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Guest Post: Real Americans Are Ready To Snap

Despite popular belief, every culture of every nation draws a line in the sand against government tyranny. The problem is, many draw this line so close to total defeat that it rarely matters.



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Meltdown America: The Movie



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Peak "Hope"

The gap between current Q1 reality and forward-looking, hope-stuffed, unicorn-tear-fueled expectations for US economic growth has reached a new peak of Keynesian 'faith'. This week saw "economists" downgrade Q1 GDP expectations once again to a mere 1.6% growth (from 2.6% in January) - meaning that cold weather is responsible for a 46% collapse in US economic growth expectation. As the chart below 'hints' at, it appears we have reached "peak hope."



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Shipbuilding Orders Evaporate As Baltic Dry Collapses

The silence is deafening still about the ongoing collapse in the Baltic Dry Index among mainstream media types (as it just might challenge the hope/hype that growth is coming back). At the dismal level of 1002, BDIY is at 8-month lows and has fallen 14 days in a row... but now it is having a real world impact. As Sea News reports, Korean shipping companies are failing to place orders for large vessels and anxiety over the future is forcing some local companies to dispose of their assets despite the relatively low shipbuilding costs as of late.



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All Hail The Draghi Put: The Global Bond Market Is Now Well And Truly Broken

The evil of modern central banking can nowhere better be seen than in this week’s mad stampede into $4 billion of Greek bonds. The fact is, Greece is not credit-worthy at nearly any coupon yield, but most certainly not at the 4.75% sticker that was attached to the offering. And the claim that Greece’s fiscal affairs have turned for the better is really preposterous. But none of this matters, of course, because the howling pack of money managers who scooped up the Greek debt at an oversubscribed rate of 5X were not pricing the non-credit of the former Greek state, but the promises of Mario Draghi. The very worst evil of monetary central planning is that it enables clueless politicians to believe in their own fiscal fairy tales, and to persist in the ritual can-kicking that is the scourge of central bank intoxicated politicians everywhere. In the context of its shattered economy, the Greek budget is a house of cards. Still, its current leaders, whose tenure is precarious by the day, get their turn in the spotlight to issue utterly specious pettifoggery...

 



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As The Bitcoin Bubble Bursts, Digital Currencies Have A Dilution Problem

As the bitcoin bubble bursts, the residual price momentum and "mining" bubbles remain only in those currencies where the "mining" of bitcoin is easier. This explains the shift from bitcoin to litecoin. In other words, where it is easier to create digital currencies out of thin air and where there is still a momentum-based surge in popularity. In yet other words - to permit a faster dilution of the existing currency pool.



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Putting The "Costs" Of US Sanctions On Russia In Context

Despite Treasury Secretary Jack Lew's insistence that "costs" have been imposed on Russia:

*LEW SAYS SANCTIONS IMPACT SHOWN IN RUSSIAN STOCKS, FX RATE

It appears from the chart below that - once again - for the elites "when it gets serious, you have to lie."



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Chief Economist Of Central Banks' Central Bank: "It's Extremely Dangerous... I See Speculative Bubbles Like In 2007"

Yet again, it seems, once senior political or economic figures leave their 'public service' the story changes from one of "you have to lie, when it's serious" to a more truthful reflection on reality. As Finanz und Wirtschaft reports in this great interview, Bill White - former chief economist of the Bank for International Settlements (who admittedly has been quite vocal in the past) - warns of grave adverse effects of the ultra loose monetary policy everywhere in the world... "It all feels like 2007, with equity markets overvalued and spreads in the bond markets extremely thin... central banks are making it up as they go along." Some very uncomfortable truths in this crucial fact-based interview.

 



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Goldman Summarizes The Rout: "Derisking Is The Name Of The Game"

From Goldman's Sales & Trading Team, "The equity rout continued. Growth tech names felt the heat once again as Nasdaq led the way down, but the weakness was truly wide spread as all sectors ended in the red – both in domestic and overseas developed markets. Earnings season continued, but derisking is the name of the game in these markets."



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Explaining Market Gyrations

A look back at the headlines and market movements of the last month provides some useful color for why markets are weak and why now... As Scotiabank's Guy Haselmann warned early last month, there is a threshold point during the Fed’s attempt to normalize policy where the tide reverses and investors join in a sell-off in a race to avoid being left behind. This is why it's called the greater fool theory.



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Government Denies It Knew About, Abused Heartbleed Bug

"Reports that NSA or any other part of the government were aware of the so-called Heartbleed vulnerability before April 2014 are wrong. The Federal government was not aware of the recently identified vulnerability in OpenSSL until it was made public in a private sector cybersecurity report. The Federal government relies on OpenSSL to protect the privacy of users of government websites and other online services. This Administration takes seriously its responsibility to help maintain an open, interoperable, secure and reliable Internet. If the Federal government, including the intelligence community, had discovered this vulnerability prior to last week, it would have been disclosed to the community responsible for OpenSSL."



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5 Things To Ponder: Is This "THE" Correction?

"The current levels of investor complacency are more usually associated with late stage bull markets rather than the beginning of new ones. Of course, if you think about it, this only makes sense if you refer back to the investor psychology chart above. The point here is simple. The combined levels of bullish optimism, lack of concern about a possible market correction (don't worry the Fed has the markets back), and rising levels of leverage in markets provide the "ingredients" for a more severe market correction. However, it is important to understand that these ingredients by themselves are inert. It is because they are inert that they are quickly dismissed under the guise that 'this time is different.' Like a thermite reaction, when these relatively inert ingredients are ignited by a catalyst they will burn extremely hot. Unfortunately, there is no way to know exactly what that catalyst will be or when it will occur. The problem for individuals is that they are trapped by the combustion an unable to extract themselves in time."



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NSA Abused Heartbleed Bug For Years, Left Consumers Exposed To Attack

It is one thing for the NSA to spy on everyone in the world, especially US citizens because all of them are obviously potential "terrorizers" just waiting for their opportunity to blow shit up (except for anything in close proximity to the Boston marathon - those things the NSA promptly filters out), but when the NSA itself is found to have not only known and itself abused the prevalent and widespread Heartbleed bug, but left consumers exposed, then it may be time to finally launch a class action lawsuit against Obama's favorite means to eavesdropping on the entire world.



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Herbalife Tumbles 14% On News Criminal Probe Has Been Launched Into Company

The Herbalife drama - perhaps the biggest billionaire pissing contest of 2013 - just got excting again, following FT news that a criminal probe has been launched into Herbalife. "The US Department of Justice and the Federal Bureau of Investigation are investigating Herbalife, the multi-level marketing company that hedge fund manager Bill Ackman has alleged is a pyramid scheme, according to people familiar with the matter. The criminal investigation by the FBI and US attorney’s office in Manhattan raises the stakes for Herbalife, which is already facing civil inquiries from multiple government agencies that are looking into the Los Angeles-based company and its associated network of independent distributors."



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Nasdaq Breaks 4,000; Collapses To Worst Week Since June 2012

Equity markets opened down hard, bounced into Europe's close, and then pushed to new cycle lows into the last hour of the day. The Nasdaq hit 4,000 for the first timein over 2 months and closed at its lowest close in 4 months. Around 3pm we saw the standard ramp attempt but it was weak and faded back towards the lows by the close. EURJPY ran the show this afternoon. This is the Nasdaq's worst week since June 2012 (with Nasdaq and Russell -3.5% from the FOMC Minutes alone). All major US equity indices closed red for 2014 (first time in over 2 months). Biotechs fell for the 7th week in a row (the longest losing streak since 1998) in a bear-market -21%. Away from the bloodbath in stocks, bond yields tumbled 8-11bps on the week (with the short-end modestly outperforming)... with 30Y yields (3.47%) at their lowest in 10 months. CAD and EUR weakness today supported modest USD buying but USD Index is -1.3% on the week (biggest weekly drop in 9 months).Commodites were flat today (despite a pump-and-dump in copper early and WTI later) with gold ending the week +1% at $1318.

 



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