Short term trades in the stock market •$$$$$•

[SpasticGramps]

No doubt it was. I thought we would see it go down some more with all the madness. If I had to take a wild guess. I'd say it stays between this ~$35-40 area until QEII ends. Then it gets crushed for a little while as the dollar rises, then if/when QEIII comes we push back the $50 barrier into the wild unknown.

I think your right. Greece didn't have much to do with rebound today, just recovery from all the panic selling. The Euro thing is ongoing. Who knows how long it will drag out. I guess as long as everyone is willing to forfeit their future with bailouts that do nothing, but prolong the inevitable agony.

 

[SpasticGramps]

More interesting stuff out of Europe. The Head of Eurogroup openly admits to lying. First step towards breaking the denial?

Head Of Eurogroup Admits To Lying About "Secret Greek Meeting" Out Of Fears For Market Collapse - "When It Becomes Serious, You Have To Lie"

On Friday the misinformation floated about the Greek expulsion event hit a fever pitch: while we correctly speculated that nobody would be expelled from the Eurozone, the amount of conflicting info was at an all time record, with glaring inconsistencies between various quoted authoritarians. Now, courtesy of the WSJ blog, we learn that, for the first time in history, a spokesman for Jean Claude Juncker, the PM of Luxembourg, and the head of the Eurogroup council of eurozone finance ministers, admits openly to having lied to media outlets. "In a phone call and text messages with two reporters for Dow Jones and the Wall Street Journal, Mr. Schuller repeatedly said no meeting would be held. He apparently said they same to other news outlets; at least one more moved his denials on financial newswires. Of course, there was a meeting–although not, apparently, to talk about Greece quitting the currency, which would be an extreme step to say the least. Mr. Juncker even said a few words to reporters who had hustled to Luxembourg to stake out the gathering. So why the lie? “I was told to say there was no meeting,” said Mr. Schuller, reached by telephone Monday. “We had certain necessities to consider.” Necessities? Why yes: such as perpetuating the now open lie that is the ponzi market: "Evening in Europe is midday in the United States. “We had Wall Street open at that point in time,” Mr. Schuller said. The euro was falling on the Spiegel report, which had overhyped the meeting. “There was a very good reason to deny that the meeting was taking place.” It was, he said, “self-preservation.”" And there you have it: the Eurozone itself now admits that it will sacrifice credibility at the expense of a few FX pips and a few basis points in the ES.Everything else is smoke and mirrors. And people think that central bankers will consider the threat of inflation should the Russell 2000 ever retrace back into bear market territory...

And it gets even more surreal:

Asked whether such deliberate misinformation would undermine the market’s confidence in future euro-zone pronouncements, Mr. Schuller, lamenting that the market had practically no confidence in pronouncements already, said “not at all.”

When Mr. Juncker, or European Central Bank President Jean-Claude Trichet, or French Finance Minister Christine Lagarde says something to the markets, Mr. Schuller said, “nobody seems to believe it.”

Mr. Juncker has voiced support for the practice of lying before.

The Web site EUobserver has video of Mr. Juncker, at a conference on economic governance in April, expounding on the practice and reasons for lying in financial and economic communications.
Asked whether such deliberate misinformation would undermine the market’s confidence in future euro-zone pronouncements, Mr. Schuller, lamenting that the market had practically no confidence in pronouncements already, said “not at all.” When Mr. Juncker, or European Central Bank President Jean-Claude Trichet, or French Finance Minister Christine Lagarde says something to the markets, Mr. Schuller said, “nobody seems to believe it.” Mr. Juncker has voiced support for the practice of lying before. The Web site EUobserver has video of Mr. Juncker, at a conference on economic governance in April, expounding on the practice and reasons for lying in financial and economic communications.

On the tape, Mr. Juncker says he has “had to lie” and, speaking about touchy economic topics, “When it becomes serious, you have to lie.”

At this point Europe no longer even attempts to hide that everything is one big lie, and that should the truth emerge the market will crash more than ever in history. And why would the US be any different? It woulnd't which is why we can now safely say that pretty much any information coming out from the government and its proxies that has a stock market impact is false until proven true. Of course, for everything else, one can blame the conspiratorial blogs...

Man when the wheels finally come off the ponzi bus it's going to be wild.

 

[SpasticGramps]

Kind of looks like Bill Gross is setting up for a shit storm. I don't think PIMCO is going to be buying any bonds when the Fed stops. That leaves out the worlds largest largest bond buyer.

Bueller? Bueller?.....Bueller? Anyone?......Anyone?

So Much For Pimco Buying Bonds: Duration Weighted Treasury Exposure Hits Whopping -23% Short, Cash Surges To Unprecedented $89 Billion

So much for all the conspiracy theories that Bill Gross was capitulating in his short position against US debt even as he continued to bash US fiscal and monetary policy. According to just released April data for the flagship Pimco $240 billion Total Return Fund (which saw a $4.2 billion increase in AUM in the month), Bill Gross actually added to his short position against US government debt, bringing total market value exposure to 4% of AUM or ($10) billion. More amazing is that on a Duration Weighted Exposure basis, the firm's Treasury short is 23%, read that again, 23%! So much for that change in outlook. Additionally, Gross also sold another $8.3 billion in mortgage securities, bringing the April total to a nominal $57.8 billion. Spring cleaning at casa de Bill continued across all fixed corporate income as well, dropping the firm's exposure to IG by $1.6 billion and to HY by $2.1 billion. The only two securities which saw a token increase was in Non-US developed markets and Emerging Markets, to $14.4 billion and $26.5 billion, respectively. Yet the biggest shocker of all, is that Gross has now brought his cash position to an all time unprecedented high of $89.1 billion! That's right, PIMCO is charging a substantial asset management fee when 37% of all assets are in cash. One would think the mattress would cost far less. Either Gross is expecting a huge collapse in the bond market (so contrary to prevailing though), or this could well be the bet that buries the Allianz subsidiary.

Looking at the maturity exposure there are no surprises: in keeping with the firm's move to almost an all cash fund, Effective Duration dropped to the second lowest in history, or 3.42 years. As the chart below shows, Gross' exposure to debt with a maturity under 5 years is a whopping 83%. Which begs the question: just how terrified is Gross of inflation to be cutting virtually any and all 5 year + exposure. And yes, if the firm was expecting a deflationary collapse, the duration exposure would be flipped upside down.

 

[Madrus Rose]

Cheney got something right, Deficits Don't Matter
By Ellen Brown

"Deficit terrorists" are gutting governments and forcing the privatization of public assets, all in the name of "deficit reduction". But deficits aren't actually a bad thing. In today's monetary scheme, in which most money comes from debt, debt and deficits are actually necessary to have a stable money supply. The public debt is the people's money.

Former vice president Dick Cheney famously said, "Deficits don't matter." A staunch Republican, he was arguing against raising taxes on the rich; but today Republicans seem to have forgotten this maxim. They are bent on stripping social programs, privatizing public assets, and gutting unions, all in the name of "deficit reduction".

Worse, Standard & Poor's has now taken up the hatchet. Some bloggers are calling it blackmail. This private, for-profit rating agency, with a dubious track record of its own, is dictating government policy, threatening to downgrade the government's long-held triple AAA credit rating if congress fails to deal with its deficit in sufficiently draconian fashion. The threat is a real one, as we've seen with the devastating effects of downgrades in Greece, Ireland and other struggling countries. Lowered credit ratings force up interest rates and cripple national budgets.

The biggest threat to the dollar's credit rating, however, may be the game of chicken being played with the federal debt ceiling. Nearly 70% of Americans are said to be in favor of a freeze on May 16, when the ceiling is due to be raised; and Tea Party-oriented politicians could go along with this scheme to please their constituents.

If they get what they wish for, the party could be over for the whole economy. The Chinese are dumping US Treasuries, and the Fed is backing off from its "quantitative easing" program, in which it has been buying federal securities with money simply created on its books.

When the Fed buys Treasuries, the government gets the money nearly interest-free, since the Fed rebates its profits to the government after deducting its costs. When the Chinese and the Fed quit buying Treasuries, interest rates are liable to shoot up; and with a frozen debt ceiling, the government would have to default, since any interest increase on a US$14 trillion debt would be a major expenditure.

Today the Treasury is paying a very low 0.25% on securities of nine months or less, and interest on the whole debt is about 3% (a total of $414 billion on a debt of $14 trillion in 2010). Greece is paying 4.5% on its debt, and Venezuela is paying 18% - six times the 3% we're paying on ours. Interest at 18% would add $2 trillion to our tax bill. That would mean paying three times what we're paying now in personal income taxes (projected to be a total of $956 billion in 2011), just to cover the interest.

There are other alternatives. Congress could cut the military budget - but it probably won't, since this option is never even discussed. It could raise taxes on the rich, but that probably won't happen either. A third option is to slash government services. But which services? How about social security? Do you really want to see Grandma panhandling? Congress can't agree on a budget for good reason: there is no good place to cut.

Fortunately, there is a more satisfactory solution. We can sit back, relax, and concede that Cheney was right. Deficits aren't necessarily a bad thing! They don't matter, so long as they are at very low interest rates; and they can be kept at these very low rates either by maintaining our triple A credit rating or by borrowing from the Fed essentially interest-free.

The yin and yang of money

Under our current monetary scheme, debt and deficits not only don't matter but are actually necessary in order to maintain a stable money supply. The reason was explained by Marriner Eccles, governor of the Federal Reserve Board, in hearings before the House Committee on Banking and Currency in 1941. Wright Patman asked Eccles how the Federal Reserve got the money to buy government bonds.
"We created it," Eccles replied.
"Out of what?"
"Out of the right to issue credit money."
"And there is nothing behind it, is there, except our government's credit?"
"That is what our money system is," Eccles replied. "If there were no debts in our money system, there wouldn't be any money."

That could explain why the US debt hasn't been paid off since 1835. It has just continued to grow, and the economy has grown and flourished along with it. A debt that is never paid off isn't really a debt. Financial planner Mark Pash calls it a National Monetization Account. Government bonds (or debt) are "monetized" (or turned into money). Government bonds and dollar bills are the yin and yang of the money supply, the negative and positive sides of the national balance sheet. To have a plus-1 on one side of the balance sheet, a minus-1 needs to be created on the other.

Except for coins, all of the money in the US money supply now gets into circulation as a debt to a bank (including the Federal Reserve, the central bank). But private loans zero out when they are repaid. In order to keep the money supply fairly constant, some major player has to incur debt that never gets paid back; and this role is played by the federal government.

That explains the need for a federal debt, but what about the "deficit" (the amount the debt has to increase to meet the federal budget)? Under the current monetary scheme, deficits are also necessary to avoid recessions.

Here is why. Private banks always lend at interest, so more money is always owed back than was created in the first place. In fact investors of all sorts expect more money back than they paid. That means the debt needs to be not only maintained but expanded to keep the economy functioning. When the Fed "takes away the punch bowl" by tightening credit, there is insufficient money to pay off debts; people and businesses go into default; and the economy spins into a recession or depression.

Maintaining a deficit is particularly important when the private lending market collapses, as it did in 2008 and 2009. Then debt drops off and so does the money supply. Too little money is available to buy the goods on the market, so businesses shut down and workers get laid off, further reducing demand, precipitating a recession. To reverse this deflationary cycle, the government needs to step in with additional public debt to fill the breach.

Debt and productivity

The US federal debt that is setting off alarm bells today is about 60% of gross domestic product (GDP), but it has been much higher than that. It was 120% of GDP during World War II, which turned out to be our most productive period ever. The US built the machinery and infrastructure that set the nation up to lead the world in productivity for the next half century. We, the children and grandchildren of that era, were not saddled with a crippling debt but lived quite well for the next half century. The debt-to-GDP ratio got much lower after the war, not because people sacrificed to pay back the debt, but because the country got so productive that GDP rose to meet it.

That could explain the anomaly of Japan, the global leader today in deficit spending. In a CIA Factbook list of debt to GDP ratios of 132 countries in 2010, Japan topped the list at 226%. So how has it managed to retain its status as the world's third largest economy? Its debt has not crippled its economy because:

(a) the debt is at very low interest rates; (b) it is owed to the people themselves, not to the International Monetary Fund or other foreign creditors; and
(c) the money created by the debt has been used to produce goods and services, allowing supply and demand to increase together and prices to remain stable.

The Japanese economy has been called "stagnant", but according to a review by Robert Locke, this is because the Japanese aren't aiming for growth. They are aiming for sustainability and a high standard of living. They have replaced quantity of goods with quality of life.

Locke wrote in 2004:

Contrary to popular belief, Japan has been doing very well lately, despite the interests that wish to depict her as an economic mess. The illusion of her failure is used by globalists and other neo-liberals to discourage Westerners, particularly Americans, from even caring about Japan's economic policies, let alone learning from them. [And] it has been encouraged by the Japanese government as a way to get foreigners to stop pressing for changes in its neo-mercantilist trade policies.

The Japanese economy was doing very well until 1988, when the Bank for International Settlements raised bank capital requirements. The Japanese banks then tightened credit and lent only to the most creditworthy borrowers. Private debt fell off and so did the money supply, collapsing the stock market and the housing bubble. The Japanese government then started spending, and it got the money by borrowing; but it borrowed mainly from its own government-owned banks.

The largest holder of its federal debt is Japan Post Bank, a 100% government-owned commercial bank that is now the largest depository bank in the world. The Bank of Japan, the nation's government-owned central bank, also funds the government's debt. Interest rates have been lowered to nearly zero, so the debt costs the government almost nothing and can be rolled over indefinitely.

Japan's economy remains viable although its debt-to-GDP ratio is nearly four times that of the United States because the money does not leave the country to pay off foreign creditors. Rather, it is recycled into the Japanese economy. As economist Hazel Henderson points out, Japan's debt is twice its GDP only because of an anomaly in how GDP is calculated: it omits government-provided services. If they were included, Japan's GDP would be much higher and its debt to GDP ratio would be more in line with that of other countries.

Investments in education, healthcare, and social security may not count as "sales", but they improve both the standard of living of the people and national productivity. Businesses that don't have to pay for healthcare can be more profitable and competitive internationally. Families that don't have to save hundreds of thousands of dollars to put their children through college can spend on better housing, more vacations, and other consumer items.

Turning the national debt into a public utility

Locke calls the Japanese model "a capitalist economy with socialized capital markets". The national debt has been "monetized" - turned into the national money supply. The credit of the nation has been turned into a public utility.

Thomas Hoenig, president of the Kansas City Federal Reserve, maintains that the largest US banks should be put in that category as well. At the National Association of Attorneys General conference on April 12, he said that the 2008 bank bailouts and other implicit guarantees effectively make the too-big-to-fail banks government-guaranteed enterprises, like mortgage finance companies Fannie Mae and Freddie Mac. He said they should be restricted to commercial banking and barred from investment banking.

"You're a public utility, for crying out loud," he said.

The direct way for the government to fund its budget would have been to simply print the money debt-free. Wright Patman, chairman of the House Banking and Currency Committee in the 1960s, wrote:

When our Federal Government, that has the exclusive power to create money, creates that money and then goes into the open market and borrows it and pays interest for the use of its own money, it occurs to me that that is going too far. ... t is absolutely wrong for the Government to issue interest-bearing obligations. ... It is absolutely unnecessary.

But that is the system that we have. Deficits don't matter in this scheme, but the interest does. If we want to keep the interest tab very low, we need to follow the Japanese and borrow the money from ourselves through our own government-owned banks, essentially interest-free. "The full faith and credit of the United States" needs to be recognized and dispensed as a public utility.



Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org. In Web of Debt, her latest of 11 books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are webofdebt.com andellenbrown.com.

 

[Madrus Rose]

Regardless of what is happening in the EU area today SLV was very oversold on Friday.

And the AGQ hit $166 premarket friday am and bounced down to there a couple of times . On a squeeze up or a tank down you try to always wait for that little last little double bottom push down for an entry matching the ectreme oversold on the daily chart & the 5-15min charts as well .

My take friday morning while watching the spot price hit low $30's with the SLV touch down to $32.30 was just showing a perfect touch to the 30RSI on the daily ...it had to bounce there and the AGQ simultaneous rise off of $166 .

Why just love RSI so much... and though this AGQ chart doesn't show it , premarket the AGQ was trading 1000s of shares below $170 !!

Silver Chart exactly the same & doesnt show the real bottom trades almost $1 lower , very often its the old maxim that the early bird catches the worm . My thought was Silver still deserves to trade in this lower channel for awhile & thought a bounce to $36 was doable ...it went a little farther but think $38 caps the move up maybe and Silver trades in this lower channel for a while . How's that for efficient markets ?? lol

Two days 50pt bounce on the AGQ but look how after 3days & $99bil dollars worth
of commodity gains washed out , bounces right off that 30RSI touch which has been
almost a no fail indicator for months . Watch this 1rst of march high here @ $215 area which it pulled back from once today (for the short) to $202 then ran back up to exactly the same spot @ $215 ....but $38 seemed to top Silver out today will tell more of the tail.

** Edit : Buggers , was a little off...this am AGQ's first trading (premarket) is up to that $225 late march pivot top with the 50ma @ $242 with $Silver trading as high as $38.70 & now $38.50 .
http://www.kitco.com/charts/livesilver.html

 

[Madrus Rose]

Inching closer to the inevitable Greek default and Euro meltdown. 50% haircut for bondholders. Ouch! Markets won't like that.

Greece Downgraded From BB- To B As S&P Believes More Than 50% Principal Debt Reduction Would Be Required


Greece doesn't waste anytime firing back.

Greek Response Is Swift And Brutal


S&P credible?

Poor Greeks , getting shafted again ...was my thought today that maybe they could do a multi
billion dollar 50yr lease on the Parthenon to Disney and raise some cash . ;O)

That downgrade effectively raises the interest for their any further
borrowing to 26-28% ??

Speaking of DIS they are reporting earnings tomorrow along with MCP this rare earth miner & NUAN which is trading up to 5yr highs here , should be a fun day with 2 day high level talks with our "A" team Treasury Secreary Geithner & Secretary Hillary & crew with 20 Chinese diplomats to get them
to raise their currency & rates .

Oil didn't stay down as they would have liked , proly $100 here to stay for a while
it was due to a reversal call out of Goldman on friday on Oil
Goldman sees new oil rally after predicting drop
http://in.reuters.com/article/2011/05/06/idINIndia-56823620110506

The Wall Street bank, seen as one of the most influential in commodity markets, said it did not rule out a further short-term fall after Thursday's near record drop, especially if economic data continued to disappoint.

But the bank reaffirmed its traditional long-term bullish view of oil, helping crude to pare some of its earlier heavy losses on Friday.
"It is important to emphasize that even as oil prices are pulling back from their recent highs, we expect them to return to or surpass the recent highs by next year," Goldman Sachs' analysts said in a research note.

"We continue to believe that the oil supply-demand fundamentals will tighten further over the course of this year, and likely reach critically tight levels by early next year should Libyan oil supplies remain off the market," it said.
Oil prices remained extremely volatile on Friday, roiled by better than expected U.S. jobs data, which eased fears about global economic recovery that contributed to a 10-percent price crash on Thursday.

Goldman said it believed that this week's correction in oil prices, which fell from above $125 per barrel of Brent crude to below $106 on Friday, was sparked by disappointing economic data releases and U.S. oil inventory data.
"The sell-off yesterday (May 5) has likely removed a large portion of the risk premium that we believe has been embedded in oil prices, which could suggest further downside may be limited from here."

 

[SpasticGramps]

He's right, deficits don't matter......until they do.

Our Neo-Keyensian ponzi economy is built on the paradigm of infinitely increasing debt. This is all fine and dandy for a while (decades) until revenues can longer service the debt and we have to monetize the deficits. Which we are going now. Begining of the Wiemar End Game IMO.

I know he isn't anyone's favorite person here, but he makes salient points.

'Paper dollar destroying world economy' PressTV

Iran's President Mahmoud Ahmadinejad strongly criticizes US economic policies, saying that the paper currency created by the American government is taking a heavy toll on the global economy.

In an address to the fourth UN Conference on the Least Developed Countries in Istanbul, Turkey, on Monday, Ahmadinejad said that the cash injected into the global economy in the form valueless US dollars amount to over USD 32 trillion, IRNA reported.

“This is while the US budget deficit for the 2011 fiscal year is expected to reach a figure above USD 1.6 trillion,” he added.

The Iranian president also pointed that the US foreign debt now approaching over USD 14.6 trillion, while the Gross Domestic Product (GDP) in the United States stands at around USD 14 trillion.

President Ahmadinejad stated that such figures clearly explain the plunder of national wealth in many countries, and the upsurge in poverty and underdevelopment across the globe.

He noted the certain countries rob less developed states to pay their international debts.

“Most of international economic organizations either defend the existing situation or serve the interests of certain states,” he said.

President Ahmadinejad further said the era of colonialism is coming to an end and the management of world issues should be reformed.

He also proposed the formation of an independent commission to assess the extent of damage inflicted on oppressed nations during the era of colonialism, and to oblige former colonialist powers to pay indemnities.

The last bit is Wiemar all over again to the T. Down to the reparations.

I'm guessing Bernanke is on the phone with Obummer telling him to ready the invasion forces. Only "terrorists" talk bad about the Dollar and US economy.

 

[SpasticGramps]

Well fuck me to tears. Looks like Jim Rogers, the commodity guru, is about go short on US bonds too. I think when June and the end of QEII comes the volatility is going to make some of us throw up.

Jim Rogers Says He Plans To Short Treasurys As Soon As This Afternoon ZeroHedge

And so the Bill Gross juggernaut begins rolling. Reuters reports that "Influential investment veteran Jim Rogers said on Tuesday he plans to short U.S. Treasuries as soon as this afternoon as he expects the end of quantitative easing to pressure government bonds." Odd. Where have we written/heard that before. But of course, who listens to Bill Gross (the largest bond manager in the world) and Jim Rogers (the co-founder of Quantum) - surely they are no-nothing fools (who just happen to agree with our initial assessment that in the absence of QE2 all bets will be off). Reuters adds: "Rogers said he expects the U.S. dollar to rally when the Federal Reserve's unconventional monetary measure ends in June. "I'm not short bonds yet but I plan to short bonds - maybe this afternoon if I get around to it," Rogers told Reuters Insider television." Recently Jim Rogers correctly pointed out that silver is not in a bubble (a finding confirmed yesterday by Zero Hedge when we demonstrated that non-commercial spec longs in silver are at 2 year low) and continues to be long precious metals until such time as silver really hits the parabolic phase, well north of $100 (by which point the dollar will likely be confetti anyway). So as ever more influential asset managers turn outright hostile on rates, just how much longer will the Fed's vol selling yield suppression scheme work for?

Anyone think we are close to the spectacle of a failed US bond auction?

 

[Zen Master]

I love learning about this stuff, great posts SG.

hard thing for me being green to it all is that this is uncharted waters, I have absolutely no clue how the house of cards is gonna crash, I can see clearly though that its well on its way.

 

[SpasticGramps]

Looks like the Post Office is about to become insolvent and need more bailout sweat from the taxpayer slaves. Go long FedEx and UPS??

U.S. post has $2.2 billion loss, warns of Sept insolvency

(Reuters) - The U.S. Postal Service posted a $2.2 billion net loss in its second quarter and said it might be unable to pay its debts by September.

The agency, which has been battling falling mail volumes and competition from FedEx (FDX.N) and United Parcel Service (UPS.N), said it expects to hit its borrowing limit by the September 30 end of the fiscal year, and will have to default on payments to the federal government unless Congress intervenes.

"The Postal Service continues to seek changes in the law to enable a more flexible and sustainable business model," said Chief Executive Patrick Donahoe in a statement.

The Postal Service -- which posted a net loss of $8.5 billion at the end of fiscal 2010, its fourth straight year of losses -- has asked Congress for permission to cut Saturday mail delivery.

The agency lost a bid last summer to raise rates on first-class mail beyond the pace of inflation.

I thought there was no inflation?

 

[emilyC]

take stock in your friends

 

[Mountain]

Crazy volatility in silver and not surprised at all the market dumping on higher volume once it reached the recent highs.

 

[SpasticGramps]

DXY is up to 75.23.

Dollar goes up, everything else sells off. Let the games begin!

 

[SpasticGramps]

From Jeremy Graham of GMO on the S&P.

"I do not feel the same degree of confidence that I did, which was considerable, that the Fed could carry all before it until October 1 of this year. A third round of quantitative easing would very probably keep the speculative game going. But without a QE3, there seem to be too many unexpected (indeed unexpectable) special factors weighing against risk-taking in these overpriced times. I had recommended taking a little more risk than was justified by value alone in honor of Year 3, QE2, and the Fed in general. Risk now should be more reflective of an investment world that has stocks selling at 40% over fair value (about 920 on the S&P 500) and fixed income, manipulated by the Fed, also badly overpriced. Although the taking of some “extra” risk by riding the Fed’s coattails has been profitable for six months, I admit to being a bit disappointed: I really felt the market had the Fed’s wind in its sails and would move up deep into the 1400 to 1600 range by October 1, where it would be, once again, over a 2-sigma 1-in-44-year event, or, officially, a bubble. (At least in a world where GMO is the official.) At such a level, I was ready to be a real hero and absolutely batten down the hatches, become extremely conservative, and be prepared to tough out any further market advance (which, with my record, would be highly likely!). The market may still get to, say, 1500 before October, but I doubt it, especially without a QE3, although the chance of going up a little more by October 1 is probably still better than even. And whether it will reach 1500 or not, the environment has simply become too risky to justify prudent investors hanging around, hoping to get lucky. So now is not the time to float along with the Fed, but to fight it. Investors should take a hard-nosed value approach, which at GMO means having substantial cash reserves around a base of high quality blue chips and emerging market equities, both of which have semi-respectable real imputed returns of over 4% real on our 7-year forecast. The GMO position has also taken a few more percentage points of equity risk off the table."

The herd will start heading for the exits IMO and it might get a little cramped trying to get out the door.

 

[Madrus Rose]

Silver hit near $39.60 or almost $40 during the night , shorted the pop premarket on AGQ at just under $225 like have done every morning sticking to the thesis that $40 caps the move on Silver ...OMG would you look at this down 40pts now @ $185! Everry uptick is getting hit on the way down ...longs got crushed ...some powerful BIG money at work .

Job #'s tomorrow after the disapointing DoE build #'s today (too muc build up , to little economic activity )...if they don't back up the #'s from last friday & show an improvement they'll be blood on the street .

Jeezus , since writing this AGQ taken down anothe 2pts to $182 ...down 44pts now !!!!!!!

this might be time for bounce mode here but silver blew down thru $36 where even i thought would hold ...big shorting going on still silver at $35.50
http://www.kitco.com/charts/livesilver.html

 

[SpasticGramps]

More attempts at price controls. This should funnel just about everyone into stocks. They had to halt trading on oil and gas futures because they were crashing so bad. Very rare to see that done to commodities.

Commodity Flash Crash Part Two As Senators Demand Immediate Position Limits In Crude

Today is shaping up to be an identical replica of the action from last Thursday as seen on the chart below. That's two flash crashes in less than a week. Whether this is driven by another margin hike known only to the CME and its closest, or due to news from Reuters that 17 senators have written to the CFTC to immediately crack down on excessive speculation in crude oil, is unclear, and largely irrelevant. The outright campaign to stomp out any non-stock trading is in full force. The message is clear: the only place where investors can henceforth put their money in is in stocks.

And from Reuters on the latest attempt to push all commodities to zero, via Reuters

A group of 17 U.S. senators called on the Commodity Futures Trading Commission on Wednesday to immediately crack down on excessive speculation in crude oil markets by hastening planned rules to limit concentration.

In a letter to the CFTC's chairman and commissioners, the lawmakers said they wanted the agency to unveil a plan by May 23 to impose position limits in all energy futures markets, beginning with crude oil. The agency has already proposed such limits as part of the financial reform, but has not finalised them.

The senators said the recent drop in crude oil prices, which fell nearly $10 a barrel in one day last week, defy supply and demand conditions. Oil prices bounced back almost $6 a barrel on Monday, but then fell more than $5 on Wednesday. Gasoline prices slumped by more than 8 percent.

"The wild fluctuation could only be the result of rampant oil speculation, plain and simple," said Senator Ron Wyden, one of the lawmakers who wrote to the CFTC demanding action, in some of the strongest language attacking speculators since oil prices surged to a record $147 a barrel in 2008.

"The CFTC needs a plan to impose position limits on oil speculation before oil speculators drive up prices even higher just as Americans go to the pumps to fill up for Memorial Day weekend," he said.

The CFTC is weighing new rules that would slap limits on the positions of big commodity traders, capping how many futures and swaps contracts any one company can control.

The Dodd-Frank law passed last July gives the agency the power to set position limits to curb excessive speculation in 28 commodities, including energy, metals and agricultural markets, "as appropriate."

But some of the agency's own commissioners are skeptical the limits would prevent a run-up in prices, and experts and traders have long said the rules risk making markets more volatile by reducting liquidity.

Anyone knows what happens when governments try to institute price controls on commodities?

 

[SpasticGramps]

Full letter from the CME in link. I would say they are in full blown panic trying to kill commodity prices. Whether or not they destroy the rest of the market in their haste is yet to be determined. Sure are trying hard though.

And For Today's Margin Hike...

CME goes full retard, and is now seriously threatening to destabilize the clearing structure of the market with what appears a panicked margin hike every single day in one or more commodities. Among today's products impacted RBOB and RBOB crack spreads, up by 21% and 50%, respectively, as the CME makes it all too clear which products the Obama memo said need to be killed post haste.

 

[The iD]

More attempts at price controls. This should funnel just about everyone into stocks. They had to halt trading on oil and gas futures because they were crashing so bad. Very rare to see that done to commodities.

Commodity Flash Crash Part Two As Senators Demand Immediate Position Limits In Crude


Anyone knows what happens when governments try to institute price controls on commodities?

"by Fiat2Zero
on Wed, 05/11/2011 - 18:42
#1265601

Emperor Diocletian's Reforms
History has something interesting to say about price controls:

Pull quote from: www.cato.org
-----------------------------------
Finally, the very survival of the state was at stake. At this point, the Emperor Diocletian (284-305 A.D.) took action. He attempted to stop the inflation with a far-reaching system of price controls on all services and commodities. [10] These controls were justified by Diocletian's belief that the inflation was due mainly to speculation and hoarding, rather than debasement of the currency. As he stated in the preamble to his edict of 301 A.D.:

For who is so hard and so devoid of human feeling that he cannot, or rather has not perceived, that in the commerce carried on in the markets or involved in the daily life of cities immoderate prices are so widespread that the unbridled passion for gain is lessened neither by abundant supplies nor by fruitful years; so that without a doubt men who are busied in these affairs constantly plan to control the very winds and weather from the movements of the stars, and, evil that they are, they cannot endure the watering of the fertile fields by the rains from above which bring the hope of future harvests, since they reckon it their own loss if abundance comes through the moderation of the weather [Jones 1970: 310].
​

Despite the fact that the death penalty applied to violations of the price controls, they were a total failure. Lactantius (1984: 11), a contemporary of Diocletian's, tells us that much blood was shed over "small and cheap items" and that goods disappeared from sale. Yet, "the rise in price got much worse." Finally, "after many had met their deaths, sheer necessity led to the repeal of the law."

Emporer O'Bottom Wears No Clothes."


source: http://www.zerohedge.com/article/chart-day-currency-devaluation-old-school-style

BTMFD! stay frosty,

-iD

edit- any insight on the prospective movement of the USD from the effect of breaching the debt ceiling in less than a weak? what do i do w/ all of my cash if RIN TIM TIM decides default and rollover is that dog's only trick? goodstuff gramps n every1, very enlightening. glad im not the only one.

 

[Mountain]

SLV dropped right back to near it's 100 MA and near recent lows, during regular trading, of about $34. At least this time the drop was on lower volume but still pretty damn severe at over 8%. Will be interesting to see what happens over the next few days.

 

[Cheeb]

All commodities down today while the dollar rallies.. silver not taking that beating alone.

This is merely based on the dollar going up (like that is possible)...eh not so much but really just more fear of the euro.

- -

Its kinda of funny watching the silver battle. Almost guaranteed prices drop in NY market while the east brings it right back up..
Really curious as to what this HKMEX is going to do to PM prices..