Thursday, November 26, 2009

Who Knew?

There is sheer panic in international markets this Thanksgiving because of news that Dubai is delaying payment on debt of Dubai World until May 2010. The Financial Times index is down 3.18%. Is Dubai's delay in paying in paying the debt the reason Treasury Bills have been paying a negative yield over the last week or so?

This is what I wrote on November 19:

Dow Jones reports that January and February T- bills hit a yield of -0.03% earlier.

Got that? Negative .03%.

This is a very spooky sign. It means major players don't want to go further out on the yield curve to earn money. They are only willing to keep their funds very liquid and pay for the privilege as opposed to earning money. This means one thing and one thing only, they are real scared about something. On a best case scenario, they are thinking longer rates are headed higher, so why invest now. On a worst case scenario, they are thinking all hell is going to break lose and they want their funds liquid to meet withdrawal requests.
Were government leaders and some traders tipped off that Dubai would make an announcement on the evening before Thanksgiving when U.S. markets were closed? Did they trade on this information?

The release of such news late Wednesday on the day before Thanksgiving, which means US traders can't, for the most part, react, and where most traders are away until Monday, suggests a sophisticated PR timed release, not likely planned out of Dubai, more likely coming out of the US.

Markets don't lie. It sure looks like that mysterious downtrend in interest rates might have been anticipating the Dubai News Dump.

Who knew?


  1. Who knew? A question best put to those who apparently paid for the protection premium.

  2. Wasn't the same day the yield first went negative the same day that ICE cancelled a bunch of trades when DXY spiked over 82? They cancelled anything over 76. Similar thing happened November 3.

    Maybe I've got a tinfoil hat on a little too tight but when I read about that on the 20th I thought that something major was going to happen pretty soon, some people know about it but they're trying to keep it under wraps.

  3. Who knew? They knew!
    The same folks who manage your longs but sell you short; those who profit by selling out their folks and countrymen; and they say they're doing God's work! Do you need a better definition of sociopaths? It's not that these type of folks never existed before, but how is it so many non-sociopaths do business with them? We out-number them 99 to 1. Guess we'll have to wait till the 99 are mad as hell, and won't take it anymore to put one in their place.

  4. Dubai's fate was sealed on Oct 14, 2007 when 60 Minutes aired its episode titled Dubai, Inc.

    In fact, both 60 Minutes and BusinessWeek have enviable reputation as consistent contrarian indicators.

  5. Markets don't lie? Come on. That is another Wall Street bogus statement like, "The market are aways right". Why not say "manipulation never lies"?

  6. Next we'll be hearing why it took 5 days for the "cause" to result in the "effect". You all seem to assume this MUST be true. Good thing you're not a bunch of sheep!!

  7. Next someone will tell us all WHY it took 5 days for the "effect" to precede the "cause". Everyone seems to accept and believe the two events MUST be causally related. Good thing this site is an "Economic Policy Journal" and not a bunch of sheep.

    Who, exacly, would "pay for the protection premium", Expat_w?

    Psst: Anonymous: something major is going to happen pretty soon...

    Mr. Cate: I think your mob MUST be on it's way...

  8. This will compound the banking problems that will be occuring around the middle of next year in the US with commercial real estate and residential real estate re-sets. When Gold gets too "expensive" to purchase, what will soon happen to the price of Silver as fiat currencies start to sag?

  9. It doesn't matter who knew. You can never bring them to justice. The only thing you can do is to invest heavily in precious metals, set yourself a strict profit target, sell 70% of your holdings when you reach that target, and then convert all of the proceeds into the one currency that will not lose its value throughout this forthcoming decade of financial mayhem - the Renminbi. Ignore this advice at your peril.