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HSBC Holdings plc Message Board

markedtofuture 87 posts  |  Last Activity: 8 hours ago Member since: May 25, 2011
  • This article makes a great case for community banks and credit unions, with a splash of physical G&S.

    By Michael Snyder, on December 3rd, 2014

    Could rapidly falling oil prices trigger a nightmare scenario for the commodity derivatives market? The big Wall Street banks did not expect plunging home prices to cause a mortgage-backed securities implosion back in 2008, and their models did not anticipate a decline in the price of oil by more than 40 dollars in less than six months this time either. If the price of oil stays at this level or goes down even more, someone out there is going to have to absorb some absolutely massive losses. In some cases, the losses will be absorbed by oil producers, but many of the big players in the industry have already locked in high prices for their oil next year through derivatives contracts. The companies enter into these derivatives contracts for a couple of reasons. Number one, many lenders do not want to give them any money unless they can show that they have locked in a price for their oil that is higher than the cost of production. Secondly, derivatives contracts protect the profits of oil producers from dramatic swings in the marketplace. These dramatic swings rarely happen, but when they do they can be absolutely crippling. So the oil companies that have locked in high prices for their oil in 2015 and 2016 are feeling pretty good right about now. But who is on the other end of those contracts? In many cases, it is the big Wall Street banks, and if the price of oil does not rebound substantially they could be facing absolutely colossal losses.

    It has been estimated that the six largest “too big to fail” banks control $3.9 trillion in commodity derivatives contracts. And a very large chunk of that amount is made up of oil derivatives.

    By the middle of next year, we could be facing a situation where many of these oil producers have locked in a price of 90 or 100 dollars a barrel on their oil but the price...

    Sentiment: Buy

  • Submitted by Tyler Durden on 12/04/2014 11:35 -0500

    ECB head Mario Draghi made it clear where the real battle is taking place in the world this morning. When asked what form QE would take, his response was to the point... "On what sorts of assets should be included in QE... we discussed all assets BUT gold" and gold dropped, right on cue.

    Not really sure which assets we discussed but definitley not gold!!

    So to summarize, the ECB will willingly take on Greek bank CDOs, Italian 3rd lien espresso shop loans, Spanish condo HELOCs, and Portuguese Used-Car ABS... but not - never - gold.

    * * *

    It appears we now know who the enemy really is... not deflation but the dreaded barbarous relic, gold.

    Perhaps this is why, as Kyle Bass so eloquently noted:

    "Buying gold is just buying a put against the idiocy of the political cycle. It's That Simple"

    Zero Hedge

  • Submitted by Tyler Durden on 12/03/2014 19:30 -0500

    Three months ago, we revealed that - with absolute certainty - foreign central banks trade (and by "trade" we mean "buy") S&P 500 futures such as the E-mini, in both futures and option form, as well as full size, and micro versions, in addition to the well-known central bank trading in Interest Rates, TSY and FX products. The reason for the certainty was that one of the world's largest futures exchange, the CME, was quietly peddling a service geared exclusively to central banks, called the Central Bank Incentive Program, whose purpose was to "incentivize" central banks to provide market liquidity, i.e., limit orders, by charging them 34% less than ordinary customers on every E-Mini trade.

    Back then we left readers wondering "the next time you sell some E-minis, ask yourself: is the ECB on the other side? Or the BOE? Or, perhaps, you are selling S&P 500 futures to Kuroda. Who knows: there is no paper trail anywhere, although a FOIA request and/or the discovery from a lawsuit, class action or otherwise, of the CME's central bank incentive program would likely yield some stunning results."

    Actually no it won't: it is now a national security issue that nobody have proof that the biggest marginal buyer of equities are central banks themselves. Otherwise, "confidence" in central planning may crumble, even if everyone knows all too well that without central banks, the equity market's artificially propped up prices would be obliterated overnight.

    There was one small piece of good news: the foreign central bank rigging (because the Fed is still technically not allowed to buy equity derivatives directly: instead it has been doing so via Citadel) would end on December 31, 2014:

    Zero Hedge

  • Reply to

    Ghost in the Machine

    by markedtofuture Dec 3, 2014 6:12 PM
    markedtofuture markedtofuture Dec 3, 2014 6:13 PM Flag

    The next 2 days have been right back to the wall to wall cartel rules being enforced. Optimistically though Monday was a tremor, as were the unusual Fridays of late. A tremor can often do little or no damage. It can also create a tsunami. Based on the past 3+ years the latter is the most likely outcome.
    James Mc

  • markedtofuture by markedtofuture Dec 3, 2014 6:12 PM Flag

    Lemetropole cafe -
    Bill,
    Circled number showed $1211.40 as the 1% cap for the day. So far gold magically laid up right on the mark. Another day, another prediction to the tick. There are a lot of technicians getting paid a lot of money to consistently miss such crucial resistance points. I guess that’s the price you pay to be a cartel ostrich. A hefty 6,000 Feb. contracts traded between 10:29 and 10:34 keeping gold at its first limit-up. Further attempt to escape have so far been repelled. We’re still just a flash crash away from sub-$1200 which is where the cartel likes it. Watching the Comex trade is more like watching a hologram of gold. The price is totally driven by algo systems, and there is no physical gold being traded divorcing it from all reality. The Comex price is, like the Police album, a "Ghost in the Machine".

    The no follow through rule serves several vital functions for the cartel, all of which fall under the MOPE category. One is to create the illusion of equilibrium in price. Capping gold after every significant rally makes it look like the buyers are hesitant, and the sellers are eager. Another function of capping gold after a rally is to quickly neutralize all bullish technicals. That can’t be underestimated in the cartel’s bag of tricks, as it stops the momentum buyers dead in their tracks. Of course the Kitco crowd is more than eager to provide narratives like this All Quiet On The Golden Front describing exactly what the cartel wants MOPE to be. As I have said gold has been a bull market that felt more like a great bear market. There are endless proclamations of its demise, and endless Kitco headlines advising caution if not outright fear of further gains. FWIW the MOPE campaign has been terribly effective in keeping ordinary investors scared off.

    We know the numbers to hurdle for gold and silver to reach escape velocity. We know that at least for a day they acted like it was possible.

  • markedtofuture by markedtofuture Dec 3, 2014 3:43 PM Flag

    Are you looking to set a posting record?

    850 posts | Last Activity: 1 hour 46 minutes ago
    Member since: Nov 20, 2014

  • Dec. 3, 2014 Fun Trading

    Summary
    IAG is a solid gold company with potential production growth, and a good management involved in a weak Gold sector since 2012.
    The gold price is trading in a tight range, between $1,100/Oz and $1,300/Oz, for about a year now, and it seems that the metal has found a strong support.
    The gold miners have suffered greatly and trade now at discount to fair value. It is perhaps time to bet on the gold miners for a rebound next year.

    Conclusion
    IAG is a solid company with potential production growth in 2015, and a good management, unfortunately, involved in a weak Gold sector since 2012. Cost reduction has been a highlight of 2014, and the recent sale of Niobec for $500 million is a very encouraging development. Here is what Steve Letwin said:

    People ask us what we intend to do with the $500 million in cash, once we close the deal to sell Niobec? Our plan is to invest in the proceeds, in the profitable growth of our gold business, which may include acquiring a producing or near-term producing mine that meets our criteria. It will depend on economic returns, and that will reflect the ability of the asset to improve our cost structure, grade profile, and cash flow.

    The production trend in 2014 is encouraging:

    The increased throughput at Essakane during Q2 2014, following the mill expansion, pushed a 20% increase in growth of production. Further cost reduction expected with lower fuel cost.

    Westwood, which is the company's new commercial operation, is delivering now 1,400 TPD at 7.5g/T.

    Rosebel had some little disappointments, but presents a strong prospect. It is important to notice that the mine has a new functioning 5-megawatt solar plant. Guidance has been lowered for 2014 at 315K to 320K Oz.

    I believe the major advantage of IAMGOLD now is the cash that the company will receive from the sale of Niobec, an estimated $500 million. The company has not decided yet what will be the strategy, however, it is possible to ..Seeking Alpha

HSBC
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