"Whichever side emerges victorious, both Republicans and Democrats should face up to a much bigger truth: Neither party as currently constituted has a real future." On this, another election day sham, it is key to not get discouraged. Things are changing at the grassroots for the better. The battle of decentralization vs. centralization, networks vs. hierarchies, will not be easily won, but it will be won. Keep fighting.
Having destroyed any remnants of the "it's earnings that matter" meme, we thought the following chart would clarify just how bad the outlook for Q4 EPS is. As Factset notes, "the decline in the bottom-up EPS estimate recorded during the course of the first month (October) of the fourth quarter was higher than the 1-year, 5-year, and 10-year averages." That is not a 'good' thing..
Watch Spain closely in the months ahead. It will be another canary in the coal mine for the entire Western world.
Government Lied About Pandemic Which Killed 50 Million People … Attempt to “Prevent Panic” BackfiredSubmitted by George Washington on 11/04/2014 14:26 -0500
Governments Have Suppressed the Dangers of Epidemics Before, Only Making Things Worse
Paul Singer Slams The Fake World: "Fake Growth, Fake Money, Fake Jobs, Fake Stability, Fake Inflation Numbers"Submitted by Tyler Durden on 11/04/2014 11:52 -0500
"Nobody can predict how long governments can get away with fake growth, fake money, fake financial stability, fake jobs, fake inflation numbers and fake income growth. Our feeling is that confidence, especially when it is unjustified, is quite a thin veneer. When confidence is lost, that loss can be severe, sudden and simultaneous across a number of markets and sectors."
"The situation is universal, a consequence of incompetent leaders and careless (or ignorant) citizenry."
what is strange is that while traditionally such a major downward growth revision would have been sufficient to send futures soaring - why: because in a world where only central banks are left, it means more central bank global bailouts of course - this time the adverse update actually had the impact of sending futures to their lows of the session, granted just a few tiny points since the market is clearly disconnected with even the most pro forma, non-GAAP version of reality, but the reaction direction was clearly unexpected. Perhaps this is explained by the ongoing devastation in both WTI and Brent, which were trading at $76.70 and $82.50 at last check, both down almost 3% as the plan to use Saudi Arabia to crush Russia has instead backfired and the Saudi princes are now openly looking at destroying the US shale infrastructure, as we forecast in the worst, for Obama, scenario.
As we noted earlier, something is seriously broken in these 'markets' and when the head of Blackrock appears on CNBC and uses the "cash on the sidelines" meme to justify stocks going higher (which is unbridled idiocy remember), we suspect even the big boys are getting nervous about the decouplings, illiquidity, and BoJ-driven exuberance. The early pre-open ramp in stocks was quickly eviscerated as data missed (PMI & Construction Spending) and stocks retraced back to bond reality... but 'they' needed all-time highs to run some more stops as USDJPY burst to 114. Once those highs in US equyities were tagged and traders realized what the Saudi actions regarding oil prices meant, WTI plunged and dragged stocks with it. Bonds, oil, HY credit, and VIX all decoupled from stocks.
The Bank of Japan's surprise expansion of financial stimulus strikes me as the monetary equivalent of Pearl Harbor --not in the sense of launching a pre-emptive war (though the move does raise the odds of a global currency war), but in the sense of a leadership pursuing a Grand Strategy to the point of self-destruction because they have no alternative within their intellectual and political framework. Trying to "fix" a sclerotic, inefficient state-cartel economy by boosting inflation--the ultimate goal of Japan's Monetary Pearl Harbor-- is a self-liquidating path to destruction.
Money-printing turns out to be the grift that keeps on giving. The US stock markets retraced all their October jitter lines, and bonds plumped up nicely in anticipation of hot so-called “money” wending its digital way from other lands to American banks. Euroland, too, accepted some gift inflation as its currency weakened. The world seems to have forgotten for a long moment that all this was rather the opposite of what America’s central bank has been purported to seek lo these several years of QE heroics — namely, a little domestic inflation of its own to simulate if not stimulate the holy grail of economic growth. Of course all that has gotten is the Potemkin stock market, a fragile, one-dimensional edifice concealing the post-industrial slum that the on-the-ground economy has become behind it.
Just as we 'forecast' this morning, on no news whatsoever...
"Solutions to the world's problems are not produced in a meeting between Bill Gates and George Soros... Renewal has to come from below... Limiting the influence [of the richest] is of the utmost importance... so that today's upper-class, high-finance capitalism can once again revert to being a capitalism of the real economy and the societal center."
...people love to hear about how technology always saves the day... "Among the thousands of shale producers, you can guarantee there are pioneers just like those who started the shale revolution. As profit margins erode due to low or even lower future prices, the pioneers will try out the revolutionary new shale techniques that have yet to be deployed." It sounds good in the same way that Twinkies taste good. We would remind people here that back in the 1700's the South Sea company, the stock shares of which bubbled up enormously - even causing Isaac Newton himself to lose the then-staggering sum of 20,000 pounds - was billed as “a company for carrying out an undertaking of great advantage, but nobody to know what it is". Would it be unreasonable to restate the author's claim as "shale operators to deploy new technology of great advantage, but nobody to know what it is?". Ungrounded hype is the same thing no matter when or where it happens.
When a central bank buys an asset directly (often government bonds), it drives up the price of this asset, the demand for which increases. But the prices of the other asset classes increase only if the economic agents that have sold the first assets to the central bank use the money received to buy these other asset classes. This transmission of increases in asset prices to all asset classes is therefore unstable, since it depends on the behaviour of investors and savers. There is therefore no stable monetary policy "risk channel"; the only asset prices that are controlled by central banks in the longer run are those of the assets that central banks buy directly... hence Japan has now resorted to buying Japanese stocks directly.
The global economy is like a jetliner that needs all of its engines operational to take off and steer clear of clouds and storms. Unfortunately, as Nouriel Roubini tells The Guardian, only one of its four engines is functioning properly: the Anglosphere (the United States and its close cousin, the United Kingdom). As Roubini continues, the question is whether and for how long the global economy can remain aloft on a single engine. Weakness in the rest of the world implies a stronger dollar, which will invariably weaken US growth. The deeper the slowdown in other countries and the higher the dollar rises, the less the US will be able to decouple from the funk everywhere else, even if domestic demand seems robust. But it's not just the rest of the world that is decoupling from US growth... as the following uncomfortable chart shows, so is a crucial pillar of monetary policy transmission, consumer wealth perception, and economic stability - the US housing market itself.