viernes, 24 de junio de 2016


Bueno, hay movimientos espasmódicos en el mundo de las finanzas. Nerrrrrrvios en las cities de todo el planeta. Así cerraban hoy los mercados europeos el día después del Brexit: Japón casi ocho puntos abajo, Alemania casi siete. Así eran los títulos de sitios web como Zero Hedge el día de hoy:

"Worse Than Lehman" - European Bank Bloodbath Sparks Dollar Funding Crisis

For European banks, today is worse than Lehman with a 13%-plus collapse in the broad index. The major banks - like Credit Suisse and Deutsche Bank - have crashed over 15% to record lows as "Lehman moments" loom. This crisis prompted massive demand for USDollars, sending basis swaps (and other funding vehicles) spiking which it appears is why The Fed said it was ready to provide liquidity.

The broad EU banking system is collapsing...

Led by the majors...

Raising "Lehman moment" alarms again...

And sparking desperate demand for USDollars...

And Sterling was sold hard into the European close (down 200 pips)

As counterparty risk looms again...

Which explains why The Fed stepped up already with swap lines...

Earlier today we said that it was inevitable that the Fed would join the world's other central bankers in providing backstops to global markets, the only question is whether it would take place before or after the open. We now have the answer. Before.

The Federal Reserve is carefully monitoring developments in global financial markets, in cooperation with other central banks, following the results of the U.K. referendum on membership in the European Union. The Federal Reserve is prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the U.S. economy.

Because free, impartial, efficient, and unmanipulated markets.  Also we can finally stop holding our breath on those two Fed rate hikes which the FOMC anticipates in 2016.

And then Lagarde confrmed:



British Money-Changer Imposes Capital Controls, Suspends Online FX Transactions

Yesterday it was physical lines as people 'queued' for hours to exchange their pounds sterling for anything else.

Perhaps more should have done the same and exchanged their far more valuable - yesterday - pounds sterling, than waiting until today's historic devaluation.

Not only that, but they may not be able to do it today. As The FT reports UK-based travel group Thomas Cook has suspended its online currency purchases and imposed a £1000 limit on transactions at its high street branches due to an unforseen demand for euros, a soft form of capital controls as FX service providers run out of "harder" currencies.

Having alreay warned yesterday that...

  “There’s been a surge in customers buying euros in the last six weeks and euro sales have been consistently strong, building day by day.”

... The leading money-changer's statement added today:

We have temporarily suspended our travel money website following unprecedented customer demand for foreign currency overnight and this morning.

We apologise to all customers affected.

Our immediate priority is to ensure that we have enough currency in store to fulfill outstanding orders.

 We hope to be back up and running as soon as possible.
Is this the beginning of more than just "soft" capital controls?


Dow Opens Down 500 Points To "Jo Cox" Lows - Largest Gap-Down Since 1986

The bounce' gap from last Friday has been filled...

... Bringing us to the largest gap-down in the S&P since 1986:


A New Balance Of Power In The Gold Market

With precious metals soaring on safe haven buying...

We thought John Rubino's thoughts (via were particularly prescient...

Gold analyst Michael Ballanger just posted an article noting how much things have changed — perhaps for the better — in the gold market. Here’s an excerpt:

Commercial Traders Have Just Gone Over the Top

(24hGold) – With Friday’s Commitment of Traders Report, the ridiculous has just metastasized into the sublime as the Commercial Cretins have just gone “over the top” and added another 5.4M “ounces” to their synthetic gold short position. At 298,077 contracts declared short, they are now carrying the largest short position in Crimex history. The scary part is that these figures don’t include the big rise in open interest yesterday and you just KNOW that it ballooned out due to more Cartel shorting.

While these numbers are synonymous with prior tops like in 2008 and 2011, the difference today lies in two realities: 1) The Shanghai Gold Exchange is keeping the Crimex and LBMA (London Bullion Market Association) thieves at bay through some voracious arbitrage, and 2) Raw demand from the Far East and from Western investment pools are keeping inventories tight. If this was back in 2011-2015, the market would be limit down on Monday as the criminals have their way with us. However, this is a NEW bull market and dips are to be bought while holding onto your core position for dear life as I have been trying to do with my GDXJ (Market Vectors Junior Gold Miners ETF) position. I can’t tell you how many times I have had to lock myself in the wine cellar during trading hours because the temptation to “SELL!” was so overwhelming.

The bullion banksters and their well-armed trading desks have now arrived into somewhat of a “pickle” in that the movie reel that they thought would play out with the bad guys winning and gold following through to the downside on what should have been another Freaky Friday where gold and silver get clobbered. Since it DIDN’T, they now have to await selling from the Asian markets in order to give them the slightest chance of a downside flush this coming week.

What IS a certainty is that the PMs are trading in a totally bizarre fashion, and anyone who fails to pay attention to Commercials are indeed paying no attention to “that man behind the curtain” who most certainly is pulling levers and spinning dials frantically in order to secure the desired effect while being short nearly 30 Moz of phony, synthetic gold that closed within a whisker of a new closing high for the move. There must be carloads of Pepto and adult diapers being handed out to the Cretins as the wait in agony for the Sunday night opening.

Let’s expand on that “voracious arbitrage” idea: The Shanghai exchange is a physical market, where buyers go to get actual gold and silver. So prices there are set by sellers with metal to move and buyers who want to take delivery. On the Western paper exchanges, in contrast, the players mostly gamble on price movements using futures contracts with very little actual metal changing hands.
But if the price set in the Shanghai physical market is higher than in the paper markets — reflecting the different aims of the respective sets of traders — then it becomes profitable for holders of long futures contracts in the West to demand delivery of the metal, ship it to China and sell it at the higher Shanghai price.

Once this process gets going it will quickly clear out the inventories of the Western exchanges, leaving nothing for future arbitrageurs. The exchanges will then force those wanting delivery to accept cash instead, in effect defaulting on their promises. Then it’s game over, with the big futures manipulators no longer a factor in pricing.

Presumably from then on gold and silver prices will reflect rising physical demand in the East (and in the West from individual stackers). And gold will begin its long climb to the $10,000 or so price necessary to balance the amount of fiat currency created during the inflation of the Money Bubble.

This phase change could take a while, creating the possibility of some more nasty corrections while the paper players retain the upper hand. And once it gets going it could be steady and relatively peaceful or a “punctuated equilibrium” move where the failure of an exchange or bullion bank sends gold from $2,000 one day to $6,000 the next. Either way, the dominance of physical exchanges implies that much higher prices are coming.


Historic Volume Surge Forces Deutsche, Morgan Stanley To Shut Down Dark Pools

Following weeks of declining volume due to fears of an "unfavorable" Brexit outcome, it was only logical that the same "unfavorable"  Brexit outcome would result in a historic surge in pent up volume. And, as Bloomberg reports, "a turbulent start to the open of the London market propelled trading volume as much as 700 percent higher than normal, while at least one dark pool was suspended as investors around the globe digested U.K. voters’ decision to leave the European Union."

Think August 24 in the US, only this time in Europe: while the London Stock Exchange was functioning properly,many stocks took longer than normal to start trading amid a spike in volatility.

“A number of stocks were going into volatility halts at the open,” Mark Hemsley, chief executive officer of Bats Global Markets Inc.’s European unit, said in a phone interview. “We’re just seeing really high volumes. It’s a heavy day, but we’re nowhere near our peak capacity rates.”

As Bloomberg details, the shock Brexit decision sparked an outpouring of buying and selling: European markets saw 25.5 billion euros ($28.3 billion) in trading -- at least half of a typical day’s volume -- by just 9:10 a.m., according to Bats, which operates the biggest exchange in Europe.

However, unlike the US, where last August a historic volatility surge broke ETF pricing models and sent the entire VIX calculation engine at the CME offline for nearly 30 minutes, European market participants had a more practical solution: just shutting everything down.

Case in point, Morgan Stanley’s dark pool - the venue where these days most size, block trades are executed due to fears of HFT frontrunning - was offline this morning, Bloomberg reports. The pool is up and running now. Morgan Stanley declined to comment. “The first hour was pretty horrific,” Rob Boardman, chief executive officer for Europe of Investment Technology Group Inc., an electronic broker and dark-pool operator, said in a phone interview. “There was almost no trading before 8:10 a.m. because prices were just bouncing around, stocks struggling to open. Now we’re actually seeing volume go through the market properly, prices are becoming a bit more real.”

Deutsche Bank followed suit, and temporarily shut off outside market makers in its dark pool, SuperX. The bank told outside market makers that they would be prohibited from trading in SuperX on Friday, until the bank notified them it was ready to resume.

Bank of America Corp. asked some outside trading firms to cut their messaging
volume by half, said the people, who asked not to be named because the
announcements were not public.

And then, all it took for trading to resume were a few central bank, IMF, and G-7 statements to soothe frayed nerves and restore confidence that Draghi, Yellen, Kuroda et al have traders' backs.

Bats says equities on its European platform are subject to price collars, which reject orders that stray too far from previous reference prices. The thresholds range from about 5 percent to 10 percent.

Meanwhile, over in Mahwah, New Jersey, the amusingly named "New York" Stock Exchange announced it would widen its price collars to 10 percent for all stocks. The company said premarket trading was heavier than usual. Today will also see a volume boost from the annual rebalancing of FTSE Russell’s stock indexes. In 2015’s rebalancing exercise, U.S. equity trading jumped by more than 10 billion shares.

The good - or perhaps bad - news, is that unlike Europe, US markets went online without a glitch.

While extended auctions are to be expected on such a volatile day, there are signs, based on how markets in Asia performed, that the infrastructure has the capacity to withstand the shock of Brexit, said Philip Gough, chief executive officer of Convergex Ltd.’s London-based brokerage.

“When you look at how the Asia infrastructure held up, I didn’t hear of any issues,” Gough said by phone. “The capacity people have put into technology is drastically different than a few years ago. So far everything has held up.”
Needless to say, as all global markets approach the CYNK singularity which we described two years ago, where ever lower volumes lead to ever higher prices, only to eventually result in a burst bubble at which point trading is halted, this is merely a precursor, and a handy harbinger, of what is coming as all those "pent up sellers", who have been so very dormant for the past several years, decided to finally cash out. We wish them the best of luck when they do.


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