Archive - Nov 2014

"Do we really need QE every time the market gets nervous? Right now the world is a very vulnerable place... we are in the midst of a big bubble that will - down the line - be referred to as 'The QE Bubble'"

During the month of October, three things happened that destroy any credibility that 'believers' had about the stock 'market' being an efficient discounter of fundamental earnings. Stocks began the month weak on geopolitical fears, concerns about the end of QE, and falling earnings; then Bullard unleashed his "but but but we might do QE4" words and stocks exploded higher. But a funny third thing happened as this malarkey occurred... analysts kept on slashing EPS estimates - in fact they slashed them by more than double the average EPS downgrade of any quarter in the last 10 years... So, if earnings are the mother's milk of the market, central bank promises are the Human Growth Hormone, EPO, Steroid cycle of all-time highs.

In a somewhat stunning announcement, Spain’s State Secretary for Security, Francisco Martinez, said in an address to the parliament, that extremists connected to the Islamic State (the terrorist organization formerly known as ISIS) have been considering using Ebola as a weapon against the West. As RT reports, Martinez notes a close eye is being kept on online chat rooms, where such attacks are reportedly discussed among jihadist groups where “The use of Ebola as a poisonous weapon against the United States” was the topic of conversation. So far US Homeland Security Secretary Jeh Johnson denied these allegations citing "no specific credible intelligence."

Spoiler Alert: No!

Before: "The U.S. economy expanded steadily again during the third quarter, a sign of sustained growth fueled by American consumers and businesses despite mounting concerns about the health of overseas economies."

After: "The U.S. economy expanded at a healthy pace during the third quarter, a sign of sustained growth fueled by government spending and a narrower trade deficit despite mounting concerns about the health of overseas economies."

While the last clause in that sentence maintains the sunshine optimism, it is hardly the same interpretation, is it?

While the Obama administration continues its schizophrenic approach in countering the threat of Ebola spreading on US soil, on one hand demanding that states eliminate mandatory quarantines of citizens in their Ebola response protocol since a ban on travel from west Africa is considered out of the question, while on the other the Pentagon just approved a mandatory 3 week "isolation" of troops returning from Ebola missions, yesterday Canada announced a far more practical solution: America's northern neighbor said it was suspending visa applications for residents of Ebola-hit nations in a bid to prevent the deadly virus from crossing its borders.

Presented with no comment...

Prepare to once again hear the word "decoupling" a whole lot more.

The Doomsday Machine has been unleashed in Tokyo...........

When work is punished and grift is not, is it any surprise that, as The Washington Times reports, nearly 60,000 triple dipping Veterans picked up $3.5 billion in benefits (collecting their military retirement pay; and disability benefits from both the Veterans Administration and Social Security too). The arrangement is legal, but since everyone else is abusing the system, from crony banks to deadbeat dads to squatting slummers, it was only a matter of time before even veterans decided to dip, then dip again and dip some more. Sen. Tom Coburn, noted it was "hard to understand," but perhaps the hardest thing to understand is why it took veterans so long to realize we live in a world without consequences.

Two headlines came across my screen today, which taken together pretty much sum up the effects of policy decisions made by Central Bankers and politicians since the financial crisis. The financial oligarchs got bailed out, and the rich got richer due to decisions made by “leaders” around the globe. As such, the entire planet has now been transformed into a neo-feudal tinderbox.

On the one Hand: "Consumers expect better economic growth and rising incomes in the coming months, pushing a measure of confidence to a seven-year high in October. The University of Michigan said Friday that its index of consumer sentiment rose to 86.9 from 84.6 in September. That's the highest since July 2007, five months before the Great Recession began. Richard Curtin, the survey's chief economist, says that almost six in ten of the respondents said the economy has improved recently, the highest proportion in more than 10 years."

On the other: "Voters are deeply frustrated with the economy as they head to the polls Tuesday for a midterm election Republicans hope will yield them control of the Senate."

If and when a country resorts to having it central bank buy up – the equivalent of – all sovereign bonds it issues, the snake truly eats its tail, and not in a metaphorical sense. Japan eats it children, most of them as yet unborn, to keep its rapidly ageing population contented and in relative wealth, because the alternative would cost Tokyo’s financial-political power cabal their jobs and heads.

This is only going to usher in the next round of the Great Crisis that much faster. Only this time around, entire countries will go bust, NOT just banks.