It was only a year ago that the PRECIOUS METALS were laboring under the continued selling of GOLD and SILVER as the John Paulson hedge funds were liquidating long positions to meet the huge amount of redemptions by long-time investors exiting the decade’s best performing FUNDS. In a repeat, Morgan Stanley announced today that it was redeeming its investors out of Paulson’s two largest funds after another year of questionable performance. In today’s world where one hedge fund can hold massive positions, divestment by disgruntled investors can initiate massive corrections. In 1980, when the Hunt Brothers caused great turmoil in the silver markets, they had a mere BILLION DOLLARS to play with (the Paulson funds control close to $15 billion under management.) As traders and investors it’s our job to be cognizant of all the animals in the jungle. When the elephants retrace their steps from the watering hole, small animals can get crushed (Niederhoffer).
Posts Tagged ‘gold/euro’
Well, the famed modeler from M.I.T. has finally admitted that he has been an avid reader of Notes From Underground and in the world of global macro finance, 2+2=5. The FOMC statement was a surrender to the work of Michael Woodford as was pre-released in a Janet Yellen speech a few weeks ago. The FED will give great credence to a 6.5% unemployment and a 2% inflation threshold, give or take a 0.5% discretionary prerogative. The 6.5% unemployment threshold is also subject to FED discretion for it seems to depend on whether or not the labor participation rate is increasing while the unemployment rate declines.
Due to the availability of virility enhancers, the Italian political arena is plagued by billionaires who still believe they remain relevant. The ability to sustain an erection does not make you politically astute. Today’s effort by Silvio Berlusconi to undermine the Monti government led to a selloff in the Italian debt markets which caused 10-year rates to rise 13 basis points. Mr. Berlusconi didn’t want to bring the present government down but merely wanted to exhibit his relevance to the Italian political establishment. What the Greek debt problems couldn’t do, a 76-year-old man with a bottle of Viagra was able to accomplish. Elections are going to be held soon and the Monti coalition will be called to account. Now with all the problems confronting the peripheral governments the attempts of a disgraced former prime minister to prove his manhood is just an exhibition of the absurd. Pay no attention to the man with unnatural bulge in his ego.
Yes, the FED released its FOMC statement today and there were no changes to the FED’S POLICY NOW AND FOR THE EXTENDED PERIOD INTO 2014. So here was nothing to upset the markets and as I read the statement for the third time in a 15-minute period, old man thoughts turned to BUYING GOLD. As a veteran trader and subsequently global macro investor for 35 years, the price action did not perform to my satisfaction. The January 25 FOMC statement was very similar. While that FOMC missive provided for the impetus for GOLD to rally and close on its highs, the action today was totally opposite as GOLD sold off and the EQUITY MARKETS RALLIED. The January 25 release also saw the EQUITIES RALLY into the close but today the stocks left the GOLD behind.
All these years of the high level meetings at the World Economic Forum in Davos and what do we have to show for its efforts? At the INSIDERS BALL, where the elites exchange views and pay up to $500,000 for the privilege to listen to ideas that are to move the global capitalist system forward. If the results of the last decade are the aggregation of the best ideas that the “best and brightest” are capable of, then it is time to end the charade of Davos and send the global elite home in tears before they can cause any further damage? The DAVOS crowd has fared well as the global economy has suffered creating a huge question mark over the policy output that is the result of the global hierarchy gathered in the scenic environs of Switzerland. This view is not new as the economist Adam Smith warned long ago: