In The News Today

Posted at 5:34 PM (CST) by & filed under In The News.

Dear Friends,

I am again posting my Bloomberg interview because it contains the only means of maintaining the general equity rally that has taken place as I anticipated.

Regulation of OTC derivatives as announced by the White House today is good going forward, but useless looking back. It therefore window dressing and not affirmative action. My presentation contains the only method that can give legs to the recent equity rally.

I know you read this and have respect for my experience in markets even if we disagree on the end result.

Listen to what I said in that interview. Failing to take the action suggested therein risks a total economic implosion that will create intolerable tensions between the US and China over their discomfort with the condition of their US dollar investments and the policy of Quantitative Easing.

Today the wrong target was struck with a useless action.

Respectfully yours,
Jim Sinclair

Click here to listen to Jim’s Bloomberg interview…

Jim Sinclair’s Commentary

It is how the quadrillion plus notional value behind us that will affect the world, not what is in front of us that is the problem.

Obama to detail regulation plans for derivative securities
12:26 PM, May 13, 2009

The Obama administration is expected today to announce new efforts to regulate the massive market for credit-default swaps and other derivative securities.

Treasury Secretary Timothy F. Geithner plans a press briefing at 1 p.m. PDT.

The administration plans "to detail its initiative to regulate the exotic financial contracts that helped fuel the global [financial] crisis and crippled some of the biggest names on Wall Street, such as American International Group," the Washington Post reports.

From Bloomberg News:

The U.S. Treasury will tell banks to increase transparency in the over-the-counter derivatives market by making prices available on centralized computer platforms, according to people familiar with the plan.

Electronic execution of trades including interest-rate and credit-default swaps would allow users of the financial instruments to get greater price transparency and make processing trades easier. Transactions in the $684 trillion over-the-counter derivatives market are now typically conducted over the phone between banks and customers.

"Anything that will bring transparency to this market will help the market, but the dealers who broker the deals would make less money," said Paul Zubulake, a senior analyst with Boston-based Aite Group. "More transparency for the buy-side is less profit for the sell-side."

More…

Jim Sinclair’s Commentary

The stairs on the Golden Ladder that will be climbed are:

$900
$961
$1024
$1089
$1156
$1224

The steps on the USDX us dollar are:

.8200
.7200
.6200
.5200

The timing was April 19th and middle June to establish the launch period.

Jim Sinclair’s Commentary

You talk about rolling the dice? Any delay or glitch in the bankruptcy and the damage to employment and suppliers will be extreme.

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Jim Sinclair’s Commentary

My granddaughter and her friend in Tanzania last week:

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Uncle Joseph Kahama with his niece and nephew at his home in Tanzania last week.

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Jim Sinclair’s Commentary

– New Accounting Fraud for Monthly Federal Deficit Reporting
– Annual Retail Sales Plunge a Depression-Like 10.1%
– Monthly "Core" Retail Sales Down 0.1% versus Official 0.4% Decline

"Flash Update" by subscription service available at http://www.shadowstats.com/

Jim Sinclair’s Commentary

Hyperinflation is a currency event defined by .82, .72, .62, and .52 (as posted here) on the USDX. This is undoubtedly coming as a product of various causes but most certainly because of Quantitative Easing (printing money out of thin air).

China has demanded a guarantee of value of their huge dollar reserve position.

You can’t guarantee the dollar’s value with more dollars because by definition calling the guarantee would increase dollar supply. That would only further complicate the Chinese problem of too many dollars.

They would be better advised to buy gold directly from the USA, giving back the dollar denominated instruments while getting gold in exchange. That is the only guarantee that would have any meaning.

China will go for it in the form of a guarantee tied to dollar levels versus some measure. The USDX would do fine for this.

China fears bond crisis as it slams quantitative easing
China has given its clearest warning to date that emergency monetary stimulus by Western governments risks setting off worldwide inflation and undermining global bond markets.
By Ambrose Evans-Pritchard
Last Updated: 1:13PM BST 07 May 2009

"A policy mistake made by some major central bank may bring inflation risks to the whole world," said the People’s Central Bank in its quarterly report.

"As more and more economies are adopting unconventional monetary policies, such as quantitative easing (QE), major currencies’ devaluation risks may rise," it said. The bank fears a "big consolidation" in the bond markets, clearly anxious that interest yields will surge as western states try to exit their QE experiment.

Simon Derrick, currency chief at the Bank of New York Mellon, said the report is the latest sign that China is losing patience with the US and aims to diversify part its $1.95 trillion (£1.3 trillion) foreign reserves away from US Treasuries and other dollar securities.

"There is a significant shift taking place in China. They are concerned about the stability of the global financial system so they are not going to sell US bonds they already have. But they are still accumulating $40bn of fresh reserves each month, and they are going to be much more careful where they invest it," he said.

Hans Redeker, head of currencies at BNP Paribas, said China is switching into hard assets. "They want to buy production rights to raw materials and gain access to resources such as oil, water, and metals. They know they can’t keep buying bonds," he said

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Jim Sinclair’s Commentary

The most successful recruiting program so far in Pakistan is the Surge that can now claim adding a new 500,000 people to the already 800,000 displaced.

Pakistan military faces humanitarian crisis
updated 3:30 a.m. EDT, Wed May 13, 2009

Pakistan’s military is dealing with more than a million Pakistanis who have been displaced by fighting since last year, a military spokesman said Tuesday.

The military has set up headquarters to manage the 1.3 million internally displaced people, spokesman Gen. Athar Abbas said.

That number includes 500,000 Pakistanis who were uprooted from their homes since August, before the latest military push against Taliban militants in the country’s northeastern region, he said

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