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Goldman Post-Mortem: Minutes Have More Hawkish Tone

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Via Goldman’s Jan Hatzius,

BOTTOM LINE: The July FOMC minutes generally had a slightly hawkish tone, emphasizing that labor market slack had improved faster than expected and that the labor market was now closer to what might be considered normal in the longer run. Separately, there was an extended discussion of exit strategy, at which the Board staff laid out a framework that was well received by meeting participants.

MAIN POINTS:

1. Regarding the assessment of the labor market, many Committee members agreed that a number of indicators of labor market conditions had “improved more in recent months than they had anticipated earlier.” Many members further noted that the FOMC statement’s “characterization of [significant] labor market underutilization might have to change before long, particularly if progress in the labor market continued to be faster than anticipated.” The broader set of meeting participants agreed that the rate of improvement in the labor market had been faster than anticipated, and that “conditions had moved noticeably closer to those viewed as normal in the longer run.” Overall, these remarks suggest that the change in the labor market language found in the July FOMC statement—shifting focus to broader labor market indicators rather than the unemployment rate specifically—was not intended to be a dovish change, as some commentators thought at the time. To the contrary, the discussion of labor market developments in the minutes had a hawkish tilt.

2. In a similar vein, the staff revised down its estimate of potential GDP growth, in light of the continued outperformance of labor market indicators despite disappointing GDP growth. This suggests that the staff reduced their estimate for the size of the output gap, a slightly hawkish signal.

3. The discussion on inflation was less substantive than on the labor market, with “most” participants now judging that downside risks had diminished. Committee members agreed that it was appropriate to recognize that inflation had moved closer to the Committee’s objective in the statement, suggesting that they viewed the recent uptick in the inflation trend as having some staying power.

4. The recovery in housing was described as “slow” by most participants, facing headwinds such as high levels of student loan debt and tight access to credit. Some felt that “factors restraining residential construction might persist, damping the housing recovery for some…
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The Market Reacts To The Fed’s Minutes

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The USD is soaring after somewhat hawkish Fed Minutes (up 1% this week) – pushing up towards critical resistance at 1-year highs. Treasury yields slammed 3-4bps higher and are holding those losses (30Y up 11bps this week). High yield credit is at the worst levels of the day as stocks retrace gains towards record highs. WTI crude jumped 1% on the minutes, back above $96 as gold slipped modestly back below $1290. Stocks, having kneejerked lower (below VWAP) have been ripped back higher by a VIX-slamming algo that decided that FOMC uncertainty is exactly the signal to buy certainty.

 

VIX lifting stocks…

 

Nothing else retracing…

 

and credit at lows of the day…

 

Charts: Bloomberg





Obama Sending More Troops To Iraq: What’s Wrong With These 3 “Boots On The Ground” Headlines

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

On June 13th, CNN reports President Obama stated:

No troops to Iraq, but other options are being considered.

 

That was President Barack Obama’s message Friday in response to the lightning advance by Sunni militant fighters in Iraq that could threaten the government of Shiite Prime Minister Nuri al-Maliki.

 

In a statement delivered from the White House South Lawn, Obama said the United States “will not be sending U.S. troops back into combat in Iraq,” but that he would be reviewing a range of other options in coming days.

 

As AP reported on July 25th

The House overwhelmingly passed a resolution Friday that would bar President Barack Obama from sending forces to Iraq in a “sustained combat role” without congressional approval, a bill with greater symbolic than legal effect.

And today, as AP reports

WASHINGTON (AP) — US officials: Military weighs plan to send a small number of additional troops to Iraq.

*  *  *

So BOOTS WILL BE ON THE GROUND – just as President Obama had told the American people they would not be…

Of course we assume these are humanitarian assassination advising troops…

*  *  *

In addition to the fact that President Obama has basically declared war on ISIS… this just happened…

  • *SEPARATISTS SHOOT DOWN UKRAINE SU-25 FIGHTER PLANE: REUTERS
  • *ISRAEL WILL HIT HAMAS INFRASTRUCTURE, COMMANDERS: NETANYAHU

So – all war, all the time…





Hilsenrath Warns Fed Rate-Hike Timing Debate Intensifying

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The Wall Street Journal’s Jon Hilsenrath unleashed an instantaneous reaction to today’s FOMC minutes and the message is clear – markets are much less uncertain than the Fed about the timing (sooner rather than later) of the first rate-hike. The minutes of the meeting, Hilsy notes, provide fresh evidence of an intensifying debate inside the central bank about when to respond to a surprisingly swift descent in the unemployment rate and rising consumer prices. The minutes appeared to reflect a slightly more aggressive stance than Ms. Yellen’s testimony.

 

Via The Wall Street Journal,

Federal Reserve officials debated at their July meeting whether to move sooner than expected to start raising interest rates in light of an improving job market and rising inflation, but decided they needed more evidence before concluding that was the right approach.

The minutes of the meeting, released Wednesday, provide fresh evidence of an intensifying debate inside the central bank about when to respond to a surprisingly swift descent in the unemployment rate and rising consumer prices.

Most officials agree they are seeing progress away from high unemployment and very low inflation. Some believe this warrants moving toward tighter credit conditions but many others remain unconvinced.

“Many participants noted that if convergence toward the [Fed's] objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated,” said the minutes of the July 29-30 meeting.

“Most participants indicated that any change in their expectations for the appropriate timing of the first increase in the federal funds rate would depend on further information on the trajectories of economic activity, the labor market, and inflation,” the minutes said.

Among their concerns: The economy’s first-quarter contraction, though seemingly temporary, caused uncertainty about the outlook, as did turmoil in the Middle East and Ukraine, persistent weakness in the housing sector and slow-growing household incomes.

Short-term U.S. rates have been held near zero since December 2008. Most Fed officials believe they can wait until 2015 before raising rates and have encouraged a perception in markets that rate increases won’t start until the middle of the year.

Fed Chairwoman Janet Yellen said in testimony to Congress in July that rate hikes might come sooner than planned if unemployment continues to fall faster than expected and if inflation—which has…
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FOMC Minutes Show Many Members Believe Rates Should Rise Sooner

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

These are the minutes from when the Fed toned down deflation fears and raised concerns over labor slack, and expectations going in were for a slightly more hawkish tone from the minutes (and perhaps commentary on financial stability – bubbles – and exit strategies). This is what we got:

  • *MANY FED OFFICIALS SAID JOB GAINS MIGHT BRING RATE RISE SOONER
  • *FOMC AGREED BALANCE SHEET SHOULD BE CUT GRADUALLY, PREDICTABLY
  • *SOME FOMC PARTICIPANTS MORE UNCOMFORTABLE WITH FORWARD GUIDANCE

Sounds pretty hawkish to us…

Pre-FOMC Minutes: S&P Futs 1982.5, 10Y 2.4175%, Gold $1294 , USDJPY 103.40, Oil $95.40

The key section from the minutes:

With respect to monetary policy over the medium run, participants generally agreed that labor market conditions and inflation had moved closer to the Committee’s longer-run objectives in recent months, and most anticipated that progress toward those goals would continue. Moreover, many participants noted that if convergence toward the Committee’s objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated. Indeed, some participants viewed the actual and expected progress  toward the Committee’s goals as sufficient to call for a relatively prompt move toward reducing policy accommodation to avoid overshooting the Committee’s unemployment and inflation objectives over the medium term. These participants were increasingly uncomfortable with the Committee’s forward guidance. In their view, the guidance suggested a later initial increase in the target federal funds rate as well as lower future levels of the funds rate than they judged likely to be appropriate. They suggested that the guidance should more clearly communicate how policy-setting would respond to  the evolution of economic data.

Here is the Fed on the topic of labor slack, or focusing on any and every incremental weakness in the labor market now that all of the Fed’s targets have been reached and it is Yellens’ job to pound the table on the weaknesses to “justify” ongoing ZIRP:

… some members expressed reservations about describing the extent of underutilization in labor resources more broadly. In particular, they worried that the degree of labor market slack was difficult to characterize succinctly and that the statement language might prove difficult to adjust as labor market conditions continued


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All That Is Wrong With US Foreign Policy In One Tweet

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Presented with no comment…





THe LiBeRaToR…

Courtesy of ZeroHedge. View original post here.

Submitted by williambanzai7.





GMO: “There Is No Safe Place To Hide”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

From Jeremy Grantham’s GMO:

We have been writing quite a bit about why asset allocation today is in one of the toughest investing environments we’ve ever encountered. And it’s not just because we think equity markets are overvalued. No, we’ve seen that plenty of times before over the past decade or so. Remember the technology bubble of the late ’90s? That was challenging, sure, but what got lost in the shuffle was that while U.S. large-cap stocks were outrageously overpriced, it turned out that real estate investment trusts, emerging equities, and international small caps were deliciously priced. And it was perfectly clear to us what we had to do: avoid technology and own the cheap stuff, even though it might have looked a bit unconventional. Then we entered the 2007–2008 credit bubble, and while, yes, virtually all equity markets were overpriced, it was perfectly clear to us what we had to do: hide and wait. And that was not a bad proposition because there were plenty of safe places to hide—Treasury Inflation-Protected Securities, U.S. Treasuries, and a strategy we had developed called Alpha Only—and earn a decent, if not spectacular, return.

 

Today’s environment, however, is quite distinct, as seen in the chart below, where we lay out the GMO seven-year forecasts in a volatility (an imperfect shorthand for risk) versus return format for the traditional asset classes, or betas. This beta desert is so challenging because not only are there no asset classes that we believe are priced to deliver 5% real return (the red line), there is also no safe place to hide and wait (the green circle).

 

*  *  *

Then again, who needs “safety” when the market’s Chief Risk Officer, the Federal Reserve of course, will never allow another market correction and when any wholesale selloff from this endless no volume elevitation will result in a CYNKing of the market, where the entire market  is simply halted. Indefinitely.





Car Repos Soar 70% As Auto Subprime Bubble Pops; “It’s Contained” Promises Fed

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

While on the surface the US economy has been chugging along from GDP-crashing “snow in the winter” to GDP-cratering “warmer|cooler than expected weather in the spring|summer|fall“, with bouts of GDP-boosting inventory accumulation inbetween, in recent months two very disturbing trends about that all important dynamo behind the economy, the US consumer, have emerged.

On one hand we wrote three weeks ago that a “shocking” 77 million, or one third, of Americans face debt collectiors: a statistic which crushes any suggestion that US household credit is substantially improving based on trends in 30, 60, or 90-day delinquency, as it means that the real pain is not at the near-end of the default/delinquency timetable, but the far end, which incidentally has just as dire an impact on one’s credit score as a plain vanilla default (and explains why none other than Fair Issac has jumped in to “adjust” its credit methodology to artificially boost FICO scores of these millions of Americans).

On the other hand, we have been closely following the ongoing deterioration of the car subprime loan bubble: something that both Bloomberg and the Fed have both also been paying close attention to recently, yet a bubble which nobody wants to burst, because as we wrote several days ago, it is none other than the subprime car loan bubble that allowed car production to surge the most last month since Obama’s Cash for Clunkers capital misallocation program, in the process lifting overall manufacturing and Industrial Production, and thus GDP.

Earlier today Experian released its latest, Q2, metrics that tie these two very worrying trends together, namely the trend in delinquencies, defaults and repossessions.

As NBC summarizes: “The repo man is getting very busy as a growing number of car and truck owners are struggling to make their monthly auto loan payments. Experian, which analyses millions of auto loans, said Wednesday that the percentage of those loans that were delinquent or ended up in default with the vehicle being repossessed surged in the second quarter of this year.”

Hyperbole? Hardly. In fact, the auto loan subprime bubble may be the latest to burst (after student loans) as the rate of car repossessions jumped 70.2 percent in the second quarter, with much of that increase coming from finance
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Gaza Truce Talks Over; Hamas Warns World To “Halt All International Flights To Israel”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With 123 rockets having been fired from Gaza today (and 61 IDF rockets in response)…

 

 

Israeli press reports:

  • *GAZA TRUCE TALKS OVER, HAMAS ARMED WING SAYS: AFP
  • *HAMAS WARNS AGAINST FLIGHTS TO TEL AVIV STARTING TOMORROW
  • *HAMAS WARNS ON BEN GURION FLIGHTS FROM 6AM LOCAL TIME TMRW: SKY

Not exactly the de-escalation that’s ‘priced-in’ to stocks?

* * *

We strongly advise Malaysia Airlines avoid Israeli airspace.





 

Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743"

Thank you for you time!

 
 

Zero Hedge

St.Louis PD Release 'Suicide-By-Cop' Shooting Clip

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As we noted previously, just days after the fatal shooting of Mike Brown in Ferguson, a 2nd officer-involved shooting ended in death for the suspect just miles from Ferguson. St.Louis Police Department - in the interests of transparency -  have released video of both the alleged shoplifting and the so-called 'suicide-by-cop' shooting itself of 25-year-old Kajieme Powell.."Powell approached the officers when they arrived, yelling at the...



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Chart School

Daily Market Commentary: Semiconductor Gains Accelerate

Courtesy of Declan.

It was more of the same from the Semiconductor index: a solid gain which took the index ever closer to 652 resistance. All of which is helping the Nasdaq and Nasdaq 100 maintain their push to all-time highs. Technicals for the Semiconductor Index are net bullish.  Weakness will offer itself as a buying opportunity, particularly at the breakout line and/or 50-day MA. Risk can be measured from the 38.2% fib retracement at $616.25.


The Nasdaq took a small loss, but 4,485 should be strong support. Losses back to this level will also offer a buying opportunity. A decisive undercut of 4,485 would switch to a 'bull trap', but that is not today's problem.
...



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Phil's Favorites

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Surely, in 1999, everyone was both aware and excited about the milestones in the market – if we were anywhere near a mania-like atmosphere, wouldn’t we be seeing something similar today?

But instead of wall-to-wall market coverage – there was just about nothing. Most business sections mentioned it, but the stock rally didn’t make the front ...



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Mid-Day Update

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Click here for the full report.




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Elizabeth Arden Put Option Activity Revisited

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On Friday of last week we wrote a short note about put option activity on the stock...



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Sabrient

Sector Detector: Bullish investors jockey for position as if the correction is over

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As many investors enjoy the final weeks of summer, some optimistic bulls seem to be positioning themselves well ahead of Labor Day in anticipation of a fall rally. Indeed, last week’s action was impressive. After only a mere 4% correction, investors continued to brush off the disturbing violence both at home and abroad, and they took the minor pullback as their next buying opportunity. But was that really all the pullback we’re going to get this year? I doubt it. But I also believe that nothing short of a major Black Swan event can send this market into a deep correction.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then ...



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OpTrader

Swing trading portfolio - week of August 18th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Stock World Weekly

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The Stock World Weekly Newsletter is ready to go! View it here: Stock World Weekly. Just put in your user name and password, or take a free trial. 

 

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Helen Davis Chaitman Reviews In Bed with Wall Street.

Author Helen Davis Chaitman is a nationally recognized litigator with a diverse trial practice in the areas of lender liability, bankruptcy, bank fraud, RICO, professional malpractice, trusts and estates, and white collar defense. In 1995, Ms. Chaitman was named one of the nation's top ten litigators by the National Law Journal for a jury verdict she obtained in an accountants' malpractice case. Ms. Chaitman is the author of The Law of Lender Liability (Warren, Gorham & Lamont 1990)... Since early 2009, Ms. Chaitman has been an outspoken advocate for investors in Bernard L. Madoff Investment Securities LLC (more here).

Helen Davis Chaitman Reviews In Bed with Wall Street. 

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BitLicense Part 1 - Can Poorly Thought Out Regulation Drive the US Economy Back into the Dark Ages?

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An Op-Ed piece penned by Veritaseum Chief Contracts Officer, Matt Bogosian

This past weekend (despite American Airlines' best efforts), Reggie and I made it to the Second Annual North American Bitcoin Conference in Chicago. While there were some very creative (and very ambitious) ideas on how to try to realize the disruptive Bitcoin protocol, one of the predominant topics of discussion was New York Superintendent of Financial Services Benjamin Lawsky's proposed Bitcoin regulations (the BitLicense proposal) - percieved by many participants at the event as an apparent ...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Promotions

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