AUDUSD position here

This channel has held for the past year. Only establishing half position here (blue line) at .8840 as a visit to the sliding parallel (red line) below seems likely. Will add the final half position if we get there. Either way i’m looking for a much higher AUDUSD.


The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

The FaceBook share sale/offering by the numbers

Zuckerberg selling 60 milion shares

Marc Andreeson selling 1.65 million shares

Facebook issuing 27 million shares

Total 88,650,00 shares with approx value $4.87B

Market cap of FB is $134B

The shares being sold represent approx 4% of the company.

FB only down 1.5% on the news after an initial 5% drop in pre-market hours.

Being added to the S&P tomorrow probably has something to do with the lack of down volume today.

Selling Calls today.

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

Yanucovych Family embezzling $8-10B/year

Payback Time for the “Yanukovych Family”
by Anders Aslund | December 11th, 2013 | 03:00 pm

Ukraine is in the midst of a financial as well as a political crisis, one that is essentially caused by embezzlement from the Ukrainian state by its rulers to the tune of $8 billion to $10 billion a year. The European Union and others dealing with Ukraine should demand that the government be audited, the culprits forced to pay back, and those found guilty be ousted and prosecuted.

So far, the Euro Maidan or Euro Revolution has largely been about politics and foreign policy, but it must not be forgotten that this government has run the Ukrainian public finances into the ground through top-level corruption. The time has come to think creatively about how to sort out the rampant Ukrainian financial crisis.

Ukraine’s well-known problems of corruption lie behind Ukraine’s last-minute demand for payment in return for association with the European Union. A headline in Yevropeiskaya Pravda on December 7 said it all: “[First Deputy Prime Minister Serhiy] Arbuzov: Ukraine needs 10 billion [US dollars], but Europe Proposed only 610 million [euro].” This is of course better than President Viktor Yanukovych’s absurd demand of €160 billion from the European Union in grants until 2017, but Arbuzov’s insistence was logical if fantastic. His government needs such a large amount because of its financial mismanagement.

The Ukrainian government’s budget deficit of 6 percent of GDP or $11 billion is driven by what is commonly called the “Yanukovych family” siphoning big money from the state budget. Because everyone knows about this corruption, the International Monetary Fund (IMF) and the European Union have refused to aid the Ukrainian government.

Billions of dollars have disappeared from the Ukrainian government each year, equivalent to an amount sufficient to cover the $30 billion budget deficit run up during President Yanukovych’s term in office. Ukraine’s independent media has reported how the money has been embezzled and who has benefited, but the exact details are important, and I abstain from naming names. Among the devices of corruption identified by the media are the following:

1. Billions of dollars are extracted each year out of the State Tax Administration and the State Customs Committee. Some appears to be sheer embezzlement, some is in the form of bribes passed on to the top, and some comes from commissions demanded from value-added tax refunds for exporters. A reasonable assessment of this embezzlement would be $3 billion to $5 billion a year.

2. Competitive bidding of large infrastructure projects, notably connected with the Euro 2012 Soccer Cup, has ceased. The government overpays for these projects by paying twice as much as it should. Reasonably, half of the money should be returned by those who will be revealed to have benefited. This source should generate at least $2 billion a year.

3. The state oil and gas company Naftogaz buys 18 billion cubic meters of domestically produced natural gas each year at the ridiculously low price of $53 per 1000 cubic meters. The alleged purpose is to sell cheaply to consumers, which is done but only to a limited extent. There is a leakage of perhaps half this volume, permitting someone to make a fortune from reselling the gas to industrial customers for a price related to the Russian gas price of $410 per 1000 cubic meter. The potential for privileged arbitrage here is enormous: $350 per 1000 cubic meters times 9 billion cubic meters equals $3.15 billion. This is probably the main reason why Yanukovych so adamantly opposes increased gas prices.

These three sources of embezzlement and corruption alone have probably generated $8 billion to $10 billion a year to the “Yanukovych family” during the last three years. Rather than allowing Yanukovych to try to get the best bargain he can from the IMF, Europe, Russia, and China, with the aim of feeding these embezzlement schemes, the appropriate legal authorities need to audit the Ukrainian state finances in the three areas mentioned above, going back to Yanukovych’s election in February 2010. Given the pervasive corruption of government state agencies and mutual political distrust in Ukraine, it might be a good idea to invite independent European auditors to sort out the mess.

Once the beneficiaries of embezzlement have been established, they should be forced to pay back to the Ukrainian state. If this were done fast, the current problems with Ukraine’s state finances would disappear.

These and other methods of corruption probably explain why Yanukovych refused to go along with the new EU-designed law on prosecution in Ukraine. Any independent investigation or prosecution directed by the West could end up with Yanukovych and members of his government in court, with the possibility of prison. Russia’s President Vladimir Putin, on the other hand, embraces and endorses corrupt practices.

Ukraine harbors many other sources of corrupt revenues, such as privileged privatization and extortions at all levels, but given the critical state finances, there is merit in focusing on the direct extraction of cash from the government that can be returned.

Five natural conclusions flow from these observations. If carried out forcefully and effectively, they would help resolve Ukraine’s current financial and political crises:

1. The Ukrainian opposition, the European Union, and the IMF need to demand a full audit of these key features of the central Ukrainian government finances during the Yanukovych presidency. The only plausible audit would be international. International donors have a stake in restitution of theft by those in power.

2. Once investigated and understood, the European Union and the IMF should demand that these corrupt practices be outlawed, putting state finances on a sustainable basis.

3. All top officials responsible for gross larceny should be ousted from government.

4. The beneficiaries of larceny should be forced to pay back what they have extracted unlawfully from the Ukrainian government. In return for reasonable repayment, they should be permitted to buy their freedom from jail.

5. Inevitably, this process will take some time and it will have to be accompanied with major political changes. If this cleansing process is on a sufficiently secure basis, the European Union and the IMF will no doubt provide the necessary crisis financing. That is the very function of the IMF, and the European Union has often cofinanced sound IMF programs.

Anders Åslund is a senior fellow at the Peterson Institute for International Economics and author of How Ukraine Became a Market Economy and Democracy.

Posted in Global Financial Crisis

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

Nice Analysis on Situation in Ukraine by Jakub Parusinski

The Ticking Time Bomb in Kyiv

Jakub Parusinski

Over the past week authorities have used bombs as excuses to close metro stations and airports, fearing the arrival of protesters. But while those alarms were false, the threat to Ukraine is very real. Nobody knows how and when it will explode, and it may turn out to be a dud. Though a peaceful outcome to the situation is still possible, there are very few positive scenarios.

Every revolution is a party, and the Euromaidan has its share of festivities. Food, hot beverages and music lighten the mood; those needing to keep busy build barricades, volunteer in kitchens or manage donations. There are even tourist attractions: the occupied city hall, renamed Revolutionary Headquarters, is “free Kyiv’s” Louvre, with visitors queuing late into the night; others line up to bring a sledgehammer down on the toppled Lenin statue and grab a small Crimean marble souvenir.

Yet the joyous atmosphere turned sombre this week when protesters were reminded of just how much they had to lose and how vulnerable they are. As the government’s deadline to clear the square approached, visions of demonstrators crossing themselves – anticipating both truncheons and a broader crackdown – during a mass on the Maidan sent chills through the spine. The sentiment was captured by political analyst Oleksandr Sushko, who told the Kyiv Post: “As some people say, if we surrender, there will be Belarus, if not – Yugoslavia.”

Despite the droves of police being bussed in to overwhelm the protests, the activists held their ground. Peripheral barricades were lost, and even central ones dismantled, but the occupied government buildings remained in the opposition’s hands. What authorities took apart the protesters quickly rebuilt, and their resolve seems harder than ever. The upshot is that Kyiv is once again at a stalemate, and a roundtable called together by President Viktor Yanukovych has achieved nothing.

The president’s promises to provide amnesty for all except provocateurs, to revive AA/DCFTA negotiations with the European Union, and to fire some officials are just not good enough. But the blunt truth is that nobody can trust him anymore. Member of European Parliament Jacek Saryusz-Wolski earlier called the president’s overtures to Europe “a smokescreen” meant to buy time, and any promises to reach out to the opposition should be seen as more of the same.

Crisis of leadership

Ukraine’s current protests and their potentially disastrous consequences are largely the result of a crisis of leadership. The opposition has largely been leading the movement from behind, limiting itself to appearing at the scene of the protests and trying to capitalise on them with populist statements. On the other side Yanukovych seems to lack the resources or will to anything substantial and empty words keep eroding his credibility.

It now appears clear that the will of the protesters was underestimated. Despite days and weeks of camping out in the tough Ukrainian winter the EuroMaidan keeps growing in numbers and resolve. The attempt to clear the square failed and barricades were rebuilt. It is worth noting the presence of Ukrainian Insurgent Army (UPA) symbolism – for many young men, whose grandfathers or uncles fought in the UPA, this is simply their turn to fight the occupant for the freedom of their country.

In the absence of clear direction, radical groups will, and indeed have, taken a leading role. Already on Saturday, November 30th, young men were being recruited to join self-defence organisations to “protect the revolution.” They can now be seen wearing hard hats, arm bands and moving in columns of 50 or 100. These foot soldiers are being organised by Afghan war veterans and younger military vets. Although their discipline and numbers may still be lacking, a growing number seem determined to fight it out, until the end. This raises the question of what their demands are and how they would react to a compromise deal between Yanukovych and the opposition.

In turn, Yanukovych’s failure to bring the situation under control has significantly limited his options. It seems unlikely Russia (or China, for that matter) will step in to rescue a weak wannabe despot. Any deals signed would hold little value: firstly, because they would almost certainly be unconstitutional; secondly, because a change in leadership could abolish them. Yanukovych has de facto lost control of parts of his capital, hardly making him the reliable partner that Moscow or Beijing would want.

This past week has only made the situation worse. The failed dispersal looks bad both from Brussels (undemocratic behaviour) and the Kremlin (ineffective crackdown). It now appears the president is unable to bring the officers responsible for the November 30th violence to justice, for fear of losing their loyalty, while anything less will almost certainly be rejected by the protesters. This leaves the option of introducing a state of emergency or bringing in the army, either of which would undoubtedly further fuel the demonstrators’ rage and cause public outcry.

Breaking the nation

Though there have been some bright examples of East-West cooperation and friendship since the protest started, the rift between these two parts of the country should not be underestimated. Reconciliation will be difficult to say the least, after parts of the country have called for pacification of the protests, while others have sealed their fates to it.

Many local authorities, particularly in the country’s west, have come dangerously close to secession. City councils have declared they will not obey government orders they do not agree with, while the mayor of Lviv warned the whole town would rise against special forces if they try anything. A small town on the Polish border even proposed to defect. If forced to pick sides, much of the military and law enforcement would almost certainly defy the president. In a region where institutional and human memory of insurgency persists, this is a very dangerous situation.

With the end-of-year deadline for a new budget fast approaching, so pressure on recalcitrant local authorities is growing. Ukraine’s centralised fiscal system means that, without the green light from the presidential administration, they will simply have no money. Some government workers in the regions have not been paid for months, and empty pockets will put a strain on principles. Oligarchs have assets in the West, and the ill-fated gas transit system also depends on the region, meaning any attempts to take over could lead to calamity.

Meanwhile, a landmine has been set in Sevastopol, which appealed not only for the pacification of the Maidan protests, as did other regional authorities in Eastern and Southern Ukraine, but asked that it be done by Russian troops. Should a compromise be struck involving early elections or an interim coalition government of sorts, it is only too easy to imagine Sevastopol authorities declaring the move a coup and asking for Russian protection.

No way out?

There is no easy way out of this conflict and all sides involved are now playing va banque. The arrests of activists, lists of student demonstrators made and veiled threats from the administration suggest a Belarusian-style crackdown could follow the dispersal of the Maidan. Meanwhile, losing for Yanukovych could mean the loss of money and freedom, and perhaps worse. His new nickname Yanuchescu, after the Romanian dictator Ceausescu shot by firing squad, reveals the popular sentiment.

Any mediated solution would require considerable compromises on both sides. Yanukovych is not likely to resign, and would demand guarantees his position and amassed wealth not be touched. Meanwhile, the opposition would need real evidence it will not be prosecuted. This could mean firing the perpetrators of the violence, handing the “power institutions” (Ministry of Interior, Prosecutor’s Office, Justice Ministry etc.) over to the opposition, or setting a date for snap elections. None of the above, however, seems likely or acceptable.

Nor would a snap vote, be it for president or parliament, prove a panacea. Despite the president’s dismal ratings, the opposition is by no means guaranteed victory. Vitali Klitschko can be dismissed on technical grounds for insufficient residency in Ukraine, while Arseniy Yatseniuk could be tried for calling for a revolution (the raiding of his party’s headquarters by secret service agents should be seen as a warning). Other potential candidates, like Roshen owner Petro Poroshenko, have yet to do the ground work, while Svoboda leader Oleh Tyahnybok is unpalatable in the country’s east.

Hanging over everyone’s heads is the imminent collapse of Ukraine’s economy. So far politics dominated people’s minds but the nation’s coffers continue to bleed hard currency at an alarming rate and a currency panic is only too likely in coming weeks. This would in turn topple the fragile banking system, and bring the country to its knees. The government is already $10 billion behind in pensions, wages and other current expenditures and fixing the problem will involve a lot of unpopular measures – something the opposition will not be keen on, especially within a coalition government.

Jakub Parusinski is Chief Editor at the English-language weekly Kyiv Post and a contributor to New Eastern

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

Short Copper

Added copper shorts today (HG futures)

Copper has been somewhat vertical for the past 3 weeks and now finding resistance right where i would expect.

Selling here at 3.31.


copper futures

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

The Economist article on situation in Ukraine

A decent piece by the Ecomonomist:

THE bells of Mikhailovsky Cathedral in the ancient heart of Kiev began to ring in alarm just after 1am on December 11th. As in medieval times this was a sign that the city was under siege, and a call to citizens to come to its defence. Down a steep hill, columns of riot police, in black helmets and bearing metal shields, descended on Independence Square, popularly known as Maidan (square), from three directions. Maidan, the site of revolutionary protests over the past three weeks, seemed to be facing its most critical hour.

There was no panic, only resolve. Young people held hands, some cried. Inside the barricaded encampment, sombre-looking men put on helmets and padded coats for protection. Women were advised to leave the square. The winter air was electrified with tension.

On the illuminated stage, projected on a screen, protest leaders called for calm and defiance, priests read out prayers and Ruslana, a popular Ukrainian singer, led the national anthem: “Ukraine has not yet perished, nor her glory, nor her freedom.” Thousands of Maidan protesters struck up the chorus line: “Souls and bodies we’ll lay down, all for our freedom/And we’ll show that we, brothers, are of the Cossack nation!” The Ukrainian and European Union flags fluttered alongside each other.

On the other side of Khreshatik, the main street, the riot police charged forward to storm the barricades. Several people were injured in skirmishes. But the protesters on Maidan itself held their ground, displaying formidable discipline and giving the police no excuse for using violence. At about 4am, with the police floundering, the atmosphere changed. Expectation of an inevitable defeat gave way to a premonition of victory. (It later transpired the police did not have an order to disperse the crowd, only to push it aside.)

Standing in temperatures of minus 13°C, ready to be beaten up, the people on Maidan were defending something far greater than an association agreement with the EU, which was the initial cause. They were standing in the way of a police state, defending fundamental European values and defying the post-Soviet order imposed by Russia. Whatever advantage the riot police had in equipment, the protesters had moral superiority. They were on the right side of history, pushing against the authoritarian power of President Viktor Yanukovych.

“This was the birth of the nation,” says Petro Poroshenko, whose television channel provided blanket coverage of the stand-off. As dawn broke over Kiev, the police retreated. Their attempts to recapture two municipal buildings occupied by protesters were easily thwarted. While some defenders of Maidan fell asleep in their tents, new helpers handed out hot tea and sandwiches, repaired barricades and cleared streets of snow. But in spite of a sense of moral triumph, the morning provided little explanation for the timing of and motives for Mr Yanukovych’s actions.

On the face of it Mr Yanukovych’s move defied common sense. Only a few hours earlier, he was shown on television talking to three former presidents of Ukraine about finding a peaceful way out of the crisis; he held talks with Catherine Ashton, the EU’s foreign-policy boss, and Victoria Nuland, America’s assistant secretary of state, and spoke by phone to Joe Biden, its vice-president. Launching an assault on Maidan with both diplomats in town seemed a deliberate provocation.

The reaction was quick to follow. John Kerry, America’s secretary of state, expressed “disgust with the decision of Ukrainian authorities to meet the peaceful protest in Kiev’s Maidan with riot police, bulldozers and batons”. Sanctions could follow, Mr Yanukovych was told. On the other hand Vladimir Putin, Russia’s president, must have been pleased. Mr Yanukovych’s actions revealed his adherence to Mr Putin’s school of governance. And Mr Yanukovych has good reasons to keep Mr Putin happy. Having ditched the pact with Europe (even though he assured Baroness Ashton, perhaps for tactical reasons, that he still intends to sign it), Mr Yanukovych is now reliant on Russia’s money to rescue Ukraine’s collapsing economy.

Mr Yanukovych and Mr Putin are supposed to meet next week in Moscow to sign several agreements which are thought to include cheaper gas for Ukraine and, rumour has it, to allow Mr Yanukovych’s family business into yet another opaque vehicle for importing gas. Mr Yanukovych is terrified of upsetting Mr Putin, who is likely to have made this deal dependent on Mr Yanukovych’s ability to clear protesters off the streets.

The botched crackdown dealt another blow to Mr Yanukovych’s dwindling legitimacy. His orders are being sabotaged. The oligarchs, who control most television channels, defy his orders. Considering Ukraine’s looming financial crisis, Mr Yanukovych’s position is not much stronger than that of the Communist coup-plotters in the Soviet Union in 1991, who lost legitimacy and power in three days by inciting violence which the country rejected.

What keeps Mr Yanukovych in power is the lack of a clear opposition leader. None of the three main options, including Vitaly Klitschko, a former heavyweight boxing champion, can really negotiate on the protesters’ behalf. For now the stand-off continues with no clear way out. Mr Yanukovych may play for time and bring out an army of paid supporters. But one thing is clear: the bells are tolling for him.

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

POMO correlation to ES futures

The past year has maintained a tight correlation between the Fed’s POMO schedule and the ES S&P futures and to me has done more to demonstrate how this market has become “managed” than anything else.
The double POMO’s seen on 3 days this month and the timing of them seem to blatantly show that it really is all about sentiment.

Below is copied from with explicit, handwritten permission from Ben Bernanke himself.

Double POMO’s in bold

Expected Purchase Size
Mon, Dec 02, 2013 Tue, Dec 03, 2013 Outright Treasury Coupon Purchases 02/15/2036 – 11/15/2043 $1.25 – $1.75 billion
Tue, Dec 03, 2013 Wed, Dec 04, 2013 Outright Treasury Coupon Purchases 11/15/2024 – 02/15/2031 $0.75 – $1.00 billion
Tue, Dec 03, 20132 Wed, Dec 04, 2013 Outright Treasury Coupon Purchases 09/30/2019 – 11/30/2020 $3.00 – $4.00 billion

Wed, Dec 04, 2013 Thu, Dec 05, 2013 Outright Treasury Coupon Purchases 02/15/2021 – 11/15/2023 $2.75 – $3.50 billion
Thu, Dec 05, 2013 Fri, Dec 06, 2013 Outright Treasury Coupon Purchases 02/15/2036 – 11/15/2043 $1.25 – $1.75 billion
Fri, Dec 06, 2013 Mon, Dec 09, 2013 Outright Treasury Coupon Purchases 12/31/2017 – 08/31/2018 $4.25 – $5.25 billion
Mon, Dec 09, 2013 Tue, Dec 10, 2013 Outright Treasury Coupon Purchases 02/15/2036 – 11/15/2043 $1.25 – $1.75 billion
Mon, Dec 09, 20132 Tue, Dec 10, 2013 Outright Treasury Coupon Purchases 02/15/2021 – 11/15/2023 $2.75 – $3.50 billion

Tue, Dec 10, 2013 Wed, Dec 11, 2013 Outright TIPS Purchases 01/15/2018 – 02/15/2043 $1.00 – $1.50 billion
Wed, Dec 11, 2013 Thu, Dec 12, 2013 Outright Treasury Coupon Purchases 02/15/2036 – 11/15/2043 $1.25 – $1.75 billion
Thu, Dec 12, 2013 Fri, Dec 13, 2013 Outright Treasury Coupon Purchases 09/30/2019 – 11/30/2020 $3.00 – $4.00 billion
Fri, Dec 13, 2013 Mon, Dec 16, 2013 Outright Treasury Coupon Purchases 02/15/2036 – 11/15/2043 $1.25 – $1.75 billion
Mon, Dec 16, 2013 Tue, Dec 17, 2013 Outright Treasury Coupon Purchases 02/15/2021 – 11/15/2023 $2.75 – $3.50 billion
Tue, Dec 17, 2013 Wed, Dec 18, 2013 Outright Treasury Coupon Purchases 02/15/2036 – 11/15/2043 $1.25 – $1.75 billion
Thu, Dec 19, 2013 Fri, Dec 20, 2013 Outright Treasury Coupon Purchases 02/15/2036 – 11/15/2043 $1.25 – $1.75 billion
Thu, Dec 19, 20132 Fri, Dec 20, 2013 Outright Treasury Coupon Purchases 09/30/2018 – 08/31/2019 $4.75 – $5.75 billion

Fri, Dec 20, 2013 Mon, Dec 23, 2013 Outright Treasury Coupon Purchases 02/15/2021 – 11/15/2023 $2.75 – $3.50 billion
Mon, Dec 23, 2013 Tue, Dec 24, 2013 Outright Treasury Coupon Purchases 02/15/2036 – 11/15/2043 $1.25 – $1.75 billion

This should get the shopping season into high gear and give the big funds a chance to book profits for the year end.

I am continuing to sell Jan 17 calls on any rallies. Mostly nasdaq high flyers such as GRPN, FB and acquisition focused Yahoo who never met a ridiculously multipled, no income company it didn’t like.

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan