- U.S., backed by Arabs, launches first strikes on fighters in Syria (Reuters, BBG)
- But not all all back: Turkey Bars Kurds From Entering Syria to Fight Islamic State (BBG)
- Dollar Weakens on Airstrikes; Europe Stocks Drop (BBG)
- Ready for Rate Riot? Emerging Markets Set to Follow Fed (BBG)
- White House fence jumper had ammunition, machete in car, prosecutors say (WaPo)
- El-Erian "would have done things differently" (Reuters)
- Eurozone business growth slows in September, PMI survey finds (BBC)
- Shrinking Bond Desks Taken by Journeymen as Masters Fade (BBG)
- Manufacturing Rebound Relieves Growth Concerns in China (BBG)
- Former Trader Quits Playboy Club to Open Own Restaurant (BBG)
European stocks, U.S. equity index futures fall after Euro area PMI for Aug. missed ests., while bond yields for German, Spanish, U.K. debt fall. Copper rises with positive Chinese PMI data, while oil gains as OPEC discusses output cut. European health care stocks among largest underperformers as U.S. plans tighter rules on tax inversion M&A.
President Obama’s neo-Cold War is not about ideology or respect for borders. It is about money and global power. The current battle over control of gateway nations - strategic locations in which private firms can establish the equivalent of financial boots-on-the-ground - is being waged in the Middle East and Ukraine under the auspices of freedom and western capitalism (er, “democracy”). In these global gateways, private banks can infiltrate resource-rich locales fortified by political will, public aid and military support to garner lucrative market advantages. ISIS poses a threat to global gateway control that transcends any human casualties. That’s why Congress decided to authorize funds to fight ISIS despite the risk. The common thread of today’s global gateway nations appears to be oil.
The Federal Reserve Bank of New York (FRBNY) has built a new crystal ball (technically a DSGE model) as part of its efforts to forecast the U.S. economy. In part 1 of a week-long series - to provide some background on the model, its use for policy analysis and forecasting, as well as its forecasting performance - they briefly discuss what DSGE models are and explain their usefulness as a forecasting tool.
Moments ago, the Goldmanite in charge of the European Central Bank delivered yet another speech, this time seeking to offset some of the hawkish comments over the weekend from his comrades, all of which suggested that no more easing, or public QE, was coming any time soon. It was, as usual, full of the same lies that have pushed European stocks to highs not seen since Lehman even as Europe's economy is now slumping into a triple-dip recession. Here is a choice selection of his comments, properly annotated.
With the snoozer of an FOMC meeting in the rearview mirror, as well as Scotland's predetermined independence referndum, last week's key events: the BABA IPO and the iPhone 6 release, are now history, which means the near-term catalysts are gone and the coming week will be far more relaxed, if hardly boring. Here is what to expect.
Back in 1930, Keynes looked out into the future and saw that with the proper management of the economy, monetary policy and the like, the world could attain a type of utopian stasis: Keynes expected growth to come to an end within two to three generations, and the economy to plateau. He referred to this imaginary state of equilibrium as "bliss," noting “thus for the first time since his creation man will be faced with his real, his permanent problem - how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well." However, Keynes did say this would happen if mankind avoided any calamitous wars and if there was no appreciable increase in population. Two more flawed base assumptions there could not have been.
Just two short months ago, Goldman Sachs was exuberant over the 'expansion' signals that the firm's Global Leading Indicator Swirlogram was exhibiting as it confirmed their 'economists' expectations that the Keynesian hockey-stick of hope would once again re-appear majestically in H2 2014 and lift America (and the world) to escape velocity. That dream is over. Confirming the collapse of world GDP expectations, Goldman's GLI has plunged into 'slowdown' with momentum starting to slow. Perhaps, just perhaps, as we noted previously, this time is not different and the annual cycle of extrapolating early-year hope is rapidly turning to late-year disappointment.
“We are mindful of the potential for a build-up of excessive risk in financial markets, particularly in an environment of low interest rates and low asset price volatility,” the G-20 officials said in a communique released in Cairns, Australia. “We welcome the stronger economic conditions in some key economies, although growth in the global economy is uneven.”It is unclear just what that statement means: BTFATH, but only on a downtick?
In order to do prove its undying commitment to the US, moments ago the French Defense Ministry took a page right out of the Pentagon/CNN playbook, and released footage of French warplanes striking targets belonging to the Islamic State after taking off from an airbase. Paris announced earlier this week it was taking part in military air strikes against the militant group in Iraq. The video shows a pilot inspecting his aircraft, a French Rafale, before takeoff. The footage also shows several craft being refueled in mid-flight as well as infrared shots of the targets being bombed.
As gold and silver prices tumble to multi-year lows, an odd thing is happening in the 'paper' precious metals ETF markets. Demand remains high for silver ETF exposure as 'someone' is aggressively unwinding gold ETF positions.. and yet the prices for both are falling rapidly. It appears the retail investor is taking advantage of the lower prices in silver to accumulate additional exposure as Credit Suisse notes, "the perception is that silver will do well, and should outperform gold as the economic recovery strengthens," adding that "belief in silver’s dual properties, as a financial asset and also as an industrial metal, appears to remain strong."
The Fed’s strategy of targeting higher stock prices to boost economic growth has done the exact opposite. This strategy has pulled money away from effective macroeconomic investments and into ineffective macroeconomic albeit effective short term microeconomic investments. The end result is that we have all time high stock prices but no economic growth. We will be stuck in this economic lull until the Fed is ready to admit defeat and allow for a new more effective strategy to be implemented.
It has been quite an eventful week between Scotland's battle over independence, the Federal Reserve's FOMC announcement and the markets making new all time highs. The FOMC announcement was more comedy than anything else as the continued facade of the Fed's forecasting capabilities was revealed, it appears the biggest factor in the world of investing and for this weekend's list of "Things To Ponder" we have accumulated a few reads relating to the Fed.
While we are not predicting that the proverbial "wheels are about the come off the cart," today, this is another in a long list of indications that value in the stock market is no longer present. Of course, this would also suggest this might be, just maybe, a time to start considering "selling high." Of course, such a suggestion is wildly ludicrous and absolutely illogical since it is widely believed that the markets will never go down...ever.