Archive - Nov 2014

While it is unclear if moments ago the Mississippian Lime Play under south Kansas was the first major shale quake to hit Kansas, or this was simply the first yet to be named shale company going Chapter 11, but moments ago the USGS reported that a 4.8 quake located 30 miles SSW of Wichita as well as a various other smaller quakes in north Oklahoma,shook the two states.

The U.S. and many other economies left the gold standard more than 40 years ago, yet advocates periodically call for its return, saying that it would curtail or prevent inflation. In these brief clips from the St. Louis Fed video series, David Andolfatto, a vice president and economist explains the gold standard noting "most economists believe a return to the gold standard would not be a wise policy," and "under the gold standard, banking panics are more likely to occur," and then pointing out somewhat stunningly that "however, the fiat system employed by the Federal Reserve has been largely successful in maintaining low inflation and price stability." Enjoy...

As today's latest example of pervasive, apparently endless criminality at the world's largest banks, where once again the shocked public is exposed to a culture of sociopathic, unchecked greed and perpetual raping of clients, showed, one is either part of the all too literal "cartel", or one loses money. However, for those who are unfamiliar with the nuances of FX trading, one doesn't even have to be on the other side of the world's most criminal, above the law, cartel of bankers to have no P and only L: the fundamental premise of currency trading, whereby one can and will be stopped out thanks to leverage as high as 50x - by others but mostly by one's own brokers as we learned today courtesy of JPM, Citi, RBS, HSBC and UBS - is the very same reason why as retail FX trader Dan Gratton, a 71-year-old retiree who lives on Social Security in Kingman, Arizona has found out: "Probably the most consistent thing is losing."

As US QE has come to an end, depriving the world of US$1 trillion printed dollars a year, SocGen's Andrew Lapthorne warns, there are still plenty of things for investors to be concerned about. Indeed with asset prices where they are, investment returns look paltry from here on, as not only is there a long list of macroeconomic issues to worry about, but bottom-up firm level indicators are also flashing red. Valuations, as measured by median price to cash flow ratios, are near historical highs, and the spread of company valuations within the market is near historical lows. The implication is that downside risks are mispriced.

Spot the banana republic:

• Nation #1 spends and issues tens of trillions in taxpayer funds and debt, crushing the growth potential of future generations, just to bail out a banking sector full to the brim with criminal "riggers" (as today's settlements once again prove), where bubble mania was so pervasive not a single bank would have survived absent a global central bank bailout, and where bank executives wouldn't bend over for anything less than a million.
• Nation #2 just sentenced two senior officials of a bank that collapsed under (a measly by New Normal standards) $1 billion in debt to 15 years in prison each for embezzlement and fraud.

Nation #1 is, of course, the US (or any other western nation). Nation #2 is Afghanistan.

If you are willing to put in another 30 minutes work per day... perhaps get that round of golf in after 1130ET and then come back for the close... in 17 of the last  21 days (14 of 14), the S&P 500 has rallied from 1530-1600ET...

The vice will close on some cities and states sooner than others, but it will eventually squeeze every city and state with declining revenues and rising fixed costs into default.

"It used to be called Black Friday, then it became Thursday, now it’s a week long...Maybe we should just call it November."

Putting Things In Context ...

The next time stuff hits the fan, will the world be as trusting in Central Banker proclamations? Will we continue to believe these folks are omnipotent? Or will their phony promises accomplish nothing?

A day of contrasts: on one hand, the world just managed to land a human-created vessel on a comet. On the other hand, two window washers are hanging helplessly from the 68th Floor of WTC1.

"The banks have been allowed to investigate themselves," one source familiar with the investigation told Reuters. "The investigated decide what they want to investigate, what they admit to, and how much they will pay."

Presented with no comment...