The Risk Of 'Hot' Inflation
Ideological deflationists and inflationists alike find themselves both facing the same problem. The former still carry the torch for a vicious deflationary juggernaut sure to overpower the actions of the mightiest central banks on the planet. The latter keep expecting not merely a strong inflation but a breakout of hyperinflation. Neither has occurred, and the question is, why not? The answer is a 'cold' inflation, marked by a steady loss of purchasing power that has progressed through Western economies, not merely over the past few years but over the past decade. Moreover, perhaps it’s also the case that complacency in the face of empirical data (heavily-manipulated, many would argue), support has grown up around ongoing “benign” inflation. If so, Western economies face an unpriced risk now, not from spiraling deflation, nor hyperinflation, but rather from the breakout of a (merely) strong inflation. Surely, this is an outcome that sovereign bond markets and stock markets are completely unprepared for. Indeed, by continually framing the inflation vs. deflation debate in extreme terms, market participants have created a blind spot: the risk of a conventional, but 'hot,' inflation.
How States Can Protect Themselves From Financial Collapse
The
states of America are, truly, children of the Constitution. The legal
framework that is the foundation of state sovereignty and internal
administration is unique for perhaps any country in history up to the
moment the U.S. won its independence. States were designed to
decentralize and keep in check the power of a subservient Federal
Government. They were meant to be the guardians at the gate, the
barrier to the formation of oligarchy or outright dictatorship. This,
of course, has changed drastically. The battle over centralized verses
decentralized authority and economy has been going on for quite some
time, and is undeniably critical in our climate of crisis now, under a
government which is bankrupt in every sense and a currency which is on
the verge of calamity... The following is a step by step method that
states could use to accomplish the task of insulation from financial
crisis and federal control. Much of it hinges on a willingness by
state governments to actually pursue independence, which might seem
like a naïve dream to most of us. But, in the wake of a major
breakdown, and the fall of the greenback, I believe many states will be
seeking a way to weather the storm, if only out of a desire to
survive, and this includes walking away from their ties to Washington.No Housing Recovery Until 2020 In 5 Simple Charts
Every day (for the past 3 years) we hear countless fairy tales why housing has bottomed and will improve any minute now. Just consider the latest kneeslapper from that endlessly amusing Larry Yun of the NAR, uttered just today: "pent-up demand could burst forth from the improving economy." Uh, right. Here's the truth - it won't and here is why, in 5 charts from Bank of America, so simple even an economist will get it.
Today’s Items:
The International Monetary Fund appeared
close to sealing a $77 billion deal with Japan, Sweden, and Denmark to
contain the EU debt crisis. $77 billion dollars? Are you kidding me? Is
this a joke? Apple is worth $600 billion. This just to go that they
are loosing it folks. What’s next? A 100 Trillion dollar deal with
Zimbabwe?
Surprise, Surprise, Surprise! Things are
getting desperate in Europe; in that, Central Banks, that do not want
to counterfeit… err print money, may be forced to increase the speed of
their printing press. The European Central Bank has already injected
over 1 trillion euros and it may not be long before it is forced to
increase that amount.
If anyone is desperately looking for how
things may be about to go in Australia, then they need look no further
than China’s economic hard landing. Added to that, is the fact that the
insurance company Genworth Financial has cited deteriorating market
conditions in the Aussie mortgage market for closing its Australian
unit.
The longer the Central Banks, like the
Fed, hold gold down in the $1650 range, with their raids, the more
powerful the upward push in its price will become. Although the Fed is
getting what they want for now, having suckers invest into stocks before
the election, things will fall apart. The key is not to be in paper
when it does; therefore, keep stacking.
Efforts are being made to pass a bill
that would empower the IRS to revoke Passports of U.S. citizens if they
owe more than $50,000. In fact, it can be just a claim without any
evidence. This of course is violation of the void U.S. Constitution’s
right to due process.
Corporations, to make a profit, profile
consumers on what they buy. It is how they stay in business in a highly
competitive market. Treat the government like a consumer, and one can
build up a profile. This consumer, the U.S. government -specifically the
domestic Department of Homeland Insecurity, likes to buy man killing
hollow point bullets, hardened checkpoints, and radiation pills. This
consumer is either a militant prepper or something more dangerous… You
decide.
Talk about Washington being out of touch, we now have Senators stating that people love junk mail.
Of course the true aim is to support the underfunded postal worker retirements with taxpayer dollars.
And when it comes to Harry Reid, can you say quid-pro-quo?
Of course the true aim is to support the underfunded postal worker retirements with taxpayer dollars.
And when it comes to Harry Reid, can you say quid-pro-quo?
Europe Drops Dismally Amid Deja Vu
Keeping it simple, Europe was a sloppy mess today.
In an almost perfect copy of last week's sovereign, corporate, and
financial credit market movements, today saw all of these assets plunge
back near post-Non-Farm-Payroll lows. Equity markets, which had
miraculously managed to regain those pre-NFP levels this morning after
the Spanish auction knee-jerk, rapidly retraced and aside from some
stick-save efforts from US markets and Lagarde, keeps the chaos-ball
rolling with yet another multiple-sigma flip-flop. Ugly all around as it
seems the reality check we discussed on the Spanish auction overnight
was better received than the spin the Euro-Elite tried to put on it as
we reinforce our view of the instability as the LTRO Stigma widens further to post LTRO1 wides as 10Y Spain approaches 6% yield and 425bps spread and Italian CDS over 440bps as 10Y yields break back above 5.5%.More On Bubbles
Dave in Denver at The Golden Truth - 8 minutes ago
*The bubble is in paper assets, particularly sovereign debt. Historic lows
in interest rates mean that prices are at historic highs as rates and
prices move inversely. Take into account the solvency factor, and the
conclusion is inescapable that such paper assets are in the biggest bubble
in history. Sadly, the vast majority of people will not understand this
until it is too late and their savings have been destroyed. *- Robert
Fitzwilson on King World News (link below)
First I quickly want to point out that yesterday, despite the rosy
headlines reported with regard to weekly mor... more »
U.S. Retail Sales Climb More Than Forecast on Jobs: Economy
Eric De Groot at Eric De Groot - 2 hours ago
American continue to "shop til they drop" despite the fact that median
retirement account balances as of 2007 with the stock market at or near
all-highs was a mere $45,000. Ouch. People scream about reducing
government largess, but the vast majority of Americans need it to save them
from destitution. What other options do policy makers have other than
infinite...
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content, and more! ]]
Liquidity Will Support But Won't Save Housing
Eric De Groot at Eric De Groot - 4 hours ago
Liquidity lifts all boats until a break in confidence says it can't. The
2015 should be a wake up call for investors placing short-term price
interpretations ahead cycles and long-term fundamentals. Chart: Lumber
(CC) And Lumber Diffusion Index (DI) Headline: Expect a Turnaround In
Housing By This Time Next Year: Mark Zandi The National Association of Home
Builders today...
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content, and more! ]]
Video Interview, Yahoo Finance
Admin at Marc Faber Blog - 5 hours ago
Latest video interview, Yahoo Finance Breakout.
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Gold Shares Are Extremely Oversold
Admin at Marc Faber Blog - 5 hours ago
Gold shares have become extremely oversold and could rebound in the next
few days. -* in Seeking Alpha*Related, Newmont Mining (NEM), Goldcorp (GG),
Barrick Gold (ABX), Yamana Gold (AUY), NovaGold Resources Inc. (USA)(NG)*Marc
Faber is an international investor known for his uncanny predictions of the
stock market and futures markets around the world.*
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The Porn Addicts Formerly Known As The SEC Take Their Vendetta With Egan-Jones To The Next Level
This is so pathetic, it is beyond words:- US SEC EXPECETED TO VOTE ON POSSIBLE CHARGES AGAINST RATING FIRM EGAN JONES ON THURSDAY - RTRS
- POSSIBLE CHARGES STEM FROM ALLEGED WILFUL MISTATEMENTS ON EGAN JONES' REGULATORY APPLICATION WITH SEC - RTRS
Agriculture Graduates Versus MBA`s
Admin at Jim Rogers Blog - 5 hours ago
Someday it's going to be that America will be producing tens of thousands of agriculture graduates, as we did once upon a time, and there are not going to be many MBAs. - *in yahoo finance**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.*
Guest Post: Wages And Consumption Are Both In Long-Term Downtrends
Here are four charts of wages, income and consumption. The charts depict changes from a year ago (also called year-over-year) and the percentage of change from a year ago. These measure rates of change as opposed to absolute changes, and so they are useful in identifying trends... The build-out of Internet infrastructure that culminated in the dot-com boom boosted employment, wages and consumption, and the credit-housing bubble of the mid-2000s also boosted income and consumption. Now that these temporary conditions have faded, what's left is the relentless chewing up of traditional industries by the Web as distributed software boosts productivity while slashing the number of people required to create value. What's remarkable about the first chart is the increase in volatility in recent years: the changes in wages and salaries are increasingly dramatic. This might be reflecting the dynamics of the global economy pulling wages lower while massive financial-stimulus policies of the Central State and bank (the Federal government and the Federal Reserve) act to artificially boost wages with trillions of dollars in borrowed/printed money.
Guest Post: Meet The Man Bankrupting The Eurozone (And Maybe The Rest Of The World)
No, it’s not Greece Prime Minister and bankster puppet Lucas Papadermos who serves his former masters at Goldman Sachs rather than the people of the country he was “appointed” to lead. No, it’s not German Chancellor Angela Merkel who is putting the interests of the banks and bailout recipients above her fellow Germans at the risk of a continually devaluing euro. And no, it’s not European Central Bank president Mario Draghi whose cheap euro policies are propping up both the banking sector and governments of the periphery at the expense of capital investment in sectors that would result in actual wealth creation rather than sustaining a clearly unsustainable status quo. Meet Ed Houben. He is not solely responsible for the slow implosion of the poster boy of New World Order also known as the Eurozone, but the results of his career certainly play a part. So who is Ed Houben? Well, he is not a politician buying votes with stolen funds. Nor is he a banker looking to use taxpayers to cover his poor investments. Mr. Houben is just a lowly entrepreneur. His business just happens to be in putting a strain on the various welfare states which permeate throughout the Eurozone. Ed Houben is a sperm donor; but he is not just any sperm donor. The “fruits of his labor,” pardon the phrase, have thus far granted him 82 children; with at least 10 more on the way.
Economic Miss Trifecta Not Bad Enough For "THE NEW QE" Rumors
Continuing today's disappointing data releases, we now get the Philly Fed, Existing home sales (aka the NAR's monthly advertising update), and Eurozone confidence. Sure enough, all missed, since we are now in NEW QE prep mode.- Philly Fed: 8.5, missed expectations of 12.0, and lower than the previous print of 12.5 (source)
- New Orders down from 3.3, to 2.7
- Prices Paid spike from 18.7 to 22.5,
- but, just to add confusion to injury following the much weaker claims data, the Employment index rose from 6.8 to 17.9
- Existing home sales, reported by the inherently conflicted NAR, missed, dropping from 4.61MM to 4.48MM, a data set which we caution readers is about 0.0% accurate and valid.
- Total housing inventory at the end of February rose 4.3 percent to 2.43 million existing homes available for sale, which represents a 6.4-month
- The national median existing-home price for all housing types was $156,600 in February, up 0.3 percent from February 2011.
- All-cash sales rose to 33 percent of transactions in February from 31 percent in January; they were 33 percent in February 2011
- Single-family home sales declined 1.0 percent to a seasonally adjusted annual rate of 4.06 million in February from 4.10 million in January
- Finally, Eurozone consumer confidence also missed sliding to -19.8, on expectation of an improvement to -19.0 from -19.1
Goldman On The Three Risk World
Three key issues remain at the heart of current markets: the
strength of the US growth cycle; the sovereign and financial risks in
the Euro area; and the risks of ongoing deceleration in Chinese growth.
Goldman has created proxies for these various risks and the
sensitivities of different assets to those risk factors. They further
note that looking at those three proxies over time confirms what general
qualitative commentary has also spelled out. From late November to
early February, the market relaxed about all three risks, as better
global data and the impact of the LTROs on European financial risks
provided a strong tailwind. From February until mid-March, China fears reappeared and the market downgraded its views of China significantly while still relaxing about European and growth risk. Since then, both European – and to a lesser degree – US growth risks have re-emerged,
but at the same time there are some very tentative signs that the
market is becoming a little less worried about China. They, however,
remain increasingly cautious on them all: Europe seems increasingly in
the hands of governments, not the ECB, raising volatility; unspectacular
growth trajectory in the US continues as outlooks adjust down; and
even thouigh China's risk has stabilized they have avoided active
exposures 'given the muddiness of news'. Understanding which assets are
more sensitive and how these risks evolve might help prognosticators understand the need to pay attention to Europe - as opposed to merely Apple's earnings.Complete 2012-2013 European Bond Issuance Calendar
Now that those so inclined are once again advised to wake up at 4 am in the morning just to keep track of the Bid To Cover of each and every blowing out European auction (which absent a few trillion in ECB liquidity would be a sheer disaster), just like in the summer and fall of 2011 (but remember, according to Jim O'Neill 2012 is "nothing like 2011"), it would be useful to have an updated calendar of all the action in Europe for the rest of the year. So courtesy of Goldman, here it is: set your alarms.The Check Is In The Mail And Other Lies
Frustration levels are running high today. Just feels like we are being lied to, and no one wants to question the lies. According to the headlines, the Spanish auction was a 'great success', MS and BAC had 'great' earnings, and jobless claims 'fell by 2000'. Nothing that has happened so far today has been good, and the attempt to spin everything so positively is downright scary.And just as we predicted moments ago, here comes the "mainstream" media.
Inital Claims Soar Again, Ninth Consecutive Miss To Expectations In A Row: BLS Back To Propaganda School
There
are those who thought last week's massive Initial claims miss was the
last one. They were wrong. Instead of printing at the expected 370K, an
improvement from last week's already big miss of 380K, this week came
at a whopping 386K, the worst standalone print in 4 months. Well, until
last week's revision that is: instead of the 380K print that stunned
everyone, last week's number has now been revised to a massive 388K.
Why? So that mainstream media can declare, with a straight face, that
this week saw the number of initial claims decline! Here is the reality: last week's expectation was for a print of 355K. Instead we got a number of 380K. Now this number is being revised to 388K,
and is the biggest initial expectation to revision miss since early
2011. Needless to say, this means two things: 1) the transitory bump
associated with record warm weather, which was nothing but pulling from
the future, is now over, and 2) the April NFP print will be another
disaster, which is just as the Fed wants it - after all it is time to
start setting the stage for the NEW QE (and certainly not QE3 which is
already in place as Jeff Gundlach was so kind to explain) now that Obama
is the margin hiker in chief.
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