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jickiss is back!

 

 

 

jickiss is back!

 

 

 

and

 

Dear Bungster, tanks for your observation on the doolar....nevertheless, AUY yearnings are out early next week, the three big mines are looking better and better, and

 

your jickiss is not afraid of da Boyz, at this point, for the AUY item is now off 5 days in a row, and the gold chart is getting smacked due to liquidations in the current contract to roll positions forward, esp to the December contract. da General says we ought to be afraid, buy your jickiss thimks that da Boyz can not make any real coin shorting da Miners lower, as they are too low to make a killing now for Shorts.

 

anyway, your jickiss expects a nice rally very soon in AUY, ABX, NEM, GG, etc., etc.

 

do believe that Gold Mining is a better business than Commerical RE in San Francisco, Kali.

 

pls click and review the below linked story.... Trouble. Even the 4 Seasons Hotel in is fin trouble, it says...SFO, soon to sink into the Bay. How Coit!

 

jickiss!!!!!!!

 

http://www.sfgate.com/cgi-bin/article.cgi?...ref=patrick.net

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jickiss is back!

 

 

 

jickiss is back!

 

 

and

 

Dear Jorma,

 

for sure, Goldman has never been shy when it comes to "Asking for the Order." A part of the trouble is mainly a function of having a lot of capital, versus, let's say, others that also want the business, but do not have the depth of capital to market, to send in teams of people the dumbest of which were in the top 40 at Harvard B School, and schmooze over Five Hundred Dollar Bottles of Wine at the finest clubs and dinner spots, not to mention "the long walks" to the cabs that drive home the clients. Sometimes it can take quite a long time to get to the cab...

 

jickiss!!!!!!!

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"Dow Sends Buy Signal That’s Worked Since 1921: Chart of the Day "

 

That's actually an overstatement, at least they posted the numbas:

Aug. 9, 1978 -3.74% -7.76% -9.83%

Sept. 11, 1939 -16.61% -4.49% -5.20%

July 6, 1938 -3.05% 10.95% 7.49%

Aug. 29, 1932 37.72% -31.68% -21.87%

 

Nice drawdown on '32, 6 months after the buy signal "that works since 1921".

 

http://www.bloomberg.com/apps/news?pid=206...id=aCbacdLSWjCs

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S&P reported P/E -- 724

 

(23rd July)

ACTUALS

09/30/2009 -- 723.87

03/31/2009 -- 116.31

12/31/2008 -- 60.70

09/30/2008 -- 25.38

06/30/2008 -- 24.92

03/31/2008 -- 21.90

12/31/2007 -- 22.19

09/30/2007 -- 19.42

06/30/2007 -- 17.70

03/31/2007 -- 17.09

12/31/2006 -- 17.40

09/30/2006 -- 17.00

06/30/2006 -- 17.05

03/31/2006 -- 17.82

12/31/2005 -- 17.85

09/30/2005 -- 18.46

06/30/2005 -- 18.80

03/31/2005 -- 19.57

12/31/2004 -- 20.70

09/30/2004 -- 19.29

06/30/2004 -- 20.32

03/31/2004 -- 21.66

12/31/2003 -- 22.81

09/30/2003 -- 25.82

06/30/2003 -- 28.21

03/31/2003 -- 27.97

12/31/2002 -- 31.89

09/30/2002 -- 27.14

06/30/2002 -- 37.02

03/31/2002 -- 46.45

12/31/2001 -- 46.50

09/30/2001 -- 36.77

06/30/2001 -- 33.28

03/31/2001 -- 25.54

12/31/2000 -- 26.41

 

http://online.barrons.com/article/SB121158...s_magazine_main

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The Department of Commerce releases it's first estimate for 2nd quarter GDP at 8:30 AM Friday. Q1 was -5.5%. The rate is a statement of the annual rate.

 

Anything above -5.5% is green shoots, technically. This thing is going to be gamed six ways to Sunday. Should be fun.

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But I want to say that I think you reveal an analytic vulnerability above. And it is the following.

 

You note that 10-year yields have risen from 2.1% to 3.65% now, as a direct result of the constant barrage of supply. I don’t dispute that. In the aggregate, what does that mean for the incremental costs the USG has paid for the net additional debt that's been issued in that time? I imagine quite a lot: incremental supply creates its own incremental costs. I assume that you would acknowledge, therefore, the implication that "They" can't control price over periods of time that stretch into weeks/months/years. Supply dictates price over those periods.

 

That leaves manipulation only available over very short time frames - which is essentially what you've maintained in that, on auction day, certain observations are made regarding fluctuation in equity markets, whose activity benefits the incremental pricing of debt issuance over periods of minutes/hours. I believe it is believed to have recurred today, and in fact, Speakeasy posted a very compelling two-day chart. Wash, rinse, repeat.

 

I lay this out in this manner, because I honestly do not want to misrepresent any claim, and thereby create a situation where I am disputing arguments that no one is making, and put anyone in a position to "defend" positions they never made. That's not my interest here - I am agnostic about all this stuff, but am a ruthless unforgiving empiricist who is only seeking compelling evidence.

 

Now, presumably, some Party somewhere is directing execution of a series of trades in public capital markets to create a momentary pricing advantage on pubic debt around auction time. On a relative basis, in terms of the acknowledged incapacity of this same Party to control the longer term trajectory of the yield curve and thereby (more) advantageous pricing, the incremental pricing advantage is actually a drop in the proverbial cost bucket... since the intra-day basis point advantage is frankly background noise to the inter-week basis point disadvantage that the supply itself creates.

 

If I understand the hypothetical mechanism, it involves battering down of equity markets ahead of auctions to generate incremental fear and therefore incremental demand for the public debt being issued (under the theory that I do not dispute that liquidity must flow somewhere).

 

Now, as a tedious empiricist, let me say that the price behavior of the auction itself is not sufficient evidence of presumed manipulation – I think that is where I depart with someone like Patents here for whom price-patterns are sufficient evidence of manipulation. They are not for me. To some extent, I find that perspective akin to Creationists pointing to the variety of Life on the planet as sufficient evidence of a Divine Creator. That is sufficient evidence for some; similarly, price behavior evidence should be as abundantly apparent to everyone as the Lord’s creatures are of His existence to a Born Again.

 

“So, what evidence would convince you?” Well, first the Intervention Theory needs mechanisms – in this case, selling in equity futures markets has been floated. Okay. As such, on auction day, there should be some incremental volume to reflect the market-moving participation of the Party who otherwise is not around on non-auction days. That would be a useful indicator to me of that mechanism.

 

Here’s another question – empirical – that can be estimated: “What sort of avoided cost is the Party generating by this intervention?” That is, but-for the intervention of the Party, how many bps higher would auctions be clearing, and what then is the implied savings on financing? (Not to drag CWD/Zero Hedge into this, but there was a similar claim & exercise available regarding claimed manipulation in overnight equity futures markets a few weekends ago – I did the math and determined to my own satisfaction that despite claims that only a very, very large player could have been the party, in fact, its size was overstated and the representations of it did not hold water to my satisfaction).

 

Okay, a little math with my TI BAII+

 

N = 5 (years - ignoring biannual coupon payments)

PMT = 1.11891 (i.e., ignoring biannual payments, 2.869% coupon rate times the $39b offering)

PV = -$39

FV = $39

I/Y = ?

 

Calculating I/Y = 2.869 (but then, I have simply demonstrated a truism about coupon rates and discount rates for bonds selling at par).

 

However, now, let’s presuppose that in the absence of intervention, the true coupon for the offering would have been 3.0%. (If you want a higher assumption, I will accommodate it.) How much was saved by intervention from the Party?

 

Well, the difference is 0.131% of annual coupon on $39B = $51,090,000/year in avoided coupon payment. What’s the present value of that coupon stream given the I/Y discount rate of 2.869% estimated above? $234 million. That’s a lot, right? Not really – it constitutes “savings” of less than 1% on the issuance (i.e., $234m/$39B). It is 0.006 of present value savings on issuance value.

 

Now, I am to understand that the Party is exposing the larger credibility of debt issuance itself to the advantage of less than 1% of present value savings, in an environment where the Party must recognize that supply itself limits its ability to control rate movements of larger scale (and financial impact) over longer time periods?

 

If the gain was enjoyed privately, I might buy it – but unless I am missing something, it constitutes a public “savings.” Further, however, it must be offset by the costs of executing the markdown in futures and other capital markets (unless the Party is so adept, that it is able to reverse all its futures positions to execute the smackdown in a manner that avoids any cost of the smackdown).

 

I’m out of time for now, but I utterly invite comment.

 

[Prior posting edited for this response.]

I respectfully suggest that you understand neither what I have said, economic theory, nor history.

 

But in response to your above arguments and invitation for comment, I advance a first point that you assume everything is a single market thereby ignoring the costs of the various type of transactions and other related factors. Assuming that we are discussing treasuries for purposes of argument, there are the underlying securities and then there are several levels of derivatives. Each of these types of instruments are treated differently for accounting purposes. Each requires different initial funds and costs to hold. There are limited number of bonds to be traded, but unlimited numbers of counterpart futures and option contracts, yet another example. Again for example, the power of futures has been long recognized as being able to move the price of the underlying securities.

 

Another consideration relates to the mix of time frames that you address. For instance economic and market forces are different over a short time frame than a longer time frame. Just like our physical theories are vastly different at the cosmological level than they are at the sub-atomic particle level. (An apples and oranges type of argument over a time frame reference.)

 

In general I submit that your analysis of mechanics of a complex system is not "rich" enough, that is the analysis does not consider a sufficient number of independent variables and does not adequately model the world and the rules of the game.

 

I will simply leave it at that.

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The Jim Willie conclusion:

 

"A whopping $250 billion in official USTreasury auctions is planned for this current week, which must seem like a misprint. That volume requires greater monetization, greater stock losses, or newer innovative programs to encourage foreign creditors. The bigger apparent misprint is the USGovt deficits. The Wednesday auction was for $39 billion, almost four times a typical entire month from over a year ago. It fetched only 1.92 bid/cover ratio, when a 2.20 ratio had been seen recently, with 2.689% in paid yield. One must be a moron to find USTBonds a safe prudent investment these days." http://www.financialsense.com/fsu/editoria.../2009/0729.html

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I got busy yesterday and couldn't respond to the M2M, but really wanted to. I have thoughts on this, but apparently work is going to dictate that some wait.

 

But I want to say that I think you reveal an analytic vulnerability above. And it is the following.

 

You note that 10-year yields have risen from 2.1% to 3.65% now, as a direct result of the constant barrage of supply. I don’t dispute that. In the aggregate, what does that mean for the incremental costs the USG has paid for the net additional debt that's been issued in that time? I imagine quite a lot: incremental supply creates its own incremental costs. I assume that you would acknowledge, therefore, the implication that "They" can't control price over periods of time that stretch into weeks/months/years. Supply dictates price over those periods.

 

That leaves manipulation only available over very short time frames - which is essentially what you've maintained in that, on auction day, certain observations are made regarding fluctuation in equity markets, whose activity benefits the incremental pricing of debt issuance over periods of minutes/hours. I believe it is believed to have recurred today, and in fact, Speakeasy posted a very compelling two-day chart. Wash, rinse, repeat.

 

I lay this out in this manner, because I honestly do not want to misrepresent any claim, and thereby create a situation where I am disputing arguments that no one is making, and put anyone in a position to "defend" positions they never made. That's not my interest here - I am agnostic about all this stuff, but am a ruthless unforgiving empiricist who is only seeking compelling evidence.

 

Now, presumably, some Party somewhere is directing execution of a series of trades in public capital markets to create a momentary pricing advantage on pubic debt around auction time. On a relative basis, in terms of the acknowledged incapacity of this same Party to control the longer term trajectory of the yield curve and thereby (more) advantageous pricing, the incremental pricing advantage is actually a drop in the proverbial cost bucket... since the intra-day basis point advantage is frankly background noise to the inter-week basis point disadvantage that the supply itself creates.

 

That about right?

 

If I understand the hypothetical mechanism, it involves battering down of equity markets ahead of auctions to generate incremental fear and therefore incremental demand for the public debt being issued (under the theory that I do not dispute that liquidity must flow somewhere).

 

Now, as a tedious empiricist, let me say that the price behavior of the auction itself is not sufficient evidence of presumed manipulation �" I think that is where I depart with someone like Patents here for whom price-patterns are sufficient evidence of manipulation. They are not for me. To some extent, I find that perspective akin to Creationists pointing to the variety of Life on the planet as sufficient evidence of a Divine Creator. That is sufficient evidence for some; similarly, price behavior evidence should be as abundantly apparent to everyone as the Lord’s creatures are of His existence to a Born Again.

 

It doesn't suffice for me.

 

“So, what evidence would convince you?” Well, first the Intervention Theory needs mechanisms �" in this case, selling in equity futures markets has been floated. Okay. As such, on auction day, there should be some incremental volume to reflect the market-moving participation of the Party who otherwise is not around on non-auction days. That would be a useful indicator to me of that mechanism.

 

Here’s another question �" empirical �" that can be estimated: “What sort of avoided cost is the Party generating by this intervention?” That is, but-for the intervention of the Party, how many bps higher would auctions be clearing, and what then is the implied savings on financing? (Not to drag CWD/Zero Hedge into this, but there was a similar claim & exercise available regarding claimed manipulation in overnight equity futures markets a few weekends ago �" I did the math and determined to my own satisfaction that despite claims that only a very, very large player could have been the party, in fact, its size was overstated and the representations of it did not hold water to my satisfaction).

 

So, to give an example, here is a snip from Bloomberg today:

http://www.bloomberg.com/apps/news?pid=206...id=ax1OllrFe9fc

 

Okay, a little math with my TI BAII+

 

N = 5 (years - ignoring biannual coupon payments)

PMT = 1.11891 (i.e., ignoring biannual payments, 2.869% coupon rate times the $39b offering)

PV = -$39

FV = $39

I/Y = ?

 

Calculating I/Y = 2.869 (but then, I have simply demonstrated a truism about coupon rates and discount rates for bonds selling at par).

 

However, now, let’s presuppose that in the absence of intervention, the true coupon for the offering would have been 3.0%. (If you want a higher assumption, I will accommodate it.) How much was saved by intervention from the Party?

 

Well, the difference is 0.131% of annual coupon on $39B = $51,090,000/year in avoided coupon payment. What’s the present value of that coupon stream given the I/Y discount rate of 2.869% estimated above? $234 million. That’s a lot, right? Not really �" it constitutes “savings” of less than 1% on the issuance (i.e., $234m/$39B). It is 0.006 of present value savings on issuance value.

 

Now, I am to understand that the Party is exposing the larger credibility of debt issuance itself to the advantage of less than 1% of present value savings, in an environment where the Party must recognize that supply itself limits its ability to control rate movements of larger scale (and financial impact) over longer time periods?

 

If the gain was enjoyed privately, I might buy it �" but unless I am missing something, it constitutes a public “savings.” Further, however, it must be offset by the costs of executing the markdown in futures and other capital markets (unless the Party is so adept, that it is able to reverse all its futures positions to execute the smackdown in a manner that avoids any cost of the smackdown).

 

I’m out of time for now, but I utterly invite comment.

 

You're probably right. On the surface, it looked like manipulation to me, but I can't quibble with your reasoning. At the very least, manipulation would be difficult to prove. There's no smoking gun.

 

As to your reference to the data and logic put out by publications like Zero Hedge, I have noted the same thing-- a real sloppiness about verifying data, then misusing data which I knew to be false to support their preconceived notions.

 

I work differently. I study data that I have verified to the best of my ability. If it doesn't pass the smell test and I can't verify it, then I don't use it. Then I take that data and connect the dots as best I can. I may deduce certain conclusions directly and logically and in other cases, intuitively, based on the weight of the evidence and how it "feels." If my feelings are subsequently disproven or proven, all that goes into the mix as the process of researching, analyzing, and concluding along the time continuum goes on.

 

I find that many pundits are guilty of coming into the game with preconceived notions, then using the time honored scientific practice of making shit up to support their prejudice.

 

I try my best to start with the facts and let my opinions flow from those facts. If someone can logically prove that my conclusion is incorrect, then I make the adjustment, and build from there. That's why you all are so important to me. You provide many of the building blocks whereby I can adjust my thinking over time.

 

But if I think someone is full of shit, well then....

 

 

:lol:

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