Michael Pettis Warns China Bulls: "Bad Debt Cannot Simply Be 'Socialized'"

"Excess credit creation is at the heart of much of China’s GDP growth, and why this means that China must choose between a sharp slowdown in GDP growth as credit is constrained, or a continued unsustainable increase in debt.   The key point is that we cannot simply put the bad debt behind us once the economy is “reformed” and project growth as if nothing happened. Earlier losses are still unrecognized and hidden in the country’s various balance sheets."

150 Years Of "Real" Oil Prices

In real terms, the price of crude oil has not been more expensive since the Pennsylvania Boom over 150 years ago...

Guest Post: The Real Purpose Of The IMF

To much trumpeting the IMF have kindly agreed to help out desperate and war torn Ukraine. How wonderful they are we are all meant to think, but the truth couldn’t be more opposite. but in reality the IMF has a very different purpose from that which is stated. If you look at the history of the IMF’s intervention in countries around the world you will see a trail of disaster and looting that repeats time and time again wherever they go.

Full-Time Pain: Mort Zuckerman Says Most Americans "Wouldn't Call This A Recovery"

When we first brought the transformation of the American economy into a part-time worker society in 2010, many scoffed and suggested that when the 'recovery' really gets going the temp jobs will all be morphed into high-paying full-time jobs. That hasn't happened, and in fact, as we noted most recently, it's got worse. As Mort Zuckerman blasts in his rampagingly honest WSJ Op-Ed, "Most people will have the impression that the 288,000 jobs created last month were full-time. Not so." And more directly, "most Americans wouldn't call this an economic recovery." The lack of breadwinners working full time is a burgeoning disaster that we have covered extensively. There are 48 million people in the U.S. in low-wage jobs, resulting, as Zuckerman concludes, "Faith in the American dream is eroding fast."

GLD ETF Holdings Surge Most In Three Years As Gold Has Biggest Daily Drop In 2014

Today saw the mainstream media congratulate themselves over the demise of the anti-status-quo indicator - gold. The precious metal dropped over 2% on the day amid major volumes in futures - its biggest drop in 2014. However, it seems the GLD ETF decided today's dump was the right opportunity to load up on the "put against the idiocy of the political cycle," which saw its largest inflow since August 2011. The ongoing oscillation between the paper and physical markets (amid the chaos that China's Qingdao ponzi has created) appears to have shifted trend as the last 2 months has seen the biggest net inflows in 2 years (since pre-German gold repatriation).

David Stockman Sees "Signs Of The Bubble's Last Days"

The central banks of the world are massively and insouciantly pursuing financial instability. That’s the inherent result of the 68 straight months of zero money market rates that have been forced into the global financial system by the Fed and its confederates at the BOJ, ECB and BOE. ZIRP fuels endless carry trades and the harvesting of every manner of profit spread between negligible “funding” costs and positive yields and returns on a wide spectrum of risk assets. Stated differently, ZIRP systematically dismantles the market’s natural stability mechanisms.

Phoenix Housing Market Hit By Unprecedented Plunge In Demand

The Phoenix housing market has a special place in the heart of housing bubble watchers: together with Las Vegas and various California MSAs, this is the place where the last housing bubble was born and subsequently died a gruesome death which nearly brought down the entire financial system. Which is why the monthly WP Carey report on the Greater Phoenix Housing Market is of peculiar interest for those who want to catch a leading glimpse into the overall state of the bubble US housing market. As hoped, this month's letter does not disappoint. What we find is that while equilibrium prices have been largely flat month over month, and are up 6% on an average square foot basis from a year ago, something very bad is happening with a key component of the pricing calculation: demand has fallen off a cliff.

What Happened To Barclays' Dark Pool Volume After It Got Caught

Barclays almost succeeded in its quest of becoming the top US dark pool at any cost, even criminal: in the week ending June 16 Barclays was second only to Credit Suisse' Crossfinder ATS with 312.1 million total shares traded on some 1.6 million in total trades. Unfortunately for Barclays it should put its ambitions on permanent halt, because as was revealed today by FINRA's new "ATS Transparency" database, Barclays total dark pool volume has plunged by a whopping 37% to under 200 million shares.

Feeling Poorer Through The Power Of Inflation

You have to love how the Federal Reserve downplays inflation when they are the primary source of it with other central bankers for this monetary phenomenon. They continue to play inflation down because it gives them the power to continue to use policies that seem to only aid their banking allies while making working Americans poorer by the day. When you hear that inflation does not exist, simply look at the price of goods and services over the last decade and look at your paycheck. You might care to differ.

Volume-Slump, Gold-Dump And Short-Squeeze Double-Pump Lifts Dow To Intraday Record High

On the heels of Friday's late melt-up, futures opened quietly on Sunday before ramping dramatically higher as Europe opened (which also saw Gold monkey-hammered lower) and then one again as US opened (along with another gold smackdown). In both cases, USDJPY was the 'igniter' of momentum. After last week's best (worst) week for "most shorted" stocks, the US open saw them instantly ramped higher and then again another squeeze pump into the EU close. Notably, the Russell dropped over 0.5% from its opening print as it appears all the buying power occurred in that early short squeeze pump. Shortly after 3ET, AAPL started to fade and then VIX pushed higher (as "most shorted" stocks started accelerating lower). By the close the Dow had lost its record highs, Russell was down 2.65% for July, Gold (and silver) were whacked 2.4% (worst in 2014), oil closed up modestly, USD unch (JPY -0.25%), and Treasury yields only +2-3bps. S&P futures volume ended 30% below average.

Global PMIs: France Worst, UK First

World rankings of June manufacturing PMIs point to GDP accelerating in the U.K. and the risk of the French economy contracting last quarter, according to Bloomberg Briefs' Niraj Shah. The U.K. economy grew by 0.8% in the first three months of the year while French output failed to grow. The French and U.K. economies account for 3.59 percent and 3.4 percent of global output, respectively. Whether one should entrust any faith in forecasting future growth to these soft-survey data is questionable at best but the investing world appears happy to find more confirmation-bias confirming indicators.

BP's Latest Estimate Says World's Oil Will Last 53.3 Years

According to BP, drivers whose vehicles rely on burning oil have a little more than a half-century to find alternate sources of energy. Or walk. BP’s annual report on proved global oil reserves says that as of the end of 2013, Earth has nearly 1.688 trillion barrels of crude, which will last 53.3 years at current rates of extraction.

Fukushima "Cleanup" Has Contaminated Rice Crops 20 Kilometers Away

Remember when Japan and Tepco lied it was in control of the Fukushima disaster recovery, when it lied radiation exposure was manageable (when concerned about radiation exposure, just raise the minimum safe dosage), or when it lied that it had any clue what it was doing when it proposed building an "ice wall" to freeze the radioactive ground water below the damanged plant? Turns out it also lied about the impact of Fukushima's radiation not only on locally produced food (which was served to a government official to "prove" its safety), but also on food as far as 20 kilometers away. According to Japan's Asahi, cleanup work at the Fukushima Dai-Ichi nuclear plant in summer last year "may have" contaminated rice harvested from 14 locations in Minamisoma city, more than 20km north of the reactors.

Draghi Admits Won't Stop Blowing Bubbles Even If He Sees Them

And scene... in what is an oddly honest moment for a central banker, Mario Draghi just admitted there-ain't-no-stopping-us-now:


So BTFD, BTFATH, and BTFWWIII as no matter what, the central bankers do not care about financial stability (or fragility). The so-called macro-prudential policy plan will save the day...which like OMT remains shrouded in a "don't ask, don't tell" Oz-ian mist.

Draghi Jawbones "Appreciating Euro Would Be Risk To Recovery"; Market Shrugs

It appears His word is losing its omniscience. Speaking to the European Parliament, ECB's Mario Draghi unleashes a torrent of negative-now-but-positive-just-around-the-corner attempts to talk down the Euro... and it's not working...


For now, EURUSD dropped 5 pips and rallied back to unch... not exactly what he hoped for...

What Hardcore Pornography Can Teach Us About Asset Bubbles

Exactly 50 years ago last month the US Supreme Court ruled on the now famous case of Jacobellis v. OhioAt stake was whether a French movie with graphic sexual content could be outlawed by the state via its obscenity laws. The court ruled that it could not because the film wasn’t hardcore pornography. How could they tell? In an explanation that has now turned into one of the most famous quotes in court history, Justice Potter Stewart explained that although he could not define exactly what hardcore porn was, “I know it when I see it” Like porn, asset bubbles are also hard to define, but given our economic history, and especially our recent economic history, we know it when we see it, and now we see it everywhere. We all see it. Apparently the only people that don’t see the bubbles are the people creating them.

One Portfolio Manager Speaks: "Nothing Can Make Me Bullish on Stocks Now"

"Stocks are going up for reasons [investors] don't really want to understand," warns Titanium Capital's Philip Manduca. The main reasoning, reflecting on the market's shrug at Portugal's problems is "We have survived so many crises. What is another," but Manduca blasts "It's a cynical approach. The real problem is the guys who have got the dice in their hands keep changing them. They can do whatever they want. They are making new rules all the time." With that background he say there are good reasons for this market to fall and "nothing can make [him] bullish stocks now." While Janet Yellen should "introduce two-way risk" this week, he reminds us that "she is a political appointee... whose job is make sure they stay in power as long as possible." The problem is - US monetary policy is the world's lowest common denominator and has consequences...