Dear CIGAs,
Here is a lesson that I learned from my Father, Bertram J. Seligman:
"The weak succumb, the strong survive."
There are a lot of people out there that know the truth, but due to a terminal lack of courage do not deserve to, nor will, survive.
Jim Sinclair’s Commentary
Do not join the madness, because that is all it is.
Buying the dollar because the Russians don’t want them ignores the basic fact that everything is as screwed up as it was two months ago. This is the way the algorithms have turned everything into a casino which is the root of the problem.
Do not join the madness because that is all it is.
Roubini: Those Are Yellow Weeds, Not Green Shoots
June 9, 2009, 9:40 AM ET
By WSJ Staff
The still-pessimistic Nouriel Roubini offers *nine* reasons for pessimism:
* First, employment is still falling sharply in the U.S. and other economies. This will be bad news for consumption and the size of bank losses.
* Second, this is a crisis of solvency, not just liquidity, but true deleveraging has not really started, because private losses and debts of households, financial institutions, and even corporations are not being reduced, but rather socialized and put on government balance sheets. Lack of deleveraging will limit the ability of banks to lend, households to spend, and firms to invest.
* Third, in countries running current-account deficits, consumers need to cut spending and save much more for many years. Shopped out, savings-less, and debt-burdened consumers have been hit by a wealth shock (falling home prices and stock markets), rising debt-service ratios, and falling incomes and employment.
* Fourth, the financial system — despite the policy backstop — is severely damaged. So the credit crunch will not ease quickly.
* Fifth, weak profitability, owing to high debts and default risk, low economic — and thus revenue — growth, and persistent deflationary pressure on companies’ margins, will continue to constrain firms’ willingness to produce, hire workers, and invest.
Jim Sinclair’s Commentary
The only things that are dollar positive is that the USDX as an index is small enough to manipulate, and the Commercials are still not yet in position for what is coming in gold.
There is an axiom that states the more leveraged market always leads the less leveraged market. That axiom means an index will lead cash but stand behind the listed derivative market, which in turn stands behind the swap market for currencies.
The means of manipulating almost everything is via the index trading supported by the ETF activity.
The dollar has NO future outside of blind algorithms, spin and index manipulation. NONE.
Gold is the inverse of the dollar and that is all you really need to know. This action taking place is productive to the future of gold if you truly understand what is afoot.
The following is one more piece of evidence of the contraction of demand for dollars as QE is an ever-flowing fountain of dollar supply via electronic creation.
Do not think it is a static picture in time, but instead look at it as values in motion.
The motion in dollar demand is down as the headline below adds Russia now to China’s approach. A swap of Treasuries for baskets is good for diversification, if the IMF is willing, as you move out of dollar denominated into basket denominated. What is being missed is this Chinese and Russian transaction with the IMF indicates diversification interest will continue. The spin doctors and general public will see this as a onetime offset and therefore not market indicative, but in fact it is a major move in momentum and downward confidence factor.
Stand back from the minute to minute, day to day action that unseats you from your insurance and trust that fundamentals will trash the algorithms in time. If that was NOT true, we would not be in the trouble we are in NOW.
Russia May Swap Some U.S. Treasuries for IMF Debt
By Alex Nicholson
June 10 (Bloomberg) — Russia’s central bank said it may cut investments in U.S. Treasuries, currently valued at as much as $140 billion, a week after China said it may reduce reliance on the dollar and American bonds.
Treasuries fell after Alexei Ulyukayev, first deputy chairman of Bank Rossii, said some reserves may be moved into International Monetary Fund debt. The yield on the 10-year note rose six basis points, or 0.06 percentage point, to 3.92 percent as of 8:27 a.m. in New York, according to BGCantor Market Data.
Finance Minister Kudrin said on May 26 Russia will buy $10 billion of IMF bonds from the reserves and China may buy as much as $50 billion, IMF Managing Director Dominique Strauss-Kahn said yesterday. Some investors are wary of U.S. assets because the budget deficit is projected to reach $1.75 trillion in the year ending Sept. 30 from last year’s $455 billion, the Congressional Budget Office says.
“The bigger picture is people are worried there are too many Treasuries, and that no one is even making a pretense of getting the fiscal deficit under control,” said Francis Beddington, co-founder of Insparo Asset Management, which oversees about $140 million in London. By Andre Soliani and Telma Marotto
Brazil will use part of its reserves to provide $10 billion in financing to the IMF, Finance Minister Guido Mantega said in Brasilia today.
Jim Sinclair’s Commentary
The plot thickens as the amount lost grows. Let get that nice PR lady from the Canadian Mint to tell us how safe it is and how good it is to get robbed because they will learn something.
This is as nuts as the algorithms running after the dollar because the Russians don’t want them.
Royal Canadian Mint ordered to call in RCMP over missing gold
Last Updated: Tuesday, June 9, 2009 | 5:11 PM ET
The federal government has told the Royal Canadian Mint to call in the RCMP to help find its missing gold and silver.
Rob Merrifield, minister responsible for the mint, told the House of Commons Tuesday he has instructed the agency to seek assistance from the Mounties.
The Toronto Star reported Tuesday that auditors are trying to track precious metals, believed to be gold, worth in the "double digits" of millions.
The mint won’t say how much might be missing, but auditors are already probing a discrepancy between the value of the precious metals on the mint’s books and the stockpile on hand at its Ottawa headquarters.
Mint spokeswoman Christine Aquino said last week the discrepancy could be anything from a heist to sloppy record-keeping.
Jim Sinclair’s Commentary
Dollar positive? You have to be kidding. Green-shoots? You have to be kidding.
U.S. Commercial Mortgage Defaults May Rise to 17-Year High
By Hui-yong Yu
June 9 (Bloomberg) — The default rate on commercial mortgages held by U.S. banks may rise to the highest in 17 years in the fourth quarter as debt for refinancing remains scarce and the recession drags down rents.
The rate is likely to reach 4.1 percent by year-end, Real Estate Econometrics LLC, a New York-based property research firm, said in a report today.
“The dramatic decline in real economic activity and labor markets since last September has undercut property fundamentals,” wrote Sam Chandan, chief economist of Real Estate Econometrics. The decline puts an increasing number of loans “at risk,” he said.
The projection implies defaults on about $44.3 billion of commercial mortgages, based on the $1.08 trillion of such loans held by U.S. banks in the first quarter, according to Chandan and Bloomberg calculations. Commercial defaults already are at a 15-year high after climbing to 2.3 percent in the first quarter, or $3 billion, from 1.6 percent at the end of 2008, according to the firm’s analysis of Federal Deposit Insurance Corp. data.
A default occurs when a loan is 90 or more days past due. A loan is considered delinquent when it’s 30 to 89 days late.
Jim Sinclair’s Commentary
The article is quite correct but try and tell Wall Street that the false appearance of the health of the financial sector does not equate to making the consumer more when they are tapped out in every way.
Wall Street equates what is in their pocket as the one and only truth. Fill it and all is well regardless of human suffering and industry bankruptcies.
Black HoleTruly terrifying data about the real state of the U.S. economy.
By Eliot Spitzer Posted Wednesday, June 3, 2009, at 7:23 AM ET
I have an unfortunate sense that the "green shoots" in the economy that everyone is talking about are nothing but dandelions. Sure, forcing $1 trillion of taxpayer money—in direct capital, guarantees, and diminished cost of borrowing—into the banking sector has permitted the major banks to claim solvency for the moment. Yet we should not forget that this solvency has come not through a much needed deleveraging of the banking sector but rather from a massive transfer of the obligations of private banks to the public, with the debt accruing to future generations. And overall loan quality at U.S. banks is still the worst in 25 years and deteriorating at the fastest pace ever.
It’s a terrible mistake to confuse the momentary solvency of the financial sector and the long-term health of our economy.
While we have addressed the credit collapse, we have not begun to tackle the far more daunting, and more significant, structural problems in the economy. Instead of focusing on the green shoots, let’s examine the macro data that will determine our national prosperity in the next generation. These data are terrifying.
Start with the job front. Long term, nothing is more fundamental than good jobs to creating the middle-class wealth that must drive the economy. The creation of true middle-class jobs was the great success of our economy from 1950s through the mid-1990s. Consider the job data, in aggregate and by sector, from the past decade. (All data are from the U.S. Department of Labor, Bureau of Labor Statistics.)
Jim Sinclair’s Commentary
This is not great business activity as it is lousy dollar indicative.
Regardless, a disdain for the dollar reflected as supply in the entire long end of the Treasury market cannot be interpreted as dollar positive unless you spend your life upside down.
As such the long bond taking out the 28 year uptrend line at 112 to 113 on the continuous is the final establishment of the last Pillar of the next and major move in GOLD.
A confirmed top in the long bond followed by a breakdown from such a long up trend means years of dollar weakness is in front of us. Thinking this is dollar positive borders on nuts.
Treasuries Fall After Auction, Russian Threat to Cut Holdings
By Dakin Campbell and Dan Kruger
June 10 (Bloomberg) — Treasuries fell, pushing 10-year yields to the highest level since November, as the government sold $19 billion of the securities and Russia said it may switch some of its reserves from U.S. debt.
Thirty-year bond yields reached the most in a year after a Russian central bank official said the nation may buy International Monetary Fund bonds. Today’s auction is the second of three sales this week that will raise $65 billion, part of the U.S.’s record borrowing program.
“It’s the same situation of overwhelming supply versus spotty demand,” said John Spinello, chief technical strategist in New York at Jefferies Group Inc., a brokerage for institutional investors, before the auction. “The trend is still against the market.”
The yield on the 10-year note rose 13 basis points, or 0.13 percentage point, to 3.98 percent at 1:03 a.m. in New York, according to BGCantor Market Data. The 3.125 percent security maturing in May 2019 declined 1, or $10 per $1,000 face amount, to 93.
The 30-year bond yield touched 4.77 percent, the highest in a year. The government is scheduled to sell $11 billion of the securities tomorrow.
Jim Sinclair’s Commentary
No pain, no gain! Brazil chimes in saying "Hey, me too! I don’t like the dollar either because it is certainly going down in value."
Let see if the idiots, spinmeisters, and algorithms consider that dollar positive. It looks like a trend to me, but not an uptrend in the dollar.
Today demonstrated the enormous amount of madness and number of cowards that populate the casino today.
The dollar rise today was a total joke and will be promptly be proved as madness.
No guts, no glory, no survival
Russia, Brazil Plan to Buy $20 Billion IMF Bonds
By Alex Nicholson and Andre Soliani
June 10 (Bloomberg) — Russia and Brazil, seeking to reduce their dependence on the dollar, announced plans to buy $20 billion of bonds from the International Monetary Fund and diversify foreign-currency reserves.
Russia’s central bank said it may cut investments in U.S. Treasuries, currently valued at as much as $140 billion, a week after China said it may reduce reliance on the dollar and American bonds. Brazil’s Finance Minister Guido Mantega said his country will purchase $10 billion of debt sold by the IMF, China will buy $50 billion and India may announce similar funding.
Treasury yields climbed this year and the dollar fell in part on concern that foreign central banks would reduce holdings of U.S. financial assets just as America sells a record amount of debt to finance a growing budget deficit and pull the economy from the deepest recession since the 1930s. Treasuries fell today, six days before officials from the so-called BRIC nations meet in Yekaterinburg, Russia, where they plan to discuss the status of the dollar as the world’s reserve currency.
“The bigger picture is people are worried there are too many Treasuries, and that no one is even making a pretense of getting the fiscal deficit under control,” said Francis Beddington, co-founder of Insparo Asset Management, which oversees about $140 million in London.
The U.S. budget deficit is projected to reach $1.75 trillion in the year ending Sept. 30 from last year’s $455 billion, the Congressional Budget Office says.