Minggu, 15 April 2012

JPM item and Jim Sinclair says the Fed will unleash another 17 trillion in QE. That should work as well as the first 17 trillion......


JP Morgan To World: Heads We Win, Tails You Lose

Once you start quantitative easing, such as we have, $17 trillion, how in the world do you pull back from it? How do you stop without having everything collapse behind you? Truth be known, Bernanke didn’t have a choice. If Bernanke did not do QE, this place would look like the day after (the movie) ‘Mad Max.’  - Jim Sinclair, link below
Happy Friday everyone!  I only wanted to link the Sinclair interview on King World News but I decided it was important to blog about what JP Morgan is doing.

To begin with, they reported earnings today and all the media fell in love JPM's reported bottom line.  The expected number was $1.17, they reported $1.31.  HOWEVER, if you strip out the 28 cents they recorded by reducing their loan loss reserve, they actually did $1.03, and missed big time.  This is not a valid decreasing of their loan loss reserve a) because we know the housing market is plunging again and JPM will soon have to write down a lot more mortgage debt, b) their non-performing loan disclosure showed that their non-performing loans increased by $600 million to $10.6 billion and c) we know the economy is tanking again so JPM will likely suffer big loan write-downs across all of its lending lines.

But then again, if you know that the President will sign off on using Taxpayer money to bail you out, it's a wonder they don't take their loan loss reserve to zero and really show some paper GAAP b.s. earnings per share!

It turns out Blythe Masters, JPM's head of commodities trading, lied her ass off on CNBC last week when she explained on CNBC that JPM's trading business is client-driven (most of knew she was full of shit).  But I thought everyone on Wall Street told the truth when they were on TV (wink wink).  Here's the report that explains how JPM has simply moved its proprietary (the in-house hedge fund aka "prop trading") functions into the office of the CIO.   This maneuver was done in order to move the risk-based capital trading out of the securities unit and into the bank holding unit.  Why?  Twofold:  1) it removes the proprietary trading away from the eyeballs of the securities regulators and the Volker Rule AND 2) it shifts this risky trading into a  business unit that would be covered by the FDIC.  It's what Bank of America did when it moved something like $52 trillion in gross derivative positions from its Merrill Lynch securities unit to its holding company.Here's the report:  LINK  That article only mentions currency trading in passing but I would bet BOTH of my testicles that the CIO prop positions include a heavy does of gold and silver COMEX short positions.  In fact, I recall about 18 months ago JPM announced that it would be moving its precious metals prop positions up to its bank holding company.  You can google it to verify that I am correct.

Finally, in connection with the above quote from Jim Sinclair, every single person reading this, if they don't read anything else today or this weekend, NEEDS to read this brief interview with Sinclair on Eric King's King World News blog: LINK  I agree with every single word and punctuation mark in the interview, except that he didn't predict QE to infinity before anyone.  Myself and many of my colleagues understood that this is how things would unfold in the U.S. and globally right around the same time Sinclair started ranting about it.



No matter how the Fed tries to manipulate the markets through its orchestrated communiques, more ‘quantitative easing’ is coming, says ‘Mr. Gold‘ Jim Sinclair.  And this time, $17 trillion more of Sinclair’s mantra “QE to infinity” is a done deal, according to him.-
How does he know?
“How does anyone know an answer to a question?  By being told.  By having sources,” Sinclair revealed to King World News, Friday.  “I’m half a century in the business.  I’ve constantly kept up my contacts in a very unique and focused way.  Quantitative easing was made clear to me, prior to Bernanke’s speech to the Washington group, prior to quantitative easing.”
The 50-year-plus veteran of the gold market first came to use the term “QE to infinity” back as early as the summer of 2009, suggesting he knew all along that the Fed had finally reach a liquidity trap and that it was inflate or die from then on.
Nearly three years later, there’s been no chink in that assessment, as evidenced by the Fed’s subsequent QE2 program, bogus currency swaps schemes as well as the most recent backdoor bailout of Europe through the Troika earlier this year.
“The next step in the formula is the fatigue of Asia in supporting bad Western monetary habits and QE to infinity to protect the long term 28 year up-trend line in the 30 year U.S. Treasury bond market,” he said in a Jul. 2, 2009 post.
A look at a 20-year chart of the 30-year Treasury reveals the trend line Sinclair had spoken of.  Investors seeking clues to the dollars next major move could find in the chart of the 30-year bond.
Both the MACD and Slow STO indicate intermediate-term technical topping in the 30-year bond, and the trend line has held ever since the Jul. 2009 post.

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