Tuesday, November 9, 2010


Desperate measures for desperate times. Like the child that refuses to take their medicine for their pneumonia, we continue to refuse try and get our sugar high instead with QE. Gold continues to explode and is trying to break through a hidden pivot of 1422 today. As talked about on this blog for almost two years Gold and Silver will be monsters that will shock you and now reality is beginning to be evidenced. The carry trade unwind with the yen in 2008 that fueled the global liquidity crises then can easily occur again here in the near future with the dollar carry trade that is now at 4 Trillion a day. It was 2 Trillion a day in 2007. Think there might be a problem? Look for Europe for the first cracks soon.

From the Irish times...

Irish bond yields rose for the tenth day in a row today ahead of EU economic commissioner Olli Rehn’s visit to Dublin.

The risk premium demanded by lenders on Government 10-year bonds rose to 7.87 per cent this evening, a record 5.48 percentage points ahead of the rate paid by Germany.

Last week the spread reached 5.34 per cent, the most since Bloomberg began collecting the data in 1991, before narrowing to 5.2 per cent.

"Irish debt is trading poorly, along with Portugal, and that lends support to bunds," said Peter Schaffrik, head of European rates strategy at Royal Bank of Canada Europe in London. "There are clearly concerns over the current Irish budget, the plan and the political support."

NCB Stockbrokers said it was “increasingly likely" that Ireland would have to seek aid from the European Union-backed rescue fund (EFSF).

"When your sales force doesn't believe it can drum up sufficient demand for Irish bonds at feasible rates, it gives an indication of sentiment," NCB chief economist Brian Devine said today, referring to comments by primary dealers in Irish bonds.

"It is increasingly looking like the European Financial Stability Fund is the most likely scenario."

The Government, which said it needs €15 billion in savings over the next four years, is struggling to convince investors it can reduce its budget deficit and cover the cost of bank bailouts without outside help.

Mr Devine said tapping the EFSF may be a "positive for both the Irish economy and the bond market" as long as the government can retain control of its tax policy, especially its 12.5 per cent corporate tax rate.

However, investment bank Nomura sounded a more upbeat note, suggesting bond yield premiums demanded by investors to hold Irish and Portuguese debt may stabilise.

"This crisis, fuelled by little true news, has entered a new phase and we expect some shorter-term stability," a team of analysts in London wrote in a research report today.

Nevertheless, Greek bonds also rose after prime minister George Papandreou ruled out calling snap election after a first round victory in local elections.

"Bunds are being driven by concerns over the peripherals," said Christoph Rieger, head of fixed-income strategy at Commerzbank AG in Frankfurt.

"The market is focusing on these issues after last week concentrating on the Federal Reserve and its quantitative easing."

German bonds have returned 8.6 per cent this year, compared with an 8.9 per cent gain for US Treasuries, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies.

Greek debt has lost 18 per cent, Irish securities lost 9.9 per cent, while Portuguese bonds lost 7.9 per cent, the indexes show.

The euro fell against the dollar on the back of solid US jobs and renewed concern over euro zone peripheral debt.

With the US Federal Reserve's decision to launch more quantitative easing out of the way, euro zone debt problems seemed to have reappeared on traders' radars.

The euro dropped 0.5 per cent to $1.3953, after triggering stops as it fell through $1.4010 and $1.3990, its low of last Wednesday when the Fed said it would increase its asset purchases.

Some experts said the euro could fall towards $1.3750, having hit a late October low of $1.3756.

Euro/yen selling out of Tokyo was also said to have helped send the single currency lower, which in turn weighed on other currencies against the yen.


  1. CHK worth a look....also STP have position in too........DCTH ...baboom

  2. ALU on resistance at 3.15....buying today

  3. dj,

    what makes DCTH unique is their drug delivery system. The drug itself is already FDA approved by other biotechs, DCTH using PHP is supposed to deliver the drug much more efficiently to patients with better results, market cap would be huge. I have given our resident doctor here ( kli) an assignment which is share the article I posted to you yesterday with oncologists in his hospital and report to us his findings .

  4. Palmer,

    You mentioned a few weeks back to start sniffing Alu @ 3 but can't recall your target could you be kind enough to repost........ Will print comments of interest from now on.



  5. Tom,

    If ALU drops to 2.80 and daily volume in the down side is reduced that would make it an attractive buy. Look at volume daily and look for signs of bottoming. $3 is a good test to see if it holds or not.

  6. support held on SnP.....rats......lets see if 1215 breaks

  7. DCTH sounds great Palmer Joe I am hoping to buy some after a pullback so far not one...lol...thks for the input..

  8. Where is HOMER? He has not posted in a while.

  9. Looks like 1215 could break here. Looking forward to kli's report on dcth delivery system. Big, big turnaround for gold/silver today, but they always do this at G-20 time it seems.

  10. Grabbed a little bit of ALU at 3.11, can't resist grabbing it at the day's low, 2.80 be damned.

  11. Wow, non-GORO PMs getting battered here, talk at Zerohedge is that margin requirements are going up for silver.. Gee, thanks JPM.

  12. Did I say "low of the day"? I meant.. uh.. well.. cya at 2.80, bah!

  13. Morla,

    Do not just look at the ALU price, it's combo of price + daily volume. If ALU gets down to 2.80 but the volume is still heavy in the down side then that means more to go. Last time when ALU bottomed around 2.25, volume was not 40M, more like 6 to 10M.

  14. everything is still relatively normal so we will continue to play the range bound cycles in stocks and commodities.

  15. As for ALU, holding 3 is important otherwise the next bounce point is around 2.50-2.75, with a possible route to test 2.25 again. This is totally separate from the rest of the market at this point due to their free cash flow. Might play the gutter bounces later but for now market is ready to pullback to recharge its batteries, for another stagflation leg up later short of a real black swan event.

  16. Thanks Joe, I did see what you said about the volume.. Mostly today I just felt like making a small buy to follow Kli to the slaughter. If we get your nice clean bottom scenario I may add more then.

  17. My oncology report is helpful but not certainly not final.....He is aware of but not using the system. NO WAY he can tell if it gets approval but I have to feel that its oncology use makes it a HIGH probablility....anyway.....use your own judgement...I will add on pullbacks