Thursday, October 15, 2015

Connect the DOTS

POINTING BIRD DOGS
..................................... & ..........................
CONNECTING THE DOTS
A GOOD BIRD DOG WILL POINT ANYTHING, SWANS INCLUDED
BE AFRAID, BE PREPARED AND BE AWARE.
DOT #1 WHAT Black Swan ?
You can see in this article that The FED forced U$D 405 Bil onto Bank Balance Sheets in Mid-Sept as if to hedge agains an “Event”.
DOT #2 HOW Much, Again ?
Its not that unusual that the other comparable firms, Trafigura, Mercruio, Vitol , Gunvor, et. al., have exposure in similar manner to GLENCORE. Now lest we belabor this point, at least one analyst, from what I could tell, was from BOA. So he said what so many were thinking, $400 Bil in debt exposure to the commodity sector major firms? So whether you follow this market or not, still a HALF TRILLION Debt exposure in this hammered sector is worth being severely concerned for its safety. Is this the amount the FED felt Necessary to HEDGE onto Bank Balance Sheets ?

DOT #3 LIQUIDATING Collateral ?
As you and I both know, distressed merchandise is marked down, and each time more comes on the market, it is marked down again. Kinda why they created the “UPTICK RULE” for short sales. Its removal of course, put back into play, the self-reinforcing downard spiral. So with NO Uptick Rule here, what will happen to all the collaterialized commodities that any of these firms hold, when the first Liquidation happens ? NOTE: , Norways $ 850 BILLION soverign fund is now selling.

DOT #4 MORE Debt ? Dropping Prices ?
So in order to try to buy time to get their houses in order against the continuing decline in commodity prices, virtually all commodity houses have sucked up as much capital, mostly debt, as they can. Given that, the only bailout will be commodity prices going UP, including Oil. A blip upwards in commodity prices, yes I can see that.
However doing some price projections in to the 20's that is the 2020's I think it possible to see a bottom with U$D 14 Oil, and 31 Cent Copper. Were any of this to come even remotely close to these numbers, of course the companies referred to herein would be TOAST. A blip won't save these guys, and the Insurance rates (CDS) on their financial health are rising not falling.
THE POINTER > HE GAVE US THE FIRST DOT
Not being 1%, to survive we should know we get news if not last, then for sure not close to first, but Mr.Market seems to be sending us a message we can ill afford to ignore, IMO. Ya gotta give Dave Kranzler, InvestmentResearchDynamics.com due credit for tipping us to this impending 10.0 Tsunami potential. Oh dont forget, Deutsche Bank is showing a pre-annoucement of a U$D 7.0 Billion LOSS. Not all VW, I bet !!
http://www.zerohedge.com/news/2015-10-07/first-crack-deutsche-bank-preannounces-massive-loss-may-cut-dividend Part of the problem is that DB has a 75 TRIL derivatives exposure, and commodities will be in there as well.

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