Economic Alert: If You’re Not Worried Yet…You Should Be
There are some people who also believe that the private Federal Reserve with the Treasury in tow has the ability to prolong the worst symptoms of the collapse indefinitely, or at least, until they have long since kicked the bucket and don’t have to worry about it anymore (the ‘pay-it forward to our grandkids’ crowd) . I can say with 100% certainty that most of us will live to see the climax of the breakdown, and that this breakdown is about to enter a more precarious state before the end of this year. You can only stretch a sun-boiled rubber band so far before it snaps completely, and America’s financial elasticity has long been melted away. A pummeling hailstorm of news items and international developments have made the first half of 2012 almost impossible to track and analyze. The frequency at which negative information has surfaced is almost dizzying. However, a pattern and a recognizable motion are beginning to take shape, and, I believe, a loose timeline is beginning to form.
Headline Watch Begins: New Democracy's Samaras Says Willing To Tolerate Minority Government
As we warned, the EURUSD would surge on any headlines that a coalition pro-bailout government would be formed (the chances of which died yesterday when Samaras handed back the government formation mandate to the president). However the following...- GREEK CONSERVATIVE LEADER SAMARAS SAYS IS READY TO TOLERATE MINORITY GOVERNMENT - BBG
- SAMARAS SAYS SYRIZA STATEMENTS DON'T SECURE PLACE IN EUROPE - BBG
- GREECE'S SAMARAS SAYS DON'T WANT COUNTRY TO GO TO NEW ELECTIONS - BBG
- GREEK CONSERVATIVE LEADER SAMARAS SAYS I WILL NOT PUT SIGNATURE TO THE DESTRUCTION OF GREECE - BBG
Biderman Sums Up Europe's Problem In 30 Seconds
After
an extended and detailed rant against the BLS and their ineptitude,
which is worth watching in its own right, Charles Biderman (CEO of
TrimTabs) sums up Europe's troubles and hopes in 30 seconds. Towards
the end of the clip, Biderman notes that Monsier Hollande is
saying that governments should borrow more money so they can give more
money to more people and THAT will create economic growth. Instead, Charles sees Europe sliding down a slippery slope faster and faster with no end in sight.Art Cashin On "Greece In A Capsule"
Short, sweet, and cutting right to the chase.Fitch Sets The Stage: "Greece Leaving The Euro Would Be Bearable"
If French Fitch, which will first be Egan-Jonesed than downgrade France from its unmovable AAA rating is starting to say that the unthinkable, namely the departure of Greece from the Eurozone, would be "bearable", then things are about to get once again exciting, as this is merely setting the stage for the next leg down. Among the other google translated gibberish said by Fitch chief Taylor, here is the argument: Germany would merely soak up the damage caused by a Greek departure: "Greece's exit does not mean the end of the euro. Above all, Germany has a fundamental interest in preserving the common currency remains. Would the D-mark re-introduced, they would add value compared to other currencies strong. The export industry, that is: would the engine of the German economy, damaged. This will not allow Germany - even if one or more countries leave the single currency area." How about Italy's exit? Or Portugal's? Or Spain's? At what point does it become unbearable for German taxpayers to burn their wealth to preserve a system that virtually nobody but a few select career politicians demand?Stratfor On Europe's Growing Anti-Establishmentism
"The traditional political elites are losing control of the system they once dominated."
12 of the 17 member states of the EMU have seen their governments
collapse or been voted out in the last two years. As Stratfor's Kristen
Cooper notes, this is testament to the near political impossibility of implementing austerity and maintaining popular support.
The tough truth is that while voters initially turn to the mainstream
opposition they soon realize that they have little to offer that is
different and so radical, extreme, or previously marginalized political
parties will, and have done in Germany (Pirates) and Greece (Golden
Dawn) already, see an increasing share of the popular anti-establishment
vote and implicitly hamper any political solutions to the crisis that Europe awakens to every morning.Hyper Report – Running Out Of Cheese
Today’s Items:
The newly elected Communist leader in
Greece wants to stay in the EU. Wow! With all of that wonderful bailout
money, why not? Hell, this is an opportunity to turn up the spending
spigot in Greece even more. What could go wrong?
Incumbents were routed in some important
elections in Europe. Greece is plunging head-first into political
uncertainty. From the elections, fiscal responsibility is out and
insane government spending is in vogue in Europe now. With
out-of-control spending on both sides of the Atlantic, look for a race
to safe haven assets soon, and it will not be treasuries, bonds, or even
phony baloney cash… In short, keep stacking physical because
manipulation will only go on so long before reality kicks in.
April Retail sales are the worst since
2009. Year-over-year housing prices continue to decline despite record
low mortgage rates! The SGS-Alternate unemployment notched up from 22.2
to 22.3 percent in April. With so much economic bad news out, it is
hard for any free-thinking person not to notice that the economy is
heading south. Get ready for that offical QE3 announcement folks.
Between Food stamps, disability, Social
Security, and other government goodies, more and more people will be
caught in the proverbial mousetrap when the money either runs out or is
worthless. Do yourself a favor, and make sure that you do not fall into
this trap and if you are, try to get out by any means possible. For
example, multiple sources of self-made income will serve you, and yours,
well.
Here are a few…
1. Portfolio contains only one type of investment.
2. Hearing the same advice from 2008.
3. Weak inflation protection.
1. Portfolio contains only one type of investment.
2. Hearing the same advice from 2008.
3. Weak inflation protection.
The Roman Empire did not fall due to a
superior external military force, it fell because of its greed and
debasement of currency. As the financial infrastructure fell, so did
the social structure to the point that it became the beginning of the
dark ages. Like the Roman Empire, the U.S. Empire is about to see the
same consequence of abusing its currency; thus, it is a good idea to
prepare with enough; so that, starting over, will be a little less
painful.
Next…
Avengers
Avengers
Forgive me; however, I wonder why a good
blockbuster movie, like the Avengers, came out so early. Usually,
summer blockbusters come out during Memorial Day weekend. Is Hollywood
planning of a horrible summer, or do Hollywood execs know something we
do not?
(ed note) A great place to start is with our sponsors...I hope you are prepared...you're going to need it...
Watch Ron Paul Hearing On "Legislation To Reform Fed And Other Alternatives"
We
skipped the first part of today's hearing by the Ron Paul-chaired
Domestic Monetary Policy and Technology Subcommittee titled “Improving
the Federal Reserve System: Examining Legislation to Reform the Fed and
Other Alternatives” as one of the two panelists was Barney Frank, which
immediately meant it would be a complete and utter waste of time, and
everyone would walk away far dumber from it, with god likely not having
mercy on anyone's soul. The second part however promises to be far
more interesting featuring such names as John Taylor (not the FX
Concepts Taylor or the musician), James Galbraith and Alice Rivlin.
While everyone knows wha has to be done about the Fed, the likelihood
that this will happen before the Big Reset is zero, but at least people
can talk, dream and speculate. Watch the live webcast for more of the
latter.Invisible Hand Smiling Again
Eric De Groot at Eric De Groot - 1 hour ago
The invisible hand which repositioned for a paper attack in gold and silver
weeks ago is smiling again today. Its relentless effort to cover its short
position here and now suggests something big on the horizon. The current
decline will end when either the paper supply positioned weeks in advanced
is consumed by new paper demand, thus, rearranging control of the trend
from weak to strong...
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content, and more! ]]
Stocks: Bulls Should Be Concerned
Admin at Marc Faber Blog - 1 hour ago
“Someone very bullish about stocks should be very concerned.” - *in CBS
MarketWatch*
Related, SPDR S&P 500 Index (SPY), iShares MSCI Emerging Markets Index ETF
(EEM)
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
The Surprise Is Going To Be How High The Price Of Oil Stays And How High It Goes
Admin at Jim Rogers Blog - 1 hour ago
I do know that the world's known reserves are declining and unless the
world finds a lot of oil in accessible areas very quickly, the surprise is
going to be how high the price of oil stays and how high it goes. If Spain
goes bankrupt next month, every thing, including oil, is going to go down.
But if that happens, I would urge you to buy a lot more because the price
of oil over this decade is going to go much higher. - *in ET*
Related, United States Oil Fund ETF (USO)
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featu... more »
Never Mind Europe. Worry About India
Eric De Groot at Eric De Groot - 3 hours ago
India, one of the world's largest economies, has been struggling without much recognition since 2008. Indian stocks slammed through major support in 2008. After a counter trend rally from 2009 to 2010, they broke to new lows in 2011. This development could one of many cautionary flags yet to be raised as we approach an important cycle date in 2015. Chart: Morgan Stanley... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]
Is EURUSD 1.20 In The Cards?
Given
both the ECB (we must give LTRO time to work) and the Fed (it would be
reckless to risk inflation for a few jobs) appear to be disappointing
the addicts in the equity markets, perhaps it is time to reflect on
what the relative size of the Fed and ECB balance sheets say about the
new normal fair-value for EURUSD. Given the current levels, it appears
1.20 is not such a leap of faith here. Or alternatively, assuming all
else equal, the market is obviously still pricing $700 billion in more QE by the Fed.Heeeeere's Goldman... With Renewed Calls For A June QE Announcement
The only relevant section from a just released note by Jan Hatzius titled "Still Dreary" (guess what he is referring to), is the following: "we have stuck with our forecast of some additional monetary easing at the June 19-20 FOMC meeting for now, despite the less-than-encouraging noises from Fed officials in recent weeks. However, it is a close call, and we worry about a re-run of the 2010 and 2011 experience—the last two times Fed officials decided to let a purchase program lapse without having put a successor program in place. In both cases, the economy slowed and financial conditions tightened to a degree that pulled them back into the market before long. It is easy to see how this could happen again, given the renewed turmoil in Europe and the possibility that US markets will ratchet up their concerns about the impending fiscal cliff in the run up to the election. In such an uncertain environment, taking out a bit more insurance still looks like the sensible choice for US monetary policymakers." Replace "US monetary policymakers" with "banker bonuses" and you get the picture. And here is our free tip to Goldman: the Fed has finally understood that in order to surprise the market with more easing it has to, gasp, surprise the market with more easing (and banks obviously have to play along and all act like they don't expect more easing, wink wink). Don't worry Jan - Bernanke knows the game plan and will not leave you hanging. However, as has been constantly repeated, there first has to be a deflationary scare before any announcement: such as oil crumbling, gold plunging, and stocks tumbling. Kinda like today. Who whouda think that Greece would serve the role of Lehman... over and over and over. In the meantime keep an eye on Bill Gross holdings of MBS securities when the April update is announced shortly- we fully expect a new all time record high, not to mention an imminent Hilsenrath Op-Ed suddenly hinting that, forget Twist, the Fed is now outright contemplating full blown MBS and UST LSAPs all over again. Because this time it will be different.BTFD...Gold and Silver is on Sale...
As China Buys, Sellers Push Gold Down To 4 Month Lows
Gold
just lost the $1600 handle for the first time since January 5th and is
suffering its biggest one-day loss in over two months as Europe's
meltdown is driving broad liquidations. Are hungry Chinese central bankers more than happy to soak up the precious metal at a discount from levered longs liquidating into the European fiasco?"Uncivilized" China Quietly Building Gold Reserves As Gold Imports From HK Soar By 587% In First Quarter
A
month ago we ended up with the hilarious situation where the US was
actively considering releasing petroleum from the Strategic Petroleum
Reserve even as China was demonstratively and concurrently adding to its strategic inventory.
Now, as the developed world is seeing day after day of gold hammering
on amusing flights of fancy that central banks won't be forced to
engage in more and ever bigger rounds of monetary dilution, and where
the seller apparently has no regard for getting a "good" price, but
merely seeks to crash the bid stack slams various PM prices, we see the
same inversion with gold. Because as Bloomberg reports, "Mainland
China's gold imports from Hong Kong surged more than sixfold in the
first quarter, to 156 metric tons, adding to signs that the country may
displace India as the world's largest consumer of the precious metal
on an annual basis." And the punchline: "The purchases through
Hong Kong may signal that the mainland is accumulating reserves,
London-based brokerage Sharps Pixley Ltd. said in February. The nation
last made its reserves known more than two years ago, stating them at
1,054 tons." Yep ladies and gents: the PBOC is very grateful
that it can add hundreds of tons of gold to its reserve holdings in a
stealthy operation which it will announce only after its conclusion, at
which point, like true 13F chasing lemmings, retail will send gold
soaring. But in the meantime, dear hedge funds worried about your margin
calls and 1 month performance reports, please proceed calmly along
with the lemming herd, and keep pushing gold lower and cheaper for our
new Chinese overlords, and for everyone else who, without P&L
timing constraints, takes delight in such brief arbitrage
opportunities.Greek Stocks Plummet To 20-Year Lows
The Athens Stock Exchange broad index of Greek stocks just dropped to its lowest level since 1992.
It is now around 90% lower than its 1999 and 2007 peak levels. The
index of Greek banking stocks is rumbling along the lowest levels on
record down over 97% from its 2007 highs. Where is the Greek Whitney Tilson (or Dick Bove) when they need him?On Europe's Phantom Austerity Spending Cuts
When
you were a child and did something wrong, the worse possible words
your mom could say were "wait til your father comes home!" and that
dreaded anticipatory angst is what Europeans must be feeling now as the
threat of austerity hangs like the sword of Damocles over their heads.
The reason we say this is that in fact, as Veronique de Rugy of National Review Online notes, the 'savage' spending cuts in Europe have yet to show up anywhere.
All the rhetoric of how Europe's austerity has failed, all the
hand-wringing and election-winning, and yet all the major nations are
spending more than pre-recession levels; France and the UK did not cut
spending at all, and even in Greece and Spain cuts have been small (and
any meaningful reforms failed to be implemented). In fact, the
epicenter of the current meltdown - Spanish banking - has seen only
de-minimus headcount reduction over the past few years - so who is
tightening their belts? The trouble, of course, is that while the
threat of austerity has struck fear in the hearts of every European
voter, the action of raising taxes has hurt just as
much and perhaps the "trumpeting the failure of austerity as a reason
to go full-Keynesian again" chatter will recede as facts overtake
fallacies. As Mark Grant recently noted, there's a big divide between austerity pledged and austerity implemented, as it appears its more about raising taxes than cutting spending.Greek Left Coalition Leaders Says Bailout Accord "Null And Void", Demands Greek Debt Moratorium
Hardly a surprise to anyone, but here it is black on white - Greece officially makes the odds for a Euro departure well over 50%:- TSIPRAS SAYS GREEK RESULTS MAKES BAILOUT ACCORD NULL AND VOID
- TSIPRAS SAYS GREEKS HAVE VOTED AGAINST BARBARIC BAILOUT
- TSIPRAS SAYS WON'T JOIN A GOVT OF NATIONAL SALVATION FOR LOAN
- TSIPRAS SAYS GREEKS HAVE ENDED PLANS FOR ADDITIONAL AUSTERITY
- TSIPRAS ASKS VENIZELOS, SAMARAS TO RENEGE PLEDGES IN WRITING
- GREECE'S TSIPRAS SAYS WANTS INTERNATIONAL COMMISSION TO INVESTIGATE IF GREECE'S DEBT IS LEGAL
- TSIPRAS SAYS MUST BE MORATORIUM ON GREEK DEBT PAYMENTS
Turkey Exports “Massive Quantities Of Gold” To Iran And Arab Spring Nations
While Turkey has assured the U.S. government it will cut purchases of oil from Iran by 20% this year, its total trade with the Islamic Republic increased 47% to $4.8 billion in the first quarter from a year earlier. Sanctions aimed at isolating Iran because of its nuclear program, combined with revolutions in the Middle East, have spurred a tripling in the region’s purchases of Turkish precious metals and jewels to $942 million in the first three months, from $282 million in the same period last year. This 30% increase in demand is contributing to gold remaining above $1,600/oz in what has all the hallmarks of another period of consolidation prior to higher prices. “Turkey is exporting massive quantities of gold to Iran and Arab Spring countries as citizens in those countries switch to portable wealth,” Mert Yildiz, chief economist for Turkey at Renaissance Capital, told Bloomberg on April 30. The increase in trade with Iran comes as sanctions make it harder for trading partners such as Turkey, India and China to pay in dollars and euros. Iran said in February it would accept payment in any local currency or gold. Reuters report today that Iran is accepting payments in yuan for some of the crude oil it supplies to China, the Iranian ambassador to the United Arab Emirates said on Tuesday. "Yes, that is correct," Mohammed Reza Fayyaz told Reuters when asked to comment on an earlier report in The Financial Times.Daily US Opening News And Market Re-Cap: May 8
European equity markets are seen trading in negative territory across the board at the midway point as the lack of a Greek governing coalition continues to weigh on sentiment. As such, an earlier Greek T-Bill auction passed by with an unsurprising increase in borrowing costs for the country. The concern over sovereign debt is clear elsewhere, as the spread between peripheral 10-year government bond yields remain wider against the German Bund. Very strong German Industrial Production data has failed to provide relief for the DAX index as concerns on the periphery outweigh the strength in the core. The monthly reading for March beat expectations, coming in at 2.8% against estimates of 0.8%. Overnight reports from the Spanish press concerning a government intervention in the lender Bankia have been denied by the Spanish Ministry, commenting that the aim for the company is a cleanup and restructuring, not a seizure. EU’s Almunia has commented on the developments, saying that it seems likely the bank will receive state aid.Overnight Sentiment: Straws Cracking
Confirming that the market is now completely insane is a rehash of the actual catalyst data flow: recall that yesterday the one thing that pushed stocks higher, as described in Clutching at Straws, was the surge in German factory orders. Today, we get another huge beat of expectations in German Industrial Production and everything is red. Although now that US traders, most of them originating at Liberty 33, are starting to walk in, we may get yet another of the much anticipated and largely loved turns from a blood red premarket to green everywhere.Frontrunning: May 8
- It just get worse and worse: After McClendon's trades, Chesapeake board gave blessing (Reuters)
- Iran Accepts Renminbi for Crude Oil (FT)... which is not news: recall China and Iran Bypass Dollar from July 2011
- As Gas Prices Fall, a Sigh of Relief (WSJ)... so now people can direct their disability payments to where they belong: extra fries
- Greece Braces for a Repeat of Elections (FT), as first predicted by Zero Hedge, this will be a recurring affair
- China dissident Chen says officials must face justice (Reuters)
- Merkel Urges Athens to Stick With Reform (FT)
- Hollande’s Win is a Chance for Change (FT)
- U.K. Manufacturers Expect Exports to Rise (WSJ)
- U.S. Says Bomb Plot Disrupted Before Public Threatened (Bloomberg)
- Santorum Endorses Romney as Republican Nominee (Bloomberg)
- Beijing May Host OTC Market (China Daily)
- India Delays Tax Avoidance Laws (FT)
European Spreadwatch Alert As Italian Bank Borrowings From ECB Rise To New Record
It may not be a big rise, but the €1 billion increase in Italian bank borrowings from the ECB, from €270 billion to €271 billion in Apirl as just reported by the Bank of Italy, is still a record, and not one Italy should be proud of. The Spanish bank update is pending and will be out in a few days, although if the recent about face by Rajoy, admitting the Spanish banks are about to be nationalized, which today is no longer sending the markets higher, is an indication, it won't be a vast improvement. Sure enough, the fact that the market's attention is once again drawn to an indicator of the PIIGS financial sector insolvency is not good for sovereign spreads and at last check everyone was wider, core and periphery together, as Spain was+5.3 bps, Italy +3.8 bps, Netherlands +0.3 bps, and France 1.8 bps. Even the futures are shocking not green on more bad news.
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