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How Fractional Reserves And Inflation Cause Economic Inequality

The economic system in which we live today is a crony capitalist system or, we might say, a system of money socialism. And that’s Piketty’s greatest error: to blame capitalism for the negative effects of crony capitalism and money socialism. But perhaps it is no error. Perhaps, he only wants to be loved by politicians and the IMF. I think they love him already, though.


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"Exceptional" - USA Is Number 1 In... Gambling Losses

Last week we highlighted just how "rigged" the casino really is (real casinos - as opposed to the equity markets) and while that was shocking, the USA can be proud of another exceptionalism... As The Economist notes, at $119 billion in 2013, the United States was the biggest gambling loser in the world. However, on a per capita basis, Australia and Singapore top the list.


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S&P Lifted Green For May On Lowest Volume Day Of 2014

Equity volumes were abysmal today... (NYSE lowest in 2014) which means only one thing... a VIX-driven levitation. Bonds sold off at the long-end (30Y +4bps) but the short-end remained bid (5Y -1bp) but did get 5s30s back to 5 week steeps. USDJPY bounced off  its 200DMA (~101.25) but did not really support stocks higher. Credit markets did not buy the exuberance in stocks either. What today's ramp appears to have been was a gap-fill for VIX from Friday's dislocation on a day with no macro data to upset the algo stop-run procession. Gold and silver (along with all commodities) overnight but once the US day session opened, the selling began and PMs closed unch. The USD ended down 0.1% led by modest EUR strength (despite ECB jawboning) and AUD weakness (rumors of downgrades). "Most shorted" stocks rallied almost 3% from Friday's lows (when S&P bounced off its 50DMA) as once again a squeeze manufactures broad index pick-ups.


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Rick Santelli Explains Why The Number 3996 Is Critical For Bond Yields

Forget international capital flows, forget central banks (even though the world's reaction to the ECB enacting such an extreme policy - QE- this far down the 'recovery' raises questions about the entire false state of the world), and forget positioning... Rick Santelli - stunned at the disconnect between stocks and bonds off the February lows... says there is only one number that matters for lower rates - Nasdaq 3996.


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Credit Suisse Reveals The Next "Pain Trade"

First there was "long social-media", then "short bonds", and now - as Credit Suisse notes - the next "pain trade" appears to be building in USDJPY (which is very worrisome for broad risk assets in general).


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The 'Sisyphean' Hope Of Succeeding And The Brevity Of Financial Memory

After little more than a year of legitimate revaluation of equities following the 2007-2009 credit crisis, and more than three years of what will likely turn out to be wholly impermanent – if dazzling – Fed-induced speculation, investors have again pushed the stone to the top of the mountain. Despite the devastating losses of half the market’s value in 2000-2002 and 2007-2009, investors experience no fear – no suffering as a result of present market extremes. There is no suffering because at every step, as Camus might have observed, “the hope of succeeding” upholds them. As we discussed several months ago, that hope of succeeding rests on what economist J.K. Galbraith called “the extreme brevity of the financial memory.” Part of that brevity rests on ignoring the forest for the trees, and failing to consider movements further up the mountain in the context of how far the stone typically falls once it gets loose. The charts below display various journeys of Sisyphus - a chronicle of multi-year, increasingly speculative market advances that terminated in the same set of conditions that we presently observe.


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More Brilliance From San Fran Fed: Existing Home Sales Tumble Blamed On "Rising" Rates

Ironically, the Fed does have a point: rates do impact existing home sales. The only problem is that according to actual, historical data, not some Fed model projection based on ridiculous assumptions, they impact it exactly in the opposite way of what the Fed proposes!


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Bernanke Says "Stocks Have Risen Because The Economy Is Stronger" - Live Feed

At $250,000 per speech, this better be worth it...

  • *BERNANKE SAYS QE WASN'T A PANACEA BUT `AVOIDED DEFLATION'
  • *BERNANKE SAYS EQUITIES HAVE RISEN BECAUSE ECONOMY IS STRONGER
  • *BERNANKE SAYS FED BALANCE SHEET COULD BE KEPT LARGE IF NEEDED

It appears not...


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Fed's Williams Admits "Soft Landings Never Happen... Be Wary Of Excessive Risk"

Fed's Williams and Fisher are talking this morning in an oddly frank (and concerning) manner...

WILLIAMS SAYS 'SOFT LANDINGS' IN MONETARY POLICY NEVER HAPPEN
WILLIAMS: FED NEEDS TO CONTINUE TO BE WARY OF EXCESSIVE RISK
Williams says our extraordinary policies could have adverse consequences down the road
Fisher must be wary of markets potential to overshoot

So, we have had Tarullo (Feb) and Yellen (May) warning of bubbles in small caps and credit and now Williams and Fisher sounding some alarms... Don't fight the Fed! (unless the Fed says 'sell') It seems the market is heeding the message in the short-term...


Tyler Durden's picture

Chart Of The Day: Whose Housing Bubble Is Bigger?

China's or the UK's?


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China Responds To "Ridiculous" Hacking Charges, Warns "Will Harm Relations With US", Demands US "Rectify Mistake"

While we wait (in vain) for the US to lob sanctions at China for doing what Russia has done and amass a military presence on its border with Vietnam, here is what China had to say about the earlier announcement by the DOJ charging China with espionage and "penetrating" US companies (if having nothing to add regarding the NSA). From the wires:

  • CHINA FOREIGN MINISTRY SAYS CHARGES HARM RELATIONS WITH U.S.
  • CHINA FOREIGN MINISTRY ‘STRONGLY REFUTES’ U.S. CHARGES
  • CHINA FOREIGN MINISTRY SAYS U.S. MADE UP FACTS IN SPYING CASE
  • CHINA FOREIGN MINISTRY URGES U.S. TO `CORRECT ITS MISTAKES'
  • CHINA FOREIGN MINISTRY CALLS CHARGES `BASELESS,' `RIDICULOUS'

Because if there was anything China needed in the week in which it is finalizing its "holy grail" gas deal with Russia, is more anatagonism from the Obama administration. And now watch as Cisco guides to a far lower sales number for Q2 on what John Chmabers can only describe as a sudden "air pocket" in Chinese demand for its routers.


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"This Could Only Happen In A Profoundly Corrupt, Dishonest, & Degenerate Society"

Funny how, in the current national rapture of techno-narcissism, it is harder than ever to do something that for generations used to be as simple as pie: to get somebody on the telephone. To some degree, this situation represents the sheer diminishing returns and unintended consequences of technology. In a nation infatuated with technology, these entropic effects are always ignored. We just don’t want to hear about it, and our related infatuation with feel-good public relations bullshit spews a fog of concealment over it. It ought to be self-evident that this could only happen in a profoundly corrupt, dishonest, and degenerate society, because it took the form of a social compact that accepted this sort of behavior as okay.


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Wealth Of UK's 1000 Richest People Increased 15% In Past Year; Equal To 3.5x GDP Of Greece

Confirming yet again that the global "recovery" benefits some (very few) more than others (the non-very few), is the latest news out of the UK where the Sunday Times reports that the 1000 richest Britons now hold a cumulative £519 billion in wealth: a number which increased by 15% in the past year as the real disposable incomes of the non-richest declined. Putting this number in context, the "most well-off Britons now own the equivalent of a third of the country's gross domestic product (GDP)." Another way of looking at it: the wealth of 1000 Britons is 3.5x greater than the GDP of Greece.


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DOJ Accuses Chinese Hackers Of "Penetrating" US Companies - Live Press Conference Feed

In the first case of its kind, US Attorney General Eric Holder has broght charges against five Chinese military officals on charges of economic espionage and other offenses related to computer hacking of US nuclear power, metals, and power industries:

  • *FIVE CHINESE MILITARY OFFICERS CHARGED BY U.S. WITH ESPIONAGE
  • *JUSTICE DEPARTMENT SAYS CHINA HACKERS PENETRATE U.S. COMPANIES
  • *DOJ SAYS ESPIONAGE TARGETED WESTINGHOUSE ELECTRIC, U.S. STEEL, ALCOA, SOLARWORLD

Holder added that the "range of trade secrets and other senstivive business information stolen in this case is significant and demands an aggressive response."


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