According To Russell Napier Which World Has No Volume, No Volatility And Rising Prices? The USSR

There it was --- a real market come and gone in half an hour, like a pregnant panda at Edinburgh zoo. What did it mean and what should you do? You should pay attention to what happens to the direction of prices when volumes surge and markets work. When the veil is lifted, pay attention to what you see beneath. Last Wednesday, in the space of half an hour of active trading, the Treasury market had one of its most rapid rises ever recorded and equities fell sharply. There is a very simple lesson that when the markets finally break through the manipulation they move to price in deflation and not inflation. This is key because it means financial repression has failed. Such repression requires the artificial depression of interest rates but, crucially, it must be paired with boosting inflation above such rates. On October 15th 2014, if only for a few short minutes, market forces broke out and the failure of central bankers was briefly evident.

Frontrunning: October 29

  • Fed set to end one crisis chapter even as global risks rise (Reuters)... you mean, for the third time?
  • Insider-Trading Probe Focuses on Medicare Agency (WSJ)
  • He's sorry: Rajoy Apologizes as New Wave of Graft Allegations Hits Spain (BBG)
  • China could 'punish' Hong Kong over protests, says ex-HK central bank chief (Reuters)
  • Dubai Insists the Boom is Not a Bubble This Time Around (BBG)
  • Bank-Data Sharing Accord Expands Push to Find Tax Cheats (BBG)
  • Deutsche Bank Sinks to Third-Quarter Loss on Legal Costs (BBG)
  • Kim Jong Un Executes 10 Officials for Watching Soap Operas (BBG)
  • French drugmaker Sanofi sacks CEO Viehbacher (Reuters)

Flat Futures Foreshadow FOMC Statement Despite Facebook Flameout

As Deutsche Bank observes, the Fed has been wanting to hike rates on a rolling 6-12 month horizon from each recent meeting but never imminently which always makes the actual decision subject to events some time ahead. They have seen a shock in the last few weeks and a downgrade to global growth prospects so will for now likely err on the side of being more dovish than in the last couple of meetings. They probably won't want to notably reverse the recent market repricing of the Fed Funds contract for now even if they disagree with it. However any future improvements in the global picture will likely lead them to step-up the rate rising rhetoric again and for us this will again lead to issues for financial markets addicted to liquidity. And so the loop will go on for some time yet and will likely trap the Fed into being more dovish than they would ideally want to be in 2015.

"Stop Thanking Me For My Service" – Former US Army Ranger Blasts American Foreign Policy

"Since 9/11, those thank yous have been aimed at veterans with the regularity of the machine gun fire that may still haunt their dreams. Veterans have also been offered special consideration when it comes to applications for mostly menial jobs so that they can “utilize the skills” they learned in the military. While they continue to march in those welcome home parades and have concerts organized in their honor, the thank yous are in no short supply. The only question that never seems to come up is: What exactly are they being thanked for?"

Things That Make You Go Hmmm... Like The Swiss Gold Status Quo Showdown

The Swiss establishment has been reliant upon the public’s ignorance, but now they are up against a formidable opponent in Egon von Greyerz. Not only that, but they can clearly see that, as elsewhere around the world, the public is fast becoming disenchanted with the status quo; and that is potentially very dangerous for these people. What is important to understand here is that if the initiative passes it will be part of the Swiss constitution IMMEDIATELY - as some are suggesting. This means that the government and parliament cannot touch it. Only another referendum can change it. This is proper democracy for you. The closer we get to the vote on November 30, the bigger this story is going to become, and the bigger it becomes, the higher the chance that the yes vote wins. Should that happen, it will undoubtedly set off alarm bells throughout the gold market, as yet more physical gold will need to be repatriated and another sizeable, price-insensitive buyer will enter the marketplace.

The 'Other' Recession Indicator Is Flashing Red

Having disproven the "yield curve is not inverted so there cannot be a recession anytime soon" meme, we thought the following chart of a much more macro-economic-data-related indicator that appears to be a useful timing tool for suggesting recessionary conditions exist would provide some more useful context than an articially-manipulated 'market' interest rate. As Evergreen Gavekal notes, the ratio of coincident-to-lagging conference board indices has an admirable record as a recession forecaster... and is at its lowest level since Sept 2009.

15 Signs That We Live During A Time Of Rampant Government Paranoia

How does it feel to live under a government that is getting even more paranoid with each passing day?  The American people are told that the emerging Big Brother police state is for our safety, but the truth is that it isn’t there to protect us.  It is there to protect them.

Angry Tim Cook Issues Veiled Threat At Retailers Shunning Apple Pay

Despite the mainstream media's effusive celebration of ApplePay - despite numerous payment systems and NFC devices alreadt existing and failing to achieve any paradigm shift - it appears Tim Cook has pushed his company into an area of competition he was not full prepared for. Seemingly expecting the world's retailers to embrace the 'unique' payment system, first Wal-Mart & Best Buy, then CVS and now Rite-Aid have all blocked ApplePay. While proclaiming the success of signing up over a million credit card users in the first 72 hours, Cook seemed ticked off at the retailers who blocked him, "it's a skirmish," he said, as Reuters reports, jabbing "merchants have different objectives sometimes. But in the long arc of time, you only are relevant as a retailer or merchant if your customers love you."

Total War Over The Petrodollar

The conspiracy theories surrounding the death of Total SA’s chief executive, Christophe de Margerie, started the second the news broke of his death. One has better odds of being struck by lightning at an airport then a snow plow, or any other ground support vehicles hitting a plane and killing all inside the plane. Did this direct threat to the petrodollar make this “true friend of Russia” - as Putin called de Margerie - some very powerful and dangerous enemies amongst the power that be, whether in the French government, the EU, or the US? How many other Western executives who dare to help Russia bypass sanctions - and turn it into an energy powerhouse - will die under suspicious circumstances?

Clip Of Unmanned NASA Rocket Exploding Shortly After Takes Off

Several months ago, a Russian rocket, carrying Russia's most advanced communications satellite, exploded on launch and the west was amused at Russia's seeming incompetence, while birthing extensive speculation of the NSA's involvement. Well, moments ago either Karma, or Russian hackers, intervened, and 6 seconds after launch, the NASA unmanned Antares rocket of rocket-maker Orbital Sciences, likewise ended its mission prematurely in a massive flaming fireball.

The Many Ways The State Taxes The Poor

Most defenders of the state assume that government services help the poor. And, sometimes, some poor people do benefit financially from government programs. But there’s a hidden cost: taxation and mandatory programs (Social Security, for instance) that hurt the needy by restricting their choices. Government taxes away income that low-income households could invest in improving their lives. At the same time, state-sponsored benefits create incentives that keep the poor trapped in poverty.

FaceBook Crashing After Hours After Guiding Sharply Lower Q4 Revenue Growth

Update: the reason FB stock is now crashing is because moments ago, the CFO stunned the investing community when he announced that FaceBook costs next year will go up by 55-75% without giving guidance on 2015 revenue. He also announced that WhatsApp, FB's $19 billion acqusition, was "accretive" to the tune of a $232 million loss in the past 6 months. Stock now down over 10%.

Facebook reported that its Monthly Active Users for the US and Canada - the segment that generates roughly half of all FB sales - rose to a record 206 million. Putting that number in context: in the same two countries, there are currently about 155 million people employed. In other words, there are about 1.3 Facebook users for every single employed person in the US and Canada.

Nomi Prins: Why The Financial & Political System Failed And Stability Matters

The recent spike in global political-financial volatility that was temporarily soothed by ECB covered bond buying reveals another crack in the six-year-old throw-money-at-the-banks strategies of politicians and central bankers. The very fact - that without excessive artificial stimulation or the promise of it - more hell breaks loose - is one that government heads neither admit, nor appear to discuss. But the truth is that the global financial system has already failed. The political system that stumbles to sustain the illusion that economies can be built on rampant financial instability, has also failed us. Past presidents talked of a square deal, a new deal and a fair deal. It’s high time for a stability deal that prioritizes the real financial health of individuals over the false one of financial institutions.

Historic Short Squeeze, Biggest In 3 Years, Sends Small-Caps Soaring; Dow Tops 17,000

In a strangely familiar case of deja vu all over again, stocks surged (alone in the cross-asset class world of economic reality) on the day before an FOMC statement. The Russell 2000 has had its best 10-day run in 3 years, best day of the year, and managed to scramble back to its 100- & 200-day moving-average. Dow 17,000 was another key technical level that was achieved. S&P 500 was levitated on volume around 40% below average into the green for October. VIX was banged under 15 and tracked stocks. Away from the equity-vol complex, asset-classes were unimpressed - HY credit, bonds, JPY, and the USD all diverged from stocks. USD weakened slightly, and commodities all gained on the day. TSY yields were up 2-3bps and HY closed practically unchanged. "Most shorted" stocks rose almost 3% - the biggest squeeze since Dec 2011 - smashing the Russell 2000 higher.

FBI Raids Federal Contractor's Home – Has The Government Identified The "Second Leaker"?

Anyone who has been following Edward Snowden’s heroic whistleblowing, and the reporting of Glenn Greenwald on the classified documents that prove egregious violations of the United States Constitution by the NSA, will also be aware of speculation that a “second leaker” had emerged earlier this year. It appears this person may have been identified by the FBI.

This Has Never Happened Before Without A Massive Bubble Bursting

As the chart demonstrates, there has never been a time when the all important leading indicator that is the San Fran housing market (see here for the reasons why) has posted such a steep slowdown in annual price increases without a bubble of some sort, be it the dot com, the first housing or the European sovereign debt bubble, having burst. Will this time finally be different?

Ebola Discoverer Warns Deadly Virus Will Hit China

Having previously warned of "an unimaginable tragedy," Peter Piot, one of the scientists who discovered Ebola, has warned that China is under threat from the deadly virus because of the huge number of Chinese workers in Africa. While offering a silver(ish) lining that the pandemic will be over in 6-12 months, Piot stresses "it will get worse before it gets better," and the director of the London School of Hygiene and Tropical Medicine explained that "widespread screening [of arrivals] in airports is not that effective," and he "assumes that an outbreak of Ebola in China will happen."

Obama Explains What "Quarantine-Like Isolation" Really Means - Live Feed

Having confirmed earlier that Ebola Czar Ron Klain did not take the weekend off, and ensured the American public knows the decisions on what Chuck Hagel called "quarantine-like" isolation (though obviously not quarantine because the polls suggest that word would not play well with core liberal voters) are still under discussion; we anxiously await President Obama to explain how the mixed messages from various government entities and individual states (with Christie re-flopping to strict quarantines again today) all make sense and are not, as Christie said "incredibly confusing."

Forget "Free Trade" - Focus On Capital Flows

In a world dominated by mobile capital, mobile capital is the comparative advantage. Mobile capital can borrow billions of dollars (or equivalent) in one nation at low rates of interest and then use that money to outbid domestic capital for assets in another nation with few sources of credit. Mobile capital can overwhelm the local political system, buying favors and cutting deals, all with cash borrowed at near-zero interest rates. Mobile capital can buy up and exploit resources and cheap labor until the resource is depleted or competition cuts profit margins. At that point, mobile capital closes the factories, fires the employees and moves on. Where is the "free trade" in a world in which the comparative advantage is always held by mobile capital?