Germany Steals Draghi's Bazooka Before The Main Event As Monetization Mutiny Grows

With one day to go until the European soap opera hits its peak, and with the ECB doing all it can to spread disinformation and sow discord and disunity between Germany and everyone else on both the ECB governing council and everywhere else, Germany has decided to again make it clear just where it stands on the topic of hyperinflation and other printing matters. The punchline:

• ECB'S DRAGHI DOESN'T HAVE 'TOO MUCH' SUPPORT FROM MERKEL, MERKEL BACKS WEIDMANN
• ECB CAN ONLY BUY BONDS ATTACHED TO CONDITIONALITY

But wait, there is much more. Readers may recall that yesterday that one of the articles we pointed out came from Dutch Dagblad which suggested that it was Weidmann who was isolated on the ECB governing council, and that the Dutch member of the ECB council Klass Knot as well as all other members was "for buying government bonds of Southern European countries." Well, prepare to be shocked, because what kind of soap opera would it be if it wasn't for unexpected narrative plot lines. Today, Frankfurt-based Market News reported precisely the opposite, and not only is Knot on the same side as the Germans, but so are virtually all the other "virtuous" European countries, aka the non-beggars.

Chuck Norris, Who Cuts Through A Hot Knife With Butter, Refuses To "Stand On The Sidelines For Socialism"

While the Clint Eastwood clip was a solid 8 out of 10 on the weirdness chart, it took the man who, as everyone knows, scares all charts away, and who singlehandedly burst the dot-com bubble, to put things in perspective to the evangelical crowd. Because, while Waldo may be hiding from Norris, Norris will no longer hide from what he terms "socialism or something much worse."
 

 Overnight Summary: Quiet Before The Printing Storm

After opening on a very weak note, it was only expected that following some even weaker economic news overnight which continue to confirm the global turn into a sharp recession, futures are doing all they can to remain unchanged, and in some cases are even green as the traditional Pavlovian reaction kicks in: the worse the news, the likelier the intervention. Of course, the market's dogs are ignoring the fact that right now both gas (never higher on this US day in history) and food prices are surging and the central planners are quite aware of this, not to mention the US presidential election, although at this point nobody really believes that the Fed is impartial so that is a secondary consideration, even as actual fundamentals continue to deteriorate and the spread between cash-flow implied valuations and central bank set risk prices has never been wider. Which brings us to the overnight session, which is slowly picking up in activity but is nothing compared to what will be unleashed tomorrow early in the morning and continuing likely through the end of the year.

German 10 Year Bond Auction Suffers Technical Failure

This morning, Germany attempted to sell €5 billion in 1.5% 10 Year bonds. It sold just €3.61 billion directly to investors (who had submitted a less than auction clearing €3.91 billion in bids), forcing the German Treasury to retain 27.8% of the auction, €1.39 billion: the highest retained amount since November 2011 when it was 39%. For one reason or another: the yield was too low at 1.42% (compared to the 1.634 average), there was much more supply elsewhere, fears of what the ECB will do tomorrow, or who knows - the real bid to cover was a paltry 0.79 (all in BTC 1.09 including government retention) compared to 1.57 at the last auction and a 1.31 average at the past 4 auctions. In other words the auction was for all technical reasons, a failure, and only the second such "failure" of 2012. The immediate reaction was Bund futures down 22 ticks at 143.28 vs 143.70 before auction as the market digested the surprising disappointment, with the German 10-year government bond yield up 2.4 basis points at 1.41 percent vs 1.37 percent before auction. In summary, if the Germans needed any more reasons that funding the insolvent Eurozone at all costs up to an including debt monetizations, which may result in failed bond auctions for German itself, are not in their best interest, they just got one. The good news: in an email sent out immediately by the German Finance agency, the bond sale was "not a risk to the budget." Wouldn't want a failed bond auction to jeopardize the budget now.

Does the Iranian Government Have A Right To A Nuclear Bomb?

The heightening tension between the United States government and Iran’s is based off of the fallacious notion that nuclear weapons have a legitimate purpose outside of killing enormous amounts of people.  Yet they have no other real purpose in the end.  Governments possess nuclear weaponry because there is little recourse for state-sanctioned murder.  The millions of innocent lives that stand to be vanquished off the face of the Earth have little meaning to the power-tripping political elite.  So while the Iranian government’s pursuance of nuclear weapons should be condemned, the United States government, the Israeli government, and others capable of waging nuclear war are in no place to criticize.

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Some European Stocks Are Now Very Inexpensive

Admin at Marc Faber Blog - 10 hours ago

The European markets, some of them like France, Italy, Spain, Greece and Portugal, two months ago were either below the 2009 low or close to the 2009 low on the S&P 500 Index that would be the equivalent of 666 (index points). So relative to other markets, some European stocks are now very inexpensive. - *in ET.com* * * *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

 

I Am Looking Around Japan

Admin at Jim Rogers Blog - 12 hours ago

But at the moment, some stock markets, like the United States stock market is within striking distance of all-time highs. That is not a time to get very excited about things, but if and when some big stock markets around the world collapse, I would have to start getting more interested. Japan, for instance, is down nearly 80% from its all-time high. So I am looking around Japan. Certainly we have to look at Japan than at other places. - *in ET.com* Related: S&P 500 Index, Nikkei 225 Index *Jim Rogers is an author, financial commentator and successful international investor. He has ... more » 

 

Another huge run on Spanish banks/Sovereign Spain left with only 23 billion in the kitty/The wars of words between Draghi and the Bundesbank continue/

Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 13 hours ago

Good evening Ladies and Gentlemen: Gold closed at par today at $1693.00  which also includes the gain of 3 dollars from Monday.  Silver again had a stellar two days by rising 36 cents today and 10 cents in European trading on Monday. The big story for the past few days have come from Spain.  They have released data showing that in July over 74 billion euros left the banking system for greener

 

Gold Daily and Silver Weekly Charts

SP 500 and NDX Futures Daily Charts - Macro Jitters

Excerpts of Alleged Letter from Troika to Greece

Gold Hits $1700, Eases off a Bit

Trader Dan at Trader Dan's Market Views - 18 hours ago

Gold bulls managed to push the yellow metal to the psychologically significant $1700 for the first time in months. As can be expected, it could not hold ABOVE the level as selling from both fresh short sellers and some profit taking from longs, surfaced on the first approach to this round number. Gold has a history of pausing around these even or round numbers, retreating, consolidating a bit, and then pushing through and moving to the next resistance level on the charts. It looks to me like the weakness in the gold mining stocks in today's session, which are feeling spillover from... more » 

 

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

Why Gold Is Going Much Higher

Dave in Denver at The Golden Truth - 18 hours ago

*I believe it’s going a lot higher…it’s going to have a parabolic spike, caused by some event or some loss of confidence…a US dollar crisis would be a perfect example. That will cause gold to go through the roof, and then everybody will want to own it…I don’t think we’re even close to that yet…Gold will probably have a much greater run than some of the other hard assets–because it’s also a currency *- Frank Giustra, mining industry entrepreneur (one of the "architects" of Goldcorp) That quote is from an incredible interview with Frank Giustra. Well worth hearing: LINK My busi... more » 

 

Coordinated Global Liquidity Injection

Eric De Groot at Eric De Groot - 19 hours ago

Last Thursday’s test of the 8/03 support gap on lighter volume was a bullish setup. There could be numerous tests of this support. Watch volume to reveal if downside force is weakening. Perhaps smart money smells a coordinated global liquidity injection around the corner. Chart: Dow Industrials ETF (DIA) ------------------------------------- Insights... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

 

Federal Reserve has already started QE3, says investor Jim Rogers

Eric De Groot at Eric De Groot - 20 hours ago

As the boys from down might say, gold and silver are ready to "Shake A Leg" (see selected audio). When asset destruction (debt implosion) equals or exceeds asset appreciation (liquidity) during a global debt crisis inflation is avoided as long as the core economy(ies) can sell bonds. When the ability to sell bonds is lost as confidence fails, the equation tilts towards... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

 

Federal Reserve: Assets Are Building On Their Balance Sheets

Admin at Jim Rogers Blog - 23 hours ago

I know they are going to print more money. They already are. If you look at their balance sheets, you will see that something is happening, assets are building on their balance sheets and they are not coming from the tooth fairy. So I do not know whether they will announce it or not. They are a little bit embarrassed because they announced QE1 and QE2, and it did not work. So they may try to discuss it. They may just continue to do it without getting egg on their face again, but they are going to print money, they are all going to print money. It is the wrong thing to do, but that i... more » 

Visualizing The Political Importance And Truthiness Of The Payroll Report

With the current lackluster economic trends and job outlook, unemployment and salary figures are tossed around left and right; figures can make or break a politician's career. The Non-Farm Payroll report supplies these numbers, and its monthly findings impact global economic performance expectations - but its reporting (as we have been vociferous about) on unemployment rates and job outlook are skewed to paint a falsely healthy picture of the economy. The following info-graphic sheds more light how the 'official' unemployment figures are much lower than they really are.

Is The Fed Responsible For The Great Financial Crisis?

"Recessions are a natural economic feature and their regular occurrence is healthy and indeed essential," is how Deutsche's Jim Reid introduces his investigation into post-Fed un-natural business cycles. Without them there is a serious danger of bubbles and the misallocation of resources as the further market participants detach themselves from the last downturn the more they tend to under-estimate risk. We, like Jim, would argue that the reason the Great Financial Crisis was so deep was due to the authorities continued refusal to let the business cycle take its natural course. The three 'super-cycles' between 1982 and 2007 were the exception rather than the norm, one where Central Banks and Governments had almost total flexibility over policy. Not only are we battling with the huge structural problems that the post-credit crisis world brings, we are fighting it without much policy flexibility and are indeed being forced into a reversal of stimulus at arguably exactly the wrong time. So it all adds up to a return to more normal length business cycles in our opinion - or perhaps even shorter.

The Bernank: "We Can't Really Prove It, But We Did The Right Thing Anyway"

It is amazing how big an effect a rambling, sleep-inducing speech by a chief central planner can have on financial markets in the short term. Nonetheless, the speech contained a few interesting passages which show us both how Bernanke thinks and that people to some extent often tend to hear whatever they want to hear. Bernanke noted that although he cannot prove it, econometricians employed by the Fed have constructed a plethora of models that show that 'LSAP's (large scale asset purchases, which is to say 'QE' or more colloquially, money printing) have helped the economy. In other words, although no-one actually knows what would have happened in the absence of the inflationary policy since we can't go back in time and try it out, the 'models' tell us it was the right thing to do. However, some indications would suggest that mal-investment is higher than ever - and accelerating - as the production structure ties up more consumer goods than it releases, an inherently unsustainable condition; additional expansion of money and credit will only serve to exacerbate the imbalance.

Financials Hide Analysts' "Earnings Recession" Expectations

We know top-line numbers were a disappointment in Q2; but the long-only AUM-defending commission-takers will remind you that 'stocks are cheap', '...valuation...', 'money on the the sidelines', and on the surface there was a 6.9% increase in EPS from Q2 2011 (growthy and as UBS notes - anything but anemic). But, like every good story, the truth is darker under the surface; looking at earnings growth (i.e., without the impact of shrinking share counts) excluding prior-period Financial sector writedowns, we see an outright earnings contraction. Further, consensus estimates are calling for EPS growth to go negative in 3Q12 - falling to $25.07 from $25.65 - which will make two quarters in a row of negative earnings growth - what we would consider an earnings recession.

Schrodinger Lisa Falcone... Or Why BusinessWeek May Want To Hire Better Fact Checkers

While we have long realized that under the 'New Normal' reality is widely in the eye of the beholder, especially if that beholder is an employee of some central planning authority, where good is good, bad is better, where "if things are serious, than you have to lie", and the result is that every 'fact' is both a wave and a particle at the same time regardless if observed with the wave-particle duality never collapsing (thus making a mockery of Schordinger's principles) little did we know that it also refers to the physical age of former 'prenup free' wives of one time hedge fund moguls, and now merely drugged, drunk drivers of (appropriately enough) GPS-impaired vehicles, which it appears can have a variance of 7 years in the span of 2 years... Read on.

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