What Happened After China’s Last “Stealth QE”?

In a worrying sense of deja-vu all over again, today’s rip higher reflects perfectly the US equity market’s knee-jerk reaction to the last ‘Stealth QE’ from China on July 28th. That did not end well as hot money flowed out to the instantaneously “easiest” central bank in the world…
The USD dumped.. triggering algos to see risk-on carry trades and ripped stocks higher for the day… but that did not end well…

This post was published at Zero Hedge on 09/16/2014.

Counting Sheep: French Government Faces Second No Confidence Vote in Six Months

Second No Confidence Vote in Six Months
In spite of the fact the Socialist party holds a majority of just 1 in the 577-seat lower house, French prime minister Manual Valls hopes to stabilize things with a Second No Confidence Vote in Six Months.
Mr Valls could see a narrowing of his majority compared with the vote when he was first appointed prime minister at the end of March after a big socialist loss in local elections. Then he won by a margin of 306 votes to 239 against, with 26 abstentions.
‘Valls is politically and economically archaic. He is taking solutions from (Tony) Blair and (Gerhard) Schroeder that don’t work any more,’ Pascal Cherki, a leftwinger who abstained in the previous confidence vote in April, told RMC radio.

This post was published at Global Economic Analysis on September 16, 2014.

The Other Epidemic (and How to Stop it)

‘While I heartily subscribe to your premise of pursuing one’s dream,’ one reader, Donald J., wrote, ‘there are alternate perspectives worth considering.’
[We’re listening… go on.] ‘Some wiseguy once said that life is what happens to you while you’re waiting for something better to come along. Milton put it a little more poetically in one of his sonnets when he wrote, ‘They also serve who only stand and wait.’ And then there’s the more familiar, ‘Take time to smell the roses.’
Thanks for the wise words, Donald. You’re right. Sometimes, in the race to create the ‘next big thing,’ we forget how important it is to slow down.
Much ink is spilled on how to be more organized… structured… efficient… productive… disruptive… and all those other lifestyle-‘enhancing’ buzzwords.
But not enough, we realize, on how to enjoy the fruits of your labor. On how to create a more balanced, holistic lifestyle.
There’s a relative drought of information, for example, on how to create a better work and family life balance. Or even the importance of it.
And, as you’ll see, it’s sorely needed (book idea! Anyone?).
Brace yourself. A slew of shocking figures coming your way…
The Bureau of Labor Statistics reports that the average American male works about one month more a year than in 1976. Even more for the average woman.
On top of this, the U. S. is the only country in the Americas without a national paid parental leave benefit. The average is over 12 weeks anywhere outside of Europe… and 20 weeks in Europe.
Americans also don’t have ‘nurture days’ per child until age 8, like in Denmark. Nor do we have year-long paid parental leaves for mothers and fathers, as in Iceland. A national three-month sabbatical policy, which Belgium enjoys? We can only dream.

This post was published at Laissez Faire on SEP 16, 2014.

The Exigence

Metals action the past two weeks has baffled me. In some way, it feels like a calm before a storm. The news stories seem to have changed their tone. World events are becoming more surreal. Illogical markets and economic indictors surround us. I glance from screen to screen on my computer at the office, looking at charts, reading news and blogs, and trying to get some work done. Perhaps it is all in my imagination.
As I prepared a lecture this past week in colonial American propaganda and social movements, I read for the first time Patrick Henry’s famous speech. It moved me.
Though we all heard Patrick Henry’s famous declaration in grammar school, ‘give me liberty or give me death,’ few fully understood the extended and brutal situation which gave rise to his passion. Great Britain had been attempting to recover costs of the ‘Seven Years War’ (1756-63) with France, and had transformed the colonies into a revenue source. ‘Civil and religious liberties’ were under attack through taxation laws and he promotion of England’s state church – the Anglicans – into a more powerful role in America.
A truth we teach in the field of rhetoric is that a speech (also songs, movies, or books) responds to a problem in society and retains its power as long as the situation which called it forth still exists. We call this an ‘exigence.’ I suppose there was a time when people read Henry’s speech, after the war was over, after the exigence had been satisfied, and these people appreciated Henry for his passion and efforts. But the speech’s work was done, it had no more grounds by which to move people. It was just another lesson in history. But today a growing situation has reinvigorated Henry’s speech. And it forces those of us in the US to examine ourselves as a similar exigence arises.

This post was published at TF Metals Report on September 16, 2014.

I Know — Let’s Screw Some More Poor People!

When are you folks in the black community going to do something about this ******* in the Oval Orifice that keeps using your orifices as playthings for his policies?
The Obama administration is moving to ease access to student loans for parents with damaged credit, a policy reversal that could saddle poor families with piles of debt but also boost college enrollment.
Under a plan likely to take effect next year, the Education Department would check the past two years of a borrower’s credit, instead of the current standard of five, for blemishes such as delinquencies or debts in collection. Also, any delinquent debts below $2,085 would be overlooked; currently, delinquencies of any amount are grounds for rejected applications.
These are what are known as “Plus” loans.
They carry a higher interest rate than Stafford loans and they have another terrifying feature — they’re not taken out by the students, but by the parents.
Stafford caps loans at $57,000, roughly. That’s far too much, but at least there’s a cap. There is no cap on PLUS loans.

This post was published at Market-Ticker on 2014-09-16.

Goldman’s Take On China’s “Stealth QE”

Domestic media (Sina) reported that the PBOC conducted RMB 500bn of Standing Lending Facility operations with the big 5 commercial banks(ICBC, BOC, BoCOM, CCB, ABC). The reports note that the duration is 3 months and the RMB 500 bn is evenly split among the banks. This amount is roughly the same as a 50 bps cut to RRR for the whole banking system on a static basis (though the impacts of RRR cuts tend to be larger because they have ongoing effects).

This post was published at Zero Hedge on 09/16/2014.

China Launches CNY500 Billion In “Stealth QE”

It has been a while since the PBOC engaged in some “targeted” QE. So clearly following the biggest drop in the Shanghai Composite in 6 months after some abysmal Chinese economic and flow data in the past several days, it’s time for some more. From Bloomberg:
CHINA’S PBOC STARTS 500B YUAN SLF TODAY, SINA. COM SAYS PBOC PROVIDES 500B YUAN LIQUIDITY TO CHINA’S TOP 5 BANKS: SINA Confused what the SLF is? Here is a reminder, from our February coverage of this “stealth QE” instrument.
* * *
The topic of China’s inevitable financial crisis, and the open question of how it will subsequently bail out its banks is quite pertinent in a world in which Moral Hazard is the only play left. Conveniently, in his latest letter to clients, 13D’s Kiril Sokoloff has this to say:
Will the PBOC’s Short-term Lending Facility (SLF) evolve into China’s version of QE?While investor attention has been fixated on China’s deteriorating PMI reports and fears of a widening credit crisis, China’s central bank is operating behind the scenes to prevent a wide-scale financial panic. On Monday, January 20th, 2014, when the Shanghai Composite Index (SHCOMP, CNY 2,033) fell below 2,000 on its way to a six-month low and interest rates jumped, the central bank intervened by adding over 255 billion yuan ($42 billion) to the financial system. In addition to a regular 75 billion yuan of 7-day reverse repos, the central bank provided supplemental liquidity amounting to 180 billion yuan of 21-day reverse repos, which was seen as an obvious attempt to alleviate liquidity shortages during the Chinese New Year. However, it is worth noting that this was the PBOC’s first use of 21-day contracts since 2005, according to Bloomberg. Small and medium-sized banks were major beneficiaries of this SLF, as the PBOC allowed such institutions in ten provinces to tap its SLF for the first time on a trial basis. A 120 billion yuan quota has been set aside for the trial SLF, according to two local traders.

This post was published at Zero Hedge on 09/16/2014.

Dollar and Gold Elliott Wave Projection

Gold is now at a key juncture and it should reveal its price action structure in the coming weeks. The first chart is my main Elliott Wave count and shows a Double Three Corrective Pattern (W)-(X)-(Y) in process from the top in 2011. You can see that Gold is currently in a corrective channel and should end soon a Wave (ii) which is also composed of a Double Three Corrective Pattern. If that scenario plays out Gold should enter a Wave (iii) that should send it to around $1550 which would be the minimum target.

This post was published at Gold-Eagle on September 16, 2014.

US Number & Unemployment

FOR THE RECORD – the 7% number for unemployment is the official number – it is by no means REAL. The real number is in the area of 12% now and will rise to test the 25% level. Here is our old forecast from 2009. It was emphasized then that the rise in unemployment will accelerate from the government sector namely state and local – not federal who can spend whatever they desire.

This post was published at Armstrong Economics on September 16, 2014.

Is The Fed About To Write the Next Chapter For Silver?

Since peaking around 21.60 in early July, Silver has sold off consistently for the past two months. By last week, the gray metal had drifted all the way down to test the critical support zone around 18.25-50; this level represents the 4-year low in silver and has provided meaningful support on three separate occasions over the last 14 months (for more on this area, see my colleague Fawad Razaqzada’s note from last week, ‘Can Silver Defend $19 Again?’). Now, metal traders are wondering, ‘will this level finally break, or is another rally to above $20 in the cards?’
As we go to press, the short-term technical picture favors the bears. As the 4hr chart below shows, silver has been in a bearish channel for over two weeks now. Just this morning, the metal peeked out above the channel, but was quickly rejected back lower, creating a large Bearish Pin Candle,* or inverted hammer pattern. This candlestick formation shows a sharp shift from buying to selling pressure and is often seen at near-term tops in the market. With the RSI still well within bearish territory, the sellers could look to drive the metal back into the key 18.25-50 support area later this week. Only a break above today’s high at 18.85 would shift the near-term bias to the topside for another run back toward $20.
Meanwhile, the fundamental side of the ledger is a bit murkier. With a plethora of high-impact economic data scheduled for the last 72 hours of the week, volatility will likely be elevated for all trading instruments. While both Scotland’s independence referendum and the ECB TLRTO auction will be important, the marquee event for silver will be tomorrow’s Fed decision and statement.

This post was published at GoldSilverWorlds on September 16, 2014.

How Financial Bubbles Fester And Burst – Even As The Fed Says Not To Worry

In today’s post Wolf Richter offers some solid insights on the dynamics of financial bubbles which merit further comment. The starting point is to recognize that once they gain a head of steam, financial bubbles tend to envelope virtually every nook and cranny of the economy, creating terrible distortions and destructive excesses as they rumble forward. In this instance, Wolf Richter explains how Silicon Valley has once again (like 1999-2000) been transformed into a rollicking capital ‘burn rate’ machine that has spawned a whole economy based on striving for bigger losses, not better profits.
This latter development – – currently exemplified by 44 venture capital start-ups companies in the IPO pipeline with a valuation of more than $1 billion each, despite no earnings and scarce revenues – -is indicative of late stage bubble dynamics. Say January 2000!
Needless to say, our monetary central planners remain hopelessly bubble blind – – still professing to see no significant speculative excesses because they are looking in the wrong place. Janet Yellen, for instance, keeps insisting that stock valuation multiples are still well within historic ranges. So do not be troubled.
Well, she’s talking about the global big cap stocks represented in the S&P 500 and is buying the Wall Street ex-items hockey stick that projects $125 per share next year (15.8X) after you exclude recurring ‘non-recurring’ losses; and also after setting aside various asset write-offs that reflect the penchant for capital destruction (job restructurings, plant and store closures and excess purchase price or goodwill charges) that has become epidemic in big company C-suites during the era of bubble finance.

This post was published at David Stockmans Contra Corner on September 16, 2014.

Treasuries Rally As Hilsenrath Hints “Considerable Time” Language Will Remain

The last week has been dominated by sell-side strategists raising hawkish concerns about this week’s FOMC with a focus on the drop of the “considerable time” language describing the period from the end of QE to the start of rate hikes. The Wall Street Journal’s Fed-whisperer Jon Hilsenrath just dropped a rather large hint that that the “considerable period” language will remain… and bonds are rallying.

This post was published at Zero Hedge on 09/16/2014.

As Lying Seems To Be The Nature Of Our Global Leaders, Don’t Trust Any Of Them

Gold prices have begun this week on a slightly firmer note, reversing the trend of the previous six days, after physical buying emerged in Asia as well as some short covering ahead of a meeting of the U. S. Federal Open Market Committee meeting this week.
Last week, gold came under selling pressure as prices fell below certain key technical levels triggering sell-stop orders which caused prices to fall to the $1230 an ounce handle in relatively thin volumes. By the end of the week, the price of the yellow metal settled at $1228.30 per ounce.
The recent price drop can be attributed to traders on Comex who have a bearish view on gold due to the current U. S. dollar strength. And, the strength in the greenback has nothing to do with a vibrant economy and instead has everything to do with the weakness in the euro and the yen as economies in Europe and Japan plunge.
Geopolitical tensions have now also become a distant second to central bank policies and the latest economic news. And, almost all the articles as well as radio and TV interviews about the gold market have nothing positive to say.
After the ECB announced another round of stimulative monetary policies, the euro tumbled, and the U. S. dollar rallied to a 14 month highs. The U. S. Dollar Index has shot up 6% from its May low, an uncharacteristically strong move for a currency.
This has weakened the gold price, since the two generally have an inverse relationship. And if the dollar is strong, maybe we should expect gold to be weak.

This post was published at Gold-Eagle on September 16, 2014.

‘Excessive Amounts of Capital’ Doom Startup Bubble

Not everything is hunky-dory in the world of stocks. The S&P 500, which has been hovering near its all-time high and hasn’t experienced a decline of 10% in three years, has been the focal point of breathless media coverage. But beneath the surface, the stocks of smaller companies are being put through the meat grinder.
Bloomberg found that 47% of all stocks in the Nasdaq have skidded at least 20% from their 12-month high; 40% of the stocks in the Russell 2000 and, chillingly, 40% of those in the Bloomberg IPO index have made that same trip south. They’re now languishing in their own bear-market purgatory. Investors have been fleeing these companies for months. I wrote about that phenomenon in May, but it has gotten worse since.
Yet, 44 startups that have not yet gone public and have not yet been acquired have valuations of over $1 billion, with five of them in (or nearly in) the $10 billion club. Uber tops the list with a valuation of $18 billion. And Snapchat, one of these $10-billion outfits, doesn’t even have revenues yet.
It’s at this confluence of excess and exuberance on one side and sub-surface carnage on the other that a voice from the venture capital world speaks up: Bill Gurley, a partner at Benchmark and investor in Uber, Zillow, OpenTable, and others, lamented in an interview with the Wall Street Journal the ‘excessive amount of risk’ piling up in Silicon Valley: ‘In some ways less silly than ’99 and in other ways more silly than in ’99,’ he said.

This post was published at Wolf Street by Wolf Richter ‘ September 16, 2014.

China brings forward gold launch

China will launch its international gold exchange 11 days ahead of schedule, sources said on Tuesday, racing ahead in the scramble to set up an Asian bullion benchmark as rival Singapore is forced to delay its gold contract due to technical issues.
Asia, home to the world’s top two gold buyers – China and India, has been clamouring to gain pricing power over the metal and challenge the dominance of London and New York in trading.
The state-run Shanghai Gold Exchange (SGE) will launch the global gold bourse in the Shanghai free-trade zone on Thursday, two sources familiar with the matter told Reuters. The SGE had initially planned the launch for Sept. 29.
The change was made based on the availability of some government officials to participate in the launch event, one of the sources said, adding that all 11 physical gold contracts will begin trading on Thursday.

This post was published at TruthinGold on September 16, 2014.

Stocks Go Vertical (Again), Just Because

In a desperate attempt to keep AAPL above $100 again, US equity markets are deja-vu-ing yesterday afternoon’s sudden (and newsless) vertical ramp to run stops this morning. As Rule 575 hits, it appears the new algo plan is just run stops wherever they may hide, because nothing says buying-panic (and selling VIX panic) like the uncertainty of a Fed meeting, Scottish vote, and Alibaba disruptions…

This post was published at Zero Hedge on 09/16/2014.

The Bear Has Begun To Stir In Gold

This is an excerpt from this week’s premium update from the The Financial Tap, which is dedicated to helping people learn to grow into successful investors by providing cycle research on multiple markets delivered twice weekly. Now offering monthly & quarterly subscriptions with 30 day refund. Promo code ZEN saves 10%.
When considering whether an asset is ready to turn higher, I generally look for an extreme negative sentiment level during an extreme price decline while the asset is in the timing band for a Cycle Low. At present, both Gold and Silver sentiment are approaching extremes, likely indicating that an ICL is near.
But let’s consider the chart from a broader perspective with the following question: Since this is just week 15 of the current IC, are there enough bears to lead us to believe that an IC low is near? In a bull market, low sentiment is a great predictor of a turn. But if Gold is still in a bear market, or even if it’s in a more neutral bottoming period, sentiment might not be negative enough yet for an ICL.

This post was published at ZenTrader on September 15, 2014.

Janet Yellen Trolls America’s Poor: Tells Them It Is Important To Get Rich

Remember when over the weekend we reported, that “America’s Poor Have Never Been Deeper In Debt“, showing how this tragic development took place over the past few years, accelerating almost exponentially into the New Normal…

… and in its proper context, using one of our favorite charts, showing that while the rich hold assets, the poor are merely drowning in ever more debt:

This post was published at Zero Hedge on 09/16/2014.

Current Gold and Silver Bear Markets Into A Longer Term Perspective

Silver bulls may eventually be right, but they are still idiots. By contrast, Gold bulls represent – by and large – a thoughtful group of folks.
As a trader and blogger, I love to have fun at the expense of Silver bulls. No other market I trade has a larger and more obsessed cult following of non-thinking and emotional ‘investors.’
I tend to be a Bayesian thinker. In my career as a trader dating back to 1976 I have found that most really good traders are Bayesian, whether they even know the term. No way could a logical Bayesian buy into the nonsense believed by Silver bulls. n mean, these are people who believe the Gold/Silver ratio should be 15 to 1 because it was so proclaimed by some Spanish king 500 years ago!
The daily and weekly graphs of Gold and Silver indicate that lower prices are most likely. Key chart levels are giving way, calling for a possible sharp drop from current prices. Let’s review these charts.
The weekly Gold chart is attempting to complete a 15 month H&S failure pattern. A decisive close below 1240 will complete this chart configuration and indicate a possible target at low as 1040. HERESY! … the Gold bulls proclaim. It must be market manipulation – after all, the destiny for Gold is $5,000 per oz.

This post was published at GoldSilverWorlds on September 15, 2014.