Fed credibility questioned and Yellen sick - Palladium surges 8% - Russia and central banks buy gold - Smart money rebalancing and selling overvalued assets to buy depressed assets especially silver
"According to a senior officer in the Syrian Arab Army (SAA) that is stationed inside the Syrian coastal city of Latakia, Chinese military personnel and aerial assets are scheduled to arrive in the coming weeks (6 weeks) to the port-city of Tartous – he could not provide anymore detail."
With deflationary pressures rising in the Eurozone, Japan and China, the Affordable Care Act levying higher taxes on individuals, and labor slack remaining stubbornly high, a continuation of a "struggle" through economy is the most likely outcome. This puts overly optimistic earnings estimates in jeopardy of being lowered further in the coming months ahead as stock buybacks slow and corporate cost cutting becomes less effective.
Japan is a useful analog in so many ways, not just about what the US and global economy can (has already?) become if allowed to follow into this same circle of Hell. It pretty much proves the incapacity of orthodoxists toward anything outside of their so very limited understanding and appreciation.
There is blood on the streets wherever you look in Brazil today, but probably of most interest to the hundreds of US asset managers (the ones managing your mutual funds) is what happens to Petrobras as it remains so widely held. As we noted below, bond prices are collapsing and default risk is soaring, and with the nation's currency collapsing amid the lower-for-longer oil prices, $90 billion of dollar-denominated debt could soon potentially be too burdensome for the company to repay.
As powerful as the Fed is, it isn’t stronger than the markets. And the longer the Fed tries to sustain abnormalities like QE and 0% interest rates, the more likely it is that the whole business will end with the markets crushing the Fed. At the next sign of a market swoon or of a weakening economy, or with the next episode of deflationary jitters, the Fed will do whatever it takes, no matter what the eventual damage to the dollar’s value. Whatever the details, one thing should be clear. This politburo of unaccountable central planners is the greatest risk to your financial wellbeing today.
The conventional financial industry touts gaining financial independence by playing Wall Street's game: working a conventional job for decades to accumulate a chunk of money in retirement funds that Wall Street wizards magically squeeze for hefty annual returns in a zero-yield world--in a completely risk-free manner that keeps your nest egg intact, of course. Financial independence via self-employment is still possible, and there are a number of pathways to that goal.
Home building is a miserable business. First you borrow to buy land, then borrow some more to develop land, then more to build, while paying out exorbitant executive compensation all along. Years later, you finally sell the finished product, maybe for a profit, maybe at a loss. Builders have been buying more land at much higher prices in hope for a continuation of optimal conditions. Lucrative margins can turn into large losses, much like 2006-07. Unless the Yellen Fed comes up with a big surprise, shorting rallies will be the way to go.
In the aftermath of Yellen's "hung hold" decision, which left the world confused if the economy is getting better or worse, global equity markets proceeded to take both Europe and Japan to task, trying to push one of the last two remaining central banks to boost their QE. And until this morning it was unclear who was going to take the lead. Then, following comments over the past several hours from ECB governing council members Ewald Nowotny and Bostjan Jazbec, as well as a well-directed leak via Market News, we got confirmation that anyone hoping for Mario Draghi to blink first may be disappointed this time around.
US equity futures plunged (Dow -140)
Following Xi's earlier speech reassuring Yellen that the "Chinese economy is stable," and the Yuan tumbled 0.25% against the USD ahead of the data. China's Flash Manufacturing PMI printed a disastrous 47.0 (against expectations of a slight rise to 47.5 from August's 47.3). This is the lowest print since March 2009. Caixin Group confidently suggests this utterly crap data is the bottom and that "patience may be needed for policies designed to promote stabilization to demonstrate their effectiveness.”
PBOC Devalues Yuan For 3rd Day As President Xi Reminds The Fed "China's Economy Is Stable" - Live FeedSubmitted by Tyler Durden on 09/22/2015 21:08 -0400
Ironically, As Xi says "won't devalue the Yuan," The PBOC devalues the Yuan for the 3rd day to the weakest in a month...
Following last night's ADB China growth downgrade, and warnings from The IMF's Lagarde that a "China slowdown is a major risk to the global economy," the weakness seen in Europe and US is continuing across AsiaPac tonight ahead of China's much-watched PMI data (though we are not sure why - since no "bad news" excuse is needed to enable super-easy policy). With Xi in the US, one would imagine a 'beat' for PMI will be engineered, although industrial metals are extending their losses. Credit markets area nxious with Malaysia CDS at 2011 highs, Philippines highest since 2014, and China back on the rise. Xi begins his speech tonight reminding The Fed that China "is the biggest developing nation in the world," and its economy "is stable" despite Yellen's fears.
Most economists and financial analysts think that 'currency war' merely refers to the competitive devaluations that nations sometimes engage in to help boost their domestic economies, as they had done in the 1930's for example. This time the currency war is a much more profound confrontation of differing agendas revolving around the historically unusual role of the US dollar, based on nothing more than the will of the Federal Reserve and the 'full faith and credit' of the US, as the reserve currency for global central banks and international trade.
Today's Glencore implosion is a far greater risk to the capital markets and the global economy than Volkswagen: a few executive resignations, a few bribes to US Congress, and the scandal will be promptly snuffed. For Glencore, however, which suddenly the entire world realizes is - as we said in March 2014 - the way to trade China, it may now be too late.
Futures Plunge On Renewed Growth, Central Bank Fears; Volkswagen Shares Crash As Default Risk SurgesSubmitted by Tyler Durden on 09/22/2015 06:49 -0400
While Asian trading overnight started off on the right foot, chasing US momentum higher, things rapidly shifted once Europe opened as attention moved back to global growth fears, global central banks losing credibility, as well as miners and the ongoing Volkswagen fiasco.
With the global economy sliding into recession, the one strawman repeatedly used by straight-to-CNBC pundits to justify some mythical case for US decoupling has been that US corporate profits are "fine." Here is the truth.