"That's just a guess, isn't it. We have no idea how exposed they are."
I read there's $700+ trillion ($707,568,901,000,000 to be exact) in unregulated derivatives out there or more than 11x global GDP. Watching the nuanced way in which Greek debt was not allowed a 'technical' default serves as my proof that the ECB was loath to triggering the CDOs reportedly held by the big european sovereign-protected banks. No one can confirm unregulated OTC market of these instruments but rest assured they will stay that way to avoid bank runs. Just a guess ... ;)
"IF they can't push it through and whole EU construct collapses, deflation continues and speeds up."
This scenario includes the derivatives trigger which will collapse western financial institutions. U.S. Fed likely to print to oblivion to save JPMorgan Chase, et al. Before massive money flows can rush back into stronger euro replacement, gold may initially play a safe haven role. Nobody knows but I would expect some really severe whipsaw action soon.
" I don't care if my portfolio is worth 10% less at the end of the year if the dollars buy 20% more."
Subtract real inflation (See ShadowStats) from that 20% increase in buying power (inflation) and you will understand why you'll want a snorkel to survive. In other words, 20% increase in dollar's buying power does not make a gain if items purchased increase more.
Thinking same on PBR and bought some today. Mike Rothman, who has been going to all the OPEC meetings since 2006, offers up some interesting charts regarding tight oil supplies and unusual seasonal direction over at KWN.
"Including bonds and other assets, the combined Assets Under Management of the eight units of Humungous Asset Managers that I listed is $16.0 trillion (Strategic Insight data)."
Thanks for the clarification. Golly. Can the eight units of HAM really effectively manage $16T given the instability of fiat currencies?! Makes the London Whale's $2B loss insignificant for sure. Gives new meaning to economies of scale ...
These eight HAMs must have all their powers of persuasion behind the IMF's SDR as the ultimate non-sovereign printing press money machine in global trade. Note how the IMF and G20 sovereign members have converged to create the SDR juggernaut.
You hit a nerve indeed. In regards to market cap, allow me to narrow HAM v. GSCs to the oil sector as an example, to show the reserve breakdown as follows:
259.9 billion barrels: Saudi Arabian Oil Co.
136.2 bb: National Iranian Oil Co.
99.4 bb: Petroleos de Venezuela
Alternatively, Tata Motors may be small but its parent Tata Group represents all heavy industry in India with assets of $68.9 billion (2010-11) and revenue of $83.3 billion (2010-11). Most of the tradable GSCs are subsidiaries of sovereign behmoths.
You have mentioned national pride as an important aspect of Petrobras (NYSE:PBR) is yet another important counter to GSCs. Will Brazil stand by and allow HAM to smother PBR? I think it becomes as currency issue v. commodity inflation before a HAM takedown.
All this boils down to currency war in my mind since a concentrated attack by HAM on these GSCs will result in sanctions like SWIFT removal and the National Iranian Oil Co. trade in gold with Russia & India.
Bottom line, HAM will find it difficult to outwit centralized national power including those western-trained traders of Chinese largesse and therein lies the hedge.
I've been thinking about Gov't Sponsored Corporations (Mercantilism; GSCs) as the one investment entity available to out gun your new acronym HAM (Humungous Asset Managers). GSCs have that unfair advantage of state-sponsored too-big-to-fail guarantee. Fighting fire with fire, as they say ...
Of course, some GSCs aren't traded on the open market and FNMA & FHLMC show that even U.S. gov't sponsored entities can fail with untethered excess but here's my list so far for hedging the HAM attack on our free markets:
Gazprom (Russia), nat gas monopoly; no U.S. exchange; rival Nabucco pipeline (U.S. & EU)
Saudi Aramco (Saudi Arabia)
China Petrochemical Corp subsidiary China Petroleum and Chemical Corp Ltd or Sinopec Ltd NYSE:SNP more downstream than PTR
China National Petroleum Corporation with state-owned arm
PetroChina Company Ltd NYSE:PTR
State Grid Corporation of China
Agricultural Bank of China
Industrial and Commercial Bank of China
On the week I capitulated by selling most of my equities based on my plan to exit when that Spanish spread to the German 10-yr bund signaled the arrival of some form of serious sovereign trouble (decisive spread crossing 4.25%), your logic serves as a confirmation that, even though I may have just 'locked in my loss', I can always re-enter another day. Technical triggers are better than opinionated ones ;)
"greece ending has already happened months ago. the news is just being told to report it now."
Greek depositors withdrew almost $1B from banks on Monday. Drudge Report headline link to the WSJ report on the run has been switch to a benign article about Greek stock losses. Matt must have gotten a phone call from the oval office? Spain's 10-yr bond spread to the German bund just blew past 4.75% yesterday. Old news? Really?
Spanish 10-year bond spread to the German 10-year bund just blew through confirmation point of 425 basis points to 4.75% to indicate trouble has arrived. This is far more problematic than the Greek situation receiving all the attention right now.
Probabilities: Print/Swap more fiat money or let some very large european banks fail. Merkel is all alone now. Printing announcement could goose the euro soon enough.
"Let me try once again: how is it a subject of outrage for us if they lost their own money trading? What was 'above the law' in that? 'These people should be blamed and stopped' - for trading losses?"
Read Pinto's comment over at KWN:
"The Fed buys a bond from JP Morgan, yielding say 2% on the 10-Year, and then they expect the bank, JP Morgan, to accept 25 basis points from the Federal Reserve. Now, they have to beat earnings by a penny, so what do they do?
Instead of allowing the 25 basis points to be given to them by the Federal Reserve, they go out and buy distressed European debt, and they hedge it by buying a CDS (credit default swap). Then the hedge blows up and they report a loss. So, once again, the Fed and the banks are to blame."
Simple. Jamie Dimon, who, by the way, is both the CEO and Chairman of THE WHALE, serves as a failed gambler of the shareholders of the Republic, not the freakin' bank.
Hope you see my point and don't rationalize it as equivalent to a too-small-to-save corporate shareholder loss.
"Both underperforming. I don't see any special news. Any comments please?"
Special news today:
(1) The Whale (JPMorgan Chase) opens up with a $2B loss over 3 months on a hedge proving that the entire Western financial system's safeguard theory of Value at Risk (VaR) through hedging risks and diversification IS A DOUBLE JEOPARDY GAMBLE starting to implode.
(2) Fourth largest Spanish bank nationalized to avoid a euro collapse.
(3) Facebook co-founder gives up U.S. citizenship in front of his IPO in the mother-of-all tax dodges as the billionaires throw patriotism/freedom out the window. When will Google quit the Republic and take its BIG BROTHER model elsewhere? Is that good or bad?
Money flows are confused right now on these major developments. PM miners have a high beta.
May be the Whale is covering that big silver Comex short ahead of a CFTC limit position ruling that's three years past due. Dimon says there's another $1B loss to come. Maybe the new Hong Kong metals futures exchange opening today as an alternative price discovery to the Comex/LBMA is the imputus.
"That post on gold you quoted for instance is taken completely out of context."
That quote related to the use of stops in that Livermore made more money sitting on his hands than using his stop-loss finger. I believe it's highly relevant to the use of stops but my reference to your day trades is what was perhaps out of context. Again, my apology.
Spanish spread decisively crosses 4.25% over the German zehn-jahre bund, insolvency has arrived. Let's see if this insolvent spread holds to default or if the EU steps in to bail.
"I don't pretend to even begin reading the gold prices and charts, that market is too weird to me." - 4/18/12 #107632
That remark stuck in my head. I don't understand why you consider it any more weird than say AAPL given its narrow long-term trend. I'm not attempting to challenge you here because I know you don't make such remarks without reason.
The issue of this thread was the use of stops. I inferred that you're a day trader because of your Trade-of-the-Day posts but I misconstrued your teachings without time scale. I apologize. I was just attempting to provide the posters with some pitfalls to avoid when setting stop losses.
I should stop wasting time here and read your lessons. It would be a better use of my time.
Vad -
"That's just a guess, isn't it. We have no idea how exposed they are."
I read there's $700+ trillion ($707,568,901,000,000 to be exact) in unregulated derivatives out there or more than 11x global GDP. Watching the nuanced way in which Greek debt was not allowed a 'technical' default serves as my proof that the ECB was loath to triggering the CDOs reportedly held by the big european sovereign-protected banks. No one can confirm unregulated OTC market of these instruments but rest assured they will stay that way to avoid bank runs. Just a guess ... ;)
http://www.zerohedge.com/news/707568901000000-how-...
Vad -
"IF they can't push it through and whole EU construct collapses, deflation continues and speeds up."
This scenario includes the derivatives trigger which will collapse western financial institutions. U.S. Fed likely to print to oblivion to save JPMorgan Chase, et al. Before massive money flows can rush back into stronger euro replacement, gold may initially play a safe haven role. Nobody knows but I would expect some really severe whipsaw action soon.
invariate -
" I don't care if my portfolio is worth 10% less at the end of the year if the dollars buy 20% more."
Subtract real inflation (See ShadowStats) from that 20% increase in buying power (inflation) and you will understand why you'll want a snorkel to survive. In other words, 20% increase in dollar's buying power does not make a gain if items purchased increase more.
baz22 -
Thinking same on PBR and bought some today. Mike Rothman, who has been going to all the OPEC meetings since 2006, offers up some interesting charts regarding tight oil supplies and unusual seasonal direction over at KWN.
http://kingworldnews.com/kingworldnews/KWN_DailyWe...
Got oil denominated in Real for a twofor?
Bill -
"Including bonds and other assets, the combined Assets Under Management of the eight units of Humungous Asset Managers that I listed is $16.0 trillion (Strategic Insight data)."
Thanks for the clarification. Golly. Can the eight units of HAM really effectively manage $16T given the instability of fiat currencies?! Makes the London Whale's $2B loss insignificant for sure. Gives new meaning to economies of scale ...
These eight HAMs must have all their powers of persuasion behind the IMF's SDR as the ultimate non-sovereign printing press money machine in global trade. Note how the IMF and G20 sovereign members have converged to create the SDR juggernaut.
Bill -
You hit a nerve indeed. In regards to market cap, allow me to narrow HAM v. GSCs to the oil sector as an example, to show the reserve breakdown as follows:
259.9 billion barrels: Saudi Arabian Oil Co.
136.2 bb: National Iranian Oil Co.
99.4 bb: Petroleos de Venezuela
7.6 bb: Exxon Mobil
7.3 bb: Chevron
5.8 bb: Conoco Phillips
http://online.wsj.com/article/SB100014240527487048...
Alternatively, Tata Motors may be small but its parent Tata Group represents all heavy industry in India with assets of $68.9 billion (2010-11) and revenue of $83.3 billion (2010-11). Most of the tradable GSCs are subsidiaries of sovereign behmoths.
You have mentioned national pride as an important aspect of Petrobras (NYSE:PBR) is yet another important counter to GSCs. Will Brazil stand by and allow HAM to smother PBR? I think it becomes as currency issue v. commodity inflation before a HAM takedown.
All this boils down to currency war in my mind since a concentrated attack by HAM on these GSCs will result in sanctions like SWIFT removal and the National Iranian Oil Co. trade in gold with Russia & India.
Bottom line, HAM will find it difficult to outwit centralized national power including those western-trained traders of Chinese largesse and therein lies the hedge.
What's AUM?
Bill -
I've been thinking about Gov't Sponsored Corporations (Mercantilism; GSCs) as the one investment entity available to out gun your new acronym HAM (Humungous Asset Managers). GSCs have that unfair advantage of state-sponsored too-big-to-fail guarantee. Fighting fire with fire, as they say ...
Wikipedia has an excellent summation of GSCs.
http://en.wikipedia.org/wiki/Government-owned_corp...
Of course, some GSCs aren't traded on the open market and FNMA & FHLMC show that even U.S. gov't sponsored entities can fail with untethered excess but here's my list so far for hedging the HAM attack on our free markets:
Gazprom (Russia), nat gas monopoly; no U.S. exchange; rival Nabucco pipeline (U.S. & EU)
Saudi Aramco (Saudi Arabia)
China Petrochemical Corp subsidiary China Petroleum and Chemical Corp Ltd or Sinopec Ltd NYSE:SNP more downstream than PTR
China National Petroleum Corporation with state-owned arm
PetroChina Company Ltd NYSE:PTR
State Grid Corporation of China
Agricultural Bank of China
Industrial and Commercial Bank of China
Aluminum Corp of China Ltd or Chalco NYSE:ACH
National Iranian Oil Company
Petroleos de Venezuela (Chavez),
Petrobras (Brazil); NYSE:PBR
Petronas (Malaysia)
BP (U.K.); NYSE:BP
Goldman Sachs (NY clan); NYSE:GS
Deutsche Bank; NYSE:DB
HSBC (U.K.); NYSE:HBC
SABIC (Saudi Arabia)
Tata Industries (India); TTM & TCL
Nippon (Japan); NTT
Eletrobras (Brazil); EBR
EDF (France)
Japan Post Holdings
Google (Space); NASDAQ:GOOG
Cemex (Mexico); NYSE:CX
Vad -
On the week I capitulated by selling most of my equities based on my plan to exit when that Spanish spread to the German 10-yr bund signaled the arrival of some form of serious sovereign trouble (decisive spread crossing 4.25%), your logic serves as a confirmation that, even though I may have just 'locked in my loss', I can always re-enter another day. Technical triggers are better than opinionated ones ;)
Cheers.
NYUGrad -
"greece ending has already happened months ago. the news is just being told to report it now."
Greek depositors withdrew almost $1B from banks on Monday. Drudge Report headline link to the WSJ report on the run has been switch to a benign article about Greek stock losses. Matt must have gotten a phone call from the oval office? Spain's 10-yr bond spread to the German bund just blew past 4.75% yesterday. Old news? Really?
Looks like the ECB will allow them to fail depending on your definition of 'is this a default' is a default?
Tighten seatbelts, folks.
http://online.wsj.com/article/SB100014240527023035...
Spanish 10-year bond spread to the German 10-year bund just blew through confirmation point of 425 basis points to 4.75% to indicate trouble has arrived. This is far more problematic than the Greek situation receiving all the attention right now.
Probabilities: Print/Swap more fiat money or let some very large european banks fail. Merkel is all alone now. Printing announcement could goose the euro soon enough.
dave -
"I'm not a fan of Communists, but its definitely one of the logical end-games when the (crony) "capitalists" continually act like thieves."
What about the socialists in gov't spending other people's money?
Vad -
So the Greeks get kicked out of the euro but don't default and ONLY borrow to cover euro debt and unstable interest. That ain't gonna last.
Vad -
"Let me try once again: how is it a subject of outrage for us if they lost their own money trading? What was 'above the law' in that? 'These people should be blamed and stopped' - for trading losses?"
Read Pinto's comment over at KWN:
"The Fed buys a bond from JP Morgan, yielding say 2% on the 10-Year, and then they expect the bank, JP Morgan, to accept 25 basis points from the Federal Reserve. Now, they have to beat earnings by a penny, so what do they do?
Instead of allowing the 25 basis points to be given to them by the Federal Reserve, they go out and buy distressed European debt, and they hedge it by buying a CDS (credit default swap). Then the hedge blows up and they report a loss. So, once again, the Fed and the banks are to blame."
http://kingworldnews.com/kingworldnews/KWN_DailyWe...
Simple. Jamie Dimon, who, by the way, is both the CEO and Chairman of THE WHALE, serves as a failed gambler of the shareholders of the Republic, not the freakin' bank.
Hope you see my point and don't rationalize it as equivalent to a too-small-to-save corporate shareholder loss.
ennar -
"Both underperforming. I don't see any special news. Any comments please?"
Special news today:
(1) The Whale (JPMorgan Chase) opens up with a $2B loss over 3 months on a hedge proving that the entire Western financial system's safeguard theory of Value at Risk (VaR) through hedging risks and diversification IS A DOUBLE JEOPARDY GAMBLE starting to implode.
(2) Fourth largest Spanish bank nationalized to avoid a euro collapse.
(3) Facebook co-founder gives up U.S. citizenship in front of his IPO in the mother-of-all tax dodges as the billionaires throw patriotism/freedom out the window. When will Google quit the Republic and take its BIG BROTHER model elsewhere? Is that good or bad?
Money flows are confused right now on these major developments. PM miners have a high beta.
May be the Whale is covering that big silver Comex short ahead of a CFTC limit position ruling that's three years past due. Dimon says there's another $1B loss to come. Maybe the new Hong Kong metals futures exchange opening today as an alternative price discovery to the Comex/LBMA is the imputus.
Okay then Vad, thanks. You've got my attention. I'll have to re-read Livermore in regards to 'sitting tight' as part of his selling rips/buying dips.
Vad -
"That post on gold you quoted for instance is taken completely out of context."
That quote related to the use of stops in that Livermore made more money sitting on his hands than using his stop-loss finger. I believe it's highly relevant to the use of stops but my reference to your day trades is what was perhaps out of context. Again, my apology.
nebish -
Spanish spread decisively crosses 4.25% over the German zehn-jahre bund, insolvency has arrived. Let's see if this insolvent spread holds to default or if the EU steps in to bail.
Vad -
"I don't pretend to even begin reading the gold prices and charts, that market is too weird to me." - 4/18/12 #107632
That remark stuck in my head. I don't understand why you consider it any more weird than say AAPL given its narrow long-term trend. I'm not attempting to challenge you here because I know you don't make such remarks without reason.
The issue of this thread was the use of stops. I inferred that you're a day trader because of your Trade-of-the-Day posts but I misconstrued your teachings without time scale. I apologize. I was just attempting to provide the posters with some pitfalls to avoid when setting stop losses.
I should stop wasting time here and read your lessons. It would be a better use of my time.