Spiegel: Investors Prepare For Euro Collapse

Two years in and they are only starting now? What took them so long. Also, absolutely nothing new here, but merely the latest attempt to shift public opinion and EUR viability perceptions ever so slightly by one of Germany's most respect magazines. Those whose agenda it is to spook Germany with images of fire, brimstone, and 3-page mutual assured destruction termsheets if the Euro implodes, are now free to take the podium. One wonders: if it wasn't for the inevitable collapse of the EUR.... the inevitable collapse of the EUR.... the inevitable collapse of the EUR.... the inevitable collapse of the EUR, and of course Paul Ryan, would there be absolutely no news today?

 

BTFD...(buy the F**king dips)...Keep Stacking...

Bill Murphy on Gold, Silver: ‘We Could See a 100% Increase in 90 Days!’

from Silver Doctors:
GATA’s Bill Murphy whose London source last month predicted that ‘gold and silver will go nuts in August‘ stated Sunday that JP Morgan still is having a massive problem with their naked short silver position, and that last week saw such a heavy covering of shorts in Chicago and New York that an imminent explosion in the price of gold and silver ‘could see a 100% increase in 90 days!‘.
Is the long-awaited next stage of the gold and silver bull markets and a massive short-squeeze finally at hand?  Bill Murphy believes so.
From Bill Murphy:
I have spoken before about my contact on the Board of Trade who trades mainly the metals and is in touch with New York minute by minute. He has been saying for several weeks that the metals would have one more big drop (1525-1550) before they really took off. Today he changed his mind. They saw heavy covering of shorts in Chicago and New York. This should show in next week’s COT. They see an explosion of huge proportions and are adding four more floor traders as they see August as a record month for them. He closed by saying “We could see a 100% increase in 90 days.”
Read More @ Silver Doctors

Bronze Is The New Gold And Why Swallowing Aliens Never Ends Well

It's not unheard of for stocks to rally when economic conditions are weak, particularly when corporate profits are doing well; Q2 marked a new all-time high run rate of S&P profits. As a result, the 13% gain in the S&P this year is not a complete anomaly. But, as Michael Cembalest of JPMorgan notes, in prior cycles, 'weak economy' stock market rallies were predicated more on the view that a private sector recovery was just around the corner, rather than the current view that more Central Bank stimulus is just around the corner. The other notable aspect of the rally is that it took place as earnings forecasts for 2012 and 2013 have been falling, and as Q2 revenue growth slowed. To paraphrase what’s going on, Cembalest believes "Bronze is the new Gold" as expectations are so low, that anything better than recessionary data can be well-received by markets. Of course, the other factor behind the recent rally is the prospect of unlimited bond purchases by the ECB to which the JPM CIO science-fictionally analogizes: "Swallowing an alien is one sure-fire way to get rid of it, but then you have to wonder what happens once it gets digested. Color me nervous how this all turns out."

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New Lawsuit Filed Against ESM Threatens Further Bailout Fund Delay

Just as we were complaining about lack of newsflow, here comes Germany, coincidentally just as Merkel comes back from vacation, with an update from Karlsruhe that the Constitutional court, which may reject the ESM as is in its September 12th decision, will likely be delayed even more following the filing of a brand new lawsuit challenging the constitutionality of the ESM.

The Bernank's Dilemma: How US Corporations Became Addicted To Endless QE

While many argue that corporate profitability in the US knows no bounds as cost-cutting amid 'slow' growth will fill the gap, we offer this quite compellingly nerve-jangling chart of the increasing dependence of S&P non-financial operating profits and the weakness of the US Dollar. The negative correlation between macro-level EPS and the U.S. dollar is both theoretically and empirically clear. As Citi points out, profits earned abroad are reported in depreciating or appreciating terms, boosting or reducing profits; and as the negative correlation between the USD and global growth can result in 'double counting' of earnings influences  - this leads to too much hope at 'turning points'. What is more critical is the trend higher in the USD - whether due to EUR break-up fears and safe-haven flows OR courtesy of Draghi's EUR weakening QE/LTRO promises - is tending to push The Bernank's hand to act to weaken the USD (do NEW QE) to 'strengthen' corporate profits and the economy. However, with inflation-expectations now high and macro data stabilizing, his justification is far from clear - no matter how high the hopes and dreams have become.

Buy When Dumb Money Sells Silver and Vice Versa

Eric De Groot at Eric De Groot - 1 hour ago

While speculators may 'hate' silver, they're not the best indication of dumb money. Retail investors, a better indication of dumb money, hated silver from April to July 2012. Today's reading suggests strong dislike that's consistent with an early stage rally (chart). Chart: Silver London P.M Fixed and the Commercial (C) & Nonreportables (NR)... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Bill Black Educates the Media On the Nature of Financial Fraud, With Little Apparent Effect

The Risks Of Currency Debasement

Admin at Jim Rogers Blog - 3 hours ago

Throughout history governments have tried to debase their currency in the hope that they would somehow get better down the road, but it’s always gotten out of control. The debt has gotten higher, the money printing makes people feel better for a while but in the end its higher inflation, higher interest rates and then you have serious, serious problems. Once inflation starts rising and gets out of control, it’s very hard to kill it. - *transcript from a video interview* *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently feat... more » 

The State Of The Global Economy

Admin at Marc Faber Blog - 3 hours ago

If we break down the global economy into Europe, the United States, Latin America and Asia, then very clearly Europe is at the present time already in recession. Not growing, it`s rather contracting if you add up everything. In Asia, we had a very strong recovery from the lows in 2009 and in my view, the peak intensity of the recovery was reached about 1 year ago. And since then the asian economies have been slowing down meaningfully, including China where the economy is growing at a much slower pace then the official statistics suggest. In my view, in Asia we don`t have a recession ... more » 

How 'Everyday Low Prices' Are Costing Americans Their Jobs

Eric De Groot at Eric De Groot - 4 hours ago

Self-reinforcing job destruction cycle - Americans saddled with rising debts, higher taxes, falling wages, and underemployment increasingly shop at 'Everyday Low Prices' stores (ELPS) to make ends meet. ELPS in order to keep their prices low, and consumers consuming to maintain economic growth, fill their stores with goods produced in foreign factories. ... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

The Importance of Retail Stocks

Eric De Groot at Eric De Groot - 4 hours ago

Personal consumption accounts for more than 70% of national income (GDP) in the US. This makes retail sales a decent proxy for domestic personal consumption an important economic trend in the United States. Inflections in the broader stock market tend to be signaled by positive and negative divergences with retail stocks. For example, when retail stocks fail to confirm the 2007 stock market... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

How Andrew Jackson Killed the Second Bank of the United States 

Bayou's Ponzi, Vodka And Cocaine, Murder, And Frontrunning The Fed's "Secret" Bond Market

Think the attempted fake suicide by Bayou Capital's Sam Israel which dominated the headlines for a few days in 2008 was strange? You ain't seen nothing yet: as the following excerpt of Octopus, The Secret Market And The World’s Wildest Con by Guy Lawson via the Daily Mail explains, that was merely the anticlimatic culmination of an amazing tale of bogus London traders, 'secret' Bond markets, frontrunning the Fed, fake CIA and MI6 spies, ponzi schemes and staged murders.

"Sense And Nonsense" - Assorted Deep Thoughts

With newsflow today non-existent, and the market acting somewhat bizarrely (i.e., not soaring on endless revenue misses and GDP forecast cuts, and in fact, selling off) we take this opportunity to share some philosophical "deep thoughts", although not from Jack Handey, but from the latest issue of the Edelweiss Journal.

What Does High Yield Credit Know That Stocks Don't?

Yes, there are call constraints. Yes, there are 'beta' differences. But, given the strong technicals (fund flows) and empirically high correlations between the much-more-like-stocks-than-bonds high-yield credit market and the equity market, the current divergence between equity ebullience and credit curmudgeon-ness is all-too-reminiscent of the post-LTRO2 sanity check that credit 'imposed' on equities. Not only are high-yield bonds underperforming stocks (as we warned last week), but the HYG ETF is now trading at a significant discount to intrinsic value which (back in March) was the start of a more pronounced downturn as cash bonds were force-sold into an illiquid market backdrop.

Africa Just Says "Nein" To The US Dollar: Time To Go Short The USDZMK And USDGHC?

Last week we presented the aftermath of the very much unannounced "Conference of Beijing" as a result of which Africa has been slowly but surely converting to a continent controlled almost exclusively by China. However, there was one thing missing: even as China has been virtually the sole source of infrastructure funding in Africa, the continent has long been a legacy dollar preserve, which obviously means renminbi penetration and replacement would be problematic to say the least. As it turns out, this too is rapidly changing: as the WSJ reports, Africa is increasingly just saying "nein" to the USD. "African countries are trying to shoo the U.S. dollar away, even if it means threatening to throw people who use greenbacks in jail. Starting next year, Angola will require oil and gas companies to pay tax revenue and local contracts in kwanza, its currency, rather than dollars. Mozambique wants companies to exchange half of their export earnings for meticais, hoping to pull more of the wealth in vast coal and natural-gas deposits into the domestic economy. And Ghana is seeking similar ways to reinforce "the primacy of the domestic currency," after the cedi plummeted more than 17% against the dollar in the first six months of this year. The sternest steps come from Zambia, a copper-rich country in southern Africa where the central bank has banned dollar-denominated transactions. Offenders who are "quoting, paying or demanding to be paid or receiving foreign currency" can face a maximum 10 years in prison, the central bank said in a two-page directive in May." Is it time to dump the EUR in hopes of a short covering rally that continues to be elusive (just as Germany wants) and buy Zambian Kwachas instead? We will wait for Tom Stolper to advise Goldman clients to sell the Zambian currency first, but at this rate the USDZMK may well be the most profitable currency pair of the next 3-6 months.

Complacency At 5 Year Highs

Short-term expectations of volatility, as measured by VIX, traded down close to a 13% handle this morning as the so-called 'fear' index dropped to practically its lowest level since July 2007. As we mentioned last week, complacency is back in more ways than just the level of VIX. Realized volatility, especially after last week's small range and low volume markets, has fallen but implied volatility is now at its most 'complacent' relative to realized vol since the end of LTRO - as it appears anticipation of the fully-expected printing-press euphoria is priced into both asset and vol markets. Furthermore, the term-structure of volatility, which measures short-term concerns relative to medium-term, has fallen at its fastest pace in 5 months (again confirming short-term complacency) and has only been this steep (short-term volatility dramatically low relative to medium-term volatility) once since the March 2009 rally began - right near the post-LTRO2 highs in the S&P.

Peeking Beneath The Surface Of The 'Most Hated' Stock Rally

Since hope re-blossomed at the start of June and was reignited by Mario's musings, the equity markets of the US and Europe have surged in an outpouring of faith in central bank excess and policy-maker's abilities to 'fix' everything (despite decades of truth that points in the exact opposite direction). But while the market levitates on ever-increasing multiples (as earnings current and forward are dragged lower by the economic reality of a debt-deleveraging world), the true picture of what is driving stocks become clear. For the first time since the BTFD rally began in March of 2009, cyclical stocks (or economically-sensitive firms) are underperforming notably - implying notably lower expectations for a levered recovery by the consumer. As Bloomberg's Chart of the day notes, either the economy will hockey-stick back to a significant rebound or broad equity market indices will fall back to a more defensive reality - given the non-economy-helping nature of LTRO/QE, we suspect the latter. Do you believe in miracles?

Olympic Calm Before Coming Financial Storm

It is important to note that markets were also unusually calm during the two weeks of the Chinese Olympics in 2008. The 2008 Summer Olympic Games took place slightly later in August than the London Olympics – starting August 8 and ending August 24. Only days after the ending of the Chinese Olympics came massive market volatility in September and then seven months of market turmoil.  Similarly to this Olympic year, in Olympic year 2008, gold traded sideways to down in a period of consolidation prior to further gains. Gold bottomed in September 2008 in euro and sterling terms.  Another brief bout of dollar strength saw gold bottom in November 2008 in dollar terms.  Besides the eurozone crisis (and the significant risk of the German Constitutional Court deciding on September 12th to reject the recently cobbled together alphabet soup response to the crisis (ESM etc etc) and significant instability in the Middle East, there is also the not inconsequential risk from the US Presidential campaign and the upcoming ‘fiscal cliff’.

Italy's Latest Record Debt Load: Bigger, Faster, More

Italy just announced its all-time record high general government debt load at EUR 1.973 trillion. What is perhaps most stunning, given all the talk of austerity, cutting back, reforms, and change is that the size of this debt is growing at an ever-increasing pace that is simply stunning. Pre-Euro (1999), Italy's debt was growing at a rate of just less than EUR 2 billion per month; in the eight years from then until the crisis in 2008, Italy's pace of debt growth (fostered we are sure by the convergent cheapness of funding and their immutable belief in invincibility) almost perfectly doubled to EUR 3.8bn per month. Since 2008, and the onset of excess Keynesian ridicule we assume, Italy's debt load has grown at a stunning pace of EUR 6.4 billion per month and perhaps most incredible; however, the last nine-months (since the peak 'peak' of the crisis in September of last year) has seen the pace of debt-load growth surge to EUR 9.5 billion per month. Sustainable levels of exponential debt growth - sure!

On GRExit, SPAilout, And Draghi's White Knight

We think as a matter of political reality, given the German polls, that Berlin will refuse to adequately fund Greece and that they will be forced back to the Drachma as a matter of Ms. Merkel’s desire for re-election. The honest truth is that the Greek debts have become so large and so impossible to pay that unless there is absolute debt forgiveness, which we think is politically impossible in Germany and a number of other European countries; the country must roll over as a matter of fiscal reality. In March, the last figures that are available, the Spanish banks lost $66 billion of capital as the citizens of Spain moved their money to safer havens. What the LTRO gave, the populace took away and the situation is unsustainable. Spain will soon be forced into a full-fledged bailout in my opinion which will require money for the regions and for the banks. What amazes us the most is that so many people have the honest opinion that Sir Draghi is going to come charging out from the round table, from the gilded gates of the ECB and save Europe. That White Knight is subject to the whims of Germany and the rest and all of the talk of independence and the separation of Church and State is just that; talk.

Through The Jackson Hole Again?

Two years ago, in August of 2010, Ben Bernanke pre-announced QE2 at the annual Jackson Hole economic policy symposium. What followed was a 20% spike in the stock market as the impact of another liquidity deluge was digested by the market, leading to such luminaries as Tepper to make his first ever TV appearance telling everyone he was "balls to the wall" long. The QE effect came and went, and Tepper made money, and then lost it, as QE2 was followed by Twist, and then by more easing out of Europe, including a global coordinated intervention. This year, as the US and global economies have been floundering, the Fed has so far disappointed, and despite a "mere" continuation of Twist, has so far refused to implement the same bazooka measure that it did 2 years ago, no doubt well aware that doing so would merely confirm that every successive intervention has less of an impact, and last about half as long as each previous one (as we demonstrated over the weekend). The market, however, like the honey badger, does not care: and with stocks trading just shy of 2012 highs, and with Crude having soared by 20% since July, and with Brent at 3 month highs, is very much convinced that the imminent Jackson Hole symposium of 2012 will be a repeat of 2010, and Bernanke will announce something (and if not, there is always September, and if the disappoints then there is October, and December - in a world addicted to Fed liquidity the only thing that matters is when is the next fix). So what happened in the last run up to the 2010 Jackson Hole meeting? Here is a visual and factual summary.

Key Events In The Coming Week And European Event Calendar August - October

Last week was a scratch in terms of events, if not in terms of multiple expansion, as 2012 forward EPS continued contraction even as the market continued rising and is on the verge of taking out 2012 highs - surely an immediate catalyst for the New QE it is pricing in. This week promises to be just as boring with few events on the global docket as Europe continues to bask in mid-August vacation, and prepare for the September event crunch. Via DB, In Europe, apart from GDP tomorrow we will also get inflation data from the UK, Spain and France as well as the German ZEW survey. Greece will also auction EU3.125bn in 12-week T-bills to help repay a EU3.2bn bond due 20 August held by the ECB. Elsewhere will get Spanish trade balance and euroland inflation data on Thursday, German PPI and the Euroland trade balance on Friday. In the US we will get PPI, retail sales and business inventories tomorrow. On Wednesday we get US CPI, industrial production, NY Fed manufacturing, and the NAHB  housing index. Building permits/Housing starts and Philly Fed survey are the highlights for Thursday before the preliminary UofM consumer sentiment survey on Friday.





Today’s Items:

First…
Is China’s Economy Staring Down The Bottomless Pit
http://www.zerohedge.com

Positive, yet very weak, numbers out of China are not pointing to a recovery.   There are more talk, within China, of more stimulus; thus, more inflation.   It may require more stimulus to get growth above 8%; however, it is a question as to whether the government is willing, or able, to stimulate the economy for this to happen.

Next…
Agressive Action Over Syria
http://www.zerohedge.com

Former Defense Secretary William Cohen said the U.S., and her allies, will probably impose a “no fly zone” over Syria.   This, like Iraq, will be a prelude to a massive kinetic action that will kill thousands of innocent people in that country.   So, there you have it, both political parties are gearing the U.S. population for war.

Next…
The Civil War of 2016
http://www.washingtontimes.com
http://www.reuters.com

U.S. military officers are being told to plan to fight Americans.   They are using the scenario of the Tea Party as the catalyst; however, anyone with an IQ above their shoe size knows the real enemy.   The idea that the major Banks, and not the American people, have been told to prepare for economic collapse is not a justifiable cause for the people rebel?   Give me a break.

Next…
Grocery Bills to Skyrocket as Drought Crushes Crop Production
http://www.activistpost.com

The Department of Agriculture has cut its projected domestic corn and soy production by 17 and 12 percent respectfully.   Dry weather in Russia has pushed prices up 19 percent.   Costs have been going up for some time now for food prices…   So, will the drought be the real reason for massive cost increases, or be used as a cover for the massive money printing that has been going on around the world?

Next…
Obama Pledges All-Out Response to Drought
http://www.cnbc.com

Just like what he did with jobs, Obama is pledging to focus his attention, like a laser-beam, on the drought.  Obama says his administration is giving farmers and ranchers access to low-interest emergency loans.   Obama says Congress needs to pass a farm bill to ensure a long-term solution while not relaxing on ethanol production targets.   Yes folks, where there is a crisis, there is an opportunity.

Next…
People Are Frightened, Money Pouring Into Switzerland & Gold
http://kingworldnews.com

Keith Barron, responsible for one of the largest gold discoveries in the last quarter century, believes that people are scared and a lot of money has been pouring into Switzerland and the Swiss franc because it is viewed as a safe harbor.   He goes on to say that pension funds will move their money into precious metals to protect their investments.   This may be the beginning manic phase of buying physical.

Next…
Back-to-School Shoppers in No Mood to Splurge
http://www.cnbc.com

U.S. Teenagers are not buying the line that the economy is in recovery as their own finances dwindle.  This does not bode well for U.S. retailers hoping for a much needed sales boost.   Back-to-school is the second-biggest selling time of the year for U.S. retailers.   Perhaps, the latest fashion, in keeping with the economy, may be sackcloth.

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

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