"The risk sell-off we've seen in recent weeks frustrates us a little as the chart we've published most this year has pretty much predicted that tougher times would come around July. We've been paying it a lot of attention for over a year now but decided to wait until the autumn before we raised the warning flags. The chart in question (included in today's pdf) is the one showing the Fed balance sheet and the S&P 500 (as a proxy for risk generally). As you can see, since the Fed balance sheet was used as an aggressive policy tool post-GFC, the graph suggests that the S&P 500 is well correlated with the size of the Fed balance sheet... This is important as virtually all of the mega rally in the last 5 years has come in the Fed balance sheet expansion periods." - Deutsche Bank
- New War Risk on Russia Fringes Amid Armenia-Azeri Clashes (BBG)
- Palestinians accuse Israel of breaking seven-hour Gaza truce (Reuters)
- Argentine Default Sours Outlook for Peso as Talks Ordered (BBG)
- Espírito Santo Saga Entangles Swiss Company (WSJ)
- Booming African Lion Economies Gear Up to Emulate Asians (BBG)
- CME Profit Falls as Trading Volume Declines (WSJ)
- Why Recalled Cars Stay on the Road (WSJ)
- London Renters Win in Billionaire Backyard as Prices Soar (BBG)
- Junk-Debt Liquidity Concerns Bring Sales (WSJ)
- Rescuers race to find survivors after 400 die in China quake (AFP)
As long as people remain obsessed with false paradigms and faux enemies, the establishment's goal of complete centralized dominance will be predictably attainable. If we change our focus to the internationalists as the true danger instead of playing their game by their rules, then things will become far more interesting...
Up until the last day of July, everything was going great: stocks were solidly up for the month, the DJIA was on the verge of 17,000, and the wealth effect was flourishing, if not the economy. Then yesterday happened, and everything changed: not only did the S&P turn red for the month, but the DJIA slid to red for 2014. So what is the best performing asset class in July? With the PBOC now openly unleashing QE in its economy, no surprise that it was the Shanghai Composite, which returned over 8%, if virtually nothing since 2009. However, don't expect this to last: for China real estate is orders of magnitude more important than the stock market to boost the wealth effect. As for the best returning assets class in 2014 YTD: don't laugh - it's still Spain and Italy. Expect the day of reckoning for Europe's periphery to be fast, unexpected and very brutal.
- As we predicted yesterday, the "big" Gaza ceasefire lasted all of a few hours (Reuters)
- To Lift Sales, G.M. Turns to Discounts (NYT)
- Espirito Santo Family’s Swift Fall From Grace Jolts Portugal (BBG)
- Argentine Debt Feud Finds Much Fault, Few Fixes (WSJ)
- Fiat Says Ciao to Italy as Merger With Chrysler Ends Era (BBG)
- Euro zone factory growth eases in July as inflation fades away (Reuters)
- CIA concedes it spied on U.S. Senate investigators, apologizes (Reuters)
- Ukraine Reports Losses After Pro-Russian Ambush Near Malaysia Airlines Flight 17 Crash Area (WSJ)
- U.S. says India refusal on WTO deal a wrong signal (Reuters)
- Why Putin Has 2006 Flash Before His Eyes After Sanctions (BBG)
- Fed Decision-Day Guide: QE Tapering to Inflation Debate (BBG)
- Obama says strains over Ukraine not leading to new Cold War with Russia (Reuters)
- Siemens to BP Prepare for Downward Russia Business Spiral (BBG)
- Paying Ransoms, Europe Bankrolls Qaeda Terror (NYT)
- Argentina Banks Preparing Bid to Help Argentina Avoid Default (WSJ)
- Obama Weighs Fewer Deportations of Illegal Immigrants Living in U.S. (WSJ)
- India Warships Off Japan Show Rising Lure as China Counterweight (BBG)
- Hong Kong Popping Housing Bubbles London Can’t Handle (BBG)
- Carnage at U.N. school as Israel pounds Gaza refugee camp (Reuters)
With the NY Fed already warning of "significant operational risk," and former Fed officials proclaiming Deutsche Bank is "horribly under-capitalized," along with Barclays 'dark pool' and gold manipulations, it is perhaps not a total surprise that, as WSJ reports, New York's banking regulator is pushing to install government monitors inside the U.S. offices of Deutsche Bank and Barclays as part of an intensifying investigation into possible manipulation in the foreign-exchange market. These two banks were selected because they had the 'greatest potential problems' based on a preliminary investigation.
- EU finalises Russian sanctions as BP warns of impact on business (FT)
- Geopolitical Risk Rises for Global Investors (BBG)
- Jaded Argentines brace for looming debt default (Reuters)
- In Argentina, Mix of Money and Politics Stirs Intrigue Around Kirchner (WSJ)
- Mom ‘Trusting God’ for Ebola-Infected U.S. Doctor’s Life (BBG)
- Thanks NSA: Tech Companies Reel as NSA's Spying Tarnishes Reputations (BBG)
- Goldman unit eyes foray into China amid metals financing scandal (Reuters)
- Cash out time: London’s Gherkin Tower Offered for Sale by Its Lenders (BBG)
- Apenomics strikes again: McDonald’s Japan axes profit guidance amid food safety scandal (FT)
- Do you see what happens Larry when you are the only USDJPY bid? Nomura Profit Falls More Than Estimated on Broking Slump (BBG)
The attached Barron’s article appeared in December 2007 as an outlook for the year ahead, and Wall Street strategists were waxing bullish. Notwithstanding the advanced state of disarray in the housing and mortgage markets, soaring global oil prices and a domestic economic expansion cycle that was faltering and getting long in the tooth, Wall Street strategists were still hitting the “buy” key. In fact, the Great Recession had already started but they didn’t have a clue: "Against this troubling backdrop, it’s no wonder investors are worried that the bull market might end in 2008. But Wall Street’s top equity strategists are quick to dismiss such fears."
As the following just released chart from Goldman shows that while non-GAAP EPS in the US have stabilized (and Japan is clearly the upside suprise even as its economy is once again teetering on the edge of recession), and Asia ex Japan is slowly rolling over once more, it is Europe that is the big shocker: as of July, European 2014 EPS forecasts are now the lowest they have been for the entire year, and are down 8% from where they were at the beginning of the year!
Manipulation of the silver market was covered in a just released ‘Get REAL’ Special on Silver. Key topics discussed in the interview include * The fix is in: Old boys, pints of beer, big cigars and top hats, * the risk of manipulation through HFT, computer trading and ‘dark pools,' * “Meet the new boss; same as the old boss,' * The importance of owning allocated and especially segregated silver
- The market in one sentence: Buying on Dips Pays Most in Five Years as Stocks Rebound (BBG)
- Europe subdued, Russia shares tumble on new sanctions (Reuters)
- Chinese Data Don’t Add Up (WSJ)
- Argentine Default Drama Nears Critical Stage (WSJ)
- Global Pressure Mounts on Israel to End Gaza Fighting (BBG)
- Ukraine troops advance as experts renew attempt to reach crash site (Reuters)
- Prospects Brighten for Republicans to Reclaim a Senate Majority (WSJ)
- Europe’s banking union faces legal challenge in Germany (FT)
- Investors Bet on China's Large Property Developers (WSJ)
- Hague court orders Russia to pay over $50 billion in Yukos case (Reuters)
There has been little in term of tier 1 data releases to drive the price action so far in the overnight session which means participants focused on the upcoming US related risk events including the Fed, Q2 GDP and July Payrolls. This, combined with WSJ article by Fed’s Fisher who opined that the FOMC should consider tapering the reinvestment of maturing securities and begin shrinking the Fed’s balance sheet (note that Fisher’s opinion piece is written based on a speech he gave on July 16th) meant that USTs came under pressure overnight in Asia and in Europe this morning. There has been little notable equity futures action (for now: the USDJPY algo team gave it a good ramp attempt just before Europe open, and will repeat just around the US open despite Standard Chartered major cut to its USDJPY forecast from 110 to 106 overnight), although we expect that to change since today is the day when Tuesday frontrunning takes place with full force. We expect equities to completely ignore the ongoing deterioration in Ukraine and the imminent release of EU's own sanctions against Russia, as well as what is now shaping up as an Argentina default on July 30.
Notice the “icicles” dripping all over the place? They occur at different times of the day. What are they? Each one is a brief but dramatic price drop.
While the allegations in the lawsuit are well-known to frequent (and all other) readers of Zero Hedge, we recommend reading the full filing as it explains in clear English just what the fixing process worked. Perhaps what is more interesting are the abnormalities in the price of gold as highlighted by Derksen, which clearly show the critical role the daily fix has in the manipulation of the price of gold, both in a downward and upward (mostly downward) direction: whichever suits the London Fix member banks.