As CNYJPY Jumps To QE2 Levels, What Odds Are Markets Implying Of A China Hard Landing?

With tonight's multi-year record CNY fixing and trillions being flushed at maintaining an arbitrary line in the sand, it seems appropriate to re-consider how to hedge a China hard landing and what probabilities various asset classes are assigning to it occurring. While many are pointing to what seems an entirely capricious level of 79.20 JPY to the USD as the 'new normal' being defended, we were curious at the strange coincidence that the CNYJPY cross implied by tonight's CNY fixing and the 79.2 JPY was exactly the average CNYJPY level during the QE2 period. It seems the Japanese are hedging their tail-risk against the Chinese and a recent note by Morgan Stanley points to how various asset class traders might consider hedging their own version of a hard-landing scenario and notably they agree with us that China sovereign CDS remains among the 'best' hedge.

 

 

EURUSD Breaches 1.4000 Support

And with that we can put the highly semantic debate over which direction the European currency opened pre-market to rest. To all who were caught wrong way for the past 160 pips, better luck during the next centrally planned intervention. The next catalyst will be BTPs opening for trading in a few brief hours. We are very curious whether the ECB will more focused on preserving the Italian stability falacy or the EURUSD overvaluation myth: perhaps both? After all, "there is a (completely unfunded) EFSF for that."

 

 

Japan intervened to stem yen's climb: finance minister

Eric De Groot at Eric De Groot - 2 hours ago

A sharp decline and bearish setup in the Yen's diffusion index (DI) last week illustrates how leveraged money flows often anticipate headline events. Yen (FXY) and the Commercial (C) & Nonreportables (NR) Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest Headline: Japan intervened to stem yen's climb: finance minister (Reuters) - Japan... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]




Unbelievable, Must-See Video: Heroic Navy Sailor Stands Tall In the Middle of Oakland Tear Gas Firestorm ... Holding Up the Cons

Posted by: George Washington

Post date: 10/31/2011 - 00:46

H-E-R-O

 

 

Clearinghouses, Regulators Told To Prepare For MF Bankruptcy, Risk Off

Just out from Bloomberg, citing the WSJ:

• CLEARINGHOUSES SAID TO PREPARE FOR MF BANKRUPTCY, WSJ SAYS
• US REGULATORS ALSO PREPARE FOR MF BANKRUPTCY, RESTRUCTURE: WSJ

The EURUSD has tumbled 50 pips in the aftermath of the news as risk just moved to the Off position

Welcome To The Latest Peg

For the last 45 minutes, USDJPY has been unable to shake loose of 79.2 by more than a pip or two. Following the SNB and their efforts with EURCHF and USDCHF, is Azumi now pushing another of our freely floating foreign exchange currencies to a peg? Gold is down a little (in its knee-jerk response to USD strength reflecting off the JPY intervention) but one has to wonder if slowly but surely we are being reverted to the 'fixedness' of a gold standard?

Japan intervened to stem yen's climb: finance minister

Eric De Groot at Eric De Groot - 16 minutes ago

A sharp decline and bearish setup in the Yen's diffusion index (DI) last week illustrates how leveraged money flows often anticipate headline events. Yen (FXY) and the Commercial (C) & Nonreportables (NR) Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest Headline: Japan intervened to stem yen's climb: finance minister (Reuters) - Japan... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Yentervention Time

Update - It's Official:
AZUMI SAYS JAPAN INTERVENED IN THE CURRENCY MARKET
AZUMI: JAPAN WILL CONTINUE TO INTERVENE UNTIL HE'S SATISFIED
AZUMI SAYS INTERVENTION WAS DUE TO STRONG SIGNS OF SPECULATION - thank god Mrs Watanabe is not speculating on the short side.

After Six Standard Deviation Jump, USDJPY Intervention Loses 38.2% In 30 Minutes

Thanks to Mr. Azumi's clearly unique (and Halloween-centric) perspective on Japanese currency fundamentals, USDJPY managed to peak with a six standard deviation move, bested only by 10/28/08 (what a weekend for a 3 year anniversary!!) before all the way back to 1995. However, as always with his unilateral decisions, the market seems to know best and we have already given back over 38% of the drop. Interestingly, broad risk markets have not enjoyed this move at all as correlations are not helping the Japanese cause and ES continues to leak lower.

Is Gold Over Or Undervalued? How About The EFSF (Europe = Fastow, Skilling & Fuld)

In an opinion piece of our own, instigated by the gentlemen at Gold Money, we were asked how we work out whether gold is over or undervalued at any given minute. What a question at the best of times, much less now! What we came up with was the following, something which encapsulates a theme about which we have written much of late: "What is ?value? in a world where the single goal of the powers that be is to deny the market the ability to have its constituents? underlying ordering of wants accurately reflected in the price structure? We have no proper market in capital; severely impaired markets in any number of basic goods; false markets in real estate; distorted markets in labour (hence why so many poor souls are still without jobs); and no certainty about anything except the awful certainty that nothing is off?limits to those who are desperately trying to put Humpty Dumpty together again in time for the next turn of the electoral cycle rather than accepting that he has shuffled off this mortal coil and that it would be better now to see whether at least we can salvage a half?decent omelette out of the remains?" And that pretty much sums up our commentary on the EFSF—the 'Excruciating Folly of Suspending Finality’ or ‘Endorsing Falsity to Succour the Few’, or perhaps just ‘Europe = Fastow, Skilling & Fuld’.

Presenting The Capeless Crusader: The Deficit (Non) Super Committee

While the soap opera in Europe lurches from one extreme to another, in the process creating substantial market knee jerk reactions, even though the final outcome is quite clear to most with cognitive bias blinders, the next major catalyst in the macro spectacle will come not from across the Atlantic, but from these here United States, in the form of the Super Duper Committee tasked with finding the $1.2 trillion in deficit cuts needed in order to make the August debt ceiling hike legitimate. As a reminder the debt back then was $14.4 trillion - tomorrow it will officially surpass $15 trillion for the first time ever, meaning that even as the Super Committee squabbles, half the benefit from its "successful" conclusion has already been implemented. And here is where Morgan Stanley's David Greenlaw comes in with a piece in which he makes it all too clear that the Super Committee may be Clark Kent, but it sure is no Superman. "Press reports continue to suggest that the so-called Super Committee, established as part of the compromise agreement to hike the debt ceiling, is foundering. In recent days, Democrats and Republicans have offered competing plans that have little common ground. Republican members appear to remain committed to a no new taxes pledge, which will make it very difficult for the Committee to come anywhere close to its $1.2 trillion target." In other words, just as nothing material or actionable (suffice for some grandiose delusions) came out of Europe, precisely the same will happen in the US, after our own dire fiscal situation is exposed for the naked emperor it is.




Investor Sentiment: The Best Gains are Behind Us

Posted by: thetechnicaltake

Post date: 10/30/2011 - 20:52

The big change will be the decreasing acceleration in the rate at which gains will occur.

BNY Mellon Slaps Fee on Some Depositors 



The Great Depression 80 Years Later:  Same Culprits, Same Rage



Eurozone "Collapsed," Euro to Vanish FinansInvest CEO Says



Gold, Silver and Fraudulent Investor Traps

some great observations on the coming hyperinflation

Please consider making a small donation, to help cover some of the labor and cost for this blog. 

Thank You

I'm PayPal Verified