en With Kuroda Under Pressure To Increase Stimulus Again, Dissenters Appear <p>With the yen strengthening ~12% against the US dollar and the Nikkei down ~10% YTD, it seems Haruhiko “Peter Pan” Kuroda is having a difficult time working his magic in favor of Abenomics. As the <a href="">WSJ reports</a>, Kuroda is under increasing pressure from the Prime Minister’s advisers to coordinate efforts to jumpstart the economy. Earlier this month, we <a href="">first reported of the secretive meeting </a>between Kuroda and Bernanke, where the former Fed Chairman urged Japan to unleash helicopter money.</p> <p><img src="" width="553" height="369" /></p> <p>With what little credibility it still has, the Bank of Japan is set to meet this week and likely agree on the size of yet another stimulus package for the economy. Prime Minister Abe’s main economic advisor Etsuro Honda recently detailed in an interview that the BOJ should increase its Qualitative and Quantitative Monetary Easing (QQE) program from ¥80 trillion to ¥90 trillion.</p> <p>In addition, there has been growing speculation regarding coordinated fiscal and monetary stimulus. The fiscal stimulus efforts are not expected to be unveiled until August, according to the WSJ. Expectations point to a “multiyear program valued at ¥20 trillion ($188 billion), including direct spending, government loans and public-private financing.”</p> <p>Perhaps more interesting, this time, Kuroda may have a difficult time convincing the 8 remaining members of the monetary board. As the Journal notes, “other BOJ officials are signaling a reluctance to act, underscoring questions about whether the central bank has reached the limits of its powers to revive Japan’s economy. They note that monetary policy is already extremely accommodative, with bond yields and interest rates at or near record lows, and express doubts that additional easing would make fiscal stimulus much more effective, according to people familiar with the central bank’s thinking.”</p> <p>As core metrics and corporate expectations of inflation plummet, Kuroda’s promise to do “whatever it takes” to reach 2% inflation seems to be under significant threat. Doing nothing now would “amount to an admission that the BOJ’s monetary policy has reached its limits—it wants to move, but it can’t,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance.</p> <p>Not unlike the Fed, it is clear that the BOJ is trapped in its own end game. As Kyle Bass recently told <a href="">CNBC</a>, "The textbooks aren't working for the academics ... I fear they're going to have to go into some sort of jubilee where the central bank just forgives the debt that they own...I don't know what happens to the yield curve then.<strong> The unconventional policies aren't working, so they're going to have to go to unconventional, unconventional policies next.</strong> I don't know where that takes them.”</p> <p>The answer appears to be a one-way ticket to Neverland, where we can all believe in our hero, Peter Pan.</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="533" height="301" alt="" src="" /> </div> </div> </div> Abenomics Bank of Japan Bond Japan Kyle Bass Kyle Bass Monetary Policy Nikkei Yen Yield Curve Mon, 25 Jul 2016 01:38:28 +0000 Tyler Durden 567029 at Deep Underground Military Bases? California Hit By Mysterious Clockwork "Booms" Daily For Years <p><a href=""><em>Submitted by Piper McGowan via The Daily Sheeple,</em></a></p> <p><strong>For years now, residents of Sonora, California have been hearing a window-shaking loud and so far officially unexplained BOOM! that always happens between 11 a.m. and 2 p.m. daily.</strong></p> <p><a href="" target="_blank">Inquisitr</a> reports that the <strong>explanation floating around Sonora</strong> from a local geologist/teacher is that an Army Depot in Hawthorne, Nevada, all the way across the state and behind a mountain range which disposes of old munitions like bombs, might be what residents have been hearing.</p> <p><strong><em>But do they have so many old bombs to dispose of that they do it daily every single day even on weekends and holidays without fail for years? Why would Sonora, California of all locations near Hawthorne be the seemingly most affected city of all?</em></strong></p> <p>Besides, even people who work at the depot aren&rsquo;t hearing the booms regularly (via <a href="" target="_blank">ABC News</a>):</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Ken Thomas, a contracting officer for the Hawthorne Army Depot, told ABC News today that they do detonate munitions regularly at the depot when the munitions are past their shelf-life, but he is not convinced that it can be heard in Sonora.</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>&ldquo;It doesn&rsquo;t feel right that what we&rsquo;re doing here would be heard 200 miles away when there&rsquo;s a mountain range in between us,&rdquo;</strong></span> Thomas said. &ldquo;My office is 27 miles from where they detonate the old munitions, I only hear it here maybe one time a month, and just barely and it&rsquo;s like &lsquo;Was that a boom?&#39;&rdquo;</p> </blockquote> <p><strong>On top of that, not only are they clockwork, but these have been described as deep, low booms which can almost be <em>felt</em> by the people who live there. </strong>In fact, a friend who lives near Sonora said that sometimes they can actually see their windows warp during the booms.</p> <p>So what is it? Lots of conspiracies are, of course, floating around including aliens (as per the usual).</p> <p><strong>But one in particular sounds a lot more plausible than an old weapons depot that&rsquo;s a three-hour drive from Sonora: DUMBs.</strong></p> <p><a href=""><img height="280" src="" width="492" /></a></p> <p><span style="text-decoration: underline;"><strong>Deep underground military bases.</strong></span></p> <p><a href=""><span style="text-decoration: underline;"><strong><img alt="" src="" style="width: 382px; height: 286px;" /></strong></span></a></p> <p>We all know there&rsquo;s an extensive network of them which has been significantly expanded since 9/11 and the creation of Homeland Security<strong><em>...</em></strong></p> <p><a href=""><img alt="" src="" style="width: 565px; height: 436px;" /></a></p> <p><strong><em>...and we&rsquo;re all just supposed to put our fingers in our ears and go &ldquo;la la la&rdquo; and pretend like they don&rsquo;t exist.</em></strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The tunneling project is a joint venture involving the National Security Agency, CIA, FBI, MiB, Homeland Security &amp; a few other groups that are buried in the Congressional Intelligence Committees with some weird acronyms no one really understands. Much of the info on this comes from private citizens in the county, public officials, as well as Coast to Coast with George Noory &amp; Art Bell. These shows have given incredibly good information on the topic for the last several months, beginning in late 2003&hellip;</p> <p>&nbsp;</p> <p><strong>According to the information available, there are several reasons for the project:</strong></p> <p>&nbsp;</p> <p>1) Homeland Security needs an system of rapid deployment in the South, free of traffic;</p> <p>2) certain gov&#39;t agencies want an easy connection route with other gov&#39;t installations in the South;</p> <p>3) there is a move on in the intelligence community to begin more efficient use of the underground rail system already in place at Lockheed in Marietta;</p> <p>4) Paulding is a central location for the complete project that will eventually connect installations in Anniston, AL; Macon, GA; Lockheed in Marietta; Lookout Mtn, TN; Greenville-Spartanburg, SC; &amp; Raleigh-Durham, NC;</p> <p>5) the Yorkville area of Paulding has been designated as the prime location for these hubs to come together because of geological preference;</p> <p>6) the addition of new Walmart facilities in NW GA give spur hubs &amp; depots easy access to large areas that can be partitioned off for moving of very large equipment &amp; large numbers of people in case of national emergency.</p> <p><em>(<a href="" target="_blank">source</a>)</em></p> </blockquote> <p><em><strong>Kinda like the CIA kept pretending Area 51 didn&rsquo;t exist for decades until it was finally, quietly admitted it in 2013. </strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="492" height="280" alt="" src="" /> </div> </div> </div> ABC News Fail FBI national security Mon, 25 Jul 2016 01:20:40 +0000 Tyler Durden 567017 at Pokemon Going, Going Gone: Nintendo Crashing Most Since 2000 After Admitting "Limited Earnings Impact" From New Game <p>After the close Friday, Nintendo admitted that the <strong>earnings impact from the newly-released 'Pokemon Go' game would be limited (and that it has no plans to adjust its forecasts)</strong>. This has sent Nintendo shares down over 16% today, following last Wednesday's 12% collapse.&nbsp;</p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="312" /></a></p> <p>&nbsp;</p> <p>Nintendo has given up half its panic-buying gains of last week...</p> <p><a href=""><img src="" width="600" height="307" /></a></p> <p>&nbsp;</p> <p><strong>Today's drop is the largest since March 2000...</strong></p> <p><strong><a href=""><img src="" width="600" height="296" /></a><br /></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="964" height="502" alt="" src="" /> </div> </div> </div> Mon, 25 Jul 2016 01:00:45 +0000 Tyler Durden 567036 at Did Verizon Just Signal The Top? <p><em><strong>The last time AOL (bought by Verizon in May 2015) was involved in a mega merger was January 2000, when AOL acquired Time Warner for $182 billion in what was the mega deal of the last tech bubble, creating a $350 billion behemoth... which nearly dragged down both companies a few years later. </strong></em>The timing could not have been more perfect as it marked the tech bubble top...</p> <p><strong><em>Will it happen again?</em></strong></p> <p><a href=""><img src="" width="600" height="315" /></a></p> <p>As Bloomberg reports, <strong>Verizon Communications will announce plans to buy Yahoo!’s core assets for about $4.8 billion on Monday, </strong>a move that would finally seal the fate of the iconic web pioneer after months of speculation and pressure from investors.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>News of the takeover is expected to come before the market opens, said a person with direct knowledge of the situation who asked not to be identified because the information isn’t public. The deal includes Yahoo real estate assets, while some intellectual property is to be sold separately, the person said. Yahoo will be left with its stakes in Alibaba and Yahoo Japan, with a combined market value of about $40 billion.</p> <p>&nbsp;</p> <p>With its core wireless business maturing, Verizon is expected to keep Yahoo mostly intact to compete with Alphabet’s Google and Facebook in digital ads by tapping into users on sites like Yahoo Finance. <strong>The takeover will double the size of Verizon’s digital advertising, placing it as a distant third behind Google and Facebook in the $187 billion market.</strong></p> <p>&nbsp;</p> <p>“The deal speaks to a clear strategy shift at Verizon,” Craig Moffett, an analyst with MoffettNathanson, said Sunday. <em><strong>“They are trying to monetize wireless in an entirely new way. Instead of charging customers for traffic, they are turning to charging advertisers for eyeballs.”</strong></em></p> </blockquote> <p>Desperately overpaying for already over-valued assets with market-wide valuations at record levels. <em><strong>What could go wrong?</strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="965" height="507" alt="" src="" /> </div> </div> </div> Google Japan Real estate Time Warner Verizon Mon, 25 Jul 2016 00:30:00 +0000 Tyler Durden 567012 at Attacker Dead, 10 Injured After Blast "From Explosive Device" At Major German Music Festival <p><em><strong>Update 1</strong></em>:<em><strong> </strong></em><span><em><strong>&quot;A man, according to our current knowledge the perpetrator, died&quot; </strong></em>in the blast they said in the short statement. Further details weren&#39;t immediately available and they did not pick up their telephone lines.</span></p> <p>*&nbsp; *&nbsp; *</p> <p>As we detailed earlier, capping an awful week for Germany (and France), an <strong>explosion in the city of Ansbach,</strong> originally reported as a gas leak, has been confirmed as being caused by &quot;<strong>an explosive device.</strong>&quot;</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="" width="420"></iframe></p> <p><a href="">As The Telegraph reports,</a> <strong>one person is dead (believed to be the bomber) and at least 11 more injured </strong>as the explosion occured shortly after 10pm outside a wine bar near the entrance to an <strong>open-air music festival, where there were some 2,500 people in attendance</strong>. The festival was shut down as a precaution.</p> <p><a href=""><img height="419" src="" width="600" /></a></p> <p><strong>With Germany already on high alert following the events in Reutlingen and Munich.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>On Sunday, 21-year-old asylum-seeker from Syria killed a woman, reported to be pregnant, with a meat cleaver in the southern German town of Reutlingen.</p> <p>&nbsp;</p> <p>Only two days earlier an 18-year-old man killed nine people in a shooting near a shopping centre in Munich, before turning the gun on himself.</p> </blockquote> <p><strong>One person has been killed and another 11 injured in an explosion at a cafe in the Bavarian city of Ansbach.</strong><a href=""><em> (via The Telegraph)</em></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>A spokesman for the Bavarian Interior Ministry said the explosion was not an accident and<strong> appears to have been intentional.</strong></p> <p>&nbsp;</p> <p><a href=""><img height="362" src="" width="601" /></a></p> <p>&nbsp;</p> <p>Bavarian Interior Minister Joachim Herrmann was en route to the site, the spokesman said.</p> <p>&nbsp;</p> <p><strong>The blast killed one person and injured 11 others in the Bavarian city, police confirmed late on Sunday</strong>. It said the cause of the blast was unknown.</p> <p>&nbsp;</p> <p><a href=""><em><span style="text-decoration: underline;"><strong><img alt="" src="" style="width: 600px; height: 384px;" /></strong></span></em></a></p> <p>&nbsp;</p> <p>The blast a at Eugene&#39;s Wine Bar triggered a large-scale police operation involving police, rescue workers and one helicopter, Sky News said.</p> <p>&nbsp;</p> <p><strong>The blast was initially reported to have been caused by a gas leak.</strong></p> <p>&nbsp;</p> <p>News agency Dpa reports that an open-air concert nearby with<strong> some 2,500 in attendance was shut down as a precaution after the explosion.</strong></p> <p>&nbsp;</p> <p><a href=""><strong><img alt="" src="" style="width: 534px; height: 266px;" /></strong></a></p> </blockquote> <p>Additionally,&nbsp; AP reports that</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Police in the southern German city of Ansbach say<strong> the man was killed when an explosive device he was believed to be carrying went off </strong>near an open-air music festival,</p> </blockquote> <p>The only question left now is <em><span style="text-decoration: underline;"><strong>how long before an otherwise patient German population react after three apparent mass attacks in one week?</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="544" height="348" alt="" src="" /> </div> </div> </div> France Germany Mon, 25 Jul 2016 00:28:19 +0000 Tyler Durden 567033 at Here's Why The New DNC Chair Is About To Make Bernie Supporters Just As Angry <p><strong>Meet Donna Brazile - interim party chair </strong>after Debbie Wasserman Schultz (DWS) resignation over Wikileaks-email-leaked proof confirming months of accusations that she had put her thumb on the scales in favor of presumptive nominee Hillary Clinton...</p> <p><a href=""><img src="" width="286" height="231" /></a></p> <p>&nbsp;</p> <p>The only problem is... <a href="">a quick search of Wikileaks leaked DNC email database shows</a>... Brazile is exactly the same as DWS - clearly demonstrating bias against the Sanders' camp...</p> <p><a href=""><img src="" width="600" height="594" /></a></p> <p>&nbsp;</p> <p>And rejecting Sanders' efforts to battle the rigged super-delegate system as "another lunacy"...</p> <p><a href=""><img src="" width="600" height="649" /></a></p> <p>&nbsp;</p> <p>So now, following Bernie's statement with regard DWS' resignation...</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">JUST IN: Bernie Sanders statement on the resignation of DWS: <a href=""></a></p> <p>— Kyle Griffin (@kylegriffin1) <a href="">July 24, 2016</a></p></blockquote> <script src="//"></script><p>We suspect,<strong> Sanders' supporters will be screaming for more blood (and rightfully so) and the deeply-rigged nature of today's body politik spews to the surface once again.</strong></p> <blockquote class="twitter-video"><p dir="ltr" lang="en">Donna Brazil swiftly corrects Jake tappert when wrongly suggests she supports <a href="">#HillaryClinton</a> WHOOPS!! Awkward???? <a href=""></a></p> <p>— DCSportNut (@DCSportNut) <a href="">January 24, 2016</a></p></blockquote> <script src="//"></script> <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="286" height="231" alt="" src="" /> </div> </div> </div> Bernie Sanders Brazil Twitter Twitter Mon, 25 Jul 2016 00:08:49 +0000 Tyler Durden 567021 at "It's Not Panicking If You're First" - China Devaluation Is Closer Than Anyone Thinks <p><strong>Once again - ahead of the G-20 meetings - China&#39;s currency mysteriously abated its incessant plunge suggesting &#39;stability&#39;. </strong>As Bloomberg notes, history shows that the Chinese currency usually strengthens ahead of major political or economic events, such as President Xi Jinping&rsquo;s state visits to the U.S. and the Boao Forum.</p> <p><a href=""><img height="282" src="" width="600" /></a></p> <p>The People&rsquo;s Bank of China raised its daily reference rate for the yuan in each of the last three days,<strong> spurring speculation it is acting to limit losses in the currency.</strong></p> <p>Howeber,<a href=""> as Mark St.Cyr notes, </a><strong>lately there have been quite a few warning signs pertaining to China. </strong>Yet, concern seems anathema to not only the &ldquo;markets,&rdquo; but the media in general. However, <strong>I&rsquo;m of the opinion that is all about to change. And that &ldquo;change&rdquo; is not years away, but rather, sooner (and much sooner at that) than later.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>To use an analogy, I don&rsquo;t think there&rsquo;s a better one than the old &ldquo;Bull in a china shop.&rdquo; Sure there&rsquo;s no broken dishes currently, but that&rsquo;s because the bull has yet chosen an aisle to venture down. That is &ndash; if he chooses to use an aisle at all. And the &ldquo;markets&rdquo; are behaving as if the bull can somehow read or cares about the &ldquo;you break it &ndash; you own it!&rdquo; sign. <strong>This pretty much sums up the absurdity of complacency now taking place in the &ldquo;markets.&rdquo;</strong></p> <p>&nbsp;</p> <p>Last week China&rsquo;s GDP figure was reported to be 6.7, beating consensus by just a tick. However, there was some concern that the print might come in (heaven forbid) below consensus. Why the need for any concern one might ask? <strong>After all, when your GDP figure is basically announced well in advance (e.g., 6.5 &ndash; 7.0) then hit with statistical precision, report, after report, after report as announced by the politburo of a communist controlled economy. Again, why sweat it? The so-called &ldquo;smart crowd&rdquo; weren&rsquo;t.</strong></p> <p>&nbsp;</p> <p>Easy: Today, in a market so utterly adulterated and carry trade sensitive via central bank meddling, just a tick lower of the expected 6.6, as opposed to their tick higher beat, has ominous implications. For any movement lower is now suspect or viewed by the outside world as &ldquo;just how bad is it if they reported lower?&rdquo; An inline, or even just a tick higher beat is seen as &ldquo;they must still have some control of their economy.&rdquo; e.g., Phew&hellip;Buy, buy, buy!</p> <p>&nbsp;</p> <p>Hence lies where the real concern is by those that understand the true, current economic conditions within China.<strong> For where that concern truly emanates from is all summed up in those 6 words. i.e, The assumption of &ldquo;they must still have some control,&rdquo; emphasis on &ldquo;still&rdquo; and &ldquo;some.&rdquo;</strong></p> <p>&nbsp;</p> <p>To understand the underlying concern of what is inferred by using &ldquo;they must still have some control.&rdquo; Let&rsquo;s use another analogy, one of a speeding car with a driver either asleep, or impaired at the wheel. The driver represents chinese consumers. The car represents all those state funded enterprises of all sorts, fueled with artificially produced rocket fuel (i.e., loans.)</p> <p>&nbsp;</p> <p>The politburo currently has no more control over that vehicle than that of guard rails. What&rsquo;s also at issue are that these &ldquo;guard rails&rdquo; are not fully constructed. They&rsquo;re being feverishly assembled, haphazardly and slightly ahead of the oncoming car which is careening from side to side as it goes along. So far they&rsquo;ve managed to just stay ahead. But to say they have the situation under &ldquo;control&rdquo; is disingenuous at best.</p> <p>&nbsp;</p> <p>To sum up the way this is being played across the main stream financial media, you&rsquo;ll hear arguments to the likes of: &ldquo;Currently the vehicle (e.g., chinese economy) is still traveling down the road. It appears things are going in the right direction with the politburo exerting control policies when needed which are showing to be quite effective.&rdquo;</p> <p>&nbsp;</p> <p><strong>It is my stance the above example is a microcosm of just how most of the specious, egregious, or intentional lack of details is allowed to go unquestioned by the financial media at large. Precisely how one uses or views the word &ldquo;control&rdquo; (i.e., meeting or beating measurements) is where the rubber hits the road.</strong> e.g., Think Bill Clinton in his now immortal argument of what the definition of &ldquo;is,&rdquo; is.</p> <p>&nbsp;</p> <p>So what are we to read into with this latest &ldquo;beat&rdquo; in GDP out of China? Are we to believe as is being dissected and disseminated by the so-called &ldquo;smart crowd&rdquo; that this &ldquo;beat&rdquo; is good news, showing that things in China are being managed efficiently and effectively, where the concerns of an impending crisis is &ldquo;overblown?&rdquo;</p> <p>&nbsp;</p> <p>Or how about: <em><strong>&ldquo;China is quite successfully demonstrating its ability of turning its economy from a manufacturing based economy, to a service economy. And this latest GDP print proves it.&rdquo; </strong></em>Which by-the-way is near verbatim of what I&rsquo;ve heard or read recently.</p> <p>&nbsp;</p> <p><u><strong>I am often amused at how this &ldquo;switch&rdquo; is reported on, as if it were remotely true.</strong></u> Need an example? Fair enough: Then why is China&rsquo;s continuing (and sometimes panicked) credit expansion still directed into ever the more construction (and all its aggregates) when &ldquo;consumption&rdquo; can&rsquo;t even begin to consume what&rsquo;s already built? And no, that&rsquo;s not a play on words.</p> <p>&nbsp;</p> <p>Let me express it this way using just a little common sense and thought-through, as opposed to the &ldquo;in-depth&rdquo; analysis delivered by most of the main stream outlets that I&rsquo;ve come across. Ready?</p> <p>&nbsp;</p> <p>It took decades for the U.S. to show measurable signs that its service sector was in any way replacing its manufacturing based economy. And in many ways that &ldquo;replacement&rdquo; has not been for the better (see Detroit, Allentown, etc., etc.) So what we&rsquo;re now supposed to believe is &ndash; in less than a decade &ndash; both during and after one of the greatest financial crisis and economic malaise of history &ndash; China has just &ldquo;flipped a switch&rdquo; and boom they&rsquo;re now &ldquo;Service Sector R Us?&rdquo;</p> <p>&nbsp;</p> <p>I&rsquo;ll just add one more point: The same people who do hold that view, also hold the view that China doesn&rsquo;t have a dept problem. Don&rsquo;t take my word for it. Just listen to any current Institute president or &ldquo;senior fellow&rdquo; of some think tank.</p> <p>&nbsp;</p> <p>I bring this all up for ne reason:<strong> Few believe there is a reason for concern that China &ldquo;might&rdquo; do something which may upset the current economy as it now stands. I am not one of those. I&rsquo;m of the opinion it&rsquo;s &ldquo;will&rdquo; and soon.</strong></p> <p>&nbsp;</p> <p>I&rsquo;m also of the viewpoint (and right now I know its controversial, and I may be well alone, but so-be-it) that the 6.7 GDP print was only to allow a little more wiggle room in the timing as for China to venture down a road of monetary policy that will rattle all other economies to their very core. I also believe some (&ldquo;some&rdquo; meaning developed market economies) will be shaken so severely they might monetarily implode all together.</p> <p>&nbsp;</p> <p>Again, I&rsquo;m not talking about emerging markets &ndash; I&rsquo;m talking about the developed. Precisely which ones are up for grabs. But none will walk away unscathed. Here&rsquo;s some of my reasoning for concern&hellip;</p> <p>&nbsp;</p> <p>One of the things you won&rsquo;t see in the main stream outlets <a href="">is the all out flooding for credit expansion happening within China</a>. Now some might say &ldquo;Well that&rsquo;s typical, nothing to see there, they&rsquo;ve been doing that since the beginning.&rdquo; Well, that&rsquo;s yes, and no. Sure, they goosed the system in unison with every other developed economy during the go-go years. What they haven&rsquo;t done is something of this size (which by all measures is gargantuan) when just previously i<a href="">n May they all but shut the spigots off</a>.</p> <p>&nbsp;</p> <p>To try and give that some context think of it this way: Imagine the Fed. coming out after the May FOMC with a 1.5% rate hike, then in July, announcing it was implementing a negative rate. (forget the global impact for comparison, just think about it from a domestic view) Would a move such as that give businesses or anyone else for that matter confidence in the controlling leaders? Yet, that&rsquo;s just about what China did. And most are unaware of it even transpiring.</p> <p>&nbsp;</p> <p><strong>Think about it: In just one month (yes, that&rsquo;s 30 days) new credit exceeded the total 2015 GDP of Chile, Ireland, or Vietnam. And all they felt comfortable reporting was 1 lousy tick above the &ldquo;hit never miss&rdquo; figure? (insert lousy T-shirt joke here) Again, reread that point. That was in a month!</strong></p> <p>&nbsp;</p> <p>Oh, and by the way, if you thought May was showing restraint and control &ndash; then maybe <a href="">I shouldn&rsquo;t mention April</a>. Yep, nothing to see here folks &ndash; please move along.</p> <p>&nbsp;</p> <p>It is my belief that China has already lost control and is desperately waiting for the right circumstance (much like the American version of &ldquo;never let a crisis go to waste&rdquo;) as to implement some form of game changing monetary upheaval that helps set the stage for a more China-centric platform, as opposed to them needing to react to both Fed. policy movements or ECB for that matter. And to my thinking, in many ways, those circumstances are piling up on a silver platter.</p> <p>&nbsp;</p> <p><u><strong>And to be clear: I believe China grabs that platter &ndash; and soon. And by &ldquo;soon&rdquo; I mean just that: very. Possibly before year-end</strong></u></p> <p>&nbsp;</p> <p>I&rsquo;m also of the opinion China is already on that brink or dilemma for that point-of-no-return, first mover decision, as to initiate those controls and policies they believe must be implemented. For if not they&rsquo;ll be left to deal (if they can at all) with the whims and consequences of all the other central banks. I believe that is an absolute non-starter for China, particularly in this current economic, and political environment.</p> <p>&nbsp;</p> <p>No matter what one thinks about current Fed. policy, just the very fact that the Fed. &ldquo;could&rdquo; raise rates is causing huge capital outflow headaches for China. It&rsquo;s as if China is being told and expected to wait patiently under the sword of Damocles while the Fed. ponders what policy move it should embark upon next.</p> <p>&nbsp;</p> <p><strong>And if indeed the Fed. were to actually raise? (I know don&rsquo;t laugh but you have to access the possibility no matter) The politburo in China may be left helpless to stop the outflows unless they come down with a complete and unforgiving hammer.</strong></p> <p>&nbsp;</p> <p>However, too this point, China can&rsquo;t make that kind of political and monetary move in anything resembling &ldquo;normal&rdquo; times. (i.e., &ldquo;normal&rdquo; being a relative term.) <strong>It would be seen as too heavy-handed (or communistic) now that they&rsquo;ve supposedly become more sympathetic to playing by western rules</strong>. (e.g., inclusion into the SDR etc.) But the necessary fruit needed to upset that apple-cart (i.e., to their first mover advantage) is just sitting there on that silver platter adorned, hand delivered, again, and again by those very economies that believe &ldquo;they need us, as much as we need them.&rdquo;</p> <p>&nbsp;</p> <p><u><strong>To which I&rsquo;ll say &ndash; <em>au contraire</em>.</strong></u></p> <p>&nbsp;</p> <p>China has been aligning, as well as solidifying its economy and its ideology (e.g., communist, dictatorial, or anti $ hegemony) with other like-minded players. Russia is just one example. Now with the advent of Brexit, who knows who else. In the advent of a sudden economic collapse one thing is certain: China can, and will, control any and all civil unrest. So too will Russia. The West? It&rsquo;s an open question. And there lies the rub. Let me explain&hellip;</p> <p>&nbsp;</p> <p>Why would China or any other communist/dictatorially led nation just sit there knowing full well that civil unrest, money outflows, and a whole lot more are inevitable because of economic dictates emanating from the West? (e.g. central bankers) Again, and I can&rsquo;t make this point enough: All while they, in-turn, do everything they are telling China not to do themselves? i.e., Implement excessive central bank intervention buying up stocks, bonds, and more. All while funding those purchases by devaluing their own currencies <em>ipso facto</em> by hitting the &ldquo;print&rdquo; button over, and over, and over again, as they simultaneously warn China of devaluing their Yuan will be seen as &ldquo;manipulation&rdquo; calling for some kind of expressed condemnation, if not out right sanctions.</p> <p>&nbsp;</p> <p>Think through just this one hypothetical: Do you think for a moment China is going to nonchalantly wait till the Fed. decides that it will or won&rsquo;t raise, then deal with its aftermath? Hint: Not a chance on Earth. And in-particularly &ndash; not in this current political environment. And those that will write this type of argument off as some &ldquo;tin foiled hat&rdquo; type of assumption, in my view, either haven&rsquo;t a clue, or aren&rsquo;t paying attention. Period.</p> <p>&nbsp;</p> <p>What China needs (and desperately wants) is to devalue the Yuan ever more. Yet, they can&rsquo;t do that if there is any chance (as remote as it may be) that the Fed. may raise interest rates. The outflows would be exponential compared to today. However, as I&rsquo;ve alluded to &ndash; that platter sits there just waiting to be tossed. And that &ldquo;bull&rdquo; is still within the store. If China devalues, and forcefully at that, the resulting mayhem ties the Fed&rsquo;s hands from ever raising indefinitely. And there&rsquo;s more&hellip;</p> <p>&nbsp;</p> <p><strong>Currently this supposed &ldquo;bull&rdquo; market in the U.S. has now been pushed to heights never before seen in human history. China&rsquo;s? Not so much.</strong></p> <p>&nbsp;</p> <p>We also know China is sitting on massive stockpiles of goods from commodities to further finished. Add to this both the current political ramifications such as the recent decision in the Hague with a denouncement of China claims in the South China Sea. <strong>Along with a current U.S. election cycle rhetoric where one of the main topics is curtailing China both in trade, as well as militarily. How do you think this is all being viewed by not only the politburo in China, but by the populace at large? </strong>Hint: Not well.</p> <p>&nbsp;</p> <p><u><em><strong>As of this writing <a href="">anti-U.S. protesters are smashing iPhones&reg; in front of a KFC&trade;</a> and calling for boycotts in China. This is in direct retaliation of the South China Sea decision. It is also exactly the type of &ldquo;fruit&rdquo; that makes that &ldquo;platter&rdquo; ever the more tempting. i.e., Why invent a scapegoat when your people are giving you one?</strong></em></u></p> <p>&nbsp;</p> <p>China has also been sending signals both overtly, as well as implicitly when it comes to how they will approach whether or not items will be sold regardless of how a manufacture believes in respect to whether it has a recognized brand, copyright protection, or not.</p> <p>&nbsp;</p> <p>As I <a href="">stated in an earlier article</a> concerning China, here are a few points that should be raising alarm bells. To wit:</p> <p>&nbsp;</p> <p><em><strong>&ldquo;China just announced some form of reprisal against Apple&trade; stating a copyright infringement on its phones therefore halting future sales. The reports have been mixed. Some say it isn&rsquo;t true, some say it is. As of this writing I&rsquo;m not quite sure myself. But what made this allegation stand out to me was the most recent public statements from none other than Alibaba&trade; founder <a href="">Jack Ma when he stated &ldquo;fakes are better than originals.&rdquo;</a></strong></em></p> <p>&nbsp;</p> <p>That wasn&rsquo;t all. He went on to make other assertions such as this. To wit:</p> <p>&nbsp;</p> <p><em><strong>&ldquo;The problem is the fake products today are of better quality and better price than the real names,&rdquo; he said during a speech on Tuesday at Alibaba&rsquo;s headquarters in Hangzhou. &ldquo;They are exactly the [same] factories, exactly the same raw materials but they do not use the names.&rdquo;</strong></em></p> <p>&nbsp;</p> <p>&ldquo;Why such a statement unless&hellip;you&rsquo;re moving closer and closer to what China wants (or is demanding) you to accept. i.e., we make the stuff, start taking the credit and now openly state you&rsquo;re going to take the money associated with it. Trade agreement or no trade agreement. Besides, agreements? We don&rsquo;t need no stinkin agreements &ndash; we make the stuff! See my point?&rdquo;</p> <p>&nbsp;</p> <p>Millions of factory workers have been displaced in China over the last few years. Every developed economy via their central bank has been implementing some form of devaluation in one way or another. And you now have non other than the former chairman of the Fed. Ben Bernanke in the midst of all this flying over to Japan (China&rsquo;s #1 trading nemesis) openly flaunting how maybe &ldquo;helicopter money&rdquo; styled policies might be the next best thing for Japan. How do you think that is being viewed in China?</p> <p>&nbsp;</p> <p>The U.S. is currently playing a game a chicken in the contested waters of the South China Sea. N.A.T.O. is rattling sabres throughout Europe. The U.S. markets are at record heights. The ECB is buying up bonds levitating the values and solvency of its own manufacturers in Europe. Japan could at any moment embark on a &ldquo;helicopter money&rdquo; styled monetary policy making the &yen;en ever the weaker helping their manufacturing.(Sure they&rsquo;ve now openly stated this is not an option. Need I remind you of what they said about implementing N.I.R.P.?) South Korea is possibly embarking on their own further easing.</p> <p>&nbsp;</p> <p><em><strong>And what to all of this? China is to just sit there? With a stockpile of commodities, finished goods, stagnant factories, possible civil unrest directed at their own politburo? Are you starting to see the powder keg here? All while the West wags its finger and says &ldquo;You better keep that Yuan in check!&rdquo;</strong></em></p> <p>&nbsp;</p> <p>Thinking all this through just using my own prism of business experience there&rsquo;s only one conclusion I would make: Use your first mover advantage &ndash; and dump everything. Your first loss &ndash; is your best loss. That rationale comes from my early career (the meat industry) where that&rsquo;s still used because it&rsquo;s true.</p> <p>&nbsp;</p> <p>Yes, such a move may harm China, but it may hurt everyone else far more. And communist run countries can, and will, deal with their populace in ways and with calculations unfathomable to those in the West. i.e., Lenin&rsquo;s famous quote when told of the millions that were dying under Mao&rsquo;s regime and change, &ldquo;To make an omelet, you must be willing to break some eggs.&rdquo;</p> <p>&nbsp;</p> <p>When one brings up the term &ldquo;war&rdquo; people immediately think &ldquo;WW3&rdquo; via some form of armed nuclear exchange. I believe that (although the warning signs are there) is where the mistake lies. People are assuming there&rsquo;s only one way to fight a war today of global proportions. I&rsquo;m not in that camp. I believe it will come via monetarily &ndash; not military. At least at first. For once it takes place all bets are off as to what happens next.</p> <p>&nbsp;</p> <p><strong>The obvious first mover advantage for China (and all its current allies) would be to use the rhetoric coming out of the current U.S. political arena, along with current, as well as proposed monetary policies via the Fed, ECB, and Japan. Add to that the proposition for the possibility of the Fed. tightening in this economic climate making it a magnet for outflows, all against the backdrop of a former Fed. chairman tries to convince their #1 trade nemesis to devalue and deploy monetary interventions of historic measures.</strong></p> <p>&nbsp;</p> <p>I would take all the above (and would find even more examples) and spin it all for populace consumption as&nbsp; &ldquo;What else are we to do? Sit back while the world holds our trade, our currency, our waters, and our economy, even our workers hostage to their demands?!&rdquo; Then I&rsquo;d dump every and all possible goods flooding the markets, devalue the Yuan in one epic move. And let the chips fall where they may.</p> <p>&nbsp;</p> <p>From a business perspective: it would be of the utmost stupidity to just sit back and wait to see how you competitors were going to position themselves when nearly every move they make helps solidify their advantages and leaves you only some form of reaction mode.</p> <p>&nbsp;</p> <p>And to think in this current environment China is going to stay, or be held to, some form of &ldquo;reaction mode only&rdquo; is absolutely ludicrous. I know I wouldn&rsquo;t. And I made my mark in business as a &ldquo;turn around&rdquo; expert. And I&rsquo;m here to tell you, if my people came into the board room and laid out just some of the things I iterated earlier?<strong> I can say unequivocally what my first response would be: Do it &ndash; and now!</strong></p> <p>&nbsp;</p> <p>That &ldquo;bull&rdquo; I alluded to earlier in the china shop is this current &ldquo;bull####&rdquo; market<strong>. It is currently standing at the peak of absurdity with no volume, earnings, or any other fundamental reason. And its fragility is just the same as that of any fine piece of crystal or china. </strong>And all it will take to send everything crashing down in a frenzy of broken shards is when he gets spooked. But by then &ndash; it will be too late. It will be a first mover world advantage world only &ndash; reactionary will be as useless as the broken glass that befalls it. Central banks (let alone many government officials) are in no way prepared for what could take place if China decides &ldquo;it&rsquo;s time.&rdquo;</p> <p>And I believe they are weighing the precise time to move &ndash; not if.</p> <p>&nbsp;</p> <p>As I conclude these following two phrases kept coming into my head. I end with them because together I believe they frame just how precarious the markets, and for that matter, the global economy sits at the doorstep of what China decides to do next. Especially as I stated previously: in this current political, as well as economic and monetary environment.</p> <p>&nbsp;</p> <p><u><strong>First to quote Hugh Hendry: <a href="">&ldquo;If China devalues by 20% the world is over!&rdquo;</a></strong></u></p> <p>&nbsp;</p> <p>The other comes from the movie &ldquo;Margin Call&rdquo; when Jon Tuld (played by Jeremy Irons) states:<em><strong> &ldquo;It&rsquo;s not panicking if you&rsquo;re first.&rdquo;</strong></em></p> <p>&nbsp;</p> <p><strong>Mix in &ldquo;your first loss &ndash; is your best loss&rdquo; and you have a situation that has the near certainty of changing the global macro world in ways never dreamed imaginable. Not in the future, but right now.</strong></p> <p>&nbsp;</p> <p>And no one seems to even notice &ndash; let alone care.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>Of course, the &#39;stealth&#39; devaluation has been ongoing for months, it&#39;s just not always directed against the US dollar...</p> <p><a href=""><img height="303" src="" width="600" /></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="965" height="488" alt="" src="" /> </div> </div> </div> Apple Ben Bernanke Ben Bernanke Carry Trade Central Banks China Detroit ETC Global Economy Hugh Hendry Hugh Hendry Ireland Japan Monetary Policy None PrISM Yen Yuan Mon, 25 Jul 2016 00:00:00 +0000 Tyler Durden 567010 at Obama's "Deeply Disappointed" Half-Brother Will Vote Trump Because "He Speaks From The Heart" <p><strong>&quot;Mr. Trump is providing something new and something fresh,&quot; explains Malik Obama</strong> - President Obama&#39;s half brother - while wearing his resplendent red &#39;Make America Great Again&#39; cap. Describing his<strong> &ldquo;deep disappointment&rdquo; in his brother Barack&rsquo;s administration</strong>, <a href="">The NY Post reports,</a> has led him to recently switch allegiance to &quot;the party of Lincoln.&quot;</p> <p><a href=""><strong><img height="565" src="" width="472" /></strong></a></p> <p>As The New York Post reports, President Obama&rsquo;s Kenyan half-brother wants to make America great again &mdash; so he&rsquo;s voting for Donald Trump...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="text-decoration: underline;"><strong>&ldquo;I like Donald Trump because he speaks from the heart,&rdquo; </strong></span>Malik Obama told The Post from his home in the rural village of Kogelo. &ldquo;Make America Great Again is a great slogan. I would like to meet him.&rdquo;</p> <p>&nbsp;</p> <p>Obama, 58, a longtime Democrat, said his &ldquo;deep disappointment&rdquo; in his brother Barack&rsquo;s administration has led him to recently switch allegiance to &ldquo;the party of Lincoln.&rdquo;</p> </blockquote> <p><strong>The last straw, he said, came earlier this month when FBI Director James Comey recommended not prosecuting Democratic presidential candidate Hillary Clinton over her use of a private e-mail servers while secretary of state.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;She should have known better as the custodian of classified information,&rdquo; said Obama.</p> </blockquote> <p><strong>Obama plans to trek back to the US to vote for Trump in November</strong>. Obama used to live in Maryland, where he worked for many years as an accountant and is registered to vote there, public records show.</p> <p><a href=""><img height="361" src="" width="530" /></a></p> <p><strong>Malik Obama, the eldest, is the director of the Barack H. Obama Foundation, a controversial Virginia charity named for his father. </strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>He says he started the charity in 2008 because he wanted to make a difference in the family&rsquo;s hardscrabble village in Kenya.</p> <p>&nbsp;</p> <p>But the charity came under fire when The Post revealed in 2011 that it was an off-the-books operation that hadn&rsquo;t registered with the state of Virginia or, as it claimed, had tax-exempt status from the IRS.</p> <p>&nbsp;</p> <p><strong>Shortly after The Post report, the IRS gave its stamp of approval, leading to speculation that the president had intervened.</strong></p> </blockquote> <p><span style="text-decoration: underline;"><strong>Lately, family ties seem to be frayed.</strong></span> Obama, who was best man at the president&rsquo;s wedding, said he spoke to his brother a year ago and was miffed that he did nothing to help his own foray into politics when he ran for governor of the southwestern Kenyan county of Siaya in 2013.</p> <p>Malik Obama lost the race, and spent $20,000 of his own money on the unsuccessful campaign.</p> <p>&ldquo;I don&rsquo;t think politics is my thing,&rdquo; he told The Post. <em><strong>&ldquo;Honestly, I&rsquo;ll be happy when my brother is out of office, and I will finally be out of the limelight and be able to live like a human being.&rdquo;</strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="530" height="361" alt="" src="" /> </div> </div> </div> Donald Trump FBI New York Post President Obama Sun, 24 Jul 2016 23:30:00 +0000 Tyler Durden 567005 at Anti-US Sabotage Suspected After Massive Fire Breaks Out Near NATO Headquarters In Turkey <p>A massive fire erupted near a NATO base in the Buca district, near Izmir, Turkey. The fire broke out on Sunday evening in western Turkey. The fire blew through the grassy wooded area and is now perilously near NATO’s military base pushed forward by strong winds.</p> <p>The NATO base in proximity to the inferno is <a href="">Allied Land Command (LANDCOM</a>), the standing headquarters for NATO land forces in the region. The Commander LANDCOM is the prime land warfare advisor to the Alliance. From its Wikipedia page we learn that "when directed by the Supreme Allied Commander Europe, it provides the core of the headquarters responsible for the conduct of land operations. The command is based at Sirinyer (Buca), ?zmir in Turkey. </p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Large fire in Izmir Buca, near the NATO base in Turkey. Fire is approaching base <a href=""></a> <a href=""></a></p> <p>— Dreaming of Peace (@cjsienna55) <a href="">July 24, 2016</a></p></blockquote> <script src="//"></script><blockquote class="twitter-tweet"> <p dir="ltr" lang="en">VIDEO: Massive fire near NATO base in Izmir, Turkey<a href=""></a> <a href="">#TECH</a> <a href="">#News</a> <a href="">#Technology</a> <a href="">#aws</a> <a href="">#startup</a> <a href="">#Breaking</a></p> <p>— TGVIA (@TGVIA) <a href="">July 24, 2016</a></p></blockquote> <script src="//"></script><p>According to CNN Turk, the fire is threatening a number of populated areas, and has already impacted a home for the elderly and its adjacent garden.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="tr">?zmir Buca'da ki Yang?n Kontrol Alt?na Al?nam?yor! </p> <p>?hmal+Sabotaj:?zmir Yan?yor! <a href=""></a></p> <p>— Göztepe Life (@GoztepeLife) <a href="">July 24, 2016</a></p></blockquote> <script src="//"></script><p>In a surprising twist, local authorities are investigating the fire as a possible act of anti-American sabotage.</p> <p>The fire erupted shortly after Erdogan's leading Islamist paper headline officially targeted a US commander as coup leader adding his name &amp; picture, in what local commentators dubbed as an "all out war" by Erdogan on the US. </p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en"><a href="">#OMG</a>: leading Erdo?an's Islamist paper headline targets US commander as coup leader w name &amp; picture. <br />all out war? <a href=""></a></p> <p>— ilhan tanir (@WashingtonPoint) <a href="">July 24, 2016</a></p></blockquote> <script src="//"></script><p>It remains to be seen if anti-US sentiment in Turkey - allegedly for housing Fethullah Gulen and being the "mastermind" behind the coup, is on the rise. </p> <p>Under the NATO nuclear weapons sharing program, Washington maintains its largest overseas nuclear arsenal in Turkey, consisting of up to 50 nuclear weapons, according to some estimates, however most nukes are stored at the base at Incirlik, and none are reportedly stored in Izmir.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">I have seen things you people would not believe: NATO bases on fire off the coast of Izmir...<a href=""></a></p> <p>— Robin Monotti (@robinmonotti) <a href="">July 24, 2016</a></p></blockquote> <script src="//"></script><blockquote class="twitter-tweet"> <p dir="ltr" lang="tr">?zmir buca'da saat 8 deki durum bu <a href=""></a></p> <p>— Okan Parimli (@OkanParimli) <a href="">July 24, 2016</a></p></blockquote> <script src="//"></script><p>According to local press the fire has not yet been subdued.</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="500" alt="" src="" /> </div> </div> </div> None Turkey Twitter Twitter Sun, 24 Jul 2016 23:01:45 +0000 Tyler Durden 567027 at "Champagne Supernova" - IceCap Asks What Happens When The Bond Bubble Finally Pops <p><em>Submitted by Keith Decker of <a href="">IceCap Asset Management</a></em></p> <p><strong>Don’t Look Back in Anger</strong></p> <p>ENGLAND (Knebworth Park, 1996) – Owning the front of the stage, Liam Gallagher closed his eyes and liked what he saw. Thousands of screaming, pushing and kicking fans positioning themselves for the what would be THE concert of the year. </p> <p>For Liam, it was total chaos and he loved it. </p> <p>Twenty feet away, Noel Gallagher also closed his eyes but what he saw wasn’t chaotic at all. Instead of small pockets of rebellious concert goers, Noel saw a sea of 250,000 people strong. They ebbed and flowed and sang together – all eyes and hearts were focused on the stage gifting Oasis the energy to make THE concert of the year. </p> <p>For Noel, it was total harmony and he loved it. </p> <p>The concert turned into an instant classic in the music world. Both Liam and Noel, strummed together one of the best evenings of 90s rock ever to be recorded. As for the evening being chaotic or harmonious – it really depended upon your perspective. </p> <p>Today, the Gallagher brothers no longer speak to each other, let alone play music together. </p> <p>Perhaps Liam was right after all – the entire Oasis experience was complete chaos. Or maybe, Noel was correct – when all of the chaos was combined, the ending was both harmonious and predictable.</p> <p>As music imitates life, today many people are trying to make sense of the chaos swamping the world. </p> <p>Yet, if one looked at the world from a slightly different perspective, perhaps you too will see a world of harmony and one with a certain outcome.</p> <p>* * * </p> <p>Everything in the world is connected – political, social, economic, fiscal, monetary and financial markets are all intricately linked. Yet, what’s extremely interesting today is that for the first time in our lifetime, they are all converging toward extreme levels simultaneously. And once you see it, be prepared for a champagne supernova smile to wrap around your face and all your troubles to be half the world away.</p> <p><strong>Chaos or Harmony </strong></p> <p>To really grasp the enormity of the chaos around the world today, spend a few minutes on our Chart 1. </p> <p><a href=""><img src="" width="500" height="305" /></a></p> <p>As we’re an investment management firm, we ultimately focus on the net effect of the chaos on financial markets. We must remain objective and remove any political or social bias and simply accept the current environment as is – anything less would be a failure on our part as fiduciary investment manager. After all, that’s the ultimate bottom line for all of our clients. </p> <p>Investment managers must never fly with blinds wrapped around their heads – understanding how and why financial markets move will not only help protect your clients’ savings from losses, and provide opportunities for gains, but more importantly we can empower clients with the knowledge of how markets really work. </p> <p>Nowhere in this publication will you find us referring to certain companies as being cheap, or just stay invested for the long term – that mouth speak only applies during markets with very specific dynamics. And unfortunately, those dynamics are from the 80s and 90s. Yes, those days were awesome but unless you are a hippie, it doesn’t pay to live in the past. </p> <p>As we dive into the chaos you’ll begin to see and understand why you cannot rely upon your past experience and worse still the past wisdom of the big bank investment machines. </p> <p>But first, most know that IceCap is fully expecting a crisis in the government bond market and it will have ripple effects around and within the world. As we inch ever closer to the crisis tipping point, we continue to see more and more evidence to support our view. </p> <p>The other critical point to understand – and this precisely why the world has been jammed into this peculiar position - the majority cannot see and distinguish between the problems and the symptoms. </p> <p>Sadly, this rather easy, simple concept has been completely lost in the industry. Time and time again, we hear a complete misdiagnosis of the world’s problems. Instead of identifying the problems, most only see the symptoms – and, they are unable to decipher the difference. </p> <p>Our Chart 2, clearly shows the difference between the problem and the symptom. It’s rather to easy to see that the problems in the world today isn’t low growth, high debt and a rise of anti-establishment political parties. Instead, these are the symptoms of perceived corruption with the established political system and the horrible stimulus plans of deficits, zero/negative interest rates and money printing. </p> <p><a href=""><img src="" width="500" height="309" /></a></p> <p>Ironically, today the main problem is that governments and central banks will not admit that they are the problem. Solve this and everything else will fix itself. </p> <p>Yet as we hear more governments drone on about the need for the wealthy to pay their fair share in taxes and for companies to create jobs, as well as central bankers congratulate themselves for creating the wackiest interest rate environment this side of Mars, the odds of them admitting they are the problem are lower than England winning the next World Cup.</p> <p>Understanding the difference between the problem and the symptom will now allow you to refocus and see why we have chaos that is clearly coming together to provide clarity and harmony.</p> <p>Now, clearly the investment industry is chock full of very smart people. Everyone has very impressive credentials, and seemingly all have become a vice-president to some degree – yes, the degrees of success are unparalleled. </p> <p>Yet, in spite of all the financial wizardry the industry still suffers from the inability to distinguish the difference between perception and reality.</p> <p><strong>Perception </strong>is that the world’s central bankers are super heroes who can influence the economy, jobs, inflation and markets at their whim. </p> <p><strong>Reality </strong>shows that Janet Yellen, Mark Carney, Haruhiko Kuroda, and yes, even the Italian maestro Mario Draghi are just plain, ordinary people with apparently no super powers at all. In fact, every time this fantastic four spun their money magic – it made things worse.</p> <p>So, the next time your investment advisor and big bank proclaim that central banks are about to stimulate the economy and fix everything, know that this couldn't be any further from the truth. </p> <p>Next up, <strong>perception </strong>is that professional economists are able to see into the future and predict with uncanny accuracy exactly how, when and where economies will move. </p> <p>Yet <strong>reality </strong>shows that professional economists have predicted 0 of the last 7 recessions in the United States. Yes, collectively they have never, ever correctly forecast a bad time for anyone (source: Ned Davis Research). </p> <p>So, the next time your investment advisor and big bank proclaim that their economists are forecasting a recovery and no recession, know that this couldn’t be any further from the truth. </p> <p>And finally, <strong>perception </strong>shows traders on Wall Street, Bay Street and the City as being immortal, brainiacs who can create profits by merely rubbing two keyboards together. </p> <p>Yet, <strong>reality </strong>shows that 85% of traders on Wall Street have only been working in the industry since 2000 or earlier. In other words, the majority of traders have never seen a rising interest rate environment. And in fact, nearly 66% of traders have spent their entire career in a 0% and negative interest rate environment. </p> <p>So, the next time your investment advisor and big bank proclaim their mutual fund managers and traders have years of experience in all markets, know that this couldn’t be any further from the truth. </p> <p>Now that we know the difference between the problems and its symptoms, as well as understand the investment industry’s blindness between perception and reality, let’s sort through the world’s chaos. </p> <p>In the end, you too will see how the chaos is driving markets and capital towards a harmonious state.</p> <p>* * * </p> <p><em>The full breakdown is in the note below, but here are the highlights:</em></p> <p><strong><em><span style="text-decoration: underline;">Politics</span></em>: </strong></p> <p>The world’s political arena has started to make very dramatic changes. In effect, the old guard is on notice and something very different will be the replacement. Seemingly everywhere today, countries have been thrown into complete chaos due to the rise of “extreme” political parties. Yes, it’s happening, this cannot be denied.</p> <p>* * * </p> <p>Again, one has to ask not why would anyone vote for Trump, but instead ask why on earth would anyone vote for Hillary Clinton? </p> <p>Yes, lifelong Democrats will always vote for their party, just as lifelong Republicans will always vote for their party. Yet, today there is a fast growing segment of the American population that has become completely disenchanted with the old, political establishment. </p> <p>And unfortunately for the Democrats, Hillary Clinton represents this increasingly despised group.</p> <p>* * *</p> <p><em><span style="text-decoration: underline;"><strong>Social </strong></span></em></p> <p>While not often discussed within investment perspectives, social dynamics have suddenly become front and center in our daily discussions. And while each situation may appear chaotic on its own, when viewed in conjunction with other social tensions, it becomes easy to see how it is all connected. </p> <p><strong>The social reaction to the political establishment, and sluggish economy is deepening within certain countries as well as across different countries. </strong></p> <p>Americans are currently experiencing a disturbing trend of violence between the black population and the police. It is occurring across the country and tensions are escalating. In addition, Americans are also experiencing an enormous rise in income inequality. The rich are perceived to be benefiting significantly from everything happening in Washington, while the poor are left fighting over low paying jobs and declining standards of living. </p> <p>Students meanwhile, have been encouraged to borrow to obtain university degrees only to discover that upon graduating, most cannot obtain jobs in their fields of study and many are finding themselves moving back home to live with their parents – all while holding thousands of dollars in student loans. </p> <p>Europe is also experiencing social tensions. Similar to America, a significant number of youths are unable to find employment.</p> <p>* * * </p> <p><em><span style="text-decoration: underline;"><strong>Economics </strong></span></em></p> <p>Depending upon where you live, where you work and who you hang out with you are experiencing a different economy than many others. For many in San Francisco, London, and New York – life is very good. Housing prices have blasted through all-time highs. Bonuses are plentiful. And, local grass-fed beef and Nova Scotia lobster paired with Marcassin Vineyard Pinot Noir is simply called lunch. </p> <p>Others outside of these super successful pockets are doing okay. Jobs are okay, housing is okay and there’s always a reason to enjoy an end of week margherita pizza paired with the usual Chianti. And then we have another, entirely different group of people who are nowhere close to enjoying the finest of fine meals, and the stability of a well-paid job. </p> <p>Instead, this group is struggling right now. This group forms the majority of populations in Asia, the Americas, Europe and the Middle East. </p> <p>We bring this to your attention because, again it’s important to view the world not from your own personal position – no matter how comfortable or uncomfortable it may be.</p> <p>We talk and write frequently how the investment industry has an incredible knack for confusing the hats off investors. Countless big bank and mutual fund companies proclaim growth is booming and only their team of crack-analysts can identify incredible opportunities to make your money grow. </p> <p>Instead, just know two things:</p> <ol> <li>Global growth is declining. Chart 3 (next page) shows falling trends in global manufacturing, global industrial production and global earnings.</li> <li>If this wasn’t the case – our central banks and governments would not be aggressively pursuing extreme stimulative policies, nor would the entire European banking system be on life support. </li> </ol> <p>From this perspective, the global economy has certainly turned chaotic – yet considering the chaos everywhere else, this shouldn’t be a surprise at all.</p> <p>* * * </p> <p><strong>Fiscal Spending and Monetary Stimulus</strong></p> <p>We have been lead to believe that our economies can be controlled and influenced in 3 ways:</p> <p>1. Governments can spend more money to create jobs<br />2. Governments can lower taxes to create jobs<br />3. Central banks can lower interest rates to create jobs </p> <p>And, when packaged together it should really provide an incredible boost to our economies. </p> <p>And, when packaged, wrapped, bundled and cobbled together it should provide a superhero-size explosion to our economies. </p> <p><strong>Sadly, we’ve been mislead. </strong></p> <p>And even more sadly, it’s the continuation of these superhero-sized rescues that has completed the chaotic loop – the one that is on track to cause an enormous shift in global capital that hasn’t been seen in quite a while. </p> <p>The 2008-09 crisis was caused by the private sector. Regardless of the reason or the assigned blame, far too many people and companies borrowed way too much money and when the bubble eventually popped (they always do), millions of people and companies lost an awful lot of money. </p> <p>The one important thing to know from those dark days is that governments were told (by the banks) that in order to save the world they had to save the banks. But what few people realise is that when they saved the banks, two things happened:</p> <p>1. Tax payers and the most conservative investors from all over the world saved the banks – in other words, many who didn’t take the risk had to bailout those who took excessive risks.</p> <p>2. The bailout and stimulus programs simply shifted the enormous debt crisis away from the private sector and straight onto the laps of the public sector. </p> <p>In other words, the bubble has shifted away from the PRIVATE sector to the GOVERNMENT sector. </p> <p>And when the government sector has a crisis, it is reflected in the GOVERNMENT BOND MARKET. </p> <p>To put this government bond market crisis into perspective, we offer our Chart 4 (next page) which shows a relative comparison to recent crises from the private sector. </p> <p><a href=""><img src="" width="500" height="310" /></a></p> <p>&nbsp;</p> <p>* * * </p> <p>To really understand how serious of a problem this is, just know that a mere 1% rise in long-term interest rates, <strong>will create losses of approximately $2 Trillion for bond investors</strong>. The fun really starts when long-term yields increase by 3%, and then 6% and then 10%. This is the point when certain government bonds simply stop trading altogether, and losses pile up at 50%-75%.</p> <p>When long-term rates decline, it is usually in a gradual trending manner – such as what we are experiencing today. </p> <p>For those of you shaking your heads in disagreement, we kindly suggest you research your history of long-term interest rates.</p> <p><strong>However, when long-term rates go higher – it is an explosive move. Long-term rates ratchet up VERY quickly making the sudden loss instant, while exponentially increasing the funding cost of the borrower.</strong></p> <p>Most investors today have no idea what is happening in the bond market today and have exposed themselves to incredible amounts of risk. </p> <p>And more importantly, because a global crisis in the government bond market has never occurred in our lifetime – advisors, financial planners and big banks continue the tradition of telling their clients that bonds are safer than stocks. </p> <p>As a result, the most conservative investors in the word remain heavily invested in the bond market and are therefore smack dab in the middle of the riskiest investment they’ll ever see. </p> <p>Chaotic indeed.</p> <p>* * * </p> <p><em>Full Icecap Presentation (<a href="">PDF link</a>):</em></p> <p> <iframe src=";view_mode=scroll&amp;access_key=key-sfnH9MiKU2WCKjRLuhMB&amp;show_recommendations=true&amp;show_upsell=false" width="100%" height="600" frameborder="0" scrolling="no"></iframe></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="1264" height="784" alt="" src="" /> </div> </div> </div> Bond Central Banks Corruption Global Economy Housing Prices Janet Yellen Mars Middle East Reality Recession recovery Stop Trading Student Loans Sun, 24 Jul 2016 22:36:59 +0000 Tyler Durden 567025 at