Last week, the misty eyed reminiscences were recalling the 25th anniversary of Black Monday. Today, we look even further back. 83 years back to be precise to this date in hallowed antiquity, when in 1929 the selling had officially begun, with what would ultimately culminate as the Great Crash. Cue Art Cashin: "on this Thursday morning, the market opened nervous but relatively steady. Within the first half hour, prices began to fade and the tape began to run late. By noon the tape was nearly an hour and-a-half late in reporting transactions in a market that had opened only two hours before. To speed the reporting digits were deleted and so "Radio" which had opened at 68 3/4 now showed on the tape at 8 3/4. But prices were moving so fast that the price was not 58 3/4 but 48 3/4 on its way to 48 1/4 before it would bottom in the afternoon at 44 1/2. To avoid confusion the Exchange published flash prices of selected securities on the slower moving bond tape." By early afternoon the cascade of prices caused an emergency meeting at the offices of J.P. Morgan across the street from the Exchange...."
Bank Of Canada Fires Shot Across Bow, Says "Withdrawal Of Stimulus Will Likely Be Required"
With the entire world engaged in global coordinated easing, slashing, burning, and overall lowering rates and printing money by the wheelbarrow, the Bank of Canada just fired a shot across the bow. Here is the kicker: "Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. Over time, some modest withdrawal of monetary policy stimulus will likely be required." Surely they must be punished for this blasphemy in the holy church of Saint John Maynard and the apostles of collapsing fiat.
As Market Plunges, Bob Janjuah Opines: "Tactical Short Risk Time"
Dow Jones down 250, and a new bearish letter from Bob Janjuah? Lucky coincidence? Or conspiracy? You decide. From Bob: "How to play it? The SPX is the obvious pure risk short because of how rich it is against other equity markets. Outright is fine, so are options. Take a look at January 1350 puts for example currently trading at 20. If doing outright we would recommend a stop just above the recent highs at 1475. We also like the USD and Treasuries because the market has seen time and time again US problems do not lead to selling of (safe) US assets and it can and we think will be the same again."No Third Term For The Bernank
While
the theater of the presidential election hits peak season, and InTrade
odds for this candidate or that are approaching flash crash territory,
the one person who truly runs not only the US, but the entire
"developed" world, Ben Bernanke, is going nowhere. At least not until
January 2014. At which point he may be going somewhere - retirement.
Reuters cites the NYT:
"U.S. Federal Reserve Chairman Ben Bernanke has told close friends he
probably will not stand for a third term at the central bank even if
President Barack Obama wins the November 6 election, the New York Times
reported." In other words: the republican Fed Chairman who mysteriously
became a Democrat president's bestest friend (and has been publicly
threatened by every other GOP candidate, including Romney, although that
would be merely to replace him with Bill Dudley, not Glenn Hubbard) that
$4 trillion that the Fed will have in assets at the time of Ben's
departure, and $5 trillion at December 31, 2014, just became someone
else's problem. Good luck to that someone else unwinding a Fed balance
sheet which as we explained previously,
will at one point in the next 2 years hold well over half of the
marketable US Treasury debt inventory. How the sale of this inventory
will happen in a time of spiking rates (because that's what the Fed
wants - inflation) is literally anyone's guess, because in practice it
will never happen.Your support is needed...
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A Slow Reduction In Standard of Livings Across The Western World
Eric De Groot at Eric De Groot - 3 minutes ago
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HFT Takes Over InTrade As Romney Flash Smashes
Since just after the US equity day session opened, Intrade's Obama and Romney markets have seen volume explosions. In what can only be described as HFT-driven chaos, perhaps someone is seeking a 'cheap' hedge on the equity market's freefall? or more likely, yet another rogue algo got loose and is toying with another market. Romney's odds exploded from 41% to 48%, crashed back down to 42% and are leaking higher once again. Obama's odds (and note the market was crossed for a while) have fallen off a cliff to their lowest since before QEtc at around 57%...
Where Do Stocks 'Belong'?
Twice
this year we have seen the US equity market become enamored of its own
hope-holding, momentum-trapping, liquidity-driven, success while the
bond markets (Treasury and High Yield) have remained a little less
sanguine. This lack of exuberance among all but the equity players
perhaps better reflects the sad reality of fundamentals (as we noted here) or perhaps this time it is different. To wit, the following two charts as a gentle reminder that gravity still exists and where the short-term floors might be... Fed considering upping QE3 size and language
Eric De Groot at Eric De Groot - 1 hour ago
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QE to Infinity
Eric De Groot at Eric De Groot - 2 hours ago
Those worried that QE will be finite should read the headlines. Stock,
gold, and commodities will be supported by the sea of liquidity, but it's
easier to see panic right now. Headline: Earnings Cliff Ahead? Profit
Outlooks Are 90% Negative Earnings conference calls are beginning to
resemble crisis hotlines as corporate executives slash profit forecasts
because of fears of higher...
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content, and more! ]]
Goldman's Tom "FX Scourge" Stolper Resumes Legendary Muppet Slaying
Greg Smith's 15 minutes of fame has come and gone, but the muppet crushing at Goldman is only starting to ramp up, courtesy of the man who singlehandedly has made sure Goldman's FX prop trading team should be the most profitable one in the entire universe by simply doing the opposite of what Goldman's clients do. As a reminder, sent out at 5 pm yesterday, as we alerted our Twitter followers: "Go long EUR/CAD on further risk premium compression in the EUR and a more dovish BoC... We recommend going long EUR/CAD at a current level of 1.296 with an initial target of 1.37 and a stop on a London close below 1.26." Big Oops (see chart). Then again, after Stolper epic failure to Impala the muppets on his last EURUSD trade reco, it is great to see him back to 0.000 batting form.
Video: The Technical Position Of The Market Is Poor
Admin at Marc Faber Blog - 2 hours ago
Related ETFs: SPDR SP 500 ETF (NYSE:SPY)
*
**Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Cartoon Comedy Or Concerned Criticism: Pick Your Favorite Debate Post-Mortem
The
debates are over; and perhaps last night's 'chat' was the least
interesting from any substantive angle of any of the interactions given
the candidates tendency to agree on virtually everything (apart from
bayonets) - and still say absolutely nothing. In the interests of being
fair and balanced - as we always are - we present two sides of this
epic farce. First, the Asian animated interpretation - for some light-hearted insight into just how our potential leaders are perceived across the ocean after last night's debate; and second, a more retrospective view by Ben Tanosborn on the three 'meaningless' debates - and the questions that should have been asked. "Mitt
Romney and Barack Obama have shown to be equally adept at dealing with
trivia and secondary issues... and equally inept at dealing with every
substantive issue." Video: The 'Greatest Garbage' Could Rebound
Admin at Marc Faber Blog - 2 hours ago
In this "Squawk Box" excerpt, investor Marc Faber explains why it may be a
good time to invest in Chinese and Japanese markets.
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Commodities 101
Admin at Jim Rogers Blog - 2 hours ago
With all commodities, the most important factor is supply and demand. - *in
ETF Daily News *
*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.*Equities Set To Open With Biggest Gap-Down In 3 Months
S&P futures are trading down around 18 points in the pre-day-session market. This would be the largest gap-down day in three months, and only the third largest gap-down open in 2012. The market has broken to its lowest since QEtc was announced and retraced more than half of the Draghi 'Believe' moment spike...
The Gray Economy: Europe's €1.5 Trillion A Year Black Hole
With
Greek tax-collectors under increasing pressure to squeeze their quote
out of an increasingly bombastic population, Italy's Rossi arguing for
the need to fight VAT evasion, and France taxing anything and
everything that moves - all in the name of austerity; it seems, as
Bloomberg Brief's Niraj Shah notes today that attempts to bring burgeoning debt levels in Europe under control - by tackling the unofficial, or gray, economy - may backfire. It seems, given the large and growing (average 17.3% of euro GDP or EUR1.5tn)
size of the gray economy that the more governments try to capture
'gray' externalities (or hike VATs - up from 18.1% to 20% on average),
they merely succeed in pushing more transactions into the gray area. A
study by Schneider of Linz University finds that focusing on the gray
economy may be counter-productive as some of the activities may act as a
safety net and contribute to growth - in a counter-cyclical way - serving as a cushion for people facing wage cuts and job losses.
With as much as 24% of Greece's economy now estimated to be
'unofficial', the Troika-inspired 23% VAT rate is having quite the
unintended consequence it seems.The American Elections
Between today and the American elections; virtually nothing else will matter. Gone
are the promises of social redemption from Mr. Obama’s speeches
because, in my view, the promises were not delivered upon. There is
no ground swell of younger voters campaigning and voting for some sort
of Orwellian new world order and I wonder just how many in this sub-set
will actually vote for anyone. Gone are the speeches promising
new hope for the next generation because America has run up the debt to
the point that something must be done and we have reached the
limit of our social indulgence and so that hard choices, tough choices,
are going to have to be made by whoever assumes the American
presidency.What Is The Actual Book Value Of Germany’s Gold Reserves
German Federal auditors handed in a report slamming the Bundesbank for not inspecting their foreign held gold reserves to verify their book value. The report says the gold bars "have never been physically checked by the Bundesbank itself or other independent auditors regarding their authenticity or weight." Instead, it relies on "written confirmations by the storage sites." The lion’s share of Germany's gold reserves (nearly 3,400 tons estimated at $190 billion) are housed in vaults of the US Federal Reserve, the Bank of England and the Bank of France since the post-war days, when they were worried about a Cold War Soviet invasion. The Bundesbank stated, “There is no doubt about the integrity of the foreign storage sites in this regard". In contrast with best industry practices Germany’s gold reserves do not seem to be independently verified by a third party. Philipp Missfelder, a politician from Merkel’s own party, has asked the Bundesbank for the right to view the gold bars in Paris and London, but the central bank has denied the request, citing the lack of visitor rooms in those facilities, German’s daily Bild reported. The Bundesbank won't let German parliament members inspect the German gold vaulted abroad because the central bank vaulting facilities supposedly lack "visiting rooms." And yet one of those vaults, the Federal Reserve Bank of New York, offers the public tours that include "an exclusive visit to the gold vault".Daily US Opening News And Market Re-Cap: October 23
The Mañana approach endorsed by the Spanish government is finally beginning to have its toll on investor confidence and after being contained by the so-called Draghi put, 2y bond yields are up over 20bps for the second consecutive day. The decoupling that is being observed is being driven by yesterday’s downgrade of several Spanish regions by Moody’s, citing deterioration in their liquidity positions. As a result, Spain runs a risk of being forced to raise the size of its regional bailout fund which stands at EUR 18bln, with EUR 17.2bln already tapped, as the latest downgrade will likely put an upward pressure on borrowing costs. Major equity markets in Europe are down close to 1%, led by basic materials and oil & gas sectors, as WTI continues to consolidate below the key USD 90 level, while spot Gold continues to lose its shine and is looking to make a test USD 1700. The second half of the session sees the release of the latest Richmond Fed report, as well as the weekly API report.Frontrunning: October 23
- Moody’s Cuts Ratings on Catalonia, Four Other Spanish Regions (Bloomberg)
- And the market top: Billionaire Ross Interested in Buying Spanish Bank Assets (Bloomberg)
- Japan Jojima denies govt seeks $250 bln BOJ asset buying boost (Reuters)
- China hints at move to strengthen Communist rule (Reuters)... well everyone else is doing it
- Euro-Area Bailout Fund Faces Challenge at EU’s Highest Court (Bloomberg)
- Obama, Romney now tied in presidential race: Reuters/Ipsos poll (Reuters)
- Former China Leader Jiang Resurfaces Before Political Transition (Bloomberg)
- Some in Congress look to $55 billion fiscal cliff 'fallback' (Reuters)
- CLOs stage comeback in US (FT)
- TXU Teeters as Firms Reap $528 Million Fees (Bloomberg)
- China’s Factories Losing Pricing Power in Earnings Threat (Bloomberg)
Overnight Sentiment: Crashy
Easy come, easier go. After yesterday's last hour ramp driven by a MarketWatch article that said absolutely nothing new about the Fed's monetization plans and an AAPL surge which saw the firm add $22 billion in market cap in one day (or more than the market cap of CBS Corp) sent stocks green, the overnight session has taken it all away and then some, with futures now trading roughly 12 ticks lower or at yesterday's lowest levels. The catalyst is, once again, Spain where Moody's downgraded five Spanish regions including Catalonia after the market close (for the reason, see our piece from the weekend "Spanish Regional Bailout Fund Runs Out Of Money"), coupled with news from Confidencial that Spain's budget deficit will overshoot the EU target of 6.3% and hit at least 7.3%, driven by a €10.5 billion deficit in the social security system, trashing the promises from last month's Spain's "reform" package, and as BNP said (confirming what we warned weeks ago), making the conditionality hurdle suddenly that much higher for Spain. And just as the world was getting comfortable that Spain will get away with using the OMP with virtually no conditions. The cherry on top came from France where the business conditions index slid to a 3 year low on expectations a trough had been put in place. The result is a tumble in the EURUSD to below the 1.3000 barrier, dragging stock futures, commodities, and of course Europe with it, sending the Spanish bond curve yield higher, and generally giving a very sour mood to the day as traders walk in.Today’s Items:
First…
The Exodus of China’s Upper Class Continues
http://frontpagemag.com
Things in China are much worse than many
believe. In fact, many of China’s upper class are trying to get as
much money out of the country before the collapse happens. Estimates
of $225 billion has left China in the 12 months leading up to
September. What is interesting these Chinese are willing follow the
West anywhere, instead of China. Maybe it is out of morbid curiosity.
QE3 Side Effects
http://www.cnbc.com
QE3 has quickly made its way into Asian
markets. Central banks in Asia spent $18 billion to curb the rise in
their currencies. The inflation created with this printing will
increase prices from food to fuel. Whatever Benji Bernanke is lacking
in ethics, he appears to more than make up for in dishonesty. So, get
out of these ponzi schemes and into real assets.
Iran Has Agreed to Nuclear Talks
http://www.nytimes.com
It is amazing that Obama has gone from a crystal-clear promise to stop Iran from getting nuclear weapons
to having nuclear talks within four years. Not! Yes, this is a
so-called last-ditch effort to stop a war between Iran and the US;
however, why would those in Iran believe anything that comes out of
Washington and vice-versa? Hell, when it comes to Obama, Romney, or Ahmadinejad, one can tell that they are lying simply because their lips are moving. Perhaps, Iran and the US could have a Beer Summit.
Pay Gap Between Government and Private Widens
http://www.federalnewsradio.com
The gap in pay of private-sector workers
over federal employees and has jumped 8 percentage points since last
year and now is at 34%. This is the second year of a pay freeze for
federal employees. Just imagine the excitement when those mandatory fiscal cuts become active starting in 2013.
Romney Owns the Voting Machines
http://www.allvoices.com
Tagg Romney, son of Mitt Romney, has
purchased electronic voting machines that will be used in the 2012
elections in some states like Ohio, Washington, and Colorado. Let’s
see, Ohio is a critical swing state this election and Romney effectively controls the voting machines. Hmm…. No conflict of interest here folks. Not!!!
2012 Race Called
http://dailycaller.com
Well, color my thumb purple
folks because Obama has already won the election weeks ahead of the
vote. At least according to a CBS News graphic that showed Obama winning
the election with 43% of the vote nationwide to Romney’s 40%. Even if
this were a simulation, it is very clear how the media follows the
dictators Chavez, Castro and Putin in supporting Obama.
Third Presidential Debate
While disagreeing on style; such as Romney
leveling the “Apology Tour” accusation with Obama’s pathetic “Ask the
Reporters” response, both candidates clearly signaled many of the same
foreign policy actions. With that, the US’s war-drums to control oil
production nations will continue; however, could this policy be soon
pointless?
http://www.thesun.co.uk
In a possible “game-changer”, British
scientists have developed a way to create synthetic gasoline with only
air and electrical power. Because it (the gasoline) is made using
hydrogen and carbon dioxide, it is carbon-neutral. When, and if, this
method goes into full production, how long before US forces liberate the
UK?
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