The legendary Jim Sinclair has sent an email alert to subscribers comparing this week’s terrible situation along the east coast in the wake of Sandy to the coming collapse of the US dollar. Sinclair states that Ben Bernanke is the only person in US financial management that understands the current situation, and that QE∞ is the only thing delaying a complete systemic collapse.
Sinclair states that if Romney is elected and follows through on his threats to fire Bernanke, it would ”be the single greatest error made in US financial management ever”, and would result in gold trading above $3,500/oz and a complete US dollar collapse within 6-9 months!
From Jim Sinclair:
The thesis of MSM is that “Nothing must ever disturb the social order.” Mother Nature can do this in seconds, and an overnight collapse of confidence in the dollar will do it in three days.Read More @ Silver Doctors
Currency induced cost push inflation is what will collapse confidence overnight and cause an explosion in the velocity of money in three days. Study history. It has happened before and will happen again. Although you will not want to hear this, it is true.
How Can You Help America? Let Politicians Know You Disapprove by NOT Voting Tomorrow & Buying 1oz of Physical Gold & Silver Inst
As normal, what takes pundits 1000s of words to pontificate upon, UBS' ever-ready Art Cashin succinctly summarizes in one paragraph. Critically, as we have noted previously (here, here, and here), he hopes that the election is not close...
Moments ago the Non-manufacturing ISM came out, and in keeping with the theme of Baffle with BS, started last night when the China HSBC services PMI dropped even as the Manufacturing PMI from last week signaled the start of a "new recovery" or something (just don't look at the Baltic Dry, and definitely don't look at the endless barrage of reverse repos proving the PBOC will not engage in wholesale easing), it printed the first miss and decline in three month, coming at 54.2 on expectations of a 54.5 print and down from 55.1 previously. What is troubling is that while otherwise an economic miss such as this one would have been sufficient to ramp the bizarro marke, today it has merely sent ES to fresh intraday lows. Perhaps the reason is that unlike last week's Manufacturing ISM, whose headline was good but internals were not, this time it is the other way around with New Orders down but Employment rising from 51.1 to 54.9, the highest since March. Does this meant the Fed will prematurely end QEternity? Of course not, but the market appears to be shooting first, as usual, and asking questions later.
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Egan Jones may be a registered NRSRO, but that doesn't matter to the global status quo perpetuation syndicate ("SQPS" or "the syndicate"). Why? Because the small rating agency misplaced a comma when it was filing its NRSRO application with the SEC and has infuriated the same clueless and corrupt SEC, which 2 years after the flash crash still allows the high freqs to make a total mockery of the market (as seen here). Another reason: it recently downgraded Spain to a CC rating, the lowest and thus most accurate of all rating agencies, with a C rating projected, which means if its rating were to be taken into account by the ECB, the result would be massive margin calls amount to 10% or higher of all the Spanish bonds repoed at the ECB. Instead, the SQPS is delighted to have Canadian-based DBRS on its side. Why? Because the tiny firm's A-rating obviates all others' sub-A ratings, this includes Moodys, S&P and Fitch, at least in the eyes of the ECB and thus Mario Draghi has an alibi to not demand an additional €17 billion collateral call from Spain, which would send its banking system on full tilt (this is money neither Spain, nor its banks has to spare). Which is why we wish to present to our readers the man behind the Spanish A-rated myth: Fergus McCormick (Reed College; BA, with honors, French), formerly of Spanish bank BBVA (surely BBVA is not calling in any favors from its former employee currently head of sovereign ratings at DBRS; none at all).
As we warned here first, and as the sellside crew finally caught on, while the key macro event this week is the US presidential election, the one most "under the radar" catalyst will take place in Greece (currently on strike for the next 48 hours, or, "as usual") on Wednesday, when a vote to pass the latest round of Troika mandated austerity (too bad there is no vote to cut corruption and to actually collect taxes) takes place even as the government coalition has now torn, and there is a high probability the ruling coalition may not have the required majority to pass the vote, which would send Greece into limbo, and move up right back from the naive concept of Grimbo and right back into Grexit. Which is why the market's attention is slowly shifting to Europe once more, and perhaps not at the best time, as news out of the old continent was anything but good: Spain's October jobless claims rose by 128,242, higher than the estimated 110,000 and the biggest jump in 9 months, bringing the total number of unemployed to 4,833,521, a rise of 2.7%, according to official statistics released Monday. This means broad Spanish unemployment is now well above 25%. In the UK, the Services PMI plunged from 52.2 to 50.6, which was the lowest print in nearly two years or since December 2010, and proved that the Olympics-driven bump of the past few months is not only over, but the vicious snapback has begun.
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As reported over the weekend, the German press did some work and discovered that despite Spain being rated practically junk across the board, its bonds pledged as collateral with the ECB had virtually no haircuts, despite as we said back in April, them needing to be haircut by a solid 5% or more an amount which would force the Spanish banko-sovereign system to scramble to procure the critical €17 billion margin call. Well, moments ago the Bank of Spain (not the ECB) came out and said that the ECB had applied collateral rules correctly. However, by that they meant not that the ECB had demanded the needed 5% haircut due upon a downgrade into sub A-range, but that the rating agency which absolutely nobody has every heard of, Canadian DBRS, has a "rating that needs to be taken into account." In other words, Spain's collateral call is now dependent not so much on Moody's downgrading the country to junk, which likely will happen soon if Rajoy does not demand the bailout which has been priced in for about 3 months now, but on what a tiny Canadian ratings firm, which has most certainly not gotten any quid pro quo from Europe to keep Spain at is A-low level (for long-term debt, not so much short-term) says is the Spanish rating quality.
So Much For "Sell Bonds, Buy Stocks": Net Long Positions In 10 Year Treasury Highest Since March 2008
Remember when back in March Goldman presented the "Long good buy: the case for equities", when they, and everyone else of course, said the once in a generation opportunity to short bonds and buy stocks is here (and when BlackRock chimed along, saying the time to go all in... BlackRock ETFs.... is here)... Or when in September, right after QEternity, Goldman, having blown up previously on said trade, reiterated its call to go long stocks and short bonds (and when BlackRock chimed along again, saying the time to go all in... BlackRock ETFs.... is here). Well, so much for that. Or rather, those. As of last week, the speculative long exposure in the 10-year Treasury more than doubled in the past week, soaring from 79,296 to 169,456 net contracts, the highest position since March 2008. Looks like Uncle Ben will need to come up with more creative and counterintuitive ways to get traders to stop frontrunning him in purchasing every bond in the open market, and herd them into buying stocks...
Gold And Silver Worth $1.4 Billion Carried In Baggage From Turkey To Iran, UAE And Middle East in SeptemberTurkey’s trade deficit has been shrinking and the country has enjoyed the best bond rally in the emerging markets this year due in part to the contributions of airline passengers transporting gold in their baggage. Statistics from Istanbul’s 2 main airports show $1.4 billion of precious metals were registered for export in September. Iran is Turkey’s largest oil supplier and Turkey has been paying for the oil not only with liras but also with gold bullion. Turkey exported $11.7 billion of gold and precious metals since March, when Iran was barred from the Society for Worldwide Interbank Financial Telecommunication, (Swift) making it nearly impossible for Iran to complete large international fund transfers. Of the $11.7 billion, $10.2 billion or 90% was to Iran and the United Arab Emirates, according to data on Turkey’s state statistics agency’s website. Turkey’s current account deficit is second in the world at $77.1 billion or 10% of GDP while the US currently holds the top spot. The problem with Turkey switching from a net importer to a net exporter of gold bullion this year is that the foreign trade data is misrepresented. Turkey’s use of precious metals is a key factor to help turn around its nation’s current junk bond rating status.
When it all gets just so silly, only an xkcd cartoon can do it justice...
- Obama and Romney Deadlocked, Polls Show (WSJ)
- NYC Commuter Week Faces Uncharted Ground as Storm Brews (Bloomberg)
- New York region struggles to move on a week after Sandy (Reuters)
- Europe's Bank Reviews Collateral (WSJ)
- Less circuses to pay for the bread? Time Warner Cable misses on falling demand (Reuters)
- Spanish unemployment total jumps by 128,242 as recession continues to take its toll on economy (Independent)
- Goldman Sachs Partner List Drops 31 Since February, Filing Shows (Bloomberg)
- China's mission impossible - a date for Hu's military handover (Reuters)
- German-Iranian trade booming (Jerusalem Post)
- Russia supplying arms to Syria under old contracts: Lavrov (Reuters)
- Russia endorses Egyptian-led regional group on Syria (Reuters)
- Election Winner Must Win Over Wall Street (Bloomberg)
- On Google, a Political Mystery That's All Numbers (WSJ)
- Richard Koo: explain to Americans why $22 trillion in debt in 4 years is good for them.. or something (FT)
G20 Jaw Flapping
1. The U.S. fiscal cliff that no one is addressing.
2. The ongoing and escalating economic crisis that is destroying the EU.
3. Japan’s own fiscal cliff.
In short, they recognize the problems; however, a bunch of jaw flapping does not solve a thing.
Obama The Liar-and-Charlatan
Big Government Fail
Why Self-Sufficiency Matters
Illinois Teachers’ Retirement System Broke
Gun Sales Surge
Surge in Retail Gold and Silver Buying
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