Archive - Oct 2015

Gold will also be vulnerable towards the end of an interest rate tightening cycle as was the case in January 1980. Today, central banks including the Fed  are having difficulty raising interest rates in even a small nominal way.

It has been a while since Icahn, who is still looking for a $200+ print on AAPL stock courtesy of corporate buybacks, issued a "no brainer" investment alert. He did that moments ago, when he revealed a "large position" in AIG, whom he is now urging to follow John Paulson's advise in order to hit a $100/share price, by doing two things: "Pursue tax free separations of both its life and mortgage insurance subsidiaries to create three independent public companies" and to "embark on a much needed cost control program to close the gap with peers."

First it was wildfires, then it was unprecedented flooding, and now it is earthquakes.  In the past two weeks alone, more than 400 earthquakes have shaken San Ramon – a small city that sits approximately 45 miles east of San Francisco.  Never before have so many earthquakes been recorded in that area in such a short span of time. 

With EURUSD having crashed to a 1.09 handle, some would say Draghi's work is done (in terms of crushing US corporate revenues) but there is a bigger problem for the ECB head. The market has already entirely priced-in a cut in the ECB Deposit Rate (in fact is already pricing in even more - at -35bps, from -20bps) which may be an issue as two ECB governors have come out today, jawboning investors not to expect more easing soon. This has sparked a reversal in EURUSD and risk assets are rolling over...

With a 4.5% chance of rate hike priced into the markets at today's FOMC meeting, it is unlikely that anything exciting will happen today. However, with China outflows, BoJ easing expectations, and Draghi still promising moar, it appears precious metals are once again bid. Both Gold & Silver have broken back above their 200-day moving-averages this morning...

• Global shares rise as Riksbank helps ease Fed wait (Reuters)
• Asian Stocks Retreat Before Fed as Material Shares Lead Losses (BBG)
• For Fed, a Rates Puzzle Looms (WSJ)
• What the Superforecasters Say About When the Fed Will Lift Rates (BBG)
• U.S. Looks at Proposals to Step Up Fight Against Islamic State (WSJ)
• China Steel Head Says Demand Slumping at Unprecedented Speed (BBG)
• VW slumps to first quarterly loss in at least 15 years (Reuters)

• After the anticipation of the previous meeting, markets focus on the statement and whether the FOMC still see December as a date for lift-off
• The vast majority expect the Fed to keep the Fed Fund Rate on hold at 0.00-0.25%, however there is a minimal outside bet (~4%) that the Fed will hike rates by between 15-25bps

EXPECTATIONS

Fearing the size of Mario Draghi's bazooka (so to speak), Sweden's Riksbank has just expanded QE by SEK65 billion, marking the fourth expansion in nine months and serving notice that the beggar-thy-neighbor, monetary madness gripping DM central banks isn't likely to dissipate anytime soon.

We would say today's main event is the culmination of the Fed's two-day meeting and the announcement slated for 2 pm this afternoon, however with the 90 economists polled by Bloomberg all expecting no rate hike, today's Fed decision also happens to be the least anticipated in years (which may be just the time for the Fed to prove it is not driven by market considerations and shock everybody, alas that will not happen). And considering how bad the economic data has gone in recent months, not to mention the recent easing, hints of easing, and outright return to currency war by other banks, the Fed is once again trapped and may not be able to hike in December or perhaps ever, now that the USD is again surging not due to its actions but due to what other central banks are doing.

For years, a rather pointless argument has been ongoing amongst economists - that of inflation vs. deflation.

This comes at the totally wrong time.

Back in 1999, a quarter of all 25-year-olds lived with their parents. By 2013 this number has doubled, and currently half of young adults live in their parents home. Here, according to the St. Louis Fed, is the answer why.

If you haven’t already, now’s the time to get out your party hats to celebrate the 14th anniversary of the USA PATRIOT Act. You know about the law, I’m sure; passed barely six weeks after the 9/11 attacks, the USA PATRIOT Act is one of the most sweeping, liberty-destroying pieces of legislation in American history.

While record numbers of indebted Americans are increasingly turning to exchanging bodily fluids directly for cash, it appears (by implication) British students are taking a similar (but indirect) path to reducing their debt loads. As Sky News reports, thousands of British students are funding their way through university on so-called "Sugar Daddy" websites. One site, SeekingArrangement.com, claims 12,600 UK students have signed up with proof of university enrolment, with some making over $3,000 per month for her 'arrangement' enabling her to pay off her student loan and travel more. While sex is not 'expected', as one female student explained, "there's a fine line between being a 'sugar baby' and prostitution."

Impunity has been the norm. The reason there have been no efforts made to criminally investigate is obvious. Former banking regulator and current securities Professor Bill Black told Bill Moyers  that "Timothy Geithner, then Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong."