Don't be fooled by what happened in the equity markets yesterday - it was a well disguised and fully planned intervention!
JP Morgan (the US Treasury's Bank) we suspect coordinated a global currency / bond effort PRIOR to the stock market explosion. As the world's largest participant in the $700 TRILLION unregulated,off balance sheet, off shore, off exchange SWAPS market, we believe JPM has the almost exclusive power to do this through un-policed trading techniques such as "netting". Contrary to what the mainstream media reports, we find it incredulous that we are expected to believe that JPM would have naively circumvented the Fed's planned Banking Stress Test announcements and then additionally did it prior to an FOMC announcement.
US$, EURO BONDS DISCONNECT - For the first time the US$, Euro & Bonds DISCONNECTED from the Equity Markets PRIOR to the equity breakout. I won't bore with you with all those dislocation charts. Here is what you need to know:
WHAT DROVE THE DECISION - Yen Carry Trade Unwind & a major Japanese US Treasury Buying Exposure (US 10Yr Treasury Yield rose yesterday to highest since October - it must somehow be contained as normal intervention as with the YEN: $ cross, is no longer working).
THE PUBLIC AND FUNDS ARE NOT INVOLVED - A Growing Market Exposure (An Increasing Global Bank Collateral Contagion problem)
THE GLOBAL PUMPING ISN'T WORKING - Either Dramatic More Pumping or other types of intervention is needed - fast!
RISK PRICING IS BROKEN - We have never seen this market behavior for the VIX and the associated Options / Derivatives RISK PRICING -- ALL IN ADVANCE OF FRIDAY'S HUGE Q1 QUADRUPLE WITCH & partially the result of the ISDA'S CDS Gaming (A CDS Hedging Industry exposure) -
A FORTUNE WAS MADE YESTERDAY on time decay and risk mis-pricing.
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