from Market Watch:
The latest round of quantitative easing made gold “even more
attractive” and owning the metal should be considered as part of a
diversified portfolio, analysts at bond giant Pacific Investment
Management Co. said in a white paper posted Tuesday on company’s website.
Pimco founder and co-chief investment officer Bill Gross, in his separate monthly investment outlook also posted Tuesday, said only gold and real assets would thrive in a “ring of fire” of U.S. fiscal problems.
Gold elicits black and white responses, the Pimco analysts said. Some investors “have a deep, almost religious conviction that gold is a useless, barbaric relic with no yield,” while others “love it” and see it as “the only asset that can offer protection from the coming financial catastrophe” always just around the corner, they said.
Read More @ Market Watch
Evidence QE3 is Working, and Other Lies
The latest round of quantitative easing made gold “even more
attractive” and owning the metal should be considered as part of a
diversified portfolio, analysts at bond giant Pacific Investment
Management Co. said in a white paper posted Tuesday on company’s website.Pimco founder and co-chief investment officer Bill Gross, in his separate monthly investment outlook also posted Tuesday, said only gold and real assets would thrive in a “ring of fire” of U.S. fiscal problems.
Gold elicits black and white responses, the Pimco analysts said. Some investors “have a deep, almost religious conviction that gold is a useless, barbaric relic with no yield,” while others “love it” and see it as “the only asset that can offer protection from the coming financial catastrophe” always just around the corner, they said.
Read More @ Market Watch
'Mugabenomics' From Zimbabwe To The UK - "Gold Is Good"
In a post entitled 'Mugabenomics: Inflation in UK Higher than in Zimbabwe,' Guido Fawkes points out how the Liberal Democrats Vince Cable once warned that Quantitative Easing (QE) was “Mugabenomics.” This was prior to coming to power and a swift u-turn which would make even the most slippery politician proud. Remember when Vince Cable warned that Quantitative Easing (QE) was “Mugabenomics”? Vince flip-flopped on that even before he joined the coalition. Guido Fawkes then reminds its readers about the time when George Osborne said “Printing money is the last resort of desperate governments when all other policies have failed.” Alas as the blog rightly warns, "In government Osborne has overseen the printing of more money than any other Chancellor in British history. A quarter of the national debt – all this government’s overspending – has been bought by the Bank of England via QE." “So it is not a shock that inflation in Zimbabwe (3.63%) is now lower than inflation in the UK (3.66%, August 2011-July 2012).” Those who have been warning about this monetary madness for some years are gradually being proved rightEvidence QE3 is Working, and Other Lies
10/03/2012 - 07:34
Chart Of The Day: America's Debt Crisis - Who Really Is Responsible?
Yesterday we brought you the news that US debt quietly soared by $90 billion overnight to celebrate the new fiscal year end, reaching $16.2 trillion and sending total US debt to GDP to 103%. Needless to say, this comes at an exciting time, with the first Wall Street muppet
presidential debate in about 12 hours, where the US debt crisis will be
a front and center topic because in about 2 months, the US debt
ceiling will again be breached adding to the Fiscal Cliff fiasco,
resulting in a flashback to August 2011 when the market had to tumble
by nearly 20% for Congress to get the hint that first and foremost its
job is to make sure the money on Wall Street keeps flowing, all else
secondary. And while it has become fashionable to say that US debt rose
by this much under that president, the truth is that the Presidency is
merely one of three institutions that are responsible for the shape of
the US debt-to-GDP line (which is now going from the lower left to the
upper right by default). The other two are, of course, Congress and
the Senate. Luckily, to simply things substantially, we have a handy
graphic from today's Bloomberg Brief which conveniently plots not only
the political affiliation of the presidency, but of the House and
Senate, in the chronology of the US debt crisis.Jim Grant Asks The "PhD Standard" To Allow Markets To Finally Clear
It is apparent, according to Jim Grant in this excellent discussion on CNBC, that we are living in a world where only PhDs know what is best for us all. As the Fed hides behind the political cover of its dual mandate to centrally-plan our lives, the Fed-fighter notes "we are off the common-sense-mandate and in a PhD-Standard."
In the brief and wonderfully erudite segment Grant guides the erstwhile
CNBC Fed-cheerleaders to a new reality of inflation not being what
they think it is (i.e. not the PCE Deflator but more prosaically too
much money chasing too few products exemplified in bloated real estate
prices in the past and now equity prices), of a '32-inch' yard, and of a
dream-like world where we "return to capitalism", and markets are finally "allowed to clear." As ever, Grant is worth the price of admission as he explains how the 'monetary mandarins' have interjected themselves between us and the public price mechanism as the Fed's 'influence' has grown exponentially since its inception.Risky Assets Will Face Some Profit Taking
Admin at Marc Faber Blog - 54 seconds ago
I’m not 100% in cash, for the simple reason that I could be wrong, but in
general I think that people that have a heavy exposure to assets being that
equities, or gold, or other commodities. I think they will face some profit
taking here. - *in Business Insider *
*
*Related ETFs: SPDR SP 500 ETF (SPY), SPDR Gold Trust ETF (GLD), iShares
MSCI Emerging Markets Index ETF (EEM), United States Oil Fund LP ETF (USO)
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Cycles Are Windows of Opportunity
Eric De Groot at Eric De Groot - 17 minutes ago
Those waiting to buy gold's next big decline (>10%) could find themselves
watching the next C-wave advance from the sidelines. A-wave (up) and B-wave
(down), best described as price climbing the wall of worry, are quite
similar. The only difference, an important distinction for timing, is the
statistical concentration of money flows by the invisible hand. This is...
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content, and more! ]]
Invest Only In What You Know
Admin at Jim Rogers Blog - 35 minutes ago
People should only invest in what they, themselves know a lot about. *- in
The Wenzel Show*
*
**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.*
Success: Skill vs. Luck
Admin at Marc Faber Blog - 1 hour ago
Most successful people would prefer to attribute their success to some
unique skill they possess, rather than just to luck. This is frequently a
great error. If one considers that there are 6 billion people in the world,
then it`s not so unusual that some of them will win the lottery. - *excerpt
from Trading The World Markets, Marc Faber: Busting Bubbles*
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Stock Markets Can Easily Drop 20 Percent
Admin at Marc Faber Blog - 1 hour ago
I am now bearish about practically all assets near term I think we’re
entering a correction time where there will be some disappointments, where
stock markets, from the recent times can easily drop 20 percent. - *in Fox
Business News*
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Catalonia & Spain
Admin at Jim Rogers Blog - 2 hours ago
I wrote a book once called Investment Biker and in that book I made the
point that I know of no country in history, in the world as we know it,
that has lasted as long as 200 years with the same borders or the same
government.
So, it would be normal if more countries continue to break up. We had at
least 10 or 12 countries breaking up in the past decade or two. Yugoslavia,
Czechoslovakia, Ethiopia and Eritrea, Sudan recently, Soviet Union. You had
a lot of countries breaking up and that is going to continue. That is the
way it has been through out history.* - excerpt from an recent ... more »
Food Prices Will Go Up And So Will Social Unrest
Admin at Jim Rogers Blog - 2 hours ago
I expect food prices to go much higher over the next few years.Whenever
that happened through out history it lead to social unrest. - *in The
Wenzel Show*
*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.*
The Coming Monetary Reset or Natural Transition?
Eric De Groot at Eric De Groot - 3 hours ago
Pete, Impending reset of the monetary system - this hypothesis tends to
imply a closed monetary system that falls out of equilibrium over time.
It’s quite possible that the monetary system is far more open than the
world recognizes. Gold pushes itself back into the monetary system in
varying degrees as a response to the nature ebb and flo of confidence. When
confidence is high,...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]Ultraluxury NY Real Estate Market Cracking As Legendary 740 Park Duplex Sells 45% Below Original Asking Price
Even as the media desperately tries to whip everyone into a buying frenzy in an attempt to rekindle the second housing bubble, the marginal, and less than pretty truth, is finally starting to emerge. Over the weekend we presented the first major red flag about the state of the housing market - in this case commercial - when we exposed that "New York's Ultraluxury Office Vacancy Rate Jumps To Two Year High As Financial Firms Brace For Impact." What is left unsaid here is that if demand for rents is low, then, well, demand for rents is low: hardly the stuff housing market recoveries are made of. Today, on the residential side, CNBC's Diana Olick adds to this bleak picture with "Apartment Demand Ebbs as ‘Avalanche’ of New Units Open." In other words rental demand for both commercial and resi properties is imploding. But at least there is always owning. Well, no. As we have shown, the foreclosure, aka distressed, market is dead, courtesy of the complete collapse in the foreclosure pipeline as banks are effectively subsidizing the upper end of the housing market by keeping all the low end inventory on their books (who doesn't love the smell of $1.6 trillion in fungible excess reserves to plug capital holes in the morning. It smells like crony capitalism). But at least the ultra luxury, aka money laundering market was chugging along at a healthy pace. After all there are billions in freefloating dollars that need to be grounded in the US, courtesy of the NAR which is always happy to look the other way, another issue we discussed this weekend. Now even that market appears to be cracking, following the purchase of a duplex in New York's most iconic property: 740 Park, by, who else but a former Goldman partner, at a whopping 45% off the original asking price.
Six Charts On Money, Oil, And Credit
Six charts tell the story of financialization and the diminishing returns of credit.Expanding base money pushes the price of oil up to stall speed, while expanding credit has a diminishing effect on the real economy. It does however handsomely boost bank assets.
The Weeping In The Counting House
One of the constant and consistent themes found in Europe is the lack of acknowledgement of what is there and not there.
It is a pervasive infection that has gripped the Continent as this
manner of doing business clouds the reality of what is at hand and
pushes consequences out to some date in the future. After the
first Greek bailout both the IMF and the EU informed us, in no
uncertain terms, that the new measures would bring the debt to GDP
ratio of Greece to 120% by 2020; today we hear a new, new number that
the debt to GDP ratio for Greece is 190% and that the country will have
a primary surplus in the next few years. These statements
have all of the truth to them as Lithuania is part of the United States
or that penguins can be found in the Amazon. The problem then, in
believing this kind of nonsense is also exactly what we are facing now;
Greece cannot pay her bills, the PSI card has already been played and
someone is going to have to pay the piper and no one wants to pay him.
Whatever remains of some coalition between the EU and the IMF is now in
tatters as neither entity wants to take the hit. In fact, neither
entity can afford the hit without devastating consequences and yet the hit is going to be taken, of that much I can assure you, because there is nothingServices ISM Better Than Expected Even As Employment Slides, Prices Soar
The ISM stunners continue. After two days ago we got a manufacturing ISM number which was not cooroborated in any other data points, and which was the biggest beat of expectations in years, we now get the Services ISM, which did a double down on the manufacturing report and rose to 55.1, from 53.7, on expectations of a decline to 53.4. And while the headline number was better than expected, the reason why futures are completely unimpressed is that the Employment index declined from 53.8 to 51.5, refuting any good ADP news, while the stagflationary specter to the economy rose, with Prices spiking from 64.3 to 68.1 - the highest since February, and leading to the biggest 3 month surge in Prices Paid since September 2005. Finally, in terms of Q3 GDP drivers, Inventory which is an input into the GDP bean count declined below 50, meaning Q3 GDP will likely be revised lower yet again, even as Backlogs dropped also to just over 50.South African Economy Paralyzed As Miner Strike Spreads To Truck Drivers
While
we have been predicting that the South African miner strike, which
started 2 months ago, and which despite (or rather due to) a one-off
concession by Lonmin to hike worker pay by 22% is more entrenched now
than ever, would spread to other countries, we failed to anticipate that
it could also move to other domestic industries. Which is precisely
what has happened as 20,000 truck drivers in the South African country
decided to go on strike following the example of their miner brethren,
demanding a 12% wage hike, and in the process crippling the South
African economy, bringing virtually every industry to a halt. Why did
they take the risk? Because they suddenly realized that they have all
the leverage in a globalized society in which as we explained in "Trade-Off: A Study In Global Systemic Collapse",
even a several hour complete trade paralysis can and likely will lead
to total social de-evolution: an outcome which the status quo which
determines wages paid to workers, would seek to avoid at all costs. Next
up: the second global worker revolution. Marx would be proud.In Harbinger Of Things To Come, UK Weathermen Sued Over Pessimistic Forecasts
While some of us grow weary of the incessant optimism among our economist elite - and their error-prone forecasts and Birinyi-ruler extrapolations, the Brits have decided enough is enough. The leisure industry is suing the weather-forecasters for coming up with "such pessimistic forecasts predicting rain." In some of the most perfect analogies for our woeful economists, The Telegraph notes that "The Met Office forecasters need to realize that everything they say has an impact on whether people go on holiday or go for a day out." But the weather service admitted (unlike our overpaid extrapolators) "No weather forecaster is going to get it 100 per cent right all the time. We have to tell the weather as it is that's what our job is." Of course, we have nothing to fear but rain itself and so the industry offers this little gem of honesty: "We're not asking them to bend the truth, but just to be more careful with phrasing." Perhaps we will soon hear this from our esteemed ivory tower academics: While we may have global thermonuclear warfare, it will generate a modest GDP bounce in several countries as a result of more than expected broken windows. All of this simply confirms that 'we can't handle the truth.'
IMF Brings Good Tidings: Prepare For Another Lost Decade
"It will surely take at least a decade... for the world economy to get back to decent shape"
is the somewhat shockingly honest (and at the same time hopeful that
ECOpocalypse does not happen before) outlook that the IMF's Olivier
Blanchard offers in a recent interview with Hungary's Portfolio.ru via Reuters. His diatribe of expectations that Germany would have to accept higher inflation, the US had to fix its fiscal problem, "Japan is facing a very difficult fiscal adjustment too"
is more an understatement of facts than a forecast but on the
bright-side he thinks China has turned the corner on its asset boom (but
faces slower growth ahead). The reality is that, as he also notes, debt reduction (via default or deleveraging) is unavoidable
and while he believes that this can be done without stifling growth in
this credit-fueled world in which we have lived (though no mention of
the tooth fairy). Dismissing the idea of inflation-targeting, he warns "You
can have an economy in which inflation is stable and low, but behind
the scenes the composition of the output is wrong, and the financial
system accumulates risks." It seems the IMF is waking to the new
reality - perhaps as evidenced by their actual disagreement with Greece
over fantasy GDP data - though we fear what another decade of this
will do to global instability.Noisy ADP Print Declines But Beats Expectations; Just 4000 Manufacturing Jobs Added
For some reason, despite the ADP number coming month after month within a 3 std deviation of the actual NFP, and thus confirming it has absolutely no predictive power, vacuum tube headline scanning algos continue to trade off the number which explains why futures had a brief spike moments ago after the latest September ADP Private Payrolls number came out at 162K, on expectations of 140K. Of course, last month's print which initially came at 201K only to see the August NFP come in at less than half this print, was revised materially lower to 189K, as was the July ADP which was cut by 17K to 156K. But who cares - the algos already had done their ramp job a month ago. Remember: in an election year, all Initial Claims will be revised upward, while all ADP. NFP prints must be revised downward - it's not called the economy for nothing. In other news, when adding the +/-150,000 margin of error on both side of the equation, we can boldly say that according to the ADP, Friday's NFP will come in a range of -1,000,000 to +1,000,000. Perhaps the only relevant datapoint in the entire ADP report is that manufacturing jobs added were 4,000 in September. Only 996,000 more to go until we hit the president's solemn promise of revitalizing US manufacturing. There was however, a last hurrah for Wall Street: "The financial services sector added 7,000 jobs in September, marking the fourteenth consecutive monthly gain." Correct: the Wall Street layoffs usually begin just before bonus season.
Daily US Opening News And Market Re-Cap: October 3
Less than impressive PMIs from Europe, as well as China failed to depress the bullish sentiment as market participants remained hopeful that a full scale bailout of Spain will take place in the very near future. As a result, in spite of opening lower, equity markets in Europe have edged into positive territory, supported by utilities and telecommunication sectors. Banks also posted decent gains, after Spanish economy minister outlined the bad bank plan which is to be financed with senior debt and private investors to have majority stake in bad bank. The bank recap plan is expected to be running by start of December. Italian markets outperformed, largely due to the fact that today’s Italian Services PMI posted a minor improvement on the previous reading. Bond yield spreads continued to tighten, however flows remained light ahead of the ECB policy meeting tomorrow, as well as the latest round of issuance from Spain and France. Heading into the North American open, EUR/USD is trading little changed as demand from Middle Eastern, as well as EU semi-official accounts was offset by risk event (ECB, auctions) pre-positioning. Going forward, the second half of the session sees the release of the latest ADP Employment Report, ISM Non-Manufacturing and the weekly DoE inventory survey.Frontrunning: October 3
- No Joy on Wall Street as Biggest Banks Earn $63 Billion (Bloomberg)
- And more good news: IMF’s Blanchard Says Crisis Will Last a Decade (Reuters)
- Hobbit Returns to Find Middle Earth Has Become Expensive (Bloomberg)
- Freddie's Foreclosure Plan Hits Roadblock (WSJ)
- Who will buy the FT? Pearson CEO Scardino Will Step Down as Fallon Takes Over (BBG)
- Jeremy Lin Said to Be in Talks With Harvard on Licensing Deal (Bloomberg)
- Jon Weil tears apart the NYAG "prosecution" - Eric Schneiderman Will Have to Do Better Than This (BBG)
- Portugal Offers to Exchange Bonds as It Seeks Debt Market Access (Bloomberg)
- Is unlimited growth a thing of the past? (FT-Martin Wolf)
- European Bank Capital Results Overtaken by Tougher Global Rules (Bloomberg)
- China’s Slowdown Reverberates as ADB Cuts Forecasts (Bloomberg)
- Tokyo has no plan to extend currency swap deal with Seoul (Reuters)
Today’s Items:
China is increasing its monetary gold
reserves at an alarming rate and will have more actual gold than the
phony gold held by the US in five years. China is preparing for a
world beyond the in-convertible paper dollar. The Chinese government
has recently removed all restrictions on personal ownership of gold.
Make no mistake though, even though gold is being hoarded, silver is not
far behind. What is even more interesting as that both gold and
silver are making yearly highs and there is little to no profit taking… Meaning that more people are not trading in their precious metals for fiat.
According to Census data, since 2009, the
middle 20% of American households saw their average incomes fall 4%. In
2011 alone, they fell 1.7%. The poorest 20% saw their average incomes
fall more than 7% since 2009. Meanwhile, the top 20% saw their
average income climb almost 2% in 2011. The top 1% received 93% of
the income gains between 2009 and 2010.
George Washington Law is ranked number 20
on U.S. News and receives the second-most applications. Because Blind
Carbon Copy was not used, George Washington graduates who did not have a
job, after paying 45,000 in annual tuition, found out that 114, or 21
percent, did not have an actual paying job after graduating.
Remember, the official unemployment rate is 8.1%. So, it appears that
graduating from even a prestigious law school will not guarantee a
job. Plumber anyone?
According to a recent study by USA Today,
which looked at 100 large municipalities across the country, on average,
Americans are paying 75% more for water today than in 2000. In
addition, expect a 5% to 15% increase, per year, going forward for such
reasons as wages & pensions to clean-water mandates. Too bad some
states, like Utah, Colorado, and Washington outlaw rainwater collection.
At $500,000 per robot, Camden, New Jersey
is planning, using research from Florida International University, to
use mechanical cops controlled by non-union and disabled veteran
cops. The plan is to eventually replace police officers who have
health benefits and pension plans with non-unionized ones. Hmmm… Sounds like a great plot line for a movie.
Romney’s promise to cut government
spending may be one reason that federal employees have contributed over
$396,000 to the Obama campaign. Employees of the State Department,
and their families, have contributed over $213,000. The top five
donning organizations for Obama are the University of California,
Microsoft, Google, Harvard University, and the US Government. The top
five donning organizations for Romney are Goldman Sachs, Bank of
America, JP Morgan, Morgan Stanley, and Credit Suisse Group. Of
course, you lose no matter which of these buffoons you vote for.
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