At first, even if the water is rough, ballast in the keel keeps you pretty stable. As the storm continues though, the boat takes on more and more water and the waterline moves up the hull. The ballast is no longer a great stabilizer because it doesnt represent that big a fraction of the total weight carried inside the Hull, filling with ever more water. The boat starts rocking back and forth with the waves, the inside water sloshing around right along with that.
Today in the markets we saw this effect in spades. Stocks have been crashing big time and USTs shooting to the Moon while the Euro was crashing, but today we went right over to starboard as the Money/Water went sloshing back the other way with the latest Wave, rumours of a new Master Plan in Eurotrashland to fix their unfixable problems. Treasuries get dumped to by Stocks and the Euro rises back up against the Dollar as FOREX traders ride the latest Momo Wave and try to make their daily Profit by being at the leading edge of the wave and surfing down it. Thos not quick enough with HFT Algos running their trading at best get left behind here and miss the ride. They have to sit and hold tight and wait for the next wave to come rolling in. Which it will of course, because this Storm is far from being over, it’s really just beginning here.
By now about everybody knows the Euro is Finished and the Euro Titanic will sink, but none of the really BIG Players can afford to admit that or exit their Euro Positions by wholesale dumping them on the market. So they hold onto most of the supply in the Hull and wait for it to slosh one way or the other as OUTSIDE the Hull the vast Sea of Money rolls in ever bigger waves.
All the time of course, MORE Money/Water sloshes over the gunwhales and into the boat courtesy of CBs pushing out endless liquidity waves and ever bigger bets are made inside the boat with the additional water, causing it to list from side to side at greater angles all the time.
Everybody on board knows the boat is sinking, but nobody wants to Jump Ship here, particularly since those Tiny Lifeboats named Drachma, Lira, Pesetas, Punts etc don’t look like they will hold up too long in such rough Seas. Everybody wants to get aboard the Lifeboat with the Swissie Cross painted on the front, but that one looks too overloaded already. Other folks want to get on the Golden Lifeboat, with the small problem that Gold doesn’t Float too well. Others wait for the Krauts to build a D-Mark Lifeboat, except only Krauts will be allowed on board that one if they build it in time.
Meanwhile, Floating out there in the same storm is the Mighty Ship of the Dollar. At the Helm, Captain Helicopter Ben Bernanke is motoring through the storm also on his big Nuke Powered Helicopter Carrier. Captain Super Mario Dragon is sending MAYDAY calls over the wireless to Captain Helicopter Ben to send in the Hueys, but so far they aren’t Flying. Captain HB doesn’t want to risk his Helicopters yet to save the sinking Eurotrash. He’s going to NEED those Helicopters when the Dollar ship goes down, and if he loses them trying to save the Eurotrash he won’t be able to get himself or his Officers off the Dollar when it goes down.
While the Storm Rages in the North Atlantic, over in the South China Sea Captain Sum Dum Fuk is piloting the recently built Renminby out of the Foxconn Shipyard, which has such poorly welded seams that not only is the water sloshing over the gun’ls, its flowing in right through the hull as well. Captain Sum Dum Fuk figures if he reverses direction on the Sump Pumps and pumps MORE water into the Renminby ship, this will create a pressure gradient forcing water OUT of the Hull rather than into it. So he orders his North Korean Chief Engineer Park Sum Cok to turn the pumps on Full pumping water INTO the good ship Renminby.
For the crew and passengers on all these ships, the band plays on and the deck chairs get rearranged, but few are building their own lifeboats still. The Helicopters will not come to save them, they are reserved for the Officers aboard the Good Ship Dollar. If you are not building a Lifeboat NOW, I sure hope you are one fucking good Swimmer.
US Treasury prices fall as stock market surges
By The Associated Press–1 hour ago
U.S. Treasury prices fell sharply Wednesday as fresh hopes that Europe will address its debt crisis drew money into riskier investments.
The Dow Jones industrial average jumped 286 points, its biggest gain of the year. The surge pushed the Dow back into positive territory for 2012.
As money flowed into riskier investments like stocks and commodities, traders sold ultra-safe Treasurys. The price of the 10-year Treasury note fell 50 cents for every $100 invested, pushing its yield up to 1.64 percent as of 3:30 p.m. EDT from 1.57 percent late Tuesday. Higher bond yields reflect lower demand for the securities.
Last week, the 10-year yield hit a record low of 1.44 percent after an alarmingly weak report on the U.S. job market renewed fears about the pace of economic recovery.
Wednesday’s whiff of optimism was related to hopes that European officials will find new ways to ease the region’s debt crisis. News reports said that German and European Union officials are assembling a rescue for Spain’s teetering banks.
Spanish banks invested heavily in that nation’s real estate bubble. Some can’t afford the losses they expect on loans, and the Spanish government can’t afford to bail them out. Spain has been the latest flashpoint of worries about Europe’s financial stability.
In other trading, the price on the 30-year Treasury bond fell $1.88 per $100 invested, pushing its yield up to 2.74 percent from 2.63 percent late Tuesday.
The yield on the two-year Treasury note rose to 0.29 percent from 0.25 percent late Tuesday. The yield on the three-month Treasury bill was unchanged at 0.08 percent.