Yields for Italy, Spain, France, and Germany …
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The Nikkei Gaps Higher, Shanghai Blasts Off, Australia Strong
The Coming Derivatives Panic That Will Destroy Global Financial Markets
“John Rolls Submits, Michael Snyder writes: When financial markets in the United States crash, so does the U.S. economy. Just remember what happened back in 2008. The financial markets crashed, the credit markets froze up, and suddenly the economy went into cardiac arrest. Well, there are very few things that could cause the financial markets to crash harder or farther than a derivatives panic. Sadly, most Americans don’t even understand what derivatives are. Unlike stocks and bonds, a derivative is not an investment in anything real. Rather, a derivative is a legal bet on the future value or performance of something else. Just like you can go to Las Vegas and bet on who will win the football games this weekend, bankers on Wall Street make trillions of dollars of bets about how interest rates will perform in the future and about what credit instruments are likely to default. Wall Street has been transformed into a gigantic casino where people are betting on just about anything that you can imagine. This works fine as long as there are not any wild swings in the economy and risk is managed with strict discipline, but as we have seen, there have been times.
For example, do you know why the largest insurance company in the world, AIG, crashed back in 2008 and required a government bailout? It was because of derivatives. Bad derivatives trades also caused the failure of MF Global, and the 6 billion dollar loss that JPMorgan Chase recently suffered because of derivatives made headlines all over the globe. But all of those incidents were just warm up acts for the coming derivatives panic that will destroy global financial markets. The largest casino in the history of the world is going to go “bust” and the economic fallout from the financial crash that will happen as a result will be absolutely horrific.
There is a reason why Warren Buffett once referred to derivatives as “financial weapons of mass destruction”. Nobody really knows the total value of all the derivatives that are floating around out there, but estimates place the notional value of the global derivatives market anywhere from 600 trillion dollars all the way up to 1.5 quadrillion dollars.
Keep in mind that global GDP is somewhere around 70 trillion dollars for an entire year. So we are talking about an amount of money that is absolutely mind blowing.
So who is buying and selling all of these derivatives?
Well, would it surprise you to learn that it is mostly the biggest banks?….”
Comments »Convergence Between the VIX and V2X Warrants Your Attention
“To every action there is always opposed an equal reaction.” – Isaac Newton
The last few days have seen a pick up in demand for downside protection on the S and P500, when it seems no one at the moment has nothing left to protect against in Europe, which explains somewhat the recent convergence move between the VIX and its European equivalent V2X – source Bloomberg: ”
Comments »Market Update
U.S. equities turned negative futures into a positive open off the headline employment numbers. Looking into the report it is clear that s good headline number was achieved on the backs of plebs getting crushed. Currently the DOW is up 43 bones while gold an oil are flat. The dollar is currently paring larger gains from this morning.
The NASDAQ remains under pressure as $AAPL drops 2.5%.
Europe failed to keep its gains and ended up largely flat on the session with the exception of Spain falling 0.79%.
[youtube://http://www.youtube.com/watch?v=5di5EhZshdQ 450 300]Comments »
Nikkei Falls on Earthquake, Europe Falls on the Bundesbank Cutting its Forecast for German Growth
Japan had a 7.3m earthquake and Tsunami warnings that were put into effect have been lifted. This caused investors to be cautious.
Europe and the euro fell as growth for Germany was ratcheted downward to 0.4%.
Comments »Asia Trades Mixed, Europe Falls , and U.S. Future are Down Slightly
Asia Trades Higher on U.S. Jobless Claims
“Asian stocks climbed, with the regional benchmark index heading for its longest streak of weekly gains in three months, as fewer Americans filed applications for unemployment benefits andAustralia’s building industry shrank at a slower pace.
James Hardie Industries SE (JHX), the building materials supplier that gets about 67 percent of sales from the U.S., climbed 1.6 percent in Sydney. Commonwealth Bank of Australia, the country’s biggest lender, rose 0.9 percent. Hyundai Merchant Marine Co., South Korea’s biggest shipping company, jumped 8.7 percent after saying its studying the feasibility of building a liquefied natural gas terminal in Brazil.”
Comments »Market Update
More of what you expect….circle jerk digestion trade. Still waiting on a possible fiscal cliff deal.
Oil is selling off a bit on supply concerns, gold is stabilizing after a few days of drudging while the dollar remains strong.
Markets continue to trade around headlines…..YAWN
Go eat a samich! Take 5 or 10 in this case….
RIP Dave Brubeck
[youtube://http://www.youtube.com/watch?v=S-x_f60VSC4 450 300]Comments »
FLASH: Mario’s Draghi Comments Takes Down the Euro and the FTS MIB
The Nikkei and European Markets Rally on U.S. Budget Talk Optimism
“European stocks rose to an 18-month high on optimism U.S. lawmakers will reach a budget deal. Italian bonds retreated for a second day after support dwindled for Prime Minister Mario Monti’s government.”
“Japanese stocks rose, with the Nikkei 225 Stock Average reaching a seven-month high, on optimism U.S. lawmakers will reach a budget compromise to avoid the so-called fiscal cliff. Toyota Motor Corp. rose after U.S. services and factory data beat estimates.”
Comments »Global Markets Rally, U.S. Futures Digest
U.S. Aerospace Industry Expected to Keep Flying High
“(Reuters) – U.S. aerospace and arms companies are poised for sales growth in 2013 for what would be their 10th straight year, even as the Pentagon prepares to cut its purchases as much as 10 percent, the industry’s chief trade group said Wednesday.
One of the economy’s bright spots, these companies continued to lead the United States in the net export of manufactured goods, buoyed by strong civil aircraft sales, the Aerospace Industries Association said.
Exports rose to an estimated $95.5 billion this year from $85.3 billion last year and are likely to grow during “at least the next several years” based on order backlogs, the AIA said in its annual year-end review and forecast publication.
Civil aircraft, engines and parts represent about 88 percent of all aerospace exports and about $9 billion of the increase in overall exports in 2012, the report said.
China, a prominent growth market, could account for 20 percent of all global business jet deliveries by the end of the decade, up from 7 percent now, AIA cited estimates as showing.
Overall sales are projected to have risen 3.4 percent this year from $210.8 billion in 2011 to $217.9 billion, it said.”
Comments »Market Update
The markets have bounced around this morning to end up 110 DOW points on no clear reason. The bulls will take it and hope for the rally to stick into the closing bell.
Oil remains down a bit, the dollar and gold are running together similar to yesterday. For not flat to slightly down.
[youtube://http://www.youtube.com/watch?v=7gXuYFih6Y8 450 300] Comments »China Sparks a Small Rally in Asia and Europe as Restrictions in Banking are Eased and Stimulus Spending Announced
“Stocks (MXWD) advanced for the first time in three days and commodities rose as China eased restrictions on investing in banks and its new leaders backed urban development. The yen slid and Spain’s bonds extended losses after the government missed its maximum sales target at a debt sale.
China’s regulators abolished a rule limiting insurers’ investments in commercial banks and Xinhua news agency said yesterday after a meeting of top party leaders that China will actively promote urbanization and expand domestic demand. Spain sold 4.25 billion euros ($5.6 billion) of debt due between 2015 and 2022, less than the 4.5 billion-euro target.
“There’s a lot of talk about potential policy support for China’s economy,” said Tim Leung, a fund manager who helps manage about $1.5 billion at IG Investment Ltd. in Hong Kong. “While urbanization is not new, people will probably focusing on that trend. There’s a lot of positive benefit from urbanization, like infrastructure spending.”
Comments »Global Markets Lift a Bit, U..S. Futures Rise Accordingly
Markets Digest Another Day Waiting on the Cliffhanger in D.C.
The markets did nothing today. The VIX remains low and breadth remains narrow. Gold had some action to the downside trading off 1%+ breaking $1,700.
DOW OFF 13
S&P OFF 2
NASDAQ OFF 5
Today’s Biggest Winners and Losers
Europe Pares Losses To Go Green, Hope Runs Strong Over Greek Bond Buying and That the Fiscal Cliff Will Be Resolved
“European stocks climbed for a second day, erasing an earlier drop, as American lawmakers continued to debate plans to address the so-called fiscal cliff. U.S. index futures and Asian shares were little changed.
OC Oerlikon (OERL) Corp. rallied 4.5 percent as the world’s largest maker of textile machinery raised its earnings forecast and sold units. TUI Travel Plc gained 2.7 percent after Europe’s largest tour operator reported earnings that topped analyst estimates. United Internet AG (UTDI)tumbled 7.5 as Warburg Pincus LLC offered its 5.5 percent stake for sale.”
Comments »Commodities Lead Asia Lower, Yen Gathers Strength as U.S. Cliff Talks Stall
“The yen strengthened for a second day and metals fell after U.S. manufacturing shrank and the budget standoff intensified. Japanese carmakers advanced after data showed American car sales rose to the highest level since 2008.
The yen advanced against all its major peers, adding 0.2 percent to 82.10 per dollar as of 11:28 a.m. in Tokyo. The euro traded near a six-week high against the greenback. Aluminum, copper and zinc declined at least 0.4 percent. Futures on the Standard & Poor’s 500 Index lost 0.3 percent, while the MSCI Asia Pacific Index (MXAP) fell 0.3 percent after yesterday closing at the highest level in seven months.”
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