Archive - Nov 14, 2014

The initial 330ET ramp took the S&P 500 green for a Friday close - the necessity for confident-spending of all that extra gas-price-cut cash this weekend. But it faded once the initial VIX slam slowed... have no fear... we'll do it again... VIX was clubbed 0.35 points to get 1.7 S&P points and ensure a green close for tonight's Evening News...

Stocks were somewhat of a sideshow to the moves in Bonds, commodities, and FX today. Trannies (Airlines) and Nasdaq (AAPL) led on the week with Small Caps the laggard and Dow/S&P not much better. A 6-7bps plunge in yields from around 10am ET today left Treasury yields only 0-2bps higher on the week. The USD dumped at around the same time, cracking back to unchanged on the week as USDJPY failed at 117. While oil prices lifted modestly today, WTI Crude fell 3.2% this week - 7th week in a row - longest losing streak since 1986 (the last time US oil production was above 9 mm bbl/d). Silver screamed over 7% off its intraday lows today (+4.1% on the day - the best day in 5 months) and gold surged 2.4% on the day (4.1% off the lows) for its 2nd best day in 5 months.  VIX (higher on the week), HY credit, and TSYs all diverged notably on the week from equity 'strength' but today's moves were seemingly driven by Swiss Gold Initiative rumors. It's a Friday so 330ET saw the standard ramp to grab the S&P green and record close (+0.02%)

“Taxes are what we pay for civilized society.” The famous quote by US Supreme Court Justice Oliver Wendell Holmes Jr. is inscribed above the entrance to the headquarters of the IRS. Most people don’t have a clue what he meant, or in what context the statement was made. They simply parrot it around to justify the state’s racketeering behavior. The logic is as twisted as saying “war is the price we pay for peace” or “debt is the price we pay for recovery.” They’re all logical fallacies, and assertions backed by zero objective evidence. This is not how a ‘civilized society’ conducts itself.

We're OPPOSED to Violent Revolution ... AND Socialist Redistribution of Wealth. We're FOR an End to Fiat Policy that Steals from the People and Hands the Loot Over to a Few Insider Friends of .Gov

While we have noted previously that "a cluster of central banking investors has become major players on world equity markets," and the BoJ has recently tripled its direct manipulative buying of stocks (after buying a record amount in August)... the conspiracy-theorist-dismissers will have to close their eyes and ears as the Swiss National Bank admits in its 2013 annual report that it greatly expanded its share of foreign stocks purchased... most notably small-cap companies.

The Fed remains fixated on financial-market feedback – and thus ensnared in a potentially deadly trap. Fearful of market disruptions, the Fed has embraced a slow-motion exit from QE. By splitting hairs over the meaning of the words “considerable time” in describing the expected timeline for policy normalization, Fed Chair Janet Yellen is falling into the same trap. Such a fruitless debate borrows a page from the Bernanke-Greenspan incremental normalization script of 2004-2006. Sadly, we know all too well how that story ended.

"On 30 November, the Swiss will vote in a referendum to decide whether the SNB’s constitutional mandate should be changed to require the central bank to 1) never sell any gold reserves once acquired, 2) store all its gold on Swiss territory, 3) hold at least 20% of its official reserve assets in gold. The likelihood of a yes vote is considerable. The proposal requires a simple country-wide majority to pass, as well as a majority in at least 50% of Swiss cantons. Current polling shows the ‘yes’ campaign with a narrow but clear lead and there are reasons to believe that factors on the day could be favourable for the amendment. If an affirmative vote was recorded, there is little political leeway to delay or dilute implementation."

As somewhat expected the House passed the Keystone XL Pipeline approval bill:

*HOUSE PASSES KEYSTONE APPROVAL BILL 252-161; SENATE VOTE NOV 18

It is relatively clear that the Senate does not have the votes to be able to overturn and thus it will be forced on to President Obama's desk - "to veto" or "not to veto."

I did a post less than a month ago called Won't You Be My Neighbor? which vividly captured a crumbling rustbucket of a "house" that was being offered for $1.8 million.

The USDollar continues its slide since 10amET (now unchanged on the week) as Gold and Silver just legged higher once again. Gold is now over $40 off the day's lows and Silver has broken above $16. Increased chatter about the Swiss Gold Initiative is being blamed for now (as EURCHF tests down to 1.2011 - inching ever closer to testing the 1.20 peg. Oddly, last Friday was also a major melt-up day for precious metals. Treasury yields are also plunging as desk chatter notes limited liquidity - also reflected in the stock markets EKG-like moves.

Whenever investors themselves begin to comprehend that the Fed is now more leveraged than many of the investment banks were when they went bust in 2008, the end game will begin.

Next week, Italy's Beppe Grillo - the leader of the Italian Five Star Movement - will start collecting signatures with the aim of getting a referendum in Italy on leaving the euro "as soon as possible," just as was done in 1989. As Grillo tells The BBC in this brief but stunning clip, "we will leave the Euro and bring down this system of bankers, of scum." With two-thirds of Parliament apparently behind the plan, Grillo exclaims "we are dying, we need a Plan B to this Europe that has become a nightmare -  and we are implementing it," raging that "we are not at war with ISIS or Russia! We are at war with the European Central Bank," that has stripped us of our sovereignty.

‘Gold wars’ are intensifying with just 16 days left to polling day in the Swiss Gold Initiative.  If the Swiss vote to revert to having 20% of currency reserves in gold, the Swiss National Bank will be forced to make huge purchases of gold bullion. Switzerland  and its ‘Gold Initiative’ would contribute to driving the price of gold higher - likely in the short term and contributing to higher prices in the long term. Understanding the important recent past and what has led to the forthcoming Swiss Gold Initiative is important and why we look at it today. This context is all important and is essential reading for all who wish to understand the key issues in the debate, for all who invest in and own gold internationally and for all Swiss people.

It seems the machines are in full stop-hunting mode today. One wonders when regulators will sniff around these 'hunts' finally (just as they did in FX markets - which banks paid minimally for this week).