But I Thought It Worked?

Beware the tricks in your bag today….
Today’s decision to expand Japan’s monetary stimulus may be regarded as shock treatment in the central bank’s effort to affect confidence levels.
Bank of Japan Governor Haruhiko Kuroda’s remedy to reflate the world’s third-largest economy through influencing expectations saw the yen sliding and stocks climbing. Kuroda led a divided board in Tokyo in a surprise decision to expand unprecedented monetary stimulus.
Remember, folks, QE works.
It works so well that it has be repeated. Time and time again. Every time. All the time.
Where’s the exit for Japan? Two decades in coming, and yet here we still are, needing evermore.
What you got out of this was a big (~2%!) move in the Yen — weaker. That of course translated into a big move northbound in the futures. Remember that a collapsing currency results in a skyrocketing stock market priced in that currency, but whether this is “good” depends on whether you can eat your (electronic) shares.

This post was published at Market-Ticker on 2014-10-31.

Weekend Update October 31

ABSTRACT: The Federal Reserve officially ended its asset purchase program on Wednesday, although their outlook for a ‘considerable time’ before the federal funds rate is raised remained largely unchanged. U. S. markets made a positive reversal this week, pulling the global markets upward along with it. With the recovery of stocks, precious metals were battered to fresh lows.
GOVERNMENT & POLICY Farewell, QE (At Least Until After We Vote)
At long last, the Federal Reserve’s quantitative easing program has come to end. Following the meeting of the FOMC on Wednesday, the committee’s announcement about the conclusion of its asset purchases gave a more hawkish outlook for the economy than most expected.
There’s a reason for this, as it turns out.
With the midterm elections less than a week away, the Fed is probably being very careful not to upset the markets in any way.
As much as anyone may like to believe that the Fed is completely insulated from American politics, this is simply not the case. When an FOMC member makes a statement, it is not merely investors who try and read the tea leaves; the comment typically makes headline news, because the implications of the Fed’s monetary policy have political ramifications, as well.

This post was published at Deviant Investor on on November 1, 2014.

Shift in Quality Spectrum Argues We’ve Entered Later Innings of Bull Market

Summary
Investors have shifted towards higher quality assets. This dynamic is present in the latter innings of a bull market. Of concern is a significant loss in market momentum. Greater emphasis on risk management is required. Was it all just a bad dream? Had you closed your eyes a month ago you would have seen the S&P 500 hovering between 1980-1990; fast forward a month ahead and we have the S&P 500 essentially unchanged. Monthly closing values are often the only thing investors look at on their monthly statements and they would have had no idea what a truly volatile month it was. From a peak of 2019.26 on 09/19/14, the S&P 500 fell to a low of 1820.66 on 10/15/14, a decline of nearly 200 points with the Dow Jones Industrial Average falling by nearly 1500 points during the same time.
The wild price swings were not confined to the stock market as the 10-Yr UST yield slid from a September high of 2.65% to a low of 1.86% on October 15th. While the move in the stock market garnered most of the financial media’s attention during the recent decline the movements in the bond market were even wilder. The Volatility Index (VIX) for the stock market is a measure of volatility for the S&P 500. There is also a measure of volatility for the bond market, which is the Merrill Lynch Option Volatility Estimate Index (MOVE). As seen below, while volatility on the VIX spiked close to $30, the MOVE Index briefly inched above 100 and was close to the volatility we saw with the ‘taper tantrum’ of 2013.

This post was published at FinancialSense on 10/31/2014.

Chart Of The Day: “It’s Not About Earnings” Edition

During the month of October, three things happened that destroy any credibility that ‘believers’ had about the stock ‘market’ being an efficient discounter of fundamental earnings. Stocks began the month weak on geopolitical fears, concerns about the end of QE, and falling earnings; then Bullard unleashed his “but but but we might do QE4″ words and stocks exploded higher. But a funny third thing happened as this malarkey occurred… analysts kept on slashing EPS estimates – in fact they slashed them by more than double the average EPS downgrade of any quarter in the last 10 years… So, if earnings are the mother’s milk of the market, central bank promises are the Human Growth Hormone, EPO, Steroid cycle of all-time highs.
Fundamentals or Central Bank liquidity!

This post was published at Zero Hedge on on 11/01/2014.

Gold Sector Analysis: Gold Ripped Hard by FOMC Report Despite Reports of Physical Buying

What a week. Valued in dollars, gold fell below a critical $1,180 support level, and then continued to tumble. This despite continued demand for the physical metal in India, Asia, Europe and China itself.
This Week’s Monetary and Industrial Trends
Only one trend really counted … the upward trend of the dollar against the yellow metal as a result of Fed reporting. The move against gold really started on Wednesday when a supposedly “hawkish” Federal Open Market Committee report shoved gold down against the dollar – a move that presaged similar action on Thursday and Friday.
Here’s how Hard Assets Investor explained it:
The end of quantitative easing in the U. S. led to a divergence in commodities this week. Gold and silver nose-dived, while natural gas and grains surged. At the same time, stock markets jumped more than 2 percent on the back of strong corporate earnings reports. The S&P 500 neared a record high above 2,000 and is now up almost 9 percent since the start of the year.
The FOMC report was said to be “harsher” than expected because the language used in the report indicated that maybe – just maybe – the Fed might be tempted not just to end QE but also to actually hike rates – perhaps sooner rather than later. Professional traders, of course, are intent on exploiting volatility generated by fairly minute changes in sentiment, whether they are attributed to the Fed, government, etc.
This is what happened this past week. The only thing that was startling was the ferocity of the reaction and the impact it had on the gold price against the dollar.

This post was published at The Daily Bell on November 01, 2014.

“This Feels A Lot Like 1999″ Beware “The QE Bubble”

It appears few remember the epic failure of Japan’s first experiment with quantitative easing from 2001 to 2006 (that even the NY Fed can’t find a silver lining to crow about) and yet, not only is QE heralded as a success (or not) but additional QE seems to be something to celebrate (even when it’s shown to fail to achieve anything economically).
How’s QE working out for Japan?

As Michael Chadwick notes in this oddly bearish interview on CNBC, where has Japan gone in the last 14 years (since its QE started), “absolutely nowhere,” and yet, he exclaims, “sadly, across the globe all central banks are following the same failed path.” Chadwick reflects on the explosion of central bank balance sheets and asks, rhetorically, “do we really need QE every time the market gets nervous?”

This post was published at Zero Hedge on on 11/01/2014.

31/10/2014: Eurocoin Falls Again in October

Meanwhile, in the vastly-repaired, improvingly-coordinated, enhancely-harmonised Euro area, leading growth indicator, Eurocoin (published by Banca d’Italia and CEPR) posted another (4th consecutive monthly decline in October, falling from massively anaemic 0.13 in September to even more anaemic 0.08 in October.

The projected underlying GDP growth rate is now back at zero, having posted a ‘recovery’ to 0.1% in Q3 2014.

This post was published at True Economics on Friday, October 31, 2014.

Ted Butler: The Silver Nightmare Will Be Over Soon

The argument for a near-term monster rally
Halloween couldn’t have been more terrifying for silver investors. The gray metal cracked under $16/oz on Friday, a price not seen for nearly half a decade.
For years now, it’s seemed like silver was beaten up so badly its price couldn’t go lower. But then it would.
Why has silver been beaten down so badly? (now down 2/3 compared to it’s high in late 2011). And will it ever see brighter days again?
This weekend, Chris has a long discussion with silver expert Ted Butler on the real culprit behind the wild price slams that have plagued silver: unfairly concentrated positions within the derivatives market:
You have to sit back and try and drill down to the cause of what’s going on. Now, the actions by the Bank of Japan and the actions of our own Central Bank have basically been to inflate all investment assets such as bonds, stocks, real estate. And the ironic thing is that in the past whenever we’ve gone through this asset inflation mode , gold and silver and a variety of commodities have always participated. It stands out this time that, contrary to the movement and all other assets, that gold and silver have been particularly weak.
The only explanation for why this is so is that we’ve developed, not just in gold and silver but in all the COMEX and NYMEX metals — copper, platinum, palladium, gold and silver, even items like crude oil and even into the grains — we’ve developed a mechanism that’s so distorted it’s like we’re allowing the inmates to run the asylum. In other words, if you’re looking for the specific cause for why gold and silver have been particularly weak over the last couple of days or any other time period, you can trace it directly to the derivatives market. Specifically the COMEX. There’s such a large volume and it’s not just trading volume, it’s positioning. The positioning is so extreme in these markets and at such a large scale that it actually becomes the tail that wags the dog.
We should remember that derivatives (which futures contracts on gold and silver traded on theCOMEX are classified as) are supposed to be derived from the real supply/demand fundamentals of any commodity. And that’s supposed to kind of follow what developments there are in the real world of supply and demand. That’s been distorted. That’s not longer the case.


This post was published at PeakProsperity on Saturday, November 1, 2014,.

U.S. Regulators Easing Mortgage Credit Requirements

Last week, Federal Housing Finance Agency (FHFA) director Mel Watt announced two measures designed to spur U. S. mortgage lending, as the U. S. housing market continues to lag. He aimed to ease Dodd-Frank legislation governing when banks could be forced to repurchase sub-par mortgages they’d sold to government sponsored housing giants Fannie Mae and Freddie Mac. He also suggested that FHFA might guarantee loans with down-payments as low as 3 percent.
Watt, as FHFA director, controls policy for Fannie and Freddie, which have been under Federal conservatorship since their near-death experiences during the financial crisis – one of the largest Federal interventions in financial markets in U. S. history.
Mortgage Standards Too Tight – Or Are Other Factors At Work?
Jamie Dimon, the CEO of J. P. Morgan Chase, commented favorably on the announcement, saying that ‘mortgage credit is too tight,’ and praised the decision to loosen the rules under which banks could be forced to repurchase defaulted loans they’d sold to Fannie and Freddie.
Of course, Mr Dimon has a vested interest here. Easing mortgage terms, and reducing banks’ risk exposure when those mortgages go bad, are good for banks. Whether it’s good for U. S. taxpayers is another matter.
Mr Dimon is not the only one to have made the assertion that lending is too tight for first-time homebuyers and others with less than stellar credit; Moody’s chief economist concurred. Is the assertion accurate?

This post was published at FinancialSense on 10/31/2014.

Favorable Sentiment for a 4th Quarter Rally

The following is an excerpt from our October 30th Investor Sentiment Survey. Investor Sentiment Survey, one of 8 different reports that we provide for subscribers at various intervals throughout the month, is a monthly analysis of a broad list of both asset flow- and survey-based measures of professional and retail investor sentiment which focuses on their directional implications for the major areas of the U. S. financial markets.
From our September 11th Investor Sentiment Survey: ‘…the collective message of these data is that U. S. stocks can still be traded from the long side on a near term week-to-week basis, but be aware of the market’s vulnerability to an upcoming standard 10% correction’
Since that report the bellwether S&P 500 (SPX) first rose by an additional 1% into the September 19th high before declining by 10% into the October 15th low.
In today’s report we display and discuss the latest investor sentiment data according to surveys of futures traders, brokerage and advisory firms, and active Registered Investment Advisors (RIAs), plus the latest money market asset flows. These data collectively suggest favorable conditions for a 1-2 month U. S. stock market advance to begin from at or near its current level, but also warn that a deeper decline may still be on the horizon by early 2015.

This post was published at FinancialSense on 10/31/2014.

The WSJ’s Pathetic Sunnyside Journalism – Retracts Its Own GDP Narrative

Submitted by Alhambra Partners’ Jeffrey Snider via Contra Corner blog,
Last week my good friend Fred Everett emailed me the Wall Street Journal’s take on GDP. They were, as you might expect, quite optimistic about what 3.5% implied toward future acceleration finally out of this seven-year depression:
The U. S. economy expanded steadily again during the third quarter, a sign of sustained growth fueled by American consumers and businesses despite mounting concerns about the health of overseas economies.
The problem with that assessment is that it is simply untrue. GDP expanded with very little aid from American consumers and businesses, especially since PCE contribution to GDP was among the lowest since 2009 (and true capex wasn’t any better). As my recent analysis of GDP history shows, that is a reason to be very pessimistic about trends due to the simple fact that over time GDP converges with American consumers and businesses, who continue to be quite and ‘unexpectedly’ dour despite all these hugely positive narratives.

This post was published at Zero Hedge on 11/01/2014.

Did QE Work?

This week saw not only the end of QE but an unending parade of told-you-so talking-head willing to proclaim not only QE’s success (unemployment ~6%, stocks at record highs, corporate profits at record highs) but to scoff at the naysayers warnings that post-QE stocks will slide since ‘the whole rally has been driven by central bank liquidity’ because “see, stocks are ripping higher post-FOMC.”
Obviously they fail to see the link between extraordinarily low rates (enabling cheap-funded financial engineering), printed money (repressing investors into buying stocks), and the fact that stocks are surged after another central bank – the BoJ – unleashed another round of even bigger insanity.

This post was published at Zero Hedge on 11/01/2014.

October Silver Eagle Sales Set A Monthly Record

1.4 million silver eagles were bought by investors in the last two days of October, setting a new one-month sales record (real analysts do not count January 2013’s 7 million tally because the Mint suspended sales in early December 2012, effectively pushing December’s demand into January). 5,790,000 silver eagles were snapped up (LINK). This was 88% more than October 2013. 38% more gold eagles were sold in October than in October 2013.
Contrary to the false narrative being spread by the financial media, the manipulated sell-off in the precious metals using fiat paper futures is triggering record investment demand for physical gold and silver. In chatting with some coin dealers around Denver this past week, they all said that there were having trouble keeping silver eagles in stock.
While there’s no way to predict how much longer the Fed and its agent banks can keep pressure on this sector by bombarding the market with paper gold and silver, the demand for physical metal is intensifying here and in Asia. Gold is being withdrawn from the Shanghai Gold Exchange at a torrid pace and recall that 90% of the physical silver has been removed this year from the Shanghai futures exchange (LINK).

This post was published at Investment Research Dynamics on November 1, 2014.

COURT PROTECTS IRS TYRANNY

Every American should be concerned when courts condone abusive and arbitrary administration in any agency The names Catherine Engelbrecht and Reggie B. Walton may not exactly be household names, but both are part of a disturbing court ruling that can only be described as a reprehensible government protection racket in plain sight for all to see. Ms. Engelbrecht was the plaintiff and Reggie B. Walton the judge. A succinct summary is provided by Breitbart in the report, True the Vote’s Lawsuit against IRS Gets Tossed by Federal Judge.
‘A federal judge in the United States District Court for the District of Columbia entered an order dismissing a lawsuit filed by True the Vote, a Houston, Texas-based non-profit organization focused on ‘voters’ rights and election integrity’ against the Internal Revenue Service (IRS). The order alleged that the IRS had improperly delayed granting their application for 501(c)(3) status and targeted them as a conservative organization. The opinion, by Judge Reggie B. Walton, found that the IRS had taken sufficient ‘remedial steps to address the alleged behavior.’
From the ruling by Judge Walton, analysis:
‘The defendants contend that the Court does not have subject-matter jurisdiction over counts one, two, and five of the plaintiff’s complaint because the IRS ultimately approved the plaintiff’s application for tax-exempt status, and thus counts one, two, and five – all of which seek ‘to correct [the] alleged targeting [of the IRS] and delay during its application process’ for tax-exempt status – are now moot as there is no longer any case or controversy for the Court to resolve.’
How nice that the IRS can slip out of a sticky wicket by simply retroactively approving a 501(c)(3) application that they officiated with a touch of harassment and a sprinkle of intimidation. The reasoning used by Judge Walton to protect the IRS from a ‘voluntary cessation’ exception follows:
‘The rationale supporting the defendant’s voluntary cessation as an exception to mootness is that, while the defendant’s unilateral cessation of the challenged conduct may grant the plaintiff relief, the defendant is free to return to its old ways – thereby subjecting the plaintiff to the same harm but, at the same time, avoiding judicial review. Accordingly, a case can be mooted by virtue of the defendant’s cessation of its allegedly illegal conduct only if (1) there is no reasonable expectation that the conduct will recur and (2) interim relief or events have completely and irrevocably eradicated the effects of the alleged violation.’

This post was published at Info Wars on NOVEMBER 1, 2014.

Greek Civil Servants Transfer 1.5 Billion Euros Abroad

Greek authorities are to investigate 5,260 Greek civil employees for transferring almost 1.5 billion euros to foreign banks between 2010 and 2014. According to the figures presented by the Administrative Reform Ministry, half of the civil servants and their relatives to be examined were involved in the education sector, with the vast majority of them being members of academic institutions. The remaining employees in question, belong to the health, defense, finance and public construction sectors.
Administrative Reform Minister Kyriakos Mitsotakis issued an order for the Inspectors-Controllers Body for Public Administration (SEEDD) to conduct an investigation as it appeared that 117 million euros were transferred solely by 415 out of the 5,260 employees. The average amount of money transferred abroad by employee was 283,000 euros, while the aforementioned 415 left the public sector during the last four years for a number of reasons.
According to a statement released by the Ministry, the investigation will cover almost the entire civil service sector, except certain categories such as judges and security forces personnel, as these do not fall under its jurisdiction.

This post was published at Greek Reporter

China’s Economy Goes From Bad To Worse, In Charts

Prepare to once again hear the word “decoupling” a whole lot more.
The reason is that while the US economy is supposedly on an upward tear after the 3.5% Q3 GDP print (thanks to the war against ISIS sending defense spending soaring and a very contradictory plunge in imports which suggest US tollers are seeing far less end-demand) and despite the immediate cut to Goldman’s Q4 GDP estimate from 3.0% to 2.2% after US consumer spending tumbled in September it is, for now at least – because GDP-crushing snow is just around the corner – doing better than Europe (where Germany just joined the ranks of Spain, Italy and Portgual in the deflation column), Japan, where the BOJ just crashed recovery hopes and unleashed more QE for the official reason that the economy is tanking once more due to the inability to keep inflation steady above 1%, and certainly China, whose economy – driven by the housing market slide now in its 5th month and which has sent Y/Y prices negative for the first time since 2012 – keeps contracting, as confirmed overnight by the latest official PMI data from the National Bureau of Statistics.
The Chinese data in a nutshell: overnight the official NBS PMI report indicted the October manufacturing PMI printed at a disappointing 50.8, below the 51.1 in September, and well below the consensus hopes for a rebound and uptick at 51.2.

This post was published at Zero Hedge on 11/01/2014.

Christmas Shopping Season Starts Today: Walmart Leads the Way with Price Cuts on 20,000 Items for the Holiday Season

In the past few years the Christmas shopping season moved from the “Black Friday” the day after Thanksgiving, to earlier and earlier starts on Thanksgiving, then to the day before Thanksgiving.
Today Walmart leapfrogged the pack with 20,000 items on sale for the holiday season.
When Halloween ends on Friday, Walmart will be switching over its stores to greet the holiday season.
On Saturday, the retailer will offer more than 20,000 ‘rollbacks’ or sale prices on items including groceries and popular brands such as Disney ‘Frozen,’ Teenage Mutant Ninja Turtles, Samsung, and Dell.
Then, on Monday, Walmart will relaunch its 24-hour holiday cyber savings event, in which customers can take advantage of free shipping on millions of items from Walmart.com. Orders must exceed $50 for free shipping. Walmart said it has expanded its online offerings to include 7 million items – one million more than last holiday season.

This post was published at Global Economic Analysis on Saturday, November 01, 2014.

The Reinvention Of Alan Greenspan

Former chairman calls Fed balance sheet a tinder box, endorses private gold ownership.
During the time Alan Greenspan and representative Ron Paul had their famous series of exchanges (some might have labeled them confrontations) during Congressional hearings from 1997 to 2005, the congressman made what turns out to have been a prescient observation. “My questions,” he said, “are always on the same subject. If I don’t bring up the issue of hard money versus fiat money, Greenspan himself does.” I say “prescient observation” because here we are a decade or more later and the “new” post-Fed Greenspan sounds very much like the “old” pre-Fed Greenspan- – – the one who consistently advocated gold before he became Fed chairman.
Greenspan has always come across as a conflicted figure forced to reconcile his responsibilities as chairman of the Federal Reserve – – the epicenter of the fiat money universe – – with a “nostalgia,” as he put it, for the gold standard, its diametric opposite. As such, I always saw him as torn between the two – – the devil on one shoulder and an angel on the other.
Outside those memorable proddings by Congressman Paul, Greenspan rarely spoke publicly about the virtues of gold while Fed chairman, and when he did his approach seemed guarded. Even in the years following his tenure, he rarely broached the subject. In recent months though, as you are to read, the gloves have come-off not just with respect to gold but with the dangers inherent to the fiat monetary system as well.
The reinvention of Alan Greenspan Part one – an article in Foreign Affairs magazine
Greenspan’s reinvention began with a surprising defense of gold in the October issue of Foreign Affairs magazine. In that article, titled “Golden Rule: Why Bejing Is Buying,” he reminds top level policy makers of gold’s role as a national asset of last resort. “If, in the words of the British economist John Maynard Keynes,” he says, “gold were a ‘barbarous relic,’ central banks around the world would not have so much of an asset whose rate of return, including storage costs, is negative. . . Gold has special properties that no other currency, with the possible exception of silver, can claim.”

This post was published at Gold-Eagle on November 1, 2014.

Gold Price Falls Below Support Although Breakdown Confirmation Needed

This is an excerpt from the daily StockCharts.com newsletter to premium subscribers, which offers daily a detailed market analysis (recommended service).
We have been watching gold for a possible triple bottom, a base for the next strong rally. Earlier this month gold bounced off an important support line, offering hope to gold bulls that the third bottom in the series would be successful. However, the price of gold has slipped badly in the last two weeks, and on Friday the triple bottom support line failed to hold.

This post was published at GoldSilverWorlds on November 1, 2014.