Another Black Monday coming for global financial markets?

from, Arabian Money:
You do not need to be terribly good at reading the tea leaves to spot the alarm calls for next Monday morning. Greece will have its general election result and Egypt may well have elected a member of the Islamic Brotherhood as president.
Call it a double whammy if you like, and it is so obvious that markets are going to anticipate it, then again being confronted with a new reality is never quite the same as expecting it to happen.
New hope or hopeless case?
Greece is most likely to have elected a government that will eventually repudiate its austerity package and yet want to stay in the euro. Everybody likes to have their cake and eat it. That will throw the ball back to the eurozone authorities to decide what to do: cave in or kick Greece out of the eurozone?
Read More @ ArabianMoney.net

UK Treasury and BoE liquor up banks again

from, Gold Money:
Stocks and commodities have rallied this morning on rumours that central banks are about to launch a coordinated market intervention following Sunday’s Greek election. Government bond yields have fallen (relief for the Spanish and Italians), while the euro reached a four-day high at $1.2685 earlier.
Gold continues to face resistance at $1,630, while $28.50 still exerts a magnetic pull on silver. However, talk from G20 officials that “central banks are preparing for coordinated action to provide liquidity” in the event that the Greek election results upset the markets is raising bullish hopes. Meanwhile in the UK, bank shares have risen after Chancellor George Osborne announced last night that HM Treasury and the Bank of England are to start a new £140 billion lending programme in the next few weeks. In the words of BoE governor Mervyn King:
“The Bank and the Treasury are working together on a “funding for lending” scheme that would provide funding to banks for an extended period of several years, at rates below current market rates and linked to the performance of banks in sustaining or expanding their lending to the UK non-financial sector during the present period of heightened uncertainty.
Read More @ GoldMoney.com

When Everything Trades As One: Goldman Declares War On ETFs, Says "May Generate Negative Alpha"

Overnight, Goldman's Robert Boroujerdi released a report whose conclusion we have been warning about for the past 3 years, which also happens to be its title: "ETFs: An Imperfect Hedge?"  Goldman's findings in a nutshell: "The rise of investor usage of ETFs as hedges continues. In a bid to gain quick exposure to evolving markets, avoid single stock M&A risk or take sector views, we believe the use of “blunt force” hedging via ETFs may impair portfolio returns and potentially create negative alpha." Read that again: not zero alpha, i.e., same returns as market, but negative alpha. In other words, the great cottage industry that has been the basis for so many riches for the likes of BlackRock, and that has ensnared so many gullible retail investors, is essentially a guaranteed money losing get rich quick scheme?
Who da thunk it.
What is more curious, are Goldman's observations on historical cross industry correlations because they show that in the grand scheme of things, virtually everything trades as one!

Peak Monthly Inflation In 1945 Hungary: 12,950,000,000,000,000% And Other Hyprinflationary Facts

For some reason, whenever people want to make a historical example of a hyperinflationary period, they always bring up the Weimar Republic, aka Germany in 1920-1923. Yet with a highest monthly inflation of just under 30,000%, Weimar was a true walk in the park compared to the 309,000,000% monthly inflation in 1992-1994 Serbia, but especially to the 12,950,000,000,000,000% inflation that Hungarians had to deal with in the aftermath of WWII. For these and more  comparative examples of hyperinflation, particularly relevant now that the entire world is rumored (for now) to be getting ready to print, see below.

The Greek Decision Has Grown Spanish Branches

It remains tough to handicap the results of this weekend's events - most notably Greek elections (though Egypt could be the blacker swan of the two). It seems New Domocracy has a slight edge on SYRIZA at the bookies in Europe but the most likely event remains that no single party would have a sufficient majority to forma government and coalition talks will be required. Barclays expanded decision tree is 'everything you wanted to know about European uncertainties but were afraid to ask' and along with our earlier note of what to expect from asset class returns in the various scenarios provides the key guide to positioning into and beyond the weekend.

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Someone Is Lying: How Can Greece Bring Down The Global Economy?

Dave in Denver at The Golden Truth - 1 hour ago

*It was noteworthy that George Soros, the world's most successful currency speculator, was revealed this week to have tripled his position in gold in the first quarter of this year. That he is a man who knows his currencies is without question. That he chooses gold speaks volumes.* - David Galland, Casey Research I'm confused. I'm not really sure why the world should be in fear of a Greek systemic collapse and exit from the EU/euro LINK . So, while most of the world's hoi polloi chooses to accept news that is fed to them like hungry ducklings with their beaks open waiting to b... more »

 

"Heads - I Win; Tails - You Lose"

Trader Dan at Trader Dan's Market Views - 1 hour ago

That's the attitude that gold bulls have apparently adopted heading into this weekend's crucial Greece vote. Whereas yesterday seemed to be a day of caution among traders, today seems to have morphed into a day of expectations of the punch bowl, complete with accompanying hard liquor, being filled to capacity by the Central Banks of the West. If the Greece vote turns out to be one which threatens the stability of the Euro and sends shock waves through the foreign exchange markets, traders are convinced that a large bouquet of liquidity is coming their way early next week. If the Gre... more »

 

Energy Prices Outlook: Crude Oil & Natural Gas

Admin at Jim Rogers Blog - 2 hours ago

Related: United States Oil Fund (USO), United States Natural Gas Fund (UNG) * * *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.*

Spain Bond Drubbing Continues As Stocks Surge

Spanish sovereign bonds ended the week at all-time record wide spreads to bunds, pushing back up near 7% yields today before falling back into the close, and +55bps on the week. This is a 50bps underperformance of Italian sovereigns on the week, while Spanish stocks notably outperformed Italian stocks on the week (though faded notably today having been unable to regain Monday's opening highs). German Bunds also deteriorated notably relative to Treasuries on the week (the biggest weekly jump in Bunds-Treasuries in almost 7 months) and while equity and credit markets reconverged into the weekend - with position-squaring evident - as the shifts in Swiss rates suggest all is not well under the surface as repatriation flows drove EURUSD up over 115pips on the week to near its Sunday-night opening highs (amid a 200 pip range). Finally for all the ebullient US investors, we note that Europe's VIX was bid notably higher today (to over 33%) to near a 3 week high relative to US VIX as hedges into the weekend were very prevalent.

Ex-Goldmanite Rajat Gupta Convicted Of Insider Trading

The untouchables are rapidly becoming touchables, as former Goldman director and McKinsey head is found guilty of insider trading.

• RAJAT GUPTA CONVICTED OF INSIDER TRADING BY U.S. JURY
• GUPTA FOUND GUILTY OF FOUR COUNTS AND ACQUITTED ON TWO CHARGES
• RAJAT GUPTA MAY REMAIN FREE ON BAIL UNTIL SENTENCING OCT. 18
• GUPTA FOUND NOT GUILTY ON ONE COUNT, JURY STILL READING VERDICT

Next up: McKinsey issues a case study on the proper way to leak confidential, material non-public information.

The Below Half Monti: Italian Anti-Austerity Push Threatens Technocrat

Since Mario Monti was appointed to replace Berlusconi back in November's coup-de-banker, the parties backing him have lost more than 10% of popular support and, as Bloomberg Businessweek reports, this leaves the four main political groups behind the unelected puppet below 50% for the first time. Just as elsewhere in Europe, support is surging for an anti-austerity bloc as 'The 5 Star Movement' - with a restructure-debt-and-exit-the-Euro stance - has become Italy's second biggest party as technocrat Monti's own popularity has fallen to 33% - less than half the level when he was appointed. The sad truth is no more dramatically highlighted by "the growing discontent with Monti’s action, because the crisis goes on and on and many realized that he hasn’t got a magic wand to overcome it. The rise of Beppe Grillo's anti-bailout party and realization among Monti's backers that maybe a 'softer stance' towards challenging austerity policies remains the only way to keep their salaries leaves Italy's 'fiscal rigor' in question and with Europe's second largest debtload (and now rising costs of funding once again), the contagion continues (in risk markets and populist politicians)

Primary Dealer Treasury Holdings Soar To Record

Whether it is the need to soak up all of the Fed's sub 3-year sold on an almost daily basis by the Fed courtesy of Operation Twist (which despite ending in 2 weeks, has already brough the average SOMA holding maturity to a record 105.5 months despite the Fed's implicit target of 100 months, meaning the Fed has overshot its duration ramping target by a lot), or because dealers are suddenly very concerned with having equity exposure, in its last update, the NY Fed has disclosed that as of June 6 Primary Dealers held a record $128 billion in Treasury holdings, a massive 41% increase over the prior week's $91 billion. Whatever the reason, Dealers are now firmly into Trasurys, having increased their net holdings across the curve by $170 billion from -$48 billion last April. And just as notably, for the first time since May 2010 Dealers held no offsetting short positions anywhere on the curve. In conclusion: absolutely everyone is now on the same side of the UST trade.

What Are Bonds Worried About That Stocks Aren't?

Equity markets remain exuberantly willing to carry risk into the weekend on the "it's discounted" argument or the "Central Banks will save us" scenario. However, it appears investors are more anxiously buying Treasury bonds into the weekend as safe-haven flows continue (and Spanish bond yields press back up to 7%) and Swiss 2Y rates hold at -32bps. Euro strength on repatriation flows and stocks diverging from risk-assets in general make us nervous for this rally holding (especialy given the underperformance of financials from the open).

The EU Smiled While Spain’s Banks Cooked the Books

By Jonathan Weil, Bloomberg:

Only a few years ago, Spain’s banks were seen in some policy-making circles as a model for the rest of the world. This may be hard to fathom now, considering that Spain is seeking $125 billion to bail out its ailing lenders.
But back in 2008 and early 2009, Spanish regulators were riding high after their country’s banks seemed to have dodged the financial crisis with minimal losses. A big reason for their success, the regulators said, was an accounting technique called dynamic provisioning.
By this, they meant that Spain’s banks had set aside rainy- day loan-loss reserves on their books during boom years. The purpose, they said, was to build up a buffer in good times for use in bad times.
This isn’t the way accounting standards usually work. Normally the rules say companies can record losses, or provisions, only when bad loans are specifically identified. Spanish regulators said they were trying to be countercyclical, so that any declines in lending and the broader economy would be less severe.
Read More @ Bloomberg

Indian gold ETF and e-gold investment swell as rupee remains weak

by Adrian Ash, MineWeb.com
Gold prices in India have reached an all time high of $544.74 (Rs 30,420) per 10 grams. In Delhi, gold jumped by $4.83 (Rs 270) to surpass its previous record of $544.56 (Rs 30,400) set on June 6. Despite the high price, investors in India are continuing to bet on gold, with gold exchange traded funds (ETFs) and e-gold turning out to be the best investment over the long term.
At the Multi Commodity exchange in Mumbai, in the futures market, the February 2013 contract has a buy price of $557.36 (Rs 31,132) for 10 grams. The December 2012 contract has a buy price of $551.77 (Rs 30,796) for 10 grams, while gold for October delivery rose by 0.16%, indicating a firm price for the yellow metal in the coming months.
Read More @ MineWeb.com

Louis James on Mining and Important Considerations when Investing in the Sector

By Team Gecko Research, Gecko Research:
One of the people with perhaps most mine site visits under his belt every year is Louis James. His work at Casey Research is followed by many and Louis is well respected throughout the industry. Gecko Research was able to get half an hour of Louis’ time and here is the result:
CLICK HERE TO LISTEN

 
 

Debt crisis: Germany signals shift on €2.3 trillion redemption fund for Europe

The German government has begun opening the door to shared debts for the first time in a profound change of policy, agreeing to explore proposals for a €2.3 trillion (£1.9 trillion) stabilization fund in order to stop the eurozone’s crisis escalating out of control.
By Ambrose Evans-Pritchard, The Telegraph:

Officials in Berlin say privately that Chancellor Angela Merkel is willing to drop her vehement opposition to plans for a “European Redemption Pact”, a “sinking fund” that would pay down excess sovereign debt in the eurozone.
“It is conceivable so long as there is proper supervision of tax revenues,” said a source in the Chancellor’s office. The official warned that there would be no “master plan” or major break-through at the EU summit later this month.
Mrs Merkel rejected the Redemption Pact last November as “totally impossible”, even though it was drafted by Germany’s Council of Economic Experts or Five Wise Men and is widely-viewed as the only viable route out of the current impasse.
Read More @ Telegraph.co.uk



BTFD...

Silver climbs in India,China and Japan despite supply surplus

from Bullion Street:
TOKYO: Silver prices in India, China and Japan climbed despite the white metal is facing an ongoing supply surplus and weak investor demand.
Japan witnessed the highest gain in Silver as prices climbed 5.6 percent Thursday to JPY 734.00 ($9.25) per 10 grams. This comes on the heels of a 2.8 percent decline the week prior.
In China, prices rose 3.8 percent to CNY 6,060 ($950) per kilogram after falling 0.9 percent during the previous week.
The price of Indian silver rose 3.3 percent to INR 54,520 ($982) per kilogram after falling 1.4 percent during the previous week.
In the Futures trade, silver maintained its upward journey with prices rising further by 0.70 per cent to Rs 58,282 per kg in futures trade on Thursday.
Read More @ BullionStreet.com

An Interesting Bailout in the Offing

by Bruce Krasting Bruce Krasting Blog:
There is a sideshow going on in Europe this week. All eyes are on the Spanish bank bailout, but there is another bailout in the works – Cyprus. I believe that a Cyprus deal will be agreed to within days. The question in my mind is, “Who is going to put up the money?”
Let me first say that the problems in Cyprus are very small compared to Spain. If it were not for the fact that the rest of Southern Europe is on fire, Cyprus would get a very nice deal from its “friends” in Brussels. I think the country needs about Euro5B to shore ups its banks, another E20B for the Treasury. Chump change these days.
I have written about Cyprus and the 2011 military base explosion that brought the country to its knees (Link, Link) . It’s an interesting story with an interesting outcome. The Russians bailed out Cyprus with a Euro 3b loan.
Read More @ BruceKrasting.blogspot.com

Want More Internet Privacy? How to Turn on ‘Do Not Track’ in Your Browser

by Eva Galperin, Activist Post
In recent years, online tracking companies have begun to monitor our clicks, searches and reading habits as we move around the Internet. If you are concerned about pervasive online web tracking by behavioral advertisers, then you may want to enable Do Not Track on your web browser.
Do Not Track is unique in that it combines both technology (a signal transmitted from a user) as well as a policy framework for how companies that receive the signal should respond. As more and more websites respect the Do Not Track signal from your browser, it becomes a more effective tool for protecting your privacy.
EFF is working with privacy advocates and industry representatives through the W3C Tracking Protection Working Group to define standards for how websites that receive the Do Not Track signal ought to response in order to best respect consumer’s choices.
Read More @ Activist Post

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