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These Are The Warships Attacking Syrian Militants From Afar

Two classes of warships kicked off the U.S.-led attacks on Islamic State and the al Qaeda-linked Khorasan group. WSJ's Jason Bellini explains what are these ships' capabilities?



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"If Something Rattles This Ponzi Scheme, Life In America Will Change Overnight"

The U.S. government is borrowing about 8 trillion dollars a year... The only way that this game can continue is if the U.S. government can continue to borrow gigantic piles of money at ridiculously low interest rates. And our current standard of living greatly depends on the continuation of this game. If something comes along and rattles this Ponzi scheme, life in America could change radically almost overnight.

 



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Why Is China Hoarding Gold? Alan Greenspan Explains

"If China were to convert a relatively modest part of its $4 trillion foreign exchange reserves into gold, the country’s currency could take on unexpected strength in today’s international financial system. It would be a gamble, of course, for China to use part of its reserves to buy enough gold bullion to displace the United States from its position as the world’s largest holder of monetary gold.... If the dollar or any other fiat currency were universally acceptable at all times, central banks would see no need to hold any gold. The fact that they do indicates that such currencies are not a universal substitute... Whereas Simon, following the economist Milton Friedman’s view at that time, argued that gold no longer served any useful monetary purpose, Burns argued that gold was the ultimate crisis backstop to the dollar." - Alan Greenspan



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Summing Up The 'Recovery' In 1 Simple Chart

The "confidence" gap between high-income and low-income earners has never been larger... Thank you Ben and Janet...



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Does Surging Demand For Gold & Silver Coins Signal A Bottom?

Reports of individuals snapping up near-record numbers of gold and silver coins are coming in from around the world. While individual buyers aren't the dominant players in precious metals, they do make a difference; and their renewed enthusiasm is matched by some recent national trends. There's no guarantee that this buying, encouraging as it seems, is anything more than a blip; but in the aggregate it does seem like a lot of buyers, old and new, are finding current prices to be attractive. That's how bottoms form and new bull markets begin.



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More Lies: Watchdog Finds Government "Greatly Exaggerated" Success In Funding Small Businesses Last Year

New investigations by the Small Business Administration (SBA) Office of Inspector General have found SBA Administrator Maria Contreras-Sweet's announcement that small businesses received 23.39% of all federal contracts was greatly exaggerated. As WaPo reports, Federal agencies overstated their success last year in contracting with small businesses that face socio-economic disadvantages finding $400 million worth of contracts that agencies gave to ineligible firms but still counted toward their targets. Rather stunningly, the report found of the top 100 recipients of the highest dollar amount of federal small business contracts, over 75% were actually current large businesses. Trust...



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Caught On Tape: HFT Algo Manipulating GOOGL 1000 Times Per Second

It is very common to find examples of stock quotes changing rapidly - hundreds and sometimes thousands of times per second in a single stock. At the extreme, we've seen in excess of 25,000 quote changes in a single stock in one second of time or less. Sometimes a simple pattern evolves from the quote price changes, such as in the case of a certain High Frequency Trading (HFT) algorithm that we've recently seen run every day in Google stock. The algo starts with an order to buy 100 shares, then replaces a millisecond (ms) later with an order to buy a penny higher.. and repeats hundreds of times. "So what? HFT needs to be able to cancel quotes fast so they can tighten spreads, add liquidity and lower costs." The problem is that when HFT cancels a quote after just 1 ms, then anyone located more than 93 miles (150 km) away will see a stale quote. Worse, they won't know it's stale unless and until they try to act on it and wait for a response.



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Investors Are Too Comfortable In The Fed's Win-Win Conditions For Taking Risk

For a long time, Fed printing via balance sheet expansion has been the key to understanding markets and the predominant driver that has trumped all other matters.  Investors have been able to ignore significant global events, tensions, and economic conditions in faraway places, because a lower real and perceived risk premium from implicit Fed promises was the single most important aspect driving asset prices higher.  This game is quickly coming to an end. As the Fed’s asset purchase program ends next month, global events and global economic fundamentals will have to be taken into account and priced accordingly.



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"Russia Could Ditch Dollar In 2-3 Years"; Deputy PM Warns Nuclear Subs "Could Reach Any Country On Any Continent"

"Two to three years is enough, not only to launch [settlements in rubles], but also to complete these mechanisms," says Andrey Kostin, head of Russia’s second-biggest bank VTB, noting that the possibility of the US and EU widening sanctions to exclude Russia from the SWIFT global money transfer system would become “a point of no return” making any further dialog impossible. However, as Deputy Prime Minister Dmitri Rogozin explains in this interview, how Russia's military and industrial complex is responding to a growing threat from America. Russia is not responding with any talk about the nuclear button (at least not yet); but they are preparing for such an eventuality: "we are creating a nuclear submarine fleet... capable of reaching any country on any continent, if [USA] suddenly becomes the aggressor, and our top-most national interests come under threat," adding that Obama's coup has ushered in "the complete demise of the Ukrainian State."



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Tuesday Humor: S##t Happens, But Not In China



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Martin Armstrong Blasts "Ruthless, Undemocratic, Pretend Leader" Rajoy For Denying Catalonia's Right To Vote

"Power devolves to dictatorship whenever there are no checks and balances. This is a simple truth of history without exceptions."



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Small Caps Suffer Worst Quarter In 3 Years; Bonds Leading Year-To-Date

Despite the ubiquitous v-shaped recovery in stocks from the US open to EU close (decoupling entirely from bonds), stocks slumped into the end of the quarter leaving the S&P and Dow barely positive for Q3 and Russell 2000 down 7.9% - its worst quarter since Q2 2011 (and -5.2% year-to-date). Treasury yields flip-flopped around in a 4-5bps range with a late-day ramp (suggesting liquidations cough PIMCO cough) leaving 30Y -1bps on the week. The USDollar suged higher in the European session and traded lower in the US session. The bigger news on the day was the carnage in commodities that appeared to occur around the European close (desk chatter of commodity fund liquidations). Silver and WTI Crude were monkey-hammered, gold and copper dropped to down 1% on the week. VIX pumped and dumped again but closed above 16. Stocks closed very weak with Russell tumbling 1.5% on the day to not "off the lows."



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Rick Santelli Slams Central Bank Intervention For "Taking The Voters Out Of The Game"

"Central Bankers have moved from being 'nudgers' on monetary policy to basically managing fiscal policy," warns Rick Santelli, adding that "in the West, it's now basically the same." As Santelli points out so accurately, the central bankers have admitted as such, noting "they have to dabble in that direction because nothing can get done in 'politics'" in the US or Europe "for the people - the voters." What this has done, Santelli chides calmly is "take the voters out of the game." Simply put, he blasts, "if central banks hadn't had such a large foray into politics, politicians would have had to sink or swim on the merit - or lack therein - of their policies... that weren't creating the growth." He concludes ominously that the 'spread' between central-bank-inspired "stability" and real-world fiscal-policy-inspired "growth" has never been wider.



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Treasury Curve Roundtrips To Flattest Since S&P's "666" Intraday Lows

Everyone remembers March 6th, 2009, right? Some days are easier to remember than others and March 6th, 2009 will not easily be forgotten as that was the day when the S&P 500 made its now infamous "666" intraday low and it also marked the closing price low of 683 for the S&P 500 during the financial crisis. Seems like a very long-time ago as the S&P 500 is roughly 1300 points higher than the intraday financial crisis low. Interestingly, as of the close yesterday, the spread between the 10-year treasury and the 30-year treasury fell to its lowest level (69 bps) since that infamous day.



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Goodbye POMO: Normalcy Returns On October 28

Here it is.. the Fed's buying guide for October. The Federal Reserve Bank of New York has released its $10 billion open market purchase plans... and the buy-into-the-weekend trade may get dented as there are no POMOs on a Friday in October.  After October 28th, equity bulls are on their own with their 'fundamentals' as its game over for QE.



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