IMF Scrambles To Double Bail Out Capacity To $1.3 Trillion, May Issue Bonds

Submitted by Tyler Durden on 09/30/2011 06:58 -0400 Source:Zerohedge

The scariest news out of the IMF overnight is not that the scandalized bailout agency telegraphed that the global sovereign debt crisis is about to get into even higher gear after the Dow Jones reported it is "exploring" ways to double its gross lending power to $1.3 trillion (which means that in addition to the EFSF's proposed $3 trillion expansion, global bailout capacity will soon hit $5 trillion), nor is it that the US middle class will soon be on the hook for tens of billions more in real European-facing exposure (over an above the hundreds of billions in USD FX swaps that the Chairman is about to unleash on the world), but that the IMF is in fact considering issuing its own bonds. The reason why this is disturbing to the G-7/8/20 is that such a move would take the SDR one step closer to being an alternative gold-backed reserve currency, an dilute the hegemony of the Western axis much to the delight of Russia and China (which however may be having problems of their own). Well, that's bad, but we take it back - just as bad is that the IMF is about to have $1.3 trillion in bailout power. And yes, they wouldn't scramble to get it if they didn't need it. What next: unlimited rescue capacity, and unlimited exposure for US taxpayers?
Read rest of the article here.

Central Banks expected to buy at least 336 tonnes of gold this year

Figures from GFMS suggest that Central Banks are continuing to buy gold with holdings in August showing a rise which has been helping boost the gold price.

Author: Rhiannon Hoyle
Posted:  Thursday , 29 Sep 2011 LONDON (WSJ) - 

Emerging-market countries continued to top up their gold reserves in August, with Russia, Thailand and Bolivia among those to add to their holdings.

Central banks have bought gold as some seek to diversify foreign-exchange reserves that have grown along with emerging market export industries. The purchases have helped drive the price of gold higher, because they absorb supply and boost market sentiment.

Read the rest of article here.

ECRI's Achutan Says US Is "Entering A New Recession"

 

Submitted by Tyler Durden on 09/30/2011 07:59 -0400 Source: Zerohedge

Last year the ECRI index was the bete noir leading indicator of the market: while the index clearly indicated the US had entered a recession, its creator Lakshman Achutan consistently refuted the findings of the index, instead pushing a contrary view that the US was in fact growing. Then came QE2 and with it s 9 month suspension of reality. That time is over, as is Achutan's ongoing attempt to deny facts. As of a minutes ago, the ECRI's head told Bloomberg Radio that the U.S. is "tipping into a new recession." "He added: "We don’t make these calls lightly. When we make them, it’s because there’s an overwhelming objective message coming out of our forward-looking indicators. What is going on with the leading indicators is wildfire; it’s not reversible.” As Zero Hedge first said months ago, when it finally extracts its head from between its gluteui maximus, we expet the NBER to proclaim the re-recession as having started in June/July.

Technical Take on Various Asset Classes

Series of lower highs and lower lows for the last 3 days. Not enough convincing action to take any of the positions based on this trading. Stocs seems to be rolling over but we will have to wait for the confirmation. Similar thoughts for SP500. 

Gold after having formed a hammer is trying to consolidate now. The basing action should take some time until there is some news flow which is positive for it taking it much higher. Silver is more damaged technically but should be used to accumulate rather than buying it on tops. 

USD may be forming a bull flag and hence its movement needs to be watched carefully. 

Crude and copper both have broken their trendlines and hence need to be watched with interest. No opnions right now on any of them. 

As far as currencies are concerned - JPY is the strongest of the lot globally having a great trend but wind has been taken from CHF after it got tied to Euro at 1.20 levels. Last bastions of fiat has been brought down. 

August infrastructure growth slumps to 3.5%

New Delhi, Sept 27: 

The eight core infrastructure industries registered an output growth of 3.5 per cent in August, lower than the 4.4 per cent growth witnessed in the corresponding period last year.

This is reflected in the latest data released by the Commerce Ministry here on Tuesday.

For the April-August 2011 period, the eight core industries recorded 5.3 per cent against 6.1 per cent during the corresponding period in 2010.

Among the eight core industries, only electricity generation registered an impressive growth of 8.9 per cent in August 2011, after having grown a measly 1.6 per cent in the year-ago period. Coal production, registered a negative growth of 15.3 per cent in August compared with 1.0 per cent growth in the same month last year.

Growth of steel production declined to 7.7 per cent in the month under review compared with 10.8 per cent during the same period last year.

Growth in crude oil slumped to 1.6 per cent in August compared with 15.2 per cent in the year-ago period.

Natural gas production contracted by 5.3 per cent in August against the positive growth of 11.9 per cent in the comparable period last year.

However, petroleum refinery production rebounded from a negative growth of 2.3 per cent in August 2010 to 3.9 per cent in August 2011.

Cement output grew by 7.2 per cent against 1.6 per cent expansion in August last year.

Fertiliser production registered a 4.3 per cent increase in August, after 5.7 per cent decline in the same period last year.

Coal demand pegged at 696 mt in 2011-12

Anil Sasi

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New Delhi, Sept 27: 

Coal demand in the country is estimated at 696 million tonnes during the current fiscal while domestic production is only expected to be around 554 million tonnes, the Coal Secretary, Mr Alok Perti, said at an industry conference.

Earlier estimates had suggested that imports of around 135 million tonnes (mt) would be needed during the current financial year ending March 31, 2012.

Fresh estimates suggest that imports could actually be lower as state-owned Coal India Ltd (CIL) has been asked to liquidate coal stocks of up to 28 mt lying at pitheads during the current fiscal for augmenting supplies to the power sector.

If this were to happen, the gap between demand and supply position in the country is expected to come down to 114 mt.

The demand-supply gap has gradually widened from about 50 mt in 2007-08 to 83 mt last fiscal.

Technical Take Various Asset Markets

The long tail above the doji does not bode well for the index at the juncture where the conditions were little oversold. Hence, lets see how we react today. Anyways the news was out that there were some dissagreements between the Euro members on the bailout for Greece. Similar thoughts for SP500. This is still a trading range and the players who are not nimble enough should not particpate for the time being. 

 Its very much possible that we may have seen the lows of Gold and Silver. But the way the charts have been damaged its quite possible that we may easily take 2-3months to complete the basing action.

Trading Personified - Alessio Rastani

There are no rogue traders, there are only rogue banks

By Barry Ritholtz, Published: September 25

In 1995, derivatives broker Nick Leeson of Barings Bank engaged in “unauthorized” speculative trading. The massive losses — 827 million pounds — led to the collapse of Barings, the oldest investment house in Britain.
In 1996, another rogue, Sumitomo Bank copper trader Yasuo Hamanaka, lost at least $1.8 billion. Some reports put the true losses at $4 billion.

Read the rest Here.

Major Plan to Save Euro is in the Works

Simone Foxman | Sep. 25, 2011, 8:16 AM | 2,974 |

Image: AP Images

German and French officials have made strides at the World Bank/IMF Meetings this weekend towards outlining a huge new plan to save the euro, according to a Telegraph report.
By building a "firebreak" around Greece, Ireland, and Portugal, bolstering banks, and expanding the European Financial Stability Facility, they think they can halt the spread of the sovereign debt crisis and restore confidence to the markets.
Reportedly, they'll even have a solution by the G20 summit on November 4.
This plan consists of two major steps which -- the report's sources say -- would need to be taken in conjunction:

- Tens of billions of euros would be used to recapitalize European banks. This would prevent contagion from spreading in the event of a Greek, Irish, or Portuguese default. We heard whispers about a plan like this last week.

- Leveraging the EFSF in order to expand the resources available to bolster Italy and Spain. U.S. Secretary Timothy Geithner proposed such a euroTALF-like solution earlier this month, and EU Economic and Monetary Affairs Commissioner Olli Rehn said eurozone leaders are considering this possibility this weekend. This piece of the plan assumes passage of the EFSF expansion proposed July 21.

By expanding existent programs rather than introducing deeper reforms, this plan sidesteps many of the reservations raised by core EU countries about bailing out profligate sovereigns in the periphery -- in particular German fears that stronger EU governance could threaten domestic sovereignty. In this way at least, the plan could prove a success.

Read more: http://www.businessinsider.com/big-new-plan-to-save-the-euro-2011-9#ixzz1Z59PejWa

NIFTY End of Day Analysis

After the formation of a Doji, Hammer is formed at the lower end of the swing near the earlier supports. Now the bulls have managed to show some strength lets see what the markets bring tomorrow.

As prices stand today, we might have a big day tomorrow -- lets see which side it is. To us it may be in the red. US markets close will certainly influence the open. They are trading flat right now not being able to close the gap.

SP500 Not Able to Close the Gap

SP500 today has not been able to close the gap it had created which is a little bearish for the index. So lets see if its dragged down again.

Nifty Technical Take

Nifty futures chart is shown above. We have almost a sell signal but the Doji star that has been made shows indecision for bears to take the prices down further. Monday will show which way the prices want to move. 4845/4811 are critical points as supports. On the upside 4911/ 4942 remain as key points to watch.

Below as well the Nifty is showing as overbought in hourly and this needs to be seen how low does it want to go. 

Banks and Their Asset Sizes

Nowhere to Hide YTD Performance Charts

Dying of Money - Jens O Parsson

Some quotes from the Book - Dying of Money by Jens O Parsson

As for speculators, the most extraordinary feature of the Reichsmark's joyride was not any attack against it but quite the opposite, an incredible ("pathological," it was later called) willingness on the part of investors at

home and abroad to take and hold the torrents of marks and give real value for them. Until 1922 and the very brink of the collapse, Germans and especially foreign investors were absorbing marks in huge quantities. Only the international reputation of the Reichsmark, the faith that an economic giant like Germany could not fail, made this possible. The storage factor caused by the investor's willingness to save marks kept the marks from being dumped immediately into the markets, and thereby for a long while held prices in check. The precise moment when the inflation turned upward toward the vertical climb was undoubtedly timed by no event but by the dawning psychological awareness of the German and foreign investor that Germany was not going to back its money. With that, the rush to get out of the mark was on. Like a dam bursting, the seas of marks flooded into the markets and drove prices beyond all bounds. The German government strove mightily to outflood the sea.

The balance of payments problem was similarly misinterpreted. It was true that Germany had one. More of its cheap money was going out than hard money was coming in, in spite of constantly rising exports and constantly falling imports. This payments deficit actually helped hold the inflation problem at bay, because it kept the pressure of Germany's cheapening Reichsmarks off its own markets and prices. The existence of the payments deficit was an accurate indicator that Germany, while sick, was not yet dying. The reversal of the payments deficit was a sure signal that the end was near. In the collapsing stages, Germany ran a huge payments surplus as all her worthless marks came home from abroad in search of something to buy. This reversal of the balance of payments toward surplus was therefore not an occasion for hope, but for deepest fear.

Doug Casey: How to Prepare for "When Money Dies"

Source: Karen Roche and JT Long of The Gold Report  (9/23/11)

If dollar-dumping turns from a trickle into a flood, look out. Exploding prices (aka exorbitant inflation) resulting from the devaluation of the dollar will compound the problems we saw in 2007–2009. Catastrophe will come when everybody realizes that the dollar is an "IOU nothing." That's the downside in the decade(s) ahead, according to Casey Research Chairman Doug Casey. But an optimist at heart, in this exclusive interview with The Gold Report, Doug also identifies some reasons to be hopeful.

The Gold Report: You've been talking about two ticking time bombs. One is the trillions of dollars owned outside the U.S. that investors could dump if they lose confidence. And the other is the trillions of dollars within the U.S. that were created to paper over the crisis that started in 2007. Are these really explosive circumstances that will bring catastrophic results? Or will it just result in a huge, but manageable, hangover?

Doug Casey: Both, but in sequence. One thing that's for sure is that although the epicenter of this crisis will be the U.S., it's going to have truly worldwide effects. The U.S. dollar is the de jure national currency of at least three other countries, and the de facto national currency of about 50 others. The main U.S. export for many years has been paper dollars; in exchange, the nice foreigners send us Mercedes cars, Sony electronics, cocaine, coffee—and about everything you see on Walmart shelves. It has been a one-way street for several decades, a free ride—but the party's over.

Nobody knows the numbers for sure, but foreign central banks, and individuals outside the U.S., own U.S. dollars to the tune of something like $6 or $7 trillion. Especially during the recent crisis, the Fed created trillions more dollars to bail out the big financial institutions. At some point, foreign dollar holders will start dumping them; they are starting to realize this is like a game of Old Maid, with the dollar being the Old Maid card. I don't know what will set it off, but the markets are already very nervous about it. This nervousness is demonstrated in gold having hit $1,900 an ounce, copper at all-time highs, oil at $100 a barrel—the boom in commodity prices.

Read rest of the article by clicking here.

Technical Take On Various Asset Classes

Despite all the market reaction to the OPERATION TWIST we srill are in the range that the markets have been struggling in since August low. Though even if we are to not break down this support area, we are unlikely to see any upward price movement as things stand today for some days since price would have to be healed. Similar conclusion for SP500. 

Gold has reentered its weekly channel and the middle band of the channel (not shown) or 150MA will be a good support for the metal. As we have told you guys, dont trade this Bull, just accumulate the PM stuff. As things stand today, Gold 150MA is 1572. Hence 1600 is a good accumuluation point.

Silver is damaged badly and looks like will take a lot of time to heal itself. Its at the confluence of multiple supports and hence needs to be seen where and how does it act when it reaches the place.

Copper again is badly damaged and now supports should provide some relief. The bounce would determine the extent and nature of correction. 

 USD had a breakout out of the consolidation zone and now is making higher highs and higher lows. But its overbought so coupled with the SP500 and other indices at support levels, we need to see if their is some relief in the indices as they try to sideways to upwards or we go straight down due to momentum.

EL-ERIAN WARNS: 'These Are All The Signs Of An Institutional Run On French Banks'

Joe Weisenthal | Sep. 22, 2011, 7:08 AM | 9,251 | 20

This is not helping French bank stocks today.

PIMCO's Mohammed El-Erian has a dramatic post up at FT on the various signs of trouble in French bank land.

You have reports of banks not trading with French banks. You have equity prices at 50-% of books, and stories about CEOs going around the world for cash.

Here's the money quote:

These are all signs of an institutional run on French banks. If it persists, the banks would have no choice but to delever their balance sheets in a very drastic and disorderly fashion. Retail depositors would get edgy and be tempted to follow trading and institutional clients through the exit doors. Europe would thus be thrown into a full-blown banking crisis that aggravates the sovereign debt trap, renders certain another economic recession, and significantly worsens the outlook for the global economy.

If Europe doesn't fix this fast, all hell could break loose.

Source: Business Insider

Nothing Specific Yet From The Governments or Central Banks

Read the article here.

The problem has not gone away nor is any short term or long term solution in sight --- hence the asset classes would be weak for the foreseeable future. 

Global Banks ‘Quietly’ Ask BRICs to Subsidize Greek Aid With $27.6 Billion

Technical Take on Nifty

Few important points for NIFTY. Incase we have another down day today, we might get a sell signal for the index on weekly TF.

Some key levels to watch out for Nifty - 4911 is a critical level. Then come 4865-4875 and then 4825 and further 4800.

38% retracement of the swing on daily has proved to be very strong resistance as the movement above that has been w/o confidence. Hence lets position ourselves for shorts only at the moment. Moreover - we have had a profit booking signal for the longs yesterday - so no longs only shorts.

US Markets and Precious Metals Technical Check

Certainly - No place to hide during the week. Seems like Risk is OFF for now. Lets us see how we close on friday ie today. 



 We are at the August lows for both Dow and SP500. The question to be asked is would the lows hold. The indicators suggest that the conditions are not oversold yet and thus in a bear market the lows would be violated -- hence it is prudent to be short or have no positions at the moment.

 After yesterdays sell off Gold has been reaching an oversold condition. It violated its 50MA on closing basis which may suggest further correction. 1700 was the swing low and must hold incase the double top formation is not to be proved right. Silver on the other hand has already reached its 200MA given it 9% sell off yesterday.

 Crude again in risk off mode as others.

Conclusion - The markets look like they may want to break the August lows. 



Few Chart Checks for US Markets andf Precious Metals

Dow Jones Industrial and SP500 both have formed Doji on the daily and the indicators are suggesting to part book profits for those who were long. Anyways we have an FOMC meet/ annoucement today which possibly may swing the market in any direction. So we are light on our positions right now. 

As far as Gold and Silver are concerned --- they are approaching the oversold zone in the bull run and are at very good points to accumulate the same. 

For anyone interested in tracking the prices history of gold --- one can see this graph I found at Financial Graph and Art site.... 

To conclude --- the recommendation is to take profits on longs in DJIA and SP500 and accumulate precious metals...

Nifty EOD Analysis

Nifty was under pressure right from the word go. 38% retracement is proving to be a stiff resistance for Nifty right now. Keeping the global cues in mind we may face further downward pressure tomorrow. Gaps have been created between opening and closing bodies in last 3 days.

There is greater probability now that we may fall back towards the swing low of 4700 pretty soon.

Nifty Plan for the Day - 19 September,2011

Watch out for these retracement levels

1. 38.2% - 5110
2. 50%    - 5230
3. 61.8% - 5350
4. 100% - 5738

Nifty has been laboring to stay above 5110, but all the candlesticks have been not confident bull candlsticks.... So lets see if today it can close above 38.2% retracement. Moreover we have news filled two days due to Fed meet and a turn date at our hand. So we will wait till tuesday to take on new positions.

The EU new economic governance package

Sat, Sep 17 2011, 17:18 GMT | FXstreet.com

FXstreet.com (Buenos Aires) – Today, the finance Ministers of the euro zone had reached an agreement in relation to a new economic governance package, one more step forward in the path of saving the area. The package that includes five regulations and one directive, aims to improve the budgetary discipline in the member States, and strengthen the stability of the region’s economy.

The package includes new criterion on debt and deficit definitions, sanctions for countries that don’t fulfill the compliance requirements to be applied at an earlier stage, and improved transparency in the decision-making process in the EU economic governance, among others.

Although positive, as the EU is showing investors that they are ready to act unequivocally, one should wonder why it took so long. The banking crisis has been growing for almost 2 years already, while the ECB ignored it most of the first one. Will investors be actually ready to trust the euro after this?

Source: FXstreet.com

 

We would have to see the details of this package and what it means.... Does it mean a mark to model type dictions that were provided to the markets... we doubt... but Ben is meeting as well on Monday and Tuesday... So lets wait and watch and be light on trading positions.... Anyways Tuesday is a turndate....

India's Energy Dependency - Need to be Independent in Long Term