A “YES” vote for the gold referendum is a first step towards redressing the imbalance that exists between the SNB and the people of Switzerland. A “YES” vote will begin a process to restore restraint, accountability, and transparency on an institution that took advantage of the removal of its previous gold holding constraint already once before to explode its balance sheet, reinvent itself as a hedge fund, and significantly expand into areas of policy far beyond its original remit. Central banks should be lenders of last resort and systemic regulators. In a direct democracy, decisions regarding taxation, membership in trade / political unions, and the autonomy of the national currency should be determined by popular vote not decreed or circumvented by central bank edict.
Something appears to be happening to gold. That something is either China finally revealing its true gold inventory, which is unlikely, or, more likely, the biggest fat finger in the history of gold, as a liquidity testing algo goes absolutely insane in the pre-open period (and loses its job on the BIS' payroll). Or, most likely, just an ongoing bad print.
“Ordinary people are unnerved about how money works in a bottomless cyber space. Gold seems tangible, clear and timeless”
A few points the "stocks are cheap" crowd should consider.
Case Shiller Reports "Broad-Based Slowdown For Home Prices", First Monthly Decrease Since November 2013Submitted by Tyler Durden on 11/25/2014 09:21 -0500
While the just revised Q3 GDP surprised everyone to the upside, the Case Shiller index for September which was also reported moments ago, showed yet another month of what it called a "Broad-based Slowdown for Home Prices." The bad news: the 20-City Composite gained 4.9% year-over-year, compared to 5.6% in August. However, this was modestly above the 4.6% expected. However, what was more troubling is that on a sequential basis, the Top 20 Composite MSA posted a modest -0.03% decline, the first sequential drop since February. And from the report itself: "The National Index reported a month-over-month decrease for the first time since November 2013. The Northeast region reported its first negative monthly returns since December 2013 and its worst annual returns since December 2012 due to weaknesses in Washington D.C. and Boston."
- Ferguson in Flames (Reuters)
- Ferguson Cop Told Grand Jury He Feared for His Life (BBG)
- Sharpton: Grand Jury Announcement ‘An Absolute Blow’ (Daily Caller)
- Gunshots echo as violence returns to Ferguson, protests across U.S. (Reuters)
- BoJ members warned on costs of more easing (FT)
- Hagel Exit Shows Obama Has Taken Power Away From Pentagon (BBG)
- Ukraine leader, under pressure from West, pledges new government soon (Reuters)
- Eurozone Stagnation Poses Major Risk to Global Growth, OECD Warns (WSJ)
- ECB’s Coeure Says Officials Won’t Rush as They Debate All Assets (BBG)
Just two months after the OECD cut its global growth outlook, overnight the Organisation for Economic Co-operation and Development cut it again, taking down its US, Chinese, Japanese but mostly, Eurozone forecasts. In the report it said: "The Economic Outlook draws attention to a global economy stuck in low gear, with growth in trade and investment under-performing historic averages and diverging demand patterns across countries and regions, both in advanced and emerging economies. “We are far from being on the road to a healthy recovery. There is a growing risk of stagnation in the euro zone that could have impacts worldwide, while Japan has fallen into a technical recession,” OECD Secretary-General Angel Gurria said. “Furthermore, diverging monetary policies could lead to greater financial volatility for emerging economies, many of which have accumulated high levels of debt.” And sure enough, the OECD's prescription: more Eurozone QE. As a result, futures in the US are in fresh all time high territory ignoring any potential spillover from last night's Ferguson protests, just 30 points from Goldman's latest 2015 S&P target, Stoxx is up 0.5%, while bond yields are lower as frontrunning of central bank bond purchases resumes. Oil is a fraction higher due to a note suggesting the Saudi's are preparing for a bigger supply cut than expected, although as the note says "it is unclear if the cut sticks."
As we noted here, despite record high stock prices and talking-heads imploring investors to believe CEOs are confident, they are not (consider the clear indication of a lack of economic confidence from tumbling capex and soaring buybacks), That is further confirmed today as Markit's survey of over 6000 firms showed optimism falling sharply in October, dropping to the lowest seen since the survey began five years ago. Hiring and investment plans were also at or near post-crisis lows, while price expectations deteriorated further. More worrying, perhaps, is the US is not decoupled whatsoever, with future expectations of US business activity at the lowest since the financial crisis.
Did China just re-enter the currency wars? The Chinese Yuan dropped 0.29% overnight - its biggest drop since September and 2nd biggest devaluation since March - as the currency tumbles back in line with the PBOC's fixing for the first time in over 3 months. Despite 'hopes', S&P confirms the recent (and reconfirmed) rate cut doesn’t signal renewed government intentions to resort to aggressive stimulus to prop up economy. More troubling is the fact that China's huge corporate debt market appears to be freezing as over $1.2 billion in bond sales were scrapped or delayed last week suggesting wall of maturing debt will find it increasingly difficult to roll-over and keep the dream alive (especially in light of Haixin's bankruptcy last week).
The actions of central bankers around the globe which have been driving stock prices higher are not a sign of control. They are signs of desperation. They are losing control. Their academic theories have failed. Their bosses insist they turn it up to eleven. Something is going to blow. You can feel it. John Hussman knows what will happen. Do you?
Despite the best efforts of central planners, shit still happens (even in China). In an 'Onion-esque' story, China.org reports a cesspool filled with excrement exploded in a central Chinese city, injuring 15 residents and toppling a building on Saturday, police said. But this is not the only excrement-enthused event in China...
All the stimulus, all $50 trillion or so globally, has been thrown into the fire, and look at where we are. There’s nothing left, and there won’t be another $50 trillion. Sure, stock markets set records. But who cares with oil at $40? Calling for more QE, from Japan and/or Europe or even grandma Yellen, is either entirely useless or will work only to prop up stock markets for a very short time. Diminishing returns. The one word that comes to mind here is bloodbath.
You cannot have the market drop 7% and then rally an even larger 10% in less than month based solely on a single non-voting Fed President’s comments and NOT be in a bubble.
Why is Bitcoin dangerous and of little intrinsic value? Because my local Central Banker Told Me So! - OR - The lasting message from the highly Centralized, Centrally Planned, Central Banks of the World? "We think, so you don't have to!"
As the debate regarding whether or not Switzerland should keep the bulk of its gold reserves at home on Swiss soil reaches it's climax - the referendum takes place on Sunday - it is telling that the Dutch announced on Friday that they have just secretly repatriated 122 tonnes of their sovereign gold reserves from New York back to Amsterdam.