en What Exactly Is Going On At Lake Mead? <p><a href="">Following our exposure of the plunge in Lake Mead water levels post Friday&#39;s earthquake,</a> officials were quick to point out that the drop was &quot;due to erroneous meter readings&quot; - which in itself is odd given we have not seen such an aberration before in the measurements. The data today shows a<strong> super surge in the Lake Mead water level</strong> - which, even more mysteriously, indicates from pre-earthquake to now, the <strong>Lake has risen by the most in a 3-day-period in years </strong>(as long as we have found history). How was this level &#39;manufactured&#39; you ask? Simple - <strong>discharge flows from the Hoover Dam were curtailed dramatically</strong>. <em>We are sure there is a simple explanation for all this...</em></p> <p>&nbsp;</p> <p><a href="">Yesterday we noted the plunge in Lake Mead water levels...</a></p> <p><a href=""><img height="274" src="" width="600" /></a></p> <p>&nbsp;</p> <p>Officials said - do not worry, the readings are faulty...</p> <blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en">Lake Mead&#39;s elevation has NOT dropped to 1,068 feet. Some inaccurate data was posted online. We are at 1,077 feet. <a href=""></a></p> <p>&mdash; Lake Mead (@LakeMeadNRA) <a href="">May 24, 2015</a></p></blockquote> <script src="//"></script><p>Which resulted in this miracle...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 279px;" /></a></p> <p>&nbsp;</p> <p>The biggest 3-day net surge in water levels (0.7 feet from Thursday to Sunday) on recent record...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 185px;" /></a></p> <p>&nbsp;</p> <p>How was this miracle achieved (given the total lack of precipitation)? <strong><u>Simple, discharge levels were curtailed drastically...</u></strong></p> <p><a href=""><img alt="" src="" style="width: 600px; height: 636px;" /></a></p> <p>&nbsp;</p> <p>Nope - nothing odd here at all...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 433px;" /></a></p> <p>&nbsp;</p> <p>So what exactly is going at Lake Mead?</p> <p>&nbsp;</p> <p><em>Charts: Zero Hedge, <a href=""></a></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1416" height="1021" alt="" src="" /> </div> </div> </div> Mon, 25 May 2015 18:00:16 +0000 Tyler Durden 506971 at The Market is Rapidly Running Out of Props… <p>While CNBC and the Financial Media trumpet the markets recent breakout to new highs, the market&rsquo;s internals are rapidly deteriorating.</p> <p>&nbsp;</p> <p>First and foremost, REAL investors have actually been fleeing the market in droves since the start of the year. This has NEVER happened before since stocks went truly vertical in late 2012.</p> <p>&nbsp;</p> <p>Put simply, money is now actively flowing out of stocks. This combined with recent statements from TD Ameritrade&rsquo;s CEO that retail investors are &ldquo;all in&rdquo; suggests, that there is little if any buying power in the markets from individual investors.</p> <p>&nbsp;</p> <p style="margin-left:.5in;"><img alt="" src="" style="width: 500px; height: 375px;" /></p> <p>&nbsp;</p> <p>This drop in equity flows also coincides with a drop in EPS (Driven by stock buybacks), which we have been tracking for some time.</p> <p>&nbsp;</p> <p style="margin-left:.5in;"><img alt="" src="" style="width: 500px; height: 365px;" /></p> <p>&nbsp;</p> <p>Remember, that corporations have been juicing EPS by issuing stock buybacks (by reducing the number of shares outstanding, the amount of earnings per share increases). And with corporate cash levels now having fallen to levels not seen since 2007 (13%) it&rsquo;s highly likely that EPS will be trailing off even faster going forward as corporates have less money available for buybacks.</p> <p>&nbsp;</p> <p>Thus, two of the biggest drivers of stocks (investors and corporate buybacks) already are or will be fleeing the market shortly.</p> <p>&nbsp;</p> <p>This leaves the Fed as the primary market prop.</p> <p>&nbsp;</p> <p>The Fed is no longer engaging in QE. It <em>does</em> provide the usual options expiration money pumps to help Wall Street shred options contracts&hellip; but this is just once a month. &nbsp;Without an active QE program, the Fed cannot pump billions of Dollars to Wall Street on a regular basis.</p> <p>&nbsp;</p> <p>This leaves Fed verbal intervention as the sole market prop.</p> <p>&nbsp;</p> <p>Because of the raging bullishness of investors, the Fed has been able to use effectively verbal interventions as market props in the past.</p> <p>&nbsp;</p> <p>Consider last October when stocks were collapsing. At that time, St Louis Fed President James Bullard said that the Fed cannot &ldquo;abide&rdquo; the drop in inflation expectations and suggested putting off the end of the Fed&rsquo;s remaining QE program.</p> <p>&nbsp;</p> <p>At this time the Fed has less than $5 billion in QE left&hellip; putting an amount that small off was negligible. To top if off, Bullard was a NON-voting member of the Fed board&hellip; so his views were largely irrelevant.</p> <p>&nbsp;</p> <p>&nbsp;And yet, his comments saved stocks&hellip; kicking off a move that has resulted in a 15 rally:</p> <p>&nbsp;</p> <p><img alt="" src="" style="width: 460px; height: 284px;" /></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>However, verbal interventions only work when the Fed has a carrot of some kind to dangle for stocks. The markets already know a rate hike isn&rsquo;t coming until December at the earliest&hellip; so the Fed has little if anything to incentivize traders to buy.</p> <p>&nbsp;</p> <p>Put simply: the market is quickly running out of props. Eventually we&rsquo;re going to get a correction. But with so little buying power in the markets that could correction would very easily become a Crash.</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>If you&#39;ve yet to take action to prepare for this, we offer a <strong>FREE</strong> investment report called the <strong><em>Financial Crisis &quot;Round Two&quot; Survival Guide </em></strong>that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.</p> <p>&nbsp;</p> <p>We are making <u>1,000 copies</u> available for FREE the general public.</p> <p>&nbsp;</p> <p>To pick up yours, swing by&hellip;.</p> <p><a href=""></a></p> <p>&nbsp;</p> <p>Best Regards</p> <p>Phoenix Capital Research</p> <p>&nbsp;</p> Primary Market St Louis Fed St. Louis Fed Mon, 25 May 2015 17:49:47 +0000 Phoenix Capital Research 506970 at Israel Refuses To Pay Old Oil Debt To Iran <p><a href=""><em>Submitted by Andy Tully via</em></a>,</p> <p><strong>Israel is refusing to comply with an order by a Swiss court that it pay $1.1 billion that it has owed to Tehran since before Iran&rsquo;s 1979 Islamic revolution for its share of a jointly owned oil pipeline.</strong></p> <p><em>&ldquo;Without referring to the matter at hand, we&rsquo;ll note that according to the Trading with the Enemy Act it is forbidden to transfer money to the enemy, including the Iranian national oil company,&rdquo;</em> the <a href="">Israeli Finance Ministry said in a statement</a>.</p> <p><strong>The complex dispute stems from 1968, </strong>when Shah Reza Pahlavi ruled Iran. The <a href="">Eilat Ashkelon Pipeline Co.</a> (EAPC) was created as a joint venture between an Israeli company, Trans-Asiatic Oil Ltd. (TAO), which is registered in Panama, and the National Iranian Oil Co. to supply Iranian oil to Europe.</p> <p>At that time, the oil was taken by ship to the Israeli port of Eilat at the northern tip of the Gulf of Aqaba. From there it moved through a network of pipelines to Ashkelon on Israel&rsquo;s Mediterranean coast, then to the northern Israeli port of Haifa and on to European customers.</p> <p>The National Iranian Oil Co. provided 14.75 million cubic meters of crude oil through the EAPC, earning $450 million for TAO.</p> <p>With relations between the two countries now severed, EAPC now is the sole operator of more than 450 miles of the EAPC pipelines in Israel, according to the company&rsquo;s website.</p> <p><strong>In its ruling, the Swiss court said the Israeli company hadn&rsquo;t paid its share owed to Iran before its 1979 Islamic revolution for buying and shipping that country&rsquo;s oil through an Israeli port, according to Iran&rsquo;s Islamic Republic News Agency (IRNA), quoting an &ldquo;informed source&rdquo; at Iran&rsquo;s Presidential Center for Legal Affairs.</strong></p> <p><a href="">Before Iran&rsquo;s revolution</a>, it and Israel were allied against the Sunni Muslim Arab nations in the region, who bridled against both the presence of a Jewish state in the Middle East and against Iran, a country that predominantly adheres to rival Shi&rsquo;a Islam.</p> <p><strong>Now Iran and Israel are sworn enemies,</strong> with Tehran providing billions of dollars in military and financial aid to groups aligned against Israel, including Hezbollah in Lebanon and Hamas in Gaza.</p> <p><u><strong>After the revolution, when Iran made clear its enmity to the Jewish state, Israel expropriated all Iran&rsquo;s assets in its territory. That included effectively nationalizing the pipeline.</strong></u></p> <p>Iran responded with three international arbitration suits in both Swiss and French courts not only for what it said were billions owed for Israel&rsquo;s operation of the pipeline, but also for other expropriated assets.</p> <p>The IRNA report says the Swiss court&rsquo;s ruling involves only Iran&rsquo;s delivery of the 14.5 million cubic meters of crude as part of the old joint venture.</p> <p>At first, in 1989, the court ordered TAO to pay $500 million, which included interest, to Fimarco Anstalt, a subsidiary of the National Iranian Oil Co. registered in Lichtenstein before the 1979 revolution.</p> <p>That ruling was put on hold, however, because of a dispute over issues including the amount of interest owed. IRNA reports that the latest ruling brings an end to that case. <em><strong>According to the court, Israel&#39;s liability includes not only the $1.1 billion for its share in EAPC, but an additional $7 million to cover Iran&rsquo;s legal fees.</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="216" height="194" alt="" src="" /> </div> </div> </div> Crude Crude Oil Iran Israel Middle East Mon, 25 May 2015 17:30:14 +0000 Tyler Durden 506951 at US Accuses Iraq Army Of Cowardice, Says "More Firepower Support" Needed Against ISIS <p>On Saturday, we discussed a <a href="">possible shift</a> in US policy as it relates to boots on the ground in Iraq. Recapping, ISIS has recently launched what the media is billing as an “offensive”, seizing the Syrian city of Palmyra (an archaeological treasure) and Ramadi in Iraq. The group also <a href="">claimed responsibility</a> for a suicide bombing in a Saudi mosque that killed 21 on Friday.&nbsp;</p> <p>Against this backdrop the calls for a more aggressive US military response have begun and it now appears that one possibility under consideration is the deployment of so-called “spotters” to help ensure that US airstrikes are maximally effective. Of course, as we noted over the weekend, once the “spotting” starts, mission creep will set in quickly and it won’t be long before the Syrian incursion aimed at ousting Bashar al-Assad is on, with the destruction of ISIS as the excuse.&nbsp;</p> <p>Two days and one <a href="">supposed ISIS nuclear attack plot</a> later and the calls for a change in strategy have gotten a lot louder with Defense Secretary Ash Carter questioning the Iraqi army’s resolve and uber-hawk John McCain calling for the deployment of special forces. WSJ has more:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Defense Secretary Ash Carter held open the possibility of a strategy shift by the White House on Iraq, a few days after recent setbacks in Iraq and Syria revived sharp criticism of the Obama administration’s approach in combating extremist groups there.</em></p> <p>&nbsp;</p> <p><em>Islamic State forces last week captured the key Iraqi city of Ramadi and also expanded their reach in Syria. Critics and even allies of the administration took to Sunday television talk shows to call for a strategy change by the administration to stem the advance of Islamic State forces…</em></p> <p>&nbsp;</p> <p><em>House Armed Services Chairman Mac Thornberry (R., Texas) said on ABC’s “This Week” that the battle in Ramadi was among the many reasons why he doubted the Obama administration’s claim that U.S. efforts have succeeded in degrading the strength of ISIS.</em></p> <p>&nbsp;</p> <p><em>“I don’t see evidence of that,” said Mr. Thornberry. “I see ISIS gaining territory in Iraq and Syria.” What is more, he said, “their ideology, their approach, their brand is growing faster than their territory.”</em></p> <p><em>Mr. Carter offered a withering critique of the will of Iraqi defense forces in the fall of Ramadi to Islamic State.</em></p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong><em>“The Iraqi forces just showed no will to fight,” he said. “They were not outnumbered. In fact they vastly outnumbered the opposing force and yet they failed to fight and withdrew from the site...We can give them training, we can give them equipment. We obviously can’t give them the will to fight.”</em></strong></span></p> <p>&nbsp;</p> <p><em><strong>John McCain, (R., Ariz.), chairman of the Senate Armed Service Committee, on CBS’s “Face the Nation” called for U.S. special forces in Iraq, in addition to forward air controllers who help direct bombing missions from the air. </strong>Right now, he said, the U.S. has “no strategy” for halting the advance of the Islamic State. “Anybody that says there is, I’d like to hear what it is,” Mr. McCain added.</em></p> <p>&nbsp;</p> <p><em>Michele Flournoy, who served as undersecretary of defense under Mr. Obama from 2009 to 2012, and was in the running for the top job, said the administration needs to do more to turn the tide in Iraq.</em></p> <p><em><br /></em></p> <p><em>“We have under-resourced the strategy,” she said on CNN. <strong>“We need to provide more firepower support.”</strong></em></p> </blockquote> <p>For their part, the Iraqis denied Carter’s assessment — which amounted to calling Ramadi’s defenders cowards — blaming poor strategy and, ironically, inadequate air support for the defeat.</p> <p>Via <a href="">AP</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>A spokesman for the Iraqi government said Monday that Carter's remarks were surprising and that the U.S. defense chief had been given "incorrect information." In a statement, Saad al-Hadithi said the fall of Ramadi was due to mismanagement and poor planning by some senior military commanders in charge of Ramadi.</em></p> <p>&nbsp;</p> <p><strong><em>Iraqi lawmaker Hakim al-Zamili, the head of the parliamentary defense and security committee, called Carter's comments "unrealistic and baseless," in an interview Sunday with The Associated Press.</em></strong></p> <p>&nbsp;</p> <p><em>"The Iraqi army and police did have the will to fight IS group in Ramadi, but these forces lack good equipment, weapons and aerial support," said al-Zamili, a member of the political party headed by radical Shia cleric Muqtada al-Sadr, who is stridently anti-American.</em></p> <p>&nbsp;</p> <p><em>American officials say they are sending anti-tank weapons to the Iraqi military. But they also noted that Iraqi forces were not routed from Ramadi— they left of their own accord, frightened in part by a powerful wave of Islamic State group suicide truck bombs, some the size of the one that destroyed the federal building in Oklahoma City two decades ago, said a senior State Department official who spoke to reporters last week under ground rules he not be named.</em></p> <p>&nbsp;</p> <p><em>A senior defense official said that the troops who fled Ramadi had not been trained by the U.S. or its coalition partners. The official was not authorized to address the matter publicly and spoke on condition of anonymity.</em></p> </blockquote> <p>Apparently, the possible destruction of a UNESCO world heritage site, the seizure of a key Iraqi city, and a suicide bombing in a Saudi mosque weren't deemed effective enough when it comes to rallying supoort for a ground incursion, so we promptly got a US Defense Secretary telling the world that the Iraqi army is not only incapable of heading off the ISIS advance but in fact lacks the will to defend itself and because that still wasn't enough, the group has now promised to turn one lucky US city into a mushroom cloud.&nbsp;</p> <p>But all of that is nothing a little stepped up "firepower support" can't remedy which is why we say again that we would not be at all surprised if sometime in the next thirty days President Obama announces the deployment of a 'small' tactical force to 'stabilize' the situation in Iraq, a force which will then grow and cross the border into Syria where ISIS will quickly discover what happens when the CIA decides it's time to issue a burn notice on a former 'asset'.&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="252" height="164" alt="" src="" /> </div> </div> </div> Iraq John McCain Oklahoma President Obama White House Mon, 25 May 2015 17:00:25 +0000 Tyler Durden 506969 at Kunstler: There Are Only 2 Choices For The Masses - "Doomer" Or "Wisher" <p><a href=""><em>Submitted by James H. Kunstler via,</em></a></p> <p>America takes pause on a big holiday weekend requiring little in the way of real devotions beyond the barbeque deck with<strong> two profoundly stupid movie entertainments that epitomize our estrangement from the troubles of the present day.</strong></p> <p><span style="text-decoration: underline;"><strong>First there’s Mad Max: Fury Road,</strong></span> which depicts the collapse of civilization as a monster car rally. They managed to get it exactly wrong. The present is the monster car show. Houston. Los Angeles. New Jersey, Beijing, Mumbai, etc. In the future, there will be no cars, gasoline-powered, electric, driverless, or otherwise. Mad Max: Fury Road is actually a perverse exercise in nostalgia, as if we’re going to miss being a nation of savages in the driver’s seat, acting out an endless and pointless competition for our little place on the highway.</p> <p><span style="text-decoration: underline;"><strong>The other holiday blockbuster is Disney’s Tomorrowland, </strong></span>another exercise in nostalgia for the present, where the idealized human life is a matrix of phone apps, robots, and holograms. Of course, anybody who had been to Disneyland back in the day remembers the old Tomorrowland installation, which eventually had to be dismantled because its vision of the future had become such a joke — starting with the idea that the human project’s most pressing task was space travel. Now, at this late date, the monster Disney corporation — a truly evil empire — sees that more money can be winkled out of the sore-beset public by persuading them that techno-utopia is at hand, if only we click our heels hard enough.</p> <p>Another theme running through both films is the idea that girls can be what boys used to be, that it’s “their turn” to be masters-of-the-universe, that men are past their sell-by date and only exist to defile and humiliate females. That this message is really only a mendacious effort to rake in more money by enlarging the teen “audience share” for the reigning wishful fantasy du jour is surely lost on the culture commentators, who are so busy these days celebrating the triumph and wonder of transgender life.</p> <p><em><strong>The reviewers are weighing these two movies on the popular pessimism / optimism scale. These are the only choices for the masses: whether to be a “doomer” or a “wisher.” Both positions are cartoon world-views that don’t provide much guidance for continuing the project of civilization, in case anyone is actually interested in that. It’s either rampaging id or the illusion of supernatural control, take your pick. I find both stances revolting.</strong></em></p> <p><span style="text-decoration: underline;"><strong>Anyway, it’s interesting that the real Fury Road of the right now runs from Syria into Iraq starring ISIS.</strong></span> There is a growing sentiment in the news media (including the web, of course) of a sickening déjà vu with these developments. The old familiar talk of air strikes and ground troops infects the wifi transmissions. Maybe we should think about sending Charlize Theron over there with a few vestigial male sidekicks to load her assault rifle. How else to git’er done? Nobody knows.</p> <p><strong>Memorial Day is a dreary moment to have to face this onrushing calamity of rocket-propelled medievalism rampant — all those poor American soldiers blown up and mangled the past twelve years.&nbsp;</strong> It’s also interesting that the news media is totally out-of-touch with the biggest prize on the great gameboard: Saudi Arabia. <strong>You think ISIS overrunning Iraq is bad news? Wait until the ordnance starts flying around Riyadh.</strong> Notice, too, that there’s no news coming out of Yemen on the base of the Arabian peninsula, a failed state with a population nearly equal to its neighbor. If we have any idea what’s going on there — and surely the Pentagon and NSA do — then it’s not for popular consumption.</p> <p>This is ironic because if the trouble happens to spread into Saudi Arabia — and I don’t see how it will not — then we’ll find out in a New York minute how <strong>America’s future is not about monster trucks, cars, dirt bikes, holograms, phone apps, and all the other ridiculous preoccupations of the moment</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="390" height="190" alt="" src="" /> </div> </div> </div> ETC Iraq Saudi Arabia Mon, 25 May 2015 16:30:10 +0000 Tyler Durden 506955 at ECB's Bizarro QE Taper May Add To Summer Bond Market Volatility, Citi Says <p>Last Monday, the ECB’s Benoit Coeure did a funny thing. He <a href="">told a non-public audience</a> of hedge funds that because markets are usually less liquid in the July-August “lull”, the central bank would be “slightly” front-loading PSPP purchases in May and June. </p> <p>Perhaps it hadn’t occurred to Coeure the degree to which the market is now completely beholden to central banks or perhaps the idea that flow trumps total stock every time when it comes to central bank liquidity injections is lost on the French economist but whatever the case, he got a valuable lesson in broken markets the following morning when that very material and very non-public information became publicly available and the EURUSD promptly plunged 150 pips.</p> <p>The reason the market cares so much about what the ECB might have assumed was a fairly benign policy move is that regardless of whether or not the overall size of PSPP has changed, front-loading asset purchases in May and June amounts to an expansion of Q€ and it means that in months when net supply is negative, the market will have to cope with what is effectively a forced taper, something we began discussing just two days after the program got off the ground in March. </p> <p>Citi's Matt King has more on what we've called the ECB's "<a href="">bizarro taper</a>":</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong><em>If the ECB had wanted to test the extent to which traders were hanging on their every word, they could hardly have come up with a better experiment than to promise to boost the pace of QE purchases today, only to cut it back during the summer. </em></strong><em>We reckon that would have been quite sufficient to produce a market reaction by itself, even without the added questions regarding the manner in which the news was released.</em></p> <p>&nbsp;</p> <p><em style="font-size: 1em; line-height: 1.3em;"><span style="text-decoration: underline;"><strong>Unfortunately what might seem a mere technicality produces very real effects on the trading floor. </strong></span>Yes, the total stock of QE will remain unchanged, and the tweak was supposedly designed to reduce market volatility in the face of significantly lower net government issuance in the summer rather than to add to it. But all our evidence points in practice to it being the flow of purchases which is the main driver of market movements, not the stock. <strong>If, as Coeuré said, you are concerned about the rapidity of the market moves, it seems odd, in our view, to give everyone an incentive to get longer today only to sell again tomorrow.</strong></em></p> </blockquote> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>&nbsp;</p> <p><em><strong><img src="" width="674" height="337" /><br /></strong></em></p> <p>&nbsp;</p> </blockquote> <p>King is referring to the following comment&nbsp;<span style="line-height: 20.8000011444092px; font-size: 1em;">Coeure made at the same event:</span></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>“[The] rapidity [of the Bund sell-off] is yet another incident of extreme volatility in global capital markets showing signs of reduced liquidity."</em></p> </blockquote> <p>That is indeed the case, but what seems to have been lost here is that<strong> if one is truly worried about dramatic instances of investors suddenly moving into or out of an asset class, one thing you would absolutely not want to do is encourage market timing by suggesting to traders that the central bank bid will vary depending on the month and depending on supply.&nbsp;</strong></p> <p>Nevertheless, that is exactly what Coeure has done, and so once again, we present the following graphic which should prove quite useful in determing what pattern ECB purchases will follow for the remainder of the year:</p> <p><span style="line-height: 20.8000011444092px; font-size: 1em;"><a href=""><img src="" width="600" height="192" /></a></span></p> <p>Or maybe not, because when you're buying into a fiscal retrenchment, sourcing purchase-eligible sovereign paper is difficult, and so ironically, the ECB's front-loading efforts, designed to ameliorate an anticipated lack of supply, appear to be complicated by, wait for it... a scarcity of government bonds, because as you can see from the following, the central bank's holdings of government and agency debt actually grew at their slowest pace in three weeks in the week ended Friday.&nbsp;</p> <p><a href=""><img src="" width="600" height="304" /></a></p> <p>Mission accomplished?</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="956" height="485" alt="" src="" /> </div> </div> </div> Bond Capital Markets Central Banks Market Timing Volatility Mon, 25 May 2015 16:01:19 +0000 Tyler Durden 506960 at Chinese IPO 826 Times Oversubscribed <p><a href=""><img src="" width="574" height="141" /></a></p> <p>&nbsp;</p> <p><a href=""><em>Reuters reports (reporting by Hong Kong and Singapore newsrooms),</em></a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Shandong Shihua Shenghua Group Co Ltd says <strong>online part of Shanghai IPO attracted interest amounting to 825.91 times amount on offer.</strong></p> </blockquote> <p>This will end well... we are sure. </p> <p><span style="text-decoration: underline;"><strong><a href="">Remember when Dubai "peaked".</a>..</strong></span></p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="316" /></a></p> Dubai Hong Kong Reuters Mon, 25 May 2015 15:35:20 +0000 Tyler Durden 506956 at Did Someone Forget To Tell The Machines The US Is Shut Today? <p>"Unrigged"... European weakness - on the heels of increasing event risk and slowing ECB purchases - provided downward impetus to global risk assets this morning... but the machines <span style="text-decoration: line-through;">rigging</span> running US equity futures appears to have forgotten that the US markets are shut and sparked the ubiquitous rampathon back to unchanged for S&amp;P futures <em>(on less than 10% of daily average pro-rata volume)</em>.</p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="313" /></a></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="956" height="498" alt="" src="" /> </div> </div> </div> Mon, 25 May 2015 15:20:17 +0000 Tyler Durden 506957 at Mario Draghi's Slippery Downward Slope <p><a href=""><em>Submitted by Raul Ilargi Meijer via The Automatic Earth blog</em></a>,</p> <p><strong>Mario Draghi made another huge faux pas last week, but it looks like the entire world press has become immune to them,</strong> because it happens all the time, because they don&rsquo;t realize what it means, and because they have a message if not a mission to sell. But still, none of these things makes it alright. Nor does Draghi&rsquo;s denying it was a faux pas to begin with.</p> <p>And while that&rsquo;s very worrisome,<strong> &lsquo;the public&rsquo; appear to be as numbed and dumbed down to this as the media themselves are </strong>-largely due to &rsquo;cause and effect&rsquo;, no doubt-. We saw an account of a North Korean defector yesterday lamenting that her country doesn&rsquo;t have a functioning press, and we thought: get in line.</p> <p><strong>It&rsquo;s one thing for the Bank of England to research the effects of a Brexit.</strong> It&rsquo;s even inevitable that a central bank should do this, but both the process and the outcome would always have to remain under wraps. Why it was &lsquo;accidentally&rsquo; emailed to the Guardian is hard to gauge, but it&rsquo;s not a big news event that such a study takes place. The contents may yet turn out to be, but that doesn&rsquo;t look all that likely.</p> <p>The reason the study should remain secret is, of course, that a Brexit is a political decision, and a country&rsquo;s central bank can not be party to such decisions.</p> <p><strong>It&rsquo;s therefore quite another thing for ECB head Mario Draghi to speak in public about reforms inside the eurozone.</strong> Draghi can perhaps vent his opinion behind closed doors, for instance in talks with politicians in European nations, but any and all eurozone reforms remain exclusively political decisions, even if they are economic reforms, and therefore Draghi must stay away from the topic, certainly in public. Far away.</p> <p><strong>There has to be a very clear line between central banks and governments. </strong>The latter should never be able to influence the former, because it would risk making economic policy serve only short term interests (until the next election). Likewise the former should stay out of the latter&rsquo;s decisions, because that would tend to make political processes skewed disproportionally towards finance and the economy, at the potential cost of other interests in a society.</p> <p><strong>This may sound idealistic and out of sync with the present day reality, but if it does, that does not bode well.</strong> It&rsquo;s dangerous to play fast and loose with the founding principles of individual countries, and perhaps even more with those of unions of sovereign nations.</p> <p>Obviously, in the same vein it&rsquo;s <strong>fully out of line for German FinMin Schäuble to express his opinion on whether or not Greece should hold a referendum on euro membership</strong>, or any referendum for that matter. Ye olde Wolfgang is tasked with Germany&rsquo;s financial politics, not Greece&rsquo;s, and being a minister for one of 28 EU members doesn&rsquo;t give him the liberty to express such opinions. Because all EU nations are sovereign nations, and no foreign politicians have any say in other nations&rsquo; domestic politics.</p> <p>It really is that simple, no matter how much of this brinkmanship has already passed under the bridge. Even Angela Merkel, though she&rsquo;s Germany&rsquo;s political leader, must refrain from comments on internal Greek political affairs. She must also, if members of her cabinet make comments like Schäuble&rsquo;s, tell them to never do that again, or else. It&rsquo;s simply the way the EU was constructed. There is no grey area there.</p> <p><strong>The way the eurozone is treating Greece has already shown that it&rsquo;s highly improbable the union can and will last forever.</strong> Too many -sovereign- boundaries have been crossed. Draghi&rsquo;s and Schäuble&rsquo;s comments will speed up the process of disintegration. They will achieve the exact opposite of what they try to accomplish. The European Union will show itself to be a union of fairweather friends. In Greece, this is already being revealed.</p> <p>The eurozone, or European monetary union, has now had as many years of economic turmoil as it&rsquo;s had years of prosperity. And it&rsquo;ll be all downhill from here on in, precisely because certain people think they can afford to meddle in the affairs of sovereign nations. The euro was launched on January 2002, and was in trouble as soon as the US was, even if this was not acknowledged right away. Since 2008, Europe has swung from crisis to crisis, and there&rsquo;s no end in sight.</p> <p>At the central bankers&rsquo; undoubtedly ultra luxurious love fest in Sintra, Portugal, where all protagonists largely agree with one another, Draghi on Friday held a speech. And right from the start, he started pushing reforms, and showing why he really shouldn&rsquo;t. Because what he suggests is not politically -or economically- neutral, it&rsquo;s driven by ideology.</p> <p><strong>He can&rsquo;t claim that it&rsquo;s all just economics. </strong>When you talk about opening markets, facilitating reallocation etc., you&rsquo;re expressing a political opinion about how a society can and should be structured, not merely an economy.</p> <p style="margin-left: 20px;"><a href="" target="new"><span style="font-size: 13px; color: #ff2222; font-weight: bold;"> Structural Reforms, Inflation And Monetary Policy (Mario Draghi) </span> </a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Our strong focus on structural reforms is not because they have been ignored in recent years. On the contrary, a great deal has been achieved and we have praised progress where it has taken place, including here in Portugal. Rather, if we talk often about structural reforms it is because we know that our ability to bring about a lasting return of stability and prosperity does not rely only on cyclical policies &ndash; including monetary policy &ndash; but also on structural policies. The two are heavily interdependent.</em></p> <p>&nbsp;</p> <p><em>So what I would like to do today in opening our annual discussions in Sintra is, first, to explain what we mean by structural reforms and why the central bank has a pressing and legitimate interest in their implementation. And second, to underline why being in the early phases of a cyclical recovery is not a reason to postpone structural reforms; it is in fact an opportunity to accelerate them.</em></p> <p>&nbsp;</p> <p><em>Structural reforms are, in my view, best defined as policies that permanently and positively alter the supply-side of the economy. This means that they have two key effects. First, they lift the path of potential output, either by raising the inputs to production &ndash; the supply and quality of labour and the amount of capital per worker &ndash; or by ensuring that those inputs are used more efficiently, i.e. by raising total factor productivity (TFP). </em></p> <p>&nbsp;</p> <p><em>And second, <strong>they make economies more resilient </strong>to economic shocks by <strong>facilitating price and wage flexibility and the swift reallocation of resources </strong> within and across sectors. These two effects are complementary. An economy that rebounds faster after a shock is an economy that grows more over time, as it suffers from lower hysteresis effects. And the same structural reforms will often increase both short-term flexibility and long-term growth.</em></p> </blockquote> <p>And earlier in the -long- speech he said:<em> &ldquo;Our strong focus on structural reforms is not because they have been ignored in recent years. On the contrary, a great deal has been achieved and we have praised progress where it has taken place, including here in Portugal.</em></p> <p>So Draghi states that reforms have already been successful. Wherever things seem to go right, he will claim that&rsquo;s due to &lsquo;his&rsquo; reforms. Wherever they don&rsquo;t, that&rsquo;s due to not enough reforms. His is a goalseeked view of the world.</p> <p><strong>He claims that the structural reforms he advocates will lead to more resilience and growth. But since these reforms are for the most part a simple rehash of longer running centralization efforts, we need only look at the latter&rsquo;s effects on society to gauge the potential consequences of what Draghi suggests. </strong>And what we then find is that the entire package has led to growth almost exclusively for large corporations and financial institutions. And even that growth is now elusive.</p> <p>Neither reforms nor stimulus have done much, if anything, to alleviate the misery in Greece or Spain or Italy, and Portugal is not doing much better, as the rise of the Socialist Party makes clear. The reforms that Draghi touts for Lisbon consist mainly of cuts to wages and pensions. How that is progress, or how it has made the Portuguese economy &lsquo;more resilient&rsquo;, is anybody&rsquo;s guess.</p> <p>Resilience cannot mean that a system makes it easier to force you to leave your home to find work, but that is exactly what Draghi advocates. Instead, resilience must mean that it is easier for you to find properly rewarded work right where you are, preferably producing your own society&rsquo;s basic necessities. That is what would make your society more capable of withstanding economic shocks.</p> <p>Still, it&rsquo;s the direct opposite of what Draghi has in mind.<strong> Draghi states that [structural reforms] <em>&ldquo;.. make economies more resilient to economic shocks by facilitating price and wage flexibility and the swift reallocation of resources within and across sectors.&rdquo;</em></strong></p> <p>That obviously and simply means that, if it pleases the economic elites who own a society&rsquo;s assets, your wages can more easily be lowered, prices for basic necessities can be raised, and you yourself can be &lsquo;swiftly reallocated&rsquo; far from where you live, and into industries you may not want to work in that don&rsquo;t do anything to lift your society.</p> <p>Whether such kinds of changes to your society&rsquo;s framework are desirable is manifestly a political theme, and an ideological one. They may make it easier for corporations to raise their bottom line, but they come at a substantial cost for everyone else.</p> <p><strong>Draghi tries to push a neoliberal agenda even further, and that&rsquo;s a decidedly political agenda, not an economic one.</strong></p> <p>There was a panel discussion on Saturday in which Draghi defended his forays into politics, and he was called on them:</p> <p style="margin-left: 20px;"><a href="" target="new"><span style="font-size: 13px; color: #ff2222; font-weight: bold;"> Draghi and Fischer Reject Claim Central Banks Are Too Politicised</span> </a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>The ECB president on Saturday said his calls were appropriate in a monetary union where growth prospects had been badly damaged by governments&rsquo; resistance to economic reforms. Mr Draghi said it was the central bank&rsquo;s responsibility to comment if governments&rsquo; inaction on structural reforms was creating divergence in growth and unemployment within the eurozone, which undermined the existence of the currency area. &ldquo;In a monetary union you can&rsquo;t afford to have large and increasing structural divergences,&rdquo; the ECB president said. &ldquo;They tend to become explosive.&rdquo; </em></p> </blockquote> <p>He even claims it&rsquo;s his responsibility to make political remarks&hellip;.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Mr Draghi&rsquo;s defence of the central bank came after Paul De Grauwe, an academic at the London School of Economics, challenged his calls for structural reforms earlier in the week. Mr De Grauwe said central banks&rsquo; push for governments to take steps that removed people&rsquo;s job protection would expose monetary policy makers to criticism over their independence to set interest rates.</em></p> <p>&nbsp;</p> <p><em>The ECB president [..] said central banks had been wrong to keep quiet on the deregulation of the financial sector. &ldquo;We all wish central bankers had spoken out more when regulation was dismantled before the crisis,&rdquo; Mr Draghi said. A lack of structural reform was having much more of an impact on poor European growth than in the US, he added. </em></p> </blockquote> <p>De Grauwe is half right in his criticism, but only half. It&rsquo;s not just about the independence to set interest rates, it&rsquo;s about independence, period. A central bank cannot promote a political ideology disguised as economic measures. It&rsquo;s bad enough if political parties do this, or corporations, but for central banks it&rsquo;s an absolute no-go area.</p> <p>Pressure towards a closer economic and monetary union in Europe is doomed to fail because it cannot be done without a closer political union at the same time. They&rsquo;re all the same thing. They&rsquo;re all about giving up sovereignty, about giving away the power to decide about your own country, society, economy, your own life. And Greeks don&rsquo;t want the same things as Germans, nor do Italians want to become Dutch.</p> <p><strong>Because of Greece, many EU nations are now increasingly waking up to what a &lsquo;close monetary union&rsquo; would mean, namely that Germany would be increasingly calling the shots all over Europe. </strong>No matter how many technocrats Brussels manages to sneak into member countries, there&rsquo;s no way all of them would agree, and it would have to be a unanimous decision.</p> <p><u><strong>Draghi&rsquo;s remarks therefore precipitate the disintegration of Europe, and it would be good if more people would recognize and acknowledge that.</strong></u> Europe are a bunch of fairweather friends, and if everyone is not very careful, they&rsquo;re not going to part ways in a peaceful manner. The danger that this would lead to the exact opposite of what the EU was meant to achieve, is clear and present.</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="173" height="162" alt="" src="" /> </div> </div> </div> Bank of England Central Banks ETC European Union Eurozone Fail Germany Greece Italy Monetary Policy None Portugal Reality recovery SWIFT Unemployment Mon, 25 May 2015 15:05:55 +0000 Tyler Durden 506950 at ISIS Planning US Nuclear Attack In Next 12 Months: Report <p>Three weeks after the <a href="">first supposed attack by Islamic State supporters in the US</a>, in which two ISIS "soldiers" wounded a security guard before they were killed in Garland, Texas, the time has come to raise the fear stakes. </p> <p>In an article posted in the terrorist group's English-language online magazine Dabiq (which as can be see below seems to have gotten its design cues straight from Madison Avenue and is just missing glossy pages filled with 'scratch and sniff' perfume ads ) ISIS claimed that it has enough <a href="">money to buy a nuclear weapon from Pakistan </a>and "carry out an attack inside the United States next year."</p> <p><img src="" width="600" height="338" /></p> <p>In the article, the ISIS columnist said the weapon could be smuggled into the United States via its southern border with Mexico. </p> <p>Curiously, the author of the piece is John Cantlie, a British photojournalist who was abducted by ISIS in 2012 and has been held hostage by the organization ever since; he has appeared in several videos since his kidnapping and criticized Western powers. </p> <p><a href=""><img src="" width="600" height="375" /></a></p> <p><em>John Cantlie</em></p> <p>As the <a href="">Telegraph notes</a>, "Mr Cantlie, whose fellow journalist hostages have all either been released or beheaded, has appeared in the group’s propaganda videos and written previous pieces. In his latest work, presumed to be written under pressure but in his hall-mark style combining hyperbole, metaphor and sarcasm, he says that President Obama’s policies for containing Isil have demonstrably failed and increased the risk to America."</p> <p>Cantlie describes the following "hypothetical" scenario in Dabiq :</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Let me throw a hypothetical operation onto the table. <strong>The Islamic State has billions of dollars in the bank, so they call on their wil?yah in Pakistan to purchase a nuclear device through weapons dealers with links to corrupt officials in the region. </strong></p> <p>&nbsp;</p> <p>The weapon is then transported overland until it makes it to Libya, where the muj?hid?n move it south to Nigeria. Drug shipments from Columbia bound for Europe pass through West Africa, so moving other types of contraband from East to West is just as possible.</p> <p>&nbsp;</p> <p>The nuke and accompanying muj?hid?n arrive on the shorelines of South America and are transported through the&nbsp; porous borders of Central America before arriving in Mexico and up to the border with the United States. </p> <p>&nbsp;</p> <p><strong>From there it’s just a quick hop through a smuggling tunnel and hey presto, they’re mingling with another 12 million “illegal” aliens in America with a nuclear bomb in the trunk of their car.</strong></p> </blockquote> <p>Cantlie continues:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Perhaps such a scenario is far-fetched but it’s the sum of all fears for Western intelligence agencies and it’s infinitely more possible today than it was just one year ago. And if not a nuke, what about a few thousand tons of ammonium nitrate explosive? </p> <p>&nbsp;</p> <p>That’s easy enough to make. The Islamic State make no secret of the fact they have every intention of attacking America on its home soil and they’re not going to mince about with two muj?hid?n taking down a dozen casualties if it originates from the Caliphate. They’ll be looking to do something big, something that would make any past operation look like a squirrel shoot, and the more groups that pledge allegiance the more possible it becomes to pull off something truly epic.</p> <p>&nbsp;</p> <p>Remember, all of this has happened in less than a year. <strong>How more dangerous will be the lines of communication and supply a year on from today? If the West completely failed to spot the emergence of the Islamic State and then the allies who so quickly pledged allegiance to it from around the world</strong>, what else of massive significance are they going to miss next?</p> </blockquote> <p>One can, of course, debate just how much the West "failed to spot the emergence of ISIS" considering it was <a href="">not only the CIA which initially trained </a>the <a href="">terrorist organization in Jordan in 2012</a>, but <a href="">according to recently declassified Pentagon documents</a>, the US was well aware the outcome its attempt to overthrow Syria's Assad would have on the region, in the process "creating" ISIS, aka al Qaeda 2.0.</p> <p>In other words, even the "hypothetical operation" involving a nuclear attack on US soil would implicitly have the blessing of the US government. Which, considering the way the stock market surges every time the US economy deteriorates further on its way towards recession, probably means that a mushroom cloud appearing in some major US metropolitan area is just what the E-mini algos would need to send the S&amp;P500 limit up.</p> <p>Finally, we leave it up to our readers to decide for themselves just who is behind the production of the <a href="">Islamic State's magazine Dabiq</a>, whose <a href="">latest issue, #9,</a> is shown below. One thing is clear: <a href="">unlike the Greek finance minister and the European Commission</a>, ISIS knows all about purging metadata after posting a pdf to avoid identification of the original author.</p> <p><iframe src=";view_mode=scroll&amp;access_key=key-qMA4w8juzViNrKOixbnF&amp;show_recommendations=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="650" height="366" alt="" src="" /> </div> </div> </div> Madison Avenue Mexico Recession Mon, 25 May 2015 14:40:12 +0000 Tyler Durden 506954 at