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MOST CRITICAL TIPPING POINT ARTICLES TODAY | |||
US ECONOMY - At Stall Speed Before Payroll Tax Holiday Not Renewed Major Realignment Of The Markets BofAML's David Woo via ZH Moment of truth for US consumers The prevailing optimism towards US consumers reflects the view that rising home prices will offset the impact of fiscal tightening. We have argued that whether this will turn out to be the case will depend critically on what happens to consumer confidence. Michigan consumer expectations fell in April to the lowest level since the fiscal cliff crisis. Furthermore, with the household saving rate having fallen to just 2.6% in February - the lowest level since December 2007 - household consumption could be more vulnerable than usual to any sudden confidence shock. In our view, the market continues to underestimate the headwinds associated with the implementation of the sequester. Our US economist team estimate that this will amount to about $50bn worth of fiscal tightening over the next six months. If we were to assume that this will primarily take the form of reduced wages/salaries of government employees and contractors and that most of the hit will occur in Q2, this could result in a very dramatic shock to household income (Chart 10). |
04-25-13 | INDICATORS CYCLE |
US ECONOMICS |
DURABLE GOODS - New Factory Orders Raise Your Hand If You Can See The Recovery 04-24-13 Durable Goods report and/or St. Louis Fedvia ZHThe year over year change in durable goods ex transports (aka Boeing's fully cancelable orders for flaming lithium- battery powered paperweights aircraft). All we say is we are so grateful for $160 billion in central bank QE each month (soon to rise to $200 billion once Goldman's Mark Carney spreads his tentacles in the Bank of England). |
04-25-13 | INDICATORS CYCLE |
US ECONOMICS |
CAPITAL EXPENDITURE - Continuing to Rollover March Durable Goods Implode, Plunge -5.7%; CapEx Recovery Put On Indefinite Hiatus 04-24-13 Zero Hedge So much for the great American CapEx recovery. Moments ago the Census department released the March Durable Goods report, thanks to which one can lay to rest any hope of a recovery in the US economy, with the headline number printing an absolutely abysmal -5.7%, an epic swing from the +5.7% (revised lower of course to 4.3%) in February, and confirming the recovery is dead and buried. This was the biggest miss in headline data and the biggest drop since August, and the second worst since January 2009. Although we are confident the propaganda spin is just waiting to be unleashed: after all it is possible that March weather was both too hot and too cold, thereby making the number completely irrelevant - after all it is always the inclement weather's fault when the economy does not act as predicted by some economist's DSGE model of reality and stuff. This headline number was obviously a huge miss to expectations of -3%, with the misses spreading to all sub headline categories too: Durables ex-transportation was down -1.4%, on expectations of a 0.5% rise, (previous revised from -0.5% to -1.7%). And so much for CapEx with Cap Goods nondefense ex aircraft up just 0.2% (0.3% exp) with the previous revised from -2.7% to -4.8%, while the nondefense orders shipped ex air missed expectations of a 0.8% rise, printing at 0.3%, and the February data revised from 1.9% to 1.2%. In brief, horrifying economic data however one looks at it, and proof that the great CapEx recovery never existed to begin with. So much for 3% Q1 GDP, which is about to be revised by everyone lower across the board. Finally, if this economic collapse validation doesn't send the S&P limit up, nothing will. The only two charts needed to show what is really going on in terms of capex and generally spending on core capex: Orders: Shipments: |
04-25-13 | INDICATORS CYCLE |
US ECONOMICS |
CRONY CAPITALISM -A destructive and distorted government protection racket Farm Supports and Social Welfare 05-24-13 James Hall BATR.ORG The planting season is in full swing as is the transfer of subsidies to big agriculture and social welfare food stamps. Which has more worth, paying the Monsanto and property tax bill or running a public assistance program that allows for the buying of lottery tickets? Well, if you are Congress, both have benefit, but mostly for their political value.Why are food stamps part of the Farm Bill? Nancy Marshall-Genzer makes a shrewd observation.
Is it necessary to expand exponentially the Supplemental Nutrition Assistance Program (SNAP), to relieve starvation when a "Happy Meal" can be purchased at every turn? Yet the socialization culture boasts of the dietary benefits of being on the government dole, as the urban society continues to consume every cuisine of fast foods. The Washington Times notes that under the Food stamp president: Enrollment up 70 percent under Obama and that present legislation "allow for those with higher incomes to take food stamps — the logic being that helping people before they reach crisis financial level will actually stimulate the economy."What did people do for food before the era of the "Great Society"? Farming was a way of life for rural America from the inception of the country. In spite of struggling out a livelihood from an often-harsh pastoral environment, agriculture capacity grew into the breadbasket of the world. Today, the gentleman farmer needs to master the skills of trading future contracts and applications for assistance. A starting point for subsidies "can supplement a farmer's income and as well as provide funds for rental payments for land and assistance when the market price of a crop is low. Farm subsidies also play a role in the cost and availability of certain agricultural commodities."
Farming as a productive enterprise is rapidly becoming big business. The family farm is no longer an independent endeavor based upon market prices and ingenious management. The quasi-government debt and subsidy cycle, demands a public partnership with federal and state agencies that distort production and consumer prices at every level. Economy of scale seems to be the only path left to plow the fertile fields of government subsidies. The corporate agriculture conglomerates have become integral constituents of the seed, fertilizer and chemical industry. Both collaborators hire their political lobbyists to expand financial supports, resistive food labeling disclosures and apply economic pressure to stamp out holistic food competition. The taxpayer should be concerned over the institutionalization and dependency of the SNAP mentality that eats at the fabric of a viable market economy. However, even more diabolical is the destructive subsidization of farming that dramatically benefits corporatist agriculture at the expense of organic agrarian alternatives. US News takes the position that the Farm Bill's Corporate Welfare Is Unacceptable.
A comprehensive overhaul of government agriculture policy may not seem very probable from a political will perspective. Nevertheless, the gravy train of public money cannot be a substitute for tilling the soil and weeding the crops. When government legislation attempts to maintain an inexpensive retail food price with public grants, loans and subsidies, the true cost of national nourishment is unsustainable. The urbanization of the political electorate dictates that the bottom feeders expect their groceries be delivered from a full service supermarket. As any rural resident knows, the nature of the land has its own set of rules and demands. Famine and undernourishment applies to much more than the food supply. It resides in the destructive and distorted government protection racket that leaves the public with a deep hunger in their belly. James Hall – April, 24, 2013 |
04-25-13 | THMEMES | CRONY CAPITALISM |
SECURITY-SURVEILLANCE COMPLEX - Vice rules over Virtue as America Remains Long on Indifference and Short on Indignation. America, Long On Indifference, Short On Indignation 04-23-13 Via Ben Tanosburn of Tanosburn.com via ZH A friend who teaches history in one of the area’s community colleges cynically told me a dozen years ago, shortly after the September 11 attack, that the upcoming writing of American history would be done not by historians, but by economists. He contended that American military spending had brought the Soviet empire to its knees a generation before, now (in 2001) Osama bin Laden was lighting what he called the “slow wick-fuse” that would have the US implode as the ruling empire within a couple of decades. My young friend then proceeded to draw economic curves on the un-rationed napkins made available with our overpriced Starbucks coffee. His extrapolation of expenditures for components and subcomponents of the GDP might have appeared pessimistic then, but there was unquestionable rationality in his overall treatment. Fear-triggered added government expenditures, whether via National Defense or some new domestic super-agency, would end up impoverishing the country; and, as he put it, “if fear expenditures don’t bury us, healthcare costs will.” And all this history in front of us, we both agreed, was happening because of our blatant civic indifference to how our nation was being governed; or, rather, how the people had forfeited their duty to govern themselves. The Boston Marathon terror incident made me revisit that extended coffee break with my friend, and what has happened in the twelve years hence. We now have Homeland Security “defending” us – from little, other than fear – at a total budget authority which approaches $60 billion annually. Two wars and more than a trillion dollars later, we have raised our chances for fear possibly ten, maybe even a hundred-fold… something which will eventually mature in terror to be perpetrated by those who’ll try to avenge the long line of victims the US has left behind in its imperial quest. And added to the grievous vice of our indifference is our lack of indignation in watching ourselves being marched to the slaughter house and not showing an ounce of courage, a legitimate cry of indignation. It became evident, if only in the economic arena, when the Occupy Movement made an attempt to pinpoint blame for the nation’s economic ills. Indignation never materialized… indifference quickly suffocating the cries of a few. As for any questioning by Americans of the seeds which grow terror; that will never happen while the empire continues waving its flags from hundreds of enclaves all over the world. Unfortunately, most Americans find pride in that, not indignation. Anton Chekhov in his Gooseberries could just as easily have been writing about life a century later in this America of ours:
So much for indignation, the silent protest of statistics! Whether Chekhov’s town of 50,000 or today’s US of 315+ million people, we are all immersed in our selfish little lives proudly displaying what could be society’s worst vice: indifference… indifference to “all the horror of life [that] goes on somewhere behind the scenes.” Indifference has historically been accepted by multiple cultures and religions as a vice. Isn’t it about time, in an era where democracy appears to be slowly gaining ground, that we successfully battle such vice with its corresponding virtue: indignation? After all, indignation is not just anger, but righteous anger at people or situations that are truly offensive or unjust to the better nature of humankind. As we look at the arrogance of the strong, and the ignorance of the weak, we can’t help but recognize that at least for now... vice rules over virtue and our country will continue to remain long on indifference and short on indignation. And that’s not a prescription to cure us from terrorism... or, what’s even worse, the fear of terrorism. |
04-23-13 | THESIS | MOST CRITICAL TIPPING POINT ARTICLES THIS WEEK - Apr. 21st - Apr. 27th 2013 |
RISK REVERSAL | 1 | ||
JAPAN - DEBT DEFLATION | 2 | ||
JAPAN - Little Physical or Mechanical reason for the BOJ’s easing program to work. Japan's Inflation Propaganda And Why The BoJ Better Hope It's Not Successful 04-20-13 Nomura's Richard Koo via ZH The existing (and ongoing) massive expansion of base money into the banking systems of the US, England, and Japan is without precedent. As Nomura's Richard Koo notes, at 16x statutory reserves, the liquidity 'should' have led to unprecedented inflation rates of 1,600% in the US, 970% in the UK, and 480% in Japan. However, it has not, yet. In short, Koo continues, businesses and households in these economies have stopped borrowing money even though interest rates have fallen to zero. And with no one borrowing money and many actually paying down debt, the money multiplier has turned negative at the margin - because of the severe damage caused to balance sheets when the bubble collapse drove asset prices lower while leaving debts intact (so-called balance-sheet-recession). This suggests that there is little physical or mechanical reason for the BOJ’s easing program to work. But the program could also have a psychological impact - and Japanese media is on an 'inflation' full-court press currently. The risk here is that not only borrowers but also lenders will start to believe the lies. No financial institutions anticipating inflation could ever lend money at current interest rates. No actual damage will be done as long as the easing program remains ineffective. But once it starts to affect psychology, the BOJ needs to quickly reverse the policy and bring the monetary base back to 'normal'. If the policy reversal is delayed, the Japanese economy (and inflation) could spiral out of control. Via Richard Koo, Nomura, The Money Multiplier... and inflation...
US and UK have 'not' been a success...
Because...
But still the central bankers try...
Ignoring the reality that...
and the empirical proof that...
Unintended consequences...
And QE may have run its course...
Because...
Yet the quantitative easing policies adopted by central banks in the major economies are all designed to increase the number of lenders...
The discussion above suggests that there is little physical or mechanical reason for the BOJ’s easing program to work. But the program could also have a psychological impact...
The problem is - what if the people start to believe...
Which could rapidly lead to...
And don't rely on 80 year old 'proof' since it is different this time...
Be careful what you wish for...
Full article below... |
04-24-13 | JAPAN | 2 - Japan Debt Deflation Spiral |
BOND BUBBLE | 3 | ||
EU BANKING CRISIS |
4 |
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SOVEREIGN DEBT CRISIS [Euope Crisis Tracker] | 5 | ||
CHINA BUBBLE | 6 | ||
TO TOP | |||
MACRO News Items of Importance - This Week | |||
GLOBAL MACRO REPORTS & ANALYSIS |
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US ECONOMIC REPORTS & ANALYSIS |
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US MACRO - Seasonal Correlation The Mystery Of The "Spring Swoon" Revealed 04-23-13 Zero Hedge For the last few years, the US equity market has soared through Q4 and into Q1 and macro-economic indications have trended with them in a virtuous circle 'confirming' that this time it's different and recovery is 'on'. Then just as investors get all bulled up, convinced by the market's all-knowing-efficiency that the old normal is back and growth is returning, macro-economic data starts to disappoint expectations. This is initially shrugged off - "it's a transitory dip", "the market sees through this temporary weakness", "where else are you going to put your money?" - and the stock buying continues through the Winter. But there comes a time, when the divergence from economic reality grows too wide and the 'faith' that the market knows best starts to fade; and sure enough, each time, the market drops back rapidly to reality. What is the common denominator for this winter surge? Simple - massive global central bank bailouts/injections in the months just before winter that levitate the market (and psychologically create 'hope' that is then extrapolated into future economic expectations which then after a one- to two-quarter lag, leads to disappointment as real economic data can't match the market's implied reality). 2010-11... 2011-12... 2012-13... So while heretofore taboo topics such as seasonal adjustments have been put forward to explain this mysterious cyclical deterioration between the winter and spring season for three years in a row; it seems the answer is far simpler and more practical to our new normal reality - a Central Bank induced hope that floods from market to real economic hopes, is 'priced in' by analysts, then fails to live up to the reality simply because it was never a real trend anyway - that leaves the economists all looking at their Birinyi's rulers and wondering if once again, the extrapolators-in-chief are wrong... Print, Rinse, Repeat... |
04-24-13 | PATTERNS | US ECONOMICS |
US PORT TRAFFIC - A Slowing Trend Showing in US Consumption LA area Port Traffic decreases year-over-year in March 04-17-13 Calculated Risk Container traffic gives us an idea about the volume of goods being exported and imported - and possibly some hints about the trade report for March since LA area ports handle about 40% of the nation's container port traffic. On a rolling 12 month basis, inbound traffic was up 2% in March, and outbound traffic down slightly, compared to the rolling 12 months ending in February. Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March. |
04-23-13 | US INDICATORS CYCLE GROWTH |
US ECONOMICS |
US RAIL TRAFFFIC - Trending Lower Rail Traffic Continues to Trend Lower 04-19-13 Pragmatic Capitalist Recent rail trends have weakened substantially from very strong levels earlier this year. The latest weekly reading came in at 3.3% year over year, but continues a trend of low single digit readings. This latest data brings the 12 week average to 4.4%. That’s still a healthy level, but well off the March high of 3.6%. In this environment I guess any growth is good growth so this has to go down as a moderate positive for the economy even though the trend is negative. Here’s more via AAR:
Chart via Orcam Investment Research: |
04-23-13 | US INDICATORS CYCLE GROWTH |
US ECONOMICS |
HOTEL OCCUPANCY - Back to Pre-Recession Levels Hotels: Occupancy Rate tracking pre-recession levels 04-19-13 Calculated Risk Another update on hotels from HotelNewsNow.com: STR: US results for week ending 13 April In year-over-year comparisons, occupancy was up 3.2 percent to 64.1 percent, average daily rate rose 7.2 percent to US$110.88 and revenue per available room increased 10.7 percent to US$71.04. The 4-week average of the occupancy rate is close to normal levels.
The red line is for 2013, yellow is for 2012, blue is "normal" and black is for 2009 - the worst year since the Great Depression for hotels. The occupancy rate will probably move sideways until the summer vacation travel starts. The occupancy rate has improved from the same period last year - and is tracking the pre-recession levels. Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com |
04-23-13 | US INDICATORS CATALYST CRE |
US ECONOMICS |
US BUDGET - As Represented and Spun for the Public President Obama's Entire Budget In One Chart 04-10-13 BI Obama's budget attempts to reduce the Federal Deficit by $1.7 trillion over 10 years, using a combination of spending cuts and increased taxes. So what does the budget really look like? We compared the numbers from the White House budget with the current CBO baseline of what budgets are currently expected to look like to figure out what he actually changes For each key category, the level zero is the current projected funding level for the next ten years. If a line goes above zero, the President's budget will spend more on it than current funding levels — or in the case of revenues, that number will be higher. Just a primer:
The general trend? Most of the lines on the budget exceed funding for the next two to three years (stimulus basically), then drop below projected funding levels following 2016 or 2017. So in other words, this represents the kind of stimulus-now, but-later budgeting that a lot of economists in Washington favor. |
04-23-13 | US FISCAL | US ECONOMICS |
BIG GOVERNMENT - A Budget That Institutionalizes Big Government President Obama's Predictable Budget: More Spending, More Tax Increases 04-19-13 Peter Ferrara, Contributor , FORBES
“more than $2 in spending cuts for every $1 of new revenue from closing tax loopholes and reducing tax benefits for the wealthiest.” SPENDING INCREASES: There are No Cuts But President Obama’s budget does not propose any spending cuts at all on net, not even reductions from expected increases in spending.
Indeed, President Obama’s talk of “spending cuts’ in his budget Overview is followed by pages of proposals for increased spending. That reflects Obama’s basic thinking that what drives economic recovery and growth is increased government spending. But Obama’s economic record is a thorough rebuttal to that thinking. Not one of those increased spending proposals in his 2014 budget would contribute to increased economic growth and prosperity on net. TAX INCREASES: Just More Tax Increases Besides these runaway spending increases, Obama’s budget also proposes
BALANCED BUDGET: A Deficit Doubletalk Mirage Despite all the tax increases, President Obama’s budget proposal would never balance the budget, by Obama’s own admission. His own budget admits that
ASSUMPTIONS: Revenue
ASSUMPTIONS: Growth
ASSUMPTIONS: Interest Rates
ASSUMPTION: No Recession
With these assumptions, the deficit and debt projections in Obama’s budget cannot be taken seriously, and most likely will turn out to be grossly underestimated. ENTITLEMENT REFORM - A Charade President Obama has his propagandist flacks out there touting his supposed entitlement reforms in this budget as a grand gesture of compromise with Republicans. But there is
Imagine what would happen to our national defense if the government refused to pay the builders of the Navy’s ships, the manufacturers of the Air Force’s planes, and the makers of the Army’s tanks. That is what is going to happen to health care for seniors under Medicare, given Obama’s so-called “reforms.” REAL ENTITLEMENT REFORM
POLITICAL POSTURING - This is What the Budget Is All About Federal law requires President Obama to propose a budget for the next fiscal year by February 4 of each year, before the House and the Senate adopt their own budget resolutions. But President Obama released his budget for next year just last week, after the House and the Senate had already adopted their budget resolutions. So what is the point of the President issuing a budget proposal now? The point is to simply posture for all those low information, Twitter voters in the 2014 elections, who will hear only from all the Democrat Party propagandists at the New York Times, the Washington Post, and MSNBC and brethren. They will hear only about President Obama’s “spending cuts,” his grand, compromising, entitlement reforms, and how he is fighting for the middle class, with declining median incomes throughout his Administration, for the poor, with record, soaring poverty, and for “equality,” even as inequality has actually risen throughout his Administration. Is this generation of Americans in the process of proving America’s more than 200 year experiment with democracy a failure |
04-23-13 | US FISCAL OBAMA BUDGET |
US ECONOMICS |
US GDP - Growth Through Manipulation
US GDP Will Be Revised Higher By $500 Billion Following Addition Of "Intangibles" To Economy 04-21-13 Zero Hedge Those who have been following the US debt to GDP ratio now that the US officially does not have a debt ceiling indefinitely, may have had the occasional panic attack seeing how this country's leverage ratio is rapidly approaching that of a Troika case study of a PIIG in complete failure. And at 107% debt/GDP no explanations are necessary. Luckily, the official gatekeepers of America's economic growth (with decimal point precision), the Bureau of Economic Analysis have a plan on how to make the US economy, which is now growing at an abysmal 1.5% annualized pace, or about 5 times slower than US debt growing at 7.5% annually, catch up: magically make up a number out of thin air, and add it to the total. And it literally is out of thin air: according to the FT the addition will constitute of a one-time addition of intangibles, amounting to 3% of total US GDP, or more than the size of Belgium at $500 billion, to the US economy.
What exactly will constitute GDP growth going forward? In a word, intangibles: films, books, magazines and iTunes songs.
Nothing like adding intangibles in the fluid, ever-changing definition of what constitutes an economy. Naturally, the only reason for this artificial "boost" to the US economy which apparently can be any old arbitrary number agreed upon by a few accountants, and which always goes up post revision, never down, is to make US debt/GDP under 100% once again, if only very briefly. Surely a few months later something else can be "added" to GDP making the US economy appear better than it is once more. Finally, all of the above is a distraction for idiots. As most people should know by know (this logically excludes economists), the only factor leading to economic "growth" is the expansion of liabilities of the financial system, whereby new credit (in a healthy environment, not one centrally-planned by several Princeton real-world rejects, where the central bank is forced to create all credit expansion with money that never leaves the banks and the capital markets closed loop) creates new money, creates demand for products and services, and circulates in the economy. This can be seen in the chart below which shows the nearly perfect correlation between total bank liabilities in the US, as per the Fed's Flow Of Funds report, and total US GDP. Bottom line: the BEA can capitalize air consumption if it thinks it will make US GDP soar, but unless new credit and bank liabilities are created not due to forced supply but demand, and unless the private financial sector is finally willing to start lending money (which for the entire duration of QE it has not) US growth will stall and then proceed to decline. Case in point: total US commerical bank loans are still lower than they were the day Lehman filed. In other words, all the GDP "growth" since the Lehman failure has come on the back of money "created" by the Fed. And there are still those who think the Fed will ever unwind... |
04-22-13 | US MONETARY |
US ECONOMICS |
TOO BIG TO GOVERN (TBTG) - Bloated Government Crowds Out Private Investment 100 Years Of Government's Takeover Of The Economy 04-20-13 Zero Hedge The ever-encroaching 'might' of the government - or perhaps, put another way, the ever-decreasing need to be gainfully employed or productive... |
04-22-13 | FISCAL | US ECONOMICS |
SURPRISE INDEX - Negative Annual Cyclical Pattern Occurs Again The Citi Economic Surprise Index Just Went Negative... 04-16-13 BI Lately economic data seems to be coming in week, and it's gotten a lot of people talking about a "spring swoon" for the economy. Actually, there's a bigger patter people are worried about, that every year we seem to have these false dawns for the economy, only for things to get sluggish again. The March jobs report (which came in at just 88K) was the most glaring example of the weakness, but also there's been some weak housing and retail data. The Citi Economic Surprise Index is a measure that tries to capture how well the data is coming in relative to economic expectations. After all, this is what's key to markets. It's not so much about whether the data is good or bad, but whether it's better or worse than what people thought it would be. Positive numbers indicate that the data is still "beating." Negative numbers show missing. The index has just turned negative. |
04-22-13 | US MACRO INDICATORS |
US ECONOMICS |
CONSUMER SENTIMENT - Americans Feel They Are In A Recession Consumers around the world grappled with increasing economic concerns Nielsen Q4 Consumer Confidence Report
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04-22-13 | CONSUMER SENTIMENT | US ECONOMICS |
US FISCAL - Taxes and Spending Show These Charts To Anyone Who Thinks Debt, Spending, And Taxes Are At All Time Highs 04-22-13 BI Think debt, taxes, and spending are at all-time highs these days? It turns out that belief is almost totally false. A presentation from the Bureau of Economic Analysis includes three charts that everyone should see. It turns out, taxes are lower than through most of history, debt as a percentage of GDP has been much higher in the past, and on government spending, only if you include transfer payments (like Social Security) is spending at a new high relative to GDP. If you look at actual government spending that doesn't go straight to people, it's low.
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04-22-13 | US FISCAL | US ECONOMICS |
CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES | |||
Market Analytics | |||
TECHNICALS & MARKET ANALYTICS |
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INFLATION - 10Y Inflation Breakeven Disconnected from Markets An Ominous Market Indicator Appears To Be Confirming The Dreaded Third Top 04-22-13 BI the S&P 500 is now outpacing inflation expectations even more than it did at the market tops of either 2000 or 2007. The chart below shows that this divergence has been a couple years in the making at this point. However, in recent weeks, a lot of talk about disinflation and deflation has resurfaced. After taking the prize as one of the worst performing asset classes in the first quarter, the commodity complex has become completely unglued in April. At the same time, there has been a big rally in Treasuries as investors position for a slowdown in global growth. As the slide below explains, "Expectations of price increases (inflation) are a sign of potentially stronger demand growth and higher margins, which is a positive for stocks." Arguably, the latest developments on the inflation front are not positive for stocks.
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04-24-13 | PATTERNS | ANALYTICS |
CANARIES - A Major Contrarian Warning Signal HUSSMAN: The Cover Of The Latest Barron's Is A Screaming Call To Sell 04-23-13 BI This weekend we mentioned the latest Barron's cover, which is about the paper's professional investor survey, which shows record high bullishness and a widespread belief that the Dow is going to go to 16,000. John Hussman, the famously bearish mutual fund manager, sees this as screaming sell signal, as he invokes the ol' contrarian magazine cover indicator. He writes: The Barron’s Big Money Poll is typically bullish, on balance. This is Wall Street, after all. But variations in the tone and extent of that bullishness can be informative, especially when the consensus is extremely optimistic at new highs of mature bull markets, and defensive at new lows of mature bear markets. I can’t really throw stones about 2009, as I had my own concerns at the time (relating to the need to stress-test against Depression era outcomes, despite our favorable views of valuation). But it’s worth noting that the 2009 Big Money Poll questioned the advance from the March lows, noting “good reason not to jump in with both feet yet.” The 2003 Big Money Poll – already well into a new bull market – was bullish on balance, and up from just 43% bulls in an October 2002 poll near the market lows. Still, the 2003 poll noted “the bulls’ views have been tempered by the market’s losses in recent years. Consequently their expectations for the Dow, the Standard & Poor’s 500 stock index, and the Nasdaq Composite have been ratcheted down from past surveys.” This certainly isn’t a criticism of Barron’s itself. I grew up on Barron’s Magazine, and will remain a devoted reader at least as long as Alan Abelson provides a worthy counterbalance to the more short-sighted views of Wall Street and the Market Lab section remains in print. Still, the Big Money Poll is most useful as a contrary indicator. Rule o’ Thumb: When the cover of a major financial magazine features a cartoon of a bull leaping through the air on a pogo stick, it’s probably about time to cash in the chips. Anyway, this chart from Hussman says it all. |
04-23-13 | RISK CANARIES |
ANALYTICS |
COMMODITY CORNER - HARD ASSETS | |||
THESIS Themes | |||
2013 - STATISM |
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2012 - FINANCIAL REPRESSION |
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2011 - BEGGAR-THY-NEIGHBOR -- CURRENCY WARS |
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2010 - EXTEN D & PRETEND |
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THEMES | |||
CORPORATOCRACY - CRONY CAPITALSIM | |||
GLOBAL FINANCIAL IMBALANCE | |||
SOCIAL UNREST |
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CENTRAL PLANNING |
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STANDARD OF LIVING - More than Americans Disposable Income Being Crushed America: #1 In Fear, Stress, Anger, Divorce, Obesity, Anti-Depressants, Etc. 04-23-13 Michael Snyder of The Economic Collapse blog via ZH The United States is a deeply unhappy place. We are a nation that is absolutely consumed by fear, stress, anger and depression. It isn't just our economy that is falling apart - the very fabric of society is starting to come apart at the seams and it is because of what is happening to us on the inside. The facts and statistics that I am going to share with you in this article are quite startling. They are clear evidence that America is a nation that is an advanced state of decline. We are overwhelmed by fear, stress and anxiety, and much of the time the ways that we choose to deal with those emotions lead to some very self-destructive behaviors. Americans have experienced a standard of living far beyond the wildest dreams of most societies throughout human history, and yet we are an absolutely miserable people. Why is this? Why is America #1 in so many negative categories? Why are we constantly looking for ways to escape the pain of our own lives? Why are our families falling apart? There is vast material wealth all around us. So why can't we be happy? Just look around you. Are most of the people around you teeming with happiness and joy? Sadly, the truth is that most Americans are terribly stressed out. Yeah, many of them may be able to manage to come up with a smile when they greet you, but most of the time they are consumed by internal struggles that are eating away at them like cancer. So why is this happening? Is modern life structured in a way that is fundamentally unhealthy? Below I have posted a short excerpt from a message that one of Charles Hugh Smith's readers named Kenneth Daigle recently sent to him. I think that it does a good job of describing the incredible stress that many people contend with on a daily basis...
Most Americans live lives of "quiet desperation" that are punctuated by moments of great crisis. We spend our prime years working for others (making them rich) in order to pay off debts that we have foolishly accumulated (thus making the banks even wealthier). When most Americans reach the end of their lives, they look back and wonder what they actually accomplished. James Altucher published an incredible article the other day entitled "Why Do People Hate Their Jobs?" It did a great job of describing what life is like for the modern worker in America. The following are a few of the reasons that he says people tend to hate their jobs...
And of course when we get home from work there is even more stress. In America today, we are witnessing a breakdown of the family unlike anything we have ever seen before. The United States leads the world in divorce and in single person households. We are having an increasingly difficult time relating to one another, and many of us drown our sorrows in our addictions. We are addicted to pills, to alcohol, to food, to entertainment, to sex, to gambling, to shopping and to anything else that will make us feel good and forget about our problems for a while. The following is a collection of facts and statistics that prove that America is being absolutely consumed by fear, stress, anger and depression...
Fear is one of the primary things that motivates the American people, and that is a very powerful weapon that can be used against us. As I wrote about yesterday, those that commit acts of terror want to get attention and they want to create fear. And that is exactly what the Boston Marathon bombing accomplished. It captured the attention of the nation for days on end, and it absolutely paralyzed the entire Boston area with fear. When we allow ourselves to be terrorized, we actually encourage more terror attacks. When we give terrorists what they want, it just encourages more psychos to commit acts of terror. If you don't believe me, just check out the following links that I found posted on The Drudge Report on Monday...
The appropriate response to a terror attack is to refuse to be terrorized. Yes, we should also work to expose and punish the individuals, organizations and governments that are behind terror. But we should also not let terror change how we live our lives, and we should definitely not allow terror to be used as an excuse to rip our liberties and freedoms away. Sadly, as Ron Paul has detailed, some of our politicians are already calling for "tighter security" in the aftermath of the Boston Marathon bombing...
But no matter how much liberty and freedom we give up, we will never be 100% safe. Bad people are always going to do bad things, and unfortunately we are probably going to see some pretty nightmarish things in the years ahead as the world becomes even more unstable. If we allow the bad guys to get us so frightened that we throw out the U.S. Constitution and abandon our liberties and our freedoms, then we are the ones who lose. Yes, the years ahead are going to be tough. The economic collapse is going to accelerate greatly, there will be tremendous natural disasters, there will be war in the Middle East and there will be other problems that we cannot even conceive of right now. At the same time, the American people will continue to become even angrier and even more frustrated. According to a recent Pew Research survey, the percentage of Americans with a favorable view of the federal government is now at an all-time low. As the economy crumbles, there will likely be great civil unrest as people demand solutions. Unfortunately, our problems took decades to develop and they will not be solved overnight even if we did have good people in office. So why am I saying all of this? And why am I constantly warning about the coming economic collapse? Is it because I want to create fear ? No, just the opposite of that. I am a watchman on the wall. In ancient times, a watchman would warn the people when the enemy was approaching. When you receive the warning, there are a few different ways that you can respond to it...
And that is how I would encourage all of you to approach the coming economic collapse and the other great problems that we will soon be experiencing as a nation. Do not be afraid. Instead, be strong and courageous and prepare well for the storms that are coming. |
04-24-13 | THEME | |
NATURE OF WORK | |||
CATALYSTS - FEAR & GREED | |||
GENERAL INTEREST |
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