The "up-to-the-minute Market Data" thread

Bank Swaps, Libor Show Doubts on Europe Bailout: Credit Markets
www.bloomberg.com...

May 11 (Bloomberg) -- Money markets and the cost of protecting bank bonds from losses show investors are concerned Europe’s almost $1 trillion rescue plan may not be enough to contain the region’s sovereign debt crisis.

The Markit iTraxx Financial Index of credit-default swaps on European banks and insurers rose to 38 basis points more than the Markit iTraxx Europe Index tied to investment-grade companies from 31 yesterday. While the gap narrowed from 58 basis points before European leaders agreed to the rescue plan, the bank index on average has traded 10 basis points less the past three years. A measure of banks’ reluctance to lend also rose to more than three times the level from March.

The loan package for debt-laden nations including Greece is part of an attempt to stop a decline in the euro and stave off a sovereign default that would threaten recovery from the worst global recession since the 1930s. European financial companies, which hold more than 134 billion euros ($170 billion) in Greek, Portuguese and Spanish sovereign debt, are under scrutiny by investors concerned that they’re owed too much by Europe’s most- indebted countries.

“Sovereign risk hasn’t gone away in the slightest,” said Jim Reid, head of fundamental strategy in London for Deutsche Bank AG, Germany’s biggest bank. “What this package has done is massively reduce the tail risk in European markets without necessarily changing the medium- to long-term dynamics of financial markets.”

EUR breaks under 1.2620...

www.netdania.com...

It Is Getting Ugly Quick In Fiat Land: S&P Now Down 8% YTD In Non-Dilutable Terms
www.zerohedge.com...

First the fun stuff: gold hit an all time record today. To those who have had the foresight to realize that in the currency devaluation race to the bottom, the only winners will be non-dilutable precious metals (and not industrial gimmickry and bets on China's excess capacity like copper...well, maybe with the reverse alchemy exception of lead), we salute you. In fact, so does the market: the S&P is now down 8% year to date when expressed in ounces of gold. Because while central banks can monetize, sterilize (whatever that means), and dilutize that last remnant of the dying Keynesian religion, the FRN and its equivalents around the world, gold is untouchable, and increases in value with each desparate attempt to save a failed economic system.

Yet the bandwagon is once again getting heavy: the EUR is getting killed after hours, approaching $1.25 and is about to break the E-mini critical 117 yen support once again. Should central bank buyers not materialize, hello gravity. Which would also mean freefall for the ES. The bailout plan is now null and void, and in need of a bailout plan itself. The French banks won: we expect their FX traders to make a killing this year. We hope their contract demands bonus payment in gold.

At least today's market farce where volume was non-existant and allowed the same algos that killed the market to ramp everything up for no reason, will likely not be repeated again tomorrow. We have now entered the next regime.

[edit on 5/11/2010 by Hx3_1963]

two very nice finds Hx3. But I don't know if it makes a difference anymore. Home gamers have realized that the game is beyond them and have all but stopped playing. Algo and HFT rules the playground and we just have to wait for the system to finish its game before small day traders or small investors can get back in with any kind of confidence.

reply to post by pause4thought


Thanks for the lesson and information, darn I am against a union here in America I don't blame the UK from turning the other way, hell all this EU union has done is feed the fat rats controlling the wealth of those nations, then when their corruptive practices goes down the hill they want ore solvent nations to bail them out.

Hell no!!!!!!!!

Originally posted by Hx3_1963
OK...WTH was this?


finviz.com...

Any opinions?

[edit on 5/11/2010 by Hx3_1963]

Oh, my bad, I should really watch what I am doing when entering market orders of over 5000 contracts at a time. Just keeping everyone honest.

reply to post by Hx3_1963


I don't think it's going to settle out under 1.26.

If it does, as I said previous, Euro is going to have major problems and will be exponentially closer to parity than it was 1 cent above.

1.26 is major, major, support levels.

Anyone playing in Cocoa lately?

Prerequisite : Must have large brass

finviz.com...

5000 contracts? who would be silly enough to give you that big of a margin account. jk.

Cocoa. wow. thats some chart. I make it a rule to not get in between large traders and hedge funds. Danger Will Robinson Danger

reply to post by jacksmoke


If you trade those markets you are prepared I am guessing for the limit locks etc.

For a good view of that reference the lumber market. It is quite impressive.

Personally, Lean Hogs for me.

haha,

reply to post by GreenBicMan


Nope. bread and butter are dividend stocks, oil & nat gas, and starting to get into jr miners. All individual, not etf or etn's

price per barrel/dollar strength is killing me. I, for one of very few, am hoping for Euro stability. I will be broke if the dollar index goes any higher.

I should have got into forex a long time ago, I remember the advice and links you gave me awhile ago, but I got distracted.

reply to post by jacksmoke


It's ok.

If you are exposed you should be hedged. But it is not end of the world as I don't think we go really a percentage even lower on EUR USD.

If we do you might think about seriously opening an account that mitigates your exposure. But I am guessing as soon as you did this EUR USD would be at 1.30 or something..

I got a few chips riding on GBP JPY Long. I about # myself a week ago when it just turbo dropped haha, but I'm still livin. But on the edge haha

reply to post by GreenBicMan


The reason I got into Jr miners was to hedge. I figured that gold producers would spike with gold price. Well some did, just not my picks. Apparently, balance sheets and fundamental analisys have very little to do with day to day volatility. (sarcasm)

I was correct in assuming that for the short term in this bizzaro market that gold and the dollar rise together, I just picked the wrong jr's.

Oh well, Guess i'll just fire up the "way back machine" to Thursday and go all in on the Spanish ETF.

reply to post by jacksmoke


Gold is strong.

I laid a massive .1 unit long around 1150 and decided to waive the white flag. Best thing I could have ever done for myself. Well.. not really, but anyway

I like your term 'turbo drop' but I think" flash crash" has become the de facto name for Thursdays glitch (?)

euro no good, gbp/jpy that's the ticket

reply to post by jacksmoke


Yeah, it was totally real to the people that were not lucky enough to be exposed to just equities at a rate of 60% less than the last consolidated price. Good thing it happened while I blinked my eyes.

Originally posted by GreenBicMan
reply to post by jacksmoke

 

Gold is strong.

I laid a massive .1 unit long around 1150 and decided to waive the white flag. Best thing I could have ever done for myself. Well.. not really, but anyway

I feel ya, I 'knew' 1050 was the bottom, gold isn't gonna see 900-950 ever again. Oh well, its a inflation hedge, nothing more nothing less. day traders shouldn't play in gold.

Originally posted by GreenBicMan
reply to post by jacksmoke

 

Gold is strong.

I laid a massive .1 unit long around 1150 and decided to waive the white flag. Best thing I could have ever done for myself. Well.. not really, but anyway

I feel ya, I 'knew' 1050 was the bottom, gold isn't gonna see 900-950 ever again. Oh well, its a inflation hedge, nothing more nothing less. day traders shouldn't play in gold.

May 12 (Bloomberg) -- U.S. Securities and Exchange Commission Chairman Mary Schapiro said the agency’s enforcement unit has issued subpoenas in an investigation of last week’s stock plunge.

The division is “fully integrated in our review of the events of May 6 and will recommend appropriate action” if violations are found, Schapiro told a House Financial Services subcommittee yesterday. “A number of subpoenas” were sent, she said, without identifying recipients.

SEC investigators began preparing for a variety of inquiries in the hours after the Dow Jones Industrial Average briefly dropped as much as 9.2 percent, people familiar with the matter said last week. Regulators haven’t found evidence the incident was triggered by computer hackers, terrorists, malicious traders or a so-called fat finger entering an oversized order, Schapiro told lawmakers.

The SEC is also concerned that firms or exchanges may have lacked required controls to prevent the rout from snowballing, people familiar with the matter said. It will also look at whether traders tried to take advantage of the chaos by steps such as entering orders that drove down some stocks.

“We may learn that the extraordinary disruption in trading, however it may have been triggered, was the result of a confluence of events which, taken together, exacerbated what already had been a down day,” Schapiro said yesterday. “We are not prepared at this time to draw that conclusion.”

....

The CFTC is examining the 10 traders holding the biggest long positions in the S&P 500 E-mini and the 10 traders with the biggest shorts on the contract, Chairman Gary Gensler said. The agency sent letters to market participants seeking data on their positions and “all communications related to trading” on May 5 and May 6, he said.

www.bloomberg.com...

_______________________________

HX - scan the letter you received.

There's rumors floating around that Germany will go back to the Deuthmark this week-end...

Also...

German Windfall Profits From Exiting The Euro

Germany is a nation that fears inflation for good historical reason, and among the nations of the world, Germany places a particularly high priority on price stability. Yet, so long as Germany remains in the European Economic and Monetary Union (EMU) with the euro as its currency, Germany may not be in control of German inflation. In particular, the current crisis with Greece, and the crises that may follow with other nations such as Portugal, Italy, Spain and Ireland may prove disastrous for German investors and taxpayers. For so long as it is in the EMU, Germany may have no effective choice but to bail out countries that have been running up huge deficits – despite Germany itself not having the economic capacity to do this for all of Europe on an indefinite basis, let alone the political will to do so. These are among the reasons why in a letter to clients late last week, Morgan Stanley warned that Germany may leave the euro and the EMU and that investors should be prepared for this event.


If this event happens, it may create an enormous financial windfall for millions of individual Germans, as well as German companies, not to mention the German government. While leaving the monetary union is still far from certain as Germany also has strong economic and political incentives to stay in the EMU, in this article we will say “what if” and explore some of the startling benefits for nations and individuals of quickly exiting a failing monetary union – as well as the many perils. But while the specifics of this article are about Germany (and France), the implications go far beyond Germans and Germany (although there are very important implications for arbitrage opportunities with German companies). Rather, in this world of financial crisis and sovereign debt crisis, there are powerful related wealth and financial security implications for individuals in every country.

(Please note that the European economic and monetary union (the EMU) is not the same thing as the European Union (the EU), and Germany may potentially leave the monetary EMU without exiting the political EU.)

The German Government Windfall

First let's consider the current German government situation. Total outstanding government debt in Germany is equal to about 1.7 trillion euros, and as of 2009, equaled about 77% of the German GDP (according to the CIA World Factbook). Now let's assume that Germany does exit the economic and monetary union, and when it does so, it creates new Deutsche marks that are exchangeable one for one at the valuation for euros as of that exit date. After the exit of Germany, let's make the reasonable assumption that Germany's economy remains strong, at least relative to much of the rest of Europe. Let's also assume that with Germany exiting, and perhaps France exiting behind it, that the European monetary union is left with the weaker members where the world in general and investors in particular are quite unsure about the ability of these nations to repay their debts. So the euro plunges.

For our scenario, we’ll assume an immediate sharp drop of the euro in the neighborhood of 30-40% when Germany exits the EMU, relative to the new Deutsche mark. This value differential is assumed to rapidly increase as an inflation differential builds, and more strong nations leave the euro. After the passage of a period of time – and it could be months or could be years – we'll assume the currency exchange rate is now 10 euros for every Deutsche mark. In other words, we'll assume that the euro loses 90% of its value relative to the Deutsche mark. (This assumption is not a precise projection, there are cases for higher and lower projections, but it does have the virtues of being a round number and reasonable.)

With this scenario, Germany's euro-denominated national debt is now worth 10% of what it was when we look at things in Deutsche mark terms rather than the euro, and keep in mind that the German government income from taxes is in Deutsche marks, rather than euros. Germany is now repaying debt at 10 cents on the dollar (so to speak) and the value of its outstanding debt has fallen from 1.7 trillion euros down to 170 million Deutsche marks – a 90% reduction in net debt. Thus, German national debt (ignoring any new debt issuance) as a percentage of the German economy has dropped from 77% of German GDP down to 7.7% of German GDP.

How much of that extraordinary benefit is realized in practice depends on what happens with German contract law internally. It is highly likely that if Germany leaves the European Economic and Monetary Union and replaces the euro with a new Deutsche mark, that there will be a wholesale statutory revision of internal German contracts, such that what was once payable in euros is now payable in the new Deutsche marks. If this happens, it will minimize many of the internal effects such as the value of German bonds held by a German bank, and this may effectively keep the German banking systems’ government bond portfolio from being effectively wiped out. However, this probably won’t apply on an international basis, except in the unlikely event that Germany can get full reciprocity from other nations (with German investors who hold euro denominated investments in other nations receiving payments in Deutsche marks instead of euros). Therefore international transactions are where the major transfers of wealth are likely to occur, and Germany may reap a major windfall profit with foreign investors in government bonds, while not enjoying a windfall at all with domestic investors.

(The key principle discussed above is that repegging a currency under statutory law has quite different internal legal consequences than ordinary inflation domestically destroying the purchasing power of a currency.)

The Economic Essence & A Race For The Exits

Germany repaying euro-denominated debts when it is no longer in the EMU illustrates two essential elements of sovereign debt. The first is whether the debt will be repaid, and the second is how much the repayments will be worth. International investors in German debt identified Germany as being a financially responsible nation that pays its bills, and they are quite likely to have every euro of debt repaid to them (particularly under the circumstances outlined in this article.)

However, Germany didn’t actually borrow in its own currency, but rather the currency of a monetary union. While it is an unintended consequence, the EMU monetary crisis creates a windfall profit opportunity in that if Germany exits the EMU, it has a one time opportunity to effectively repay its external debts in drachmas and liras rather than marks. This windfall opportunity will carry its own accelerant, because the exit of Germany would shift the burden to France. France would now face the choice between carrying much of Europe’s financial burden on its back – or making its own exit from the euro, and reaping its own windfall profit, much like Germany. This exit would of course accelerate the destruction of the euro, which would increase the size of Germany’s windfall.

There is indeed a chance that if France thinks Germany is about to exit, then French national interest may require it to exit first. Being the first to exit means reaping the maximum windfall profits from the destruction of the value of a nation’s national debt.

Now this is not to say that there won't be any economic chaos and turmoil in Germany, or that the resulting potential shrinkage of the German economy may not more than offset this fantastic windfall, or perhaps much more than offset it (with the same holding true of France). All else being equal, the German and French governments would strongly prefer that there were no monetary crises with their monetary union partners. The one time debt windfall from the destruction of the value of the euro may not provide anywhere close to enough value to voluntarily “cheat” bond investors.

However, if Germany feels it is forced to exit the economic and monetary union, the debt windfall effect provides a powerful incentive to do it sooner rather than later. The lower the euro falls, the greater the damage to Germany, and the less the benefits of the windfall. If things are right on the edge – the greater the chance that France will strike first, and reap the disproportionate benefits of being the first strong power to leave. Taken in combination, this means that while Germany will likely continue to do everything it can to avoid having to drop the Euro, if and when it decides an exit is inevitable – Germany will have powerful financial incentives to move with breathtaking speed in destroying the euro. As will France.

Which leads us to the next essential point. That which applies to the nation also applies to individuals and companies. And this debt windfall – if it occurs – will likely leave many German companies and individuals much wealthier than they were before the crisis, even if Germany as a whole becomes somewhat poorer.

Read the whole article at the link... Anyway this would be BIG WIN for the German people...and total doom for the Euro. The article also points out that if France thinks Germany would leave the Euro, they could do it before them to not get crushed...

What a nice situation we have here... this is an economic WW3... Who's gonna strike first and leave the other with the euro?