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Gold Tumbles To 2014 Lows As China Unveils Anti-Rigging Benchmark

With a Fed hinting at exit strategies, gold has tumbled to 2014 lows (and almost in the red year-to-date) as traders apparently forget Japan, China, and European central banks continue to (or are set to) print more money into the global reflation trade. It appears that as the West continues to sell 'paper' gold, the East remains enamnored as the PBOC announced this morning:

*CHINA TO FORM SHANGHAI GOLD BENCHMARK, PBOC GOVERNOR SAYS GOLD MARKET IMPORTANT PART OF FINANCIAL MARKET
*SHANGHAI GOLD MARKET HAS TO AVOID SYSTEMIC RISK: PBOC'S ZHOU

Furthermore, traders have noted physical buying interest continues in the Asian region as premiums rise in China and India.



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China's Housing Slump Accelerates, Worst In Over Three Years

While the rest of the world is focused on what any given "developed" (or Chinese) central bank will do to continue the relentless liquidity-driven rally to new record highs, China has bigger problems as it continues to scramble in its attempts to figure out how to halt the slow motion housing crash that has now firmly gripped the nation. So firmly, that according to overnight data from the National Bureau of Statistics, monthly house prices dropped in some 68 of 70 tracked cities, the most in over three years, since January 2011 when the government changed the way it compiles the data.



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Frontrunning: September 18

  • House votes to arm Syrian rebels (Reuters).... aka ISIS
  • Fed Plots Cautious Course on Rate Rises  (Hilsenrath)
  • Scots vote in independence referendum to seal the United Kingdom's fate (Reuters)
  • Yes or No, the Winner of the Referendum Is Brand Scotland (BBG)
  • Draghi Loan Plan Missing Estimates Hampers ECB Stimulus (BBG) - get with the spin, it simply means "Moar QE"
  • Obama Plans to Tightly Control Strikes on Syria (WSJ)
  • IMF warns of risks from 'excessive' financial market bets (Reuters)
  • Russia Praises Ukraine's Autonomy Law for Rebel Areas (WSJ)


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Dollar, Futures Resume Ramp On Both Hawkish And Dovish Yellen Announcement

Yesterday's market reaction to Yellen's commentary was curious: there was none, because when all was said and done the S&P and DJIA traded precisely where they traded just before the show began.  Which, of course, was unacceptable, because one way or another the hawkish for the USD - the USDJPY just traded at the highest since 2008 - statement and conference had to be promptly interpreted for the algos as dovish for stocks - Futures are again just why of record highs - if not so much for the Fed-hated bonds, and sure enough, European equities traded in the green from the get-go even as RanSquawk notes, "there has been no major fundamental catalyst behind the spike higher seen in the morning, although do note that the move comes in the backdrop of the positive close on Wall Street which saw the S&P 500 (+0.13%) touch record highs before paring a large portion of the gains." In other words, the upside volatility in the intraday move is now a bullish catalyst, closing print notwithstanding. And what did US equity futures do? Why they followed Europe higher, with the ES now +8, on what is "explained" as a European move to intraday US futures previously. That, ladies and gentlemen, means we may have finally achieved perpetual motion, because all that would take to send the market higher is... for the market to go higher, etc, ad inf.



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ECB's First TLTRO A "Failure": European Banks Take Less "Free" ECB Loans Than Worst Case Expectation

As part of Draghi's attempt to reflate the ECB's balance sheet by €1 trillion, a key variable was the extension of the LTRO (1&2) program, in the form of the Targeted LTRO, or TLTRO aka LTRO 3 & 4, whose initial take up results were announced earlier today. It was, in a world, a flop. Because while the consensus was for European banks to take anywhere between €100 and €300 billion in nearly zero-cost credit from the ECB (at 0.15%) to engage in carry trades in today's first round TLTRO operation (ahead of the second TLTRO in December), moments ago the ECB announced that banks, which head already been actively paying down the first two LTRO carry programs, of which only €385 billion had been left of over a €1 trillion total at inception, were allotted a tiny €82.6 billion across 255 counterparties.



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It’s Not Just The Police – The Feds Are Also Militarizing Public Schools With Grenade Launchers, M16s & Tanks

"A federal program that has drawn criticism in recent weeks for supplying surplus military gear to local police has also provided high-powered rifles, armored vehicles and other equipment to police at public schools, some of whom were unprepared for what they were getting... The Los Angeles Unified School District stocked up on grenade launchers, M16 rifles and even a multi-ton armored vehicle from the program...  Mr. Zipperman said his department thought it could be useful for evacuations and to save lives in a "sustained incident.""



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Scottish Independence: Politicians Love Democracy So Much They're Trying To Subvert It

The polls in Scotland will close this week on one of the more important elections in recent history... perhaps one of the only elections that actually matters. Every eligible voter has a say, and a simple majority decides the outcome for everyone else. By definition, this is the purest possible form of the democratic process. But that’s not what’s happening. British politicians are scared to death that Scotland will file for divorce; so they’re doing everything they can to influence the outcome of this supposedly impartial democratic process. They’ve spent an incalculable amount of money trying to influence the outcome, effectively subverting a democratic election.



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Citi Explains Why FX Moved So Much More Than Other Markets After FOMC

The Fed came across as somewhat hawkish relative to expectations, according to Citi's Stephen Englander, but FX made an outsized move against high-beta G10 and EM relative to equities buying and moderate money market moves... here's why...



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Thanks To "Title 50", US Boots Are Already On The Ground

"When are actual boots-on-the-ground, not Presidential promise-breaking boots-on-the-ground?" ... when, as The Washington Post reports, those 'boots' are protected by 'legal alchemy' called Title 50... simply put, as Ignatius concludes, "U.S. boots are already on the ground, and more are coming. The question is whether Obama will decide to say so publicly, or remain in his preferred role as covert commander in chief."



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An Appalling Practice Used In Only Two Nations, Of Which The US Is One

Eritrea - a tiny, mostly unheard-of country in East Africa - taxes its citizens who live abroad. Nearly every other country in the world bases its tax system on residency rather than citizenship. This practice has been condemned as “extortion” and a "repressive" measure by an 'authoritarian' government by the media. In Resolution 2023, the UN Security Council condemned Eritrea for "using extortion, threats of violence, fraud and other illicit means to collect taxes outside of Eritrea from its nationals." You may be thinking, "What's the controversy? Eritrea is getting criticized, and rightly so.” But there's another country that does the same...



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Russia To Deploy "Full-Scale Military Unit" In Crimea

Just a day after NATO began military exercises (with troops from the US) near the city of Lviv in Western Ukraine, WSJ reports Russia's Defense Minister Sergei Shoigu is responding to the "rising foreign military presence," near Russia. In a not-so-de-escalatory move, Shoigu explained that NATO's comments were "light-minded" and his ministry's key task now is to "deploy a full-scale and self-sufficient force grouping" in the Crimea region.



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JPY Plunges To 6-Year Lows, Nikkei Tops 16,000 As Japanese Deficit Runs 41st Month In A Row

For the 41st month in a row, the Japanese Trade Balance is in deficit (around JPY1 trillion). Of course, the fact that exports fell 1.3% (but but devalued currency means competitive?) means nothing as all that really matters is the collapsing JPY (now at 108.60) at its weakest against the USD in 6 years. That can mean only one thing - a surging Japanese stock market - as the Nikkei breaks 16,000. What is odd - just as in the US - is the rising equity index (no doubt helped by Japanese pension funds buying JPY393billion in Q2) against a backdrop of plunging indivdidual stocks. Sony is limit down (as we explained earlier) with offers outnumbering bids 8-to-1. And that's Japan...



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The "It Doesn't Matter Until It Matters" Chart Of The Day

Growing concerns about the weakness of breadth in the stock 'market' where, as we noted here, 47% of Nasdaq Composite stocks are down at least 20% from their highs with the average stock in the index in a bear market (down 24%), continue to be ignored by a market that cares nothing for fundamentals. NewEdge's Brad Wisack adds another "it doesn't matter until it matters" chart to the list of worrisome indicators today by noting that "we haven't seen this before..."



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Paul Krugman Explained

Presented with no comment...



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