Archive - Sep 3, 2015

To answer the question: yes, the US recession is hiding just under the "question mark" at the unexplained and perplexing divergence between industrial production, and actual end sales all of which result in a record inventory stockpiling which as we showed before, is what recently boosted Q2 GDP to an unsustainable 3.7% growth rate.

"There is no reason to embarrass the president of China..."

The REAL RISK currently is not missing some of the upside if the bull market does begin to resume, but rather catching the downside if this correction turns into a full-fledged bear.

Friend.. or Foe?

"...we live in an age in which the policies of the past are coming to an end. The Keynesian model does not work, and our Empire does not work. This total failure has to change, and we need to present the alternative."

"... we estimate that only about half (or slightly more than half) of total technical selling was completed to-date (mostly completed by VT funds, half by CTAs, and a smaller fraction by RPs). We estimate that a further ~$100bn of selling remains to be completed over the next 1-3 weeks. As a result, we expect elevated volatility and downside price risk to persist."

Back in early 2014, when IRS director Lois Lerner pleaded the Fifth, it became clear that not all is well with the official narrative. Fast forward to this week when another prominent democrat caught up in another email scandal has just indicated they would plead the Fifth. And no, its not Hillary Clinton, at least not yet, but her former staffer, Bryan Pagliano, who oversaw her private email server. As reported by Politico, he too plans to invoke his Fifth Amendment right not to answer incriminating questions before the House Benghazi Committee, according to a letter his lawyer sent the panel.

While the market nervously eyes the petrodollar reserves of Saudi Arabia and the UAE as the countries juggle domestic expenditures, dollar pegs, and the cost of war, Yemen itself is coming apart at the seams - literally. As WSJ reports, it now looks as though the country may in fact split, as Aden residents have eschewed the red, white and black for the flag of South Yemen, which existed as an independent republic for more than two decades.

We live in a Fiat economy where growth is fuelled by debt, and less and less from productivity and demographics. This takes place in a closed circuit with the US dollar as the reserve currency. The problem now is that the economy can not get restarted without changes to one or several parameters. Simply put, this fiat economy is unsustainable and must change, and we must adjust to slower growth and start actually producing.

For all...

Leading Republican presidential nominee Donald Trump appears to have just gone 'all-in'...

*TRUMP SAYS HE'S SIGNED PLEDGE NOT TO RUN AS 3RD PARTY CANDIDATE

And while he was at it, he took a jab at Hillary as "the worst secretary of state in the history of the world." . Maybe The Economist is on to something.

"The opening of the new units will feed an artificially created confrontation. [This is] the logic of the Cold War. It runs counter to genuine interests of the European and regional security." - Alexander Grushko, Russian ambassador to NATO.

"If we accepted everyone, we would be larger than Iceland." – Liberland founder, Vit Jedlicka

This Friday appears to be make or break for the Fed's data dependency, as the FOMC's September rate decision looms.