Too Little Too Late? Will the Fed’s Taper Be Able to Stop the US Dollar Going Off a Cliff?

Janet Yellen has a BIG problem on her hands.


The Fed has been tapering its QE programs to the tune of $10 billion per month or so. The problem with this is that the Fed is once again behind the curve and the markets are already smelling inflation.


Indeed, the US Dollar just took out key support yesterday.



This is a HUGE problem for the Yellen Fed. They are already tapering QE but the markets continue to display inflationary tendencies. What is the Fed to do? Raise rates? It’s already said that won’t happen for another year. And tapering QE more aggressively could tank stocks.


Meanwhile, food prices are roaring higher. Wholesale beef prices are up 21% from this period last year. Pork prices are up 56%. Agricultural commodities in general have moved sharply since the beginning of the year.



The problem with inflation is that it is a lot easier to create than contain. The Fed continues with its dubious claims that inflation is too low, but the markets and prices are saying otherwise.


Buckle up, much higher prices are coming. The Fed is behind the curve again, just as it was in 2007. We all know what happened next.


This concludes this article, swing by for a FREE investment reports Protect Your Portfolio, which outlines how to protect your portfolio from bear market collapses.


Best Regards


Phoenix Capital Research



via Zero Hedge Phoenix Capital Research

Should Women Who Have Had an Abortion Feel Guilty About It?

The (non-graphic) video above follows a woman named Emily Letts
having an early-term abortion (according
to Letts
, she was only a few weeks pregnant when she had the
procedure). The video was produced for the Abortion Care Network’s
Stigma Busting Competition

Writing in Cosmopolitan, Letts, who works as a
counselor at a birth-control and abortion clinice, says

I know
there are women who feel great remorse. I have seen the tears.
Grieving is an important part of a woman’s process, but what I
really wanted to address in my video is guilt.

Our society breeds this guilt. We inhale it from all directions.
Even women who come to the clinic completely solid in their
decision to have an abortion say they feel guilty for not feeling
guilty. Even though they know 110 percent that this is the best
decision for them, they pressure themselves to feel bad about

I didn’t feel bad. I do feel a little irresponsible and
embarrassed about not using birth control. I mean, Emily,
wake up! What are you doing?
 I was going against the
advice I give to patients all the time. So I had them put an IUD in
after the abortion. I was able to learn and move forward. And I am
grateful that I can share my story and inspire other women to stop
the guilt.

Read more.

According to the Alan
Guttmacher Institute
, there were slightly more than 1 million
abortions performed in the U.S. in 2012, and virtually all of them
(89 percent to 92 percent, depending on the source) were done at 12
weeks of gestation or earlier. Abortion rates are trending down,
mostly due to an increase in the use of and effectiveness of birth

Letts’ video is certainly provocative and it likely generates
the broadly ambivalent feelings that abortion itself inspires in
Americans. For all the political discussions about abortion, few
voters (18 percent, according to Gallup) say that candidates must
share their views on abortion to win their vote. About equal
percentages (in the mid-40s) call themselves “pro-choice” and
“pro-life.” While there is widespread agreement that later-term
abortions should be banned except in cases involving the life of
the woman, there is very strong agreement that abortion should be
legal in the first three months of pregnancy, with 61 percent
saying yes and 31 percent saying no. Those
percentages essentially flip when it comes to the second trimester.
For all the stats above and more, see

It seems to me that there is wisdom in that split reaction. We
understand that a fetus at, say, 10 weeks is very different than
one at 20 or 30 weeks. While strict opponents of abortion talk
about life beginning at the moment of conception (exactly what that
means is often difficult to define precisely) and strict proponents
of abortion say that anything goes until delivery, most of us
follow a less stark, less Manichean line.

That sliding approval scale also comports with the
levels of grief that mothers and fathers feel in real life: We
grieve a baby that dies hours after birth in a very different way
than we do a miscarriage that happens at eight weeks, 20 weeks, or
even later in a pregnancy.

While I find something vaguely unseemly in Letts’ presentation
(she’s an actress by trade and there’s a lurking sense of
exhibitionism in it all), I think she is right not to feel guilty
about her abortion. While the exact definition of
personhood will always ultimately be somewhat arbitrary and
socially constructed, she certainly didn’t commit infanticide.
Rather, she exercised control over her body.

For people interested in a truly enaging social history of
abortion, I highly recommend Marvin Olasky’s
Abortion Rites
. A strong social conservative and opponent of
abortion, Olasky nevertheless provides a comprehensive and
meticulous examination of the changing status and practice of
abortion in American culture from the colonial period through the
early 1990s, when the book was published. Independent of your
position on abortion, you will walk away with a much-richer and, I
suspect, a much greater understanding for the complexity of the

Last year, Reason hosted a powerful discussion about libertarian
perspectives on abortion with Ronald Bailey, Mollie Hemingway, and
Katherine Mangu-Ward. Watch it now:

More links and resources here

from Hit & Run

The Next Big Catalyst: East Ukraine May Be Officially Indepedent In Seven Days

The Geneva de-escalation lasted one day. The latest “Putin de-escalates the OSCE” gambit which served its purpose to send spoos higher by 6 points, lasted minutes. To wit:


And the most “de-escalatory” statement of all:


So much for that particular distraction.

However, focusing on what is actually important and market-moving (or will be with a 4-6 week delay in this rigged, non-discounting, broken market) and what most are ignoring for now, is that as previously reported on several occasions, East Ukraine is about to become the next Crimea, following an indepedence referendum that is set to take place in the self-proclaimed Donetsk people’s republic on Sunday May 11.

And as Itar-Tass reported moments ago, the results will be in as soon as aweek from today or May 14 which means Russian troops will be officially in what will then be former east Ukraine by the end of next week.

Most polling stations in east Ukraine’s Donetsk Region are already fully equipped for a local referendum that is expected to determine the regional status on May 11, co-chairman of the government of the self-proclaimed Donetsk People’s Republic Denis Pushilin told TAR-TASS on Wednesday.


“Ballot papers are being delivered to polling stations, most of which are already equipped properly,” he said, noting that referendum results are planned to be made public within three days.


Pushilin noted that a sociological survey conducted earlier indicated that a referendum turnout may reach no less than 60%, but it will most likely be higher due to latest tragic events in the country.


“Many calls are coming even from Kiev and western Ukraine,” he said. “Now even those who did not believe that we are right begin to understand all the depth of a catastrophe in Ukraine and begin to realize where this may lead to,” Pushilin added.


Pushilin also did not rule out that provocations were possible in the region on the referendum day on May 11. “All can be expected from the Kiev junta,” he added.

What happens then?

Look no further than the Crimea case study:

  1. Donetsk declares independence
  2. Kiev, the west and NATO condemn the results, sternly refuse to accept the outcome, and issue more sanctions against Russian politicians and oligarchs
  3. Newly “independent” Donetsk requests military support from friendly Russia to defend its population, and the Russian tanks roll across the border

And as other regions in east and south Ukraine follow in the Donetsk’ footsteps, assuring Russia a land connection to Crimea and cutting off Kiev from the Donbas industrial zones and the Slavyansk shale gas, Putin wins again.

via Zero Hedge Tyler Durden

Chinese Vessel Rams Vietnamese Ships Under Air Support; Water Cannon Used

With all eyes firmly focused on WWIII in Ukraine (oh, and don’t forget Al Qaeda’s pivot to attacking Saudi Arabia), China – as we noted here – decided now was the appropriate time to send an oil rig into Vietnamese (admittedly uncertain) territorial waters. The Vietnamese are not happy and is blasting China this morning after a Chinese vessel intentionally rammed two of its ships. As Reuters reports, the foreign ministry in Hanoi said the collisions took place on Sunday and caused considerable damage to the Vietnamese ships with six people sustaining minor injuries. Vietnam’s foreign minister noted, “Chinese ships, with air support, sought to intimidate Vietnamese vessels. Water cannon was used,” adding that “Vietnam won’t fire unless China fires first.” China has not yet responded to the Vietnamese allegations of ramming, but did have this to say, “The United States has no right to complain about China’s activities within the scope of its own sovereignty.”


As we noted here, China sent an oil rig into disputed Vietnamese waters…

An oil industry official in China said the deployment of the rig owned by China’s CNOOC oil company to waters near Vietnam appeared to be a political decision rather than a commercial one.


“This reflected the will of the central government and is also related to the U.S. strategy on Asia,” said the official, who spoke on condition of anonymity because of the sensitivity of the issue.


“It is not commercially driven. It is also not like CNOOC has set a big exploration blueprint for the region.”

But as Reuters reports, tensions are rising…

Vietnam said on Wednesday a Chinese vessel intentionally rammed two of its ships in a part of the disputed South China Sea where Beijing has deployed a giant oil rig, sending tensions spiraling in the region.



“On May 4, Chinese ships intentionally rammed two Vietnamese Sea Guard vessels,” said Tran Duy Hai, a foreign ministry official and deputy head of Vietnam’s national border committee.


Chinese ships, with air support, sought to intimidate Vietnamese vessels. Water cannon was used,” he told a news conference in Hanoi. Six other ships were also hit, other officials said, but not as badly.


Dozens of navy and coastguard vessels from both countries are in the area where China has deployed the giant rig, Vietnamese officials have said.


“No shots have been fired yet,” said a Vietnamese navy official, who could not be identified because he was not authorized to speak to media. “Vietnam won’t fire unless China fires first.”

The US will have to decide if this is a red line being crossed after Obama’s recent visit… but China is already putting him straight…

China has not yet responded to the Vietnamese allegations of ramming, but Foreign Ministry spokeswoman Hua Chunying said earlier on Wednesday that the deployment of the rig had nothing to do with the United States, or Vietnam.


“The United States has no right to complain about China’s activities within the scope of its own sovereignty,” she said.

Vietnam concludes for now… we assume knowing the US has its back?

We are a peace-loving nation that has experienced many wars,” he said. “If this situation goes too far, we will use all measures in line with international law to protect our territory. We have limitations, but we will stand up to any Chinese aggression.”

So Russia vs US in Ukraine, check! Al Qaeda vs Saudi Arabia, check! China vs Vietnam, check! Must be time for all time highs in stocks!!

via Zero Hedge Tyler Durden

A.M. Links: U.S. Government Asks for Private Information More Than Once Per Minute, EPA Office Accuses EPA Office of Blocking Investigations, Michael Jordan Considered Himself a Racist in His Youth

  • sports!The
    U.S. government is reportedly pinging
    Verizon and AT&T
    more than once per minute in search of
    private customer information.
  • The House is expected to take two votes related to the
    Internal Revenue Service
    (IRS) this week; it will vote today on
    whether to hold Lois Lerner in contempt and tomorrow on a
    resolution urging Attorney General Eric Holder to appoint a special
    counsel to investigate the IRS.
  • The Office of the Inspector General at the
    Environmental Protection Agency
    (EPA) is accusing the agency’s
    Office of Homeland Security of illegally blocking its
  • The New Jersey Board of Pensions rejected an application by a

    police officer who staged a shooting with his wife. One
    member of the board wondered why no charges more seriously than
    “disorderly conduct” were brought against the officer for the
    apparent fraud.
  • In a recently released biography,
    Michael Jordan
    reveals that he considered himself a racist
    against white people in his youth.
  • Vietnam claims a vessel from
    intentionally rammed two of its own in a disputed region
    of the South China Sea. 

Follow Reason and Reason 24/7 on
Twitter, and like us on Facebook. You
can also get the top stories mailed to
up here

from Hit & Run

Productivity Slows At Fastest Pace In A Year As Labor Costs Soar

Non-Farm productivity fell most in a year at 1.7% in Q1 – notably worse than the 1.2% drop that was expected. Output growth slowed dramatically and real compensation also fell.

However, unit labor costs surged 4.2% (its most since Q4 2012) as unit non-labor costs tumbled 2.7% (its worst since Q4 2012).


Must be the weather – pay those that made it through the weather more as their productivity plunges… and all will be well in Q2 – the man on the TV said so.


via Zero Hedge Tyler Durden

Putin “Talks” Spark Another De-Escalation-Fueled Hope Bounce In Stocks

Forget POMO, today’s market is all about FOMO – fear of missing out – when Ukraine is ‘fixed’ and new newer-er highs are achieved. All it took this morning to lift S&P futures 8 points was a headline that:


USDJPY responded instantly, as did bond yields (higher) and gold (lower) as it’s clear that everything will be fixed now. Of course, the Geneva “de-escalation” lasted 1 days; this latest “diplomacy” should last hours if not minutes, but for now the high freaks are delighted and upward momentum has been restored.



Of course, Yellen is also speaking this morning so there’s enough rumor-mongering there alone to provide support in the pre-market illiquidty also.

via Zero Hedge Tyler Durden

How Bank Of America Explains The Treasury Bid: “Cold Weather”

Bank of America, whose stubborn, and quite abysmal “short Treasurys” call, has been one of the worst sellside trade recos in recent history and cost investors countless losses, has an update. Only instead of doing a mea culpa and finally admitting it was wrong, the bailed out bank has decided to provide humor instead. Namely it too has joined the ranks of countless others providing an “explanation” (or in its case, an “excuse”) for the relentless bond bid. The punchline: “cold weather.


Idiocy aside, here is another “Treasury buying explanation”, one far more non-insane, this time from Louis-Vincent Gave

Why Are Bond Yields So Low?


As long as men continue to age, they will probably complain that “things were better in their day” and that “the world is going to hell in a hand-basket”. Ignore for a moment that the proportion of undernourished people fell from 23% of the developing world in 1990-92 to under 15% in 2010-2012, that more than two billion people gained access to improved sources of drinking water in the past decade, and that never in history have so many people across the globe lived so comfortably—as far as financial markets are concerned, the ‘old-timers’ may have a point.


Indeed, anyone who started their financial career in the late 1990s has had to deal with the Asian Crisis, the Russian default and Long Term Capital Management failure, the Technology, Media, Telecom (TMT) bubble and collapse, the subprime bust and global financial crisis, the eurozone crisis and the past 12 months’ bond market taper tantrum and emerging market wobbles. In other words, there have been plenty of opportunities to catch the volatility on the wrong side. And these recurrent punches in the gut (combined with the recent violent rotation from growth stocks to value stocks or the fall in the renminbi), may explain why so many investors continue to seek the shelter of the long-dated treasuries, bunds and Japanese Government Bonds, despite these instruments apparent lack of value. Simply put, after almost two decades of repeated financial crisis, investors today do not have their forebears’ tolerance for pain. And so the old timers may be right: today’s young people are wimps, for both theoretical and practical reasons:

  • An inherent level of systemic risk? Most people intuitively feel Karl Popper’s observation that: “In an economic system, if the goal of the authorities is to reduce some particular risks, then the sum of all these suppressed risks will reappear one day through a massive increase in the systemic risk and this will happen because the future is unknowable”. In other words, suppress risk somewhere and it comes back with a vengeance to bite you on the derriere at some later date. Look at 2008 as an example: we cut up credit-issuing risk into tiny parcels and distributed it across the system through securitization, only to see the banks take on a lot more leverage and ultimately sink their balance sheets on instruments they failed to understand. Hyman Minsky summed up this inherent contradiction well when he stated that “stability breeds instability”. In other words, the more stable a thing is, the temptation rises to pile on leverage, which makes that “something” more unstable on the back end.
  • The notion of Anti-Fragile: the above brings us to the Nassim Taleb notion of “anti-fragile”: just as a parent who overly cocoons a child prepares that offspring poorly to function in the wider world, so policy-makers intent on cushioning the private sector from every shock in the economic cycle are a doing the overall system a massive disservice. By preventing the build-up of immunity, or the ability to thrive in crisis (i.e., anti-fragility), policymakers sow the seed for a greater  crisis down the road (hence the repeated cycle of crises).
  • Lay the blame on zero interest-rate policy (ZIRP): following on the above, not only does ZIRP allow the survival of zombie companies (which drags down the returns for everyone) but it most certainly affects investors’ behavior. Firstly, by encouraging  banks to play the yield curve and buy long bonds, rather than go out and lend. Secondly, because almost all investors hold part of their assets in equities and part in cash or fixed incomes. And in a world in which fixed income instruments yield close to nothing, the tolerance for pain in other asset classes probably diminishes all the more. Indeed, if an investor is guaranteed a 7% coupon on his fixed income portfolio, then a mild sell-off in equity markets can be easily dismissed. But drop the yield on the bond portfolio to 2.5% and all of a sudden, the slightest drop in equity markets risks pushing the overall returns of the total portfolio into the red… Unless, of course, one holds much more fixed income instruments than equities. Paradoxically, that growing population cohort which seeks a guaranteed level of annual income faces the perverse reality that low bond yields force an even greater allocation of their savings into bonds! And this quandary is further amplified by the last point.
  • The changing structure of savings: a generation ago, employees of large corporations would typically be enrolled in that company’s “defined benefits” pension plan. This meant that most salary-men, at least in the US, could look forward to a fixed monthly sum upon retirement, regardless of a) how long they lived for and b) what the market did. At that time, the overall behavior of financial markets was the concern of the pension fund’s managers who, if they were wise, could average up in bear markets and take some gains off the table when markets got hot; in other words, stomach the volatility of financial markets (backstopped by their companies’ long-term earning power) for the long-term benefit of their plan holders. But today, following the evolution of most pension plans away from “defined benefits” to “defined contribution”, the average pensioner’s relationship to his pension has been turned on its head. Today, the average saver receives a monthly statement explaining how much he has saved; and any dip in that amount triggers sentiments of panic and fears that a looming retirement may not be well provided for. Combine that fear with rises in healthcare and college costs (two costs that older folks have to worry about) that, over the past decade, have typically continued to outstrip inflation and any dip in the market is more likely to trigger a sentiment of panic, and rapid shift into bonds, then a willingness to ‘buy on the dip’ (see chart below).

Putting it all together, it seems hard to find one factor that explains the low level of yields. In our view, the ageing of our societies, ZIRP and the low level of rates, the shift from defined benefits to defined contributions, the activism of policy-makers (who, by attempting to cushion the volatility of the economic cycle more often than not end up increasing the volatility of financial markets down the road)… have all had a hand in keeping interest rates low. And if that is the case, then it will probably take a marked change in some of the above factor to trigger a significant rise in bond yields?

* * *

What do you mean “it’s difficult” – Bank of America just ‘splained: snow in the winter!

QE… oh yes, and D

via Zero Hedge Tyler Durden

Shikha Dalmia on Pope Francis’ Inequality Fetish

PopeThe Pope waded into the debate raging over Thomas
Piketty’s 500-plus page controversial bestseller,
Capital in the Twenty-First Century
, which warns that
Western capitalist countries are headed for ever-widening
inequality, when he issued this tweet: “Inequality is the source of
social evil.”

This is a rich statement coming from the head of the most
hierarchical organization on the planet, notes Reason Foundation
Senior Analyst Shikha Dalmia.

Setting aside that irony, there isn’t much evidence for the
Pope’s claim that inequality in America and the West is all that
evil. In poor countries like India, it’s another matter, suggesting
that not all inequalities are equal. So if the Pope wants something
to worry about, he should concentrate on making poor people rich,
not rich people poor.

View this article.

from Hit & Run

Ukraine Scapegoated As Fixed Income Revenue At SocGen Plunges Over 25%

When Obama repeatedly chanted “costs” should the Kremlin continue to ignore him, it appears he was referring to western corporations, because overnight we got the first batch of companies scapegoating no longer snow in the winter but – what else – the Ukraine.

Leading this morning’s scapegoat parade is SocGen, which following in Barclays’ footsteps reported a 13% tumble in its Q1 profit, plunging to €315 million from €364 million. The reason for this huge hit to profits apparently was a €525 million ($731.26 million) write-down at its Russian bank – the same bank which, as recently as April 11, saw SocGen “increase its stake in Russian subsidiary Rosbank which it said was part of a long-term commitment to Russia. The deal comes as Russia’s economy is under pressure partly as a result of sanctions imposed by the United States and Europe to protest against Moscow’s annexation of Crimea.”

So SocGen was dumping money into a Russian subsidiary well after the Ukraine conflict  had begun, knowing quite well it would be “forced” to take a Rosbank charge mere weeks later! Why yes, of course.

WSJ reports:

While Russia today accounts for only about 5% of the group’s total revenue, Société Générale once had big ambitions in the country. It hoped its local lender Rosbank would help drive growth over the next few years as Europe struggled to pull itself out of the financial crisis.


Société Générale bought a 20% stake in Rosbank for $634 million in 2006. Since then it has spent over €4 billion building a 99.4% stake, integrating its back-office and technology platforms, shaking up management and cutting more than 2,500 jobs.


But the French bank’s efforts have been slow to pay off. It suffered a setback last year when Rosbank Chief Executive Vladimir Golubkov stepped down after he was charged with bribery by Russian authorities.

We wonder if SocGen will also blame the absolute collapse in its fixed-income revenue – that key variable for New Normal bank profitability – also on Russia. Because once the ability to addback massive charges on unrelated Russian assets ends, SocGen may finds itself in trouble. From Reuters:

SocGen’s corporate and investment bank, which is traditionally weighted more towards equities trading than fixed income, was not immune to the fixed-income slump that has hit rivals such as British bank Barclays.


SocGen said fixed-income revenue fell 25.3 percent in the first quarter, while equities revenue rose 9.3 percent. Overall, its investment banking and asset management division saw earnings drop 15.2 percent to 481 million euros.

But how was the loss not bigger? Simple: SocGen did what ever other self-respecting and insolvent US bank does every quarter – balance sheet gimmickry. “French retail banking fared better thanks in part to a 28 percent drop in loan-loss provisions. SocGen’s international retail bank, however, swung to a loss on the Russian charge.” That’s ok, that Russian charge was also added back, allowing investor to ignore the elephant in the room: namely that aside from vacuum tubes and central banks, virtually nobody is trading any more.

As for the rest, blame it on Ukraine.

via Zero Hedge Tyler Durden