Quantitative Easing

· The tragic events in Paris are set to dictate price action at the beginning of the week in Europe

· The US sees an increase in tier 1 data this week as well as the release of the minutes from last month’s Fed meeting

"My guess is that we will have negative rates in Norway before there will be any talk of QE"...

If it looks like a recession, walks like a recession and quacks like a recession, it’s a recession.

U.S. stock investors may be complacent regarding the ability of the stock market to withstand higher interest rates. Their confidence may come from the fact that, historically, markets have not peaked until 12-24 months after the Fed begins to tighten. This assumes the tightening cycle begins with the first official rate hike. But if it really began with the increase in the Shadow Rate, then a December rate hike will already be 19 months into the tightening cycle! Plus, given how overvalued stocks may currently be, and the amount of corporate debt accumulated to finance share buybacks, this bull market may be far more vulnerable than most to higher interest rates.

Ooops ...

Good Thing Debt Doesn't Matter! </sarc>

Evolution happens without goals... without conscious thought. It is a trip without a destination. It is also the way economies work; they do not respond well to manipulation by self-important meddlers. But if you are speaking for the entire planet, you have already gone way beyond the theory of evolution. You are in a world without theory… without science… without experience or history. You are in a world of make-believe – where pundits pretend to know what they are talking about and newspapers fill space with mythical claptrap.

Today’s dilemma – for financial markets and central bankers – is that pushing back against nascent “risk off” unleashes another forceful bout of “risk on.” At this point, it’s either Bubble on or off – destabilizing either way. The global Bubble has grown too distended and the market backdrop too dysfunctional. Central bankers over the past 25 years have created excessive “money,” while incentivizing too much finance into financial speculation. There is now way too much “money” crowded into the securities and derivative markets, and the upshot is an increasingly hostile backdrop for leverage and speculation.

With the US bond markets closed for Veterans' Day, it is time to take a breath and examine how far (and how fast) yields have moved in the last few weeks. With the entire curve bursting higher, we focus on the 10Y yield which will need to fight through critical resistance here if rates are to continue to rise.

Prudent companies internationally are allocating capital to gold and silver bullion as a way to diversify their assets and as a form of financial insurance to protect against bank bail-ins, capital controls, currency debasement and other risks posed by another financial crisis.

The ongoing failure of China to achieve any stabilization in its economy, after already cutting interest rates six times in the past year, and the prospect of a U.S. interest rate hike in December, had made markets increasingly jittery and worried which is not only why the S&P 500 Index had its biggest drop in a month, but thanks to the soaring dollar emerging market stocks are falling for a fourth day - led by China - bringing their decline in that period to almost 4 percent, and the global stock index down for a 5th consecutive day.

The failure of the Fed’s policies of massive money creation, corporate bailouts, and quantitative easing to produce economic growth is a sign that the fiat money system’s day of reckoning is near. The only way to prevent the monetary system’s inevitable crash from causing a major economic crisis is the restoration of a free-market monetary policy.

Repeated dosages of quantitative easing to kick-start economic recovery have proved totally ineffective everywhere. Yet central bankers are talking about doing it again – in larger amounts. The obsession with spending rather than saving has led governments everywhere to suppress interest rates to near zero. Under this destructive economic model governments are the worst offenders. In their craze to spend cheap money they allocate resources blindly into projects of dubious viability, for which there was no public demand in the first place. Result: huge taxpayer-borne losses.

• Fed speakers are likely to take focus in the US this week as market participants attempt to forecast the likelihood of a December FOMC rate lift off
• Eurozone GDP release is the most notable Eurozone data of the week, with a possible downbeat reading increasing the possibility of further easing by the ECB

The most important question (which no one’s asking) that needs to be asked and addressed today is: With the Fed. all but signalling come heck or high-water – they’re raising in December. Do the global markets once again stand at the same ledge they did in early August? And if that is indeed so, the question that is self-evident is this: Are you now better equipped both psychologically, as well as strategically and tactically adroit to handle such gyrations? Or, have you focused on “fees” and “diversification” as expounded via today’s financial books with a tendency to just BTFD because it’s worked so well in the past regardless of forethought or angst?