Dexia shares suspended/Partial nationalization of Dexia/England resumes Quantiative Easing

Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 32 minutes ago

Good evening Ladies and Gentlemen: Gold closed today up $11.60 to $1051.90.  Silver had a very good day rising by $1.68 to $31.97. I would like to throw a little caution into the wind as tomorrow is the big jobs report and you know these bums always attack either the day before the report or immediately after its release so be very careful tomorrow. Let us head over to the comex and see how

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Euro Rumormill Disintegration Begins As Reality Returns: France, Germany Fail To Reach Agreement On EFSF

In our previous post we warned, indirectly through the IMF, that the biggest risk for Europe is the inability to reach consensus over anything from the most complicated, to the simplest matter. As noted previously, one of the main initial drivers of the market surge which has since translated into yet another short covering rally of epic proportions was the belief that Europe can actually come together in agreement over the simplest thing - like its own survival. Alas, it appears even that is not the case. As Bloomberg reports, "Germany and France are at odds over whether the European Financial Stability Facility should have limits on government bond purchases, Handelsblatt reported, citing an unidentified high-ranking European Union diplomat. France doesn’t want to restrict the EFSF on how much of its funds it can use for such purchases, the newspaper said in a preview of an article to appear in tomorrow’s edition. Germany wants to limit the amount EFSF can spend for bonds per country and is also considering whether there should be a time limit for bond purchases, Handelsblatt said." Said otherwise, here comes the latest cause of discord within Europe. Unfortunately, it also means that any rumor, innuendo and speculation that Europe has finally reached a coherent union over its own bailout can be promptly discarded. As if there was ever any doubt in the first place.

Market Snapshot: Did Credit Just Capitulate?

Another day, another 12 swings of greater than 0.75% in S&P futures as volume slid to the lowest in a week and second lowest in two weeks. Credit and equity markets stayed largely in sync (as they have for the last few days - with slight beta-adjusted underperformance of credit) until around lunchtime and then a funny thing happened to investment grade credit. At around 12:30ET, the most liquid credit index, IG17, gapped tighter as ES and HY reversed briefly off the highs and then IG did not stop - compressing 3-4bps more into the close - notably outperforming HY and ES (its far higher beta cousins). At the same time, the less liquid but hugely levered (and exposed to correlation traders, tail-, and jump-risks), IG9, cracked very notably tighter (from our runs around 15bps) to 147bps. IG9 had held up as markets rallied but this move's magnitude and velocity suggest more than just some hedge adjustments and while the rest of the risk assets we cover were all levitating, this 'capitulation' stands out among them. Dollar weakness of course helped fuel the equity strength and commodities and PMs pushed on all day with gold the most subdued.

In The News Today

October 6, 2011, at 12:47 pm
by Jim Sinclair 

Jim Sinclair’s Commentary

QE to infinity is unavoidable.

Nearly Half of U.S. Lives in Household Receiving Government Benefit By Sara Murray
October 5, 2011, 2:31 PM ET
Families were more dependent on government programs than ever last year.
Nearly half, 48.5%, of the population lived in a household that received some type of government benefit in the first quarter of 2010, according to Census data. Those numbers have risen since the middle of the recession when 44.4% lived households receiving benefits in the third quarter of 2008.
The share of people relying on government benefits has reached a historic high, in large part from the deep recession and meager recovery, but also because of the expansion of government programs over the years. (See a timeline on the history of government benefits programs here.)
Means-tested programs, designed to help the needy, accounted for the largest share of recipients last year. Some 34.2% of Americans lived in a household that received benefits such as food stamps, subsidized housing, cash welfare or Medicaid (the federal-state health care program for the poor).
Another 14.5% lived in homes where someone was on Medicare (the health care program for the elderly). Nearly 16% lived in households receiving Social Security.
More…





Jim Sinclair’s Commentary

This man was screaming at Bernanke for utilizing QE?

Trichet Ends ECB Rein With More QE 10/06/2011 @ 12:08PM
Conducting his last press conference as head of the European Central Bank (ECB), President Jean Claude Trichet announced a further round of covered asset purchases, a sort of QE, while reiterating rates would be kept unchanged, with the key interest rate unchanged at 1.5%.
European markets rallied on the news, while beleaguered Franco-Belgian bank Dexia made headlines on news the Belgian government sought to nationalize part of the bank.
Trichet was the man of the hour, though.  With the sovereign debt crisis in Europe intensifying and pressure on bank financing markets increasing, Trichet and the ECB were under fire for having hiked rates back in July.
The ECB’s Governing Council decided, by consensus and not unanimously, to keep rates at 1.5%, despite pressure to cut rates and ease policy further.  Trichet told journalists that he understood high uncertainty and intensified downside risks faced the European economy, with Euro-wide real GDP in the second quarter of 2011 having slowed to 0.2%.
But Trichet also recognized inflation was to remain above 2% in coming months.  The ECB has a single mandate to maintain price stability.  Trichet’s big move was a new round of asset purchases, a sort of European QE.  The ECB President announced a €40 billion ($53.7 billion) covered bond purchasing program, along with a two year long financing facilities for Euro banks and the promise to keep shorter-term financing facilities in place until mid-2012.
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Jim Sinclair’s Commentary

QE to infinity is coming everywhere in the Western financial world.

Bank of England restarts QE Posted by Joseph Cotterill on Oct 06 12:08.
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to increase the size of its asset purchase programme, financed by the issuance of central bank reserves, by £75 billion to a total of £275 billion.
The pace of global expansion has slackened, especially in the United Kingdom’s main export markets. Vulnerabilities associated with the indebtedness of some euro-area sovereigns and banks have resulted in severe strains in bank funding markets and financial markets more generally. These tensions in the world economy threaten the UK recovery.
In the United Kingdom, the path of output has been affected by a number of temporary factors, but the available indicators suggest that the underlying rate of growth has also moderated. The squeeze on households’ real incomes and the fiscal consolidation are likely to continue to weigh on domestic spending, while the strains in bank funding markets may also inhibit the availability of credit to consumers and businesses. While the stimulatory monetary stance and the present level of sterling should help to support demand, the weaker outlook for, and the increased downside risks to, output growth mean that the margin of slack in the economy is likely to be greater and more persistent than previously expected.
CPI inflation rose to 4.5% in August. The present elevated rate of inflation primarily reflects the increase in the standard rate of VAT in January and the impact of higher energy and import prices. Inflation is likely to rise to above 5% in the next month or so, boosted by already announced increases in utility prices. But measures of domestically generated inflation remain contained and inflation is likely to fall back sharply next year as the influence of the factors temporarily raising inflation diminishes and downward pressure from unemployment and spare capacity persists.
More…

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