Let The Carnage Continue

I amused myself in the first fifteen seconds or so of open trading, watching ERX bomb a few hundredths of a percent per second as backed up trades came through the lines. I’ll cover some of the ERX I added last week in the next day or so, just to keep balance between ERX and UCO. UCO is a much smaller position, but I’m not convinced that makes sense. I’m bearish on both oil and energy, but lower oil can help energy companies, so there’s some give and take there to be considered.

A peculiarity found its way onto my desk this weekend. As I sat in the 9th floor, working diligently on the backed up paperwork that had been gaping at me for the last week from its place in the corner, I came across a bit of mail sent from a certain major bank that is overseeing a certain, smaller account that I have.

The offer was simple; if I could raise the amount of money in this particular account to $10,000 and leave it there for an extended period of 90 days, they would deposit $100 into said account.

Most interested, I quickly did some back of the envelop math and realized that such an offer annualized to paying a little over 4%.

From this oddity I am convinced of three things:

1. The value of money is much higher than federal interest rates suggest, obviously, and so this offer is in support of my stronger dollar thesis.
2. The major banks are concerned enough about liquidity to offer a fairer price on deposits over the next 90 days.
3. Other preferred sources of financing may not be sufficient to cover all the bank’s needs, hence why they are scrounging around looking for shit ass deposits.

This could have something to do with the Federal Reserve’s latest ruling on minimum finance requirements; or the larger international regulations that were crafted. Unfortunately, it could also have to do with an overheating China, slowing U.S. and Europe on fire.

I think the end of summer is shaping up to be a most fascinating experience.