Silver’s Paper Driven Sell Off To Be Confronted By Continued Significant Physical Demand 

Submitted by Tyler Durden on 05/05/2011 07:58 -0400

Gold stabilised in Asian and early European trading prior to a 1% fall, while silver’s sharp price fall continues and silver is now down 20% in USD terms in 5 days. The huge and unprecedented increase in margin in the paper silver market has forced some weak hands out of the silver market and allowed the concentrated shorts on Wall Street to press their advantage to the downside. 

 

 

 

 

Initial Claims: 474K - Bring Out QE3 

Submitted by Tyler Durden on 05/05/2011 08:30 -0400

And scene: jobless claims explode to 474K, beyond the worst economist expectation, far above consensus of 410K, and well above the previous (upward revised of course) number of 431K. This is the worst claims number since Aigist 2010. Game over for the US "recovery." 

 

 

 

 

 

Goldman Warns The EURUSD Surge May Be Coming To An End 

Submitted by Tyler Durden on 05/05/2011 07:05 -0400

Goldman, which some time ago posited a 1.50 target in the EURUSD, is starting to get rather nervous about its recommendation: "We expect the dollar depreciation trend to extend in the twelve months ahead. In the near term, however, recent cross-asset correlations could mean that equity market softness would translate to dollar strength. This could especially be the case in the event that markets start to perceive the recent slowdown in data as deeper and more global in nature. This is not our expectation at the moment. However, given that we are less than 1% away from what was initially considered an ambitious target of 1.50 in our long EUR/$ recommendation, any incremental increase market volatility could significantly tilt the overall risk/reward of the trade. Hence we are watching relevant developments across risky assets closely." In other words, now that the intertim silver "bubble" has popped, the EURUSD may be next to follow, since the key requirement for a market drop, and further monetary easing greenlighting, is unexpected, and not priced in, dollar strength. Based on this Goldman piece, it may be coming very soon.

Euro Plunges On Dovish Trichet Comments, Says ECB Has Credibility Because Hiked First (What Does That Leave For The Chairsatan?) 

Trichet says:

• CPI rates likely to stay above 2% in coming months
• Risks on economy from Japan disaster
• Geopolitical tensions pose growth risks
• Paramount that rise in HICP inflation does not lead to second-round effects
• Risks to medium term inflation outlook are on upside
• Inflation expectations must remain firmly anchored
• Monetary analysis indicates underlying pace of monetary expansion picking up but moderate
• Confirm banks have continued to expand lending to private sector
• Governments need to achieve their fiscal consolidation targets in 2011

Most importantly: he says nothing about a June hike which was largely "priced in" by the Wall Street lemmingraty.

 

True Finns Leader: "Greece Will Default As Efforts To Keep Country Afloat Have Failed" 

Submitted by Tyler Durden on 05/05/2011 09:27 -0400

This does not sound like the sound of European consensus: "The leader of Finland’s euro-skeptic True Finns party, Timo Soini, said Europe’s crisis-handling mechanism “doesn’t work” and Greece will default on its debts as efforts to keep the country afloat have failed. He spoke today in a phone interview with Bloomberg Television." More like the sound of inevitability...We wonder how this will be spun by Trichet. In the meantime, things in carry land are getting worse and worse, as the USDJPY hit 79.60 overnight, a level at which the Japanese economy joins Europe and the US in full contraction mode. The summer of central bankers' discontent is coming fast and furious.

 

Charting Today's Second Worst Ever Initial Claims Miss To Expectations 

Submitted by Tyler Durden on 05/05/2011 09:38 -0400

Today's horrendous Initial Claims number was so bad that not even CNBC tried to spin it. In fact, as John Lohman points out, it was the second biggest miss to consensus in history! Of course, seeing how this is consensus and the BLS does not reveal any unknown information, we wonder just how difficult is it to factor in any special factors in determining project numbers, and if the answer is "very" then why do we need economists in the first place (that's rhetorical). And while Liesman is in Europe on some assignment, here is Goldman explaining why the historic miss was based entirely on special factors.

UN Reports April Food Prices Climb Again, Hit Second Highest Ever 

Submitted by Tyler Durden on 05/05/2011 10:17 -0400

And even as Bernanke continues to believe he can take away inflation with a 15 minute wave of his magic wand, the downstream effect persist. The UN's Food and Agriculture Organization reported that April food prices rose once again, from 231 to 232.1, putting it at the second highest compared to the all time high peak hit in February. Bloomberg reports: "“There seems to be some easing for a lot of commodities, but whether this is demand rationing, we have to wait and see,” Abdolreza Abbassian, a senior economist at the FAO, said before the report. “If the weather is good, if plantings expand, I think we could see some relief in food prices." Granted, in April various food commodities have seen their prices drop: "Sugar prices slumped 18 percent in New York last month, while milk futures fell 1.8 percent in Chicago, U.S. wholesale beef prices dropped 3.4 percent and pork declined 2.2 percent. Wheat prices rose 5 percent in Chicago after falling the previous two months and corn jumped 9.1 percent." Yet the drop has not been uniform: "Corn has almost doubled in the past 12 months on speculation that more planting in the U.S., the world’s largest grower, won’t be sufficient to rebuild global stocks. Wheat surged 57 percent over the same period and soybeans gained 39 percent as flooding ruined crops in Canada and Australia and drought reduced harvests in Russia and Europe. Of the grains, corn “is the most worrisome,” Abbassian said in a statement. “We would need above-average, if not record, yields in the U.S.,” however, “plantings so far have been delayed considerably due to cool and wet conditions on the ground,” he said." On the other hand, as most know, a far bigger issue is that prices tend to be sticky on the upside once they begin rising. And a cursory check in local retail stores confirms that any price drop has yet to impact the US proper. 

 

 

 

 

Commodity Plunge Resumes (Updated) 

Submitted by Tyler Durden on 05/05/2011 10:58 -0400

The liquidation wave has arrived, as the entire commodities complex, with an emphasis on silver and crude, continues to feel the wrath of a bipolar market which from inflation has suddenly realized that the underlying deflation needs to exhibit itself before the US Central Bank has a justification for more monetization. Elsewhere, the by bar biggest bubble in the world: the dollar short, is blowing up, with the EURUSD on route to post a 300 pip move in a few hours. Basically, the tit for tat repeat of 2010 in this Anno Domini 2011 continues. 

 

 

 

 

A Brief Reminder On NYSE Margin Debt 

Submitted by Tyler Durden on 05/05/2011 11:23 -0400

Today seems like an opportune time to remind readers that as of March, margin debt, and specifically net leverage, were at near all time highs. Surely, selling off from a market that has more leverage now than almost ever, will lead to a perfectly orderly unwind.