Archive - Aug 7, 2014

Moments ago Bloomberg reported, citing Defense minister Rob Nicholson speaking in Trenton, Ontario, that Canada, a NATO member, will send military equipment to Ukraine. Ukraine will in turn supposedly use supplies to protect eastern border Nicholson speaking to reporters, although perhaps one should ask ISIS where US military equipment that was meant for Al-Qaeda, pardon, Syrian rebels to dethrone Assad ended up...

High-Yield bonds funds saw record outflows of $7.1 billion this week - the fourth week running - as the slow-motion train crash in credit starts to accelerate. As Forbes reports, the huge redemption blows out past the prior record outflow of $4.63 billion in June 2013. The full-year reading is now deeply in the red, at $5.9 billion, with 43% of the withdrawal tied to ETFs. Simply put, everyone in the bond market knew 'not' to sell because liquidity is simply not there; but game theory's first mover advantage finally broke as retail investors run and create a vicious cycle of 'liquid' ETF selling forcing 'illiquid' underlying bond selling... just as we warned here and here. Why should equity investors care? See chart below...

Retiring early means calculating more years into the equation - how much you'll need to fund your lifestyle for as long as you (and your partner) will live. "Once you know your "number," there are only two other steps to commit to memory: Start saving and stop spending. Put another way: Live not just within your means, but well below," says Rick Miller, president of Sensible Financial Planning. Living "well below" your means really is un-American – it goes against the fundamental American cultural values of consumerism and debt.

"War Crimes" ... Recommend International Criminal Court Investigation

A day dominated by geopolitical headlines saw stocks hit 4-month lows, gold jump to 3-week highs, and bond yields tumble to 14-month lows. The Dow made new "sell in May" lows today, now -1.5% from end-April (joined in weakness since then by the Russell). The S&P 500 broke its 100-day moving-average (and did not bounce) as USDJPY broke the critical 102.00 level. The Dow stalled at its 200-day moving-average (16343).  10Y Treasury yields continued to plunge pressing a 2.41% handle - new 14-month closing low-yields. Gold jumped above $1315 closing near the highs of the day (and silver above $20). The USD ended up on the day but JPY carry unwinds continued. VIX broke back above 17 (and remains inverted for the 10th day in a row). Equities continues to catch down to high-yield credit's weakness. A late-day buying-panic, sparked by VIX-slamming, was triggered as S&P futures broke 1900.

No insurance, no penalty appears to be Obamacare's new meme as The Wall Street Journal reports almost 90% of the nation's 30 million uninsured won't pay a penalty in 2016 because of a growing batch of exemptions to the health-coverage requirement. In the interests of socialism, the Obama administration has provided 14 ways people can avoid the fine (on top of exemptions carved out under the 2010 law for groups including illegal immigrants, members of Native American tribes and certain religious sects). The exemptions are worrying insurers, as they could make it easier for younger, healthier people to forgo coverage, leaving the pools overly filled with old people or those with health problems. That, in turn, could cause premiums to rise.

In an unbelievable display of arrogance and self-importance, the Australian government recently announced the most sweeping changes to their national security legislation since 9/11. Basically they’re telling everyone that they should just be afraid… and that the government must spy on citizens in order to protect them. This is how it always happens... and we can watch yet another country slide rapidly into a police state.

Growth in Consumer Credit dropped for the 2nd month in a row (at $17.25bn) missing expectations by the most since November 2013. The March/April credit impulse has now completely faded. Given that "debt is the great bridge between working hard and playing hard in this country," it would seem this news will disappoint Steve Liesman. Revolving credit dropped to its lowest since February as spend-what-you-don't-have appears to be fading also...

Congratulations president Obama, because this is certainly one chart which goes from the bottom left to the upper right you can take full credit for.

Monetary central planning is failing to achieve Keynesian “escape velocity” because it has deeply impaired the engines of capitalist enterprise. Nowhere is this more apparent than in the grotesque financialization of American business that has occurred since the 1980s. As usual, this deformation is rooted in the massive growth of debt carried by non-financial businesses. At the end of the day, there is no mystery as to why trend GDP growth has fallen to just 1.8% per annum since the year 2000 - a rate which is barely half its trend during the previous half-century. Monetary central planning inherently deforms market capitalism by flooding the business sector with cheap debt, thereby turning it into an engine for the redistribution of existing wealth rather than the generation of new growth, jobs and enterprise.

Top U.S. health official are testifying at a congressional hearing to assess the threat from the Ebola virus ravaging Africa. Chairman Smith begins: “The Ebola virus had been contained in one small area of Central Africa for years. Even when there was an outbreak, such as in Uganda, international cooperation was able to prevent a broader spread of the disease. This hearing will examine current international efforts to meet the challenge of the worst outbreak of Ebola in history.” Speakers include CDC Director Tom Frieden...

Do you know of a woman wanting to learn about a different way to survive and thrive in America today?

Charles Arntzen is the Regents’ Professor and Florence Ely Nelson Presidential Chair of the Biodesign Institute at Arizona State University. Dr. Arntzen is known as a pioneer in the development of edible plant-based vaccines, and he has also been a key collaborator on what appears to be a promising new Ebola drug. The only problem is this guy is kind of creepy. In fact, he was apparently caught in 2012 joking about culling 25% of the world’s population to solve the challenging problem of feeding 8 billion people.

"Don't fight the Fed," unless she tells you to sell your favorite idiot-maker momo stock. For a few days, investors were anxious after Yellen's July 15th warning, then a barrage of disgruntled asset-gatherers explained how 'she knows nothing about stock valuations' (but we must trust her every word on the economy). Now - 3 weeks later, Dow and Trannies are down 4%, S&P and Russell down 3%, and Nasdaq down 2% from her warnings... still wanna fight the Fed?

Having admitted that a Russian fighter jet flew within 30 meters of a US spy plane (on the border of Russia) a month ago, The Washington Times reports defense officials confirming Russian strategic nuclear bombers conducted at least 16 incursions into northwestern U.S. air defense identification zones over the past 10 days - an unusually sharp increase in aerial penetrations.