http://www.zerohedge.com/fullrss2.xml/article/2011/12/www.telegraph.co.uk/news/worldnews/middleeast/iran/9545597/www.telegraph.co.uk/news/worldnews/middleeast/iran/2010/2010/2011/11/nobel-prize-winning-economist-war-is-widely-thought-to-be-linked-to-econo en China Cuts Reserve Ratio Most Since 2008 In Scramble To Preserve Equity Bubble, Boost Economy http://www.zerohedge.com/news/2015-04-19/china-cuts-reserve-ratio-most-2008-attempt-preserve-equity-bubble-boost-economy <p>As we <a href="http://www.zerohedge.com/news/2015-04-18/why-record-drop-chinese-house-prices-suggests-beijing-already-recession">observed yesterday </a>when we showed that if comparing the collapse in China's housing market with that of the US following their respective peaks..</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/China%20vs%20US%20housing%20history.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/China%20vs%20US%20housing%20history_0.jpg" width="600" height="313" /></a></p> <p>&nbsp;</p> <p>... then China is already a recession, we added that "as shown in the chart below [China] has recently engaged in several easing steps, <strong>with many more to come..</strong>."</p> <p>Sure enough, just a few hours later, the PBOC announced its second Reserve Requirement Ratio (RRR) for all <a href="http://www.zerohedge.com/news/2015-02-04/pboc-cuts-rserve-requirement-05-joins-15-other-central-banks-easing-2015">banks since February 4</a>, when China had its first industry-wide RRR cut since May 2012. The move will be effective Monday, April 20. </p> <p>Incidentally, this is the first time in history that China has been easing its monetary policy <em>into a surging stock market, </em>as the chart below shows.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/China%20easing.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/China%20easing_0.jpg" width="600" height="364" /></a></p> <p>&nbsp;</p> <p>Perhaps more notably this was the biggest RRR-cut for China since November 2008, and everyone knows what was going on back then. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/RRR%20history.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/RRR%20history_0.jpg" width="600" height="297" /></a></p> <p>&nbsp;</p> <p>While the move was not unexpected and follows Premier Li's vow last month to actively step in if the economic slow down begins to hurt jobs, as well as the <a href="http://www.bloomberg.com/news/articles/2015-04-18/zhou-says-china-has-monetary-easing-room-may-not-need-to-use-it">PBOC's hint yesterday </a>that the PBOC has room to act, the size of the cut, which will unleash CNY1.2 trilion into the market or about $200 billion, was far bigger than most had predicted.</p> <p>“This RRR cut is much bigger than the market anticipated and banks <strong>will be flooded with liquidity</strong>,” said Liu Li-Gang <a href="http://www.bloomberg.com/news/articles/2015-04-19/china-follows-on-stimulus-pledge-with-bank-reserve-ratio-cut">quoted by Bloomberg</a>, chief China economist at Australia &amp; New Zealand Banking Group Ltd. in Hong Kong. “It will also add fuel to the already red hot stock market.”</p> <p>Other commentators, clearly long "of stocks", were just as giddy: “The move is positive, showing policy makers are trying to offset the impact of potential capital outflow and stabilize the macro environment,” said Helen Qiao, Hong Kong-based chief greater China economist at Morgan Stanley. “The 100 basis point cut shows the intensification of policy easing, which is warranted given the sharp slowdown.”</p> <p>And since none of the recent PBOC easing has done anything to arrest the collapse in the all important housing market, more interest rate cuts are forthcoming.</p> <p>But is it really about the economy? </p> <p>Recall that on Friday <a href="http://www.zerohedge.com/news/2015-04-17/chinese-stocks-are-still-crashing">Chinese equity futures crashed </a>after the close following news that the China Securities and Regulatory Commission (CSRC) put out an announcement which tightened up rules governing certain trading on margin while simultaneously liberalized rules on short selling. The tighter margin rules applied to a category of investors using what are known as 'umbrella trusts' where leverage has expanded greatly in the last 6 months.&nbsp; </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/04/20150417_china2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/04/20150417_china2_0.jpg" width="600" height="342" /></a></p> <p>&nbsp;</p> <p>This kind of margin has now been ruled illegal going forward (the margin rules for ordinary citizens not using these vehicles have not been altered). The rise in Margin looks somewhat like the rise in the number of new accounts being opened at the brokerages.&nbsp; The week of Apr 10 it was 850k, versus just about 100k a year earlier. </p> <p>The CSRC also increased the number of issues eligible for short selling from about 900 to 1100 in the same announcement.&nbsp; In the few years that either margin or shorting have been allowed, the practice of shorting in China has not caught on at all like the use of long margin. </p> <p>The result of these moves prompted Evercore ISI to comment that: "after a near 100% rise in Shanghai equities over the last year, any rule tightening would likely yield an immediate correction.&nbsp; <strong>Monday is likely to be a bad day in the Chinese markets.&nbsp; And maybe all week.</strong>"</p> <p>Well, not so fast.</p> <p>Terrified it had just popped its equity bubble prematurely, overnight China’s securities regulator "moved to allay fears that it intends to kill a breathtaking rally in the country’s stock market, just one day after it warned small investors about trading risks and expanded the use of a mechanism that bets against stocks."</p> <p>As the <a href="http://www.wsj.com/articles/china-not-trying-to-chill-red-hot-stock-market-says-regulator-1429441374?mod=WSJ_hp_LEFTWhatsNewsCollection">WSJ reported</a>, "<strong>the abrupt about-face betrays a dilemma faced by the regulator between cooling a market that has doubled over 12 months and causing panic among vulnerable retail investors that account for the vast majority of stock trading in China, analysts say.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>In a statement published on Saturday evening, the China Securities Regulatory Commission said measures rolled out on Friday, including tightening rules on margin lending and promoting the use of short selling, <strong>aren’t aimed at clamping down on a red-hot market.</strong></p> <p>&nbsp;</p> <p>The measures are about “maintaining the healthy development of the market,” the CSRC said in the statement. “They aren’t intended to encourage short selling, let alone depressing the market...the market shouldn’t over-interpret the measures,” it added.</p> </blockquote> <p>In other words, the Chinese market may be "red hot", but please don't stop making it even redder. Because as long as China is unable to halt its housing hard-landing, it will gladly take an equity bubble in lieu of a housing bubble if that helps preserve the people's wealth (the problem being that in China only 25% of household assets are in financial products - 75% is in financial markets, <a href="http://www.zerohedge.com/news/2014-07-29/why-china-couldnt-care-less-about-its-stock-market">something which as we showed before is inverted in the US</a>). </p> <p>Which is why any attempts to offset the bursting housing bubble with a stock bubble in China will fail.</p> <p>But it won't keep it from trying, and if yesterday's CSRC announcement was designed to halt the selling seeing on Friday, then the PBOC rate cut hours ago cements it. <em><strong>Call it China's "Bullard" moment.</strong></em></p> <p>But perhaps the biggest question is what happens with the Renmibni next: because on one hand China desperately needs to weaken its currency to boost exports and stimulate its mercantilist economy which due the CNY's peg to the soaring USD has lost its competitiveness, yet on the other as many have suggested (<a href="http://www.zerohedge.com/news/2015-03-06/how-beijing-responding-soaring-dollar-and-why-qe-china-now-inevitable">us included</a>) beneath the surface China is currently suffering a massive capital outflow, one which a weaker currency will accelerate, leading to an even worse outcome for China: a sequence of events which ultimately will culminate with the launch of the <a href="http://www.zerohedge.com/news/2015-03-06/how-beijing-responding-soaring-dollar-and-why-qe-china-now-inevitable">"final" QE</a>. <em><br /></em></p> <p>Expect the Friday selloff to be more then BTFDed as soon as China opens for trading in a few hours, and the SHCOMP to surge even higher and to even more unsustainable, and centrally-planned levels, merely pushing back the day of reckoning by a few weeks or months, as yet one more bank scrambles to preserve the "wealth effect" by artificially pushing its stock market higher.. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="789" height="479" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/China%20easing.jpg?1429449528" /> </div> </div> </div> http://www.zerohedge.com/news/2015-04-19/china-cuts-reserve-ratio-most-2008-attempt-preserve-equity-bubble-boost-economy#comments Australia China Evercore Fail Hong Kong Housing Bubble Housing Market Monetary Policy Morgan Stanley New Zealand None Recession Sun, 19 Apr 2015 13:20:30 +0000 Tyler Durden 504993 at http://www.zerohedge.com What Is Really Driving Gold? http://www.zerohedge.com/news/2015-04-19/what-really-driving-gold <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p style="text-align: justify;">NOTE: We are excited to release our first column under our new name. Loyal readers of Zerohedge have read many of our insights under <strong>Sprout Money</strong> [<a href="http://www.zerohedge.com/blogs/sprout-money" target="_blank">http://www.zerohedge.com/blogs/sprout-money</a>]. As of this week we will continue to bring the best of ourselves under <strong>Secular Investor</strong> [<a href="https://secularinvestor.com/" target="_blank">https://SecularInvestor.com</a>]. This name reflects what we stand for: <em>a research team that identifies and monitors secular trends in order to provide maximum profits for subscribers</em>.</p> </blockquote> <p><img src="http://secularinvestor.com/files/2015/03/cheap-gold-mining-stocks.png" alt="cheap gold mining stocks" width="456" height="338" style="display: block; margin-left: auto; margin-right: auto;" class=" wp-image-10604 aligncenter" /></p> <p style="text-align: justify;"><em>If anything, gold bulls are continuously looking to confirm their bullish outlook.</em> Most precious metals websites are filled with stories, news and developments from the gold market, accompanied by the implication that they will drive the gold price up. Examples of this include gold coin sales, Shanghai gold withdrawals, central bank buying volumes, evidence of market manipulation, money printing volumes, velocity of money, etc.</p> <p style="text-align: justify;">The ongoing narrative is that there is a positive correlation between monetary stimulus and the price of gold. However, as you probably know by now, precious metals collapsed <em><strong>during</strong></em> the Fed's QE to infinity program. The long-term gold chart (first chart below) shows that gold stabilized when the Fed started tapering and around the end of QE, which is very counterintuitive to say the least. That is not to say there is no correlation, but there is definitely not a direct correlation.</p> <p style="text-align: center;"><strong>This begs the question: what drives gold and the whole precious metals complex?</strong></p> <p style="text-align: justify;">Before answering that question, readers should understand gold's dual role. Fundamentally, it provides <strong>protection</strong> during times of monetary crisis. That is why a secular investor needs physical gold in its portfolio, especially as the current government debt bubble and global currency crisis unfold. However, this type of protection is only useful in exceptional times.</p> <p style="text-align: justify;">Next to that, gold is an <strong>investment asset</strong>. We are aware that the average gold bug does not agree with this, but let's face it, most of the time we do not find ourselves in extreme circumstances. Gold follows the dynamics of market cycles as well: it goes up until it is (severely) overbought, it goes down until it is (severely) oversold, it consolidates (for a long time), and starts all over again. Admittedly, this is a very simplistic view, but that is essentially what a normal cycle looks like.</p> <p style="text-align: justify;"><em>What we, as humans, tend to do is associate 'events' with market developments,</em> because we need an 'explanation' for everything. Similarly, when trends change, we want to be able to explain why that is happening, and associate it with some sort of 'event'. That is human nature. This has a drawback, however, as it prevents investors from looking at reality. Think about this for a second and try to identify the last time it happened with yourself.</p> <p style="text-align: justify;">One of the real drivers of investment assets, however, is <strong>opportunity and opportunity cost</strong>. What does that mean? It means that people prefer assets that are likely to have better yield. Alternatively, if an asset climbs too high and/or too long, the opportunity cost becomes high.</p> <p style="text-align: justify;">This is true today more than ever before and there is a reason why we are emphasizing this. The point is that all trading decisions nowadays are computer based. More than ever before, small and large investors are using chart and market analyses to make decisions.</p> <p style="text-align: justify;">On top of that, <strong>algorithmic trading</strong> is becoming more prevalent. We, just like everyone who is in some way disadvantaged by algo based trading, are no fans of this practice. But let's face it, algorithms have the same driver as the humans that programmed them: they search the markets in search for maximum yield.</p> <p style="text-align: justify;">Electronic trading is a factor that should not be underestimated. It is driving markets more than ever before, and the gold market is no exception to that. That is not to say we like it; it is simply the way things are done nowadays.</p> <p style="text-align: justify;">To make that point, we have added several “events” to the long term gold chart. Note how gold was rising during QE1 and QE2. When the Fed went 'all-in' with its QE to infinity program, gold started to collapse. <em>Clearly, there is no one-to-one correlation between the gold price and 'the creation of money', which was widely assumed up to that point.</em></p> <p> <a href="https://secularinvestor.com/guide-gold/"><img src="https://secularinvestor.com/files/2015/04/gold_monthly_chart_1999_March_2015.png" alt="gold_monthly_chart_1999_March_2015" width="678" height="490" style="display: block; margin-left: auto; margin-right: auto;" class="wp-image-11014 aligncenter" /></a></p> <p style="text-align: justify;">Gold's uptrend in 2011 had lost so much momentum that alternatives started to look much more interesting. As a consequence, gold's strong trend started turning and it eventually reversed; just because other alternatives had higher yield expectations.</p> <p style="text-align: justify;"><span style="font-size: large;"><strong>Gold's fundamental driver: inflation (expectation)<br /> </strong></span></p> <p style="text-align: justify;">We went one step further and analyzed all market conditions when the big rally in precious metals started in the summer of 2010. The only observation that stood out was the <strong>record volume of short positions</strong> held by commercial traders in the COMEX gold futures market (not in silver though). Because of that, the short squeeze that followed was phenomenally powerful. COMEX helped fuel the rally, but it is doubtful whether it was the 'driver'.</p> <p style="text-align: justify;"><em>The clearest driver, in our view, has been inflation expectation.</em> The chart below makes that point. The red line, which represents TIPS (<strong>inflation-protected US Treasury bonds</strong>), an instrument that reflects real yields for maturities ranging from 5 to 30 years, moves almost perfectly in sync with gold. Similarly, we know meanwhile that disinflation (a slowing level of inflation, not deflation though) is gold's biggest enemy. That is confirmed by the stabilization of TIPS since mid-2013, which has been preventing gold from rising as the chart shows.</p> <p style="text-align: justify;">Another thing that stands out on the chart below is that<strong> gold does not correlate with interest rates</strong> (the grey line). There is a strong narrative currently around interest rate hikes and lower gold prices. The problem with that is the underlying assumption that all other conditions apart from interest rates remain the same, in particular the rate of (dis)inflation. For instance, if interest rates go up in an inflationary environment, we should see gold go up. Remember, it is the interest rate in the context of inflation expectations that drives gold.</p> <p> <a href="https://secularinvestor.com/guide-gold/"><img src="https://secularinvestor.com/files/2015/04/TNX_GOLD_TIP_1999_March2015.png" alt="TNX_GOLD_TIP_1999_March2015" width="713" height="327" style="display: block; margin-left: auto; margin-right: auto;" class="wp-image-11016 aligncenter" /></a></p> <p style="text-align: justify;">We can hear you thinking, dear reader, that we are not taking <strong>manipulation</strong> into account. Manipulation works in both directions, however. When gold was going through one of the strongest and longest bull markets in history, there was also market manipulation. Just like it pushed gold prices higher back then, it has been reinforcing the downtrend since its peak. Consequently, as precious metals have been manipulated lower, there will be a point where the opportunity becomes so attractive that investors will increase their exposure to gold related investments again and we could be very close to that point.</p> <p style="text-align: justify;">The other argument that one could come up with is that we are not taking <strong>physical gold's supply and demand</strong> into account. The fact is these are not price drivers. Why? Demand for gold is truly different than demand for other commodities because the supply of gold is fixed (it only increases by approximately 2% per year). Consequently, higher gold demand means that gold is merely changing hands, without necessarily pushing prices higher.</p> <p style="text-align: justify;"><span style="font-size: large;"><strong>Gold's investment driver: opportunity (cost)</strong></span></p> <p style="text-align: justify;"><em>At its all-time high in 2011, gold was severely overbought.</em> There was simply more potential for yield in stocks. The long-term S&amp;P 500 chart (see below) makes that point. The notes indicate that the rise of the stock market is not linked to one type of event, although it is commonly accepted that the creation of money has been fueling it.</p> <p style="text-align: justify;">Even more interesting, in 2012, when QE to infinity was launched, the chart setup for US stocks looked promising. There were several sell offs in the years before which prevented the overheating of momentum, as indicated by the two green circles. <strong>Gold, on the other hand, showed a failed attempt to push through its peak.</strong></p> <p> <a href="https://secularinvestor.com/guide-gold/"><img src="https://secularinvestor.com/files/2015/04/sp500_monthly_chart_1999_March_2015.png" alt="s&amp;p500_monthly_chart_1999_March_2015" width="698" height="515" style="display: block; margin-left: auto; margin-right: auto;" class="wp-image-11015 aligncenter" /></a></p> <p style="text-align: justify;"><em>However, as time passes and conditions change the opportunity cost to not hold gold-related assets is subject to change</em> as well, and to such an extent that it is turning into an exciting opportunity. Maybe the gold market will attract sufficient interest in one or two years, or in a couple of weeks, we simply do not know in advance. But the key point is the opportunity, and contrarian secular investors have a strategic plan which they are slowly but surely executing as the new trend unfolds.</p> <p style="text-align: justify;">When gold's trend changes,<strong> everyone will be ready with a 'reason' or an 'explanation' for the new uptrend.</strong> A new narrative will be created. Mark our words. Most investors, however, will enter very late in the new cycle because they are still blinded by the former narrative, the one which says that gold will not go up because of reasons x, y, and z.</p> <p style="text-align: justify;"><span style="font-size: large;"><strong>Another golden opportunity in the making?</strong></span></p> <p style="text-align: justify;">Going forward, what does all this mean for secular investors? We will answer that question based on the chart below as well as the long-term gold and S&amp;P 500 charts above.</p> <p style="text-align: justify;"><strong>First, the S&amp;P chart above looks tired.</strong> Momentum is fading, which does not bode well for the short and mid term. Is this the end of the stock bull market? Probably not, but hard to say. Assume a scenario in which stocks would correct and test the breakout point; that would point to a strong secular bull market going forward in US stocks. On the other hand, a break below 1,600 points would be ultra bearish.</p> <p style="text-align: justify;"><strong>Second, gold is building a solid base </strong>and there is a <strong>technical buying signal</strong>, evidenced by the green circle on its long-term chart (first chart above). If the consolidation continues, and gold doest not break below $1,000/oz, the opportunity cost for not holding gold related investments would simply become too high.</p> <p style="text-align: center;"><strong>Consequently, if inflation picked up in an environment where the opportunity cost of not holding gold rises, gold would most likely continue its secular bull trend in a big way. Do you recognize the two drivers we discussed before?</strong></p> <p style="text-align: center;"><em>Likewise, as long as the ongoing disinflationary trend continues, gold rallies will be capped.</em></p> <p style="text-align: justify;">Other asset classes, in particular commodities and the dollar, are somewhat mixed. On the one hand, commodities have fully retraced their multi-year rally and the chart does not look good. At the same time it seems that the downside is becoming limited. The dollar has had a strong rally, but keeping this up at the same pace is doubtful because of the exceptional strength of its recent rally, <span style="color: #000080;"><span style="text-decoration: underline;"><a href="http://secularinvestor.com/dollar-lose-grip-commodities-gold/10755/">as we explained</a></span></span> last month.</p> <p> <a href="https://secularinvestor.com/guide-gold/"><img src="https://secularinvestor.com/files/2015/04/crb_tnx_dollar_sp_2000_2015.gif" alt="crb_tnx_dollar_s&amp;p_2000_2015" width="722" height="455" style="display: block; margin-left: auto; margin-right: auto;" class="wp-image-11017 aligncenter" /></a></p> <p style="text-align: justify;"><strong>So could we conclude that gold has an attractive outlook and that opportunity cost is rising? Being secular investors, we think so, but we would like to see more evidence.</strong></p> <p style="text-align: justify;">What we would like to see, ideally, is an indication of rising inflation, which could come in the form of an uptake in economic activity; that would stop the ongoing disinflationary trend. However, there is another form of inflation. If interest rates rise, bond prices would fall. As the bond market is huge compared to other markets, it means that a significant part of those dollars and/or euros will flow to other assets. Because of that, the price sof stocks and commodities, including gold, should inflate.</p> <p style="text-align: justify;"><strong>And there you have our contrarian call. We at <a href="http://www.secularinvestor.com/">SecularInvestor.com</a> are sensing that higher interest rates could become the next trigger to push precious metals higher in the years ahead.</strong></p> <p style="text-align: justify;">Obviously this is a statement that goes against the ongoing narrative and consequently it is not in the minds of most investors. Why? Because almost everyone believes that gold can only go lower, that interest rates can only go lower, and that there is a one-to-one correlation between interest rates and gold. This has been fueled day after day by mainstream media, as usual.</p> <p style="text-align: justify;"><strong><a href="https://secularinvestor.com/guide-gold/" target="_blank">&gt;&gt;&gt; Check Out Our Latest Gold Report!</a></strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p style="text-align: justify;"><strong>Secular Investor</strong> offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies are transformed into the <a href="https://secularinvestor.com/gold-silver/"><strong>Gold &amp; Silver Report</strong></a> and the <a href="https://secularinvestor.com/commodities"><strong>Commodity Report</strong></a>.</p> <p style="text-align: justify;">&nbsp;</p> <p style="text-align: justify;">Follow us on Facebook <strong><a href="https://www.facebook.com/SecularInvestor">@SecularInvestor</a> [NEW] </strong>and Twitter <a href="https://twitter.com/SecularInvest"><strong>@SecularInvest</strong></a> </p> </blockquote> http://www.zerohedge.com/news/2015-04-19/what-really-driving-gold#comments Algorithmic Trading Bond ETC fixed Futures market Market Conditions Market Cycles Market Manipulation Precious Metals Reality Twitter Twitter Sun, 19 Apr 2015 12:33:56 +0000 Secular Investor 504992 at http://www.zerohedge.com How Belief in Mainstream News Propaganda Affects Belief in Gold & Silver Propaganda http://www.zerohedge.com/news/2015-04-19/how-belief-mainstream-news-propaganda-affects-belief-gold-silver-propaganda <p>Today, most mainstream news channels in every country has devolved into nearly pure State propaganda. Recognition of this will prevent one from falling victim to the mountains of financial propaganda that also dominate mainstream TV shows and newspapers as well. In our SmartKnowledgeU Podcast #4, we discuss how to spot the mainstream news propaganda and how to connect the dots of the mainstream news propaganda to the propaganda that surrounds gold and silver news today to ultimately ferret out the truth.</p> <p><a href="https://www.youtube.com/watch?v=MUffTjmwqYo"><img src="https://www.smartknowledgeu.com/images/podcast4LL.jpg " alt="SmartKnowledgeU podcast #4 - Gold &amp; Silver propaganda" width="500" height="500" style="display: block; margin-left: auto; margin-right: auto;" /></a></p> <p>You may listen to this podcast by clicking on the above image and then clicking the link "Watch this video on YouTube" or you may download this podcast by searching iTunes for the "SmartKnowledgeU podcast". </p> <p>&nbsp;</p> http://www.zerohedge.com/news/2015-04-19/how-belief-mainstream-news-propaganda-affects-belief-gold-silver-propaganda#comments SmartKnowledgeU Sun, 19 Apr 2015 12:13:30 +0000 smartknowledgeu 504991 at http://www.zerohedge.com The Greek "White Knight" Emerges: Putin To Give Athens €5 Billion For Advance Gas Pipeline Fees http://www.zerohedge.com/news/2015-04-18/greek-white-knight-emerges-putin-give-athens-%E2%82%AC5-billion-advance-gas-pipeline-fees <p>With Greece teetering on the edge of insolvency and forced to raid pension and most other public funds, ahead of another month of heavy IMF repayments which has prompted even the ECB to speculate Greece <a href="http://www.zerohedge.com/news/2015-04-17/ecb-considering-parallel-greek-currency">should introduce a parallel "IOU" currency</a>, a white knight has appeared out of nowhere for Greece, one who may offer $5 billion in urgently needed cash. <strong>The white knight is none other than Vladimir Putin. </strong>“Just because Greece is debt-ridden, this does not mean it is bound hand<br /> and foot, and has no independent foreign policy,” Putin said previously. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/Putin%20Tsipras%202.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/Putin%20Tsipras%202_0.jpg" width="500" height="362" /></a></p> <p>According to <a href="http://www.spiegel.de/wirtschaft/unternehmen/griechenland-und-russland-syriza-hofft-auf-pipeline-milliarden-a-1029328.html">Spiegel</a>, citing a senior figure in the ruling Syriza party, Greece is poised to sign a gas deal with Russia as early as Tuesday which could bring up to €5 billion into the depleted Greek coffers.</p> <p> <strong>The <a href="http://www.telegraph.co.uk/finance/economics/11546965/Russian-gas-deal-will-net-Greece-5bn-and-turn-the-tide.html">move could now "turn the tide</a>" for the debt-stricken country according to a senior Greek official.</strong></p> <p>As <a href="http://www.reuters.com/article/2015/04/18/us-eurozone-greece-russia-gas-idUSKBN0N90CR20150418">Reuters adds</a>, during a visit to Moscow earlier this month, Greek Prime Minister Alexis Tsipras expressed interest in participating in a pipeline that would bring Russian gas to Europe via Turkey and Greece.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Under the proposed deal, Greece would receive advance funds from Russia based on expected future profits linked to the pipeline. The Greek energy minister said last week that Athens would repay Moscow after 2019, when the pipeline is expected to start operating.</p> <p>&nbsp;</p> <p>Greek government officials were not immediately available to comment on the Spiegel report.</p> </blockquote> <p>Of course, this being Greece, the probability of actual repayment is negligible: after all the likelihood of a Greek default is astronomical, and €5 billion will do little to change the mechanics of Greek debt sustainability. And Putin very well knows this. </p> <p>However, the Russian leader is not acting out of the kindness of his heart, but merely engaging in another calculated move, one which kills two birds with one stone:</p> <ul> <li>Following the death of the South Stream, whereby the EU pressured Bulgaria to refuse passage of the Russian gas pipeline to Europe, Russia needed an alternative route of bypassing Ukraine (and Bulgaria) entirely, something which according to Kremlin's plan should happen over the next 3 years. And with Hungary and Serbia all eager to transit Russian gas to the Austrian central european gas hub, Greece was the missing link for a landline transit. With this agreement, Russia gets the green light to extend the <a href="http://www.gazprom.com/about/production/projects/pipelines/blue-stream/">Blue Stream </a>all the way to Austria and preserve its dominance over the European energy market while leaving Ukraine in a completely barganining vacuum.</li> </ul> <p style="padding-left: 30px;"><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/Blue%20Stream.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/Blue%20Stream_0.jpg" width="600" height="323" /></a></p> <p>&nbsp;</p> <ul> <li>Perhaps just as importantly, suddenly Russia will energy as the generous benefactor riding to Greece's salvation, in turn even further antagonizing the Eurozone and further cementing favorable public opinion. As a reminder, several weeks ago we showed that Russia already has a higher approval rating among the Greek population thatn the Eurozone. In this way, Russia has just won a critical ally for the very low price of just €5 billion, without even having to restructure the entire Greek balance sheet should Greece have exited the euro and been attracted to the Eurasian Economic Union. Which also means that all future attempts to impose further sanctions on Russia by Europe will fail thanks to the Greek veto vote. </li> </ul> <p>Russia is not alone in seeking to divide the spoils of the collapsing Eurozone: Beijing has also sought to invest in Greece's infrastructure and bought up €100m worth of short-term government debt last week the Telegraph reports.</p> <p>Ironically, it was none other than Germany's finance minister Wolfgang Schauble who said the Greeks are free to pursue deals with Russia and China as they rush to avoid an impending bankruptcy. Turns out the Greeks decided to do precisely as the German suggested, and the outcome will certainly not be to Germany's liking.</p> <p>The only question following what may well be another masterful stroke by Putin is what will Europe do, now that Putin has in the span of under one year, not only "annexed" Crimea but fully drawn Greece (and the Mediterranean <a href="http://www.zerohedge.com/news/2015-02-09/russias-newest-military-base-europe-will-be-just-40km-nato-facilities-cyprus">courtesy of Cyprus</a>) into its sphere of influence.</p> <p>*&nbsp; *&nbsp; *</p> <p>While we are sure the European leadership will be 'disappointed' at Greece's get-out-of-Troika-jail card thanks to Russia, The Greek people have already expressed their opinion on just who they trust more...</p> <p>Despite all the western propaganda... </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/03-overflow/20150328_eurasia.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/03-overflow/20150328_eurasia_0.jpg" width="600" height="472" /></a></p> <p>*&nbsp; *&nbsp; *</p> <p>Finally, for those confused about the flow of funds, here it is: </p> <p><em><strong>Russia (Gazprom) gives Greece money, which Greece uses to repay the IMF, which uses the Greek money to fund a loan to Kiev, which uses the IMF loan to pay Russia (Gazprom). </strong></em></p> <p>A perfect circle.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="644" height="466" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Putin%20Tsipras%202.jpg?1429365283" /> </div> </div> </div> http://www.zerohedge.com/news/2015-04-18/greek-white-knight-emerges-putin-give-athens-%E2%82%AC5-billion-advance-gas-pipeline-fees#comments Bulgaria China default Eurozone Fail Greece Hungary None Reuters Turkey Ukraine Vladimir Putin Sun, 19 Apr 2015 02:54:44 +0000 Tyler Durden 504968 at http://www.zerohedge.com More Hillary Cronyism Revealed: Cisco Used Clinton Foundation To Cover-up Human Rights Abuse In China http://www.zerohedge.com/news/2015-04-18/more-hillary-cronyism-revealed-cisco-used-clinton-foundation-cover-human-rights-abus <p><a href="http://libertyblitzkrieg.com/2015/04/17/more-hillary-cronyism-revealed-how-cisco-used-clinton-foundation-donations-to-cover-up-human-rights-abuse-in-china/"><em>Submitted by Mike Krieger via Liberty Blitzkrieg blog</em></a>,</p> <p dir="ltr"><img alt="Screen Shot 2015-04-09 at 12.09.13 PM" class="alignnone wp-image-22991" height="172" src="http://libertyblitzkrieg.com/wp-content/uploads/2015/04/Screen-Shot-2015-04-09-at-12.09.13-PM.jpg" width="315" /></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p dir="ltr"><strong><em>In her 2014 memoir &ldquo;Hard Choices,&rdquo; Clinton&nbsp;reiterated&nbsp;her support for human-rights advocates in China. She specifically criticized the Great Firewall,&nbsp;writing&nbsp;that after she made comments about the right to dissent in China in 2011, &ldquo;censors went right to work erasing mentions of my message from the Internet.&rdquo;</em></strong></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><strong><em>But the issue of Chinese repression &mdash; and Cisco&rsquo;s role &mdash; was already known by then. In 2009, weeks after Clinton&rsquo;s State Department had named Cisco a finalist for the secretary of state&rsquo;s Awards for Corporate Excellence (ACE), a&nbsp;report&nbsp;from the Electronic Freedom Foundation noted &ldquo;Cisco&rsquo;s deep involvement&rdquo; in building the Chinese government&rsquo;s censorship system. The report pointed out that &ldquo;Cisco engineers gave a presentation&nbsp;acknowledging&nbsp;the repressive uses for their technology.&rdquo;</em></strong></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><strong><em>Daniel Wade, an attorney who represented Chinese dissidents in a lawsuit against Cisco, told IBTimes that &ldquo;Cisco knew full well that its products were going to be used to suppress and facilitate the torture of democracy activists.&rdquo; </em></strong></p> <p dir="ltr">&nbsp;</p> <p><strong><em>&ldquo;Crony capitalism has defined Clinton&rsquo;s career, from her tenure on the board of Walmart, to the Wall Street execs whom she surrounded herself with at the State Department, to her allegiance to Cisco, even as it violated principles on which she staked her tenure,&rdquo; said David Segal, executive director of the Internet freedom advocacy group Demand Progress.</em></strong></p> <p>&nbsp;</p> <p>- From the <em>International Business Times</em> article:&nbsp;<a href="http://www.ibtimes.com/hillary-clinton-cisco-china-company-funded-foundation-was-lauded-clinton-despite-role-1884160">Hillary Clinton, Cisco And China: Company Funded Foundation, Was Lauded By Clinton Despite Role In Repression</a></p> </blockquote> <p>As many suspected, it turns out that the Clinton Foundation is indeed&nbsp;a tepid cesspool of crony corporate and government donations used to buy influence at the highest levels of Washington D.C. This shouldn&rsquo;t surprise anyone paying attention, but it will hopefully wake up some&nbsp;Democrats still buying into the deep rooted myth of Hillary Clinton.</p> <p>David Sirota and his colleagues<a href="http://www.ibtimes.com/colombian-oil-money-flowed-clintons-state-department-took-no-action-prevent-labor-1874464"> at <em>International Business Times</em></a> have been relentless in uncovering several extremely important examples of her pathological cronyism. I highlighted his very important work just last week in the post,&nbsp;<strong><a href="http://libertyblitzkrieg.com/2015/04/09/this-is-how-hillary-does-business-an-oil-company-human-rights-abuses-in-colombia-and-the-clinton-foundation/" rel="bookmark" title="Permanent Link to This is How Hillary Does Business – An Oil Company, Human Rights Abuses in Colombia and the Clinton Foundation">This is How Hillary Does Business &ndash; An Oil Company, Human Rights Abuses in Colombia and the Clinton Foundation</a></strong>. Here&rsquo;s an excerpt:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>The details of these financial dealings remain murky, but this much is clear: After millions of dollars were pledged by the&nbsp;oil company&nbsp;to the Clinton Foundation &mdash; supplemented by&nbsp;millions&nbsp;more&nbsp;from Giustra himself &mdash; Secretary Clinton abruptly changed her position on the controversial U.S.-Colombia trade pact. Having&nbsp;opposed&nbsp;the deal as a bad one for labor rights back when she was a presidential candidate in 2008, she now promoted it,&nbsp;calling&nbsp;it &ldquo;strongly in the interests of both Colombia and the United States.&rdquo; The change of heart by Clinton and other Democratic leaders enabled congressional passage of a Colombia trade deal that experts say delivered big benefits to foreign investors like Giustra.</strong></em></p> <p>&nbsp;</p> <p><em><strong>The details of her family&rsquo;s entanglements in Colombia echo&nbsp;talk&nbsp;that the Clintons have blurred the lines between their private business and philanthropic interests and those of the nation. And&nbsp;Hillary Clinton&rsquo;s connections to Pacific Rubiales and Giustra intensify recent questions about whether big donations influenced her decisions as secretary of state.</strong></em></p> </blockquote> <p>As it turns out, this was just an appetizer. Despite claiming to be a strong advocate for human rights in China, it turns out she is an even stronger advocate for corporate donations. From <a href="http://www.ibtimes.com/hillary-clinton-cisco-china-company-funded-foundation-was-lauded-clinton-despite-role-1884160">the <em>International Business Times</em></a>:</p> <div> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div> <p dir="ltr"><em>Cisco Systems had a public relations problem: Having invested<a href="http://newsroom.cisco.com/press-release-content;jsessionid=0E30E3CD11ACB6D7DA4A4BA02EFC2094?type=webcontent&amp;articleId=4405874" rel="nofollow" target="_blank">&nbsp;$16 billion</a>&nbsp;in the Chinese market, the technology giant was suddenly facing congressional&nbsp;<a href="http://usatoday30.usatoday.com/tech/techinvestor/corporatenews/2008-05-20-cisco-china_N.htm" rel="nofollow" target="_blank">scrutiny</a>&nbsp;over its alleged complicity in building the so-called Great Firewall that helps China&rsquo;s authoritarian regime censor information and surveil its citizens.</em></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><em>The San Jose, California, company endured a high-profile Senate hearing about its Chinese operations in 2008 and&nbsp;<a href="http://newsroom.cisco.com/press-release-content;jsessionid=ACF45B981DECC76B4A91F89FDB737136?type=webcontent&amp;articleId=4717396" rel="nofollow" target="_blank">reaffirmed its&nbsp;</a>&ldquo;continued commitment to China.&rdquo; But the issue wouldn&rsquo;t die. A<a href="http://www.bostoncommonasset.com/news/cisco111009.html" rel="nofollow" target="_blank">&nbsp;group</a>&nbsp;of investors stormed the company&rsquo;s annual meeting in November 2009, pressing a shareholder resolution that would force the company to prevent the Chinese government from using Cisco technology to engage in what critics said was widespread human-rights abuse.</em></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><em><strong>That&rsquo;s when then-Secretary of State Hillary Clinton tossed the company a lifeline.&nbsp;<a href="http://www.state.gov/r/pa/prs/ps/2009/dec/133023.htm" rel="nofollow" target="_blank">Weeks</a>&nbsp;after Cisco executives killed the shareholder initiative, Cisco was honored as a finalist for the State Department&rsquo;s award&nbsp;<a href="http://www.state.gov/r/pa/prs/ps/2009/dec/133023.htm" rel="nofollow" target="_blank">for</a>&nbsp;&ldquo;outstanding corporate citizenship, innovation and democratic principles.&rdquo; The next year, the company&nbsp;<a href="https://www.youtube.com/watch?v=NdjWSfbOJDQ">won</a>&nbsp;the award.</strong> While the honors were for the company&rsquo;s work in the Middle East, they gave Cisco a well-timed opportunity to change the subject and present itself as a champion of human rights.</em></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><em><strong>What Clinton did not say at the State Department award&nbsp;<a href="http://www.state.gov/r/pa/prs/ps/2009/dec/133023.htm" rel="nofollow" target="_blank">ceremonies</a>&nbsp;was that Cisco had been pumping money into her family&rsquo;s foundation.</strong> Though the foundation will not release an exact timeline of the contributions, records reviewed by International Business Times show that Cisco had by December 2008&nbsp;<a href="http://projects.nytimes.com/clinton-donors/page/3" rel="nofollow" target="_blank">donated</a>&nbsp;from $500,000 to $1 million to the foundation. <strong>The company had hired lobbying firms run by former Clinton aides.</strong> <strong>After the money flowed into the foundation, Clinton&rsquo;s State Department not only lauded Cisco&rsquo;s human rights record, it also delivered millions of dollars worth of new government contracts to the company.</strong></em></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><em>Internet freedom advocates say Clinton&rsquo;s moves helped Cisco whitewash its image and also raise questions about the sincerity of her often-stated commitment to human rights.</em></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><em>&ldquo;Crony capitalism has defined Clinton&rsquo;s career, from her tenure on the board of Walmart, to the Wall Street execs whom she surrounded herself with at the State Department, to her allegiance to Cisco, even as it violated principles on which she staked her tenure,&rdquo; said David Segal, executive director of the Internet freedom advocacy group Demand Progress.</em></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><em>But the issue of Chinese repression &mdash; and Cisco&rsquo;s role &mdash; was already known by then. In 2009, weeks after Clinton&rsquo;s State Department had named Cisco a finalist for the secretary of state&rsquo;s Awards for Corporate Excellence (ACE), a&nbsp;<a href="https://www.eff.org/deeplinks/2010/01/selling-china-surveillance" rel="nofollow" target="_blank">report</a>&nbsp;from the Electronic Freedom Foundation noted &ldquo;Cisco&rsquo;s deep involvement&rdquo; in building the Chinese government&rsquo;s censorship system. The report pointed out that &ldquo;Cisco engineers gave a presentation&nbsp;<a href="http://www.wired.com/threatlevel/2008/05/leaked-cisco-do/" rel="nofollow" target="_blank">acknowledging</a>&nbsp;the repressive uses for their technology.&rdquo;</em></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><em>In 2010, the Clinton Foundation gave Cisco CEO John Chambers a high-profile speaking&nbsp;<a href="http://www.gettyimages.com/detail/news-photo/john-chambers-chairman-and-chief-executive-officer-of-cisco-news-photo/104380932" rel="nofollow" target="_blank">role</a>&nbsp;at its &ldquo;Turning Ideas Into Action&rdquo; annual meeting. Cisco also&nbsp;<a href="http://blogs.state.gov/stories/2010/12/17/secretarys-award-corporate-excellence-recognizes-businesses-improving-lives" rel="nofollow" target="_blank">won</a>&nbsp;an ACE that year &mdash; just before the Human Rights Law Foundation filed a lawsuit against Cisco outlining what the foundation&rsquo;s executive director, Terri Marsh, said was the &ldquo;key role Cisco played in the design, construction, and maintenance of China&rsquo;s Internet surveillance system.&rdquo;</em></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><em>In an interview with IBTimes, Marsh said that &ldquo;Cisco&rsquo;s conduct has enabled an unprecedented and widespread crackdown on religious minorities, Tibetans, and democracy activists in China.&rdquo; Cisco&rsquo;s work in China, she said, &ldquo;runs contrary to Secretary Clinton&rsquo;s&nbsp;<a href="http://www.state.gov/secretary/20092013clinton/rm/2010/01/135519.htm" rel="nofollow" target="_blank">stated commitment</a>&nbsp;to &lsquo;a single Internet where all of humanity has equal access to knowledge and ideas.&rsquo;&rdquo;</em></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><em>She added: &ldquo;We are disappointed that the State Department has chosen to reward rather than condemn such a company, and believe that the United States should instead be sending a clear message to American technology corporations that complicity in global human rights abuses is not acceptable.&rdquo;</em></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><em>Daniel Wade, an attorney who represented Chinese dissidents in a lawsuit against Cisco, told IBTimes that &ldquo;Cisco knew full well that its products were going to be used to suppress and facilitate the torture of democracy activists.&rdquo; </em></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><em>The Electronic Frontier Foundation, which today&nbsp;<a href="https://www.eff.org/deeplinks/2014/11/certificate-authority-encrypt-entire-web" rel="nofollow" target="_blank">works</a>&nbsp;with Cisco on an Internet encryption project, said Cisco technology enabled violent repression by the Chinese government.</em></p> <p dir="ltr">&nbsp;</p> <p dir="ltr"><em>&ldquo;We have ample evidence to indicate that the technology Cisco created was instrumental in the tracking down of religious minorities, detaining them, and murdering them,&rdquo; said Rainey Reitman, the EFF&rsquo;s activism director. &ldquo;Unfortunately, there hasn&rsquo;t been a full public accounting.&rdquo;</em></p> </blockquote> </div> <p dir="ltr">There&rsquo;s shameless, and then there&rsquo;s Hillary Clinton. She is in a league all&nbsp;by herself.</p> <p dir="ltr">*&nbsp; *&nbsp; *</p> <p dir="ltr"><em>For related articles, see:</em></p> <p dir="ltr"><em><a href="http://libertyblitzkrieg.com/2015/04/15/all-hail-hillary-iowa-students-locked-in-classrooms-as-clinton-arrives-at-college-to-visit-everyday-iowans/" rel="bookmark" title="Permanent Link to All Hail Hillary – Iowa Students Locked in Classrooms as Clinton Arrives at College to Visit “Everyday Iowans”">All Hail Hillary &ndash; Iowa Students Locked in Classrooms as Clinton Arrives at College to Visit &ldquo;Everyday Iowans&rdquo;</a></em></p> <p dir="ltr"><em><a href="http://libertyblitzkrieg.com/2015/04/09/this-is-how-hillary-does-business-an-oil-company-human-rights-abuses-in-colombia-and-the-clinton-foundation/" rel="bookmark" title="Permanent Link to This is How Hillary Does Business – An Oil Company, Human Rights Abuses in Colombia and the Clinton Foundation">This is How Hillary Does Business &ndash; An Oil Company, Human Rights Abuses in Colombia and the Clinton Foundation</a></em></p> <p dir="ltr"><em><a href="http://libertyblitzkrieg.com/2015/02/20/hilary-clinton-exposed-part-1-how-she-aggressively-lobbied-for-mega-corporations-as-secretary-of-state/" rel="bookmark" title="Permanent Link to Hillary Clinton Exposed Part 1 – How She Aggressively Lobbied for Mega Corporations as Secretary of State">Hillary Clinton Exposed Part 1 &ndash; How She Aggressively Lobbied for Mega Corporations as Secretary of State</a></em></p> <p dir="ltr"><em><a href="http://libertyblitzkrieg.com/2015/02/26/hilary-clinton-exposed-part-2-clinton-foundation-took-millions-from-countries-that-also-fund-isis/" rel="bookmark" title="Permanent Link to Hillary Clinton Exposed Part 2 – Clinton Foundation Took Millions From Countries That Also Fund ISIS">Hillary Clinton Exposed Part 2 &ndash; Clinton Foundation Took Millions From Countries That Also Fund ISIS</a></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="274" height="243" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150418_clint.jpg?1429382593" /> </div> </div> </div> http://www.zerohedge.com/news/2015-04-18/more-hillary-cronyism-revealed-cisco-used-clinton-foundation-cover-human-rights-abus#comments China Cronyism Middle East Washington D.C. Sun, 19 Apr 2015 01:45:25 +0000 Tyler Durden 504987 at http://www.zerohedge.com This Technical Signaled The Last Two Market Crashes And It Just Happened http://www.zerohedge.com/news/2015-04-18/technical-signaled-last-two-market-crashes-and-it-just-happened <p><a href="http://www.firstrebuttal.com/2015/04/17/this-technical-signaled-the-last-two-market-crashes-and-it-just-happened/"><em>Submitted by Thad Beversdorf via FirstRebuttal.com</em></a>,</p> <p>So the fundamental case for a 20 year bull run as BMO is calling for and &nbsp;certainly many other banks seem to be onboard with that is not looking great YTD.<strong> &nbsp;In fact, most perma bulls have shy&rsquo;d away from even mentioning fundamentals other than to say&nbsp;that generally they aren&rsquo;t looking great but don&rsquo;t worry the Fed is still engaged. </strong>&nbsp; And so I feel its a worthwhile exercise to have a look at the technicals. &nbsp;Thing about the technicals is that you can cherry pick any baseline point to really make any case, good or bad. &nbsp;But if we take a look at a time period that encompasses several cycles we negate our ability to cherry pick the baseline and we can be much more confident&nbsp;in our overall analysis.</p> <p>So what I&rsquo;ve done is taken a two decade period of S&amp;P pricing which encompasses several cycles. &nbsp;Mid 1990&prime;s was a market mid cycle having recovered from the short recession of the early 1990&prime;s but before things really began heating up in the late 1990&prime;s. &nbsp;If we just have a gentle&nbsp;look at the chart we see we&rsquo;ve had a couple large cycles with fairly extreme booms and subsequent busts. &nbsp;Currently we are in the midst of the third boom which has taken us to new all time highs. &nbsp;Now even a 5 year old can look at the chart and say at some point this thing has a large down turn, same as it always does. &nbsp;That&rsquo;s easy to see&nbsp;and not many will argue it. &nbsp;But as so many bulls remind us we could have said the same thing about this chart a year ago and we&rsquo;d have missed out on significant returns. &nbsp;Very true. &nbsp;So the key is then figuring out where the down turn begins. <strong>&nbsp;I know I know that&rsquo;s the kind of stuff you have to go to biz school for eh. &nbsp;Ok so let&rsquo;s first have a look at the easy chart.</strong></p> <p><a href="http://www.firstrebuttal.com/wp-content/uploads/2015/04/Screen-Shot-2015-04-17-at-3.20.32-PM.png"><img alt="Screen Shot 2015-04-17 at 3.20.32 PM" class="alignnone size-full wp-image-1797" src="http://www.firstrebuttal.com/wp-content/uploads/2015/04/Screen-Shot-2015-04-17-at-3.20.32-PM.png" style="width: 600px; height: 452px;" /></a></p> <p>So pretty simple. &nbsp;Two full cycles and into the third which doesn&rsquo;t tell us much. &nbsp;<strong>Let&rsquo;s add&nbsp;some markers to see if we can&rsquo;t pick up on some&nbsp;technical cues.</strong></p> <p><a href="http://www.firstrebuttal.com/wp-content/uploads/2015/04/Screen-Shot-2015-04-17-at-2.39.28-PM.png"><img alt="Screen Shot 2015-04-17 at 2.39.28 PM" class="alignnone size-full wp-image-1794" src="http://www.firstrebuttal.com/wp-content/uploads/2015/04/Screen-Shot-2015-04-17-at-2.39.28-PM.png" style="width: 600px; height: 448px;" /></a></p> <p>So what we&rsquo;ve done is run a 2.5 standard deviation Bollinger Band (BB)&nbsp;using a 100 period moving average looking&nbsp;at monthly returns because we are interested long cycle technical cues. &nbsp;We&rsquo;ve also run Relative Strength Indicator (RSI) using 20 periods. &nbsp;What we find is actually quite notable. &nbsp;<strong>During&nbsp;the tech bubble&nbsp;cycle we saw the S&amp;P rise&nbsp;to the upper BB where it tracked the upper band for some time.</strong> &nbsp;&nbsp;During that same period we saw the RSI move above 70. &nbsp;Now as the market peaked we saw the S&amp;P move below the upper BB and we also saw a decline in RSI. &nbsp;What is&nbsp;very interesting is that the point where RSI dropped below 70 is the point the tech bubble burst and sent S&amp;P into a free fall. &nbsp;The market continued to sell until the RSI dropped below 30 at which point the market stabilized and reversed higher.</p> <p><strong>This took us into the start of the credit bubble cycle. </strong>&nbsp;Here the RSI move up very quickly and plateaued just below 70 for several years during which time the S&amp;P moved up but never quite made it to the upper BB. &nbsp;Then in 2007 the RSI moved above 70 but then quickly reversed&nbsp;back down below the upper band. <strong>&nbsp;Interestingly again the RSI dropping below the upper band seemed to trigger the bursting of the credit bubble as we saw S&amp;P again move into free fall.</strong> &nbsp;Then here too we saw the market stabilize as the RSI moved through the bottom band.</p> <p><strong>And again this brought us into the latest Fed bubble.</strong> &nbsp;Now during this latest cycle the RSI moved up but bounced off the upper band a few times without actually breaking through 70. &nbsp;At the same time the S&amp;P moved higher but with quite heavy volatility. &nbsp;Eventually we saw the RSI move up and break through the upper limit. &nbsp;It was about the same time that the S&amp;P traded&nbsp;higher to the upper BB where it tracked for some time. <strong>&nbsp;However,&nbsp;at the end of November 2014 the S&amp;P started to dislocate and moving down below the&nbsp;upper BB. &nbsp;And then ominously January&nbsp;of this year we saw the RSI also move below the upper RSI band.</strong></p> <p>Remember this technical signaled the popping&nbsp;of the past two bubble cycles. &nbsp;Now February saw the RSI move back above the upper band but March moved back down below. &nbsp;I would watch this very carefully now. <em><strong>&nbsp;I would venture to say if April remains&nbsp;below the upper RSI band we could very well have moved into the latest and perhaps greatest period of wealth destruction.&nbsp;It is time to protect those assets.</strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="559" height="301" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150418_tech.jpg?1429368836" /> </div> </div> </div> http://www.zerohedge.com/news/2015-04-18/technical-signaled-last-two-market-crashes-and-it-just-happened#comments Recession Volatility Sun, 19 Apr 2015 01:30:31 +0000 Tyler Durden 504970 at http://www.zerohedge.com What Bernanke's New Employer Had To Say About Him Just 2 Years Ago http://www.zerohedge.com/news/2015-04-18/what-bernankes-new-employer-had-say-about-him-just-2-years-ago <p>Having previously explained the <a href="http://www.zerohedge.com/news/2015-04-16/175846629768-reasons-why-ben-bernanke-joined-citadel">175,846,629,768 reasons why former Fed Chair Ben Bernanke would join Citadel</a> - the most-levered hedge fund in the world and alleged conduit of fed put protection; we thought it intriguing to note what billionaire Citadel <strong>Ken Griffin had to say about Bernanke and his policies just 2 years ago</strong>...</p> <p>The revolving door between Wall Street and Washington doesn’t often involve big banks like Citigroup or Goldman Sachs anymore. Instead, <a href="http://www.forbes.com/sites/nathanvardi/2015/04/16/billionaire-hedge-fund-critic-of-the-fed-under-ben-bernanke-hires-bernanke-for-advice/"><em>as Forbes' Nathan Vardi reports,</em></a> <strong>hedge fund and private equity firms have become the destination of choice. They are richer and guys like Bernanke feel they are less controversial than the big banks.</strong></p> <p>But, ironically, <strong>Griffin has been publicly critical of some of the more prominent Federal Reserve policies that were implemented on Bernanke’s watch</strong>. He particularly took some shots at those policies in 2013, as Bernanke was coming close to finishing his run at the Fed. </p> <p><span style="text-decoration: underline;"><strong>In a statement on Thursday</strong></span>,</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Griffin said that <strong><em>Bernanke “has extraordinary knowledge of the global economy and his insights on monetary policy and the capital markets will be extremely valuable to our team and to our investors.”</em></strong></p> </blockquote> <p><span style="text-decoration: underline;"><strong>But two years ago - he was not so sure</strong></span>...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Here are some of Griffin’s criticisms of Federal Reserve policy during the Bernanke years.</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>To The Economic Club of Chicago, May 2013:</strong></span></p> <p>&nbsp;</p> <p>“I think <strong>QE3 is a terrible idea because we are now reaching the point where the Fed is becoming captive to our political institutions</strong>. You see with the Fed owning several trillion dollars of U.S. Treasuries it’s easy to imagine that at the next confirmation hearing the questions posed by politicians will be of the nature, <strong>will you continue to help subsidize the cost of the U.S. federal government’s borrowings even at the ensuing risk of potentially creating uncontrollable inflation</strong>? That last part won’t be asked but that will be the risk. And I think there will be real pressure on picking people to the Federal Reserve board who will appease our politicians and continue to try to <strong>drive interest rates to an artificially low level, very worried about that, very worried about that</strong>.”</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>To The Milken Institute Conference, April 2013:</strong></span></p> <p>&nbsp;</p> <p>“The Federal Reserve is really trying to counteract a number of the very poor policies that are coming from our legislative and executive branches and it’s damn near impossible to overcome the headwinds created by Obamacare, an inability to reform tax policy, inability to thoughtfully create jobs in our country and <strong>the Fed’s policies are doing two things that I am very gravely concerned about</strong>. Number one is we have all learned over the years that <strong>if you reduce the cost of capital you increase your use of fixed assets and you take out jobs</strong>. Corporate America seeing an ever increasing cost for its employee base and extraordinary low interest rates is <strong>taking every step they can possibly take to reduce employment</strong>, to build factories abroad and domestically to substitute technology and automated processes for people. So <strong>one of the very sad negative characteristics of the Fed’s policies is it’s leading to job destruction</strong>.”</p> </blockquote> <p>*&nbsp; *&nbsp; *<br />This 'flip-flopping' though, is understandable - the only 'edge' any fund has anymore is an inside line on monetary policy headlines and actions and the fee generation from running the Fed's trades likely came with some quid pro quo...</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1067" height="582" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150418_bernanke.jpg?1429382180" /> </div> </div> </div> http://www.zerohedge.com/news/2015-04-18/what-bernankes-new-employer-had-say-about-him-just-2-years-ago#comments Ben Bernanke Ben Bernanke Capital Markets Citadel Citigroup Corporate America Federal Reserve fixed Global Economy Goldman Sachs goldman sachs headlines Ken Griffin Monetary Policy Obamacare Private Equity Sun, 19 Apr 2015 01:10:44 +0000 Tyler Durden 504986 at http://www.zerohedge.com Did Presidential Candidate, Marco Rubio, Make A Deal With The Devil? http://www.zerohedge.com/news/2015-04-18/did-presidential-candidate-marco-rubio-make-deal-devil <p><a href="http://www.firstrebuttal.com/2015/04/16/presidential-candidate-marco-rubio-makes-a-deal-with-the-devil/"><em>Submitted by Thad Beversdorf via FirstRebuttal.com</em></a>,</p> <p><a href="http://www.firstrebuttal.com/wp-content/uploads/2015/04/Screen-Shot-2015-04-16-at-12.32.35-PM.png"><img alt="Screen Shot 2015-04-16 at 12.32.35 PM" class="alignnone size-full wp-image-1762" src="http://www.firstrebuttal.com/wp-content/uploads/2015/04/Screen-Shot-2015-04-16-at-12.32.35-PM.png" style="width: 600px; height: 230px;" /></a></p> <p><strong>Is mainstream&nbsp;media really going to ignore&nbsp;that Marco Rubio&rsquo;s campaign is named after the late 1990&prime;s think tank called a &lsquo;Project for a New American Century&rsquo; (PNAC), founded by Head Neocon &ndash; Bill Kristol? &nbsp;</strong>And this is no coincidence. &nbsp;Guess who&rsquo;s doing the Sunday talk show circuit&nbsp;campaigning for a Rubio presidency? &nbsp;You know it&hellip;</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/ytqAN48f2ss" width="560"></iframe></p> <p>&nbsp;</p> <p><strong>Now as a reminder the PNAC is a&nbsp;lobby group formed&nbsp;by a host of neocons at the end of the 1990&prime;s&nbsp;with an objective of war in the Middle East. </strong>&nbsp;See if you recognize a few of the notable names of people that signed the PNAC&rsquo;s founding statement of principles; Dick Cheney, Donald Rumsfeld, Ron Perle and Paul Wolfowitz. &nbsp;You&rsquo;ll note these guys became Vice President, Secretary of Defense, Chairman of the Defense Policy Board and Deputy Secretary of Defense, respectively, under president Bush about six months before&nbsp;9/11.</p> <p><strong>Have a look at the following recommendations from the Project for a New American Century&rsquo;s&nbsp;apex report sent to President Clinton in September of 2000. </strong>&nbsp;One year exactly before the 9/11 tragedy that became&nbsp;the sales pitch&nbsp;for an unendable war on terror similar to&nbsp;Reagan&rsquo;s war on drugs some 35 years ago, both&nbsp;still going strong with no signs of slowing. The&nbsp;report titled &ldquo;<a href="http://www.informationclearinghouse.info/pdf/RebuildingAmericasDefenses.pdf" target="_blank">Rebuilding America&rsquo;s Defenses</a>&rdquo; recommends that while the world was in the longest sustained period of global peace (acknowledged in the report) that America should establish four key objectives as it headed&nbsp;into the new century. &nbsp;Pay particular attention to the second &lsquo;core mission&rsquo; in the following excerpt from the report.</p> <p><a href="http://www.firstrebuttal.com/wp-content/uploads/2015/01/Screen-Shot-2015-01-08-at-2.49.08-PM.png"><img alt="Screen Shot 2015-01-08 at 2.49.08 PM" class="alignnone size-full wp-image-1443" src="http://www.firstrebuttal.com/wp-content/uploads/2015/01/Screen-Shot-2015-01-08-at-2.49.08-PM.png" style="width: 600px; height: 395px;" /></a></p> <p><u><strong>Funny thing about these four core missions is that each and everyone of them came to fruition. </strong></u>&nbsp;Not surprising given the authors became the senior military policy makers about 6 months&nbsp;after the recommendations were sent to outgoing President Clinton. &nbsp;Now there is more than meets the eye to all of this and I won&rsquo;t get into the details&nbsp;here but for those interested, if you want to understand the very ugly truth about how and why America is in the midst of a seemingly endless war on &lsquo;terror&rsquo; in the Middle East have a read of an article I wrote some time ago called &ldquo;<a href="http://www.paulcraigroberts.org/2014/12/08/essential-lesson-history-one-wants-admit/" target="_blank">The Most Essential Lessons of History that No One Wants to Admit</a>&ldquo;.</p> <p><strong>You will realize that our boy Bill Kristol is just the face of an immense amount of money and political persuasion. </strong>&nbsp;Money talks and our government is for sale. &nbsp;Just ask Marco Rubio what the going rate for naming rights is on a presidential campaign these days. &nbsp;The power and money that Kristol represents do&nbsp;not provide their support without expectations. &nbsp;These thugs absolutely want their return on capital. &nbsp;The returns come by way of a currency only a President carries.</p> <p>Anyone not interested in WWIII should be very wary of a Rubio presidency. &nbsp;<strong>Marco Rubio&rsquo;s financial backing will absolutely guarantee a&nbsp;war with Russia and a war with Russia means a war with China for it&nbsp;must protect its future energy supplies. </strong>&nbsp;Bill Kristol and his band of armchair warriors have been lobbying for a war with Russia since at least as far back as 2004 as evidenced in the following letter to group of European heads of state.</p> <p><a href="http://www.firstrebuttal.com/wp-content/uploads/2014/12/Screen-Shot-2014-12-06-at-5.02.58-PM.png"><img alt="Screen Shot 2014-12-06 at 5.02.58 PM" class="alignnone size-full wp-image-1142" src="http://www.firstrebuttal.com/wp-content/uploads/2014/12/Screen-Shot-2014-12-06-at-5.02.58-PM.png" style="width: 600px; height: 623px;" /></a></p> <p>&nbsp;</p> <p><strong>The letter really depicts the kind of rhetoric used by these neocons. </strong>&nbsp;You can see from the list of names supporting this effort at the end of the <a href="http://www.aei.org/publication/an-open-letter/" target="_blank">full letter</a>, these neocons are the very same neocons recommending the US start a series of arbitrary wars in the name of peace via the Project for a New American Century, as noted above. &nbsp;Now they lack any substantive facts in their letter and so use&nbsp;implications and conjecture about Russia being a dictatorship, which is no more true, and probably less, than it is for&nbsp;the US meaning we are throwing stones in glass houses. &nbsp;President Bush and Obama remember have signed several executive orders, such as the AUMF and NDAA that negate an American citizen&rsquo;s&nbsp;constitutional rights.</p> <p>The best evidence that indeed Americans&rsquo; constitutional rights to things like Habeas Corpus are&nbsp;negated under the combined executive orders of AUMF and NDAA is depicted in the United States Court of Appeals Second Circuit&nbsp;<a href="http://www.scribd.com/doc/154380761/UNITED-STATES-COURT-OF-APPEALS-FOR-THE-SECOND-CIRCUIT-NDAA-July-167-2013" target="_blank">District Judge, Lewis Kaplan&rsquo;s ruling statement</a>. &nbsp;He explains their plurality decision was a compromise that gives authority to suspend a citizen&rsquo;s constitutional rights but only until the respective &lsquo;war&rsquo;, is over. &nbsp;However this is not a compromise at all. <strong>&nbsp;When the &lsquo;war&rsquo; is a war on terror it is not only&nbsp;indefinite but&nbsp;infinite for when would we ever suggest we are no longer fighting against terrorism. </strong>&nbsp;So while the District court&rsquo;s ruling suggests that it limits the negation of a citizen&rsquo;s constitutional rights, for all intents and purposes it limits the negation to a duration of forever, which is by definition not a limitation.</p> <p>But as I so often do I digress. &nbsp;<u><strong>My point is that Bill Kristol and his armchair warriors have been lobbying for a war with Russia in the very same way they lobbied for &ldquo;multiple simultaneous major theater wars&rdquo;, which they got in the Middle East. &nbsp;One can only conclude then that given a Rubio presidency, war with Russia is all but guaranteed.</strong></u></p> <p>One of Kristol&rsquo;s armchair warriors is the one and only Victoria Nuland, wife of a Kagan boy, he himself a general in the armchair army. &nbsp;Note that Nuland was the conductor of the coup d&rsquo;etat in Ukraine as evidenced in a&nbsp;<a href="http://www.bbc.com/news/world-europe-26079957" target="_blank">recording</a> of a conversation between her and a fellow&nbsp;US diplomat discussing who they were going to place as head of state in Ukraine. &nbsp;Now the recording begs two questions. &nbsp;What gives US diplomats&nbsp;the right to decide the head of state for a foreign &lsquo;democratic&rsquo; nation? &nbsp;And perhaps more&nbsp;interesting, how did Nuland know that there would be an opening for head of state in Ukraine given&nbsp;the recorded conversation took place prior to the coup d&rsquo;etat and so prior to any rational notion that&nbsp;a replacement would be needed? &nbsp;Unless of course Nuland was aware that there would soon be an opening for the role of President of Ukraine.</p> <p><strong>Anyone that&nbsp;still believes the US is not the most corrupt government in the world is simply in denial.</strong> &nbsp;All the facts are there and to discount them is to deny them. &nbsp;I&rsquo;m going to leave you with perhaps the best interview I&rsquo;ve ever seen with Bill Kristol by a character&nbsp;we can all appreciate. &nbsp;Enjoy&nbsp;it but don&rsquo;t miss&nbsp;the message. &nbsp;Kristol is nothing but a muppet, however, the men behind Kristol are extremely dangerous and men who work in political shadows to&nbsp;get what they want by purchasing and threatening the careers of American legislators. &nbsp;These men who work in the shadows are just the&nbsp;current members of the same&nbsp;group that forced Woodrow Wilson to approve the Central Banking Act against his better judgment in 1913 and 30 years later forced Harry Truman to support taking land from the Palestinians and calling it Israel against his better judgement. &nbsp;<strong>Ample evidence shows that both took those personally regretful actions under extreme political duress by a group we now call the neocons.</strong></p> <p><strong><em><u>Rubio has essentially made a deal with the devil. </u></em></strong>&nbsp;He has accepted the help of perhaps the most powerful political force in Washington but it will cost him a Presidential executive order to initiate military aggression against&nbsp;Russia. &nbsp;<u><em>If we allow this to play out the blood&nbsp;of so many more young Americans and other young men and women around the world will be on the hands of we the people for again failing to uphold our duties as Americans, a self governed people, rather than&nbsp;as subservient fools.</em></u></p> <p>&nbsp;</p> <p><iframe frameborder="0" height="288" src="http://media.mtvnservices.com/embed/mgid:arc:video:colbertnation.com:9caacbfe-ed00-11e0-aca6-0026b9414f30" width="512"></iframe></p> http://www.zerohedge.com/news/2015-04-18/did-presidential-candidate-marco-rubio-make-deal-devil#comments China Israel Middle East Neocons New Century Ukraine Sun, 19 Apr 2015 00:35:26 +0000 Tyler Durden 504983 at http://www.zerohedge.com "More Than Half Of All Global Government Bonds Are Yielding 1% Or Less" http://www.zerohedge.com/news/2015-04-18/more-half-all-global-government-bonds-are-yielding-1-or-less <p>Earlier today, we were quite shocked when we heard two statements by central bankers uttered during a press briefing in Washington. The first comes from the ECB's Mario Draghi:</p> <ul> <li>DRAGHI: LOW RATES FOR LONG PERIOD INCREASE FINANCIAL STABILITY RISKS</li> </ul> <p>The second: from his supposed nemesis, if only for public consumption and not during the BIS' bimonthly meetings in Basel, Bundesbank head Jens Weidmann, who said a carbon copy replica of what Draghi had said minutes prior:</p> <ul> <li>WEIDMANN SAYS LOW INTEREST RATES INCREASE FIN STABILITY RISKS</li> </ul> <p>We were "shocked" because for once, we agree with central bankers. And to get a sense of just how right the two central bank heads are we go to Bank of America which overnight released a report in which it said that as of this moment, "<span style="text-decoration: underline;"><strong>53% of all global government bonds are yielding 1% or less</strong></span> (Chart 3)."</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/10%20Year.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/10%20Year_0.jpg" width="600" height="332" /></a></p> <p>Let that sink in for a second.</p> <p>And while you are contemplating that, here is another fact from Bank of America: </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The global narrative remains maximum liquidity (Chart 2) &amp; minimal interest rates. And it’s impossible to be max bearish with such an extravagant monetary backdrop.</p> <p>&nbsp;</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/maximum%20liquidity_0.jpg" width="600" height="342" /></p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>Central bank assets now exceed $22 trillion, a figure equivalent to the combined GDP of US &amp; Japan</strong></span></p> </blockquote> <p>So yes, low rates for a long period of time most certainly "increase financial stability risks" - the central planners are certainly correct about that. But next time they make that remark, perhaps someone from the media can ask Messrs Draghi or Weidmann the following question: </p> <p><strong>does the fact that central banks now collectively own nearly a third of global GDP in government bonds and equivalent assets - an amount that is greater than the GDP of first and third largest global economies, have anything to do with "low rates" and the fact that "financial stability risks" as of this moment have never been higher?</strong></p> <p>Oh, and good luck with that "renormalization."</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="793" height="439" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/10%20Year_0.jpg?1429391980" /> </div> </div> </div> http://www.zerohedge.com/news/2015-04-18/more-half-all-global-government-bonds-are-yielding-1-or-less#comments Bank of America Bank of America Central Banks Japan Sun, 19 Apr 2015 00:01:09 +0000 Tyler Durden 504990 at http://www.zerohedge.com Why The Record Drop In Chinese House Prices Suggests Beijing Is Already In A Recession http://www.zerohedge.com/news/2015-04-18/why-record-drop-chinese-house-prices-suggests-beijing-already-recession <p>Another month, and another confirmation that China's hard landing is if not here, then likely mere months away. </p> <p>Overnight, the NBS reported that in March, Chinese house prices dropped in 69 of 70 cities compared to a year ago. According to Goldman's seasonal adjustments, in March home prices dropped another 0.5% from February, the same as the prior month's decline, suggesting that the <a href="http://www.zerohedge.com/news/2015-02-28/china-cuts-interest-rates-takes-number-central-banks-easing-2015-21">February 28 rate cut </a>hasn't done much to boost housing spirits. </p> <p>However, it is the annual data that truly stands out, because with a drop of 6.1% this was the biggest drop in Chinese house prices in history.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/20150418_china2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/20150418_china2_0.jpg" width="600" height="341" /></a></p> <p>&nbsp;</p> <p>To be sure, the PBOC is now scrambling to halt what, unless it is stopped, will become a full-blown hard landing in months, if it isn't already. As a result, as shown in the chart below it has recently engaged in several easing steps, with many more to come according to the sell-side consensus. So far these have failed to stimulate the overall economy, which continues to be pressured by a deflation-importing world, but have certainly lead to a massive surge in the Chinese stock market.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/china%20easing%20history.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/china%20easing%20history_0.jpg" width="600" height="364" /></a></p> <p>&nbsp;</p> <p>Incidentally, the ongoing collapse in Chinese home prices is precisely why the PBOC and the Politburo have both done everything in their power to substitute the burst housing bubble with another: that of stocks, by pushing everyone (<a href="http://www.zerohedge.com/news/2015-03-27/dumb-money-30-new-equity-investors-china-have-elementary-education-or-less-bloomberg">even the illiterates</a>) to invest as much as possible in the stock market, leading to the biggest and fastest liquidity and <a href="http://www.zerohedge.com/news/2015-03-26/aint-no-margin-debt-margin-debt">margin debt-driven </a>bubble in history.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/03/Margin%20Debt.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/03/Margin%20Debt_0.jpg" width="600" height="417" /></a></p> <p>...one which has left <a href="http://www.zerohedge.com/news/2015-03-26/chinas-stock-bubble-leaves-bnp-speechless-what-happens-next-unknown-unknown">BNP "speechless.</a>"</p> <p>Unfortunately for China, as we have shown before, all Chinese attempts to do what every self-respecting Keynesian would do, i.e., replace one bubble with another, are doomed to fail for the simple reason that unlike in the US, where the bulk of assets are in financial form, in China 75% of all <a href="http://www.zerohedge.com/news/2014-07-29/why-china-couldnt-care-less-about-its-stock-market">household wealth is in real estate</a>. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/07/China%20vs%20US%20Real%20Estate.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/07/China%20vs%20US%20Real%20Estate_0.jpg" width="600" height="453" /></a></p> <p>&nbsp;</p> <p>And this is where things get scarier, because <strong>if one compares the history of the Chinese and US housing bubbles, one observes that it was when US housing had dropped by about 6% following their all time highs in November 2005, that the US entered a recession. </strong></p> <p>This is precisely where China is now: a 6.1% drop following the all time high peak in January of 2014. If the last US recession is any indication, the Chinese economy is now contracting!</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/China%20vs%20US%20housing%20history.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/China%20vs%20US%20housing%20history_0.jpg" width="600" height="313" /></a></p> <p>&nbsp;</p> <p>So much for hopes of 7% GDP growth this year.</p> <p>The good news, if any, is that Chinese home prices have another 12% to drop before China, which may or may not be in a recession, suffer the US equivalent of the Lehman bankruptcy.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="961" height="501" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/China%20vs%20US%20housing%20history.jpg?1429382024" /> </div> </div> </div> http://www.zerohedge.com/news/2015-04-18/why-record-drop-chinese-house-prices-suggests-beijing-already-recession#comments China Fail Housing Bubble Lehman Real estate Recession Sat, 18 Apr 2015 23:24:36 +0000 Tyler Durden 504985 at http://www.zerohedge.com