Gold Soars Above $1350 As Silver Crosses 100 DMA

The reason why gold just did an upward spike move of the type not seen since the summer of 2011, when it exploded higher by $20 in seconds, is clear - as we noted yesterday, JPM is now actively buying up gold in the market to meet delivery demands. That, and countless stops getting hit, helps. But the most important factor: Paulson, Soros et al finally got out of the yellow metal. That meant there is only upside as the latent selling overhand is gone. As for silver: why not...

Fidelity Asks How Long Can Draghi's Bond-Buying Bluff Hold?

Draghi is a clever man in charge of a pretend central bank (for it’s only equipped to fight inflation, not a banking-turned-sovereign-debt-and-unemployment crisis). He must guess that bond investors will soon figure out that a stateless central bank defending a stateless currency is so hamstrung politically that it carries far less firepower than, say, the Federal Reserve has over the US economy and US dollar. If his outright-monetary-transactions bluff collapses, he may well have other tricks ready to suppress yields on struggling sovereign debt and save the euro (without which there is no need for the ECB). If Draghi is out of surprises, he can be thanked for buying time for politicians to come up with durable solutions to the eurozone’s woes. Oh, that’s another flaw with Draghi’s scheme; it removed the pressure for politicians to act. So they haven’t.

India Bans All Gold Coin Imports, Increases Capital Controls

Not satisfied with raising import tariffs on gold and putting in place jarring new FX flow capital controls, it seems the war on a weakening Rupee continues. We previously discussed the unintended consequence of such actions - including the rise of the gold smuggler - but the latest total ban on the importation of gold coins and medallions is edging India closer and closer to the Argentinian edge of Cristina Fernandez totalitarianism (after the initial ban on sales in June). In an effort to "moderate outflows" of Rupee, the Indian central bank slashed the amount of money families can send out of the country per year to $75k (from $200k) and limited overseas investment to 100% of net worth (from 400%). "We will leave no stone unturned" to control the current account deficit and stabilize the rupee, the finance minister warned; which of course removes any hope that monetary easing to revive growth will occur anytime soon.

Guest Post: How The Corrupt Establishment Is Selling Moral Bankruptcy To America

The American narrative is quickly changing. There has long been criminality and degeneracy within our government (Democrat and Republican) and the corporate cartels surrounding it, but what we are witnessing today is the final step in the metamorphosis that is totalitarianism. The last stage accelerates when the average citizen is not just complicit in the deeds of devils, but when he becomes a devil himself. When Americans froth and stomp in excitement for the carnival of death, and treat the truth as poison, then the transformation will be complete.

As Egypt Burns, Obama "Strongly Condemns" Violence From Martha's Vineyard Vacation House

Those damn Egyptians are so inconsiderate: first they non-coup just when John Kerry is busy honing his sailing skills. Now, the non-coupy country breaks out in civil war just as Obama is on vacation in Martha's Vineyard. Well, Egypt may be important enough to serve as a middleman when the US pays Lockheed Martin using Egypt as a dumb intermediary, but is obviously not important enough for Obama to cancel his vacation. Moments ago in an audio-only presentation (couldn't russle enough Martha's Vineyardians for the podium behind him? Were his sleeves rolled up? Was he reading from paper or a teleprompter? The people demand to know), Obama joined Kerry in "strongly condemning" the violence that according to some has already spilled over into all out civil war.

Great Rotation From Bonds Into Stock... Shorts

So rising rates are "a positive"? The Fed would "never allow" rates to rise unless all is well with the world? Well it seems the 10Y yield smashing to new 2Y highs along with some mixed economic data (and a TIC dataset showing the rest of the world is losing confidence in the bond) is enough to set investors rotating out of stocks and bonds and into cash (as the USD surges). The S&P is at one-month lows. The belly is underperforming as 7Y is +23bps on the week, homebuilders are getting monkey-hammered (-4.3% on the week), and AUD is getting smashed lower as carry unwinds persist. The Dow is holding right at its 100DMA (and the S&P 500 at its 50DMA). After 6 Hindenburgs in 8 days it is perhaps no surprise but we note that here are only 6 New 52wk highs today and 303 new 52wk lows.

Philly Fed Drops Most In 9 Months

From last month's cycle-leading 19.8 print, Philly Fed printed a disappointing (but rather preduictably cyclical drop to 9.3). The same pattern we have seen in economic data (post QEs) has happened once again for the fourth year in a row as the headline print dropped the most since November 2012. Missing expectations after such a cognitively reassuring pront last month is hard for some take we are sure but under the surface things are even worse as the average workweek sub-index turned negative, new orders dumped, and both current and futures expectations for number of employees collapsed.

TICsaster: Foreigners Sell More US Securities Than After Lehman Bankruptcy

While Americans were blissfully BTFD in June, and enjoying the media propaganda that "all is well" and the beard has their back (he does, but not in the conventionally accepted way) foreigners were selling. Did we say selling? Pardon, we meant dumping with a vengeance, throwing out the boatload with the bathwater, with both hands and feet and getting to da choppa.

Industrial Production Misses For 4th Month In A Row

Industrial production was unchanged in July, missing expectation of a modest 0.3% rise (making this the 4th miss in a row). Under the surface things are not much better as Consumer goods and non-industrial supplies production both fell their most in 3 months (with only Materials production rising). Capacity Utlization also missed expectations (77.6% vs 77.9% exp.) and has seen the biggest 4 month slide since October 2012 as manufacturing production fell 0.1% on the month (the first drop in 3 months). So how's that H2 recovery shaping up?

Thursday (Un)Humor: The IMF's European Growth Expectations

With all the excitement over France and Germany's emergence from recession based on this morning's advance first-guess GDP data - a recovery-less recovery the likes of which the US has been languishing in for years - we thought it worth a reminder of the hopeful hockey-stick growth embedded in the IMF's forecast for the European Union. Assuming that Europe is still clinging together in 2016, we present the IMF's dreams of the future.. and most intriguingly the OECD's forecast that Germany will grow at a mere 1.1% for the next 50%.

Trifecta Of CPI, Initial Claims And Empire Manufacturing All In Line, And All Pushing The Market Lower

If there was one thing the bulls did not want this morning, it was a goldilocks report in the trifecta of economic data, which included CPI, Initial Claims and the Empire Fed. Sadly, Goldilocks is precisely what they got with CPI printing just as expected, up 0.2% from June, and up 2.0% from a year ago (ex food and energy also in line at 0.2%), claims coming modestly better than expected at 320K vs Expectations of 335K, and finally the Empire Fed offsetting the sligh claims beat by printing at 8.24 on expectations of 10.00, down from 9.46 in July. As a reminder, only a big economic shock could have derailed the Fed's September taper intentions. So far it is not coming, which means only the August NFP report is left.

Hedge Fund Second Quarter 13F Summary

It's a Carl iCahn world, and 13-Fs are nothing more than 45 day old tweets. Also, with Ben Bernanke Chief Risk Manager of the developed world, there is absolutely no point to be invested in hedge funds (why - there is simply no risk, until Ben loses control, then no amount of hedging will help anyone), and as such what "hedge" funds are buying is irrelevant. But since the cottage industry of alphacloners still exists, here, via RanSquawk and Fly, is the full June 30 holding recap of the usual suspects.

Frontrunning: August 15

  • This won't end well: Islamists call Cairo protest march as Egypt death toll mounts (Reuters)
  • JPMorgan Said to Expect Multiple Fines for Whale Loss (BBG)
  • Ex-bosses at JPMorgan unlikely to face charges in 'Whale' scandal (Reuters)
  • China could target oil firms, telecoms, banks in price probes (Reuters)
  • For once, it's not the weather's fault: U.K. Retail Sales Increase More Than Forecast on Heatwave (BBG)
  • Japanese visits to shrine on war anniversary anger China (Reuters)
  • India Fighting Worst Crisis Since ’91 Seeks to Buoy Rupee (BBG)
  • Japan Signals Corporate Tax Cut a Long Shot as Deflation Eases (Reuters)
  • Indonesia Tackles Graft in Energy Sector (Reuters)
  • Merkel Touts Strength of German Economy (WSJ)
  • and... British stuntman who parachuted into London Olympics opening ceremony as James Bond dies in fall (AP)

Wal-Mart Misses, Guides Below Expectations; Blames Weak Consumer Spending, Payroll Tax, FX And Lack Of Inflation

For those who think this article is repost of our May recap of Wal-Mart's Q1 earnings, you are forgiven: after all it was almost a carbon copy: "Wal-Mart Misses Revenue, Guides Below Expectations: Weather Among Factors Blamed." Well, as we expected, Wal-Mart just missed, and guided lower, although at least the company appears not to have blamed the weather for the second quarter in a row. Of course, that does not mean WMT didn't find spacegoats, and while it blamed the usual suspects of consumer spending and FX headwinds, it also accused the payroll tax of being the reason for a 0.5% drop in comp store sales. But didn't economists everywhere say the payroll tax' impact is now neligible? Finally, WMT blames the lack of grocery inflation. Really? Maybe stop cutting the price-equivalent size of your portions and the inflation will materialize.

Boring Overnight Session Redeemed By Latest Japanese Lie; Egypt Death Toll Soars

In a session that has been painfully boring so far (yet which should pick up with CPI, jobless claims, industrial production and the NY Empire Fed on deck, as well as Wal-Mart earnings which will no doubt reflect the continuing disappointing retail plight) perhaps the only notable news was that Japan - the nation that brought you "Fukushima is contained" - was caught in yet another lie. Recall that the upside catalyst (and source of Yen weakness) two days ago was what we classified then as "paradoxical news" that Japan would cut corporate taxes in a move that somehow would offset the upcoming consumption tax hike. Turns out that, as our gut sense indicated, this was merely yet another BS trial balloon out of Japan, which admitted overnight that the entire report was a lie.