Whether it is due to the recent margin hikes, a dwindling of greater fools, more scrutiny (albeit weak) by the regulators, increased free-money competition, or the monopolization of bandwidth; it would appear, from the following charts from Nanex, that we have seen Peak HFT. Quote Spam (the number of quotes per actual trade) has dropped to a 3 year low today.
Given his track record, Alan Greenspan's publication of a guide to economic forecasting will likely prove as successful as Lance Armstrong's guide to drug-free cycling. As Bloomberg reports, Greenspan's new book "The Map and the Territory" is about as credible as art history by Mr. Magoo; as it pretends to tackle the subject of forecasting while saying next to nothing about the author’s historic failure to reduce the risks leading to the crisis, which he calls "almost universally unanticipated." Bloomberg's Daniel Akst sums it up best with his concluding sentence: "'The Map and the Territory' is an infuriating book, one that will leave readers wondering how its author could have come all this way and yet remain so hopelessly lost." Indeed...
In what is the most remarkable news of the day, which has so far passed very quietly under the radar, Fosun International, China's largest private-owned conglomerate which invests in commodities, properties and pharmaceuticals also known as "Shanghai's Hutchison Whampoa", announced in a statement filed just as quietly with the Hong Kong stock exchange, that it had purchased JPM's iconic former headquarters, the tower built by none other than David Rockefeller, at 1 Chase Manhattan Plaza for a measly $725 million. None of this is particularly newsworthy What is, however, is what Zero Hedge exclusively reported back in March, namely that the very same former JPM HQ at 1 Chase Manhattan Plaza is also the building that houses the firm's commercial gold vault: incidentally, the largest in the world. Why? We don't know. We do know that China's gross gold imports from Hong Kong alone have amounted to over 2000 tons in the past two years. This excludes imports from other sources, and certainly internal gold mining and production. One guess: China has decided it has its fill of domestically held gold and is starting to acquire gold warehouses in the banking capitals of the world. For now the reason why is unclear but we are confident the answer will present itself shortly.
In one sense, the past couple of weeks’ debt ceiling debate was just one more in a long line of annoying-but-otherwise-pointless pieces of bad political theater. But in another sense it was a turning point, one that may have put the democrats completely in charge. Once the civil war costs the republicans control of the House of Representatives (November 4, 2014), the democrats will be relieved of the need to fool the middle about their commitment to fiscal sanity. The incoming Clinton administration and its congressional majorities will ramp up domestic spending and finance it with higher taxes, more borrowing and way more money printing. Janet Yellen (the perfect Fed chair for this transition) will expand QE and make it permanent. The Fed’s balance sheet will grow in trillion-dollar chunks as it buys up all the bonds issued by the government and the mortgage packagers and pretty much anybody else with paper to sell. Could there be a better environment for gold?
While "hard" data has been scarce in the US thanks to the shutdown, we recently noted that whet little we had recently indicated notable weakness relative to the survey-based "soft" data. Goldman has, in the past, indicated how little forecasting power the soft survey data has in Europe and yet still, day after day we are treated to the herd of mainstream media types proclaiming that Europe is recovering and that their fundamentals have turned a corner. The problem with that "story" is that is that is a lie. In fact, European macro data has been sliding since the start of September and has plunged recently to 3 month lows. Of course, the reality is that a record high for European stocks is all that matters to the fast-money charging momo players and betting against divergences from fundamentals is for dummies...
After the quickest collapse since the first week of the year (another congressional "fold"), spot VIX is now heading towards its highs of the day. The divergence between an ever-rising demand for the S&P 500 at all-time-highs and the bid for VIX is notable to say the least... or is this demand for calls (because when you know it's going up, why not lever up as much as possible?)...
We already highlighted the return of gold lease rates to subzero yesterday, during the dramatic spike in gold following Gartman's latest sell recommendation. Now, it is time for the banks to also begin admitting that, as SocGen has just pointed out, the gold "physical squeeze returns."
The whole fulcrum of the bloated American state is beyond ready for a radical deconstruction. The same goes for most nation-states in the West. The continual borrowing, serviced indiscreetly by an accommodating central bank, has made an entirety of the populace fat and happy off of debt. This is no realistic method for operating any institution. Something has to give eventually. Any conservative who places high value on civil society over the intrusion of government should balk at the prospect of a higher debt load. It makes certain that the ruling political class will not cease in their effort to infiltrate private life. Unfortunately it appears as if some otherwise sharp minds have fallen prey to the liberal device of alarmism.
The corks are popping, new valuation metrics are confirming the buy signals, and everyone's a stock-picking genius... that is the image projected by CNBC USA (and Europe) as the Russell 2000 is now up 30.6% year-to-date. However, we can only imagine the elation, exuberance, and ecstasy that would be seen day in and day out in at CNBC Venezuela as the Caracas Stock Index rises its most in a month to a new all-time record high and is now up 312.5% year-to-date...
While Bloomberg's BusinessWeek division is no stranger to provocative covers (here, here and here), it will be interesting to see what reactions among a growing segment of the US population, those that don't believe that unsustainable, reserve currency-threatening spending like a drunken sailor is the equivalent of "wealth creation", its latest cover (to the following story) will provoke: namely, the "crazy", "deadender" tea party.
Confirming our fears from a few days ago, the early numbers are in for Obamacare... and they are not good. Of course, listening to "bloggers" an be bad for your health, but it seems, very few of the million of "uninsured" have decided that it is as crucial as the "leader" has exclaimed. As Millard Brown Digital reports, fewer than 1% of those trying to register for health insurance under Obamacare have completed the enrollment process. The following inverted pyramid highlights the dismal reality of the Affordable Car Act so far...
Earlier this month, we highlighted the fact that the Carlyle Group was the latest in a series of “smart money” private equity firms to decide it was time to exit the suddenly extremely crowded “buy-to rent” residential real estate trade. Well it appears Carlyle has already started to make its move. In case you can’t figure out what appears to be the key logic behind the shift in focus, try this line on for size:
Because the cost of relocating a home is expensive, residents are less likely to move away. “Our customers have no alternative shot at homeownership, nor do they [normally] even have the credit scores and quality to seek anything better,” Mr. Rolfe said. “They never leave the park they are in, and the revenues are unbelievably stable as a result.”
In neo-feudalistic America, always, always go long serfdom.
Perhaps no (albeit brief) conversation sums up how the debacle of the last couple of weeks started than the following exchange that took place on October 2nd, according to Politico,
Obama: "John, What Happened"
Boehner: "I Got Overrun, That's What Happened"
The question, prompted by the shutdown in the face of Boehner's pledge to avoid it, set the scene for what Politico notes was a fiscal drama set on a series of complicated relationships. A look back reveals how Republicans waged a fight on Obamacare that their leaders knew they would probably lose but pushed anyways because many in their ranks truly believed that Democrats, like they’ve done so often before, would fold - especially under the threat of an historic default on U.S. debt.