How do we get a fundamental change away from this extend-and-pretend which prevails not only in Europe but also the world? History tells us that we only get real changes as a result of war, famine, social riots or collapsing stock markets. None of these is an issue for most of the world - at least not yet - but on the other hand we have never had less growth, worse demographics, or higher unemployment since WWII. This is a true paradox that somehow needs to be resolved, and quickly if we are to avoid wasting an entire generation of youth. Policymakers try to pretend we have achieved significant progress and stability as the result of their actions, but from a fundamental point of view that’s a mere illusion..
This artificial prosperity plan for Wall Street has the added benefit of allowing the captured politicians in Washington D.C. to continue their $1 trillion per year deficit spending with no consequences for their squandering of future generations’ wealth. Bernanke and Yellen will never taper, because they can’t. The Fed balance sheet will continue to grow by at least $1 trillion per year until they crash the financial system again. Except this time, there will be no money printing solution. We are all trapped like rats in this monetary experiment being conducted by evil mad scientists. No one will get out alive. Welcome to the new normal. Now eat your cheese.
Russell Brand's excited exchange with stoic Brit Jeremy Paxman this week is a must-see "exchange of new ideas vs old." Among Brand's clearer moments were "stop voting, stop pretending, wake up. Be in reality now, time to be in reality now. Why vote, we know it's not going to make any difference, we know that already." The excellent discourse has prompted this open letter supporting the comedian.. concluding so legitimately nowadays, with Upton Sinclair's infamous quote "It is difficult to get a man to understand something, when his salary depends upon his not understanding it."
It's happening again. The US lack of intervention in Syria (and implicit and explicit support for the rebels) has apparently emboldened none other than Al-Qaeda. As the WSJ reports, a flurry of recent attacks by al Qaeda-linked militants in Iraq - strengthened by their alliance with jihadist fighters in Syria - is threatening to undo years of U.S. efforts to crush the group, widening sectarian conflict in the Middle East. Iraqi security officials say al Qaeda-linked fighters from the militant group Islamic State of Iraq and al-Sham, or ISIS, are moving aggressively to re-establish a base of operations in Anbar province, the stronghold of the Sunni insurgency during the U.S.-led war in Iraq.
As frequent readers will recall, one of our favorite series of posts describing the "Walking Dead" monetary zombie-infested continent that is Europe is the one showing the abysmal state Europe's credit creation machinery, operated by none other than the Bank of Italy's, Goldman's ECB's Mario Draghi, finds itself in. As a reminder, it was as recently as September when we found that "Mario Draghi's Nightmare Gets Worse" because "European Loans Declined At Record Rate." To our complete lack of surprise, when a few hours ago the ECB released the latest monetary and credit creation update for the month of September, it showed... no change. Or rather, while loans to the private sector are at all time record lows, that other metric which Draghi at least has some direct control over (since he obviously can't control the amount of confidence in the system aside from threats of brute force), M3, just had its lowest pace of increase since January 2012.
Busy, Lackluster Overnight Session Means More Delayed Taper Talk, More "Getting To Work" For Mr YellenSubmitted by Tyler Durden on 10/25/2013 07:00 -0400
It has been a busy overnight session starting off with stronger than expected food and energy inflation in Japan even though the trend is now one of decline while non-food, non-energy and certainly wage inflation is nowhere to be found (leading to a nearly 3% drop in the Nikkei225), another SHIBOR spike in China (leading to a 1.5% drop in the SHCOMP) coupled with the announcement of a new prime lending rate (a form a Chinese LIBOR equivalent which one knows will have a happy ending), even more weaker than expected corporate earnings out of Europe (leading to red markets across Europe), together with a German IFO Business Confidence miss and drop for the first time in 6 months, as well as the latest M3 and loan creation data out of the ECB which showed that Europe remains stuck in a lending vacuum in which banks refuse to give out loans, a UK GDP print which came in line with expectations of 0.8%, where however news that Goldman tentacle Mark Carney is finally starting to flex and is preparing to unleash a loan roll out collateralized by "assets" worse than Gree Feta and oilve oil. Of course, none of the above matters: only thing that drives markets is if AMZN burned enough cash in the quarter to send its stock up by another 10%, and, naturally, if today's Durable Goods data will be horrible enough to guarantee not only a delay of the taper through mid-2014, but potentially lend credence to the SocGen idea that the Yellen-Fed may even announce an increase in QE as recently as next week.
"We see upside surprise risks on gold and silver in the years ahead," is how UBS commodity strategy team begins a deep dive into a multi-factor valuation perspective of the precious metals. The key to their expectation, intriguingly, that new regulation will put substantial pressure on banks to deleverage – raising the onus on the Fed to reflate much harder in 2014 than markets are pricing in. In this view UBS commodity team is also more cautious on US macro...
Economics isn't a science. It is a mistake to think it would be so. Science does not have schools. Only philosophies have schools. The difference between a science and a philosophy is the difference between seeking truth while honestly admitting you don't know it and declaring that truth is something you define. The distinction between science and philosophy with respect to economics is important because economists have an annoying ability to set policy - policy that affects the quality of your lives.
Just two weeks after Goldman's "Slam Dunk Sell," report, the price of gold is surging once again. Goldman's Currie (in direct opposition to BofAML's Curry) argument that post debt-ceiling, "... with significant recovery in the U.S., tapering of QE should put downward pressure on gold prices," seems like another round of wishful thinking as physical premiums for gold around the world surge to record highs and spot prices reach one-month highs. Of course, while Goldman had a few days of positive reaction after their call, it is none other than Dennis Gartman who provided the bottom-tick in the latest exuberance.
The diplomatic farce in the aftermath of the most recent revelations that Obama had tapped not only Hollande's but Merkel's cell phone as well continues, when moments ago Germany's Foreign Ministry summoned the U.S. ambassador over claims that U.S. intelligence agencies may be spying on Chancellor Angela Merkel's cellphone, a ministry spokeswoman said. They used the word "may" loosely. John B. Emerson, the newly appointed U.S. ambassador to Germany, will meet Foreign Minister Guido Westerwelle Thursday afternoon, she said. But while the latest diplomatic escalation will have zero impact whatsoever on either US spying intentions, mostly of US citizens let alone foreigners, or German-US relations, what is missing is that had this "scandal" happened four short months ago, the farce would have been truly complete as the summoned US Ambassador would be none other than former Goldman senior director and head of Goldman Germany, Philip Murphy, who alas stepped down in August. Had that been the case someone may have just put two and two together.
Tokyo, and the entire country of Japan, which the documentary below describes as "a place where socially awkward people gather and use money to resolve their communication problems", has a ticking demographic timebomb: on one hand the population is getting so old that sales of adult diapers now exceed those for babies; on the other as the chart below courtesy of Mark Adomanis shows, the number of actual births each year has dropped to a record low. The issue: young people in Japan just don't want or have any interest, in commitment to the other sex, nor do they seem to have any interest in procreating in a narrow sense, or sex in a broad one (a topic further pursued in "Why have young people in Japan stopped having sex"). There is another angle. As this documentary from Vice investigates, "sex sells and the Japanese are buying." The reason: Japan has a "seemingly infinite menu of relationship replacement services." Watch the following clip to find out just what that menu is...
This is probably the most painful bug report I’ve ever read, describing in glorious technicolor the steps leading to Knight Capital’s $460m trading loss due to a software bug that struck late last year, effectively bankrupting the company. The tale has all the hallmarks of technical debt in a huge, unmaintained, bit-rotten codebase (the bug itself due to code that hadn’t been used for almost 9 years), and a really poor, undisciplined dev-ops story.
Wallowing in Fed-Induced Stock Market Delirium, Even Texas Instruments Admits: Stocks Are OverpricedSubmitted by testosteronepit on 10/22/2013 15:14 -0400
Stocks balloon, we’re incessantly told, because revenues and earnings rise. But what if they sag for years, and the stock still balloons?
These men are masters of the capital markets. They are voting with their feet and pulling their capital out of them.
It seemed as if this morning's exuberant run into US equities would never stop but it would appear that comments from none other than Dan Loeb has (for now) put an end to the exuberance. With fundamentals collapsing, and even Cramer's "Cult stocks" tumbling, today's rally was yet another blindlingly obvious insight into the fact that this market is entirely artificial and Third Point's Dan Loeb, worried about the global economy, has reduced his exposure to equities. Furthermore, he plans to return 10% of capital to investors. Not exactly the wealth-effect enhancing, confidence-inspiring action that the Fed hoped for...