If one listens to Goldman's chief economist Jan Hatzius these days, it is all roses for the global economy in 2014... much like it was for Goldman at the end of 2010, a case of optimism which went stupendously wrong. Goldman's Dominic Wilson admits as much in a brand new note in which he says, "Our economic and market views for 2014 are quite upbeat." However, unlike the blind faith Goldman had in a recovery that was promptly dashed, this time it is hedging, and as a result has just released the following not titled "Where we worry: Risks to our outlook", where Wilson notes: "After significant equity gains in 2013 and with more of a consensus that US growth will improve, it is important to think about the risks to that view. There are two main ways in which our market outlook could be wrong. The first is that our economic forecasts could be wrong. The second is that our economic forecasts could be right but our view of the market implications of those forecasts could be wrong. We highlight five key risks on each front here." In short: these are the ten things that keep Goldman up at night: the following five economic risks, and five market view risks.
One of the biggest mistakes we can make, Saxo Bank's CEO warns, is to assume that rationality will prevail, that just through superior economic performance, freedom will capture enough peoples' hearts in a democracy to win the day. In the last of his three-part series (part 1 and part 2), Lars Seier Christensen focuses on the broader relevance of Ayn Rand in society today, noting that she remains among the few that recognised with crystal clarity, that we will not win the battle through just proving that freedom and capitalism works. This, he warns, creates a major problem for those of us that like to argue rationally, rather than emotionally.
"Paper and digital markets levitate, central banks pull out all the stops of their magical reality-tweaking machine to manipulate everything, accounting fraud pervades public and private enterprise, everything is mis-priced, all official statistics are lies of one kind or another, the regulating authorities sit on their hands, lost in raptures of online pornography (or dreams of future employment at Goldman Sachs), the news media sprinkles wishful-thinking propaganda about a mythical “recovery” and the “shale gas miracle” on a credulous public desperate to believe, the routine swindles of medicine get more cruel and blatant each month, a tiny cohort of financial vampire squids suck in all the nominal wealth of society, and everybody else is left whirling down the drain of posterity in a vortex of diminishing returns and scuttled expectations."
2013 Was A Year Of Calm In The World Of Finance ... 2014 May Not Be So Calm ... Highlights Of Year - German Gold Repatriation, Record Highs In Yen, Huge Chinese Demand - Lowlights Of Year - Massive Paper Sell Offs in April/June and First Deposit Confiscation and Capital Controls ...
A year which showed that central planning works (for the fifth year in a row and probably can continue to "work" at least a little longer - in the USSR it surprised everyone with its longevity before it all came crashing down), is drawing to a close. This is what has happened so far on the last trading session of 2013. As market participants head in to the New Year period, volumes are particularly thin with closures being observed across Europe with only the CAC, IBEX and FTSE 100 trading out of the major European indices, with German, Switzerland, Italy and the Nordic countries are already closed. The FTSE and CAC are both trading in the green with BP leading the way for the FTSE earlier in the session after reports the Co. have asked a federal appeals court to block economic loss payments in its settlement of the Gulf of Mexico oil spill. European stocks rise, with real estate, travel & leisure leading gains. Retail shares underperform as Debenhams slumps following its IMS. A number of major markets will close early today. The euro falls against the dollar. Fixed income market are particularly quiet with the Eurex being shut. Whilst Gilts are seen down this morning following on from yesterday’s short-covering gains.
Heading into the North American open, stocks in Europe are seen broadly lower, with consumer services seen as the worst performing sector, where the UK based retailers have underperformed amid fears that a combination of heavy discounting, along with bad weather, impacted heavily on overall performance. Of note, the SMI index in Switzerland underperformed throughout the session, with Swatch shares under pressure after officials were unable to say what caused the fire at the weekend at the co.'s ETA unit factory in Grenchen, which destroyed one workshop and damaged another. As expected, traded volume is far below the daily avg and this trend is expected to continue this week. The euro is stronger against the dollar. Japanese 10yr bond yields rise; Italian yields decline. Commodities little changed, with silver, gold underperforming and natural gas outperforming. U.S. pending home sales, Dallas Fed manufacturing data due later.
In September 1939, six days after the United Kingdom declared war on Germany, Charlie Chaplin began filming one of his most epic films ever... and the first “talkie” for the silent film star. It was a courageous project - the ‘Great Dictator’ directly poked fun at Adolf Hitler. At the end of the movie, Chaplin looked into the camera and gave a stirring speech about timeless principles– peace, mutual respect, freedom from evil men who aspire to lead nations. This did not win Chaplin any friends in Washington who were keen to maintain official neutrality. And he paid dearly for it; the Great Dictator was the beginning of an entire decade of turbulent trouble between Chaplin and the US government. His rousing speech at the end of the Great Dictator calls for a world free of violence, intimidation, and government control. Unfortunately, we don’t get to live in that world. This our reality. The world is beautiful. Life is beautiful. But the leaders of humankind surely make it all damned hard to appreciate sometimes.
Following David Woo's initial $1300 fair-value price target for Bitcoin, the BofAML strategist has had to suffer through some significant changes; not the least of which is China's increasingly strict Bitcoin regulation. The shifts, he notes, raise key questions about the future of Bitcoin as he asks "is this the end of Bitcoin?"
What time can you go home today? Find out with the schedule of early market closures below:
- CME/CBOT - Early Close: Equities - 12:15PM Central; Interest Rates, FX, Commodities - 12:00PM Central
- NYMEX - Early Close: 1:30PM Eastern
- COMEX - Early Close: 11:30AM Central
- NYSE - Early Close: 1:00PM Eastern
A little followed development is revealing about the emerging financial architecture and the role of the dollar. A dispassionate discussion.
While shortened Christmas Eve trading is traditionally the lowest volume day of the year, based on recent trends it may be difficult for today's action to stand out from the landscape thanks to an ongoing volume collapse, which however should make the even more traditional low-volume melt up that much easier. Sure enough, futures are modestly higher driven by their favorite signal, the EURJPY. Not surprisingly there has been particularly light newsflow with market closures in Germany, Italy and Switzerland in addition to early market closures for UK, France, Netherlands and Spain. Those markets that are open are trading in positive territory with the FTSE 100 being supported by BSkyB following an upbeat pre-market report for the company and their customer base, whilst the IBEX 35 is being supported by the financial sector. Overnight in China there was news of an injection of CNY 29bln via a 7-day reverse repo, although market commentators have said that this is more of a gesture than any meaningful intervention given the size of the country's banking market. Fixed income markets are particularly light with there being no trade in the bund future given the Eurex closure, with other trading products relatively flat given the lack of newsflow. However, the short-sterling curve has bear-steepened and thus continuing the trend seen since the end of last week as a result of both UK unemployment and UK GDP coming in better than expected.
December 23rd, 1913 is a date which will live in infamy. That was the day when the Federal Reserve Act was pushed through Congress. Many members of Congress were absent that day, and the general public was distracted with holiday preparations. Now we have reached the 100th anniversary of the Federal Reserve, and most Americans still don't know what it actually is or how it functions. But understanding the Federal Reserve is absolutely critical, because the Fed is at the very heart of our economic problems. Since the Federal Reserve was created, there have been 18 recessions or depressions, the value of the U.S. dollar has declined by 98 percent, and the U.S. national debt has gotten more than 5000 times larger. This insidious debt-based financial system has literally made debt slaves out of all of us, and it is systematically destroying the bright future that our children and our grandchildren were supposed to have. The truth is that we do not have to have a Federal Reserve. The greatest period of economic growth in U.S. history was when we did not have a central bank. If we are ever going to turn this nation around economically, we are going to have to get rid of this debt-based financial system that is centered around the Federal Reserve. On the path that we are on now, there is no hope.
"The powers of financial capitalism had (a) far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland; a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank... sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world." - Carroll Quigley, member of the Council on Foreign Relations
While the ECB (and the Fed) continues to warn (danger of theft), threaten (asset-ize and tax it!), or de-bunk the idea of virtual currencies (despite two of the world's largest banks apparently seeing value in the idea), the Swiss Parliament is proposing a different angle. A postulate signed by 45 (of 200) members of parliament asks for bitcoin to be treated as any other foreign currency - and examine the potential bitcoin-related opportunities for the Swiss financial sector. The crucial point here, of course, is if Bitcoin is 'deemed' an asset (as EU regulators appear to want), it can (and will) be taxed; but it seems the Swiss beg to differ with that definition.
Outflows of gold from ETF's amounted to 24.3 million ounces, nearly 700 metric tonnes, in 2013. Imports from Hong Kong to China totaled 26.6 million ounces or 754 metric tonnes through September alone. It is unknown where gold would come from to replenish these ETF holdings, if there was a sudden surge in demand in the West in the event of a new sovereign debt crisis or a Lehman Brothers style contagion event.