http://www.zerohedge.com/fullrss2.xml/article/article/%3Ca%20href%3D en Greece Slides Back Into Recession Amid Riots, Rewewed "Grexit" Calls http://www.zerohedge.com/news/2016-02-12/greece-slides-back-recession-amid-riots-rewewed-grexit-calls <p dir="ltr">It was just over a year ago that Greece elected Alexis Tsipras and Syriza amid a flurry of anti-austerity sentiment. </p> <p dir="ltr">Things didn’t exactly go as planned. </p> <p dir="ltr">The new PM and his “radical” finance minister Yanis Varoufakis thought they could shake things up in Brussels and wrench Greece from the clutches of Berlin-style fiscal rectitude. As it turns out, Wolfgang Schaeuble is not a man who is easily bested at the bargaining table and after more than six months of negotiations, the imposition of capital controls, a referendum on the euro that Tsipras promptly sold down the river, Greeks ended up facing an outright depression. </p> <p dir="ltr">In the end, Varoufakis unceremoniously resigned and Tsipras agreed to a third bailout before calling for snap elections that would ultimately see the PM re-elected albeit at the helm of a party that was completely gutted by the arduous bailout talks. </p> <p dir="ltr">As we and quite a few others warned, the new bailout and the attached terms would do exactly nothing to turn the Greek economy around. We’re all for being responsible with the budget but you can’t very well implement fiscal retrenchment during a depression unless you intend to remain in said depression in perpetuity, but alas, that’s exactly what Brussels forced Greece to do and on Friday we learn that <strong>the country has slipped back into recession</strong>.</p> <p dir="ltr"><strong>GDP contracted 0.6% in Q4 after shrinking 1.4% in Q3</strong>. “With opposition mounting to the government’s pension reform plan, the European Union pressuring it to stem the tide of refugees entering the country and the global market rout hastening the sell-off in Greek assets, dark clouds are gathering again,” <a href="http://www.bloomberg.com/news/articles/2016-02-12/greece-sinks-back-into-recession-as-year-of-turmoil-takes-toll">Bloomberg writes</a>. Ironically, capital controls appear to have helped the economy perform better than expected: “The economy fared less badly than those initial expectations in part due to a 90 percent annualized increase in cashless payments since the introduction of capital controls in June, shifting activity out of the shadow economy.” Another justification for banning cash we suppose. </p> <p><span id="docs-internal-guid-1a2d1990-d54a-8fc7-45f7-0b2dc151cc84">Earlier this month <a href="http://www.zerohedge.com/news/2016-02-08/greek-tragedy-pension-pandemonium-sparks-bank-crash-stocks-26-year-lows">we noted</a> that Greek bank stocks were cut in half in just a matter of 72 hours while Greek equities as a whole had fallen to their lowest levels since 1989. Yields on the Greek 10Y had spiked back above 10%.</span></p> <p><span>Greece, sources told MNI, "seems unable to deliver" on a number of measures Brussels says Athens needs to implement an effective fiscal con</span>solidation plan. "We agreed&nbsp;to disagree," one official said. "Judging from (last week's) talks, <strong>the negotiations could drag for months</strong>.&nbsp;Anyway, I don't see any real funding needs for Greece until June," the official went on to note.</p> <p>Maybe not, but things are getting dicey again. <strong>Tsipras faced the largest public revolt he's seen since his re-election earlier this month</strong> when&nbsp;<a href="http://www.zerohedge.com/news/2016-02-04/meanwhile-greece-familiar-scenes-are-back-general-strike-molotov-cocktails-tear-gas">a massive general strike</a> that cancelled flights, ferries and public transport, shut down schools, courts and pharmacies, and left public hospitals with emergency staff. Even the undertakers were striking.</p> <p>Tens of thousands took to the streets to protest pension reforms and in relatively short order, it was 2015 all over again.&nbsp;</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2016/02/09/Greece.png" width="435" height="295" /></p> <p>And it didn't stop there. "<strong>Greek riot police fired tear gas at farmers protesting against pension reform plans on Friday who hurled stones at the agriculture ministry</strong> in central Athens ahead of a major demonstration outside parliament scheduled for later in the day," <a href="http://www.reuters.com/article/us-greece-farmers-protests-idUSKCN0VL0OX">Reuters reported</a> on Friday. "Under the planned reform of the pension system demanded by Greece's international lenders, farmers face a tripling of their social security contributions and higher income tax." Here are some images from the scene:&nbsp;</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2016/02/09/greece2.png" width="600" height="387" /></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2016/02/09/Greece3_0.png" /></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2016/02/09/Greece4_0.png" width="600" height="361" /></p> <p>So no, Greece is not "fixed." And even as the farmers swear "they won't make us bend," something will have to give because as&nbsp;Poul Thomsen, head of the International Monetary Fund’s European Department wrote in a blog post on Thursday, "Grexit fears to resurface once again [if all sides adopt] a&nbsp;plan built on over-optimistic&nbsp;assumptions."</p> <p>In other words: the reforms are a must if Greece wants to remain in the euro and those reforms entail tough times ahead for the farmers and for everyone else living in the socialist paradise.&nbsp;</p> <p>Throw in a couple of hundred thousand refugees that are lliterally arriving in boats and you've got a particularly precarious situation that will likely devolve into the type of chaos shown above on an increasingly frequent basis.</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="582" height="402" alt="" src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/Greece3.png?1455278752" /> </div> </div> </div> http://www.zerohedge.com/news/2016-02-12/greece-slides-back-recession-amid-riots-rewewed-grexit-calls#comments European Union fixed Greece Recession Reuters Fri, 12 Feb 2016 12:11:21 +0000 Tyler Durden 523519 at http://www.zerohedge.com Despite Crashing Japan, European, U.S. Markets Rebound On Firmer Oil http://www.zerohedge.com/news/2016-02-12/despite-crashing-japan-european-us-markets-rebound-firmer-oil <p>There was some hope in early Japanese trading that after a seemingly endless rout in the USDJPY, which has seen the Yen surge the most in the past two weeks since the 1998 Asian crisis, the BOJ would intervene, if not via policy where it has botched things up beyond repair then directly by selling Yen on the tape: the reason for this is not only yesterday's direct intervention that sent the USDJPY soaring by over 150 pips briefly, but also after a report that Finance Ministry’s FX chief Masatsugu Asakawa met deputy chief cabinet secretary to discuss market issues; this was followed by a meeting between Kuroda and Abe the news of which promptly allowed the USDJPY to rise to 113. </p> <p>However, it was not meant to be, and when there was no major intervention during the BOJ's preferred hours of 9-11, the USDJPY proceeded to tumble all the way down to 111.60, from where it has rebounded modestly and is now trading around 112.45.</p> <p>As a result, the Nikkei 225 plunged another 4.8%, and following prior day losses of 2.3% and 5.4%, Japan's stock market is now down a whopping 20% just this past week! Perhaps putting all those pensions in stocks was not such a great idea. </p> <p>Elsewhere, with China still closed, the Hang Seng Index fell 1.2% to 18,319.58, its lowest close since June 2012; it has fallen 5% this week. </p> <p>However, while Japan crashed and burned, the feeling of some fleeting optimism returned after oil halted its plunge after hitting a 13 year low yesterday following an out of context statement from the U.A.E. minister, who said that "everyone is ready to cooperate,” U.A.E. Oil Minister Suhail Al Mazrouei told Sky News Arabia in Arabic-language interview that was originally posted to website Feb. 10. He added that "Prices are not appropriate, I won’t say for the majority only, but for all producers" which is a far cry from the imminent OPEC supply cut he was spun as saying. Still, for now the algos are happy and his comment helped push oil about 5% higher. It won't last. </p> <p>Oil also helped Europe, where the Stoxx Europe 600 Index rallied from its lowest close since September 2013 following a Commerzbank AG (+17%) report that led financial institutions higher after saying it returned to profit, while miners and energy producers rose with commodities. </p> <p>Still, few are optimistic, especially after Marko Kolanovic latest note which sees not only near-term risks, but a potential recession that could be worse than the 2008-2009 crisis. </p> <p>Here is an example of the hyperbolic pessimism out there: "I’d be weary of calling anything a lasting rebound until I see it,” said Ben Kumar, an investment manager at Seven Investment Management told Bloomberg. "<strong>It’s crazy that the market is priced for recession and a complete failure of the financial system. But you wouldn’t want to call it the end of the rout quite yet. Nobody wants to be the first bull now.</strong>” Uhm, the S&amp;P is about 15% below its all time high: you will know when the market is priced for a "complete failure of the financial system" <strong>- this is not it</strong>.</p> <p>The yield on 10-year Treasuries rose after reaching the lowest since 2012 on Thursday. In Asian trading, Japanese stocks capped their worst week since 2008 and currencies from New Zealand to Thailand slumped.</p> <p>Industrial metals also advanced. Nickel climbed 1.1 percent to $7,675 a metric ton, rebounding from a 13-year low. Copper rose 1 percent and aluminum added 0.6 percent. </p> <p><strong>Gold was modestly down from its highest levels in over a year, trading at $1242, and is headed for its biggest weekly gain in four years as investors sought out havens. </strong>Silver dropped 0.7 percent.</p> <p><strong>Market Wrap</strong></p> <ul> <li>S&amp;P 500 futures up 1.2% to 1846</li> <li>Stoxx 600 up 1.8% to 309</li> <li>FTSE 100 up 1.5% to 5622</li> <li>DAX up 1.4% to 8872</li> <li>German 10Yr yield up 3bps to 0.21%</li> <li>Italian 10Yr yield down 2bps to 1.69%</li> <li>Spanish 10Yr yieldunchanged at 1.78%</li> <li>MSCI Asia Pacific down 2.9% to 113</li> <li>Nikkei 225 down 4.8% to 14953</li> <li>Hang Seng down 1.2% to 18320</li> <li>Shanghai Composite closed</li> <li>S&amp;P/ASX 200 down 1.2% to 4765</li> <li>US 10-yr yield up 2bps to 1.68%</li> <li>Dollar Index up 0.17% to 95.72</li> <li>WTI Crude futures up 4.5% to $27.40</li> <li>Brent Futures up 4.9% to $31.53</li> <li>Gold spot unch at $1,242</li> <li>Silver spot down 0.7% to $15.65</li> </ul> <p><strong>Global Top News</strong></p> <ul> <li>Syria Truce Set for Next Week as U.S., Russia Back Peace Bid: Munich summit of 17 nations produces accord on cease- fire</li> <li>Cameron and Merkel Head to Hamburg as EU Deal Nears Completion: PM in final push for new U.K. membership terms</li> <li>Euro Area Stalls Deal to Shield London Banks From EU Rules: Diplomats only make progress on technical and legal points</li> <li>Commerzbank Said to Have Shortlist for Successor to CEO Blessing: cites note to staff obtained by Bloomberg</li> <li>DBS, OCBC Said to Submit Bids for Barclays’s Asia Wealth Unit: The two Singapore-based cos submitted non-binding bids for the business, according to people familiar</li> <li>Deutsche Bank Ranks Last on Capital Gauge Where Citigroup Excels: U.S. banks outrank Europe’s as regulators demand more capital</li> <li>Templeton’s $5.9b Bet on Brazil Bonds Paying Off in 2016: Fund &gt;doubled holdings of Brazil debt last quarter, while country’s local-currency bonds have returned 4.7% this year</li> <li>Pandora Said to Explore Sale of Company as Losses Mount: Online radio provider’s talks are said to be preliminary</li> <li>Goldman Sachs Bankers Said to Depart on Guidelines Breach: Two bankers in Dubai, one in London said to leave in December</li> </ul> <p>Going quickly through regional markets, we start in Asia where the equity market rout continued with fuel was added to the fire with concerns rising over the health of the financial sector following yesterday's poor earnings from SocGen. Subsequently, Nikkei 225 (-4.8%) yet again experienced another bout of heavy selling pressure amid the rampant JPY, as such, <strong>the index has now fallen over 20% YTD</strong>. ASX 200 (-0.8%) and the Hang Seng (-0.9%) were dragged lower with losses in financial names, however the latter pulled off worst levels with energy names providing some leeway following the uptick in crude prices. JGB's fell following spill-over selling in USTs while notable underperformance had been observed in the belly of the curve.</p> <p><em>Top Asian News</em></p> <ul> <li>BOJ Seen as Toothless for Yen Bulls Boosting Currency Forecasts: Barclays sees yen climbing to 95/USD by yr end</li> <li>Cash Crunch in India Flips Company Bond Curve as Debt Costs Rise: India’s cash squeeze flipped corporate bond yield curve, making borrowers pay more for s-t debt than they have for almost a yr</li> <li>Asia’s Rich Urged to Buy Yen as BOJ Negative Rates Backfire: CS is advising private-banking clients to buy yen vs euro or S. Korean won</li> <li>China Turns a Glut of Oil Into a Flood of Diesel Swamping Asia: China’s total net exports of oil products will rise 31% this yr to 25m metric tons</li> <li>Rio Tinto Sees Mining Distress Spreading to Majors: Rio has M&amp;A target list for mines not yet for sale, CEO says</li> </ul> <p>European equities take a breather following a hectic week of huge intraday day moves as the banking sector once again comes into focus. One bank under the spotlight is Commerzbank (+16.7%), recover their intraweek losses in today's trade, following a positively received earnings report. In turn financials outperform in Europe, improving the risk sentiment, with equities higher across the board. Energy is also among the best performing sectors with WTI Mar'16 futures up around a dollar in the session, holding onto the USD 27.00 handle.<br />In line with the long awaited return of risk on sentiment, fixed income products take a hit, with Bunds trading lower by some 50 ticks but still retaining the 165.0 level. Elsewhere peripheral spreads widen, with PE/GE spread wider by 0.8bps, amid concerns over the country's budget plans</p> <p><em>Top European News</em></p> <ul> <li>PAI Partners Said to Weigh Bid for Dental Clinic Chain Vitaldent: Co. could be valued at about EU500m</li> <li>Commerzbank Jumps After Fourth-Quarter Profit Beats Estimates: Bank expects ‘slight’ increase in profit this year from 2015</li> <li>Whisky Makers Want a Single Market for Single Malt, Not ‘Brexit’: Diageo, Pernod Ricard among cos supporting free market</li> <li>SocGen CIB Earnings Constrained, Cut to Neutral at Mediobanca: SocGen delivering on capital, missing on earnings, Mediobanca says</li> <li>Thyssenkrupp Posts Net Loss on Record Chinese Steel Imports: Co. says it needs materials recovery to meet profit target</li> </ul> <p>In FX, the euro declined the most in a week against the dollar, falling 0.3 percent to $1.1287. Europe’s currency slid for a third day against the yen, dropping 0.1 percent to 127.12. The yen was little changed at 112.45, set for its biggest two-week gain versus the dollar since 1998, sparking speculation that authorities will intervene to weaken it. New Zealand’s dollar lost 0.7 percent. The Thai baht slid 0.9 percent, the most since October and the South Korean won fell 0.7 percent. An index of 20 developing-nation currencies declined less than 0.1 percent Friday, taking its drop this week to 0.6 percent, the most since Jan. 15. The gauge is down 1.4 percent this year and reached a record low in January.</p> <p>In commodities, Brent and WTI have managed to hold on to their modest recovery after major declines this week, following comments from the UAE oil minister saying 'everyone is ready to cooperate' yesterdays, and analysts pondering the thought of producers dropping production rates to bolster markets. Gold is still holding up well on the risk on sentiment we have seen in recent days which saw its largest one day rise in seven years, with the next support coming in at 1232.59/oz. Industrials are mostly trading higher with the emptions of tin that has seen a fall of 0.90%. In the European session there has been a lack of fundamental news for commodities.</p> <p>Looking at the day ahead, there’s a busier calendar for data for us to<br /> sift through today. The key release of note in Europe will be the Q4 GDP<br /> report for the Euro area where the print came in at 0.3%, just as expected. In the US the main focus will be on the<br /> January retail sales report. Current market expectations are for a +0.1%<br /> mom headline and +0.3% ex auto and gas print. Remember to keep an eye<br /> on the retail control component given it’s a direct input into GDP. Away<br /> from this in the US we’ll also see the January import price index<br /> reading, December business inventories and the first estimate of the<br /> University of Michigan consumer sentiment survey for February. In terms<br /> of Central Bank speakers the Fed’s Dudley is due to speak at 10:00am GMT.</p> <p><strong>Bulletin Headline Summary from RanSquawk and Bloomberg<br /></strong></p> <ul> <li>Equities are taking a breather today after a tough week with Commerzbank leading the way higher 15%</li> <li>GBP steaming ahead, with Cable looking to trade above the weekly highs with the next resistance around 1.4665-70</li> <li>Looking ahead, US Import Prices and Retail Sales and comments from Fed's Dudley </li> <li>Long-end Treasuries underperform overnight as European equities and bank stocks rally; retail sales and U. of Mich. sentiment today. </li> <li>Deutsche Bank’s riskiest debt was downgraded by Standard &amp; Poor’s due to concerns that potential losses at Germany’s biggest lender could restrict its ability to pay on the obligations</li> <li>Deutsche Bank’s co-CEO John Cryan called the company’s balance sheet “rock solid” this week after the firm’s shares and bonds tumbled but its leverage ratio still lags behind every one of its main competitors</li> <li>Commerzbank jumped the most in more than two years after fourth-quarter profit beat analyst estimates, as the lender said it plans to wind down its unit for soured loans at a faster pace than forecast</li> <li>Commerzbank CEO said “no specific problem” with balance sheet, in Bloomberg TV interview</li> <li>Jamie Dimon, JPMorgan chairman and CEO, spent $26.6 million to buy shares of his bank Thursday after they tumbled to the lowest price in more than two years, bringing his total holdings to 6.75 million shares, according to a regulatory filing</li> <li>U.K. investors are harking back to 2013 and increasing bets the Bank of England will need to do more to stimulate the economy. The last time traders were this certain the central bank would cut its benchmark rate was almost three years ago</li> <li>Fresh doubts over the strength of the British economy emerged Friday as the building industry shrank more than previously estimated in the fourth quarter. Construction output fell 0.4% instead of the 0.1% decline estimated in GDP data last month</li> <li>Italy’s GDP rose 0.1% in the 4Q, its slowest pace in a year, prompting concerns that the recovery from the country’s longest recession since World War II might falter in coming months</li> <li>Germany’s GDP rose a seasonally-adjusted 0.3% in 4Q, matching the rate of the previous quarter, showing resilience amid an emerging-market slowdown that’s heightened concerns about global growth and sent equities plunging this year</li> <li>Greece entered a recession in the fourth quarter, ending a turbulent year with its economy back in the doldrums. GDP contracted 0.6% in 4Q after shrinking a revised 1.4% in the 3Q</li> <li>A top U.S. lawmaker questioned the Federal Reserve’s authority to cut interest rates below zero after Janet Yellen disclosed that the central bank was re-examining the tool as a policy option if the economy faltered</li> <li>Sovereign 10Y bond yields mixed; European stocks rise, Asian markets drop; U.S. equity-index futures rise. Crude oil and copper rally, gold falls</li> </ul> <p><strong>Key US Events</strong></p> <ul> <li>8:30am: Import Price Index m/m, Jan., est. -1.5% (prior -1.2%); Import Price Index y/y, Jan., est. -6.8% (prior -8.2%)</li> <li>8:30am: Retail Sales Advance, Jan., est. 0.1% (prior -0.1%) <ul> <li>Retail Sales Ex Auto, Jan., est. 0.0% (prior -0.1%)</li> <li>Retail Sales Ex Auto and Gas, Jan., est. 0.3% (prior 0.0%)</li> <li>Retail Sales Control Group, Jan., est. 0.3% (prior -0.3%)</li> </ul> </li> <li>10:00am: Business Inventories, Dec., est. 0.1% (prior -0.2%)</li> <li>10:00am: U. of Mich. Sentiment, Feb. P, est. 92.3 (prior 92) <ul> <li>Current Conditions, Feb. P (prior 106.4)</li> <li>Expectations, Feb. P (prior 82.7)</li> <li>1 Yr Inflation, Feb. P (prior 2.5%)</li> <li>5-10 Yr Inflation, Feb P (prior 2.70%)</li> </ul> </li> <li>10:00am: Fed’s Dudley at press briefing in New York</li> </ul> <p><strong>DB's Jim Reid completes the overnight wrap</strong></p> <p>It’s hard to know where to start with yesterday’s price action with markets gapping and buckling everywhere following the latest bout of huge risk aversion. The Asia session had thrown open a few warning signs as safe haven flows rolled in for Gold and the Yen. Once the European session kicked into gear however it was all about moves in Banks once again after two days of relative calm. The iTraxx Senior and Sub financials indices closed 12bps and 31bps wider at 140bps and 333bps respectively. The move for the latter in particular meaning it’s now at the widest level since October 2012. That helped Main and Xover widen 9bps and 29bps on the day. European equity markets were heavily hit too with the Stoxx 600 collapsing -3.68%, the 8th time it has closed lower in the last 9 sessions with yesterday’s move the worst single day loss since August. The banking sector fell 6% - not helped by some much weaker than expected results from Societe Generale. Peripheral bourses were again the underperformers with the IBEX and FTSE MIB -4.88% and -5.63% respectively.</p> <p>Sentiment wasn’t much better in the first half of the US session with the S&amp;P 500 falling as low as -2.30% and testing the January 20th intraday lows of 1810. Focus was also on the tumbling Oil price which was helping to exacerbate the selloff as WTI at one stage traded as low as $26.05/bbl (down over 5% on the day) and the lowest since May 2003. That said, energy prices then turned on a dime which helped the S&amp;P 500 retrace slightly into the close, finishing the day at -1.23%. WTI is actually up nearly 6% this morning with the rebound being attributed to a headline out of the WSJ quoting the UAE energy minister as saying that OPEC stands ready to co-operate on production cuts. This isn’t the first time we’ve seen such a headline in recent weeks so it remains to be seen how credible this really is.</p> <p>It was the move in Gold which was perhaps the most eye catching of all yesterday. Gold closed up a massive +4.14% yesterday (although had been up as much as 5%), smashing through the $1,200 mark to eventually close at $1,247. That move was in fact the largest single daily gain since January 2009 with the metal now up close to 17% YTD already. Given the magnitude of the risk off moves yesterday, all things considered the closing moves for Treasuries were a little more muted with the 10y yield eventually finishing 1bp lower at 1.659% (although in fairness it did trade as low as 1.529%) and 2y yields nearly 4bps lower at 0.650%. Moves in European rates were a bit more aggressive however with 10y Bunds down over 5bps to 0.185% and slowly but surely creeping in on those astonishing lows made last April.</p> <p>There’s been little relief for risk assets in Asia this morning. Once again the focus has been on the sizeable declines for Japanese bourses after yesterday's holiday with the Nikkei and Topix currently down over 4.5%. The Nikkei has in fact plummeted over 10% this week. This morning’s move comes despite the Yen being a touch weaker. In Australia the ASX is -1.2% while elsewhere the Hang Seng (-0.8%) and Kospi (-1.4%) are also lower. The South Korean small cap index was however temporarily halted after tumbling 8%. Credit markets are faring little better with iTraxx Aus and Asia indices 3bps and 2bps wider respectively. US equity market futures are however pointing towards a positive start, most probably reflecting a better morning for Oil.</p> <p>NIRP is a big talking point currently and yesterday we got another flavor of how far central banks are prepared to push the boundaries after the Riksbank cut its benchmark repo rate by more than expected (15bps vs. 10bps expected) to -0.50%. It was telling also that the Bank acknowledged that policy could be made ‘even more expansionary if this is needed to safeguard the inflation target’.</p> <p>Fed Chair Yellen also made an interesting acknowledgment of the potential for similar policy in her comments yesterday in the Q&amp;A following her remarks to the Senate. While Yellen stuck to her guns in saying that she doesn’t expect the Fed to be in a position anytime soon where it is necessary to cut, she did highlight that ‘we had previously considered them and decided that they would not work well to foster accommodation back in 2010’ but that ‘in light of the experience of European countries and others that have gone to negative rates, we’re taking a look at them again because we would want to be prepared in the event that we needed to add accommodation’.</p> <p>Wrapping up yesterday, the only data of note out was the latest weekly initial jobless claims print in the US which declined 16k last week to 269k (vs. 280k expected). That was in fact a low for the year and helped to nudge down the four-week average to 281k from 285k.</p> <p>Looking at the day ahead, there’s a busier calendar for data for us to sift through today. The key release of note in Europe will be the Q4 GDP report for the Euro area where current market expectations are running for a +0.3% qoq print. We’ll also see Q4 GDP reports for Germany and Italy while in France we’ll see the latest quarterly employment indicators. Euro area industrial production for December is also expected. Over in the US this afternoon the main focus will be on the January retail sales report. Current market expectations are for a +0.1% mom headline and +0.3% ex auto and gas print. Remember to keep an eye on the retail control component given it’s a direct input into GDP. Away from this in the US we’ll also see the January import price index reading, December business inventories and the first estimate of the University of Michigan consumer sentiment survey for February. In terms of Central Bank speakers the Fed’s Dudley is due to speak at 3pm GMT.</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="660" height="371" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/happy%20trader%202_1.jpg?1455278340" /> </div> </div> </div> http://www.zerohedge.com/news/2016-02-12/despite-crashing-japan-european-us-markets-rebound-firmer-oil#comments Australia Bank of England Barclays Bond Brazil Central Banks China Citigroup Consumer Sentiment Copper Crude Crude Oil Dubai Equity Markets fixed France Germany India Initial Jobless Claims Italy Janet Yellen Japan Jim Reid Michigan New Zealand Nikkei OPEC Price Action RANSquawk Recession recovery SocGen Steel Imports University Of Michigan Yen Yield Curve Fri, 12 Feb 2016 11:59:14 +0000 Tyler Durden 523517 at http://www.zerohedge.com JPM's Kolanovic Warns Upcoming Recession Could Be Comparable To 2008 Crisis; Says "Buy Gold, Cash And VIX" http://www.zerohedge.com/news/2016-02-11/jpms-kolanovic-warns-upcoming-recession-could-be-comparable-2008-crisis-says-buy-gol <p>By now all of our readers should be familiar with <a href="http://www.zerohedge.com/news/2016-02-08/jpms-quant-guru-kolanovic-confirms-tech-bubble-has-burst-again">JPM's head quant Marko Kolanovic </a>whose unblemished track record of accurate market calls is not only second to none, but is the equivalent <em>in absolute value terms </em>of Dennis Gartman's consistently wrong calls, which is why we won't spend time introducing him. </p> <p>Instead we cut right to the chase with the highlights of his latest note released moments before the market close today, in which he lays out the biggest risks to the market, which are as follows:</p> <ul> <li>deterioration of sentiment and fundamental selling (hedge funds, pensions, wealth funds, retail, etc.). </li> <li>deleveraging of Equity Long-Short hedge funds is an overhang </li> <li>quant funds may pare gross leverage. </li> <li>increased volatility, deleveraging, rotation out of momentum, and weak sentiment will continue to be a headwind </li> </ul> <p>Kolanovic then explains how to hedge against this ongoing storm ("increased allocation to gold, cash and VIX"), with the section on gold particularly delightful for his crucifixion of the strawman created by the most famous Obama tax advisor and crony capitalist from Omaha:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The arguments against gold that we have heard were along two lines: The first is what can be loosely called “Warren Buffet’s” argument: “Gold is a relic of past; aliens visiting earth would be puzzled why people hold it at all.” As the argument is non-quantitative in nature, one can only address it as such. <strong>If indeed aliens could overcome space-time barriers, they would also know that the metal was used as a store of value longer than any other real asset. Since the beginning of written history, countless currencies and governments emerged and failed while gold kept approximately the same purchasing power (albeit with some volatility, and positive correlation to levels of risk). </strong></p> </blockquote> <p>All we can say here is that when JPM employees viciously attack Buffett for his position on gold, hold on tight. </p> <p>Kolanovic also crushes Wall Street's penguin momentum train:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The second argument was that of Momentum: “if an asset was going down, it will keep on going down,” <strong>We have concluded that many of our competitors rely on momentum in their commodity forecasts </strong>(e.g., when oil is $150, they forecast $200; when it is $30, they forecast teens). This type of trend following can always be rationalized (e.g., oil will go down because it is very difficult to store it – so it has to be sold; and Metals will go down because it is very easy to store them – so production will not slow down). While a simple momentum prescription does work most of the time, the <strong>key is to assess the likelihood of market turning points during which one can lose years of profits in a matter of days </strong>(less painful for a sell-side analyst and more for an investor). </p> </blockquote> <p>More apropos to the current global bear market and economic slowdown, is Kolanovic' warning that a recession as a result of the market's loss of trillions in market cap now seems inevitable:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Global markets are now facing a significant ‘negative wealth effect’ that has a potential to result in a recession</strong>. This negative wealth effect of low commodity prices and a strong <strong>USD combined with the slowdown in China could be comparable to that of the 2008/2009 crisis </strong>(it involves diverse effects ranging from layoffs in the Global Energy sector to a lack of EM Sovereign wealth flowing into developed market equity hedge funds). While the economists were debating if the low-priced oil is good or bad for the economy, the equity markets never had any doubts – Oil and Equities were moving down together.</p> </blockquote> <p>Finally, to our applause, Kolanovic concludes by slamming ole' crony uncle Warren one final time (no point in wasting too much time on the senile billionaire).</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Finally, we think the aliens from the previous section would likely be surprised: not with the gold price, <strong>but with markets and an economy that are driven by a handful of central bankers taking active market views.</strong></p> </blockquote> <p>The aliens would quickly understand, however, when they realize they are dealing with a <em>banana planet </em>in which the central bankers only serve a handful of billionaire oligarchs, while leaving billions of people to fend for themselves. </p> <p>* * * </p> <p><em>Kolanovic's full note:</em></p> <p><strong>EQUITIES</strong>: Exposure of systematic strategies (CTA, Risk Parity, Vol Targeting) to equities is relative low, which reduces some downside tail risk for the S&amp;P 500. <strong>Currently, the main risk comes from deterioration of sentiment and fundamental selling </strong>(hedge funds, pensions, wealth funds, retail, etc.). <strong>Deleveraging of Equity Long-Short hedge funds is an overhang as well, given the poor performance YTD </strong>(see, for example, HFRXEH index). <strong>Quant funds took a significant hit with the momentum sell-off during the first week of February </strong>(see HFRXEMN index) and may pare gross leverage. <strong>A market-neutral portfolio of Momentum stocks declined ~6% in the first week of February </strong>and has been recovering slightly over the last two days. <strong>Increased volatility, deleveraging, rotation out of momentum, and weak sentiment will continue to be a headwind for the S&amp;P 500 in coming days. </strong><br />&nbsp;<br /><strong>GOLD</strong>: Since the end of last year, <strong>we have been advocating increased allocation to gold, cash and VIX</strong>. Specifically on gold, we have argued that it would benefit from the main market concern, which is the rising risk of a global recession, as well as potential mitigation of these risks: the Fed turning more dovish and a weaker dollar removing pressure from emerging markets and the commodities sector. <strong>In an unlikely tail scenario that we see as a temporary loss of confidence in central banks, gold would likely benefit as well</strong>. The arguments against gold that we have heard were along two lines: <strong>The first is what can be loosely called “Warren Buffet’s” argument: “Gold is a relic of past; aliens visiting earth would be puzzled why people hold it at all.” As the argument is non-quantitative in nature, one can only address it as such</strong>. If indeed aliens could overcome space-time barriers, <strong>they would also know that the metal was used as a store of value longer than any other real asset. Since the beginning of written history, countless currencies and governments emerged and failed while gold kept approximately the same purchasing power (albeit with some volatility, and positive correlation to levels of risk)</strong>. </p> <p>The second argument was that of Momentum: “if an asset was going down, it will keep on going down,” <strong>We have concluded that many of our competitors rely on momentum in their commodity forecasts </strong>(e.g., when oil is $150, they forecast $200; when it is $30, they forecast teens). This type of trend following can always be rationalized (e.g., oil will go down because it is very difficult to store it – so it has to be sold; and Metals will go down because it is very easy to store them – so production will not slow down). While a simple momentum prescription does work most of the time, the key is to assess the likelihood of market turning points during which one can lose years of profits in a matter of days (less painful for a sell-side analyst and more for an investor). We have written on market turning points from a theoretical perspective, as well as in the context of recent market moves, specifically in terms of positioning, gold CTA signal turning positive, etc. For a further rationale behind the gold thesis, see notes from our Metals strategist (here and here).&emsp;<br />&nbsp;<br /><strong>CENTRAL BANKS AND OIL:</strong> Central banks outside of the US have been trying to push on a string recently with negative rates. It has not produced desired results (e.g., a sell-off in the banking sector). Our view is that over the past 18 months, the Fed has been too concerned with the risk of inflation, and perhaps too little with global deflationary pressures and a crisis outside of the US. This has contributed to a rapid strengthening of the USD and put additional pressure on Emerging Markets and certain segments of the US economy. <strong>As a result global markets are now facing a significant ‘negative wealth effect’ that has a potential to result in a recession</strong>. <strong>This negative wealth effect of low commodity prices and a strong USD combined with the slowdown in China could be comparable to that of the 2008/2009 crisis </strong>(it involves diverse effects ranging from layoffs in the Global Energy sector to a lack of EM Sovereign wealth flowing into developed market equity hedge funds). <strong>While the economists were debating if the low-priced oil is good or bad for the economy, the equity markets never had any doubts – Oil and Equities were moving down together. </strong><br />&nbsp;<br />So, if the negative rates and more bond purchases are losing effectiveness, what else could central banks do at this point? <strong>Could they buy commodities </strong>(<span style="text-decoration: underline;"><em><strong>other than gold</strong></em></span>)? Should they urge for a fiscal stimulus (they are governments’ biggest bondholders)? Perhaps as a start, a hold could be placed on all planned rate hikes. Finally, <strong>we think the aliens from the previous section would likely be surprised: not with the gold price, but with markets and an economy that are driven by a handful of central bankers taking active market views </strong>(on inflation, oil, etc.). Last but not least, they may wonder how the current levels of oil production outside of the US make any economic sense.<br />&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="900" height="596" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/eye%20hurriance.jpg?1455244365" /> </div> </div> </div> http://www.zerohedge.com/news/2016-02-11/jpms-kolanovic-warns-upcoming-recession-could-be-comparable-2008-crisis-says-buy-gol#comments Bear Market Bond Central Banks China Equity Markets ETC None Purchasing Power Recession Volatility Fri, 12 Feb 2016 04:33:58 +0000 Tyler Durden 523485 at http://www.zerohedge.com Canada Sells Nearly Half Of All Its Gold Reserves http://www.zerohedge.com/news/2016-02-11/canada-sells-nearly-half-all-its-gold-reserves <p><em>By Monique Muise, as published on <a href="http://globalnews.ca/news/2508940/canada-sells-nearly-half-of-all-its-gold-reserves/">Global News</a></em></p> <p><strong>Canada sells nearly half of all its gold reserves</strong></p> <p>The government of Canada sold off nearly half its gold reserves in recent weeks, continuing a pattern of moving away from the precious metal as a government asset.</p> <p>According to the International Monetary Fund’s International Financial Statistics, Canada held three tonnes of gold reserves as of late 2015.</p> <p><iframe src="http://globalnews.ca/video/embed/2511836/" width="600" height="391" frameborder="0"></iframe></p> <p>&nbsp;</p> <p>The latest data, published last week, show the total Canadian gold reserves&nbsp;<a href="http://www.gold.org/research/latest-world-official-gold-reserves">now stand at 1.7 tonnes</a>. That’s just 0.1 per cent of the country’s total reserves, which also include foreign&nbsp;currency deposits and bonds.&nbsp;In comparison, the U.S. holds 8,133 tonnes of gold, while the United Kingdom weighs in at&nbsp;310 tonnes.</p> <p>The decision to sell came from Finance Minister Bill Morneau’s office.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“Canada’s gold reserves belong to the Government of Canada, and are held under the name of the Minister of Finance,” explained a spokesperson for the&nbsp;Bank of Canada on Wednesday. “Decisions relative to gold holdings are taken by the Minister of Finance.”</p> </blockquote> <p>Reached by Global News on Wednesday evening, a spokesperson for the&nbsp;finance department said the sale&nbsp;“was done in the normal course of business for the government. The decision to sell the gold was not tied to a specific gold price, and sales are being conducted over a long period and in a controlled manner.”</p> <p>This latest sell-off is indeed part of a much longer-term pattern of moving away from gold as a government-held asset. According to economist Ian Lee of the Sprott School of Business at Carleton University, Ottawa has no real reason to keep its gold reserves&nbsp;other than adhering to tradition.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“Under the old system, (gold)&nbsp;backed up currencies,” Lee explained. “The U.S. dollar was tied to gold. One ounce was worth US$35. Then in 1971, for lots of reasons I won’t get into, Richard Nixon took the United States off the gold standard.”</p> </blockquote> <p>Gold and dollars were interchangeable until that point, he said, <strong>but in the modern financial world,&nbsp;the metal&nbsp;is no longer considered a form of currency.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“It is a precious metal, like silver … they can be sold like any asset.”</p> </blockquote> <p>The amount of gold the Canadian government holds&nbsp;has therefore&nbsp;been falling steadily&nbsp;since the mid-1960s, when over 1,000 tonnes were kept tucked away. Half of those reserves&nbsp;were sold by 1985, and then almost all the rest were sold through the 1990s up to 2002.</p> <p>By last year, Canada’s&nbsp;reserves&nbsp;were down to just three tonnes, and the latest sales have now halved that.&nbsp;<strong>At the current market rate, the value of 1.7 tonnes of gold comes in at just under CAD$100 million, barely a drop in the bucket when you consider the broader scope of federal finances.</strong></p> <p>According to Lee, there may soon come a time when Canada’s gold reserves are entirely a&nbsp;thing of the past. There are better assets to focus on, he argued, calling the government’s&nbsp;decision to dump gold “wise and astute.”</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“It gives them more strategic flexibility to sell the gold, take the money and invest in U.S. government bonds, or United Kingdom bonds or French bonds or German bonds,” Lee said.</p> </blockquote> <p>“Central banks can hold the government bonds of other countries, and they also hold actual dollars. The Chinese Central Bank actually holds hundreds of billions of U.S. dollars. Dollars are very liquid, so are government bonds, especially of a Western country.”</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/02/09/canada-gold.png"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/02/09/canada-gold_0.png" width="597" height="417" /></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="900" height="900" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/canada%20gold.jpg?1455245220" /> </div> </div> </div> http://www.zerohedge.com/news/2016-02-11/canada-sells-nearly-half-all-its-gold-reserves#comments United Kingdom Fri, 12 Feb 2016 04:12:23 +0000 Tyler Durden 523487 at http://www.zerohedge.com If Credit Is Right, The S&P Is Facing A 40% Crash http://www.zerohedge.com/news/2016-02-11/if-credit-right-sp-facing-40-crash <p>...and credit is always right in the end!</p> <p><strong>1,100 is the target...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/02/11/20160211_EOD20_1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/02/11/20160211_EOD20_1_0.jpg" width="600" height="331" /></a></p> <p>&nbsp;</p> <p>High Yield bond yields and Leveraged Loan prices are at their worst since 2009 as it seems the hosepipe of QE3 liquidity (its the flow not the stock, stupid) is slowly unwound from a buybacks-are-over equity market.</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="1493" height="824" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160211_EOD20.jpg?1455227866" /> </div> </div> </div> http://www.zerohedge.com/news/2016-02-11/if-credit-right-sp-facing-40-crash#comments Bond High Yield Fri, 12 Feb 2016 03:50:00 +0000 Tyler Durden 523464 at http://www.zerohedge.com Is This The Biggest Crisis In History? http://www.zerohedge.com/news/2016-02-11/biggest-crisis-history <p>Talking of Oil and Gold, last week Deutsche Bank showed a long-term graph of Oil in real adjusted terms, showing that the average real price since 1861 was $47. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/02/11/20150128_DB2.png"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/02/11/20150128_DB2_0.png" width="600" height="348" /></a></p> <p>Following on from that, Deutsche notes one ratio they occasionally look at is the ratio of various assets to the price of Gold...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p> Today we update the <strong>Oil/Gold ratio back to 1865 and find that the Gold price has just hit an all time high at around 44 times the price of Oil. </strong></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/02/11/20160211_goldoil.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/02/11/20160211_goldoil_0.jpg" width="600" height="322" /></a></p> <p>&nbsp;</p> <p><strong>The previous high of 41 in 1892 has just been exceeded.</strong> </p> <p>&nbsp;</p> <p>For perspective, the ratio was at 6.6 in June 2008 and only 12 in May 2014. <strong>The long-term average is 15.5.</strong> While this says nothing about where the ratio is going in the short-term surely this looks a good trade to exploit over the longer-term for those who care about such things.&nbsp;&nbsp; </p> </blockquote> <p>However, as <a href="http://www.zerohedge.com/news/2016-01-17/what-crisis-goldoil-ratio-predicting-time">we noted recently</a>, it merely predicts a crisis and according to the chart above it is the biggest crisis in history...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/01-overflow/20160117_oilgold.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/01-overflow/20160117_oilgold_0.jpg" width="600" height="308" /></a></p> <p>&nbsp;</p> <p>The previous "biggest crisis in history" was in<a href="https://en.wikipedia.org/wiki/Panic_of_1893"> 1893 when a serious economic depresion hit America. W</a>e just topped that in terms of the gold/oil "crisis" ratio, making us wonder: what crisis is just around the corner, and just how big will it be?</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="942" height="505" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160211_goldoil.jpg?1455204247" /> </div> </div> </div> http://www.zerohedge.com/news/2016-02-11/biggest-crisis-history#comments Deutsche Bank Fri, 12 Feb 2016 03:40:00 +0000 Tyler Durden 523430 at http://www.zerohedge.com Liberty Activists And ISIS Will Soon Be Treated As Identical Threats http://www.zerohedge.com/news/2016-02-11/liberty-activists-and-isis-will-soon-be-treated-identical-threats <p><a href="http://www.alt-market.com/articles/2802-liberty-activists-and-isis-will-soon-be-treated-as-identical-threats"><em>Submitted by Brandon Smith via Alt-Market.com,</em></a></p> <p>Many of us saw it coming a long time ago &mdash; <strong><em>increasing confrontation between liberty proponents and the corrupt federal establishment leading to increasing calls by political elites and bureaucrats to apply to American citizens the terrorism countermeasures designed for foreign combatants.</em></strong> It was only a matter of time and timing.</p> <p>My stance has always been that the elites would wait until there was ample social and political distraction; a fog of fear allowing them to move more aggressively against anti-globalists. <strong>We are not quite there yet, but the ground is clearly being prepared.</strong></p> <p><strong>Economic uncertainty looms large over our fiscal structure today, more so even than in 2008. </strong>Global instability is rampant, with Europe at the forefront as mass migrations of &ldquo;refugees&rdquo; invade wholesale. At best, most of them intend to leach off of the EU&rsquo;s already failing socialist welfare structure while refusing to integrate or respect western social principles. At worst, a percentage of these migrants are <a href="http://www.washingtontimes.com/news/2016/feb/5/german-spy-agency-received-100-tip-offs-isis-fight/?utm_source=RSS_Feedutm_medium=RSS" target="_blank">members of ISIS</a> with the goals of infiltration, disruption and coordinated destruction.</p> <p>With similar immigration and transplantation measures being applied to the U.S. on a smaller scale (for now) the ISIS plague will inevitably hit our shores in a manner that will undoubtedly strike panic in the masses. I believe 2016 will be dubbed the &ldquo;year of the terrorist,&rdquo; and ISIS will not be the only &ldquo;terrorists&rdquo; in the spotlight.</p> <p>While scanning the pages of mainstream propaganda machines like Reuters, I came across this little <a href="http://www.reuters.com/article/us-usa-militants-domestic-insight-idUSKCN0VD0FG" target="_blank">gem of an article</a>, which outlines plans by the U.S. Justice Department to apply existing enemy combatant laws used against ISIS terrorists and their supporters to &ldquo;domestic extremists,&rdquo; specifically mentioning the Bundy takeover of the federal refuge in Burns, Oregon as an example.</p> <p><span style="text-decoration: underline;"><em><strong>&ldquo;Extremist groups motivated by a range of U.S.-born philosophies present a &ldquo;clear and present danger,&rdquo; John Carlin, the Justice Department&rsquo;s chief of national security, told Reuters in an interview. &ldquo;Based on recent reports and the cases we are seeing, it seems like we&rsquo;re in a heightened environment.&rdquo;</strong></em></span></p> <p>&ldquo;Clear and present danger&rdquo; is a vital phrase implemented in this statement from Carlin and he used it quite deliberately. It refers to something called the &ldquo;clear and present danger doctrine or test,&rdquo; a doctrine rarely used except during times of mass panic, such as during WWI and WWII. The doctrine applies specifically to the removal of 1st Amendment rights of free speech during moments of &ldquo;distress.&rdquo;</p> <p>What does this mean, exactly? &ldquo;Clear and present danger&rdquo; is a legal mechanism by which the government claims the right not only to prosecute or destroy enemies of the state, but also anyone who publicly supports those same enemies through speech or writing.</p> <p>Recently, the prospect of allowing the Federal Communications Commission to target and shut down websites related to ISIS has been fielded by congressional representatives. Many people have warned against this as setting a dangerous precedent by which the government could be given free license to censor and silence ANY websites they deem &ldquo;harmful&rdquo; to the public good, even those not tied to ISIS in any way.</p> <p>Of course, overt hatred of Islamic extremism amongst conservatives is at Defcon 1 right now, and with good reason. Unfortunately, this may lead constitutional conservatives, the most stalwart proponents of free speech, to mistakenly set the stage for the erasure of free speech rights all in the name of stopping ISIS activity. The greatest proponents of constitutional liberties could very well become the greatest enemies of constitutional liberties if they fall for the ploy set up by the establishment.</p> <p>The Reuters article outlines the future implications quite plainly:</p> <p><strong>The U.S. State Department designates international terrorist organizations to which it is illegal to provide &ldquo;material support.&rdquo; No domestic groups have that designation, helping to create a disparity in charges faced by international extremist suspects compared to domestic ones.</strong></p> <p><strong>It has been applied in 58 of the government&rsquo;s 79 Islamic State cases since 2014 against defendants who engaged in a wide range of activity, from traveling to Syria to fight alongside Islamic State to raising money for a friend who wished to do so.</strong></p> <p><strong>Prosecutors can bring &ldquo;material support&rdquo; terrorism charges against defendants who aren&rsquo;t linked to groups on the State Department&rsquo;s list, but they have only done so twice against non-jihadist suspects since the law was enacted in 1994. The law, which prohibits supporting people who have been deemed to be terrorists by their actions, carries a maximum sentence of 15 years in prison.&rdquo;</strong></p> <p>The Justice Department goes on to explain that they are &ldquo;exploring&rdquo; options to make &ldquo;material support&rdquo; charges more applicable to &ldquo;domestic extremists.&rdquo;</p> <p><strong>So what constitutes &ldquo;material support?&rdquo; </strong>Well, as mentioned earlier, John Carlin just told us. His use of the phrase &ldquo;clear and present danger&rdquo; denotes that 1<sup>st</sup> Amendment speech will be restricted, ostensibly because some speech will be labeled &ldquo;material support&rdquo; of terrorist organizations. The liberty movement, likely in the near future, is about to be outwardly defined by the establishment as a terrorist movement, and those who support it through speech will be designated as material supporters of said terrorism.</p> <p><u><strong>To be utterly clear, this could apply to any and everyone who promotes anti-government sentiments online,</strong></u> and will likely be aimed more prominently at liberty analysts and journalists. The argument for this move is rather humorous in my view &mdash; bureaucrats and others complain that it is &ldquo;not fair&rdquo; that Islamic terrorists are being treated more harshly than &ldquo;white rural domestic extremists&rdquo; and that material support laws should be enforced against everyone equally.</p> <p><strong>Yes, that&rsquo;s right, the 1<sup>st</sup> Amendment is under threat because the Justice Department does not want to appear &ldquo;racist.&rdquo;</strong> At least, that is their public excuse&hellip;</p> <p>I&#39;m not sure whether it is depressing or hilariously ironic that the U.S. government (along with many other governments) is <strong><em>preparing the groundwork for prosecution of liberty activists for material support of terrorism</em></strong> when it is the government that has been proven time and again to be by far the most generous material supporter of terrorist organizations.</p> <p>Will this all take place in a vacuum? Of course not. <u><strong>Something terrible is brewing. </strong></u>Another Oklahoma City-stye bombing, perhaps. Or a standoff gone horribly awry. The standoff in Oregon continues without Ammon Bundy and is about to get worse in the next week according to my information (you will see what I mean). The point is, the narrative is being finalized in preparation for whatever trigger events may be in store, and that narrative closely associates ISIS with liberty activists as being in the same category.</p> <p><em><strong>&ldquo;As law enforcement experts confront domestic militia groups, &ldquo;sovereign citizens&rdquo; who do not recognize government authority, and other anti-government extremists, they also face a heightened threat from Islamic extremists like the couple who carried out the Dec. 2 shootings in San Bernardino, California.&rdquo;</strong></em></p> <p>This is why I have consistently argued against giving <em>any</em> extra-judicial powers to our already bloated federal system. I am a staunch opponent of Islamic immigration and terrorism, but some people are so desperate to fight one monster that they are willing to give unlimited powers to another monster thinking it will give their minds ease. These people are fools, and they are putting the rest of us at risk.</p> <p><strong>If you want to fight ISIS, then fight them yourself. Do not give the same government that helped <em><a href="http://www.judicialwatch.org/wp-content/uploads/2015/05/Pg.-291-Pgs.-287-293-JW-v-DOD-and-State-14-812-DOD-Release-2015-04-10-final-version11.pdf" target="_blank">create ISIS</a></em> and then deliberately transplanted them to Europe and the U.S. even more legal authority over our lives to supposedly &ldquo;stop&rdquo; ISIS. This would be absurd.</strong></p> <p>In the meantime, I would point out that regardless of how the federal government wishes to label us,<strong> the liberty movement could not be more different from the Islamic State</strong>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>1)</strong> We don&rsquo;t enjoy covert funding and training from the government at large as ISIS does. (Though according to leftists, we all take our marching orders from the Koch Brothers).</p> <p>&nbsp;</p> <p><strong>2)</strong> Most of us were born in this country and are rather attached to it.</p> <p>&nbsp;</p> <p><strong>3)</strong> ISIS fights to dismantle traditional Western values. We fight to restore traditional Western values, and we will not only fight ISIS but also cultural Marxists and collectivists who share the same disdain for liberty.</p> <p>&nbsp;</p> <p><strong>4)</strong> Many of us are far better trained than ISIS goons, so if anything, we are a more severe threat to the enemies of free society. (We actually look down our sights when we shoot rather than hiding&nbsp;behind cars with the rifle over our head and squatting like a constipated dog. We can also operate their AK-47s better than they can).</p> <p>&nbsp;</p> <p><strong>5)</strong> We are as opposed to Sharia Law as we are to martial law. In fact, we see them as essentially the same unacceptable circumstance.</p> <p>&nbsp;</p> <p><strong>6)</strong> We don&rsquo;t cannibalize our enemies. (Who would want to take a bite out of Henry Kissinger&rsquo;s spleen?)</p> <p>&nbsp;</p> <p><strong>7)</strong> We might look down on the insane ramblings of today&rsquo;s feminists, but at least we would not stone them, enforce female circumcision, then rape them, then throw acid in their faces, then slap a hijab on them and take away their driver&rsquo;s licenses. So maybe, just maybe, we toxic masculine conservative barbarians aren&rsquo;t as bad as they seem to think we are.</p> <p>&nbsp;</p> <p><strong>8)</strong> We understand that black pajamas are not the best camouflage, but ISIS may have better fashion sense than we do.</p> <p>&nbsp;</p> <p><strong>9)</strong> Our beards are all-American. Their beards are just plain creepy.</p> <p>&nbsp;</p> <p><strong>10)</strong> They fight to be martyred. We fight to win.</p> </blockquote> <p><u><strong>When all is said and done, who is the greater threat to you and your freedoms?</strong></u> <em>A psychotic theocrat that has taken his religion so far into the forbidden zone that any evil, no matter how heinous, is justified through the circular logic of zealotry? The criminal government that funded that psycho, trained him, slapped a rocket launcher in his hands and then gave him a free plane ride to your favorite shopping mall? Or, some weirdo that stores lots of food and gas masks in his basement and every once in a while talks to you about 9/11?</em><strong> Come on, think about it&hellip;</strong></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="468" height="311" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160211_alt.jpg?1455228139" /> </div> </div> </div> http://www.zerohedge.com/news/2016-02-11/liberty-activists-and-isis-will-soon-be-treated-identical-threats#comments Henry Kissinger Martial Law national security Oklahoma Reuters Fri, 12 Feb 2016 03:25:00 +0000 Tyler Durden 523466 at http://www.zerohedge.com Lines Around The Block To Buy Gold In London; Banks Placing "Unusually Large Orders For Physical" http://www.zerohedge.com/news/2016-02-11/lines-around-block-buy-gold-london-banks-placing-unusually-large-orders-physical <p>This is the best quarterly performance for Gold in 30 years...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/02/11/20160211_gold2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/02/11/20160211_gold2_0.jpg" style="width: 600px; height: 303px;" /></a></p> <p>&nbsp;</p> <p><em>And as </em><a href="http://libertyblitzkrieg.com/2016/02/11/lines-around-the-block-to-buy-gold-in-london-banks-placing-unusually-large-orders-for-physical/"><em>Mike Krieger of Liberty Blitzkrieg blog details, physical demand is soaring...</em></a></p> <blockquote><p><em><strong>First, let’s look at the improved fundamentals. Gold bugs will exasperatingly proclaim&nbsp;that fundamentals have been great for&nbsp;the past four years yet the price plunged anyway, so who cares about fundamentals? To this I would respond with two observations. First, large institutional investors and sovereign wealth funds have been anticipating a rate hike cycle for a very long time now. They didn’t know when, but they expected it. The fact that&nbsp;the gold bugs never believed this is irrelevant; what matters is that&nbsp;big money believed it, and it was perceived to be very gold negative. In their minds, this anticipated&nbsp;rate hike cycle would confirm that things were getting back to normal, and if things are normal you don’t need to own gold, right?</strong></em></p> <p>&nbsp;</p> <p><em><strong>The problem is that this assumption&nbsp;is quickly being called into question. Sure the Fed hiked rates once, but it is starting to look&nbsp;more and more like a policy error. Meanwhile, other major central banks around the world are going in the opposite direction, toward negative rates. I am a huge believer in market psychology, and the psychology dominating the minds of most institutional investors over&nbsp;the past&nbsp;few years has been&nbsp;that&nbsp;things were&nbsp;slowly getting back to normal. This has weighed on institutional demand for gold in a big way, and been a meaningful factor in the bear market (manipulation aside). If this psychology shifts, the shift back into gold could&nbsp;be very&nbsp;meaningful.</strong></em></p> <p>&nbsp;</p> <p><em><strong>While that backdrop is interesting in its own right, what may&nbsp;make the move into gold that much more explosive is the lack of alternative investments…</strong></em></p> <p>&nbsp;</p> <p>– From the&nbsp;February 3, 2016 post:&nbsp;<em><a href="http://libertyblitzkrieg.com/2016/02/03/gold-its-time-to-pay-attention/#more-31186">GOLD – It’s Time to Pay Attention</a></em></p> </blockquote> <p>What a difference a couple of weeks can make. <a href="http://www.telegraph.co.uk/finance/personalfinance/investing/gold/12151770/Investors-go-bananas-for-gold-bars-as-global-stock-markets-tumble.html"><em>The</em> <em>Telegraph</em>&nbsp;is reporting</a> the following:</p> <blockquote><p><strong><em>BullionByPost, Britain’s biggest online gold dealer, said it has already taken record-day sales of £5.6m as traders pile into gold following fears the world is on the<a href="http://www.telegraph.co.uk/finance/economics/12138466/when-is-the-next-financial-crash-coming-oil-prices-markets-recession.html" target="_blank">&nbsp;brink of another financial crisis.</a></em></strong></p> <p>&nbsp;</p> <p><em>Rob Halliday-Stein, founder and managing director of the Birmingham-based company, said takings today had already surpassed the firm’s previous one-day record of £4.4m in October 2014. </em></p> <p>&nbsp;</p> <p><strong><em>BullionByPost, which takes orders of up to £25,000 on the website but takes higher amounts over the phone, explained it had received a few hundred orders overnight and frantic numbers of phone calls this morning. </em></strong></p> <p>&nbsp;</p> <p><strong><em>“The bullion market has been building with interest since the end of last year but this morning things have gone bananas,” said Mr Halliday-Stein. “Some London banks are placing unusually large orders for physical gold.”</em></strong></p> <p>&nbsp;</p> <p><em>London-based ATS Bullion added it had been inundated with orders for the past week. The firm has sold 4,000 gold bars and coins since February 1, a 40pc rise on the same period a year ago when it sold 1,500. </em></p> <p>&nbsp;</p> <p><strong><em>“It’s been crazy – it’s been the best week since 2012. We’ve had people queuing round the block,” </em></strong><em>said Michael Cooper of ATS Bullion, a family run firm that trades online and also from an outlet in the West End.</em></p> </blockquote> <p>But that’s just part of the story. As reported by the World Gold Council, the buying really started to pick up in the fourth quarter, courtesy of the Chinese and central banks. <a href="http://www.reuters.com/article/us-gold-wgc-idUSKCN0VK114"><em>Reuters</em></a> notes:</p> <blockquote><p><em>Buying by central banks as well as Chinese investors seeking protection from a weakening currency helped lift demand for gold in the final quarter of last year and the trend looks set to continue, the World Gold Council said on Thursday.</em></p> <p>&nbsp;</p> <p><em><strong>Chinese demand for gold coins surged 25 percent in the fourth quarter from a year earlier as consumers sought to protect their wealth after Beijing devalued the yuan currency.</strong> But stock market turmoil and a slowing economy knocked consumer sentiment and Chinese demand for gold for jewelry fell 3 percent from a year earlier, WGC said. </em></p> <p>&nbsp;</p> <p><em>Central banks have been buying gold to diversify their reserves away from the U.S. dollar and their purchases edged up to 588.4 tonnes last year, second only to a record high 625.5 tonnes in 2013, the report showed.</em></p> <p>&nbsp;</p> <p><strong><em>Central bank buying accelerated sharply in the second half of last year and jumped 25 percent in the fourth quarter, from a year earlier, as the need to diversify was reinforced by falling oil prices and reduced confidence in the global economy, WGC said.</em></strong></p> <p>&nbsp;</p> <p><em>Chinese demand for gold totaled 985 tonnes last year, followed by India on 849 tonnes. They accounted for nearly 45 percent of total global demand, with consumer demand up 2 percent and 1 percent respectively in those countries.</em></p> </blockquote> <p>Think about the lack of gold buying from the U.S. relative to its global wealth and it becomes quite easy to see where the fuel for the next bull market will come from.</p> <p>Meanwhile, on the supply side…</p> <blockquote><p><em><strong>Global supply of gold fell 4 percent last year to 4,258 tonnes, partly because of slower mine production.</strong></em></p> <p>&nbsp;</p> <p><em>Mining companies have scaled back since 2013 in a bid to slash costs and mine production shrank in the fourth quarter of 2015, the first quarterly contraction since 2008, WGC said.</em></p> </blockquote> <p>* * *</p> <p>Keep in mind, all of the above is <strong>nothing </strong>compared to what may happen in China once gold fever returns to the mainland like in 2013, <a href="http://photos.caixin.com/2013-06-12/100540387.html">as Caixin profiled before</a>:</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/02/09/china-gold1.jpg" width="600" height="399" /></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/02/09/china-gold2.jpg" width="600" height="399" /></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/02/09/china-gold4.jpg" width="600" height="399" /></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/02/09/china-gold5.jpg" width="600" height="399" /></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/02/09/china-gold6.jpg" width="600" height="399" /></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/02/09/china-gold7.jpg" width="600" height="399" /></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="600" height="399" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/china-gold1.jpg?1455211308" /> </div> </div> </div> http://www.zerohedge.com/news/2016-02-11/lines-around-block-buy-gold-london-banks-placing-unusually-large-orders-physical#comments Bear Market Central Banks China Consumer Sentiment Global Economy Gold Bugs India Institutional Investors Market Manipulation Reuters World Gold Council Yuan Fri, 12 Feb 2016 03:16:23 +0000 Tyler Durden 523418 at http://www.zerohedge.com This Is What Central Bank Failure Looks Like (Part 4) http://www.zerohedge.com/news/2016-02-11/what-central-bank-failure-looks-part-4 <p><a href="http://www.zerohedge.com/news/2016-02-08/what-central-bank-failure-looks">First, it was The BoJ&#39;s utter collapse from omnipotence to impotence</a>. Then came the <a href="http://www.zerohedge.com/news/2016-02-09/what-central-bank-failure-looks-part-2">collapse of The Fed&#39;s credibility in the short-term</a>.... and the longer-term. And now it is the <strong>turn of Mario Draghi&#39;s ECB to face total failure</strong>, as the European banking system - the prime beneficiary of &quot;whatever it takes&quot; - has crashed back to pre-Draghi levels.</p> <p>&nbsp;</p> <p><img height="313" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/02/11/20160211_whatever_0.jpg" width="600" /></p> <p>&nbsp;</p> <p>As former Morgan Stanley guru Gerard Minack explains,<strong> the most corrosive factor for markets currently is the downgrading of perceived central bank potency.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>There are several recent hints of this decline.</p> <p>&nbsp;</p> <p>Mario Draghi&rsquo;s &lsquo;whatever it takes&rsquo; comment in 2012 was, in my view, the single most important central bank action of the past 5 years.&nbsp; <strong>However, European bank stocks &ndash; a principal beneficiary of &lsquo;whatever it takes&rsquo; &ndash; have now almost given up all their &lsquo;whatever it takes&rsquo; gains, despite recent &lsquo;whatever it takes with steroids&rsquo; comments from Mr. Draghi.</strong></p> <p>&nbsp;</p> <p>Likewise,<strong> the Bank of Japan&rsquo;s bazooka now seems to be firing blanks.&nbsp;</strong> The yen strengthened and equities fell after the cash rate was cut below zero &ndash; the opposite of what was presumably expected.</p> <p>&nbsp;</p> <p>Second,<strong> the central bank bubble seems to be deflating.</strong>&nbsp;&nbsp; Central banks have long been over-rated in my view; markets seem to be starting to agree.</p> </blockquote> <p><span style="text-decoration: underline;"><strong>The equity sell-down is changing:</strong></span> <em><strong>it had been led by economically-sensitive sectors but is now shifting to financial risk &hellip;.financial stress is not good for growth.</strong></em></p> <p>Some further clarifications from <a href="http://www.bloomberg.com/news/articles/2016-02-10/dollar-nurses-losses-on-yellen-rate-comments-oil-back-below-28">Bloomberg</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Financial markets are signaling that investors have lost faith in central banks&rsquo; ability to support the global economy.</strong></p> </blockquote> <p>And some <a href="http://www.bloomberg.com/news/articles/2016-02-09/markets-signal-central-banks-are-losing-awe-even-if-they-shock">more</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;The markets are wondering, well, we&rsquo;ve had these non-conventional monetary policy experiments for the last six or seven years and they haven&rsquo;t caused a sustainable boost to global growth, so what will the latest moves do,&rdquo; said Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors Ltd. <strong>&ldquo;It&rsquo;s a reasonable question to ask given the events of the last few weeks.&rdquo;</strong></p> <p>&nbsp;</p> <p>&ldquo;<strong>The notion that central banks and regulators could not act if the financial panic were to turn into a serious threat to the real economy and hence to jobs looks wrong</strong>,&rdquo; said Holger Schmieding, chief economist at Berenberg Bank in London. &ldquo;Central banks can bolster confidence if they really have to in order to support the real economy.&rdquo;</p> <p>&nbsp;</p> <p>&quot;The period of central bank &lsquo;shock and awe&rsquo; operations is likely to be behind us,&quot; Stephen Jen, co-founder of SLJ Macro Partners LLP in London and a former International Monetary Fund economist, wrote in a note on Friday. &quot;<strong>This will be the year that &lsquo;gravity&rsquo; will overwhelm the central bank policies,&quot; he said, recommending selling equities during rallies.</strong></p> </blockquote> <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="963" height="503" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160211_whatever.jpg?1455211595" /> </div> </div> </div> http://www.zerohedge.com/news/2016-02-11/what-central-bank-failure-looks-part-4#comments Bank of Japan Central Banks Global Economy International Monetary Fund Japan Monetary Policy Morgan Stanley Yen Fri, 12 Feb 2016 03:00:00 +0000 Tyler Durden 523433 at http://www.zerohedge.com Crushing The "Oil's Just A Supply Issue" Meme In 1 Painful Chart http://www.zerohedge.com/news/2016-02-11/crushing-oils-just-supply-issue-meme-1-painful-chart <p>Day after day we are told that the plunge in oil prices (just like the collapse in The Baltic Dry freight index) is a "supply" issue... it's transitory and global demand is doing fine thank you very much. Sadly, as everyone really knows deep down inside their Keynesian hearts, this is utter crap and as Barclays shows the<strong> shocking 18% YoY crash in distillates "demand" - something that has never happened outside of a recession</strong> - blows the one-sided argument of the energy complex out of the water.</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/02/11/20160211_demand.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/02/11/20160211_demand_0.jpg" width="600" height="461" /></a></p> <p>&nbsp;</p> <p>Still gonna claim "it's a supply issue?"</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="827" height="635" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160211_demand.jpg?1455204507" /> </div> </div> </div> http://www.zerohedge.com/news/2016-02-11/crushing-oils-just-supply-issue-meme-1-painful-chart#comments Baltic Dry Barclays CRAP Distillates Recession Fri, 12 Feb 2016 02:10:00 +0000 Tyler Durden 523432 at http://www.zerohedge.com