America Maxes Out Its Credit Card Again - Treasury To Raise Debt Limit By Another $1.2 Trillion On December 30
You didn't think US consumer confidence could be bought for free now did you?- U.S. TREASURY SAYS DEBT LIMIT TO BE RAISED BY $1.2 TRILLION
- U.S. DEBT TO BE $100 BLN WITHIN LIMIT ON DEC. 30, TREASURY SAYS
- STEPS FOR INCREASING DEBT LIMIT UNDER 2011 BUDGET CONTROL ACT
- OBAMA ON DEC. 30 LIKELY TO ASK CONGRESS TO RAISE DEBT LIMIT
Fed QE3 Possible in 1st Quarter, Van Nostrand Says
Tradition Analytics Asks The $64K Question: Has The Fed Run Out Of Options To "Grow" Credit Money?
Last week, we presented an equity "valuation" analysis based on Austrian economics, which concluded that the only thing that matters for the economy and for asset prices in general, is the amount of credit money moving one way or another at the margin, ie how active global central banker printers are. Unfortunately, in this economy of record correlations, and in which alpha creation is now impossible, this may well be the only approach to capital markets that works any more. Today, Tradition Analytics takes this analysis from the micro the macro level, explaining why the US, and global, economy is now like a shark - cash has to move (inward) or else the economy will suffocate. Naturally, nothing could make Bernanke happy- according to Tradition, "To sustain the up-cycle banks will have to pump out net new credit probably in the order of about $1 trillion in the coming 8-10 months, even larger than the $700 billion pumped out in the previous 8-10 months." Alas there is a problem with this, very much along the lines of what we discussed last week, which is that the new crude baseline is now a triple digit number, not one in the $30s or even $60s: "it is going to be difficult to sustain this level of credit expansion, not only due to the sheer gravity of the inflation problem that would follow, but also simply due to the fact that it is always increasingly difficult to extend more credit at the margin, and this time into an economy that is already steeped in credit."
The Euro Is Good For The World. It Needs To Work.
The world needs the euro or something like it to compete with the US
dollar. We need another sound currency. The eurozone as a whole is not a
big debtor nation. The eurozone has some debtor problems, some debtor
nations, debtor states, but it's not a big, big problem. The euro is good
for the world. It needs to work. - in BBC
*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 C... more »
The Banks Are Suffering Because They Are Too Leveraged
The banks are in a very bad shape because they are so leveraged. US banks
are also leveraged through the derivatives markets and so forth. - *in BI*
*Related: Bank Of America (BAC), Citigroup (C), Wells Fargo (WFC), Banco
Santander (STD), Deutsche Bank AG (USA) (DB), JPMorgan Chase & Co. (JPM) *
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Trade With Brain, Not Emotions - It Ain't Gonna Happen
The vast majority of investors, traders and John Q. Public trade
predominantly with their emotions rather than brain. 15+ years of trading
and market experience has taught me that regardless the number of self-help
seminars, books, and free Internet content that readers think is the next
"big score" to the path of easy money this behavior will not change.
Enhanced marketing timing of secular...
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European Crisis: Nobody Kept The Maastricht Treaty Promises
When the European Union and the Eurozone were formed, in the Maastricht
treaty it was stated that no country should have a fiscal deficit of more
than 3 percent and the debt to Gross Domestic Product (GDP) ratio should
not exceed 60 percent, but nobody kept that promise. - *in Reuters*
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
The Risks Of Currency Debasement
You can debase currency, and history is replete with governments that have
debased their own currency and ruined their own currency for hundreds of -
well for thousands of years it has been going on. You can do that and
everything is okay for a while, but eventually you have inflation, you have
high interest rates, you have currency turmoil, you have people no longer
trusting each other to invest with each other, and then you have the end of
the system, and we have chaos, and it starts over again. - in BBC
*Jim Rogers is an author, financial commentator and successful
international ... more »
Guest Post: Are Commodities Topping Out?
The past several years have seen a growing backlash against "paper" investments as more and more investors consider hard assets to be a safe haven against the implications of central bank money printing. But as the global economy visibly slows, this question arises in many minds: Are commodities, which have been on a tear since the March 2009 bottom, finally topping out? The question requires both a fundamental economic response as well as a technical chart analysis. We can start by observing the common-sense connection between demand for commodities such as copper, cement, steel,etc. and economic expansion. When demand rises faster than supply, prices rise. Since supplies of commodities face all sorts of restraints in terms of extraction rates, energy costs, and declining reserves, increased demand quickly pushes prices higher.Biggest 2 Month Jump In Confidence Since May 09 As Housing Drops To March 03 Levels
UPDATE:
And then Dallas Fed manufacturing misses (at -3.0 vs +4.8
expectations) as expectations for future finished goods plunge as do
current inventories.As if we needed yet further evidence of the dichotomous macro data that seems to provide as much bearish fodder as bullish decoupling confidence, today sees a near-record two-month jump in conference board confidence at the same time as S&P/Case-Shiller prints at a seasonally-adjusted 103 month low. With the Richmond Fed also missing expectations (though positive), we remain in the miasma of CONfidence uninspiring macro data as the underlying sub-indices of the conference board data show little to no shift in purchasing decisions despite some seemingly incredulous ramp in confidence that incomes will rise more than they decline in the next six months.
Guest Post: Why Am I Hopeful
Readers often ask me to post something hopeful, and I understand why: doom-and-gloom gets tiresome. Human beings need hope just as they need oxygen, and the destruction of the Status Quo via over-reach and internal contradictions doesn't leave much to be happy about. The most hopeful thing in my mind is that the Status Quo is devolving from its internal contradictions and excesses. It is a perverse, intensely destructive system with horrific incentives for predation, exploitation, fraud and complicity and few disincentives. A more human world lies just beyond the edge of the Status Quo. I know many smart, well-informed people expect the worst once the Status Quo (the Savior State and its corporatocracy partners) devolves, and there is abundant evidence of the ugliness of human nature under duress. But we should temper this Id ugliness with the stronger impulses of community and compassion. If greed and rapaciousness were the dominant forces within human nature, then the species would have either died out at its own hand or been limited to small savage populations kept in check by the predation of neighboring groups, none of which could expand much because inner conflict would limit their ability to grow. The remarkable success of humanity as a species is not simply the result of a big brain, opposable thumbs, year-round sex, innovation or even language; it is also the result of social and cultural associations that act as a "network" for storing knowledge and good will--what we call technical and social capital.Today's Economic Releases
Despite it being a holiday shortened week, and volume already abysmal, there still are some robotic kneejerk reaction inducing economic datapoints, both today and Thursday. Here is what the consensus expects today, even as US economic data is once again irrelevant as Italy has taken front and center following the Zero Hedge report that ECB deposit facilities hit an all time record, leading to Italian BTPs widening to over 7% yet again, an a margin hike by LCH imminent.Thanksgiving Day Massacre: Sears Slaughtered On Collapsing Margins, To Shutter Hundreds Of Stores, Provides Revolver Update
That retailer Sears, aka K-Mart, just preannounced what can only be described as catastrophic Q4 results should not be a surprise to anyone: after all we have been warning ever since the "record" thanksgiving holiday that when you literally dump merchandize at stunning losses, losses will, stunningly, follow. Sure enough enter Sears. What we, however, are ourselves stunned by is that as part of its preannouncement, Sears has decided it would be prudent to provide an update on its credit facility status... and availability. As a reminder to anyone and everyone - there is no more sure way of committing corporate suicide than openly inviting the bear raid which always appears whenever the words "revolving credit facility" and "availability" appear in the same press release. Just recall MF Global. And here, as there, we expect shorting to death to commence in 5...4...3...Anonymous Explains Why 2.7 Million Stratfor Emails Were Hacked
Anonymous' Barrett Brown speaks: "Stratfor was not breached in order to obtain customer credit card numbers, which the hackers in question could not have expected to be as easily obtainable as they were. Rather, the operation was pursued in order to obtain the 2.7 million e-mails that exist on the firm's servers. This wealth of data includes correspondence with untold thousands of contacts who have spoken to Stratfor's employees off the record over more than a decade. Many of those contacts work for major corporations within the intelligence and military contracting sectors, government agencies, and other institutions for which Anonymous and associated parties have developed an interest since February of 2011, when another hack against the intelligence contractor/security firm HBGary revealed, among many other things, a widespread conspiracy by the Justice Department, Bank of America, and other parties to attack and discredit Wikileaks and other activist groups. Since that time, many of us in the movement have dedicated our lives to investigating this state-corporate alliance against the free information movement. For this and other reasons, operations have been conducted against Booz Allen Hamilton, Unveillance, NATO, and other relevant institutions."LTRO "Bazooka" Is Epic Disaster As Banks Scramble To Redeposit "Free Carry" Cash With ECB, Lose Money On "Inverse Carry"
When on Friday we penned "And This Is Where The LTRO Money Went"
we said that the final nail in the "Carry Trade" theory was that
instead of using the LTRO "Bazooka" cash to collect meaningless pennies
in front of a steamroller, Europe's banks turned around and deposited
it right back with the ECB after the bank's deposit facility soared to a
2011 record €347 billion, €82 billion more than the day before. Today,
any residual doubt of where the LTRO cash proceeds went is eliminated,
as the ECB has just confirmed that what goes out of one pocket comes
back in the other, as the ECB's deposit facility has just exploded to
not a 2011 record, but an all time record high €412 billion, a
€65 billion increase overnight, and €167 billion higher in the past two
days alone, which effectively accounts for practically all of the
LTRO's free €210 billion... But the biggest slap in the face of
Sarkozy is that instead of banks pocketing the "guaranteed" 2-3% in
carry trade between the 1% LTRO rate and the soveriegn bond yield, banks
are losing 75 basis point on this inverse carry trade, where they take
LTRO cash and deposit it with the ECB where it yields... 0.25%!Gold Down As China Tightens Controls
It appears the PBoC is stepping up the monitoring and management of their gold reserves. Headlines, via Bloomberg, suggest controls tightening on the trading of gold away from official channels:
- *CHINA TO INCREASE MANAGEMENT OF GOLD TRADING, PBOC SAYS
- *CHINA GOLD TRADING RESTRICTED TO SHANGHAI EXCHANGES, PBOC SAYS
- *CHINA ORDERS UNAUTHORIZED GOLD TRADING PLATFORMS TO STOP: PBOC
- *PBOC ASKS SHANGHAI GOLD, FUTURES EXCHANGES TO BOOST MANAGEMENT
Market Snapshot: Asia Down, Europe Stable
Despite
more ramblings from Juncker this morning, the overnight session in
Asia saw comments on downside risks from the BoJ drive risk assets
modestly lower. Led by Japan, Asia-Pac equities were down around 0.3%.
While EURUSD is higher by 25pips or so from Christmas Eve's close (and
implicitly USD weaker), commodities are broadly underperforming with
Copper worst (-1.3%), Gold (under $1600) and Silver in line -0.8%, and
Oil just underwater from 12/23 close. European credit markets just
started trading and are a smidge tighter - though liquidity is
questionable for now - but sovereigns are leaking wider in spread with Italian 10Y worst for now +13bps (and BTP yields now breaking 7% again).
US TSYs are 1-2bps lower in yield from the afternoon surge on
Christmas Eve's discorrelated action. Given the markets that are open
so far, CONTEXT (a broad risk market proxy for where ES - the e-mini
S&P futures contract - should trade) is practically unchanged,
which given the late-day surge on 12/23, leaves us looking for modest
weakness when it re-opens later today.
Not Going Tactical Could Pose Real Business Risks, Advisors Fear … Following the twin market implosions of the past decade—first tech, then real estate—many retail financial advisors are looking for more tactical, meaning active, asset allocation solutions for client portfolios to dampen volatility, improve total returns and avoid market catastrophes. At least some of them fear that if they don’t dramatically change the way they allocate client portfolios, moving away from traditional buy-and-hold investing strategies, they could lose clients. So say a handful of advisors and an investing expert. Things could get especially bad if another bear market hits, says Ron Carson, founder and CEO of Carson Wealth Management Group. “[Investors] are hanging on by a thread right now, and I don’t think they’re going to forgive.” – Registered Rep
Dominant Social Theme: We need to show you new ways of investing, though we don’t want to.
Free-Market Analysis: Is it time for Wall Street to fall on the ceremonial sword of tactical asset allocation? In the long-term, this is the only strategy that works, but for the last ten years – as for much of the rest of last century – Wall Street has proven impervious to its blandishments and even conspired to withhold the strategy from investors.
The reason is simple. To suggest tactical asset allocation (and to explain it properly) one actually has to grapple with some of the fundamental issues of the modern, Western monetary economy. The big firms that most Wall Street and “independent” brokers work for would rather chew their own (figurative) arms off than engage in these discussions.
Yes, the idea of explaining that modern central banks are a kind of Ponzi scheme that collapse every 15 or 20 years and that gold and silver are historically valid money metals is not the kind of palaver that Wall Street’s bosses want to engage in.
Read More @ TheDailyBell.com
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