In case you missed the kerfuffle last Friday, Blythe Masters, the 44 year- old, super-smart head of JPMorgan Chase’s commodities trading business, declined to sit on the CFTC’s Global Markets Committee advisory board.
This came as a big surprise.
After all, many of us following the CFTC presumed the brainy Blythe had already accepted the position after she showed up as a member of the advisory panel that is formulating the CFTC’s cross-border rules for the global derivatives market on the CFTC’s website.
While all this is certainly laughable… there’s another part of this story that is actually repulsive.
I’m talking about the man responsible for what happened last week and what a slimy, slippery regulator he has been. Worse, he’s now acting head of the CFTC.
It’s like letting a pedophile babysit your kids. It’s sickening.
Let me show you what I mean…
Out of far left field, I see something coming that I never expected.
It’s more like the coming together of pieces of a puzzle that have eluded us for too long.
By the way, Occupy Wall Street, if you’re listening, and I hope you are, and you’re still floundering (which I know you are) without a cause that anybody can really wrap their heads around, drop your drums, chants, and wanderings, and make the coming together of this puzzle what you’re protesting.
And make what could result what you are demanding.
Because, really, this could be the mother lode…
What a fun day that was yesterday.
No, I’m not talking about Jefferson County, Alabama, filing for bankruptcy… that’s not fun or funny, as you’ll come to learn shortly.
I’m talking about global stock markets and bond markets.
Wow, what fun! Can you imagine being short stocks and having one heck of a day yesterday? I can.
Can you have imagined that Italy’s interest rates would have soared the way they did? I can. And you could too, if you read what I wrote on Monday about how the CDS market was broken and what that would do to Italian bond rates.
Look, I’m not the kind of guy to say I told you so, but if I was, I’d sure be saying it now.
Italy is the canary in the coalmine – not Greece. (FYI, they used to keep a canary in every coalmine, because if it died, that meant poisonous gases that humans couldn’t smell were present.)
If Italy implodes, either by its bond yields exploding, its economy sinking, or its fiscal house burning, all of Europe is going down. And America will surely follow.
While you were sleeping this morning, Italy had to offer 6.087% interest on the one-year bills it floated. That compares to the 3.57% it paid just last October 11. What smells is that Greece just floated some bills at 4.90%.
In other words, the canary (Italy, in case I lost you) is starting to teeter on its perch.
It has another €28 billion to roll over by the end of 2011, and how much it will have to offer investors to buy its paper is anybody’s guess.
There’s only one guessing game that matters in Europe right now. That is whether or not the ECB will step up and promise – à la the U.S. Federal Reserve Bank – to be lender of first and last (and in-between) resort.
The ECB has to do something bold. And it probably will.
If it does, the next guess will be, where will its backing and credibility to backstop all of Europe come from?
Will it come from the same teetering nations that’s its going to have to support? Good luck with that. Or will it come from the backing of the IMF, with a ton more commitments from the U.S. and other G20 countries? Good luck with that.
We’re going to get a relief pop this morning in the stock market. Good luck with that, too.
Until Europe is figured out – and it won’t be any time soon – stay short with tight stops, just in case there is a Santa Claus coming to a chimney near you.
Oh, and by the way, if Italy starts singing again, watch Spain, then France, they are the next canaries we’ll have to watch in the coal pit we call the European Union.
Full story here…