Odds & Ends

Not much happening on this day after Christmas but I found a few things for you to consider.

It has been a very quiet, rangebound trade since the conclusion of the last raid back on Thursday. The HFTs are in charge and they are alternately jamming price slightly higher and lower as they attempt to fatten some profits before year-end. The result is 3 days of market boredom with silver in a 50¢ range and seemingly going nowhere. Gold is stuck, too, but at least shows some signs of life. It double-bottomed near $1640 late last week and has since recovered quite nicely. IF it can get some traction here and move UP through $1680 and then $1690, it will actually enter 2013 with a positive-looking chart. Let's just see what the rest of this week holds.

The only market that held any excitement today was crude. Recall that we've been watching crude in a range from $85-90 since mid-October. Today, it finally broke higher and through $90, with the Feb13 closing at $91.17. Now the question is: Can it hold the breakout tomorrow and Friday or will it simply fall back down under $90? IF it can hold, it will set up an early 2013 test of the $95 level and IF it gets above there, a return trip to $100 awaits. Two things:

  1. $100 crude would definitely be supportive of higher metals prices.
  2. The situation in the MENA has been "hot" for some time now with various headlines going and coming. However, crude has remained below $90. Suddenly, today, it's $91. Hmmmm....

Finally, if you're like me you're probably looking for something to do, so, below is a YouTube link to a documentary. This show was mentioned in a ZH thread last week and I took the time to watch it. It's a fascinating story about the "Flash Crash" of May 2010. It's relevant here simply because the focus is High Frequency Trading and, as you know, those damn WOPRs have been wreaking havoc in the metals pits for some time now. Here are some background links to pique your interest:

http://www.zerohedge.com/contributed/2012-08-03/doug-kass-kill-quants-their-technology-they-kill-us

http://www.zerohedge.com/news/joe-saluzzi-hft-parasites-are-killing-market-host

http://www.zerohedge.com/news/2012-12-11/guest-post-five-minute-example-hft-shenanigans

And here's the show:

That's all for now. Hang in there and keep the faith.

TF

181 Comments

Istack's picture

I Hope

the silver santa was good to you all....

Bum in the library...'s picture

word

word

cpnscarlet's picture

GERRY ANDERSON, RIP. AMEN.

Hello all -

Had to just post a reply to the announcement about Gerry. I assure you that I am one of many, many people who will say,

"I am an aerospace engineer because of Gerry Anderson."

Laugh all you want at puppets on strings, but HE INSPIRED dreamers who were not content to twiddle their thumbs while the egg heads talked about starships centuries in the futures. Others looked to hypersonics and space travel in OUR lifetime. Gerry showed us visions of the possible that we could reach.

The world would be a much better place place if families with money were more like the Traceys instead of the Rothschilds. The world would be a much better place if visionaries like Clarke were in charge instead of psychopaths like Obama.

We could have had a better world and we let Gerry down. I am so sorry and I apologize for my nation.

Revelation's picture

May You All Break Free...

Delusions-Of-Granduer.jpg

In 2013...

Mr. Fix's picture

Top five! It is a Christmas present worth having.

Thank you for your time and effort Turd, it is much appreciated.

Always wonderful to have some new material's pore over at this time of the day.

Happy holidays everyone.

cpnscarlet:

I wish I could give you 1000 had tips, that was one of my favorite shows as a child, and I also found tremendous inspiration in it. I may not have become a rocket scientist, but I enthusiastically learned what made things work, and it has benefited my life.

I share your sentiments on what we could have become, and your sorrow for what we are.

This system is about to collapse, we may be better off in the next system, but only if the evil can be removed from it first.

At least we are more aware than most of what needs to be done.

¤'s picture

Break on through to the other side...

Big L's picture

Couldn't resist

Top Ten! Whoo hoo....

Wanted to say the Kyle Bass video was very interesting. Listened to it twice while doing holiday highway shuffles to the relatives. It helped pass the time and once again, I learned a lot.

The cycle of learning never ends, much thanks to Mr Turd.

¤'s picture

When is $85 bln not $85 bln?

Dec. 26, 2012, 12:27 p.m. EST

Fed, Treasury working against each other

By Thomas H. Kee Jr.

The stimulative efforts of QE3 are not what they appear to be. The Federal Open Market Committee (FOMC) is prepared to buy about $85 Billion worth of U.S. Treasurys and mortgage-backed securities, we all know that, but when the left hand is shuffling the cups one way, we need to pay attention to what the right hand is doing or this shell game could get the best of us.

In this case, at the same time the FOMC is buying bonds, the U.S. Treasury is selling them, and when the government sells bonds, it actually drains liquidity from the system.

Looking back to QE2, I wrote a special report titled " Pulling Back the Curtain on the Wizard ," which described the true stimulative nature of QE2. That program sought to buy about $100 billion of bonds per month, but after the offsets by the U.S. Treasury (including maturing bonds), the net stimulus was only about $30B per month. This is much lower than the face value of the program, but it still worked to induce the wealth effect and stimulate equity markets.

Arguably that has caused a “valuation bubble” in our equity markets, but that is left for another day. Today's discussion is on the real net stimulus of QE3, but this time there is more than just one other hand at play in this shell game. Not only does the U.S. Treasury act as a drain on liquidity this time, but fiscal policy is now poised to do the same.

Breakdown of QE3

Without the inclusion of the U.S. Treasury, the stimulus would be the face value of the program, $85 billion, but when we include the offsets by the U.S. Treasury, the net stimulus changes to $11.5B/month. This reduced stimulus estimate is no surprise because QE3 is lower than QE2 by $15B/month anyway, but again another important factor is at play. Fiscal policy will now also drain money from the system, and although no one knows what that will look like yet, we can deduce a best-case scenario now.

Assuming a best-case scenario of a $200B headwind this year, which would have been negotiated down from about $600B as we know, the monthly headwind of fiscal policy would be about $16.66 billion. This further offsets the $11.5 billion that came after the U.S. Treasury was included in the equation, and changes the net real stimulus of QE3 to a negative number. The true net stimulus of QE3 is -5.1B per month with a best-case scenario in mind.

The table below offers tangible estimates and comparisons:

Monthly Stimulus Face Value After U.S. Treasury After Fiscal Headwinds Net Stimulus
QE2 $100 billion $30 billion $30 billion $30 billion

QE

3

$85 billion $11.5 billion -$5.1 billion -$5.1 billion

http://www.marketwatch.com/story/fed-treasury-working-against-each-other-2012-12-26?link=MW_TD

tobydaniel's picture

Some good humor on the Pope for your pleasure

Since nothing at all is happening in the silver arena today, I thought I would entertain you with my new blog entry. Beware, if you are a Catholic, you might be offended:)

http://faithfinancefitness.com/the-pope-wants-to-prey-for-your-children/

Dr Jerome's picture

good to see you

Good to see you posting now and then cnpscarlet!

I have a sincere question for the turdisatan community (a hat shaped geographic region somewhere in the world)

I am purchasing a home.

We are trying to decide whether to purchase an apartment building that will provide some income in a college town of 60K, close to the college where I work, or purchase a home  15 miles from work where the my "stuck-at-home-college-age-kids-who-can't-afford-their-own-place" will be bored and resent living, but we will be safer in the case of a SHTF situation with enough land to get serious about self sufficiency.

Tough decision--the kids happiness or safety.

Why must it come to that?

Bollocks's picture

saves a bundle.

Bongo Jim's picture

@Doc

If the insider info in the previous linked posts is getting as near as they say, get outta Dodge & teach those  bored kids how to grow food. Maybe they'll invent a better way to kill gophers.

tpbeta's picture

@DrkPurpleHaze

Great post. Highlights the fiscal cliff problem. No-one actually knows if going off the cliff or not going off the cliff is bullish or bearish for metals becasue no-one knows what the follow-up will be. Into that vacuum at the appropriate moment will step the monkeys posing as the market, to lead opinion by the short and curlies. A potential 'heads I win tails you lose' scenario for Gold Bugs.

Mr. Fix's picture

@ tobydaniel

I read your blog post,

as someone who went through 12 years of Catholic school, and found epic corruption everywhere I looked, right down to my religion teacher  ( A Priest) who was screwing one of my classmates, I fully endorse your post.

As for the pope thinking that he is God, that might be true, but wouldn't that put him in direct competition with Obama? Do you envision a power struggle on the horizon?  

Or, are they going to arrange some kind of shared power, kind of like a dynamic duo replacing the holy Trinity?wink

Keep up the good work, I wish more people would wake up and see what a farce that church really is.

vonburpenstein's picture

Dr. Jerome, Re: Buying...

...Why not both? Seems they are both potentially good ideas in their own way...Would YOU live in the apartments also?...

Mr. Fix's picture

RE, Dr Jerome

as tempting as a rental income sounds,   it is my opinion that in a SHTF  scenario which I have come to believe is not only unavoidable, but imminent, that rent check would probably stop coming in a heartbeat,  and those kids would still be hungry.

Therefore, it is my judgment that the house farther away from town, with enough land to grow something to eat is an infinitely wiser choice.

You can't eat a rent check that doesn't come,

you and your kids won't benefit from it either.

 Even if everything turns out okay, it would still be worthwhile owning some land, and learning how to farm it. The lessons learned will be valuable for the rest of all of your lives,

and as an added extra bonus,  you may even get to eat the fruits of your labor.

Besides, it sounds like you're going to have a built in labor force for a while.

It's a no-brainer,  get the house!

Bollocks's picture

@Mr Fix

Dr Jerome wasn't asking about making an income from renting.

Rather where to live.

edit: or have I misunderstood his post? dunno.

Mr. Fix's picture

@ Bollocks:

I found this in there:

" apartment building that will provide some income"

Edit:

I believe that the very definition of self-reliance is a about to change forever.

Being “set up” with a steady rental income, may not be worth what it used to be.

Learning the life skills required to be truly self-reliant is priceless.

Long-term,  the children will be much happier as a result of it.

Short-term, they're going to think that working for their food sucks.

It won't be until  their friends starve to death that they will see the wisdom in your choice.

Isn't parenthood wonderful?wink

Zoltan's picture

Doc J

I'd vote for the house as well.  TFB for the "adult kids".  Maybe they will GTFO and start their own lives.  Being a landlord isn't a great thing in tough times.  Also you could put yourself in a conflict of interest situation if you have trouble from tenants who are also your students.

Z

Timber Tim's picture

I am serious now.Piers Morgan

I am serious now.Piers Morgan stays in America.We don't want him back.You let him in,you can keep him.Britain is much happier mentally and physically since he left.We could go into remission if he arrived on these shores again.Send him to Canada or Alaska.There's loads of open space up there.

Bollocks's picture

Sure Mr Fix...

But questions by the Dr. about his children and where they would be happiest staying.

I'm confused.

I'm probably not drinking enough. lol.

¤'s picture

The Moody Blues - Nights in White Satin

File:Bartholomeus van der Helst, Banquet of the Amsterdam Civic Guard in Celebration of the Peace of Münster.jpg

Title: The celebration of the peace of Münster, 18 June 1648, in the headquarters of the crossbowmen's civic guard (St George guard), Amsterdam.

Artist: Bartholomeus van der Helst - 1648

Summary: Celebration of the peace of Münster, 18 June 1648, in the headquarters of the crossbowmen's civic guard (St George guard), Amsterdam. The people portrayed are: (right, with silver horn) captain Cornelis Jansz. Witsen, (shakes hand of previous) lieutenant Johan Oetgens van Waveren, (seated behind the drum, with flag) reserve officer candidate Jacob Banning, sergeants Dirck Claesz. Thoveling and Thomas Hartog. Additionally: Pieter van Hoorn, Willem Pietersz. van der Voort, Adriaen Dirck Sparwer, Hendrick Calaber, Govert van der Mij, Johannes Calaber, Benedictus Schaesk, Jam Maes, Jacob van Diemen, Jan van Ommeren, Isaac Ooyens, Gerrit Pietersz. van Anstenraadt, Herman Teunisz. de Kluyter, Andries van ANstenraadt, Christoffel Poock, Hendrick Dommer Wz., Paulus Hennekijn, Lambregt van den Bos and Willem the drummer

Mr. Fix's picture

Dr. Jerome?

It sounds to me like a little bit of clarification would go a long way.

Some relevant questions have been raised, what say you?

Ferd Torgerson's picture

Dr. Jerome

Depends on how much time you have to do bookkeeping, tax returns, etc.  Remember that there will be extra work involved in keeping records, responding to broken water pipes, etc.  Not to mention the sob stories you'll hear about why this month's rent is late.

I asked an old boss of mine once how he felt about my buying a rental property.  He responded that he once owned two rental properties but sold them.  He added that he still woke up occasionally in the early hours of the morning from nightmares that he STILL owned them.

I'd opt for the home in the country. 

Ferd (no charge for my advice but you get what you pay for.)  smiley

kingboo's picture

Landlord..........

not only do the rent checks stop coming in hard times.......but you can't legally get em out!  (you can, but it's hard as hell)........ and not only that........when you buy rental property.......you're deploying your capital "above board".....you will have to declare all the income.........and once you add up the mortgage, prop taxes, emergency repairs, appliance upgrades from time to time, paint, landscaping.......you get the drift...     Now for fun, lets assume you earn 10k profit for the year......at 30% tax rate.....  you end up with 7k.  Big f--king deal.  

So now lets look at how much exposure you created for yourself in order to earn a measly 7k.......

you are subject to housing market losses, you are subject to local tax changes, local regulatory changes, tenants walking out on you, extended vacancies, unforeseen expenses, potential rising insurance costs......etc, etc........

and ultimately, you are exposing yourself to losing the total investment to foreclosure......

now, i understand this is a worst case scenario.........but isn't that exactly what you want to consider when you enter an investment?    I wouldn't touch real estate with a 10 ft pole right now.....the market is still WAY too obscured to attain even a close guesstimate as to true values............and at the end of the day.......real estate is not "light on it's feet".....meaning if the economy changes for the worse quickly......you will have no maneuverability......

you will be stuck with a boat anchor........    I know it's tempting......but don't do it. 

Bollocks's picture

I agree with Timber Tim...

The suicide rate in the UK has dropped to zero.

Burglaries have turned into deposits. Burglars are breaking into homes and leaving gifts.

Crime is non-existent. The police have been made redundant.

The MSM are reporting on cute fluffy bunnies, and the like, all day long. NO nasty shit.

And all since Piers Morgan FUCKING left.

So, NO, we 'aint having him back.

 

kingboo's picture

@Bollocks........

We aren't "asking" if you will have Piers Morgan back!..........We are just forewarning you.......  cheeky

opticsguy's picture

Rental property

I learned 20 years ago that in most parts of the country (S. CA and the Bay area excepted) houses are affordable purchases for anyone having a job and decent credit.   For those with neither, renting is the only option.  I knew of families that would pay a deposit, move in, never pay rent again, and after 6 months have enough to make the deposit at another place, and they move before being evicted.

With 47 million on SNAP, how long before 40 million are on Section 8?  We individuals won't be able to lease out Section 8 properties by then, they will all be owned by GE, the big banks, and Warren Buffett.  More corporate welfare.

57Goldtop's picture

I strongly disagree with Timber Tim

Canada doesn't want him. It's bad enough when we accidentally look at the front side of the currency... 

zman's picture

College is the biggest bubble

College is the biggest bubble of all, what is going to happen when kids start to realize the debt is not worth the education, or when they can't get massive loans to pay the college. Who are you going to rent to when enrollment drops -40%?

Part-time landlords have the worst times, stay away.

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