Archive - May 14, 2014 - Story

It would seem that the day after Tuesday is not Tuesday... and so stocks sold off. The Russell 2000 is now 3% off its Monday highs, comfortably red for the week, and back below its crucial 200day moving-average. The Nasdaq is also down with the 50DMA crossing death-like below the 100DMA. Of course, it is the "you can't trust the signals" bond market that is making the real headlines as 10Y yields slump to fresh 7-month lows breaking notable support. The USD leaked lower on the day (but USDJPY was stable under 102) as ECB talked back some of the recent EUR losses. Commodities all pushed higher with silver up over 3% onthe week, gold back over $1305, and WTI over $102. VIX pumped-and-dumped at the open but could not sustain weakness as 330RAMP saw VIX's slam unable to drag stocks notably higher.

Last week in the Land of the Free, I heard a radio campaign ad for a local political candidate while in Texas. In the ad, he was talking about the debt and excessive government spending. And then he said something along the lines of, “We need to get this under control before America goes bankrupt.”

‘Buddy,’ I remember thinking, "America isn’t going bankrupt. It already IS bankrupt."

This is the stuff that revolutions are made of. It’s already happening around the world from North Africa to Southeast Asia. And it’s starting to spread to the West.

Q. What will happen after 14 August 2014? Will the Silver Fixing cease to exist?

A. With effect from the close of business on 14 August 2014, the Company will cease to administer a Silver Fixing, and a daily Silver Fixing Price will no longer be published by the Company.

It is a mark of the fanaticism and desperation of the Keynesians that they would resort to threats of money confiscation in order to prevent people from saving and force them to spend in the present. This is shear and utter madness... some might say it is theft on a vast scale, perpetrated by government fanatics.

With stocks at record highs and priced for some nirvanic perfection of future growth reaching escape velocity at some point soon, the question of why bonds keep rallying is vexing to the status quo minders who just can't fathom it. However, as Bloomberg notes, the world’s most actively traded short-term interest-rate futures are signaling the path higher for the Federal Reserve’s benchmark rate won’t be that high. "The market now sees diminished macroeconomic expectations and expects the Fed to ending the upcoming tightening cycle at around 3 percent." In other words, the bond market believes in the Japanization of America and another lost decade as the new normal low/no growth world slugs along with no escape velocity dreams anytime soon.

In his first major speech since The White House got their 'flexible' man in to manage the GSEs, Mel Watt outlined his strategic plan for Fannie Mae and Freddie Mac. Predicated on the maintenance of liquidity, competition, and resilience of the national housing finance market, Watt's remarkably blind to the past proposal will, as CNBC's Rick Santelli warns, create Subprime 2.0. Easing lending standards, not lowering limits, and raising the possibility of principal reduction seems to do anything but reduce taxpayer risk and merely creates more perverse incentives. Santelli steams, as the orthodox monetary policy channel of the last 30 years continues to be pumped ever higher, "immense fiscal and monetary stimulus has gotten us nowhere." As we suspect Rich might have concluded... Watt the fuck!? "if you believe any of this, you have to be crazy after what we've been through."

In honor of the end of the one of the most infamous price manipulation cartels in precious metal history - the London silver fix - below we present (pdf) the full history of the london silver market, from 1600 all the way until the year 2000. There is just one more event to add to the timeline: 2014 - the end of the silver fixing cartel (and its replacement with the BIS manipulation cartel?)

Is the top 10% up to the task of borrowing and blowing enough money to prop up a debt and bubble-dependent economy? Right now, we're one stock-market-and-housing bubble pop away from finding out if the top 10% will be able and willing to spend, spend, spend once their bubblicious assets are evaporating like mist in Death Valley.

"...Since March, 20 property developers in Guangzhou have been offering "zero down-­payments" to attract buyers, in addition to large discounts and tax refund, the National Business Daily reported Monday."

"by July we expect the US economy to be in full recovery from the weather- and inventory-induced slowdown in Q1, and this should push US rates higher and boost the Dollar, including against the Yen." - Goldman Sachs

Yesterday we were the first to report that none other than Vice President Joe Biden's son was joining the board of Ukraine's largest gas producer. It appears to have signaled peak crony capitalist as the new went viral with almost complete disdain. There was one defender though... as The Washington Examiner reports, The White House brushed off questions about any ethical issues as Jay Carney snapped "Hunter Biden and other members of the Biden family are obviously private citizens, and where they work does not reflect an endorsement by the administration or by the vice-president or president."

If you are in the US, the answer is, of course, "a lot." Elsewhere in the world, not so much.

Russia Ministry of Finance is ready to greenlight a plan to radically increase the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. Governmental sources believe that the Russian banking sector is "ready to handle the increased number of ruble-denominated transactions". According to the Prime news agency, on April 24th the government organized a special meeting dedicated to finding a solution for getting rid of the US dollar in Russian export operations. Top level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia.

Stuyvesant Town, Manhattan's largest 'rental community', is back on the block as Bloomberg reports Fortress is preparing a $4.7bn bid for the apartmenet complex whose last 'failed' deal came to epitomize the lax lending based on unrealistic projections of future income that fueled the real estate bubble. Tishman Speyer and BlackRock purchased the 11,000-unit complex for $5.4 billion in 2006 - a record at the time - helped by a $3bn senior loan which was sliced-and-diced to investors (and then defaulted upon). But, as one analyst notes, "Stuytown has certainly come a long way since the depths of the crisis,” and Fortress' $4.7bn reflects a "resurgence in pricing." No bubble here at all as they hope rent-stabilized tenants will flip enabling all that fresh cash-flow for yet another yield-chasing investment idea based on the belief that real-estate prices (and rents) never go down (ever)... or potential buyers might remember "too many people have had too many unpleasant surprises at this location."