silver-coins-barsThose who are thinking that the banking cabal will NEVER die are listening too closely to the Mainstream Media (the band playing) and not looking at the reality… the Big Banks are hemorrhaging badly just under the surface on their leveraged interest rate bets (the Titanic Sinking).
Chart of the Day: Taper Fears Lead to Biggest Monthly Loss in Bank Securities Portfolios Since Lehman
“Wondering how the blow out in interest rates is impacting commercial banks, which just happen to have substantial duration exposure in the form of various Treasury and MBS securities, not to mention loans, structured products and of course, trillions in IR swap, derivatives and futures? Wonder no more: the Fed’s weekly H.8 statement, and specifically the “Net unrealized gains (losses) on available-for-sale securities” of commercial banks in the US gives a glimpse into the pounding that banks are currently experiencing. In short: a bloodbath.”
“In other words, the shorthand is to look at the massacre that is going on in the AFS line and extrapolate it to all other levered commercial bank (and hedge fund) rate exposure. Expect math PhD-programmed GETCO algos that determine the marginal momentum of the S&P to figure this out some time over the next 2-3 weeks once banks begin reporting results that are not quite in line with expectations.
Basically, the MOTHER of all bubbles is exploding as we speak!
The biggest gamble by far in interest rate derivatives is JP Morgan at $45 TRILLION. Nothing is done by accident in our markets these days. On the Road to Roota it seems the Good Guys’ final attempt to save some portion of the system by surgically extracting the bad players from the global monetary system is being abandoned and they are going to blow the derivative world to kingdom come!
I have one thing to say to all those still listening to the beautiful deck music…
May the Road you choose be the Right Road.
Bix Weir
PS – Where gold and silver prices will go over the next few months is anybody’s guess but if you can wait out the chaos you will be richly rewarded. 🙂