“This is different" and "this location is different" is the mantra of every property bubble. We will soon see if the London property bubble is truly different or will suffer the fate of the bubbles throughout history. Of the four charts in our market update today, which ones do you think show characteristics of a bubble? Those diversifying and buying gold in the UK will be rewarded in the coming years. The smart money is reducing exposure to overvalued London property and increasing exposure to undervalued gold.
- JPMorgan $13 Billion Mortgage Deal Seen as Lawsuit Shield (BBG)
- J.P. Morgan Is Haunted by a 2006 Decision on Mortgages (WSJ)
- World powers, Iran in new attempt to reach nuclear deal (Reuters)
- Keystone Foes Seek to Thwart Oil Sands Exports by Rail (BBG) - mostly Warren Buffet?
- How Would Fed Deal With Debt Ceiling Crisis? Look to Minutes for Clues (Hilsenrath)
- Anything to prevent the loss of prop trading: 'Volcker Rule' Faces New Hurdles (WSJ)
- BOE Sees Case for Keeping Record-Low Rate Beyond 7% Jobless (BBG)
- Obama Backs Piecemeal Immigration Overhaul (WSJ)
- Abenomics Seen Cutting Japan Bad-Loan Costs to 2006 Low (BBG)
It is time for the centrally-planned markets to "try" for the round number trifecta of 16000, 1800 and 4000 again, although it may be a tad more difficult on a day in which there is no double POMO and just $2.75-$3.50 billion will be injected by the NY Fed into the S&P - perhaps it is Bitcoin that will hit the nice round number of $1000 first? Overnight, the Chinese Plenum news rerun finally was priced in and the SHComp closed red, as did the Nikkei 225 as the Asian euphoria based on communist promises about what may happen by 2020 fades. What's worse, the Chinese 7-day repo rate is up 140bp this morning to 6.63% amid talk of tightening domestic liquidity conditions, and back to levels seen during the June liquidity squeeze. All this is happening as China continues leaking more details and hope of what reform the mercantilist country can achieve, and how much internal consumption the export-driven country can attain: overnight there were also additional reports of interest rate liberalization and that the PBOC are to set up a floating CNY rate. Good luck with that.
“$8.5 TRILLION In Taxpayer Money Doled Out By Congress To The Pentagon Since 1996 … Has NEVER Been Accounted For”Submitted by George Washington on 11/18/2013 16:28 -0500
Thanks to some overnght levitation (and in spite of major outflows from foreigner from the US as seen in the TIC data), US equities have opened this morning to new all-time highs. As "investors" watched in disappointment on Friday at the 'miss', the opening this morning - amid a double POMO day - has lifted the Dow above 16,000 and the S&P 500 above 1,800 for the first time ever (now up around 10% from the debt-ceiling lows in the last month). Caracas here we come...
The only numbers that matter today are 16000, 4000 and 1800: those are the Fed's closing targets for the Dow Jones, the Nasdaq and the S&P. Following last night's Chinese euphoria which saw the Shanghai Composite surge by 2.87%, or up 61.4 to just under 2,200 on renewed hopes for Chinese reform by 2020, the Fed's price targets should all be quite easily achievable. And not even the rising home prices in 69 out of 70 cities year over year, and 65 over month - the same as last month, with new nome price inflation at 0.6% overall and 0.8% for the first tier cities, was able to put a dent in the reflationary spirits in the Mainland. Additionally, news that China would join the US and Europe in "adjusting" its GDP calculation method, which would add R&D expensing into the bottom line, and as a result boost the overall number, is, well, helping things. Finally, with today's POMO a rather whopping $3-$4 billion, it is only a matter of time before all three of the previously noted psychological resistances are promptly taken out by the Fed's open markets desk.
The establishment desires to acclimate Americans to the idea that being anti-government is wrong; that it is a despicable philosophy embracing social deviance, aimless violence, isolation and zealotry. Looking beyond the mainstream position, my question is, is it really such a bad thing to be anti-government today?
The third stage of bull markets, the mania phase, can last longer and go farther that logic would dictate. However, the data suggests that the risk of a more meaningful reversion is rising. It is unknown, unexpected and unanticipated events that strike the crucial blow that begins the market rout. Unfortunately, due to the increased impact of high frequency and program trading, reversions are likely to occur faster than most can adequately respond to. This is the danger that exists today. Are we in the third phase of a bull market? Most who read this article will say "no." However, those were the utterances made at the peak of every previous bull market cycle.
- China to Ease One-Child Policy (WSJ), China announces major economic and social reforms (Reuters)
- Consumers line up for launch of PlayStation 4 (USAToday)
- Trust frays between Obama, Democrats (Politico)
- Yellen Stands by Fed Strategy (Hilsenrath)
- Hero to zero? Philippine president feels typhoon backlash (Reuters)
- Brussels warns Spain and Italy on budgets (FT)
- Moody’s Downgrades Four U.S. Banks on Federal Support Review (BBG)
- CIA's Financial Spying Bags Data on Americans (WSJ)
- Germany Digs In Against Risk Sharing in EU Bank-Failure Plan (BBG)
- Bill Gates wants Norway's $800 billion fund to spend more in Africa, Asia (RTRS)
We have seen a confluence of events that suggests we may be reaching the terminal point of the financial markets merry-go-round – that point just before the ride stops suddenly and unexpectedly and the passengers are thrown from their seats. Having waited with increasing concern to see what might transpire from the gridlocked US political system, the market was rewarded with a few more months’ grace before the next agonising debate about raising the US debt ceiling. There was widespread relief, if not outright jubilation. Stock markets rose, in some cases to all-time highs. But let there be no misunderstanding on this point: the US administration is hopelessly bankrupt. (As are those of the UK, most of western Europe, and Japan.) The market preferred to sit tight on the ride, for the time being.
Discussion of a market bubble (in stocks, credit, bonds, Farm-land, residential real estate, or art) have dominated headlines in recent weeks. However, QEeen Yellen gave us the all-clear this morning that there was "no bubble." Are we currently witnessing a market bubble? It is very possible; however, as STA's Lance Roberts notes, if we are, it will be the first market bubble in history to be seen in advance (despite Bullard's comments in opposition to that "fact"). From a contrarian investment view point, there is simply "too much bubble talk" currently which means that there is likely more irrational excess to come. The lack of "economic success" will likely mean that the Fed remains engaged in its ongoing QE programs for much longer than currently expected - and perhaps Hussman's pre-crash bubble anatomy is dead on...
- Yellen to defend Fed's ultra-easy monetary policy (Reuters)
- Japan growth slows on global weakness (WSJ)
- Eurozone third-quarter growth falters (FT)
- Fed Debates Its Low-Rate Peg (Hilsenrath)
- Yellen: Economy Still Needs Fed Aid (WSJ)
- ‘Obamacare’ launch fiasco rouses sceptics (FT)
- DoubleLine's Gundlach says U.S. equities 'only game in town' (Reuters)
- Indian Inflation Exceeding Estimates Adds Rate-Rise Pressure (BBG)
- HUD Said to Fail in Bid to Sell $450 Million of Mortgages (BBG)
- Boeing machinists reject labor deal on 777X by 67 percent (Reuters)
Most market watchers expect that Janet Yellen will grapple with two major tasks once she takes the helm at the Federal Reserve in 2014: deciding on the appropriate timing and intensity of the Fed's quantitative easing taper strategy, and unwinding the Fed's enormous $4 trillion balance sheet (without creating huge losses in the value of its portfolio). In reality both assignments are far more difficult than just about anyone understands or admits.
The death of the dollar is coming, and it will probably be China that pulls the trigger. What you are about to read is understood by only a very small fraction of all Americans. Right now, the U.S. dollar is the de facto reserve currency of the planet. Most global trade is conducted in U.S. dollars, and almost all oil is sold for U.S. dollars. More than 60 percent of all global foreign exchange reserves are held in U.S. dollars, and far more U.S. dollars are actually used outside of the United States than inside of it. As will be described below, this has given the United States some tremendous economic advantages, and most Americans have no idea how much their current standard of living depends on the dollar remaining the reserve currency of the world. Unfortunately, thanks to reckless money printing by the Federal Reserve and the reckless accumulation of debt by the federal government, the status of the dollar as the reserve currency of the world is now in great jeopardy.
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