Chinese Buyers Defaulting On Commodity Shipments As Prices Plunge
One can come up with massively complicated explanations for why the
Chinese commodity bubble is popping including inventory of various
colors, repos, etc, but when all is said and done, the explanation is
quite simple, and is reminiscent of what happened in the US with housing
back in 2007: everyone was convinced prices would only go up,
and underlying assets was pledged as debt collateral at > 100 LTV...
and then everything blew up. Precisely the same thing is
happening in China right now, where buyers of commodities thought prices
could only go up, up, up and instead got a nasty surprise: prices went
down. Big. As a result, many are not even waiting for their orders to
come in, but are defaulting on orders with shipments en route.
The One Chart US Banks Don't Want You To See
Three
years ago, the government in all its glory and sound central-planning
decided to provide a fully-FDIC-backed facility to allow banks to raise
capital at ultra-cheap cost of funds in the middle of the crisis. The
Term-Loan-Guarantee-Program (TLGP) has not been far from our thoughts
but the next month or so is going to be increasingly anxiety-inducing
for the banks that took advantage of that bailout. By the end of June 2012 (i.e. the next six weeks) there is almost $60 billion of TLGP debt that matures for US banks (and will need to be refinanced we assume). This $60 billion has an average
cost of funds of 0.3% (that is yield NOT spread) which when compared
to the 3.5% - 4% cost of funds for mid-dated US financial debt
currently (average CDS around 230bps) means a more than 10x
increase in funding costs for this segment of their debt. Of course
there are yield-hungry ETF-buyers to be satisfied (note LQD can soak
this up and few retail investors realize just how exposed LQD - the
investment-grade ETF - is to US financials) and so we expect them to
get this off but it can only pressure spreads wider as supply dominates
demand in this risk-averse market environment. FaceBook Enters Bear Market; -20% From Highs
Facebook
has officially entered bear market territory - down over 20% from its
high print at $45 now with lows now at $33.05 today and 63mm shares
trade so far today...Time For Blasphemy? About Damn Time
Eric De Groot at Eric De Groot - 19 minutes ago
Turn off the TV, ignore the headlines, follow the money, and open your mind
to the possibilities. What if commodities are NOT DEAD (see chart 1 and 2).
Chart 1: Australian Dollar (FXA) And Australian Dollar Diffusion Index (DI)
Chart 2: CRB Spot And Year-over-Year (YOY) Change What if Jim's suggestion
that consensus expectation of a significantly lower Euro might be wrong. ...
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JPM Halts Share Repurchase Program
Remember when Jamie Dimon showed the Fed who's boss and preannounced it was starting a share repurchase program? Turns out the Chairsatan will have the final laugh:- DIMON SAYS JPM IS SUSPENDING SHARE REPURCHASES
- DIMON SAYS SUSPENDING REPURCHASE PROGRAM ISN'T RELATED TO LOSS
- DIMON SAYS SUSPENDING REPURCHASE PROGRAM ISN'T RELATED TO LOSS
- JPM'S DIMON SAYS THERE'S UNREALIZED $8B IN PROFIT FROM CIO
- JPM'S DIMON: DOESN'T SEE INVESTIGATION TO UNVEIL BIG SUPRISES
- DIMON SAYS LOSS IS AN ISOLATED EVENT
- DIMON SAYS FORTRESS BALANCE SHEET REMAINS
A Look Inside Art Cashin's Crystal Ball
When it comes to clear, concise, comprehensive forecasts of the future, nothing beats Art Cashin... even when his crystal ball is admitted a little cloudy.Why The Greeks Do Not Want To Leave The Euro
Admin at Marc Faber Blog - 1 hour ago
Why the Greeks do not want to leave the Euro.
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
FaceBook Under $38 As Artificial Underwriter Support Ends
About
Face(book) took all of 24 hours. The FaceBook $38/share support
freebie courtesy of Morgan Stanley is now gone. As of moments ago the
stock was well below its IPO price and sliding. The humiliation for a
Zuckerpunched Morgan Stanley, which is now funding its $70 million IPO
fee with hundreds of millions in sales and trading losses, and which is
scrubbing any mention of the FaceBook IPO from its pitchbooks, and of
course the NASDAQ, is just soaring by the minute.
Today’s Items:
Finally, Please prepare now for the escalating economic and social unrest. Good Day
While the media and even the politicians are failing to admit it,
the EU in its current form is already breaking up because of three reasons:
1. The Rise of Nationalism.
2. The rejection of austerity.
3. The end of dominate political alliances with politicians, like Sarkcozy, being thrown out of office.
With so much invested in EU derivatives, the US dollar will most likely suffer significant hits when those derivatives collapse.
the EU in its current form is already breaking up because of three reasons:
1. The Rise of Nationalism.
2. The rejection of austerity.
3. The end of dominate political alliances with politicians, like Sarkcozy, being thrown out of office.
With so much invested in EU derivatives, the US dollar will most likely suffer significant hits when those derivatives collapse.
Gerald Celente does not speculate in
gold, he buys it and you can be assured that it is the physical kind he
buys. The price of gold, and silver, may go down in the short-term, but
long-term it is very bullish. This is a totally different scenario than
it was in the 70s, in that, it is in the best interest of the central
banks, worldwide, to keep suppressing the price of gold because of the
banks runs. In short, keep stacking physical and prepping for the long
term.
Many had a good idea that it was not just
a $2 billion loss. In fact, as of late, it has risen another $1
billion. This is the proverbial canary in the derivative coalmine… In
short get the hell out of paper before the whole thing collapses.
Both the White House and both parties in
Congress are celebrating the fact that the debt has increased nearly
$13,000 per household, since 2011. Yes folks, during this election year,
where people are demanding fiscal responsibility, both parties have
managed to put you, your children, and your grandchildren up the creek
without a paddle. Remember, your manipulated vote counts this November.
A US judge ruled that the indefinite
military detention of American citizens, as allowed in the National
Defense Authorization Act that Obama signed on December 31, 2011, is
unconstitutional. United States District Judge Katherine Forrest
declared that the law had “a chilling impact on First Amendment rights”
Of course the law still holds for non-citizens – which leaves Obama
vulnerable to this law.
Within 24 hours of trucks not delivering, medical supplies, U.S. mail, fuel at service stations will cease.
Within 48 hours, food shortages develop.
Within 72 hours, ATM’s are out of cash and garbage is piling up.
Within in a week… In short, pandemonium on the streets. Are you prepared?
If not, you may be wondering if your neighbor tastes like chicken. BUCUCK!!
Within 48 hours, food shortages develop.
Within 72 hours, ATM’s are out of cash and garbage is piling up.
Within in a week… In short, pandemonium on the streets. Are you prepared?
If not, you may be wondering if your neighbor tastes like chicken. BUCUCK!!
Gold's Aging D-Wave Decline
Eric De Groot at Eric De Groot - 1 hour ago
The long and powerful C-wave advance of 2009-2011 has been followed by a
D-wave decline of similar proportions. The invisible hand continues
redistribute control of the trend from weak to strong hands. 20% percentile
or less is considered statistically oversold. 0% percentile generates a
buy signal for contrary investors and nimble traders A cross of the 50%
after the third hook...
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Why Has Gold Fallen In Price And What Is The Outlook?
Gold Has Fallen Due To:- Gold’s recent weakness is in large part due to a period of recent dollar strength. While gold in dollar terms has fallen by 25% ($1,920 to $1,540), gold in euro terms is only down by 14% (from €1,374/oz to €1,210/oz).
- Oil weakness – since the end of February, oil has fallen from $111 a barrel to below $95 a barrel (NYMEX) today. Gold and oil are often correlated and many buy gold to hedge inflation that comes from higher oil prices.
- Gold’s weakness may also have been due to wholesale liquidation in all risk markets due another bout of "risk off" which has seen global equities and commodities all come under pressure.
- Physical demand from retail investors in the western world has slowed down as did demand from India in recent weeks due to the increase in taxes on bullion (since removed).
- Much of the selling has been technical in nature – whereby more speculative elements on the COMEX who trade gold on a proprietary basis have been selling gold due to the recent price weakness and the short term trend clearly being down. This has led to speculative longs now having their smallest positions since December 2008.
Frontrunning: May 21
- Is Insider Trading Part of the Fabric on Wall Street? (NYT) ... uhm, next question
- Nasdaq Says Glitches Affected Millions of Shares; IPO System to Be Redesigned (WSJ)... it's all the robot's fault... And the weather... And Bush
- Special Report: The algorithmic arms race (Reuters)
- Barclays to Sell Entire BlackRock Stake (WSJ) ... but they don't need the money... and it's not a market top.
- BoE's Posen: some European banks need more capital (Reuters)... some?
- Limbo on Bankia Undermines Confidence in Spain's Handling of Crisis (WSJ)
- JPMorgan CIO Risk Chief Said to Have Trading-Loss History (Bloomberg)... a guy called Goldman, blowing up JPM... the irony
- Pentagon's tone softens on Chinese military growth (China Daily)
- EU summit to raise pressure on Merkel (FT)
- Romney Super PAC raises less, still tops Democrats (Reuters)
- JPMorgan’s Home-Loan Debt in Europe Increases Anxiety: Mortgages (Bloomberg)
Spain's Public Servants: A Lifetime Of Serfdom
The Spanish government has promised to reform the public sector to make it thinner and more efficient. In practice, however, the political machinery based on spoils is being kept intact while some very critical public functions are coming apart at the seams. This results, for example, in overcrowded courts with insufficient staff and resources that bear no resemblance to a developed nation's judiciary. Angry and less motivated public employees feel robbed of their dignity and pockets while the general population’s dissatisfaction with tax-draining, yet increasingly inefficient, public services grows. Public workers fear a new wave of cuts in their salaries as a result of the debt-laden regional governments’ asking for more "solidarity" from those who have a secure job. Naturally, in a nation with almost 6 million unemployed, public servants will not find much support from society if they opt to go on strikes to protest additional salary cutbacks. Just how far is the government willing to make itself redundant, especially in a time of economic crisis? Does Spain need state-journalists working for state-owned radio and television stations (there are 48 public television stations across the country)? How about the double, triple and sometimes quadruple existence of government officials and agencies due to layers and layers of local, regional and central government institutions? Unions and political parties sustained with taxpayers' money? As far as public servants are concerned, more and more are realizing that a false concept of merit astutely devised by mediocre politicians secured them not a job for life, but a lifetime of serfdom.On Europe And The United States Of Facebook And JPM
The
policy responses and hints of policy responses are starting to come
out. What will they be, how big will they be, and what will they
accomplish remains to be seen, but the market is due to rally on almost
anything. We expect some announcements out of Europe. A policy
shift towards “growth” and some new ECB plans. We don’t think they
will work well, especially if they don’t address the root of depositor
fear in Spain, Ireland, Portugal, and Italy, but with so many
indicators pointing to oversold conditions, the markets could snap
back, and that is the way Peter Tchir of TF Market Advisors is leaning.Markets Are Getting Closer To An Intermediate Low
Admin at Marc Faber Blog - 2 hours ago
I would cover my shorts in the next 10 days, because I think the market is
very close to approaching an intermediate low from which we will rebound. -
*in CNBC*
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
A Few More FaceBook Numbers
Up
until 26 minutes ago, $38.00 was the most important number for
Facebook. That is no longer the case. Below, courtesy of Grant Stevens
and Things That Make You Go Hmm are a few more numbers that readers may
be interested in.The Bullish Case For Hard Assets
Admin at Jim Rogers Blog - 2 hours ago
I own real assets because if the world economy gets better I'll make money because of shortages and if things get worse they'll print more money. -*in CNBC * *Jim Rogers is an author, financial commentator
and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.*
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