Tuesday, September 11, 2012

QE In Perspective

We have already discussed what is priced into FX markets with regard QE3 - and as Barclays notes, we also saw a similar gain in momentum into QE1 and QE2 (only to fade post the announcement). Mortgage traders see a sizable QE3 more than priced in, which is especially notable given the consensus forming around the NEW LSAP being centered on the MBS market. Of course, global markets are imbibing more than just the hope of the Fed's extreme policy actions but the ESM ratification as well as handicapping ECB's OMT conditionality (and European growth expectations). Having said all that, it is worthwhile to get a sense of just what happened among the major risk asset classes into and beyond the prior QE (and Twist) announcements, and just what these markets have been doing in the lead-up to this much-anticipated announcement. It seems that no matter where one looks, as one wise old mortgage derivative trader put it "the rumor has been bought." 

The Fed Is Officially Insane

by Dan Amoss, Daily Reckoning.com.au:
There’s an old saying that defines insanity as doing the same thing over and over again and expecting different results. The Federal Reserve wants to test that theory.
Fed officials have been all over the media for weeks, laying the groundwork for a third round of quantitative easing. By preparing markets for QE3, the Fed refuses to let real-world evidence get in the way of its beloved theories. QE operations haven’t worked; they’ve just promoted government spending and higher savings rates to make up for low interest rates.
The arrogance and groupthink among Federal Reserve officials won’t allow them to diagnose the following: The Fed, by its radical actions, mutates the very economy it’s trying to “boost.”
An honest review of the Fed’s record would conclude that it’s rotten. In a recent update of The Speculative Investor, Steve Saville explains why the whole concept of central banking is “rotten to the core.” He describes how central banks are providers of gambling insurance to the banking system:
Read More @ DailyReckoning.com.au

Second Gold rally to end with $2,000 Gold

from Bullion Street:
The second gold rally will end only when the yellow metal hit the coveted $2000 an ounce mark, according to some analysts.
However, some others argue gold prices went up too high and maybe it’s now time they will recede.
The precious yellow metal hit a six-month high this month, sparked by strong global cues coupled with the European Central Bank’s bond-buying plan.
Gold hovered around the $200 something per ounce level in 2000. Its price spiked to $1,900 less than a month after the euro zone debt crisis surfaced in August 2011, but in November it started sinking, and it seemed that the long-held formula of “gold is equal to safe haven” had been broken.
It jumped again earlier this year, but dropped again in March and went down to the level of $1,500 something per ounce in May.
Read More @ BullionStreet.com

Promises Broken: If Moderate Voters See This Video, It’s Over for Obama

by Mac Slavo, SHTFPlan:
Take a good look. This is who we elected to be our leader. When you take away the pre-written speeches, the teleprompters, the flashy stage lights, the thousand dollar suits, and the star power, you’re left with just another political sycophant and his rhetoric.
His actions speak much louder than the words that convinced tens of millions of our countrymen that he would act in our interests.
Barack Obama’s administration is plagued with one promise after another being broken. For those who have not yet been hypnotized into submission by his words, the following will be infuriating.
Via The Daily Crux:
This is a stunning thirteen minute video that shows Obama in his own words, with commentary from mostly mainstream media sources. If this video goes viral and reaches moderate and independent voters, it would be a big blow to the Obama re-election bid.

Read More @ SHTFPlan.com

Help Wanted: Central Bank Governor

The official release, just issued by HM Treasury, is below. The unofficial one is as follows: "The successful candidate must have proficiency with the CTRL and P buttons. Must sound confident and sophisticated when talking in circles while saying nothing. Must be malleable to financial sector suggestions. All other considerations secondary."

Jim's Observation

Eric De Groot at Eric De Groot - 2 hours ago
Jim, Incomplete, simplistic, lousy…...education of financial history and human behavior places individuals in vulnerable position relative to “carrot and a stick” programs provided by central planners. Ignore tax sheltered retirement plans more a moment and ask why do individuals entrust central planners to handle their retirement through public pension and social security? Many of these... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Raising Taxes Has Never Been Good For Any Economy

Admin at Jim Rogers Blog - 3 hours ago
Raising taxes has never been good for any economy anywhere in the world. - *in CNBC* *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.*

$32 Billion 3 Year Auction Prices At Second Lowest Yield Ever, Record High Bid To Cover

There was a time when the short end of the curve was not very loved, as all bonds 3 years and shorter were sold by none other than the Fed. Today, that is no longer the case, driven primarily by ever louder whispers that because the Fed is very much limited in its long-dated purchases as we first calculated last Friday, it may give up on sterilization entirely (since nobody really knows what the Fed will do, but 101% of traders are now certain it will do something), and proceed to monetize all maturities as all Stock considerations are thrown away, and everyone focuses solely on the Flow. Sure enough, the $32 billion 3 year auction just priced at the second lowest yield ever of 3.37%, with only the Sept 2011 yield of 0.334% lower. This was well inside the WI yield of 0.34% at 1 pm. Offsetting the yield "disappointment" was the spike in the Bid To Cover which rose from 3.51 to 3.936, the highest ever. Finally, looking at the internals, for the first time November, Dealers took down less than half of the auction, or 49.8%, with 36.8% going to Indirects, and 13.4% to the PIMCOs of the world, and other Direct bidders such as China. Of course, if there is disappointment on Thursday, and if Dealers have no choice but to keep buying the short-end as a result of the continuation of Twist, as sterilization continues, expect to see some disappointed buyers of today's auction, which incidentally together with the rest of this week's issuance will bring total US debt to a new record of just over $16.07 trillion, and rising very rapidly.

Market Is Expecting $850 Billion NEW Fiat Printing (QE)

from Zero Hedge:
Last week we discussed what the expectations were for Draghi’s OMT – approximately EUR250bn – which coincidentally provided cover for the rest of the year (conditionally) for the entire new issuance of the European Union. Based on EURUSD’s recent exuberance – something we saw ahead of QE1 and QE2 – the market is now more than primed for some serious USD debasement. The current EURUSD of 1.2850 implies a Fed-to-ECB balance sheet ratio around 1.11x. If we assume the ECB wil not have to fire its conditional bazooka (of which is priced in 100% likelihood of EUR250bn), then the Fed is expected to conjure a monetization scheme of around USD580bnanything less would be a disappointment to the market. However, if we assume the ECB will be doing it’s bond-buying monetization thing  – as per the equity market’s expectations – then the Fed will need to come to the table with a bag of swag around USD850bn in order to debase the USD just enough to regain some hope. It seems like the market has priced in a great deal of monetary policy exuberance  – especially considering how ‘confident’ consumers appear to be.
Read More @ Zero Hedge

The Federal Reserve's Cargo Cult Magic: Housing Will Lift the Economy (Again)

I have often identified Keynesian economists and the Federal Reserve as cargo cults. After the U.S. won World War II in the Pacific Theater, its forces left huge stockpiles of goods behind on remote South Pacific islands because it wasn’t worth taking it all back to America. After the Americans left, some islanders, nostalgic for the seemingly endless fleet of ships loaded with technological goodies, started Cargo Cults that believed magical rituals and incantations would bring the ships of “free” wealth back. Some mimicked technology by painting radio dials on rocks and using the phantom radio to “call back” the “free wealth” ships. The Keynesians are like deluded members of a Cargo Cult. They ignore the reality of debt, rising interest payments and the resulting debt-serfdom in their belief that money spent indiscriminately on friction, fraud, speculation and malinvestment will magically call back the fleet of rapid growth. To the Keynesian, a Bridge to Nowhere is equally worthy of borrowed money as a high-tech factory. They are unable to distinguish between sterile sand and fertilizer, and unable to grasp the fact that ever-rising debt leaves America a nation of wealthy banks and increasingly impoverished debt-serfs.

Egyptian Protesters Scale US Embassy Walls, Tear Down US Flag

Three months ago, the Muslim Bortherhood supported, US-endorsed and recommended candidate, Mohammed Mursi won the Egyptian presidential election. Fast forward to today, when we learn from Al Jazeera that the grateful Egyptian population has decided to conduct a little Arab Spring repeat rehearsal in the fall, as Egyptian protesters scaled the walls of the U.S. embassy in Cairo on Tuesday and some pulled down the American flag during a protest over what they said was a film being produced in the United States that was insulting to the Prophet Mohammad, witnesses said.

Is The Market Losing Faith In AAPL's Leadership (Again)?

It happened in September 2011, again in April 2012, and now its starting again. Despite the launch tomorrow of Apple's iPhone 5 (rumored to include the happy-ending-hand-extension), AAPL has notably underperformed in the last few days. Whether this is to do with the 20%-plus weighting in the NASDAQ-100 or whether, as we show below, the market's wise-men see AAPL's P/E ratio approaching that of the exuberant market and capping their attention, we do not know. What we do know is that each time, AAPL has notably underperformed the broad market for the next month (whether an up-market or down-market).

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The conundra continue to mount up around the world as central planning efforts dislocate asset-values from reality wherever one looks. Nowhere is the juxtaposition of hope-and-fear more evident than in the industrial metals. We have discussed the reality of Iron Ore, and the unreality of China stimulus (funded or unfunded) bringing the excess inventory back from the edge ad nauseum but, as the WSJ notes, the stacks of copper slabs inside the warehouses of Shanghai last month grew by 20% since July. In fact, so much copper has been sent into storage that it is being lined up outside some buildings as "there's much more metal than we'd expected," and some would see this huge inventory growth as a signal of "people's uneasiness about Chinese growth." However, sure enough, copper prices are soaring - on the back of expectations that inventories are so high that the PBoC will step in with some stimulus and all will be well in the world again. While Deutsche Bank opines "any rally in copper prices based on expectations will likely not be sustainable," the alternate perspective, based on hope and dreams is that "just a couple of months of better demand - it will quickly change the perception of surplus to tightness." Meanwhile, the effervescence of central-bank-driven exuberance in prices has driven the 'value' of a good-old-US-Nickel up to 5.2 cents (its highest in four months).

The Euro Crisis is NOT Over, And Is About To Get Interesting

They even suggested that I should send a rebate of fees to my clients. And something to Telegraph readers, perhaps?
Sorry to disappoint, but I am not remotely contrite. On the contrary. Was it not to be expected that Draghi would deliver some sort of bond-buying programme?
How many times since this crisis began have we supposedly been given “the solution” only to find in the succeeding weeks that it breaks in our hands?
What Mario Draghi has done is to deploy the ECB’s undoubted firepower to counter break-up risk in the yields on peripheral debt. If the height of such yields were the essence of the euro problem, then ECB bond-buying would indeed be a game changer.
Read More @ Telegraph.co.uk

Breaking the Set: TSA – Criminality & Body Scanners Beyond Airports

We break down the TSA Bureaucracy: criminality, ineptitude and their blatant violation of citizens’ rights. She goes over the government collusion with the industry, exposes body scanner flaws and asks: “why is the TSA expanding beyond airports nationwide?

D.C. Finalizing Plan for Assault on Metro NYC

by Bruce Krasting, Bruce Krasting Blog:
Bloomberg has a story today that has special meaning for me (Link)
- The USA has a tax that very few pay. It is called the AMT (Alternative Minimum Tax).
- AMT became law in 1969 when it was (shockingly) revealed that (get this):
155 people earned more than $200,000 and legally didn’t pay any taxes.
What is it today? 15Mn?
– AMT (functionally) eliminates most tax deductions (the mortgage deduction is excluded).
- If applied to all taxpayer today, the AMT would clobber the middle class. It would change the way charities and churches are funded. It would discourage people from having children. It would discourage home ownership. It would crush people who live in states where there is an income tax.
-Congress is well aware of the problems with AMT. Every year for the last ten they have rolled over a “patch”. The yearly exemption reads (sort of):
“If you didn’t pay AMT last year, you don’t have to pay this year either! Vote for us early and often!
Read More @ BruceKrasting.blogspot.com

Peak Silver Redux?

by Jeff Lewis, Lewis-Mariani-publishing:
As prices at the pump gradually move back up, one finds no shortage of people calling for new financial regulations.Frequently blamed on speculators, higher gasoline prices are – as some politicians say – the result of lax laws regulating the financial system.
Nevertheless, can it really be only speculators that are driving up the price of oil? Surely, the petroleum market is deeper than that.
Without question, those with very deep pockets can drive up the price of just about any commodity, but typically only for a very short amount of time. Unless of course they have access to a virtually unlimited supply of paper money.
Read More @ Lewis-Mariani-publishing.com

Truman Show, Jim Grant, Gold & Economies Close To Meltdown

from KingWorldNews:
Today 40 year veteran, Robert Fitzwilson, wrote the following piece exclusively for King World News. Fitzwilson, who is founder of The Portola Group, put together one of his greatest pieces ever where he warns, “What we have now are economies that are close to synchronous meltdowns.”
“Jim Grant made the astute observation that the world we live in is akin to a movie called the Truman Show. In the movie, the main character is unaware that he is living an artificial life as entertainment for an audience. It was a charade.
As we await the two big events of the week, the German high court decision on the ratification of the ESM and the announcement from the Fed on Thursday about further monetary stimulus, it does indeed feel like a variant of the movie. The main difference is that the audience is also part of the charade.
It is most likely that we will get more of the same. There really is no other choice, and it has been so for quite some time. As economic activity declines in the major economies of the world, one would have to try really hard not to see what is unfolding….
Robert Fitzwilson continues @ KingWorldNews.com

Rob McEwen: gold should be in your portfolio and it’s going to $5,000

In an upbeat presentation at the Denver Gold Forum, Rob McEwen forecast that gold is going to $5,000, while setting out the path forwards for the company which now bears his name – McEwen Mining.
by Lawrence Williams, MineWeb.com
This year’s Denver Gold Forum kicked off yesterday morning and one of the early speakers was Rob McEwen of McEwen Mining. He has a great name in the industry due to his long term stewardship of Goldcorp, which was largely responsible for building the gold mining major to the strong position it holds today. Nowadays he runs McEwen Mining – a U.S. headquartered and quoted developing gold producer for which he has the avowed intent of bringing into the S&P 500 by 2015 – and with one gold/silver mine in production, a second just starting up with its first gold pour expected in a matter of weeks, a third in permitting and a very significant copper/gold/silver project at the exploration stage he may be well on his way to achieving this aim.
But it is perhaps as an avowed believer in gold that McEwen attracts a strong following at a conference of this type, perhaps the most significant annual gold event in the calendar- and he opened his presentation with a strong statement of his beliefs in this respect.
Read More @ MineWeb.com

Constitutionalists Labeled as Terrorists for Speaking Out Against the Government

by Susanne Posel, Occupy Corporatism:

In August, Brian Loftus, commercial fisherman and member of Oathkeepers, was harassed by local police for purchasing “a few boxes of ammunition.”
The local shop keeper contact the police because he was concerned Loftus “wasn’t going to do something crazy” with the ammunition. Without probable cause, police checked his criminal background – finding no further cause for questioning, however they continued to question Loftus as to why he purchased the ammunition.
Loftus explains: “As things are progressing in the country, this is becoming more prevalent and as someone who has swore an oath to defend the Constitution like I have and these officers have, they have to wonder how many people are they gonna call? Are they gonna call their brother in law next time he goes to buy some ammunition or their brother or sister or son – where does it end?”
Read More @ OccupyCorporatism.com

The French Government Gets Whacked, Even The Left Is Angry, And Hollande Gets Slapped In The Face

by Blankfiend Testosterone Pit.com:
France is mired in a stagnating economy. The private sector is under pressure, auto manufacturing is heading into a depression. Unemployment hit a 13-year high of 10.2%, leaving over 3 million people out of work. Youth unemployment of 22.7%, bad as it is, belies the catastrophic jobs situation for young people in ghetto-like enclaves, such as the northern suburbs of Paris. The “solution”—fabricating 150,000 jobs for the young at taxpayers’ expense—has been tried before, with little success. Gasoline and diesel prices are hovering near record highs. So there are a lot of very unhappy campers.
In a BVA poll, 55% of the respondents were dissatisfied with President Fran├žois Hollande’s efforts to tackle the economic crisis. By comparison, only 31% were dissatisfied with Nicolas Sarkozy in 2007 at the end of his honeymoon. Devastatingly, for a socialist: 57% believed that he didn’t distribute the “efforts” equitably—same as Sarkozy, the president of the rich.
The problem with voters is Hollande’s “inaction,” after some initial half-measures, such as the partial reinstatement of retirement at 60 and raising back-to-school aid for families. Now people “seriously doubt his ability to change things.” They believe that the government spends its time trying to “unravel Sarkozy’s legacy” and “sitting around in meetings,” rather than making decisions.
Read More @ TestosteronePit.com


from KingWorldNews:
“The monetary base will grow in the eurozone, and you are going to see a condition of stagflation metastasize across the entire EU17 zone.
And the same thing for the United States. We are going to see inflation, if they continue down this path, like we have never seen before. Remember this, we have never had a central bank, under Ben Bernanke, that actually dared to threaten to conduct open-ended, never-ending quantitative easing.
Let me explain what that means. That means that the Federal Reserve will print X billion dollars per month, until some economic goal is reached. Specifically, what Bernanke has in mind is he’s going to continue to attack the currency and the middle class, until the unemployment rate drops from 8.1%, to somewhere in the 6% range.
Michael Pento AUDIO INTERVIEW @ KingWorldNews.com

Today’s Items:

U.S. ‘Not Setting Deadlines’ for Iran
Oh, you folks are going to love this…   Hillary Clinton, describing the escalating hostilities with Iran, stated that it’s always been more about their actions than their words when describing Iran and its ongoing nuclear program.   Truer words were never spoken…   Not about Iran, but, about Hillary Clinton, the U.S. government, and her sycophant allies.

The Economic Mess in China
The mess in China is continuing to unravel. Investment in new buildings and other fixed assets is in the doldrums.   Manufacturers are retreating from ambitious production goals as they struggle with bloated inventories of unsold goods.   No wonder the Chinese government is destroying its currency with so much printing.

Central Bankers and Politicians are Running Out of Ideas
Other than printing, central bankster have run out of ideas.   Politicians, in any political party, need for the economy to look stable and will lie out their backsides.   Even with the manipulated numbers, real unemployment and inflation are rising and things are more desperate.   So, what will they do?   Well, they still have one idea left and that is thermonuclear war to hide their crimes.

Unprecedented Interventions Will Lead To Chaos & Destruction
Michael Pento says that central bank interventions are unprecedented and are the reason for the recent breakout in precious metals.   Of course, Central Banks, like the Fed, have to react when only 96,000 new jobs that were created; of which, one-third came from the low-paying food service sector.   Add to that the laugh-out-loud plan by the European Central Bank to monetize the struggling euro-zone nations debt with unlimited bond-buying without printing any new euros? Give me a break.

Gold, Silver & A Major October Surprise
When Geald Celente says “Trick or Treat” this Halloween, he cautions anything can happen with gold and silver.    There are just too many wild cards in this hocus-pocus paper market. With that in mind…   The dollar, euro, rupee, and other fiat currencies around the world are in an accelerated rate of collapse due to mismanagement.   To that end, after preparing, keep stacking physical because if you do not have it in your hands then you do not own it.

JP Morgan Losses
http://silvervigilante.com  1
http://silvervigilante.com  2
Since the London Whale was made public, JP Morgan has lost over $28 billion.   Will the 11 plus state, federal, and international enforcement agencies finally do their job?  Don’t hold your breath.

How “Crazy Survivalists” Make The World A Better Place
Here are a few of the advantages…
1. Survivalists have their own stuff – They don’t need your stuff.
2. Survivalists keep to themselves – Your business is your own.
3. Survivalists stand their ground when it counts.
4. Survivalists are time capsules for liberty.

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

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