Archive - Jan 2015

How to find the safe haven heading into 2015....GOLD, $USD

Don't listen to or become entrapped by financial advisors offering some great skill, in knowing the guide path for various asset prices, and therefore can guide you in when to buy and sell certain securities.  It's their only job to simply sell as much insane fantasy as possible, to anyone willing to buy.  And it's those same advisors -frenzied by their battalion of technology resources- who are likely uneducated on the lessons contained in the straightforward story about the Grinch, to provide a better light for anyone in their winter voyage ahead.

Reading headlines and social media commentary in last night's thin trading, one could have been excused for thinking the collapse of global crude oil prices was over and a new renaissance had begun as 'watchers' proclaimed WTI's spurt above $55 (for a nanosecond) as indicative of the lows being in. However, just hours later, following weak European data (and a recognition of massively offside speculative positioning), WTI has collapsed over $3 from the highs and is testing towards a $51 handle.

• The year of dollar danger for the world (Ambrose Evans-Pritchard)
• Draghi Says ECB Prepares Action as Deflation Risk Non-Negligible (BBG)
• Obama Pivots to Lawmakers: New Plan to Advance Policy Goals by Working With Congress Draws Skeptics (WSJ)
• Affordable Care Act Creates a Trickier Tax Season (WSJ)
• Oil pares early gains, trades near $57 as supply glut prevails (Reuters)
• Iran says Saudi Arabia should move to curb oil price fall (Reuters)
• Pimco Fund Trails Peers in 2014 After Missing Rally (BBG)
• Piketty rejects Légion d’Honneur award (FT)
• UK manufacturing activity hits three-month low (BBC)

The new year has officially started because it wasn't even a day in and Mario Draghi was once again out and about, jawboning the Euro to a lower level than where it was when he said back in 2012 he would do "whatever it takes" to push it higher. The reason, as Reuters reports, why the Euro sank to a nearly 5 year low against the USD, was "clear indications that the European Central Bank will soon embark on outright money-printing." Actually, it was on just more hollow rhetoric by Draghi, who told German Handelsblatt that "the risk that we don’t fulfill our mandate of price stability is higher than it was six months ago." He also added that "it’s difficult to say” how much the institution will have to spend on government-bond purchases.

Another year of putting lipstick on the zombie known as the global economy, kept walking only thanks to $11 trillion in liquidity injections by the world's central banks and tens of trillions of new Chinese credit created out of thin air and promptly misallocated and embezzled, and the results are in. The bottom line: according to Nielsen, is that despite the S&P recording a whopping 53 all time highs, and the Dow rising over 18,000, the channel that was once must watch financial TV for mom and pop, and has since devolved into endless cheerleading of failed policies and rigged markets, namely CNBC, just suffered its worst year in, well, ever.

Well that didn't take long... With the smell of fireworks still lingering in the air, Bloomberg reports that Chinese developer Kaisa Group defaulted on a HK$400 million ($51.6 million) loan triggered by forced repayment terms after the firm's chairman resigned. With shares already down over 50% in December alone, trading is suspended as the company faces what S&P calls "more challenges" ahead and the 2018 bonds have collapsed to just 43c on the dollar (yields over 42%).

If the tech mania was based on magic, and the housing mania was based on a supposed fact that was historically untrue, today’s mania is a mania of manias, interlinked and resting on premises that are patently illogical, contradicted by both the historical record and current experience. Those premises are: central planning works, government debt promotes prosperity, and economic growth stems from central banks buying that debt with money they create from thin air. On these premises rest manias in governments, their debts, and central banking.

"This series is about how those in power have used Freud's theories to try and control the dangerous crowd in an age of mass democracy," begins Adam Curtis, as he describes the propaganda that Western governments and corporations have utilized stemming from Freud's theories (and his nephew Bernays). The words of Paul Mazur, perhaps ironically working for Lehman Brothers at the time, sum it all up: "We must shift America from a 'needs' to a 'desires' culture. People must be trained to desire, to want new things, even before the old have been entirely consumed... Man's desires must overshadow his needs."

Having been trained well to BTFD in any and everything, after weeks of picking bottoms, clutching falling knives, and being run over, Bloomberg reports hedge funds finally pulled back from bets on higher oil prices - reducing their net-long position in WTI crude for the first time in four weeks, cutting their holdings by 5% in the week ended Dec. 23. “Traders just said enough is enough,” Phil Flynn, a senior market analyst at the Price Futures Group in Chicago, said by phone. "They were tired of trying to guess the bottom of the market and missing. We don’t have a bottom yet and there’s still a ways to go."

Rejoice mortals, for the daily update of Glorious Leader's Hawaiian vacation is nigh.

Goldman head Lloyd Blankfein was completely wrong when he declared his firm was doing “god’s work”. That couldn’t be. In fact, Goldman and its principal competitors have become nothing less than the devils workshop during the modern era of Keynesian central banking instigated by Alan Greenspan. Greenspan’s “committee to save the world” did no such thing. What it did was bury the American middle class in debt, while massively outsourcing US goods production capacity to China and elsewhere in the EM.

French investors are piling into Japanese stocks again - just as they did at the end of 2013 - and as Bloomberg reports, this is a sign to Nomura that the market is poised to fall as those same French 'investors' unceremoniously dumped it all in January and February of 2014. “The French were huge net buyers at the end of last year... and now they're doing it again," noptes Nomura, "if they decide to unwind positions, the Japanese market is in for a drop."

Everything we're told by journalists and politicians is confusing and contradictory. As The BBC's Adam Curtis explains in this brief documentary, it is an odd, non-linear world that plays into the hands of those in power. But the real epicenter of this non-linear world is the economy, and it's dark heart: Quantitative Easing. "We as individuals become ever more powerless, unable to challenge anything, because we live a state of confusion and uncertainty... this has become a central part of a new system of political control."

After years of being blocked by Democratic leader Harry Reid, The Washington Times reports, the Senate will finally get a chance next year to vote on legislation to force a broad audit of the Federal Reserve's decision-making. Ron Paul's flagship legislative efforts have been picked up by his son and now has the backing of the leader of the new Republican majority, Sen. Mitch McConnell, whose office says the legislation will earn a floor vote. While the bill is not a sure thing, it appears to have The Fed worried as Reuters reports, Yellen and other Fed officials are lobbying Capitol Hill to drop the audit push.