Foreigners Dump Record Amount Of US Treasurys In Past Month

With year end fund flows making absolutely no sense for the most part, thank you global central planning, as the euro plunges and the market refuses to follow, with risk assets rising on speculation the ECB (and/or Fed) are about to restart printing yet gold collapsing (on one or two hedge funds liquidating, yet econ PhDs already rewriting their theses on why the "gold bubble has popped"), and finally with Treasurys soaring to near all time highs (10 Year under 1.9% yesterday even as stocks surged on data from the National Advertisers of Realtors, aka NAR, of all fraudulent and corrupt entities), here is the latest observation to make the confusion complete. As the Fed's critical H.4.1 weekly update shows (which is leaps and bounds more accurate than the Treasury's TIC international fund flow data), in the week ended December 28, foreign investors sold the second highest amount of  US bonds in history, or $23 billion, bringing total UST custodial holdings to $2.67 trillion, a level first crossed to the upside back in April. This number peaked at $2.75 trillion in mid-August, and as the chart below shows the foreign holdings of US paper have been virtually flat in all of 2011, something which is in stark contrast with what the price of the 10 Year would indicate vis-a-vis investor demand. And going back further, the last week is merely the latest in a series of Custodial account outflows. In fact, in the last month (trailing 4 weeks), foreigners have sold a record $69 billion in US paper, a monthly outflow that was approached only once - in the aftermath of the US downgrade (when erroneously it is said that a surge in demand for US paper pushed rates lower - obviously as the chart shows nothing could be further from the truth).

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

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Official and Unofficial Liquidity Injections Translate Into Gold & Silver Accumulation

Eric De Groot at Eric De Groot - 3 hours ago

While money concentration tends to follow price, it can be associated with nearly every type of market action. Most often, particularly in gold and silver, money flows concentrate as price advances and declines. For example, commercial trader accumulation (long buying and short covering) and retail distribution (long selling and short selling) tends to occur as price declines. There are... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

The Disconnect Continues

Presented with little comment - equities and bonds are diverging aggressively now as 10Y accelerates towards its all-time low yields (1.67 on 9/23). As we noted earlier, foreigners are dumping Treasuries at a record pace and yet it grinds tighter and stocks rally on USD weakness. Our 'thesis' from yesterday that a reactive Fed QE is being priced in seems the most 'sensible' but year-end flows for now are tough to call.

UBS' Art Cashin Waxes Poetic For The New Year

It may not be pentamic diameter or Shakespearean sonnet-worthy but the venerable Art Cashin delivers his now traditional year-end poetic summation of all things newsworthy - old and new.

Words and Phrases We Hope Not To See Or Hear In 2012

Rather than making some predictions, here is a list of words and phrases that were popular in 2011 that just annoy us.  It would be nice if they become less popular in 2012, but we predict they will remain in use.

European Stocks Surge As Sovereigns Slump

UPDATE: Spanish bonds are leaking wider after the defiict projection looks set to be significantly worse than previously expected.
Something strange is happening in European risk markets this week. While that sentence is entirely 'normal' for what has become a diverging/converging flip-flopping correlation microstructure but the clear trend this week has been European Sovereign derisking and European Stock rerisking. The Bloomberg 500 index (that tracks a broad swathe of European stocks) is up 0.75% from Christmas Eve (and 1.6% from yesterday's lows) while 10Y sovereign spreads are wider by 10 to 30bps in the same period. France stands out as one of the worst performers - more than 25bps wider this week alone. Only Spain is notably improved on the week (-17bps) but all 10Y sovereigns are well off their best levels as stocks make new highs. Whether this is a front-run on asset rotation into the new year or expectations of the same risk-on ramp-job we saw on the first trading of this year is unclear - we do remind those front-runners that mutual fund cash levels are significantly lower this year than last. It is clear that yet another 'sensible' correlation (such as BTPs to equities) has broken but when volumes return and the reality of the huge supply calendar we face in the next month alone sinks in, perhaps equity ebullience will pull to bond bereavement. If stocks are reacting to a quasi-QE from the ECB, why wouldn't sovereigns who are the direct beneficiaries in that surreal LTRO-driven-carry trade?

Refinery Crunch In Europe

A few weeks ago we discussed the pressure the Greeks were under to source their energy needs from Iran since no one else would extend them credit. The European credit strain contagion now appears to be spreading rapidly as Europe's largest independent refiner by capacity, Petroplus Holdings AG, is suspending operations at three plants as banks freeze a $1bn revolving loan facility. S&P cut its rating from B to CCC+ citing a sharp deterioration in the firm's liquidity position. As a pure play refiner, meaning it needs to buy all of its crude supplies (on credit obviously) to feed its plants, it seems evident that both vendor- and bank-financing mechansims are starting to clog up very seriously. Bloomberg notes that refining margins are down considerably and we suspect that the closure of the Petroplus plants will help margins implicitly but as headlines show:

• *PETROPLUS SAYS TEMPORARY ECONOMIC SHUTDOWNS IN JAN. '12
• *PETROPLUS SAYS RESTART DEPENDS ON ECONOMIC CONDITIONS, CREDIT AVAILABLE

French CEO About Ratings Agencies: ‘We Have To Shoot All These Guys’

Posted by : testosteronepit

Post date: 12/29/2011 - 19:50

Until now, the crisis has touched mostly the financial world. But in 2012, it will hit the real economy.

BTFD!

by Silver Shield, Dont-Tread-On.Me:

I am working furiously right now buying silver and I hope you are too.   I have gone to extreme measures to free up capital everything from selling our second car, garage sales, and now dumping all the gold that I can to buy silver.   In the past week or so I have made that largest silver purchases since 2005, even more than I bought in the 2008 smackdown.  With the Commercial Short position at a decade low, the explosive upside potential is awesome.  After the 60% 2008 smackdown silver went up 400%, if we match that we would see $125 silver.  Let’s be honest here, if that happens this time with no exponential short position for the banks to worry about, in such a limited physical market, during a paper fiat financial crisis, silver will not be available at any fiat price.
Read More @ Dont-Tread-On.Me

Part 2

BTFD! “Nothing Shines Brighter Than SILVER” – Chris Duane

Bix Weir: We’ve Reached the End of This Round of Silver Manipulation

from Silver Doctors:
Bix Weir has stated today that he believes we have reached the end of this round of silver manipulation, with silver matching the low for 2011 this morning near $26. While it’s possible we have seen the lows for this correction (silver will need to close above $28 before we can even consider calling $26 THE bottom), think again if you believe we have reached the end of silver manipulation.  The bullion banks are merely positioned for a sharp rally to the upside, profiting from their HFT naked shorting induced illiquid holiday week smash.
From Bix:
Just a quick note. I’ve been getting emails from people around the world who are angry that they are not able to secure physical silver at these low manipulated prices. There are both problems with supply and exorbitant premiums in the retail sales market. We have been waiting for the separation between paper and physical silver and it seems we are there.
Read More @ SilverDoctors.Blogspot.com

The Depth Of Despair In The Gold Community

by Jim Sinclair, JSMineset.com:
My Dear Friends,
Today was the first day that we got some good action in the gold price. It will be very interesting to see if sellers appear as they have been during Asian hours. Just because the manipulators use the illiquid Asian hours to paint gold do not assume it reveals the nationality of the selling. The gold market as we all know on a day to day basis is totally rigged. In fact, find a market anywhere that is not bullied by some young buck who considers himself the Master of the Universe.
Gold is coming up on a tight group of four very major support areas that will hold the price from which the next advance is to take place. We have reached a point in terms of the depth of despair in the gold community that was never reached in the 1968 to 1980 reactions.
That is all this is. Just another reaction in a Gold price headed for Alf’s $4500.
Read More @ JSMineset.com

John Williams: The US Has $100 Trillion in Debts & Obligations

from King World News:
With so many questions surrounding the stability of the financial system, John Williams of Shadowstats issued this warning in his latest commentary: “Annual Deficits of $5 Trillion Are Not Sustainable. Significant space was taken up in the government’s latest financial statements to assess the sustainability of the current system. Most of the material covered was overly misleading nonsense.”
John Williams continues: Read More @ KingWorldNews.com

Egon Von Greyerz: Gold Will Trade $3,000 – $5,000 in 2012

from King World News:
With the gold price tumbling, along with silver, today King World News interviewed the man who told clients in 2002, when gold was $300, to put up to 50% of their assets into physical gold, held outside of the banking system. Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland. When asked about the plunge in gold, von Greyerz said, “Well, Eric, I’m not really surprised because last time I talked to you I did say gold could go down to $1,550 support and maybe even $1,420. In my view that would be quite normal in a very thin market and I said that would probably happen by the year end.”
Egon von Greyerz continues: Read More @ KingWorldNews.com

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