Goldman Sachs Headline Of The Day: German Unemployment Higher, Employment Also Higher

Today may be the final snorefest before tomorrow Uncle Ben Chairsatan disappoints everyone (sending the market even higher on hopes and prayers he is really saving the super-duper nitrous turbo bazooka for the Sept 13 FOMC meeting) with nothing actionable coming through the J-Hole teleprompter, but that doesn't mean the day has to be boring. Luckily, Goldman has made sure of just that with a report on the surprising higher than expected rise in German unemployment, which coupled with yesterday's higher than expected inflation in Deutschland (they didn't build that inflation, someone else did it for them) is certain to get all ze Germans in a very bailouty moody. However, this being Goldman: the bank that runs the ECB, the Fed, the BOC, and soon, if all goes according to plan, the BOE, the base coverage is enough to make one's head spin. To wit: 'Unemployment edges higher, but employment continues to rise." In other words, add both German employment and unemployment to that other list of items that just goes up come hell or high water, such as stocks, bonds, VIX, crude, gold, blood pressure, coffee consumption, and so forth. Why, one may ask? Simple - "the new central-planned normal." Which of course is the same as the old central-planned normal from circa 1954 Stalingrad.

Initial Claims Miss For Third Week In A Row To Highest in Six Weeks

Initial claims were unchanged from last week - thanks to the now ubiquitous upward revision of the previous week's data. This is the highest print in six weeks and the third week in a row that the claims data has been greater than expected. The market is unsure - is this enough pre-FOMC to make a real difference or just more 'seasonal' noise? One thing is sure - the trend is higher in the last six weeks, hardly a positive sign (as the 4-week moving average rises 1,500 to 370,250) - and after the standard upward revision today's 374k claims will be 377k by next week.

Savings Rate Drops For First Time In 5 Months Even As Spending Misses Expectations

Personal Spending rose 0.4% MoM, its first rise in three months, but this seems to have been 'funded' by consumers dipping into savings mode with the rate of growth of income rising at the same level as last month and as expected +0.3%. The Spending rate of increase missed expectations however and with the savings rate dropping for the first time in 5 months (to 4.2%) - it suggests a 'man on the street' who is perilously close to the edge to meet his needs.



European Bank Run Watch: Spaniard Edition

Posted by: Reggie Middleton

Post date: 08/29/2012 - 15:11

The Spanish bank run has started -  as was explicitly warned about 6 months ago!

Chart Of The Day: Europe's Chip On Its Shoulder Hasn't Been Heavier In Three Years

As noted yesterday, the confounding divergence between the stock markets of the Chinese growth "dynamo" which is at three year lows, and that imploding basket case of a banana republics known as Europe, whose stock markets trade like a penny stock and have been soaring laelt, may never have been wider, but when it comes to how people feel, unlike in the US, they refuse to be fooled by some arbitrary manipulated level of the DAX, CAC, IBEX or MIB. In fact, Europe's "chip on its shoulder" grow to the largest it has been in three years as confidence plunged. Specifically, consumer confidence in the euro area slumped to the lowest in three years at minus 24.6, according to the final estimate for August. The 3.1 deterioration in August represents the sharpest decline in a year. The index has been lower in only two periods over the past three decades. Not unexpectedly the least unconfident is Germany, while Greeks are urgently trying to find new reasons to keep pushing the rock uphill day after day.

Germany Is Cornered

Several recent releases of data bring the problem into focus; a sharp focus. In Germany, once thought to be almost invincible and somehow outside the recession that is raging in Europe, the crisis is just beginning - but it is clearly indicated by the newest data which shows that Germany has begun the descent down the rabbit hole with the rest of its brethren. Germany is now trapped; having lost control of the situation - first by the way the game has been played; and second by the limitations of her capital. We suspect you will soon find a politician in Germany who is opposed to the policies of Ms. Merkel and who will rise to power based upon "Germany for the Germans". All of this is also defined by a very warped time-line. The problems are now, the recession is now, the economic difficulties are now and the solutions that have been proposed are one to three years out. Germany is in the box and we are afraid that it is now Frau Pandora and not Frau Merkel who owns the key.

The Kangaroo In The Metals Mine: Fortescue Trying To Raise $1.5 Billion From 20 Banks As Iron Prices Implode

While last week's surprise announcement that GM was desperately seeking up to $5 billion in additional cash through a new revolver (meaning the administration's pride and bailed out joy, Government Motors, is once again burning far too much cash and that channel stuffing only pays in porn movies) took precisely nobody by surprise (at least not anyone who has been following our 2 year long series tracking AOL GM's dealer inventory warehousing habits), a far more sinister cash need has developed a very short time ago in a continent far, far away. Because while we have also noted the collapse in steel inventories and iron ore prices , which have recently imploded to 3 years lows as the Chinese hard landing, no longer maskable or avoidable, is finally sending shock waves around the world, as well as what these mean for a world that is sliding into a deep recession, promises by various impotent central bankers notwithstanding (see here, here and here), so far this wholesale collapse in the iron market had not translated into discrete events at the corporate level. Until now that is, because that second derivative of the "Chinese economic miracle", Australian hyper-levered iron ore miner, Fortescue, which is the fourth largest in the world, and is also the kangaroo in the iron ore mine for not only China, but Australia as well (and with a cornucopia of junk bonds in its balance sheet, a massively levered one at that) just telegraphed to the world that it is in desperate need of cash. According to Bloomberg, Fortescue Metals Group has approached about 20 banks as it markets a $1.5 billion loan in syndication, according to three people familiar with the matter.

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French PM: 75% Tax Will Not Define Government

Eric De Groot at Eric De Groot - 20 minutes ago

The CEO of Societe Generale, Frederic Oudea told CNBC the 75 percent tax is highly symbolic and could stop people coming to and investing in France. Mr. Oudea is right. If you listen carefully, you can hear the sounds of money leaving France already. Taxing the ultra rich, followed by the rich and upper middle classes when the highly mobile upper classes leave, will... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

 

My Chinese Shares Are For My Children

Admin at Jim Rogers Blog - 35 minutes ago

* ** *Short Summary: In this excerpt from CNBC Asia's "Squawk Box," investor Jim Rogers says he's keeping his investments in China despite a slowdown for that country's economy. * **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.* 

 

The "Counterfeiters" At The Central Banks

Admin at Marc Faber Blog - 45 minutes ago

On the other hand you have the money printers, the counterfeiters at the central banks. And they are going to print money and more more... it`s just a question of when. - *in Bloomberg Radio* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*

Overnight Sentiment And Key Events

Unlike the last two weeks, overnight sentiment for once can not be simply described as zombified, as there has been a decidedly negative undertone to risk, first in Asia, then in Europe, and finally in the US, accompanying the stealthy climb in the VIX which from a 13 handle a few days ago has quietly crept to 17. Will the market, finally realizing Bernanke will not say anything groundbreaking tomorrow, sell off just in time for J-Hole, or will the mysterious buying force-cum-Knight Algo reappear at one or more inflection points and push stocks to unchanged or green on the day. Find out in 9 hours. As for the key events of the past several hours, here is Bloomberg's dealbook summary of all the news that's fit to copy and paste.

Frontrunning: August 30

• Merkel Adviser: Unlimited ECB Bond Purchases Would Violate Mandate (Dow Jones)
• Illinois' credit rating downgraded after pension reform failure (Chicago Tribune)
• Correspondence and collusion between the New York Times and the CIA (Guardian)
• ECB action prospects underpin Italian bond auction (Reuters)
• Ryan puts down calculator, picks up bullhorn (Reuters)
• Barclays Names New CEO (WSJ)
• Barclays’s New CEO: Analysts React (WSJ)
• September Offers 15 Days to Cement Crisis Solutions (Bloomberg)
• Iran's Nuclear-Arms Guru Resurfaces (WSJ)
• Rocket blasts off to put NASA radiation belt probes into orbit (Reuters)
• Citi to Settle Suit for $590 Million (WSJ)
• Swiss-Style Latvian Banking Hub Thrives on Ex-Soviet Cash (Boomberg)

The "China Bails Out Europe" Rumor Is Back

It's been a while since the ridiculous "China bails out Europe" rumor made the scene: in fact, the last time we can find with definitive confirmation was back in September of 2011, just before the bottom fell out of Europe, and when the FT, based on "anonymous sources" tripped over itself to report that "[insert European country] is in talks with China to buy bonds, assets." Sure enough, now that Merkel came, and saw, but hardly conquered Beijing, it is the turn of China's Wen Jiabao to add his 10 pips to the EURUSD rumormill: Reuters reports: "China is prepared to buy more EU government bonds amid a worsening European debt crisis that is dragging on the world economy, Premier Wen Jiabao said, in the strongest sign of support for its biggest trading partner in months." Naturally, considering how often this rumor (re)appeared in the past it will be excusable if nobody but the dumbest vacuum tubes fall for it this time, especially considering that the Chinese economy itself is going down in flames faster than the October Iron Ore contract. And lest there be any confusion, China's commitment is about as definitive as a Best Buy LBO "preunderwritten" with a Jefferies highly confident letter: "China is willing, on condition of fully evaluating the risks, to continue to invest in the euro zone sovereign debt market, and strengthen communication and discussion with the European Union, the European Central Bank the IMF and other key countries to support the indebted euro zone countries in overcoming hardships," [Wen] said after meeting Merkel." Ah, conditional aid. The kind that gets Mario Monti to break out the petulant ex-Goldman child act and refuse to leave the Belgian catered dining room until the beggees succumb to his technocratic platitudes. Needless to say, we'll believe China's "continued" investment in Europe when we see it.

The Complete 'Ranked' World Calendar Of Events To The End Of The Year

The market over the summer has been quieter than we had expected - thanks to Draghi's threats placating-words and Bernanke's promises. Equities rallied, Bunds and Treasuries sold off, and government spreads in Europe declined. All these markets look more constructive. However, the event calendar in the near future is very heavy, notably the political one. This article from UBS' global strategy group does three things. First, they provide a list of events until the end of the year. Second, the relative importance of the various events are ranked; and finally, they provide, where needed, a comment on what to expect. We still believe three topics will drive markets: (1) the ongoing European sovereign crisis, where we see some progress (albeit slow) as Draghi has pushed forward his agenda and found some support from politicians; (2) the political issues in the US, although the main change is the more dovish Fed; and (3) world growth, which has been disappointing and is a major risk to monitor.

So Much For The Great "Buy BRICs" Trade

Presented without comment. Those who need explanation are encouraged to call Jim O'Neill. He will be delighted to explain this.

Today’s Items:

First…
Judgment Day For The Euro And What’s At Stake
http://www.zerohedge.com

The world is awaiting the decision of Germany’s Constitutional Court, on September 12th, regarding the ESM.   Article 125, of the Maastricht Treaty, protects Germany from the socialization of other EU member states debt.   So, will the ESM, that is in violation of this article, still fly?   We will see.

Next…
Continued Bank Runs In Europe, Battle Lines Drawn & Gold
http://kingworldnews.com
http://live.wsj.com

According to Caesar Bryan, September will be a good month for gold because there will be support from Europe and the US as the Fed could pull the trigger on printing.   More economic weakness news is coming out of Europe as deposit flight continues out of countries like Spain.   The Far-Eastern central banks and some emerging central banks are buying gold and it is not for tradition.

Next…
U.S. Debt Officially Passes $16 Trillion
http://www.silverdoctors.com

The U.S. debt is now $16.05 trillion. It just seems like last year that we passed the $15 trillion dollar level. Wait! It was! We passed it on November 15th 2011.    Oh, how time flies when you are having fun.

Next…
The Top 3 Rules to Understand About Gold & Silver Price Behavior
http://news.goldseek.com

Here they are…
1. Volatility does not equal risk.
2. Lack of patience is the greatest enemy.
3. Ignore disinformation campaigns by the banking industry.

Next…
US farmers Eye Record Profits
http://www.ft.com

Despite the worst drought in generations, US farmers are heading to their most profitable year on record. Net farm income could reach $122 billion in 2012.   According to the USDA, farmers from North Dakota, will earn 39% more this year.   So, should we expect class-warfare rhetoric to pit the people against the rich family farmers soon?

Next…
Turn Out The Lights: The Grand Old Party Is Over
http://markamerica.com

For anyone seriously following the Republican Convention in Tampa, one thing is clear…   All dissent has been crushed, it is rigged, and the Republicans do not follow their own rules.   While it is important to throw Obama out fast, one must carefully consider this potential felon, who sold his soul to the financial devil, that would replace him.

Next…
Congressman Calls For More Research Into Safety Of Airport X-Ray Scanners
http://newyork.cbslocal.com

Citing 3,778 mechanical malfunctions over the last year, Congressman Steve Israel, of Long Island, has called on the TSA to launch an independent investigation on potential health risks of the TSA X-ray scanners.  Of course, the TSA is too busy committing Constitutional crimes to worry about a little thing like safety.

Finally, please prepare now for the escalating economic and social unrest. Good Day!

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