Feel Like Betting On Life Expectancy? There’s A Derivative For That

Think CDS were the scourge of humanity, think again. As Pension360 reports, several Wall Street firms are selling securities backed by longevity risk – the risk that retirees receiving benefits will live longer than expected (and thus incur a higher cost on their retirement plan). As Ted Ballantine notes, ‘no one ever said Wall Street wasn’t creative’; but one wonders just how the banks are mitigating this risk…

More from Institutional Investor:
Sovereign wealth funds, educational endowments and ultrahigh-net-worth individuals are the target investors for longevity derivatives, which package the risk that retirees drawing annuities will outlive actuarial expectations. The roots of this nascent market date back to 2006, when small monoline insurance companies such as U. K.-based Lucida (purchased by Legal & General in June 2013) and Paternoster (bought by Goldman Sachs Group in 2011) began taking longevity risk off European pension funds through bulk annuity buyouts.
These buyouts entail a company selling pension assets earmarked for all or some of its plan participants. The assets are converted to annuities that the sponsor can keep on its books or off-load to the insurer.

This post was published at Zero Hedge on 09/06/2014.

Jobs Report Makes Huge Miss

The market seems to be cheering the surprisingly weak jobs report in the hope that it will lead to a more favorable Fed policy. But in order to reach that conclusion, you first need to believe this jobs read. And I find it extremely hard to believe it.
A total of 142K jobs were created in the economy, materially below consensus estimates of around 225K and below the 212K average of the preceding 12 months. To add to the surprising nature of this jobs read, the tallies for the prior two months were revised lower by a total of 28K. It is very hard to square this jobs data with other economic readings like the ISM surveys, motor vehicle sales, weekly initial jobless claims and anecdotal evidence from the corporate sector in general.
In terms of industries, the August gains were in the professional and business services and healthcare industries while retail lost ground. The manufacturing sector was unchanged following the 28K gain in July. Construction added 20K jobs in August, roughly in-line with the preceding 12-month run rate of about 18K.
[See: Proof of a Structural Change in the U. S. Workforce] The average workweek remained unchanged at 34.5 hours for the 6th month in a row, while average hourly earnings edged up 6 cents to $24.53. Average hourly earnings have increased by 2.1% over the past year. The labor force participation rate was 62.8%, essentially unchanged since April. The unemployment rate remained unchanged at 6.1%, down 1.1% over the preceding 12 months.

This post was published at FinancialSense on 09/05/2014.

Financial system looking for a crisis to take the blame for global debt defaults

As time passes and the world becomes more chaotic — and poor, with the exception of the uber-wealthy, whose income and worth just keeps rising no matter what happens around the globe — more and more financial experts and economic analysts have become uber-pessimistic, especially about the financial future for the debt-ridden United States. You can add financial analyst and writer Bill Holter to that list. In a recent interview with Greg Hunter’s USA Watchdog, Holter says he believes that the elite power brokers in the U. S. and around the world are well aware of the fragile nature of the economic system and are set to play a major blame game when — and he says when – the coming crash hits.“I believe that they know the financial system is upside down and there is no bringing it back, so they do need to have something to point at,” he told Hunter. “It could be a war with Russia. We are trying as hard as we can to create a war, and it looks like Russia, and Mr. Putin, is trying as hard as he can [to not] have a war.”Holter continued: “There could be any number of things to point at. It could an Ebola virus outbreak. It could be the Saudi Arabians accepting euros, gold, rubles, yuan, what have you. It could be anything. There are dozens of topics.”

This post was published at Natural News on Saturday, September 06, 2014.

But Who the Heck Is Going to Buy all these ‘Overpriced’ Homes?

With home prices rising for three years in much of the country, and soaring at dizzying rates in a number of metro areas, the inevitable is happening: sales stalled. But prices have continued to rise, even as sales have deteriorated further. Something has to give. And it’s not going to be maxed-out American consumers. They’re not going to all suddenly inherit enough money to buy these mid-range homes that have moved beyond reach.
But something else is happening.
In the Las Vegas-Paradise metro area, one of the epicenters of the former housing bubble, and one of the epicenters of Housing Bubble 2, the ratio of homes sold to absentee buyers (mostly investors) as a percent of total sales in July plunged by a quarter year-over-year, according to DQNews, a division of CoreLogic. The ratio of homes sold to cash buyers plunged by a third. The ratio of homes flipped swooned. Total home sales have dropped year-over-year for the past 10 months; in July, they were down 11.8% to 4,260 units, the lowest for any July since crisis-year 2008.
And the median price? $190,000, up 9.6% year-over-year. The highest since November 2008. It has now booked 28 months in a row of year-over-year gains that reached up to 36.5%. Crazy! But July was the first month in two years with ‘only’ a single-digit gain.
These price increases have moved homes up the price ladder across the board, and potential buyers looking at the lower end found their American dreams evaporate: the number of homes that sold for less than $100k plunged 32%; the number of homes that sold for less than 200k plunged 21%; but the number of homes selling for over $500k rose 11%.

This post was published at Wolf Street by Wolf Richter ‘ September 6, 2014.

Stocks Have Reached a Permanently High Plateau

A permanently high plateau of stock prices is a marvelous innovation.
Somebody said this before, of course, but one glance at a chart of the S&P 500 tells us that stock prices have reached what looks like a permanently high plateau. How can we identify a permanently high plateau? One sign is price never touches the 50-week moving average (MA), much less the 200-week MA: prices just keep marching higher in a volatility-free permanently rising plateau.
It’s almost like a film set, where the special effects department (i.e. the Financial Singularity) has been called in to get rid of pesky volatility and fluctuations.
Memo to Head Office: Done. The MACD indicator has been locked into a permanently high plateau as price marches higher in an orderly fashion.
A permanently high plateau of stock prices is a marvelous innovation: you can practically set your watch to the steady tick of new all-time highs, and all you need to plan your retirement or cash-out of your stock options is a ruler and a pencil–just extend the price line as far forward as you want, and calculate your wealth.
The only downside of this permanently high plateau of stock prices is that it eliminates the need for the financial punditry and the workforce of money managers. With bearish influences and volatility both eradicated, there is nothing left to talk about except the upward slope of the permanent plateau.

This post was published at Charles Hugh Smith on SATURDAY, SEPTEMBER 06, 2014.

ROFL! Crap Jobs Number, Futures 10?

This is your stock market.
This is your stock market on heroin.
This is your market’s heart, addicted to a woman that should be in prison, and a clown-car stuffed with 535 critters that have ignored violations of their own laws, and in fact cheer them on, for 100 years — and thus should also be in prison.
Note: The “benefit” from being on heroin is temporary and the intermediate and longer-term impact is catastrophic.
Total nonfarm payroll employment increased by 142,000 in August, and the unemployment rate was little changed at 6.1 percent, the U. S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services and in health care.
That’s a crap number.
What’s worse is that the unadjusted number from the household survey is negative 618,000!

This post was published at Market-Ticker on 2014-09-05.

Weekly Gold Trend Analysis: EU Quantitative Easing Takes Center Stage

The big story this week regarding gold shifted away from political issues as the market digested the lessening of tensions in Ukraine following negotiations between Russia and Crimea over a ceasefire.
What was a brief gold price recovery as the dollar weakened lagged during the week. A dollar drop provided some bargain hunting and short covering that lifted prices on Friday, but generally, the trend was down. In the near term, the dollar will likely retain strength against gold, though long term, analysts seem more hopeful.
As Reuters pointed out:
Weak demand has shaken the seasonal strength and outlook for the yellow metal remains sluggish in the near term … On the global front, gold succumbed to heavy offloading from hedge funds and investors following robust US macro data even as optimistic view of the economy amid Fed rate hike concerns prompted selling.
The Week’s Monetary and Industrial Trends
On the financial front, the big news was the surprise announcement by Mario Draghi that the European Central Bank would cut its benchmark interest rate. But of even more import was Draghi’s position regarding ECB stimulus. Draghi intends what amounts to an almost US$1 trillion stimulus for the EU, according to reports.
Draghi’s action included a rate cut but he also indicated a broadening of asset-backed securities. He intends to “significantly steer” the ECB’s balance sheet to 2.7 trillion euros up from 2 trillion euros today. Whether he can accomplish his goals via quantitative easing remains questionable given German resistance, which is based on legal facilities embedded in duly signed EU documents.

This post was published at The Daily Bell on September 06, 2014.

Report: It’s YOUR Fault: Fed Says Americans Who ‘Hoard Money’ Are To Blame For Poor Economy

Despite arguments to the contrary from the Obama administration, mounting evidence suggests that the U. S. economy is rapidly falling back into negative growth territory. More Americans are out of the workforce than ever before, median household incomes are at levels not seen since 1967, and consumer spending is coming to a veritable standstill. The crisis is apparently so significant that a Federal Reserve governor recently said U. S. policymakers are crafting regulations that will force bank depositors to cover any losses should their financial institutions fail.
The question that many are asking is, how did this happen? How, after six years of recovery efforts and trillions of dollars printed, is it possible that the economy is not booming again?
This week the Federal Reserve published a report that claims to have figured it out and it turns out that the renewed economic downturn has nothing to do with foreign outsourcing, high taxation, increased health care costs for business or rising consumer prices for food and energy.
No, according to the Fed it is your fault. Apparently, you are not spending enough money. In order for the economy to recover you need to stop hoarding cash now and get out there and start buying more homes, cars, vacations, and electronics. Otherwise, you’ll only have yourself to blame when the system comes unhinged.
From the St. Louis Federal Reserve:
The issue has to do with the velocity of money, which has never been constant, as can be seen in the figure below . If for some reason the money velocity declines rapidly during an expansionary monetary policy period, it can offset the increase in money supply and even lead to deflation instead of inflation.

This post was published at shtfplan on September 6th, 2014.

Fast food protesters to be hit with massive job losses when Obama grants amnesty in November

My heart goes out to all those fast food workers protesting for higher wages, but I’m sad to have to watch them experience the harsh lesson in real-world economics that’s about to hit home. By taking to the streets and demanding $15 / hr. in wages, fast food workers are unintentionally making themselves economically obsolete. They are, in essence, guaranteeing their own unemployment. Sadly, few of the protesters realize this. Nor will they realize why they are being fired when that day soon arrives. Entry-level fast food workers, after all, tend to have relatively little knowledge of how business really works, where money comes from, where money goes and why no private sector business can stay in business for very long if its operating costs exceed its income. Fast food workers have a tough life. Getting by on anything less than $10 / hour is almost impossible these days. The relentless debasement of the U. S. currency by the Federal Reserve (the global banking cartel) has caused mass price inflation across the board, and that’s why food costs more, housing costs more, cars costs more and clothing costs more. Even pursuing an education costs way more than it should these days, too. It’s no wonder fast food workers are desperate to fight for higher wages, but the raw truth of the situation is that a $15 / hour wage mandate would simply cause many fast food companies to close their doors and go out of business. There’s very little profit margin in the fast food industry, and businesses can’t simply raise their menu prices because “low cost food” is the primary reason why people buy fast food in the first place.

This post was published at Natural News on Saturday, September 06, 2014.

Australia’s Economy Enters the Danger Zone

The federal government’s former top resources forecaster says the economy faces a painful downturn in 2015 as a property crisis in China accelerates the biggest hit to Australia’s export income in more than two decades.
Speaking after iron ore plunged to a five-year low of $US85.70 a tonne, the former chief economist and head of the Australian Bureau of Resources and Energy Economics, Quentin Grafton, said the Chinese economy looked like it was “unravelling”.
He said falling prices for coal and iron ore, a slump in business investment, an overpriced housing market and high dollar had placed the Reserve Bank of Australia “between a rock and a hard place”. “Put all those things together and it could be a difficult ride for us,” he said. “This isn’t about doom and gloom – it’s about looking at the risks and numbers. There’s a clear and present danger.”

This post was published at AFR

The Fed and Mr. Krugman: The Price of Nuts

The pine nuts I like to sprinkle on my salads have become so precious the price jumped from an already outrageous $5.99 per 4 ounce container to $6.99 this past week. One person who is happy about this is the New York Times’ Paul Krugman, for instead of being like Europe, that is ‘clearly in the grip of a deflationary vortex,’ America only teeters on the edge of a general price plunge. ‘And there but for the grace of Bernanke go we,’ writes the voice of Grey Lady economics wisdom.
Google ‘grocery prices last 12 months’ and it’s post after post beginning with ‘Consumer prices rise’ or ‘Rising food prices bite.’ However, Krugman claims there is something called a ‘deflation caucus’ keeping the Fed from doing even more than quadrupling its balance sheet. Monetary policy is partisan politics and the right wingers ‘demand tight money even in a depressed, low-inflation economy?’
Krugman then uses a word coined by Stephen Colbert, truthiness, meaning something that sounds true that isn’t to describe ‘The Fed is printing money, printing money leads to inflation, and inflation is always a bad thing.’ He writes that this ‘is a triply untrue statement, but it feels true to a lot of people.’

This post was published at Mises Canada on Friday, September 5th, 2014.

For September/October We Suggest Watching Traders the CFTC Classes as Other Reportables in Silver Futures

HOUSTON – (Got Gold Report) — We end this partial update on silver futures with a suggestion as to who (which class of large reporting futures traders) to watch going forward.
First, as silver prices edged $0.20 or 1.2% lower (actually less of a move than might have been expected given huge U. S. dollar relative strength), from $19.35 to $19.15 (as of Tuesday, September 2), trend following Managed Money traders (large hedge funds, commodity pool operators, commodity trading advisors, etc., aka ‘The Funds’) piled on a whopping 7,396 short contracts in COMEX silver futures, from 28,228 to 35,624 gross shorts.
That’s the equivalent of 178 million ounces of silver.
As longtime GGR readers already know, we view large Managed Money gross short positions as ‘insurance shorts,’ the highest of high octane rally fuel (and probably the first shorts to be covered) once The Funds are convinced the downward price impulse has been exhausted.
Managed Money can be expected to aggressively cover these short bets leading to upward price pressure on the COMEX if history is any guide. (For evidence consider the sharp spikes in MM shorts on the chart just below. It is a lead pipe cinch that all of the Managed Money silver shorts will be covered (bought back) at some point. At issue is the price.)

This post was published at GotGoldReport on Saturday, September 06, 2014.

Gold And Silver – NWO = Deceit, Debt, & War. PMs A Casualty.

[Last week, we said, ‘Next week, we will cover a brief history, a track record of the Rothschild banking dynasty that has controlled all Western countries for a few centuries.’ See Elite’s NWO Losing Traction. Expect [More] War, at least as it pertains to the US.] If you want to know why your holdings of physical gold and silver have remained under suppression, it is because both are anathema to paper fiat currencies, and the ones who are in control, the moneychangers, will not tolerate competition against their fiat Ponzi monopoly scheme. Not until the elite bankers lose control of the fiat US ‘dollar’ can you expect to see dramatic price increases for gold and silver, irrespective of any and all fundamentals and more widely recognized efforts of manipulation.
How long will that take? No one knows, except a lot longer than most expect, as the time horizon continues to shorten. Months? Years? Unknown and unknowable.
The only way the elites can exist is through deceit, hiding behind the scenes but unquestionably in total control, with emphasis on the word ‘total.’ If anyone is of the limiting belief that the Rothschilds, moneychangers, bankers, New World Order [NWO] is some kind of conspiracy theory, either take the time and do some studied research on factual events and read several court cases, or simply stay the course for being fleeced and enslaved by unwitting assent.

This post was published at Edge Trader Plus on September 6, 2014.

Hipster neighborhoods and the flippers that love them: Eagle Rock housing and sprucing up small spaces for hefty price tags.

Rinse and repeat. That seems to be the mantra some flippers are adhering to in certain SoCal neighborhoods. Some zip codes seem to attract flippers like flies to a bright light. Eagle Rock is one of those markets. Nestled between Glendale andPasadena, Eagle Rock seems to be a siren call for hipsters. What I find interesting in these hipster hoods is that they try to pitch a frugal eco-friendly lifestyle yet carry a massive mortgage. Okay, you are growing tomatoes and radishes but now have amortgage on a $700,000 crap shack. Seems like cognitive dissonance especially when you are getting such a tiny living space. Hipsters seem to be buying it up but the market is now cooling off. Apparently living in a closet and having a tiny garden isn’t so appealing when you look at the underlying price tag.
Eagle Rock fun
I’ve gotten a few e-mails from those in the housing industry talking about how hot Eagle Rock has become. A sort of center of hipster wishes and aspirations. It is an odd pitch when you are telling your prospective buyers to enjoy more ‘earthly’ desires yet slap on a price tag as if they were buying an Italian Villa. Only in SoCal does it cost a lot to live as if you were broke.

This post was published at Doctor Housing Bubble on September 5, 2014.

Halliburton Got Away With Murder

This week, Halliburton, the contractor that worked on BP’s Deepwater Horizon oil rig, has just gotten away with murder! This rogue corporation has agreed to pay a mere $1.1 billion dollars to settle most of the lawsuits over its role in the Gulf of Mexico spill. The settlement is lower than the $1.3 billion dollars that the Houston company had set aside for the case.
Justice still has not been done as Halliburton, BP, Goldman Sachs and Transocean got away manslaughter and illegally profiteering from the misery that these four corporations perpetrated on an entire region of the United States.

This post was published at The Common Sense Show on September 6, 2014.

Gold Needs To Be Rising In All Currencies!

Source: http://www.sharelynx.com
When one thinks of gold, it is usually always in terms of US$. Everyone has been conditioned to think that way. But if you live in Canada you most likely pay for your gold in Cdn$ not US$. For the most part one would make their gold purchase in the local currency. The above chart is not any particular local currency. Above is a gold index expressed in a basket of local currencies. This particular index does not weight the currencies. It is an equal weighted index of currencies of the top 20 countries by GDP. The chart is prepared by Nick Laird of http://www.sharelynx.com. Nick has also created a weighted index of the top 20 countries by GDP, however, at time of publication Nick was correcting some errors in the data.
The index is created the same as one would create the TSX Composite or the Dow Jones Industrials or for that matter the Gold Bugs Index (HUI). The index can be compared to gold in US$. Some differences do stand out.

This post was published at Gold-Eagle on September 5, 2014.

Housing Bubble 2 Hits Wall: Middle Class Priced out of Market

With home prices rising for three years in much of the country, and soaring at dizzying rates in a number of metro areas, the inevitable is happening: sales stalled. But prices have continued to rise, even as sales have deteriorated further. Something has to give. And it’s not going to be maxed-out American consumers. They’re not going to all suddenly inherit enough money to buy these mid-range homes that have moved beyond reach.
But something else is happening.
In the Las Vegas-Paradise metro area, one of the epicenters of the former housing bubble, and one of the epicenters of Housing Bubble 2, the ratio of homes sold to absentee buyers (mostly investors) as a percent of total sales in July plunged by a quarter year-over-year, according to DQNews, a division of CoreLogic. The ratio of homes sold to cash buyers plunged by a third. The ratio of homes flipped swooned. Total home sales have dropped year-over-year for the past 10 months; in July, they were down 11.8% to 4,260 units, the lowest for any July since crisis-year 2008.
And the median price? $190,000, up 9.6% year-over-year. The highest since November 2008. It has now booked 28 months in a row of year-over-year gains that reached up to 36.5%. Crazy! But July was the first month in two years with ‘only’ a single-digit gain.

This post was published at Wolf Street on September 6, 2014.

Hope and exact change…Tales from the New World Disorder

Things rarely end the way we think they will, usually a low-probability event occurs, something it seemed safe to ignore, or at least to discount, until suddenly it wasn’t. Once the stuff of novels, the unexpected is now the stuff of life. It’s what makes interesting times dangerous times. We’re seeing a replay of 2008 but at the next higher level, not unstable financial outfits, not even unstable markets, but unstable regions of the world. Where we had banks fail we’re having nations fail, at the near periphery for now but moving toward the core like Genghis Kahn at a gallop.
The nations of the world have become unstable, politically, militarily and economically. For one, the European Union and its Euro may dissolve for the oldest of reasons: a squabble over money. Like us, they can say debt is credit right up until the rent’s due, then they discover the insolvent can prop up the bankrupt only until somebody has to give something of value to get something of value. It’s then they understand how poor they’ve been all along, that they don’t actually have much that anybody else wants.
In the US flash crash of May 2010, bogus trading slipped the leash and a trillion dollars of notional market value vanished in minutes, and in the doing setting a new standard for downward volatility. They liked to call it “avoided transition”, a fancy way of saying no one trusted the other guy’s bookkeeping once the cosigner went missing. When bogus trades on bogus data can pump up the market for years, then slip utterly out of control in about the time of a commercial break, when the FAILURE IS NOW PERMITTED sign lit up but briefly, and it’s still long enough for the market to flash-crash, it suggests our black swan will be the truth, the simple truth. Said differently – reality.

This post was published at Silver Bear Cafe on September 6, 2014.

China Economy Unraveling: How Soon? How Fast?

The Sky Is Falling on Chinese Corporations … The four largest banks in China, the banks that have to officially show big profits and profit growth no matter what because they’re an integral part not only of the government but also of China’s miraculous debt-driven expansion, are showing officially tolerated signs of increasing stress. – WolfStreet Dominant Social Theme:
There are no market risks in the fall.
Free-Market Analysis: The “fall” is aptly named when it comes to Wall Street’s prospects over the next three months. These three months, and especially October, have been most cruel to market performances, especially during occurrences of asset bubbles. Such bubbles tend to get pricked in, say … October. Will it happen again?
As much as any publication, we’ve called the market’s performance over the past year by observing the behavior of the power elite and mechanisms put in place to prop up equity markets – most notably monetary stimulation.
But it’s autumn, now, and October could certainly see a market event.
The question is whether or not an “event” will effectively end the current market rise. Chances are even if markets go down fast and hard, certain sectors will remain viable and profitable over time. Cannabis, for instance, is expanding as an industry worldwide and it’s hard to see that trend dissipating.
However, it is certainly true that there are many ways that markets can unravel. And at these heights, it only takes a push to reduce market valuations. There are plenty of places the push can come from. One such, as we’ve long pointed out, would be the public unraveling of China’s increasingly problematic economic “miracle.”

This post was published at The Daily Bell on September 05, 2014.