BNP Furious That Draghi "Jumped The Gun"

Ken Wattret who is chief Euroarea economist for BNP is quite furious with Draghi: the reason? Precisely what we warned last week: that Draghi is posturing and attempting to bluff the Bundesbank into accepting his "conditions." End result, Buba called the bluff and the ECB blew it in a fashion so spectacular that Draghi actually had to defend himself from reporter who were mocking him and the ECB with questions if the ECB won't get its inflation call wrong "again." It also prompted the head of the Central Bank to spin off Mario Draghi FX trading advisory, of which he is the sole employee, and issue the following Series 7 and 63 unauthorized advice: not to short the EUR, which incidentally was the dumbest thing he could say, because the one thing that can save Europe is if its currency keeps sliding (much to the benefit of Germany) in the process boosting Europe's manufacturing sector. That he openly warned against this is perhaps precisely why the EUR tumbled just after he said it. Trust us: the Chairsatan would love if investors were shorting the USD. Anyway, back to Draghi and the biggest French bank which realizes all too well one simple thing: Draghi no longer has credibility, and all those European banks which rely on the ECB for their day to day operations (like BNP) are suddenly far more exposed than ever before.

European Bonds Give Up ALL Draghi "Believe" Gains In Worst Day In Over A Decade

Spanish sovereign bond spreads blew almost 60bps wider today - that is the single-largest absolute move in spreads on record. Almost the entire gain in bonds post-Draghi 'Believe' speech from last week has been retraced in a mere few hours and while the front-end of the Italian and Spanish curves has outperformed, the sad fact is that in promising to maintain that end, then the entire rest of the curve becomes subordinated and therefore is sold as hope fades. Swiss, German, and Dutch short-dated bond yields all dropped to new record low rates. EURUSD has retraced its entire gain from Draghi-'believe', back to 1.2150 - despite his call not to short the EUR. Equity markets in Europe has dumped across the board today - with Italy and Spain -7% from pre-Draghi this morning - though notably still full of some hope from last week. It would seem that perhaps Mr. Draghi should keep his arrogant mouth shut a little more as we thought price stability was his mandate? The largest rise in EGB yields in a decade - all on the back of his misguided and over-confident egotistical attempt to jawbone markets to his reality. All mouth; no trousers.

We Should All Love Fed Transparency

Ron Paul’s signature Audit the Fed legislation finally passed the House; on July 25, the House bill was passed 327 to 98. But the chances of a comprehensive audit of monetary policy — including the specifics of the 2008 bailouts — remain distant. All that the current state of secrecy does is encourage conspiracy theories. What is the FOMC trying to hide? Are they making decisions that they think would prove unpopular or inexplicable? We can’t have a real debate about policy unless we have access to all the data about decisions. Those who believe the Fed’s monetary policy has worked should welcome transparency just as much as those who believe the Fed’s monetary policy has not worked. If the Fed’s actions have been beneficial, then transparency will shine kindly on it. If not, then transparency will help us have a better debate about the road forward.

Let the Staring Contest Begin

Eric De Groot at Eric De Groot - 33 minutes ago

Global capital flows defined by the risk on/off oscillator turned negative in May 2012 (chart 1). This suggests risk-off or defensive capital flows that will pressure Greece, Spain, Portugal, Italy, etc. The ECB will be forced to provide either direct or indirect liquidity to stem the defensive outflows from Europe. Chart 1: Large Cap Stocks Total Return Index (LCSTRI) and... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

A Corporatist Coup d'Etat Led By Think Tanks, Media Control, and Bribery By Lobbyists

Opinions Vary But the Message of the Market Is Absolute

Eric De Groot at Eric De Groot - 4 hours ago

Opinions not supported by the message of the market tend to be misleading. Stocks were cheap relative to bond bonds in 1932, 1942, 1974, 2002, and 2009 (chart). 2012 suggests neither over- or under-peformance of stocks or bonds. The time to buy stocks in size with leverage was 2009. Chart: Large Cap Total Return Index (LCSTRI) to Long-Term Government... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

 

Colleges freeze, reduce tuition as public balks at further price hikes

Eric De Groot at Eric De Groot - 4 hours ago

These guys were alarmed to discover that enrollment started to slip when tuition was increased two to three times the rate of inflation in perpetuity? Jobs required to ask “do you want fries with your order” only introduce the next generation to the 21st century’s version of indentured servitude at an earlier age. Of course, students and families are fed up. Headline: Colleges freeze,... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

And Another Twang Moment For The Broken Market

It seemed as Rajoy and Monti let us all down, so something 'snapped'. EURUSD cracked lower and Spanish and Italian bonds re-accelerated lower but most critically an anomalously large volume rip went through S&P 500 e-mini futures (ES). 72,000 contracts traded very suddenly dragging ES down 8pts as it crossed the almighty VWAP line. 65,000 down volume or around $4.4bn notional equivalent wanted out very rapidly.

Spain Refuses To Admit It Has A Problem

As hope fades of an ECB-funded lift to their bonds, Spain's Rajoy and Italy's Monti skip hand in hand to a press conference where they just agreed that water is wet and the sky is blue and that:

• *RAJOY: WE WANT BANKING UNION, FISCAL UNION SOON (and ponies)
• *RAJOY SAYS WE ARE ASKING GREAT SACRIFICES FROM CITIZENS
• *RAJOY SAYS SPAIN, ITALY CONVINCED ON NEED FOR BUDGET CUTS

But, as the market is indicating - no request for a bailout (why would they need that?) - and so Italian and Spanish bond yields are soaring and EURUSD is plunging further. It seems the Kubler-Ross model remains front-and-ceter with denial critical as beggars once again believe they can be choosers but the inexorable belief that they can magically grow their way out of over a decade of debt-fueled excess remains. (Spain 10Y Spread +65bps now from pre-Dragi and Italy +62bps)

Art Cashin On Wall Street's Eras Of Error

In the aftermath of Knight's crushing algo-driven error and subsequent cash loss, which may well prove terminal for the business - an artifact of a broken market we have been warning and writing about since 2009 - we present some informative insights into the various eras of Wall Street trading errors courtesy of that grizzled trading veteran, the Chairman of the Fermentation Committee, Art Cashin.

Knight CEO Comments On Algo Failure Which Has Cost Him 70% Of His Market Cap In One Day

Here are the choice highlights from the interview with Knight CEO Tom Joyce, who is inexplicably on Bloomberg TV without any clear point, purpose or spin, and nothing to tell anyone and restore confidence.

That Was Fast: Spain Back Over "Critical" 7%, Punk'd By Draghi

While absolute yields are back over 7% for 10Y Spain (and over 6% for Italy), the spread has retraced over 60% of the gains post 'believe' speech.

Summarizing Draghi's Epic Dud

No commentary necessary.

Hope On. Hope Off

Sigh...

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Richard Russell – Brutal Times, Here Is The Key Going Forward

from KingWorldNews:

Today the Godfather of newsletter writers, Richard Russell, wrote about life during the Great Depression and the unknown but extremely important index that everyone needs to watch going forward: “The 30 Dow Industrial stocks portray the industrial capabilities of the US. But suppose there was an Index that portrayed the industrial capabilities of the entire civilized world? Happily, we now have just such an index. Dow Jones developed it, and they call it GDOW. It’s made up of 150 major blue chip international stocks, and it includes all 30 D-J Industrial stocks plus over 100 other major international blue chips.”
“I include a daily chart of GDOW below. You can see that GDOW has formed a pattern that is a potential head & shoulders formation. The base and the support for the formation come in at a value of 1700. This formation tells us where the world manufacturing and production stands, just as the Dow Industrials tells us where US manufacturing stands.
James Turk continues @ KingWorldNews.com

Ed Steer – The Markets Are A Complete Rig Job, But No Scam Lasts Forever

from FinancialSurvivalNetwork.com:

Casey Research’s Ed Steer joined us for a look at the stunningly blatant manipulation that took place today in the gold and silver markets. The moment Ed hit his send key on today’s gold and silver report, he knew what was going to happen. And as usual, he was not at all disappointed. Ed says that the biggest problem for investors today, is that they have to overcome market psychology and buy the precious metals in a falling market. Very few people have the stomach and the nerve do this. But as a recent guest said, “You’re either a contrarian or you’re a victim.” The choice is yours.
CLICK HERE TO LISTEN TO AUDIO

 

HOPIUM: Markets hope for bold moves ahead of ECB meeting

from France24:
The European Central Bank takes centre stage Thursday as markets look for strong action to quell the eurozone crisis at what one analyst called its “most exciting meeting for a long time.”
Last week, ECB chief Mario Draghi sent markets soaring with an unusually strong pledge to do “whatever it takes” to save the crisis-wracked euro, adding: “And believe me, it will be enough.”
This touched off a raft of similar promises from top eurozone leaders including German Chancellor Angela Merkel, sparking speculation over a possible intervention on the markets to bring down borrowing costs for Spain and Italy.
Now market players are looking to Draghi to put his money where his mouth is. “We are now waiting for ECB action after Draghi’s words,” said Cedric Thellier, eurozone economist at Natixis bank.
Analysts are eyeing three possible ECB actions that could help to ease the eurozone debt crisis: an interest rate cut; a decision to buy the government bonds of struggling nations or offering the EU rescue fund unlimited borrowing.
Read More @ France24

Stunning Crimes of the Big Banks: Worse than Your Wildest Imagination

from Washington’s Blog:
Preface: Not all banks are criminal enterprises. The wrongdoing of a particular bank cannot be attributed to other banks without proof. But – as documented below – many of the biggest banks have engaged in unimaginably bad behavior.
You Won’t Believe What They’ve Done …
Here are just some of the improprieties by big banks:

• Funding the Nazis

• Laundering money for terrorists

• Financing illegal arms deals, and funding the manufacture of cluster bombs (and see this and this) and other arms which are banned in most of the world

• Launching a coup against the President of the United States

• Handling money for rogue military operations

• Laundering money for drug cartels. See this, this, this and this (indeed, drug dealers kept the banking system afloat during the depths of the 2008 financial crisis) Read More @ WashingtonsBlog.com
  

Failure of Facebook … and We Are Not Surprised

by Staff Report, The Daily Bell:
Facebook’s Slide Continues Despite the Company’s Reach and the Market’s Hopes … Facebook shares fell nearly 4 percent on Wednesday to $20.88 — nearly half of what they were worth when the company went public on May 17 … It has been a tough week for Facebook. Last Thursday, the company’s shares declined 8.5 percent in regular trading, as investors reacted to the weak earnings report the day before of Zynga, the social gaming site that is a major Facebook partner. Then last Friday, the stock was down again, to slightly under $23 a share in after-hours trading, after Facebook’s own earnings report. This week the stock declined steadily each day. – New York Times
Dominant Social Theme: Facebook and social networks in general represent the best of the Internet and the hope of the future.
Free-Market Analysis: We are in our “told you so” mode these past few weeks so we might as well add one more. As reporters on the dominant social themes of the elite, we never believed in the whole social network nonsense.
Read More @ TheDailyBell.com

They Really Do Want To Implant Microchips Into Your Brain

from End of the American Dream:
Are you ready to have a microchip implanted into your brain? That might not sound very appealing to you at this point, but this is exactly what the big pharmaceutical companies and the big technology companies have planned for our future. They are pumping millions of dollars into researching “cutting edge” technologies that will enable implantable microchips to greatly “enhance” our health and our lives. Of course nobody is going to force you to have a microchip implanted into your brain when they are first introduced. Initially, brain implants will be marketed as “revolutionary breakthroughs” that can cure chronic diseases and that can enable the disabled to live normal lives. When the “benefits” of such technology are demonstrated to the general public, soon most people will want to become “super-abled”. Just imagine the hype that will surround these implants when people discover that you can get rid of your extra weight in a matter of days or that you can download an entire college course into your memory in just a matter of hours. The possibilities for this kind of technology are endless, and it is just a matter of time before having microchips implanted into your brain is considered to be quite common. What was once science fiction is rapidly becoming reality, and it is going to change the world forever.
Read More @ EndoftheAmericanDream.com

Biderman’s Daily Edge 8/2/2012: There is No Solution For Satus Quo

from TrimTabs:

Owner of Atlantic Bullion & Coin Pleads Guilty in $90 Million Silver Ponzi Scheme

from Silver Doctors:
The South Carolina owner of Atlantic Bullion & Coin, Inc. has plead guilty to misallocation of $90.1 million of funds that were supposedly invested in silver bullion.
The CFTC has called the theft a ‘Ponzi Scheme’, as 945 investors had sent the Bullion firm over $90 million to purchase contracts of silver bullion. Atlantic failed to purchase any silver at all for their investors over the last 12 years.
If you don’t hold it, you don’t own it!

A former Anderson County, South Carolina councilman and past national commander of the Sons of Confederate Veterans entered a guilty plea in U.S. District Court in connection with a Ponzi scheme in which an estimated 945 investors in 16 states were duped into investing a total of $90.1 million in alleged silver contracts.
In a complaint filed in the U.S. District Court in South Carolina, the U.S. Commodity Futures Trading Commission said Ronnie Gene Wilson, 64, of Easley operated a Ponzi scheme through his company Atlantic Bullion & Coin, Inc. since “at least 2001 through February 29, 2012.”
“As part of their Ponzi scheme, Wilson and AB&C….fraudulently offered contracts of sale of silver bullion, a commodity in interstate commerce,” said the CFTC. “Through their Ponzi scheme, defendants obtained at least $90.1 million, from at least 945 investors, for the purchase of silver.”

Read More @ Silver Doctors

Draghi vs. Weidmann Round 1

from GoldCore:
Gold was off less than 1% on Wednesday, its biggest drop in 3 weeks, as the Fed didn’t deliver the sparks for QE3’s fireworks. It did signal that further bond buying could be in store to help the US economic recovery that had lost steam this year. Fed officials commented that the economy had “”decelerated somewhat,” a change of tone from its previous assessment in June when the economy was “expanding moderately”.
Investors now look to the European Central Bank’s rate decision at 1145 GMT. If “Super” Mario Draghi doesn’t come out with a loaded arsenal (bold intervention), then the markets will be disappointed. Mario Draghi will be confronting his colleague and nemesis in the ECB Jens Weidmann.
Weidmann is the Head of THE Bundesbank, a former Merkel economics advisor, and an ECB governing council member who has just 1 vote out of the 23 today at the ECB MEETING in Frankfurt.
However Weidmann sees his role differently. “I certainly would not say that we are just one of 17 central banks [in the Eurozone],” he said in an interview published on Wednesday. “We are the largest and most important central bank and we have a greater say than many other central banks in the Eurosystem. This means we have a different role.”
Read More @ GoldCore.com

China’s Economy – How the Devil is in the Detail

By Greg Canavan, Daily Reckoning.com.au:

According to the latest manufacturing data on China, the Chinese economy actually recovered slightly from last month, thanks to a renewed burst of bank lending and a directive from the top to fast track projects and ‘build stuff’. But the devil is in the detail for China. The index reading is a composite number, meaning it’s derived from a bunch of sub-indices. One of those is employment. And while the press release doesn’t give the actual reading, it does say ‘employment down at sharpest rate in 40 months.’
As we’ve been saying for some time, Chinese authorities try to engineer economic growth with the aim of achieving full employment and social stability. The Chinese ruling class have their snouts so deeply in the trough that maintaining a ‘harmonious society’ is their over-riding aim. They don’t want their countrymen to become unemployed, restless and inquisitive as to how the 1% live.
In order to keep the dream alive, China looks like abandoning its efforts to try and rebalance its economy. Already you’re hearing grandiose announcements about big infrastructure spending packages from cities like Changsha and Guizhou.
Read More @ DailyReckoning.com.au

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