Hugh Hendry On Europe "You Can't Make Up How Bad It Is"

At The Milken Institute conference yesterday, Hugh Hendry delivered his usual eloquent and critical insights on the state of Europe. Beginning with the statement that "All of Europe has defaulted", the canny-wee-fella (translation: shrewd and cautious young chap) explained that "The political economy in Europe is such that the politicians chose to default on their spending obligations to their citizens in order to honor the pact with their financial creditors and so as time goes on, the politicians are being rejected." Between France's election of Mr. Hollande and Luxembourg's 'when times get tough you have to lie' Juncker, Hendry says the only inspiration for Europe is fiction as "you just can't make up how bad it is" as he goes on to discuss the precedent for a way forward, the grotesque distortions of fixed exchange rate regimes, why Wiemar happened, why the transfer union will never happen, Ayn Rand's reality, and fear politicians are feeling - ending with his view that "we are single-digit years away from the most profound market clearing moment".

Biderman Makes Friends: "Bankers Are As Dumb As Politicians"

In his usual quiet manner, TrimTabs CEO Charles Biderman unloads his emotional baggage along with USAWatchdog's Greg Hunter in this 15-minute interview. The sad truth is that, just like his alter-ego Lewis Black, Biderman is right - again and again. Whether it is reflecting on the kick-the-can mentality of polticians or US investor's apparent willingness to accept the  pulling-the-printing-press-over-our-eyes-behavior, or the fact that Europe can only get worse and how that will spread contagiously to the rest of the world (directly via trade or indirectly via risk-aversion), his focus on the facts (especially with regard to the real state of the US economy as he describes it) makes it hard to disagree for even the most vehement long-only manager (is it any wonder we don't see him on CNBC that much anymore?). Biderman and Hunter discuss the signs of growing inflation, the need to get rid of the deadwood bankers, Europe's imminent demise, central banks' 'funny money' creation, and the need for Gold and TIPs in any portfolio, Charles is at his best as he makes friends (except with the bankers and politicians that he scoffs at) and hopefully influences people.

Zuckerman To CNBC: "The Recession Never Ended"

Everyone's favorite perma-bullish stand-in for Cramer, Fast Money's Scott Wapner, seemed lost for words when Boston Properties CEO Mort Zuckerman laid down some basic truthiness on the state of the US economy "We have the most stimulative fiscal and monetary policy in the history of this country and here we are three years into the recession and it's not ended. I think we may be heading for an even weaker economy this year than people expect." The righteous REIT ruler went on to note that it is not just the US but Europe (ridiculously high unemployment rates) where he analogizes (rather picturesquely) that it reminds him of "the man who jumps off a 25-story building and as he's hurtling by the sixth floor he says 'don't worry, nothing has happened yet'." Wapner is silenced and changes the topic as we suspect he is stunned at the honest sentiment given the nominal three-year-highs in REIT indices. Truth is indeed stranger than fiat-fiction.

Jim Rogers’ Warning: Riots Coming to America

from Beacon Equity Research:
Speaking with the Wall Street Journal on Friday, commodities trader Jim Rogers of Rogers Holdings said riots such as the ones witnessed in Greece and reported as widespread in China will hit the United States and again in Europe as the next leg down in the financial crisis takes shape (after the election, he speculates in previous interviews).
“I’m more worried about those kind of problems [rioting] in the U.S. and Europe; this is where social unrest is going to be worse,” Rogers told the Journal.  “I would suspect that, when economic conditions get worse here and get worse in Europe, we’re going to see . . . you’ve seen governments fail in Europe; you’ve seen countries fail in Europe. I suspect you’re going to see more of it [rioting], yes.
“We saw it in London; we’ve seen it in several countries in Europe in the last year or two.  Yes, I expect to see it here, too.  If you don’t, look out your window”
Read More @ BeaconEquity.com

 

Leeb – We Will See Unbelievable Chaos Going Forward

from Stephen Leeb, KingWorldNews:

“Once gold gets going, people will be amazed at how fast the silver price moves. You are going to see three digit silver in the next couple of years. Going forward, there simply isn’t enough silver available to satisfy both the industrial demand and investor demand.
We will start to see strains in the physical market in silver at some point in the future. When that happens, silver will be off to the races.”
Stephen Leeb continues @ KingWorldNews.com

Chancellor George Osborne tells EU he won’t sign Britain up to ‘idiotic’ Basel III plan

George Osborne has warned the European Union that Britain will refuse to sign up to “idiotic” proposals that would water down tough international rules on bank capital requirements.
by Louise Armitstead, Telegraph.co.uk:
During angry exchanges, the Chancellor told a meeting of Europe’s finance ministers on Wednesday night that EU measures to implement “Basel III” bank rules would be ridiculed by financial markets and the banking sector because it so clearly failed to enforce clear and tough rules.
“We are not implementing the Basel agreement as anyone who will look at this text will be able to tell you. I’m not prepared to go out there and say something that will make me an idiot five minutes later,” he said.
After 10 hours of talks, a furious Mr Osborne said that since he had been forced to cancel a Downing Street dinner party he was ready to keep EU finance ministers at the negotiating table all night until they got it right.
Read More @ Telegraph.co.uk

Ron Paul Packs the Stands & Rocks the Fullerton Rally [Eat It Mitt, the PEOPLE Love Dr. Paul]

CME issues Clarification on Performance Bond Requirements

Trader Dan at Trader Dan's Market Views - 7 hours ago

This afternoon, the CME Group issued a clarification on their communique detailing the increase in performance bond requirements for it clearing member customer accounts with non-hedged positions. Evidently there was a great deal of confusion regarding the wording of the original release. The Dow Jones wire service interpreted the original communique in the same manner as I did. I am not sure about Reuters but either way, the wording was so poor, that it forced another release to clarify it! Here is the Dow Jones report: * 3:03 (Dow Jones) CME notifies members of its clearinghouse th... more »

 

German unemployment rises/all of Europe posts low PMI numbers/Italian and Spanish bond yields rise/Spanish IBEX plummets to levels not seen since 2003/

Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 8 hours ago

Good morning Ladies and Gentlemen: Gold closed down today to the tune of $8.30 to finish the comex session at $1653.40.  Silver continues to be trampled on, finishing the day down 29 cents to $30.59. Today Europe came back from the May Day holiday and immediately equity shares fell, especially the Spanish iBEX which has now fallen to levels not seen since the 3rd quarter of 2003.  Spanish and more »

 

Factory Orders Post Biggest Decline in Three Years

Eric De Groot at Eric De Groot - 9 hours ago

Does an unexpected surge in the PMI, followed by the biggest decline in factory orders in three years the next day really matter to service and consumption driven economy? Headline: Factory Orders Post Biggest Decline in Three Years The Commerce Department said orders for manufactured goods dropped 1.5 percent after a revised 1.1 percent rise in February. Economists had forecast orders... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] more »

 

Dodd-Frank Strikes the Commodity Markets

Trader Dan at Trader Dan's Market Views - 10 hours ago

I will try to write more on this later as I am still working the session but news came out last evening that CME was requiring all member firms to comply with regulations arising from Dodd-Frank which basically is forcing margin requirements for all "Non-Hedges" to effectively double as of this coming Monday. Talk about short notice! The ramifications of this are obviously huge and no doubt are adding to an already volatile mix of madness. Those traders with losing positions are going to be impacted even more since the new requirements may well push them over the line as far as mar... more »

 

The Next Slowdown Is Going To Be Even Worse

Admin at Jim Rogers Blog - 11 hours ago

In 2002 we had a slowdown, 2008 was worse because the debt was so much worse, the next time around is going to be worse still, because the debt just keeps going up by staggering amounts. - *transcript from a recent video interview* *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.* more »

 

My Advice To Young People

Admin at Marc Faber Blog - 12 hours ago

My advice to young people is that the degree is not important. If you have parents that can pay for your degree, then I would take one. If I had to borrow a lot of money, I’m not sure I would take one. I would try to work for someone who is successful and acquire knowledge from them. Whatever you do, you should do with a lot of passion and heart and like what you do. If you like what you do, you will do a better job than if you are indifferent to what you do at your job. I think there are plenty of opportunities in every field. *Marc Faber is an international investor known for his ... more » 

 

Who Actually Votes In America?

Depending on how one views the current state of the union, this infographic from TakePart.com offers insight into who is to be thanked or which cohort of our illustrious population didn't do enough to exercise their right for democratic central-planning by-fiat. Our favorite - top reasons for not voting: Too Busy or Not Interested; we can only assume American Idol or X-Factor was on that day. The rich voted at higher rates than the poor and the corollary perhaps that higher levels of education led to higher levels of voting leaves the big question - will even fewer of our unemployed turn out to vote this time that the 54.7% that turned out last time?

SNB Buys Swiss Francs And Sells Euro: Welcome To The EUR/CHF Peg

Anybody watching the EUR/CHF exchange rate this year was wondering why the volatility the pair saw last year had completely left. The pair slowly fell from 1.2156 over 1.2040 at the end of Q1 to 1.2014 today. FX traders hoped on a hike of the floor from 1.20 to 1.25, as many Swiss politicians and companies requested. Banks sold masses of Long EUR/CHF certificates and options. The retail market measured in SSI (Speculative Sentiment Index) was 96% long EUR/CHF.  We saw the typical Forex web sites telling regularly their masses of followers that the protagonists of these web sites were going long EUR/CHF in the hope that the SNB is going to act. This happened at multiple critical levels, at 1.2070, 1.2050, at 1.2030 and finally at 1.2010. The small FX trader was begging for months that the SNB would finally intervene. When all these people were long EUR/CHF, who was actually short, when the exchange rate continued to fall ? We speculated that some big accounts wanted their clients to be knocked out with their EUR/CHF longs, we thought that Swiss pension funds and big investors continued to repatriate their foreign funds.  What did the SNB ? Did they support the hopes of the masses, of all these SNB rooters ? But on the back-door of all this rhetoric they did the complete opposite: The central bank was happy to get rid of their Euros at a higher price than the floor they had set in September 2011 !

Frontline On Financial Fraud Part 2

Concluding last night's post on the PBS Frontline "Money, Power, & Wall Street" mini-series, the remaining two episodes below take us from the market lows to the current euphoric highs. From Obama's decision for more of the same on his economic team to the Stress Tests, from Larry Summers cavorting arrogance to the Public's rising anger, these two 'post-crisis' episodes seem to have less revisionism than the first two and proceed beyond the US to Europe's 'hiding of the truth' and whether the system can ever be truly reformed - not a pretty picture (especially with the mutually assured destruction argument already being played by the banks in their discussions with the Fed on Dodd-Frank today). No Blythe Masters' pool-side this time but Larry Summers is always happy to please.

Guest Post: 3 Likely Triggers Of The Next Recession

There is really no argument whether there will be a recession in our future — the only question is the timing and cause of it. The latter point is the most important. Recessions do not just happen — they need a push. In 2011 the economy was just a breath away from a recession due to the dual impact of the Japanese earthquake and tsunami and the European debt crisis. Had it not been for the combined efforts of the Fed through "Operation Twist" and the Long Term Refinancing Operations via the ECB, a drop in oil prices and a plunge in utility costs due to the warmest winter in 65 years, it is entirely likely that that we may have already been discussing a "recession." The ECRI launched a debate that was literally heard around the world with their recessionary call in 2011. The weight of evidence as shown by our composite economic output indicator index shows that the ECRI call was most likely correct. However, the restart of manufacturing, primarily automotive, after the crisis in Japan combined with an effective $90 billion tax credit due to lower oil and utility costs, turned the previously slowing growth rate of the economy around over the last couple of quarters. Sustainability is becoming the question now as weather patterns return to a more normal cycle and the effects of the lower energy costs began to dissipate. In a more normal post recessionary recovery the third year should be closer to a 6-8% economic growth rate versus 2%. While 2% growth is much better than zero — the current sub-par pace of growth leaves the economy standing on the edge of the pool with very little stability to offset any unexpected "push" into the cold waters of recession. The problem is identifying what that "push" could likely be.

Fidelity Loses Nearly Half A Billion On Green Mountain Implosion

Fidelity is happy to announce it has an opening for a new consumer discretionary analyst, because the current one, the one who recommended the firm's investment in Green Mountain, is now looking for a job. Fidelity's GMCR position , which as of 3:59 pm amounted to $1.13 billion, was minutes later trimmed by $445 million, after the company finally posted earnings (and we use the term loosely) which may have finally validated the David Einhorn (and every single skeptic's before) thesis on the name. Because while the earnings themselves came in line, it was the forecast that buried the company: specifically, its forecast of $885 million in Q2 revenue on expectations of $971.7 million, $3.92 -$4.05 billion in full year revenue on estimates of $4.32-$4.46 billion, as well as its 2012 EPS which were forecast to come at $2.40-$2.50 while the street was looking for 2.631 EPS. The result: the growth thesis is now over, and the growth premium has collapsed, with the stock plunging by 40% after hours.

Commodities Trounced As Stocks Dead-Cat-Bounce

For the third day in a row, the USD was bid from the Europe open to its close and drifted lower in the US afternoon. Today's limp lower in the USD this afternoon (with AUD and CAD strength while JPY was flat) provided, along with some leaking higher in Treasury yields, support for a modest risk-on levitation in stocks as the S&P 500 tried and failed to get back to unch after falling below yesterday's lows (well below the pre-ISM levels) early in the day. Credit, equity, and Treasury markets were remarkably in sync today - which is unusual given recent dislocations and correlation across asset classes in general picked up. Gold (and the rest of the commodity complex) traded pretty much in sync with the USD all day, leaving Silver down 2% on the week and WTI back under $106 but still +0.4% on the week - but Gold -0.5% (in sync with USD's 0.5% gain this week) was the best performer of a bad bunch today. VIX generally traded in sync with stocks aside from an odd gap lower right at the close. Treasuries ended the day 2-3bps lower in yield (a few bps off their best levels though) leaving the entire complex modestly lower in yield for week (aside from 2Y which is +0.4bps). Broad risk assets ebbed a little into the close even as stocks bounced off VWAP for one last push but volume leaked away as we rallied (as normal).

Name The Country: 101.5% Debt/GDP And... 1.7% Effective Interest Expense

That this rhetorical question will not pose any difficulty is almost sad: the answer, of course, is America, which as we pointed out yesterday, just crossed 101.5% in total debt/GDP (excluding its tens od trillions in unfunded liabilities, that is a different story entirely). What however may surprise some is that the already curiously low average interest rate that America pays on its interest, which in calendar 2011 was 2.5% (or $240 billion on $9.5 trillion in debt) is in realty far lower. The reason is that, as has been indicated repeatedly over the past years, the Fed is now the proud owner of $1.7 trillion in US debt, and it continues to load up on ever more expensive debt courtesy of Twist. As a result, it pockets the interest expense paid out by the Treasury, which in 2011 amounted to $76.9 billion. Then, once a year Bernanke remits all of his "profits", which are essentially interest proceeds on its portfolio, back to the Treasury, which then lowers the effective cash outflow, to just $163.1 billion, or a tiny 1.7%.

Why Did Gold Become Money?

With increasing chatter about extreme monetary policy, the chaps at Santiago Capital reprise their previous discussion with a look at why gold became money. With many calling for a return to a Gold-Standard, understanding why there was ever a gold standard to begin with, why has it been used as money dating back over 5000 years, and what makes gold so special (aside from its personality).

US Complacency Near 9 Year High Versus Europe

Europe's VIX broke back above 28% today, sending it to its highest level relative to US VIX since 2003 and almost three standard-deviations above its long-run norm. So what, we hear you cry - didn't you see European PMI and unemployment and the glorious ISM data in the US yesterday? To which we counter, US equities and European equities are not diverging dramatically, US investment grade credit and European investment grade credit are not diverging dramatically, and macro-economically the two regions have been trending down together in terms of negative surprises. We assume that VIX is holding relatively low to V2X (Europe's VIX) due to market expectations that The Fed will be first to flinch in the game of global thermonuclear money-printing war; however, until we see a significant drop in US equities (and therefore the implicit risk flare and rise in VIX), we suspect Bernanke is cornered. With VIX relatively 'cheap' to its realized vol (as we noted here), perhaps Europe-US Vol-compression trade (ahead of NFP at least) is worth a look - or more simply if you are bullish Europe, sell vol (as its the richest asset) or bearish US, buy vol (as its the most out of line).

Stock Gambling Addicts Go Cold Turkey As IB Yanks AAPL Options

 

 

Cellphone Airtime Becomes Currency in Zimbabwe

by Nick Clayton, The Wall Street Journal:

In the developed west, payment by cellphone feels as if it has been on the verge of taking off for years. Barely a week it seems goes by without the launch of another electronic wallet. But in Zimbabwe a local startup has seized the initiative.
It has developed its service in response to the financial mess the African country finds itself in. This has reached the stage where, as a result of hyperinflation, Zimbabwe abandoned its own dollar currency in 2009.
Instead people use whatever hard currency they can get hold of, often, but not exclusively, they pay with U.S. dollars. If their shopping did not add up to a round figure they either had to take additional goods or accept a credit note.
Read More @ WSJ.com

Think Fukushima Radiation Won’t Reach Us? Think Again, the Physical Debris Even Has.

“A Staggering Mess” as Tsunami Debris Hits Alaska Coast Early
from The Sun Break :
Gulf of Alaska Keeper, a non-profit organization that estimates it has cleared nearly 1,000,000 pounds of plastic debris from Alaskan coasts over the past 10 years, is reporting “tons” of what it believes is likely tsunami debris washing up on the coasts of the Kayak and Montague islands. Chris Pallister, president of Gulf of Alaska Keeper, told Alaska’s KTUU TV that ““It’s a staggering mess [...] the magnitude of this is just hard to comprehend and I’ve been looking at this stuff a long time.”
In an email to The SunBreak, Pallister let loose:

“In my opinion, this is the single greatest environmental pollution event that has ever hit the west coast of North America. The slow-motion aspects of it have fooled an unwitting public. It far exceeds the Santa Barbara or Exxon Valdez oil spills in gross tonnage and also geographic scope. (I was in Prince William Sound during the during the Exxon Valdez oil spill and so have a sense of comparison).”
Read More @ TheSunBreak.com

 

MUST HEAR: The American Empire Is Crumbling

A Truly Physical Perspective On Precious Metals

Too many people miss the silver lining because they’re expecting gold
- Maurice Setters
by Krassen Ratchev Seeking Alpha:

Many people will agree that silver is a beautiful precious metal. After just a little polishing, jewelry and crockery made from sterling silver can look just as good today as it did over a century ago. In fact, there are very few materials like silver that can lay claim to possessing versatility of use, durability, fungibility, store of value, liquidity and aesthetics all at once. In my opinion, the only materials that tick all of these boxes simultaneously are the precious metals gold, silver, platinum and copper.
Like a long-lost silver vase you might chance upon in the attic, many investors have re-discovered the fact that precious metals are and have always been a safe haven – an investment that literally stands the test of time. This is due to the simple fact that owning or investing in physical precious metals has absolutely no counterparty risk. Essentially, what you see is exactly what you possess.
In this article I would like to take a step back from the financial mayhem and take a fresh look at the physical stuff. Literally. I am hoping that for both old and new investors my analysis will yield a new perspective on precious metals.
Read More @ SeekingAlpha.com

The Obama Recovery Persists At Least Until After the Election … and Then Watch Out!

from The Daily Bell:

U.S. Manufacturing Grows at Fastest Pace in a Year … Manufacturing grew in April at the fastest pace in almost a year, propelled by a pickup in orders that signaled factories will remain a source of strength for the U.S. expansion. The Institute for Supply Management’s factory index climbed to 54.8 last month, exceeding the most optimistic forecast in a Bloomberg News survey and the best reading since June, the Tempe, Arizona-based group’s report showed today … The world’s largest economy may pick up after slowing in the first three months of the year as the increase in bookings indicates American assembly lines will keep churning out more goods. Combined with a report showing manufacturing in China also accelerated, the figures sent the Dow Jones Industrial Average to the highest level since 2007 as the data eased concern global growth was slackening. – Bloomberg
Dominant Social Theme: Wow, America’s had a tough time, but now things are getting better.
Free-Market Analysis: Just in time for Barack Obama‘s re-election, as we’ve pointed out previously, the entire American economy is taking a tremendous uptick.
Read More @ TheDailyBell.com

COMEX Warehouse Silver Volatility Continues

from Silver Doctors:
Silver was drained from every vault except The Morgue’s Tuesday, as massive silver inventory movements continue in COMEX vaults.  
COMEX WAREHOUSE SILVER INVENTORY UPDATE 5/2/12
*Correction: Delaware adjusted 3,960.350 ounces into eligible vaults which was not accompanied by a corresponding adjustment out of registered vaults.
While the CME is now reporting inventory levels to 3 decimal places, strangely enough- once again, NO MENTION FROM THE CME OF THE MISSING 1.4 MILLION OUNCES OF REGISTERED SILVER THAT SIMPLY DISAPPEARED IN THE AFTERMATH OF THE MF GLOBAL BANKRUPTCY!
Read More @ SilverDoctors.com

Martin Feldstein Suggests Spain Should Force Citizens and Companies to Buy Government Debt

Liberty Blitzkrieg
My Take:  Martin Feldstein’s article in the FT from a couple of days ago is so frightening I feel compelled to turn everyone’s attention to it if they have not read it yet.  The focus of the piece is Spain and he spends much of it talking about how “confidence” is the key (one of the 10 Commandments of the Keynesian religion).  While that is to be expected, he then goes on to state that the Spanish government should consider forcing its citizens and corporations to buy sovereign debt.  Here are the key paragraphs:

An alternative emergency approach would be to mandate, on a temporary basis, bond purchases by Spanish households and businesses. Here is how such a plan might work.
Read More @ LibertyBlitzkrieg.com

Please donate...

Thank You

 

I'm PayPal Verified