made – and political hay too – with another war, so I’m guessing he won’t get much of a hearing on either side of the aisle.

    http://www.washingtonmonthly.com/magazine/marchapr

    Right now, we’re running in fear of “the terrorists”, so much so that we have to spend more than the 14 other nations immediately below us in the world military food chain combined, and any talk of trimming back is met with exclamations of horror as if one fewer battle group or one less base in Germany (!) would somehow expose us to immediate terrorist attack.

    Dems are too scared of looking “soft” and Reps – well they want to play the macho card because they think it will differentiate them from the soft Dems. Same old same old. Kennedy had the exact same issue back in the 60s back in the “missile gap” days. So the spending just grows and grows…and the MI complex laughs all the way to the bank. Your Tax Dollars At Work.

    Just how much is enough? The answer is: you can NEVER have enough military hardware to be truly safe. So the answer is – “never enough.”

    http://en.wikipedia.org/wiki/List_of_countries_by_

  11. Facebook adds 25 more underwriters for... [#106046]
    By: NYUGrad (4750 comments) Go to top ↑

    Facebook adds 25 more underwriters for IPO
    http://yhoo.it/x79TXK

    anyone?

    • I think i found my own answer. " meaning most of Wall... [#106047]
      By: NYUGrad (4750 comments) Go to top ↑

      I think i found my own answer.
      ” meaning most of Wall Street will have a role in the share sale”

      So every broker and every analyst in the world in every language, will be pumping to sell this stock.

      epic epic washout event.

  12. That's in about 17 minutes :) You just gotta love it when... [#106048]
    By: davefairtex (5215 comments) Go to top ↑

    That’s in about 17 minutes :)

    You just gotta love it when things are about earnings, fundamentals, success in the marketplace, building a better mousetrap, and all that, right?

  13. ... on those who believed all that "Greece will default on... [#106049]
    By: Vadym Graifer (4341 comments) Go to top ↑

    … on those who believed all that “Greece will default on March XX”and stayed short:

    (GR) Investor participation in Greece debt swap deal pushing above 90%
    - Greece financial press
    - Most recent reports indicated participation was near 85%

    • ... [#106052]
      By: Dr. Strangelove (2004 comments) Go to top ↑
      • "you just gotta believe this can-kicking is going to leave... [#106053]
        By: Vadym Graifer (4341 comments) Go to top ↑

        “you just gotta believe this can-kicking is going to leave someone with a stubbed toe.”

        I never said any different; if you paid attention, I many times posted a view that with each next kick the can becomes heavier and road surface – rougher, until at some point kicking leg just breaks and its once-proud owner comes tumbling down.

        But you better believe that before this happens, many prematurely established short positions will be destroyed. There is just no way such widely advertised event (bankruptcy and related market drop) happens as advertised.

        • Looks like The Slog wasn't on target with this... [#106054]
          By: davefairtex (5215 comments) Go to top ↑

          Looks like The Slog wasn’t on target with this one!

          http://www.reuters.com/article/2012/03/08/us-greec

          (Reuters) – Over 75 percent of bondholders with eligible Greek debt have signed up for a bond exchange to ease the country’s debt burden, a senior Greek government official said on Thursday.

          Greece had set 75 percent as the minimum level of participation to go through with the deal, and the news suggested it was moving closer to the 90 percent rate it has been aiming for.

        • Perhaps GDXJ:GDX provided a clue three days ago about how... [#106056]
          By: davefairtex (5215 comments) Go to top ↑

          Perhaps GDXJ:GDX provided a clue three days ago about how this might turn out?

          I wonder how much was known ahead of time, and how much was a surprise to the insiders.

        • Vad - "I never said any different; if you paid attention... [#106068]
          By: Dr. Strangelove (2004 comments) Go to top ↑

          Vad -

          “I never said any different; if you paid attention, I many times posted a view that with each next kick the can becomes heavier and road surface – rougher, until at some point kicking leg just breaks and its once-proud owner comes tumbling down.

          But you better believe that before this happens, many prematurely established short positions will be destroyed. There is just no way such widely advertised event (bankruptcy and related market drop) happens as advertised.”

          First, I always listen to what you say, Vad, and do my best to pay attention but, alas, I’m slow and like to rephrase what my mentors say ;)

          Second, to rephrase Mr. Wellman, ‘It all works until it doesn’t! Ha!’

          Maybe the manipulations will fail instead of the “as advertised” diversion one of these days. Looks as if the Greek deal is done at a declared 80% sign up to slaughter and March 20 or any other advertised date will come to pass, as you predicted, unless some unforeseen hitch kills it at the closing table. In real estate, you learn not to count your money until it’s in hand. I guess since you’ve lived through a hyperinflation, even that is not good enough …

          • "as you predicted" Ugh... no matter what happens (or... [#106069]
            By: Vadym Graifer (4341 comments) Go to top ↑

            “as you predicted”

            Ugh… no matter what happens (or doesn’t) on March 20, let me reiterate: I do not predict, I do not believe anyone can, I view anyone who claims the ability to predict as an incompetent at best or a fraud at worst. I outline scenarios and assign probabilities as I view them – but they are merely probabilities.

          • Vad - Whoops. My... [#106071]
            By: Dr. Strangelove (2004 comments) Go to top ↑

            Vad -

            Whoops. My bad.

  14. Iran, may or may not have a nuclear weapon. none of this... [#106055]
    By: Jeff B (715 comments) Go to top ↑

    Iran,

    may or may not have a nuclear weapon.

    none of this matters, a host of nations have weapons that can cause severe damage, some of them more hostile to the US than Iran.

    most of what we hear is bluster about how one side will retaliate if another is attacked.

    likely nothing will come of this, but should one nation decide to attack a suspected nuclear site, likely nothing will come of that as disinformation about what actually happened will obscure the truth.

    this is great fodder for bored journalists who just recycle the same headlines about “such and such says if attacked they will respond…” and “such and such said that if they are threatened they will defend themselves..”

    blah blah blah.

  15. Time to duck and cover Sold the TZA I bought @20.10 for... [#106057]
    By: Tower Dog (90 comments) Go to top ↑

    Time to duck and cover Sold the TZA I bought @20.10 for 19.62 Lot of headline risk It looks like the official announcement isn’t scheduled to be released until some time overnight:

    http://blogs.marketwatch.com/thetell/2012/03/08/cl

  16. ... [#106058]
    By: ea32da32 (2362 comments) Go to top ↑
  17. is everyone still pushing headlines on greece? see i told... [#106059]
    By: NYUGrad (4750 comments) Go to top ↑

    is everyone still pushing headlines on greece? see i told you they defaulted a while ago. a 70% haircut or whatever it is, is a default.

    the people of greece are no better off today. 1st ripple in the pond. now comes port, spain, italy.

    i am not in the camp of europe is worse off than usa. the student loan issue and waste of a group of 21-28 yr olds, who are languishing in the wind with $100k+ debt, is alone a bigger problem than any. as we as a country have the most to lose.

    If you marry housing and student loans, it will be a huge anchor for our country for 2+ decades.

    We need a president who has the balls to go on tv and tell all americans to save, cut spending, pay off debt, own property and car with minimal debt, and raise future leaders of america.

    Our K-12 school system is in shambles compared to growth countries. we are producing american idiots. who care more that Snooki is pregnant over real issues. I would bet if you asked 1M americans if they knew whether snooki was pregnant vs what their apr on their credit card was… you get the point.

  18. good sight for some great... [#106060]
    By: ea32da32 (2362 comments) Go to top ↑

    good sight for some great pictures
    http://www.space.com/14826-solar-storm-hitting-ear

  19. Per GMO (Jeremy Grantham's organization) it's CONSUMERS in... [#106062]
    By: jock (1011 comments) Go to top ↑

    Per GMO (Jeremy Grantham’s organization) it’s CONSUMERS in China and India. Check exhibit 4 in this:

    https://www.gmo.com/America/CMSAttachmentDownload….

    • Guess that's where the missing ounces have been going... [#106064]
      By: Juniorgoldminerseeker (228 comments) Go to top ↑

      Guess that’s where the missing ounces have been going then.

    • jock - Very nice find. Fascinating. Emerging market... [#106072]
      By: davefairtex (5215 comments) Go to top ↑

      jock -

      Very nice find. Fascinating. Emerging market consumers drive gold prices. Who knew indeed?

      Financial repression in the emerging world drives people into gold. I wonder if the same thing will happen in the developed world when the sovereign defaults start to happen for real.

      • Orientals and Indians have historically been gold horders... [#106074]
        By: Ilya (572 comments) Go to top ↑

        Orientals and Indians have historically been gold horders. Once China legalized gold, it was only a matter of time that mom and pop Chang would store their excess wealth in a commodity which is easily hidden. The Chinese also have a history of using copper as money.

        The West is a book credit civiliazation. Once we ‘invented’ double entry book keeping, gold diminished as a store of wealth except for the lower classes who were ignorant of higher finance.

        But yes, in paper dollar terms, gold is a decent proxy as a commodity asset that if coveted by foreigners who have willingly ammassed way too much of our paper book credits will increase the price as the supply and demand dictates.

        Should the price of gold increase in dollar terms to say $5,000/oz, we could then ship to our creditors our bullion to satisfy our debts. They could then sit on a hoard of cold shiney metal and we could get back to business as usual, free from foreign debt claims.

        That will probably not happen since we can continue to print credits that earn scant interest and force them to choke on it. For now, here, stagflation be thy name.

  20. Long time, no visit. (Four years? Five?) My model has me... [#106066]
    By: MarkM (1 comments) Go to top ↑

    Long time, no visit. (Four years? Five?)

    My model has me switching regimes from low volatility uptrend to medium term high volatility. Better entry and re- entry points are in the future for any investors out there with more than a medium term horizon. This is not a bull market. I may be a tad early but after 100% from the bottom , it is time. Again, this is for investors not traders. Targeting low single digit returns over the next horizon and waiting to redeploy.

    Hello to stockman, Chief Falling Knives, et al from 2005 days. There are too many old friends to list. Take this for whatever you wish.

    • Welcome back Mark. I don't know why the blog system held... [#106081]
      By: Bill Cara (4105 comments) Go to top ↑

      Welcome back Mark. I don’t know why the blog system held your post from publication, but as soon as I saw it this morning, I released it. Looking forward to hear more.

  21. ... of scorched earth tactics in dealing with Greece... [#106073]
    By: Vadym Graifer (4341 comments) Go to top ↑

    … of scorched earth tactics in dealing with Greece crisis:

    (EU) Telegraph’s Ambrose Evans-Pritchard believes that the handling of the Greek debt crisis has hurt the integrity of the global bond markets, as contagion remains a risk in the EU
    - Notes that Portugal, Spain and Italy could still be vulnerable because investors could be wary of buying certain peripheral debt due to the impression left on bond buyers from the Greek PSI.
    - Some analysts have suggested that investors have doubts about the EU pledges related to Greece being an isolated case.
    - In terms of the fiscal situation in Portugal, Nomura analyst Dimitris Drakopoulos said that the country’s government had used “fiscal engineering” in 2011 to help improve its deficit figures by using its pension funds

    Say what you will about Evans-Pritchard bit in this case I absolutely agree with him. In putting out this particular fire they made whole system much more vulnerable to any future flames.

    • Yeah I think its a "win the battle but lose the war" sort... [#106075]
      By: davefairtex (5215 comments) Go to top ↑

      Yeah I think its a “win the battle but lose the war” sort of thing. The end result of this is:

      * the ECB is now seen to be “more equal than others”
      * bondholders get a haircut yet CDS are somehow not valid
      * nobody imagines this will be the last Greek default
      * nobody believes that Greece will be able to meet the austerity/anti-corruption goals.
      * it is clear that Germany wants Greece out of the eurozone

      Bottom line: if the rules get in the way of what the insiders want, the rules will be changed as necessary to achieve the desired objective. At this point, all I see is mailed fist – no more velvet glove.

      At some point, private money will decide to stop playing the game. What the tipping point is though, who can say?

      Read in FT that suggested the new Greek debt (the stuff swapped for the old Greek debt) was trading dramatically below par on the “grey market” – whatever that is.

      http://www.ft.com/intl/cms/s/0/68a97dfc-6945-11e1-

      Financial markets are already betting Greece will default again in the future. Grey market pricing for the new Greek bonds to be issued as part of the exchange ranged from 17 to 28 cents on the euro, a highly distressed level, according to indicative quotes seen by the FT.

      • If a picture paints a 1000... [#106077]
        By: Juniorgoldminerseeker (228 comments) Go to top ↑

        If a picture paints a 1000 words

        http://www.presseurop.eu/files/120302ft.jpg

        But if Greece, then what?

        Capital flight to Germany exagerrates the stresses in the Eurozone still further.

        I still think there is stubborn political will for the Euro project – see GEAB.

        If Portugal or Spain or Italy cannot live with the core France is questionable.

        An exit of a Northern hard money Euro Germany, Netherlands, Finland would mean a new Northern Euro which would revalue upwards “creating wealth” (I know!)investment power, with the debt of the southern area denominated in old Euros which will devalue. A printing central bank, common currency for this group might allow serious devaluation but without a sprialling hyperinflation some see for a tiny Greece or others exiting alone. They could rejoin the northern group on new terms and start again, though hard to see once the bullet is bitten. As I have read before no-one with a printing press ever defaults. The default is through devaluation.

        Creates a different set of problems for the “strong” group which leave but I think would be the simplest solution, contracts, bonds etc are all still in old Euros and are devalued without contractual messiness. Devaluation, regained competitiveness.

        Hard money area sees a big shift down in competitiveness but used to taking the hair shirt path and their accumulated wealth revalued upwards potentially driving an increased consumption level, again rebalancing.

      • ALOHA!! Go out on the streets of any major city in... [#106079]
        By: kaimu (3289 comments) Go to top ↑

        ALOHA!!

        Go out on the streets of any major city in America, Canada, Australia, South America, Africa or Asia and take a poll asking whether they care about Greece debt or whether Greece stays in the EU and you will find out quickly how little politicians and bankers and their CDS matter in the equation of day-to-day life. Yet the entire global financial system is leveraged to the hilt on the smallest of debt. Its not me as I never use margin or CDS. Is there anyone here on the blog of some 300,000 global visitors that does use CDS for “insurance” on their EU bonds? I would imagine that same poll taken in major cities asking about CDS would come back with about 96% not even knowing what CDS is. Once again we are faced with total corrupt systems of governments and markets leveraged for the sole benefit of elite traders with central bank connections.

        Four outlay line items on the US Treasury Statement, as of March 7th, just crossed $780BIL in less than six months. These are the basics of entitlement that include Social Security(a German concoction)Medis and the MIC(Military Industrial Complex), which are all the political equivalent of the “sacred cow” in India. Times that by at least “2″ to see where that number will be at the end of 7 months time.

        Our US PUBLIC DEBT, in statutory terms, went over $15.455TRIL on March 7th and in gross terms it is at $15.5TRIL USD. That officially bumps our per capita debt to almost $50,000USD per man, woman and child in America. To be accurate it is $49,679USD per capita given a current population of 312 million. In less than six months the US Treasury ran up another $708BIL USD in debt on our behalf, around $118BIL per month. Now imagine you got a bill from the US Treasury along with your other monthly bills for electricity, telephone and healthcare of $378.20 for every member of your household. If you were married with two kids your monthly “US Debt” bill would be $1,512.80. Do you think such a monthly US Treasury bill would have any effect on who you voted for in November?

        My guess is that the giant cube of shiny gold Warren Buffet speaks of is about as worthless as the intent of the global citizenry to pay back any of their debts. In other words the shiny gold cube is about as worthless as the “debt money” it is denominated in!

        • Kaimu, It's only a number, the value will be worth what... [#106080]
          By: Juniorgoldminerseeker (228 comments) Go to top ↑

          Kaimu,

          It’s only a number, the value will be worth what the US wants it to be worth.

          Why not buy the world’s resources with paper while you can?
          Gather real assets and labour from the world in exchange for your sea-shells.

          When the sellers say no more then use your internal resources, revalue and write off the “debt” for the paper it is.
          Refresh, renew, destroy, create.

          The shiny transferred value through the cycle before.
          Again to the reset?

          Geopolitik.

          • ALOHA!! "It's only a number, the value will be worth what... [#106084]
            By: kaimu (3289 comments) Go to top ↑

            ALOHA!!

            “It’s only a number, the value will be worth what the US wants it to be worth.”

            No, its only worth what the world’s dominant military power wants it to be worth. You cannot have the dominant military power without the dominate weapons manufacturing power.

            Without our WW1 and WW2 military what would a USD be worth today and would it even be a reserve currency? There was a line in the movie BAND OF BROTHERS when they were driving in trucks past German POWs marching on the Autoban where one of the US soldiers yells at the German soldiers.

            “Say hello to Ford and General Motors …”
            LINK: http://www.youtube.com/watch?v=K_DnRn9hyFU

            It’s interesting that now GM depends on political “plug-in”. Could Ford and GM pull us out of a WW3? Or have we capitulated to the Asian manufacturing engine? I recall the US military ran short of bullets in Baghdad and we had to buy them from Israel. Even that turned political …

            “For the four fiscal years 2002-2005, the military’s small-arms ammunition “requirements” totaled nearly 5.6 billion rounds. With approximately 3.6 billion being added during the next two years, the total for fiscal years 2002-2007 comes to about 9.2 billion rounds. If we assume that U.S. forces in Afghanistan and Iraq have killed 50,000 people with small-arms fire (a high estimate, I suspect), then they have needed, for training plus actual fighting, 184,000 bullets per person killed. If they have killed only 30,000 in this way, then the figure rises to almost 307,000 bullets per person shot dead, which is roughly equal to the estimate Pike ventured two years ago before he decided to “round that down to 250,000 so that we are underestimating.”
            LINK: http://www.lewrockwell.com/higgs/higgs62.html

            We used over 41 billion small arms rounds in WW2, which lasted four years for America(1941-1945) and we can’t keep up with 9 billion for Iraq and Afghanistan. The Iraq War was eight years,double WW2. Do the “bullet math”! Where does that leave us in WW3 when we go against all our largest foreign debtors? Can we still borrow from China so we can increase our bullet manufacturing in order to shoot Chinese troops invading Honolulu?

            It’s now pure global insanity all being driven by corrupt politics and the central banks. In the end everything is just numbers …

          • Kaimu, True consequences, and an enormous risk in an... [#106086]
            By: Juniorgoldminerseeker (228 comments) Go to top ↑

            Kaimu,
            True consequences, and an enormous risk in an apparently less co-operative world.
            The true lessons and dangers of the 1930′s indeed lie a decade later, strong-men elected to fix the economic mess with grand plans; lost trust, lost gold standard.
            The only difference I can see, the mutually assured destruction of any future global conflict to end all conflicts, the next conflicts will not require bullets, but currency wars, information, data, technology wars, “worms” in PLCs at nuclear plants.
            A grand WW3, who wins, how?

            Apologies if my post seemed flippant.
            I do take the monetary and central banking insanity very seriously, but I feel some of it is a natural course which will drive us back to something we think we want, but may benefit those we question most.
            If some see this coming then the debt is not real.
            If China play along with the game but are actually exiting all the while to real assets across Africa and elsewhere as Sinclair suggests then just how upset will they be to have built out their country’s infrastructure and capacity for internal consumption on the back of a paper fraud on the part of debtor and perhaps creditor.
            A gold standard, cui bono?

        • ... [#106085]
          By: Grym (5469 comments) Go to top ↑
    • yeh, default protection has no market value, the interests... [#106076]
      By: Les (7233 comments) Go to top ↑

      yeh, default protection has no market value, the interests of private investors are subordinated to those of the state and the ECB is concentrating massive risk in giving Euro banks a ‘free lunch’ today in exchange for insanely skewed portfolio risk tomorrow. Run, run, run (from your banking counter-party risk) as fast as you can…

      • Les, "default protection has no market value" I do not... [#106091]
        By: lessmore (322 comments) Go to top ↑

        Les,

        “default protection has no market value”

        I do not believe that this decision has been made yet. As I understand the situation, the derivatives industry voting body must decide later today whether for those who are being forced to participate and who have waived no rights, a failure to pay is a credit event that triggers the insurer’s obligation to pay.

  22. From @DimitrisApi: @jimcramer the issue should not be the... [#106078]
    By: ea32da32 (2362 comments) Go to top ↑

    From @DimitrisApi: @jimcramer the issue should not be the CDS trigger. The PSI take-up removes a tail risk (at least for the next 2-3 years). Big picture

    @jimcramer: Lots of chatter about credit default events–it is largely priced in but journalists have to make this as exciting as possible.