- Early Warning Signs of Recession Flash Faintly in U.S. Jobs Data (BBG)
- Who Needs Buybacks? One S&P 500 Variant Just Rallied to a Record (BBG)
- The unpredictable new voice of Saudi oil (FT)
- Saudi's Other Warning Makes Oil Traders Sweat After Doha Failure (BBG)
- U.S. oil investors rush for protection at $35 as Doha talks collapse (Reuters)
- Trump candidacy: Where some fear to tread others see a path to victory (Reuters)
Yesterday’s leaks confirm the ECB’s plans will effectively give Europe’s consumer lenders access to unlimited zero-cost finance – going far further than the free money showered on them by the multiple previous TLTRO financial packages. Under the proposed scheme, European banks have the option to issue their clients a new branded European Banking Union debit card.
"The property bubble is everything to this economy and the country’s citizens, whether they know it or not, are 'all in'." Those who so to speak 'live inside the bubble' are no longer aware of its dangers. The mentality of Australians is generally well aligned with the country’s great weather – their outlook usually tends to be 'happy-go-lucky' and optimistic; but Australia’s citizens have far greater exposure to the bubble than is immediately obvious.
Contrary to those blaming the Fed for causing stocks to fall by “raising rates” (which Joe Salerno reflects on here) we want to stress the fact that, in raising rates, the most that the Fed could do is unravel previously made mistakes. In other words, there is nothing praiseworthy in the first place about artificially propped up stock market levels. We have no interest in lauding the longevity of the bubble, because the bubble is the enemy of the healthy economy. The collapsing equity markets reveal where bubbles were formed and that our alleged prosperity is an illusion. And this is precisely what former Dallas Fed Chairman Richard Fisher stated in a conversation on CNBC last week when he confessed: “We frontloaded a tremendous market rally to create a wealth effect.”
- Dollar rises versus euro, oil drops before ECB, OPEC meetings (Reuters)
- Smog chokes Chinese, Indian capitals as climate talks begin (Reuters)
- Obama: COP21 Paris Climate Talks Could Be ‘Turning Point’ For Planet (BBG)
- China plans to launch carbon-tracking satellites into space (Reuters)
- Scientists Dispute 2-Degree Model Guiding Climate Talks (WSJ)
- At NATO, Turkey defiant over downing of Russian jet (Reuters)
- ECB Left With No Choice But Action After Draghi's Priming (BBG)
So far today's trading session has been a repeat of what happened overnight on Monday, when following a weak start on even more weak Chinese data, US equities soared on the first trading day of the month continuing their blistering surge since that dreadful September payrolls report, which as we showed was mostly catalyzed by a near record bout of short's being squeezed and covering, which accelerated just as the S&P broke the 2100 level.
Yesterday Doi and Gina were back at 7 Little Bloomfield Street, Surry Hills. Their fingers crossed for greater fools because Doi was keen to offload his March purchase. The reason? Like most of us who've bought $800k crack shacks, Doi had a healthy dose of buyers' regret and came to his senses "after realising just how small the property was he decided to sell." How lucky was Doi? This is Australia! Doi found a plumber willing to go 60k higher than he'd paid six months earlier
- Greek PM sticks to hard line as contagion hits euro zone bonds (Reuters)
- Greek Deadlock Has Leader Hoping for Miracle to Avoid Default (BBG)
- Greek Showdown Puts Merkel's Teflon Legacy at Risk (BBG)
- Greek standoff saps Europe, dollar swings ahead of Fed (Reuters)
- Allianz Increased Holdings of Greek Debt as Its Largest Investor (BBG)
- French Bonds Infected as Greek Crisis Swells Euro-Region Spreads (BBG)
- Statoil to cut 1,500 more jobs as savings drive intensifies (FT)
- UnitedHealth, Anthem Seek to Buy Smaller Rivals (WSJ)
- Five Million Reasons Why China Could Go to War (BBG)
Current policy coming from the Fed seems to be geared to create a never-ending series of booms and busts, with the hope that the busts can be shortened with more debt and easy money. Yet one major driver behind the financial crisis in 2008 was too much debt - much of which led to taxpayer-funded bailouts. In spite of this, the best the Fed can come up with now is to lower interest rates to boost demand to induce households and governments to borrow even more. Interfering with interest rates, however, is by far the most damaging policy. The economy is not a car, and interest rates are not the gas pedal. Interest rates play a critical role in aligning output with society’s demand across time. Fiddling with them only creates an ever-growing misalignment between demand and supply across time requiring an ever larger and more painful adjustment.
How will the central planners contain this MONSTER?!
- Germans Tired of Greek Demands Want Country to Exit Euro (BBG)
- Weak euro powers European stocks to new highs (Reuters)
- Siemens Cheers Euro Slump as Emerson Eases Dollar’s Sting (BBG)
- A Police Gadget Tracks Phones? Shhh! It’s Secret (NYT)
- If Economists Were Right, You Would Have a Raise by Now (BBG)
- iWatch: who’s going to pay $17K for a device that will be obsolete in two years? (Barrons)
- Ferguson Suspect Said to Claim He Wasn’t Firing at Police (BBG)
- Why Bankers Are Leaving Finance for No-Salary Tech Jobs (BBG)
This past week has been a virtual tennis match watching the evolution of the Greek bailout negotiations. No Deal, Deal, No Deal, Deal. However, despite the fallout that would likely come from a Greek "exit," the markets have largely managed to ignore the risk and hit an all-time high this week. Market valuations, bullish sentiment and complacency are all pushing higher as the focus remains on the ignition of the ECB's QE program as a stimulus for the markets. In fact, this is so much the case that the net percentage of managers overweight Eurozone equities is at the highest level on record.
Another Conspiracy Theory Becomes Fact: The Fed's "Stealth Bailout" Of Foreign Banks Goes MainstreamSubmitted by Tyler Durden on 09/30/2014 13:25 -0400
Back in June 2011, Zero Hedge first posted: "Exclusive: The Fed's $600 Billion Stealth Bailout Of Foreign Banks Continues At The Expense Of The Domestic Economy, Or Explaining Where All The QE2 Money Went" Of course, the conformist, counter-contrarian punditry promptly said this was a non-issue and was purely due to some completely irrelevant micro-arbing of a few basis points in FDIC penalty surcharges, which as we explained extensively over the past 3 years, has nothing at all to do with the actual motive of hoarding Fed reserves by offshore (or onshore) banks, and which has everything to do with accumulating billions in "dry powder" reserves to use for risk-purchasing purposes. Fast, or rather slow, forward to today when none other than the WSJ's Jon Hilsenrath debunks yet another "conspiracy theory" and reveals it as "unconspiracy fact" with "Fed Rate Policies Aid Foreign Banks: Lenders Pocket a Spread by Borrowing Cheaply, Parking Funds at Central Bank"
In July, the gain in durables was led by an increase of 10.1 percent in the index for motor vehicles and parts, which was the largest since the index jumped 26.9 percent in July 2009. In other words, when it comes to the US economy, subrpime is the new "cash for clunkers" as can be seen on the chart below.
The stories make you want to take all of your money out of the stock market and put it in your mattress!