China Central Bank Crushes Hopes For A “Large-Scale Fiscal Or Monetary Stimulus”

Jon

Late into Friday’s major market selloff, a completely unfounded rumor emerged out of nowhere, seeking to rekindle the BTFD spirits, that with central bank intervention from both the BOJ and ECB already priced in, and with the Fed still in taper mode (if not for much longer should the S&P dump accelerate), that the last central-planner wildcard, China, would join the fray and a major monetary gusher would come out of Beijing over the weekend to halt the slide. Alas, we have bad news for said BTFDers: just hours before futures are set to open on Sunday afternoon, the chief economist at China’s central bank said Saturday that he doesn’t see any reason for large-scale fiscal or monetary stimulus ‘in the foreseeable future’ despite slowing growth in the world’s second-largest economy and disagreements about the depth and timing of economic overhauls.
According to the WSJ, the PBOC’s Ma Jun, speaking in Washington at a meeting of the Institute of International Finance – the same place where Jamie Dimon said that he is concerned about shadow banking – said the Chinese job market ‘looks pretty stable’ despite wobbly economic growth. That’s up to debate, but it was what he said about leverage in certain sectors – including real estate, certain state-owned enterprises and local-government financing vehicles – that was already too high, and that further lending to these areas should be avoided.

Ma Jun, chief economist at the People’s Bank of China, shown in September.
We have covered the critical state of China’s debt-stock consistently since 2009, a country whose corporate debt is higher than any developed or developing country, so while we wholeheartedly agree with Jun, one question emerges: why tell the truth? After all, the only reason the status quo managed to survive so long is because it piled lies upon lies upon propaganda. If indeed the times has come for the truth, then all bets are off…

This post was published at Zero Hedge on 10/12/2014.

HIGH ALERT Continues!! The Stock Market Is In A Dangerous Place Right Now

Jon

On September 20th, we posted a warning article to our subscribers.
‘HIGH ALERT!!! The stock market sits at a very precarious place this weekend. There are important and rare technical indicators that are contemporaneously telling us that a major stock market top is close at hand and a powerful and damaging stock market decline is not far from starting.’
Since we published that warning, the Industrials have plunged from their all time top on Friday, September 19th, so far falling 806 points. Since that warning, the S&P 500 has fallen 113 points, and the NASADQ Composite has fallen 334 points. Since then, the Semiconductor Index has crashed. This all came the day after we got a confirmed Hindenburg Omen.
The stock market just had its worst week since May 2012. The Industrials are now at a loss for the year 2014. We have been showing a multi-decade Jaws of Death stock market pattern for several years now, warning that when it finishes, a massive Bear market and economic collapse will begin and last for many years. I even wrote a book about this pattern’s clear warning, The Coming Economic Ice Age, available at amazon.com . It is very possible that the time has come when this pattern is finished and the next Bear market and economic collapse has begun. We are now on high alert.
Bids are hard to come by right now, and our analytic work suggests that the secret Plunge Protection Team activity is providing at least half the bids in the stock market right now. Prices keep falling, but the descent is slowed by PPT buying, providing a safety net under the stock market. However, this market continues to look heavy, and there are limits to what the PPT can buy. At several points over the next seven years, we expect the stock market to experience crashes. Some will be minor, some huge. At this phase of the new Bear market, many advisors are labeling this decline from September 19th as a buying opportunity. That sentiment will change down the road.

This post was published at Gold-Eagle on October 12, 2014.

A New Age Of IMF Bailouts – Great Britain In The 1970s

Jon

A New Age Of IMF Bailouts – Great Britain In The 1970s
Hearing of IMF interventions generally conjures up images of developing nations (and the occasional Eurozone peripheral economy of late) facing some kind of financial difficulty. But it was actually Great Britain, the cradle of the industrialized world, which in 1976 became one of the first countries ever to be “bailed out” by the IMF in the modern sense of the term.
Now, previously the IMF had already provided financial assistance plenty of times, including to several advanced countries. Out of the 22 countries which were part of the OECD in the 1960s, no less than 8 negotiated new IMF programs during that decade, including France (1969), Japan (1962, 1964), Great Britain (1961-64, 1967, 1969) and even the US (1963-64). But these had been mostly to address short-term balance of payment issues.
Britain’s bailout in 1976, on the other hand, had strict conditionality elements with deep repercussions on the prevailing political ideology, sparking an intense private and public debate at the time as to whether the country should actually accept it. This episode inaugurated a much more interventionist approach by the IMF, anticipating many features of modern assistance programs.
The bailout arguably marked the culmination of a secular decline which had begun decades earlier. With the emergence of America and the Soviet Union as the global ideological and de facto superpowers at the end of World War II, the sun was setting fast upon the British Empire, which would fade away not long after. Still, in the postwar decades Great Britain offered plenty of prosperity, along with a free and vibrant society (who can ever forget the swinging sixties?), world-class music bands, abundant energy supplies and a respectable manufacturing sector.
Then came the 1970s. And things got bad pretty quickly.
Some Historical Context
The Labor Party was elected with a landslide majority in 1945 against the iconic wartime leader Sir Winston Churchill of the Conservative Party. Sweeping economic reforms were promptly introduced: the creation of a welfare state with national health, pensions and social security; industries were nationalized, seeking to broaden the state-planned manufacturing vitality during the war years; and taxes were raised to pay for the whole thing.
As Britain emerged from the wartime devastation, the economy got better and better, and accelerated in earnest after Churchill’s return to power in 1951. However, things were beginning to heat up abroad, with war raging in Korea, waves of Arab nationalism following the creation of the State of Israel and an increasingly belligerent Soviet Union. The Suez crisis of 1956 weakened Britain’s global standing and the government’s reputation, leading to the resignation of Anthony Eden, the Conservative Prime Minister who had succeeded Churchill.
But the economy managed to remain fairly robust with low unemployment into the 1960s, aided by tax cuts and other stimulative policies. Nevertheless, this was a time of change. Harold Wilson, the Labor party leader, ended 13 years of Conservative rule with a narrow victory in 1964 before increasing his majority in 1966. But despite the traditionally “euroskeptic” Conservatives losing their grip on power, Britain’s second attempt to join the European Economic Community (‘EEC’) was once again vetoed by France’s President, Charles de Gaulle, in 1967.
At the same time, Britain’s increasing lack of competitiveness internationally was starting to become very apparent. The government eventually devalued the pound in 1967 to stem the continuous outflow of gold and dollar reserves. By the end of the decade, the swinging sixties were no longer swinging all that much. And Wilson was surprisingly voted out of power in 1970.
In came a new Conservative government led by Edward Heath. And that’s when things started to get interesting.

This post was published at Zero Hedge on 10/12/2014.

Draghi The Dictator: “Working With The Germans Is Impossible”

Jon

The war of words between Europe’s unelected monetary-policy dictator Mario Draghi and Germany’s “but it’s us that pays for all this” Bundesbank has been gaining momentum since Jens Weidmann penned his Op-Ed slamming Draghi’s OMT ‘whatever it takes’ as “too close to state financing” in 2012. A week ago, Weidmann stepped up the rhetoric by claiming ECB policy is “hostage to politics” and has lost its indepdendence – warning Draghi’s dictatorial policies were leading Europe down a “dangerous path.” But now, as pressure grows from the Spanish (record unemployment, record bad debt, record low yields), Italian (record unemployment, record debt-to-GDP, record low yields) and French (record unemployment, treaty-busting-deficits, record low yields) for Draghi to monetize more assets, he has struck back in Focus magazine, blasting Weidmann is “impossible” to work with because the Germans “say no to everything.” Dis-union…

This post was published at Zero Hedge on 10/12/2014.

October Market Breadth

Jon

There has been quite a lot of market action in stocks as of late, so it is time for another Market Breadth Summary. Most market participants would look at the chart of S&P 500 and conclude that some kind of trouble only started several days ago as selling intensified and the volatility index jumped. However, the internal market breadth for the US equities has been deteriorating since at least June of this year. Let us look at a few charts.

Before I start, there is an important point I would like to make. According to the price behaviour and various indicators I track, market conditions are changing as bulls lose control to the bears. In other words, probability is quite high that the central bank sponsored rally, which has lasted for the better part of two years, has probably come to an end and the prevailing trend right now is bearish.
Why is this important? Because a lot of market participants fail to trade with the trend. Since I’m not that smart nor experienced, I will quote Jesse Livermore on this subject:
I was utterly free from speculative prejudices. The bear side doesnt appeal any more than the bull side, or vice versa. My one steadfast prejudice is against being wrong. When I am long of stocks it is because my reading of conditions has made me bullish. But you find many people, reputed to be intelligent, who are bullish because they have stocks. I do not allow my possessions, or my prepossessions either to do any thinking for me. That is why I repeat that I never argue with the tape. Obviously the thing to do was to be bullish in a bull market and bearish in a bear market.

This post was published at GoldSeek on 12 October 2014.

What the Heck just Happened in Global Stock Markets?

Jon

It was a crummy week for the world’s major stock markets:
One, volatility came roaring back. Forget complacency. People are still rubbing their necks from whiplash.
Two, the Fed hype-effect fizzled. The publication of the FOMC minutes – designed to pump up markets with their ambiguities – was able to generate a rally that lasted less than a day, followed by a terrific swoon. The ECB too tried to goose markets, which failed miserably. And the Bank of Japan, well, I call it Bank of Japandemonium for a reason.
Three, the relentlessly successful strategy, nay religion, that worked without fail for the last couple of years and allowed traders to earn instant bucks in a seemingly risk-free manner – ‘Just buy the frigging dip’ – turned into a vicious back-biting monster.
The Nasdaq, after dropping 4.5% for the week, the worst since May 2012, closed on Friday below its 200-day moving average. So did the Dow. For chart decipherers and trend prophesiers, those are not exactly propitious signs.
The thing is, if everyone believes that everyone believes in this sort of line crossing and reacts to it, then a simple line either bouncing off or crossing over another line can become a magic signal for a lot of people. And they react to it in unison, and it becomes a self-fulfilling prophesy. It worked wonderfully on the way up. And because it worked so wonderfully and made people rich, more and more traders and investors became chartists, and even economists switched to becoming chartists because economic and corporate fundamentals had become irrelevant to stocks, which soared no matter what, and they had to find something else that their clients actually wanted to hear.
But it’s not just in the US. The European Stoxx 600 dropped 4.1% for the week, also its worst week since May 2012. Most of the national indices were splattered with red. Germany’s Dax dropped 4.4% to the lowest level since October last year. It’s down 12.6% from its all-time peak in January. It’s in a full-blown correction.

This post was published at Wolf Street on October 12, 2014.

Claudio Grass: The Upcoming Swiss Gold Referendum

Jon

Jeff Deist and Claudio Grass discuss the uniquely Swiss mindset behind the upcoming Swiss gold referendum, and how decentralization of political power is part of Swiss DNA; the tremendous geopolitical aftershocks that would occur if the referendum passes – including the physical repatriation of gold to Switzerland; and how the Swiss people may be waking up to the sellout of their country by the Swiss National Bank and the IMF.
Claudio Grass is the managing director of Global Gold, a bullion company specializing in storage of precious metals outside the banking system.


This post was published at Ludwig von Mises Institute on October 11, 2014.

IMF Admits They Are Clueless to Solve World Economic Crisis

Jon

At the meeting of the IMF and the World Bank, we began to see for the first time some blow-back against Obama’s hand-picket lawyer masquerading as the world leading of international finance. There were significant rifts between supporters and opponents of new state investment programs that LaGarde and Obama are trying to pull off taking pensions and squandering them on infrastructure that only produces temporary jobs anyway.
The LaGarde at the IMF warned at of the risks in the financial systems that amount to the shadow banks with a market of $71 trillion dollars. She asserted that this is a tremendous danger on the basis it is not regulated by her. Effectively, she wants to seize control of such money to bailout governments without reform.
Lawyers who prefer politics to rule the world are different from private lawyers. They are the same type of people Shakespeare wrote – the first thing we do is kill all the lawyers. They were the king’s lawyers (prosecutors) since private people were not allowed to hire lawyers. These type of people are high on their power and only see things as writing laws to force people to do what they demand. The cannot understand just how do you stimulate an economy by raising taxes. They want to tax you 80% and then want to charge you negative interest rates if you do not spend what you have left. They are totally insane. They cannot comprehend where is economic growth supposed to come from?

This post was published at Armstrong Economics on October 12, 2014.

King Dollar – Be Careful What You Wish For

Jon

It’s so good to be the cleanest dirty shirt, right? Wrong…

As the dollar has strengthened in recent weeks, so the performance of stocks in the S&P 500 most dependent on overseas revenue has collapsed… and furthermore, a strong dollar implies (all else being equal) a weaker oil price and as is already evident from Energy stocks, likely means significant capital-spending cutbacks among E&P firms…
Not exactly the escape velocity, rates will rise, Fed is only leaving coz things are so awesome, King Dollar meme now is it…

This post was published at Zero Hedge on 10/12/2014.

Weekend Update October 10

Jon

ABSTRACT: After precious metals tracked with stocks into red territory last week, the metals reversed direction on persistent fears that Europe and Russia will drag down the global economy. The stock markets recovered much of their losses from early in the week following the release of September’s FOMC meeting minutes; the minutes and statements by the Fed essentially reaffirmed the central bank’s inclination toward accommodative monetary policy for at least the next several months.
GOVERNMENT & POLICY Goldman Sachs, NY Fed Draw Regulatory Scrutiny
It seems there is never a dull moment when it comes to the Federal Reserve these days. With the release of the Federal Reserve Open Market Committee (FOMC) minutes from the group’s September meeting, the news of an unchanged outlook from the Fed was expected to carry the day. Indeed, investors responded with fervent optimism on Wednesday when it became clear the Fed intends to continue delaying normalizing monetary policy until more lag has been removed from the economy. This was after President Obama met with a group of financial regulators, including Fed Chair Janet Yellen, on Monday.
Yet, the FOMC’s signals that it will ‘stay the course’ held the attention of the markets only briefly, while the more scintillating story revolved around the emerging relationship between Goldman Sachs and the New York Fed. A whistle-blower from the bank accused the NY Fed of being ‘soft’ on Goldman Sachs, overlooking its less savory activities and even deferring to Goldman on certain regulatory issues. The informant, Ms. Carmen Segarra, complained about the apparent favoritism to her employer and was summarily fired. She did, however, make secret recordings that reveal the bank ignored red flags of Goldman’s questionable practices, deeming them ‘legal, but shady.’ The Securities and Exchange Commission (SEC) has raised concerns that Goldman Sachs exploits conflicts of interest, alleging that Goldman has dubiously sold financial products to their customers while simultaneously placing speculative bets against the performance of those products.
This developing story again raises the issue of the Fed being overly sympathetic to the financial institutions it is tasked with overseeing. Massachusetts Senator Elizabeth Warren has called for a Senate Banking Committee hearing on the topic, pointing out that the Fed ‘can identify problems, but can’t bring itself to make the banks fix those problems.’ The New York Fed, always the most powerful branch of the Federal Reserve System, has a long history of close dealings with Wall Street. Consider for a moment that the NY Fed President, William Dudley, served as chief economist for Goldman Sachs from 1986 to 2007. Although this inextricable connectedness is the nature of the financial industry, it should never rise to the level of outright cronyism. As the scandal continues to unfold, we wait to see how much teeth a response from the regulatory community will have.

This post was published at Deviant Investor on October 12, 2014.

Stock markets drop ‘more than a dip’ says analyst

Jon

The Global stock market selloff accelerated on Friday with the FTSE 100 index falling 91.56 points, or 1.4pc, to 6,340.2, it’s lowest level in a year and 7.81pc below highs of 6,878 on May 14.
Gold, a shelter for investors in times of uncertainty, has surged during the past week by as much as 2.64pc, to $1,222.95 per ounce, as the Federal Reserve minutes hinted at delaying interest rate rises till later next year.
The Dow Jones Industrial Average slumped by 334.97 points, or 1.97pc, to close at 16,659.25 last night as Wall Street feared the US economy would be dragged down by weakness in Europe and the rest of the world..

This post was published at The Daily Sheeple on October 11th, 2014.

Greenwald: Why Privacy Matters

Jon

Privacy is the outer skin of the self.
Privacy is the space that defines the will of the individual, which sets the area which says, ‘this is mine, because this is me.’
I may wish to share my space to varying degrees with family, friends, and acquaintances. I may even wish to operate within my space in a continuing act of worship and companionship with my Creator. But that choice to conform myself to His will and open my thoughts and heart to Him, is mine. This is a gift that is hard to comprehend, but which makes us the objects of His love, rather than a puppet, or a mere object of His to be owned.
It is His most supreme condescension that He grants us the power to resist Him, to be other than Him if we so choose. He makes us the sovereigns of a portion of His being, and says, you are free, and in His caring for another grants us a soul of our own. This is the essence of our being.
What love is that which is in thrall to the beloved, which has no choice, no self identity that it may give, freely? What are we to an all-powerful God, except that which He has granted to us, forever, as ours alone?
A tyrannical State, which has no virtuous restraint, by its very definition wishes to insert itself into this space, not as a gracious God who grants me the will to either open or close my heart to Him, but rather to take by force that space that marks my individuality, and to be as a god on its own terms.
Surveillance on an indiscriminate and massive scale by an increasingly intrusive State is not a benign act in the cause of homeland protection.
It is an act of the will to power of the State over the individual, to claim that last bastion of privacy that marks the least amount of space that a person may occupy as their own.
It is the State’s way of asserting that all that we have, all that we are, all that we may do or think, belongs to them at their unquestioned discretion.


This post was published at Jesses Crossroads Cafe on 12 OCTOBER 2014.

TO INFINITY, BEYOND & BACK TO EARTH

Jon

There are two ways to buy Chinese slave labor produced stuff you don’t need at one of our millions of mega-retailers. You can pay cash from your latest payroll direct deposit or you can whip out one of your eight credit cards and do it the American way.
A measure of how delusional and desperate the average American has become is to divide their total consumer debt by their total salary and wages. The chart below tells the true story about the average American. Back in the pre-delusional days, before the banksters and their propaganda media had convinced the willingly ignorant public that debt financed purchases equaled wealth, consumer debt divided by salaries and wages ranged from 24% to 30%.
Around the time that Greenspan made his irrational exuberance speech, the American public went full retard and have never looked back.

This post was published at The Burning Platform on 11th October 2014.

Pension Crisis

Jon

After 2015.75, we will begin to observe the Pension Crisis manifest before our eyes. There are few governmental exceptions within Western Society without this serious trouble. While they keep everyone occupied between soccer and football, governments have done an incredible job of committing massive fraud upon the public. Public unions are simply demanding that governments raise taxes and extort money from other sectors to hand to them.
Government pension funds are a joke. Even in Britain, pensions will run out of cash next year: Amount handed out to future generations will be disastrous. Those under 35 should not expect anything for their taxes. (see also the Mail). This will be part of the ever increasing civil unrest that we see coming after 2015.75 moving into January 2020.

This post was published at Armstrong Economics on October 12, 2014.

Will gold and silver prices continue to go up as stocks go down?

Jon

Last week gold and silver prices advanced by three per cent while the S&P 500 lost that much in its worst week for two years. Is this a new trend?
Gold has almost certainly traced out a bullish triple bottom in its price chart, although the position looks less clear on the silver chart. Many areas of the US stock market are already past 10 per cent corrections while the major indexes are the last dominos to fall and on their way down now.
Safe haven status
Is this a straightforward rotation into safe havens? T-bonds are also up. Riskier assets like junk bonds are out of favor like small cap stocks. True but this is not going to be a repeat of the 2008-9 wipe-out for precious metals for three reasons.
First, gold and silver have just completed a three-year-plus correction. They are not at the top of their cycle waiting for a correction like equities today as they were in late 2008.
Secondly, this time is also different in that investors are now worried about paper money as a future store of value. What if the central banks respond to a stock market crash by cranking up the money printing again? That’s what happened last time. This will create inflation which is bad for paper money and good for gold and silver.

This post was published at Arabian Money on 12 October 2014.

Burden of Proof Has Shifted to the Bulls

Jon

Summary
World markets are in the midst of a growth scare. Greatest concern is centered on Europe, which should continue to decelerate. Stock market breadth has worsened as the bears are now in control. While major indexes show mild declines, stealth bear market has occurred in most stocks. Global stock markets are being pressured to the downside amidst a global growth and deflationary scare. Since August most developed country economic reports have surprised to the downside as seen by the Citigroup Economic Surprise Indexes. The only major economic region still in positive territory is the U. S. (blue line) but even in the U. S. the magnitude of positive economic surprises has moderated since September.

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

On QE99, Gold, & Global Growth Concerns – The Chart That Explains Marc Faber’s Fears

Jon

While The IMF recognizes the gaping chasm between collapsing global growth expectations and market exuberance, they remain confident that US growth will save the world. This, Marc Faber explains to a wise Bloomberg TV panel, is why stocks around the world (and now in the US) are starting to weaken, “the recognition that global growth is not accelerating,” as the narrative would like us all to believe, “but is slowing.” Central Bank money-printing has enabled deficit-heavy fiscal policy and, Faber simplifies, “the larger the government, the less growth there will be from a less dynamic economy.” Policy-makers have only one tool – money-printing, and QE99 is coming.


This post was published at Zero Hedge on on 10/11/2014.

This is the best currency to hold for now (you may be surprised)

Jon

October 10, 2014 Santiago, Chile
I just got off a two-hour conference call with the board of directors of our agricultural investment company.
I’m fortunate that our board is comprised of some incredibly smart people, including a senior executive at one of the largest sovereign wealth funds in the world, another investment banking executive, private wealth manager, etc.
These are very intelligent people who understand both finance and agriculture.
Our conversation this morning turned to exchange rates, and we discussed the future of the US dollar.
Bear in mind that we all hold a rather dim view of the dollar’s long-term fundamentals. That is, after all, why we pooled funds to trade paper currency for high quality productive farmland.
But over the coming months, our consensus was that the US dollar is in a favorable position when ranked against other major fiat currencies. I’ll explain why:
There are only a handful of currencies in the world that can handle huge institutional inflows and outflows.

This post was published at Sovereign Man on on October 10, 2014.

Bonds Entering Resistance Zone

Jon

As the market volatility increases and that is likely to continue for awhile let’s turn our attention to Bonds for clues. It’s entering an obvious area of resistance right now so it will be important to see how it trades between the $120-125 level. I personally don’t think this has enough momentum to break out which could give the general markets a lift if this chart tops, but it’s to early to know that right now. It could just as easily continue moving higher but watch the RSI for clues as right now there is negative divergence as it won’t make a new RSI high if TLT makes new highs.

zentrader.ca

This post was published at ZenTrader on October 10, 2014.