ltcm bis + action de caballas pour contrer les effets des sorties $ de capitaux étrangers
More on the inflow report:
U.S. foreign capital flows slow in March
By Rex Nutting, MarketWatch
Last Update: 11:02 AM ET May 16, 2005
WASHINGTON (MarketWatch) - Foreign central banks became net sellers of U.S. assets for the first time in 19 months in March, helping to slow foreign capital inflows into the United States by 46%, the Treasury Department said Monday.
Net capital inflows fell to $45.7 billion in March from $84.1 billion in February. Read the full report.
It was the lowest level of capital inflows since October 2003.
It was the first time since October 2004 that foreign inflows have fallen short of the U.S. trade deficit for the month. The trade gap was $55 billion in March…
However, foreign official institutions were net sellers of $14.98 billion worth of Treasuries, or 15 times as much as the last dip in 2003.The last time foreign official institutions were net sellers of Treasuries was almost two years ago, when they sold $963 million of Treasuries. Hail to the Caribbean Pirates who came to the rescue.
In other words if it were not for the Caribbean Pirates interest rates would be much higher than where they are today. Who knows where the dollar would be?
Who are those guys, the Caribbean Pirates? The Fed, that’s who, at least most of them. The Fed is printing money and buying US Government Securities through these accounts to disguise the FACT that foreigners are pulling way back in the their support of our credit markets. This should be no surprise as late last year they demanded the US gets its fiscal house in order for them to continue their buying of our debt. We have done nothing to correct the problem
This report almost leaves one speechless. The biggest holders of our debt, the Chinese and Japanese, went negative for the month!!!!
What this tells us (the way I see it) the MIDAS analysis of blatant market manipulation is right on the money. Interest rates have come down to where they are because the Fed is forcing them down in fear of imploding a fragile US economy and the US real estate bubble, which is providing the only real strength in the economy at the moment.
This also lends credence to my notion the PPT and G-7 have maneuvered the dollar to the upside because the US credit market situation is close to a disaster (with foreigners lightening up while credit spreads widen due to the hedge fund trades gone bad). With the dollar firmer and the interest rate vehicles going up, they are placating the current foreign holders of our debt and preventing a fiasco.
PRICE ACTION MAKES MARKET COMMENTARY. Today the explanation du jour of what is occurring in the US financial markets is credited almost solely to the hedge funds getting out of trades gone wrong. This is all we hear about from Planet Wall Street and even a couple of savvy Café members. Here is a note from one of them:
Bill- I am of the opinion that the recent dollar strength, gold weakness, US long bond strength, are all related to troubles in the derivatives markets. These markets are held together by insurance firms such as AIG, in many ways.
If the AIGs slow up-or reverse-their underwriting swaps et al, then many will flee these deals-a liquidity crunch may be feared.
To cash out, many recent years worth of swaps that feature short dollar, long gold, short US bond positions will have to be sold (reversed). That's a lot of deals in a $600 plus trillion market.
Just as the US stock market couldn't collapse in 1987 until the shorts capitulated-late summer, so we may be today experience the same phenomena in the markets I mention.
Cheers. J B
Metropole Subscriber, former gold, currency, and bond trader.
PS: Greenspan's speech last week in Chicago on derivatives is a must read. I think he is issuing a typical oblique warning on problems in this huge market. You'll see he mentions LTCM several times, notes "basis risk" exists (one of LTCM's problems), and to my horror, draws our attention to the fact that "swaps" aren't. By this I mean sales/purchases aren't offset. And all this in a huge market-$600 plus trillion.
No doubt a massive potential derivatives problem is in play and no doubt the hedge funds are unwinding some very substantial positions. However, I think it is too simplistic an explanation when reviewing the action of all the markets for one basic reason. There is no accounting by Planet Wall Street for any sort of financial market engineering. None whatsoever. Yet, the evidence is clear as can be. My reasoning:
*The Working Group on Financial Markets is playing the US financial markets like a maestro finesses an orchestra.
*Intermediate and long-term interest rates are at their lows despite evidence our two largest debt buyers (China and Japan) are retreating from adding to their positions.
*The dollar is going up despite these rates going down, a trend which has gone on for two months.
*The dollar has moved up smartly since early March, just as foreigners were shying away from buying our credit instrument as shown in the TICS report. That doesn’t jibe. The demand for dollars from this arena dropped, yet the dollar moved up steadily.
* The surprise re various economies around the world is the growing weakness in the US.
*Gold has been taken down again to disguise what the Fed is up to behind the scenes with its clandestine monetization of our debt.
*Hedge funds seem to be cited all day long for what the markets are doing. Yet, the US stock market goes up on bad news (with most all other markets going down) and doesn’t exhibit the slightest signs of stress. Were the DOW down 350 today, I would be buying into the hedge fund explanation for what the markets are doing. Yet, the calm action of the US Treasury markets after receiving disturbing news, the continue strength of the dollar, the rising stock market, and falling gold market, more than suggests the US financial markets are nothing more than financial market engineering these days.
Yep, the evidence mounts everywhere these markets are being maneuvered. This can work in the short-term as the PPT can move technical systems and momentum traders any way they want. However, as time goes by it will not work when the fundamentals are deteriorating as they are now. They can only buy time and hope current problems disappear or are resolved in some satisfactory way.
The gold market itself has become a complete bore of late as a result of the machinations of the cabal thugs. Same drill. They have flushed out huge numbers of fund longs and are turning them into shorts as they cover their own shorts. The gold open interest fell 4374 contracts to 273,749.
One day the market is headed for disaster – enter the Working Group on Financial Markets – next day it is headed for bliss.http://business.timesonline.co.uk/article/0,,8209-1612390,00.html
May 15, 2005
City hedge funds head for domino collapse
Peter Koenig and Louise Armitstead
BAD investments by some of the biggest hedge funds in London have triggered unprecedented losses, record demands for money back and talk of a death spiral weighing heavily on stocks and bonds.
GLG, a hedge fund started in 1995 by a group of former Goldman Sachs bankers, has in recent weeks had demands for more than $500m (£270m) from investors wanting to pull out of its $4 billion market-neutral fund.
The predicament of GLG, the biggest group in Europe, with $13 billion under management, highlights the stress being felt at many hedge funds in Europe and America after four months of deteriorating results.
Prime brokers and the credit departments in investment banks have been calling clients to check their capital strengths as rumours of a big hedge-fund blow-out grip the industry.
London-based Cheyne is thought to be down by at least 10% in its credit fund after the downgrading of debt at General Motors and Ford. Ferox, another of London’s most successful funds, is thought to be down nearly 20%. Bailey Coates, Polygon, Rubicon, Vega, Moore Capital and Brevan Howard are all nursing heavy losses of about 5% each in April. Bailey Coates, whose losses reported in The Sunday Times three weeks ago first alerted the wider market to the industry crisis, has had yet more redemption calls.
"What you’re seeing is like a run on the bank," said Narayan Naik, director of hedge-fund studies at the London Business School. "Selling forces more selling and there’s a cascade effect."
Although industry experts said there was no hedge-fund blow-out on the scale of Long Term Capital Management in 1998, many are concerned that the worst might not be over.
"There’s not a panic like when LTCM nearly went bust," said Naik, "but prices will keep dropping until excess money is squeezed out of the hedge-fund industry and a new floor is established."
After performing well in the fourth quarter last year, funds have run into increasing difficulty this year as a downturn in consumer spending has sparked fears of a broader slowdown.
While GLG reported that one of its key funds was down 5.2%, a Man Group scheme suffered a 3.1% decline and Madrid-based Vega told investors one of its leading funds was down 6%.
May has also started rockily. Some hedge funds were wrongfooted when Standard & Poor’s downgraded General Motors and Ford bonds to junk levels, and US investor Kirk Kerkorian used the opportunity to buy shares. Bond prices fell and share prices rose, the opposite of what fund managers thought would happen.
Hedge funds that specialise in convertibles ­ bonds investors can exchange for shares ­ have also had a hard time. Funds had bought up nearly 80% of all convertibles, so when their prices fell it turned into a stampede.