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- Inverted Italian Yield Curve Spells Trouble
- How To Profit From Hungary's Downgrade
- Barrick Gold: Options Strategy To Make 30% On This Undervalued Stock
- What The Cost Of Thanksgiving Dinner Says About Inflation
- Gold, Inflation And Lessons From Latin America
- The Future Of The Euro, Gold And European Stocks
- Links 11/27/11
- Our Diseased Monetary Bloodstream
- BrotherJohnF: History Of Silver
- The Weekend Vigilante
- Prepare for Riots in Euro Collapse, Foreign Office Warns
- A Glimpse Into the Future of the Stock Market and Dollar
- Italian, Belgium, and Spanish Bonds / Raid on Gold and Silver
- A Crude Awakening
| Inverted Italian Yield Curve Spells Trouble Posted: 27 Nov 2011 12:52 AM PST A distressed credit tends to exhibit what's called an "inverted yield curve." The reason is that in a bankruptcy the bond maturity generally does not matter - all pari passu (same seniority) paper tends to have the same recovery (thus the same discount). If you apply the same discount to shorter maturity paper, it will generally have higher yield (depending on the coupon) than the longer term bond from that issuer. Distressed bonds are said to "trade on price" rather than yield. For example, a 10-year bond with a 5% coupon trading at 80 cents on the dollar would yield 8% (you can check this using the YIELD function in Excel). A 2-year bond with the same coupon also trading at 80 would yield 18%. Thus we have an inverted yield curve. This also holds true for inverted CDS curves. So why did we start the beautiful Black Friday morning Complete Story » |
| How To Profit From Hungary's Downgrade Posted: 27 Nov 2011 12:47 AM PST By Benzinga: By Daniel James Hayden IV After having its credit rating lowered to junk status, Hungary is the latest European country to see its borrowing costs climb higher. The country was downgraded by Moody's Investors Service from Baa3 to Ba1 with a negative outlook a week after it had to ask the International Money Fund for help. Although he's asking the International Monetary Fund to save his country from a financial collapse, Hungarian Prime Minister Viktor Orban has said that he doesn't want any strings attached to any funds he receives from the IMF. The Hungarians have also characterized the Moody's downgrade as a financial attack on Hungary itself. The downgrade by Moody's Investors Service is sure to increase Hungary's borrowing costs and make it much more difficult for the country to raise funds from international investors. American financial institutions have been shying away from European sovereign debt and unlike eurozone Complete Story » |
| Barrick Gold: Options Strategy To Make 30% On This Undervalued Stock Posted: 27 Nov 2011 12:07 AM PST By Bret Jensen: Given the turmoil in the markets and the real potential of a complete European meltdown, I am being exceedingly cautious here in deploying new money into the market. I am using options strategies on stocks I like at these levels to protect my portfolio on the downside and to pick up the high premiums in the options market due to that same market volatility. One stock I think provides a very reasonable way to deploy this strategy with is Barrick Gold (ABX). Option Strategy: Sell the April 12 $44 puts and buy the April 12 $41 puts via a bull market put spread for a net credit of a $1. Scenario 1: ABX holds a minimum $44 level when the option spread expires in April 2012. I believe this is a highly likely scenario (See 4 reasons why below). In this case, I make my dollar share spread while only Complete Story » |
| What The Cost Of Thanksgiving Dinner Says About Inflation Posted: 27 Nov 2011 12:05 AM PST By Parsimony Investment Research: While some might say this is a silly thing to track, we believe the increase in the price of a classic Thanksgiving dinner indicates a great deal about rising prices. Most market participants and government officials reference the consumer price index ("CPI"). According to the BLS, the CPI program produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. Underlying Issue with the CPI From time to time the BLS makes hedonic quality adjustments. As the quality or quantity of goods is changing, adjustments are made to try to captures changes as the sample set of goods is not shrinking. As stated on the BLS website:
Complete Story » |
| Gold, Inflation And Lessons From Latin America Posted: 26 Nov 2011 11:59 PM PST By Parsimony Investment Research: As shoppers in the U.S. celebrate the official start of the holiday shopping season with Black Friday and seek out the bargain basement prices, our own central bank is seeking to lift prices and deter deflation. The central bank's view is that even modest bouts of deflation must be dealt with swiftly, as the combination of heavy debt loads and declining prices is a recipe for recession and rising unemployment. Our response to the threat of deflation has been to expand the Federal Reserve's balance sheet.
In the early 1970s, Nixon closed the gold window, and ever since, debt and government spending has increased rapidly.
We fear that tinkering with the price of money (e.g. interest rates) does not always bring the desired effect. Economies are large, complex and have a way of bring about unintended consequences. Our view is that quantitative easing programs will eventually bring the desired amount Complete Story » |
| The Future Of The Euro, Gold And European Stocks Posted: 26 Nov 2011 11:24 PM PST By John Lindauer: Things are changing rapidly in Europe as the euro block continues to move towards a partial disintegration. This week, for the first time, Germany was unable to sell all of its bonds and most of the rest of the euro countries could not sell any at all. That's the result of uncertainty and not surprising because most investors and traders have not yet figured out what's going to happen. So money moved out of the euro and into safe and not so safe havens such as the dollar and gold. Look for the dollar and the price of gold to rise. More significantly, the European Central Bank reiterated that it would not buy Greek, Portuguese, and other sovereign debt. Those countries will not be able to refinance their existing debt as it comes due. The ECB's refusal to buy is in keeping with its charter which specifies its sole goal Complete Story » |
| Posted: 26 Nov 2011 06:28 PM PST Dear readers, Still having trouble with my yves@nakedcapitalism.com account but this seems to be a DNS problem, not hacking. Hungarian Hacker Pleads Guilty After Hacking into Marriott Computers and Extorting Job in Company's IT Department Security Week Peru protests at huge gold mine BBC Britain unites with smaller countries to block US bid to legalise cluster bombs Guardian (hat tip reader May S) UK tabloids brace for more damage at ethics inquiry Raw Story Egypt Braces for Fresh Clashes After Protester's Death New York Times Activists accuse Mexican president of war crimes in drug crackdown Guardian (hat tip reader May S) How the Plummeting Price of Cocaine Fueled the Nationwide Drop in Violent Crime Atlantic Cities (hat tip reader May S) Mr. Romney on Foreclosures New York Times Fewer Americans serve in the military than at any time since 1920s amid growing gulf in connections and attitudes Daily Mail (hat tip reader May S) For Occupying Protesters, Deadlines and Decisions New York Times LAPD's handling of Occupy L.A. will be put to the test Los Angeles Times Naomi Wolf's 'Shocking Truth' About the 'Occupy Crackdowns' Offers Anything but the Truth AlterNet. OK, Naomi Klein was journalistically sloppy. But does anyone doubt the crackdown was coordinated? And Holland has a history of policing the leftie ghetto. Frankly, journalists should be putting the onus on officials to explain how so many raids happened on the same day if there was not any coordination. Slipping Backward on Swaps Gretchen Morgenson, New York Times Black Friday Sales Rise 6.6% to Record: ShopperTrak Bloomberg One man's haircut is another man's unsecured risk FT Alphaville (hat tip reader Michael C) Antidote du jour:
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| Our Diseased Monetary Bloodstream Posted: 26 Nov 2011 04:00 PM PST Gold University |
| BrotherJohnF: History Of Silver Posted: 26 Nov 2011 01:52 PM PST BJF: I believe we are going back to one to one ratio, I think we are looking at a reversal of a 600 year trend, $15,000 per ounce silver" From BrotherJohnF:
~TVR |
| Posted: 26 Nov 2011 01:09 PM PST from DollarVigilante.com:
It's been a whirlwind month for me, from Argentina to Montreal to San Francisco. I'll be wrapping it up this week at the Hard Assets show and then will be returning to my beach condos in Acapulco. But, the craziness doesn't stop there. I'll be getting married on the beach in Acapulco on December 2nd… and, from what I hear, Mexican weddings last anywhere from 3-15 days… so, by Christmas, if I and my liver are still alive, I should be looking forward to a few weeks on the beach to replenish and get rested up for what the Mayans keep saying is going to be a wild 2012. With or without the Mayans, it is going to be wild though. At the rate the euro is going, it may not make it through to 2012. TDV subscriber, Stefan S., sent us these two photos from Frankfurt airport which may already show that the designs for a hyperinflating 10,000 euro note are already in process.
Read More @ DollarVigilante.com |
| Prepare for Riots in Euro Collapse, Foreign Office Warns Posted: 26 Nov 2011 01:08 PM PST by James Kirkup, Telegraph.co.uk:
As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible. Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis. The Treasury confirmed earlier this month that contingency planning for a collapse is now under way. A senior minister has now revealed the extent of the Government's concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time. Incredible admission:
Read More @ Telegraph.co.uk |
| A Glimpse Into the Future of the Stock Market and Dollar Posted: 26 Nov 2011 01:05 PM PST by Charles Hugh Smith, OfTwoMinds.com:
The "accident" many have been waiting for has finally happened, and it's called Europe. That doesn't bode well for the U.S. stock market. A lot of technical analysts and financial pundits are expecting a standard-issue Santa Claus Rally once a "solution" to Europe's debt crisis magically appears. There will be no such magical solution for the simple reason the problems are intrinsic to the euro, the Eurozone's immense debts and the structure of the E.U. itself. We can fruitfully start a speculative look into the future of the U.S. stock market and dollar with a quote from John Mauldin's book Endgame: The End of the Debt Supercycle and How It Changes Everything: Read More @ OfTwoMinds.com |
| Italian, Belgium, and Spanish Bonds / Raid on Gold and Silver Posted: 26 Nov 2011 12:55 PM PST Italian Bonds Reach 7.26% Yield / Record Levels for Belgium and Spanish Bonds / Raid on Gold and Silver by Harvey Organ: Good morning Ladies and Gentlemen: Before commencing, no banks entered the morgue ahead of the long Thanksgiving holiday weekend. The FDIC decided to give the boys an extra week's holiday due to their strenuous activity for the past year. The price of gold finished the comex session bat $1685.50 down $10.20 on the day. Silver continues to be a punching bag closing down 86 cents to $31.02. The bankers are putting on quite a show preventing gold from breaking the 1700 dollar level. First day notice is on Wednesday so we will have to see how many gold ounces are standing and silver as well. December is a delivery month for both gold and silver. Read More @ HarveyOrgan.Blogspot.com |
| Posted: 26 Nov 2011 12:53 PM PST by Alasdair Macleod, GoldMoney.com:
The basic argument is this: very little can happen in our lives without oil. It is required for mining, agriculture, manufacturing, transport and distribution. Global consumption is rising, and extraction has levelled off. Oil-exporting nations are consuming more, leaving smaller balances for those with oil deficits. The cost of extraction is rising sharply: whereas fifty years ago it cost one barrel of energy to extract a hundred, we are moving towards new fields where the rule is one barrel for three. We face a train-wreck between the increasing rates of global consumption and the declining rates of net exportable production. Read More @ GoldMoney.com |
Hello from chilly San Francisco!
One of the joys of interviewing some of the best brains in the world of finance and economics is that they alert you to important factors that perhaps you haven't fully considered. This was my experience with Chris Martenson in Madrid last week (the interview will be posted on the GoldMoney website in the coming weeks). He reminds us that the availability and price of oil are central to our economic future.| You are subscribed to email updates from Gold World News Flash 2 To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
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