In a carry-trade driven world in which news and fundamentals no longer matter, the only relevant "variable" is whether the JPY is down (check) and the EUR is up (check) which always results in green equities around the globe and green futures in the US, with yesterday's sudden and sharp selloff on no liquidity and no news long forgotten. The conventional wisdom "reason" for the overnight JPY underperformance against all major FX is once again due to central bank rhetoric, when overnight BOJ's Kiuchi sees high uncertainty whether 2% CPI will be reached in 2 years, Shirai says bank should ease further if growth, CPI diverge from main scenario. Also the BOJ once again hinted at more QE, and since this has proven sufficient to keep the JPY selling momentum, for now, why not continue doing it until like in May it stops working. As a result EURJPY rose above the 4 year high resistance of 138.00, while USDJPY is bordering on 102.00. On the other hand, the EUR gained after German parties strike coalition accord, pushing the EURUSD over 1.36 and further making the ECB's life, now that it has to talk the currency down not up, impossible. This is especially true following reports in the German press that the ECB is looking at introducing an LTRO in order to help promote bank lending. Since that rumor made zero dent on the EUR, expect the ongoing daily litany of ECB rumors that the bank is "technically ready" for negative rates and even QE, although as has been shown in recent months this now has a half-life measured in minutes as the market largely is ignoring whatever "tools" Draghi and company believe they have left.
It is undeniable that America is thoroughly addicted to fiat stimulus. Every aspect of our economy, from stocks, to bonds, to banks, and by indirect extension main street, is now utterly dependent on the continued 24/7 currency creation bonanza. The stock market no longer rallies to the tune of increased retail sales, growing export markets or improved employment expectations. In fact, “good” economic news today is met with panic and market sell-offs! Why? Because investors and banks still playing equities understand full well that any sign of fiscal improvement might mean the end of the private Federal Reserve’s QE pajama party. They know that without the Fed’s opiate-laced lifeline, the economy dies a fast and painful death. All mainstream economic news currently revolves around the Fed, as pundits clamor to divine whether the latest signals mean the free money will flow, trickle, or dry up. At the edge of the Federal Reserve’s 100th anniversary, it is vital that we see the current developments for what they really are – history changing, in a fashion so violent they are apt to scar America forever.
In a world some thought we would never see, most Americans and much of Congress seem to agree with Ron Paul's foreign policy advice - at least on the question of a military strike against Syria...
This is the essential primer on the Fed that every high school and college student in America should read. If they study this short essay, they will grasp the essence of the Fed and understand why the financial Status Quo is doomed.
And What About Your Smart Meter?
Over the course of decades we have allowed ourselves to be corrupted by the love of material possessions, the lure of a debt based faux wealth, the money for nothing entitlement promises of dishonorable politicians, the evil of currency debasement, the effectiveness of mass media propaganda, and the belief that we could sacrifice freedom and liberty for promises of safety and security made by a cabal of powerful rich men. Power has been concentrated into the hands of the few, who operate in secrecy and despise the people. They don’t want transparency or open debate. Freedom of speech is nothing but a thorn in their side. They believe they are smarter than the serfs and have no morality when it comes to committing illegal acts and disregarding the Constitution. They are not acting in the public interest. Their abuse of power and looting of the national wealth have put us on a path towards a bloody revolution. This is not a time for conformity, obedience or submission. It’s time to stand up and expose the evil doers. It’s time to rally around those who care about this country. Who are the real traitors? You know the answer.
Well, isn't that convenient? At the moment when the Obama administration is feeling more heat then ever before, it starts another war. Suddenly everyone in the mainstream media is talking all about Syria and not about the IRS scandal, Benghazi, NSA snooping or any of the other political scandals that have popped up in recent weeks. As if on cue, Obama made headlines all over the globe on Thursday by claiming that the Syrian government has used chemical weapons against the rebels "multiple times", and that the U.S. was now ready to do more to assist the rebels. As far as the Obama administration is concerned, there is no such thing as a coincidence. The timing of this announcement regarding Syria was not an accident.
- Must defend against Chinese colonial expansion and get the Nigerian oil: U. S. Boosts War Role in Africa (WSJ)
- BOJ nominee Kuroda sets out aggressive policy ideas (Reuters)
- China becomes world’s top oil importer (FT)
- Baby Cured of HIV for the First Time, Researchers Say (WSJ)
- Obama to nominate Walmart's Burwell as White House budget chief (Reuters)
- Wal-Mart Anxious to Combat Amazon’s Lead in Web Vendors (BBG)
- Nasdaq executing trades at a loss (FT)
- Spending cut debate casts pall over Obama's second-term agenda (Reuters)
- Russell Indexes to Reclassify Greece as Emerging Market (BBG)
- Bond Bears Collide With Swaps Showing Low Rates (BBG)
- Buffett Deputies Leaving Billionaire in the Dust Get More Funds (BBG)
- Brazil's leftist president fights to win back business (Reuters)
- U.S. Special Forces train Syrian Rebels in Jordan (Le Figaro)
- Carlos Slim Risks Losing World’s Richest Person Title as Troubles Mount (BBG)
- Geithner allegations beg Fed reform (Reuters)
- BOJ Adopts Abe’s 2% Target in Commitment to End Deflation (BBG)
- Bundesbank Head Cautions Japan (WSJ)
- In speech, Obama pushes activist government and takes on far right (Reuters)
- Atari’s U.S. Operations File for Chapter 11 Bankruptcy (BBG)
- Israel goes to polls, set to re-elect Netanyahu (Reuters)
- Apple May Face First Profit Drop in Decade as IPhone Slows (BBG)
- EU states get blessing for financial trading tax (Reuters)
- Indian Jeweler Becomes Billionaire as Gold Price Surges (BBG)
- Europe Stocks Fall; Deutsche Bank Drops on Bafin Request (BBG)
- Algeria vows to fight Qaeda after 38 workers killed (Reuters)
- GS Yuasa Searched After Boeing 787s Are Grounded (BBG)
- Slumping pigment demand eats into DuPont's profit (Reuters)
The personal freedom to indulge in 32 ounces of sugary corn-syrup-filled fizzy drinks left New Yorkers with a nasty libertarian taste in their mouths. Now, a few months later, as The Telegraph reports that UK council officials are cracking down on the freedom to choose how your burger is done, warning restaurants not to offer them rare or even medium-rare. Of course, this is proposed to be in the best interests of the eating public focused on "making sure customers are eating meat that is a not a threat to their health." This policy, set to the subject of a legal ruling shortly, leavs some to suggest it could destroy the gourmet burger industry (by mandating lengthy cooking times): "Not only that but you’re opening a Pandora’s box, because where do you finish? Steak tartare, runny eggs … the list is endless." Soylent Green anyone?
- Obama-Romney: Breaking the Tie (BBG)
- Fiscal cliff looms over campaign climax (FT)
- Tough Calls on Deficit Await the Winner (WSJ)
- Election Likely to Leave Housing Unmoved (WSJ)
- Regulator Investigating Rochdale Trading (WSJ)
- Greeks Plan Strikes On Eve of Votes (WSJ)
- China Communists consider internal democratic reform (Reuters)
- Wen urges Asia-Europe co-op to promote world economy (China Daily)
- Italy Said to Reject Bad Bank That May Boost Ties to Sovereign (BBG)
- IMF warning adds to French economy fears (FT)
- Europe, Central Bank Spar Over Athens Aid (WSJ)
- Unlimited Lending May Help Weaken the Yen, BOJ Official Says (BBG)
- PBOC Official Says U.S. Election Won’t Impact Yuan Level (BBG) - Just the USD level to which it is pegged
The coincidence of comments from Germany - both the Bundestag's Hasselfeldt "If a country is not in a position to fulfill its obligations, or is unwilling to, then it must leave the Euro zone"; and vice-Chancellor Philip Roesler (of the FDP) to the effect that the dangers associated with a Greek exit had faded - and the IMF (which has been suspect for a while in its 'steadfastness' with regard Greece, seem to suggest as UBS notes, that there is notable suspicion of collusion among the politicians to apply pressure to the Hellenic Republic. Against becoming too concerned there is the Realpolitik of the Euro area. Decisions about the direction of the Euro project are taken by a very small coterie of political leaders within the Euro area, and we should be concerned not necessarily because of the specifics of the comment or the associated “hardball” bargaining stance, but because politicians still feel that comments like this can be made at all without fear of repercussions. As silly season is set to begin, we should prepare for the impact of politicians need to hear themselves speak.
This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied - The SequelSubmitted by Tyler Durden on 07/19/2012 18:05 -0500
Two years ago, in January 2010, Zero Hedge wrote "This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied" which became one of our most read stories of the year. The reason? Perhaps something to do with an implicit attempt at capital controls by the government on one of the primary forms of cash aggregation available: $2.7 trillion in US money market funds. The proximal catalyst back then were new proposed regulations seeking to pull one of these three core pillars (these being no volatility, instantaneous liquidity, and redeemability) from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal would give money market fund managers the option to "suspend redemptions to allow for the orderly liquidation of fund assets." In other words: an attempt to prevent money market runs (the same thing that crushed Lehman when the Reserve Fund broke the buck). This idea, which previously had been implicitly backed by the all important Group of 30 which is basically the shadow central planners of the world (don't believe us? check out the roster of current members), did not get too far, and was quickly forgotten. Until today, when the New York Fed decided to bring it back from the dead by publishing "The Minimum Balance At Risk: A Proposal to Mitigate the Systemic Risks Posed by Money Market FUnds". Now it is well known that any attempt to prevent a bank runs achieves nothing but merely accelerating just that (as Europe recently learned). But this coming from central planners - who never can accurately predict a rational response - is not surprising. What is surprising is that this proposal is reincarnated now. The question becomes: why now? What does the Fed know about market liquidity conditions that it does not want to share, and more importantly, is the Fed seeing a rapid deterioration in liquidity conditions in the future, that may and/or will prompt retail investors to pull their money in another Lehman-like bank run repeat?
The debate around San Bernardino County’s proposed program to use eminent domain rights to seize ownership of underwater mortgages has continued to heat up since we first wrote about it here last week. As Barclays notes, the county (along with two other cities in the area) has formed a joint powers authority, which would not need permission from the respective city councils unless they need public money. There are conflicting reports of the path that such an authority would take and the role of private investors. However, the most likely path seems to be that the authority is funded by private investors and it uses this money to buy current loans that are underwater at a "fair price" and then refi the borrower into a new private or more likely into an FHA mortgage. So, this program, if implemented, is likely to be a transfer of wealth from existing investors in these loans to the city governments and the newer investors led by venture-capital firms. Barclays does note though that there are many challenges to such a program including the legal issue of whether eminent domain can be used to seize financial assets in this fashion, especially if the primary beneficiaries are private investors at the expense of existing investors, which include, among others, pension funds and mutual funds and the fact that new mortgage origination is likely to suffer with new mortgagees bearing the costs of such a program in the form of higher mortgage rates/less credit availability.