Archive - Nov 2014

"In a tense confrontation with President Obama’s closest adviser on Thursday, a group of Senate Democrats accused the White House of trying to censor significant details in a voluminous report on the use of torture by the Central Intelligence Agency."

With President Obama proclaiming this morning "it's too early to tell" if a nuclear-deal with Iran is still possible; and apparent confirmation this afternoon that differences are "still significant," the US is said to be discussing extending the nuclear-deal deadline. Yet again no consequences (for a newfound 'ally') and yet again John Kerry finds himself purposeless... and now we hear Vladimir Putin will be calling Iran's Rouhani tomorrow (one can only imagine the topic of conversation).

OPEC faces numerous dilemmas this week as it meets to decide what, if anything, is to be done about falling oil prices. As Goldman notes, consensus expectations have shifted to only expecting a modest cut announcement on Nov 27th. Furthermore, any large cut that would lead to a large price rally would be self-negating as it would enable US producers to hedge 2015 production and sustain elevated production growth.

The “unintended consequences” of the negative interest rate policy will vastly outweigh the perceived advantages of any short term boost to economic activity they may provoke. Given that the failure of these interventions is already absolutely certain, we must be prepared for even more interventions to “fix” the failures produced by the previous ones. Many modern-day intellectuals appear quite keen on abolishing the market economy and replacing it with some form of command economy (just as long as their personal plans are implemented of course). They should be careful what they wish for.

Want to escape a lifetime of debt servitude? Then some of the fields one may want to avoid include drama, music, religion, anthropology, philosophy, psychology and education.

Now, get back to your Kim Kardashian apps...

A central bank was (and still is officially) supposed to be independent of politics, to be a buffer between a society’s long term interests and a politician’s short-term ones. In particular, no-one should issue huge amounts of money to make it look like they were just awesome leaders that make everyone rich, while sinking the future of a society in the process. Today’s central banks do nothing BUT engage in short term policies that keep incumbents as happy as they can be in bad economic circumstances. Central banks have become political instruments that pamper to the tastes of whoever may be in charge on any given day, which is the exact 180º opposite of why they exist in the first place. What drives central bankers in November 2014 is fear, pure and simple, if not absolute screaming panic.

While technicals remain largely meaningless in the global centrally-planned "USSR market" (as penned by Russell Napier, who asked "Which World Has No Volume, No Volatility And Rising Prices?", his answer: the USSR), pattern-seeking carbon-based traders still find refuge in the comfort provided by technical analysis. So for all those who believe past performance is indicative of future results, here according to BofA's MacNeil Curry is how various asset classes perform during Thanksgiving week compared to all other weeks during the year.

All that the Fed, BoJ (Bank of Japan), the Bank of England etc. have been concerned with is the preservation of private banks and the continued propping up of stock markets. None of these institutions really care about the real-world economy, real-world inflation or the ability of individuals to maintain their lives in a prolonged period of economic contraction. When you couple high real inflation with stagnation or reduction in wages over the years since the 2008 crash then real-world buying power of most individuals is drastically reduced. This doesn’t just make people depressed, it makes them angry – hardworking people do not expect or deserve to be thrust into poverty.

The PBOC, which cut rates for the first time in two years on Friday, will have its work cut out for it. And in the worst tradition of "developed world" banks, Beijing will now have no choice but to double down on the very same bad policies that got it into its current unstable equilibrium, and proceeds with a full-blown policy flip-flop, leading to a full easing cycle that reignites the bad-debt surge once more. And sure enough, today Reuters reports citing "unnamed sources involved in policy-making" (supposedly different sources than the unnamed sources Reuters uses to float trial balloons used by the ECB and the BOJ), that "China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions" due to concerns deflation "could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making." In other words, China has once again looked into the abyss once... and decided to dig a little more.

The look at the drivers of next week, without using the word manipulation or conspiracy, or referring to how stupid or evil some people may or may not be. 

Why all of a sudden this quick 'gold fix'?

Sporadic confrontations and violence between protesters and police continued to occur overnight in Ferguson as multiple news agencies report grand jury considering whether to indict the Ferguson police officer who shot and killed teenager Michael Brown is unlikely to meet and render a decision this weekend. The fear, as we have previously noted, is a major uprising as one sign protested, "if the killer cop walks, AmeriKKKa Halts," and as Fox reports, Brown family attorney is managing expectations, "99% of the time the police officer is not held accountable for killing a young black boy," Crump said. "The police officer gets all the consideration." There is, however, another potential reason for delaying the decision's reporting, as VICE reports, business owners in the St. Louis, Missouri area have hired private military contractors to transport guns and gold, fearing their shops will be targeted by looters if a grand jury does not indict.

They say be careful what you wish for. And, as is often the case, "they" are right.

"This last 1900 point Dow Jones push upwards - and the Ebola events leading into it - it was so orchestrated and heightened at critical points but the ascent and push straight up in price, and sideways nonreaction after was completely unlike anything I've seen before.   After going up for a record-breaking amount of time the last five or so years, in a nonlinear exponential mania type of ascent, there should normally be tremendous volatility that follows... After this year and especially this last 1900 point Dow run up in October, and post non-reaction, that I am 100 percent confident that that one buyer is our own Federal Reserve or other central banks with a goal to "stimulate" our economy by directly buying stock index futures."