Fisher

Back in June 2011 we first reported how "Goldman, JP Morgan Have Now Become A Commodity Cartel As They Slowly Recreate De Beers' Diamond Monopoly" in an article that explained, with great detail, how Goldman et al engage in artificial commodity traffic bottlenecking (thanks to owning all the key choke points in the commodity logistics chain) in order to generate higher end prices, rental income and numerous additional top and bottom-line externalities and have become the defacto commodity warehouse monopolists. Specifically, we compared this activity to similar cartelling practices used by other vertically integrated commodity cartels such as De Beers: "the obvious purpose of "warehousing" is nothing short of artificially bottlenecking primary supply." Over the weekend, with a 25 month delay, the NYT "discovered" just this, reporting that the abovementioned practice was nothing but "pure gold" to the banks. It sure is, and will continue to be. And while we are happy that the mainstream media finally woke up to this practice which had been known to our readers for over two years, the question is why now? The answer is simple - tomorrow, July 23, the Senate Committee on Banking will hold a hearing titled "Should Banks Control Power Plants, Warehouses, And Oil Refiners."

Last week: “A culture of dangerous greed and excessive risk-taking has taken root in the banking world.” Now: a quixotic moment for those senators from both sides of the aisle

Ben Bernanke blames fiscal policies out of Washington.  However, it is starting to look more and more like Fed policy is equally to blame for the lackluster U.S. GDP growth.

The aging 'me' generation is still putting itself first...

A harbinger of what will happen to the Chairsatan perhaps? Or is this just a logical response of what the "other half" of the Fed, those who  demanded an end to QE by the end of 2013, think about Bernanke's latest public statement. If Dick Fisher quits next, watch out.

Many people believe there is a significant risk that the Irving Fisher debt-deflation theory of great depressions is still an economic threat today. They overlook the fact that Fisher published his theory examining debt-deflation events under a gold standard, which does not apply today. Financial credit contractions therefore take a different appearance. It is indicative of our economic biases that we completely overlook the differences between the sound money of 1929/30 and the infinitely expandable money of 2008/09. We make this error because today’s economists lead us astray with a fundamental belief that the state through monetary intervention can fix everything. Even though today’s economists are a broad church they follow beliefs instead of well-reasoned economic theory. Beliefs are better left to clerics.

Bulls make money, bears make money, feral hogs gets slaughtered (by Fed faux hawks)

The global Central Banks are in damage control mode. The big story here is China, then Japan then the US. But all of them are losing control of the markets.

• Here come the rolling blackouts: Obama takes on power plant emissions as part of climate plan (Reuters)
• Walking Back Bernanke Wished on Too Much Information (BBG)
• As previewed last week: Bridgewater "All Weather" is Mostly Cloudy, down 8% YTD (Reuters)
• U.S. Said to Explore Possible China Role in Snowden Leaks (BBG)
• Coeure Says No Doubt ECB Loose Monetary Policy Exit Distant (Bloomberg)... so a "recovery", but not at all
• U.S. steps up pressure on Russia as Snowden stays free (Reuters)
• Texas' Next Big Oil Rush: New Pipelines Ferrying Landlocked Crude Expected to Boost Gulf Coast Refiners (WSJ)
• Singapore Offsets Bankers as Vacancies Fall (BBG)
• Asian Stocks Fall as China Sinks Deeper Into Bear Market (BBG), European Stocks Rally With Bonds as Metals Advance (BBG)
• Qatar emir hands power to son, no word on prime minister (Reuters)

It was shaping up to be another bloodbathed session, with the futures down 10 points around the time Shanghai started crashing for the second night in a row, and threatening to take out key SPX support levels, when the previously noted rumor of an imminent PBOC liquidity injection appeared ex machina and sent the Shanghai composite soaring by 5% to barely unchanged, but more importantly for the all important US wealth effect, the Emini moved nearly 20 points higher from the overnight lows triggering momentum ignition algos that had no idea why they are buying only knowing others are buying. The rumor was promptly squashed when the PBOC did indeed take the mic, but contrary to expectations, announced that liquidity was quite "ample" and no new measures were forthcoming. However, by then the upward momentum was all that mattered and the fact that the underlying catalyst was a lie, was promptly forgotten. End result: futures now at the highs for absolutely no reason.

The 100-day moving average (100DMA) and VWAP (as usual) appeared to be the key pivots today as equity markets plunged lower on the open after drifting lower overnight as the liquidity-suck-out circles the global market's drain. At their worst, the S&P 500 was 7.5% off its recent highs but the Fed hawks came out in full dovish mode and provided just enough headline-fodder to slam VIX lower (as it appeared to over-react to the upside at the open) and drag the S&P back above its 100DMA. Some (prematurely) proclaimed the day a victory for the bulls as we didn't close at the lows but the last few minutes of the day saw equities roll back over, VIX rising, credit widening, and commodities fading (even as the USD closed the day unchanged from Friday). Treasuries - the center of most people's attention in recent days - had an interesting day (30Y -1.5bps, belly +3-4bps), especially into the close as stocks sold off (bonds rallied in safe-haven mode as opposed to un-taper mode). The S&P 500 faded and closed below its 100DMA for the first time in 2013... as it seems the time for jawboning os over.

Recent market actions have left many staunch gold advocates uncertain about what's ahead... not to mention how to invest wisely for both the short and long term. What gold assets are the best to buy? Should investors be buying today or holding for further drops? There is bad news and good news...

"I'm terrified about what will happen to interest rates once financial markets wake up to the implications of skyrocketing budget deficits.... The accident -- the fiscal train wreck -- is already under way.... How will the train wreck play itself out? Maybe a future administration will use butterfly ballots to disenfranchise retirees, making it possible to slash Social Security and Medicare. Or maybe a repentant Rush Limbaugh will lead the drive to raise taxes on the rich. But my prediction is that politicians will eventually be tempted to resolve the crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt.... And as that temptation becomes obvious, interest rates will soar. It won't happen right away. With the economy stalling and the stock market plunging, short-term rates are probably headed down, not up, in the next few months, and mortgage rates may not have hit bottom yet. But unless we slide into Japanese-style deflation, there are much higher interest rates in our future.... I think that the main thing keeping long-term interest rates low right now is cognitive dissonance."

Paul Fisher Head of Markets at the Bank of England told the economic worriers of the UK that the BoE would not pull the stoppers out on the economic stimulus plan in the UK and that the “macroeconomic outlook here is not as bright as in the US, therefore we are some way behind them in terms of return to anything like trend growth”. Has Mr. Fisher been to the US recently?

A harbinger of things to come in other markets