From the Arabian Spring of hope (although technically protesting soaring food prices, something which is about to happen all over again) to the Arabian Fall of anti-American revulsion in under two years: has to be a blowback record. The latest casualty: the German embassy in Sudan:
- Protestors now inside German Embassy in Khartoum, Sudan - RTRS
- Protesters pull down emblem at German embassy in Sudan, raise Islamic flag, Reuters witness says - RTRS
- Protesters set KFC restaurant on fire in Lebanon over pope's visit, anti-Islam film -RTRS
So: Egypt, Libya, Yemen, Morrocco, Tunisia, Sudan and now Lebanon. Did we miss anyone?
- Weeks before U.S. election, Mideast gives Obama perfect storm (Reuters)
- Clashes intensify near US embassy in Cairo (Al Jazeera)
- Puppet governments in trouble: Mursi Risks Rift With U.S. or Voters as Islamists Rally (Bloomberg)
- Protests Put Egypt Relations on Edge (WSJ)
- Fed insists politics had no role in decision (FT)
- UBS "rogue trader" fraudulently gambled away $2.3 billion, court told (Reuters)
- Obama Holds Lead in Three Key States (WSJ)
- China's Xi recovering from bad back, could appear soon - sources (Reuters)
- Japan voices anger over Chinese incursion after vessels entered waters around disputed Senkaku islands (FT)
- Goldman Scales Back Junior-Analyst Program; No Contracts for College Hires (WSJ)
- China commentary slams Romney's "foolish" China-bashing (Reuters)
- Aging Baby Boomers Face Losing Care as Filipinos Go Home (Bloomberg)
Remember Peregrine Financial, the firm that just like MF Global, ended up vaporizing $200 million in client money after it was revealed that its suicide-challenged CEO Russell Wasendorf was stealing operating cash for two decades under the nose of the CFTC? Yes? Good. Because in four days, said CEO will be relaxing in the comfort of his own home. It seems odd to us that the man who caused hundreds of clients to lose up to all of their life's savings, will be hanging out on his leather sofa, if only until such time as a one-way first class ticket to a non-extradition country is consummated. But who knows: perhaps this is all part of the "New Fairness Normal" where fraud and crime is if not rewarded, then certainly ignored.
With a few minutes to go until Ben speaks, the entirely useless projections are out (as noted before by Reuters that the Fed has been constantly wrong in its forecasts). The stunning punchline is that according to the Fed things are not as bad as one would have expected given the dramatic open-ended shart-fest that Bernanke is portraying. In fact, things are improving per the FOMC! Though we assume that these projections are self-defeating since they likely include this new policy. Be interested to see the pre-policy projections.
- *FED OFFICIALS SAY GROWTH WILL IMPROVE FASTER THAN JUNE OUTLOOK
- *FED: 2012 GROWTH OF 1.7%-2.0% VS 1.9%-2.4% IN JUNE
- *FED: JOBLESS END OF 2012 AT 8.0%-8.2% UNCHANGED FROM JUNE
- *FED: JOBLESS END OF 2013 AT 7.6%-7.9% VS 7.5%-8.0% IN JUNE
One wonders, whether in addition to having excel models which appoarently do not recognize circular assumptions, if the Fed's forecasts also assume $10 gas, $100 loaves of bread, and $10,000 gold?
Stiking South Africa Miners Set To "Bring The Mining Companies To Their Knees", Call For National StrikeSubmitted by Tyler Durden on 09/13/2012 07:55 -0500
As if Bernanke promising to print, print, print until such time as the Fed's flawed policy brings unemployment lower, which by definition will not happen when the US is now suffering not from a structural unemployment "part-time new normal" problem, was not sufficient to send gold and other hard assets higher, today we get the double whammy announcement that the situation in South Africa, already very bad, is about to get much worse. Earlier today, South Africa's striking miners, already set on belligerent courtesy with their employers and authorities, prepare to go on general strike on Sunday, in effect shutting down all precious metal production in a world that is about to demand hard asset more than ever. "On Sunday, we are starting with a general strike here in Rustenburg," demonstration leader Mametlwe Sebei told several thousand workers at a soccer stadium in the heart of the platinum belt near Rustenburg, 100 km (60 miles) northwest of Johannesburg. The action was designed to "bring the mining companies to their knees", he said, to mild applause from the crowd, which was armed with sticks and machetes."
In the last 30 days (since August 13th), platinum has risen by 18.9%, silver by 18.7%, palladium by 18.4% and gold by 7.6%. All remain well below their nominal record highs (see charts) and more importantly well below their inflation adjusted highs. All will most likely continue to rally especially if the Fed announces QE3 today as investors turn to precious metals to hedge substantial money printing by governments and the real risk of future inflation. "The Euro bailout measures and the opening of the monetary policy floodgates by the central banks are likely to result in higher inflation in the medium to long term," says today's Commerzbank commodities note. The strikes and violence in South Africa's gold and platinum industries are supporting and may contribute to higher prices. Machete-wielding strikers forced Anglo American Platinum, the world's No.1 platinum producer, to shut down some of its operations in South Africa, sending spot platinum to a five month high of $1,654.49.
Fortescue Implodes As Company Requests Debt Waiver: 2007 Deja Vu Liquidity Fears Send Stock PlungingSubmitted by Tyler Durden on 09/13/2012 06:52 -0500
Two weeks ago when we posted "The Kangaroo In The Metals Mine: Fortescue Trying To Raise $1.5 Billion From 20 Banks As Iron Prices Implode" we observed several developments in the bond prices of Australian mega iron miner, and fourth largest in the world, Fortescue, which suddenly found itself in dire need of cash which is always a first step to insolvency, which made us comment that just "like that we are back to those days of 2008 when the Chinese demand collapse meant any day could be FMG's last. Happy days are back again." Not really. We added that "as usual, the bond market is the first to get the memo that the landing is going to be a hard one. We give the farce that is known as equities about 4-6 weeks before they too get the memo." We were actually wrong: it took just two weeks for equities to finally figure out what we were warning about. From Reuters: "The world's no.4 iron ore miner Fortescue Metals Group Ltd has asked lenders to waive debt covenants if iron ore prices remain under pressure, the firm said on Thursday, after its shares suffered their worst loss in almost four years. Like other Australian miners, Fortescue's earnings have come under pressure from a plunge in commodity prices caused by weak demand in top consumer China. This has squeezed its ability to service its long-term debt, which stands at $11.3 billion." Of course, those who read our August 31 report, and were positioned accordingly and ahead of the market, made 20% in two weeks.
- Italy Says It Won't Seek Aid (WSJ)... and neither will Spain, so no OMT activation, ever. So why buy bonds again?
- European Lenders Keep Ties to Iran (WSJ)
- Fink Belies Being Boring Telling Customers to Buy Stocks (Bloomberg)
- Dutch Voters Buck Euro Debt Crisis to Re-Elect Rutte as Premier (Bloomberg)
- China's Xi cited in state media as health rumors fly (Reuters)
- China vs Japan: Tokyo must come back 'from the brink' (China Daily)
- Manhattan Apartment Vacancy Rate Climbs After Rents Reach Record (Bloomberg)
- Well-to-do get mortgage help from Uncle Sam (Reuters)
- Princeton Endowment Expected to Rise Less Than 5% in Year (Bloomberg)
- Protesters Encircle U.S. Embassy in Yemen (WSJ)
- US groups step up sales of non-core units (FT)
While this and that may have happened overnight, the only thing that matters today is what the FOMC presents to a market which has now priced in well over 100% of a new easing round. Except little movement until Bernanke speaks, and with that removes any doubt that i) the Fed, like the ECB, are both political creations comprised of unelected academics, and ii) the entire modern capitalist world is nothing but a Pavlovian creation that responds only to promises of liquidity injections. Luckily, if nothing else, this will once and for all shut up anyone who claims that the market reflects the economy, it doesn't; that a "virtuous economic cycle" is possible under the new centrally planned normal, it isn't, and that the US economy is recovering 4 years after Lehman collapsed. It never did, and without $14 trillion in central bank liquidity injections over the same period, the world, as represented by the S&P, would be in a mindblowing depression, which it will still get back to once the surge in hard asset inflation offsets any incremental liquidity provided by the central planning academics as Citi warned yesterday.
Anti-American violence and hatred is spreading: first Egypt, then Libya, with very tragic consequences, now Yemen. From Reuters: "Hundreds of Yemeni demonstrators stormed the U.S. embassy in Sanaa on Thursday in protest at a film they consider blasphemous to Islam, and security guards tried to hold them off by firing into the air. The attack followed Tuesday night's storming of the United States Consulate in Benghazi, where the ambassador and three other staff were killed. President Barack Obama said the perpetrators would be tracked down and ordered two destroyers to the Libyan coast, but there were fears protests would spread to other countries in the Muslim world." And since the US will not retaliate against any of these attacks on what is technically US territory except with "strong condemnation", expect many more retaliations against America in the middle east in the days ahead as blowback finally blows up. Also, will the US warships headed to Libya now be redirected to Yemen or the next country that decided to burn down its US mission?
US Totalitarianism Loses Major Battle As Judge Permanently Blocks NDAA's Military Detention ProvisionSubmitted by Tyler Durden on 09/12/2012 21:43 -0500
Back in January, Pulitzer winning journalist Chris Hedges sued President Obama and the recently passed National Defense Authorization Act, specifically challenging the legality of the Authorization for Use of Military Force or, the provision that authorizes military detention for people deemed to have "substantially supported" al Qaeda, the Taliban or "associated forces." Hedges called the president's action allowing indefinite detention, which was signed into law with little opposition from either party "unforgivable, unconstitutional and exceedingly dangerous." He attacked point blank the civil rights farce that is the neverending "war on terror" conducted by both parties, targetting whom exactly is unclear, but certainly attaining ever more intense retaliation from foreigners such as the furious attacks against the US consulates in Egypt and Libya. He asked "why do U.S. citizens now need to be specifically singled out for military detention and denial of due process when under the 2001 Authorization for Use of Military Force the president can apparently find the legal cover to serve as judge, jury and executioner to assassinate U.S. citizens." A few months later, in May, U.S. District Judge Katherine Forrest ruled in favor of a temporary injunction blocking the enforcement of the authorization for military detention. Today, the war againt the true totalitarian terror won a decisive battle, when in a 112-opinion, Judge Forrest turned the temporary injunction, following an appeal by the totalitarian government from August 6, into a permanent one.
The headlines proclaimed - confidence is back and the money-market funds are buying European debt again. This makes perfect sense, Europe is fixed and they are backing up the Corzine truck!! Well, no! According to the report from JPMorgan, Prime MMF assets rose $16bn but the bulk was in secured exposure to German and French banks - not exactly the kind of risk-on short-end exuberance that investors are supposed to infer from the headlines. Just as we have seen everywhere, collateral is king and secured credit is the preferred way - even if it comes at a premium. It seems that while the tail-risk is supposedly gone, even short-duration funds are not comfortable with the conditionality. Isn't it odd how headlines (from Reuters: U.S. money funds add euro zone debt in August) can be so different from reality?
Federal Chairman Ben Bernanke made a strong case for more easing in his Jackson Hole speech last month so the outlook is positive. IF the Fed declines additional easing then it could send the markets into a tailspin especially due to the fact that the EU just got the “green-light” on the European Stability Mechanism (ESM) from the German courts.
It has been a long time since US territory abroad, i.e., a US embassy, was openly attacked. It has been even longer, or about 33 years, since a US ambassador was last killed in the line of duty in 1979 Afghanistan. Both happened last night. Below, courtesy of Reuters, are pictures of the event.
The answer, of course, is yes: they are after all, economists (who somehow, with no real world experience, determine the daily fate of billions of productive and capital-allocation decisions every day). But it is one thing for everyone to discuss the obvious anecdotally by the water cooler. It is something else for this verbal heresy to be printed in a "serious" publication. Such as Reuters, which today asks if "the Federal Reserve has watched the U.S. recession and painfully slow recovery through rose-colored glasses?" And answers: "A look at the U.S. central bank's economic forecasts over the past five years suggest it has." It then explains: "Since October 2007, when the Fed's policy committee began giving quarterly predictions for GDP growth and the jobless rate, the central bank has downgraded its nearer-term forecasts almost two-and-a-half times as often as it upgraded them. The gap between Wall Street's expectations for 2012 growth and the Fed's own current view points to yet another downgrade on Thursday, when policymakers wrap up a two-day meeting that has world financial markets rapt." It concludes: "The trend of back-pedaling shows how poorly the central bank has fared at reading the economic tea leaves, with the Fed's optimism a likely factor in policy decisions through the Great Recession and its fallout, economists say." In summary: the world's most ebullient and permabullish forecasters, who incidentally happen to constantly be wrong in their desperate attempts to affect the only thing that matters: consumer and investor sentiment and confidence via the increasingly irrelevant myth that are asset prices, happen to run the monetary world and "determine" just what the future looks like. Needless to say, if the Fed's presidents were actually employed in the private sector, they would have been fired ages ago. Only in a fiat world do they not only keep their jobs, but keep on running the world.