The Market Traders

There May Be No Free Lunch, but Is There a Magic Wand?
by John Butler on Thu, 2 Sep 2010

By the late-1990s it became clear to informed observers that the substantial portion of EU countries that had signed the Maastricht Treaty in 1992 were going to proceed with a European monetary union (EMU) as codified in the Treaty, most probably on schedule, in 1999. Previously dismissed as a Franco-German political pipe-dream, there was a growing air of excitement in financial markets as the political winds blew ever stronger in the direction of making EMU a reality. But on the trading floors of banks and in the boardrooms of asset management firms, such excitement quickly gave way to the practical reality of how best to prepare for the euro. What were the implications for the EU economies? Their financial markets? How would the euro trade as a currency? How would the various euro sovereign bond markets trade vis-à-vis each other? Or national equity markets? Most importantly, how should investors adjust their existing forecasting, valuation and asset-allocation methods for a single European currency?

By National Inflation Association

The Financial Crisis Inquiry Commission today held hearings with former Lehman Brothers Chairman Dick Fuld. They are trying to figure out why Lehman Brothers was allowed to collapse, with the belief that the failure of Lehman Brothers caused the financial crisis of 2008. The truth is, the failure of Lehman Brothers was a result of the crisis and allowing them to fail was the only correct decision the government made during the crisis.

Gold – Boxed in
Bob Hoye
Institutional Advisors
Posted Sep 2, 2010

The rally to $1244 this month corrected 81% of the July decline to $1156 (slightly better than the 72% ‘Cup and Handle’ retracements in Oct ’80 and ‘Feb ’75). It also closed against the 7/8th speedline resistance from the all-time high of $1265. Such speedlines have produced temporary highs in gold nine times since the bottom at $253 in 1999.

In 2008, the U.S. tax payer backed large U.S. financial institutions that made crazy bets on real estate; in 2009, we discovered that U.S. taxpayer money went to prop up banks in Europe for making the same wacky bets, but with even MORE leverage; in 2010 we see that we have exported our banking practicing to Afganastan.  And what do they expect?  A bailout of course.  And why shouldn’t they.  We have bailed out just about everyone else.  The Washington Times Reports below with my comments:

by Jim Willie on Thursday, 2 Sep 2010

Many observers to the wild gyrations, deep contortions, extreme measures, and other bizarre activity in the government and banking arenas are suffering from severe confusion. The public is alarmed, even frightened, by the sequence of events, without much benefit of comprehension of what is happening or which clans are in control. The degree of deception hit a peak during the TARP Fund creation and disbursement, done behind private closed doors for the replenishment of sacred preferred stock, that bridge between corporate bonds and stock equity. The deception hit a very high pitch with the financial titan failures, the entire string of them. It has never stopped since. The economic data and promising forecasts (mere marketing group propaganda) featured Green Shoots, Jobless Recovery, and the totally vacant Second Half Recovery that is useful every initial six months to sway the ignorant masses. Just what is happening is difficult to describe succinctly. But the main description reads like an obituary. The most recent and visible distortion is not of price inflation, which has zoomed at 7% annually for a couple years, but rather the Institute of Supply Mgmt. The ISM index has somehow registered a slight increase from July to August, despite almost every single regional index faltering badly. See the careening Philly Fed, from plus 5.1 to minus 7.7 in the latest month. They ignore the weak components and present a distorted aggregate, much like retail sales.

By Chris Vermeulen, Thursday, Sept 2

Wednesday was a big session with better than expected manufacturing surging the market 3%. In this article I will do a quick technical take on the current situation for the SP500 and gold as they are both trading at a key resistance level. also its important to know what type of price action we will get in the next 1-2 days so you can have your profit targets or protective stops in place depending on which side of the market you are currently playing.

Brewers Futures Group

New U.S. Weekly Jobless Claims declined last week according to the government, but were still too high to have a strong impact on the weak labor market.

The number was good enough to push Treasury yields slightly higher, driving down December Treasury Bonds. This market has been trading in a tight range for six days indicating impending volatility. On the downside, 130'17 to 129'11 remains a potential downside target. The top at 135'19 seems to be closely guarded at this time.

DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation         Wealth Enhancement

“The crucial passage comes in Chapter 17 entitled "Velocity". Each big inflation -- whether the early 1920s in Germany, or the Korean and Vietnam wars in the US -- starts with a passive expansion of the quantity of money. This sits inert for a surprisingly long time. Asset prices may go up, but latent price inflation is disguised. The effect is much like lighter fuel on a camp fire before the match is struck.
 
People’s willingness to hold money can change suddenly for a "psychological and spontaneous reason", causing a spike in the velocity of money. It can occur at lightning speed, over a few weeks…

"Velocity took an almost right-angle turn upward in the summer of 1922," said Mr. O Parsson. Reichsbank officials were baffled. They could not fathom why the German people had started to behave differently almost two years after the bank had already boosted the money supply. He contends that public patience snapped abruptly once people lost trust and began to "smell a government rat".

Daniel Loeb

Whatever you think of either of these aspiring masters of the universe, this clash of the titans is bad news for the rest of us.