As the markets were heading into the close on Friday afternoon, I noticed that silver and gold were rallying and the newswire failed to provide any headline for the a substantial price rise. (There was no Syria news or any other type of geo-political event.) The weekend news also failed to support the rally at least until a few hours ago when the Washington Post ran a headline announcing that Larry Summers had withdrawn his name for consideration for Chairman of the Fed. Many pundits have been maintaining that Summers would be quick to end the entire QE program and thus would have a negative impact on all asset prices. Nonsense in the first degree, but as a trader, the first rule is to respect prices. The removal of Summers has led to the U.S. dollar selling in early Asian trading as the anticipation is now the Fed will be under a Chairman more in step with the Bernanke method of central bank theory.
The important outcome is that President Obama decided it was not worth wasting political capital and energy to support Larry Summers. In my HUMBLE OPINION it is a huge loss for Wall Street as President Obama has discovered that the left-wing of the Democrats in line with the Republican Tea Party was a powerful force and was representative of Main Street instead of Wall Street. The Wall Street success in blocking Elizabeth Warren as the head of consumer financial affairs has been a blowback to HUBRIS. We don’t know who will be the White House nominee but if it is Yellen, this will be a huge defeat for the Wall Street money machine. The other big loser is the political mouth of CNBC, John Harwood, and his claim to insider privileged knowledge. Speaking of insider knowledge, who was buying the precious metals on Friday? It could have been any of 535 members of an illustrious legislative body.
***In the Bavarian State elections held today, Chancellor Merkel’s sister party, the Christian Social Union (CSU) polled a very strong 49%, which was expected. A possible problem though is that Merkel’s main coalition partner, the FDP, failed to achieve the necessary 5 percent, which may prove ominous for the present Merkel government going into next week’s national election. The CDU leadership may feel strong enough that they will push dome present CDU voters to vote for the FDP in order to prevent a coalition of the CDU/SPU. The anti-euro party, AfD, did not field a candidate in Bavaria as our man in Berlin, GREEN AB, wrote in a post to Notes From Underground last week. We will be very attentive to the German news this week for the election outcome will have a bearing on the overall European financial situation.
Tags: Angela Merkel, CDU, CSU, Fed, German elections, Larry Summers, Wall Street
September 16, 2013 at 1:30 am |
Hi Yra, Re- precious metals upward move on Friday, could also likely be the result of an alleged surrendering of info by 2 whistleblowers from JPM regarding manipulations in this market. I cannot confirm whether this report is 100% correct. Perhaps you could source some info as you are a lot closer to the action there than I am here in Oz. I would appreciate some feedback on your findings, many thanks. Cheers, Ian.
September 16, 2013 at 5:37 am |
King World news had Andrew Maguire reporting two JPM whistleblowers have come out stating the Investment House is manipulating the gold & silver markets.This could have been the catalyst.
September 16, 2013 at 7:44 am |
Not sure how WS looses when the market rises unless the concept renders a limiting regulatory blow to TBTF, which is a potential win for the little guy in a sense but that will never happen in a meaningful way IMHO.
So Fluor and NuScale along with Rolls Royce have announced scalable reactors, I bet Japan goes this route?
September 16, 2013 at 8:46 am |
Chicken–this is definitely about regulation of the large banks.Minimize it at your own risk but the winds of change against wall street are growing and the tbtf banks know it
September 16, 2013 at 8:48 am |
Silverburg and Ian –cannot confirm but you post but that is interesting but why that would rally the metals late on a friday is questionable.The irrational fear of Summers was more in play because of his open views on QE–again my humble opinion
September 16, 2013 at 12:34 pm |
Quite right yra, I’m unprepared to minimize anything, just to be clear. 🙂 My eyes and ears remain open to all ideas and observations on behalf of those wiser than I, don’t consider myself invincible to any extent.
Again, thanks for you thoughts, seriously. 🙂
September 16, 2013 at 2:42 pm |
Everyone shoot me your favorite posts from the Underground guru. I will compile at the end as we know it will still bring importance to all of us by looking at some of our “winners” and “learning” trades taken.Mario@vfund.com. Another shift in the wind with Summers out now will it be Kohn or Geithner or can Yellen hold out. Yellen’s nomination would come as a result of a liberal repudiation of Wall Street so we are likely to know a lot more very soon.