Archive for September, 2012

Mid-Day Update

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

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Austerity Programs Hit France; Marchers Demand Vote on Treaty; Hollande Reneges on Campaign Promise

Courtesy of Mish.

Following protests in Portugal, Spain, and Greece, a wave of Leftists march in Paris against austerity.

Thousands of leftists marched through Paris on Sunday demanding a referendum on the EU’s new fiscal discipline treaty in the latest of a series of anti-austerity protests in countries hit by the eurozone crisis.

The demonstration, the biggest political rally in France since May elections brought Socialist president François Hollande to power, followed protests on the streets of Madrid and Lisbon on Saturday.

The communist-backed Left Front and 60 other organisations backing the Paris march said tens of thousands of supporters turned out for the protest, timed to coincide with the opening this week of a parliamentary debate on ratification of the fiscal treaty, which Mr Hollande had originally vowed to renegotiate.

Jean-Luc Mélenchon, the Left Front leader, said austerity policies were “dangerous for all the people of Europe”. Demanding a vote on the treaty, he added: “Democracy is sicker than we thought.”

analysts worry that the recent upsurge in political unrest in Portugal, Spain and Greece – where the neo-Nazi Golden Dawn party has risen to third in national surveys – could be a sign of more trouble ahead as repeated rounds of austerity bite even further into daily lives.

“The cracks are showing in Spain’s social and economic fabric,” said Nicholas Spiro, a London-based sovereign risk consultant. “The risk is that in seeking to retain as much domestic ownership of the terms attached to any [EU rescue] programme, the government [of prime minister Mariano Rajoy] overdoes it and sparks an even more intense social and political backlash.”

In Portugal, tens of thousands of trade unionists turned out in Lisbon’s central square for a peaceful protest against terms of the country’s €78bn EU-IMF bailout.

Greek unions have also vowed to hold big protests if the government moves forward with a new €13.5bn austerity programme agreed last week by the coalition government.

The recent upheavals in Portugal – where there had been widespread bipartisan support for the bailout since it was launched 16 months ago – has come as a particular shock to eurozone leaders, forcing Lisbon to reverse a rise in social security taxes designed to hit mandated budget targets.


Hollande Reneges on Campaign Promise

Recall that Hollande ran on a platform to rework the Merkozy Treaty.



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Exposing China’s Shadow Banking System

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

We have in the past attempted to take on the gargantuan task of exposing the multi-trillion Chinese Shadow Banking system (not to be confused with its deposit-free, rehypothecation-full Western equivalent), most recently here. Alas, it is has consistently proven to be virtually impossible to coherently explain something as decentralized and as pervasive as an entire country’s underground economy, especially when the country in question is the riddle, wrapped in a mystery, inside an enigma known as China. Today, however, courtesy of AsiaFinanceNews we get a report as close as possible to the most comprehensive overview of what may soon be (especially if rumors of tumbling Chinese municipal dominoes are correct) the most talked about subject in the financial world: China’s Shadow Banking empire.

From Chinese Shadow Banking System

China presently has five state-controlled megabanks operating within the supervision of the central government, of which the government is a majority shareholder, and seventeen additional “shareholder banks.” Because China’s state banking sector operates as a direct subsidyfunding channel for state-owned enterprises (as opposed to acting in the capacity of risk analytics based credit institutions), the largest state-owned banks have required periodic recapitalization every decade over the past sixty years as the constant generation and cumulative exposure to non-performing loans exceeds the banks’ total equity. The circumstances comprising the present situation, however, will include monetary exposure by international asset management firms which have acquired both direct equity-stakes in the banks as well as exposure to Hong Kong-listed shares.

 

State Control and Politically Mandated Loans

 

The banking system is generally considered to represent the weakest link in China’s political economy. Loans are typically a form of direct subsidy by the central government to the various state-owned enterprises. According to Victor Shih, a professor at Northwestern University who specializes in China’s political economy and is considered an expert on China’s banking system, prior to 1997 there had been no comprehensive audits, nor general ledgers, nor any capital stock at any of the five largest banks, as such was considered unnecessary. The central government, which controls 98% of China’s financial sector, maintains control over the banks in order to finance various political and socio-economic policy objectives, maintain capital controls and set fixed interest rates, comprising in effect a self-referential sector,  resulting


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Investor Sentiment: Repudiation?

Courtesy of ZeroHedge. View original post here.

Submitted by thetechnicaltake.

The repudiation by the markets of Federal Reserve policy is almost complete. Economic numbers continue to deteriorate, but from the beginning, Fed policy has not been about the economy. The markets have benefited from QE, and the current run up in asset prices prior to QE3 would suggest that investors quickly learned a winning behavior over the past 3 years. If the markets convincingly break the QE3 announcement lows, then QE3 is a failure for both the markets and the economy. The Bernanke put will be considered dead. If so, both asset prices and the economy will likely sink. Of course, the market will do its best to create that bullish spin. However, there will be little help from the sentiment picture as the data remains consistent with a market top or the late stages of the rally. There are too many bulls, and company insiders remain net sellers.





Goldman’s Clients Are Skeptical About The Effectiveness Of QEtc., Worried About Inflation

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

While it is just as perplexing that Goldman still has clients, what is most surprising in this week’s David Kostin “weekly kickstart” is that Goldman’s clients have shown a surprising lack of stupidity (this time around) when it comes to the impact of QEtc. Shockingly, and quite accurately, said clients appear to be far more worried about the inflationary shock that endless easing may bring (picture that), than what level the S&P closes for the year. Incidentally with Q3 now over, and just 3 months left until the end of the year, Goldman’s chief equity strategist refuses to budge on his year end S&P forecast, which has been at 1250 since the beginning of the year, and remains firmly there.

From Goldman’s “Conversations we are having with clients: QE has equity investors asking about inflation

QE has succeeded in increasing asset prices and inflation expectations but has not convinced investors to raise their US growth expectations. Instead, equity investors have expressed concern about inflation risks while both gold prices and implied inflation rates show similar shifts. During the 1970s, US core inflation averaged 6.5% and impacted equity performance: the S&P 500 rose in 7 of 10 years by an average of 8% per annum, Energy and high yield sectors outperformed, and consumer sectors lagged.

The response to open-ended QE has been mixed. While asset prices have risen, so have inflation expectations and the performance of growth-sensitive assets shows skepticism about QE’s effectiveness.

Asset markets are giving the Fed credit for being able to reduce risk premium and inflate asset prices but have been unwilling to increase growth expectations. Equity investors have benefitted from higher asset prices, are concerned about slow growth, and are beginning to fret about inflation risk. A 1970s case study of equities and inflation is generally intuitive: equity prices rise in nominal terms, Energy and high yield sectors outperform, and consumer sectors lag the market.

Declining risk premium has driven the S&P 500 rally as negative earnings revisions continue and growth expectations have not improved. We estimate the S&P 500 Equity Risk Premium (ERP) has declined 20 bp to 7.2% this month (Exhibit 4). All else equal, that move equates to a 5%  move in the index. Not surprisingly the Europe ERP has also fallen significantly. Investment Grade Credit Risk Premium…
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EL PReSiDeNTe……….

Courtesy of ZeroHedge. View original post here.

Submitted by williambanzai7.

EL PRESIDENTE WRESTLING

 

.
AMERICAN CRONIES

 

.
MITT BOMBHEAD

 

 

.
NDAA UBERMENSCH

 

.
VISUAL COMBAT BANZAI7





Is The Money-Laundering Driven Real Estate “Boom” Ending?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

One by one all the money-laundering loopholes in a broke world are coming to an end.

First it was Swiss bank accounts, which for centuries guaranteed the depositors absolute secrecy, and as a result saw money inflows from all the wealthiest savers in the world, who felt truly safe their wealth (obtained by legal means or otherwise) would not be redistributed forcefully. In the ecosystem of finance, Switzerland was the depositor bank. Then 2008 happened, and starting with the US, shortly to be followed by every other insolvent country, demands were issued for a full list of people who had used Zurich and Geneva bank vaults to avoid the risk of asset taxation, capital controls and confiscation on their own native soil. The result was the end of the Swiss banking sector as the ultimate target of all global money laundering. In the ensuing power vacuum, others have sprung up to take its place, most notably Singapore, but its days as a tax-haven are numbered by how long it takes China to fall face first into a hard landing at which point no saving on the Pacific seaboard will be safe.

Now, it is the turn of real estate.

While hardly a secret, for decades the ultra-luxury housing segment in any country was the target not so much of local wealthy individuals and business, but foreigners, for whom the grass was always greener, and sought to put their money into “hard assets” abroad to save it from local confiscation. After all, it is far easier to be sued and prosecuted by your own government than a foreign one. Two very vivid examples are the most expensive house in Miami ever sold, which two months ago fetched a price of $47 million, which was purchased by “a Russian who bought the home in the name of a U.S.-based limited-liability company” and in the until recently a record $88 million paid for a 15 CPW penthouse for the daughter of Russian billionaire, Dmitry Rybolovlev (bought from Citi’s Sandy “End TBTF” Weill). The record was topped at $90 million paid for a One57 duplex apartment paid by an unknown individual, almost certainly a foreigner.

The common theme here of course is that foreigners come to the US (or London, or Geneva, or…
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With central banks flooding the world with cash, how can Treasuries and stocks sell off? Professional Edition

Courtesy of Lee Adler of the Wall Street Examiner

Here are a few of the key bullet points from this week’s report.

• The Fed’s purchases of $85 billion this month in MBS and net Treasury purchases from Primary Dealers under Operation Twist will be enough to fund almost 100% of new Treasury supply.

• The one chink in this picture is that Primary Dealers aren’t cooperating. They’ve been sellers of Treasuries since June, while everyone else has been buying. That suggests that a turn is coming. The issue is timing, as always.

• Foreign Central banks have shown signs of returning to being big buyers after a year of holding back. A strengthening US economy may be increasing the recycling of dollars by China, OPEC, Japan and other nations who export to the US, who also are motivated to weaken their currencies against the dollar

• US commercial banks have not been big buyers of Treasuries and Agencies lately, but they are no longer sellers as they were for the better part of a year. Even modest levels of buying by the banks adds to market liquidity

• Bond fund inflows have been strong, reaching the highest level since April in the latest reported week. They remain a bullish factor for the bond market.

• Excess liquidity will flood the markets for as long as the Fed provides enough cash to the Primary Dealers to absorb virtually all new Treasury supply while FCBs, banks and the public remain net buyers. Under those conditions, there’s probably not much chance of a big selloff in Treasuries or stocks. Those who believe that a market cataclysm is likely under these conditions are probably engaging in wishful thinking. If Primary Dealers are flipping their Treasury inventory, it means that they will have plenty of cash to deploy elsewhere. A concerted effort by the world’s central banks to rig the markets is likely to be successful until something happens (like a commodities bubble) which forces them to change course.

Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE's Professional Edition risk free for 30 days!

Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution…
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China’s Great Wall Of Suds: Chemical Spill Results In 50 Foot Foam Tsunami

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

This is just the second time in three days that China’s province of Guangdong is being discussed on Zero Hedge. On Thursday we wrote that the mega city of Dongguang, once Guangdong richest, is now on the verge of bankruptcy as China’s hard landing begins to take its toll. Today, we learn that instead of the rivers running red once all hell breaks loose in China, the color will be soapy white. Specifically, following a chemical spill in Xintang, in the provine of Guandong, the result was a 50 foot tsunami of foam which was swept down a river by heavy rainfall, causing widespread panic and evacuations. It also caused the following brilliant explanation from a Chinese spokesman: “People are right to be cautious but it is harmless. It made very large bubbles when it went over a waterfall, but apart from one or two dead fish, it is harmless.” We can’t wait to hear Chinese justifications of mushroom clouds: “aside from one or two billion dead people, they give you a healthy green afterglow“?

More:

This wall of foam sparked widespread panic among locals as it rushed along a river in southern China.

 

The mass of soapy suds blanketed the water in Xintang, in China’s Guangdong province, leading to evacuations along the banks of the river.

 

But officials have now said the only threat posed by the foam – thought to have been caused by chemicals washed into the river – was the possibility of ‘one or two dead fish’ lurking in the bubbles.

 

The bizarre scene is thought to have been caused after heavy rainfall washed a non-toxic chemical deodorant from a household rubbish tip into the river.

 

The bubbles were created when the chemical was swept over a waterfall, officials said.

 

A spokesman said: ‘People are right to be cautious but it is harmless. It made very large bubbles when it went over a waterfall, but apart from one or two dead fish, it is harmless.’

This is how China’s great wall of soap suds looks like:

River of bubbles: The mass of foam sparked panic along the banks of the river in Xintang

Panic’: A local man is dwarfed by the mass of suds floating
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Weighing the Week Ahead: The Debate about Jobs

Courtesy of Doug Short.

Sometimes the political and economic streams converge to determine the agenda.

Prepare for a non-stop debate about jobs.

This week the major data all relate to employment. We also have the first of the Presidential debates, Wednesday night at 9:00 PM EDT. Moderator Jim Lehrer, whom I met when he got an honorary degree in my professor days, has released the topics for the debate and also devised an interesting format. There will be plenty of opportunity for discussion and following up. Neither candidate can expect to give a prepared answer and stick to the script while dodging the main points — especially with Lehrer in charge!

The debate will start with a discussion of economic policy. Employment will be at the forefront. Both campaigns are engaged in driving down expectations. Two examples: “Obama is a great orator.” “Romney has so much recent experience and won most of the primary debates.”

It is a tricky game. You have to praise your opponent so much that any outcome seems good for your side. You must do so in a way that belittles debating skills as not relevant to the actual job. Check out The Hill’s report for details.

I’ll offer some of my own expectations in the conclusion, but first let us do our regular review of last week’s news.

Background on “Weighing the Week Ahead”

There are many good sources for a list of upcoming events. One source I especially like is the weekly post from the WSJ’s Market Beat blog. In contrast, I highlight a smaller group of events. My theme is an expert guess about what we will be watching on TV and reading in the mainstream media. It is a focus on what I think is important for my trading and client portfolios.

This is unlike my other articles at “A Dash” where I develop a focused, logical argument with supporting data on a single theme. Here I am simply sharing my conclusions. Sometimes these are topics that I have already written about, and others are on my agenda. I am putting the news in context.

Readers often disagree with my conclusions. Do not be bashful. Join in and comment about what we should expect in the days ahead. This weekly piece emphasizes my opinions about what is really important and how…
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Zero Hedge

US Regulators Warn Stablecoin Adoption Could Disrupt Economy, Financial Stability

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

A panel of senior financial regulators in the United States has warned the public about the purported risks of stablecoins and cryptocurrencies

...



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Phil's Favorites

Federal Reserve V.P. Grilled at House Hearing on Hundreds of Billions in Fed Loans to Wall Street

Courtesy of Pam Martens

Randal Quarles, V.P. for Supervision at the Federal Reserve, Testifies at House Financial Services Committee Hearing on December 4, 2019

While the Democrats focused on the continuing predatory practices of U.S. banks and the Federal Reserve’s coziness with those same banks, three Republicans at yesterday’s House Financial Services Committee hearing delved into why the Federal Reserve is showering Wall Street’s trading houses with super cheap loans on the pretext that it’s simply part of the Fed’s routine monetary operations.

Since September 17, the Federal Reserve, through its N...



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Kimble Charting Solutions

Health Care & Merck Working A Bullish Breakouts!

Courtesy of Chris Kimble

Health Care (XLV) ETF has lagged the S&P for the past few years. Is the lagging trend about to end? It sure could and we should find out very soon!

This chart looks at the Health Care/S&P Ratio (XLV/SPY), which reflects that it has created a series of lower highs and lower lows inside of falling channel (1). Over the past 6-months the ratio has created a series of higher lows, reflecting out performance of XLV to the broad markets.

The ratio is testing a support/resistance line at (2). If the ratio breaks out at (2), it would suggest that health care stocks wi...



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Insider Scoop

CMA CGM Bolsters Its LNG Fuel Supply With Total Deal

Courtesy of Benzinga

CMA CGM said it signed a deal with France's largest energy firm to supply liquefied natural gas (LNG) to power container ships.

The fourth-largest global carrier by capacity, CMA CGM said the deal with Total's marine fuels division will cover LNG supply at the Marseille-Fos fueling hub in the Mediterranean. Terms were not disclosed.

Total will supply approximately 270,000 metric tons of LNG per year over the next 10 years. CMA CGM said it will be the volume needed for its 15,000 twenty-foot equivalen...



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Digital Currencies

Chinese Crypto Exchange IDAX Locks Cold Wallet As CEO "Goes Missing"

Courtesy of ZeroHedge

By William Suberg via CoinTelegraph.com

Chinese cryptocurrency exchange IDAX has suspended deposits and withdrawals after its CEO allegedly disappeared.

In a blog post on Nov. 29, IDAX, which earlier this week warned it was seeing a run on withdrawals, said the whereabouts of Lei Guorong were currently unkno...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.

Date Found: Tuesday, 09 July 2019, 01:48:48 AM


 

Click for popup. Clear your browser cache if image is not showing.





Comment:
FED has no ammo in the next crisis!


Date Found: Friday, 12 July 2019, 02:38:12 AM
 

Click for popup. Clear your browser cache if image is not showing.





Comment:
YIP Corporate debt blows up when econ...



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Members' Corner

Sacha Baron Cohen Uses ADL Speech to Tear Apart Mark Zuckerberg and Facebook

 

Sacha Baron Cohen Uses ADL Speech to Tear Apart Mark Zuckerberg and Facebook

By Matt Wilstein

Excerpt:

Sacha Baron Cohen accepted the International Leadership Award at the Anti-Defamation League’s Never is Now summit on anti-Semitism and hate Thursday. And the comedian and actor used his keynote speech to single out the one Jewish-American who he believes is doing the most to facilitate “hate and violence” in America: Facebook founder and CEO Mark Zuckerberg.

He began with a joke at the Trump administration’s expense. “Thank you, ADL, for this recognition and your work in fighting racism, hate and bigotry,” Baron Cohen said, according to his prepared...



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Lee's Free Thinking

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

 

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

Courtesy of , Wall Street Examiner

Here’s today’s press release (11/14/19) from the NY Fed verbatim. They’ve announced that they will be making special holiday welfare payments to the Primary Dealers this Christmas season. I have highlighted the relevant text.

The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released the schedule of repurchase agreement (repo)...



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The Technical Traders

VIX Warns Of Imminent Market Correction

Courtesy of Technical Traders

The VIX is warning that a market peak may be setting up in the global markets and that investors should be cautious of the extremely low price in the VIX. These extremely low prices in the VIX are typically followed by some type of increased volatility in the markets.

The US Federal Reserve continues to push an easy money policy and has recently begun acquiring more dept allowing a deeper move towards a Quantitative Easing stance. This move, along with investor confidence in the US markets, has prompted early warning signs that the market has reached near extreme levels/peaks. 

Vix Value Drops Before Monthly Expiration

When the VIX falls to levels below 12~13, this typically v...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

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

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

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...

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