Archive - Jan 25, 2014 - Story

Mike Krieger brings to our attention this clip from the Daily Show, in which Jon Stewart takes on the orgy of crony capitalists, vacuous celebrities and corrupt politicians that is the World Economic Forum in Davos, or as he calls it, "The Money Oscars."

The US wants its dollar system to prevail for as long as possible. It therefore has every interest in preventing a ‘rush out of dollars into gold’. By selling (paper) gold, bankers have been trying in the last few decades to keep the price of gold under control. This war on gold has been going on for almost one hundred years, but it gained traction in the 1960's with the forming of the London Gold Pool. Just like the London Gold Pool failed in 1969, the current manipulation scheme of gold (and silver prices) cannot be maintained for much longer.

One couldn't make this up:

• S.KOREA TO HOLD EMERGENCY MEETING ON JAN. 26 TO DISCUSS MARKETS

What have we done: after a series of reports in late 2012 in which we showed, with no ambiguity, that not only might the Bundesbank's offshore held gold be severely "diluted" (follow our 2012 exposes on German gold here, here, here, and here), but that on at least one occassion, the Fed and the Bank of England conspired against the Buba in returning subpar quality gold, the Bundesbank shocked everyone in early January 2013 when it announced it would repatriate 300 tons of gold helt in New York and all of its 374 tons of gold held in Paris. But convincing the Bundebsbank to demand delivery was peanuts compared to changing the tune of the Financial Times - that bastion of fiat "money", and where the word gold is mocked and ridiculed, and those who see the daily improprieties in the gold market as nothing but "conspiracy theorists" - to say the magic words: "Learn from Buba and demand delivery for true price of gold", adding that "one day the ties that bind this pixelated gold may break, with potentially catastrophic results."

The first month of a quarter may set the market’s tone in subsequent months. In the context of today’s markets, they tie into a few questions you may be asking about early 2014 volatility:  Is January’s market drop merely noise on the way to another string of all-time highs, or is there more to it than that? For instance, doesn’t it seem a little ominous that we stumbled out of the gates this year despite sentiment being rampantly bullish? Does this tell us to be cautious going forward?  If you happen to read the Stock Trader’s Almanac, you’ll connect our questions to the “January barometer” (not to be confused with the “effect” discussed above). The Almanac’s founder, Yale Hirsch, coined the term in 1972 when he presented research showing that January’s return is a decent predictor of full-year returns. He concluded: “As January goes, so goes the year.”

So far in 2013, Bank of America lost money on 9 trading days out of a total 188. Statistically, this result is absolutely ridiculous when one considers that the bulk of bank trading revenues are still in the form of prop positions disguised as "flow" trading to evade Volcker which means the only way a bank could make money with near uniform perfection is if it either i) consistently has inside information that it trades on or ii) it consistently front-runs its clients (the latter incidentally was a topic we covered back in 2009 relating to Goldman Sachs, and which the bank sternly rejected). We now know that when it comes to Bank of America at least one of the two happened.

Just because it wasn't enough of a vote of confidence in Jamie "Dear Congress: oath I vouch under oath that it was nothing but a tempest in a teapot" Dimon that his pay rose 74% to $20 million in 2013 despite JPM's Net Income crashing as the bank had to provision for tens of billions in legal expenses (conveniently excluded from Non-GAAP earnings) - but that's ok because the Fed's pumping of $1 trillion in fake buying power meant the stock soared - here comes folksy Crony Capitalist #1, aka cuddly Uncle Warren seemingly desperate for close encounters of the rectal kind with the JPM CEO, telling the world just how underappreciated poor, poor (we use the term loosely) Jamie is and said that if he owned J.P. Morgan, "he would keep Chief Executive James Dimon at the helm and would pay him even more than he’s making now."

#BREAKING: France's Francois Hollande announces split with partner Valerie Trierweiler to @AFP

— Agence France-Presse (@AFP) January 25, 2014

The most heavily touted statistical "proofs" that the U.S. economy is "recovering" and "growing" are the unemployment rate and the stock market. Both are completely bogus. Yes, bogus, as in phony, wrong, rigged, misleading, carefully crafted propaganda. Simply put, "new highs" in the stock market are statistical sleight-of-hand. By any practical, real-world measure, the SPX is worth significantly less adjusted dollars in 2014 compared to the real peak in 2000. Equally bogus is the unemployment rate, which has magically declined for years. You probably know this already, but it bears repeating: the unemployment rate is calculated by counting the labor force and those with a job of some sort--temporary, part-time, whatever.