Chart of the Day – Today’s chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 9.8 ounces of gold to “buy the Dow.” This is considerably less that the 44.8 ounces it took back in 1999 – Chart of the Day ————

Goldman’s Quarter-Trillion-Dollar Cushion - Robert Lenzner – Not at all the riverboat gambler, Goldman has fully hedged its book of credit default swaps, and then some. – Forbes

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Speculative position limits – first reaction? – UNG to Reduce Certain Natural Gas Positions, Limit Future Size, NGI Reports – (BUSINESS WIRE)–As the Commodities Futures Trading Commission (CFTC) examines the possibility of imposing speculative position limits on “all commodities of finite supply,” the $4.4 billion United States Natural Gas Fund (UNG) moved to reduce its holdings of natural gas futures contracts and indicated that it may not continue to pursue its plans to expand its fund, Natural Gas Intelligence (NGI) reported. –
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Technical Analysis – Time to Buy the homebuilders? – KBW Mortgage Finance Index – Bullish Breakout Imminent! – … A break above 20 signals a multi-week high, actually a 10 month high! This suggests a change in fundamentals. It would also allow us to finally rest at ease each night knowing the back of bear market in the real estate sector had finally been broken. … – Thomas McCloud – Glenorchy Capital

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Bailout Banks Buying Treasuries Help Keep Rates Low - By Liz Capo McCormick – … helping to temper a rise in borrowing costs.  Bank holdings of U.S. government securities are up 15.6 percent from a year ago, almost double the average annual growth rate of about 8 percent since the Federal Reserve began tracking the data in 1973, according to the Greenwich, Connecticut-based trading and research firm MKM Partners LP. Purchases may accelerate as lenders look for places to park rising deposits as sales of federal agency debt of companies such as Fannie Mae and corporate bonds slow. – Bloomberg
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DvD Insights – The Merton Model of Risky Debt, Confessions of a Former True Believer - Donald R. van Deventer - In the mid 1980s at First Interstate, I participated in serious discussions about how the Merton model of risky debt could be used to diversify credit risk.  In the early 1990s, I actively marketed default probabilities based on the Merton concept in Japan.  I wrote two books advocating the model in the 1990s as well.  Now my view of the model has completely changed.  This blog explains how and why that came about – riskcenter.com