Had these three thoughts:

1. Exclusive and expensive aren’t the same thing. (On the way to the gym)
2. Italian soccer is more entertaining than Italian opera. (At the gym)
3. China’s money supply growth must be huge because for the zillionth time when I took money out of the ATM I got twenty freshly printed, consecutively numbered 100 yuan bills that were all stuck together. (Coming back from the gym)

I don’t know how useful or meaningful these charts are, but they’re fun to look at anyway. Gold bugs tend to be lunatics, and like most lunatics, they are often interesting and thoughtful drinking buddies.

Copper Price / Gold Price

Corn Price / Gold Price

Oil Price / Gold Price

US Stock Prices / Gold Price

Wheat Price / Gold Price

In the week’s Barron’s, Charles Gave calls the Euro “grotesquely overvalued” and says he is looking for it to return to $1.05 to $1.10 in “the next couple of years.” His guess is as good as the next guy’s. It might be wise to wait for the trend to reverse before targeting $1.05 to $1.10.

I’d like to thank reader “Donk” for pointing out the hidden spam links cluttering my footer. Somehow it gets inserted at the highlighted section of code - php wp_footer(); - see enlarged screenshot below.

Click to enlarge

I just deleted that line of code which didn’t mess anything up and gets rid of the spam. Does anyone have any insight into how this happened?

(Another in the TGIF series)

China’s Yuan Rises Past 7.40 Per Dollar Before Trichet Visits

“Forwards contracts show traders are the most bullish on yuan gains since the end of the dollar link, betting the currency will reach 6.7790 in 12 months, a gain of 9.2 percent from the current spot rate. The U.S. dollar reached a record low versus the euro today.”

Good thing my long-term assets are mainly yuan-denominated while my long-term liabilities are mainly dollar-denominated.

Related: Renminbi Revaluation Redux, April 17, 2007

Europe Suspends Mortgage Bond Trading Between Banks

“‘In light of the current market situation and in order to avoid undue over-acceleration in the widening of spreads,’ the committee of banks and borrowers ‘recommends that inter-bank market making be suspended,’ the European Covered Bond Council said in an e-mailed press statement.”

That’s the way to keep spreads from widening: shut down the market. ;-)

Even if your trade timing stinks, if you have the wind (a.k.a. the larger time frame trend) at your back, you should be OK. Here are the hourly Crude and weekly Dollar charts:

Click to enlarge (Crude, Hourly)

Click to enlarge (US Dollar Index, Weekly)

Related:

Sticking Firmly with a Totally Arbitrary Price Target for Crude
Crude Will Hit $100 No Problemo

Eight stories from the “Most Read” today … read ‘em and weep.

1. Freddie Posts Loss, May Cut Dividend; Shares Plunge

“Freddie Mac had $1.2 billion in provisions for credit losses and reduced the value of assets by $3.6 billion … A slump in the value of mortgages reduced core capital by two-thirds to $600 million more than Freddie Mac’s regulatory requirements, prompting the company to seek more money … Freddie Mac’s $713.1 billion portfolio as of September included $105 billion of securities backed by subprime mortgages.”

2. At Subprime Event Too Early to Tell Who’ll Survive

“‘These events tend to become deeper and play out longer than most people initially expect. This is one of the slowest-moving train wrecks we’ve seen,’ says Michael Mayo, an analyst who covers securities firms at Deutsche Bank AG in New York.”

3. Fed Pares Growth Forecast, Calls October Cut `Close’

“‘Participants generally viewed financial markets as still fragile and were concerned that an adverse shock — such as a sharp deterioration in credit quality or disclosure of unusually large and unanticipated losses — could further dent investor confidence and significantly increase the downside risks to the economy,’ the minutes said.”

Further dent? Body slam unfortunately is not a term you see in Fed minutes.

4. Credit Market Collapse Claims Victims as Lawyers Exit

“While structured finance practices have been hit the hardest, mergers and acquisitions and private equity practices also face a slowdown … ‘the market has caved in.’”

5. Citigroup, Bank Credit Swaps Rise on Subprime Concern

“… analysts predict that writedowns by banks and securities firms, already $50 billion worldwide, will continue to grow.”

6. Federated Investors Bails Out Cash Fund After Losses

“Enhanced cash funds, which hold about $850 billion in assets in the U.S., are sold to wealthy investors and institutions as an alternative to money-market funds, offering higher yields by buying riskier assets such as mortgage-backed securities.”

7. Corporate Bond Risk Increases as Freddie Mac Posts Record Loss

“Countrywide’s ’survival strategy has depended on access to the secondary markets through’ Fannie Mae and Freddie Mac, the largest sources of money for U.S. home loans, analyst Howard Shapiro wrote in a research note. ‘That strategy is less viable in an atmosphere where’ Fannie and Freddie are ‘capital constrained and may need to shrink.’”

8. Northern Rock May Not Get Extended Aid; Bids Reviewed

“The government expects ‘the costs and risks associated with Northern Rock to be borne to the greatest extent possible by the current and future private sector providers of capital,’ the Treasury said.”

The “greatest extent possible” may turn out to be very little indeed.

It’s been awhile since I posted the Commercial Mortgage Backed Security BBB- spread chart, mainly because I’ve been busy living in denial. This is a terrifying chart — the credit crisis is huge and is still raging.

Countrywide in the single digits, Fannie and Freddie blowing up, E*trade approaching zero, nearly all of the regional banks and other financial stocks I’ve bought will likely slash their dividends (I bought them for the dividends) — everything I thought was a bargain I’ve been dead wrong about.

Live and Lose and Learn.

Click to enlarge (CMBS BBB- Spread over the 10-year Treasury)

Related: All posts mentioning the CMBS BBB- Spread