Still convinced it's different this time? Think again... these 9 charts suggest Europe is very much on its way to Japan... and remember Japan was doing QE through this period too...
The epic voyage of USD Longs and Treasury Shorts continues...
While reflecting on how many of 2014's "outrageous predictions" came true (and the still strong US equity markets), Saxobank CIO and Chief Economist Steen Jakobsen warns 2015 will see "deeper and deeper market corrections." If we continue to apply medicine to keep the patient alive, instead of dealing with the disease Jakobsen ominously warns, 2015 will see increased volatility and mean-reversion, "think in terms of October 1987 or 9/11." Maintain a balanced portfolio, he suggests, the preservation of capital suggests you take all the gains you have made this year and put them into cash to wait for better opportunities. "We are investing in a paperless society where everyone in the world is becoming either a banker, a fund manager, or a hairdresser - it's all about services. A non-productive society reigns supreme in most developed countries."
Forget Black Friday and Q4 GDP... it appears, from the most recent forecasts that from Wednesday on this week, the eastern US faces a 'White Five-Day' as Accuweather reports "an increasing likelihood for a swath of heavy snow stretching from eastern Pennsylvania through New York's Hudson Valley and across much of New England before all is said and done." Furthermore, as WaPo notes, Wednesday’s possible storm has a chance to develop into a legitimate Nor’easter (though current models offer 3 scenarios).
With hopes high, at least among corner offices of the majors, that this week's OPEC meeting will somehow manage to slow down the biggest plunge in crude prices since Lehman, it will take much more than mere talk and hollow promises to offset the recent cartel-busting actions of Saudi Arabia. So in a worst case scenario where supply remains unchanged even as global energy demand continues to decline sharply due to the ongoing global slowdown what is the worst case scenario that could happen - aside from the mass energy HY defaults discussed previously - should the price of a barrel of oil continue to correlate the change in 2014 global GDP estimated? Here are some thoughts from Deutsche Bank.
"In a tense confrontation with President Obama’s closest adviser on Thursday, a group of Senate Democrats accused the White House of trying to censor significant details in a voluminous report on the use of torture by the Central Intelligence Agency."
With President Obama proclaiming this morning "it's too early to tell" if a nuclear-deal with Iran is still possible; and apparent confirmation this afternoon that differences are "still significant," the US is said to be discussing extending the nuclear-deal deadline. Yet again no consequences (for a newfound 'ally') and yet again John Kerry finds himself purposeless... and now we hear Vladimir Putin will be calling Iran's Rouhani tomorrow (one can only imagine the topic of conversation).
OPEC faces numerous dilemmas this week as it meets to decide what, if anything, is to be done about falling oil prices. As Goldman notes, consensus expectations have shifted to only expecting a modest cut announcement on Nov 27th. Furthermore, any large cut that would lead to a large price rally would be self-negating as it would enable US producers to hedge 2015 production and sustain elevated production growth.
The “unintended consequences” of the negative interest rate policy will vastly outweigh the perceived advantages of any short term boost to economic activity they may provoke. Given that the failure of these interventions is already absolutely certain, we must be prepared for even more interventions to “fix” the failures produced by the previous ones. Many modern-day intellectuals appear quite keen on abolishing the market economy and replacing it with some form of command economy (just as long as their personal plans are implemented of course). They should be careful what they wish for.
Want to escape a lifetime of debt servitude? Then some of the fields one may want to avoid include drama, music, religion, anthropology, philosophy, psychology and education.
A central bank was (and still is officially) supposed to be independent of politics, to be a buffer between a society’s long term interests and a politician’s short-term ones. In particular, no-one should issue huge amounts of money to make it look like they were just awesome leaders that make everyone rich, while sinking the future of a society in the process. Today’s central banks do nothing BUT engage in short term policies that keep incumbents as happy as they can be in bad economic circumstances. Central banks have become political instruments that pamper to the tastes of whoever may be in charge on any given day, which is the exact 180º opposite of why they exist in the first place. What drives central bankers in November 2014 is fear, pure and simple, if not absolute screaming panic.
While technicals remain largely meaningless in the global centrally-planned "USSR market" (as penned by Russell Napier, who asked "Which World Has No Volume, No Volatility And Rising Prices?", his answer: the USSR), pattern-seeking carbon-based traders still find refuge in the comfort provided by technical analysis. So for all those who believe past performance is indicative of future results, here according to BofA's MacNeil Curry is how various asset classes perform during Thanksgiving week compared to all other weeks during the year.
All that the Fed, BoJ (Bank of Japan), the Bank of England etc. have been concerned with is the preservation of private banks and the continued propping up of stock markets. None of these institutions really care about the real-world economy, real-world inflation or the ability of individuals to maintain their lives in a prolonged period of economic contraction. When you couple high real inflation with stagnation or reduction in wages over the years since the 2008 crash then real-world buying power of most individuals is drastically reduced. This doesn’t just make people depressed, it makes them angry – hardworking people do not expect or deserve to be thrust into poverty.