http://www.zerohedge.com/fullrss2.xml/wp-content/plugins/uBillboard/Korean%20Buying%20Spree%20Boosts%20Brent%20Price en Former CIA Boss and 4-Star General: U.S. Should Arm Al Qaeda http://www.zerohedge.com/news/2015-09-02/former-cia-boss-and-4-star-general-us-should-arm-al-qaeda <p>Former CIA boss and 4-star general David Petraeus &ndash; who still (believe it or not) holds a lot of sway in Washington &ndash; <a href="http://www.thedailybeast.com/articles/2015/08/31/petraeus-use-al-qaeda-fighters-to-beat-isis.html" target="_blank" title="suggests">suggests</a> we should arm Al Qaeda to fight ISIS.</p> <p>He&rsquo;s not alone &hellip;</p> <p>As we&rsquo;ve previously shown, <a href="http://www.washingtonsblog.com/2015/03/mainstream-media-calls-supporting-al-qaeda-isis.html" title="other mainstream American figures support arming Al Qaeda … and ISIS">other mainstream American figures support arming Al Qaeda &hellip; and ISIS</a>.</p> <p>The U.S. actually did <a href="http://www.washingtonsblog.com/2014/04/confirmed-u-s-armed-al-qaeda-topple-gaddaffi.html" title="knowingly">knowingly</a> <a href="http://www.washingtonsblog.com/2015/02/confirmation-us-knowingly-aided-al-qaeda-libya.html" title="supported">support</a> <a href="http://www.wnd.com/2015/01/generals-conclude-obama-backed-al-qaida/" target="_blank" title="Al Qaeda">Al Qaeda</a> in Libya. And <a href="http://www.washingtonsblog.com/2014/05/america-switched-sides-now-backs-al-qaeda-nazis.html" title="also">also</a> in <a href="http://www.washingtonsblog.com/2015/08/meet-the-moderates-the-u-s-is-supporting-in-syria-theyre-al-qaeda.html" title="Syria">Syria</a>.</p> <p>And we <a href="http://www.washingtonsblog.com/2015/08/usa-turkey-and-israel-act-as-air-force-for-isis.html" title="actually ARE supporting ISIS">actually ARE supporting ISIS</a> to some extent.</p> <p>Truly, America&rsquo;s <a href="http://www.washingtonsblog.com/2014/09/americas-strategy-failing-world-complex-use-enemy-enemy-friend-strategy.html" title="foreign policy is insane">foreign policy is insane</a>.</p> http://www.zerohedge.com/news/2015-09-02/former-cia-boss-and-4-star-general-us-should-arm-al-qaeda#comments Wed, 02 Sep 2015 06:04:32 +0000 George Washington 512739 at http://www.zerohedge.com The Alarming Regularity of 6 and 7-Sigma Events Illustrates Why a Deep Understanding of Banker-Induced Fraud is a Necessity http://www.zerohedge.com/news/2015-09-02/alarming-regularity-6-and-7-sigma-events-illustrates-why-deep-understanding-banker-0 <p class="MsoNormal">In today's SmartKnowledgeU_Vlog_005, we discuss why an intelligent investment strategy is impossible without incorporation of market &amp; banker fraud analysis, something that we have incorporated heavily into our strategies since we launched our company in mid-2007. Understanding market fraud allowed us to position our portfolio short the US stock market before the fall out occurred these past few weeks, as we even publicly posted this warning about an <em>"imminent"</em> US market collapse to our twitter account on 19 August, 2015, <em>just one day before the US stock markets began free-falling.</em></p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal">&nbsp;<img src="https://www.smartknowledgeu.com/images/skutweet19aug.jpg" alt="smartknowledgeu 2015 US stock market crash prediction " width="588" height="441" style="display: block; margin-left: auto; margin-right: auto;" /></p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal">In addition to shorting US markets and closing out positions at very quick and substantial gains, our understanding of banker pricing fraud in gold and silver futures markets also allowed us to short gold and silver into the US stock market free fall and quickly close out our short gold and short silver positions respectively for very quick +5.27% and +16.24% gains. In our latest vlog below, we discuss why understanding the meaning behind these 5, 6, 7, and even 16<em>-</em>sigma events that are occuring with alarming regularity in global financial markets has been critical to maintaining positive yields this year in the short-term, will be critical to maintaining strongly positive yields over the long-term, and is necessary in&nbsp;&nbsp; formulating intelligent low-risk strategies to cope with the massive asset and market volatility that we have been experiencing, and that will likely accelerate in future months.</p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal"><a href="https://www.youtube.com/watch?v=6OSzZM64A6o"><img src="https://www.smartknowledgeu.com/images/vlog005.jpg" alt="smartknowledgeu_vlog_005: why formulating intelligent investment strategies without a deep understanding of banker fraud is impossible" width="550" height="308" style="display: block; margin-left: auto; margin-right: auto;" /></a></p> <p class="MsoNormal" style="text-align: center;"><em>&nbsp;to watch the above vlog, please click the image above</em></p> <p class="MsoNormal" style="text-align: center;"><em><br /></em></p> <p class="MsoNormal"><em><strong>About the Vlogger: </strong>JS Kim is the Managing Director and Chief Investment Strategist of <a href="https://www.smartknowledgeu.com" title="intelligent investment strategies &amp; research for uncertain volatile global markets">SmartKnowledgeU</a>. His <a href="https://www.smartknowledgeu.com/pdf/cio-newsletter.pdf">Crisis Investment Opportunities newsletter </a>has respectively outperformed the Philadelphia Gold &amp; Silver Index, the Australian ASX200, the London FTSE and the US S&amp;P 500 by +125.53%, +76.92%, +69.07% and +27.63% (investment period from inception on 15 June, 2007 until present day on 2 September, 2015). For more information and <a href="https://www.smartknowledgeu.com/pdf/smartknowledgeuperformance.pdf" target="_blank" title="SmartKnowledgeU performance yields since inception, 2007 to 2015">access to our annual returns</a>, please visit smartknowledgeu.com</em></p> http://www.zerohedge.com/news/2015-09-02/alarming-regularity-6-and-7-sigma-events-illustrates-why-deep-understanding-banker-0#comments KIM SmartKnowledgeU Twitter Twitter Volatility Wed, 02 Sep 2015 05:50:29 +0000 smartknowledgeu 512738 at http://www.zerohedge.com The Alarming Regularity of 6 and 7-Sigma Events Illustrates Why a Deep Understanding of Banker-Induced Fraud is a Necessity http://www.zerohedge.com/news/2015-09-02/alarming-regularity-6-and-7-sigma-events-illustrates-why-deep-understanding-banker-i <p class="MsoNormal">In today's SmartKnowledgeU_Vlog_005, we discuss why an intelligent investment strategy is impossible without incorporation of market&amp; banker fraud analysis, something that we have incorporated heavily into our strategies since we launched our company in mid-2007. Understanding market fraud allowed us to position our portfolio short the US stock market before the fall out occurred these past few weeks, as we even publicly posted this warning about an <em>"imminent"</em> US market collapse to our twitter account on 19 August, 2015, <em>just one day before the US stock markets began free-falling.</em></p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal">&nbsp;<img src="https://www.smartknowledgeu.com/images/skutweet19aug.jpg" alt="smartknowledgeu 2015 US stock market crash prediction " width="588" height="441" style="display: block; margin-left: auto; margin-right: auto;" /></p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal">In addition to shorting US markets and closing out positions at very quick and substantial gains, our understanding of banker pricing fraud in gold and silver futures markets also allowed us to short gold and silver into the US stock market free fall and quickly close out our short gold and short silver positions respectively for very quick +5.27% and +16.24% gains. In our latest vlog below, we discuss why understanding the meaning behind these 5, 6, 7, and even 16<em>-</em>sigma events that are occuring with alarming regularity in global financial markets has been critical to maintaining positive yields this year in the short-term, will be critical to maintaining strongly positive yields over the long-term, and is necessary to&nbsp; intelligently formulating strategies to cope with the massive asset volatility that we have been experiencing and that will likely accelerate in future months.</p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal"><a href="https://www.youtube.com/watch?v=6OSzZM64A6o"><img src="https://www.smartknowledgeu.com/images/vlog005.jpg" alt="smartknowledgeu_vlog_005: why formulating intelligent investment strategies without a deep understanding of banker fraud is impossible" width="550" height="308" style="display: block; margin-left: auto; margin-right: auto;" /></a></p> <p class="MsoNormal" style="text-align: center;"><em>&nbsp;to watch the above vlog, please click the image above</em></p> <p class="MsoNormal" style="text-align: center;"><em><br /></em></p> <p class="MsoNormal"><em><strong>About the Vlogger: </strong>JS Kim is the Managing Director and Chief Investment Strategist of <a href="https://www.smartknowledgeu.com" title="intelligent investment strategies &amp; research for uncertain volatile global markets">SmartKnowledgeU</a>. His <a href="https://www.smartknowledgeu.com/pdf/cio-newsletter.pdf">Crisis Investment Opportunities newsletter </a>has respectively outperformed the Philadelphia Gold &amp; Silver Index, the Australian ASX200, the London FTSE and the US S&amp;P 500 by +125.53%, +76.92%, +69.07% and +27.63% (investment period from inception on 15 June, 2007 until present day on 2 September, 2015). For more information and <a href="https://www.smartknowledgeu.com/pdf/smartknowledgeuperformance.pdf" target="_blank" title="SmartKnowledgeU performance yields since inception, 2007 to 2015">access to our annual returns</a>, please visit smartknowledgeu.com</em></p> http://www.zerohedge.com/news/2015-09-02/alarming-regularity-6-and-7-sigma-events-illustrates-why-deep-understanding-banker-i#comments KIM SmartKnowledgeU Twitter Twitter Volatility Wed, 02 Sep 2015 05:46:50 +0000 smartknowledgeu 512737 at http://www.zerohedge.com Sheep Led To The Slaughter: The Muzzling Of Free Speech In America http://www.zerohedge.com/news/2015-09-01/sheep-led-slaughter-muzzling-free-speech-america <p><a href="http://www.rutherford.org/publications_resources/john_whiteheads_commentary/sheep_led_to_the_slaughter_the_muzzling_of_free_speech_in_america"><em>Submitted by John Whitehead via The Rutherford Institute,</em></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;If the freedom of speech be taken away, <a href="http://www.mountvernon.org/research-collections/digital-encyclopedia/article/national-gazette/">then dumb and silent we may be led</a>, like sheep to the slaughter.&rdquo;&mdash;George Washington</p> </blockquote> <p><strong>The architects of the American police state must think we&rsquo;re idiots.</strong></p> <p>With every passing day, <strong>we&rsquo;re being moved further down the road towards a totalitarian society</strong> characterized by government censorship, violence, corruption, hypocrisy and intolerance, all packaged for our supposed benefit in the Orwellian doublespeak of national security, tolerance and so-called &ldquo;government speech.&rdquo;</p> <p><strong>Long gone are the days when advocates of free speech could prevail </strong>in a case such as <em>Tinker v. Des Moines</em>. Indeed, it&rsquo;s been 50 years since <a href="http://www.theatlantic.com/education/archive/2014/04/do-students-still-have-free-speech-in-school/360266/">13-year-old Mary Beth Tinker was suspended for wearing a black armband to school</a> in protest of the Vietnam War. In taking up her case, the U.S. Supreme Court declared that <a href="http://www.theatlantic.com/education/archive/2014/04/do-students-still-have-free-speech-in-school/360266/">students do not &ldquo;shed their constitutional rights to freedom of speech or expression at the schoolhouse gate</a>.&rdquo;</p> <p>Were <em>Tinker </em>to make its way through the courts today, it would have to overcome the many hurdles being placed in the path of those attempting to voice sentiments that may be construed as unpopular, offensive, conspiratorial, violent, threatening or anti-government.</p> <p>Consider, if you will, that the U.S. Supreme Court, historically a champion of the First Amendment, has declared that citizens can exercise their right to free speech everywhere it&rsquo;s lawful&mdash;online, in social media, on a public sidewalk, etc.&mdash;<a href="http://www.washingtonpost.com/politics/courts_law/protesters-have-no-free-speech-rights-on-supreme-courts-front-porch/2015/08/28/f79ae262-4d9e-11e5-bfb9-9736d04fc8e4_story.html">as long as they don&rsquo;t do so in front of the Court itself</a>.</p> <p>What is the <a href="http://www.washingtonpost.com/politics/courts_law/protesters-have-no-free-speech-rights-on-supreme-courts-front-porch/2015/08/28/f79ae262-4d9e-11e5-bfb9-9736d04fc8e4_story.html">rationale for upholding this ban</a> on expressive activity on the Supreme Court plaza?</p> <p>&ldquo;Allowing demonstrations directed at the Court, on the Court&rsquo;s own front terrace, would tend to yield the&hellip;impression&hellip;of a Court engaged with &mdash; and potentially vulnerable to &mdash; outside entreaties by the public.&rdquo;</p> <p>Translation: The appellate court that issued that particular ruling in <a href="http://rutherford.org/publications_resources/on_the_front_lines/first_amendment_setback_federal_appeals_court_upholds_60_year_old_ban_on_ex"><em>Hodge v. Talkin</em></a> actually wants us to believe that the Court is so impressionable that the justices could be swayed by the sight of a single man, <a href="http://www.washingtonpost.com/politics/courts_law/protesters-have-no-free-speech-rights-on-supreme-courts-front-porch/2015/08/28/f79ae262-4d9e-11e5-bfb9-9736d04fc8e4_story.html">civil rights activist Harold Hodge</a>, standing alone and silent in the snow in a 20,000 square-foot space in front of the Supreme Court building wearing a small sign protesting the toll the police state is taking on the lives of black and Hispanic Americans.</p> <p><strong>My friends, we&rsquo;re being played for fools.</strong></p> <p>The Supreme Court is not going to be swayed by you or me or Harold Hodge.</p> <p>For that matter, the justices&mdash;<a href="http://www.latimes.com/opinion/opinion-la/la-ol-supreme-court-diversity-ivy-league-20141028-story.html">all of whom hale from one of two Ivy League schools</a> (Harvard or Yale) and <a href="http://www.usatoday.com/story/news/politics/2014/06/20/supreme-court-justices-financial-disclosure/11105985/">most of whom are now millionaires</a> and enjoy such rarefied privileges as lifetime employment, security details, ample vacations and travel perks&mdash;are anything but impartial.</p> <p>If they are partial, it is to those with whom they are <a href="http://www.reuters.com/article/2014/12/08/us-scotus-advocates-specialreport-idUSKBN0JM11E20141208">on intimate terms: with Corporate America and the governmental elite who answer to them</a>, and they show their favor by investing in their businesses, socializing at their events, and generally marching in lockstep with their values and desires in and out of the courtroom.</p> <p>To suggest that Harold Hodge, standing in front of the Supreme Court building on a day when the Court was not in session hearing arguments or issuing rulings, is a threat to the Court&rsquo;s neutrality, while their dalliances with Corporate America is not, is utter hypocrisy.</p> <p>Making matters worse, the Supreme Court has the effrontery to suggest that the government can discriminate freely against First Amendment activity that takes place within a government forum. Justifying such discrimination as &ldquo;<a href="http://www.scotusblog.com/case-files/cases/walker-v-texas-division-sons-of-confederate-veterans-inc/">government speech</a>,&rdquo; the Court ruled that the Texas Dept. of Motor Vehicles could refuse to issue specialty license plate designs featuring a Confederate battle flag because it was offensive.</p> <p><strong>If it were just the courts suppressing free speech, that would be one thing to worry about, but First Amendment activities are being pummeled, punched, kicked, choked, chained and generally gagged all across the country.</strong></p> <p><u><strong>The reasons for such censorship vary widely from political correctness, safety concerns and bullying to national security and hate crimes but the end result remains the same: the complete eradication of what Benjamin Franklin referred to as the &ldquo;<a href="http://www.saturdayeveningpost.com/2015/01/16/history/great-american-thinkers-free-speech.html">principal pillar of a free government</a>.&rdquo;</strong></u></p> <p>Officials at the University of Tennessee, for instance, recently introduced an Orwellian policy that would prohibit students from using gender specific pronouns and be more inclusive by using <a href="http://www.foxnews.com/opinion/2015/08/28/call-me-ze-not-university-wants-everyone-to-use-gender-inclusive-pronouns.html">gender &ldquo;neutral&rdquo; pronouns such as ze, hir, zir, xe, xem and xyr</a>, rather than he, she, him or her.</p> <p>On many college campuses, declaring that &ldquo;America is the land of opportunity&rdquo; or asking someone &ldquo;Where were you born?&rdquo; are now considered <a href="http://www.theatlantic.com/magazine/archive/2015/09/the-coddling-of-the-american-mind/399356/">microaggressions</a>, &ldquo;small actions or word choices that seem on their face to have no malicious intent but that are thought of as a kind of violence nonetheless.&rdquo; &nbsp;<a href="http://www.theatlantic.com/magazine/archive/2015/09/the-coddling-of-the-american-mind/399356/">Trigger warnings</a> are also being used to alert students to any material or ideas they might read, see or hear that might upset them.</p> <p>More than 50 percent of the nation&rsquo;s colleges, including Boston University, Harvard University, Columbia University and Georgetown University, subscribe to <a href="http://personalliberty.com/american-colleges-are-killing-free-speech/">&ldquo;red light&rdquo; speech policies</a> that restrict or ban so-called offensive speech, or limit speakers to designated areas on campus. The campus climate has become so hypersensitive that comedians such as Chris Rock and Jerry Seinfeld <a href="http://www.theatlantic.com/magazine/archive/2015/09/thats-not-funny/399335/">refuse to perform stand-up routines to college crowds</a> anymore.</p> <p><strong>What we are witnessing is an environment in which political correctness has given rise to &ldquo;<a href="http://www.theatlantic.com/magazine/archive/2015/09/the-coddling-of-the-american-mind/399356/">vindictive protectiveness</a>,&rdquo; </strong>a term coined by social psychologist Jonathan Haidt and educational First Amendment activist Greg Lukianoff. It refers to a society in which &ldquo;everyone must think twice before speaking up, lest they face charges of insensitivity, aggression or worse.&rdquo;</p> <p>This is particularly evident in the public schools where students are insulated from anything&mdash;words, ideas and images&mdash;that might create unease or offense. For instance, the thought police at schools in Charleston, South Carolina, have instituted a <a href="http://www.latimes.com/nation/nationnow/la-na-charleston-schools-ban-confederate-flag-apparel-20150818-story.html">ban on displaying the Confederate flag on clothing, jewelry and even cars</a> on campus.</p> <p>Added to this is a growing list of programs, policies, laws and cultural taboos that defy the First Amendment&rsquo;s safeguards for expressive speech and activity. Yet as First Amendment scholar Robert Richards points out, &ldquo;The categories of speech that fall outside of [the First Amendment&rsquo;s] protection are <a href="http://news.psu.edu/story/341896/2015/01/27/research/probing-question-are-there-limits-freedom-speech">obscenity, child pornography, defamation, incitement to violence and true threats of violence</a>. Even in those categories, there are tests that have to be met in order for the speech to be illegal. Beyond that, we are free to speak.&rdquo;</p> <p><u><strong>Technically, Richards is correct. On paper, we are free to speak.</strong></u></p> <p><u><strong>In reality, however, we are only as free to speak as a government official may allow.</strong></u></p> <p>Free speech zones, bubble zones, trespass zones, anti-bullying legislation, zero tolerance policies, hate crime laws and a host of other legalistic maladies dreamed up by politicians and prosecutors have conspired to corrode our core freedoms.</p> <p><strong>As a result, we are no longer a nation of constitutional purists for whom the Bill of Rights serves as the ultimate authority. </strong>As I make clear in my book <a href="http://www.amazon.com/Battlefield-America-War-American-People/dp/1590793099"><em>Battlefield America: The War on the American People</em></a>, we have litigated and legislated our way into a new governmental framework where the dictates of petty bureaucrats carry greater weight than the inalienable rights of the citizenry.</p> <p>It may seem trivial to be debating the merits of free speech at a time when unarmed citizens are being shot, stripped, searched, choked, beaten and tasered by police for little more than daring to frown, smile, question, challenge an order, or just breathe.</p> <p>However, while the First Amendment provides no tangible protection against a gun wielded by a government agent, nor will it save you from being wrongly arrested or illegally searched, or having your property seized in order to fatten the wallets of government agencies, without the First Amendment, we are utterly helpless.</p> <p>It&rsquo;s not just about the right to speak freely, or pray freely, or assemble freely, or petition the government for a redress of grievances, or have a free press. The unspoken freedom enshrined in the First Amendment is the right to think freely and openly debate issues without being muzzled or treated like a criminal.</p> <p><strong>Just as surveillance has been shown to &ldquo;<a href="http://www.aljazeera.com/indepth/opinion/2013/06/201362574347243214.html">stifle and smother dissent, keeping a populace cowed by fear</a>,&rdquo; government censorship gives rise to self-censorship, breeds compliance and makes independent thought all but impossible.</strong></p> <p>In the end, censorship and political correctness not only produce people that cannot speak for themselves but also people who cannot think for themselves. And a citizenry that can&rsquo;t think for itself is a citizenry that will neither rebel against the government&rsquo;s dictates nor revolt against the government&rsquo;s tyranny.</p> <p><u><strong>The end result: a nation of sheep who willingly line up for the slaughterhouse.</strong></u></p> <p><strong><em>The cluttered cultural American landscape today is one in which people are so distracted by the military-surveillance-entertainment complex that critical thinkers are in the minority and frank, unfiltered, uncensored speech is considered uncivil, uncouth and unacceptable.</em></strong></p> <p>That&rsquo;s the point, of course.</p> <p>The architects, engineers and lever-pullers who run the American police state want us to remain deaf, dumb and silent. They want our children raised on a vapid diet of utter nonsense, where common sense is in short supply and the only viewpoint that matters is the government&rsquo;s.</p> <p><strong>We are becoming a nation of idiots, encouraged to spout political drivel and little else.</strong></p> <p>In so doing, we have adopted the lexicon of Newspeak, the official language of George Orwell&rsquo;s fictional Oceania, which was &ldquo;<a href="http://artcontext.org/remote/newspeak.html">designed not to extend but to diminish the range of thought</a>.&rdquo; As Orwell explained in <em>1984</em>, <strong><em>&ldquo;The purpose of Newspeak was not only to provide a medium of expression for the world-view and mental habits proper to the devotees of IngSoc [the state ideology of Oceania], but to make all other modes of thought impossible.&rdquo;</em></strong></p> <p>If Orwell envisioned the future as a boot stamping on a human face, a fair representation of our present day might well be a muzzle on that same human face.</p> <p>If we&rsquo;re to have any hope for the future, it will rest with those ill-mannered, bad-tempered, uncivil, discourteous few who are disenchanted enough with the status quo to tell the government to go to hell using every nonviolent means available.</p> <p><u><strong>However, as Orwell warned, <a href="https://ebooks.adelaide.edu.au/o/orwell/george/o79n/chapter1.7.html">you cannot become conscious until you rebel</a>.</strong></u></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="237" height="198" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150901_free.jpg?1441147241" /> </div> </div> </div> http://www.zerohedge.com/news/2015-09-01/sheep-led-slaughter-muzzling-free-speech-america#comments Corporate America Corruption ETC First Amendment George Orwell national security Reality South Carolina Wed, 02 Sep 2015 02:45:00 +0000 Tyler Durden 512732 at http://www.zerohedge.com It's The Fed, Stupid; Why Kuroda And Draghi Are No Match For Quantitative Tightening http://www.zerohedge.com/news/2015-09-01/its-fed-stupid-why-kuroda-and-draghi-are-no-match-quantitative-tightening <p>Earlier today, Deutsche Bank - who last week won the sellside race to coin a new term for the unfolding EM FX reserve unwind - took a close look at the end of the "Great Accumulation" and what it means for asset prices and DM monetary policy going forward. Here was Deutsche Bank’s "profound" takeaway:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Less reserve accumulation should put secular upward pressure on both global fixed income yields and the USD. Many studies have found that reserve buying has reduced both bund and US treasury yields by more than 100bps.&nbsp;</em></p> <p>&nbsp;</p> <p><em>Declining FX reserves should place upward pressure on developed market yields given that the bulk of reserves are allocated to fixed income.&nbsp;</em></p> <p>&nbsp;</p> <p><strong><em>This force is likely to be a persistent headwind towards developed market central banks’ exit from unconventional policy in coming years, representing an additional source of uncertainty in the global economy. The path to “normalization” will likely remain slow and fraught with difficulty.</em></strong></p> </blockquote> <p>But that, as it turns out, is not all.&nbsp;</p> <p>As you might imagine, EM capital flows have tracked the Fed, BOJ, and the ECB’s balance sheets quite closely (albeit with a lead) in the post-crisis, QE-dominated world. </p> <p>What’s interesting however, <strong>is that there now appears to be a disconnect:</strong></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/08/EMFlowsVsG3.png" width="400" height="320" /></p> <p>What accounts for that, you ask? Well, according to DB (and this isn't exactly surprising) the simple fact is that EM inflows/outflows are far more dependent on the Fed than they are on the BOJ and ECB and that means that a dovish Kuroda and Draghi will be no match for an even semi-hawkish Fed and that could be very bad news for EM flows considering how far ahead the Fed is in terms of approaching a rate hike cycle and considering, as <a href="http://www.zerohedge.com/news/2015-09-01/abn-amro-warns-there-40-chance-mario-draghi-expands-ecb-qe-soon-week">we noted earlier</a>, that DB's previous answer to the EM FX reserve liquidation quandary was that perhaps "other central banks [will] come in to fill the gap that the PBoC is leaving [as] China’s QT would need to be replaced by higher QE elsewhere, with the ECB and BoJ being the most notable candidates". From DB:<span style="white-space: pre;"> </span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Given the reliance of EM reserves on QE-enabled financial flows since the 2008 crisis, the speed of reversal should be a key driver of reserves trends going forward. EM capital flows have indeed had a strong relationship with G3 central bank balance sheet growth with a two-quarter lead (Figure 15), given that market pricing anticipates shifts in QE. Projecting G3 balance sheet trends thus offers some clues. In our most hawkish scenario, the Fed stops reinvestment by mid- 2016 and the ECB and BoJ stop QE by September and December 2016, respectively. A more dovish scenario might see the Fed reinvesting ad infinitum and the ECB and BoJ extending QE purchases until end-2017.</em></p> <p><em><span style="white-space: pre;"> </span></em></p> <p><em><strong>Worryingly, EM capital flows are already significantly undershooting the projection from the hawkish scenario.</strong> A constructive take on this would be that EM outflows have overreacted and could give way to inflows again as global liquidity conditions remain more accommodative than feared.<strong> The less constructive view is that the Fed balance sheet simply matters far more for EM, with liquidity provided by the ECB and BoJ a poor compensation for the Fed’s retrenchment. Indeed, Figure 16 suggests this to be the case, with EM flows tracking the fall in Fed balance sheet growth closely of late. The hawkish scenario of Fed stopping reinvestment next year would suggest that EM flows can get weaker, while even a more dovish scenario of a constant Fed balance sheet would not be enough to lift inflows again.&nbsp;</strong></em></p> <p>&nbsp;</p> <p><em><strong><a href="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/08/EMFlowsVsFed.png"><img src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/08/EMFlowsVsFed.png" width="398" height="328" /></a></strong></em></p> </blockquote> <p>In other words, even under DB's dovish scenario for the Fed, in which Yellen reinvests the proceeds from maturing securities forever, EM capital flows will likely remain negative, putting perpetual pressure on FX reserves. And as should be abundantly clear by now, perpetual pressure on FX reserves means the unwind of the "Great EM Accumulation" continues unabated until either the Fed launches QE4 or else stands by while the world's emerging economies burn through their cushions and careen into crisis.&nbsp;</p> <p>Finally - as noted earlier in "<a href="http://www.zerohedge.com/news/2015-09-01/abn-amro-warns-there-40-chance-mario-draghi-expands-ecb-qe-soon-week">ABN Amro Warns There Is A 40% Chance Mario Draghi Expands ECB QE As Soon As This Week</a>" - while we agree with ABN that the ECB may indeed boost QE in a rerun of what the BOJ did in the great Halloween massacre of 2014, it would be largely a non-event, as the ECB biggest limitation remains the availability of monetizable assets. As such, any real monetary offset to the Reverse QE that is about to be unleashed now <a href="http://www.zerohedge.com/news/2015-09-01/great-accumulation-over-biggest-risk-facing-worlds-central-banks-has-arrived">that the "Great Accumulation" is over</a>, is and will always be the Fed. For a quick explanation of this, re-read "<a href="http://www.zerohedge.com/news/2015-08-28/reason-chinas-crash-will-unleash-global-bond-shockwave">Why QE4 Is Inevitable.</a>"</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="552" height="305" alt="" src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/YellenChina.png?1441149346" /> </div> </div> </div> http://www.zerohedge.com/news/2015-09-01/its-fed-stupid-why-kuroda-and-draghi-are-no-match-quantitative-tightening#comments Central Banks Deutsche Bank fixed Global Economy Monetary Policy Wed, 02 Sep 2015 02:15:21 +0000 Tyler Durden 512733 at http://www.zerohedge.com Circling The Drain.... http://www.zerohedge.com/news/2015-09-01/circling-drain <p>CIRCLING THE DRAIN:</p> <p>So last weeks turmoil is seemingly not over yet…..Was it simply a storm in a teacup brought on by another one of those market tantrums that erupt every now and again to keep everyone on their toes and eventually evaporate? Or was it a significant tremor giving pre warning of a major earthquake to follow?</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user75652/imageroot/2015/09/sp3.png" width="1920" height="1040" /></p> <p>WAX ON WAX OFF;</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user75652/imageroot/2015/09/wax.jpg" width="640" height="480" />Historically September and October are not very good months for stocks and there are fundamental arguments for both sides.</p> <p>The fact is that there is a lot more to worry about than to be confident of.&nbsp;</p> <p>There are clearly real concerns both internally and externally that the China's growth rate is running at closer to 5% than 7%, Brazil and Russia are in recession,&nbsp;</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user75652/imageroot/2015/09/IBOV.png" title="BOVESPA" width="1920" height="1080" /></p> <p>Emerging market countries are suffering massive capital outflows and are burdened with huge dollar debts, Abenomics is not delivering inflation in Japan, the Eurozone is an invalid, Greece is a month away from another potential exit crisis, Europe faces a migrant crisis and the Middle East is unstable.&nbsp;</p> <p>&nbsp;</p> <p>There is plenty of reason to be concerned especially when the global economy is in the anaemic state it is despite a zero interest rate environment and huge injections of QE. At the height of last week’s crisis the proposed responses if the rout continued were for more of the same -- QE in China to be added to more QE in Japan and Europe. There was even a suggestion from the president of the Minneapolis Fed that the week’s developments potentially justified "adding accommodation". All this despite evidence that the impact of each new injection is diminishing and creating side effects that are sowing the seeds of the next financial crisis.</p> <p>THE CHARTS DON’T LIE</p> <p>We broke ,we rallied to the multi year trend line &nbsp;and now we have retreated again…..</p> <p>Weekly S&amp;P chart:</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user75652/imageroot/2015/09/SP1.png" width="1920" height="1040" /></p> <p>You really dont need to be a rocket scientist;</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user75652/imageroot/2015/09/SP2.png" width="1920" height="1080" />What I have not liked from the recent move is that the fixed income market that one would expect to flatten from his point has if fact steepened…this has been down to apparent Chinese liquidation of treasury positions;</p> <p>YIELDS UP / STOCKS DOWN……</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user75652/imageroot/2015/09/yld.png" width="1920" height="1040" /></p> <p>With everything for sale…the next 2 months could be quite hairy</p> <p>&nbsp;</p> <p>&nbsp;</p> <p style="font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13.3333330154419px; line-height: 17.3333320617676px;"><strong style="color: rgba(0, 0, 0, 0.701961); font-family: Georgia, serif; font-size: 18px; line-height: 32px;">In regards to more detailed and expert options and futures advice ,volatility analysis etc ,please contact Darren Krett,Bryan Fitzgerald or John Haden through&nbsp;<a href="http://www.maunaki.com/" title="www.maunaki.com">www.maunaki.com</a>&nbsp;or&nbsp;<a href="mailto:dkrett@maunaki.com" title="dkrett@maunaki.com">dkrett@maunaki.com</a>&nbsp;</strong></p> <p style="font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13.3333330154419px; line-height: 17.3333320617676px;"><em style="color: rgba(0, 0, 0, 0.701961); font-family: Georgia, serif; font-size: 18px; line-height: 32px;">"Futures and options trading involves substantial risk and is not for everyone. Such investments may not be appropriate for the recipient. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. Nothing contained in this message may be construed as an express or an implied promise, guarantee or implication by, of, or from Mauna Kea Investments LLC. that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Although care has been taken to assure the accuracy, completeness and reliability of the information contained herein, Mauna Kea Investments LLC makes no warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, reliability or usefulness of any information, product, service or process disclosed.”</em></p> <p>&nbsp;</p> http://www.zerohedge.com/news/2015-09-01/circling-drain#comments Abenomics Brazil China ETC Eurozone fixed Global Economy Greece Japan Middle East Recession Volatility Wed, 02 Sep 2015 01:45:16 +0000 dazzak 512736 at http://www.zerohedge.com The Myth Of A Russian 'Threat' http://www.zerohedge.com/news/2015-08-31/myth-russian-threat <p><em><a href="http://sputniknews.com/columnists/20150825/1026161727/myth-of-russian-threat.html">Authored by Pepe Escobar, originally posted at SputnikNews.com,</a></em></p> <p><u><strong>Not a week goes by without the Pentagon carping about an ominous Russian &quot;threat&quot;.</strong></u></p> <div> <p>Chairman of&nbsp;the Joint Chiefs of&nbsp;Staff Martin Dempsey entered certified Donald &ldquo;known unknown&rdquo; Rumsfeld territory when he recently tried to&nbsp;conceptualize the &ldquo;threat&rdquo;; &ldquo;Threats are the combination, or the aggregate, of&nbsp;capabilities and intentions. Let me set aside for&nbsp;the moment, intentions, because I don&rsquo;t know what Russia intends.&rdquo;</p> <p><em><strong>So Dempsey admits he does not know what he&rsquo;s talking about. What he seems to&nbsp;know is that Russia is a &ldquo;threat&rdquo; anyway&nbsp;&mdash; in&nbsp;space, cyber space, ground-based cruise missiles, submarines.</strong></em></p> <p>And most of&nbsp;all, a threat to&nbsp;NATO; &ldquo;One of&nbsp;the things that Russia does seem to&nbsp;do is either discredit, or even more ominously, create the conditions for&nbsp;the failure of&nbsp;NATO.&rdquo;</p> <p><strong>So Russia &ldquo;does seem&rdquo; to&nbsp;discredit an already self-discredited NATO. That&rsquo;s not much of&nbsp;a &ldquo;threat&rdquo;.</strong></p> <p>All these rhetorical games take place while NATO &ldquo;does seem&rdquo; to&nbsp;get ready for&nbsp;a direct confrontation with&nbsp;Russia. And make no mistake; Moscow does view NATO&rsquo;s belligerence as&nbsp;a real threat.</p> <p><u><strong>It&rsquo;s PGS vs. S-500</strong></u></p> <div>The &ldquo;threat&rdquo; surge happens just as&nbsp;US Think Tankland recharges the notion of&nbsp;containment of&nbsp;Russia. Notorious CIA front Stratfor has peddled a propaganda piece praising Cold War mastermind <a href="https://history.state.gov/milestones/1945-1952/kennan" target="_blank">George Kennan</a> as&nbsp;the author of&nbsp;the &ldquo;containment of&nbsp;Russia&rdquo; policy.</div> <div>&nbsp;</div> <div><strong>The US intel apparatus don&rsquo;t do irony;</strong> before&nbsp;he died, Kennan said it was now the US that had to&nbsp;be contained, not Russia.</div> <div>&nbsp;</div> <div>Containment of&nbsp;Russia &ndash; via&nbsp;the expansion of&nbsp;the EU and NATO&nbsp;&mdash; has always been a work in&nbsp;progress because the geopolitical imperative has always been the same; as&nbsp;Dr. Zbigniew &ldquo;The Grand Chessboard&rdquo; Brzezinski never tired of&nbsp;stressing, it was always about&nbsp;preventing the &ndash; threatening&nbsp;&mdash; emergence of&nbsp;a Eurasian power capable of&nbsp;challenging the US.</div> <div>&nbsp;</div> <div><strong>Ultimately, the notion of &ldquo;containment&rdquo; can be stretched out&nbsp;towards the dismantling of&nbsp;Russia itself. It also carries the inbuilt paradox that NATO&rsquo;s infinite expansion eastwards has made Eastern Europe less, not more, safe.</strong></div> <p>Assuming there would even be a lethal Russia-NATO confrontation, Russian tactical nuclear weapons would knock out&nbsp;all NATO airports in&nbsp;less than&nbsp;twenty minutes. Dempsey &ndash; cryptically &ndash; admits as&nbsp;much.</p> <p>What he cannot possibly admit is if a decision had been made in&nbsp;Washington, a long time ago, preventing NATO&rsquo;s infinite expansion, Russia&rsquo;s concerted move to&nbsp;upgrade its nuclear weapon arsenal would have been unnecessary.&nbsp;</p> <p><em><strong>Geopolitically, the Pentagon has finally seen which way the &ndash; strategic partnership &ndash; wind is blowing; towards&nbsp;Russia-China. This major game-changing shift in&nbsp;the global balance of&nbsp;power also translates as&nbsp;the combined military assets of&nbsp;China and Russia exceeding NATO&rsquo;s.</strong></em></p> <p>In terms of&nbsp;military power Russia has superior offensive and defensive missiles over&nbsp;the US, with&nbsp;the new generation surface-to-air missile system, the S-500, capable of&nbsp;intercepting supersonic targets and totally sealing Russian airspace.</p> <p>Moreover, despite&nbsp;short-term financial turbulence, the Sino-Russian combined strategy for&nbsp;Eurasia &ndash; an interpenetration of&nbsp;the New Silk Road(s) and the Eurasian Economic Union (EEU) &ndash; is bound to&nbsp;develop their economies and the region at&nbsp;large to&nbsp;an extent that may surpass the EU and the US combined by&nbsp;2030.</p> <p><strong>What&rsquo;s left for&nbsp;NATO is to&nbsp;stage military strength made-for-TV shows such as &ldquo;Atlantic Resolve&rdquo; to &ldquo;reassure the region&rdquo;, especially hysteria-prone Poland and the Baltics.&nbsp;</strong> </p><p>Moscow, meanwhile, has made it clear that nations deploying US-owned anti-ballistic missile systems in&nbsp;their territory will face missile early-warning systems deployed in&nbsp;Kaliningrad.</p> <p>And Major General Kirill Makarov, Russia&rsquo;s Aerospace Defense Forces&rsquo; deputy chief, has already made it clear Moscow is upgrading its air and missile defense capabilities to&nbsp;smash any &ndash; real&nbsp;&mdash; threat by&nbsp;the US Prompt Global Strike (PGS).</p> <p>In the December 2014 Russian military doctrine, NATO&rsquo;s military build-up and PGS are listed as&nbsp;Russia&rsquo;s top security threats. Deputy Defense Minister Yuri Borisov has stressed, &ldquo;Russia is capable of&nbsp;and will have to&nbsp;develop a system like&nbsp;PGS.&rdquo;</p> <p><u><strong>Where&rsquo;s our loot?</strong></u></p> <p><em><strong>The Pentagon&rsquo;s rhetorical games also serve to&nbsp;mask a real high-stakes process; essentially an energy war &ndash; centering on&nbsp;the control of&nbsp;oil, natural gas and mineral resources of&nbsp;Russia and Central Asia. Will this wealth be controlled by&nbsp;oligarch frontmen &ldquo;supervised&rdquo; by&nbsp;their masters in&nbsp;New York and London, or by&nbsp;Russia and its Central Asian partners? Thus the relentless propaganda war.&nbsp;</strong></em></p> <p>A case can be made that the Masters of&nbsp;the Universe have resurrected the same old containment/threat geopolitical alibis &ndash; peddled by&nbsp;what we could dub the Brzezinski/Stratfor connection&nbsp;&mdash; to&nbsp;cover, or conceal, another stark fact.</p> <p><strong>And the fact is that the real reason for&nbsp;Cold War 2.0 is New York/London financial power suffering a trillion dollar-plus loss when President Putin extracted Russia from&nbsp;their looting schemes.</strong></p> <p>And the same applies to&nbsp;the entire Kiev coup&nbsp;&mdash; forced through&nbsp;by the same New York/London financial powers to&nbsp;block Putin from&nbsp;destroying their looting operations in&nbsp;Ukraine (which, by&nbsp;the way, proceed unabated, at&nbsp;least in&nbsp;the agricultural domain).</p> <p>Containment/threat is also deployed on&nbsp;overdrive to&nbsp;prevent by&nbsp;all means a strategic partnership between&nbsp;Russia and Germany &ndash; which the Brzezinski/Stratfor connection sees as&nbsp;an existential threat to&nbsp;the US.</p> <p>The connection&rsquo;s wet dreams &ndash; shared, incidentally, by&nbsp;the neo-cons &ndash; would be a glorious return to&nbsp;the looting phase of&nbsp;Russia in&nbsp;the 1990s, when the Russian industrial-military complex had collapsed and the West was plundering natural resources to&nbsp;Kingdom Come.</p> <p><u><em><strong>It&rsquo;s not going to&nbsp;happen ever again. So what&rsquo;s the Pentagon Plan B? To create the conditions of&nbsp;turning Europe into&nbsp;a <a href="http://english.pravda.ru/russia/politics/15-07-2015/131347-russia_nato-0/" target="_blank">potential theater of&nbsp;nuclear war</a>. Now that&rsquo;s a real threat &ndash; if there ever was one.</strong></em></u></p> </div> <p>&nbsp;</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="471" height="533" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150831_putin.jpg?1441058757" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-31/myth-russian-threat#comments B+ China Eastern Europe Germany Natural Gas Poland Ukraine Wed, 02 Sep 2015 01:45:00 +0000 Tyler Durden 512674 at http://www.zerohedge.com Chinese Stocks Open Down Hard As PBOC Strengthens Yuan By Most Since 2010 & Default Risk Hits 2-Year High http://www.zerohedge.com/news/2015-09-01/china-strengthens-yuan-most-5-years-default-risk-hits-2-year-high <p><strong>From the moment Japan opened, USDJPY buying took off </strong>(standard 100 pip rip on absolutely no news whatsoever) as yet another manipulated market breathed new life into equity longs dreams. That &#39;help&#39; combined with the fact that, as SCMP&#39;s George Chen reports, <strong>50 China brokerages will jointly contribute 100 bln RMB capital to the government margin finance agency to start &quot;new round of market rescue&quot; </strong>provided some stability after US markets&#39; collapse. However, tonight&#39;s big news appears to be a major crackdown on leverage as MNI notes <strong>regulators ordering brokerage houses to clear all non-official margin trading services - not just halting new clients but also closing existing accounts</strong>. Chinese stocks are opening modestly lower as <strong>PBOC fixes Yuan stronger for the 4th day in a row.</strong> Finally,<strong> China credit risk has spiked to 2-year highs </strong>as traders increase positions dramatically. The manipulation will continue through tomorrow at least when Parade Week peaks, so buckle up.</p> <p>&nbsp;</p> <p>Japan &quot;rescued&quot;... &quot;Mysterious&quot;? - <strong>Large USD/JPY Buyer Seen Before Nikkei Index Opened: Traders</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china3_0.jpg" style="width: 600px; height: 352px;" /></a></p> <p>&nbsp;</p> <p>China &quot;Stability?&quot;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china1_0.jpg" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>Though some weakness at the Chinese open:</p> <ul> <li><strong>*FTSE CHINA A50 SEPT. FUTURES DROP 0.7% IN SINGAPORE</strong></li> <li><strong>*CHINA&#39;S CSI 300 STOCK-INDEX FUTURES FALL 2.2% TO 2,939.8</strong></li> </ul> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china6.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china6_0.jpg" style="width: 600px; height: 324px;" /></a></p> <ul> <li><strong>*SHANGHAI COMPOSITE INDEX SET TO OPEN 4.4% LOWER</strong></li> </ul> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china9.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china9_0.jpg" style="width: 600px; height: 319px;" /></a></p> <p>And then PBOC Strengthens Yuan:</p> <ul> <li><strong>*CHINA SETS YUAN REFERENCE RATE AT 6.3619 AGAINST U.S. DOLLAR</strong></li> <li><strong>*CHINA RAISES YUAN REFERENCE RATE FOR FOURTH DAY</strong></li> </ul> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china7.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china7_0.jpg" style="width: 600px; height: 298px;" /></a></p> <p>And loses controil of money markets:</p> <ul> <li><strong>*CHINA OVERNIGHT MONEY-MARKET RATE RISES 18 BPS TO 2%</strong></li> </ul> <p>&nbsp;</p> <p><u><strong>This is the biggest 4-day strengthening in 5 years!</strong></u></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china8.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china8_0.jpg" style="width: 600px; height: 300px;" /></a></p> <p>But tonight&#39;s big news appears be a <strong>major clampdown on margin trading</strong> <em>(as MNI reports),</em></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>China&#39;s stock market regulator has issued a circular<strong> ordering brokerage houses to clear all non-official margin trading services jointly provided with a third party -- not just halting new clients but also closing existing accounts. </strong></p> <p>&nbsp;</p> <p>Chinese brokerage houses were allowed to offer margin trading services in 2010 but strong stock market performance since last year saw many third parties also providing margin trading services with help from brokerage houses.<strong> Beijing realized the potential threat of these fast-growing margin trading services</strong>, particularly unofficial ones, and started to push for market deleveraging in late-June this year, contributing to the stock market rout which saw Shanghai Composite Index lose nearly 40% since.</p> </blockquote> <p>Even as margin debt drops to a fresh 9-month low...</p> <ul> <li><strong>*SHANGHAI MARGIN DEBT BALANCE FALLS FOR 11TH STRAIGHT DAY</strong></li> </ul> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china2_0.jpg" style="width: 600px; height: 315px;" /></a></p> <p>&nbsp;</p> <p>The very same brokerages that are seeing executives detained and are being told to shut down margin trading have <strong>also provided funds for rescuing the <strike>government</strike> market...</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Chinese brokerage houses are providing more funds to the China Securities Finance Corp for stock market intervention. </strong></p> <p>&nbsp;</p> <p>Many listed brokerage houses issued statements last night saying they were <u><strong>giving no more than 20% of their net assets to CSFC</strong></u>, which will use the money to set up a special account for investment in blue chip stocks. These firms include CITIC Securities, which said it&#39;s giving another CNY5.4 billion to CSFC. CITIC Securities is at the center of a regulatory storm as many of its senior executives are being investigated by police and Chinese investors have been questioning if CITIC was a key player among short sellers that caused the recent stock market rout.</p> <p>&nbsp;</p> <p><strong>Besides CITIC, several other brokerage houses which are contributing new funds to CSFC, have also said they are being investigated by the stock market regulator.</strong></p> </blockquote> <p>Followed by more talk..</p> <ul> <li><strong>*CHINA EXPORTS MAY RISE 2% IN 2015; IMPORTS SEEN DOWN 10%: NEWS</strong></li> <li><strong>*CHINA HAS ROOM FOR FURTHER RATES, RRR CUTS: SECURITIES NEWS</strong></li> <li><strong>*CHINA SHOULD MAKE FUND TO SUPPORT SMALL CO. MARKET-ORIENTED: LI</strong></li> <li><strong>*CHINA PREMIER LI KEQIANG COMMENTS ON 60B YUAN SMALL CO. FUND</strong></li> </ul> <p>Then - now that China is flush with cash again apparently, it decided to help out Venezuela...</p> <ul> <li><strong>*VENEZUELA SIGNS $5B LOAN W/CHINA TO BOOST OIL PRODUCTION:MADURO</strong></li> </ul> <p>But, not everyone is happy, as Bloomberg reports,</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>China-focused hedge funds probably had their worst month in almost 16 years in August,</strong> with firms including Orchid Asia Group Management and APS Asset Management Pte suffering losses from the nation&rsquo;s stock market collapse.</p> <p>&nbsp;</p> <p><strong>&ldquo;Greater China hedge funds are on track to show the worst three month returns in at least a decade,&rdquo;</strong> said Mohammad Hassan, an analyst with Eurekahedge in Singapore. &ldquo;It&rsquo;s not a surprise given the funds&rsquo; limited ability to short the stock markets in China.&rdquo;</p> </blockquote> <p>And finally,<u><strong> it appears traders are hedging China credit risk in size...</strong></u></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Open positions in China&rsquo;s credit-default swaps increased by 212 contracts to 9,444 in the week ended Aug. 28, according to latest data from DTCC.</strong></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china4.jpg"><strong><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china4_0.jpg" style="width: 600px; height: 310px;" /></strong></a></p> <p>&nbsp;</p> <p><strong>That&rsquo;s the biggest increase among global sovereign CDS; gross notional amount rose $1.31b last week</strong></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china5.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_china5_0.jpg" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>Among Asian sovereigns, South Korea&rsquo;s CDS had second-biggest increase in positions last week, with outstanding amount up 137 contracts, or $1.10b in gross notional value</p> </blockquote> <p><em>Charts: Bloomberg</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="955" height="494" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150901_china4.jpg?1441155970" /> </div> </div> </div> http://www.zerohedge.com/news/2015-09-01/china-strengthens-yuan-most-5-years-default-risk-hits-2-year-high#comments CDS China Credit-Default Swaps default Japan Mohammad Nikkei notional value Sovereign CDS Sovereigns Yuan Wed, 02 Sep 2015 01:21:30 +0000 Tyler Durden 512735 at http://www.zerohedge.com Macroeconomics Is The Root Of All Error http://www.zerohedge.com/news/2015-09-01/macroeconomics-root-all-error <p><a href="http://dailycaller.com/2015/09/01/macroeconomics-is-the-root-of-all-error/"><em>Submitted by Bill Frezza via The Daily Caller,</em></a></p> <p><span style="font-weight: 400;">Will Fed chief Janet Yellen pull the trigger to raise interest rates in September or not? Only the soothsayers at </span><a href="http://www.cato.org/blog/kansas-city-feds-top-secret-jackson-hole-conference"><span style="font-weight: 400;">Jackson Hole </span></a><span style="font-weight: 400;">know for sure. <strong>But while the world awaits the decision, ponder this. What do the following have in common? </strong></span></p> <ul> <li style="font-weight: 400;"><span style="font-weight: 400;">Asset bubbles fueled by monetary policy. </span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Unsustainable sovereign debts threatening government bankruptcies. </span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Government economic &ldquo;cures&rdquo; worse than the diseases they are supposed to treat. </span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Questionable GDP statistics. </span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Recurring bank bailouts.</span></li> </ul> <p><span style="font-weight: 400;">Figured it out yet? <strong><u>They are all driven by an overweening state religion called macroeconomics.</u></strong></span></p> <p><span style="font-weight: 400;">Friedrich Hayek said it best. <strong><u>&ldquo;</u></strong></span><strong><u><em><span style="font-weight: 400;">The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design</span></em><span style="font-weight: 400;">.&rdquo; </span></u></strong></p> <p><span style="font-weight: 400;">A pity this simple, yet profound insight remains at the fringes of a field that continues to wreak havoc in the hands of those who imagine they </span><em><span style="font-weight: 400;">can</span></em><span style="font-weight: 400;"> design economic outcomes.</span></p> <p><span style="font-weight: 400;">Think about it. <strong><em>We are currently watching global stock markets gyrate toward breakdown trying to anticipate the whims of a cloistered professor who never launched a business, never met a payroll, never shipped a product, and never won an election, yet has been empowered to determine the price of money.</em></strong> What&rsquo;s even stranger is that people consider this normal. Ask yourself: Why do we wait on pins and needles for Janet Yellen to set interest rates yet laugh at the idea that kings once set the &ldquo;</span><a href="https://mises.org/library/myth-just-price"><span style="font-weight: 400;">just price</span></a><span style="font-weight: 400;">&rdquo; for a loaf of bread?</span></p> <p><strong><span style="font-weight: 400;">That&rsquo;s where Hayek&rsquo;s curious task comes in.</span></strong></p> <p><span style="font-weight: 400;">The human inclination to seek order in a seemingly chaotic world has long been exploited by generations of pundits, professors, and politicians eager to convince us they can impart certainty to the unknowable.</span></p> <p><span style="font-weight: 400;"><strong>Note that I say the unknowable, not the unknown.</strong> Science has proven quite adept at exploring&nbsp;the unknown. That&rsquo;s because as science progresses, falsifiable hypotheses that fail to make accurate predictions get discarded in favor of alternatives that do. No so in macroeconomics, whose prognostications bear an uncanny resemblance to predicting the nature of the afterlife. Rather than make continuous progress, the same discredited macroeconomic theories tend to cycle in and out of fashion depending on which court economists have the upper hand at any given time.</span></p> <p><span style="font-weight: 400;">One cannot perform controlled macroeconomic experiments because &ldquo;the economy&rdquo; is not a measurable thing, like the weight of a stone or the strength of an electric field. <strong>It is merely the name we give to billions of transactions that take place across the planet, each driven by decisions made by independent actors optimizing their own well being according to their own criteria</strong>. These criteria cannot even be articulated by many of the players themselves, much less known to a third party pretending omniscience. Undeterred, practitioners of the black arts conjure up aggregates like &ldquo;GDP&rdquo; or &ldquo;CPI,&rdquo; but any honest examination of these metrics quickly leads to the conclusion that they are nothing more than </span><a href="http://www.shadowstats.com/"><span style="font-weight: 400;">political fictions </span></a><span style="font-weight: 400;">that can be manipulated to suit the policy proclivities of the moment.</span></p> <p><span style="font-weight: 400;">Macroeconomists use GDP to characterize billions of economic transactions, supposedly like a physicist uses temperature to characterize the average kinetic energy of gas molecules as they bump into each other in the atmosphere. They come up with equations linking the velocity and quantity of money to the inflation rate, or the inflation rate to the unemployment rate, designed to look like the ideal gas law </span><a href="https://en.wikipedia.org/wiki/Ideal_gas_law"><span style="font-weight: 400;">PV = nRT</span></a><span style="font-weight: 400;">. <strong>This fools many people into believing these soothsayers are doing science. </strong></span></p> <p><span style="font-weight: 400;">But gas molecules are not willful. They don&rsquo;t have hopes and fears, friends and enemies, retirement savings and mortgage payments. Gas molecules don&rsquo;t change their behavior when you tell them what their temperature is. The idea that you can write equations to accurately capture complex human behaviors, and then develop policies based on these equations aimed at controlling those behaviors, is what Hayek called the </span><a href="http://www.amazon.com/The-Fatal-Conceit-Errors-Socialism/dp/1501263757"><span style="font-weight: 400;">Fatal Conceit</span></a><span style="font-weight: 400;">. </span></p> <p><span style="font-weight: 400;"><strong>Macroeconomics reigns in the realm of the unknowable promising that which cannot be delivered to the eager to be deceived, benefitting an entrenched priesthood and the potentates they serve.</strong> Its cloaking in mathematics, rather than music and incense, gives it the requisite air of mystery to discourage questioning the guidance of its anointed sages and prophets. Unless and until we acknowledge that what these people are practicing is a religion and not a science, we will remain in its obscurantist thrall.&nbsp;</span></p> <p><span style="font-weight: 400;">When scientific laws consistently fail to make accurate predictions, we throw the laws away. What happens when predictions about the impact of macroeconomic interventions fail, such as the </span><a href="http://www.washingtonsblog.com/2015/08/the-federal-reserve-which-created-quantitative-easing-admits-qe-doesnt-work.html"><span style="font-weight: 400;">inability of quantitative easing to deliver anything like the results promised</span></a><span style="font-weight: 400;">? There is always a macroeconomist standing by to claim &ldquo;we didn&rsquo;t do enough.&rdquo; And so the answer to every policy failure is: &ldquo;</span><a href="http://www.nytimes.com/2015/08/21/opinion/paul-krugman-debt-is-good-for-the-economy.html"><span style="font-weight: 400;">Give Us Moar</span></a><span style="font-weight: 400;">!&rdquo;</span></p> <p><em><span style="text-decoration: underline;"><strong>Thus, the goal of reformists cannot be to simply replace one set of grandees with another, but to throw the Church of Macroeconomics out of the <a href="https://en.wikipedia.org/wiki/Overton_window">Overton Window</a>, so it can pass into history alongside phrenology, phlogiston, and luminiferous aether.</strong></span></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="183" height="180" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150831_naked_0.jpg?1441144562" /> </div> </div> </div> http://www.zerohedge.com/news/2015-09-01/macroeconomics-root-all-error#comments CPI Fail Janet Yellen Monetary Policy Quantitative Easing Unemployment Wed, 02 Sep 2015 00:40:00 +0000 Tyler Durden 512730 at http://www.zerohedge.com Wondering Why Dow Futures Just Spiked Over 100 Points? http://www.zerohedge.com/news/2015-09-01/wondering-why-dow-futures-just-spiked-over-100-points <p>Wonder no more... </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_WTF1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_WTF1_0.jpg" width="600" height="478" /></a></p> <p>&nbsp;</p> <p>Get back to work Mr. Kuroda...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_WTF.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_WTF.jpg" width="600" height="352" /></a></p> <p>&nbsp;</p> <p>But remember - it's Chinese stocks that are "manipulated" - that is all.</p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</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="851" height="499" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150901_WTF.jpg?1441152722" /> </div> </div> </div> http://www.zerohedge.com/news/2015-09-01/wondering-why-dow-futures-just-spiked-over-100-points#comments Wed, 02 Sep 2015 00:12:13 +0000 Tyler Durden 512734 at http://www.zerohedge.com