by Zero Hedge - November 23rd, 2014 1:29 pm
Submitted by Tyler Durden.
Based on the following “before” and “after” the Ukraine crisis pictures of NATO warplanes located just off the Russian border…
… one can almost understand why Victoria Nuland was so eager to tell the EU to “fuck off” in her successful attemp to foment Ukraine unrest leading to the overthrow of ex-president Yanukovich, and destabilize the region, giving NATO a pretext for a major arms build up on the other side of the Russian border.
Per CNN, “There used to be only four jets ready to intercept Russian planes that crossed into European airspace. Now there are 18.” And rising.
As for what the US response would be if Russia were to park a few squadrons of Mig-35s in Cuba, Canada and Mexico, we leave that to the reader’s imagination.
by Zero Hedge - November 23rd, 2014 12:44 pm
Submitted by Tyler Durden.
While technicals remain largely meaningless in the global centrally-planned “USSR market” (as penned by Russell Napier, who asked “Which World Has No Volume, No Volatility And Rising Prices?”, his answer: the USSR), pattern-seeking carbon-based traders still find refuge in the comfort provided by technical analysis. So for all those who believe past performance is indicative of future results, here according to BofA’s MacNeil Curry is how various asset classes perform during Thanksgiving week compared to all other weeks during the year.
Many global markets behave differently during the week of the US Thanksgiving holiday (observed Thursday Nov 27). While much has been written about US equity market outperformance around this date; less has been written on other markets. We expand upon this analysis in our Chart Of The Week. During the week of Thanksgiving, Oil (Brent), Gold, US ten year note futures and the US $ all tend to do better than their weekly average, while €/$ tends to suffer. Given this backdrop, we look for the S&P500 to extend upon last week’s break higher, while we reiterate our basing views on gold and oil. However, we are reluctant to turn too bearish on €/$. Not only does sentiment and momentum remain at bearish extremes, but the month of December is its most bullish month of the year. As such, the risk of a €/$ bear trap is too high to ignore.
Chart of the week: Thanksgiving seasonal tear sheet
Historically, many global markets have behaved differently during the week surrounding the US Thanksgiving holiday. Over the past 20yrs the S&P500, Brent Crude Oil, Gold, US 10yr note futures, and the US $ Index have all done better than average, while €/$ have underperformed. In contrast, Thanksgiving has had relatively little effect on $/¥.
And that last sentence is why the entire chart shown above is worthless, because if there is one asset class that is virtually assured to have the highest volatility in the coming days, it is the Yen, which will either continues its unprecedented collapse, or soar higher on short covering, should the trek to 120 (and then 145) prove to be fleeting in the immediate future.
Fear Of “Surge In Debt Defaults, Business Failures And Job Losses” Means Many More Chinese Rate Cuts
by Zero Hedge - November 23rd, 2014 11:35 am
Submitted by Tyler Durden.
If admitting you have a problem is the first step toward recovery, then China is making progress. The question is progress to what, because the generic answer, “another debt-fueled boom” is no longer applicable. Recall that as we noted here initially in the summer of 2013, the very reason why China finds itself in a reformist quandary is that the traditional method of Chinese “growth” – issuing a little under $4 trillion in aggregate system debt per year – no longer works as the bad debt portion of the Ponzi scheme is rising at a faster pace than the total notional of debt itself.
Which means the PBOC, which cut rates for the first time in two years on Friday, will have its work cut out for it. And in the worst tradition of “developed world” banks, Beijing will now have no choice but to double down on the very same bad policies that got it into its current unstable equilibrium, and proceeds with a full-blown policy flip-flop, leading to a full easing cycle that reignites the bad-debt surge once more.
And sure enough, today Reuters reports citing “unnamed sources involved in policy-making” (supposedly different sources than the unnamed sources Reuters uses to float trial balloons used by the ECB and the BOJ), that “China’s leadership and central bank are ready to cut interest rates again and also loosen lending restrictions” due to concerns deflation “could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making.” In other words, China has once again looked into the abyss once… and decided to dig a little more.
The story is well-known: “Economic growth has slowed to 7.3 percent in the third quarter and policymakers feared it was on the verge of dipping below 7 percent – a rate not seen since the global financial crisis. Producer prices, charged at the factory gate, have been falling for almost three years, piling pressure on manufacturers, and consumer inflation is also weak.”
Of course, in modern economics, deflation simply means deleveraging, which as we showed last weekend, is precisely what is happening to China’s shadow banking sector every month in the prior quarter.
by Zero Hedge - November 23rd, 2014 11:35 am
Submitted by Tyler Durden.
Much has been made of the decision by the Japanese government to inject another $700 billion into their ailing economy. While some may see this as an earnest attempt to save Japan from further stagnation and deflation, even some of the mainstream media (e.g. Bloomberg) are questioning the wisdom of this reckless act.
Over the last few decades, since the crash of 1989, Japan has injected billions into its banks and stock-market to help its economy but all of it has been a miserable failure. America has, via the Federal Reserve, increased its national debt to formerly unthinkable numbers with almost no effect on its ailing economy. Most of Europe has huge public debt as a result of bank bailouts, but still suffers from stagnating or shrinking economies.
In fact, any privately owned central bank that has undertaken monetization policies (creating more public debt) has failed to improve their nation’s economy and merely created a transfer of wealth from the general public to corporate hands.
Of course, government owned banks such as in China and Russia are and do take somewhat different actions given that they are owned by the public (state owned) and not private individuals or corporate entities. Therein lies the crux of the matter – private ownership means private interests, therefore the needs of the country and the populace are of no concern at all.
All that the Fed, BoJ (Bank of Japan), the Bank of England etc. have been concerned with is the preservation of private banks and the continued propping up of stock markets. None of these institutions really care about the real-world economy, real-world inflation or the ability of individuals to maintain their lives in a prolonged period of economic contraction.
While monetizing is all great news for the banks and stock-markets it is terrible news for any people that do not receive well over average earnings – this is because monetizing debt (printing money) causes inflation. As with everything else connected with the economy, governments cook the books on inflation to the extent that the CPI is a total fantasy designed to give falsely low inflation rates.
by Chart School - November 23rd, 2014 11:07 am
Courtesy of Doug Short.
The world market rally continued last week with six of the eight indexes on my watch list posting gains. Europe led the pack, with Germany’s DAX up 5.18%, France’s CAC 40 up 3.44% and the UK up 1.45%. Hong Kong’s Hang Seng was the big loser with its -2.70% loss. The other negative performer was Japan’s Nikkei 225. It’s fractional -0.76% decline snapped not only a four-week string of gains, but also four weeks as the top performer.
China’s Shanghai Composite remains the only index on the watch list in bear territory — the traditional designation for a 20% decline from an interim high. The index is down 28.36% from its August 2009 peak. See the table inset (lower right) in the chart below.
Here is a look at 2014 so far.
Here is a table highlighting the year-to-date index performance, sorted from high to low, along with the 2014 interim highs for the eight indexes. At this point, seven of the eight are positive YTD, up from five last week, with the three European indexes in the red.
India’s SENSEX and the US’s S&P 500 both ended the week with record highs.
A Closer Look at the Last Four Weeks
The tables below provide a concise overview of performance comparisons over the past four weeks for these eight major indexes. I’ve also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colors for each index name help us visualize the comparative performance over time.
The chart below illustrates the comparative performance of World Markets since March 9, 2009. The start date is arbitrary: The S&P 500, CAC 40 and BSE SENSEX hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE on March 3rd, the Shanghai Composite on November 4, 2008, and the Hang Seng even earlier on October 27, 2008. However, by aligning on the same day and measuring the percent change, we get a better sense of the relative performance than if we align the lows.
A Longer Look Back
by Zero Hedge - November 23rd, 2014 10:29 am
Submitted by Marc To Market.
Many people assume that politics and economics are separate spheres. We find ourselves often harkening back to the even older tradition of referring to “political economy”. After all it was Harold Laswell, who is regarded as the father of modern political science, that famously defined politics as who gets what, when and how. Isn’t that the role of the price mechanism and the market economy?
The highlight of the holiday-shortened week (Japan Monday, US Thursday) ahead are two official meetings. The EU and OPEC. There are three issues at the EU meeting that will be important for investors. First, the new European Commission will assess the 2015 budgets. Although the outgoing commission let France and Italy slide with some financial sleight of hand to improve from their initial offering, the two countries still stopped shy of the previously agreed up targets. If there is truly a new sheriff in town(and we are not convinced there is), France may be subject to a fine up to 4 bln euros or 0.2% of national income for breaching the fiscal rules.
To be clear, this is not a defense of the austerity fetish, rather it is a recognition of the untenable situation. Despite its violations, France has not made a clear break of the ordo-liberal diktat, nor does it enact strong measures to boost aggregate demand. France is neither fish nor fowl, but its goose is cooked as the political elite is intellectually bankrupt, and National Front are the only ones promising change.
Second, EC President Juncker is expected to unveil a new three-year 300 bln euro infrastructure program of the European Investment Bank that will be administered by local governments. Preliminary reports suggest that the funds will be used to facilitate private investment, but is mostly funds already earmarked. Less than a third is can be considered what the Japanese call “real water”. While we are sympathetic to the idea that what ails Europe is not something that monetary policy alone can fix, the program is far too small of a scale to make much of a difference. It is not even 1% of GDP per annum.
by Zero Hedge - November 23rd, 2014 10:03 am
Submitted by Sprout Money.
In what could definitely be called a stunning move, the Netherlands has announced it has repatriated in excess of 120 tonnes of gold from the vaults of the Federal Reserve in New York to the Dutch Central Bank in Amsterdam. Officially a move made to rebalance the locations where the gold is being stored, one cannot ignore the fact that the Netherlands only repatriated a large part of the gold which was stored in New York and it did not touch the gold stored in Canada and London.
Additionally, it’s not just ‘some’ gold being brought back home, no, the total amount is 122.47 tonnes or almost 4 million ounces with a market value of $5B. This will reduce the exposure of the Dutch Central Bank to the US financial system as now just 31% of its gold is being stored in the vault of the Fed, coming down from 51%. We have the impression this won’t be the last repatriation as the Dutch Central Bank is keeping its shipping route secret ‘in case more gold needs to be repatriated’.
So what was the main reason why the Netherlands brought the shiny precious metal back home? The central bank wants you to believe it’s just an ordinary decision, but believe it or not, the only reason for this move was to restore the confidence of the public in the Central Bank. By publishing this statement, the Dutch Central Bank basically admits that holding gold increases the public trust in the central bank as an institution, and that’s an statement which should not and cannot be underestimated as it basically means that only physical gold can be trusted and that the gold should be stored inside the country. ‘He who owns the gold makes the rules’ once again seems to be up-and-coming again.
The best place to store your gold is obviously in your own back yard, and it looks like the Netherlands aren’t agreeing with the Germans which also wanted to repatriate most of its gold which was stored in the vaults of the Federal Reserve. However, after bringing just a fraction of its gold back to Berlin, Germany publicly stated it would not repatriate any more gold as it ‘fully trusts the Federal Reserve as an institution’ and ‘the Americans…
by Zero Hedge - November 23rd, 2014 9:12 am
Submitted by Tyler Durden.
Sporadic confrontations and violence between protesters and police continued to occur overnight in Ferguson as multiple news agencies report grand jury considering whether to indict the Ferguson police officer who shot and killed teenager Michael Brown is unlikely to meet and render a decision this weekend. The fear, as we have previously noted, is a major uprising as one sign protested, "if the killer cop walks, AmeriKKKa Halts," and as Fox reports, Brown family attorney is managing expectations, "99% of the time the police officer is not held accountable for killing a young black boy," Crump said. "The police officer gets all the consideration." There is, however, another potential reason for delaying the decision's reporting, as VICE reports, business owners in the St. Louis, Missouri area have hired private military contractors to transport guns and gold, fearing their shops will be targeted by looters if a grand jury does not indict.
As Fox reports, a grand jury decision this weekend is unlikely,
The grand jury considering whether to indict the Ferguson police officer who shot and killed teenager Michael Brown is unlikely to meet and render a decision this weekend, sources told Fox News on Saturday.
Those same sources say it is likely the grand jury will wait until Monday to reconvene.
The 12-member grand jury has been considering whether charges are warranted against Officer Darren Wilson, who shot and killed the 18-year-old Brown on Aug. 9 during a confrontation on a street in Ferguson. Wilson is white and Brown, who was unarmed, is black.
On Saturday, the authorities set up barricades around the Buzz Westfall Justice Center in Clayton, which is where the grand jury has been meeting.
Barricades also went up in the shopping center parking lot on West Florissant Avenue in Ferguson, which was where police set up a makeshift command center in the immediate aftermath of Brown's death.
"I just hope it stays peaceful," Freeman said of protests that will follow the grand jury decision. "We all have human emotions, bit there's a way to do things, and violence, you can't get peace from violence."
Crump, the Brown family attorney, seemed doubtful that Wilson would be charged, saying the grand jury process is
by SWW - November 23rd, 2014 1:52 am
Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here's the Happy Thanksgiving Edition of Stock World Weekly!
Picture via Pixabay.
by Zero Hedge - November 22nd, 2014 11:20 pm
Submitted by Tim Knight from Slope of Hope.
From the Slope of Hope: They say be careful what you wish for. And, as is often the case, "they" are right.
As a kid, I wished the world favored the smart. I was a smart kid, and it seemed like the world – at least my world – was dominated by bullies and airheads. Might made right, just like in the times of old. My high IQ and love of learning were no match for popular dolts, so a portion of my childhood was wasted just trying to disappear into the background.
Unknown to me at the time, much of the adult world operated the same way. It didn't take a lot of intellect to have a respectable, enjoyable middle class existence in the world of the 1970s. The willingness to put in a full day's work (or, if protected by a union, a portion of a day's work) was enough to trump the potential impediment of a double-digit IQ. As I've mentioned before, my own uncle had a nice house, an even larger vacation home, and plenty of leisure time, and he worked inside the stink of a Louisiana paper mill.
The world did change, however, exactly as I hoped. My first indication was a cover story of California magazine titled "Revenge of the Nerds" with Steve Wozniak's smiling face and Apple-logo eyeglasses. It turns out the grey matter languishing in my head started to have value. At 15 years of age, I began writing articles for nationally-distributed computer magazines. At 16 years old, I wrote my first published book, which was followed by a couple dozen others. I was earning enough money to buy a Porsche in high school. It was suddenly cool – and profitable – to be smart.
The Simple World
This post isn't about my misspent youth, however. I simply use that as a point of reference, because the gap between the fates and fortunes of the "smart" and "not as smart" has become grotesquely large. So much so, I'm starting to yearn for the days when the cavemen among us had some say-so.