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Jim Grant On Complexity: The Hidden Cost Of Central Bank Actions

Central banks are printing rules almost as fast as they’re printing money. The consequences of these fast-multiplying directives — complicated, long-winded, and sometimes self-contradictory — is one topic at hand. Manipulated interest rates is a second. Distortion and mispricing of stocks, bonds, and currencies is a third. Skipping to the conclusion of this essay, Jim Grant is worried: "The more they tried, the less they succeeded. The less they succeeded, the more they tried. There is no 'exit.'"



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Russia Weaponizes The Arctic: Will Build 13 Airfields And 10 Radar Stations To Meet "Unwelcome Guests"

Two weeks ago, Sweden was gripped by a ludicrous panic when it dispatched virtually its entire army, navy and airforce to hunt down what according to eyewitness reports (subsequently proven to be false) was a Russian sub that had broken down somewhere close to Stockholm. There was no sub. However, one angle that made the story plausible were rumors of a recent surge to Russian military transports and support units to the Artcic, in a scramble to defend its vast natural resource deposits located close to the North Pole. And not surprisingly, this weaponization of the Artic was confirmed two days ago when a senior military commander said that Russia will build at least 13 airfields and 10 radar stations in the Arctic to safeguard the nation's military security in the region.



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How Long Can The Shale Revolution Last?

A new study has cast serious doubt on whether the much-ballyhooed U.S. shale oil and gas revolution has long-term staying power.



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Algos Please Ignore: Citi Slashes Previously Reported Net Income Due To "Legal Investigations" Over FX Rigging Probe

Nothing to see here move along:

*CITIGROUP ADJUSTS 3Q DOWN ON $600M INCREASE IN LEGAL ACCRUAL, LOWERS CITI’S 3Q '14 NET  TO $2.8B FROM $3.45B
*CITIGROUP SAYS DOJ, CFTC, OTHERS PROBING CITI'S FOREX BUSINESS

When did company earnings become like GDP: first release is highest, second is lower, third lowest? Aren't you glad you bailed this trustful people out?



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Broken Stocks, Battered Bullion, & Bruised Crude

If a broken window is good for the Keynesian economy, then today's broken market (worse than the 2013 Nasdaq blackout) was certainly good for stocks as exchanges broke left and right, futures volume exploded and S&P almost hit 2,000 all on the back of a 2-week old headline from Japan. Today's market was volatile... everywhere. Silver and gold were smashed lower (-2.2% & -4.1% on week); US Dollar was pumped higher (+0.5% on the week) but weakened after GDP; Treasury yields unch today, notably flatter on week (30Y unch - almost broke 3.00% today, 5Y +9bps); HY Credit wider in whippy range (+10bps on week). VIX tested to 14 but closed near 15. Stocks end mixed: Trannies -1.2% (worst in a week), Nasdaq unch, Dow +1.1% (V +145 of Dow's 220pts). Post-FOMC - Energy is down 1%, Utes/Healthcare +1.6%.



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3 Things Worth Thinking About

The question that remains to be answered is whether the economy and the financial markets are strong enough to stand on their own this time? The last two times that QE has ended the economy slid towards negative growth and the markets suffered rather severe correction...



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Shadow Banking Assets Increase By $5 Trillion To Record $75 Trillion, 120% Of Global GDP

We are not exactly sure which is scarier: that total financial assets amount to about 500% of world GDP or that about $75 trillion in financial leverage is just sitting there, completely unregulated and designed with one purpose in mind: to make billionaires into trillionaires (with taxpayers footing the bill of their failure).



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Which Director Are Politicians Listening To About Ebola?

Presented with no comment...



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QE’s Seeds Are Already Sown

When the next crisis comes there will no doubt be economists and commentators who blame it on some proximal event, like the failure of a large important financial institution. Don’t be fooled. The seeds of the next crisis are already sown. Fed policy under Ben Bernanke and Janet Yellen has distorted the economy in a way that makes it precariously fragile, and susceptible to collapse.



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Broken Market (Worse Than 2013 Nasdaq Blackout) Just Fails To Send S&P Back Over 2,000

To 'prove' that the end of QE3 is not a negative for stocks and to 'confirm' the Fed's narrative that the economy is surging (despite all the unsustainable one-offs in the GDP print), algos are tearing stocks higher, targeting the crucial 2,000 S&P level... thanks to 2-week old headlines from Japan, a broken options market, and the NYSE unable to report trades... As Nanex notes "this is a bigger event than the 2013 market blackout."



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Bad Debt At China's - And The World's - Largest Bank Surges By Most Ever

A week ago, when showing the following chart of Chinese housing trends, we reported that the "burst Chinese housing bubble leads to first annual price decline since 2012", and warned that it is only a matter of time before both China's GDP, extensively reliant on housing construction, as well as Chinese bank assets, vastly consisting of housing-related loans and other fixed income exposure, take a major hit. This happened yesterday, when in an exchange filing China's Industrial & Commercial Bank of China, the largest lender by assets in both China and the entire world, reported its biggest jump in bad loans since at least 2006. Specifically, ICBC’s nonperforming loans rose to 115.5 billion yuan in September from 105.7 billion yuan in June. The increase was the biggest since quarterly data became available.



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This Is The 12-Days-Old News That Just Spiked USDJPY And Stocks

Day after day after day this 'market' is manipulated and managed by headlines that memory-less machines read and act upon. Today - yet again - at 210am Japan time, Nikkei news decides it is time to print these headlines:

*JAPAN GPIF TO CUT JAPAN DEBT ALLOCATION TO 35%, RAISE DOMESTIC STOCK ALLOCATION TO 25%: NIKKEI

And sure enough JPY explodes instantly in an attempt to spark momentum. This is not news (it's a constant headline every day since October 19th) as Abe sacrifices his economy and his people's economic future for an uptick in stocks. S&P e-minis just posted the record for most contracts traded in a second!!!



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Tailing 7 Year Auction Is Carbon Copy Replica Of Yesterday's 5 Year

If one had to pick a carbon copy replica of yesterday's 5 Year tailing auction, today's 7 Year probably ranks toward the top. Just like yesterday, the auction priced with a tail to the 2.009% WI, coming in 0.9 bps wider at 2.018%. Just like yesterday, the high yield was a steep drop from the September auction, sliding from 2.24 to just over 2%, and just like yesterday the Bid to Cover slid alongside the yield, with the 2.415 BTC printing at the lowest level since November 2013. Finally, and just like yesterday, the internals demonstrated the same trend with Directs taking down 15.42%, less than the 23.11% TTM average, Indirects ended up with 46.6% or more than the recent average, and dealers left holding 38.0%: right on top of where it has been in the past year. In fact, the only difference from yesterday is that there is no FOMC announcement in less than an hour.



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The M&A Gift That Keeps On Giving: Mass Layoffs Coming To A Tim Hortons Near You

There are three things that are certain: death, taxes and M&A "synergies." And while the recent debt and record stock price-funded M&A bubble has been a present from god, or rather the Fed, to the activist shareholders and owners of target stocks (and acquirors, because in the New Normal M&A announcements somehow boost the price of both), it has been a scourge for everyone else: namely the employees of companies that undergo M&A as the first and foremost place where EPS "synergies" are extracted is by eliminating duplicative headcount, read mass layoffs. This is precisely what workers at Canada's Tim Hortons are about to find out first hand, because as Financial Post reports, citing a study from the Canadian Centre for Policy Alternatives, "widespread layoffs and strict cost cutting measures could befall Tim Hortons if Burger King’s parent company takes over the chain." Small correction replace "could" with "definitely will" and the sentence will be spot on.



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