Sunday, November 6, 2011

"Every Former MF Global Account Faces A Margin Call" - Non-CME MF Global Transfers Get The Monday Blues

If you are a former MF Global account and you have your account transferred over to RJ O'Brien, or many others, you will have no choice but to fork out a bunch of cash to keep positions on, according to a statement awaiting all such accounts on the RJO website, or else be next in line for broad liquidations. To wit: "Former MF Global customers transferred to R.J. O’Brien were delivered with approximately 75% of the maintenance margin requirement related to their accounts. As a result, every former MF Global account faces a margin call. No excess equity was transferred." Naturally the next question is "Why are we not getting 100% of our MMR (Maintenance Margin) from the exchange?" And the answer: "This is an agreement between the trustee and CME Group. Please visit for further information or questions." So, in addition to lowering initial margin for everyone, not just MF Global clients, did the CME iron out preferential terms over other exchanges and get larger equity of the account transfer than most? Because somehow we doubt that RJ O'Brien is the only exchange that is greeting their clients with this particular notice.

Did You BTFD?????

Gold $1771

Having retraced almost 61.8% of the September drop, Gold's recent run up - as the USD strengthens no less (from 10/28) - suggests some demand for safety is back (or more simply is the demand for German Gold making the German's hoard a little more?). Silver is actually outperforming from Friday's close but remains below Friday's highs for now.

Ray Dalio On How The Economic Machine Works (As Of October 2011)

As China 'threatens/promises' liquidity injections to its banks, Greek politicians argue over premium parking spaces, US brokers/exchanges squabble over the MF capital leftovers, and global liquidity goes from bad to worse - perhaps it is time to take a step back and focus on what really hasn't seemed to matter - the economy. Ray Dalio published his Template For Understanding back in October of 2008 and has recently updated it (as of October 2011). For your Sunday evening reading pleasure - "How the Economic Machine Works and How It Is Reflected Now". Critically, the hedge fund manager provides a framework for considering what he believes are the critical Three Big Forces: trend line productivity growth, the long-term debt cycle, and the business/market cycle.

Goldman's Roadmap For Europe - The Next Steps

Three of the smartest strategists at Goldman, Huw Pill, Francesco Garzarelli, and Peter Oppenheimer, have released what one could tentatively call a white paper on the "next steps" for Europe. Far from being the traditional permabullish sellside drivel, this is a must read note, as it cleanly lays out the risks for the Eurozone from this point. The note focuses on three key aces: 1) fiscal consolidation and the ongoing role of the ECB in the future of a Eurozone which still has no fiscal cohesion (which makes sense: just like in the US, the Fed is aggressively putting the ball in Congress' court, as neither the monetary nor fiscal apparatus has any interest in being blamed for ongoing economic deterioration, so in Europe the ECB wants a federal union, complete with Eurobond issuance powers, so it is not in the cross hairs: alas, European politicians realize this is career suicide and the question remains: when push comes to shove, and saving the Euro requires career harakiri from politicians, will they step up to the plate?); 2) Italy, of course, as the country under the spotlight now and going forward; and 3) what the above two mean for BTPs and thus the European (and Global) equity markets. The sense we get from the Goldman trio is that while the company which has just spawned Europe's latest central banking head, while cautiously neutral is pushing for a downside case: after all what better way to unlock the Heidelberger Druckmaschinen true potential, than with a full blown crisis...

New book details starvation during the siege of Leningrad

Greek Tragedy, Act II: Der Bild reports that some businesses are getting ready for reintroduction of the Greek Drachma. TUI rechnet schon in Drachmen:
. For non-German readers, here is a rudimentary translation. This might not be "Das Ende der Welt, wie wir sie kennen." But it might be The End of the Euro As We Know It...

Special Series (Part 1): Assessing the Damage of the European Banking Crisis

Bank Of America Derivatives Timebomb Shows System Is Corrupt To The Core 

Those Who Know Will Understand

Situation is Ultra-Bullish for Gold & Silver Bullion and Stocks

Greek Government Teeters on Brink of Collapse as Crisis Deepens 

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