The game is many boards deep. Nobody has god-like powers, every player makes mistakes and miscalculations. The advantages and arrangements are all contingent and temporary; those with the most flexibility and the deepest spectrum of assets will eventually increase their influence at the expense of those with weaker hands and those who fail to respond promptly and decisively to new configurations on the multiple boards in play.
We have the very makings of a Crash. If stocks breakdown from this line and cannot reclaim it, we could easily wipe out all of the gains going back to 2013.
A quick anecdote that should quickly confirm just how broken everything is: earlier today MarkIt reported European manufacturing data that was atrocious, with both German and European PMIs tumbling to levels not seen since mid-2013, and with Europe's growth dynamo now in a contraction phase clearly signalling what has been long overdue: a European triple dip recession. So what happens? Moments later Germany sells €4.1 billion in 10 Year paper at a record low yield below 1%.... even as the Bundesbank had to retain a whopping 17.84% of the auction, the highest since June, with only €4.663 Bn in bids for the €5 Bn target, the first miss since May 21. So hurray for the central banks, boo for the economy, and as for that mythical creature, once known as bond vigilantes, our condolences: good luck figuring out what the hell just happened, and good luck recalling what a free market is.
There Might Be Some Truth to China's Accusation that the U.S. is Doing Its Best to Stir Up Hong Kong
Reports of individuals snapping up near-record numbers of gold and silver coins are coming in from around the world. While individual buyers aren't the dominant players in precious metals, they do make a difference; and their renewed enthusiasm is matched by some recent national trends. There's no guarantee that this buying, encouraging as it seems, is anything more than a blip; but in the aggregate it does seem like a lot of buyers, old and new, are finding current prices to be attractive. That's how bottoms form and new bull markets begin.
For a long time, Fed printing via balance sheet expansion has been the key to understanding markets and the predominant driver that has trumped all other matters. Investors have been able to ignore significant global events, tensions, and economic conditions in faraway places, because a lower real and perceived risk premium from implicit Fed promises was the single most important aspect driving asset prices higher. This game is quickly coming to an end. As the Fed’s asset purchase program ends next month, global events and global economic fundamentals will have to be taken into account and priced accordingly.
"Russia Could Ditch Dollar In 2-3 Years"; Deputy PM Warns Nuclear Subs "Could Reach Any Country On Any Continent"Submitted by Tyler Durden on 09/30/2014 18:18 -0400
"Two to three years is enough, not only to launch [settlements in rubles], but also to complete these mechanisms," says Andrey Kostin, head of Russia’s second-biggest bank VTB, noting that the possibility of the US and EU widening sanctions to exclude Russia from the SWIFT global money transfer system would become “a point of no return” making any further dialog impossible. However, as Deputy Prime Minister Dmitri Rogozin explains in this interview, how Russia's military and industrial complex is responding to a growing threat from America. Russia is not responding with any talk about the nuclear button (at least not yet); but they are preparing for such an eventuality: "we are creating a nuclear submarine fleet... capable of reaching any country on any continent, if [USA] suddenly becomes the aggressor, and our top-most national interests come under threat," adding that Obama's coup has ushered in "the complete demise of the Ukrainian State."
Singapore continues its push to be a global gold hub ... Gold and money, throughout history has flowed to where it is better treated. Today, gold continues to flow from West to East. A sign of shifting economic fortunes ...
Another Conspiracy Theory Becomes Fact: The Fed's "Stealth Bailout" Of Foreign Banks Goes MainstreamSubmitted by Tyler Durden on 09/30/2014 13:25 -0400
Back in June 2011, Zero Hedge first posted: "Exclusive: The Fed's $600 Billion Stealth Bailout Of Foreign Banks Continues At The Expense Of The Domestic Economy, Or Explaining Where All The QE2 Money Went" Of course, the conformist, counter-contrarian punditry promptly said this was a non-issue and was purely due to some completely irrelevant micro-arbing of a few basis points in FDIC penalty surcharges, which as we explained extensively over the past 3 years, has nothing at all to do with the actual motive of hoarding Fed reserves by offshore (or onshore) banks, and which has everything to do with accumulating billions in "dry powder" reserves to use for risk-purchasing purposes. Fast, or rather slow, forward to today when none other than the WSJ's Jon Hilsenrath debunks yet another "conspiracy theory" and reveals it as "unconspiracy fact" with "Fed Rate Policies Aid Foreign Banks: Lenders Pocket a Spread by Borrowing Cheaply, Parking Funds at Central Bank"
The crowds of protesters in Hong Kong swelled overnight with some estimates that 3-400,000 "will join in a show of people's power," on the eve of the two-day National Day holiday. With neither side showing any signs of backing down, protestors remain calm and police keeping their distance - though monitoring from on high - as the Occupy Central group said it will announce plans for its next stage of civil disobedience on Wednesday if Hong Kong Chief Executive Leung Chun-ying does not meet their demands for democratic reform, including true universal elections by October 1 and Leung's resignation. Leung has called for Occupy Central leaders to "fulfill the promise they made to society" and immediately stop the protests, which he said have gotten "out of control," adding that, for now, they could keep control without the help of the People's Liberation Army (PLA). The protest meme remains one heard around the world - in addition to their concerns about democracy and out of control local government, Hong Kong’s younger generation are worried about low-paying jobs.
The ultra high end of US housing is now sliding fast, and that unless some other central banks steps up and resumes the injections of some $100 billion in outside money into inflating asset prices such as stocks and billionaire mansions, then all bets are soon off.
- Hong Kong protesters stockpile supplies, fear fresh police advance (Reuters)
- Protesters stay out on Hong Kong streets, defying Beijing (Reuters)
- Traders Turn Up Grilling Sausages at Hong Kong Protests (BBG)
- Ukraine Army Sees Worst Day Since Truce as Battles Flare (BBG)
- Islamic State uses grain to tighten grip in Iraq (Reuters)
- For Putin Ally, U.S. Sanctions Only Add to Anti-Russia Conspiracy Theory (WSJ)
- Coinbase Leads Move to Bring Bitcoin to Masses (BBG) - good luck
- Austria Cracks Down on Spies -- and Jihadis (BBG)
- EU Believes Apple, Fiat Tax Deals Broke Rules (WSJ); Apple’s Irish Tax Deal ‘Engineered’ to Boost Employment, EU Says (BBG)
It has been a night of relentless and pervasive disappointing economic data from just about every point on the globe: first the Chinese HSBC manufacturing data was well short of expectations (50.2 vs. Exp. 50.5), which was promptly spun as bullish and a reason for more stimulus by the PBOC even though the central bank has been constantly repeating it will not engage in western-style shotgun easing. Then Japanese wages, household spending and industrial production came in far below expectations - in fact at levels which suggest Japan is once again in a recession - which once again was spun as bullish, because the BOJ has no choice but to do more of the same failed policies that have made Abenomics the laughing stock of the world. Finally, moments ago Europe reported the lowest inflation data in 5 years, as well as core CPI sliding to just 0.7%, and which was, wait for it, immediately spun as bullish for risk as once again the local central bank would have "no choice but to ease." In other words, thank god for horrible news: because how else will the rich get even richer?
Considering that as recently as 3 weeks ago the leader of the Occupy Central movement in Hong Kong decided to throw in the towel, after admitting that his civil disobedience movement’s pursuit of democracy had “failed” as a result of waning public support, many are shocked by how aggressively Hong Kong's students took up the baton: almost as if the mystery sponsor behind the ISIS blitz-ascent from obscurity had decided to "destabilize" yet another region. Tongue-in-cheek kidding aside, for everyone confused about the context of this weekend's at time very violent student protests, here is Evergreen GaveKal with its wrap up of the "Hong Kong Democracy Protests."