The MasterCharts

Investor Sentiment: Is This the End of the Road for the Rally? | ZeroHedge

noreply@blogger.com (MasterBlog) — Sun, 22 Jan 2012 15:32:17 PST

Investor Sentiment: Is This the End of the Road for the Rally?

zerohedge.com

January 22, 2012

The "dumb money" indicator has become extremely bullish (bear signal), and this is what one would expect with rising prices. The higher prices go the more bulls that are recruited. But is it the end of the road for the rally? Not necessarily so. In 1995, 2003, 2009, and Q4 2010/Q1 2011 we saw the phenomenon that I have dubbed "it takes bulls to make a bull market". It is a market characterized by rising prices and excessive bullishness. In the case of 1995, 2003, 2009, the excessive bullishness and multi-month rally seem to be warranted as the markets were bouncing back from steep losses or a prolong period of consolidation (1995). The Q4 2010/ Q1 2011 version of this phenomenon was a QE2 induced feeding frenzy. With investors taking their cues from the Federal Reserve and European Central Bank, the current market environment resembles Q4 2010/ Q1 2011. For now, we need to respect this dynamic as we could be witnessing another melt up. The bulls have the ball in their court and are on the cusp of turning this recent price move into a multi-month barn burner.

The “Dumb Money” indicator (see figure 1) looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investors Intelligence; 2) MarketVane; 3) American Association of Individual Investors; and 4) the put call ratio. This indicator shows extreme bullishness.

Figure 1. “Dumb Money”/ weekly

Figure 2 is a weekly chart of the SP500 with the InsiderScore “entire market” value in the lower panel. From the InsiderScore weekly report: "Insider trading volume was seasonally thin last week, the result of most insiders being locked-up and prohibited from trading until after their companies' Q4'11 earnings announcements, as well as the market holiday."

Figure 2. InsiderScore “Entire Market” value/ weekly

Figure 3 is a weekly chart of the SP500. The indicator in the lower panel measures all the assets in the Rydex bullish oriented equity funds divided by the sum of assets in the bullish oriented equity funds plus the assets in the bearish oriented equity funds. When the indicator is green, the value is low and there is fear in the market; this is where market bottoms are forged. When the indicator is red, there is complacency in the market. There are too many bulls and this is when market advances stall. Currently, the value of the indicator is 65.09%. Values less than 50% are associated with market bottoms. Values greater than 58% are associated with market tops.

Figure 3. Rydex Total Bull v. Total Bear/ weekly

Read the article online here: Investor Sentiment: Is This the End of the Road for the Rally? | ZeroHedge

Burgernomics shows Switzerland has the most overvalued currency @ECONdailycharts

noreply@blogger.com (MasterNews) — Fri, 13 Jan 2012 14:29:50 PST

The Big Mac index

Jan 12th 2012, 16:53 by The Economist online

Burgernomics shows Switzerland has the most overvalued currency

THE ECONOMIST's Big Mac index is based on the theory of purchasing-power parity: in the long run, exchange rates should adjust to equal the price of a basket of goods and services in different countries. This particular basket holds a McDonald's Big Mac, whose price around the world we compared with its American average of $4.20. According to burgernomics the Swiss franc is a meaty 62% overvalued. The exchange rate that would equalise the price of a Swiss Big Mac with an American one is SFr1.55 to the dollar; the actual exchange rate is only 0.96. The cheapest burger is found in India, costing just $1.62. Though because Big Macs are not sold in India, we take the price of a Maharaja Mac, which is made with chicken instead of beef. Nonetheless, our index suggests the rupee is 60% undercooked. The euro, which recently fell to a 16-month low against the dollar, is now trading at less than €1.30 to the greenback. The last time we served up our index in July 2011, the euro was 21% overvalued against the dollar, but it is now just 6% overvalued. Other European currencies have also weakened against the dollar since our previous index, notably the Hungarian forint and Czech koruna, which have fallen by 23% and 16% respectively. Six months ago both currencies were close to fair value, but they are now undervalued by 37% and 18%.

For the full data set see here.

Market Breakout? S&P 500’s Highest Close Since July Could Fuel More Buying

noreply@blogger.com (MasterBlog) — Tue, 10 Jan 2012 16:52:07 PST

Market Breakout? S&P 500's Highest Close Since July Could Fuel More Buying - CNBC.com Article

The S&P 500 closed above its closing high hit last October, a technical breakout that could spark more buying, chart analysts and traders said. How much buying, is subject to debate.

Full Story:
http://www.cnbc.com/id/45946824

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The Chart That's Stirring Skepticism About the #Jobs Numbers

noreply@blogger.com (MasterNews) — Sun, 08 Jan 2012 04:52:59 PST

Courier jobs through the years. Click for big image.
http://s.wsj.net/public/resources/images/OB-RG876_courie_K_20120106104109.jpg

The Chart That's Stirring Skepticism About the Jobs Numbers

MarketBeat - WSJ

By Mark Gongloff

: RBC; Courier jobs through the years. Click for big image.

The standard question people are asking about this morning’s strong jobs report is whether it’s nothing more than so much holiday strength, which will vanish with the turn of the calendar to cold, cold January.

The standard reply to that question has been, duh, the Bureau of Labor Statistics adjusts for that seasonality.

But there are still doubts about how well they’re doing that adjusting.

Tom Porcelli at RBC sent along this eye-catching chart which demonstrates why people might be having these doubts. It’s a chart of hiring in the sector known as “couriers and messengers,” a group that includes the elf workers that help deliver gifts to good girls and boys and coal to the naughty.

You don’t have to look too hard at the chart to see what looks an awful lot like seasonality at work — these numbers spike every December and then fade immediately.

Porcelli writes:

What we find peculiar is that the BLS once again looks to have failed to properly adjust for the seasonal hiring of holiday couriers. This series is actually seasonally adjusted yet every December over the past few years we see a surge in hiring in this space followed by a rather large unwind in January. This year in particular, a sizeable 42k jobs were added meaning we should see about the same number fall out next month. Accounting for this anomaly, today’s +212k (private sector payroll gain) loses a bit of its luster.

Cardiff Garcia at FT Alphaville has been writing for a while about the problems with adjusting economic numbers for seasonality. If we see a drop in these jobs numbers next month, that question could gain more traction.

The Chart That's Stirring Skepticism About the Jobs Numbers - MarketBeat - WSJ

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Summarizing 2011 In Nine Easy Charts

noreply@blogger.com (MasterBlog) — Thu, 29 Dec 2011 14:43:24 PST

If one had to summarize 2011 in one sentence, it probably would be: "a year in which the market ended unchanged, in which the world got within seconds of global coordinated bankruptcy, and in which central planning finally took over everything." Simple. On the other hand, conveying a comparably concise message full of hope and despair at the same time, using charts would actually be slightly more problematic. But not for the Economist, which has managed to do just that, however not in one but nine discrete charts. Here is what they did.

From the Economist:

IN 2008 banks were saved by governments. The question that dominated 2011 was how to save governments. The euro-area sovereign-debt crisis metastasised from a problem affecting small, peripheral states to one that threatens the single currency itself. The rise in Italian bond yields in particular marked a dangerous new stage in the saga (chart 1). European banks, stuffed full of government bonds, have suffered a severe funding squeeze since the summer (chart 2). The euro was oddly resilient against the dollar, but Switzerland and Japan intervened to hold down their currencies as investors sought shelter (chart 3).

Faced with skittish creditors, countries in Europe tried to instil confidence by cutting spending (chart 4). Austerity and growth do not mix, however. Euro-area GDP remains below its pre-crisis level. American output did at least regain that mark in 2011 (chart 5) but US unemployment remained very high.

The emerging economies again outshone their rich-world counterparts in terms of growth and jobs. But fears about inflation (chart 6) slowly gave way to fears about growth as the year went on and Europe's problems worsened. Emerging-market stocks dropped sharply in the summer as investors put their money into less risky assets (chart 7). Gold also benefited from another year of fear. The metal was set to post its 11th consecutive annual gain in 2011 (chart 8). Google searches for "gold price" rose whenever measures of market uncertainty did (chart 9). If governments aren't safe, after all, what is?

Chart 1

Chart 2

Chart 3

Chart 4

Chart 5

Chart 6

Chart 7

Chart 8

Chart 9

http://www.zerohedge.com/news/summarizing-2011-nine-easy-charts

Gold and Stocks Signal Start of a Bear Market for 2012 :: The Market Oracle

noreply@blogger.com (masterfin) — Sun, 18 Dec 2011 17:22:05 PST

Gold and Stocks Signal Start of a Bear Market for 2012

Stock-Markets / Financial Markets 2012 Dec 18, 2011 - 12:22 PM

By: Clive_Maund

Last week saw a severe breakdown in the Precious Metals sector that is now viewed as marking the start of a bearmarket, and that means the onset of a deflationary episode that is likely to prove more serious than that we witnessed in 2008, because it will involve countries going bust rather than "just" banks and large corporations as was the case in 2008.
At first glance gold's 3-year chart still doesn't look too bad, with its price in the vicinity of a still rising 200-day moving average, but last week it broke below this average for the first time since 2008, which is in itself a serious warning, and ominous devolopments on the charts for silver and the Precious Metals stocks indices, strongly suggest that gold is in the process of completing an important top area, which looks like it is taking the form of a bearish Descending Triangle. Momentum as shown by the MACD indicator, is now firmly in negative territory, and failure of the important support level at the lower boundary of the suspected Descending Triangle will lead to a severe decline as shown.

The Market Vectors Gold Miners Index (GDX) broke down last week from the Diamond formation that we had identified a week or two ago, confirming that the pattern that has developed this year is a large top area. This being so it is clear that both gold and silver are in the late stages of large top areas from which they are both soon likely to break down, and also that a major deflationary episode is in the works that will see the still elevated broad stockmarket suffer a severe decline, probably similar to that which occurred in 2008. The breakdown in the GDX was a very serious bearish development, so any rallies arising from the current oversold condition are likely to meet heavy selling and are thus unlikely to get far. Whatever rallies now occur should be aggressively sold - the real downside fireworks are likely to occur in the New Year.

On the 5-month chart for the GDX index we can clearly see the fine example of a rare "Fish Head" Triangle, which is what enabled us to call an imminent big move in the sector last weekend, although at the time we did not know which way it would break. To enable those readers less endowed with imagination to spot the Fish Head pattern, an eye and mouth have been added to the chart. We placed a general stop beneath this Triangle which took us out of most positions, and a straddle was recommended for speculators which has already garnered big profits.

At the same time that the PM sector started breaking down last week, the dollar broke out above an important resistance level, negating a potential Double Top, as we can see on its 6-month chart below, although the breakout is not as yet by a decisive margin. This has opened up the possibility of another strong upleg by the dollar, which is of course what we would expect to see if deflation strikes.

How far could the dollar rally? The 5-year chart gives us a good idea - it could run swiftly to the 88 - 89 area during a major deflationary episode.

A big dollar rally of course implies further euro weakness. As we can see on the 5-year chart for the euro, it has just broken down from a Head-and-Shoulders top and could drop back swifly to the vicinity of its 2010 lows in the 120 area or even lower. This implies further turmoil in Europe early next year, which is hardly surprising given the disorderly crew who are running Europe. Actually, it is surprising that the euro is not a lot lower considering what has gone down in Europe in the recent past - it would appear that the markets have been hanging in and hoping for a solution - tough luck if one isn't forthcoming.

If the PM sector is signaling a major deflationary episide, then we should see signs of topping action in the broad stockmarket, and we do. A large Head-and-Shoulders top is completing in the S&P500 index, and with the index high in the Right Shoulder we are believed to be at an excellent point go short, buy bear ETFs etc, which we will be reviewing on the site shortly. One leading market commentator who actually has a very good track record recently said that the markets will continue higher "because people are going to continue getting up in the morning and going out to work in order to buy stuff for themselves and their families". Oh, is that right? - try telling that to the 50% of Spanish youth who are out of work and can't find it no matter how hard they try BECAUSE THE JOBS DON'T EXIST due to the economy of Spain being ravaged by deflation, aggravated by the bursting of a huge property bubble - and what about American workers in the early 30's? - they didn't go around asking "buddy can you spare a dime?" because they were lazy ****ers - they were likewise the victims of deflation.
This same writer portrayed the 2008 market meltdown as a "once in a lifetime event", implying that everything's OK now and that "the great bull will climb the wall of worry". That might be so if the problems exposed by the 2008 financial crisis had been properly dealt with, but they weren't, they were simply "swept under the rug" - papered over with more of the stuff that created the problems in the first place - debt and derivatives - which means that the forces of deflation have now built up to staggering proportions - the lamed zombie banks, who exist now only to line the pockets of their elite executives and sluice fuinds in the direction of favored politicians, and governments nursing monumental debt overhangs are now powerless in the face of the oncoming deflationary train wreck. The final denouement will be when bond markets crash and interest rates skyrocket - that's when creditors will finally get the message that they are not going to get a penny back. One big reason for the current procrastination is that big private creditors are scrambling to use the current window of opportunity to offload as much bad paper as possible onto governments and thus the taxpayer before the final collapse.

Let's stand back a moment now to consider the larger implications of all these developments on the charts. The breakdowns now occurring across the PM sector are an indication that the forces of deflation are set to assert themselves and come to the fore. These forces have always been there, lurking in the background since the first major deflationary convulsion back in 2008, and their intent is to cleanse the world economic system of the dross of the gargantuan debt and derivatives overhang that is bringing the world economy to a dead stop. The key point to understand here is that these forces may be kept at bay for a while but they cannot be stopped - and creating even more debt and derivatives in an effort to stave off their impact, which is what central banks and governments have been doing since 2008, simply creates a more disastrous situation later on. Thus the accelerated ramping of the money supply and the maintenance of "zombie banks" and the propping up of bond and stockmarkets is an open invitation to disaster on a massive scale. There is still a widespread assumption that somehow "they" will fix it, they will muddle through by creating money out of nothing, juggling things around and engaging in firefighting where deflation threatens to break out and we will eventually come out of the end of the tunnel. We have even fallen for this ourselves having been fooled temporarily by the COTs and other data which it has to be said may be being tampered with. The problem is that the continued increases in debt and derivatives have created a situation that is dangerously unstable and now increasingly out of control. There is also a widespread assumption that that the entrenched powers that be, Goldman Sachs, the Republican Party etc are unassailable and immortal - that's what the Tsar of Russia and his family thought before they were summarily shot by the Bolsheviks in 1918. Nothing is forever.
2012 is going to suck - it probably won't be as bad as the movie "2012", but it's going to suck. Prepare yourselves as best you can - that's what we are going to do on www.clivemaund.com
By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2011 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2011 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.
Gold and Stocks Signa l Start of a Bear Market for 2012 :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

Why generalist funds should look at gold equities now

noreply@blogger.com (MasterNews) — Thu, 08 Dec 2011 05:11:10 PST

Why generalist funds should look at gold equities now

CONCLUSION: this chart shows two things: 1- you cannot make the argument anymore than gold equities are trading at a premium, yet it is the only commodity always trading on a positive contango ( should trade at premium). 2- Gives more reasons for gold producers to buy copper/base metal plays.

Source: BMO Capital Markets

It's Time To Start Freaking Out About Oil Prices

noreply@blogger.com (MailMaster) — Tue, 06 Dec 2011 05:23:05 PST

It's Time To Start Freaking Out About Oil Prices

Goldman Sachs Has Some Bad News For New York Homeowners

noreply@blogger.com (masterfin) — Tue, 06 Dec 2011 04:46:22 PST

this chart from Citi shows that 53% of foreclosed housing stock is in five states.

http://static5.businessinsider.com/image/4edd05c56bb3f7951f000010/foreclosures.jpg

Read more: http://www.businessinsider.com/goldman-sachs-new-york-home-prices-are-going-down-2011-12#ixzz1fhRNdQmM

Goldman Sachs Has Some Bad News For New York Homeowners

Here Is What Happened After The Last Global Coordinated Central Bank Intervention | ZeroHedge

noreply@blogger.com (masterfin) — Wed, 30 Nov 2011 07:09:23 PST

Here Is What Happened After The Last Global Coordinated Central Bank Intervention

Submitted by Tyler Durden on 11/30/2011 09:52 -0500

Presented with little comment but following the mid-September Global Save, things didn't end so well.

Here Is What Happened After The Last Global Coordinated Central Bank Intervention | ZeroHedge

-- The MasterFeeds

US Home prices in terms of #Gold Ounces

noreply@blogger.com (MasterBlog) — Fri, 25 Nov 2011 04:07:20 PST

http://www.mineweb.com/mineweb/media_stream/mineweb/1/132376/images/ash1.jpg

Keystone XL pipeline: Much ado about nothing?

noreply@blogger.com (MasterNews) — Fri, 25 Nov 2011 04:07:48 PST

See below comments from BMO on the delay of the Keystone XL Pipeline from Canada's Oil Sands to the USA

Much ado about nothing?

CONCLUSION: BMO's Randy Ollenberger (Energy) and Carl Kirst (Pipelines) conclude that the delay for a decision on Keystone XL is probably "much ado about nothing." Given the availability of alternatives, we do not believe that the delay or demise of Keystone will negatively impact the growth outlook for the Western Canadian producers. Our analysis suggests that heavy oil and bitumen producers will need to be able to access the PADD III market by 2015 or else face significant price discounting. Given the availability of alternatives within this time period we do not foresee a material increase in light-heavy spreads. We do see an increased likelihood that Enbridge's Wrangler and Spearhead expansions proceed as well as the probability that the Canadian federal government will attempt to diversify away from the U.S., favouring the Gateway and TMX proposals. Please see Randy and Carl's report for full details.

Summary of alternatives to Keystone for Western Canadian producers:

1- The most immediate alternative to Keystone XL is a two-step expansion by the largest transporter of crude oil, Enbridge (Wrangler/Spearhead)

2- Rail. Sending oil by rail from Alberta is an option and some producers are doing it now, although it's a much more prevalent alternative out of the Bakken. Typically producers own the cars, and lead time to have these cars built is around 4–6 months. As we understand Alberta bitumen requires specialized cars for movement, we see rail more as a robust alternative to pipes in the Bakken.

3- Seaway Reversal. Not a true alternative, though Seaway carries crude northbound from Freeport, Texas, to Cushing, as well as supplying refineries in the Houston area. Until recently, COP was reluctant to reverse the 350k b/d pipeline, not surprising given the over-supply at Cushing and depressing impact on WTI prices has helped increase Conoco's own realized MidContinent refinery spread. That changed, however, in early November when Enterprise announced it was in talks with Conoco to buy out its joint venture partner (while at the same time reaffirming its commitment to the larger Wrangler proposal with Enbridge). This makes sense to us.

4 - Longer-term: Crafting a path to Asia. Northern gateway: Gateway is a proposed C$5.5 billion project that would transport 525k b/d of heavy oil from near Edmonton to Kitimat.

Trans Mountain Expansion: Leveraging off its infrastructure already in place, Kinder Morgan is (has been for some time) seeking to expand its Trans Mountain Pipeline in phases, ultimately from 300k b/d today to 700k b/d

FT Alphaville » French exposure in pictures

noreply@blogger.com (masterfin) — Fri, 25 Nov 2011 04:08:04 PST

Interconnectedness of the EuroZone Financial System, from the Banca d'Italia's latest financial Stability Report of Nov. 2, via the FT's Alphaville

French exposure in pictures

Posted by Sid Verma on Nov 10 12:56.

Au bout du fossé, la culbute.

Brace yourself. Here are some reasons why markets are giving France, in particular, a kicking today, according to the Banca D’Italia’s latest financial sector report on November 2:

(Click to enlarge)

Source: Banca d’Italia

We will reserve judgement for now and let you mull this over. In the bank’s words: (Emphasis ours)

Figure A shows the trend in the total gross assets held by some large European Union countries (France, Germany, Italy, the Netherlands and the United Kingdom) vis-à-vis Greece, Ireland and Portugal in the aggregate and also Belgium, Italy and Spain.

The growth of gross assets was rapid for France, which had total exposure equal to about 60 per cent of its GDP at the end of 2009. For Germany the rise was more moderate but still resulted in an overall exposure of more than 30 per cent of GD P. The United Kingdom’s exposure to Greece, Ireland and Portugal rose particularly sharply (to over 25 per cent of GDP).

For the Netherlands, whose degree of openness and financial deepening is especially high, the exposure to the six countries comes to more than 100 per cent of GDP, owing in part to the massive presence of special purpose entities controlled by European financial companies. Italy’s overall exposure to the countries with sovereign debt strains – not counting domestic assets – is much lower (less than 15 per cent of GD P), compared with the other main European countries.

For both France and Germany the largest component of the exposure is debt securities (government and corporate), followed by bank loans (Figure B). For the UK the exposure consists primarily of substantial bank assets vis-à-vis Ireland.

And like manna from — eurozone-financial-exposure-statistics — heaven, the Institute for International Finance’s (IIF) Capital Markets Monitor, published Wednesday, dishes out more reasons to be bearish, particularly viz a viz France. (Click here to enlarge:)

Here come the bank deleveraging waves, current account adjustments, spike in contingent liabilities on sovereign balance sheets, safe haven bids etc… you know the drill by now.

FT Alphaville » French exposure in pictures

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Who's Buying U.S. Debt?: 1955-Today - MarketBeat - WSJ

noreply@blogger.com (djm) — Fri, 25 Nov 2011 04:08:04 PST

Who's Buying U.S. Debt?: 1955-Today

MarketBeat - WSJ

By Matt Phillips

As diehard Treasury bond geeks, you gotta love the charts that accompany Treasury Borrowing Advisory Committee’s quarterly refunding report.

As we contemplate the massive amount of debt that the U.S. has managed to pile up over the years, it’s worth taking a look at who’s been loaning us the cash. This chart goes a long way to answer that question, showing the major holders of Treasury debt over time. You have to note that rather sharp uptick in Fed holdings of Treasurys lately. (The red line.) But obviously the big story has been among foreign holders, whose lending to Uncle Sam has exploded over the last 20 years.

: Treasury Department

The key question of course is why did foreign lending to the U.S. pick up so much in the mid-19990s. Well, some people would argue that this chart has a lot to do with it.

: FactSet

This FactSet chart shows the exchange rate between the U.S. dollar and the Chinese Renminbi. It’s a little counter intuitive, but when the line goes up, the CNY is getting cheaper against the greenback. So you can that in early 1994, there was a large and sharp devaluation of the Chinese currency against the dollar, making Chinese goods way more competitive as exports. China devalued its currency, the yuan, to 8.7 yuan to the dollar from 5.8 yuan to the dollar on Jan. 1, 1994. More recently the Chinese government has let its currency appreciate against the dollar somewhat. But the U.S. wants a lot more.

By the way, another way of looking at this whole debt issue is basically as the flip side of the U.S. trade deficit. The trade deficit started getting bad in the 1980s. But it really really got terrible in the 1990s and worsened up until the financial crisis. Here’s a look at the current account deficits, which measures mostly trade in goods and services and also includes transfer payments and investment income, as a share of GDP.

: FactSet

Basically, this means we started selling a lot less than we produce. That means our trading partners were socking away massive amounts of dollars that we paid them. And largely they stuck those dollars back into U.S. Treasurys for safekeeping. That keeps the U.S. borrowing costs low, which makes it easy for us to rely on too much debt. At that keeps the whole corrosive cycle going.

Who's Buying U.S. Debt?: 1955-Today - MarketBeat - WSJ

Chart of the Day: MF Global gets hit; Yield jumps to 18%

noreply@blogger.com (djm) — Fri, 25 Nov 2011 04:08:04 PST

Chart of the Day

MF Global gets hit; Yield jumps to 18% on Moody's downgrade...

read the article below from zerohedge.com:

Will Goldman Be MF Global's Executioner With Terminal Collateral Calls, As Yields Explode?

By Tyler Durden

Created 10/26/2011 - 10:38

[1]

Submitted by Tyler Durden [1] on 10/26/2011 10:38 -0400

We all know the news by now [12]: "MF reported its biggest quarterly loss ever yesterday, after having its credit ratings cut a day earlier by Moody’s Investors Service on concern that the broker won’t meet earnings targets and may not be able to manage investments in European sovereign debt. The company’s shares fell 48 percent. “It’s aggregated risk,” said Richard Repetto, an analyst at Sandler O’Neill & Partners LP. The positions in Europe, the further downgrade potential and the quarterly loss, combined to discourage investors, he said." Here is where it gets worse: "Analysts at KBW Inc., led by Niamh Alexander, wrote in a note yesterday that the Moody’s downgrade and lower earnings could cause a ripple effect on the company, raising borrowing costs and triggering collateral calls. “It also exposes MF to collateral calls of up to $5 million,” the note said. “We believe it could also prompt lenders to reduce financing, clients to withdraw assets and trigger the need to recognize losses on certain bilateral over- the-counter and off-balance sheet transactions." Well, judging by the bond yield chart below, MF is done (further confirmed by WSJ reports that the company has hired restructuring expert Evercore Partners). The only question is whether that ever so handy uber collateral puller, Goldman Sachs, so critical in the extinction of AIG and Dexia, will be the party responsible for the death of MF Global? Considering who the current head of MF is, and his "key man status [13]" in the prospectus of the company's recently bonds (which are plummeting today), we somehow doubt it.

[14
Will Goldman Be MF Global's Executioner With Terminal Collateral Calls, As Yields Explode?

The MasterMetals Blog

US consumer spending: Hard times | The Economist

noreply@blogger.com (djm) — Tue, 25 Oct 2011 11:52:15 PDT

US consumer spending

Hard times

Oct 25th 2011, 14:33 by The Economist online

How the economic slowdown has changed consumer spending in America
AMERICANS are spending less on clothes and eating out and more on household fuel bills and healthcare, according to data from the Bureau of Labour Statistics. Between 2007 and 2010, average annual consumer spending per unit—defined as a family/shared household or single/financially independent person—fell by 3.1% to $48,109. Average prices over this period have risen by 5.2%, so real consumer spending has fallen by almost 8%. The recession and economic slowdown have reduced buying power and consumers are tightening their belts in many ways, though spending on women’s clothes (and belts) fares slightly better than men’s. There are some positive health effects to be gleaned from the data. Real spending on tobacco products fell by 23%, probably because the price of a nicotine fix has risen by 46% between 2007 and 2010. Similarly, people are spending more on fruit and vegetables (up by 9%) and less on sugar and sweets (down by 6.5%). During the good times of 2003-06 consumer spending rose by 8.2%. In that time, Americans boozed more and bought more cushions: spending on alcohol and household furnishings increased by 19% and 13% respectively. Contrast that with 2007-10 when spending on these items fell by over 16%.

US consumer spending: Hard times | The Economist

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Gold Price Set to Drop into Aggressive Accumulation Zone

noreply@blogger.com (masterfin) — Mon, 10 Oct 2011 10:47:09 PDT

Gold Price Set to Drop into Aggressive Accumulation Zone

Commodities / Gold and Silver 2011 Oct 09, 2011 - 09:30 AM

By: Clive_Maund

It now looks like we were a little too bullish in the last update, for the way gold has acted over the past week suggests that another sharp drop is imminent before the dust finally settles on this reactive phase, that it likely to take it to or some way below its recent panic lows.

On gold's 4-month chart it is now apparent that a bear Pennant has been forming since the panic bottom, with the weak upside volume portending an imminent breakdown and steep drop. A reader pointed out to me during last week that gold's panic lows occurred in thin trading on the Hong Kong market, and for this reason we do not have to factor in the tail of the hammer candlestick when deciding where to draw the boundaries of the Pennant. The measuring implications of this Pennant call for a drop at least to the vicinity of the intraday lows of the Reversal Hammer and possibly somewhat lower towards the $1520 area - at this point the decline should have completely run its course and we will be looking to buy aggressively. If we look carefully we can see that a small "bearish engulfing pattern" has formed in gold over the past 2 trading days, implying that breakdown from the Pennant and the expected steep drop that will follow is imminent. A reason why this next drop should end the decline is that gold is already deeply oversold as shown by its MACD indicator, and it will of course be even more so after this impending decline. Those interested in going long gold investments in the near future should "keep their powder dry" but stand ready to wade in big time if gold drops into the bright green "aggressive accumulation zone" shown on our chart.

Other reasons why the imminent sharp drop expected should mark the end of gold's reactive phase are to be seen on its 1-year chart. On this chart we can see that a decline to or below its recent panic lows will take it deep into strong support near to its rising 200-day moving average, the classic point for a major reaction in an ongoing bullmarket to end.

Still another reason for the reaction to terminate with this final drop are gold's now strongly bullish COT chart on which we can see that Commercial short and Large Spec long positions have dropped back to relatively low levels - the lowest for a long, long time.

There is certainly plenty of light at the end of the tunnel for gold over a longer time horizon, and not just that which arises from its own COT charts. The COT charts for the dollar are strongly bearish, with the Commercials going heavily short, and they are also going heavily long the euro. This implies that the current state of extreme crisis in the Eurozone should ease soon and the euro rally sharply, and the dollar fall heavily - which suggests that european leaders may scale back their bickering soon and cooperate sufficiently to ease the crisis with generous helpings of QE, which will of course be bullish for gold and silver. Our euro fx COT chart below shows the big long position in the that the Commercials have built up.

Although the big Commercial short position in the dollar is a harbinger of doom for the current strong dollar rally, it looks on its 3-month chart like it has a bit of life left in it yet. The long-legged doji candlestick that formed on Friday implies that it will turn higher again next week and maybe make new highs.

Bearish price action in both copper and oil on Friday suggests that they too will turn down this coming week.

By Clive Maund
CliveMaund.com

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Fed Is 4 Times More Efficient At Selling Government Bonds Than The US Treasury... With A Taxpayer-Funded Twist

noreply@blogger.com (masterfin) — Mon, 10 Oct 2011 10:47:54 PDT

Published on ZeroHedge (http://www.zerohedge.com)

We are confident that the "99%" will be delighted to learn that Operation Twist, while flattening the 2s10s and 10s30s massively, a terminal scourge for the Net Interest Margin-reliant community, also contains in it the salvation for these very banks, and specifically the bonuses for their bond trading divisions: because all QE or Twist or whatever really is, is an ongoing subsidy via the bid/ask spread, funded by US taxpayers, to keep America's hurting banks solvent.

Fed Is 4 Times More Efficient At Selling Government Bonds Than The US Treasury... With A Taxpayer-Funded Twist

By Tyler Durden

Created 10/06/2011 - 13:07

[1]

Submitted by Tyler Durden [1] on 10/06/2011 13:07 -0400

Something curious happened today. As we pointed out earlier, for the first time as part of Operation Twist, the Fed, instead of buying bonds in the open market, actually sold bonds: a departure for Bernanke, and only the first time the Fed has practically rebalanced its portfolio since the first Operation Twist 50 years ago. In essence, by dint of its adjusted mandate, the Fed became the Treasury - what proceeded at precisely 11 am was the announcement of a sale of $8.87 billion in bonds with maturities from January 31, 2012 through July 31, 2012, bonds that were sold not by the traditional issuer of bonds, but by the Fed. Granted no new money was raised by the US in the process, but it was still a curious development. What was far more curious was the staggering turnout by the Dealer community, which indicated an interest for, wait for it, a whopping $242.6 billion in bonds! Said in conventional terms, the Bid To Cover was an unprecedented 27.3, or there was $27 in demand for every $1 of bonds finally sold by the Fed. Why is this worthy of bolding. Because, in a traditional Treasury auction, the Bid to Cover by the Dealer community is far, far lower. In fact, as the most recent 52 week Bill auction demonstrates, there was $89.5 billion in Bids for $14 billion in bonds allocated to Dealers, or a 6.4 Bid To Cover. Said otherwise the Fed is about 4.3 times more efficient at finding buyers than the Treasury. How is this possible? And should the Fed take over Treasury in all future bond sales? Nope: the answer is that this is nothing but yet another taxpayer funded gift to the (recently expanded by 2 Canadian banks) Dealers. Let us explain.
First, here is what the mechanics of the most recent 52 week Bill [7]sale looks like:
[8]
One can see how the Dealer Bid To Cover is a respectable 6.4.
Alternatively, here is what today's Fed's POMO looked like in its final form [9]:
[10]
Bid To Cover? 27.4!
How is this possible? Is the Fed really 4 times more efficient at selling bonds than the Treasury? How and why can dealers have such a huge apetite for paper which yields inside of 0.1% and thus provides absolutely no real top or bottom line benefits?
Simple. As Zero Hedge has discussed many times in the past, POMO, in whatever format, be it under LSAP auspices or Operation Twist, is nothing but a taxpayer funded gift to the Dealer community. As a reminder, the actual POMO process is conducted in the form of a reverse dutch auction, where the collusive Dealer Community (recently expanded to include 2 more Canadian Banks, BMO and Bank of Nova Scotia [11], which simply means that US Taxpayers are now on the hook to bailing out two more banks which are part of the supposedly safe and stable Canadian banking system) submits best bids or offers to the Fed, depending on whether the community is buying or selling bonds. Today, for the first time, it was buying, so it was Bidding. And while we can not prove it as the actual details of the price allocation are a non-public mystery, we are 100% confident that the answer lies precisely in the risk-free arbitrage, funded by the Fed, and hence the US taxpayers, consisting of a collusive wholesale bid at prices far lower than prevailing market rates, and the ability to immediately flip the bonds to the open market upon allocation for a tidy profit.
How tidy? We have no idea: the data is private. However, it is tidy enough to generate 4 times more buying interest than would be there normally. Hence the, pardon the pun, twist.
We are confident that the "99%" will be delighted to learn that Operation Twist, while flattening the 2s10s and 10s30s massively, a terminal scourge for the Net Interest Margin-reliant community, also contains in it the salvation for these very banks, and specifically the bonuses for their bond trading divisions: because all QE or Twist or whatever really is, is an ongoing subsidy via the bid/ask spread, funded by US taxpayers, to keep America's hurting banks solvent.
What is the ultimate top line benefit? We are not sure. But we are confident the result will be made immediately obvious once the monthly POMO details are revealed. We are eagerly looking forward to reverse engineering just how much money the middle-class is now funneling into America's banks via what is once again a daily POMO bail out.
And here is what the actual flip looks like in process: below we show the price chart of one of the cheapest bonds in today's POMO, 912828NS5, which accounted for $1.2 billion of total, and how its price changed starting at 11 am once the POMO was concluded. One can only imagine the amount of leverage involved in this operation...
[12]
And another:
[13]

[14]

Copper keeps bearish momentum

noreply@blogger.com (masterfin) — Wed, 05 Oct 2011 11:15:47 PDT

Copper keeps bearish momentum

CK_20110410115316.jpg (PNG Image, 940x652 pixels) - Scaled (88%)

The MasterMetals Blog

Deficits for Dummies

noreply@blogger.com (djm) — Sat, 10 Sep 2011 06:11:43 PDT

Deficits for Dummies

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Global Currency Wars Sees Swiss Franc Devalue 8.5% Against Gold In Week | ZeroHedge

noreply@blogger.com (djm) — Sat, 10 Sep 2011 03:28:27 PDT

Gold in Swiss Francs

Gold in Swiss Francs – 5 Day (Tick)

Gold in Swiss Francs in Nominal Terms – 40 Years (Quarterly)
From zerohedge.com:
The Swiss franc’s 10% plummet against gold this week clearly shows how cash is far from ‘king’ and no fiat currency in the world, in any bank in the world can be considered a “safe haven”.
Gold is again becoming the sovereign of sovereigns and reasserting itself as the safe haven money and asset par excellence.
If the Swiss franc, long considered the safest fiat currency in the world, can devalue 10% in a week, then it can happen and likely will happen to other currencies as well.

Global Currency Wars Sees Swiss Franc Devalue 8.5% Against Gold In Week | ZeroHedge

_______________________________________

Check it out on The MasterCharts

Switzerland's central bank EIU ViewsWire

noreply@blogger.com (djm) — Fri, 09 Sep 2011 04:47:17 PDT

Swiss FX Reserves

http://viewswire.eiu.com/asset_images/408422025.GIF

see the whole article here and here:Switzerland's central bank EIU ViewsWire

-- The MasterFeeds

CHART OF THE DAY: Apple Made Twice As Much Profit On Phones As Everybody Else COMBINED

noreply@blogger.com (MasterBlog) — Fri, 29 Jul 2011 13:31:36 PDT

CHART OF THE DAY: Apple Made Twice As Much Profit On Phones As Everybody Else COMBINED
Matt Rosoff | Jul. 29, 2011, 2:37 PM | 449 | 6

Apple is now the leading phone manufacturer by market share. It passed Nokia for the first time last quarter.

But more impressive: it captured two-thirds of all profits in the mobile phone business last quarter, according to statistics from Asymco.

Another way of looking at it: Apple made about twice as much profit on mobile phones as Samsung, RIM, and HTC did -- combined. Nokia, Motorola, Sony-Ericsson, and LG all saw losses.

Read more: http://www.businessinsider.com/apple-made-twice-as-much-profit-on-phones-as-everybody-else-combined-2011-7?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+typepad%2Falleyinsider%2Fsilicon_alley_insider+%28Silicon+Alley+Insider%29#ixzz1TWo0Ss9U

CHART OF THE DAY: Apple Made Twice As Much Profit On Phones As Everybody Else COMBINED

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Fed Is 4 Times More Efficient At Selling Government Bonds Than The US Treasury... With A Taxpayer-Funded Twist

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