Everything Not Nailed Down Being Bought

$15 for a loaf of bread … coming to a store near you.


Everything Not Nailed Down Being Bought (ZeroHedge, Feb. 27, 2012):

When in doubt – buy. When in doubt what – everything. As the chart below shows starting with the open of the US market, literally everything has been bought: stocks, bonds, crude, gold, and ‘logically’, the VIX. It took the market virtually no time to remember that when trillions in liquidity are being injected into the market courtesy of central planners, a downtick is verboten. Next up: waiting for WTI $110. Should take a few minutes at most.

Chart Of European Emergency Liquidity Back At Record Levels, And Why Bank Of America Is Long French CDS

Chart Of European Emergency Liquidity Back At Record Levels, And Why Bank Of America Is Long French CDS (ZeroHedge, Dec, 21, 2011):

Yesterday we charted the combined ECB balance sheet which showed that it had hit an all time record of €2.5 trillion, exclusing today’s operation (to the stunned surprise of all those who scream that the ECB should be printing more, more, more). Today, we focus exclusively on the various forms of unsecured liquidity measures, such as today’s 3 Year LTRO, because as the following chart from Bank of America shows, European emergency liquidity provisioning post today’s liquidity bailout brings the total to €873 billion and is just shy of its all time record of €896 billion, a number which we expect will be taken out as soon as the next liquidity provisioning operation. In other words, European liquidity in euro terms, has virtually never been worse. And as today’s additional drawdown of Fed swap lines indicates, the USD liquidity crunch is getting worse not better (confirmed by the rapid deterioration in basis swap levels). Perhaps the fact that not only is nothing fixed, but things are about as bad as they have ever been explains why Europe closed blood red across the board, and also why Bank of America continues to push for an outright crash in all risk (and some were doubting our earlier analysis that BAC is outright yearning for a market crash): To wit from Bank of America’s Ralf Preusser: “The tender results do not however change either our longer term  cautious outlook on growth, or the periphery. We remain long 5y CDS protection on France, at 210bp (target 300bp, stop loss 175bp).” So let’s see: BAC is shorting the EURUSD, which implies they are pushing for a market drop, and now they want French CDS to soar? Who was it that said the megabanks do not want a crash?

And here is what near record liquidity needs look like:

Read moreChart Of European Emergency Liquidity Back At Record Levels, And Why Bank Of America Is Long French CDS

Moody’s Downgrades French Banks (Telegraph) – Eurozone Banking System On The Edge Of Collapse (Telegraph) – EU Summit: This Emergency Plan Is Great News – If You’re A Bank (Guardian)

Flashback ( on ECB’s Mario Draghi):

ECB’s Mario Draghi: We Need Fiscal Union (= EUSSR), Not Bank Intervention

Former Goldman Sachs Managing Director Mario Draghi Appointed European Central Bank President!

Mario Draghi (Wikipedia):

Draghi was then vice chairman and managing director of Goldman Sachs International and a member of the firm-wide management committee (2002–2005). A controversy existed on his duties while employed at Goldman Sachs. Pascal Canfin (MEP) asserted Draghi was involved in swaps for European governments, namely Greece, trying to disguise their countries’ economic status.


 

French banks downgraded by Moody’s (Telegraph, Dec. 9, 2011):

Moody’s has downgraded BNP Paribas, Societe Generale, and Credit Agricole warning their creditworthiness is being damaged by the fragile operating environment for European banks.

The agency cut its ratings on the long-term debt of BNP and Credit Agicole by one notch to Aa3, concluding reviews that began in June and were continued in September. Societe Generale’s long-term debt was cut by one notch to A1.

The downgrades were driven by the increasing difficulties the banks were having in raising funding and the worsening economic outlook, Moody’s said.

The news comes a day after the European Banking Authority (EBA), warned the region’s banks must find €114.7bn of extra capital in order to withstand the euro zone debt crisis and restore investor confidence.

Moody’s said its ratings did take into account the fact that all three French banks were likely to benefit from state support if the crisis deepened.

“Liquidity and funding conditions have deteriorated significantly,” said Moody’s, adding that the banks have historically relied on wholesale funding markets.

“The probability that the will face further funding pressures has risen in line with the worsening European debt crisis.”

Eurozone banking system on the edge of collapse (Telegraph, Dec. 9, 2011):

Senior analysts and traders warned of impending bank failures as a summit intended to solve the European crisis failed to deliver a solution that eased concerns over bank funding.

The European Central Bank admitted it had held meetings about providing emergency funding to the region’s struggling banks, however City figures said a “collateral crunch” was looming.

“If anyone thinks things are getting better then they simply don’t understand how severe the problems are. I think a major bank could fail within weeks,” said one London-based executive at a major global bank.

Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding.

“The system is creaking. There is a large amount of stress,” said Anthony Peters, a strategist at Swissinvest, pointing to soaring interbank lending rates.

Read moreMoody’s Downgrades French Banks (Telegraph) – Eurozone Banking System On The Edge Of Collapse (Telegraph) – EU Summit: This Emergency Plan Is Great News – If You’re A Bank (Guardian)

Gold And Silver Plunge-Fest – Case Closed: CME Hikes Gold, Silver, Copper Margins

Gold Liquidations Open Thread (ZeroHedge, Sep. 23, 2011):

Update: Yep – it was a leak of a margin hike as just confirmed. Which may very well mean nobody actually had to liquidate, just the herd thundered, as it always does, in the wrong direction. Expect gold to actually rise on this news.

Everyone knew they were coming… Just not when. Now that the gold liquidation frenzy has struck we still don’t know much if anything: who was it, why, and where did the money go? Some rumors have it as a bank in Central, Eastern Europe unwinding massive PM positions, which if true is paradoxically bullish for gold and silver as reported previously, as it means the already tight liquidity situation in Europe is about to come to a head, possibly as soon as this weekend. Others speculate it was a plain vanilla satisfaction of collateral requirements by a big funds who may or may not be liquidating and who have sizable gold positions. Or, the simplest explanation, was it simply an expectation (and leak) of a gold margin hike?

Case Closed: CME Hikes Gold, Silver, Copper Margins (ZeroHedge, Sep. 23, 2011):

And there you have it: CME just hiked gold margins by 21%, silver by 16% and copper by 18%. Mystery solved.

Gold Margin Hike 9.23

Gold/Silver Plunge-fest (ZeroHedge, Sep. 23, 2011):

Gold down over $100, and Silver down over 15% – someone is liquidating. Rumors vary from very prominent hedge funds to Central European (as in geographically) central banks. Bottom line is, it is a self-fulfilling prophecy at this point and will continue until every last seller is out, and until the margin calls end.

UPDATE: Silver <$30 -17%

Charts: Bloomberg

Lehman Deja Vu: There Goes Market Liquidity

European liquidity just went into Defcon 1. Presenting the FRAOIS spread. Oops.

And now moving to a US near you…


An explanation from a trading desk:

So the fact that Greece itself was stretched further on the rack was not the be all and end all of the new credit crisis and catalyst of the latest Libor jitters.

In reality, analysts immediately warned that the ramifications of any action on the ‘threat’ of French Bank downgrades was this time a significant event in the financing market.

When other EuroZone Banks had been downgraded or threatened with downgrades, the markets were to some extent immune because any shortfalls in Euro funding were continually topped up via swapped Dollars.

However, this ‘$-Funding’ has been dominated by the Big French Banks and now we see the reality of such a polarized or skewed funding profile for Europe.

Not only are these French Banks significant players in the short-term $ markets, but many investors have large exposures to these entities either via CP?CD/ABCP or the Repo Markets.

**Based on the current market info on their money-market activities, we are told that the 3main French Banks collectively account for as much as 50% of all Eurozone CP/CD exposure as at recent month-end (31st May)…and, furthermore, they account for almost 15% of $ Repo Markets as per the end of Q1 2010 (31st March).!!!**

Why Is Warren Buffett Keeping $34 Billion In Cash?

Warren Buffett bought 130 million ounces of silver between 1997 and 1998.

If the elitists agree that the time for the US dollar is up (and that time will come soon), he and his elite friends will sell their dollars, buying up all silver and gold, running up the manipulated gold and silver markets.

Silver and gold will skyrocket, the dollar will crash and then he will buy up everything in America for a few cents on the dollar, especially land.

Mission accomplished!



Warren Buffet, Arnold Schwarzenegger, Jacob Rothschild

NEW YORK (TheStreet) – Improving market conditions have been a major benefit for Warren Buffett, who has famously remained bullish throughout this long, arduous global economic recovery.

Now, as we head further into the year, the Omaha native is sitting on a mountain of cash, leading many analysts, commentators, and fans to speculate what the world’s third richest man plans to do with it. According to a Sept. 30, 2010 filing, Berkshire Hathaway(BRK.A) has $34.46 billion in cash.

While it is possible, the chance that Buffett would be satisfied simply standing by and watching his money pile continue grow in size is slim. In the past, he has clearly expressed his negative feelings towards the idea of holding cash as a long term investment.

In an interview on the Charlie Rose Show, Buffett insisted that although Berkshire Hathaway always has enough cash around, he sees cash as always being a bad long-term investment. He went on to say that he is typically unhappy when he finds that there is excess cash available.

Likening cash to oxygen, the legendary investor said it is important to know that it is around but unnecessary to have it in excess. Rather than have hoards of excessive cash on hand, he would rather own a strong business.

A more likely scenario is that Buffett’s massive cash reserves will be used to fund another big ticket purchase. Although the investor has tweaked the positions within his legendary investment portfolio on a number of occasions, he has not made a major purchase since Berkshire Hathaway announced that it was acquiring the remaining shares of Burlington Northern Santa Fe Railroad at the close of 2009.

Finding a suitable purchase is not easy endeavor for the investor, however. The Burlington Northern purchase highlights the challenges Buffett faces when seeking out opportunities.

Whereas Buffett could once generate strong returns by picking up small, undervalued companies, the pool of attractive investment opportunities has shrunk significantly as his firm has grown. Today, in order for a company to significantly impact Berkshire’s performance, it must be large. The small, fast-moving companies that pocketed the investor staggering returns in the past would barely make a dent in Berkshire.

There is a strong chance that Buffett would like to use his massive pile of cash to fund a new purchase. However, finding an attractive destination to sink his funds will be a difficult task going forward.

The financial newswires are buzzing this week in response to a recent Buffett-related article in Barron’s which forecasted that a dividend may be in the future for Berkshire Hathaway shareholders. Citing the company’s massive surplus of funds and the challenge of finding attractive acquisition targets, the author notes that a dividend could be one logical way the company could utilize its cash on hand.

Although Berkshire Hathaway has not traditionally paid out a dividend, Buffett is no stranger to distributions. On the contrary, the investor’s investment portfolio is loaded with notable income-paying positions such as Proctor & Gamble, Johnson & Johnson and Coca-Cola. Additionally, the investors’ personal investment portfolio boasts exposure to a number of yield-bearing firms which have provided him with a comfortable payout in recent years.

While attractive, many have been quick to point out issues such as the tax challenges Berkshire Hathaway and Buffett would face if they chose to offer a dividend.

These are only a few of Buffett’s available options and ultimately, it remains unclear how he will eventually choose to spend Berkshire Hathaway’s cash. However, given the massive size of his available funds, whichever route he chooses to take down the road will be exciting to watch.

Don Dion, The Street | Jan. 28, 2011, 11:39 AM

Source: The Business Insider

German Finance Minister Schaeuble on Bernanke’s QE: ‘With All Due Respect, US Policy Is Clueless’

True, but Schaeuble is also an elite puppet, who supported the bankster bailouts and he is the greatest public supporter of the German ‘Big Brother STASI Police State’, now called ‘Schaeuble 2.0’:


That is easily the Quote Of The Day, and it’s from German Finance Minister Wolfgang Schaeuble regarding Ben Bernanke’s quantitative easing.

He added: “(The problem) is not a shortage of liquidity. It’s not that the the Americans haven’t pumped enough liquidity into the market and now to say let’s pump more into the market is not going to solve their problems.”

Joe Weisenthal | Nov. 5, 2010, 7:30 AM

Source: Business Insider

The US Government Is Preparing For Collapse: Your Legal Right To Redeem Your Money Market Account Has Been Denied

Must-read! Don’t miss to take a close look at the members of the the Group of Thirty!


When Henry Paulson publishes his long-awaited memoirs, the one section that will be of most interest to readers, will be the former Goldmanite and Secretary of the Treasury’s recollection of what, in his opinion, was the most unpredictable and dire consequence of letting Lehman fail (letting his former employer become the number one undisputed Fixed Income trading entity in the world was quite predictable… plus we doubt it will be a major topic of discussion in Hank’s book). We would venture to guess that the Reserve money market fund breaking the buck will be at the very top of the list, as the ensuing “run on the electronic bank” was precisely the 21st century equivalent of what happened to banks in physical form, during the early days of the Geat Depression. Had the lack of confidence in the system persisted for a few more hours, the entire financial world would have likely collapsed, as was so vividly recalled by Rep. Paul Kanjorski, once a barrage of electronic cash withdrawal requests depleted this primary spoke of the entire shadow economy. Ironically, money market funds are supposed to be the stalwart of safety and security among the plethora of global investment alternatives: one need only to look at their returns to see what the presumed composition of their investments is. A case in point, Fidelity’s $137 billion Cash Reserves fund has a return of 0.61% YTD, truly nothing to write home about, and a return that would have been easily beaten putting one’s money in Treasury Bonds. This is not surprising, as the primary purpose of money markets is to provide virtually instantaneous access to a portfolio of practically risk-free investment alternatives: a typical investor in a money market seeks minute investment risk, no volatility, and instantaneous liquidity, or redeemability. These are the three pillars upon which the entire $3.3 trillion money market industry is based.

Yet new regulations proposed by the administration, and specifically by the ever-incompetent Securities and Exchange Commission, seek to pull one of these three core pillars from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal in the overhaul of money market regulation suggests that money market fund managers will have the option tosuspend redemptions to allow for the orderly liquidation of fund assets. You read that right: this does not refer to the charter of procyclical, leveraged, risk-ridden, transsexual (allegedly) portfolio manager-infested hedge funds like SAC, Citadel, Glenview or even Bridgewater (which in light of ADIA’s latest batch of problems, may well be wishing this was in fact the case), but the heart of heretofore assumed safest and most liquid of investment options: Money Market funds, which account for nearly 40% of all investment company assets. The next time there is a market crash, and you try to withdraw what you thought was “absolutely” safe money, a back office person will get back to you saying, Sorry – your money is now frozen. Bank runs have become illegal. This is precisely the regulation now proposed by the administration. In essence, the entire US capital market is now a hedge fund, where even presumably the safest investment tranche can be locked out from within your control when the ubiquitous “extraordinary circumstances” arise. The second the game of constant offer-lifting ends, and money markets are exposed for the ponzi investment proxies they are, courtesy of their massive holdings of Treasury Bills, Reverse Repos, Commercial Paper, Agency Paper, CD, finance company MTNs and, of course, other money markets, and you decide to take your money out, well – sorry, you are out of luck. It’s the law.

A brief primer on money markets

A very succinct explanation of what money markets are was provided by none other than SEC’s Luis Aguilar on June 24, 2009, when he was presenting the case for making even the possibility of money market runs a thing of the past. To wit:

Money market funds were founded nearly 40 years ago. And, as is well known, one of the hallmarks of money market funds is their ability to maintain a stable net asset value – typically at a dollar per share.

In the time they have been around, money market funds have grown enormously – from $180 billion in 1983 (when Rule 2a-7 was first adopted), to $1.4 trillion at the end of 1998, to approximately $3.8 trillion at the end of 2008, just ten years later. The Release in front of us sets forth a number of informative statistics but a few that are of particular interest are the following: today, money market funds account for approximately 39% of all investment company assets; about 80% of all U.S. companies use money market funds in managing their cash balances; and about 20% of the cash balances of all U.S. households are held in money market funds. Clearly, money market funds have become part of the fabric by which families, and companies manage their financial affairs.

Read moreThe US Government Is Preparing For Collapse: Your Legal Right To Redeem Your Money Market Account Has Been Denied

Citigroup and JPMorgan are hoarding cash as if another crisis were on the way

Citigroup Is In Serious Trouble


citigroup

Nov. 2 (Bloomberg) — Citigroup Inc. and JPMorgan Chase & Co. are hoarding cash as if another crisis were on the way.

Citigroup has almost doubled its cash to $244.2 billion in the year since Lehman Brothers Holdings Inc. filed for bankruptcy, the biggest such stockpile of any U.S. bank. The lender, which last year came so close to a funding shortfall it had to get a $45 billion government infusion, is under pressure from the Treasury Department and regulators to keep more money on hand for emergencies, even as markets improve.

Read moreCitigroup and JPMorgan are hoarding cash as if another crisis were on the way