Archive - Sep 2015

With a call to “end the private prison racket in America,” a group of progressive lawmakers on Thursday introduced a bill that seeks to subvert the reigning “pro-incarceration agenda” by banning private prisons, reinstating the federal parole system, and eliminating quotas for the number of immigrants held in detention.

Hot on the heels of British military threats of a coup, the potential for a truly 'red' black swan of an event has reared its ugly head in China, just as Xi tours America. As Reuters reports, bitterness is growing within China's armed forces to President Xi Jinping's decision to cut troop numbers by 300,000, and, according to a source and commentaries in the military's newspaper, considerable effort will be needed to overcome opposition to the order with PLA official sources warning "people are worried, it's been too sudden."

The negative feedback look between Brazil's political and economic crises is serving to make each day worse than the last. Tuesday was no exception...

The aggregate Buybacks to Free Cash Flow ratio for the S&P 500 exceeded 100% for the first time since October 2009. The ratio hit 108% on a TTM basis at the end of Q2, which represented a 12.9% increase quarter-over-quarter and a 42% increase year-over-year. The 10-year median ratio was 72.2%. And that, in a nutshell, is why the market is tumbling today - the biggest buyers of stock in the past 2 years, the corporations themselves, just priced themselves out of the market and no longer generate the cash needed to push their own stock to new all time highs.

Allegedly spotted on Sand Hill Road and the West Side Highway...

"The dissenters were the ministers representing the Czech Republic, Hungary, Romania and Slovakia. Under European law, three of the countries — the Czech Republic, Romania and Slovakia — would be required to accept migrants against their will, said one European Union diplomat, who spoke on condition of anonymity shortly after the vote."

In short, the next round of the great crisis is beginning.  It will take time to unfold, but we have reached Peak Central Bank Intervention. When Central Banks loosen policy and the markets fail to respond, you're in the End Game.

That’s what yesterday’s Bullard Rip was all about - it amounted to the bell at the top. In time it will become evident that the market is unable to break-out of the bubble finance channel it has established between 2075 and 2125 over the past year. When December comes around and the Fed has to explain the growing signs of global and domestic recession, the robo-machines will have grown themselves an altogether new set of programs. Namely, an algorithm that says any day the Eccles Building is open for business is a good day to sell.

The Nasdaq was the last great hope holding on to positive returns in 2015... until this morning.. and as Nasday went red YTD, panic-buying ensued slamming TRIN near record highs...

"There is a chance that the Fed, like a number of central banks in recent years, may find it impossible to escape the effective lower bound to which policy rates were cut during the dark days of the crisis some seven years ago."

In the last non-Bill auction conducted by the US Treasury two weeks ago, many were surprised to see a surge of interest for 30 Year paper. Then after the Fed refused to hike rates sending the long yield plunging, it suddenly all became very clear. Fast forward two weeks to today's just concluded auction on the other end of coupon paying US paper, namely the issuance of $26 billion in 2 Year paper. And while a month ago, the 2 Year left a lot to be desired, today's issue was positive euphoric, pricing at 0.699% 0.3 bps through the When Issued, with a Bid to Cover of 3.269, solidly above last month's 3.164 which was the lowest since October.

Most Fed officials still expect a first rate increase this year, Yellen says, noting that "13 out of the 17 are looking for a move in 2015." The market disagrees...

One of the more remarkable characteristics of American life is our passive acceptance of systems that are so obviously completely insane. Yes, I refer to our healthcare system, a.k.a. sickcare because in America sickness is profitable and health is not, and healthcare profiteering that would be the envy of pirates and warlords everywhere is the norm.

"We are heading towards disaster" exclaims UKIP's Nigel Farage in this brief clip. Having warned for months about both the consequences of actions and the EU's disastrous policies, the flood of immigrants, Farage warns "we face a direct threat to our civilization if we allow large numbers of people from that war-torn region into Europe." Simply put, he fears within EU policy "there is no way to filter out extremists in favor of people fleeing in genuine fear of their lives," and suggest following the Australian policy.