While the discussions between these two legends varied from Phat Phong nightlife to Dow 30,000, and from China bullishness to AAPL bearishness, it was the conversation about the actions of Bernanke, and more importantly our political leaders that summed up perfectly the dreadful reality in which we find ourselves. The punchline: "It is very dangerous to have ignorant people believing that they know something."
Explaining Hyperinflation
The fact that naturally scarce currencies like gold do not hyperinflate — even in times of extreme economic stress — suggests that the underlying mechanism here is of an extreme exogenous event causing a severe drop in productivity. Governments then run the printing presses attempting to smooth over such problems — for instance in the Weimar Republic when workers in the occupied Ruhr region went on a general strike and the Weimar government continued to print money in order to pay them. While hyperinflation can in theory arise either out of either ?Q or ?M, government has no reason to inject a hyper-inflationary volume of money into an economy that still has access to global exports, that still produces sufficient levels of energy and agriculture to support its population, and that still has a functional infrastructure. This means that the indicators for imminent hyperinflation are not economic so much as they are geopolitical — wars, trade breakdowns, energy crises, socio-political collapse, collapse in production, collapse in agriculture. While all such catastrophes have preexisting economic causes, a bad economic situation will not deteriorate into full-collapse and hyperinflation without a severe intervening physical breakdown.
ZNGA Zingered
UPDATE: ZNGA re-opened -13%, now -16%That foundation of social media monetization has just announced a cut to its outlook and plenty more. The stock is currently halted but its proxy FB is being sold after-hours...
- *ZYNGA SEES YR BOOKING $1.085B TO $1.100B, SAW $1.15B-$1.225B
- *ZYNGA 3Q PRELIM EST. $286.4M, SAW $300M-$305M, :ZNGA US
- *ZYNGA SEES YR ADJ EBITDA $147M-$162M, SAW $180M-$250M :ZNGA US
- *ZYNGA 3Q PERLIM ADJ. BREAKEVEN-LOSS 1C; SAW BREAKEVEN
- *ZYNGA CITES REDUCED EXPECTATIONS FOR `THE VILLE,' OTHERS
- *ZYNGA SEES CHARGE ON INTANGIBLE ASSETS ACQUIRED ON OMGPOP
How Goldman Calculates Its 100,000 NFP Forecast For Tomorrow
There was a time, long ago, when economic data mattered, and when Goldman's NFP forecast was considered one of the best on the street due to the proximity of The Pound and Pence to both 85 Broad and 33 Liberty. Then Goldman went to 200 West, central planning took over, and Bizarro world was the result, where a huge NFP beat would mean a collapse in the stock market once the prospect of QEternity actually ending returns. In other words, Goldman lost its touch. Yet their insight can still be valuable. Which is why below we present the argumentation that Goldman's Sven Jari Stehn uses to expect a BLS payroll number of 100,000 tomorrow, translating into an 8.1% unemployment rate.
Iran Arrests Gang-Of-16 'Currency Manipulators'
A gang of 16 shady individuals have been arrested by Iranian officials for allegedly smuggling currencies outside the banking network in order to increase the value of foreign currencies and to disturb the public. As CNN reports, amid the protests in the clip below, Iran says the 16 unidentified individuals "had used an atmosphere of psychological war created by the enemy" and colluded with "certain domestic and foreign groups" to exacerbate conditions. One of the accused, allegedly, had $300mm going through a bank account and "will be dealt with soon." Those arrested "were the main players in the recent fluctuations in the foreign currency market," the Tehran Judiciary said in a statement as the public panics over a 60% drop in its currency's purchasing power in the last few weeks. Of course, a 99% drop in the USD's purchasing power is acceptable to the US public since it has been achieved over a century or so...
Who Really Calls The Shots In Europe
Hint: It's not the "sovereigns." The chart below (an update of a chart we showed some
years ago: not unexpectedly, Dexia no longer made the cut) shows the
ratio of the biggest European and American bank assets to domicile
nation GDP. The red line is the 50% assets/GDP breakeven. It is safe to
say that if a bank's "assets" whether marked to myth, unicorns, or
markets (sadly nobody has done the latter in the past 3 years)
represents at least half of a domicile nation's GDP, the bank is
obviously Too Humongous To Fail, and when it comes to leverage it is its
unelected executive committee which calls the real shots for not only
the host country, but any monetary union it may be part of. This is how
20 or so corner offices hijacked Europe. The ironic observation is
that for all the complaints about the TBTF phenomenon in the US (banks
in red), it is Europe where the TBTF spectacle will truly unfurl once
the central banks finally lose control, and the giant unwind begins.Obama Reelection Odds Vs The S&P
Not much to say here. Hopefully, for the bulls' sake, the Obama reelection odds (which really are Bernanke, and thus QEternity, termination odds) are not a leading indicator to the market. Either that, or the recent spike in Obama's ratings was merely a bubble which got preemptively popped even without 5 consecutive CME margin hikes on the Obama InTrade contract.
Gold rises to $1794. Silver breaks 35.00 to end up at $35.04/Iran enters hyperinflation/Open revolt in France/Greeks take to the streets to riot austerity/
Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 1 hour ago
Gold
closed up today by a rather large $16.80 to finish the comex session at
$1794.10. Silver broke the 35 dollar barrier finishing the session at
$35.04. Resistance levels have no been broken and the two key areas
that lie ahead are very big:
gold: 1800.00
silver: $36.00
The bankers showed up early today trying to bash gold and silver down.
At one point in the day, silver hit its low of
I Have A Lot Of Cash At The Moment
Admin at Marc Faber Blog - 2 hours ago
I have a lot of cash at the moment, because on this rally since April I
have been lightening up on positions. - *in CNBC *
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Net Asset Value Premiums of Certain Precious Metal Trusts and Funds
Got Milk?
As
corn prices have rolled over and even the World Bank worries over the
impact of financial crises and food prices, we present with little
comment, one of the more staple sustenances - now trading at record high
prices... transitory we presume?Wholesale Gasoline Shortage In California Causes Gas Stations To Shut Down: Hoarding Next?
"The squeeze is on, and people are doing desperate things," is how one independent described the situation in California. As Bloomberg reports, a shortage of supply along with drastically higher wholesale prices of gasoline has caused 'mom-and-pop' gas stations to close down as their margins are destroyed.- *VALERO SAYS SUPPLY IN CALIFORNIA HAS TIGHTENED
- *VALERO SAYS IT HAS TEMPORARILY HALTED SPOT SALES IN CALIFORNIA
Oil & Stocks Win As Bonds, USD, & AAPL Lose
Threaky Thursday. Oil perfectly round-tripped its plunge from yesterday (ending back above $91.50) as Treasury yields caught 'up' to equity strength on the week. USD weakness was a one-way street of straight-line trend from 0500ET in EUR today - until the Fed minutes broke something. Gold and stocks continue their synchronized lift
- though gold is still the clear winner post QEternity. Trannies
outperformed again but the day-session in the Dow and the S&P were
largely treading water - after the factory-order-driven stop run surge
this morning. Meanwhile, all those front-running winners in MBS land
have seemingly started to unwind - as mortgage spreads have retraced post-QEternity gains quite significantly
(which is likely what helped Treasury yields higher today - though the
convergence to risk also helped). The ubiquitous 3ET AAPL ramp was
modestly front-run and epically failed as the stock-that-shall-not-be-named closed red with a $666 handle once again with some major volume at the close.
VIX was solidly banged lower right at the close (coinciding with
AAPL's high volume action) to end at 14.55 (down 0.88vols) in line with
the S&P.Artemis On The Volatility Of An Impossible Object
A
common theme among many of our insights is the reality that lurks
behind the proposed perception of many of our economic, financial, and
political leaders' projections. From Spain not needing a
bailout to Juncker's lies, from Bernanke's transitory inflation to
Dimon's not needing TARP, the list is endless. Artemis Capital, whose
insights we have discussed here and here,
use the metaphor of the impossible object (e.g. Penrose Triangle or
Necker's Cube) to explore the role of perception in modern markets,
monetary policy, and risk. In a world where global central banks
manipulate the cost of risk, the mechanics of price discovery have disengaged from reality resulting in paradoxical expressions of value that should not exist according to efficient market theory. Fear and safety are now interchangeable in a speculative and high stakes game of perception. The market is no longer an expression of the economy... it is the economy; and common sense says do not trust your common sense.NEW 4-Mile Long Oil Slick Near BP's Gulf Oil Well
10/04/2012 - 16:57
The Chicago Tribune reports that Moody’s Investors Service, which had
already cut the Chicago Board of Education’s rating once in July, cut it
again last week. Moody’s now grades the Chicago Public 
Right on the heels of the Republican and Democratic National
Conventions, the recent Casey Research Summit in Carlsbad,
California—cosponsored by SprottGlobal—focused on a timely theme:
“Navigating the Politicized Economy.” The somber revelations of the
summit contrasted with the buzz of the party conventions. The Gold
Report sat down with Louis James, Casey Research’s chief metals and
mining investment strategist, Rick Rule, founder and chairman of Sprott
Global Resource Investments and chairman of Sprott US Holdings, and
Marin Katusa, Casey Research’s chief energy investment strategist, to
discuss how investors can position themselves in a politically driven
economy.
Gold and gold receivables held by euro zone central banks rose in value
by 45.5 billion euros to 479 billion euros after a quarterly
revaluation, the European Central Bank said on Wednesday.
A mega fixed income deal for GE:
A near-death experience isn’t something one gets over right away. So
it’s no surprise that the US leveraged speculating community was a tad
more cautious than usual for a while. Real estate investors, for
instance, still bought houses, but only on very favorable terms where
rental income would clearly exceed expenses. And investment banks still
repackaged loans into asset backed securities, but on a very small
scale, since there weren’t that many willing/able buyers for exotica
that was “toxic” so recently.
Did we tell you or did we tell you? It’s a bit premature to claim
bragging rights but the Junior market has been trading exactly how we
hoped it would. Ben Bernanke delivered the early Christmas presents
gold bugs were dreaming of and the market tenor looks better than it has
for a year.
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