Archive - Oct 2014

Put another way, those individuals responsible for running the largest companies in the US, who know more about their companies’ growth prospects and the economy have used the Fed’s policies to cash out.

"Yes, we did extremely well in 1987... What really scared me in October of 1987 was that after Monday’s crash, there was a lot of concern about not getting paid, that brokerage firms would have to liquidate. That was a wake-up call that really helped us to protect ourselves later during the crisis in 2008... [because] you are an unsecured creditor of a brokerage firm... That lesson also shaped my understanding of how fragile the system was. I believe the system was much closer to going down in two days in 1987 than at any point in 2008."

“Because of the success of science, there is a kind of a pseudo-science. Social science is an example of a science which is not a science. They follow the forms. You gather data, you do so and so and so forth, but they don’t get any laws, they haven’t found out anything. They haven’t got anywhere – yet. Maybe someday they will, but it’s not very well developed. But what happens is, at an even more mundane level, we get experts on everything that sound like they are sort of scientific, expert. They are not scientists. They sit at a typewriter and they make up something like ‘a food grown with a fertilizer that’s organic is better for you than food grown with a fertilizer that is inorganic’. Maybe true, may not be true. But it hasn’t been demonstrated one way or the other. But they’ll sit there on the typewriter and make up all this stuff as if it’s science and then become experts on foods, organic foods and so on. There’s all kinds of myths and pseudo-science all over the place."

Mel Watt is one of the most dangerous financial oligarch puppets operating in America today. As Bloomberg reports, "a U.S. housing regulator plans new steps to encourage banks to lend to buyers with less than-perfect credit scores... Watt will also discuss an effort that would allow borrowers to put down as little as 3% of the purchase price." It’s for the good of the people right? He’s a “liberal” so he’s always working for the little guy, right? Wrong...

"It could never happen again... right?"

"This is a market that has been seriously overvalued for some time," exclaims Paul Tudor Jones, "and what we are seeing today is the piercing of the bubble..." adding that "Wall Street was uniformly unprepared for this kind of a drop."

Once in a blue moon officials commit truth in public, but the intrepid leader of Germany’s central bank has delivered a speech which let’s loose of three of them in a single go. Speaking at a conference in Riga, Latvia, Jens Weidmann put the kibosh on QE, low-flation and central bank interference in pricing of risky assets.

Nobody in the economic intelligentsia is implying that the IMF is staffed by paranoid cranks. They continue to ignore and belittle the Austrian school. This pompous and undeserved behavior will go on until it’s too late. In the process, the ivory tower disciples of Keynes will only further prove their intellectual bankruptcy. The average person never trusted them to begin with. And things certainly won’t change now.

What’s He Going To Do … Lobby To Convince Us that Ebola Is Not That Big A Risk?

In late August, we drew the world's attention to the fact that ISIS had acquired three fighter jets when the Iraqi military ran away. Now, six weeks later, as Reuters reports, having been trained by Iraqi pilots who have joined Islamic State,  a group monitoring the war said on Friday, saying it was the first time that the militant group had taken to the air.

With a combined position of nearly $2 trillion in US government debt, against which they hold little or no capital buffer, US banks are now extremely vulnerable to a bond market sell-off.

This past week investors took a blow from a sharp selloff in the financial markets. Now that the correction has occurred, at least to some degree, the question that must be answered is simply: “Is it over?” That is the basis of this weekend’s reading list which is a compilation of reads that debate this point. The bulls remain wildly bullish, believing that this is simply a “dip” in the ongoing “bull market.” The more pessimistic crowd sees the opposite.

Many market participants are looking dumbstruck at the miraculous surge in Dow Transports and Small Caps this week off the bond-short-puke lows of Wednesday morning. The answer - sadly for those who believe this is presaging new new highs and utopia once again - is that this was the biggest weekly short-squeeze in 11 months... and more troubling for the bulls - it ran out of steam today.

Despite a Bullard-bullshit-driven rampalicious surge in the last 36 hours, this is the first weekly close below the 200DMA for the S&P 500 in 2 years and longest losing streak since August 2011. Today was the best day of the year for the Dow Industrials and 4th up-day in a row for the Transports (which ended the week up 3%) as the major indices saw significant divergence on the week. The USDollar closed lower for the 2nd week in a row with EUR strength the main driver. Treasury yields ended the week remarkably stable (30Y -3bps, 5Y -11bps) up 30-40bps above intraday lows on Wednesday. Despite USD weakness, only gold managed gains in the commodity complex. Oil bounced off $80 but ended the week down 3.2% (around $82). VIX was slammed lower at the open today, closing -3 at 22 (+1 on the week).