The One Chart That Says It All
Depending on debt to fuel nominal growth leads to an economic death spiral.
Sometimes one chart says it all. Charted against consumer credit, the
S&P 500 (SPX) collapsed after the 2000 dot-com bubble burst and has
been tracing out a descending channel since then. The Fed's injections
of liquidity via trillion-dollar purchases of toxic mortgages and
Treasury bonds does not funnel money into productive investments--all it
accomplished was to further incentivize speculative churning and
financialization to enriched the few at the expense of the many. So sit
back, tighten your seatbelts and enjoy the death spiral ride, brought to
you by the Federal Reserve and your elected servants of the financial
Elite.Ugly European Sovereign CDS Rerack
An ugly day all around as European sovereign CDS jump the most in three weeks...
5Y 10Y 5/10's
ITALY 374/382 +15 365/385 -10/0
SPAIN 432/440 +15 426/446 -5/5
The overall Situation is Getting Much Worse
Admin at Jim Rogers Blog - 1 hour ago
As I have explained several times, this is an election year in the united
Staes as you well know and there are something like 40 or 45 elections over
the next 12 months including France, US, Germany. So we have a lot of
elections, a lot of politicians who want to be re-elected, so there is
going to be a lot of good news. The people who is receiving the money which
is being spend and printed are obviously going to be much better off in the
next year or so.
The overall situation however is getting much worse because the debt is
going through the roof for all of us. So, you should wor... more »
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...
We May Have A Significant Correction In The Next 3 Months
Admin at Marc Faber Blog - 1 hour ago
I am not entirely out of the stock market although I think that we may have
a significant correction coming up in the next 3 months. - *in a recent
podcast*
*Related, SPDR S&P 500 ETF (SPY), iShares Russell 2000 Index ETF (IWM),
iShares MSCI Emerging Markets Index ETF (EEM)*
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Important Mark Grant showing 140% Debt to GDP for Italy/Iran's Ultimatum/Spain's economy in turmoil/European bond yields rise
Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 17 hours ago
Good evening Ladies and Gentlemen: Before beginning with this commentary, I have seen a lot of needless attacks from certain readers and I have received a lot of emails that these comments should be moderated. I have always believed in free speech and thus I don't remove these comments no matter the persuasion. I will warn you however, their emphasis relies heavily on the paper gold/silver
First…
The Bernank Says US Banks Could Withstand Euro Shocks
http://news.yahoo.com
http://www.foxbusiness.com
The Bernank Says US Banks Could Withstand Euro Shocks
http://news.yahoo.com
http://www.foxbusiness.com
After 4 of 19 U.S. banks failed the
laugh-out-loud bank stress test and the 35 percent of U.S. prime money
funds are European holdings, Sugar Daddy Bernank actually told a
congressional panel that U.S. banks could withstand shocks from Europe,
even if the debt crisis there significantly worsened. Man, I do not what
this blithering idiotic jack-ass is smoking, but it must be some good
stuff.
Belgium, the Czech Republic, France,
Germany, Greece, Italy, Japan, the Netherlands, Poland, Spain, and the
United Kingdom have been exempt from Iranian oil sanctions. Gee, now why
was China and India not on this list? Could it be because they are
basically giving a collective bird to the U.S..
According to investor Wilbur Ross, and
others, Long-term government debt, which has provided some of the best
market returns for decades, now poses the greatest threat to portfolios.
Inflation, by the loose Fed policy, has been causing the 10-year bonds
to creep up. In short, fantasy cannot override reality forever;
therefore, it may be a good idea to get out of paper folks.
John Embry says not to be worried about
the short $50, or so, downside on gold because of the thousands of
dollars to the upside. Eastern Central Banks and wise people are taking
this wonderful opportunity to acquire physical metal while on this dip.
The supply/demand for silver is also powerful. No amount of paper
shenanigans will make up for demand for physical silver; therefore, keep
stacking.
A $100 note in 2010 possessed a
purchasing power of only $16.83 in 1969 dollars. Despite this enormous
depreciation, the Fed has not issued larger denomination, forcing more
electronic transactions. This is precisely the intent of the US
government. Like Sweden, the U.S. government is waging a war on cash.
Black Markets, and locally produced currency is going to make the U.S.
government loose the war on cash in the same manner as its war on drugs.
During the 2001 Bush-Gore showdown, we
heard a lot from the Republicans about changing the rules in mid-stream.
Well, when it comes to Ron Paul, this news video clearly illustrates
that concept is perfectly alright for the Republican Leadership. Please
watch this video as rules are changed, people are arrested, and the
national news media purposely ignores what is happening on the ground.
The United States Supreme Court
unanimously sided with an Idaho couple in regards to building a new home
on their property. The EPA halted construction citing that part of the
property was a wetlands that could not disturbed. This ruling may limit
the Clean Water Act, and this also could be just a prelude to Obama’s
political Waterloo… Obamacare! Anyway, totally unreliable sources
indicated that the couple had burned a pile of old truck tires in their
backyard to celebrate.
Just BTFD...
Thomson Reuters GFMS Global Head: "Buy This Gold Dip" As $2,000/Oz Possible
The global economy remains on shaky ground. China’s manufacturing activity contracted for its 5th straight month, the US recovery is still very early to call, and the euro zone debt crisis may not be finished. Eurozone PMI data is due later today which will show how the economy is doing after Greece averted default earlier this month. Thomson Reuters GFMS have said that gold at $2,000/oz is possible - possibly in late 2012 or early 2013. Thomson Reuters GFMS Global Head of metals analytics, Philip Klapwijk, featured on Insider this morning and advised investors to "buy this gold dip”. Gold should be bought on this correction especially if we go lower still as we may need a shake-out of "less-committed investors." Klapwijk suggested that a brief dip below $1,600 is on the cards but the global macro environment still favours investment, notably zero-to-negative real interest rates and he would not rule out further easing by either the ECB or the Fed before year end12 Charts On China's Chagrin
While
some believe we can decouple from the primary and secondary impacts of
a China slowdown (jst what happens if we all decouple from the
world?), it seems like wishful thinking that the growth engine of the
world can now be waved aside on the back of "well, they will just
re-stimulate and will be well" especially given where oil prices are
currently. Michael Cembalest is little more sanguine that us on China's
growth (expecting 7-8% GDP growth to fuel Asian economic activity) but given the 'easing' that has already occurred in China: Chinese
government has injected more liquidity; expanded the quota for foreign
equity investment; cut bank reserve requirements; delayed tighter
capital adequacy rules; created a program through which municipalities
can issue bonds with government guarantees (rather than having to borrow
from banks); eased first time homebuyer restrictions; and injected
capital into its biggest banks; and yet still the macro data is leaking weaker as these 12 charts highlight only too harshly.WTI Drops Most In 3 Months
Commodities
are broadly under significant pressure but nowhere is it more
noteworthy than in Crude (even though the USD is only modestly higher
on the day). Brent is falling but WTI is underperforming as it trades
down on the day at the biggest drop in over three months. Brent-WTI is leaking higher
though as the focus shifts increasingly to Brent. WTI and Brent are
trading down close to the SPR-rumor spike-low levels as China and Russia
both raise the rhetoric against the US on Iran.Stolper Appears In Time Of FX Uncertainty, Provides Fadance
FX
traders of the world have been forlorn for a week or two as the lack
of directional guidance from the anti-guru-du-jour Thomas Stolper of
Goldman has been sorely lacking. Worry no more. He is back with with his
latest 'Fadance' (/fey-dyns, verb/ - "Advice" which Goldman Sachs provides to "muppets")
in that he prefers to be short USDJPY from 82.8 (suggesting JPY
strength on the back of seasonal patterns and the recent deterioration
in the trade balance as being transitory temporary). Given his recent track record, being long the USD against the JPY would seem appropriate and his stop (and therefore the target) at around 84.5. Home Prices Miss Large On 9th Consecutive Downward Revision
It
will come as no surprise to many that the warm-weather-induced
ebullience and renaissance in the US housing market is perhaps
floundering as all that demand was dragged forward. Today's notable miss
in the FHFA Home Price Index (at unch vs an expectation of +0.3%) is
ugly but the huge downward revision from +0.7% to merely +0.1% in the previous month is now the ninth consecutive notable downward revision.Add
to that the fact that FreddieMac just reported mortgage rate cracking
over 4% (from 3.92% to 4.08%) and the ugly data on MBA applications
and...well at least we're decoupling.Art Cashin Takes On Critics Of His Seasonal Adjustment Seasoning
We have covered the topic of BLS seasonal adjustment to death and beyond, as well as the endless expansion of those dropping out like flies from the labor pool (did those not in the US labor force, one way or another, whether due to mistracking, statistical aberrations, or outright data manipulation, increase by 1.2 million in January? It did? Next question... or does the government now desperately need an apologist for its own upwardly biased data 'mismanagement'?). Yet some of the formerly relevant elements at the less than cutting edge of asset management-cum-blogging decided to call out Art Cashin for daring to point out just this glaringly obvious seasonal adjustment issue. Of course, Art does not need us rushing to his defense. He can do a good enough job on his own.The Bernank: The Man, The Legacy And The Law
Fed chairman Ben Bernanke is covered in a long profile by Roger Lowenstein in the Atlantic. The sympathetic account takes the reader blow-by-blow through the criticism that he has received from virtually all quarters during his tenure as Fed chair. What Lowenstein hones in on are the reviews and criticisms of Bernanke’s performance in “resurrecting the economy” — the interest rate policy, his interpretation of the dual mandate, quantitative easing, Operation Twist, etc. But for a piece that clocks in at 8,287 words, Lowenstein pays scant attention to the emergency actions taken to save the financial system itself.Turkish Government "Goes For Gold"; Seeks To "Transfer" Private Gold Holdings Into Bank System
Gold may not be 'money' to the Chairman, but it sure is to Turkey. The WSJ reports that
"The Turkish government, facing a bloated current-account deficit that
threatens to derail the country's rapid expansion, is trying to
persuade Turks to transfer their vast personal holdings of gold into
the country's banking system." The reason: "The push to tap into the
individual gold reserves—the traditional form of savings here—is part of
Ankara's efforts to reduce a finance gap that is currently about 10%
of gross domestic product." In other words, "sequester" the
population's hard assets (politely of course), and convert these to
paper to fund the country's creditors, both foreign and domestic.
Mostly foreign. In other words, Southeast Europe is slowing becoming
the staging ground for the 21st century equivalent of Executive Order
6102, where first Greek, and now Turkish gold, is about to be pulled
from point A to point B, where point B is some top secret vault deep
under London.LTRO Stigma Spikes As Sovereigns Slump
As
we approach the US day session open, Europe is on a similar trend to
yesterday with broad market weakness. European sovereigns, most notably
the fulcrum securities in Italy and Spain - but also France, are at
their worst levels in three weeks with Italian 10Y back over 5% yield and Spanish 10Y back over 5.5% (near its worst level since mid January). The LTRO Stigma (the spread between LTRO-encumbered banks and non-LTRO-encumbered banks) has jumped again and is near its worst levels
since the initial LTRO at over a 90bps differential. Corporate credit
and stocks are also notably weaker as credit decompresses to catch up
with stocks weakness as CDS roll technicals unwind.Initial Claims Beat Expectations, To Miss Next Week Following Revision
Same
old, same old from the BLS: with initial claims expected to print at
350K, we get a number that is just better, or 348K - supposedly the
best since February 2008, however one which will be revised to about
351K next week, hence a miss, in line with the perpetual +3K upward
statistical bias each and every week demonstrated by the BLS, which is
no longer even funny. To be sure, last week's 351K was just raised to
353K, just so that headlines can announce a 5K drop in claims week over week. Continuing
claims printed at 3.352MM, down from an upward revised 3.361MM. And
yes, initial claims are lowest since February 2008... Until one adds the
continuing claims, EUCs and Extended Claims as seen in the chart
below. The 99 week cliff saw a total of 18K drop from total rolls:
these are now 1MM lower compared to a year ago.Those Catchy Spanish (Yield) Curves
With ZIRP and LTRO it is hard to get a good read on the Spanish yield curve and what anything means. Spanish 10 year yields have risen 9 days in a row, 5 year yields have moved higher 8 out of 9 days, and the 2 year has been much more mixed, until recently. The 2 year yield is out 19 bps in those 9 days, but 18 bps of that move has occurred the last 2 days. The 2 year bond fits the sweet spot of LTRO, is likely to be held by banks in non mark to market accounts, so it has been stable, but it has even started to leak a little. The move is small, almost trivial, yet with all the things working to support 2 year bonds, it is curious that it is able to widen at all, let alone 18 bps in 2 days.Europe's 'Success Story' Double Dips: Irish Economy Re-Contracts, As Predicted
Remember
Europe's so-called success story - Ireland? Time to scratch it off the
list, as the "best performing" PIIG, and "peripheral reform"
wunderkind, just reminded everyone that the only true success story in
Europe is that other I country - Iceland,
after its fourth quarter GDP unexpectedly dropped 0.2%, well below
consensus estimates of a 1.0% GDP boost. Odd - recall that back in
October, following the announcement that Greece would be allowed to
extract a bondholder haircut, initially at 50% and ultimately at 78.5%, we said that "this means that Portugal, Ireland, Spain and Italy will promptly commence sabotaging their economies (just like Greece) simply to get the same debt Blue Light special as Greece." Looks like Ireland is well on its way to doing just that,
and the GDP slide is actually not all that surprising. Next: prepare
for more "surprising" GDP misses from Portugal, Spain and, of course,
Italy.Our new 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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