Monday Will Not Be The End Of The World, Sorry

Perhaps all of this has gone on for so long, or perhaps because we keep hearing the cries of “Wolf” each week for the last several years, that the markets are impervious to any new cries for help. An odd kind of complacency seems to have set in where nothing matters too much and everything will just be fine. Yesterday’s equity market rally based upon the central banks providing liquidity is just what any serious observer would expect and yet the stock markets rallied as if this was something out of the ordinary which clearly demonstrates either the market’s lack of understanding of real world events or it represents the hype of some hedge fund that was tossed around in the media like it was a new product at Apple. In any event, don’t wake up on Monday morning and think that Greece will have left the Eurozone and returned to the Drachma. That is not how things will play out. In the final analysis it probably all comes down to what price the Germans are willing to pay for dominating Europe.

Overnight Sentiment: Calm Before The Storm... With A Surprise Twist

If yesterday's global intervention rumor was a feeler of market response to the next latest and greatest intervention then we may have big problems: the EURUSD is now unchanged, Spanish bond yields are now unchanged, stocks are doing their quad witching thing which means all stops will be taken out before the day is done, but most importantly the euphoria such an announcement would have created before is now completely gone (as per The Diminishing Returns Of Central Planning). What is actually worse, and how the G-20 rumor may have backfired, is that as we pointed out, suddenly there has been a significant shift in expectations: if Syriza does not have an outright win on Sunday then there will be no immediate central bank response, which was predicted to be "if needed". Remember: for this market, when all that matters is the next 10 minutes of trading, this is the only relevant metric. Which means that suddenly from a Risk On event, Syriza's loss has become Risk Off! Of course, the reality is that Sunday will almost certainly be a replay of the last election, where the parliament continues to be empty, and Greece continues to be "Belgium" - recall from May 3, "Previewing The First Of Many Greek Elections." In either case, as others have suggested holding on to positions over the weekend may not be the most prudent thing.

The Fed's Secret Phone Menu

Very few know about the Federal Reserve's "other" phone number. You know, the one reserved for those in the innermost ring of power. Someone gifted me the number, and I found it offered up the most curious menu of choices:

Energy Prices Outlook: Crude Oil & Natural Gas

Admin at Jim Rogers Blog - 55 minutes ago

Related: United States Oil Fund (USO), United States Natural Gas Fund (UNG) * * *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.*

 

Follow the Money, Not the Hype

Eric De Groot at Eric De Groot - 1 hour ago

Investors are often forced in and out of markets by reactionary headlines. Expect the Greek elections and surrounding hype to push around global markets over the short-term. Long-term capital flows, however, ignore noise and focus on the messages of the markets. The collective message illustrated in the charts below has been one of negative divergences and risk-off money flows since late... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Taxes Are Already Going Up, The Formula Slowly Weakening

Eric De Groot at Eric De Groot - 2 hours ago

'Temporary' taxes increases designed to prevent a nasty fall from the fiscal cliff have a history of stickiness once enacted. In other words, temporary quickly becomes permanent when motivated by self-preservation, greed, and the sheer size of the cliff ahead. The counter trend rally in the US federal budget (the Formula) represents the calm between storms. The world's sovereign debt crisis... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Greece Sinks Into Despair: 'There's Nothing Here Anymore'

Eric De Groot at Eric De Groot - 3 hours ago

No election outcome in Greece will reverse the flight of capital from the Euro zone's weaker members and the Euro in general. While the world markets rose on speculation that central banks stand ready for coordinated action yesterday, they could just as easily reverse those gains in the future based on reality that Germany will not be swayed by quick fixes and the historical tendency of... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

The Average Age Of A Farmer In The US Is 58

Admin at Jim Rogers Blog - 4 hours ago

More people study public relations in this country then study agriculture. The average age of a farmer in the US is 58. - in CNBC *Related: Potash (POT), Mosaic (MOS), John Deere (DE), PowerShares DB Agriculture Fund (NYSE:DBA), ELEMENTS Rogers Intl Commodity Index - Agriculture Total Return ETN (NYSE:RJA) * *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.*

Primary Dealer Treasury Holdings Soar To Record

Whether it is the need to soak up all of the Fed's sub 3-year sold on an almost daily basis by the Fed courtesy of Operation Twist (which despite ending in 2 weeks, has already brough the average SOMA holding maturity to a record 105.5 months despite the Fed's implicit target of 100 months, meaning the Fed has overshot its duration ramping target by a lot), or because dealers are suddenly very concerned with having equity exposure, in its last update, the NY Fed has disclosed that as of June 6 Primary Dealers held a record $128 billion in Treasury holdings, a massive 41% increase over the prior week's $91 billion. Whatever the reason, Dealers are now firmly into Trasurys, having increased their net holdings across the curve by $170 billion from -$48 billion last April. And just as notably, for the first time since May 2010 Dealers held no offsetting short positions anywhere on the curve. In conclusion: absolutely everyone is now on the same side of the UST trade.

What Are Bonds Worried About That Stocks Aren't?

Equity markets remain exuberantly willing to carry risk into the weekend on the "it's discounted" argument or the "Central Banks will save us" scenario. However, it appears investors are more anxiously buying Treasury bonds into the weekend as safe-haven flows continue (and Spanish bond yields press back up to 7%) and Swiss 2Y rates hold at -32bps. Euro strength on repatriation flows and stocks diverging from risk-assets in general make us nervous for this rally holding (especialy given the underperformance of financials from the open).

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Consumer Confidence Plunges, Biggest Miss Since February 2006

Following misses to expectations in every single economic data point for the past week, not to mention today's Empire Index, Industrial Production, and Capacity Utilization we just got the latest June University of Michigan Consumer Confidence number which, lo and behold, printed at 74.1 on expectations of 77.5, and a plunge from May's 79.3. In brief, this was the biggest miss to expectations since February of 2006. If this latest economic datapoint abortion does not send the market soaring, nothing will.

Cashin's Cliff Notes Of Bernanke's Playbook

Earlier in the week, UBS' Art Cashin noted that some traders were re-reading Bernanke’s speech of November 21, 2002 on countering inflation. Prior re-readings had given clues on things like QE1 and even Operation Twist. The primary theme of the speech was - what can the Fed do to fight deflation (and stimulate the economy) if the Fed Funds rate fell to zero (aah, those simple golden years). Cashin points out that most of the operations, however, tend to be means to make money available or easy. With nearly $2 trillion in excess free reserves that doesn’t seem to be the problem. Inducing spending is the problem. Of all the suggestions, the wider inflation tolerance may be the only one that may do that.

The ECB Has Stopped Preparations For A Collateral Management Program

This just crossing the streams:

• ECB TO STOP PREPARATIONS FOR COLLATERAL MANAGEMENT PROGRAM

We have no idea what this means, but rumor is that the ECB finally looked at its "collateral" and found a picture of the Athens Ministry of Finance...

Gold Stop Hunt Goes Full Retard

Did a BIS gold trader just spill coffee on his keyboard not once but twice, or did we just have another ye olde algo trick of stopping the hunts (get it?) out of all marginal players? We will never know. What we will know is that paper prices of physical objects are becoming increasingly more meaningless.

Plunging Empire Manufacturing Index Confirms Ongoing Economic Slide, Imminent Central Planner Intervention

Recall last month's soaring Empire Manufacturing Index which jumped far above all expectations, and was the last of the "baffle them with bullshit" series? Well no more need for baffling: we are in NEW QE mode. In June the Empire Manufacturing plunged from 17.09 to 2.29, on expectations of a 12.5 print: the lowest in 7 months. Confirming the crash in the economy, New Orders, Shipments, Unfilled Orders, Inventory, Prices Paid, Prices Received, Employees and Workweek, or all the subcomponents were lower in June than in May. Gold soars as the NEW QE becomes more and more obvious on the horizon, as there has now not been an economic indicator beat in weeks. So much for the 2012 recovery. Without the central banking CTRL-P'ing, the US, or any other country, continues to be in free-fall mode. Hopefully that can kill any debate about a "virtuous cycle" once and for all.

Gold Will Be Top Performer in 2012 - UBS Poll Of 8 Trillion USD Official Sector

More than 80 institutions with collective assets under management of over $8 trillion attended the event and were polled regarding macroeconomic matters and their outlook for various asset classes. Gold is seen as one of the assets likely to outperform again in 2012 due to risks posed to the euro and longer term risks for the dollar. Those polled by UBS were also positive on emerging market debt. Both asset classes, gold and emerging market debt, were the top pick of 22.5% of the assembly – thereby accounting for 45% of the votes. On gold’s role as a reserve asset, the importance reserve managers attach to the yellow metal has slipped back to 2009 levels, with about 14% having the opinion that it will be the most important reserve currency in 25 years. This marks a decline from the past two years’ surveys wherein over 20% viewed gold to be the most important reserve currency.

Daily US Opening News And Market Re-Cap: June 15

The announcement by the UK Treasury and BoE to take co-ordinated steps to boost credit and with the central bank re-activating its emergency liquidity facility has resulted in a sharp move higher in UK fixed income futures. GBP swaps are now pricing in a cut of 25bps in the base rate by the end of this year and following on from Goldman Sachs, analysts at Barclays and BNP Paribas are now calling for an increase in QE next month. The new measures have seen the likes of Lloyds Banking Group (+4.3%) and RBS (+7.0%) outperform the more moderate gains observed in their European counterparts. Meanwhile in Europe the focus remains on the possibility of co-ordinated action from the major central banks. However, it would seem more realistic that any new measures will likely come after the Greek election results are known and once ministers have conducted their G20 meetings. Given that there is an EU level conference call this afternoon scheduled for 1500BST the likelihood of rumours seem high but as the wires have indicated already these conversations are purely based upon co-ordination ahead of the meeting which is usual practice. The yields in Spain and Italy have been a lot calmer so far with the 10yr in Spain at 6.88%, off the uncomfortable test of 7% seen yesterday.

"A Matter Of Life And Death": The Collapsing Greek Health-Care System Is In Critical Condition

While by now virtually everyone around the world is intimately familiar with the nuances of Greek electoral law, knows the names of Greek politicians better than of those at home, and is all too aware of the broader media propaganda that unless Greece does as the banks demand the world as we know it will end, one aspect of the Greek collapse into hell has gotten lost: the complete failure of the Greek healthcare system. As the following Reuters report shows, regardless of the outcome on Sunday, it just may be too late to preserve the future of Greek sickcare, and with that, of the entire population: "The country's state hospitals are cutting off vital drugs, limiting non-urgent operations and rationing even basic medical materials for exhausted doctors as a combination of economic crisis and political stalemate strangle health funding. "It's a matter of life and death for us," said Persefoni Mitta, head of the cancer patients' association, recounting the dozens of calls she gets a day from patients needing pricey, hard-to-find cancer drugs. "Why are they depriving us of life?"" They are depriving of you of life, Persefoni, because in old times, when a given country was enslaved, there was a specific aggressor that the people could revolt against. Now, when the slave-master is debt, and thus one's own desire to live beyond their means, it is far more difficult to look in the mirror and to revolt against what one sees. Which is why, one day at a time, the Greek civilization will continue to suffer the terminal consequences of infinite debt serfdom, until finally, after two thousand years, it no longer exists.

The Diminishing Returns Of Central Planning, And Why More Printing Would Have No Impact

Now that all the rage is now just the NEW QE, but global coordinated NEW QE, it would make sense to observe the impact the last three episodes of quantitative easing, QE1, QE2 and Twist, have had on the market. And more importantly, whether such impact is rising, dropping, or staying the same. Well, as the following chart from BofA shows, we may be lucky if there is any favorable impact on risk assets following the announcement of more easing, and incidentally perhaps global easing is what is necessary (if not sufficient) now that the devaluation of the US dollar has become an exercise in futility. Because it now appears that only an absolute currency devaluation would work, not a relative one. What is another way of saying this: a global devaluation of all currencies relative to some benchmark... say gold. Most importantly, the only question now is how long before the entire "global intervention rumor" is faded, and what happens when the market realizes that suddenly, Syriza not winning the Greek elections is the downside case as it would mean no coordinated central bank intervention. Great job central planners - you have just shot yourself in the foot once again.







Today’s Items:

First…
We Are Within Months of This Crisis Blowing Wide Open
http://kingworldnews.com

Many are coming to the inescapable conclusion that the euro is on its last legs.  People, who see this and understand it, are moving into gold and silver.   From bank runs to holidays, the economic rot is hitting the core.  The core is Germany and ultimately the U.S.; therefore, get ready.

Next…
Jobless Claims on the Rise
http://finance.yahoo.com

The number of Americans filing for first-time unemployment benefits climbed last week to 386,000.  That additional 11,000 was unexpected.  They keep using that word.  I don’t think it means what they think it means.  Nearly 3.3 million people filed for their second week of unemployment benefits.  Of course, officials are using the Euro-zone crisis as a scapegoat to deflect blame.

Next…
U.S. Foreclosures Up
http://www.reuters.com

U.S. robo-signing foreclosure starts rose year-over-year in May for the first time in 27 months.  The $25 billion settlement between major banks and states in April is now a thing of the past as banks began the foreclosure process on 205,990 properties in May, a 9.1 percent increase from April.

Next…
Physical Silver Demand Heading Higher
http://www.goldmoney.com

Even though the manipulated price of silver has been in the proverbial basement, demand has been going up. Yearly silver production, from mines, and recycling is about 1 billion ounces; however, demand is only a hundred million less.  With events in the Euro-zone, the Mideast, the far east and here in the U.S., demand for silver will escalate because it is increasingly viewed as a monetary money.  To that end, after preparing, keep stacking physical.

Next…
Preserving Freedom from Unwarranted Surveillance Act
http://thehill.com

Senator Rand Paul has introduced a bill that would prevent unwarranted government intrusion, by drones, on Americans. S. 3287 would require the government to obtain a warrant to use drones with the exception of patrolling national borders.  With that said, do not expect any other senators, on both sides of the isle, to support freedom or the U.S. Constitution.

Next…
Event at Grocery Store
http://www.abovetopsecret.com

Please read this little story about what happens when a glitch hits a local grocery store.  See how the people react when they cannot pay for their food.  See how they react when the only ATM, after a few withdrawals, goes down. When reading this story, imagine, not just one store, but entire cities. Exciting would not be a word to describe what happens.

Finally, Please prepare now for the escalating economic and social unrest. Good Day

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