Wall Street Journal

• BIS lays out "simple" plan for how to handle bank failures (Reuters) - Are we still holding our breath on Basel III?
• Deficit Deal Even Less Likely - Improving U.S. Fiscal Health Eases Pressure for a 'Grand Bargain' Amid Gridlock (WSJ)
• IRS Faulted on Conference Spending (WSJ)
• Deadly MERS-CoV virus spreads to Italy (CNN)
• Turkish PM Erdogan calls for calm after days of protests (Reuters)
• Financial system ‘waiting for next crisis’ (FT)
• Russia to send nuclear submarines to southern seas (Reuters)
• China Nuclear Stockpile Grows as India Matches Pakistan Rise (BBG)

Breaking: SAC Capital executives are preparing for estimated client withdrawals of $3.5 billion. http://t.co/l2P6Dy8LwX

— Wall Street Journal (@WSJ) June 2, 2013

This confluence of indicators tells us point blank that stocks are in a bubble. If I know this, I can assure you that Ben Bernanke and the Fed know it. And this is why the Fed is in deep trouble. I guarantee you Bernanke is hoping he can get to the exit as Fed Chairman before the stuff hits the fan.

• Record unemployment, low inflation underline Europe's pain (Reuters)
• The ponzi gets bigger and bigger: Spanish banks up sovereign bond holdings by more than 10% (FT)
• California Lawmakers Turn Down Moratorium on Fracking (BBG)
• China’s Growing Ranks of Elderly Beset by Depression, Study Says (BBG)
• Tokyo Prepares for a Once-in-200-Year Flood to Top Sandy (BBG)
• Morgan Stanley Cutting Correlation Unit Added $50 Billion (BBG)
• IMF warns over yen weakness (FT)
• Rising radioactive spills leave Fukushima fishermen floundering (Reuters)
• India records slowest growth in a decade (FT)

There are countless examples of rampant criminality and corruption as well as blatant evidence of a two-tier system of justice in America today.  Too many to note or write about, but in this case we want to focus on this concept of “money laundering” in light of the recent shutdown of Liberty Reserve.  The crackdown on Liberty Reserve has nothing to do with “money laundering.”  It’s about a cartel of “too big to jail” banks and the fraud financial system they operate eliminating any players that try to encroach on their turf.  That isn’t capitalism, or socialism and it certainly isn’t anything close to freedom.  It is a parasitic, oligarch created feudalistic structure that must be done away with.  We often hear people say “we never learn from our mistakes.”  Incorrect.  People learn from their mistakes when there are consequences to their actions.  Of course criminals don’t learn from their mistakes when there are no serious consequences to their crimes.

• Japan’s Stocks Correction Raises Stakes for Abe’s Growth Plan (BBG)
• China Failure to Grow With $1 Trillion Is Warning to Li (BBG)
• Blankfein Leads Bank CEO Pay With $26 Million Deemed Overpaid (BBG)
• IMF says ‘no evidence yet’ of Abenomics hurting other economies (FT)
• Europe Seeks CFTC Delay in Imposing Swaps Rules on Banks (BBG)
• Fed's Rosengren: 'Modest' QE3 cut may make sense in a few months (Reuters)
• Who’s who of Obama lobbyists pushes Keystone pipeline (FT)
• China to Study Joining U.S.-Led Trade Accord After Japan Added (BBG)

• South China Sea tension mounts near Filipino shipwreck (Reuters)
• OECD cuts economic forecasts as eurozone drags on growth (FT)
• Switzerland frees banks to settle U.S. tax evasion cases (Reuters)
• U.S. Says Firm Laundered Billions (WSJ)... no, it's not HSBC, also: Free Corzine!
• Ardent conservative Bachmann to not seek re-election to Congress (Reuters)
• Russia faults U.S. over 'odious' Syria rights resolution (Reuters)

• ‘Cov-lite’ loans soar in dash for yield (FT)
• Cambodian police clash with thousands of garment workers, 23 hurt (Reuters)
• Obama Accepting Sequestration as Deficit Shrinks (BBG)
• Having done nothing to restore confidence in a fragmented market, the SEC turns back to main street fraud (WSJ)
• Europe's austerity-to-growth shift largely semantic (Reuters)
• Germany thwarts EU in China solar fight (FT)
• In EU-China dispute, Beijing warns of trade  (FT)
• U.S. Oil Boom Divides OPEC (WSJ)
• Record Cash Sent to Balanced Funds (BBG)
• Hilsenrath: Fed Wrestles With Market Expectations About Pace of QE (WSJ)
• Worse-Than-Cyprus Debt Load Means Caribbean Defaults to Moody’s (BBG)
• States Raise College Budgets After Years of Deep Cuts (WSJ)
• U.K. Banks Cut 189,000 With Employment at Nine-Year Low (BBG)

Russia, Greece, Turkey, Kazakhstan and Azerbaijan expanded their gold reserves for a seventh straight month in April, buying bullion to diversify foreign exchange reserves due to concerns about the dollar and the euro. Russia’s steady increase in its gold reserves saw its holdings, the seventh-largest by country, climb another 8.4 metric tons to 990 tons, taking gains this year to 3.4% after expanding by 8.5% in 2012, International Monetary Fund data show.  Kazakhstan’s reserves grew 2.6 tons to 125.5 tons, taking the increase to 8.9% this year after a 41% expansion in 2012, data on the website showed. Turkey’s holdings rose 18.2 tons to 427.1 tons in April, increasing for a 10th month as it accepted gold in its reserve requirements from commercial banks.  Belarus’s holdings expanded for a seventh month as did Azerbaijan’s. Interestingly, Greece’s gold holdings climbed for a fourth month, according to the IMF data.   This could be a sign of rising economic nationalism in Greece or that the Greek central bank realises that if Greece leaves the euro and is forced back onto the drachma that gold reserves will offer a modicum of protection. Only a modicum, because Greece’s gold reserves remain miniscule especially considering the scale of their debts. 

Through most of the 20th century, America led something of a charmed life, at least when compared with the disasters endured by almost every other major country. We became the richest and most powerful nation on earth, partly due to our own achievements and partly due to the mistakes of others. The public interpreted these decades of American power and prosperity as validation of our system of government and national leadership, and the technological effectiveness of our domestic propaganda machinery - our own American Pravda - has heightened this effect. Author James Bovard has described our society as an “attention deficit democracy,” and the speed with which important events are forgotten once the media loses interest might surprise George Orwell.

The influence of central banks on markets seems to have reached unparalleled heights. We look at why, turning to behavioural finance for some clues.

• The deeper agenda behind "Abenomics" (Reuters)
• BoJ governor Haruhiko Kuroda promises to stabilise bond market (FT)
• Obama Sees Sunset on Sept. 11 War Powers in Drone Limits (BBG)
• Lower CPMs for everyone: FTC Begins Probe of Google's Display-Ad Business (WSJ)
• Apple’s Tax Magic Leaves Irish Bondholders Unmoved (BBG)
• Asia Goes on a Debt Binge as Much of World Sobers Up (WSJ)
• All hail Gazpromia: UK gas supply six hours from running out in March (FT)
• Spain’s banks face €10bn more provisions (FT) ... and then more, and more, and more
• Truck strike may have caused Washington state bridge collapse, officials says (Reuters)
• P&G Says A.G. Lafley Rejoins as Chairman, CEO (BBG)
• Five Key Things About the SAC Insider Case (BBG)

• Global shares sink, following 7.3 percent drop in Japan's Nikkei (Reuters)
• When all fails, pull a Kevin Bacon: Japan Economy Chief Warns Against Panic Over Stock Sell-Off (BBG)
• White House Feeds IRS Frenzy by Revising Accounts (BBG)
• In any scandal, lying to Congress is tough to prove (Reuters)
• Debt limit resets at higher level, budget impasse grinds on (Reuters)
• China factory data to test political calculations (FT)
• European Leaders Saying No to Austerity (BBG)
• And yet, nobody wants in anymore: Iceland’s new coalition government suspends EU accession talks (FT)
• Oil Manipulation Inquiry Shows EU’s Hammer After Libor (BBG)
• The Fed Squeezes the Shadow-Banking System (WSJ)
• Diamond Said to Weigh Backing Barclays Alumni in Venture (BBG)
• Spain’s Private Jets Disappearing as Tycoons Cut Flights (BBG)

The fundamentals of the platinum and palladium markets are beginning to receive market attention and not before time. The positive supply demand dynamics are leading to increased investment demand as seen in the ETF data and Chinese demand rising again due to both industrial and jewellery demand.

• Apple Bonds Stick Buyers With $280.6 Million Loss as Rates Climb (BBG)
• Iceland Freezes EU Plans as New Government Shuns Euro Crisis (BBG)
• "Transparent Fed" - Ben Bernanke meets privately with Darrell Issa (Politico)
• Bank of Japan vows market steps to curb bond turbulence (Reuters) holds policy (FT)
• Stockholm riots spread in third night of unrest (FT)
• Dudley Says Decision on Taper Will Require 3-4 Months (BBG)
• Senate panel passes immigration bill; Obama praises move (Reuters)
• Italy to outline youth jobs plan as government struggles (Reuters)
• Apple CEO Tim Cook, Lawmakers Square Off Over Taxes (WSJ)
• Google Joins Apple Avoiding Taxes With Stateless Income (BBG)
• Sony Board Discussing Loeb’s Entertainment IPO Proposal (BBG)
• Vote Strengthens Dimon's Grip (WSJ), Dimon performance well choreographed (FT)