Odds & Ends

180
Wed, Dec 26, 2012 - 6:05pm

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:

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

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

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

And here's the show:

Flash Crash 2010 - VPRO documentary - 2011

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

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  180 Comments

Bum in the library...
Dec 26, 2012 - 6:09pm

word

word

Istack
Dec 26, 2012 - 6:14pm

I Hope

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

cpnscarlet
Dec 26, 2012 - 6:15pm

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.

Anonymous
Dec 26, 2012 - 6:23pm

Removed comment

Removed comment.

¤
Dec 26, 2012 - 6:25pm
Mr. Fix
Dec 26, 2012 - 6:39pm

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.

Big L
Dec 26, 2012 - 6:41pm

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.

¤
Dec 26, 2012 - 6:44pm

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

https://www.marketwatch.com/story/fed-treasury-working-against-each-othe...

tobydaniel
Dec 26, 2012 - 6:44pm

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:)

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

Dec 26, 2012 - 6:51pm

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?

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

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Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits

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