The Bernank to announce QE3 Today at 2:15pm ?

China National Development And Reform Commission Joins The Party, Says QE3 Likelihood Appears High

Just in case there was any concern which way China is leaning ahead of today's meeting, here is the missing clue:

• China's NDRC official says likelihood of US QE3 appears highs
  
• China's NDRC official says US QE3 will push up commodity prices and will intensify hot money flows
  
• China's NDRC official says QE3 will threaten Chinese price stability

Of course, China is quite adept at saying one thing and meaning another. And with inflation there continuing to surge, and no chance of a loose monetary policy any time soon, China will be very delighted to see the Fed to another round of easing. After all by the time, exported inflation hits China it will be at least 3-6 months down the line, by which point China should have its inflation problem under control. So with Goldman and China both egging Bernanke on, we doubt there is much surprise left in today's 2:15pm announcement.

 

 

Government Bonds In The US Are The Short Of The Century

Marc Faber Blog - 1 hour ago

In my opinion, around this level, government bonds in the US are the short of the century. - *in CNBC* *Related ETFs: ProShares UltraShort 20+ Year Trea (ETF) (NYSE:TBT) iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSE:TLT), iShares Lehman 7-10 Yr Treas. Bond (ETF) (NYSE:IEF) * *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

Greek Bank Run Continues Unabated: €3.8 Billion In June Outflows Bring Total Deposit Base To Mid-2007 Levels

Who could have possibly imagined that in the month of June, Greek banks would see yet another major deposit outflow. Alas, according to just released NBG data, June deposit outflows by households and corporates amounted to €3.8 billion, bringing the total down to just €188 billion. This is a whopping 20% decline in total Greek bank deposits since January 2010. It also means that each increasing outflow merely plants the seeds for even more outflows in the next month as less and less confidence (and cash) remains in Greek banks. As a reference, an equivalent outflow in the US, based on the total $8 trillion in total domestic deposits, would imply a $160 billion monthly outflow, enough to put two Bank of Americas out of business. We expect to see comparable data out of the Bank of Italy, and then all other pigs, as billions of euros are being pulled from deposit accounts in insolvent countries and deposits in Switzerland. Naturally, it also means that European efforts to quell the panic are failing abysmally.

Goldman Crashes To Earth: Reports 24% Trading Day Losses In Q2, Compared to 1% In Q1

What a difference a quarter makes. Back in Q1, Goldman reported one (1) day in which it had a trading loss out of 62. It also reported 32 days on which it made over $100 million. Oh how the times have changed. According to the just released 10-Q, Lloyd Blankfein's firm suffered an epic implosion, recording 15 trading day losses out of 63, or a stunning 24% loss rate. And far worse: only 4 days in which Goldman recorded profits of $100 million. And that's why the stock is floundering. The only question is whether this was premeditated to shift the public anger away from Goldman which back in 2010 barely had any trading day losses in the entire year. And if not, what is the systemic change that caused this worst quarterly performance for Goldman in years?

JP Morgan Warns Gold to Go Parabolic and Rise to $2,500 By Year End

This may be a sign that the current sharp rally may have reached its zenith as neither bank has a great track record regarding short term trading calls on commodity markets. In the short term there is the risk of a correction as gold’s rise is now becoming front page (on front page of FT today) and headline news. The fact that silver has fallen in recent days and remains below $40/oz and the fact that gold mining equities have also not risen may also be a warning signal. Gold has risen from below $1,500/oz to nearly $1,800/oz in 5 weeks (since the start of July) and is up nearly 18% in dollar terms.  Therefore, in conventional terms gold is most certainly overbought.  However, we are not living in conventional or normal times and the ongoing global market crash and global currency debasement means that there is a chance that gold will go parabolic as it did in the 1970’s.

Market Commentary: "Broken"

Asking almost any credit trader how their market is trading, and the most common answer is broken.  Yesterday, a few people would have said bidless, or ugly, but today, its just broken.  Liquidity is extremely low.  Every trade resets the market. Trades are being driven by fear and fear alone.  Fear of a further sell-off.  Fear of whipsaw.  Sovereign debt trading was the first to be hit, and it has now hit all the credit markets.  Even equities seem to have seen a complete breakdown, with big air pockets.  For the S&P, 5 points seems to be just a little noise every few minutes waiting for the next big move.  S&P futures have already traded in a 70 point range, not too big for a month, but a lot for 12 hours.

More Made Up Data From The BLS: Non-Farm Productivity Better Although Huge Prior Revision Wipes Out All 2011 Gains

The only economic data point of the day is a disappointment as non-farm productivity drops 0.3% on consensus of -0.9%, although we once again get an unprecedented revision from the BLS whose data can no longer be trust for anything, as Q1 productivity was cut by whopping 2.4% from 1.8% to -0.6%! This is the first consecutive quarterly drop since 3Q, 4Q 2008. Net, this is very disappointing data and means that the economic slow down is far more broad than previously expected. And, not at all surprisingly, we get the same thing with labor costs rising 2.2% on consensus of 2.4%. The kicker yet again is in the revision, which speaks for itself: from 4.8% to 0.7% in Q1. US economic reporting is rapidly becoming a bigger joke than the Chinese Department of Truth.

Guest Post: Global Grand Policy Failure: Liquidity Traps And Financial Black Holes

All three Keynesian policies have been tried, and all three have failed completely. The massive "shovel-ready" fiscal stimulus caused a minor blip up in activity, but it did not spark any regeneration of borrowing and spending. All it did was enable further deleveraging as consumers and businesses struggled to pay down their crushing debt loads. As for devaluing the currency, the Fed's policies devalued the U.S. dollar 32% from the early 2000s, and 17% from 2008. Rather than spark a boom of spending and investment, this massive devaluation sparked a dramatic loss of purchasing power which households experience as high inflation. No nation ever prospered in the long-term by devaluing its currency. Devaluation is just another Keynesian "quick fix." Borrowing 40% of Federal spending didn't "fix" what's wrong with the economy? Then borrow 50%. That devaluation wasn't enough? Then takes the dollar down another 10%. These are the policies of debt-junkies, not legitimate long-term growth based on capital formation and productive investment.

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