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Bill Gross Has A Message For Paranoid Investors

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Caterpillar Global Sales Down 12%, Crushes Recovery Hopes With Negative Sales Around The World

Among other things, the month of November was memorable because for the first time, Caterpillar - that bellwether of the old industrial economy in which "stuff" was actually made, dug out of the ground, erected, or otherwise processed instead of merely hosted ad impressions - posted declining retail sales in every region around the globe. This was the first time of uniform declining retail sales since February 2010. To say that this data conflicts massively with all the rumors, fairytales and lies about a global recovery, is an understatement which is why it has not been mentioned anywhere, in hopes the subsequent month would demonstrate some improvement and perhaps an upward inflection point. That did not happen. Moments ago CAT released its November dealer retail sales: for the second time in a row CAT posted negative retail sales across the world, with total retail sales down a whopping 12%.

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Russian Stock Market Jumps On News Of Khodorkovsky Pardon By Putin

Russia's MICEX jumped almost 1% this morning on news that Vladimir Putin had asked for clemency in the jailing of vocal Kremlin critic, Yukos founder Mikhail Khodorkovsky. Khodorkovsky has been jailed since 2003 on a variety of tax-evasion, fraid and embezzlement charges though being among the nation's wealthiest men, the jailing was seen as politically-motivated (because of his political ambitions). The WSJ reports that Putin said this morning, "He asked for a pardon for humanitarian reasons, his mother is sick, and I believe that we can make a decision and will soon sign a decree to pardon him." The twist in this tale is that Khodorkovsky's people deny the pardon request, since Putin's spin would be the pardon request implies an admission of guilt...

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Bonds Becoming Unglued As Gold Drops Below $1200, Lowest In 6 Months

Despite yesterday's somewhat lackluster response, treasury bond yields are breaking bad this morning with 5Y up 13bps from the Fed taper (and 10Y at 2.94%). But it is gold (and silver) prices that have been monkey-hammered with the former trading below $1200 briefly - its lowest in 6 months.

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Initial Claims Worst In 9 Months; Holiday Volatility Blamed For Surge

For everyone who shrugged off last week's enormous spike in initial jobless claims as "can't be real", the BLS has another "holiday volatility"-blamed statistical anomaly for traders to ignore. Initial claims rose 10k to 379k - dramatically worse than the 336k expectation - and the worst since March. Though the BLS says no states estimated jobless claims last week, they would suggest, ever so humbly, that we ignore this data and focus on the trend of the 4-week moving average. Total benefit rolls also rose to 3 month highs, up 94k to 2.88 million. The piece de resistance - non-seasonally-adjusted initial claims were down 48.2k (against the seasonally-adjusted 10k), yet both are up exactly 13k from a year ago (seems the Sandy-based YoY adjustments are playing havoc). Lastly, 1,374,031 American on Emergency Unemployment Compensation (ie. extended benefits) - which are about to run out thanks to Congress (which will implicitly send the unemployment rate plunging).

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Complete Recap Of Overnight's Volatile Markets

If yesterday's price action in the moments following (and preceding) the FOMC announcement was just a little suspicious, with a seemingly endless supply of VIX selling originating as if from nowhere (or perhaps the 9th floor of Liberty 33) the morning after has so far been a snoozer. Perhaps this is to be expected following the third biggest one-day surge in the stock market in the year (1st =  Jan 2nd, 2nd = October 10th), or perhaps the market is finally focusing on Bernanke's tongue in cheek suggestion that the taper may be lowered by $10 billion per month (we disagree as described previously). Or perhaps the creep higher in 10 Year yields, at 2.915% at last check and just shy of the 3.00% psychological level, is finally being noticed. Or perhaps the fact that China, very surprisingly, is also tapering concurrently is finally being appreciated as is the fact that despite all talk of preparedness, developing economies were hardly left unscathed following yesterday's development. Whatever the reason, the euphoria this morning has "tapered."

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The Taper Morning After: A Full Summary Of What "They" Are Saying

Strategists were largely wrong about the yes taper in September, and then they were just as largely wrong about the no taper in December, and yet their opinion is just as largely gospel and people continue to listen to them (what else is there to be distracted by in a still very much centrally-planned market and economy). Which is why the below summary by Bloomberg of what global financial strategists and investors, also known as "they", are saying about how to trade assets in the post-taper world, should probably be taken, largely, with a grain of salt.

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Frontrunning: December 19

  • Traders Seek an Edge With High-Tech Snooping (WSJ)
  • Gold Drops Below $1,200 an Ounce for First Time Since June (Bloomberg)
  • SAC Manager Guilty as Insider Focus Turns to Martoma (Bloomberg)
  • Why Ukraine spurned the EU and embraced Russia (Reuters)
  • Target confirms major card data theft during Thanksgiving (Reuters)
  • Zuckerberg is no suckerberg: Company to Sell 27 Million Class A Shares While CEO Will Offer 41.4 Million (WSJ)
  • Facebook, Zuckerberg, banks must face IPO lawsuit (Reuters)
  • Swiss Christmas Trees Feel Chill as Franc Helps Rivals (BBG)
  • Iran, six powers to resume nuclear talks after snag (Reuters)
  • Dolphins Suffering From Lung Disease Due to Gulf Oil Spill, Study Says (WSJ)
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What Happened The Last Time A Major Central Bank "Tapered" QE?

After having followed a zero interest rate policy strategy and facing a further deteriorating economy in an environment of falling prices (deflation), the Bank of Japan (BoJ) announced the introduction of QE on 19 March 2001 and kept it in place until 9 March 2006. The BoJ chose for a very orderly and gradual unwinding of its government securities portfolio, by continuing its regular purchases of these securities (i.e a taper and not sale).  The market rejoiced at the normalization for a week or 2... before dropping 24% in the following 2 months. Of course, that was a "policy mistake"; the Fed knows this time is different.

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Chart Of The Day: The Taper In Perspective (And What We Learned Today)

... we learned what the difference between $85 billion and $75 billion is in the grand scheme of things. Or, in case we haven’t, here is a chart showing just how “vast” the impact of today’s announcement will be on the Fed’s balance sheet at December 31, 2014 when instead of printing well over $5 trillion at its old monetization pace, the Fed’s balance sheet will be only $4.9 trillion.


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NSA Official: "I Have Some 'Reforms' For The First Amendment"

One truly unenlightened NSA official seemed to hold the press in particular disregard and stated: 

“I have some reforms for the First Amendment.”  

We're quite certain he has some reforms in mind for the 4th Amendment as well... Once again we ask, if they hold the U.S. Constitution and civil rights in such disdain; what exactly are they protecting us from?

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The Fed, The Taper & What Happens "When The Kidnapper Wears Prada"

The rich continue to grow richer, and as David McWilliams (of Punk Economics) so eloquently explains in this brief clip, this has pushed the Fed into a corner. As the Federal Reserve gets a new chair and decides what to do next, whether to print $85 billion a month more or not, McWilliams examines the heist that is the new normal financialized economy - who gets all the loot and why today's kidnappers wear Prada. "Wake up," he blasts, explaining the uncomfortable reality of what happens when financial kidnappers dress up as loyal patriots and extort money in the name of the common good.

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Who Knew What 50 Seconds Before The FOMC Release?

Last time it was trading faster than the speed of light in gold and stocks. This time, 50 seconds before the FOMC statement was officially released to the great unwashed, Nanex notes that the market exploded with activity reaching levels higher than during the actual FOMC news release. As they show in the charts below, approximately $106 Million of SPY and 3,700 eMini Futures contracts traded in 1 second. Gold - while less voluminous - was just as berserko in the minutes and seconds leading up the news release. What is going on here?

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Guess The Smogged City

Residents of this city woke on Wednesday to a third day of thick gray smog which has disrupted dozens of flights and train services and caused a rash of health complaints. As Reuters reports, the toxic levels of pollution, fuelled by industrial growth a surge in the numbers of vehicles crowding their roads, are more than 7x what the nation deems safe and what the US EPA calls "hazardous". But it's not in China...

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Guest Post: Keeping It Real

There are those who would blame the people who have chosen to live far beyond their means. They have a point. The financialization of America; where Wall Street con artists,shysters and swindlers rake in billions for shuffling paper and making risky casino bets; mega-corporations ship blue collar middle class jobs to Asia in an all out effort to increase quarterly profits; politicians spend future generations into the poor house in order to get re-elected; and the Federal Reserve purposefully creates monetary inflation to prop up the corrupt system; has systematically destroyed the working middle class and created generations of debt slaves. The American people have been foolish, infantile, and easily duped. But it is clear to me who the real culprits in our long downward spiral have been. Lord Acton stated the obvious, many years ago:

 “The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”

? John Emerich Edward Dalberg-Acton

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