The People On This Photo Have A Warning For The Market: There Is “A Build Up Of Excessive Risk”

The people shown on the photo below, also known as “the people in charge”…

… have a warning for the algos.
First, a step back.
Two months ago, none other than Janet Yellen warned that a bubble is forming in some equity sectors, namely biotechs and social media when the Fed said that “valuation metrics in some sectors do appear substantially stretched – particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year.”
The warning was ignored, and as a result both biotechs and social/tech stocks have soared to fresh post dot com, if not record, highs.
Then, a week ago, the central banks’ central bank, BIS, warned again of unprecedented complacency when it said there was “low volatility everywhere“, and once again reprised its warning from the summer of 2013, that there is a asset bubble, and that it is central banks policies themselves that are responsible for this.

This post was published at Zero Hedge on 09/21/2014.

Was the Scottish Vote Really Scottish?

Being Scottish was actually not the criteria to be able to vote. The entire criteria was residency. As a result, almost 400,000 people living north of the border in Scotland were actually not Scottish but born in other parts of the UK (reported the BBC back in 2012). The number of Scots living in England, Northern Ireland and Wales had no vote amounting to 800,000 not counting the Scottish in Canada and the United States.
Even if we set aside the question of rigging the vote, it seems that the criteria by itself may have doomed the entire vote. Can you imagine if the right to vote that the United States should merge with Mexico was based upon simply residency?
The turnout for any Scottish vote was no doubt setting all records in this referendum . In total, 4.29 million people registered to vote in Scotland based simply upon residency not requiring any Scottish birth record. It appears that more than 90% of voters turned out. In a similar vote in Canada in 1995 on whether Quebec should secede, 94% of registered voters cast their ballot.

This post was published at Armstrong Economics on September 21, 2014.

Global Leading Indicator Plunges To Economic “Slowdown”, Goldman Warns

Just two short months ago, Goldman Sachs was exuberant over the ‘expansion’ signals that the firm’s Global Leading Indicator Swirlogram was exhibiting as it confirmed their ‘economists’ expectations that the Keynesian hockey-stick of hope would once again re-appear majestically in H2 2014 and lift America (and the world) to escape velocity. That dream is over. Confirming the collapse of world GDP expectations, Goldman’s GLI has plunged into ‘slowdown’ with momentum starting to slow. Perhaps, just perhaps, as we noted previously, this time is not different and the annual cycle of extrapolating early-year hope is rapidly turning to late-year disappointment.
As Goldman explains…
Our September Advanced GLI came in at 3.0%yoy, down from last month’s reading of 3.1%yoy. Momentum decreased to 0.25%mom from 0.29%mom last month.
The September Advanced reading places the global cycle in the ‘Slowdown’ phase, characterised by positive but decelerating momentum.

This post was published at Zero Hedge on 09/21/2014 –.

The 4C’s That Never Happened – And Those That Did

Submitted by Mark St. Cyr,
We didn’t get what I first postulated yet (4 C’s That Could Change The Financial World As We Know It, Again. Those 4 C’s are: Confirmation, Crisis, Contagion, Catastrophe), what we did might be even more illuminating.
In my earlier article the 4C’s I set up the premise that if a Yes vote took place in Scotland there were possible ramifications within the markets than what was being expressed, as well as reported, throughout the financial media.
Well it turns out the cause for any worry has now been voted and booted away so far down the road it would make a can envious. However, what did we really get?
In my opinion we might have been shown there is even far more need to be concerned, for once again, the powers that be have seemingly demonstrate they truly are – the one’s in control.
What happened this week was exactly what a great many (including myself) expected out of the Federal Reserve’s meeting and press conference. i.e., Confirmation it was not only more of the same, but that the world was, and will be, ‘fine’ under their guided hands of policy dictates. Strike a win for the first of the four C’s: confirmation.
However, for the remaining three? i.e., crisis, contagion, catastrophe? The markets were delighted to find any hints of turmoil now brushed firmly and neatly aside.
Crisis became calm. Contagion became cured. And last but not least catastrophe morphed into an even grander state of complacency.

This post was published at Zero Hedge on 09/21/2014.

China Goes For The Gold As Beijing Gold Demand Goes Parabolic

It’s Official: China consumed, mined and imported the most gold ever in 2013. In all three gold categories the Sino nation is Number One Worldwide. Here are details.
China has been officially crowned the world’s largest gold market for the first time in history, according to fresh industry figures. The country overtook India as the world’s largest consumer of gold in 2013, with consumer demand soaring 32 percent to 1,066 tonnes for 2013. That’s the most gold ever demanded annually by one country’s consumers in bars, coins and jewelry, topping India’s previous 2010 record of 1,007 tonnes.
China is already the world’s top producer of gold, mining 437 tonnes in 2013 on industry estimates, with the largest annual increase globally for 2013. It displaced South Africa as the world’s largest gold producer in 2007. The country also imported a record 1,108 metric tons in 2013, up 33 percent from a year ago, via Hong Kong. That’s more gold imports than any other country.
‘The impact on the Chinese gold industry of the extraordinary growth in 2013 demand has been marked, with significant growth in both manufacturing and retail network capacity,’ reads the World Gold Council’s latest quarterly demand report.
‘The gold market has really taken off in China over the last five years: from being quite small to now being the largest in the world,’ World Gold Council managing director Marcus Grubb told IBTimes in a phone interview.
Without a doubt: We ain’t seen nothing yet…as the GLOBAL GOLD RUSH IS ON…especially in China.
Recent international gold news headlines shout: CHINA To Boost Gold Reserves Amid Imbalances in Holdings HONG KONG Gold Bourse Approved to Build Vault in China SINGAPORE : New gold contract to set Singapore up as a global gold hub INDIA gold imports rocket 176%

This post was published at Gold-Eagle on September 21, 2014.

The Keynesian State Wreck Ahead

Remarks of David A. Stockman at the Edmond J. Safra Center for Ethics, Harvard University, September 26, 2013
The median U. S. household income in 2012 was $51,000, but that’s nothing to crow about. That same figure was first reached way back in 1989 – meaning that the living standard of Main Street America has gone nowhere for the last quarter century. Since there was no prior span in U. S. history when real household incomes remained dead-in-the-water for 25 years, it cannot be gainsaid that the great American prosperity machine has stalled out.
Even worse, the bottom of the socio-economic ladder has actually slipped lower and, by some measures, significantly so. The current poverty rate of 15 percent was only 12.8 percent back in 1989; there are now 48 million people on food stamps compared to 18 million then; and more than 16 million children lived in poverty households last year or one-third more than a quarter century back.
Likewise, last year the bottom quintile of households struggled to make ends meet on $11,500 annually –a level 20 percent lower than the $14,000 of constant dollar income the bottom 20 million households had available on average twenty-five years ago.
Then, again, not all of the vectors have pointed south. Back in 1989 the Dow-Jones index was at 3,000, and by 2012 it was up five-fold to 15,000. Likewise, the aggregate wealth of the Forbes 400 clocked in at $300 billion back then, and now stands at more than $2 trillion – a gain of 7X.
And the big gains were not just limited to the 400 billionaires. We have had a share the wealth movement of sorts – at least among the top rungs of the ladder. By contrast to the plight of the lower ranks, there has been nothing dead-in-the-water about the incomes of the 5 million U. S. households which comprise the top five percent. They enjoyed an average income of $320,000 last year, representing a sprightly 33 percent gain from the $240,000 inflation-adjusted level of 1989.
The same top tier of households had combined net worth of about $10 trillion back at the end of Ronald Reagan’s second term. And by the beginning of Barack Obama’s second term that had grown to $50 trillion, meaning that just the $40 trillion gain among the very top 5 percent rung is nearly double the entire current net worth of the remaining 95 percent of American households.

This post was published at David Stockmans Contra Corner by David Stockman ‘ September 21, 2014.

GOOGLE KNOWS SOMETHING ABOUT THE DOLLAR – TDV WEEK IN REVIEW: SEPTEMBER 21, 2014

Google is known as a massive technology company. Best known for its Search, Adwords, Adsense, Analytics, Google Books, Google News, YouTube, Google Voice, Google Maps and other products and services, something Google is not known for is financial advice, but that might be changing.

It seems Google knows what’s up…It seems to be giving its user a hint to divest from the US Dollar…
As you can see, the use-example for the word “currency” hints at something The Dollar Vigilante (TDV) has been writing about for some time now…that the dollar “was” a strong currency, but is no longer. Since Google technically licenses its definitions from Oxford, we can look across the pond for the source of this nuggest of insight. Many nations are catching onto the fact that the dollar “was” a strong currency, but is no longer. Brazil, China, India, France, Russia, and South Korea have all been vocal about the fate of the US Dollar.

This post was published at Dollar Vigilante on SEPTEMBER 21, 2014.

Chart Of The Day: 150 Years Of Global Monetary Policy

While everyone debates if the Fed will, once again, be wrong in its forecasts about a rate hike cycle starting some time in mid-2015 (spoiler alert: it will be), we decided to take a look in the other direction.
The chart below shows the key global events that have influenced monetary policy for the 4 major legacy central banks: the US, UK, Germany and Japan since the mid-19th century. Because if there is one thing to “learn” from the history of monetary policy it is that there is nothing to learn from the history of monetary policy: after all, “this time is always different” when the voodoo priests in charge of it all try to make a bubble-blowing, kneejerk-response “science” out of something that only a mother could call art.

This post was published at Zero Hedge on 09/21/2014.

USDJPY Opens At 6-Year Highs, Extreme ‘Relative Strength’ Signals 30% Drop Potential

USDJPY has been on a tear in recent weeks. Since China unleashed QE-lite, JPY and CNY have greatly diverged with USDJPY breaking above 109 and pushing six-year highs. This recent ‘relative strength’ is the most extreme overbought for the currency pair since early 2001 – which saw USDJPY plunge 30% in the following six months. The tick-for-tick rise in Japan’s stock market also broke a 9-month almost-perfect analog with the last time the nation raised its consumption tax.
Perhaps even more worrying in the world of FX trading, ECB Governing Council member Ignazio Visco told the G-20 that it may not need to add stimulus measures after steps in the past three months pushed down the euro noting that “there may not be a next step,” since he explains, the ECB was “bold enough to reduce interest rates to a level that was unexpected to the market.”
The extent of the exchange rate’s fall is “more or less, given the moves that were done between June and September, the right response,” said Visco, who also heads Italy’s central bank, but added very Japan-like, “the ECB isn’t targeting any exchange-rate level.” That is not what the EUR shorts will want to hear.
USDJPY is at six-year highs with RSI at its most extreme overbought since 2001 – which saw a 30% decline in the next 6 months.

This post was published at Zero Hedge on 09/21/2014.

Desperate Acts to Retain the Paper Monetary System

Within the current global economic environment, central bankers – of the world’s developed economies and those of emerging markets alike – remain obsessed with the struggle to incorporate monetary policies which will engender renewed gross domestic product (GDP) growth in their respective economies. These central bankers have been led by the example of the U. S. Federal Reserve, whose implementation of a multi-year quantitative easing program, i.e. the $4.5 trillion (U. S.) purchase of U. S Treasurys and mortgage-backed securities, has been coupled with the maintenance of historically low administered interest rates; such as the present 0% – 0.25% range for the Federal Funds Rate. Complicating the global GDP growth challenge has been the persistent increase in the debt levels of many sovereign credits, once again led by the United States, whose national debt level now exceeds $16.8 trillion (U. S.) – that’s $16,800,000,000,000 (U. S.). Within the context of the above, it behooves us to visit a few historic examples of paper money systems which, while well-marketed, met with an inglorious fate.

This post was published at Gold-Eagle on September 21, 2014.

The Fed Then And Now – Remembering William McChesney Martin, Jr.

Submitted by Erico Tavares of Linares & Co.
The Fed Then and Now – Remembering William McChesney Martin, Jr.
These days, central banks have become so intertwined with the economy and capital markets that every word uttered by just about any senior Federal Reserve official is endlessly scrutinized to gauge what their next step might be.
But it wasn’t always like this. There were times when the Fed actively defended the strict independence of monetary policy, as well as the role of free markets in creating prosperity and even preserving civil liberties. And those were the days of William McChesney Martin, Jr.
An Experienced Central Banker
Born in 1906, Martin was associated with the Fed from the very start. His father, a prominent banker from St. Louis, was part of the team that helped write the Federal Reserve Act and subsequently served as President of the Federal Reserve Bank of St. Louis from 1929 to 1941.
After graduating from Yale with a B. A. degree in Latin and English, Martin started his professional career at the Fed of his native St. Louis. He then left to become the head of the statistics department at A. G. Edwards & Sons, a local brokerage firm. He was promoted to partner just after two years, marking the beginning of a meteoric rise in the world of finance. He moved to New York to become the firm’s representative at the New York Stock Exchange, and eventually became the first paid President of the latter at the tender age of 31 – prompting the newspapers to label him the “boy wonder of Wall Street’.

This post was published at Zero Hedge on 09/21/2014.

ECB Executive Board Urges Germany to Borrow and Spend

In a foolish as well as never-ending attempt to prevent price deflation and revive growth, the ECB Urges Berlin to Cut Taxes and Spend.
Berlin has hit back at calls from a top European Central Bank official urging Germany to spend more to help the eurozone escape from its economic malaise.
In one of the most politically charged statements to come from the central bank, Benot Cur, a member of the ECB’s executive board, urged Berlin to increase borrowing in order to support investment and cut taxes.
The article follows calls by ECB president Mario Draghi last month for governments to match the central bank’s steps in loosening monetary policy with growth-boosting measures. However, Mr Cur and Mr Asmussen have gone further than Mr Draghi, who stopped short of asking Germany to raid its fiscal coffers.

This post was published at Global Economic Analysis on Sunday, September 21, 2014.

Monetary Inflation And The Stock Market

Concerning bull markets; what is the prime mover driving share prices higher over the decades:
Economic Growth? Compelling Value? Rising Earning? Skilled Management? I wouldn’t dismiss the importance of any of these factors to investors when considering where to invest their money in the stock market. But the one factor that has impacted share prices more than any other is usually ignored: monetary inflation flowing from the Federal Reserve.
Below is a chart plotting US Currency in Circulation (CinC) since 1920. From 1920 to 1931, CinC never exceeded five billion dollars. Today, in any room where Warren Buffet and Bill Gates are sitting, five billion dollars is chump change as the Federal Reserve has expanded US CinC to an obscene 1.3 trillion dollars over the past nine decades.

This post was published at Gold-Eagle on September 21, 2014.

Andy Hoffman: This Dollar Ponzi Scheme Will Collapse

ntroduction: Andrew (“Andy”) Hoffman, CFA joined Miles Franklin, one of America’s oldest, largest bullion dealers, as Media Director in October 2011. For a decade, he was a US-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005. Since 2002, his focus has been entirely on precious metals, and since 2006 has written free missives regarding gold, silver and macroeconomics. Prior to joining the company he spent five years working as an investor relations officer or consultant to numerous junior mining companies. Andy’s articles can be found on the Miles Franklin Blog, at http://www.milesfranklin.com.
Daily Bell: Good to speak with you again, Andy. What’s new with you?
Andy Hoffman: Working harder than ever to dispel the mistruths and misinformation permeating the clueless, captive MSM and historically manipulated financial markets. Thankfully, despite multi-year lows in Western Precious Metals sentiment, Miles Franklin is as strong as ever, as we complete our 25th year of operation.
Daily Bell: In a recent blog entry you referred to the “potentially cataclysmic Scottish referendum.” What did you mean by that?
Andy Hoffman: Just from a pure economic standpoint, it would indeed be a lethal blow to the UK economy – which, like the U. S., is supported solely by unfettered central bank money printing, which has created nearly identical equity and high-end real estate bubbles. Scotland generates just 10% of UK GDP, but theoretically would have title to 90% of North Sea oil and gas revenues – which not only could prove devastating for England, but could yield years of bitter property disputes.
Of course, the bigger issue is the expanding secession movements we wrote about last week. Whether or not the Scotland vote turns out “yes” or “no,” the inexorable movement to escape oppressive social and/or financial governance will only accelerate as the global economy collapses. The situation is particularly tenuous in Europe, with its myriad cultures and nationalist movements, where the first such “yes” vote could catalyze numerous others – starting with Spain’s Catalonia region, which will hold a similar referendum in November; and afterwards, the famed Italian city of Venice. Catalonia accounts for a whopping 20% of Spanish GDP; and Venice, 10% of Italian GDP.

This post was published at The Daily Bell on September 21, 2014.

Gold, Oil, and Why the Market Doesn’t Care About Geopolitical Events

Between Ukraine and ISIS, 2014 has been a year marked by geopolitical tension. Yet, contrary to intuition, market volatility has continued to trend downward along with the price of gold and oil, while stocks continue to hit new all-time highs. Why? Jim Bianco, President of Bianco Research, provided a number of key insights in his recent interview with Financial Sense Newshour.
Why do you think gold and oil haven’t reacted to geopolitical events this year?
“Whenever there’s a geopolitical event, you have to ask yourself a simple question: Will this change the supply-demand outlook for the world economy? Will it mean we get less of something or will it change people’s attitudes about purchasing things? And sometimes those attitudes can be changed because we are applying sanctions or going to war or something along those lines. The thing about the current set of geopolitics is that the President himself has said that he wants to take a minimalist approach when it comes to Ukraine. The President went out of his way twice in press conferences in the last month to six weeks to say the sanctions were designed to not impact the global markets or the global economy. So, for things like the Ukraine, the President is saying to you it doesn’t matter… It is not going to change the supply of any products you get, the demand of any products you get, and we’re not going to put onerous regulations on banking or financial services or the energy sector because of what’s happening there – that’s why the market is ignoring it. When it comes to ISIS in Iraq, we’ve kind of taken the same approach: we’re not going to do a whole lot about it; they’re not near the oil fields so nothing has changed. So, that’s why I think from a geopolitical standpoint, these events aren’t resonating in the financial markets… Now, with that said…typically, when markets react, the first market reaction is the wrong reaction…at some point in the future the market is going to have an epiphany and say, “You know what, I got this wrong. Maybe this is a bigger deal than we think.”

This post was published at Silver Bear Cafe on September 20, 2014.

Gold Price Artificially Pressured Down

As expected, immediately following its Wednesday speech, the Fed went on with its market regulating policy in order to send positive signals to the markets and to maintain the trust of investors.
Thus paper gold was sold without end, combined with the now traditional suspicious moves occurring outside of the COMEX, in order to be able to break support levels more easily. Silver, though already quite oversold, but easier to manipulate, was hit by a powerful smash-down on Friday that broke its major support at $18. Usually, those violent attacks can last up to two or three days, so it is still possible to witness more hits.
Sadly, for the ‘market regulators’, gold could not be brought down near its $1,180 support… if it had been, we’d have witnessed the same avalanche of paper gold on the COMEX to break it! The gold miners, for their part, did not manage to stay above their lateral support that was defining a bullish trend since December 2013. In short, the entire sector has been sold at a time when all economic indicators are down and that no one knows when interest rates will rise.
From a trading point of view, we see two red flags (silver support/miners support) and, until the technical situation gets better, we should remain cautious with our trading positions. But this doesn’t change anything at all for our long term positions in this market which must ALWAYS be held as fire insurance in case of a crash or a market closure.
Clearly, since 2013, we have entered a period where stupidity is rewarded. It has paid off astoundingly well, for more than a year now, to follow the mainstream consensus and the bankers’ recommendations (bullish on stocks and bearish on gold), when normally what looks obvious to the majority is already priced in and the market is begging to turn. Either we are getting very close to the last breath to inflate the bubble, or it keeps inflating beyond 2014 to the point of bringing the whole financial system to a devastating explosion!

This post was published at Gold Broker on September 20, 2014.

Beware the Witches of September!

It’s not quite Halloween yet, but the witches are already revving up their brooms, clad in their finest rags, and cackling their merry song of mischief. Investors beware – the Witches of September will be flying this afternoon at a stock exchange near you.
Luckily, the witches make their rounds creating havoc on the markets just once a month, on the third Friday of the month, known as ‘Freaky Friday’. There are at least two witchy sisters who take to the skies each month – one who molests stock markets, while the other sinister sister stalks the futures markets.
But every quarter on the last month of the quarter, the two wacky witches are joined by a third twisted sister for a night on the town that makes even the wildest cougars look tame. The evil triplets are at their worst when three threes all line-up together – the third Friday of the third month of the third quarter. And today is that day!
If three is the perfect number, then today will be met with perfect madness and perfect mayhem on this third and most ominous Triple Witching of the year.

This post was published at Silver Bear Cafe on September 20, 2014.

Minimum Requirement For A Bear Market

The best time to prepare for a Bear market, as with any foreseeable disaster, is long before it strikes. If one waits for word of a Bear market to be broadcast on the evening news, chances are good that it is already too late to prepare.
It’s too late to build a storm cellar when the tornado sirens are blaring, too late to get off the volcano when the pyroclastic flows have begun, and too late to buy bread and milk when the blizzard winds are howling. The best one can normally hope for, when a disaster is already underway, is to mitigate the damage; and that includes stock market crashes.
The problem with preparing for disaster is that there is a natural tendency to become desensitized to warnings that later prove inaccurate. As television’s Simpsons character Troy McClure observed many years ago, in 1995, ‘phony tornado alarms reduce readiness’. So to do phony predictions of coming stock market crashes reduce readiness.
Many have viewed the widely circulated charts showing the similarities of the current stock market to that of the Crash of 1929. While it is conceivable that such similarities could indeed mean we are headed for another stock market crash, the truth is that so many similar predictions have failed in the past that even if this one proves to be true it will likely be ignored, quite like phony tornado alarms.

This post was published at ZenTrader on September 1, 2014.

Dollar’s longest rally since 1973 could pop the stock market bubble

US multinationals are an enormous force in global commerce and when they send profits home they have to be changed into US dollars. Ergo a strong US dollar is toxic for profits and lower profits are bad for stock prices.
With the US dollar now in its longest rally since records began in 1973 there is every reason to worry about the currency’s recent surge in value. Commodity producers from the Gulf of Arabia to iron ore exporters in Perth are also feeling its impact as a strong dollar lowers commodity prices from oil to iron and copper.
Rally too long?
The only relief in sight might be the length of the rally itself. At 10-weeks this is over long and due for a correction. Currency markets seldom go up in a straight line for anything like this length of time.

This post was published at Arabian Money on 21 September 2014.