Gold/Silver ratio nearing 40!!!

Gold/Silver ratio nearing 40 (at the moment 41,30)! Keep in mind that the 40 mark is highly important.
Last time we have been there was in 1998 before exploding to 100.
Dow Transport and DOW show negative divergence and bearishness. So we think it's time to lighten up in silver for trading purposes....

Oil/Gas ratio at its highs

Ratio of Crude Oil vs Natural Gas!
Friends of mean reversion know what to start looking for, eh???

Inflation and the function of Centralbanks!!!

It is NOT that, what the Centralbanks and Politicans are telling us since ages.
They are not trying to stop inflation! The U.S. dollar Gold standard was abandoned in 1971!

Remember the 100Y Mexican bond?

FYI A perfect contrary indication, eh?! The bond was issued in October 2010... Let's wait for the US to come with a 100Y one...

Time for a halt in commodities?

Attached I've the chart where you can see the ratio of the CCI Index divided by US average hourly earnings private nonfarm payrolls services sa. As you can see the ratio is near its top from June2008 before the cruel sell off. With all the food shortage mumble going around it should be nice to keep this chart in mind...As always when the hype is at its peak markets have the tendency to be ironic...

Even the lean hogs mistrust Ben's deflation bias...

Orphanides says raw material prices no immediate ...

inflation risk.................Here is the chart for this argument!!

And now look, how artificially low yields are...

Inflation

The Chart shows the Ratio between CRB/Dow Jones and Gold/Dow Jones. As you can see, the Dow outperformed all Commodities over the last 20 years in USD terms. Since 2002 Commodities outpaced paper profits (aka inflated Dow Jones) in real puchasing power terms.. If the asset allocation shift out of paper assets into hard assets starts food prices will be the tail rsik and bottel neck for all of us!

Wheat...Watch out the squeeze!!!

Wheat targets 1000 USD if 850 USD gets lifted. COT suggests that Net Shorts will increase their exposure in the upmove. Prepare for a sell when the shorts got slaughtered...

Gold/Silver ratio vs S+P500 warns!!!

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Rising Gold/Silver ratio warned/warns for lower equities!!! See chart attached
The ratio is moving up after building a bottom and warns for a weaker equity market in a time frame of 2 to 4 weeks....If 50 in G/S ratio is lifted Credits should also start to underperform after this fabolous rally
CAVEAT EMPTOR

Bund chart and thinking out loud!

With the ongoing mumble for an increase in the EFSF (which is more or less a done thing to me) spreads in Euroland see a further compression (Spain 14 bps tighter on the day) while Bunds hover around their yesterday's low. Short end in Euroland (including the belly) is heavily under pressure with interest rate hike phantasy (hawkish ECB from last Thursday) still the name of the game. In short we think the following: A proper increase in EFSF fund (in order to guarantee or lend real 440 bln € or even more) will avoid a further market intervention from the ECB to buy peripheral bonds! Therefore they can play their independence and price stability game and might even lift the repo by 25 bps as Germany could easily absorb this. On the other hand the EFSF is the "undercover lender of last resort" and buys Euro peripheral bonds (FED style) in order to compress spreads, take pressure from the EUR, squeeze out shorts and reduce existing funding worries for candidates like Portugal, Ireland or Spain. Therefore the interest rate level for the peripheral countries would be reduced or at least held constant. European banks/insurance houses could also be relieved from buying heavy sizes of €-govies and see a rally in their peripheral govie books. Following today's German DAX performance one can see that insurance companies and banks lead the market upmove - it might be that the big boys already took the above mentioned arguments into account!? The implications for Bunds are obvious - 122.08 (see attachement) would be the first target before 120 and lower. Caveat emptor...........

The Day the Dollar Died

German ZEW and 5/10 Swap curve

White- ZEW current conditions
Red- 5/10 Swap curve (inverted)
Doesn't 5/10 look too steep?

Chinese CSI300...Down 11% in 3 trading days...

FYI....Not a healthy sign for US and European equity markets...

10 year Spanish Govies versus Pfandbriefe... 1993 - 2010

We find this Chart interesting, also to get a feeling where this spread came
from...

Sovereign vs High Yield Chart

This chart shows the current trend channel where High yield trades in comparison to AAA US Treasuries!

Obviously High yield had its run and trades near the September 2007 levels.

Might be time to leave the party a bit earlier....

Pimco Municipal Income Fund II chart attached...

Next playground for QE2...?

Greek PM on the wires....embarrassing statements!!!

12:00 15Nov10 RTRS-GREEK PM SAYS GERMAN POSITION ON DEBT RESOLUTION LED TO INTEREST RATE SPIRAL FOR IRELAND, PORTUGAL
12:03 15Nov10 RTRS-GREEK PM SAYS OF GERMAN POSITION ON DEBT:"THIS COULD BREAK BACKS, FORCE COUNTRIES TOWARD BANKRUPTCY"

A Deep Dive Into The Mechanics Of A QE Transaction... Must Read! on

http://www.businessinsider.com/a-deep-dive-into-the-mechanics-of-a-qe-transaction-2010-11

10Y US Treasury vs 10Y10Y US Treasury

Spread is getting higher and higher...FYI

Ireland 10yr BundSpread

Thinking out loud...

Given the unconfirmed rumour of a 80 bln € bailout next week for Ireland I think that there's much more going on behind the politic curtains! The € currency gets more and more to a 100% political currency where every rule gets broken (by politicians and Central bankers) in short time! I'm convinced that a €-joint bond will come in not too distant future. Additionally the EU will mutate into a transfer union. As a sidenote: In Germany we have a "Laenderfinanzausgleich" which means "Federal state equalization fund" where the "rich" states transfer money to the "poor" ones....Exactly this will happen in Euroland soon! By the way: From 16 states in Germany 13 of them receive money from the 3 wealthy ones.... Does not look too bullish in the long term for Bunds and the €-currency... Feedback welcome!

Britain's Trillion Pound Horror Story!!!

There was a program on TV here last night; "Britain's trillion pound horror story".  Here are a few of the facts it quoted:

* The govt now accounts for 53% of economic activity.

* In Scotland it is 65%, Northeast 70%, Wales 77% and N.Ireland over 80%.  Once you get above 70%, you're in Communist Eastern Europe territory.

* The UK currently has 7.5mio public sector workers but only c2mio of these are actual "front-line" (i.e doctors, firemen, teachers etc).

* Nearly 1 in 5 households is jobless

http://www.channel4.com/programmes/britains-trillion-pound-horror-story/4od#3139408

EuroStoxx vs DAX plus Spanish 10yr BundSpread!!!

New or old normal!  Reality always wins!