Futures, Precious Metals Soar As The Bernank Says More "Accommodative" Policies Needed, Hints At "The New QE"
Curious why futures and PMs both soared out of the gate at 8am? Look no further than the Chairman of the Federal CTRL-Preserve
who is speaking at the National Association for Business Economics and
just made a very strong hint that the New QE (or is that the NEWER QE)
is coming. And there are those mocking Bill Gross for saying the April
FOMC would lead to the next QE announcement (something we expounded on
extensively yesterday).
And here is the most idiotic statement uttered by the Fed: "If this
hypothesis is wrong and structural factors are in fact explaining much
of the increase in long-term unemployment, then the scope for
countercyclical policies to address this problem will be more limited. Even if that proves to be the case, however, we should not conclude that nothing can be done." Recall what JPM said about
central planning breaking the virtuous cycle just two days ago. The
Fed has just admitted it... but it does not mean that the Fed will be
forced to print print print infinitely more. After all, it's all there
is.Sentiment Better As German 'Confidence' Ignores Fundamentals, Tracks Stock Market, Rises
Remember
all those European PMIs which imploded over the past month, destroying
any hopes of a rapid rebound from Europe's technical recession? You
can forget them now because the one indicator which tracks the level of
the manipulated stock market more than anything else, German IFO
business survey, just came better than expected, at a whopping 109.8
compared to expectations of 109.6 print, same as the previous one. And
that is all it takes for futures, and the EURUSD to ramp, which in turn
plants the seeds for another confidence ramp next month and so on.
Here is Goldman's take: "The assessment of current conditions remained
unchanged at 117.4, while expectations increase to a level of 102.7
after 102.4. Looking at the different sectors it shows that confidence
in the manufacturing sector was broadly stable on a high level (14.0
after 14.3), while construction saw a small decline after a surge over
the last couple of months (2.3 after 3.3; confidence stood at -13.2 in
October). Confidence in the retail sector also recorded a strong gain
(106.6 after 3.7), while wholesale saw a decline (12.8 after 15.0).
This is a strong report with business conditions remaining
significantly above their long-term average of 101.1. The
rebound in business conditions after a soft spot during October to
January is indicative for a rebound in the underlying momentum in the
economy." Well, no, if anything it is indactive that Germans
were happy to reap the benefits of a few trillion in liquidity which in
turn pushed markets higher, and making Germans even more confident
despite the big miss in German PMI in March. But for now a big drop in
the market is unwelcome so let's focus on reflexive, Catch 22
indicators. Even Goldman is perplexed on the spin: "Only the release of
the 'hard' data in the coming weeks will show which survey is giving
the correct signal with respect to the underlying momentum of the
German economy. But in any case, the March IFO argues against taking,
at least for now, the PMIs at face value."ECB Shoots First, Conducts Analysis Of LTRO Inflationary Impact Later
Confirming once again that when it came to last year's LTRO desperation, the operation was nothing but the latest attempt at filling liquidity holes at insolvent banks, and nothing to do with facilitating lending, is the interview by Helsingin Sanomat with ECB council member Joerg Asmussen, according to which there would be no more LTROs until the ECB found out what it is the LTROs actually do. From Bloomberg: "The European Central Bank won’t provide more long-term loans until it has studied how the funds are distributed into the economy, council member Joerg Asmussen told newspaper Helsingin Sanomat. “We need to see how this liquidity feeds through over the next few months,” Asmussen said, according to a transcript of an interview with the Finnish newspaper on March 24 and published today." Well supposedly this means that with everyone now looking the ECB squarely in the eyes while also looking askance at $10/gallon European gas, there will be no more LTROs "for at least a few months" as the ECB actually figures out what it has done. Which also explains why the need to redirect from one bailout process, now topped out as the LTRO no longer is pushing the European economy higher, to another: the old narrative of EFSF+ESM expansion, so prudently picked up over the weekend by Angela Merkel.Source Links for Today’s Items:
First…
Obama Taps Jim Yong Kim for World Bank
http://apnews.myway.com/
http://www.huffingtonpost.com
Obama Taps Jim Yong Kim for World Bank
http://apnews.myway.com/
http://www.huffingtonpost.com
Well, it looks like ice-witch Hillary
Clinton, has been shafted, yet again. This time she will not be taking
control of the World Bank. Instead Dartmouth College President Jim Yong
Kim, a public health expert, will head this financial institution. In
short, the cancer of Obamacare now extends to choosing a Public health
expert for the World Bank.
Many in the world have a collective
amnesia when it comes to their financial savior Benji Bernanke. Many
have forgotten how his sluggish response to the brewing credit storm in
2006-2007 Many will follow his advice and not invest in gold because
they have been told it is a bad risk. Many will loose when their paper
assets go up in flames. Many will not heed the advice to keep stacking.
While those looking at the short term are
dismayed at the lowering price of precious metals, the Chinese are
delighted and are treating this as an opportunity to make more physical
gold and silver disappear off the market. Everyday, China continues its
not-so-secret mission to back its currency with physical gold as other
nations around the world back their currencies with empty promises. When
gold can be directly traded for a fixed money denomination, it will be
destroy the fiat currencies; therefore, keep stacking.
The U.S. intelligence community will now
store information about Americans with no ties to terrorism for up to
five years under the new Obama administration guidelines. Up until now,
this information had to be immediately destroyed; however, a more
fearful U.S. government of its worst enemy, the American people, is
doing everything possible to stay ahead of the game.
As Obama’s sycophants defend Obama’s
crowning government takeover of healthcare at the Supreme Court, this
video clearly illustrates the compounded lies that Obama put forth in
getting this crap passed. Remember what what the blithering idiot Nancy
Pelosi said… “We have to pass the bill to see what is in it.”
Barf!
Barf!
We are beginning to know why Jon Corzine
is not in an orange jump suit. He would have had company. Namely members
of the the Securities and Exchange Commission. This may be the reason
why time stamps on official documents received unusual treatment; in
that, their dates were suspiciously altered. Who ever said the SEC was
ethical, must be smoking the same thing that Bernanke is.
Every Money Printing Exercise Leads To Unintended Consequences
Admin at Marc Faber Blog - 3 hours ago
But every money printing exercise in the world leads to unintended
consequences at a later point. And, this is the important issue to
remember. We don’t know yet for sure what the unintended consequences are.
- *in BI*
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
The Side Effects Of Money Printing
Admin at Jim Rogers Blog - 3 hours ago
Throughout history when you destroy the people who save and invest and do things the right way, your society ultimately has to pay a huge price for it. - *in MLC* *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.*
What It's All About
Decrypting the subtle nuances of Bernanke's speech this morning was hardly a surprise. The key is 'unemployment' and whether its structural or cyclical - we'll ease anyway (just in case).
Debase first or most or lose... 86 mentions of 'unemployment', No
mention of 'inflation', and no mention of
'oil-price-inspired-consumption-slump' or 'debase'. 'Structural' 16: 'Cyclical' 8Long End Decouples On Risk Of Constant Central Planning Failure
Treasuries
have rallied on the hope being handed out by Bernanke, recovering
overnight losses after gains from last week moving more Goldman muppets
back into pain. What's different this time from last week's rally is the notable underperformance of the long-end relative to the front-end.
While still red from Friday's close, 2s through 7s are almost back to
unchanged and 4-5bps off overnight high yields. 30Y however is still
+4.5bps and only 1.5bps off the high yields overnight. 2s10s30s has
fallen notably (which should be risk-negative) but for now - all the
equity market can see is a centrally planned equity market rally to
float all boats. It seems to us that the long-end remains stuck in the
mud on long-run worries over the print-big-of-go-home attitude that was
just reaffirmed.The Bernank Reprises His Role As a Gold Bug's Best Friend
The
initial reaction to the release of Bernanke's speech this morning was
'QE3 is on' and this was borne out perfectly in the data. TSYs rallied
(with the short-end performing best), the USD dropped and with it
commodities soared (though Oil stayed much more in sync with it than we
have seen historically) and the nominal price of stocks jumped
handsomely. What was most notable though was Gold's outperformance (and
Silver given its high-beta juice) compared to other asset classes. Then
as the US day session opened, Treasuries turned around with the whole
curve rising in yield and the long-end steepening as the
correlation-algos stepped in to pull the TSY complex back into a twist around the 10Y
(10Y unch from 8amET, 30Y +2bps, 5Y -2bps and Mortgage spreads - which
widened initially - are now back to unch from 8amET and well down on
the day). Oil and the USD have tracked sideways from the open and aside
from a gap up around 10amET (on dismal data we assume locking in more
QE hope), stocks have leaked back a little as volume faded. Gold (and Silver), however, have continued to surge - now over $1685 and at near two-week highs
as once again the cleanest and largest impact of Bernanke's hint at
further debasement is exemplified in the price of precious metals.Quadruple Dip: Housing Relapses As "March Is Turning Out To Be The Weakest Month Since Last October Re: Buyer interest"
For months we have been saying that there is no housing recovery, and what little buying interest there was was driven purely by abnormally warm weather and still record low interest rates. Well, the seasonal aberrations are now over, and normalcy can return, but not before much demand was pulled forward (Cash for Caravans? Money for McMansions? Shekels for Shacks? Dough for Dumps?) to December-February courtesy of "April in January" and mortgage rates soaring to well over 4%, leading to a major tumble in MBA new home and refi mortgage applications (as noted here "So Long Housing - Mortgage Applications Collapse, And Sentiment Update"). So we won't repeat ourselves, intead we will give the podium to CNBC's Diana Olick who now finds empirical evidence of what we have been saying all along. From Olick: "Housing was charging back. Spring sprung early. Sentiment among home builders doubled in six months. Any talk that the fundamentals might not be supporting the sentiment was met with harsh criticism. And then suddenly it wasn’t. A slew of new housing data last week disappointed the analysts and the stock market, and all of a sudden you started to hear concern that maybe housing wasn’t exactly in a robust recovery. From home builder sentiment to housing starts, to home builder earnings right through to sales of newly built homes, there was not one hopeful headline in any of it (except perhaps if you invest in rentals, as multi-family housing starts made more gains, but that is a contrary indicator to housing recovery)." And from the ground:"And then an email from a Realtor in New Jersey: “Just reviewed March buyer clicks, Google’s analytics on all the sites we monitor – March is turning out to be the weakest month since last October re: Buyer interest."And 14 of 16 On Dallas Fed Miss
The Dallas Fed Manufacturing Outlook just came with its largest miss of expectations in 9 months - and biggest drop in 7 months..
A 10.8 print vs expectations of 17.0 dropped the index back to its
lowest since December and keeps the 'good is good but bad is better'
dream alive we assume and markets are entirely unfazed. The 'hope'
sub-index printed higher which accounts for some of the reaction but we
note that New Orders went negative, Average Workweek plummeted to its lowest in at least six months (and the number of employees also fell), and Prices Paid jumped but Prices Received dropped
for the first time in three months (more margin pressure). This makes
14 of the last 16 macro data prints in the US a miss - but Ben is here
to save us from considering the harsh reality of our quagmire.Another Housing Data Miss Makes It 13 of 15
Pending Home Sales missed expectations by the largest amount since September of last year and printed negative (-0.5%) versus hope of +1.0%. It seems our self-fulfilling housing recovery is not so self-fulfilling or recovering...this makes 13 of the last 15 macro data prints in the US a miss.
What is perhaps most surprising is the fact that this is from our old
friends - the NAR - who seem comfortable 'fabricating' whatever number
they need and in a wonderful ignorance of the reality of the situation
(or uncomon confidence in extrapolating exceptional trends), Larry Yun
(NAR Chief Economist) notes "The spring home buying season looks bright
because of an elevated level of contract offers so far this year"
which seems odd given the fall MoM and the clear warm-weather
demand-pull that has occurred (but we assume he is spinning the
better-than-expected YoY data that marked a pick up from the last abyss
we saw in home sales). We also note that while YoY comps are the
positive spin, the Jan print was almost the highest 'rise' seasonally
for January of the last 10 years and this print (for Feb) is well below seasonal average (and near the worst of the last 5 years).Goldman's Take On Bernanke's "NEW QE" Speech
While it appears to us that Bernanke's message was loud and clear, there are those who need validation and peer-confirmation. Such as that from the firm whose alumni run the Fed, namely Goldman Sachs. Below is Jan Hatzius' take on the "surprising" Chairman speech which essentially said QE can and will come at any time there is a downtick in the market, masked by the unemployment rate rising to its fair value, as estimated by Gallup, somewhere around 9%.Leveraged ETFs - Why Do We Have Them?
According to Barron's as much as 91% of “triple” ETF’s might be owned by individual investors. That figure seems shocking, and as the article admits, could be wrong, but it is scary. The activity in TVIX the past few weeks does indicate a strong retail presence – we would like to think professionals didn’t bid something up to an 80% premium to NAV, knowing that the share creation process could be re-instated, virtually assuring that the premium would collapse to 0. We don’t see a need for these products except for small retail investors who can’t get leverage any other way, and we suspect they don’t understand how these things really work, as they are the most likely to buy and hold these things.Spot The Odd Labor Market Out
Earlier
this morning, strategically timed just in advance of the Chairman's
tacit admission that everything attempted to date has once again failed to stimulate the economy as now both housing and soon employment have resume their drop, New York Fed released a note titled "Prospects for the U.S. Labor Market"
which in not so many words explains why there are none. While the
analysis is the same that has been presented here over and over,
confirming that the jobs recovery has been anything but, and thus
setting the stage for today's Bernanke preannouncement to either a March
NFP miss or more QE at the April FOMC meeting as Bill Gross tweeted
yesterday, it has one chart that shows why when it comes to restoring a
virtuous cycle this time is different, and why endless central planning
may have finally broken traditional economic assumptions. The chart
below is perhaps the only one worth noting. Spot the odd "recovery" out.Our sponsors were chosen to help you prepare for the coming global financial collapse...If you wait until TSHTF (the shi! hits the fan) it will be too late...
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