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Why Americans Are So Sensitive To Even The Smallest Increase In Prices

In the last year, even the 'smartest men in the room' PhDs with advanced degrees have seen their wages shrink, according to a new study by the Economic Policy Institute. As The WSJ notes, inflation has been low by most measures in recent years, but wage growth for the majority of workers has been even lower. That means even small amounts of inflation have been painful for vast swaths of the workforce. In recent years, one thing is clear: Neither monetary policy nor labor market policies nor fiscal policies have been able to boost earnings for most Americans. Only workers in the 80th percentile and up have seen their wage gains outpace inflation, though not by much.



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Summarizing The West's Russia-Ukraine Propaganda

With regard to the goings-on in Ukraine, quite a few European and American voices piping in, saying that, yes, Washington and Kiev are fabricating an entirely fictional version of events for propaganda purposes, but then so are the Russians. They appear to assume that if their corporate media is infested with mendacious, incompetent buffoons who are only too happy to repeat the party line, then the Russians must be same or worse. The reality is quite different.



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The Fed's "Mutant, Broken Market"

Financial markets are broken. Fundamental analysis and Modern Portfolio Theory are relics of the past. Investors used to care about maximizing a portfolio’s expected return for a given amount of targeted risk. Fed policies have led to (investor) herd behavior that has plunged market volatilities and manipulated asset prices and correlations to lofty levels. The allure of the Fed’s magic spell has lapsed investors into a soporific state of cognitive dissonance, with them focusing more on trying to justify valuations, rather than on the Upside Downside Capture Ratio. Markets have thus mutated into one of two possible combustible states. Either financial assets have all transcended into prodigious bubbles, or stocks and bonds are signifying two completely separate outcomes. Either possibility will have dangerous repercussions for the economy, and for portfolios and investors.



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Pump And Dump VC Style: Kleiner Perkins’ Gambit To Shear The IPO Sheep

That was quick! Last November Snapchat was valued at $2 billion in the private VC market; by Q1 that had risen to $7 billion; and yesterday it soared to $10 billion. Gaining $8 billion in market value in just nine months is quite a feat under any circumstance - but that’s especially notable if you’re are a company with no profits, no revenues and no business model. How much does it cost to manipulate an entire market? Apparently not much. And it’s getting cheaper!



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I Blame The Central Banks

The current bubbles in financial assets -- in equities and bonds of all grades and quality -- raging in every major market across the globe are no accident. They are a deliberate creation. The intentional results of policy. Therefore, when they burst, we shouldn't regard the resulting damage as some freak act of nature or other such outcome outside of our control. To reiterate, the carnage will be the very predictable result of some terribly shortsighted decision-making and defective logic.



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"Markets In Turmoil" S&P 500 Loses 'Crucial' 2,000 Level As Bond Yields Slump

Good news was bad news for stocks (and great news for bonds) today as GDP's best sent stocks reeling early on, only to ramp back magically into the European close. For the next 4 hours, the S&P 500 traded in a 1.5 point range. While stocks dumped and pumped, Treasury yields went only on direction, lower (30Y -3bps today and -8bps on the week). FX markets were less chaotic than yesterday with early EUR weakness leaking back as the US day rolled on (USD -0.15% on the week). Silver, gold, and oil rose on the day (though well off spike highs during the EU session as Russia 'invasion' headlines hit). Copper tumbled the most in over 4 months. While equity markets closed modestly lower (Trannies red on the week), VIX and Credit markets weakened somewhat further.



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Obama Makes Another Ukraine Statement: Live Webcast

In the endless series of public statements by the Chief Golfer on the Ukraine.... situation... which nobody knows exactly what to call, here comes the latest one. Expect the GOTUS to dangle more threats of sanctions, red lines, hash tags, in short an all out European depression, as to how the US will respond to the latest regurgitated story of a Russian "invasion" (at least pre-retraction). The statement is scheduled for 4 pm, so expect Obama to talk around 5 pm.



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Politically Correct War: World Stumped At What To Call Ukraine "Events"

In the USA, instead of "boots on the ground," we have 'humanitarian advisors' on the battlefield - because it's so important to manage the iPad -fiddling public's perception of how hawkish politicians are. However, for the various nations opining upon the ongoing events in Ukraine, finding just the right word is simply stunning... as descriptions of the conflict soften as one more from East to West. However, as Ian Bremmer notes, “Russia and Ukraine as sovereign countries are now at war and it’s going to be very difficult for the United States and Europe to deny that reality.”

 



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A Bearish Sign For Treasurys?

It is no secret that throughout 2014 Bank of America has been actively urging its clients to join the most crowded short trade of the year, the 10 Year Treasury, which also happens to be one of the best performing asset classes year-to-date, and one which just hit 2014 highs. However, with the 10Y yield  plunging, BofA's chief technician, which as is widely known is another words for "momentum chaser" who has over the past year been branded as the new coming of the legendary Tom Stolper thanks to the inverse-accuracy of his calls, has changed his tune, to wit: "the trend in yield is lower." If there was something that could make us nervous about being long TSYs, this is it.



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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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