obama's Master Plan: Bailout Everyone...
A 40% loss of post-IPO market-cap, channel-stuffing largesse, contract-law destruction, and all with tax-payer backing. That is what the Bailout'er-in-chief has in mind for every manufacturing company in the US. As Politico reports this evening, President Obama gave a speech we think rivals his 'you didn’t build it' miasma as he alienated foreigners, encouraged socialized losses, and suggests bailouts for any and all. "I said, I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back," (cough - down 43% - cough) he said. "Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry."

What Every Farmer And Commodity Trader Will Be Glued To Tomorrow at 830ET

With drought conditions bad and getting worse and agricultural commodities 'stabilizing' at their multi-year highs, tomorrow morning could be the catalyst for the next leg in a global food inflation spike (and its accompanying deflationary impacts on economies). The USDA releases it August World Agricultural Supply and Demand Estimates (WASDE) at 830ET  - which is particularly important since it is the first survey-based estimates of the year. It would appear that while pre-positioning has slowed a little, sell-side analysts expect prices (and implied vols) for corn, soybeans, and less-so wheat to rise on the back of not just (dramatically) lower crop yields (in this first of the year survey) but overly optimistic harvested-to-planted estimates and demand limits. Ethanol demand destruction is also emerging as a consensus.

On The Mystery Rally Of Summer 2012

Six weeks ago we detailed how watching intra- and inter-asset-class correlations can tell investors a lot about what is behind market movements and as Nick Colas, of ConvergEx, highlights in his monthly review of asset price correlations - it reveals a key feature of the "Mystery Rally of Summer 2012."  The move from the early June lows for U.S. stocks has come with increasing correlations across a wide array of asset types and industry sectors.  That's unusual, because rising markets over the past three years more commonly bring lower correlations.  For example, the rally from January to early April of this year saw industry correlations within the S&P 500 drop from +95% to 75-80% as the index went from 1270 to 1420 (a 12% return).  Conversely, the move from 1278 to 1400 (early June to present day) has come with increasing industry correlations – 82% in May to 86% currently.  To us, that's an important "Tell" about what's been taking us higher – hopes for further Federal Reserve liquidity at the next FOMC meeting in September and ECB liquidity to support the euro.  The rest of August will likely feature the kind of light-volume tape that loves to drift higher, but increasing correlations represent a flashing yellow light signifying the need for caution in trading over the balance of the month.

A Step Towards Gold Confiscation

In attempting to stimulate risk appetite by taking “safe” assets out of the market, the Fed has actually achieved precisely the opposite of stimulating productive investment. First, it has turned bond markets into a race to the bottom as bond flippers end up piling into the very assets that the Fed is trying to discourage ownership of  — because who care about low yields when the Fed will jump in at an even lower price floor, thus assuring the bond flippers a profit? Second it has energised other safe asset markets (such as gold) as longer term investors look for alternatives to preserve their purchasing power in the context of a global economic depression. The Fed is firing at the wrong target; the real problem — the thing that is causing investors to scramble for safe assets — is an economic depression brought on by (among other non-monetary causes) the deleveraging costs of an unsustainable debt bubble.

Downside Risks Later In The Year

Admin at Marc Faber Blog - 4 hours ago

I think these lows could be exceeded and I think it may be October or November – or after the U.S. election – we could essentially have a decline of around 20 percent in the market. - *in Business Insider* * * Related: SPDR SP 500 ETF (SPY), iShares MSCI Emerging Markets Index ETF (EEM) * **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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Greek unemployment rises to 23.1%/Youth unemployment in Greece an astonishing 55%/China has soaring food prices as their CPI skyrockets/

Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 5 hours ago

Good evening Ladies and Gentlemen: Gold closed up $4.20 to $1617.10 whereas silver rose by two cents to $28.09. The day started as a risk off situation with the monthly ECB report from Draghi in which he stated again his willingness to purchase sovereign bonds outright.  We heard from Greece that their unemployment rose to a high of 23.1 % and even more troubling is it's youth unemployment is

What does it mean if almost half of Americans die with less than $10,000 in assets?

Eric De Groot at Eric De Groot - 6 hours ago

Living beyond one’s means is easy in a world that revolves around debt. As the market challenge debtor’s ability to service their debt, it becomes clear that easy and sustainable do not coexist for long. If nearly half of Americans are dying with less than $10,000 and the debt crisis is certainly not over, it most likely means that the restriction of who’s defined as rich will loosen... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Perspective On The US Presidential Race

Admin at Marc Faber Blog - 7 hours ago

If I had to vote for Obama or Romney, I'd shoot myself. - *in Business Insider * *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*

Signs Of The Times

Today's youth are especially drawn to digital platforms because most of them don't know how to read anyway, and the grease from their sausage-fingers can be quickly wiped off the screen of their iDevice. The New American Golden Boy will collect not one, but two weekly checks from the government.  First he will get the well-deserved unemployment check, and on top of that he will receive his disability check simply for being a fat-ass. But let's be real here: these are not rational consumers making rational consumptions decisions.  This is the new America that is being engineered by corporations that force mindless individuals to become addicted to their products with zero regard for health implications.  We are witnessing consumption for capitalism's sake. An economy is the aggregate of its consumers, and just like its consumers, this economy is structurally sick.  The monetary policy pill that central planners and investors have been high on since 2008 has caused the economy to build up such a tolerance that it is no longer effective unless taken in doses that will kill the patient.

Confused Why Goldman Will Face No Criminal Charges? Here's Why

Today we learned courtesy of Goldman's 10-Q, that the US justice department will not press criminal charges against Goldman Sachs. This, despite Senator Carl "Shitty Deal" Levin, in one of the most bombastic kangaroo court spectacles on live TV ever, asking for a criminal investigation after the subcommittee he led spent years looking into Goldman, and in which he said Goldman misled Congress and investors (and according to which billions in fraudulent RMBS misrepresentations are all still only Fabrice Tourre's fault, at that time under 30 years old). And so we pose the same answer, and provide the same anwer, as yesterday, only flipped around: "Confused Why Goldman Will Face No Criminal Charges? Here's Why."

The Whack-A-Mole Algo Is Back

Because as we showed today on not one but two occasions, humans no longer trade the casino formerly known as the 'stock market', we were glad to see that our old friend - the Whack-A-Mole algo - is back. As the following animated chart from Nanex shows, the algorithm is one which merely cycles in a broad, 10%+ sawtooth pattern blasting out empty quotes to feel the market in a test of other algos' responsiveness, and during a period of 6000 quote blasts, executes just under 20 actual trades. We will launch a catalog of all the various algos as we see them. After all, now that nobody else is left, it makes sense to at least make the acquaintance of all those robotic parasites that are the only entities left quote stuffing each other to death all the while, in true Knightian fashion, levitate the general market higher.

Want More Tax Revenue? Increase Jobs Not Rates

The Obama campaign has amplified its push on increasing taxes on the wealthy and has painted Mitt Romney as a Robin-hood in reverse saying that he wants to take from the poor and give to the rich.  The attack on Romney is incorrect as the real truth is that it is the current Administration that is failing, once again, to recognize that the problems facing the economy has nothing to do with the current tax rate structure.  It is election season, however, and the Obama campaign's "eat the rich" rhetoric will play well with the 22% of the population that is either unemployed, discouraged, working part-time for economic reasons or have just given up looking for work.  It will also play well with the rest of the country that are living paycheck to paycheck as real wages have been on the decline over the last couple of years while the cost of living has risen.  While the speeches, finger pointing and podium pounding will certainly tug at the heart strings of those living in a recessionary economy - it only serves to deflect attention from where it should be directed - employment.

Margin Hiker-In-Chief Fires First Warning Shot As CME Raises Crude Oil Margins

Back in April, when gas at the pump hit all time highs for that time of the year, and when the world was still hoping the euphoria from the LTRO would last (it didn't), Obama decided to implement his own centrally-planned vision of events in yet another market: crude. Recall: "now that Obama's uber-central planning mandate has proven completely powerless to redirect the flow of zero-cost money from acquiring real, as opposed to paper-based, assets (read crude), the Teleprompter in Chief will have a sit down with the nation at 11:10 am and in the latest sermon from the White House mound, will "confront" oil speculators once and for all. His plan: why encourage margin hikes of course - the same principle that crushed the spine of the gold and silver spike in 2011." Furthermore as part of his then adopted plan, Obama would "Give the Commodity Futures Trading Commission authority to increase the amount of money that a trader must put up to back a trading position. The administration officials said such authority could help limit disruptions in energy markets." Our conclusion was that "Obama is about to become the Margin Hiker-in-Chief." 4 months later, the MaHinC has fired the first warning shot. After all, while Obama would love to have 1600 on the S&P the day before the election, the last thing he would like is to also have the $150 in WTI that would necesssarily accompany it, and guarantee his reelection failure. Sure enough: the first attempt at disconnecting the hard asset market from the S&P has arrived, as the CME just hiked various Crude margins by about 3.7%.

Volatility ETFs' Crazy Churn

Two volatility ETFs (VXX and UVXY) are having almost half of the trading volume in the world’s largest ETF (SPY). How come? On August 9, 2012, SPY had a trading range of 60bps. VXX offered 220bps, topped by UVXY with 440bps. Tiny moves in the equity market can be amplified by using volatility ETFs (not that I would endorse this). It’s leverage without leverage for the day trader.

Stocks.Must.Close.Green. Lowest 4-Day Volume in 5 Years

Another day, another low volume, low range, VWAP-reverting, must-close-green move in S&P 500 e-mini futures and stocks in general. The last 4 days have been the lowest volume for a non-Xmas holiday week since 2007 in futures and NYSE volumes are just remarkably bad compared to even normal cyclical seasonal dips. The range-compression in equity markets is very reminiscent of last April/May's top but the magic 1400 level was held and maintained by an entirely VWAP-clinging afternoon of trading. HYG dipped intraday and recovered to unch (underperforming once again). VIX ended just in the red at 15.28% - and also had a very narrow range day. Gold led stocks higher even as the USD rose notably (with EUR weakness the main factor) and Treasuries with by far the greatest relative range - thanks to the 30Y auction tail (which was bid like crazy after to end unchanged). The USD is now 0.36% up on the week - but Gold/Silver/Copper/Oil are all up from 1%-2.5% on the week. Broad risk-assets and ETFs all ended the day in sync with stocks as Materials and Energy outperformed while Consumer sectors underperformed (along with financials). Another odd day to say the least.

Labor Department Admits Data Leak, Says Claims Data Was Released 15 Hours Early Due To "Glitch"

As we reported first earlier, moments after today's market moving initial claims data was posted, we observed that it had been leaked previously as various other data aggregators, but not the main wires, had looked at the DOL's website and found today's claims number had been posted at least 15 minutes before the formal release, and possibly far prior to that. Minutes ago, the DOL, already embroiled in numerous data disclosure SNAFUs was force to add epic humiliation to mere modest humiliation, and admit that the data was indeed released before its official embargo lift time of 8:30 am. 15 hours before. And whose fault is it? Why a "computer glitch" of course. In other words, computers now have the capacity to not only destroy market makering firms, to push key currency pairs at will, to cause stock market flash crashes, to scuttle mega-IPOs, but also to released key data at will, and entirely on their own. Needless to say, there is never a human being behind any of these errors, which are always in the passive voice. It is always the computer's "fault."

Stock Market Self-Cannibalization To Continue As Volume Implosion Accelerates

The 'what we lose in margin, we'll make up for in volume' strategy is failing. And for the NYSE it is failing large. The decision to 'enable' HFT - for its 'liquidity-provision', which after all has done nothing but expose the dismal reality of a market structure designed to nickel-and-dime retail til the last penny drops, has had the absolute opposite unintended consequence of driving the only real liquidity provider - the retail trader putting his real money to work - out of the market. As Securities Technology reports, the NYSE Euronext reports daily volume of trading stocks down 16.9% from a year ago (and down 17.8% YTD compared to last year) and down 9.9% from June alone. NYSE/Arca/MKT's share of trading in NYSE-listed stocks is down 34.3% from a year ago as the dark pools rise, and with volumes collapsing it is only likely that we will see far more 'incidents' such as Knight - where companies whose top-line explicitly stems from flow trading - increasingly find themselves redundant; whether or not this is due to a self-inflicted algo, or other, potentially more sinister, reasons.

Forget The Fiscal Cliff, Here Comes The Corporate Bond Maturity Wall

While ZIRP will apparently be with us for the next millennium - or instantly not - the dominant flow from equity funds to bond funds (whether driven by risk-aversion or demographics - or fundamental deflationist views) remains the key technical for both issuance and pricing/demand. Of course, for now, it seems that nothing can break this virtuous circle of reinvesting coupons and principal but as retirees de-boom and spend that income drainage will continue and the next few years show a rather dramatic wall of corporate bond maturities that will need to be refinanced (or paid down). Is it any wonder that corporations are keeping their cash-piles high and not just hose-piping it out to shareholders or M&A?

There Is More to Gold than Mere Capital Appreciation: John Hathaway

by The Gold Report, Casey Research:

John Hathaway, senior managing director of Tocqueville Asset Management, does not particularly trust banks to keep stores of physical gold safe and segregated. Indeed, he considers his black lab Jake a better watchdog than the SEC. That is why he favors the SmartMetals program from Hard Assets Alliance, a new service launched in July. Hard Assets Alliance has partnered with Gold Bullion International (GBI) to offer precious metal purchasing and storage solutions to retail investors. With more investors realizing that safety of capital is the real reason to own gold, safe storage is more important than ever. Read more in this exclusive Gold Report interview.
The Gold Report: John, you predicted $2,000/ounce (oz) gold prices. After rising to $1,900/oz last fall, the price has hovered at $1,500–1,600/oz much of 2012. What will cause it to take the next leg up?
John Hathaway: There are several factors that I think will drive gold higher. On the monetary side, central bankers and treasury secretaries are bobbing and weaving, making it up as they go. They lack a comprehensive solution to the sovereign debt crisis in Europe, to the forces that are pulling the Eurozone apart or to the stagnation in the world’s key economies. Ultimately, all of this will further debase the value of paper currency.
More quantitative easing may also be on the table, and I have read a good deal about taking nominal rates to less than zero. That would mean people who have money in savings accounts would be charged a fee for keeping the money, as opposed to earning interest. It would not surprise me to see that evolve as a way to get all of these free reserves in the banking system into the economy.
Read More @ CaseyResearch.com

How to Lose Friends and Make Enemies

by Bruce Krasting, Bruce Krasting Blog:

Two headlines today from Switzerland tell an important story. The first is about the rapid increase of foreign reserves due to the currency “Peg” administered by the Swiss National Bank (SNB). The reserve rose by another CHF 41.4Bn ($43Bn) in July. This follows big increases in May (CHF 59.1Bn) and June (CHF 68.4Bn).
In an effort to protect the domestic Swiss economy from deflation, and all the other ills that are besetting the rest of the Europe, the SNB has purchased all of the Euros that have been coming into Switzerland the past three months.
Guess what? It’s working! With the benefit of unlimited printing of Swiss Francs and the “rigging” of the exchange rate, the Swiss economy is doing very well. This headline was also in the Swiss press this morning:
Read More @ BruceKrasting.blogspot.com

Got Physical Gold?

by Byron King, Whiskey and Gunpowder:
As you can figure out, especially if you’re a longtime reader, you had better have your stash of physical gold and silver. Furthermore, if you haven’t noticed lately gold is on sale. The shiny stuff trades at a 17% discount to last year’s highs.
People give me grief all the time about recommending and holding gold. “Oh, gold is risky,” they say. “Yes, of course,” I reply. “Gold has been risky since I started buying it at $300 per ounce, back in 2001.”
Indeed, gold is risky today. From its current level gold could decline. That would be if there’s a massive market crash, and people have to sell gold to raise cash to pay off their margin calls. Remember 2008? Gold sold down from about $1,000 to about $750. Still, that 25% haircut was mild, compared with what happened to the rest of the market. And through it all — the crash and turmoil — gold remained liquid. Somebody bought that gold. So gold is good, especially when people need fast cash.
Read More @ WhiskeyAndGunpowder.com

Marshall Auerback: Central Banks Will Need to Recover Their Gold

from Jesse’s Café Américain:

Although I have heard this line of reasoning before, it was interesting to see it coming from the economist Marshall Auerback.
There is not much doubt in my mind that the markets are being ‘managed’ here. By whom, for what reasons, and for how long is another question. But the trades and the tape are telling their tale.
I am wondering if this is a new phase of the Fed’s interference in the markets in lieu of genuine economic reform. They have used indirect means to pump equities as a means of wealth transmission before. This was a favorite ploy of Robert Rubin when he was Treasury Secretary.
It would not surprise me if the gold price was being held around 1600 in order to give the banks an opportunity to redeem their leased gold IOU’s to avoid embarrassment before things get ‘messy’ in Europe. The people in Germany, Italy, Spain, England, and Portugal will be angry enough, and to find out that their irresponsible banks had sold off their gold to their cronies in the bullion banks on the cheap might be a bit much. As for the US, that is a murky situation indeed.
Read More @ Jesse’s Café Américain:

Why dost thou whet thy knife so earnestly?

by Simon Black, Sovereign Man :

Yesterday evening I attended an outstanding performance of Shakespeare’s Merchant of Venice; if you’re unfamiliar with the play, the story is about a young Venetian nobleman named Bassanio who needs 3,000 gold ducats to woo a beautiful heiress. Having squandered his wealth, Bassanio approaches his friend Antonio for a loan.
In the middle of the performance, I got curious about the sum. How much is 3,000 ducats in today’s money? A quick check on my phone gave me the answer.
A ducat’s weight is roughly 3.5 grams, or .11 troy ounces of gold weight… so 3,000 ducats is roughly $530,000 at today’s gold price.
In the context of the play, this amount makes sense; in other words, if one were to write an updated version of the play to today’s standards, substituting half a million dollars for 3,000 ducats would definitely fit the plot.
Read More @ SovereignMan.com

Ben Davies – There Is A Massive Buyer In The Gold Market

from KingWorldNews:

Today rising star Ben Davies told King World News that there is a massive buyer in the gold market, and they have been steadily increasing the price level of their bids. So with investors around the world wondering which way gold and silver will break after the long consolidation, today Ben Davies writes exclusively for King World News to answer to that question. This is an absolutely incredible piece that is a must read for all KWN readers globally.
There is a great deal of critical information in this piece. As an example, Davies addressed this key development in the gold market: “We want to state there has been a strong buyer in the gold market these past few months. Also we want to reiterate the buyer in the room is Asian and has been stepping up their buy order, 1545, 1575 now 1600?” Below is the entire piece Ben Davies wrote exclusively for KWN.
August 9 (King World News) – The Precious metals market is trend ready. Gold, on our short and long-term trend indices, is primed for a substantial move. This could be up or down. We will examine both possibilities and which direction we believe has a greater probability of being realised.
Davies continues @ KingWorldNews.com

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