• Tim Knight from...
    09/01/2014 - 12:24
    Although I never thought it was possible, it makes me angry to write this book review. I'm not angry because I don't like the book. On the contrary, this is the best economics book I've ever...

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Pakistan Faces (Another) Military Coup As PM Charged With Murder

Having slammed the US for "liking only those governments in Muslim countries that are your slaves," opposition leader Imran Khan, just as we warned here, has given the army 24 hours to prepare a broad-based reform agreement on behalf of the government (having been asked by Prime Minister Sharif)... i.e. coup-prone Pakistan appears to be back under military rule (for now). Then things got even more bizarre as WSJ reports, Prime Minister Sharif is to face murder charges related to the killing of 10 Muslim cleric Qadri's followers. Qadriu has agreed to wait 24 hours for the army response before announcing his strategy.



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As If Millions Of European Voices Suddenly Cried Out In Terror: US Threatens More Russian Sanctions



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6 Reasons Why ECB Will Avoid QE As Long As Possible (And Why The Fed Did It)

Yields on European sovereign debt have collapsed in recent months as investors piled into these 'riskless' investments following hints that the ECB will unleash QE (at some point "we promise") and the economic situation collapses. However, Mario Draghi has made it clear that any QE would be privately-focused (because policy transmission channels were clogged) and the appointment of Blackrock to run an ABS-purchase plan confirms that those buying bonds to front-run the ECB may have done so in error. As Rabobank's Elwin de Groot notes in six simple comments that he expects continued "procrastination" by the ECB over sovereign QE even after dismal economic data - and in doing so, exposes the entire facade behind The Fed's QE.



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Martin Armstrong Warns "Ferguson Is The Flash-Point In The Cycle Of War"

"Ferguson is a flash-point. Justifying the shooting is irrelevant. This is no longer a race riot, it is being seen worldwide as war waged by military troops pretending to be police and this crosses the line for that same level of force will be used against white protesters when the economy turns down. The goal is to be so harsh and cruel, like in Donetsk, anyone who disagrees better not show their face."



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"The Buyback Party Is Over" - Albert Edwards Warns The "Market Is Now Running On Fumes"

"two landmark firsts have occurred only recently, with the S&P500 breaking above 2,000 and the 10y bund yield breaking below 1%. Our Ice Age thesis has long called for sub-1% bond yields and I see this extending to the US and UK in due course. It is the equity markets where I have been consistently surprised. QE has been an essential driver for the equity market, providing the fuel for the heavy corporate bond issuance being used for share buybacks. Companies themselves have been the only substantive buyers of equity, but the most recent data suggests that this party is over and as profits also stall out, the equity market is now running on fumes." - Albert Edwards



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New Technology Could End The Debate Over Pipeline Safety

The surge in North American oil and gas production is arguably the most important development in energy over the last decade. That’s the good news. The not so good news is that North America doesn’t have nearly enough oil and gas pipelines to accommodate its 11-million-barrel-a-day output level. Both are good examples of how pipelines – considered the safest way to move oil and gas – have become politicized and scrutinized, and not without reason. Despite their reliability, pipelines still lead to an unacceptable rate of safety mishaps. They corrode and rupture, which threatens workers and nearby communities. In 2013 alone, over 119,000 barrels of oil were spilled in 623 incidents. America’s existing pipelines are getting older and more prone to corrosion, and over the next five to 10 years, there will be a significant increase in the number of new pipelines. And that is creating a huge opportunity for better pipeline safety technology.



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German Security Expert Warns "War Between Russia And The West Is A Real Possibility"

"The de-escalation strategy with Moscow has failed," warns Joachim Krause, Director of the Institute for Security Studies, concluding ominously that "A war between Russia and the West... is a real possibility." As Handelsblatt reports, Krause states "we should not deny this reality any longer."



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Ebola Outbreak Evolving "In Alarming Ways," WHO Warns 20,000 Could Be Infected

More than 20,000 people may be infected with the Ebola virus before the outbreak in West Africa is controlled, warns the World Health Organization. As we noted previously, they believe the costs to fight this epidemic will be $490 million (higher than the previous $430 million estimate) as Bloomberg reports the WHO roadmap released today warns "The 2014 Ebola virus disease outbreak continues to evolve in alarming ways." So far, the virus has infected more than 3,000 people, making it the biggest outbreak ever, and has killed more than 1,550. It’s on a pace to cause more deaths than all previous outbreaks combined.



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The “There’s No Inflation” Checklist

1) Don’t go to school – if you want to learn then turn on CNN.
2) Don’t pay for medical care – if you get hurt then put on a band-aid and drink more water.
3) Don’t pay for transportation – if you have to get somewhere then teleport.
4) Don’t eat – if you HAVE to then cut your food into small pieces so it lasts longer (cough cough cough #McResources cough).
5) Don’t buy a house – if you have to live somewhere then pitch a tent in your local park.



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The "European Close" Trade Goes For 5 In A Row

Yesterday's warning worked out as the moment Europe closed, US equities reversed trend... Today we are rallying once again into the European close - will we get 5 reversals in a row?



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Russian Ruble Tumbles To Record Low Against Dollar

The Russian Ruble has collapsed this morning to its weakest against the USDollar on record. The drop - similar in size to the drop when US and Europe unleashed Sanctions 3.0 - has sent USDRUB to 36.89. Russian stocks are down 2.2% this morning - biggest drop in 3 weeks - and Russian bonds are weaker (10Y +20bps back above 5%). We can't help but think somewhere Shinzo Abe is getting ideas about how to really devalue his nation's currency to competitiveness...



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Ukraine Again Says It Has Destroyed Russian Military Vehicles, Market No Longer Cares

The last time the Ukraine who cried Russian wolf invasion swore it had blown up Russian military vehicles, as part of the humanitarian convoy, it turned out rather quickly it had lied after it couldn't provide any evidence of this. So, in keeping with crying wolves, now is the time for try #2. From BBG:

  • UKRAINE SAYS TWO COLUMNS OF RUSSIAN MILITARY VEHICLES DESTROYED
  • UKRAINE SAYS RUSSIAN MILITARY VEHICLES DESTROYED NEAR ILOVAYSK

Judging by the market reaction, which actually rose on the headlines, it is becoming clear that Ukraine propaganda has lost all market moving abilities, as not even the algos buy the fabricated attempts at escalation.



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Pending Home Sales Drop YoY For 10th Month In A Row

Pending Home Sales fell 2.7% year-over-year making this the 10th month of falling YoY sales. This print beat expectations of a 3.5% decline but last month's data was revised lower to a 4.7% decline. MoM sales jumped 3.3% but the series has been extremely noisy in the last 6 months as the Northeast saw a seasonally-adjusted gain of 6.2% MoM (and Midwest fell 0.4%).



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Argentina Proclaims Peso Devaluation "Obviously Won't Happen" - Just Like It "Vowed" In 2013

May 2013, President Kirchner: ""As long as I'm president, those who want to make money through devaluations, which other people have to pay for, will have to keep waiting for another government,"

Jan 2014: Argentina Devaluation Sends Currency Tumbling Most in 12 Years

Aug 2014: Argentina’s Cabinet Chief Jorge Capitanich said today a devaluation of the peso, "obviously won't happen."

So what's next?



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The Housing Echo-Bubble Is Popping

How do we know when an asset class is in a bubble? When everyone who stands to benefit from the continuation of the expansion declares it can't be a bubble.



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