Jim,

Dark Pool investing is spreading to Asia – allegedly because of client demand.

The chairman of the Hong Kong stock exchange is critical of the practice because of the lack of transparency. He warned that “Financial markets face a “systemic risk” from alternative trading platforms.”

No one is listening to him.

Best Regards,
CIGA Black Swan

Dear CIGA Black Swan,

If they are a danger to Asia where they are incipient what are they in the West where they are mature?

Regards,
Jim

Deutsche Bank Starts Hong Kong Dark Pool as Demand Increases 
By Jonathan Burgos – Aug 23, 2010 6:00 AM ET 

Deutsche Bank joins U.S. rival Citigroup Inc. in offering services in Asia for clients seeking trading venues that don’t display quotes publicly. 

Deutsche Bank AG started dark pool trading in Hong Kong today, the German lender’s first such platform in Asia, to meet growing demand in the region. 

After Hong Kong, the bank plans to offer off-exchange trading in Australia, Japan and Singapore, said Mark Davis, head of equity and equity-linked execution for the Asia-Pacific region at Deutsche Bank. The timing of the introduction in those markets is still being confirmed, he said. 

Demand for dark pools, which don’t display quotes publicly, has grown more slowly in Asia than in the U.S. and Europe and Ronald Arculli, chairman of Hong Kong’s stock exchange, has criticized the platforms for lack of transparency. New York- based Citigroup Inc. said last week it plans to start dark pool services in Singapore next year after its off-exchange trading in Australia increased to a record in June. 

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Jim Sinclair’s Commentary

Intellectual giants and floor traders rarely go together. Floor traders and callused knuckles is a commonality.

There is one exception, maybe the only, and that is my dear friend and former partner Yra Harris.

Listen carefully, he knows what is coming.

Notes From Underground: CNBC-CME trader sounds off
August 25, 2010 at 9:19 am

Dear CIGAs,

When reading Yra’s article, remember that he is not in the Bubble Camp, he is a floor trader who has profited and survived by never standing in front of a locomotive.

The day a bubble is a bubble is the day after it gets pricked. True bubbles are always identified in hindsight.

Regards,
Jim

Treasuries – The New and Improved Toxic Asset?
CIGA Eric

Treasuries are now the New and Improved Toxic Asset. Everyone knows that they are overvalued, everyone knows their yields are absurd—yet everyone tiptoes around that truth as delicately as if it were a bomb. Which is actually what it is.

Bob

Bob,

The only opinion that matters is the market. The secular trends in the bond market suggest two things: (1) While the nominal (U.S. dollar)trend in bonds remains intact, it serves as a poor "canary in the coal" mine because of the devaluation bias (see chart below):

Long-Term U.S. Government Bonds Total Return Index (LTGBTRI):

(2) When the devaluation bias is removed, the secular trend in the bond market changes from up to down. Clearly, the canary in the coal mine died in 2001 – a long time ago.

Long-Term U.S. Government Bonds Total Return Index (LTGBTRI) to Gold Ratio:

Do not let consensus opinion – "what should be" cloud your perception of reality. As I have said many times before, follow the money.

The flow of capital has already begun its transition from the public to private sector (see chart below). This transition will be manifested into market trends (capital flows) yet to be recognized by the collective vision of consensus opinion.

Long-Term U.S. Corporate Bonds Total Return Index (LTCBTRI) to Long-Term U.S. Government Bonds Total Return Index (LTGBTRI):

Regards,
Eric

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Silver Has Jumped The Creek
CIGA Eric

Silver will lead another liquidity blast. This is illustrated by the gold to silver ratio (GSR).

In early August I suggested that,

While the ratio remains above June 2009 swing low, today’s technical suggest that another wave of currency debasement lurks just around the corner.

Today’s price and volume action suggest that silver has "jumped the creek" above near-term resistance. This has increased the pull of the May-June highs.

Silver ETF (SLV):

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‘Quantitative Easing’: What Does It Really Mean for Investors?
CIGA Eric

Don’t make things more complex than they have to be. What does it mean?

Devaluation of paper money, particularly the senior currency in which the majority of debt was issued (U.S. dollar)

• Reduction in the general standard of living
• Ongoing default of debt through inflation
• Rising price of gold and silver relative to fiat.

Gold, London P.M. Fixed

Silver, London P.M. Fixed

Investors queasy over whether there’s anything that can be done to boost the flagging US economy could get a trillion-dollar answer this week from the Federal Reserve.

When officials from the central bank emerge from this week’s Jackson Hole, Wyo., retreat, they will likely disclose the latest in the arsenal of so-called "quantitative easing" measures.

Source: cnbc.com

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