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Dec 9 2014
USDJPY Collapses 350 Pips, Drags Japanese Stocks Down 700 Points
Submitted by Tyler Durden on 12/09/2014
China's overnight destruction of $80 billion of eligible collateral from the great global carry trade has had destructive consequences on the massively crowded short JPY (long USDJPY) trade. Haviung already lost ground following the dismal downward revisions in GDP, USDJPY is down 350 pips from yesterday morning's highs (This is the biggest 2-day drop in USDJPY in 18 months.) and the Nikkei 225 is down over 700 points in the same period... Abe approval ratings are plunging-er. Did the downward revision to Japanese GDP straw finally break the back of the Central Bank Omnipotence camel?
Venezuelan Bonds Crash To Lowest Price Since 1998
Submitted by Tyler Durden on 12/09/2014
Bond prices in Venezuela have totally collapsed this morning - at 45c on the dollar, they are the lowest since 1998 - as the realization of the "abyss" they are staring into sparks an exodus from all credit positions in the country. VENZ 5Y CDS rallied 130bps which signals hedgers unwinding and the simultaneous sale of the underlying bonds implies broad-based capital flight (and profit taking) as 1Y CDS surges to record highs at 4830bps.
High-Yield Credit Crash Accelerates
Submitted by Tyler Durden on 12/09/2014
High-yield energy bond spreads are crashing-er. Up 15bps to 880bps today, these are record wides and massively impact the economics of these firms - no matter how much investors want to ignore it. This is contagiously spreading across the broad high yield and even investment grade credit markets as high yield bond prices crash below the mid-October Bullard lows...
Greek Bond Curve Inverts As Stocks Crater
Submitted by Tyler Durden on 12/09/2014
Amid the collapse of the global carry trade, no nation on earth has benefited more (and is now suffering more) from the dash-for-trash, buy-the-pig-sty trade than Greek stocks and bonds. Combining carry unwinds with uncertainty over snap Presidential elections (which could usher in a left-wing anti-EU party into power) and a 'technical-only' extension of its handouts from Troika and Greek capital markets are in freefalll. The Athens Stock Index is down over 11% on the day, destroying 3 weeks of gains; the Greek 3Y bond price has collapsed (as the carry-traders pile out through small doors) inverting the yield curve - never a good sign.
China Crashes: Shanghai Composite Plunges 5.4% Amid Record Trading, Biggest Tumble Since 2009
Submitted by Tyler Durden on 12/09/2014
Those who have been following the ridiculous moves in the Shanghai Composite in recent months, knew it was only a matter of time before yet another major stock market (one which recently surpassed the Nikkei for the second largest spot in the world) crashed violently, further eroding faith in the centrall-planned "price discovery" process. The only question was when. Tonight we got the answer.
Gold Surges To October Highs, Snaps Japanese Linkages
Submitted by Tyler Durden on 12/09/2014 -
Gold prices have surged this morning to their highest since October (over $1221) as leveraged hot money greatly rotates its repo-driven way out of risk assets and into Greenspan's alternative currency. However, there is a bigger problem for the biggest pairs trade that no one is discussing - apart from us - the decoupling of the long Nikkei, short gold trade as the repo market folds in on itself from the suck out of $80 billion in collateral by China...
Surveying The Carnage: Bullion Bounces, 30 Year Below 2014 Lows, Stocks Dump
Submitted by Tyler Durden on 12/09/2014
While it took a few hours for people (and machines) to realize exactly what China did last night, the fallout in risk markets is now clearly evident when a central bank decides enough-is-enough for speculative wealth creation bubble-followers. As we described last night, China's tightening has dramatically influenced the carry trade (USDJPY back under 120) and thus global stocks (from Abu Dhabi to Greece), global corporate bonds (all significantly wider) and European peripheral bonds (cracking wider) all face pressure. The beneficiary safe havens so far are precious metals (Gold > $1315) and US Treasuries (30Y at 2014 low yields). For now the mainstream media's narrative is that this oil-driven (which is fantasy as oil prices are up today) - this is the fallout from the marginal removal of $80bn of leverage collateral from the world's carry trades.
(End of articles -- our thanks to www.zerohedge.com for above articles)
Subscribers to goldtrends have been trying to buy gold in the 1183 area since last Thursday and at 1173 since Monday. We got as low as 1186 and this morning once we breached above 1208, I issued a buy via e-mail as quickly as possible at 1209.50 and 1652 in silver. We really would have liked to see one more down day today, but as you’ll see as you read the cycles update, we need to be careful.
Gold Chart
We discussed on last night’s website update that we needed a close above 1204-1206 but also a move above 1212 would favor higher prices. The breakout occurred this morning. We have reached the 1st channel line resistance after 1222 and odds favor this will be the high point for today. Any pullback to 1215-1222 should find support. While the short term trend remains up, the key now is the cycles, so let’s go to them right now.
 
Cycles
The biggest reason the short term cycle has never been discovered by the majority is in its ability to INVERT. The March medium term cycle had an inversion to the blue cycle and that was the peak. So did the June and Sept cycle. It just so happens that today is the LAST DAY of the short term cycle window (Dec 6th – plus or minus 72 hours). That means the window closes today but it is extremely important to understand that TODAY’S high could be the peak. We either bottomed 2 days early and we’re heading higher to the 23rd or we are peaking today/tomorrow at the latest and heading lower. That mess that was created by the control boyz on the Friday/Sunday night Thanksgiving holiday in USA leaves us open to interpritation. We have been favoring a low and higher prices to the 23rd and we had hoped we would have one final down day today near 1172-1182 but it did not happen. Resistance is now 1238-1244 and 1255-1272. Support is 1217-1227 (ideal 1222). ANY CLOSE BELOW 1209 and we have to favor this was a peak in the short term cycle. A close today below 1217-1222 would also not be good. There’s a LOT GOING ON in markets. The initial move has been to gold this morning --- but we must be careful. If this turns into a full blown panic, there’s no telling what the control boyz might do.
Silver
Silver has also reached resistance for today and the status is the same as gold. We have to be careful this is not a high. Any new high after Thursday favors we’re in an uptrend until Dec 23rd (plus or minus 72 hours). Support is the 1650-1675 area today and resistance is 1720-1735. ANY CLOSE BELOW 1590 negates the short term uptrend.
INTRA-DAY NEWSLETTER ~ Dec 9 2014
Small Caps Plunge Negative Year-To-Date (Again) As 10Y Slides Below 2.20%
Submitted by Tyler Durden on 12/09/2014
10Y yields are back below 2.20% and 30Y below 2.85% - awkwardly close to the Bullard lows - and stocks appear to be waking up to the massive squeeze-driven decoupling in the last 6 weeks (as USDJPY tests below 118.00). Small Cap Russell 2000 has plunged back into the red year-to-date, and the rest of the equity complex is not "off the lows". Remember, it's all about the fun-durr-mentals.
USDJPY Collapses 350 Pips, Drags Japanese Stocks Down 700 Points
Submitted by Tyler Durden on 12/09/2014
China's overnight destruction of $80 billion of eligible collateral from the great global carry trade has had destructive consequences on the massively crowded short JPY (long USDJPY) trade. Haviung already lost ground following the dismal downward revisions in GDP, USDJPY is down 350 pips from yesterday morning's highs (This is the biggest 2-day drop in USDJPY in 18 months.) and the Nikkei 225 is down over 700 points in the same period... Abe approval ratings are plunging-er. Did the downward revision to Japanese GDP straw finally break the back of the Central Bank Omnipotence camel?
Venezuelan Bonds Crash To Lowest Price Since 1998
Submitted by Tyler Durden on 12/09/2014
Bond prices in Venezuela have totally collapsed this morning - at 45c on the dollar, they are the lowest since 1998 - as the realization of the "abyss" they are staring into sparks an exodus from all credit positions in the country. VENZ 5Y CDS rallied 130bps which signals hedgers unwinding and the simultaneous sale of the underlying bonds implies broad-based capital flight (and profit taking) as 1Y CDS surges to record highs at 4830bps.
High-Yield Credit Crash Accelerates
Submitted by Tyler Durden on 12/09/2014
High-yield energy bond spreads are crashing-er. Up 15bps to 880bps today, these are record wides and massively impact the economics of these firms - no matter how much investors want to ignore it. This is contagiously spreading across the broad high yield and even investment grade credit markets as high yield bond prices crash below the mid-October Bullard lows...
Greek Bond Curve Inverts As Stocks Crater
Submitted by Tyler Durden on 12/09/2014
Amid the collapse of the global carry trade, no nation on earth has benefited more (and is now suffering more) from the dash-for-trash, buy-the-pig-sty trade than Greek stocks and bonds. Combining carry unwinds with uncertainty over snap Presidential elections (which could usher in a left-wing anti-EU party into power) and a 'technical-only' extension of its handouts from Troika and Greek capital markets are in freefalll. The Athens Stock Index is down over 11% on the day, destroying 3 weeks of gains; the Greek 3Y bond price has collapsed (as the carry-traders pile out through small doors) inverting the yield curve - never a good sign.
China Crashes: Shanghai Composite Plunges 5.4% Amid Record Trading, Biggest Tumble Since 2009
Submitted by Tyler Durden on 12/09/2014
Those who have been following the ridiculous moves in the Shanghai Composite in recent months, knew it was only a matter of time before yet another major stock market (one which recently surpassed the Nikkei for the second largest spot in the world) crashed violently, further eroding faith in the centrall-planned "price discovery" process. The only question was when. Tonight we got the answer.
Gold Surges To October Highs, Snaps Japanese Linkages
Submitted by Tyler Durden on 12/09/2014 -
Gold prices have surged this morning to their highest since October (over $1221) as leveraged hot money greatly rotates its repo-driven way out of risk assets and into Greenspan's alternative currency. However, there is a bigger problem for the biggest pairs trade that no one is discussing - apart from us - the decoupling of the long Nikkei, short gold trade as the repo market folds in on itself from the suck out of $80 billion in collateral by China...
Surveying The Carnage: Bullion Bounces, 30 Year Below 2014 Lows, Stocks Dump
Submitted by Tyler Durden on 12/09/2014
While it took a few hours for people (and machines) to realize exactly what China did last night, the fallout in risk markets is now clearly evident when a central bank decides enough-is-enough for speculative wealth creation bubble-followers. As we described last night, China's tightening has dramatically influenced the carry trade (USDJPY back under 120) and thus global stocks (from Abu Dhabi to Greece), global corporate bonds (all significantly wider) and European peripheral bonds (cracking wider) all face pressure. The beneficiary safe havens so far are precious metals (Gold > $1315) and US Treasuries (30Y at 2014 low yields). For now the mainstream media's narrative is that this oil-driven (which is fantasy as oil prices are up today) - this is the fallout from the marginal removal of $80bn of leverage collateral from the world's carry trades.
(End of articles -- our thanks to www.zerohedge.com)
Subscribers to goldtrends have been trying to buy gold in the 1183 area since last Thursday and at 1173 since Monday. We got as low as 1186 and this morning once we breached above 1208, I issued a buy via e-mail as quickly as possible at 1209.50 and 1652 in silver. We really would have liked to see one more down day today, but as you’ll see as you read the cycles update, we need to be careful.
Gold Chart
We discussed on last night’s website update that we needed a close above 1204-1206 but also a move above 1212 would favor higher prices. The breakout occurred this morning. We have reached the 1st channel line resistance after 1222 and odds favor this will be the high point for today. Any pullback to 1215-1222 should find support. While the short term trend remains up, the key now is the cycles, so let’s go to them right now.
Cycles
The biggest reason the short term cycle has never been discovered by the majority is in its ability to INVERT. The March medium term cycle had an inversion to the blue cycle and that was the peak. So did the June and Sept cycle. It just so happens that today is the LAST DAY of the short term cycle window (Dec 6th – plus or minus 72 hours). That means the window closes today but it is extremely important to understand that TODAY’S high could be the peak. We either bottomed 2 days early and we’re heading higher to the 23rd or we are peaking today/tomorrow at the latest and heading lower. That mess that was created by the control boyz on the Friday/Sunday night Thanksgiving holiday in USA leaves us open to interpritation. We have been favoring a low and higher prices to the 23rd and we had hoped we would have one final down day today near 1172-1182 but it did not happen. Resistance is now 1238-1244 and 1255-1272. Support is 1217-1227 (ideal 1222). ANY CLOSE BELOW 1209 and we have to favor this was a peak in the short term cycle. A close today below 1217-1222 would also not be good. There’s a LOT GOING ON in markets. The initial move has been to gold this morning --- but we must be careful. If this turns into a full blown panic, there’s no telling what the control boyz might do.
Silver
Silver has also reached resistance for today and the status is the same as gold. We have to be careful this is not a high. Any new high after Thursday favors we’re in an uptrend until Dec 23rd (plus or minus 72 hours). Support is the 1650-1675 area today and resistance is 1720-1735. ANY CLOSE BELOW 1590 negates the short term uptrend.
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