Seven years after the start of the financial crisis, economic and financial conditions remain far from normal. In the ‘Wonderland’ of near-zero interest rates, many of the traditional relationships that have governed the way in which markets and cycles evolve have broken; the value of historical analysis has weakened. In Goldman's view, there are three very different near-term paths that economies and markets can now follow, and that imply very different outcomes for financial markets... (What GS realizes, in short, is The Fed is entirely boxed-in)
With global growth concerns on the rise, whether a bust in the Chinese housing sector could threaten the economic activity and financial stability of the world’s largest contributor to growth is top of mind for Goldman Sachs. As Michael Pettis warns, "this story only has a few possible endings, all of which imply a significant reduction in economic growth as debt problems are addressed." The following 3 charts suggest Pettis is right...
Ottawa Shooter Idenfitied As Canadian National Michael Zehaf Bibeau, Whose Passport Was Recently SeizedSubmitted by Tyler Durden on 10/22/2014 - 17:27
Moments ago CBS News reported, citing Law enforcement and U.S. Government sources, that the shooter in today's tragic Ottawa incident was Michael Abdul Zehaf Bibeau, born in Canada in 1982. One source says he sometime dropped the name Michael and went by Abdul Zehaf Bibeau. At other times he apparently dropped the Abdul. In a report from the Muslim Issue, Zehaf-Bibeau is said to be reportedly of Algerian descent.
"We play the “Great Game” as we have been taught and as we have learned, being reticent about following inordinate strength and/or inordinate weakness; holding as best we can to major trends and always remembering that in a bull market… and this does still remain a global bull market… there are but three positions one may have: Aggressively long of equities; “pleasantly” long of equities, and neutral of them." - Dennis Gartman
The trend of average U.S. citizens being incarcerated by overzealous judges and prosecutors within the police state formerly known as America continues with reckless abandon.
Most of us have heard of the seven stages of grief. Shock, Denial, Anger, Bargaining, Guilt, Depression, Acceptance. Where are we in our journey through these stages when it come to the financial crisis, and to growth? There’s only one stage that even remotely sounds right: Denial. We’re not even close to Anger yet, not when it comes to the larger population. We simply deny that something has really changed. And even if you wish to claim that it hasn’t, no-one can deny the possibility that it has. Still, that is exactly what happens. Denial, everywhere you look. Freud’s ideas are (ab)used to hide reality from us (to ‘sell’ the message), while Keynes’ ideas are abused to hide the reality that you can’t buy growth with debt your children will have to pay back. Pretty simple, when you think about it.
While some pointed north to the aweful events in Ottowa, it appears the bigger driver of weakness in stocks today (aside from a sudden absence of broken VIX markets, a lack of Fed Speakers, and the truth about ECB bond-buying being exposed) was the plunge in crude oil. WTI tumbled from over $83 to a low $80 handle after inventories surged more than expected and that appeared the catalyst for equities to catch down to credit weakness. Treasury yields closed the day unchanged but sold off notably in the EU session (like yesterday). The USDollar strengthened for the 2nd day in a row (now up 0.55% on the week) on EUR weakness (CAD volatile around shootings), weighing on commodities. Silver was monkey-hammered early, copper and gold slid, then oil plunged (down 2% on the week). Yesterday's big winner Trannies tumbled the most today (-2%) as stocks gave up half the week's gains today.
RCMP Press Conference at 2pmET - Live Feed
Two days after two Canadian soldiers were hit by a car driven by Martin Couture-Rouleau, a 25-year-old Canadian who, as The Globe and Mail reported, "converted to Islam recently and called himself Ahmad Rouleau."
At least two people are injured, including a soldier, after shots were fired in the Parliamentary precinct in Ottawa on Wednesday morning; one shooter is dead and police suspect as many as two others are on the loose. A dark-clothed gunman fired the shots just before 10 a.m. at the Canadian War Memorial, where a uniformed soldier was shot. The gunman then fled for Parliament Hill, where he unleashed more gunfire inside Centre Block. A security guard was injured before the sergeant-at-arms shot the suspect dead, according to multiple reports. Ottawa Police said there was also an incident near the Rideau Centre, a large mall metres from Parliament Hill. Still active shooter, 3 separate shooting sites, Multiple gunmen, 1 gunmen dead, soldier dead
The last 2 days have seen enormous volatility in the Saudi Riyal exchange rate, purportedly oil-related FX hedging programs as the SAR dropped to its lowest sicne Dec 2008, but the most extreme 'moves' were left to The Kingdon's top Muslim cleric. As The BBC reports, Sheikh Abdul Aziz al-Sheikh, the Grand Mufti of Saudi Arabia, exclaimed that Twitter is "the source of all evil and devastation". As the 12th most influential Muslim in the world, it perhaps matters that he says users were using Twitter to "promote lies, backbite and gossip and to slander Islam," but citizens of Saudi Arabia, who are some of the heaviest users of Twitter, did not appreciate his remarks, summe dup by one tweet, "People need an outlet to express themselves, to start to disclose what's hidden and drop the masks, without fear or commands, or censorship from anyone."
There was a time when one couldn't get Bernanke to shut up: whether it was swearing to Congress how the Fed is not monetizing debt, explaining to Ron Paul that gold is nothing but "tradition", or otherwise issuing one after another after another debt monetizing quantitative easing program in hopes that "this time" the trickle down from the record high stock market would finally unleash central-planning utopia, Bernanke's verbal insight was in a state of constant deflation. However, ever since his departure from the marble halls of the Marriner Eccles building, suddenly Bernanke's insight has hyperinflated to the tune of some $250,000 per hour of Bernanke's time (time during which he says such profound insights as "No Rate Normalization During My Lifetime"). So without further ado, and without having to fork over a ridiculous quarter of a million dollars, here is what the Chairsatan really said...
"If you like your broken markets," it would appear you can keep them... but this time in bond futures. June 2015 30Y Futures prices are surging today (up a stunningly fat-finger-esque 7.4% (or 10 points)). This, however, is being traded... there is volume being exchanged... and at 151-19/32, it implies 30Y Bond yields will be below 2.4% by the middle of next year (from 2.99% today).
From Tepper's "Short The Euro," call (which he hopes does better than his "bond bull is over" call) to Icahn's "HY credit is in a bubble... and I am short" warning, The 2-day Robin Hood conference in NYC had something for everyone. Paul Tudor Jones thinks US equities will outperform the rest of the world this year but "the piper will be paid one day," and Larry Fink says "equities are health" after last week's correction... and Whitney Tilson is short Lumber Liquidators (trade accordingly).
Congress gave the Fed a mandate to “promote maximum employment, production, and price stability”; it never explicitly authorized propping up stocks. Yet through a remarkable theoretical stretch called the “wealth effect,” that’s exactly what the Fed is doing.