Archive - Mar 2015 - Story

No lessor official than European Commission President (and liar-when-it's-serious) Jean-Claude Juncker has called for the creation of an EU army... in order to show Russia "that [The EU is] serious about defending European values." Juncker explained an EU army would "help us fulfil Europe's responsibilities in the world," arguing that NATO was not enough since not all EU members are part of the alliance. As one stunned euro-skeptic exclaimed, "we have all seen the utter mess the EU has made of the economy, so how can we even think of trusting them with its defence."

"Commodity pricing is vastly more important than most people actually realize," explains former CFTC Commissioner Bart Chilton, warning that "beginning around 2007 the rise of computer driven trading algorithms changed the rules, and the markets have not been the same since." Chilton is sympathetic to the perception many frustrated and bruised investors have about the manipulation of the precious metals markets - on record saying that the large short position concentrations have been outrageous. Why not the CFTC directly? Sadly, the former CFTC boss notes, "regulators by and large aren't listening to average people."

Another best seller?

Greenspan started the destructive Keynesian tradition of pumping liquidity to stimulate the economy, and this tradition has created significant economic pain for Main Street in the form of long-term unemployment and underemployment, reduced wages, foreclosures, bankruptcies, reduced savings rates, shuttered businesses, and drained savings and retirement accounts. So, “Mr. Bubble” inferring that the Fed creates unsustainable bubbles for the benefit of Main Street is pretty insulting.

Back in 2009, the United Nations Statistical Commission endorsed a revision to the System of National Accounts (SNA), which sets the international standards for the compilation of national accounts. As a consequence, Eurostat has amended the European equivalent of the SNA, the European System of Accounts (ESA) leading to a revision of GDP figures. Out of nothing but accounting smoke and mirrors, the reclassification has had a positive effect on GDP, increasing it on average by 3.5 percentage points for the EU and the Euro area as whole.

The longest running European "Union" soap-opera may finally be coming to its anticlimatic end.

Mission Accomplished?

The availability and cost of floating storage, and the magnitude of the crude oil contango will be critical in helping form the price path of oil," Soc Gen says. If that's the case, we could see crude go far lower over the coming months.

Goldman confirms precisely what we’ve been saying all along which is that the risks inherent in subprime lending are materializing and at the margin, growth in US auto sales has all been created by lowering credit standards and extending terms to a whole load of 'new' auto buyers.

While Russia's envoy to NATO notes that statements by the deputy head of NATO testify to the fact that the leaders of the bloc want to intervene in Russia’s internal politics, and are "dreaming of Russian Maidan," Washington has a bigger problem... Germany. As Der Spiegel reports, while US President Obama 'supports' Chancellor Merkel's efforts at finding a diplomatic solution to the Ukraine crisis, hawks in Washington seem determined to torpedo Berlin's approach. And NATO's top commander in Europe hasn't been helping either with sources in the Chancellery have referred to Breedlove's comments as "dangerous propaganda."

Suddenly everywhere you look, one after another, a story is making its way into the main stream press (albeit a trickle but that’s a tidal wave in comparison) that we may be, in fact; experiencing a “bubble” in stock prices. Even those who still believe in unicorns and rainbows (cue CNBC) are finding it harder and harder to hold onto the magic. Anyone with just a smidgen of common sense knows what’s being presented as “a miracle of economic intervention” has been nothing more than a grand escapade only made possible through the use of monetary smoke and mirrors.

With more than USD 200bn of Treasury securities held by the Fed due to mature in 2016, the Fed will have to make meaningful monetary policy choices in advance. Fed VP Stanley Fischer commented on SOMA maturities in his speech last Friday, but it appears very few have taken notice as yet and even fewer comprehend the challenge soon confronting The Fed. Many believe that Twist had pushed maturities farther “into the future”. The “future” is Q1 2016. (Note: a shrinking balance sheet is a defacto tightening)

Convenient? While two North Caucasus men have been formally arrested and charged for the murder of Boris Nemtsov (and three others arrested as suspected accomplices), The Telegraph reports a sixth suspect decided to blow himself up with a grenade when police surrounded his home in Chechnya. The suspects are the suspected hitmen, according to officials, who added that the masterminds behind the murder are still at large.

Since 1969, when the U.S. U-3 unemployment rate has hit a 6-year low while the stock market is at a 12-month high, the market has been lower 1 year later 12 out of 13 times by a median 14.8%...

Think the current S&P forward PE multiple of 18.1x (which has been higher in the history of the market on only 1% of all observations), and especially when factoring for AAPL which has become the largest contributor to S&P earnings growth on the back of essentially one product, is too high? Unable to find any value in a market which trades where it does only thanks to $13 trillion in central bank liquid "generosity"? Don't be concerned, because Goldman has a trade idea for you. Sell the S&P 500 and instead go "deep value" by buying... the Nasdaq.