Who do you think was pushing Italian bonds lower this morning? Keep in mind, when I’m asking this, that less mainstream Italian short term debt nearly doubled in yield at the latest auction. Ten year yields are pushing much lower, back below 7%; ten year yields are runway models of finance.
No one in the private sector is buying Italian debt. No foreign countries are buying Italian debt. No European countries are buying Italian debt. America is not buying Italian debt.
The ECB is the only buyer of Italian debt.
Do you think that the euro is properly priced here against the dollar? Do you think that a simple move from 1.4 to 1.35 is adequately representing the amount of money the ECB will need to create to keep Italy from sucking her neighbors into a singularity?
Italy needs 300 billion euros, and the grand fanfare, the EFSF, is going to be off line for even longer than Europe first anticipated – assuming you believe it’s coming online at all.
Is the euro pricing in the rate cut? I doubt it. Is the euro pricing in the recessions that are miring her members? Certainly not.
Is the euro pricing in the EU forcing out two or even three of their members? Is it pricing in the citizens of the cast-out keeping their euros (who trades in for a currency facing imminent devaluation?), then running into the remaining euro members to spend?
Nope.
I know you do not want to hear this; you desperately want to believe in the Fed, QE3, government stimulus, and the inevitable demise of the dollar. But it’s not happening.
The Fed is not intervening unless the U.S. economy contracts and input prices settle. The government is in deadlock and will accomplish nothing, but that won’t change that we’re borrowing at rates that make “free” look attainable and don’t need to address the debt ceiling until after the elections. They are not coming to aid until they have too.
And in the meantime, European austerity – which doesn’t even cover the whole funding issue – will ensure a euro that buys little and still faces the threat of devaluation.
I added to EUO this morning, and look for it to go much higher.
I also bought ERY.
Sadly friends, Thanksgiving has been canceled this year.
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tell the last line to DR.fly
Spamducken, with all the trim.
Cain, did you send out an official email to cancel Thanksgiving, what am I going to do with that fucking turkey in my freezer ???
I would eat it.
The e-mail was sent through AOL so don’t be surprised if it never delivers.
Cain, I am sending you an official invitation to celebrate Thanksgiving with me and my family, all your folks are invited … I hope AOL can successfully deliver to you the invitation …
UCO went from 25 to 40 since early October, how much higher will it go, geez …
It will probably double, just to vex me.
The oil market is not healthy right now; I was going to comment on a few things I’ve noticed later.
There have been several downward spikes, especially in the early morning.
I mean no offense when I say this…How does that old adage go again? “Markets can stay irrational longer then you can stay solvent”
I agree with you on your outlook. However, the oil market doesn’t seem to be seeing your side of the story. Im sure that will change, but who knows when.
We’ll see about that.
If I buy the Euro to parity thesis what does that say for USA manufacturing and exports? Whither Japan? I agree with your analysis but don’t like the possible conclusions.
IMHO the current uncertainty will take 1% off Western World GDP, the collapse of credit and pulling in of Federal and State deficits will pull 2% off GDP leaving around ZERO GDP for the next few years. Zero is not bad but with growing populations it means negative per capita GDP growth and that will feel like a recession. Is this too pessimistic?
Well at some point the Fed – not to be outdone – announces QE3.
Just not yet.
http://www.losanjealous.com/nfc/perm.php?c=128&q=50
Cain. Listen to this interview and you will double your position
http://www.zerohedge.com/news/jim-grant-ecb-now-implementing-mf-global-trade?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29