Archive - 2014 - Story

The Global Monetary Reset is under way, but people have not noticed it yet. The key is the move to zero interest rates.

Banks are selling a record amount of U.S. structured notes tied to the stocks of fast-growing, volatile technology companies such as Facebook and Twitter. As Bloomberg Briefs reports, sales of securities linked to Facebook soared to $457.6 million this year, more than double the $204.2 million issued during the same period of 2013. Bloomberg notes that investors are flocking to products tied to social media companies, where more volatile share prices help banks improve structured-note terms that have been hurt by low interest rates... and issuers are "trying to put shiny objects in front of the client," as the BTFD mentality gets increased leverage (and downside risk). Investors have purchased $1.88 billion of structured notes linked to the 10 most popular technology stocks so far this year - 31% more than the same period in 2013 - and $32.7bn equity- and commodity-linked notes this year alone (up ~10% YoY). As we warned last week, counterparty risks are rising.

Having confirmed unequivocally, in a statement by the FBI and reiterated by President Obama, that "the North Korean government is responsible" for hacking Sony, it appears the YouTube-less 'evidence' the FBI provided is being questioned by the hacking-collective 'Anonymous' and former Lulzsec hacker Sabu. As The Daily Beast reports, the hackers blasted, the North Koreans "don’t have the technical capabilities," and added "we all know the hacks didn't come from North Korea, and "all of the evidence FBI cites would be trivial things to do if a hacker was trying to misdirect attention to DPRK." Meanwhile, on Saturday afternoon, Guardians of Peace, the hacking group that’s so far claimed responsibility for wreaking havoc on Sony, posted a message online mocking the FBI’s investigation - a series of gyrating animated bodies shrieking, "You are an idiot!"

It is a tyranny of the PhDs. It is a group-think mania that has gone global. It’s also only a matter of time before the central bankers’ money printing spree takes down the very bubble-ridden financial system it has so recklessly spawned.

In an oddly familiar echo of Bernie Madoff's massive ponzi collapse, The Telegraph reports, a currency trader has vanished along with £130  million in investors’ cash in an alleged fraud that could be one of the biggest in recent British history. Joe Lewis, 59, is being investigated by police over almost $200 million which he claimed was in clients’ accounts (incluidng professional footballers and golfers) but now no longer exists. In a stunning email sent to clients 2 weeks ago, Lewis admitted that his company - JL Trading - had stopped operating in 2009 (after suffering heavy losses on disastrous FX trades), adding that "I have covered up my mistakes from everyone including my staff, no one else knew what was happening." The father of two has since failed to answer emails and phone calls, and at his Istanbul apartment a doorman said he had not been seen for a few weeks.

When the conventional media ordains oil inevitably dropping to $40/barrel, we start looking for something else to happen - like oil going to $70/barrel. There are number of reasons this isn't as farfetched as it might seem at the moment.

Turn on any “news” outlet and what will be touted in some form of giddy-esque fashion is the markets are once again hitting new all time highs. And not only will this Christmas be better than expected, it will be better because people will now enjoy a sudden rush of unrealized gains now that gasoline is plummeting. Sounds like a festive holiday season made to order. Well it is, just not for Main Street...

Forget lost decade (or two), Japan's economic growth trajectory has fallen, almost unbroken, since the end of World War II... just one more decade, we are sure is all it will take to revive this Keynesian catastrophe... (one way or another)...

While the shockingly large scale of death and violence in Chicago has now become so mainstream as not to warrant daily attention by the media, the news that Mayor Rahm Emanuel's son Zach was robbed of his cellphone and assaulted around 10:05pm Friday night near the family's affluent neighborhood home is likely to raise public awareness of just how bad things are getting in 'Chiraq'. As The Chicago tribue reports, two males approached Zach from behind; one of them "placed his arm around the victim's neck in a rear chokehold," and the second one struck the teen with a fist, knocking him to the ground. The robbers took the teen’s cellphone and patted him down, the police report said. The mayor has an around-the-clock police detail - fully 5% of the 19th district's police manpower, but its whereabouts at the time of the robbery weren't disclosed.

The shale patch can exist in its present form only if it has access to nigh limitless credit, and only if prices are in the $100 or up range. Wells in the patch deplete faster than you can say POOF, and drilling new wells costs $10 million or more a piece. Without access to credit, that’s simply not going to happen. That’s about all we need to know. Shale was never a viable industry, it was all about gambling on land prices from the start. And now that wager is over, even if the players don’t get it yet. So strictly speaking my title is a tad off: we’re not drilling our way into oblivion, the drilling is about to grind to a halt. But it will still end in oblivion.

ECB's Vitor Constancio, October 26, 2014: "The scenario of deflation is not there because indeed we don't consider that deflation is going to happen."

ECB's Vitor Constancio, December 20, 2014:" "We now expect negative inflation in the coming months."

Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."

"I’m tired of being outraged!"

What took place in Washington over the past two weeks with the repeal of Dodd Frank and then the effective repeal of the Volcker Rule sounds strikingly familiar to at least three previous periods in American History that led to total disaster. What the bankers just pulled off will lead to their demise.  They have played with a historical fire that may end in actual bloodshed. It would not be the first time they have been dragged from their palaces and hanged on the streets. That is what the term “BLACK FRIDAY” really stood for – the day a mob hanged bankers on Wall Street.

As even Reuters observes this morning when discussing the ongoing crude rout, "the market slide has triggered conspiracy theories, ranging from the Saudis seeking to curb the U.S. oil boom, to Riyadh looking to undermine Iran and Russia for their support of Syria." It appears said theories will continue raging for a long time, because as Saudi Arabia's oil minister who has been extensively in the news in the past couple (that means "two" as per Janet Yellen) of month explained, the biggest OPEC oil producer said on Sunday it would not cut output to prop up oil markets even if non-OPEC nations did so, in one of the toughest signals yet that the world's top petroleum exporter plans to ride out the market's biggest slump in years, and that the price of crude is not going up any time soon.