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Thursday, August 4

4th Aug LATE - stocks crash

Summary: Everything worse again. ECB panic-buys bonds, then Bundesbank tells it’s a bad idea. Very good time for the eurocrats to take their holidays and complete lack of policy coordination. CDS prices up heavily across the board, while yields were relatively calm (=did not surge), thanks to ECB. Surprisingly price of gold was down.

Views: QE3-talk getting stronger, but Europe is not going to get its act together.  The drop in gold price is somewhat surprising, given the trouble everywhere. This suggests to me that a large part of the longs are highly leveraged. Partly people are taking profits to meet margin calls everywhere, and partly because they cannot afford any drop in gold prices. I believe from this point on, gold is going to be a lousy safe haven.

Trades: Hope you covered any S&P 500 shorts, as advised. Keep Brazil short. Prepare to cover HALF of any EURUSD shorts around 1.4050-1.4100. Did you sell USDJPY @ 79.80? Take profit with a limit order @ 78.20 and lower the stop-loss from 81 to 79.30.

EURO CRISIS



CEBR’s latest analysis

FT: ECB must become the lender of last resort and all EU institutions must be completely overhauled.
Europe needs a bazooka – Pragmatic Capitalism







“Prime Minister Resists Calls for New Measures, Anxiety Spreads Across Continent”

FINANCIAL CRISIS
Bernanke to the rescue? – Free exchange / The Economist

TED & OIS vs. LIBOR are jumping, interbank markets stressed
The name’s TED, remember me? – Pragmatic Capitalism



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