Jim’s Mailbox

Posted at 2:05 PM (CST) by & filed under Jim's Mailbox.

Apologies, there is more to the story below.


Embattled Attorney General Jeff Sessions resigns under pressure from Trump
November 7, 2018

Embattled Attorney General Jeff Sessions resigned at the “request” of President Donald Trump on Wednesday after more than a year of public criticism from the president.

Sessions’s chief of staff Matthew Whitaker will serve as acting attorney general, Trump announced.

Whitaker also will assume oversight of the ongoing investigation by special counsel Robert Mueller into Russian interference in the 2016 presidential election, and possible collusion by Trump’s campaign in that meddling, according to the Justice Department.

Whitaker, who has publicly criticized the Mueller investigation, by law can serve as acting AG for a maximum of 210 days.




The latest news this morning regarding international payments systems:

SWIFT Caves To US Pressure, Defies EU By Cutting Off Iranian Banks
November 7, 2018


However, Europe will respond:

See the source image

The U.S. is cutting off their nose to spite their face.

Is anything thought through?

Somebody teach these guys the game of chess.  Checkers just doesn’t cut it anymore.

CIGA Wolfgang Rech

Europe’s Alternative To Swift Another Nail In The Dollar’s Coffin
September 27, 2018


  • Europe’s alternative to SWIFT will allow them to get around trade sanctions the US has put on Iran.
  • Russia, China, and European leaders have all expressed the desire to move past the dollar system for international trade.
  • The Dollar’s reserve currency status is under serious threat considering trade deals being negotiated in other currencies and gold.
  • The Wall Street Journal reports that Europe has agreed to develop an alternative to the SWIFT payments system to facilitate trade with Iran.

    The European Union’s announcement that it would establish a special payments channel to maintain economic ties with Iran sent a clear message to Tehran and Washington: Europe is intent on trying to save the 2015 nuclear deal.



Courtesy of Q via JB.















Courtesy of JB.


The Senate was the target.

Corker + Flake removed.

How do you catch a FISH?

Mission forward.

These people are stupid.



Future proves past.












It’s not the auction itself, but the inner workings that should spook everyone.

Note the common denominator in the past few auctions listed at the end of this posting:  Direct Bidder Collapse!

This could be significant as it represents a lack of demand by asset management firms, which are generally thought of as offsetting any central bank selling.  Here’s a snippet from an older article, but the concept is still the same:

“Global reserves turned negative on a year-over-year basis in the middle of 2015 (blue-line in the chart below). In spite of this and the strong correlation of foreign treasury holdings (red-line), ten-year treasury yields have remained stubbornly low. Many market pundits have theorized that central bank selling pressure in treasuries will be offset by a “risk-off” trade domestically. The argument is that during times of market uncertainty where emerging market governments are grappling with slow economic growth, a flight of capital, and weakening currencies, there is a burgeoning demand among investors and asset managers for treasuries. This demand naturally offsets the selling pressure by Central Banks as they try to stem their currency devaluations by buying their domestic currencies (selling dollars and U.S. treasuries). “










My fear is that the consensus of opinion is showing a global slowdown today, as was back in then, but with a major difference…the Direct Bidder is no longer there!

CIGA Wolfgang Rech

Bond Traders Shocked By Dismal 30Y Auction As Direct Bidder Collapse Continues
November 7, 2018

When discussing yesterday’s stellar 10Y auction, we said that we expect today’s sale of $19 billion in 30Y paper to show the same collapse in Direct bidder demand observed that has been observed for the past 2 weeks. Well, that’s precisely what happened. However, it was much more than just that in what was a truly dismal auction.

Starting at the top, the yield on today’s 30Y auction was 3.418%, the highest since April 2014, which tailed the When Issued 3.395% by 2.3bps, the biggest delta in years and a major surprise for the market which did not expect such a poor topline demand heading into today’s auction. The bid to cover was also dreadful, printing at just 2.058, not only far below last month’s 2.419% and the six auction average 2.36%, but also the lowest since February 2009.

Meanwhile, it was the internals where the big “surprise” was to be found once again, as the ongoing Direct bidder collapse emerged again, with Directs taking down just 2.9% of the auction, far below last month’s 12.8%, and the lowest since Sept. 2009. The Treasury has yet to provide some argument or justification for the ongoing boycott by this aspect of the buyside. Offsetting the plunge in Directs was a relatively strong Indirect bid, if at 59.1% it was also the lowest since March 2018. Rounding off the demand were Dealers, who took down 38.1% of the auction, the highest since August 2015.


Bizzare Plunge In Direct Demand Continues In Today’s 3Y Treasury Auction
November 5, 2018

Two weeks ago we observed a series of Treasury auctions, specifically the 2Y, 5Y and 7Y issues in late October, which were generally in line with historical average except for a perplexing collapse in Direct Bidders. Today, this Direct bidder “boycott” continued, when moments ago the Treasury sold $37 billion in an upsized 3Y auction whose most notable feature was the plunge in the Direct takedown.

First, the big picture: the 3Y auction stopped at a high yield of 2.983%, just below last month’s 2.989% and tailing the When Issued 2.980% by 0.3bps, and the 2nd highest since May 2007. The bid to cover printed at 2.54, also in line with last month’s 2.56 if below the 6 auction average of 2.67.

However, it was the internals where the surprise lay again, because while Indirects took down a strong 49.1%, the highest since July, and above the 42.1 6 auction average, the Directs tumbled again, taking down just 3%, or $1.1 billion, of the auction after tendering $2.8BN in bids. This left Dealers holdings 47.9% of the auction, the highest since December 2016.

As we discussed two weeks ago, it remains a mystery why the Direct bid has suddenly dried out, and due to the Treasury’s somewhat nebulous distinction between Directs and Indirects, as well as what and who Dealers actually buy US paper for, it will be next to impossible to get to the bottom of this recent quandary without the Treasury itself chiming in.