Both Keynesians and monetarists believe that increased government spending, or more money injected into the economy, is sometimes necessary. The intervention is in the form of unfunded government spending, artificially low interest rates to boost demand for money and bank credit, or a drive to make the currency “competitive” by lowering it. These methods have been tried unsuccessfully time and again, and they must be denounced if we are to understand our true economic condition. The reason they don’t work can be summarized as both an oversight and a fallacy.
Trading has a few simple rules - do the opposite of Goldman's Thomas Stolper; don't fight the Fed; and buy low, sell high. However, as this series of charts from Nanex shows, it is the latter rule that is the easiest to comprehend and yet - thanks to massive and obvious HFT manipulation - is an extremely difficult thing to do. As Nanex's Eric Hunsader notes, high frequency trading algos do not get much clearer than this as the machines buy low (from you) and sell high (to you) each and every millisecond of the trading day.
Would you be willing to give up what Edward Snowden has given up? He has given up his high paying job, his home, his girlfriend, his family, his future and his freedom just to expose the monolithic spy machinery that the U.S. government has been secretly building to the world. He says that he does not want to live in a world where there isn't any privacy. He says that he does not want to live in a world where everything that he says and does is recorded. Thanks to Snowden, we now know that the U.S. government has been spying on us to a degree that most people would have never even dared to imagine. Up until now, the general public has known very little about the U.S. government spy grid that knows almost everything about us. But making this information public is going to cost Edward Snowden everything. The following are 27 quotes from Edward Snowden about U.S. government spying that should send a chill up your spine...
With a massive 6,208 (or 80% of the total in the entire Comex system) Customer Delivery issues outstanding against JPM so far in June alone, many have been wondering - how and when will the firm reconcile what is seemingly more demand for JPM vaulted gold than the firm has in its possession? While we still don't have the answer, what we do know is that as of an hour ago when the Comex released its daily vault depository statistics, JPM has said goodbye to another 28.4% of all of its vaulted gold, the result of the departure of 61.5% of its Eligible gold, as hundreds of thousands of registered ounces in the bast few weeks have seen warrant detachment. Which means that as of last night, total gold held by JPM has fallen to a new fresh all time low of just 550k ounces, down from 768K the day before, and total eligible gold of only 136,380 troy oz in inventory - also a record low.
With the US macro surprise index having hit 10-month lows - and now among the dirtiest of dirty shirts of world economic regions (thanks to the over-optimistic expectations) - we thought it useful to reflect somewhat stoically on the reality of the macro-economic environment that we are told day after day is doing so well in the US...
If the constitutional scholar was hoping he would quietly avoid a major showdown over the constitutionality of the biggest spying scandal since Nixon (whether legal or not remains to be determined) and which would likely have led to an early POTUS retirement if current president was republican, the ACLU just slammed the door shut on the possibility. Moments ago, the American Civil Liberties Union filed a lawsuit against the Obama administration over its "dragnet" collection of logs of domestic phone calls, contending that the once-secret program is illegal and asking a judge to both stop it and order the records purged. And, as the NYT reports, "the lawsuit, filed in New York, could set up an eventual Supreme Court test." Only once that happens it will be too bad that InTrade is no longer available, to take the other side of a trade that believes the SCOTUS will for once do the right thing and preserve the constitution when everyone knows the decision to formally enact a Big Brother state will pass along political party lines and America will officially become the country that for 5 decades, at least superficially, it was waging "cold war" against.
After a couple of days of exuberant dead-cat-bouncing in Japan (and therefore implicitly US equities), the reality that credit markets had been hinting at is starting to be realized once again. A nasty gap-down open in US equities saw BTFDers come piling back in, aided by pressure on bonds and a final liftathon into the EU close in AUDJPY. That was the best of the day and JPY's biggest surge in over 3 years (~3%!) dissolved any equity-dip-buying power as stocks jerked up and down around VWAP for the rest of the day. Credit markets opened even more gap wider than stocks weaker as chatter was that bondholders were hedging exposures (as opposed to reducing exposure - hoping that redemptions don't come). That gap was very rapidly filled and aided the parabolic ramp into the EU close. Then, credit was offered, stocks followed as VIX and Treasuries were bid the rest of the day. A very chaotic day in almost every asset class (with PMs actually relatively stable) as US markets begin to mimic Japanese volatility. The Nikkei is now 800 points off the dead-cat-bounce highs from 2 days ago.
Equity bulls remain cognitively biased to the belief that a rising interest rate market implies growth expectations (enough to warrant a Fed Taper) that confirm the hope priced into stocks (entirely missing the bubble concerns and technical corruptions in the markets caused by these policies). However, at the very short-end of the interest-rate curve in the US, the market has pulled forward rate-hike expectations from End-2015 to May 2015 in the last month alone. The problem with the velocity of this adjustment is that in order to hike rates - the entire extraordinary asset purchase program known as QE4EVA has to be over... Still think equities are pricing that in?
Socialist Paradise: Homeless Frenchmen Squat In Vacant Office Buildings While City Hall Enacts "Eminent Domain"Submitted by Tyler Durden on 06/11/2013 - 15:16
it appears the memo about the glorious housing recovery has bypassed the socialist paradise of France. Either that, or the concept of shared property is so advanced there, and the costs of evicting squatters so high, that all a homeless Parisian needs in order to have four walls and a roof above their heads is to find an empty office building and claim it as their own. Which is precisely what is happening. And while squatting is not a unique phenomenon to any paradise, socialist or otherwise, when a group of 16 Parisian families decided to take over a vacant 4-story building, have decided to put a little signature touch: they telegraphed their presence far and wide by placing repeated food orders so the neighbors could see the "comings-and-goings" of the delivery man (supposedly justifying their squatting), but actually went so far as to invite the French housing minister. And got her support! Socialist utopia indeed.
Moments ago CNBC cued to the its gas-mask clad coverage from a violent Taksim Square, where a crowd of 50,000 was just getting the tear gas treatment from the local police. And sure enough, going back to the question we posed first thing this morning whether with "a big demonstration is due in a few hours: will Taksim Square June 2013 be the "Waddel and Reed/May 2010" Syntagma Square flash crash equivalent?", we got the answer courtesy of the USDJPY which just tumbled over 80 pips in the span of minutes and dragged down not only the S&P but the Nikkei with it. We hope the NSA has a read on just where Waddell and Reed is located exactly this moment or else things may get very Syntagmaish Squarish circa May 2010 in a hurry...
When even Zee Germans are staring open-mouthed at what they call "American-style Stasi methods" you know things have got a little out of hand. As Reuters reports, German outrage over a U.S. Internet spying program has broken out ahead of a visit by Barack Obama, with ministers demanding the president provide a full explanation when he lands in Berlin next week and one official likening the tactics to those of the East German Stasi. "The more a society monitors, controls and observes its citizens, the less free it is," Merkel's Justice Minister exclaimed, adding, "the suspicion of excessive surveillance of communication is so alarming that it cannot be ignored." While Obama has defended it as a "modest encroachment" on privacy and reassured Americans that no one is listening to their phone calls, the Germans reflect "I thought this era had ended when the DDR fell."
Very Weak 3 Year Bond Auction Prices At Highest Yield Since July 2011, Lowest Bid To Cover Since 2010Submitted by Tyler Durden on 06/11/2013 - 13:12
If there is one word to describe today's 3 Year $32 billion auction it would be atrocious. With the When Issued stopped at 0.577%, the closing high yield tailed notably at 0.581%, a dramatic spike from last month's 0.354% and the highest yield since July 2011, indicating substantial turbulence on the surface. Beneath the surface it was the same story, with the Bid To Cover plunging from 3.38 to just 2.95, the lowest since December 2010, driven by a crash in Direct Bidder take down to just 8.4% from 14.6% and a TTM average of 12.9%: this was the lowest Direct interest since August. The result was that Indirects were left with a sizable 33.1% of the auction well above the 26.3% TTM average, and Dealers had to absorb the remainder, or 58.4% of the auction. All in all, a very ugly auction although with investors still demanding only 0.5% to hold 3 year paper it would appear that any fears of an imminent hike in rates (regardless what the Fed does with the longer-end of the curve), is still far away.