Couldn’t resist taking a time out from our work on The Great ‘flation Debate (and a new short thesis which we’ll be laying out for investors next week) to share this one. It’s not often you get an opportunity to insert New Edition into a blog post. But Hussman’s recent Case Against the Fed opened the window just wide enough for Ronnie, Bobby, Ricky and Mike to slide through:
Full of holes? Yes, but what other plan is out there?
Kind of a drab hum drum day in the market yesterday as no new countries were close to defaulting, no new IPOs of shitty companies were being sold (and yeah Harrah's, Money McBags is looking at you), and no new news on whether Milla Jovovich will be joining her country's burgeoning Femen movement.
WARNING: It is strongly recommended that you do not watch this clip after, during or before the consumption of food or beverage!
Futures are currently experiencing a stunning moment of weakness, something not seen unless the entire Liberty 33 trading crew is at Scores. The culprit according to the three sober traders we could track down is the recently unembargoed speech to be delivered by the Bernank tomorrow in Frankfurt. In it, not too surprisingly, the inkmaster considers revealing details of his most recent DNA sequencing result to prove once and for all, that he is not the antichrist. More relevantly, what Bernanke has done to defend his reputation is to claim that QE will work, and that everything is really mercantilist China's fault, and the Fed is just woefully misunderstood. In other words nothing that has not been said before many times, just another overture which will likely precipitate a prompt round of Chinese retaliation in the form of accelerating trade wars, to be followed by further commodity price inflation in the US, leading to another ramp in Chinese inflation, etc. China now will have no choice but to either hike rates (which will pretty much end of the tech bubble), remove even more excess liquidity (real estate bubble burst) or merely export another $20 billion of crap to the US each month, pretending nothing happened (leading to more QE in the US). As Albert Edwards summarized so well earlier, the global game of chicken will continue until either China's or America's population decides it has had enough of being treated like a experimental gerbil in the endgame of failed economic chess.
The market absolutely flew today as if it were late to the only showing of Natalie Portman's first lesbian scene thanks to a European country needing to be rescued from the brink of bankruptcy, retail investors being able to buy stock again in...
Substantially more sanguine than their two key strategists Albert Edwards and Dylan Grice, SocGen's Cross Asset research has come out with a report looking at the future of the world, and the various scenarios that may end up taking us there (although the actual reality will of course be something unforeseeable). So while we play predictive games, here is how SocGen believes the upside/neutral/downside cases could look like across asset classes, and across the globe.
Can you visualize a possible scenario that could put a sudden end to the secular rise now underway in gold and silver? In a recent conference call with the research team of The Casey Report, we once again collectively tried to imagine what situation… what scheme… what government manipulation… might finally put a stake through the heart of gold. Setting the stage, I think it’s safe to assume that in order for the gold bull to decisively reverse direction, the following general conditions would have to be precedent in the economy...
As discussed earlier this week and last week, Murphy's law is verified in the bond market as we are inching closer to 122-30 in TY futures and the 5Y future is leaning dangerously on the 100-dma, eyeing the 118-30 support below. The market is arguably still long but trimming. All the buying last week post long end supply is getting stopped out for those who did not cash in on a quick buck, and a lot of pre-FOMC positioning is getting pushed out as well. The irony? People are starting to feed the sell-off mentioning next week's supply... just when real money is about to step up and bid the market again! If you have been playing from the short side the past couple weeks you have been right. I tried to play that way mostly with more or less success catching the tops on the pullbacks (or missing them by a few ticks), and even schatz which I thought would hold up broke the 108.80 level.
The market quieted down today as European investors apparently have turned their focus from Ireland's spiraling deficit to wondering if they will be charged international rates for voting in Argentina's Dancing with the Stars while also...
In a letter written by republicans bashing the Fed's QE2, the four congressmen and senators amusingly insist "that monetary policy decisions by the U.S. Federal Reserve must be free and independent from political pressures." It is not that we disagree. But even a blind monkey may see the irony of a political group telling the Fed to do something. The only way the Fed will be independent is if it is terminated. Why is it so difficult for these politicians to grasp this. And no, removing the maximum employment mandate won't do jack - the only thing that will happen is more papers from various Fed professors will be published explaining how, suddenly, they have discovered that printing massive loads of money is in fact deflationary.
Chris Martenson And James Howard Kunstler Explain How "The World is Going to Get Rounder and Bigger Again"Submitted by Tyler Durden on 11/17/2010 10:45 -0500
In this week's Straight Talk with Chris Martenson, contributor is James Howard Kunstler, author and social critic. His better-known works include The Long Emergency, in which he argues that declining oil production will result in the decline of modern industrialized society and compel Americans to return to smaller-scale, localized, semi-agrarian communities; World Made By Hand and its sequel, The Witch of Hebron, all published by The Atlantic Monthly Press. He writes a weekly blog is also a leading proponent of the movement known as "New Urbanism."
The country which has languished in 6th position in the world, with combined gold holdings of 1,054 tonnes (just behind the GLD ETF), may have finally awoken that it needs to buy about 7,000 tonnes of gold to catch up with the US, and its 8,133 tonnes (or even France with 2,435). China daily 21st Century Business Herald has just reported that: "China is considering raising its gold reserves, a move which would push
up gold prices in the future, a person providing consulting services to
the Chinese government said." Conveniently, China can now buy gold notably cheaper courtesy of a $100 dip in gold price as recorded over the past week, precipitated by... China inflation concerns. When next month the politburo reports below consensus inflation (as the number is imaginary to begin with), look for gold to surge, but not before China manages to load up at depressed prices.
Once again Zero Hedge pulls a fast one on the MSM. We highlighted this earlier today, but it bears repeating: in a post yesterday we asked rhetorically: "Are republicans preparing for a push to eliminate the "maximum employment" part of the fed's dual mandate?" As of a few minutes ago, Reuters has answered: "Republicans want Fed focus solely on inflation." Those who have read us will find absolutely nothing new here, but here is the gist of the Reuters piece: "Two U.S. Republican lawmakers said on Tuesday the Federal Reserve should focus solely on inflation and ditch its "dual mandate" to promote both price stability and full employment. The pressure from Senator Bob Corker and Representative Mike Pence adds to the pile of international criticism over the central bank's plan to buy an additional $600 billion in government bonds to try to speed up a sluggish economic recovery." As we stated before, while we ridicule the fact that Bob Corker is suddenly all about curbing the Fed, despite that 5 of his top 15 contributors are banks, and last year did his best to make the Paul-Grayson "Audit the Fed" initiative disappear, the fact that this idea is finally making the rounds should be endorsed by all those who believe that a bankrupt America is a bad America. As the Fed will not cease from doing everything it can to boost banker recoveries, under the guise of stimulating employment, the only way to curb its central planning aspirations is to pass legislation that will make it focus solely trillions of excess dollars creating asset bubbles across the global economy.
The paradigms which undergird the global status quo are broken; doing more of the same (the current strategy) will not fix them. I think a strong case can be made that each of these paradigms is either already broken or in danger of breaking. Studies have shown that when presented with factual evidence that their core beliefs are wrong, humans respond by clinging even more tightly to their fallacious beliefs. I think that is precisely the reaction of the global Status Quo.