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The Bilderberg 2016 Agenda: Trump, Riots, Migrants, Brexit

Elite E Services
Every year, the world’s richest and most powerful business executives, bankers, media heads and politicians sit down in some luxurious and heavily guarded venue, and discuss how to shape the world in a way that maximizes profits for all involved, while perpetuating a status quo that has been highly beneficial for a select few, even if it means the ongoing destruction of the middle class. We are talking, of course, about the annual, and always secretive, Bilderberg meeting.
And, as the Guardian notes, “you know Bilderberg’s about to begin when you start seeing the guns.”

Workers erect a barricade outside the Taschenbergpalais hotel in Dresden
The Taschenbergpalais hotel in Dresden – the venue of “Bilderberg 2016” which starts tomorrow and continues until June 12 – is filling up with pistol-packing plainclothes security as the last guests are ushered out. The frowning gunslingers head up and down the corridors with their hotel maps, trying door handles and checking the lay of the land while, down in the hotel lobby, corporate goons gather in muttering huddles.
A glimpse at what is about to unfold: according to the local newspaper DNN, at least 400 police officers will be surrounding the venue for the three days of the talks. There’s already a ring of concrete blocks around the entrance.
Is that not enough? What are they expecting? The charge of the light brigade?
The hotel is being trussed up tighter than Reid Hoffman’s trousers. No one gets in or out without the right lanyard. As Ed Balls remembers only too well, from that awkward business in Copenhagen. Inside the security cordon, the final nervy tweaks are being made by conference staff. They’ve got to make sure Henry Kissinger’s curtains don’t let any light in. A single ray could be fatal.
Year after year, a sizeable number of extremely rich and powerful workaholics seem to think it’s worth strapping on their Bilderberg lanyard. But why? What’s getting the head of Google, two prime ministers, a vice-president of the European commission and the chairman of HSBC together in the same hotel basement for the same three days in June?  On its official website, Bilderberg attempts an answer. It describes itself as “a forum for informal discussions” that are “designed to foster dialogue between Europe and North America”. Dialogue which is designed to foster dialogue. Talk for talk’s sake.
Of course, as Charlie Skelton notes, that’s nonsense. And yet Bilderberg insists “there is no desired outcome”. That’s like a Club 18-30 rep saying there’s no desired outcome of his tequila groin-slurping contest. Someone’s getting something out of the event. Even if that something is chlamydia.

Taschenbergpalais hotel in Dresden
What is really discussed is how to take the existing trends in the world, some favorable, some undesired, and mold them in such a way as to create even more wealth for the world’s 0.01%, while perpetutating the existing system, one which even the IMF agrees is no longer working.
This time, as Paul Joseph Watson infers, the secretive Bilderberg Group whose Steering Committee Advisory Group consists of one David Rockefeller, will discuss how to prevent Donald Trump from becoming president, the possibility of mass riots as a result of wealth inequality, the migrant crisis, as well as the United Kingdom’s vote on leaving the European Union.
As noted above, the official list of “key topics” to be discussed is both broad quite vague and includes:
  1. Current events
  2. China
  3. Europe: migration, growth, reform, vision, unity
  4. Middle East
  5. Russia
  6. US political landscape, economy: growth, debt, reform
  7. Cyber security
  8. Geo-politics of energy and commodity prices
  9. Precariat and middle class
  10. Technological innovation
That’s just for public consumption. After all, who needs massive concrete blocks and 400 police officers for protection to discuss “technological innovation” – better yet, just open up the session to the press and public.
Of course, that won’t happen, because the real agenda must remain under wraps. However one can infer from the agenda and some of the names on the participant list what the group will be discussing in more detail. As PJW writes, the attendance of anti-Trump Senator Lindsey Graham is an obvious sign that Donald Trump will be a prominent topic of discussion at this year’s Bilderberg meeting, with the likely focus on how to prevent Trump from defeating Bilderberg’s chosen candidate, Hillary Clinton, who has already raked in tens of millions in fees from “speaking” before numerous participants at the meeting that begins tomorrow.
In 2015, the Bilderberg elite was confident that Clinton could shake off her GOP challengers, but Trump’s self-funded campaign and his public opposition to globalism and internationalist trade deals like NAFTA has shocked the Bilderberg elitists. As a result, it will now have to spend much more time dealing with the damage control.
Brexit will be another major topic. With the British referendum vote to leave the EU taking place in just two weeks, and withDavid Cameron getting concerned, a vote to secede threatens the future of the European Union federal superstate that was the brainchild of Bilderberg in the first place.
The inclusion of “precariat and middle class” on the list also means that the powerful lobby group will be ruminating on how they can exploit and manage the inevitability of more riots and civil unrest in the west – and increasingly, the east with an emphasis on China whose government is terrified about the prospect of rising social unrest – a topic that elitists were also concerned about at the 2015 Davos Economic Summit. “Precariat” describes those who are struggling to survive in today’s economy and who have no long term wage security. Studies have shown that wealth inequality increases the likelihood of mass social disorder. Furthermore, as the Fed itself admitted recently, it is the Fed, by way of manipulating markets higher, that has been an instrumental catalyst behind record wealth inequality.
The flooding of Europe with third world migrants, a process which has driven European voters into the arms of nationalist parties that typically oppose Bilderberg’s wider agenda, will also be a key topic of discussion, as per bullet point 3.
As Watson observes, aone interesting name that pops up on this year’s list is that of Richard Engel, NBC News’ chief foreign correspondent.  “Normally, a semi-secret meeting of over 100 of the most powerful people on the planet would be a monumental news scoop, but don’t expect Engel to utter a word.” After all, real journalists are not allowed anywhere on the premises; Engel likely has to sign an NDA.
Indeed, Bilderberg operates under Chatham House Rules, which means that none of the participants are able to reveal any comments made during the conference. As the Guardian floridly puts it, “after the politicians drag their drained and bloodless bodies back to their respective parliaments, they don’t say a word about what happened. They act like abuse victims. “It’s just our little secret,” murmurs Kissinger as he pops the politicians back in their limos. “Chatham House rules. You remember? Yes, of course you do. Now off you go.” And he nimbly licks a heart shape on to the car window with his black tongue before it speeds off.”
Although it was reported in the German media that German Chancellor Angela Merkel would attend this year’s conference, her name does not appear on the list. However, it is a common practice for Bilderberg to omit names from the official list if the individual’s attendance is politically sensitive.
* * *
So what do the politicians and public officials get from the deal? For the more ruthless, it’s a chance to line up future employment. As the Guardian reminds us of the then head of MI6, Sir John Sawers, networking with the chairman of BP on a Copenhagen patio in 2014. A year later he was sitting on the oil firm’s board of directors.
For those who don’t use the event as a glorified LinkedIn mixed for billionaires, the motive is far simpler: make even more money. In this regard the Guardian’s amusing conclusion is spot on:
Tony Blair admitted he found the 1993 conference “useful”. And I’m sure it was. It’s useful to know in what direction in the world is being led by the people that own it, so you can trot along in the right direction. And if you learn to play the game, to fit in with the in crowd, then maybe, like Blair, you can end up with a cushy job with US investment bank JP Morgan.
Ultimately, what is decided will never see the light of day, or rather it won’t over the next 4 days. Instead it will emerge as official policy, fiscal but mostly monetary as central bankers live to serve the Bilderberg elite, laws, regulations, and social norms. And if history is any indicator, it will only make the current global situation even worse.
* *  *
CHAIRMAN
  • Castries, Henri de (FRA), Chairman and CEO, AXA Group
  • Aboutaleb, Ahmed (NLD), Mayor, City of Rotterdam
  • Achleitner, Paul M. (DEU), Chairman of the Supervisory Board, Deutsche Bank AG
  • Agius, Marcus (GBR), Chairman, PA Consulting Group
  • Ahrenkiel, Thomas (DNK), Permanent Secretary, Ministry of Defence
  • Albuquerque, Maria Luís (PRT), Former Minister of Finance; MP, Social Democratic Party
  • Alierta, César (ESP), Executive Chairman and CEO, Telefónica
  • Altman, Roger C. (USA), Executive Chairman, Evercore
  • Altman, Sam (USA), President, Y Combinator
  • Andersson, Magdalena (SWE), Minister of Finance
  • Applebaum, Anne (USA), Columnist Washington Post; Director of the Transitions Forum, Legatum Institute
  • Apunen, Matti (FIN), Director, Finnish Business and Policy Forum EVA
  • Aydin-Düzgit, Senem (TUR), Associate Professor and Jean Monnet Chair, Istanbul Bilgi University
  • Barbizet, Patricia (FRA), CEO, Artemis
  • Barroso, José M. Durão (PRT), Former President of the European Commission
  • Baverez, Nicolas (FRA), Partner, Gibson, Dunn & Crutcher
  • Bengio, Yoshua (CAN), Professor in Computer Science and Operations Research, University of Montreal
  • Benko, René (AUT), Founder and Chairman of the Advisory Board, SIGNA Holding GmbH
  • Bernabè, Franco (ITA), Chairman, CartaSi S.p.A.
  • Beurden, Ben van (NLD), CEO, Royal Dutch Shell plc
  • Blanchard, Olivier (FRA), Fred Bergsten Senior Fellow, Peterson Institute
  • Botín, Ana P. (ESP), Executive Chairman, Banco Santander
  • Brandtzæg, Svein Richard (NOR), President and CEO, Norsk Hydro ASA
  • Breedlove, Philip M. (INT), Former Supreme Allied Commander Europe
  • Brende, Børge (NOR), Minister of Foreign Affairs
  • Burns, William J. (USA), President, Carnegie Endowment for International Peace
  • Cebrián, Juan Luis (ESP), Executive Chairman, PRISA and El País
  • Charpentier, Emmanuelle (FRA), Director, Max Planck Institute for Infection Biology
  • Coeuré, Benoît (INT), Member of the Executive Board, European Central Bank
  • Costamagna, Claudio (ITA), Chairman, Cassa Depositi e Prestiti S.p.A.
  • Cote, David M. (USA), Chairman and CEO, Honeywell
  • Cryan, John (DEU), CEO, Deutsche Bank AG
  • Dassù, Marta (ITA), Senior Director, European Affairs, Aspen Institute
  • Dijksma, Sharon A.M. (NLD), Minister for the Environment
  • Döpfner, Mathias (DEU), CEO, Axel Springer SE
  • Dyvig, Christian (DNK), Chairman, Kompan
  • Ebeling, Thomas (DEU), CEO, ProSiebenSat.1
  • Elkann, John (ITA), Chairman and CEO, EXOR; Chairman, Fiat Chrysler Automobiles
  • Enders, Thomas (DEU), CEO, Airbus Group
  • Engel, Richard (USA), Chief Foreign Correspondent, NBC News
  • Fabius, Laurent (FRA), President, Constitutional Council
  • Federspiel, Ulrik (DNK), Group Executive, Haldor Topsøe A/S
  • Ferguson, Jr., Roger W. (USA), President and CEO, TIAA
  • Ferguson, Niall (USA), Professor of History, Harvard University
  • Flint, Douglas J. (GBR), Group Chairman, HSBC Holdings plc
  • Garicano, Luis (ESP), Professor of Economics, LSE; Senior Advisor to Ciudadanos
  • Georgieva, Kristalina (INT), Vice President, European Commission
  • Gernelle, Etienne (FRA), Editorial Director, Le Point
  • Gomes da Silva, Carlos (PRT), Vice Chairman and CEO, Galp Energia
  • Goodman, Helen (GBR), MP, Labour Party
  • Goulard, Sylvie (INT), Member of the European Parliament
  • Graham, Lindsey (USA), Senator
  • Grillo, Ulrich (DEU), Chairman, Grillo-Werke AG; President, Bundesverband der Deutschen Industrie
  • Gruber, Lilli (ITA), Editor-in-Chief and Anchor “Otto e mezzo”, La7 TV
  • Hadfield, Chris (CAN), Colonel, Astronaut
  • Halberstadt, Victor (NLD), Professor of Economics, Leiden University
  • Harding, Dido (GBR), CEO, TalkTalk Telecom Group plc
  • Hassabis, Demis (GBR), Co-Founder and CEO, DeepMind
  • Hobson, Mellody (USA), President, Ariel Investment, LLC
  • Hoffman, Reid (USA), Co-Founder and Executive Chairman, LinkedIn
  • Höttges, Timotheus (DEU), CEO, Deutsche Telekom AG
  • Jacobs, Kenneth M. (USA), Chairman and CEO, Lazard
  • Jäkel, Julia (DEU), CEO, Gruner + Jahr
  • Johnson, James A. (USA), Chairman, Johnson Capital Partners
  • Jonsson, Conni (SWE), Founder and Chairman, EQT
  • Jordan, Jr., Vernon E. (USA), Senior Managing Director, Lazard Frères & Co. LLC
  • Kaeser, Joe (DEU), President and CEO, Siemens AG
  • Karp, Alex (USA), CEO, Palantir Technologies
  • Kengeter, Carsten (DEU), CEO, Deutsche Börse AG
  • Kerr, John (GBR), Deputy Chairman, Scottish Power
  • Kherbache, Yasmine (BEL), MP, Flemish Parliament
  • Kissinger, Henry A. (USA), Chairman, Kissinger Associates, Inc.
  • Kleinfeld, Klaus (USA), Chairman and CEO, Alcoa
  • Kravis, Henry R. (USA), Co-Chairman and Co-CEO, Kohlberg Kravis Roberts & Co.
  • Kravis, Marie-Josée (USA), Senior Fellow, Hudson Institute
  • Kudelski, André (CHE), Chairman and CEO, Kudelski Group
  • Lagarde, Christine (INT), Managing Director, International Monetary Fund
  • Levin, Richard (USA), CEO, Coursera
  • Leyen, Ursula von der (DEU), Minister of Defence
  • Leysen, Thomas (BEL), Chairman, KBC Group
  • Logothetis, George (GRC), Chairman and CEO, Libra Group
  • Maizière, Thomas de (DEU), Minister of the Interior, Federal Ministry of the Interior
  • Makan, Divesh (USA), CEO, ICONIQ Capital
  • Malcomson, Scott (USA), Author; President, Monere Ltd.
  • Markwalder, Christa (CHE), President of the National Council and the Federal Assembly
  • McArdle, Megan (USA), Columnist, Bloomberg View
  • Michel, Charles (BEL), Prime Minister
  • Micklethwait, John (USA), Editor-in-Chief, Bloomberg LP
  • Minton Beddoes, Zanny (GBR), Editor-in-Chief, The Economist
  • Mitsotakis, Kyriakos (GRC), President, New Democracy Party
  • Morneau, Bill (CAN), Minister of Finance
  • Mundie, Craig J. (USA), Principal, Mundie & Associates
  • Murray, Charles A. (USA), W.H. Brady Scholar, American Enterprise Institute
  • Netherlands, H.M. the King of the (NLD)
  • Noonan, Michael (IRL), Minister for Finance
  • Noonan, Peggy (USA), Author, Columnist, The Wall Street Journal
  • O’Leary, Michael (IRL), CEO, Ryanair Plc
  • Ollongren, Kajsa (NLD), Deputy Mayor of Amsterdam
  • Özel, Soli (TUR), Professor, Kadir Has University
  • Papalexopoulos, Dimitri (GRC), CEO, Titan Cement Co.
  • Petraeus, David H. (USA), Chairman, KKR Global Institute
  • Philippe, Edouard (FRA), Mayor of Le Havre
  • Pind, Søren (DNK), Minister of Justice
  • Ratti, Carlo (ITA), Director, MIT Senseable City Lab
  • Reisman, Heather M. (CAN), Chair and CEO, Indigo Books & Music Inc.
  • Rutte, Mark (NLD), Prime Minister
  • Sawers, John (GBR), Chairman and Partner, Macro Advisory Partners
  • Schäuble, Wolfgang (DEU), Minister of Finance
  • Schieder, Andreas (AUT), Chairman, Social Democratic Group
  • Schmidt, Eric E. (USA), Executive Chairman, Alphabet Inc.
  • Scholten, Rudolf (AUT), CEO, Oesterreichische Kontrollbank AG
  • Schwab, Klaus (INT), Executive Chairman, World Economic Forum
  • Sikorski, Radoslaw (POL), Senior Fellow, Harvard University; Former Minister of Foreign Affairs
  • Simsek, Mehmet (TUR), Deputy Prime Minister
  • Sinn, Hans-Werner (DEU), Professor for Economics and Public Finance, Ludwig Maximilian University of Munich
  • Skogen Lund, Kristin (NOR), Director General, The Confederation of Norwegian Enterprise
  • Standing, Guy (GBR), Co-President, BIEN; Research Professor, University of London
  • Svanberg, Carl-Henric (SWE), Chairman, BP plc and AB Volvo
  • Thiel, Peter A. (USA), President, Thiel Capital
  • Tillich, Stanislaw (DEU), Minister-President of Saxony
  • Vetterli, Martin (CHE), President, NSF
  • Wahlroos, Björn (FIN), Chairman, Sampo Group, Nordea Bank, UPM-Kymmene Corporation
  • Wallenberg, Jacob (SWE), Chairman, Investor AB
  • Weder di Mauro, Beatrice (CHE), Professor of Economics, University of Mainz
  • Wolf, Martin H. (GBR), Chief Economics Commentator, Financial Times
* * *
Finally, for those who are skeptical about the massive power and reach of the relatively small Bilderberg group, here is a recent graph which shows the members’ connections to virtually every important and relevant organization, company and political entity in the world.
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Saudi Authorities Panic – Ban Speculation On Riyal Devaluation Amid Banking Crisis

Elite E Services
With Saudi Riyal forwards plunging back above 3.81, dramatically weaker than the current peg, Bloomberg reports that Saudi authorities are cracking down on currency traders as speculation mounts that the world’s biggest oil exporter won’t be able to maintain the riyal’s peg to the dollar as revenue plunges.
Saudi Arabia ordered banks in the kingdom to stop selling some products that allow speculators to bet against its currency peg just days after demanding information from lenders on the offerings, according to people with knowledge of the matter.
he Saudi Arabia Monetary Agency sent a circular to banks this week saying that dollar-riyal forward structured contracts are banned with immediate effect, said the people, asking not to be identified because they are not authorized to comment publicly. Forward foreign-currency transactions backed by actual goods and services will still be allowed, the people said.
The regulator, also known as SAMA, has asked lenders for details on derivative deals dating to January, saying they hadn’t informed the central bank about some products. An e-mailed request for comment to the agency outside of normal office hours on Friday wasn’t immediately returned.
“The directive shows the continuing disconnect between the Saudi foreign-exchange policy and market expectations,”Raza Agha, VTB Capital’s chief economist for the Middle East and Africa, said by e-mail. “SAMA appears committed to the exchange-rate peg despite the cost to foreign-exchange reserves, large fiscal deficits and consensus forecasts that see only a very gradual rise in oil prices.”
SAMA ordered banks to stop selling options contracts on riyal forwards at a meeting in Riyadh on Jan 18., people with knowledge of the matter said at the time, which explains the surge in the chart at that time, but it appears funds have found another vehicle to implement their bets.
It makes sense, since as Bawerk.net’s Eugen von Bohm-Bawerk explains, the Saudis have two tough choices:
1) maintain the peg, control price inflation through continued deflation of the money supply and get a full-blown banking crisis; or
2) alternatively, reflate the money supply, increase speculation in riyal forwards, devalue and get massive price inflation through the extremely important import channel.
During the reign of the mighty petro-dollar standard, it was necessary for major oil exporters to recycle their dollar holdings back into the dollar-based financial system to maintain their self-imposed exchange rate pegs. US government bonds are the very centrepiece of this elaborate system and it is thus no surprise to see the dollar price correlate well with overall OPEC TSY holdings. In other words, when oil prices were high, oil exporters amassed a capital surplus that were channelled into, among other things, US treasury bonds. When oil prices fell, oil exporters had to liquidate TSY holdings to cover capital shortfalls.
 Oil Price vs OPEC TSY Holdings
It is interesting to note that the more money and credit issued in the US the more foreign goods could be purchased by Americans and by extension the more foreign demand for US TSYs rose. The savings glut proposed by Bernanke was, and still is, nothing more than exported dollar inflation. There were no savings glut, but rather an indirect form of QE long before QE became an official policy. Home equity withdrawal lines through commercial banks, based on phony asset appreciation promoted by an accommodative Federal Reserve policy stance, increased Americans purchasing power, which inevitably leaked into global markets. Growing financial imbalances were exacerbated by the fact that there were no functioning pricing mechanisms to correct these flows.
With dollars flowing into oil exporting countries it would be natural for the recipient exchange rate to appreciate whilst the dollar depreciate. However, many oil exporters have pegged their exchange rate to the dollar so no such effect took place. Instead, local monetary authorities bought up dollars by inflating their own local currency to maintain the pre-set price. As the chart below shows, in a fixed exchange rate system pegged to a freely floating, and thus rapidly inflating and deflating, currency the LCU will have to inflate and deflate accordingly. With no price effect to soften the impact, any change in demand will be borne by supply. Compared to a flexible exchange rate regime, the inflation and deflation of the LCU will have to be larger with a fixed price of the LCU in relation to the dollar.
    Fixed and flexible FX regime
In the boom time it is easy to adjust as the monetary authorities can inflate the LCU to buy up dollars and create the consequent phony boom in the domestic economy. Local businesses thrive, credit is plentiful and asset prices rises. Very few complain.
However, as the dollar deflation takes hold the very opposite effect must by necessity occur. To maintain the exchange rate peg monetary authorities must buy up LCU through sales of previously accumulated dollars.
The key metric to watch for dollar dependent economies with exchange rate pegs is the value of domestic money supply (at the fixed dollar price) relative to FX reserves. If domestic claim to dollars, id est money supply, exceed FX reserves it is highly likely that the monetary authorities will be forced to devalue in order to realign the two metrics. If we look at an economy like Saudi Arabia, where there have been a lot of talk about devaluation, we find that there are more than enough FX reserves to cover the outstanding money supply. Since there will be no positive effect from a devaluation, there are no immediate devaluation threat.
SA FX vs M2
However, at current trends the FX reserves will drop below M2 by late 2017 or early 2018. Current trends does not lead to very pleasant outcomes for the Saudi economy because the domestic money supply is and will continue to deflate. This will expose internal malinvestements, which will show up as increasing NPLs in the banking sector, which in turn will lead to further deflation.
It is thus tempting for the Saudi government to reflate their economy by pushing more Riyals into the system; but this runs the risk of exacerbating the possibility of devaluation as the money supply will soon exceed falling FX reserves.
As most of the rest of the world, also the Saudis have become path dependent; 1) maintain the peg, control price inflation through continued deflation of the money supply and get a full-blown banking crisis; or 2) alternatively, reflate the money supply, increase speculation in riyal forwards, devalue and get massive price inflation through the extremely important import channel.
This obviously begs the question; at what oil price can the Saudi’s mange to muddle through without ending up in either 1 nor 2.  At today’s price of around USD50 / bbl Saudi Arabia will burn through USD90bn worth of reserves per year.Change in FX reserves vs oil price
This means under a mild deflationary scenario FX reserves will fall below M2 already by early 2018; even with a 10 per cent cost reduction. At 60 dollar and only 2 per cent reduction in cost Saudi Arabia will probably not have to worry about severing the peg. FX vs M2 under different scnearios
Unless prices continue upwards, it will be interesting see what route, and which risks, the Saudi government is willing to take on.For now it appear route 1 is the preferred one, but as the banking crisis escalates we expect a gradual movement toward route 2. Unless oil prices spikes back to USD60 /bbl plus, and save the day. We doubt it!
*  *  *
Finally, given the ban on FX products – and the seemingly inevitable de-pegging discussed above – one potential way to play the devaluation is via CDS…
In fact, as the FX ban comes into play, it’s clear CDS is starting to become more active and more indicative of Saudi stress that forwards.
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EES: FX Liquidity 3.3 released

Elite E Services

Elite E Services has released Liquidity version 3.3 – in this version, we’ve included an optional trailing stop on all orders.  See Liquidity on the MQL Marketplace

Checkout the parameters:

  • BuyOrSell = B (default) or S – Buy or Sell. This parameter defines if the system is in buy mode, or sell mode. If set to “B” the system will only Buy. If set to “S” the system will only sell. To use liquidity in grid fashion – load the EA on 2 charts – set one to “B” and the other to “S”
  • GridLevel = Ladder – This is the level, in pips, the system will place a buy or sell order. Default is set to 5.
  • Lots = Lots – Number of lots for each order. (static value)
  • TakeProfit = Take Profit – Take profit for each order. (static value)
  • UseTrailing = Use Trailing? Yes or No. Default is No. This means a trailing stop will be placed on each individual trade.
  • TrailingStop = Trailing Stop (10) Default is 10. Only applicable if UT is set to Yes. If UT is Yes, place a TP and Trailing stop on all new orders.
  • UseGPoint = Use G? Yes or No. Default is Yes. If No, do not utilize the below parameter, and subsequent functions.
  • G = Point at which system reset and reverse. Default is 0 – meaning whatever price the system is loaded at, will always be the price where system reverse. In the chart example, once the price reach the original price, the system will go into buy again mode. If G value is 10 (in pips), then add 10 pips to the price when system will reverse from buy mode to sell mode. (number of legs before reverse)
  • F = Pips to go into the reverse trade. Default is 5, should be same default as ladder. (To count the number of legs to wait to enter, multiply by the ladder value, i.e. 2 legs, if ladder is 5, this value should be 10.)
  • P = Account protection, in % equity from peak. Default is 10 (which is 10% peak to valley, for this EA only NOT the entire account). This means if the peak to valley draw-down is 10%, close all positions, and display the message “Account Protection Hit – Restart to resume trading”
  • CloseAll = Close All – Default is “No” – If set to Yes, EA will close All trades for this EA only, and stop trading.


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“An Unusual Number Of Known Unknowns” – These Are The Key Event Risks In June

Elite E Services
One of the recurring concerns voiced by Bank of America’s Michael Hartnett is that with May now in the rearview mirror, we are entering “the event risk month” of June (incidentally,over the weekend, the credit strategist presented several ideas how to trade said event risk, either bullish or bearish). Now it is UBS’ turn to reiterate the warning that June may see a spike in volatility due to “an unusual number of known unknowns.”
According to UBS, in June there will be “an unusual number of known unknowns from several sources. June 2016 is a month in which the number of event risks is particularly high. In our baseline scenarios we do not see market upsets, but the potential is there: Japanese fiscal policy; meetings of the ECB, Fed and BoJ; new ECB policy implementation; a German Constitutional Court ruling; the UK referendum; elections in Spain; and a decision on the FTT are all thrown into the mix.”
Here is the full breakdown, first in table format.
And then the chronological narrative:
1 June: Closing day of the Japanese Diet – new fiscal action?
We expect Japanese Prime Minister Shinzo Abe to announce new fiscal policy on 1 June – the closing day of the current session of the Japanese Diet. We think that the scheduled rise in the consumption tax will be delayed and a supplementary budget of ¥5-10tn could be announced. It is also possible that the Lower House is dissolved and new elections called.
2 June-16 June: Central bank meetings
On balance, we do not expect any change in monetary policy to be announced by the ECB, the Federal Reserve or the BoJ in June, but statements and guidance will be watched closely.
First up is the ECB on 2 June. The ECB will present its new staff forecasts at the press conference. We think the key challenge for Mr Draghi will be to not appear too hawkish amid rising oil prices and robust Eurozone Q1 GDP growth, and we believe it too early for the ECB to send strong signals about the duration of QE beyond March of next year. But much will be discussed.
After that, the FOMC will meet on 15 June. We think that it will wait until September before it next raises rates (in part because of upcoming event risk). However, the minutes of the April meeting and recent Fed rhetoric has kept this meeting “live” and expectations higher than they might otherwise have been.
We don’t think that the BoJ will announce a further easing on 16 June, but it will be a close call. We see a 40% chance that it does, and a 60% chance that this takes place by July. If conducted in combination with a fiscal expansion (see above), Japan would in effect be conducting a policy of ‘helicopter money’ and we would expect the polemic to increase in global markets on this subject
6-10 June / 24 June: TLTROs, and other ECB policy implementation
While we do not expect new ECB policy to be announced at the June meeting (see above), June is the month in which some already-announced policies are implemented for the first time. The first auction of the new Targeted Long-Term Refinancing Operations (TLTRO II) will take place on 23 June, with the publication of the results on 24 June. Market focus has been on the ability of banks to borrow 4-year money at an interest rate (to be set by ex-post calculations) as low as the current deposit rate of -0.40%.
However, we think that more important will be the first voluntary repayment of TLTRO I to be announced at 11.00am London time / 12.00pm CET on 10 June. (The repayment itself will take place on 29 June, coinciding with the first settlement date of TLTRO I). It is likely that the bank repayment of  LTRO I will be larger than the take-up of TLTRO II – and result in the first significant reduction of the ECB’s balance sheet since QE began in March of last year. In turn, this might appear as an involuntary tightening of monetary policy.
The reason this might happen is that one of the effects of QE has been a largescale creation of deposits in euro area banks. But TLTRO I took place before QE was announced and banks have been unable to repay it until now. Many of them – particularly in core countries – have been burdened with large excess liquidity as a result. In turn, this has meant a drag on Net Interest Margins (NIM) for these banks as risk free rates have been negative while they are (by and large) paying 0% to depositors.
Also in June, we expect the Eurosystem to begin its purchases of corporate bonds in its Corporate Sector Purchase Programme (CSPP). It is likely that this will begin in the days shortly after the ECB’s press conference on 2 June. The corporate bond market will be watching the implementation of purchases on a daily basis. We believe that once the CSPP settles in, the Eurosystem will be buying around €12bn a month in corporate bonds. Last Wednesday Reuters reported that – citing “several bank sources” – these will amount to €5-10bn per month initially.
21 June: German Constitutional Court ruling on OMTs
On 21 June, the German Federal Constitutional Court in Karlsruhe will give its final ruling on the acceptability of the ECB’s Outright Monetary Transactions (OMTs) programme in the field of German law. In our view, this represents less of an immediate market risk than a contingent one. In a scenario where the Court ruled against OMTs, uncertainty might increase over the ability of the ECB to respond to another period of extreme volatility in European sovereign markets
Some appear to think that a ruling against OMTs might impede the purchase of peripheral bonds in the ECB’s current QE programme. We believe this to be unlikely. Bundesbank opposition to QE as a monetary policy tool in principle (even if not in timing) seems slight.
It is widely accepted that the announcement of OMTs in the summer of 2012 was the beginning of the end of the sovereign debt crisis in Europe. But in October 2014, the German Constitutional Court found that the policy was “incompatible with primary law”. At the same time, the judges in Karlsruhe passed it on to the European Court of Justice for review, which last year came to the opposite conclusion (though in the context of European law).
24 June: Result of the UK referendum on EU membership
The recent rally in sterling and the tightening of peripheral sovereign spreads have been widely attributed in the media to an increase in confidence that the UK referendum will result in a vote to remain. If correct, this would mean that there would be potential for sterling to fall and peripheral spreads to widen once more in a scenario where there is either a vote to leave or if opinion polls showed increased support for that outcome.
Figure 3: Average Italy and Spain 10-year spread to Germany and EURGBP; past 6 months
26 June: Elections in Spain
Spain will hold another general election on 26 June, after its 21 December 2015 election resulted in no government being formed. In general, we think that Spanish yield spreads to Germany should tighten over the coming months as the relatively strong growth heals the economy and improves debt dynamics.
However, Spain missed on its deficit targets in 2015 by a wide margin and is likely to miss again this year, according to the European Commission. In part, this can be attributed to the dominance of elections in the public calendar. But there is a risk to sovereign spreads if a government is formed after the elections which might take an anti-austerity stance and widen the public deficit even more.
30 June: A decision on the European Financial Transaction Tax
A group of European governments have been proposing a European Financial Transaction Tax (FTT) for several years. In the most recent statement, the proponent governments indicated that “taxation should be based on the principle of the widest possible base and low rates and it should not impact the cost of sovereign borrowing”.
The statement also directs governments to decide on further details – including, importantly, the levels of the tax – by the end of June: “in order to prepare the next step, experts in close coordination with the commission should elaborate adequate tax rates for the different variants. A decision on these open issues should be made until the end of June 2016.”
It should be noted, however, that aside from the 10 countries currently promoting the tax there is opposition among other EU member states, most notably the UK. Under the “Enhanced Cooperation” framework, the countries will pursue the policy only if 9 or more member states support it. In December, Estonia withdrew its support for the project.
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WSJ: A First Look at America’s Supergun

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DAHLGREN, Va.—A warning siren bellowed through the concrete bunker of a top-secret Naval facility where U.S. military engineers prepared to demonstrate a weapon for which there is little defense.
Officials huddled at a video screen for a first look at a deadly new supergun that can fire a 25-pound projectile through seven steel plates and leave a 5-inch hole.
The weapon is called a railgun and requires neither gunpowder nor explosive. It is powered by electromagnetic rails that accelerate a hardened projectile to staggering velocity—a battlefield meteorite with the power to one day transform military strategy, say supporters, and keep the U.S. ahead of advancing Russian and Chinese weaponry.
In conventional guns, a bullet loses velocity from the moment the gunpowder ignites and sends it flying. The railgun projectile instead gains speed as it travels the length of a 32-foot barrel, exiting the muzzle at 4,500 miles an hour, or more than a mile a second.
“This is going to change the way we fight,” said U.S. Navy Adm. Mat Winter, the head of the Office of Naval Research.
Watch the Video: Pentagon officials believe the high-tech railgun could pave the way for a military advantage defending assets on sea and on land. Photo: U.S. Department of Defense
The Navy developed the railgun as a potent offensive weapon to blow holes in enemy ships, destroy tanks and level terrorist camps. The weapon system has the attention of top Pentagon officials also interested in its potential to knock enemy missiles out of the sky more inexpensively and in greater numbers than current missile-defense systems—perhaps within a decade.
The future challenge for the U.S. military, in broad terms, is maintaining a global reach with declining numbers of Navy ships and land forces. Growing expenses and fixed budgets make it more difficult to maintain large forces in the right places to deter aggression.
“I can’t conceive of a future where we would replicate Cold War forces in Europe,” said Deputy Secretary of Defense Robert Work, one of the weapon’s chief boosters. “But I could conceive of a set of railguns that would be inexpensive but would have enormous deterrent value. They would have value against airplanes, missiles, tanks, almost anything.”
Inside the test bunker at Dahlgren, military officials turned to the video monitor showing the rectangular railgun barrel. Engineer Tom Boucher, program manager for the railgun in the Office of Naval Research, explained: “We are watching the system charge. We are taking power from the grid.”
Wires splay out the back of the railgun, which requires a power plant that generates 25 megawatts—enough electricity to power 18,750 homes.
The siren blared again, and the weapon fired. The video replay was slowed so officials could see aluminum shavings ignite in a fireball and the projectile emerge from its protective shell.
“This,” Mr. Boucher said, “is a thing of beauty going off.”
The railgun faces many technical barriers before it is battle ready. Policy makers also must weigh geopolitical questions. China and Russia see the railgun and other advances in U.S. missile defense as upending the world’s balance of power because it negates their own missile arsenals.
The railgun’s prospective military advantage has made the developing technology a priority of hackers in China and Russia, officials said.
Chinese hackers in particular have tried to penetrate the computer systems of the Pentagon and its defense contractors to probe railgun secrets, U.S. defense officials said. Pentagon officials declined to discuss the matter further.
The Navy began working on the railgun a decade ago and has spent more than half a billion dollars. The Pentagon’s Strategic Capabilities office is investing another $800 million—the largest share for any project—to develop the weapon’s defensive ability, as well as to adapt existing guns to fire the railgun’s high-tech projectiles.

Railgun Components

Power
A 25 megawatt power plant and large capacitor bank are required to provide enough pulse power to fire the weapon 10 times a minute.
Electromagnetic railgun
32 feet
Projectile
A non-explosive bullet filled with tungsten pellets; weight: approx. 25 pounds.
Shoe
An aluminum jacket that supports the bullet in the gun barrel; also provides a bridge for the current between the rails.
Approx. 24 inches
Source: Office of Naval Research
Some officials expressed concern the technology has commanded too large a portion of resources and focus. “This better work,” one defense official said.
The age of the gun faded after World War II, hampered by the limited range and accuracy of gunpowder weapons. Missiles and jet fighters dominated the Cold War years, prompting the Navy to retire its big-gun battleships. The railgun—and its newly developed projectiles—could launch a new generation of the vessels.
“Part of the reason we moved away from big guns is the chemistry and the physics of getting the range,” said Jerry DeMuro, the chief executive of BAE Systems, a railgun developer. “The railgun can create the kind of massive effect you want without chemistry.”
The Navy’s current 6-inch guns have a range of 15 miles. The 16-inch guns of mothballed World War II-era battleships could fire a distance of 24 miles and penetrate 30 feet of concrete. In contrast, the railgun has a range of 125 miles, officials said, and five times the impact.
“Anytime you have a projectile screaming in at extremely high speeds—kilometers per second—the sheer kinetic energy of that projectile is awesome,” Mr. Work said. “There are not a lot of things that can stop it.”
Star Wars sequel
Railguns have for years been limited to laboratories and videogames.
Former President Ronald Reagan ’s Strategic Defense Initiative—the so-called Star Wars missile defense—at one time envisioned using the railgun to shoot down nuclear missiles. Those plans were stalled by 1980s technology. One problem was that the gun barrel and electromagnetic rails had to be replaced after a single shot.
The Navy now believes it has a design that soon will be able to fire 10 times a minute through a barrel capable of lasting 1,000 rounds.
Besides speed, the railgun also has a capacity advantage. A typical U.S. Navy destroyer can carry as many as 96 missiles—either offensive cruise missiles or defensive interceptors. A ship armed with a railgun could potentially carry a thousand rounds, allowing the vessel to shoot incoming missiles or attack enemy forces for longer periods and at a faster rate of fire.
Unlike the Reagan-era initiative, the Pentagon doesn’t see the railgun as a shield against intercontinental ballistic missiles but defense against shorter-range conventional missiles.
The U.S. has kept its military dominance over the past quarter-century largely through such precision weaponry as guided missiles and munitions. It also has spent billions of dollars on interceptor-missile based defense systems to shoot down ballistic missiles fired at the U.S. or its allies.
That monopoly is about over. China is perfecting a ship-killing ballistic missile. Russia mostly impressed U.S. military planners with the power and precision of its cruise missiles deployed in Syria, and its improved artillery precision revealed in Ukraine.
“I am very worried about the U.S. conventional advantage. The loss of that advantage is terribly destabilizing,” said Elbridge Colby, a military analyst with the Center of a New American Security.
Defense planners believe the U.S. needs new military advances. Russia, for example, is believed to be developing longer-range surface-to-air missiles and new electronic warfare technology to blunt any forces near its borders.
Prospects for an armed conflict among the great powers still seem remote. But for the first time since the end of the Cold War, the Pentagon is again looking closely at responses to rising tensions with China and Russia.
Military planners say the railgun would be useful if the U.S. had to defend the Baltic states against Russia, or support an ally against China in the South China Sea.
Moscow and Beijing are investing in missile systems aimed at keeping the U.S. out of those respective regions. A railgun-based missile defense could defend naval forces or ground troops, making it easier to move U.S. reinforcements closer to the borders of Russia or China, officials said.
Deputy Secretary of Defense Robert Work, right, views the hole made in a steel plate by a railgun projectile during testing last year at a top-secret Naval facility in Dahlgren, Va.
Deputy Secretary of Defense Robert Work, right, views the hole made in a steel plate by a railgun projectile during testing last year at a top-secret Naval facility in Dahlgren, Va. PHOTO: U.S. DEPARTMENT OF DEFENSE
“You can’t ignore the fact that Russia has great ability to mass conventional munitions and fire them over great range. We have to be able to fight through those salvos,” said Mr. Work, of the Pentagon. “And the railgun potentially will give us the means to do that.”
Russian officials, meanwhile, including Alexander Grushko, Moscow’s envoy to the North Atlantic Treaty Organization, have said technological advances by the U.S., including missile defense, could undermine the strategic stability currently guaranteed by the relative balance between the Russian and U.S. nuclear arsenal.
Faster, smarter
Hitting a missile with a bullet—a technical obstacle that hampered Mr. Reagan’s initiative—remains a challenge. Railgun research leans heavily on commercial advances in supercomputing to aim and on smartphone technology to steer the railgun’s projectile using the Global Positioning System.
“Ten years ago, we wouldn’t have been able to build a projectile like this because the cellphone industry, the smartphone industry, hadn’t perfected the components,” said William Roper, the director of the Pentagon’s Strategic Capabilities Office. “It is a really smart bullet.”
Development of the railgun guidance system is about done, officials said, but circuits in the projectile must be hardened to withstand gravitational forces strong enough to turn most miniaturized electronics to scrap.
Missile defense by the railgun is at least a decade away, but Pentagon officials believe the weapon’s projectiles can be used much sooner. They are filled with tungsten pellets harder than many kinds of steel, officials said, and will likely cost between $25,000 and $50,000, a bargain compared with a $10-million interceptor missile.
The electrical energy required to fire a railgun means it is likely to be used first as a ship-mounted weapon. Only one class of Navy ship, the Zumwalt-class destroyer, has such a power plant, officials said. The Navy is building just three of those destroyers, so the Pentagon is working to adapt the projectile to use in existing Naval guns on other vessels, as well as for Army artillery.
While slower than a railgun, a powder-fired railgun projectile still flies at 2,800 miles an hour, which extends the range and power of existing weapons.
At Dalhgren last year, military engineers test-fired 5- and 6-inch Navy guns loaded with a version of the railgun projectile. The range of the Navy’s 6-inch guns was extended to 38 miles from 15 miles.
The Pentagon also tested the railgun projectile in 155mm Army howitzers, successfully extending its range.
“The Navy is on the cusp of having a tactical system, a next generation offensive weapon,” Mr. Roper said. “It could be a game changer.”

http://www.wsj.com/articles/a-first-look-at-americas-supergun-1464359194?mod=WSJ_article_EditorsPicks_0

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Bitcoin Is Soaring On Unprecedented Burst In Chinese Buying

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Last September (when bitcoin was trading at $230) we said that “As China Scrambles To Enforce Capital Controls, This Is Great News For Bitcoin” and that it is only a matter of time before Chinese buyers figure out that in a world in which the freeflow of capital out of China is increasingly more suppressed and where physical gold is actively being stored in China but is next to impossible to get it out of the country, it is only a matter of time before bitcoin explodes as China’s bubble berserk population scrambles to buy.
One month ago, we showed a chart according to which it was almost time for the bitcoin breakout, in “Is Bitcoin About To Soar?” At the time bitcoin was trading in the low $400s.
Then, just yesterday, something snapped, and as we reported “Bitcoin Surges To 2016 Highs On Rising Chinese Demand.”
It is unclear if that something is fears about an imminent round of Chinese devaluation following Friday’s dramatic move higher in the US Dollar, something we also hinted at on Friday afternoon…
… or simply because China’s $30 trillion in deposits had finally found the most efficient way to get their funds out of the country.
Whatever the reason, moments ago – as we expected – bitcoin finally broke out of its long-term range, and was trading at $520 moments ago on Coinbase…
… the highest price it has hit since the summer of 2014.
What is the reason for this dramatic move higher? It appears to be coming out of China, because moments ago Bitcoin traded in CNY on the Huobi exchange soared as high as 3820, or over $580, implying a massive local-demand driven arb to the US price of “only” $520.
It looks like the Chinese have finally awoken to bitcoin, just as we expected them to last September, when the price of bitcoin was over 50% lower.

With bitcoin now 100% higher than when we first said China would send it soaring,and 15% higher in the past two days, why do we remain in the bullish camp? Simple: China has $30trillion in deposits – which concerns about devaluations will make very “flighty” while the market cap of bitcoin is under $8 billion. If Chinese depositors have finally figured out to use bitcoin to get their funds out of the country, watch out BTC shorts.
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Brexit Will Take Down Euro Along With GBP

Elite E Services

Summary

The Brexit would change the dynamic of the EU.
Brexit is bad for the EU, not just the GBP.
A Brexit will impact all who deal with the pound.
Volatility peaking June 23 is guaranteed for GBP-related assets.
For Americans, a referendum is a vote whereby voters determine a political decision. America is largely a Representative Republic. Only some U.S. states, like California, have direct social democracy in which referendums determine state law.
There’s a referendum in Great Britain that can change the structure of Europe. The question in this case: Should Great Britain stay in the European Union, or leave? (The BBC has complete coverage of Brexit.)
In Britain, polls show the vote would lead to a stay — but it’s very close. From the Financial Times Brexit poll tracking:
Analysts agree a vote to leave the EU would cause major volatility, and the British Pound would decline. From CNBC:
A U.K. vote to leave the European Union on June 23 would cause major currency fluctuations and dent growth in the country, according to Ramin Nakisa, global macro strategist at UBS. He estimated it would have an approximately “2 percent impact on GDP (gross domestic product) in the U.K. over the long term.” However, the “biggest effect would be on FX (foreign exchange), so we’re saying euro/sterling would go to parity if there was an exit,” he told CNBC Friday.
For traders, the ETFs to watch are:
  • The Currency Shares British Pound Sterling Trust ETF (NYSEARCA:FXB)
  • The iPath GBP/USD Exchange Rate fund (NYSEARCA:GBB)
Or in your Forex account, watch all GBP pairs. The vote is June 23, and there is constant polling leading up to this historic vote, to gauge public sentiment.
Because the vote is so close, there’s tail risk to any assets connected to the GBP currency and to a lesser extent, to the EU. This will also affect the Euro (EUO, FXE).
The European Union is an idea. Great Britain is one of the periphery states that joined the EU but still uses its own currency. This leads to confusion: Is Britain in the EU or not? They are. That means they enjoy the privilege of traveling and doing business inside the EU without visas or permits, taxes, and other barriers that would exist were Britain not in the EU.
If they vote to leave, all that can change. It will be a net negative for the EU as well. Not only will the EU lose economically, it will send a message to other breakaway members: If Britain can leave, you can too! The EU is a fragile idea, and there exists in most European countries strong movements against the EU.
A short list of regions that have the potential to ‘breakaway’ and form their own states, outside the EU, from The Washington Post:
Venice (Italy), Catalonia (Spain), Corsica (France), Flanders (Belgium), The Basque Region (Spain), Bavaria (Germany), Wales, Cornwall, Northern Ireland (The United Kingdom), Galicia, Aragon (Spain), Silesia (Poland), Frisia (Netherlands, Germany), Sardinia, Brittany, Occitania, Alsace, Savoy (France), and Aaland (Finland).
A yes vote on Brexit could break the threads holding the EU together. Again, the EU is an idea, an economic business plan, and as such it relies on the consensual participation of its members. As explained in Splitting Pennies, Forex is a derivative, just like the EU, an idea that underpins the euro. Ideas can unravel, and if the euro idea unravels, it could lead to a return of European national currencies like the Italian lira, French franc, Spanish peseta, and so on. A country is a currency. Britain maintained their currency and stayed part of the EU. But now, if they completely leave, it will further destabilize the euro.
The boards of many of Britain’s largest listed companies have made no contingency plans for a possible Brexit amid polls showing rising public support for leaving the European Union. The Financial Times contacted every FTSE 100 company, and only four- Easyjet, Persimmon, GKN andStandard Life – said they were engaged in detailed planning for a Brexit. Asked what measures it was taking to prepare, Vodafone, on the other hand, said “none of note required”.
Europe often will surprise us, and investors would have been wrong betting against the will of the people. Investments in GBP companies can be partially hedged by trading.
On a longer-term view, the GBP is down from its highs, as seen on this chart:
GBB Chart
GBB data by YCharts
A vote to leave the EU could see the pound go down even further. But it’s more likely Britain will stay. If Britain votes to stay, the pound could shoot back up near its highs. Investors should stay tuned to the Brexit channel, because this will be a great straddle trade opportunity, with guaranteed volatility no matter what the outcome of the vote.
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Saudi Officials Crackdown On FX Market As Currency Peg Starts To Strain

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As we warned previously, the devaluation, or breaking of the Saudi Riyal peg to the dollar, could be the black swan event for crude oil and the recent weakness in SAR forwards – while not as violent as Nigeria’s Naira – certainly signals a renewed market fear that breaking the peg is imminent. It appears Saudi officials are none too pleased with the free markets speculating on this devaluation and as Bloomberg reports, banks in Saudi Arabia are coming under fresh pressure over products that allow speculators to bet against the kingdom’s currency peg, according to people with knowledge of the matter, which were supposedly banned in January.
  • *SAUDI ARABIA SAID TO SEEK DETAILS ON BANKS’ FORWARD CONTRACTS
  • *SAUDI ARABIA SAID TO PROBE BANK CURRENCY TRADES AS PEG STRAINS
  • *SAUDI ARABIAN MONETARY AGENCY SAID TO WARN BANKS ON PRODUCTS
SAR Forwards signal a renewed interest in betting on a devaluation…
As Bloomberg reports, The Saudi Arabia Monetary Agency has asked lenders to explain why they are offering dollar-riyal forward structured products to customers less than four months after the regulator banned options contracts that let speculators place wagers on a currency devaluation, the people said. The authority, known as SAMA, didn’t reply to requests for comment.
There has been renewed speculation that the world’s biggest oil exporter won’t be able to maintain the riyal’s peg to the dollar as revenue plunges and the kingdom weighs paying government contractors with IOUs. Riyal forwards for the next 12 months rose to 590 points, the highest since Feb. 19, according to data compiled by Bloomberg, signifying increased speculation of a devaluation.
SAMA is asking banks to explain the rationale and relevance of the structured products for the economy and explain why they’ve entered into the products without informing the central bank, according to the people. It also wants transaction details of the derivatives since Jan. 18.
It’s also seeking to understand the impact of the products on Saudi banks’ U.S. dollar buy positions from the central bank as well as the risks to customers and banks, they said. The central bank warned any future structured derivative product should be submitted to SAMA for review and approval before they’re launched.
As The Telegraph’s Ambrose Evans-Pritchard recently wrote, Saudi Arabia faces a vicious liquidity squeeze as capital continues to leak out the country, with a sharp contraction of the money supply and mounting stress in the banking system.
Three-month interbank offered rates in Riyadh have suddenly begun to spiral upwards, reaching the highest since the Lehman crisis in 2008.
Reports that the Saudi government is to pay contractors with tradable IOUs show how acute the situation is becoming. The debt-crippled bin Laden group is laying off 50,000 construction workers as austerity bites in earnest.
Societe Generale’s currency team has advised clients to short the Saudi riyal, betting that the country will be forced to ditch its long-standing dollar peg, a move that could set off a cut-throat battle for global share in the oil markets.
Francisco Blanch, from Bank of America, said a rupture of the peg is this year’s number one “black swan event” and would cause oil prices to collapse to $25 a barrel. Saudi Arabia’s foreign reserves are still falling by $10bn (£6.9bn) a month, despite a switch to bond sales and syndicated loans to help plug the huge budget deficit.
The country’s remaining reserves of $582bn are in theory ample – if they are really liquid – but that is not the immediate issue. The problem for the Saudi central bank (SAMA) is that reserve  depletion automatically tightens  monetary policy.
Bank deposits are contracting. So is the M2 money supply. Domestic bond sales do not help because they crowd out Saudi Arabia’s wafer-thin capital markets and squeeze liquidity. Riyadh now plans a global bond issue.
…
Eventually the next cyclical oil spike will come to the rescue. The question is whether the Saudis can batten down the hatches and make it through the financial storm in a very leaky ship.
As for what happens if (or perhaps “when” is now the more appropriate term) the peg does fall, we close with the following bit from BofAML, who calls the breaking of the riyal peg the “number one black swan event for the global oil market in 2016”: 
 
 
For oil, however, the most crucial point is what happens to Middle East currencies and in particular to the Saudi Riyal. In fact, Saudi Arabia’s FX reserves are still high and point to an ample buffer for now, but they have been falling at a relatively fast rate (Chart 21). However, should China allow for significantly faster FX depreciation than is currently priced in by markets, we believe oil prices could fall further. Naturally, the FX reserve drain on Saudi could accelerate to $18bn per month if Brent crude oil prices average $30/bbl (Chart 22), sharply reducing the Kingdom’s ability to retain its currency peg. 
However, if Saudi cannot resist the gravitational forces created by a persistently strong USD and depegs the SAR to follow Russia or Brazil, oil prices could collapse to $25/bbl. Weaker commodity prices would in turn add more downward pressure on EMs (Chart 26). Thus, even if micro supply and demand dynamics are improving, the path for oil prices in 2016 will heavily depend on how the USD moves against the CNY and the SAR. Or on a Saudi supply cut.

http://www.zerohedge.com/news/2016-05-26/saudi-officials-crackdown-fx-market-currency-peg-starts-strain 

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