Research Report

November 30th, 2011

Issue: Volatility due to Suspect Ratings
Author: Khalid Natto Chief Market Strategist The KIN Consortium Jeddah, Saudi Arabia Email: Mobile: +9665 686 100 43 The KIN Consortium Opinion: It is our view that the huge swings in the volatility of the markets will exceed the current resistance and support levels that are programmed into the HFT High Frequency Trading Algorithms.

In this report we are going to highlight a series of articles that will show you the catastrophe that is about to happen in the near future. Discredited Rating Agencies:

ON November 25th, 2011:U.S. credit raters set back on First Amendment:

“(Reuters) - A federal judge has said credit ratings are not always protected opinion under the First Amendment, a defeat for credit rating agencies in a lawsuit brought by investors who lost money on mortgage-backed securities.
The November 12 decision was a little-noticed setback for McGraw-Hill Cos' Standard & Poor's, Moody's Corp's Moody's Investors Service and Fimalac SA's Fitch Ratings, which have long invoked First Amendment free speech protection to defend against lawsuits over their ratings. These agencies had argued that the Constitution protected them from claims they issued inflated ratings on more than $5 billion of securities issued in 2006 and 2007, and backed by loans from former Thornburg Mortgage Inc and other lenders. But the judge said the ratings were shared with too small a group of investors to deserve the broad protection sought. ‘The court rejects the rating agency defendants' arguments that the First Amendment provides any protection to them under the facts of this case,’ U.S. District Judge James Browning in Albuquerque, New Mexico, wrote in a 273page opinion.”

1. Sovereign Debt Downgrades


2. S&P downgrades Belgium to AA on funding pressures

2. Bank Downgrades and Upgrades

On November 29th. 2011 Downgraded: Banco Bilbao Vizcaya Argentaria S.A. Bank of America Corp. Bank of New York Mellon Corp. Barclays Plc Citigroup Inc. Rabobank Nederland Goldman Sachs Group Inc. HSBC Holdings Plc JPMorgan Chase & Co. Lloyds Banking Group Plc Morgan Stanley Royal Bank of Scotland Plc UBS AG Wells Fargo & Co. Upgraded: Bank of China Ltd. China Construction Bank Corp.

3. Market Perspective

The markets are programmed by computer algorithms. The algorithms are driving the markets up and down based on the subjective and politicized ratings agencies. We are seeing huge moves in the market. This volatility is going to exceed the pre-programmed parameters in the computer. At some point we are going to see huge bankruptcies as a result of the volatility in the markets. We reiterate our earlier position that the lack of investor confidence in sovereign debts and now bank debts, will lead to the rise of GOLD Prices.

4. Our Forecasts

5. Probability and Timing

The probability of Gold being the chosen underlying asset is rather high, since we have seen that trend on a historical basis. In fact it has gone from 1705 in our last report on November 1st, 2011 to close to 1800 on November 8th, 2011. Today on November 30th, 2011 Gold is at 1746.50 In terms of when we will see the money flow towards Gold again, that depends upon the programmers of the leveraged computers traders. The Quants have to reprogram the computers with buy orders that are oriented towards buying the safest commodity on earth.

DISCLAIMER: This content is provided for educational and informational purposes only. Evaluate any strategy prior to use to understand risk and suitability. The KIN Consortium does not endorse or warrant any Market Analyst content, service or product. Use this content at your own risk without guarantee or warranty of any kind from The KIN Consortium

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