Guest Post: Economic Policy And The Price Of Gold

Economics isn't a science. It is a mistake to think it would be so. Science does not have schools. Only philosophies have schools. The difference between a science and a philosophy is the difference between seeking truth while honestly admitting you don't know it and declaring that truth is something you define. The distinction between science and philosophy with respect to economics is important because economists have an annoying ability to set policy - policy that affects the quality of your lives.

Another Naval Base Shooting Incident; Two People Shot, Shooter In Custody

There are reports of at least two people who have been shot in Millington. Emergency crews are responding to 5650 Attu which is listed as the Army National Guard recruiting center. We are told the shooter is in custody. A shelter in place order has been given on the base. Multiple ambulances are on the scene.

NQ Mobile Cut In Half In Minutes Following Muddy Waters "Strong Sell" Report

While the recent track record for Muddy Waters has been uninspiring, their "strong sell" report on NQ Mobile this morning has garnered attention since it has halved the stock's market cap in minutes. NQ is now down 50% on the day having been halted numerous times. Still, if you feel like catching this knife, a full 5 out of 5 analysts that cover the stock have 'buy' recommendations with Topeka's Fred Ziegel topping the list at $33.50 (a 200% rise from current levels). Full report below...

Biderman Blasts Barack Obama's Biggest Of The Big Lies

"Inherent in the nature of government itself is the fact that it is incapable of effectively providing services," Biderman blasts, noting that "by 'effective', he means dollars and hours." The TrimTabs CEO is breathless in his beration of "the biggest of the big lies," that continues to be believed by most of America ("given their re-election of Barack Obama" he adds), that government can effectively provide services. The reality is "governments are not capable of getting anything done cost-effectively," and Biderman, focused on Obamacare as a recent example, concludes "its all FUBAR."

Guest Post: Is RV Nation at Risk?

A reduction in retirees' disposable income coupled with a global rise in the price of oil could crimp the assumptions underpinning RV Nation.

French Unemployment Surges As Another "Technical Glitch" Crushes Hopes Of Recovery

When France released its August Jobseekers data in August, and it beat expectations dramatically reversing the trend of ongoing malaise with little to no supporting evidence of 'why', we were skeptical. Fast forward one month and we are almost speechless in that not only are European PMIs rolling over just as we warned but the French jobs data is totally screwed up as yet another technical glitch meant 20,000 'text' messages that went unreplied were responsible for the entire improvement. French Labor Minister Michel Sapin is back tracking fast, admitting pre-emptively that "September's data won't be good... due to the 'statistical incident'." The 50k drop last month has been was bettered by a 60k rise to a new record high for French unemployment.

Meanwhile, In Bitcoin...

Just last week we noted that the cryptocurrency was quietly surging towards record highs once again as the debacle in Washington, China's comments on the USD, and Baidu's acceptance of Bitcoins all interplayed to disrupt what many called he end of Bitcoin following the shuttering of Silk Road. Just yesterday, Bitcoin rose to almost USD235, within touching distance of April's record high... but then this morning, it collapsed to under $175 (as its liquidity reflected NFLX not global FX). The last couple of hours have seen the price bounce back to $210, but if you like high-beta vol, then Bitcoin is the new TSLA...

The Obamacare Debacle: It's Everyone Else's Fault

As the Congressional hearing, to apportion blame for the farce that Obamacare has already become, gathers steam the overwhelming theme from the four witnesses is "it's not our fault," and as much as the Congressmen dive deeply into the process, the more it is clear that the left hand had no idea what the right hand was doing in yet another government-funded SNAFU. The entire discussion can be summed up by CGI's comments that "our portion of the application worked as designed." Indeed, all of the contractors point the finger back at the government's Centers for Medicare and Medicaid as responsible for "end to end testing," and ultimately the #fail.

Are We In The 3rd (And Final) Stage Of The Bull Market?

The risk of a more meaningful reversion is rising. It is unknown, unexpected and unanticipated events that strike the crucial blow that begins the market rout.  Unfortunately, due to the increased impact of high frequency and program trading, reversions are likely to occur faster than most can adequately respond to.  This is the danger that exists today. Are we in the third phase of a bull market?  Most who read this article will immediately say "no."  However, those were the utterances made at the peak of every previous bull market cycle.  The reality is that, as investors, we should consider the possibility, evaluate the risk and manage accordingly. With the current bull market now stretching into its fifth year; it seems appropriate to review the three very distinct phases of historical bull market cycles.  While the current bull market cycle may not be set to end tomorrow; it seems sensible to take a pause to question mainstream beliefs.

Stocks Stumble On $200bn Liquidity Shortfall From Fed's Tougher-Than-Expected Bank Rules

In a tougher-than-expected proposal, the Fed has decided that "internationally active banks" raise their minimum liquidity standards (more than some expected, it would seem by the reaction in stocks).


The Fed seeks comments on this proposal over the next 90 days - which we presume will involve much hand-wringing and jawboning until the shortfall disappears magically with transformed collateral... but for now, it is yet another 'tightening' stance in global policy that will impact 'trading' banks considerably more than 'deposit-taking' banks.

October US Manufacturing Output Tumbles To 2009 Levels

While hardly as followed as the other two key US manufacturing indices, the Mfg ISM and the Chicago PMI, the recently introduced Markit PMI, which comes from the same firm that tracks manufacturing data across the rest of the world, shows that in addition to the sliding job picture in September (and soon October), one other aspect of the US economy that took a big hit in October was manufacturing. As Markit just reported, "the U.S. manufacturing sector grew at its weakest pace for a year in October... based on approximately 85% of usual monthly survey replies. The flash PMI index registered 51.1, down from 52.8 in September, and was consistent with only a modest rate of expansion." Not only was this the lowest headline print in one year, and should the drop continue it would be the worst print since 2009, not only was the New Order index had its weakest number in 6 months, but worst of all, the Output index, plunging from 55.3 to 49.5, had its first contrationary print since 2009!

Baltic Dry Bear Market Index

As much as we loathe saying "we told you so" - especially when it relates to highlighting the fallacious bullshit of one James Cramer - the truth is that just 3 weeks ago we pointed out the fact that the Baltic Dry Index was being heralded as proof of China's (and therefore the world's great recovery) was a mistake. At the time, we noted the temporary nature of the move and now forward markets indicated it was not sustainable; and of course, were met with a chorus of deniers. Well, following a 4.4% decline today, the Baltic Dry Index has now plunged over 20% from its recent peak (and the more crucial Capesize container rates even more) as underlying demand simply cannot keep pace with the massive (overbuilt) ship glut that remains. Added to this is the apparent 'tightening' stance by the PBOC that we have been noting and we suspect, as we warned, the 2011 deja vus will be clear.

Initial Claims Still "Idiotic", Still "Rising Above" As California ObamaVista Glitch Persists

With claims from the backlog in California's systems "glitch" (which began in September) still working their way through the system, one can only imagine the debacle that this data really is as more people filed for unemployment claims that expected for the 3rd week in a row. 44,100 Federal workers applied for claims two weeks ago (and received it we presume as well as their back pay now) but the Labor department notes these claims are not reflected in the total. At 350k, vs 340k expectations, this is the first time since early January that we have seen 3 weeks in a row of missed expectations...

Gold Hits 1-Month High In Aftermath Of Goldman's (And Gartman's) "Slam Dunk Sell" Advice

Just two weeks after Goldman's "Slam Dunk Sell," report, the price of gold is surging once again. Goldman's Currie (in direct opposition to BofAML's Curry) argument that post debt-ceiling, "... with significant recovery in the U.S., tapering of QE should put downward pressure on gold prices," seems like another round of wishful thinking as physical premiums for gold around the world surge to record highs and spot prices reach one-month highs. Of course, while Goldman had a few days of positive reaction after their call, it is none other than Dennis Gartman who provided the bottom-tick in the latest exuberance.

Ordinary Americans Priced Out Of Housing: Institutional Purchases Hit Record, Half Of All Deals Are "All-Cash"

If there was any doubt that the US housing "recovery" is anything but the latest speculative play by deep-pocketed (namely those who already have access to cheap funding) investors, who are now engaged in rotating cash gains out of capital markets and into real estate, on their way hoping to flip newly-acquired properties to other wealthy investors, then the most recent, September, RealtyTrac report will put that to rest. To wit: Institutional investors (purchasing 10 or more properties in the last 12 months) accounted for 14 percent of all sales in September, up from 9 percent in August and also 9 percent in September 2012. September had the highest percentage of institutional investor purchases of any month since RealtyTrac began tracking in January 2011....All-cash purchases nationwide represented 49 percent of all residential sales in September, up from a revised 40 percent in August and up from 30 percent in September 2012. In other words, institutional purchases are now at all time highs, with all-cash accounting for half of all transactions!

Frontrunning: October 24

  • Central Banks Drop Tightening Talk as Easy Money Goes On (BBG)
  • More Democrats voice Obamacare concerns as website blame goes around (Reuters)
  • Contractors Point Fingers Over Health-Law Website (WSJ)
  • Jury Decides Against BofA on 'Hustle' Program (WSJ)
  • Credit Suisse to overhaul interest rates trading business (FT)
  • Home Builders Target Higher End (WSJ)
  • The Many Lives of Iron Mountain (NYer)
  • Busy tourist season nudges Spanish unemployment lower (Reuters)
  • Morgan Stanley Joins BofA in Broker Recruiting Truce (BBG)
  • Ending World’s Longest Nonstop Flight Adds Five Hours (BBG)