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Gary Tanashian is proprietor of Actionable, hype-free technical, macro economic and sentiment analysis is provided in the premium newsletter Notes From the Rabbit Hole ( Complimentary analysis and commentary is available at the 'Biiwii Blog'... More
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  • Dubai - Is the Enchilada Coming Apart?
    "Credit-Default Swaps Soar" --Bloomberg

    Garbage in, garbage out I say. And the sources of the 'recovery' were inflationary garbage. Here come the first manifestations:

    "Dubai World, the government investment company burdened by $59 billion of liabilities, roiled markets around the world yesterday by seeking to delay repayment on much of its debt. The dollar’s slump to a 14-year low against the yen prompted Japanese Finance Minister Hirohisa Fuji to say his government is watching currencies “very closely,” while traders said the Swiss central bank sold the franc after it climbed to the highest value against the euro since June 24.

    Is this it, the beginning of the unraveling? When you consider that it took more than a year for the last enchilada to unravel after outward signs began popping up and officials began trying to hammer them down like whack-a-moles, you think that it could be. Funny thing about symptoms though, they tend to get rationalized, swept under the carpet and twisted in some bizarre way as bullish fuel during mania. As in 'look, the market is no longer over bought... it's a BUYING opportunity.'

    And the herd will believe it and possibly propel this to new highs one day. Then, out of nowhere too many of these FrankenMarkets incur too many fatal hits, and the whole mess just wheezes and declines in the initial lurch toward the opposite of today's hyper-greed.

    Alternatively, maybe this is it and while we Americans and other Thanksgiving celebrants enjoy our turkey, the entire system is led into deflationary round II by a small outpost in the interconnected global FrankenMess.

    The other component is of course the USD. The moment global casino patrons feel that the scam is coming apart, the game of musical chairs shifts to FIND A SEAT mode. And the ones that find a seat will be resting their butts on cushions stuffed with dollars.

    Happy Thanksgiving to all who celebrate!
    Nov 26 9:41 PM | Link | Comment!
  • Alert For Tanks

    John Hussman's Alert For Tanks is recommended reading and in this context it is not too hard to see why the Fed is keeping this thing on full pump mode. They know that if it is allowed to unravel it may not conveniently stop at some given technical point on a chart.

    This is the path toward hyperinflation. The question remains in the nature of deflationary twists in the path.

    "As I noted a couple of weeks ago in The Second Wave Begins, we are now largely beyond the peak of the sub-prime mortgage crisis, and have just begun the second wave of Alt-A and Option-ARM resets. That's important, because what we saw in the third quarter, then, was still part of the relatively tame and predictable March-November 2009 lull in the reset schedule. In that context, the surge in delinquencies and foreclosures on prime fixed-rate loans is disturbing, because that wasn't even part of the reset equation, and represents a relatively pure effect of the weakness in employment conditions.

    Now, we face a coupling of those weak employment conditions with a mountain of adjustable resets, on mortgages that have to-date been subject to low teaser rates, interest-only payments, and other optional payment features (hence the “Option” in Option-ARM). These are precisely the mortgages that were written at the height of the housing bubble, and therefore undoubtedly carry the highest loan-to-value ratios"

    Nov 24 10:15 AM | Link | Comment!
  • "Wall St opens higher after Bullard comments"
    NEW YORK (Reuters) – "U.S. stocks opened higher on Monday after comments by a Fed official reassured investors the government is committed to helping the economy recover from a deep recession."

    Translation: Look, you know this is illegitimate and we know this is illegitimate, but we hope that HOPE can become a transformational thing, with the best case being a cyclical bull market kick started through admittedly panicked, ill-guided and unproductive policy. We'll deal with the fall out later but for now, party on... we NEED you speculators to friggin' PARTY ON!!
    Nov 23 10:35 AM | Link | 3 Comments
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