The Gods Of The Marketplace
by Zero Hedge - May 25th, 2013 10:27 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Submitted by Mark J. Grant, author of Out of the Box,
“It’s the lure of easy money. It has a very strong appeal.”
-Glenn Frey, Smuggler’s Blues
Investors borrowed $384.4 billion in April, a 1.3% gain from the previous month and a 29% rise from the same month last year. This is an all-time record for margin debt and it exceeds the previous high mark set in June 2007. Some may see this as an increased sign of investor confidence but I am not one of them. To me this is a giant red warning flag blowing in the financial breeze indicating the leveraging of dumb money making very risky bets.
“Every swindle is driven by a desire for easy money; it’s the one thing the swindler and the swindled have in common.”
-Mitchell Zuckoff
Substances based upon some sort of white powder are quite dangerous. They can overcome your good sense and then they it can be quite difficult to extricate yourself from them. The Great Depression was caused, in large part, by massive leverage utilized in the equity markets. This was the white powder of 1929. It took a decade and a World War before America was able to loosen the grip of the stuff.
The white powder of 2008/2009 was easy money provided by the American banks. It wasn’t the subprime mortgages that caused the problem but the leverage that was used to buy them and then various securities that were appended to them. It took the coordinated efforts of the world’s central banks to stop the carnage. Money for nothing, money from nothing and checks for free.
Chicks were still expensive but at least we could afford them once again.
“I came to a stark realization: chronic surpluses could be almost as destabilizing as chronic deficits.”
-Alan Greenspan
The economies of Europe are in recession by any definition that you would like to use.
America is sputtering and barely above the red line.
Japan is now on steroids and the recent volatility in their equity and bond markets is astounding if not scary.
All over the globe the white powder is being dispensed once again but this time there is far more of it than ever in history. It is being made by the central banks and so people think it is sanitized but let…
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The Dreaded Curse of the IMF!
by Zero Hedge - May 25th, 2013 8:33 am
Courtesy of ZeroHedge. View original post here.
Submitted by Pivotfarm.
It looks like the International Monetary Fund has been jinxed. It’s fated. It’s doomed! The next managing director should start wearing garlic around their neck already or at least burn sage in their office to ward off evil spirits. Seems these days that anyone that steps into the shoes of the Managing Director of the IMF ends up becoming fated, the object of all desire. The man (or woman) to be in the sites of all our guns. The one to be bumped off.
Christine Lagarde has defended herself. She has stated, declared, promised and reiterated countless times until she has gone blue in the face that she did not do anything untoward. “I always acted in the interests of the state and in conformity with the law” she said last night before she headed off at double-quick speed to chit-chat with her lawyer. All image! Outwardly calm and collected. Inwardly, terrifiée. She is an ‘assisted witness’ in the Adidas case, embroiling Bernard Tapie (and the 45 million euros that were awarded to him, which Lagarde never appealed against as Finance Minister of France) and Sarkozy’s (illegal?) election funding in 2007 and 2012. Being an ‘assisted witness’ is a nice way of putting it that you aren’t going to be prosecuted yourself, but you had some dangerous dabbling and fancy footwork going on and the judge knows more than you think. Why is it that the French always allow their past Ministers and Presidents to be ‘assisted’? I thought they hated their image of ‘assistanat’ (translate as: (state) dependency)!
Jacques de Larosière (yes, another Frenchman), Managing Director of the IMF from 1978 until 1987 once wrote about moral hazard. Moral hazard is the name given by insurers to people who take risks just because they are insured and that they wouldn’t have taken those risks had the insurance policy not existed. Maybe he should have got on the blower to Lagarde before she took the risk of toying with Tapie and told her that; and maybe he should have stunted Strauss-Kahn’s ardent desires in room 2820 of the Sofitel Hotel NY before he took the risks.
But Lagarde and Strauss-Kahn are not the only ones that have been involved in scandals. Some of other Managing Directors have too (thankfully, not all of them, and not all of them…
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FX Price Action: What’s Next?
by Zero Hedge - May 25th, 2013 7:50 am
Courtesy of ZeroHedge. View original post here.
Submitted by Marc To Market.
The main development in the foreign change market over the past week has been the short squeeze of the yen, and to a lesser extent, the Swiss franc.
The move coincided with a backing up in JGB yields, with the 10-year approaching the 1.0% threshold, a nearly three-fold increase since the BOJ announced its more aggressive monetary stance in early April. The Nikkei took it on the chin, falling 12.5% between Thursday’s high near 16k and Friday’s low just below 14k.
Many of the foreign investors who have poured almost $80 bln into Japanese equities this year have hedged the currency risk, by selling the yen. However, given the slide in Japanese share prices, the may be over-hedged. To reduce the hedge yen needs to be bought.
At the same time, Japanese investors are not exporting their savings. Instead they appear to be taking profits on some of the foreign assets they had previous acquired. This is more consistent with the behavior on investors who do not expect the recent yen weakness to be sustained or substantially extended.
A band of support for the dollar extends from JPY100.60 to JPY100.00. The top of the band corresponds to a 61.8% retracement of the rally that began on May 9 near JPY98.65. The lower end of the band is the top of the month-long consolidation triangle pattern (early April through early May). The RSI, MACDs and Stochastics have turned lower. It probably takes a break of JPY99.60 to start talk in earnest that a top of some significance is in place. It would likely coincide with weaker Japanese shares.
The euro was confined to the previous week’s trading range and chopped around a roughly $1.2820-$1.3000 trading range. The technical indicators we look at favor an initial upside break of this range. Additional resistance is seen in the $1.3020-40 area., which corresponds to retracement objectives and the 20- and 200-day moving averages. If this is overcome, there is potential toward $1.3200.
The euro has held support near JPY130. The measuring objective of the triangle pattern carved out mid-April through mid-May is near JPY135 and provided the JPY130 area hold, that remains a reasonable target. On the other hand, a break of JPY130 could be part of a large short squeeze on the yen another…
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Jack Lew’s Triple Whammy – IRS Ignorance, Corzine Corruption, And The ‘War On The Poor’
by Zero Hedge - May 24th, 2013 9:35 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
While some, we are sure, will view this brief clip as partisan showmanship by Representative Steve Pearce, the questions he asks Treasury Secretary should surely be responded to in some manner that is anything but the typical perfunctory shrug these matters normally garner. From Lew’s apparent disbelief that the IRS Audits debacle was in any way ‘political’ to Lew’s “waiting for the investigation’ on Jon Corzine’s misappropriation of funds, and finally to the “War on the Poor” that Pearce describes the current administration’s policies (for the benefit of Wall Street); these few minutes are well worth some time as we ‘remember’ this weekend.
“For New Mexico, we recognize a war on the poor when we see it”
(h/t Sense On Cents)
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STICK SAVE TO CLOSE THE WEEK
by Zero Hedge - May 24th, 2013 9:01 pm
Courtesy of ZeroHedge. View original post here.
Submitted by David Fry.
Bulls are a determined and desperate bunch. There were two consecutive days of large sell-offs this week but on each day dip buyers entered to make things more respectable. Let’s face it, bulls have positions to defend, so getting a green close was huge psychological win for Main Street.
Durable Goods Orders beat expectations coming in at 3.3% vs 1.4% expected, and prior, -5.9%; Ex-transportation, which gives a better picture of conditions since they’re generally volatile like Boeing 787 orders for example, would be at 1.3% vs 0.4% expected, and prior -1.7%. This gave bulls some hope. But that news was sold hard early in the day Friday.
There really wasn’t any other news Friday and many traders were leaving early for the long weekend thus volume started to slacken making it easy for some algos (they never take a holiday) to bid things up squeezing some shorts.
The volatility in Japan markets continued as their leaders haven’t learned how to describe new policies as Earnings from Hewlett-Packard (HPQ) were initially well received but on second look the stock was hit hard Friday. More defensive sectors again led markets like consumer staples (XLP), but that’s about it. Most other sectors were either mildly lower or much lower. Overseas markets were mostly weaker than U.S. sectors especially China (FXI), emerging markets (EEM) and Europe (IEV). It would be wrong to conclude that Friday’s action was bullish when looking over the global landscape.
The dollar (UUP) was flat. Both gold (GLD) and silver (SLV) weakened once again. Commodities (DBC) were weak once again as was oil (USO) and bonds (TLT) were fractionally higher.
Volume trailed off and bulls were free to ramp stocks into the close. Breadth per the WSJ was mostly negative.
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NYMO
The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.
NYSI
The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the…
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Guest Post: Are Pipeline Spills A Foregone Conclusion?
by Zero Hedge - May 24th, 2013 8:58 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Submitted by Daniel Graeber of OilPrice.com,
Exxon Mobil hasn’t asked federal regulatory authorities to restart the Pegasus oil pipeline, which burst open in a neighborhood in Mayflower, Ark. In March, a 22-foot rupture in the pipeline spilled about 5,000 barrels of diluted Canadian crude oil into an area of marshland, though the company said it’s been effectively cleaning the area with long-term remediation in mind. Policymakers on both sides of the Canadian crude oil debate have focused on issues ranging from emissions to economic stimulus. If pipelines like Keystone XL have any chance of approval, perhaps pipeline integrity should be the focal point of real policy debates.
Exxon said it was still looking into what caused a 22-foot gash to appear in the wall of its 65-year-old Pegasus oil pipeline. Arkansas Attorney General Dustin McDaniel said his office was pouring over 12,500 pages of information sent to his office by Exxon. Those documents were related to maintenance, inspection and safety of the 850-mile oil pipeline. Exxon, for its part, said it was combing over data taken from inside the pipeline itself in an effort to figure out what happened before the spill. That inspection, a spokesman said, could take at least another month.
Exxon already removed the damaged section and replaced it with new pipe. About a month after the Arkansas incident, about a barrel of oil leaked from the same pipeline about 200 miles north of Mayflower. The “wait and see” reaction to the Pegasus spill, and potentially the delay in the restart, may be part of Exxon’s evaluation of the debate over the Keystone XL pipeline. Last week, a measure dubbed the Northern Route Approval Act passed through a Republican-led committee on its way to the full House. The bill would leave the fate of Keystone Xl in the hands of policymakers, who may have a vested interest in seeing that the project gets built.
Rep. Jerrold Nadler, D-N.Y., cast his vote against the Northern Route Approval Act. He expressed frustration that lawmakers were moving the debate away from renewable energy and focusing more on how best to circumvent normal review processes. Last year, the White House passed new laws that would stiffen the penalties for pipeline safety violations and mandate more inspections. That decision followed…
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Stick Save To Close The Week
by Zero Hedge - May 24th, 2013 8:22 pm
Courtesy of ZeroHedge. View original post here.
Submitted by David Fry.
Bulls are a determined and desperate bunch. There were two consecutive days of large sell-offs this week but on each day dip buyers entered to make things more respectable. Let’s face it, bulls have positions to defend, so getting a green close was huge psychological win for Main Street.
Durable Goods Orders beat expectations coming in at 3.3% vs 1.4% expected, and prior, -5.9%; Ex-transportation, which gives a better picture of conditions since they’re generally volatile like Boeing 787 orders for example, would be at 1.3% vs 0.4% expected, and prior -1.7%. This gave bulls some hope. But that news was sold hard early in the day Friday.
There really wasn’t any other news Friday and many traders were leaving early for the long weekend thus volume started to slacken making it easy for some algos (they never take a holiday) to bid things up squeezing some shorts.
The volatility in Japan markets continued as their leaders haven’t learned how to describe new policies as Earnings from Hewlett-Packard (HPQ) were initially well received but on second look the stock was hit hard Friday. More defensive sectors again led markets like consumer staples (XLP), but that’s about it. Most other sectors were either mildly lower or much lower. Overseas markets were mostly weaker than U.S. sectors especially China (FXI), emerging markets (EEM) and Europe (IEV). It would be wrong to conclude that Friday’s action was bullish when looking over the global landscape.
The dollar (UUP) was flat. Both gold (GLD) and silver (SLV) weakened once again. Commodities (DBC) were weak once again as was oil (USO) and bonds (TLT) were fractionally higher.
Volume trailed off and bulls were free to ramp stocks into the close. Breadth per the WSJ was mostly negative.
You can follow our pithy comments on twitter and become a fan of ETF Digest on facebook.
NYMO
The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.
NYSI
The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the…
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Abenomics 101 – The 15 Most Frequently Asked Questions
by Zero Hedge - May 24th, 2013 8:20 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
With the first arrow of Abenomics perhaps hitting its limit, it will be the second and third arrows that need to occur quickly and aggressively to carry this momentum forward (and for the economy to grow into stock valuations). Barclays lays out 15 of its most frequently asked questions below but concerns remain as the BoJ’s planned absorption of nearly 80% of new JGB issuance from the markets this fiscal year has triggered a dramatic change not only in JGB supply/demand and ownership structure but in the JGB market risk profile itself, which has moved from “low carry, low volatility and high liquidity (superior to other assets from perspective of risk-adjusted returns or Sharpe ratio)” to “low carry, high volatility and low liquidity (inferior from same perspective)”. Barclays added that with a wave of major political and policy events ahead, starting with a crucial Upper House election, there was no big change in the basic belief among foreign investors that Japan is likely to be the main source of surprise for the global economy and of volatility in financial markets.
Via Barclays:
Q1: Is the BoJ’s 2% price stability target achievable?
A1: It will be difficult through monetary easing alone
Q2: Where might a surprise appear in inflation trends?
A2: Inflation tends to jump unexpectedly when a combination of monetary easing and significant fiscal expansion coincides with some sort of supply shock.
Q3: What transmission channel is the BoJ envisioning for achieving its inflation target?
A3: Since the interest rate and credit channels are unlikely to recover anytime soon, the BoJ will have to depend largely on more accommodative financial conditions via higher share prices and a weaker yen.
Q4: What other monetary policy actions are expected?
A4: We think the BoJ will likely be compelled to ease again in 2H FY13 (most likely in October), consisting mainly of increased purchasing of ETFs as the most feasible risk asset.
Q5: How do we describe the government’s fiscal policy stance for 2013-14?
A5: Assuming no additional fiscal measures, fiscal policy will shift from a markedly expansionary stance relative to other developed nations in 2013 to an abrupt contractionary stance next year.
Q6: What is the likelihood of a return to a public-spending-driven economic recovery?
A6: If the economy is underpinned by strong overseas demand (robust exports), as in…
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One Experience That Really Shaped My Thinking
by Zero Hedge - May 24th, 2013 7:23 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Submitted by Simon Black of Sovereign Man blog,
Years ago as a young intelligence officer, I served a stint in Saudi Arabia running a team of counter-terrorism analysts and agents.
We used to have regular “threat working groups,” a fancy way of saying we would get together at the US Embassy for meetings with the embassy staff, local NSA operators, and CIA operatives working in the country under official cover.
The tone of the meetings was always the same – looking at various reports and figuring out which intelligence was credible.
It seemed like every week we would hear about some terrorist with a suitcase-sized bomb, and the bureaucrats would dive into a lively debate about whether or not to evacuate the Americans.
One day, I remember, my friend who was the senior ranking non-commissioned officer interrupted and said, “What about the Swedes?”
Silence. You could have heard a pin drop.
An embassy official looked at him, puzzled. “Sergeant?”
“What about the Swedes? Do we evacuate the Swedes too?”
The embassy staff looked at each other, shrugged a bit, “Oh sure, sure, we’ll coordinate with Washington on that.” And the discussion continued.
“What about the Saudis?”
Silence again. And then he really made his point. “It’s not just about Americans, you know. Their blood is worth something too.”
I’ll never forget it. It was formative for me. But for the government bureaucrats, it was as if he were speaking Greek. They just didn’t understand the concept.
It’s so commonplace… and one of the more unfortunate aspects of humanity. We group ourselves, defining each other by irrelevant things like nationality or the color of our passports.
The modern nation state has only served to reinforce this purpose. The flag waving and bombastic patriotism drive a sentiment that other peoples are less important– that their lives are worth less than our lives… as if we’re not all human beings.
To give you a harsh example, former British Prime Minister David Lloyd George was a vocal opponent of Geneva Convention restrictions to prevent British planes from bombing certain civilian targets.
He had a long history of this, having dropped 97 tonnes of bombs and fired 183,861 rounds on Iraqi civilians in a 1920 revolt against British occupation.
According to his wife in later memoirs, George opposed any…
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Guest Post: One Experience That Really Shaped My Thinking
by Zero Hedge - May 24th, 2013 7:23 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Submitted by Simon Black of Sovereign Man blog,
Years ago as a young intelligence officer, I served a stint in Saudi Arabia running a team of counter-terrorism analysts and agents.
We used to have regular “threat working groups,” a fancy way of saying we would get together at the US Embassy for meetings with the embassy staff, local NSA operators, and CIA operatives working in the country under official cover.
The tone of the meetings was always the same – looking at various reports and figuring out which intelligence was credible.
It seemed like every week we would hear about some terrorist with a suitcase-sized bomb, and the bureaucrats would dive into a lively debate about whether or not to evacuate the Americans.
One day, I remember, my friend who was the senior ranking non-commissioned officer interrupted and said, “What about the Swedes?”
Silence. You could have heard a pin drop.
An embassy official looked at him, puzzled. “Sergeant?”
“What about the Swedes? Do we evacuate the Swedes too?”
The embassy staff looked at each other, shrugged a bit, “Oh sure, sure, we’ll coordinate with Washington on that.” And the discussion continued.
“What about the Saudis?”
Silence again. And then he really made his point. “It’s not just about Americans, you know. Their blood is worth something too.”
I’ll never forget it. It was formative for me. But for the government bureaucrats, it was as if he were speaking Greek. They just didn’t understand the concept.
It’s so commonplace… and one of the more unfortunate aspects of humanity. We group ourselves, defining each other by irrelevant things like nationality or the color of our passports.
The modern nation state has only served to reinforce this purpose. The flag waving and bombastic patriotism drive a sentiment that other peoples are less important– that their lives are worth less than our lives… as if we’re not all human beings.
To give you a harsh example, former British Prime Minister David Lloyd George was a vocal opponent of Geneva Convention restrictions to prevent British planes from bombing certain civilian targets.
He had a long history of this, having dropped 97 tonnes of bombs and fired 183,861 rounds on Iraqi civilians in a 1920 revolt against British occupation.
According to his wife in later memoirs, George opposed any…
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Twitter
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