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Thurs. June 27th , 2013
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There is a limit to the Gold Manipulation - The Cash Cost of Production When mines go 'dark' because gold is below their production costs then Supply plummets and Prices must rise - NO? |
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PATTERNS - Asset Trends versus Bubbles The Wealth Effect Half-Life 06-26-13 Barclays via ZH Wild swings in asset prices have produced two recessions in the last 15 years - and, we suspect, FOMC members are keen not to see a repeat of the collapses of the last decade. As the following chart shows, measured relative to an equally nominally inflated USD-based disposable income, the wealth effect is nothing like as strong as some suggest and indeed it should be clear that time after time in the last 20 years we have seen the artificially blown 'wealth-effect-creating' bubbles implode back to what was an old-normal level of 'sustainable' wealth (and in fact the Fed is having to work harder to keep us from that level). As Barclays notes,
Chart: Barclays ANNOTATIONS BELOW BY gordontlong.com |
06-27-13 | PATTERNS STUDY ROTATION |
ANALYTICS |
GOLD - Prices Nearing a Practicasl Bottom of Production Costs of $1300/OZ and Cash Cost $1104 Gold Drops Below Its Average Cash Cost 06-26-13 Barclays Research As shown two months ago, the marginal cost of production of gold (90% percentile) in 2013 was estimated at $1300 including capex. Which means that as of a few days ago, gold is now trading well below not only the cash cost, but is rapidly approaching the marginal cash cost of $1104... Which means that of the following mines (as we showed here) which make up the gold cost curve, one by one, starting on the right and going left, production is going to go dark, even without the recent demand by South African gold miner labor unions to have their wages doubled. Until eventually virtually no gold will be produced. It is at that point where one must apply the New Normal supply and demand curve, when one can predict a $0 per ounce price for gold, as physical demand continues unabated, while actual physical, not paper, production has now started going offline. Joking aside, not even Bernanke and all the paper Gold ETFs in the world will be able to do much to suppress gold prices from reaching their fair value when gold production hits a standstill, and when demands, especially by China, is still in the hundreds of tons each year. |
06-27-13 | GOLD | PRECIOUS METALS |
PATTERNS - Credit Leading Equities The Credit Market Sees Things Differently 06-26-13 Barclays via ZH Both the absolute levels and the implied volatility of credit markets are significantly divergent from the recovering exuberance in stocks. As we discussed here and here, this cannot last. If you 'believe' that Bernanke was bluffing and the taper is off then credit is grossly cheaper than stocks; if not, equity shorts seem an appropriate position into Q3. Easy Come, Easy Flow... Which leaves equities 9-sigma rich to credit... (approximately 3x HYG to 1x SPY delta) Of course, the fund flows are affecting credit (as we are constantly reminded on CNBC) and as we saw here, the selling pressure is dramatic; but - as we noted previously -
Charts: Bloomberg and Barclays |
06-27-13 | PATTERNS | ANALYTICS |
TAPER - Clearly A Bluff or Muddled Policy The Bernanke Fed is playing with deflationary fire 06-24-13 Ambrose Evans-Pritchard, The Telegraph I hope the Fed knows what it is doing. It has chosen to tighten monetary policy even though core PCE inflation is actually lower right now than it was when the Fed previously thought it dangerous enough to launch further QE. America is one shock away from a slide into outright deflation, and the eurozone is half a shock away. Anyone who still thinks the Fed has not just tightened significantly – or that markets have overreacted – should read this lament by St Louis Fed chief James Bullard in the Washington Post:
Here is M1 money to cheer you up: And here is M1 velocity to cheer you up further: Now, short-term M1 money data is very volatile, and can often flash wild signals. Nevertheless, I am frankly flabbergasted by the actions of the Bernanke Fed at this point. They are gambling that the US economy will shake off the effects of fiscal tightening of 2pc to 3pc of GDP this year, arguably the biggest squeeze in half a century. It may indeed do so, but it may not, and the costs of making a mistake before the US recovery is safely established are asymmetric. Scott Sumner, the spiritual father of the Market Monetarists, says the errors made by the Fed in 1937 and the Bank of Japan in 2000 did serious damage, while the US suffered little lasting effect when the Fed delayed too long in 1951. Are we to conclude that Ben Bernanke has lost his nerve and joined the Austro-nihilists? |
06-27-13 | US MONETARY
STUDY BOND SCARE |
CENTRAL BANKS |
MOST CRITICAL TIPPING POINT ARTICLES THIS WEEK - June 23rd - June 29th |
RISK REVERSAL | 1 | ||
JAPAN - DEBT DEFLATION | 2 | ||
JAPAN - Some Policies Have Clearly Hit the Limit The BIS Chart That Abe And Kuroda Would Rather You Didn't See 06-23-13 BIS via ZH Earlier we noted the rather peculiarly truthful (lack of optimistically-biased bullshit) annual report from the BIS as reading ZeroHedge-sermon-like. There is a smorgasbord of data, charts, and quotes strewn throughout the 204-page melodrama but one caught our eye. Reflecting on the fact that governments in several major economies currently benefit from historically low funding costs, and yet at the same time, rising debt levels have increased their exposure to higher interest rates, the BIS projects the dismal reality that any rise in interest rates without an equal increase in the output growth rate will further undermine fiscal sustainability. Although predicting when and how a correction in long-term rates will unfold is difficult, it is possible to examine the potential impact on the sustainability of public finances and how any normalization of rates (or Abe's success in creating 2% 'inflation' in Japan) leads the nation's debt-ratio to explode (to over 600% debt-to-GDP). What is more concerning is that even with no negative impact from demographics (age-related adjustments) and even assuming a central bank that can keep interest rates at their ultra-low levels for another 30 years, Japan's debt-to-GDP ratio will reach almost 400% (that's a best case scenario!!) Unsurprisingly, the higher the interest rate, the faster debt will increase; and while the BIS and the central planners of the world clearly 'believe' they can manipulate JGB yields should this happen, we suspect there is a (non-specific R&R vs Krugman based) limit that once crossed creates the qualitative perception shift that Kyle Bass has so unequivocally explained is coming. As we noted earlier from the BIS - "some policies have clearly hit their limit." Chart: BIS
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06-24-13 | MACRO MONETARY
GMTP JAPAN |
2 - Japan Debt Deflation Spiral |
BOND BUBBLE | 3 | ||
RISK - Volatility and Increasing Instability The Surge In Interest Rates Is Unlike Anything We've Seen In At Least 50 Years Bepsoke via BI The yield on the 10-Year Treasury is up 13 basis points today, to 2.63%. Interest rates have been exploding recently — at their highest levels since August 2011. The chart below, via Bespoke Investment Group, shows just how extended we are. The 10-year yield is up to 33.3% above its 50-day moving average, the farthest it has been above its 50-day in at least 50 years. This just goes to show how quickly rates have been surging. "Talk about extended!" exclaim the folks at Bespoke. "At what point does this see at least a short-term turnaround?" ANNOTATIONS BY gordontlong.com
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ANALYTICS 1-RISK 2- STUDY
MACRO 1- BOND SCARE |
3- Bond Bubble | |
EU BANKING CRISIS |
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SOVEREIGN DEBT CRISIS [Euope Crisis Tracker] | 5 | ||
CHINA BUBBLE | 6 | ||
CHINA - PBOC Liquidity Squeeze Credit Warnings Offer World a Peek Into China’s Secretive Banks 06-24-13- NY Times BEIJING — China’s hidden banking system is coming out of the shadows as the government seeks to rein in the excessive lending that it fears could spin out of control. The People’s Bank of China, the central bank, let the world know on Monday that it was putting the nation’s banks on notice: the loose money and the speculation it fed had to stop. It said banks had to step up risk controls and improve cash management. And they had to do it, the bank said, by avoiding a “stampede” mentality. The banks had quietly received that very message a week earlier, which set off, if not a rush for the exits, certainly widespread worry in China and financial centers around the world. It precipitated a cash squeeze among the banks that sent their short-term interest rates sharply higher last week. The crackdown, appears aimed at reining in banks engaged in complex deals that involve hiding and repackaging risky loans so that regulators cannot notice them, ... also led to a sharp sell-off in stocks worldwide during the last week. Investors feared it might further slow the Chinese economy. China, the world’s second-largest economy after the United States, has a huge influence on the world economy so the actions of its central bank are closely watched across the globe. But its financial and banking system remains opaque to Chinese and foreigners alike. Within the government’s own warnings about lending lies its dilemma: it needs to control where money is being lent at the same time it wants to reform a banking system that has grown dependent on government direction. “The government knows some banks are doing things that aren’t prudent,” says Yukon Huang, a senior associate at the Carnegie Endowment for International Peace in Washington. “Some of them are taking easy money and putting it in Ponzi schemes. The government is saying, ‘Don’t do that any more. And don’t count on the government to bail you out.’ ” Li Keqiang, China’s prime minister, who took office last March, has promised a more market-oriented approach to managing the economy. And analysts say his economic advisers are pressing to reorganize the economy in a way that will allow it to respond better to market forces. But to put such reforms in place, the new government is going to have to take on powerful state-run companies and interest groups that sometimes resist pressure from the center or turn to allies in the central leadership who block such moves. The government’s target is the sharp and potentially dangerous rise in the so-called shadow banking. Banks borrow at the low interbank rate, then lend to trust companies and smaller banks who in turn make riskier loans. The fear among some analysts is that the vast amount of bad debt and hidden liabilities the shadow banking system masks could start sinking banks. Those excesses could start a chain of other economic setbacks. Most economists say China’s financial system is not facing huge systemic risks, and that growth could even come in at 7 percent, which would still make it the world’s fastest-growing major economy. But there are mounting concerns here that the good times could be over partly because the banking sector is hiding piles of bad debt. The Chinese government has the policy tools to deal with a crisis, including huge foreign exchange reserves and the ability to force state banks to lend in a time of crisis. The People’s Bank of China is not an independent institution, like many central banks in major economies are; it reports to the central government. But after years of pumping money into the economy, the central bank can see signs of diminishing returns. Banks lent a huge amount of money in the first half of this year, and yet growth has been tepid. Manufacturing has begun to contract, according to a recent survey, and banks seem desperate for more cash. Last Friday, Fitch Ratings said in a report that less money in the market for interbank loans could hamper some banks from making payouts when high-interest financial instruments for China’s rich,called wealth management products, mature later this month. Fitch said about $244 billion would come due later this month and that the effort to make the payout could send short-term borrowing rates even higher. Wall Street analysts are now revising their economic growth forecasts downward and warning that the Chinese central bank’s refusal to alleviate commercial banks’ cash shortages by pumping more money into the economy could lead some smaller banks to default. They warn of other dangers facing China’s economic policy makers. If the property market stumbles, some analysts fear that could wallop the broader economy. China’s exports, long a strength, had been buoyant early in the year, according to official statistics. But some analysts have questioned whether trade statistics were being manipulated by speculators pretending to sell goods overseas in order to bring money into the country that they would then use to speculate in the financial markets. The most recent export figures have been less robust, possibly hurt by China’s currency, the renminbi, which has strengthened over the last year against the dollar and the Japanese yen. The prime minister and his economic team are trying to move swiftly to guard against a crisis down the road, after years of loose credit and heavy spending on manufacturing, property and infrastructure. But if they press too hard, analysts say, an already weakening economy could lock up, and see growth dip below 7 percent, starting even more trouble with the banking sector. “To push through their reforms I think Li Keqiang and Xi Jinping are willing to accept lower growth,” says Nicholas Lardy, an expert on China’s economy at the Peterson Institute for International Economics in Washington. Last Friday, a large group of bankers and entrepreneurs surveyed by the central bank said their confidence in the country’s macroeconomic conditions was weakening. Loan demand was falling, said Xiang Songzuo, chief economist of the Agricultural Bank of China, according to the English language China Daily. “Even a monetary easing is not going to solve the problem,” he sai |
06-26-13 | CHINA | 6 - China Hard Landing |
PATTERNS - Financial Stress Index Sends Market Clue Financial Stress Index Hits Scary Level 06-25-13 CNBC he St. Louis Fed's Financial Stress Index has shot upward in the past few months. Instead of going into the details about how the index is composed, I'll let you click through to the St. Louis Fed's explanation here. The last three times that we've seen spikes like this were during the U.S. financial crisis of 2008, during the acceleration of the Greek crisis in May 2010 and in August 2011, when the U.S. credit rating was downgraded by S&P. The latest stress spike began in the second week of May and has continued unabated. We already know that markets are in turmoil, so this isn't exactly news. But one thing to remember is that the past spikes in the index were swiftly followed by Fed action that relieved the stress. In June 2010, the Fed extended swap lines to central banks around the globe. In August 2011, the Fed announced that rates would remain low for at least two more years. Assuming this isn't a completely spurious correlation, the recent rise in financial stress may mean that we should expect something new from the Federal Reserve soon. —By CNBC's John Carney |
06-26-13 | PATTERNS SENTIMENT
GMTP US CONFIDENCE |
22 - Public Sentiment & Confidence |
INFLATION EXPECTATIONS - Contributing to Volatiltiy The Declining Inflation Expectations Chart That Should Have Stock Investors Very Concerned 06-24-13 BI From last night's Bedtime with BTIG note, Dan Greenhaus (@danBTIG on Twitter) points to the below chart as something that's of increasing concern to investors:
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06-25-13 | PATTERNS MACRO MONETARY |
26 - Rising Inflation Pressures & Interest Pressures |
TO TOP | |||
MACRO News Items of Importance - This Week | |||
GLOBAL MACRO REPORTS & ANALYSIS |
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WORLD BANK - Cuts Global Outlook World Bank Cuts Global Outlook as China Slows 06-13-13 Bloomberg The World Bank cut its global growth forecast for this year after emerging markets from China to Brazil slowed more than projected, while budget cuts and slumping investor confidence deepened Europe’s contraction. The world economy will expand 2.2 percent, less than a January forecast for 2.4 percent growth and slower than last year’s 2.3 percent, the bank said in a report released yesterday in Washington. It lowered its prediction for developing economies and sees the euro region’s gross domestic product shrinking 0.6 percent. In contrast, forecasts were raised for the U.S. and Japan, which was helped by fiscal and monetary stimulus. “Hard data so far this year point to a global economy that is slowly getting back on its feet,” the Washington-based lender said in its twice-yearly report. “However, the recovery remains hesitant and uneven.” Efforts by European policy makers to stem the region’s debt crisis have alleviated the main risk to global growth and financial-market stability, according to the lender. The bank now sees smaller threats, including lower commodity prices and the impact of unwinding unprecedented monetary stimulus in advanced economies including the U.S., the talk of which has sent currencies from India to Thailand lower and Mexican bond yields higher in recent weeks. Stocks TumbleAsian equities tumbled today, with the region’s benchmark index headed toward a correction, and the yen rose to the strongest in two months against the dollar after the World Bank cut its growth forecast amid concern central banks may pare monetary stimulus. The MSCI Asia Pacific Index dropped as much as 3 percent, erasing this year’s gains. Bond risk in Asia climbed, and emerging-market stocks slid to a nine-month low, led by Chinese and Thai shares. Debate among U.S. policy makers over when and how to dial back the Federal Reserve’s $85 billion-a-month program of asset purchases has shaken financial markets in developing nations. More than $2.5 trillion has been erased from the value of global equities since Fed Chairman Ben S. Bernanke said May 22 that the Fed could scale back stimulus efforts if the employment outlook shows “sustainable improvement.” “In the short run, if the U.S. becomes a little more attractive, there will be some marginal movement of money,” World Bank Chief Economist Kaushik Basu said in an interview yesterday. “I don’t think this is the kind of fluctuation that will last past two months or so.” Korean RatesThe withdrawal of accommodative policy may have consequences in the longer run as interest rates in developing countries rise more than in their industrial counterparts, slowing investment and growth, according to the report. The Bank of Korea kept its benchmark interest rate unchanged today after a surprise cut in May aimed at boosting an economy hit by a yen drop that gives Japanese companies an edge over Korean exporters. New Zealand’s central bank left its Official Cash Rate at 2.5 percent and cut its growth forecast for the year through March 2014 to 3 percent from 3.3 percent. For next year, the World Bank said it expects 3 percent growth worldwide, compared with a 3.1 percent advance in its January forecast. The World Bank predicts the U.S. will grow 2 percent this year compared with a forecast in January for a 1.9 percent expansion, though fiscal tightening is holding it back. The new forecast for the 17-country euro area compares with a 0.1 percent contraction seen in January. Emerging EconomiesDeveloping countries collectively were forecast by the World Bank to expand 5.1 percent, less than the 5.5 percent estimated in January. China’s growth outlook was cut to 7.7 percent from 8.4 percent, according to the World Bank’s report. The 6.1 percent forecast for India was reduced to 5.7 percent and Brazil’s was lowered to 2.9 percent from 3.4 percent. While China’s slowdown was expected, “it is the timing, that it happened a bit quickly that caught people by surprise,” Basu said. “Given that China used to grow at 10 percent and it was pulling so much of the world along with that, that is indeed a concern,” especially in regions that benefited from Chinese investment such as sub-Saharan Africa, he said. The effects could be neutralized if growth picks up in Europe or Japan, which the bank now sees expanding 1.4 percent this year from 0.8 percent in its January forecasts, he said. Japan’s monetary and fiscal stimulus is the right policy for the country, even if it’s pushed up the currencies of some nations as the yen depreciated, Basu told reporters yesterday. The bank estimates higher Japanese exports could also benefit countries such as Thailand and the Philippines, which supply parts and components to Japan. “For growth to remain strong through 2015, however, Japan will have to implement a robust set of productivity enhancing policy changes,” according to the report. World Bank Cuts China's Growth Forecast And Warns Of A Possible 'Sharp' Slowdown 06-13-13 BI The World Bank has slashed its growth forecast for China's economy this year to 7.7 percent from 8.4 percent, warning of a potential "sharp" slowdown triggered by a fall in investment. The projection is lower than the 7.8 percent expansion the country recorded in 2012, which was its weakest in 13 years, and comes as a slew of data indicate the economy is struggling to pick up pace. "The main risk related to China remains the possibility that high investment rates prove unsustainable, provoking a disorderly unwinding and sharp economic slowdown," World Bank. It tipped growth to pick up to around eight percent next year and in 2015 -- unchanged from the bank's previous forecast -- as "global conditions improve". Chinese household debt is around two to three times higher than the level before 1997 when the Asian Financial Crisis hit, the report said. While the headline inflation rate is mild, price pressures remain in certain rapidly growing segments of the economy, including real estate, it added.
In April, China announced unexpectedly weak growth of 7.7 percent for the first quarter, surprising analysts who had expected expansion to accelerate in 2013 after showing strength at the end of last year. Other recent indicators have raised alarm bells, with exports showing almost no growth last month, while industrial output expanded at a slightly slower pace than April and big ticket investment growth also eased. A survey by British banking giant HSBC showed China's manufacturing activity measured 49.2 in May, an eight-month low, and below the 50 mark that indicates contraction. The World Bank's forecast cuts followed a recent lowering by the International Monetary Fund to 7.75 percent from the previous 8.0 percent. |
06-25-13 | MACRO OUTLOOK | MACRO ECONOMICS |
US ECONOMIC REPORTS & ANALYSIS |
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CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES | |||
BIS WARNS - MONETARY Kool-Aid Party is Over
The Bank Of International Settlements Warns The Monetary Kool-Aid Party Is Over 06-23-13 BIS via ZH When a month ago the Central Banks' Central Bank, aka the Bank of International Settlements (or BIS) in Basel where the MIT central-planning braintrust meets every few months to decide the fate of the world, warned that the Fed-induced collateral shortage is distorting the markets, few paid attention. That the implication behind said warning was that QE can not continue at the current pace, was just as lost. A few short weeks later following the biggest plunge in markets since 2011 in the aftermath of Bernanke's taper tantrum, some are finally willing to listen. However, they will certainly not like what the BIS just released as a follow up, both in the form of the BIS' 83rd Annual Report, and the speech by Jaime Caruana to commemorate said annual meeting. For the simple reason that it reads like a run of the mill Sunday morning Zero Hedge sermon, which says, almost verbatim, that the days of kicking the can via flawed monetary policy are now over, and that the time for central banks to end the monetary morphine drip has finally come. The BIS message, as summarized by the FT, is that "central banks must head for the exit and stop trying to spur a global economic recovery... cheap and plentiful central bank money had merely bought time, warning that more bond buying would retard the global economy’s return to health by delaying adjustments to governments’ and households’ balance sheets." Here is a better summary of the BIS' unprecedented U-Turn on its 5 year long monetary strategy, in its own selected words:
Of course, it would have been more useful for the BIS to reach this commonsensical conclusion some four years ago (or roughly when we started preaching to the choir, which now includes the BIS itself), instead of allowing the global private bank controlled syndicate known as "central banks" to inject $15 trillion into global capital markets in the past 4 years, and nearly $25 trillion (a #Ref! % increase!) since 2000. Some of the "shocking" and painfully late observations on the chart above:
Some of the other, just as "shocking" observations: a dramatic surge in artificially low bond yields will result in crippling, systemic losses, amounting to trillions of dollars for bond (and certainly stock) investors around the globe, to the tune of 8% of GDP losses in the US, and a mindblowing 35% of GDP in losses for Japanese investors:
All of which Japan's "sophisticated", yet joyously cartoonish, "leaders" recently found out when they almost lost all control of the bond (and stock) market. What's the "wealth effect" solution: why buy stocks but don't sell bonds. Or if selling bonds, do so vewy, vewy quietly. Alas, not even the BIS is dumb enough to fall (or push) for this possibility any longer. The BIS report goes on, doing all it can to distance itself from those central banks who merely implemented policy that the BIS supported (and encouraged) for the past 5 years, but which has suddenly turned a cold shoulder. It does so by dramatically and rhetorically blasting a litany of questions to which it fully-well knows the answers:
Regardless of the politics behind the shift in BIS sentiment, the days of Mario Draghi's "whatever it takes" shriek of desperation are over. Here are some more of the key soundbites from the BIS report:
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However, that never happened.
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The BIS conclusion:
And yes, the central banks' central bank really did say all of the above. Unpossible the Keynesian Magic Money Tree growers will say: surely there is an error in the BIS excel model... Those pressed for time, if unable to read the full 204 page annual report, should at least read the following stunning speech from Jaime Caruana, General Manager of the BIS, titled "Making the most of borrowed time." (only 9 pages - pdf here). Because, if nothing else, it validates everything Zero Hedge has said for the past 4 years.
OTHER SOURCES
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06-24-13 | MACRO OUTLLOK |
CENTRAL BANKS |
BIS - Central banks Are Against A Wall in Crating Time that the Private and Public sectors HAD for adjustment The World's Central Banks May Have Just Started A Strike 06-24-13 Jaime Caruana, general manager of the Bank for International Settlements (as Ryan Avent characterized it. via BI Paul Krugman says that the Federal Reserve may have made a historic blunder this week in signaling its intent to "taper" the pace of bond purchases, with an eye towards ending them completely sometime in 2014. By taking a hawkish turn before the economy has recovered (it's still nowhere close on employment goals, and inflation trends are going the wrong way) the Fed may have lost any credibility to restimulate should it come to that. Four days after Bernanke's guns-blazing press conference, we get another datapoint indicating that the central banks of the world are ready to say "no mas" in the fight against depression. In a speech given today, Jaime Caruana, general manager of the Bank for International Settlements (which is, as Ryan Avent characterized it, kind of the central bank to the central banks), said the following:
The title of Caruana's speech is "Making The Most Of Borrowed Time," and it's filled with warnings about what happens if central banks keep stimulating for too long. Read these three paragraphs. It's basically a white flag, saying we're done here:
So you have the BIS and the Fed both signaling the end is nigh for how much central banks can do at this point. It looks like a central banker strike. Meanwhile, this past week, we saw the People's Bank of China allow SHIBOR (a measure of intrabank lending similar to LIBOR) to surge, in what was seen as a tool to clamp down on speculation. Ostensibly the Bank of Japan is just in the beginning of a new era of easing, though even they're internally divided according to reports. Thanks to political gridlock (especially in the U.S.), central banks have done much of the heavy lifting in the recovery. That seems to be coming to an end. Hopefully escape velocity has been achieved. |
06-24-13 | MACRO OUTLLOK |
CENTRAL BANKS |
Market Analytics | |||
TECHNICALS & MARKET ANALYTICS |
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PATTERNS - Contrarian Breadth Rule BofA: 'EQUITY BUY SIGNAL TRIGGERED' 06-25-13 BofAML via BI Around the world, stock markets have faltered over the past month as fears that the Federal Reserve will taper back quantitative easing sooner than expected have crept into the global marketplace. BofA Merrill Lynch Chief Investment Strategist Michael Hartnett says at this point, the sell-off looks overdone. In a note to clients titled "Equity Buy Signal Triggered," Hartnett says nearly every major stock market – with the exception of those in the U.S. and Japan – is now oversold:
The chart below shows previous performance of the Global Breadth Rule. SUPPORTING REFERENCES:
GORDONTLONG.CO ANNOTATION Setting Up for our predicted 'E" Wave following the Bond Scare
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06/26/13 | PATTERNS | ANALYTICS |
CONSUMER CONFIDENCE - The Mortgage Spike "Peak Signal" What Happened The Last 2 Times Mortgage Rates Spiked Like This? 06-25-13 Citi FX Technicals via ZH Perhaps - as we are always reminded - it will be different this time but following this morning's surge in Consumer Confidence, we got to thinking, just why is everyone so confident? The facts are, as Citi's FX Technicals group notes, the last times we saw mortgage rates surge like they just have, that marked the peak in consumer confidence and the market followed shortly after. It seems that the Fed, by engineering ever lower rates, can lift confidence; but as is clear from this chart (and as we noted previously) there is a limit to this effect (ZIRP) and each cycle has diminishing returns. Chart adapted from Citi FX Technicals SUPPORTING REFERENCE: |
06/26/13 | PATTERNS | ANALYTICS |
BONDS - Yields Improved, Especially Against Stock Yields Stocks Have Lost A Major Advantage They Had Over Bonds 06-23-13 BMO Capital via BI For several months, at least some investors seeking income have fled the bond market and headed toward the stock market because stock dividend yields were higher than than bond coupon payments. This was a considered a tailwind for the stock market. However, with this week's -- and this month's -- sell-off in the bond market, prices have come down so much that bond yields are now higher than stock dividends. Here's BMO Capital's Brian Belski:
This is not to say stocks aren't attractive on an absolute basis. However, the relative value offered by stocks over bonds has narrowed significantly. |
06-24-13 | FUND- MENTALS VALUATIONS |
ANALYTICS |
COMMODITY CORNER - HARD ASSETS | PORTFOLIO | ||
PRIVATE EQUITY - REAL ASSETS | PORTFOLIO | ||
AGRI-COMPLEX | PORTFOLIO | ||
SECURITY-SURVEILANCE COMPLEX | PORTFOLIO | ||
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 | |||
NEW IMMIGRATION LAW - What is the Real Driving Force? Amnesty Capitulation Assures a Failed Society 06-23-13 BATR.org After decades of documenting the mad consequences of an "Open Borders" policy, voices of rational and sane immigration, ready themselves for definitive betrayal from their phony conservative brethren. Mark Krikorian, Roy Beck, Peter Brimelow and Pat Buchanan have waged the crusade to save the nation from the forces of greedy corporatists and demented egalitarianism. Proponents of limitless immigration are committed to the unilateral destruction of what once made America, "A City upon a Hill".
The inauspicious application of previous illegal immigration amnesty is irrefutable. Even the Gipper resigned himself to Ronald Reagan’s Biggest Mistake – According to Reagan Himself on Ronald Reagan immigration amnesty, "Ronald Reagan was not comfortable with amnesty. He was pro-enforcement, and he admitted to Edwin Meese that the biggest mistake of his presidency was to sign the 1986 amnesty." The Radical Reactionary essay, The Gang of Eight Immigration Constituency, sums up the plight thusly, "The hype that meaningful security of the borders would be an important aspect of this Senate initiative ignores the countless promises previously pronounced that the first duty of the federal government is to secure the nation." A report in the Washington Times, Border security deal boosts immigration bill’s chances in Senate, signals Iacta alea est - translated, "The die is cast."
The next complicity cover comes from the bureaucratic CBO accomplice. For the White House spin on the CBO Report: Immigration Reform Will Shrink the Deficit and Grow the Economy, the rosy fruits of the globalist economy are never mentioned. The projected convalescence in public debt is beyond credulity.
In an accurate assessment of this same account, Neil Munro points out the obvious in the Daily Caller article; CBO says immigration bill aids investors, not wage earners.
Now review the video from the Heritage Foundation on Scoring the Immigration Reform Bill: An Analysis of the CBO's Numbers. You can trust Krikorian, Beck, Brimelow and Buchanan on the immigration issue, so why not acknowledge that the Heritage’s assessment on the actual costs from the amnesty legislation is the valid appraisal. Kudos to one Senator, Ted Cruz Launches National Petition Against Gang of Eight's Bill, who is rallying grassroots opposition to this amnesty bill. He urges citizens to sign the petition demanding REAL border security. What is the saying - a little short and a couple of generation too late?
So, who has the guts to stop this lunacy? Usually, fair-minded citizens look to the House of Representatives to safeguard the national interest. Even so, what does the Speaker say: John Boehner: ‘Bipartisan’ immigration reform only way, "And while the rest of his party maligns the Congressional Budget Office's report on the economic benefits of immigration reform, Boehner said: "If in fact those numbers are anywhere close to being accurate, it'll be a real boon for the country."
It should be apparent that the entire political process, held hostage to international corporatism, wants to destroy the domestic economy. Slave labor wages, ensured by an endless flow of low skilled immigrants is a formula for national destruction. The Washington Watcher in VDARE article, Conservatism Inc. Using IRS Scandal To Mask Amnesty Drive, laments the cold hard facts that the establishment speaks with one voice on destroying the remains of a common law republic.
Amnesty is tantamount to the elimination of the last remains of the middle class. The prospect of derailing this juggernaut through Congressional action is inconceivable as long as cowardly conservatives capitulate to their corporate donors. Even more absurd are the lobotomized liberals. They purport to be champions of the worker, but are willing and eager to destroy any meaningful employment for their own compatriots. Where is that elusive fairness for our own citizens? Soon the remnant economy will be reduced to the same level of third world exploitation, with the United States being the biggest loser. No wonder that the media presstitutes over at NBC, push their hit program - by the same name - to a dullard public. Facts no longer matter to most masses. Understanding their self-interest is even more obscure. Exploiters use these shortcomings to their advantage. Accepting an amnesty capitulation illustrates the triumph of global corporatists over the merchant class that built the wealth creation economy. For this reason alone, it is imperative that sane citizens demand a reasonable and rational rejection of the proposed Senate bill. The latest appeal from NumbersUSA says: Hold Nothing Back.
How many Americans will gets off their back side and challenge their Senators? Register an ultimatum. A vote in favor of amnesty means all out political war. Any incumbent that refuses to secure the borders needs to face a serious primary challenge. Nevertheless, perceptive political onlookers have a chilling feeling that this round of legislation will be the toughest to defeat. The reason is simple. The secular society is rooted in self-destruction. Common sense no longer has a place in the immigration hysteria. Relinquishing traditional standards and historic values in representative government has produced a Congress that walk lock step in unison with big business. The opportunity culture has become the entitlement society. Even a militant NeoCon like Ann Coulter can be correct once in a while, when she acknowledges, U.S. 'finished' if amnesty passes.
There is a death wish bent on collapsing the productive economy. Transnational businesses want an implosion and the inevitable reduction and permanent subsistence level of wage scales. The mercantilist is in the business of manufacturing monopolies. After eons of debating the particulars of the negative consequences inevitable from accepting any and all of those hallowed huddled masses, by skipping the Ellis Island examination, the final extermination of the American experiment is in sight. That profound are the stakes. The public fears the label of racist, and shuns a healthy aspiration that earns the respect of defenders of our noble heritage. For many, surrendering to authoritarian progressivism is a badge of dishonor, but most view such submission as a small price to pay to be accepted. SARTRE – June 23, 2021 |
06-25-13 | THEMES
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SECURITY-SURVEILLANCE COMPLEX - NSA Whistleblower Example: Booz Hamiltion How Booz Allen Hamilton Swallowed Washington 06-23-13 Zero Hedge From its origins as a management consulting firm, Booz Allen has quietly grown into a government-wide contracting behemoth, fed by ballooning post-Sept. 11 intelligence budgets and Washington’s increasing reliance on outsourcing. With 24,500 employees and 99% of its revenues from the federal government, its growth in the last decade has been stunning (and until very recently with little to no knowledge from the main street that it even exists). (click image for large legible version) In 1940, a year before the attack on Pearl Harbor, the U.S. Navy began to think about what a war with Germany would look like. The admirals worried in particular about the Kriegsmarine’s fleet of U-boats, which were preying on Allied shipping and proving impossible to find, much less sink. Stymied, Secretary of the Navy Frank Knox turned to Booz, Fry, Allen & Hamilton, a consulting firm in Chicago whose best-known clients were Goodyear Tire & Rubber (GT) and Montgomery Ward. The firm had effectively invented management consulting, deploying whiz kids from top schools as analysts and acumen-for-hire to corporate clients. Working with the Navy’s own planners, Booz consultants developed a special sensor system that could track the U-boats’ brief-burst radio communications and helped design an attack strategy around it. With its aid, the Allies by war’s end had sunk or crippled most of the German submarine fleet. That project was the start of a long collaboration. As the Cold War set in, intensified, thawed, and was supplanted by global terrorism in the minds of national security strategists, the firm, now called Booz Allen Hamilton (BAH), focused more and more on government work. In 2008 it split off its less lucrative commercial consulting arm - under the name Booz & Co. - and became a pure government contractor, publicly traded and majority-owned by private equity firm Carlyle Group (CG). In the fiscal year ended in March 2013, Booz Allen Hamilton reported $5.76 billion in revenue, 99 percent of which came from government contracts, and $219 million in net income. Almost a quarter of its revenue - $1.3 billion - was from major U.S. intelligence agencies. Along with competitors such as Science Applications International Corp. (SAIC), CACI, and BAE Systems (BAESY), the McLean (Va.)-based firm is a prime beneficiary of an explosion in government spending on intelligence contractors over the past decade. About 70 percent of the 2013 U.S. intelligence budget is contracted out, according to a Bloomberg Industries analysis; the Office of the Director of National Intelligence (ODNI) says almost a fifth of intelligence personnel work in the private sector. It’s safe to say that most Americans, if they’d heard of Booz Allen at all, had no idea how huge a role it plays in the U.S. intelligence infrastructure. They do now.
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06-24-13 | THEMES |
CRONY CAPITALISM
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Tipping Points Life Cycle - Explained
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