Archive - Nov 3, 2014 - Story

The Petrodollar, long serving as the US leverage to encourage and facilitate USD recycling, and a steady reinvestment in US-denominated assets by the Oil exporting nations, and thus a means to steadily increase the nominal price of all USD-priced assets, just drove itself into irrelevance. A consequence of this year's dramatic drop in oil prices, the shift is likely to cause global market liquidity to fall.  This decline follows years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling. But no more: "this year the oil producers will effectively import capital amounting to $7.6 billion.

There has always been a substantial level of incompetence at federal agencies, but under the Obama administration incompetence has risen to unprecedented levels.

"I was on a panel with Alan Greenspan a week ago... I said, you mean to say that the Federal Reserve is not independent? He immediately said, Marc, I never said the Fed was independent. In other words, the Fed and the Treasury and the government is basically one and the same."

"Japan is engaged in a Ponzi scheme"

"The oil price decline is not necessarily very good for the US - if oil prices went lower, it may actually have an adverse impact on the US economy"

"As a father, I want to raise responsible adults, which is why my wife and I will not be heading to the polls this election. Previously, I would have seen this stance as many people do: as an irresponsible act. Both Democrats and Republicans support militarism, taxation, spying on us, inflation, redistribution of wealth, Keynesian economics and corporatism once they get in office. My children need not to identify with this group of sociopaths, so to vote would be a bad example for them." Simply put, The lesser of two evils is still evil.

Spot the free-money, wealth-effect-pumping, inequality-driven difference...

One word - seppuku

Presented with no comment...

China first delegated the management of gold policy to the People's Bank by regulations in 1983. To our knowledge this subject has not been properly addressed by any private-sector analysts, which might explain why it is commonly thought that China's gold policy is a more recent development, and why even industry specialists show so little understanding of the true position. But in the thirty-one years since China's gold regulations were enacted, global mine production has increased above-ground stocks from an estimated 92,000 tonnes to 163,000 tonnes today, or 71,000 tonnes; and while the west was also reducing its stocks in a prolonged bear market all that gold was hoarded somewhere.

Three months ago when we questioned the FAA's decision to issue a no-fly zone over Ferguson "to provide a safe environment for law enforcement activities" because TV crews recording every incident put "law enforcement" in jeopardy? We were scoffed at by the usual suspects as conspiracy wonks who need to get out of our mom's basement. Sadly - for America and its citizenry - we have once again been proved 100% correct as yet another conspiracy theory becomes fact. As AP reports, audio recordings show that local authorities privately acknowledged the purpose was to keep away news helicopters during violent street protests. "They finally admitted it really was to keep the media out," said one FAA manager about the St. Louis County Police in a series of recorded telephone conversations obtained by AP.

More than originally estimated, apparently...

"For real world people, it is a simple common sense that wealth does not fall from the sky. It has to be produced. It is beyond me that such an obvious truth is so difficult for elite economists to comprehend. This is largely because they just sit in the ivy tower, imagining the magic golden touch such as monetary and fiscal policies, mocking practitioners. They are so ignorant and arrogant."

Presented with nothing but respect ahead of the US Midterm elections...

Herbalife: the harbinger of what happens when every stock buyback story inevitably turns very, very ugly.

The problem with what we call the Exit Rule for Bubbles - "you only get out if you panic before everyone else does" – is that you also have to decide whether to look like an idiot before the crash or an idiot after it.

As we noted earlier, something is seriously broken in these 'markets' and when the head of Blackrock appears on CNBC and uses the "cash on the sidelines" meme to justify stocks going higher (which is unbridled idiocy remember), we suspect even the big boys are getting nervous about the decouplings, illiquidity, and BoJ-driven exuberance. The early pre-open ramp in stocks was quickly eviscerated as data missed (PMI & Construction Spending) and stocks retraced back to bond reality... but 'they' needed all-time highs to run some more stops as USDJPY burst to 114. Once those highs in US equyities were tagged and traders realized what the Saudi actions regarding oil prices meant, WTI plunged and dragged stocks with it. Bonds, oil, HY credit, and VIX all decoupled from stocks.