Silver Surges Over $46.25/oz As Rumours Of A Short Squeeze And Cornering Market Gain Credence

Submitted by Tyler Durden on 04/21/2011 08:18 -0400

Gold and silver have surged to new record nominal highs in dollar terms (all time and 31 year) with the dollar falling sharply on international markets. Silver has continued to surge in all currencies and has surged to a new record nominal high of $46.25/oz (£27.85/oz and €31.54/oz) on growing rumours of a short squeeze involving a billionaire or state interest attempting to corner the silver market. The massive concentrated short positions of some Wall Street banks have incurred serious losses and a desperate attempt to close their futures positions due to the tight physical marketplace may be leading to a short squeeze. This is something that GoldCore and a few other analysts have warned of for some time. We have long said that the very small silver market was ripe for cornering by private or state interests and that appears to be happening on some level. However, there are an increasingly large number of silver buyers who realize the market can be cornered and they are buying in anticipation of this event. The blogosphere has again been ahead of the curve and dismissal of much circumstantial evidence of silver manipulation, a short squeeze etc. as “conspiracy theories” is becoming less easy to do. It looks like many investors internationally and one or a few private individuals and states are cornering the silver market. At one stage the Hunt Brothers cornering of the market was a “conspiracy theory” – it soon became fact.

 

403K Initial Claims WorseThan Consensus Again, Down From As Always Upwardly Revised 416K

Submitted by Tyler Durden on 04/21/2011 08:34 -0400

First, as always happens, the BLS revised last week's non-credible mega miss even worse, from 412K to 416K. As for this week, the number will end up being worse than 403K, which is what was reported for this week, to be revised upward to 406K or so next week. This is (and will be) much higher than the expected 390K. And so Tim Geithner has to start his latest "Welcome to the Recovery - edition 2011" draft from scratch. Continuing claims also were well above expectations, printing 20K over consensus at 3,695K. Last week's number of 3,680K was revised, gee, higher to 3,702K. And just as importantly those hitting the 99 week cliff seem to be accelerating: those on EUCs dropped 24K, while people on extended benefits declined by 47K. Total number of persons claiming benefits across all programs dropped by 217K in the week ended April 2. And so the Yen carry trade unwinds once again: the USDJPY just plunged to 81.72. 

 

 

 

Futures Curves Gone Wild: Backwardation Or Chaostango?

Recently, the silver futures curve "normalized" for a while. Well, the "while" is over. It's backwardation deja vu, all over again. Or not quite... 

 

 

 

 

 

 

Philadelphia Fed Massive Miss: Comes At 18.5 On Expectations of 36.9, Downward Q2 GDP Revisions Can Now Commence

Submitted by Tyler Durden on 04/21/2011 10:08 -0400

And here comes the first indicator that Q2 GDP is about to be mass revised by everyone, courtesy of Japan, and ongoing inflation pressures: the Philadelphia Fed collapsed from a revised 43.4 (a 27 year high) to 18.5. And here is why even the Philly Fed admits "indicators suggest slower growth" - "The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from 43.4 in March to 18.5 this month (see Chart). The demand for manufactured goods, as measured by the current new orders index, showed a similar slowing: The index fell 22 points, following seven consecutive months of increase. The shipments index declined 6 points and remained at a relatively high level....A majority of firms continue to cite price pressures, and a significant share of firms reported higher prices for their own manufactured goods again this month." Translation: Wall Street Q2 GDP revisions coming en masse: the podium is yours Jan Hatzius. 

 

 

 

Mrs. Watanabe - Meet Sovereign Bond Trading; Next Up - 10 Year Bond Circuit Breakers

Submitted by Tyler Durden on 04/21/2011 09:37 -0400

As if insane FX vol (has anyone looked at the EURUSD chart recently) and failed LCH.Clearnet margin hikes to prevent surging vol in Irish and Portuguese bond was not enough, the CME is doing its best to make sure developed world sovereign bonds, which had for the time being been recently stable, follow in the footsteps of all other assets that actually trade (read: not stocks) and see volatility surge (perhaps so the Fed can sell more of it). The CME has just announced it is launching cash-settled Sovereign Yield Spread futures beginning May 22 for a trade date of May 23. What this means simply said, is that after discussions with Dealers, the CME has realized that its biggest clients are all too willing to hedge sovereign risk (pocketing wide bid/ask spreads in the process). It also means that the market for sovereign bonds is about to be opened up to all Mrs Watanabes in the world who are willing to express a direction bias in the 10 Year bonds of France, Germany, Italy, Netherlands, UK and, of course, the US. Now on the surface there is nothing wrong with that, however it does open the Treasury market to two traditional risk factors always seen when an otherwise ration market is opened up to everyone: 1) the herd, which tends to be always wrong, steps in and exacerbates prices moves in either direction and 2) here comes HFT: very soon the spread arbs will be trading the living daylights out of Treasury bonds, which courtesy of market reflexivity, where the derivative actually sets the price of the underlying, means that a bunch of computers will soon be the reason for why 10 Years trade at 0 or 10%. Coming next: circuit breakers in the Treasury market. At least this means that CDS traders will no longer be scapegoated for sovereign insolvency. 

 

 

 

Jim Rogers Joins "Team Gross", Will Short Treasurys If Rise Continues; Does "Not See Who Will Buy With The Fed Gone"

Submitted by Tyler Durden on 04/21/2011 07:58 -0400

On one hand we have Goldman (and various other novices) telling us there may be a small blip at most in Treasurys when the Fed stops buying bonds. On the other, as has been much discussed, we have the world's biggest bond manager disagreeing. Now he gets some popular company. Jim Rogers, formerly of the Quantum Fund, who traditionally comments more on the commodity space has chimed in and pledged his allegiance to Team Gross. In a release to Reuters Insider Rogers said: "If the bond goes up another 3 or 4 points, I for one am going to sell it short." He also said what we have been saying since about October of last year: "I mean the market is just going to give up. Once (the Fed) ... stops buying bonds I'm not sure who's left to buy bonds at that point." The right question is who are Primary Dealers going to flip their bonds to, especially once the marginal increase in excess reserves ends. 

 

 

 

"Five Sigma" Evidence Of Japanese Repatriation: Meet The Country That Sold The World

Submitted by Tyler Durden on 04/21/2011 07:30 -0400

Courtesy of Sean Corrigan, we share this stunning chart of Japanese relative buying/selling of foreign stocks denominated in USD (and thus subsequently needing to be converted to JPY). Having swung in what is largely a one standard deviation range, in the last month the ratio of foreign buying to selling plummeted to the lowest in the past decade, and possibly ever: the relative dumping of foreign stock is easily the most pronounced five sigma event of recent times, and has been largely unnoticed. Want empirical evidence of repatriation? There you have it, in not one, not two, but five standard deviations. But don't tell the G7, or Steve Liesman. There is no such thing as repatriation following the country's biggest natural disaster in... ever. 

 

 

 

It’s GAME OVER For the US

Posted by: Phoenix Capital Research

Post date: 04/21/2011 - 10:00

If the US were a company, it’d be spending more in salaries than it makes in sales. Aside from being unprofitable, it’s also got a MASSIVE debt load. And it’s current policy of paying out more than it makes only increases this debt load… which begs the question… who’s going to pay the interest payments on the debt? Now, about those payments…More than half of all Americans (59%) receive a Government payout in one form or another. This is not a sliver of the population… it is endemic to the system.

 

 

 

Fed may keep QE going by reinvesting maturing debt -- as Rickards predicted