Financial topics

[OLD1953]

Will those who actually use the commodities market find some other venue, and leave the mercantile exchange to speculators?

http://www.forbes.com/sites/emilylamber ... s-trouble/

The actual users of the exchange who have product to sell and are waiting for a buyer are the ones getting hurt most by MF Global. If they take a bath on this, or wait years to get their money back, some will go bankrupt and many others will be seeking contracts before planting rather than risking the exchanges again.

[richard5za]

Has anyone some thoughts on what happens if the futures markets are shut down whilst the MF Global mess is sorted out?

[richard5za]

I remain 100% short also.

An extract from Yahoo Finance website:
NEW YORK (AP) -- The Dow Jones industrial average jumped 208 points Thursday after Greece scrapped a referendum on unpopular budget cuts and the European Central Bank unexpectedly cut interest rates. It was the second straight day of big gains in the stock market.

We are living in dangerous markets!! Conventional technical analysis points to a downward correction, over the next few weeks, and going short is a logical decision (albeit that shorting with leverage is always dangerous) then Greece changes their mind on a referendum and buyers go back to the party.

I am uncomfortable that stocks and metals are going up an down together; somethings wrong.

[jcsok]

It is doubtful that exchanges would be shut down while unwindind MF Global mess. Although MF was a significant player, it by no means was large compared to Lehman or AIG. Such an act would be highly bearish, IMO, which the powers that be would not allow.

On another forum I visit, a poster closed a MF account last week, received a check in the mail Saturday, deposited it Monday, and check didn't clear. Upon my questioning, poster claimed it was a segregated funds account, not part of a pool. This does make me think more of the safety of my segregated funds account. As has been discussed here and on other forums, if a crash occurs, even if a speculator such as myself and Higgenbotham is positioned for a crash, will we get our original account balance back, let alone the paper profit? Although the futures are a zero sum game, if the exchange is faced with several bankruptcies, and the counterparty to futures can't pay, the exchange won't be able to pay in a sudden crash.

[vincecate]

I am uncomfortable that stocks and metals are going up an down together; somethings wrong.

The value of the dollar has had wild swings which causes the price on stocks and metals to change in the same way.

[aedens]

The People's Bank of China named the Triffin Dilemma as the root cause of the economic disorder.
Zhou Xiaochuan's speech of 29 March 2009 proposed strengthening existing global currency controls, through the IMF.
On April 13, 2010, the Strategy, Policy and Review Department of the IMF published a comprehensive report examining these aforementioned problems as well as other world reserve currency considerations, recommending that the world adopt a global currency called the "Bancor" and that a global central bank be established to administer such a currency.

The point is Americans are truly blind and do not care top to bottum. The Constitution mentions sound money, and a few of use know what Nixon did.
You have no rights to there money is as plain as it gets.

[Higgenbotham]

From a generational standpoint, look at the behavior of the chart before 9-11. It is exactly the same as today. Nothing has changed at all. Nothing has been learned at all. The behavior of this chart says we are still Third Turning. Just to make sure I am clear, note the final countertrend rally segment from 1075 to 1300 in each instance - before 9-11 and just recently.

My hypothesis from two weeks ago was that at least something may have been learned and behavior would be a little different.

This means that the masses that are invested in the stock market, and they are still considerable, don't "get it" at all. If they start to "get it" next week and panic, literally hundreds of points can come out of the S&P within days. On a number of scales, this whole rally is phony, whether it's the move above 1310 in 2011, the move above 1010 from 2009-2011, or the move above say 650 from 1996-2011.



http://i39.tinypic.com/fjfho4.gif

[Higgenbotham]

I believe John will be proven correct - the true generational panic and stock market crash has not happened yet, that 2008 was not it.

It seems at this "juncture of maturation" as Haig would put it, the facts point to an upcoming panic, yet at the same time few any longer believe it is possible.

November 7-21 looks to be a vulnerable period. If there's a sea change in thinking of the masses which results in a generational panic, it seems possible that the S&P could fall to 800 or even lower within 2-3 weeks. History supports that notion, as the 1929 crash took the Dow from 360 to 210 from October 14-29, 1929. It's my guess that this bubble is even larger; we are likely in the equivalent of September 1931, at which point the Dow had sunk to about 100. While it's true that liquidity can be pumped in, in my view liquidity is not the limiting factor once the black hole of insolvency (im)materializes to the point that liquidity cannot overcome it.

[aedens]

I have been under the impression we were seeing the back wall of the storm wall. Like Truman said give me one handed economist.
The hard rain was just that only. If I read this correct, and I asked my wife what trust means, it was someone you can believe in.
Given the amount of head winds as it is said, we are seeing, to an extent the convergences of ZIRP policy for its due process.
I read that the belivers in there orthodoxy's alone are looking for statist capital tax evaders funds which I conveyed as peeling the onion.
My thought process as this is written is what bureaucratic efficency can they extole to its proper usage to productionist means?
I will not convey what there ventures have profited since it historically has been malinvested in sectors we can produce to staggering clarity anyway.
No it is distractionary to persist in that timeline since productive capital we witnessed was already mentioned in the forums to clarity we need not linger in. Those ventures are already progessing under documents we have provided given ante view connections. The study captured in the forums provided is 1378 clusters of innovated supply chain in context to contractual and property rights. Under that guise there shock analysis from the Fed rings true on that bell alone and the mechanism for dislocation. We did mentioned orphan structures from funds that under scrutiny the statists are obligated for public dissemination.
We captured the historical context and remain diligent the facts that do remain under the scope of true legal scutiny since capital structures have to funtion under it. We can only convey lost capital and uncertainty to opportunity from balances as conveyed we monitor on the transitional market clearing mechanism of contracts to date. The confidence we measure reflects only opinion from unaudited firms leveaged to risk models funded from taxpayers subordinted to moral foundations which leads to trust as defined by my wife. It rings true that usury founded on policy is not compatable as we already know. We are reminded that socialism, or the true market, there is no third way. It was a very modest amount, but i gave it willingly to a person who will supply a need in the community not backed by force to those in need in our area in trust. Not a cent will be wasted to this effort. It will not change the affairs given the bent of mind of to many in the hour scripted as we are reminded in the GD underway. Politic's cannot fix the injury's I witness and we are subject to. I agree on your thesis of clearing dislocation's and my first blush was the week of the 14th. Best guess with no clue but will sumise many will just stay away maybe a number of weeks to see what the hot money pursues in there risk quests.

Addon: http://finance.yahoo.com/news/As-Regula ... 2.html?x=0
How in the hell do you figure this out with the "smart money" it defies words.

[John]

Is the following hysteria, or is it a sign of actual approaching crisis?

The Fed was hit with withdrawals of $83.3 billion last Wednesday, the
largest withdrawals from its deposit accounts that were not associated
with quarterly tax payments since February of 2009. $7 billion of that
was the net cash transferred to the US Treasury from its note and bond
sales less outlays. The Fed still had to meet the other $76
billion. These transactions were revealed in the Fed’s weekly H.4.1
report.

The Fed was apparently forced to take extraordinary measures to fund
these withdrawals. These included the outright sale of nearly $24
billion in its Treasury note and bond holdings from the System Open
Market Account. As a result, the Fed’s System Open Market Account
(SOMA) fell to $2.611 trillion, some $43 billion below the Fed’s
stated target of $2.654 trillion. Prior to this week, it had not
strayed from by more than $7 billion since June. The Fed’s action was
not only a direct contradiction of its stated policy, but it was done
without warning or explanation. It ran counter to Bernanke’s penchant
for telegraphing every important move the Fed makes so that the
banking/speculating organizations can front-run it.

The Fed took another unusual and virtually unprecedented action to
fund these massive withdrawals. It borrowed $43 billion from foreign
central banks (FCBs) through Reverse Repurchase Agreements (revese
repos, or RRPs).


Fed Reverse Repos Chart

The Fed’s commitments of reverse repurchase agreements, where it
pledges its securities holdings in return for cash loans, bulged by a
record amount to a record level. The magnitude of this action is
unprecedented.

These RRPs were done with FCBs. There were no open market operations
with the Primary Dealers or Tri-party RRP participants reported in the
NY Fed’s daily postings, or in the H41.

This borrowing and the sales of the Treasuries covered all but $10
billion of the withdrawals. The Fed issued currency to cover about $7
billion, and covered the rest with minor adjustments to other
accounts.

This action was such a surprise and done with such stealth, that
apparently I am the only person in the in the known universe, who
writes regularly about the Fed, who noticed it. I could find no
coverage of it anywhere this weekend, either in the mainstream Wall
Street lackey press, or in the financial wackosphere, of which, like
it or not, I am a member. Since I know that I’m not that smart and the
big boys at the Wall Street Urinal are, I have to assume that there’s
nothing going on here… (Uh… Not).

One other surprise item on this week’s Fed H41 was the U-turn in
foreign central bank buying, which I suspect is related to these
withdrawals. After 7 weeks of record selling of their Treasury
holdings, the FCBs last week did an about face and made record
purchases, reversing much of their recent selling. The dollar rose
sharply on Tuesday and Wednesday. I covered the details, with charts,
in the Wall Street Examiner Professional Edition Treasury update
(Rising Cesspool Lifts All Floaters).

Whether there’s any relationship between these gigantic FCB actions
and the giant withdrawals from the Fed’s deposit accounts, I can’t
say. Unfortunately, I’m not one of the Fed’s fair haired boys to which
they like to leak inside information. For that, your business card
must include the magic words– Wall Street Journal, New York Times, or
Washington Post.

I actually did put in phone calls to Michael Derby at the WSJ, and
Greg Robb at Marketwatch, but it was late in Friday afternoon, and
neither returned my call. It will be interesting to see if, and what,
they report as a result of my calling this to their attention. They
obviously have the inside contacts which I do not and I was hoping to
glean some information from them, or to tip them to what might be a
story worth pursuing. I wait with baited breath to see if anything
comes of these contacts– Or maybe a press release from the horse’s
mouth (cue visual- horse’s backside) itself.

Until then, I don’t know whether this is some kind of technical
adjustment, however big, or a sign that the wheels might be beginning
to come off the world financial system. Given what’s going on with
countries and brokerages going bankrupt and internet coupon companies
setting the investing world on fire, it’s difficult not to suspect the
latter.

We’ll have to see what hits the fan this week. If no reports show up
in the mainstream media, rather than concluding that there’s nothing
here, I would tend to suspect that there is, and that the reason
there’s no reporting is that the Fed does not want us to know. I’d
infer from that that Dr. Bernankenstein has lost control of his
monster.

http://wallstreetexaminer.com/2011/11/0 ... rows-cash/