Gold & A Time Of Universal Deceit

We have forty Centuries of Wage and Price Controls’ and their inevitable failure to draw upon. We know how this game ends, we just don’t know precisely when. As Orwell wrote, "in a time of universal deceit, telling the truth is a revolutionary act.” The reality bears restating: as the good folk of Incrementum rightly point out, "...the monetary experiments currently underway will have numerous unintended consequences, the extent of which is difficult to gauge today. Gold, as the antagonist of unbacked paper currencies, remains an excellent hedge against rising price inflation and worst case scenarios."

Macro Miasma: China 6Mo Highs; Japan/South Korea 9Mo Lows

Tonight's round of baffle 'em with bullshit is courtesy of a diverging AsiaPacific economic picture that is anything but supportive of the 'reality' being painted by China's official PMI (which printed at 51.0 as per expectations at 2014 highs) followed by HSBC China PMI which missed its flash estimate (with employment dropping to 8mo lows). South Korea PMI collapsed to 10-month lows; Aussie PMI faded further into contraction at 48.9; and then Japan's Tankan dramatically missed expectations, tumbling to 9-month lows (only to be followed by a 51.1 Japan print (3-month highs). Just to complete the "picture", Chinese home prices fell for the first time in over 2 years. The result, USDJPY rallies and Nikkei 225 soars 200 points... baffled?

California Housing And The Bubble At Hand

Janet Yellen is an officious school marm. She constantly lectures us on Keynesian verities as if they were the equivalent of Newton’s Law or the Pythagorean Theorem. In fact, they constitute self-serving dogma of modern vintage that is marshaled to justify what is at bottom an economic absurdity. Namely, that through the primitive act of banging the securities “buy” key over and over and thereby massively expanding its balance sheet, the Fed can cause real wealth - embodying the sweat of labor, the consumption of capital and the fruits of enterprise - to magically expand beyond what the free market would generate on its own steam. Dr. Yellen, of course, claims there are no financial bubbles to worry about because the Keynesian bathtub of potential GDP has not yet been filled to the brim. Perhaps she would like to put in a bid for one of these homes...

The Riskiest Housing Markets In America

As homeownership rates tumble, perhaps it is not just the stagnation of income or piling up of 'other debts' disabling any organic buying frenzy; perhaps, as Bloomberg breaks down, it is the realization that real-estate is nothing less than another boom-bust roller-coaster ride. ??When so much wealth is tied up in one asset, the risk -- or stability -- of a local market can mean a lot to a homeowner and Bloomberg has quantified the 'riskiest' (and most stable) home markets in America... not Vegas, not Phoenix, and not LA...

Guest Post: The Language Of Despotism

Long before 1984 gave us the adjective “Orwellian” to describe the political corruption of language and thought, Thucydides observed how factional struggles for power make words their first victims, "Words had to change their ordinary meaning and to take that which was now given them." Orwell later explained the reason for such degradation of language, "Political speech and writing are largely the defense of the indefensible." The bottom-line is that tyrannical power and its abuses comprise the "indefensible" that must be verbally disguised; which seems to have never been more appropriate than now in the stream of 'disguised' words we are fed every day...

Japanese Man Self-Immolates Over Abe's Increasingly Militarist Shift

Under Article 9 of its post-war pacifist constitution, Japan is blocked from the use of force to resolve conflicts except in the case of self-defense; but, as The BBC reports, Japan's Prime Minister Shinzo Abe says he wants a new interpretation of the constitution to be agreed on. This has brought major protests in Japan, climaxing this weekend when a man set himself on fire in central Tokyo in protest at a proposed law which could allow Japan to deploy its military overseas. With stocks falling, JPY strengthening, an economy collapsing, and a surging disapproval rating, it seems Abe needs a 4th arrow - war?

Et Voila: World War Three

Whoever really runs things these days for the semi-mummified royal administration down in Saudi Arabia must be leaving skid-marks in his small-clothes thinking about Abu Bakr al-Baghdadi and his ISIS army of psychopathic killers sweeping hither and thither through what is again being quaintly called “the Levant.” ISIS has successfully shocked the world over the last two weeks by negating eight years, several trillion dollars, and 4,500 battle deaths in the USA’s endeavor to turn Iraq into an obedient oil dispensary. Things are happening at lightning speed over in the region and beware of how the turmoil spreads from one flashpoint to another.

Ukraine President Declares End To Cease-Fire; Vows To "Attack & Liberate Our Land"

As propogandists prepare their "it's the other guy's fault" press releases, Ukraine's President Poroshenko issued a statement declaring the cease-fire over...

  • *POROSHENKO SAYS UKRAINE TO END CEASE-FIRE IN EASTERN REGIONS
  • *POROSHENKO PLEDGES TO MOVE AGAINST REBELS, 'FREE OUR LAND'
  • *POROSHENKO BLAMES REBELS FOR FAILURE OF PEACE PLAN IN UKRAINE
  • *POROSHENKO SAYS MILITANTS VIOLATED CEASE-FIRE OVER 100 TIMES

Furthermore, his promise to "attack and liberate" the land and resumption of the "anti-terrorist" operations, means civil war is back on (and what appeasrs to be martial law) as he explains Armed Forces, National Guard, the State Border Guard Service, Security Service received appropriate instructions.

Obama Lied: US Sending 300 Additional Troops Into Iraq, Including Detachment Of Helicopters And Drone Aircraft

The lukewarm war waged by the Nobel peace prize winner is getting warmer by the day. Just out from Reuters:

  • UNITED STATES SENDS UP TO AN ADDITIONAL 300 TROOPS INTO IRAQ, DETACHMENT OF HELICOPTERS AND DRONE AIRCRAFT - PENTAGON

Note that "this time" it is not just "military advisors" but outright troops: According to the Pentagon, the deployment is “separate and apart” from military advisers deployed to Iraq.  This force is deploying for the purpose of protecting U.S. citizens and property, if necessary, and is equipped for combat. This force will remain in Iraq until the security situation becomes such that it is no longer needed,” Obama says in letter to Congress.

The A-Z Of Foreign Governments That The NSA Is "Authorized" To Spy On

You know you've made it when you land on the official "yes, you can spy on them" NSA list. As WaPo reports, this exhibit lists the 193 foreign governments as well as foreign factions, political organizations and other entities that were part of a 2010 certification approved by the Foreign Intelligence Surveillance Court. These are the entities about which the NSA may conduct surveillance, for the purpose of gathering foreign intelligence. One thing comes to mind... what about Canada?

The Stock Market's Seven-Year Itch

"If past is indeed sometimes prologue, this simple chart might be hinting that a rally similar in arithmetical range and time-span – if not in percentage gain – to the Tech bubble itself is becoming dangerously overripe and that, if so, the most propitious time to effect an exit is not when the fat lady interrupts her warbling of the anthem to shriek, 'Fire!' at the audience instead."

Shorts Squeezed Most In 11 Months As Russell Surges But Outperformed By Gold In H1

Gold is the best performing asset in H1 2014 (just beating crude oil). The USA is the worst-performing macro-economy in the world's majors in H1. The S&P 500 is up now 6 quarters in a row - its best run since 1998. The Russell 2000 had its best month since September but Trannies are leading the Dow by over 900bps year-to-date. "Most shorted" stocks had their 'best - biggest squeeze' month in 11 months. Gold and silver had great months. Today saw stocks rally then fade and bond yields rose then fell (down 1-2bps). The dollar slipped markedly on the day to 2-month lows as commodities surged (ex Oil) with Gold, silver, and copper all reaching multi-month highs (amid short-covering and CCFD unwinds). VIX closed the month higher.

Forget 'Shrugged'; Atlas Just May Throw Up His Hands

Financial markets do the one thing better than nearly any other form of protest or lauding of government policies. When the financial markets are falling that’s a tell-tale sign something somewhere is wrong. Same for the lifting, where the rise lifts all giving policy makers as well as the general public at large explicit feedback of what is, as well as, what’s not working. Yet, once those indicators become an adulterated vehicle with the ability to mask true economic information, everything is lost. Just how pungent does today’s economic corpse need to stink before everyone understands it hasn’t been resting, or recovering, but has been dead for who knows how long? With a print of nearly 3% negative GDP, sustaining, or plodding along, or any other descriptor stating “recovering” is ludicrous.

President Obama To Dictate His New 'Executive Action' On Immigration Reform - Live Feed

It's been a busy day for President Obama and he needs a win... a bright shiny PR moment, surrounded with immigrant children explaining how he is the Pied Piper that will save them all from the despotic servitude they come from. In an unplanned press conference President Obama will address his immigration reform at 1450ET through executive action. No lesser man than Cantor-buster Dave Brat opined that the President's policies "sound nice", like "the Kids’ Act, the DREAM Act, the ENLIST Act," but did little to address the growing influx of children. “The reason we have those thousands crossing the border is because of poor policy in the first place,” Brat added. We are sure Obama disagrees - besides, this has to be good for GDP, right? - The Broken Border Fallacy.

Gold Spikes To 3-Month Highs

It appears the same 'contagion' that is driving copper prices higher is also impacting gold and silver this morning. As we have noted previously, the CCFD unwind drives synthetic short (hedge) covering and inevitably rolls down the curve to drive spot strength (as the paper gold market tail wags the 'physical' market's dog). Gold is at 3 month highs and silver getting close...

WTF Chart Of The Day: "Holy $340 Billion In Quarter-End Window Dressing, Batman"

Behold: a record $340 billion in reverse repos submitted by the world's financial institutions with the Federal Reserve, an increase of $200 billion overnight, and amounting to a record $3.5 billion on average among the 97 operations participants. Considering this is a clear quarterly event, it goes without saying that all the reverse repo is, is a quarter-end window dressing mechanism underwritten by Mr. Chairmanwoman itself.

Europe Gives Bulgaria A Bank System Lifeline As Battle Over "South Stream" Pipeline Heats Up

Earlier today Reuters reported that the European Commission said on Monday it had approved a Bulgarian request to extend a credit line of 3.3 billion levs ($2.30 billion) in support of banks that have come under speculative attack. “The Commission concluded that the state aid implied by the provision of the credit line is proportionate and commensurate with the need to ensure sufficient liquidity in the banking system in the particular circumstances,” the EU executive said in a statement. The statement said Bulgaria’s banking system was “well capitalised and has high levels of liquidity compared to its peers in other member states. For precautionary reasons, Bulgaria has taken this measure to further increase the liquidity and safeguard its financial system”. The move follows runs by jittery depositors on two major Bulgarian commercial banks in the space of a week. And while this latest backstop of the Bulgarian bank system should provide a respite from bank insolvency fears (if only for the time being), one wonders about Europe's true intentions.