• Gold Standard I...
    07/28/2015 - 04:17
    Greece has no future, so long as it clings to the euro. The dollar won't servce you much better. A drachma will only harm the Greek people. That leaves one other option.

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5.8 Magnitude Quake Shakes Fukushima

How could the Fed have known?


Of course, we are sure Abe will just rebuild it all, ringfence it with another ice-wall, and welcome athletes from all around the world to his 'stable' nation.

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"Fed Credibility In Tatters", Credit Agricole Laments: "Market In State Of Shock"

The "market is in a state of shock" after the Fed's decision to postpone taper, noted Credit Agricole's David Keeble adding that "Fed credibility and its communication strategy are in tatters." This, as others have noted, will make it many times more difficult to manipulate yields lower in the future as the "Fed is moving to a new way of looking at asset purchases." As we explained in detail 15 months ago, Keeble notes the Fed appears to have clearly signaled that the degree of accomodation is not linked to size of the Fed balance sheet, but that the flow of Fed buying is "very important."

So, it's the flow, not the stock; and that means, as we noted here, that unless The Fed is actively engaged in monetization at every given moment, the impact from easing diminishes progressively; ultimately approaching zero and subsequently becoming negative.

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SEC Head Recused Herself From JPM "Whale" Vote Due To Conflict Of Interest

When the absolutely useless reign of the "captured" SEC head Mary Schapiro came to an end, only to be replaced with former Wall Street darling, former Debevoise lawyer Mary Jo White whose prior Wall Street clients were virtually all financial firms, many said her appointment was an epic blunder, since she would have no choice but to recuse herself out of the majority of SEC enforcement actions. And if not many, then certainly Zero Hedge. Recall from April: "Think the revolving door for Morgan Stanley's diaspora of clutch interests goes only from the private sector outward, with the recent appointment of MS' darling Mary Jo White (who will promptly recuse herself in virtually all major cases involved her former clients at Debevoise for years to come) to head the SEC? Think again. Sure enough moments ago, as part of the SEC's perhaps most important action in history, in which the agency managed to get a confirmation of securities law violation from none other than the largest US bank, JP Morgan, where was Mary Jo White? Why quietly drinking her coffee in some quiet corner of course, for one simple reason: she had to recuse herself as JPM was, you guessed it, a former client.

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Summing Up The Exuberance In One Simple Stock Chart

Having crossed the $1,000 Maginot Line, Priceline.com became the first company in the S&P 500's 56-year history to trade at that level. As WSJ reports, the company reached a high of $1,001, before settling at $995.09, up 2.6%. It's up 60% so far this year. 25 of the 30 analysts that cover the stock still have this firm as "Buy" with a target of $1,112 trading at a P/E of 32. Priceline's shares have flirted with $1,000 before. During the dot-com bubble, it topped out split-adjusted closing high of $974.25 in April 1999. The stock had a meltdown in the years that followed, closing below $7 a share in October 2002. Of course, it's different this time...

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Putin To Seek Fourth Presidential Term In 2018

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Bank of America Closes Silver Short, Says Bearish Precious Metal View Was "Incorrect"

Yesterday it was Goldman capitulating on their near-term gold, er, capitulation reco (expectedly so after gold ripped over $75 in the span of 24 hours). Now, it is Bank of America's turn to close their silver short. To wit: "The Wednesday Bullish Candlestick formations (Bullish Engulfing Candles) in gold and silver say that our bearish view on precious metals now incorrect. Indeed, this is supported by the US $ breakdown and the increasingly constructive environment for risk assets generally. As such, we are cutting our Silver Short and moving to the sidelines. Silver should see a test of long term resistance at 24.24/26.23, in the sessions and weeks ahead while gold should re-test its 1433, August highs. In both cases, watch trendlines at 23.20 & 1375. A close above confirms the bullish candles and upside trajectories." When was the trade put on? September 4.

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Boehner Speaks: "Obamacare Is A Trainwreck" - Live Webcast

Sounds like the 'negotiation' is going great...


And while noting that Obama was willing to 'deal' with Russia's Putin, Boehner added that "not engaging" threatens the US economy.

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Albert Edwards Asks You To Spot The Difference (Hint: There Isn't One)

"I sometimes feel I am in a parallel universe. Maybe I am... It?s like they're on a train which they know to be heading for a crash, but it is accelerating so rapidly they?'re scared to jump off." - Albert Edwards

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The Rich Have Never Been Happier (Relative To The Poor)

The outlook for the economy, based on Bloomberg's Consumer Comfort index dropped to a 13-month low this morning. This must be great news for the bulls in the equity market of course and perhaps nowhere is that better indicated than the record high spread between the 'comfort' of the wealthy and the 'comfort' of the poor. Those with an income over $99,000 per year are the most comfortable they have been in 6 years while the lower incomes (below $40,000) have seen their comfort plunge to one-year lows. It seems, as Druck noted earlier, that the wealth redistribution is having a visceral effect on sentiment.

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Philly Fed Soars Above Expectations, 6 Month Optimism Near Record High

It is unknown whether the Philly Fed was using the BLS' pre-upgrade computers to calculate their diffusion index of broad manufacturing conditions, but the bottom line is that while the Fed is telling the market the economy is deteriorating and is adjusting its GDP forecast accordingly, the manufacturers in the Philadelphia region did not get the memo, and as a result the general business activity number soared from 9.3 to 22.3, more than double the expected 10.3. This was driven by a jump in both New Orders and Shipments, both printing at 21.2, a jump in Inventories to -1.8 from -11.3, as well as the Number of Employees and the Average Employee workweek, which soared from low single digits and negative, to over 10 each. The only negative in the report is that while Prices Paid jumped to 25.3, prices received barely budged. Then again, with the Fed micromanaging everything now, who needs profits when one can just go public and sell stock indefinitely.

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Druckenmiller Blasts "The Biggest Redistribution Of Wealth From The Poor To The Rich Ever"

Reflecting on exactly what was said yesterday, Duquesne's Stanley Druckenmiller is initially perplexed as Bernanke explained 'financial conditions' - not interest rates - have prompted the decision to forestall any taper. His confusion is that financial conditions are actually slightly better than they were in June and "a stock market at an all-time high would suggest we don't have a problem with financial conditions." While he dismisses surveys, the big-money was betting that they were going to taper as is clear from the moves in gold, bonds, and stocks; and it appears the Fed "lost their nerve." In fact, Druck continues, the Fed "blew it... they had a freebie," they could have started the process to "get us off the dope." This action, or inaction, he warns "is going to make it so much harder for the next Chairman to start the process." In fact, he concludes, that from beginning to end - once markets adjust from these subsidized prices - that the wealth effect of QE will have been negative not positive.

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Fraud Fortress: JPM Settles London Whale, Admits To Violating Securities Laws

"By late April 2012, JPMorgan senior management knew that the firm's Investment Banking unit used far more conservative prices when valuing the same kind of derivatives held in the CIO portfolio, and that applying the Investment Bank valuations would have led to approximately $750 million in additional losses for the CIO in the first quarter of 2012." Translated: Jamie Dimon lied to Congress.

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Initial Claims Data Worthless For Second Week Due To Ongoing "Computer Upgrade" Glitches

Economic data may be completely meaningless now that the Fed is openly blowing a bubble without any qualms, but even the Fed at least pretends its policy is guided by said economic data. Which is a problem because for the second week in a row, Initial Claims data is absolute garbage, following an admission by the BLS that "two states" are still working through the claims backlog caused by the "computer-system changeover." Recall that last week's "computer upgrade" was the reason why claims plunged from 323K to 292K (on expectations of 330K). Today, the number was 309K, but instead of indicating any improvement in the economy, and hence a potential Taper catalyst (yes, we laughed too), it merely shows that at least two states have been slow to complete their computer upgrades. According to Bloomberg strategist the computer "issue" may be resolved in the next 2 weeks. Or it may not. If it wasn't such a farce, it would be funny.

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The Fed's Reflexive Catch 22 In One Sentence

"...the path of tapering is going to be tough because every time the market thinks they are going to taper, yields will likely rise and conditions will tighten" - Deutsche Bank

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Eurozone Recovery Fades - Will The U.S. Follow?

It has been a "Summer of Recovery" for the U.S. economy with GDP growth rising from 1.1% in the first quarter to 2.5% in the second and manufacturing surveys showed sharp jumps in new orders and outlooks.  The same occurred in the Eurozone with Markit's PMI reports showing sharp bounces higher and hopes that the recession that has plagued the region was finally coming to an end.  The question of sustainability remains. The recent uptick in the Eurozone has now ended which most likely suggests that the recent pop in domestic production is likely ephemeral.  The next couple of months of data should be telling in the regard and also suggests why employment reports have been much weaker than anticipated. With hopes once again running high that the economy is set to regain "escape velocity" in the coming year there is plenty of margin for disappointment.

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