House Votes 348-79 To Declare (Trade) War On China
by ilene - September 29th, 2010 10:47 pm
House Votes 348-79 To Declare (Trade) War On China
Courtesy of Joe Weisenthal at Clusterstock
We’re not sure what they hope to accomplish with this, but the House has voted 348-79 to penalize China for its practice of fixing the yuan to the dollar, at a level which foreign exchange experts in Congress believe to be too low.
WSJ:
The measure would allow, but not require, the U.S. to levy tariffs on countries that undervalue their currencies. The bipartisan support highlights lawmakers’ long-simmering frustration with Chinese trade practices as well as their sensitivity to the faltering economic recovery with elections looming. It’s the strongest trade measure aimed at China to make it through a body of Congress after more than a decade of legislative threats by U.S. lawmakers.
We doubt this will go anywhere in the Senate, which is gridlocked beyond all rhyme and reason, but the message is sent.
Click here to see the 10 US states that will get crushed in a US-Sino trade war >
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DiggDistrust In US Media Hits Record High, As CNBC (And Especially Mad Money) Viewership Drops To Multi-Year Low
by Zero Hedge - September 29th, 2010 10:40 pm
Courtesy of Tyler Durden
In today’s “less than surprising data point” category, the clear winner is Gallup’s analysis of people’s ever increasing distrust in the mass media. From 46% in 1998, the percentage of people who indicate they have “not very much/none at all” trust in mass media has grown to a stunning 57% currently. This is an all time record, as the general public perception toward the MSM has flipped over the past decade. Is it becoming increasingly more difficult to lie to the average American? In this time of unprecedented economic upheaval, where the political regime depends on just how far any given administration’s lies can penetrate amongst the broader population, this may well become the most critical factor in determining policy for the future. And with ever increasing alternatives of non-traditional media, could the legacy ad-supported media model, which by definition is one which espouses the status quo, be doomed precisely by the slow but steady education of the average American, who intuitively realizes that nearly every “fact” appearing in the media, especially that supported by any given political party, is a lie?
From Gallup’s study on media distrust:
For the fourth straight year, the majority of Americans say they have little or no trust in the mass media to report the news fully, accurately, and fairly. The 57% who now say this is a record high by one percentage point.
The 43% of Americans who, in Gallup’s annual Governance poll, conducted Sept. 13-16, 2010, express a great deal or fair amount of trust ties the record low, and is far worse than three prior Gallup readings on this measure from the 1970s.
Trust in the media is now slightly higher than the record-low trust in the legislative branch but lower than trust in the executive and judicial branches of government, even though trust in all three branches is down sharply this year. These findings also further confirm a separate Gallup poll that found little confidence in newspapers and television specifically.
Bottom Line
Gallup’s annual update on trust in the mass media finds Americans’ views entrenched — with a record-high 57% expressing little to no trust in the media to report the news fully, accurately, and fairly, and 63% perceiving bias in one direction or the other.
…
HOUSING UPDATE – DOUBLE DIP IN PROGRESS?
by ilene - September 29th, 2010 10:00 pm
HOUSING UPDATE – DOUBLE DIP IN PROGRESS?
Courtesy of The Pragmatic Capitalist
Have housing prices in the United States started to turn down already? We’ve seen some mixed news in the real estate market lately, but given the lag in most home price data it looks to me like the market is already beginning its double dip. I am still expecting as much a 7-15% decline in national prices from current levels. The Cleveland Fed sums up the current situation:
“Home price growth was absent in July, from the standpoints of both the S&P/Case-Shiller and the FHFA home price reports. As expected in an early after-month of the home buyer tax credit, S&P/Case-Shiller home
prices ground to a halt in July after a full year of growth in the 10-city index, while prices in the 20-city index dipped a slight 0.1 percent. Year-over-year growth in both indexes cooled off roughly a percentage point over the month. Prices in the 10-city index are now up 4.1 percent since last July, and prices for the 20-city index are up just 3.2 percent.The FHFA Purchase-Only House Price Index declined for a second straight month, dropping 0.5 percent in July following a 1.2 percent retreat in June. Year-ago price growth slipped accordingly, from −2.5 percent to −3.2 percent. After the FHFA index reached a peak value in April 2007, prices fell rapidly until November 2008. Since then the index has fluctuated considerably, overall trending slightly downward. In the big picture, the index has been set back to its level in September/October 2004, when home prices were still rising rapidly.”
John Taylor On Why TARP II Will Follow Promptly After QE II
by Zero Hedge - September 29th, 2010 9:30 pm
Courtesy of Tyler Durden
Pump and Dump
September 30, 2010
By John R. Taylor, Jr.
Chief Investment Officer
At the Jackson Hole conference near the end of August, Fed Chair Bernanke informed the markets that they should anticipate the Fed’s announcement of a new quantitative easing (QE II) effort in the near future. In response, the global equity markets began a powerful rally, which continues today. In the US, the stock market gave us the strongest September since 1939, and Bernanke is still advertising his future plans to inflate the money supply, stimulate inflation, and reflate the economy. The Fed’s strategy seems to go beyond the famous Greenspan ‘put’ or even the Plunge Protection Team, which is rumored to be on the bid whenever US equities are down sharply. Bernanke is being proactive. In the street vernacular, Bernanke’s words are pumping up the prospects for a future liquidity boom, and a very strong equity market. The next step in this process, as carried out by Wall Street’s more scurrilous denizens, would be to dump their lousy equity positions on the market at inflated prices – hence ‘pump and dump.’
Strange thing, the US Treasury has lots of stock to sell: Citibank, AIG, and General Motors. It seems that the US authorities are very interested in making as large a profit as possible on the TARP program and its other equity positions, perhaps trying to draw our attention away from the Fannie Mae and Freddie Mac messes. General Motors is currently worth somewhere between $60 and $85 billion dollars, up from zero eighteen months ago, and at any valuation over about $67 billion, the US would break even. As the offering will be finalized in a month or so, the pressure to get a good price will last for a while. Prior to that AIA, AIG’s very profitable Asian arm, should be sold for around $40 billion, allowing the repayment of AIG’s line of credit from the NY Fed with some left over. Even Citibank, the last of all the banks still owing money to TARP, looks to be a winner. For the government this Houdinilike escape from the horrifyingly large TARP bailout of almost exactly two years ago is a tremendous success, for those buying out the government’s position: caveat emptor!
Standing on its own, the outlook for the equity market is not rosy. Earnings have been boosted by…
Global Tactical Asset Allocation Q4 Update: Commodities
by Zero Hedge - September 29th, 2010 9:22 pm
Courtesy of Tyler Durden
The third update in Damien Cleusix’ Q4 update series has been released, this one focusing on commodities. The attached presentation is one of the most comprehensive observations on what may happen to global commodities, with an emphasis on the “China factor.” Damien’s observation: “Most commodities are now greatly overvalued. As with other assets it does not really matter in the short-term (as long as the trend is positive) but it is paramount for longer-term projections.” What does the future hold should the China wave ebb? “This increased elasticity of demand will work both ways… The China buying spree will abate as the strategic reserves are completed, the fiscal stimulus projects are being built (and we will have new waves later but this is another story but as you know we are not as bullish as the consensus on 2030 and beyond China, and all other countries by the way, commodities demand… we are too maybe confident on human ingenuity…) and the housing markets cools.” All this and much more inside.
Daily Oil Market Summary: 9.29.2010
by Zero Hedge - September 29th, 2010 9:22 pm
Courtesy of Tyler Durden
Submitted by Cameron Hanover
Big game hunting – is this the largest stop-loss in history?
by Chart School - September 29th, 2010 9:18 pm
Big game hunting – is this the largest stop-loss in history?
Courtesy of Rohan at Data Diary
Credit spreads continue to shrink, yet the VIX refuses to follow. Perhaps, the Fed’s current POMOs are just enough to encourage fixed interest investors to push down the risk curve. With low volumes in equities, the indexes can follow. But this just makes for an even more nervous market.
In the absence of a categoric announcement, I’m beginning to doubt the wisdom of backing the Fed to scale up Treasury purchases with credit spreads at current levels.
We are unlikely to return to the credit spreads that prevailed through the credit boom - that means the marginal gains from a large scale QE2 are just not warranted from here. More likely that more QE would come if the market were to go pear shaped again. This is when it works best – at least according to the Fed.
In this context, here is an update of the VIX derived S&P500 that we looked at the other day (here). The stubbornness of the VIX looks suspiciously like a non-confirmation of the recent S&P500 highs.
If we need to have a market breakdown in order to prompt the Fed into buying another $1 trillion in securities, then by the law of stop-loss hunting, that is what we are going to get.
Guest Post: In Defense Of A Robot
by Zero Hedge - September 29th, 2010 9:09 pm
Courtesy of Tyler Durden
Submitted by Frode Haukens of EconoTwist
In Defense Of A Robot
This must be one of the weirdest lawsuits we have seen in long time: Starting this week, the two Norwegian day traders who are charged with fraud and violation against an automatic trading robot will appear in Oslo District Court to defend their actions. However, the poor robot, being called a stupid, cheating liar, have the best representatives any offended robot can have; a hard hitting police attorney, backed by an army of experts from the Oslo Stock Exchange. The robot’s owner, Timber Hill, has not been seen, nor heard from since the news story broke in August this year.
“Either the robot is very, very stupid, or is the person who programmed the robot is very, very stupid.”
Sven-Egil Larsen
case, neither the Financial Authority or the police, seems to be able to look at the case with competent and critical eyes. For this reason, we now have a case that hardly anyone in the market can understand,” says Mr. Larsen’s lawyer, Halldor Christen Tjoflaat, according to the website Stocklink.no.…
An Exhaustive, Graphic Illustration of All of the Differences Between the Modern Democratic and Republican Parties
by Zero Hedge - September 29th, 2010 8:37 pm
Courtesy of George Washington
Painting by Anthony Freda: www.AnthonyFreda.com.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
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