In recent months talking heads, disappointed with the lack of economic recovery, have turned their attention to wages. If only wages could grow, they say, there would be more demand for goods and services: without wage growth, economies will continue to stagnate. Unfortunately for these wishful-thinkers the disciplines of the markets cannot be bypassed.
If last week's disappointing global economic data, that saw Brazil added to the list of countries returning to outright recession as Europe Hamletically debates whether to be or not to be in a triple-dip, was enough to push the S&P solidly above 2000, even if on a few hundreds ES contracts (traded almost exclusively between central banks), then the overnight massacre of global manufacturing PMIs - when not one but both Chinese PMIs missed spurring calls for "more easing" and pushing the SHCOMP up 0.83% to 2,235.5 - should see the S&P cross Goldman's revised year end target of 2050 (up from 1900) sometime by Thursday (on another few hundreds ES contracts).
Dispassionate look at the week ahead, without the hysterics of the sky is falling or the mother of all crises is around the corner.
Were this extreme policy to be implemented it would be a further and deliberate debasement of fiat currencies. Alan Greenspan’s warning of “fiat money in extremis” becomes more real by the day. Were this silly proposal ever to become policy, it would significantly increase the risk of inflation and stagflation. In a worst case scenario, it will lead to currency collapse and hyperinflation.
Confirming Europe's realization just how serious events are, and how far down the rabbit hole Europe's bureaucrats have gone, French President Francois Hollande, while stressing that a failure by Russia to reverse a flow of weapons and troops into eastern Ukraine would force the bloc to impose new economic measures i.e., nothing new, it is what he said just after that indicated a dramatic change in rhetoric: "Are we going to let the situation worsen, until it leads to war?" Hollande said at a news conference. "Because that's the risk today. There is no time to waste."
This seems to be the biggest question in financial markets for me right now because the math just doesn`t add up any way you slice it.
A dispassionate discussion of the technical condition of the dollar.
With the Federal Reserve ending their support of the markets by October, and as discussed yesterday, corporate share buybacks on the decline; two of the biggest supports of asset prices over the last couple of years is fading. What does this mean for investors going forward?
HIGHLIGHTS > Gold reserves destination unknown after moved from Ottawa vault as part of Bank of Canada HQ renovation > Switzerland, the Netherlands and Sweden say they hold gold in Ottawa > Upcoming Swiss vote on gold repatriation could lead to gold repatriation from Bank of Canada > Bank of Canada only acts as gold custodian to four foreign central banks > Bank of Canada no longer a major gold custodian; Canada has virtually no gold reserves
"In a very real sense, it is fractional reserve banking and not money itself that is the root of so many of today’s evils. Whenever fractional reserves are permitted, the banking system – including the one that exists today throughout the world – comes to resemble a classic Ponzi scheme which can only function as long as most people don’t try to get at their money."
The current bubbles in financial assets -- in equities and bonds of all grades and quality -- raging in every major market across the globe are no accident. They are a deliberate creation. The intentional results of policy. Therefore, when they burst, we shouldn't regard the resulting damage as some freak act of nature or other such outcome outside of our control. To reiterate, the carnage will be the very predictable result of some terribly shortsighted decision-making and defective logic.
Yields on European sovereign debt have collapsed in recent months as investors piled into these 'riskless' investments following hints that the ECB will unleash QE (at some point "we promise") and the economic situation collapses. However, Mario Draghi has made it clear that any QE would be privately-focused (because policy transmission channels were clogged) and the appointment of Blackrock to run an ABS-purchase plan confirms that those buying bonds to front-run the ECB may have done so in error. As Rabobank's Elwin de Groot notes in six simple comments that he expects continued "procrastination" by the ECB over sovereign QE even after dismal economic data - and in doing so, exposes the entire facade behind The Fed's QE.
According to Russia's RIA Novosti, citing business daily Kommersant, Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfers. Meaning Russia will export energy to either Europe or China, and receive payment in either Rubles or Yuan, in effect making the two currencies equivalent as far as the Eurasian axis is conerned, but most importantly, transact completely away from the US dollar thus, finally putin'(sic) in action the move for a Petrodollar-free world.
Investors in European Bonds are running over each other all in an effort to front run what the Big Banks have been begging the ECB to begin a bond buying program. It is hilarious as European yields are already ridiculously low right now, how much lower do they think these yields can go?