Total US Debt Soars To 101.5% Of GDP
There
is nothing quite like a $70 billion debt auction settlement at the
last day of a month to bring total US debt to a record $15.692 trillion,
which happens to be just $600 billion shy of the $16.394 trillion debt
ceiling. (and no, contrary to simple economic textbook lesson, this
does not mean that the private sector just got another $70 billion in
debt capacity courtesy of taxpayers, as explained here).
And now that we know what Q1 GDP was at the end of Q1, or namely
$15.462 trillion, it is simply math to divine that today alone total
US/debt to GDP rose by 50 bps to a mindboggling 101.5%.Goldman Explains The Fizzle: "Folks Remembered Europe Isn’t Closed Tomorrow?"
Goldman's sales desk brings us the FTW "analysis" of why today's rally fizzled: "What happened to the equity rally? SPX slips 65bps from the day’s high, NDX an even more substantial 1.15%. Post-ISM glow just fading? Prudent profit-taking as folks remember Europe isn’t closed tomorrow?"May day holiday so very little action/gold and silver hold another raid attempt/more on the "fat finger fiasco"/
Good evening Ladies and Gentlemen:
Gold closed down today to $1661.70 a fall of $1.70. The price of silver lowered by 9 cents to $30.89.
Today is the May day holiday in Europe and as such there was no real activity today. The action will start tomorrow.
Let us head over to the comex and assess trading today.
The total gold comex OI fell by 3411 contracts yesterday as no doubt JPMorgan
Reuters Video: Farmland, Agriculture, US Elections
Latest video interview with Reuters.
*
*
*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.*
It Won’t Surprise Me If Gold Goes Down Much Lower
What I said was, if gold gets to $1100 or $1200 or $1300, I would hope I’m
smart enough to buy more. I don’t know if it’s going to go there or not. I
may buy it at $1850 if war breaks out with Iran. It depends on what happens
in the world. What I said was that it won’t surprise me if gold goes down
much lower; that’s normal for the way markets work. And if it goes there, I
hope I’m smart enough to buy more. But if it goes to $1,550, I would
probably buy more. Just depends on what happened. - *in SA* Related, SPDR
GOld Trust ETF (GLD) *Jim Rogers is an author, financial commentator an... more »
Video Interview With RT, April 2012
A RT.com video interview.
Topics: Inflation, deflation
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Government vs Private Sector
Whatever the government does, it does it much worse than the private
sector. - *in a recent interview*
*
*
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
If Anybody Thinks There’s A Bubble In China, They Haven’t Been Doing Their Homework
It was a bubble in urban coastal real estate. But China, for the past three
years, has been trying to pop that bubble. And the bubble has popped. You
could certainly go down further, but I wouldn’t say there’s a bubble there
now. Prices are coming down, transactions are coming down and people are
losing money. I don’t know how long China will stay tough. I would hope
they’d stay tough much longer, because they’ve got to kill inflation too.
But if anybody thinks there’s a bubble in China, they haven’t been doing
their homework. The bubble popped. Prices have come down and are continui... more »
If You Can't Live With Volatility, Stay In Bed
If you can't live with volatility, stay in bed. - *in Reuters*
Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.
Phoenix Housing Market, Taxi Drivers & Concubines
I was in Phoenix the other day. Then, the taxi driver took me to the hotel,
nice hotel, in Fairmont. And then he told me, "the person that I just drove
before you—I drove him to a five-bedroom house". He told me, "he just
bought it for $120,000".
Where in the world can you buy a five-bedroom house for $120,000? I would
buy it, live in one bedroom and rent out four bedrooms to concubines. - *in
Bloomberg*
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Sugar Is Still Down 70 Percent Since 1974
Over the past 38 years sugar — and I’m not suggesting you buy sugar, I’m
using this as an indication — is down 70 percent, I believe, from its
all-time high. Well, there’s not much that’s down 70 percent in price since
1974, 37-38 years ago. But sugar is one of those things. - *in Seeking Alpha
* Related, Sugar Futures, PowerShares DB Agriculture Fund (DBA) *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
r... more »
The Way To Go Is To Become A Farmer
The very best way is to go and become a farmer. Buy farmland and become a
farmer, because then you are going to get huge paybacks. If you don’t want
to go into the fields, open a chain of restaurants in Midwest (US) or in
the outback of Australia, or get a Lamborghini dealership in Oklahoma or in
Nebraska because farmers are going to be driving the Lamborghinis; stock
brokers are going to be driving tractors. - *in Commodity Online* *Jim
Rogers is an author, financial commentator and successful international
investor. He has been frequently featured in Time, The New York Times,
Barr... more »
States Scaling Back Worker Pensions to Save Money
This is only the beginning. Headline: States Scaling Back Worker Pensions
to Save Money Neil Carpenter took a pay cut when he accepted a job as a
Louisiana state accountant more than 12 years ago, but he figured he would
make up for the loss with a retirement check that would guarantee long-term
financial security for him and his family. Now the 41-year-old finds his
life plan teetering...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]
Grinsanity
- *GREENSPAN SAYS *EQUITY STIMULUS* IS HELPING TO DRIVE ECONOMY
- *GREENSPAN SAYS *EQUITY STIMULUS* IS UNDERESTIMATED
- *GREENSPAN SAYS EQUITY IS COLLATERAL OF FINANCIAL SYSTEM
- Alan Greenspan on CNBC (sourced from zerohedge)
I guess all you can do is let Greenspan's remarks put a grin on your face.
The source of the grin being the knowledge that Greenspan is now nothing
more than a senile old man who will go down in history as the one who
started the fiat monetary inflation (printing) of our system that will
ultimately be its demise.
Let's consider for a moment what... more »
Sell in May and Go Away: Will It Work Again?
The ebb and flow between supply and demand can often be described in threes. For example, the three drives (pushes) to a top (or bottom) dynamic is often followed by a reversal that returns price to the point of origination. The interplay between supply and demand, often in threes, is responsible for the formation of widely recognized trading patterns such as heads and shoulders... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]
"Calculating The Power Of Your Hard-Earned Yuan"
There is so much #win (not to be confused with #yuan) in the following article from today's edition of China Daily, that we just felt compelled to post it in its entirety for three reasons: i) an article like this will never appear in the US press - here the best one could get is the calculation of the lack of power of one's easily borrowed Charmin'; ii) it contains the phrase: "There are no lies, just statistics" when discussing data released by the China's National Bureau of Statistics, iii) being on the front page of the paper, and addressing a topic near and dear to everyone: namely how much pay Chinese workers are receiving in absolute and relative terms, in an attempt to spin the data, it confirms what everyone knows - that more and more Chinese workers are getting antsy about the only number that matters: the bottom one. So without further ado, here is China Daily and "Calculating the power of your hard-earned yuan."Frontline On Financial Fraud
In one of the most complete documentaries undertaken on the financial crisis, PBS Frontline's "Money, Power, & Wall Street" series stretches from the origins of the credit derivative business with a bikini-clad pool-side Blythe Masters and her JPMorgan colleagues to the scary (but absolutely true) fact that the financial crisis never ended.
The four-part series (of which we present the first two below)
continues tonight at 730ET and the entire set of 20 in-depth interviews
with the various players (from Sheila Bair to Rodgin Cohen with a
smattering of Jared Bernstein and Dick Fisher in between) can be found here.
A must-watch series from beginning to end to get a grasp of how we got
here (despite what Chairman Greenspan told us all this morning), where
exactly we are now (in spite of today's FTMFW ISM print), and what we
can expect in the next few years.AAPL Drops Below 50 DMA After Hours As Stocks Retrace 60% Of ISM Spike
Equity
indices managed to close green on a generally lower-than-average
volume day but while the morning was dominated by a 20pt rip post-ISM's
4.5-sigma surprise, the post-Europe-close afternoon session saw us give back over 60% of those gains on rising volume and average trade-size.
As the day-session closed, ES (the S&P 500 e-mini futures) was
right around yesterday's highs and today's VWAP in a relatively balanced
manner but after-hours was leaking lower still. AAPL also had a big
rotation day as it opened red, surged into the middle of the day then
gave it all back to close within a few pennies of its 50DMA (and in fact
is trading below it in after-hours trading). Stocks pushed well ahead
of credit markets as they rallied and HYG was far less impressed. Sure
enough by the close, equities had limped back in line with
credit's reality but in the meantime, HYG was back down at last
Wednesday's levels. The ISM caused the USD to pop, stocks to
pop more, oil to pop about the same and gold/silver/Treasuries to drop.
The post Europe-close action saw stocks give back most of those gains,
the USD leak back lower (as CAD strengthened), Oil maintained it bid over $106 (month highs) and Gold/Silver pulled back up nicely. Treasuries remained under pressure
though with only a very late-day dip lower in yields to show for the
dips in stocks. As expected, Energy and Financials outperformed
close-to-close on a rally-day but also retraced the most in the
afternoon as Discretionary and Materials also joined the high-beta fray.
The strength in oil and weakness in TSYs was enough to juice
risk-assets in general and provided some support for the rally but stocks remain rich relative to risk in general
and we wonder how the bulls have it both ways - rally on unsustainable
good news (but no QE3) and on bad news (Ben's got yr back) as the first
day of May (absent any European hedging) seemed a chaotic rush to buy
this morning that may have been a short-term climax. Is Another Bout Of Global Food Inflation Just Around The Corner?
While
the price of food to the American end consumers has been relatively
flat over the past few months (at least according to official CPI
data), behind the scenes another food inflationary storm for the "rest of the world"
is quietly brewing. The reason: after creeping higher all year,
soybean prices are just shy of record highs. And while that may not
mean much for a population that is used to dining out on 99 cent meals,
soy is one of the most highly prized and used broad spectrum use food
commodities around the world. From the FT:
"The price of soyabeans is heading towards the record high set during
the 2007-08 food crisis, which is set to reignite fears of runaway
global food inflation. The surge in prices is because of falling global
production levels following dry weather in Latin America and increased
China imports. Soya’s wide range of use as feed for cows, sheep, pigs
and poultry – and as a source for oil used in foodstuffs such as
biscuits and cakes – means its high price could trigger food inflation
fears." Most importantly, soy is one of China's most important agricultural imports,
with soy prices very closely linked to Chinese inflation. So for all
those wondering why the great Chinese goal seek model continues to
confound expectations and keep coming in stronger than expected (at
least in a Schrodinger sense) despite the country's economy sputtering
based on both electrical usage and net trade, that's the reason: the
last thing China needs in a critical political election year (ahem Bo
Xilai) is a sudden spike in food inflation which would be only
exacerbated by more PBOC easing. Just recall how closely the media was
following reports out of China last year as many thought a rerun of the
Arabian spring in the streets of Beijing was virtually inevitable.May-Day, May-Day: Houston, We Have Global Unemployment
While it might have slipped your notice, today was a holiday in most of the world as it celebrates May-Day. In Europe, The Economist notes,
this day typically 'belongs' to 'international workers' of the world,
and has been associated with left-wing anti-government protest. This
year even more so as extreme political parties are on the rise and
austerity seems to have no end in sight - but most of all because of the
broad-based high-levels of unemployment. Outside of Greece (and
perhaps the UK), violent confrontations have so far been rare in the
wake of the financial crisis but tensions are mounting (notably in
Spain) and as the following graphic shows - with Spain now the 12th
nation in Europe to fall into recession - the dramatically bad changes
in unemployment and GDP since the crisis began (especially among the
youth) suggest more angst is to come as the political compact is pushed
to its limits.Obama Makes Secret Visit To Afghanistan On Anniversary Of Osama Death; Will Designate Country Major Non-NATO Ally
Just when we thought the president didn't have any tricks left up his pre-election sleeve on the anniversary of Osama's death announcement, here he comes and surprises everyone with what has just been disclosed as a secret visit to Afghanistan, where in a televised statement at 7:30 pm Eastern, the president will announce a strategic partnership with president Karzai, and where he will designate Afghanistan a major non-Nato ally - the "first such designation of the Obama presidency."A Different Way Of Looking At China
Hard landing, soft landing, civil unrest, dominant economic superpower – the forecasts flow freely regarding China. The fact that good data is hard to come by regarding China does not seem to inhibit many outside observers. In this piece I will look at China through the lens of economic structure, Chinese history and culture—concepts which a number of observers often overlook. My general conclusion is that Chinese GDP growth rates are about to undergo a gradual but nevertheless perceptible decline. But I now believe a hard landing crash is unlikely, assuming that Europe does not totally disintegrate and the US does not roll over into a full scale recession.With Market Complacency Back, Realized Vol Flashes Red Light
The
20-day realized volatility of the S&P 500 ETF (SPY) has more than
doubled in the last two months from a low near 7% to the current level
over 15%. At the same time, implied vol (akin to VIX) has dropped
2-3vols during that period and almost 5 vols in the last two weeks -
nearing its multi-year lows once again. For the first time this year
though, 3-month-implied volatility is trading below realized 20-day
volatility and while they are apples-to-oranges to some extent
(forward-looking vs historical), the 'cheapness' of volatility may well
be enough to encourage hedgers back in - especially on a day when
stocks pop unexpectedly. What is more worrisome though is almost exact
replica that implied- and realized-vol are following when compared to
last year in the run-up to the big mid-summer swoon as complacency is
back it seems.Another Energy Company Nationalized As Bolivia Follows In Argentina's Footsteps; More Pain For Spain
Two weeks ago, when commenting on the (first of many) nationalizations of energy companies (yes, the collateral shortage we have been discussing over the past year is particularly in effect when it comes to energy assets, although one does not need superficially complicated theories to explain it), in this case of Spanish YPF assets in Argentina we said "How soon until any and every government follows suit in a world in which excess liquidity sloshing around makes expropriation of vital energy producing assets a key prerogative? And how long until the resultant (accelerating) collapse in faith of the monetary system, leads government to declare "monetary self-sufficiency" and confiscate everything that is not nailed down. In exchange for worthless pieces of paper of course. Just to make it "fair"." The answer: two weeks. As of a few hours ago, Bolivia has followed in Argentina's footsteps and has just announced it is nationalizing yet another Spanish company's domestic assets, in this case Red Electrica.The Other Credit Crunch
Much
has been made of the apparent lack of demand for credit as well as
apparent supply (especially well-collateralized and credit-worthy
credit) during a period when the banks have been mouth-to-a-fire-hose
gorged on money. Small businesses, as UBS notes, have been at the center
of this debate - as the engine of the economy, politicians have been
vociferous in the face of banks ignoring their suggestions to lend. This
initial credit crunch, however, has led to a structural change among
small businesses which may have a much larger slowing-impact on OECD
growth than is currently understood. Small businesses horded cash and reduced their reliance on bank loans after the crisis
as the fear of the credit crunch remains front-and-center (and
therefore crushed a key transmission mechanism of monetary policy). This
drop in demand is driven by the hidden credit crunch - a structural
shift to more just-in-time inventory management regime. This in turn
reduces the inventory:sales ratio (which is exactly what we have seen in
an unusual divergence from large business and appearing like a
structural decline). The worrying aspect of this, and indeed the
other credit crunch is that the inventory management regime-change
among small businesses exaggerate anaemic growth since restocking has
traditionally helped to drive economic growth above trend in a recovery
phase. As UBS' Paul Donovan concludes, "the traditional
concept of inventory restocking may be a great deal more lacklustre in
the current environment."Two Words - Screw That
History shows that freedom is almost always the price that societies pay to maintain the status quo and keep their rulers in power. When the system finally collapses under its own weight, though, things can go from bad to worse as the people cry out for CHANGE. The French, for example, traded an absolute monarch in Louis XVI for an absolute dictator in Robespierre. Similarly, the Russians traded the empire of ‘Bloody’ Tsar Nicholas II for the Red Terror of Soviet Russia. As the Russian Marxist revolutionary Leon Trotsky said in 1937, “The old principle of ‘who does not work shall not eat’ has been replaced by a new one– who does not obey shall not eat.”Two words: Screw that.
Time To Start Looking At The Pump Prices Again
In late February and early March, gas prices were all the rage with every media outlet quoting them ad nauseum until
European distresses reclaimed the headlines and suddenly, gas prices
became irrelevant once again in the minds of the politicians and media -
despite only a very modest drop from their near-record highs.
Retail gas prices have indeed fallen for the last three weeks and some
have heralded this 13c drop as the second-coming of tax-rebates for
consumers in the US. However, in the last few weeks, Crude oil prices
have rallied somewhat smartly from under $101 to over $106 this morning
(back to one-month highs). RBOB (wholesale gasoline) prices have also -
in the last few days - started to push higher with their 'normal'
few-week lag. Given the historical precedent, we would expect to see retail gasoline prices stabilize and turn up once again within the next week or two
- just in time for the winter-warmth effects to wear off on the
macro-economy and the summer driving season to begin - burning an
ever-bigger hole in the household's pocket.Previewing Tomorrow's Floating Rate Treasury Launch
When we last discussed what
now appears certain to be a TBAC announcement tomorrow that Floating
Rate Treasurys are about to be launched by the US during the Treasury,
we cautioned, using an analysis by the IMF's Singh, that "the US
Treasury may be telegraphing to the world that it, or far more
importantly, the TBAC, is quietly preparing for a surge in interest
rates." We then continued that "What is also obvious is that if
the TBAC is quietly shifting the market into preparation mode for "a
steady (or rocky) rise in rates from near zero to a "neutral" fed funds
rate of 400 bps and a "normal" 5 percent yield on 2 year U.S.
Treasuries" as the IMF warns, then all hell is about to break loose in
stocks, as by now everyone is aware that without the Fed liquidity, and
not just liquidity, but "flow" or constant injection of liquidity, as
opposed to merely "stock", VIX will explode, equities will implode, and
all hell would break loose. It is not yet certain if the TBAC will
proceed with implementing FRNs. Although, since the proposal came from
the TBAC, read Goldman and JPM, and what Goldman and JPM want, they get,
it is almost certain that in about a month, concurrent with the next
quarterly refunding, America will slowly but surely proceed with
adopting Floaters." Judging by the amount of press coverage this topic
has received in the past week, the advent of FRNs is now a given. What
is unclear is why: our take is that this is simply a move to make
Treasurys more palatable to investors, simply to avoid capital losses
when rates finally resume their inevitable surge higher. The flipside of
course, is that the guaranteed coupon payments in a rising rate
environment means that more cash will leave the Treasury to cover
interest. It is this corollary to increasing demand that has made the
"father" of Treasury floaters warn on Bloomberg that now is the worst
possible time to being sales of FRN Treasurys.The Europe Crisis From A European Perspective
When we talk about Europe today in an economic context, we really mean the Eurozone, whose seventeen members are the core of Europe and share a common currency, the euro. The euro first came into existence thirteen years ago, on January 1, 1999, replacing national currencies for eleven states; Greece joined two years later. In theory, the idea of a common currency for European nations with common borders is logical, and it was Canadian economist Robert Mundell's work on optimum currency areas that provided much of the theoretical cover. However, the concept was flawed from the start.
Dallas Fed: Why We Must End TBTF Now!
"We're on the road to economic stagnation"
is how the Dallas fed describes the status quo as Too-Big-To-Fail
(TBTF) is forcing the US economy to suffer from the perpetuation of
perverse incentives. We want to get back on the path to prosperity and
they note that there are some things monetary policy can't fix (well we
know that already) but in this case they demand an end to the TBTF
paradigm now. In an excellent presentation of the costs and benefits of
ending TBTF (defined rather tongue-in-cheekily: The unwillingness of a
government entity to abruptly close an insolvent company and force its
creditors to sustain sizable losses due to the company’s size,
complexity, interconnectedness and general significance within the
financial system), the ignorance of the process of creative destruction is critical as they note that a sick (or failed) bank cannot lend: "Undercapitalized banks gum up the working of the interdependent moving parts of the monetary policy engine". Dismissing the Dodd-Frank Act as a distraction
that doesn't buttress market discipline, they summarize their guiding
principles as: End banking oligopoly power; punish failure quickly; and
change the do-or-die (M.A.D.) decision-making paradigm; ending with the
threat promise suggestion that Restructuring isn't so radical, firms do it all the time.The Demented "Old Normal" Speaks: Greenspan Forgets His Lines From Year Ago, Now Hearts QE
Forget 'irrational exuberance', forget 'deregulation of derivatives', Big Al is back and this time he seems to have forgotten any- and every-thing we has ever said. It was only a year ago that Greenspan told CNBC "I am ill-aware of anything that really worked. Not only QE2 but QE1" and yet today the mumbling-'maestro' pronounces, via Bloomberg:- *GREENSPAN SAYS EQUITY STIMULUS IS HELPING TO DRIVE ECONOMY
- *GREENSPAN SAYS EQUITY STIMULUS IS UNDERESTIMATED
- *GREENSPAN SAYS EQUITY IS COLLATERAL OF FINANCIAL SYSTEM
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