The Financial Decline In Europe Continues
As
Industrial Production falls -0.6% in Europe and as the economy shrinks
-0.2% there is once again a good reason to pause to consider the
ramifications for this going forward. When you sit back and take a hard
look at the last two years you begin to learn a few things. If you just
stick to the actual data and forget the rhetoric that surrounds it the
picture becomes clearer. Each and every projection for Greece, Spain and Italy that has been forecast by the EU and the IMF has been wrong; dead wrong. Europe is getting worse and not better. Whether you turn your attention to Greece, Spain, Italy, Portugal or even Ireland; it is getting worse.
Nowhere on the Continent are things improving and even in France and
Germany the financial strains are beginning to show. It is not a
question of Euro-bear or Euro-bull; it is just the numbers as they come
rolling out month after month. It is the banks, it is the sovereigns and grand visions must, in the end, give way to the facts.Jackson Hole To Be Empty: July Retail Sales Spike As Producer Prices Have Highest Increase In 6 Months
Dash any hopes about a "surprise" Jackson Hole announcement by the Fed. The reason: July retail sales posted the biggest beat to expectations, rising at 0.8% on expectations of a 0.3% increase, which was above the highest Wall Street estimate of 0.6%, and which despite the downward revision of June headline retail sales from -0.5% to -0.7%, means that the Fed will now be looking at the possibility of inflation rising as a result of increased consumer spending. Ex autos and gas, the increase in spending was +0.9%, on expectations of a 0.5% rise (prior revised from -0.2% to -0.4%). Was this spike in spending credit driven or not? This will be seen once the next personal savings and consumer credit report is out, but that won't happen until after Jackson Hole. So those who trade based on hope and prayer may be well-advised to shelve those two strategies for the next 3 weeks, especially since PPI rise 0.3%, on expectations of a 0.2% pick up following June's 0.1% increase: the biggest increase in 6 months.
Gold/FX/TSYs Signal QE-Off, Equities Still Believe
The
inevitable headline-driven algo-kneejerk reaction to retail sales and
inflation coming hotter than expected was a 4-5pts pop in S&P 500
futures (testing the magical 1410 line). But almost immediately, gold,
silver, FX, and TSYs all reacted in a decidedly QE-off manner and are
extending QE-unwind-type moves. For now, S&P 500 futures still
believe in miracles...Small Business Optimism Hits 9-Month Low
Despite
the majestic efforts at jawboning 'markets' higher with constant
reassurance that infinite QE will come 'we promise', it seems the real
economy - full of small businesses and job creators - hasn't got the
message. As while equities trade at multi-year highs, small business optimism just printed at its lowest in 9 months.
Trickle-down QE doesn't seem to be taking hold among the dismal
reality in which we all actually live - as opposed to the vacuum tune
hyperplane that stocks exist on.Overnight Sentiment: Bad News Is Good On More Hope And Prayer
It is just getting stupid. Europe officially enters recession, Japan GDP declines nominally, China admits to food inflation which locks the PBOC out of easing for months, UK inflation is again rising faster than expected which will soon force the BOE to reevaluate its latest easing episode, Brent is once again rising on supply fears and middle east war fears to a 3 month high, corporate revenues have never been worse in this recession cycle and what happens? Futures spike following a very visible invisible finger pushing ES higher by 0.5% at 9 pm Eastern and setting the scene for trading throughout the night. And since the market has reverted back to full retard mode full of hope of an absolution from the Fed, this time at the August 31 Jackson Hole meeting, which will be very disappointing as Ben will say absolutely nothing yet again, why not take the S&P to new 2012 highs? After all well over 100% of QE3 is now priced in. Finally, expect the ES to surge by 10 points should advance retail sales miss wildly the consensus of a +0.3% print. After all, inverted is the NKI.Hard Times Generation: Families living in cars
Eric De Groot at Eric De Groot - 46 minutes ago
As we slug our way through another trading box that extends until
2021-2015 and will in-time be compared to the economic malaise of
1929-1950, Americans have come face-to-face with hardships not seen since
the children of the Great Depression. This one is not over by a long shot,
so be prepared to fight and adapt. Chart: S&P 500 Total Return Index to
Gold...
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I'm PayPal VerifiedSpanish Bank Borrowings From ECB Continue Parabolic Rise
Even
as the Spanish (and Italian) sovereign bond market foundered in July,
hitting record yields following stark realizations just how insolvent
Spain is, a more sinister development was taking place: Spanish banks,
completely disconnected from the funding needs of the sovereign were
receiving a daily bailout from the ECB to the tune of over €1 billion.
As the Bank of Spain released hours ago,
in July Spanish banks borrowed a record €375.5 billion from the ECB, a
new record, and a €38 billion increase from June. Sadly, as the red
line in the chart below demonstrates, the parabolic increase in Spanish
bank borrowings from what is effectively Germany, continues unabated.
Indicatively this is comparable to the US banking system obtaining a
roughly $500 billion rescue in one month for the 8th month running. Year
to date, Spain has received €257 billion in ECB "borrowings" which we
put in quotes as this money will obviously never be repaid, which means
simply that Europe continues to be entrenched in the most diabolical
version of Stockholm syndrome, where the hostages and the kidnappers
have now realized they can only exist as long as the other is alive. If
there was any good news, it is out of Italy, whose ECB bank borrowings rose
by "only" €2 billion in July to €283 billion, and leaving Spain far
ahead in the direct borrowing insolvency race. Of course, this was
offset by the far more complicated ponzi scheme where banks can and
continue to issue government-backed bonds. In fact, as reported
yesterday, Italian sovereign debt rose to a new all time high. Because
at the end of the day remember: sovereign or financial debt - it doesn't
really matter in Europe, an asset-starved continent where the two
terms are now effectively synonymous, and where the law of fungible
funding and communicating vessels in the context of debt has never been
more in your face.Frontrunning: August 14
- Must be those evil speculators' fault: Oil price inflates as speculators bet on stimulus (Reuters)
- Need moar stimulus: UK Coalition plans housebuilding stimulus (FT)
- Paul Ryan brings fundraising prowess to Romney presidential bid (Reuters)
- Chinese serial killer shot dead after massive manhunt (Reuters)
- Silver Hoard Near Record As Hedge-Fund Bulls Recoil (Bloomberg)
- World powers eye emergency food meeting; action doubted (Reuters)
- Clegg Said to Have Role in Picking King Successor as BOE Chief (Bloomberg)
- Standard Chartered CEO takes charge of Iran probe talks (Reuters)
- Risks must not hide positive China trends (FT)
- BOJ should not rule out any policy options: July minutes (Reuters)
- India Says Growth Sacrifice Needed in Inflation Fight (Bloomberg)
European Q2 GDP Contracts 0.2%, German Growth Beat Offset By Plunge In ZEW
The
two major overnight data points were European Q2 GDP which printed at
-0.2%, or the expected continuation of the European double dip. As
SocGen explains, these numbers continue to paint an all too predictable
picture of growth in Europe, with expansion in Germany driven by
exports and consumption, growth in France stagnating and deep
recessions continuing in southern Europe. The European GDP pattern is
now expected to be a copy of 2011. Amongst the country details, growth
beat expectations in Germany (+0.3 q/q), Austria (0.2%), Slovakia
(+0.7%) and the Netherlands (0.2%) but this was offset by deep declines
in Finland (-1.0%) and Portugal (-1.2%). Amongst data already
published we know Italy declined 0.7%, Spain declined 0.4% and Belgian
GDP declined 0.6%. And while the market was clutching at the German GDP
beat straw, it was the German ZEW Survey which threw a cog in the
spikes of German economic perception, after the number came at a
whopping -25.5, declining for the 4th consecutive month and far below
expectations of -19.3, and a drop from the already negative -19.6.
Finally, while there may be hopes that this is the bottom, already weak
IP data confirms that the weakness in Europe has continued into Q3 and
as such as the continental contraction will likely not stop
contracting for the foreseeable future.S&P Futures Gap Up 0.5% -- That Is All
Asia
opens loud and proud and announces itself with a subtle
'buy-every-single-contract-in-the-stack-coz-I-am-desperate' algo
grabbing 7000 contracts in S&P 500 e-mini futures (ES). Nothing else
moved, just ES. Now a few things are reacting but the total lack of
news and sheer ignorance of unloading that much into an illiquid thin
market at this time of day suggests this market is more broken than we
suspected. Also, since the move is identical to what a certain Bruno
Iksil would have done back in March with IG9, when he would sell through
all the bids, only this time in reverse with equities, we wonder if
the "water walking" Frenchman may not have already found his next port
of call.
from Wealth Cycles:
Reuters put out a piece last week claiming that the unelected Goldman Sachs International Advisor,
Mario Monti, who happened into the Italian Prime Minister position,
“has taken the gloves off in his fight to save Italy from disaster.”
This is quite misleading.Meanwhile we have written about the fact that austerity in the European Union (EU) is virtually nonexistent. (See What Austerity Measures?) As a reminder, austerity has nothing to do with taxation, and everything to do with a reduction in spending. To live austerely means to live far below one’s means. This especially pertains to governments, spending far less than they take in.
Here is the truth on austerity in Italy. Rate of increase in debt:
Under € 2 billion per month up until end-1999
€ 3.8 billion per month 2000 – 2007
€ 6.4 billion per month 2008 – September 2011
€ 9.5 billion per month September 2011- 2012 (Monti’s “Austerity”)
This is the opposite of fighting to save Italy. Let alone with gloves off. Another way to measure the failure of this unelected boss from the perspective of the Italian people is to look at how much more it costs Italy to loan cash today than it did a year ago.
Read More @ WealthCycles.com
By The Daily Reckoning, Daily Reckoning.com.au:
Recently, the leftist London Guardian posted an article against the nineteenth-century gold coin standard.
The author, who seems recently to have begun shaving, has provided a
highly useful summary of the Keynesian case against the gold coin
standard. His article is a fine mixture of familiar old canards and
creative new errors. His name is Duncan Weldon.Mr. Weldon has not written a book, so it is difficult for me to know exactly what his monetary theory is. He was the unknown Keynesian in the 2011 BBC debate between two teams of economists at the London School of Economics: The Keynes vs. Hayek debate. I assume that Robert Skidelsky, his partner, thought he was an up-and-coming economist. Skidelsky is the author of a multi-volume biography of Keynes.
I think it would be a useful exercise to go through Mr. Weldon’s case against gold. Clearly, he expects people to take it seriously. While I cannot bring myself to do this, having actually read it, I do think some editor at The Guardian took it seriously, even though he also read it.
GOLD BUGS UNDER EVERY BED
He begins with an historical statement.
Read More @ DailyReckoning.com.au
from FinancialSurvivalNetwork.com:
Ann Barnhardt was living her dream. She had a successul commodities firm, helping farmers across the US and Canada to hedge their crop risks. Then MF Global blew up and Ann realized that no matter how carefully she invested her clients’ money, it could always be stolen right out from underneath them. Therefore, in good conscience she couldn’t continue the business, so she liquidated the assets and paid off her clients in full, so that they would never have to suffer an MF Global meltdown. She has mixed thoughts about it to this day, but she’s absolutely certain she did the morally correct act. And while Ann’s business ethics are very much intertwined with her religious beliefs, she’s decided that she cannot liver her life any other way. And we have to admit, there’s something nice about being able to sleep at night, regardless what your religious beliefs may be.
CLICK HERE TO LISTEN TO AUDIO
Ann Barnhardt was living her dream. She had a successul commodities firm, helping farmers across the US and Canada to hedge their crop risks. Then MF Global blew up and Ann realized that no matter how carefully she invested her clients’ money, it could always be stolen right out from underneath them. Therefore, in good conscience she couldn’t continue the business, so she liquidated the assets and paid off her clients in full, so that they would never have to suffer an MF Global meltdown. She has mixed thoughts about it to this day, but she’s absolutely certain she did the morally correct act. And while Ann’s business ethics are very much intertwined with her religious beliefs, she’s decided that she cannot liver her life any other way. And we have to admit, there’s something nice about being able to sleep at night, regardless what your religious beliefs may be.
CLICK HERE TO LISTEN TO AUDIO
from The Economic Collapse Blog:
It is absolutely amazing what some people will do to make a living in
this economy. Desperate times call for desperate measures, and we have
not seen this kind of desperation for jobs in America since the Great
Depression of the 1930s. What some people are willing to put up with
just to bring home a paycheck these days will totally shock you. For
example, would you slaughter dogs all day long even though you are
really a dog lover? Would you personally train your replacement from
China even though you knew he was about to take your job? Would you
trade sex for a job? There are people out there actually doing all
these things and worse. Every night in America, millions upon millions
of people roll around endlessly in their beds and stare at their
ceilings for hours because they can’t sleep. They are sick to their
stomachs because their money is gone and nobody will hire them. They
can’t provide even the basics for their families and they feel
worthless. Unemployment can be absolutely soul crushing and it can suck
the life right out of you. Things were supposed to be better by now,
but they aren’t. The month after Barack Obama took office the
unemployment rate broke the 8 percent barrier and it has stayed above it
ever since. But the truth is that the “official” unemployment number
greatly understates the real amount of suffering that is going on out
there. In reality, the percentage of working age Americans that have
jobs is lower today than when the last recession ended.
There are millions upon millions of Americans that are desperate for
some hope, and there is no hope on the horizon. In fact, things are
going to be getting a whole lot worse for the U.S. economy.
Read More @ TheEconomicCollpaseBlog.com
It is absolutely amazing what some people will do to make a living in
this economy. Desperate times call for desperate measures, and we have
not seen this kind of desperation for jobs in America since the Great
Depression of the 1930s. What some people are willing to put up with
just to bring home a paycheck these days will totally shock you. For
example, would you slaughter dogs all day long even though you are
really a dog lover? Would you personally train your replacement from
China even though you knew he was about to take your job? Would you
trade sex for a job? There are people out there actually doing all
these things and worse. Every night in America, millions upon millions
of people roll around endlessly in their beds and stare at their
ceilings for hours because they can’t sleep. They are sick to their
stomachs because their money is gone and nobody will hire them. They
can’t provide even the basics for their families and they feel
worthless. Unemployment can be absolutely soul crushing and it can suck
the life right out of you. Things were supposed to be better by now,
but they aren’t. The month after Barack Obama took office the
unemployment rate broke the 8 percent barrier and it has stayed above it
ever since. But the truth is that the “official” unemployment number
greatly understates the real amount of suffering that is going on out
there. In reality, the percentage of working age Americans that have
jobs is lower today than when the last recession ended.
There are millions upon millions of Americans that are desperate for
some hope, and there is no hope on the horizon. In fact, things are
going to be getting a whole lot worse for the U.S. economy.Read More @ TheEconomicCollpaseBlog.com
from Zero Hedge:
It only took 20 years, a trail of counterfeit documents, superficial
and failed audits, dubious tax returns and one unsuccessful suicide
attempt, but in the end they got him: the CEO of failed commodity
brokerage Peregrine aka PFG, Russell Wasendorf has been indicted on 31
charges of lying to government regulators regarding the failed
brokerage’s operations. He faces a maximum sentence of 155 years’
imprisonment on the charges and fines of about $7.75 million, according
to a statement from the U.S. Attorney’s Office for the Northern
District of Iowa. There is also that whole $215 million in commingled
and subsequently stolen client money but that’s another matter. In
other words, just like Bernie Madoff, Wasendorf is going away for a
long, long time for doing precisely what everyone else does: the first
one for engaging in a ponzi even as now everyone acknowledges the entire system is one big ponzi – does that make it better and legitimate: apparently so; the second one for commingling client cash for personal benefit.
As a reminder, this is what JPM did with $350 billion in excess
deposit cash as part of its London whale trading fiasco, and broadly
what every bank in the post Glass-Steagall world does with the roughly
$8 trillion in total US bank deposits.
Read More @ Zero Hedge.com
It only took 20 years, a trail of counterfeit documents, superficial
and failed audits, dubious tax returns and one unsuccessful suicide
attempt, but in the end they got him: the CEO of failed commodity
brokerage Peregrine aka PFG, Russell Wasendorf has been indicted on 31
charges of lying to government regulators regarding the failed
brokerage’s operations. He faces a maximum sentence of 155 years’
imprisonment on the charges and fines of about $7.75 million, according
to a statement from the U.S. Attorney’s Office for the Northern
District of Iowa. There is also that whole $215 million in commingled
and subsequently stolen client money but that’s another matter. In
other words, just like Bernie Madoff, Wasendorf is going away for a
long, long time for doing precisely what everyone else does: the first
one for engaging in a ponzi even as now everyone acknowledges the entire system is one big ponzi – does that make it better and legitimate: apparently so; the second one for commingling client cash for personal benefit.
As a reminder, this is what JPM did with $350 billion in excess
deposit cash as part of its London whale trading fiasco, and broadly
what every bank in the post Glass-Steagall world does with the roughly
$8 trillion in total US bank deposits.Read More @ Zero Hedge.com
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