Archive - Jan 21, 2015 - Story

Having explained to all the 10th graders in the nation how 'everything is awesome' and "the crisis has passed," President Obama starts his roadshow to populise the many myths and factnesses from his State of The Union speech. Speaking at Boise State University, we suspect the call for more research dollars will leads nicely into his package of "middle class economics" fixes...

As everyone knows by now, tomorrow the ECB will announce a QE plan that monetizes some €50 billion (and maybe more) in European government bonds per month, although Greece may be left out in the cold. It is also the reason why while European stocks have priced in more than 100% of the full impact of a €1 trillion QE, those gains are about to be wiped out. Here's why according to Panmure Gordon.

Remember how well JPMorgan's innovative social media experiment #AskJPM went? Well, taking a lesson from the Einsteinian insanity instruction manual, John Kerry and The White House have unleased #AskTheWH ... enjoy...

The EU’s financial watchdog, the European Securities and Markets Authority, will look at whether automated trading adds fake, or ghost, liquidity to markets, said Steven Maijoor, the regulator’s chairman. “There has been a suggestion that the liquidity they are providing is not real liquidity because once you would like to go into the trade and accept an order the offer disappears,” Maijoor said in an interview in Hong Kong on Jan. 20. “We are looking now into the specific issue of what is called ghost liquidity.”

The timidness with which mainstream media in the U.S. approaches news has been well documented. In fact, the inability of traditional media to do a reasonable job of holding powerful interests accountable has been one of the primary drivers behind the ascendency of alternative news. Despite this reality, one thing we know less about is specifically how the power structure goes about suppressing news it doesn’t want reaching the plebs. Until now...

Debt-serfs who make the difficult and risky transition to small-scale business owners find they have simply moved to another class of serfdom. The net result is a system in which the vast majority of productive assets are owned by the few who then have the means to exploit the many.

Swiss interest rates were already the lowest in the world before The Swiss National Bank de-pegged from the Euro last week but in the ensuing few days, investor demand for the 'safety' of Switzerland has collapsed the yield curve to levels thought impossible just weeks ago...

As we further showed, the bulk of foreign demand for New York's most expensive properties, originated in China, Russia and various other oligarch-controlled nations, where the impetus to launder illegally obtained hot money meant an impulse to buy US real estate sight unseen and virtually at any price. And all of it, of course, all cash. No mortgages.  That onslaught of foreign oligarch demand is ending, and with it so is the bubble that luxurious New York real estate found itself in on the back of some $12 trillion in central bank liquidity created out of thin air in the past 6 years. Business Week cites Manhattan real estate agent Lisa Gustin who listed a four-bedroom Tribeca loft for $7.45 million in October, expecting a quick sale. Instead, she cut the price this month by $550,000. “I thought for sure a foreign buyer would come in"... They didn't.

“If the government and the Kansas Corporation Commission care about the people of Kansas and the damages, they will order a moratorium,” exclaims Joe Spease, chairman of the Kansas Sierra Club's fracking committee following a report from Kansas officials, who have been reluctant to link the mysterious earthquakes in south central Kansas to fracking, admitted last week that "we can say there is a strong correlation between the disposal of saltwater and the earthquakes." As LJWorld reports, it's the first time state officials have so clearly stated the likely cause of the earthquakes, which are afflicting a region where fracking is widely used.

Greece's bailout program is not working. After receiving hundreds of billions of Euros in new loans to stave off a sovereign default, Greeks are on the verge of electing a new government that may throw Eurozone politics into turmoil. How things will play out in Greece and abroad is anybody’s guess. But it is important to consider the factors which have contributed to the current state of affairs.

NATO's Jens Stoltenberg unleashed the latest tirade against Russia this morning proclaiming - though offering no proof - that there are Russian forces and heavy equipment in Ukraine and a high number of Russian forces on the border which "doesn't contribute to a peaceful solution." Apparently pre-empting this outburst, Pravda reports Anatoly Tsyganok, director of the Military Forecasting Centre, exclaims, "Ukraine reiterates that Russia is in the war, but it's not true," adding that in fact "the USA and the NATO have artificial satellites continuously circulating above this territory and control the situation," concluding with a jab at The US & NATO that "Russia has never participated in the military conflict. And no attempt to involve Russia in the conflict will be crowned with success." The propaganda battle continues...

As we have reiterated very frequently over recent years, the biggest vulnerability in the post crisis environment was that central banks start to make policy errors, by taking activist and precipitous decisions. Thus following on from last year's error by Norges Bank (and noting that we would not call last week's SNB decision a mistake, despite the shockwaves that it caused), the Bank of Canada joins that policy error club.

And so with less than 24 hours to go, the ECB has decided to leak its deliberations not only to Merkel and Hollande, but Dow Jones. To wit:

DJ: ECB EXEC BOARD'S QE PROPOSAL CALLS FOR ROUGHLY EUR50B IN BOND BUYS A MONTH -  SOURCES
ECB SAID TO PROPOSE QE OF 50 BILLION EUROS A MONTH THROUGH 2016

More as we see it, but if indeed this will be a program without risk-mutualization and conditional and limited burden-sharing, where the hope was that Draghi would "shock and awe" the world with the size of the bond purchasing program instead, €600 billion per year looks decidedly on the low side of any "surprise" announcement where the whisper number was for €1 trillion per year, and if indeed this is the final formulation may result in a substantial disappointment for stocks after the initial kneejerk reaction.

We already did our post-mortem of last night's teleprompted annual evangelizing of Barack Obama's "straight to folks" propaganda that would make both Goebbels and Dzerzhinsky blush. So instead of repeating ourselves, here is AP with its own fact check of what can only be dubbed lie after lie, courtesy of the president of the "free world" and the head of the "most transparent administration ever."