"We are living in an aberrational world. It’s all driven by an orgy of money printing...it sure feels to me that we’re nearing the day that it spins out of control. By the end of this year or by the start of next year, without QE, the market is going down."
"To maintain your sanity, you need to turn off the hype machines of some of the financial media like CNBC."
"Give me your corrupt, your crony, your oligarch masses yearning to launder money free,
The criminal masterminds of your destroyed environment and police state.
Send these, the pampered, the private jet setter to me, I open my hands to your golden yuan."
- Banks Had Unfair Advantage From Commodity Units (Bloomberg)
- Report Notes Deals Between Goldman, Deutsche and Others Drove Up Aluminum Prices (WSJ)
- Goldman, Morgan Stanley Commodity Heyday Gone as Units Faulted (BBG) - because when you can no longer manipulate, you move on...
- Lenders Shift to Help Struggling Student Borrowers (WSJ)
- Immigrants face major hurdles in signing up to new Obama plan (Reuters)
- Distressed Debt in China? Ain’t Seen Nothing Yet, Buyers Say (BBG)
- Banking culture breeds dishonesty, scientific study finds (Reuters)
- Amazon Robots Get Ready for Christmas (WSJ)
In a nation in which 1 out of every 3 homes is unaffordable, you’d think the primary goal of public policy wouldn’t be to ensure real estate becomes even more out of reach for the average citizen. It’s bad enough that American financial oligarchs have leveraged free money polices of the Federal Reserve to purchase tens of billions of dollars in real estate only to rent it back to people who were kicked out of their homes during the 2008 crisis, but the government is now going out of its way to allow Chinese (and other foreign criminals) to launder money via U.S. property.
An Adventure of Fundraising, Massive Disintermediation and the Confrontation of the Most Powerful InterestsSubmitted by Reggie Middleton on 11/19/2014 08:59 -0500
There's always more than one way to skin a cat. Follow me as I raise a war chest of cash from the establishment... To disintermediate the... Establishment!
- Yellen Inherits Greenspan’s Conundrum as Long Rates Sink (BBG)
- West African Mining Projects Take Hit From Ebola Crisis (WSJ)
- Saudi oil policy uncertainty unleashes the conspiracy theorists (Reuters)
- Senate Rejection of Keystone XL Measure Sets Up 2015 Showdown (BBG)
- Ferguson, Missouri, remains on edge ahead of grand jury report (Reuters)
- Putin Said to Stun Advisers by Backing Corruption Crackdown (BBG)
- Italian ‘Invasion’ Has Swiss Fuming as Immigration Vote Looms (BBG)
- Apple and Others Encrypt Phones, Fueling Government Standoff (WSJ)
Despite the apparent economic and profit news improvements recently, JPMorgan CIO Michael Cembalest notes there are a few instances where people are still flipping out. It’s worth reviewing them, he suggests, as they're indicative of risks and opportunities in financial markets heading into 2015, and of the continued presence of central banks affecting asset prices.
"Just when did Central Bankers become world media superstars and when do we get to put them back in their box?" Strutting the world stage, flitting from press conference to rubber chicken dinner, dispensing what passes for wisdom and prognosis as if the court astrologers have toppled the mighty Nebuchadnezzar and now rule in his place. Whatever happened to discreetly overseeing the balance of payments and facelessly staunching the worst panics only when absolutely necessary? This is clearly Japan’s last stand and there is no real exit strategy except to explicitly default on its debt. But an economic collapse and a sovereign debt default on the world’s third largest economy will contain massive economic ramifications on a global scale.
“Unconventional measures might entail the purchase of a variety of assets, one of which is sovereign bonds,” the ECB president said in Brussels yesterday in answer to a question during his quarterly testimony to lawmakers at the European Parliament. Draghi and the uber doves appear determined to ignore the failure of QE in both the U.S. and Japan.
- Scuttled deals worth $580 billion put hedge funds on back foot (Reuters)
- Mounting Pressure on OPEC Spurs More Wagers on Oil Rally (BBG)
- It's not just US real estate: Chinese Students at U.S. Universities Jump 75% in Three Years (BBG)
- Frankfurt Open for Yuan Clearing as Liquidity Rises (BBG)
- Obama defends healthcare law after adviser criticism (Reuters)
- Michael Hasenstab Bets Big in Controversial Places (WSJ)
- Facebook seeks foothold in your office (FT)
- Russia Seen as Greatest Threat in Poll as Oil Erodes Putin Power (BBG)
- Falling Oil Prices Test OPEC Unity (WSJ)
Needless to say, this relentless expansion of the bubble eventually kills off the bears, the skeptics, the prudent and even the militantly incredulous. Undoubtedly, that is where we are now because the global economic news has been uniformly negative since the October dip, yet the market has resumed its relentless melt-up. Under such circumstances, therefore, it is well to remember that we are in the middle of the greatest central bank fueled inflation in recorded history, and that this insidious inflation has been channeled into financial assets owing to the arrival of peak debt everywhere around the world. But that is the Achilles heel of the game. As the bubble takes on ever greater girth, it becomes increasingly susceptible to a negative shock to confidence.
Brace yourselves, the zero sum game is on like Donkey Kong.
With Wall Street having bid real estate prices to the moon in the US (and become Spain's biggest slumlord), and handed them happily over to willing Chinese 'get-my-money-out-of-China' buyer greater-fools, it would appear the Chinese (having colonized America) have found a new more attractive place to park their excess liquidity. As Bloomberg reports, at a property auction in Lisbon, Portugal last month, about 90% of the bidders for the government-owned apartments and stores on offer were Chinese. They ended up acquiring more than two-thirds of the 45 properties, with one money-launderer investor noting "Lisbon is cheap if you compare it with other cities."
Kuroda has fired the shot that looks likely to trigger the next phase of the crazy monetary experiment we’ve all been living in for the last five years. Unfortunately, the next phase is where things start to get nasty. Just because equity markets cheered the latest sugar rush he guaranteed them should not make smart investors lower their guard — quite the opposite, in fact. Colonel Kuroda has gone up-country into the Heart of Darkness, and all we can do is await the Apocalypse now.
A bull market in the US Dollar is underway and its magnitude and duration are likely to catch everyone by surprise