European Stocks Slump On German Double-Whammy ; US Markets "Crossed"

US and European stock markets (and European sovereign bond markets) have been sliding since early in the European morning overnight. The blame for the weakness appears to be coming from a double-whammy in Germany. First the German government resolved to push for the financial transaction tax (despite banks rejection of the proposal – well they would wouldn’t they) and then later in the day when Germany’s emerging coalition rejected the last-best-hope for shared sacrifice (or using more of Germany’s balance sheet) – The Debt-Redemption Fund – leaving more pressure back on Draghi to save the day. Anxiety in the US is clear with VIX (and credit spreads) rising as hedgers are active – and of course, markets are broken with NASDAQ options prices ‘crossed’ acording to some sources.

 

Europe’s markets are falling rapidly…

 

And the US is unhappy…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/oqnRtxinDL0/story01.htm Tyler Durden

European Stocks Slump On German Double-Whammy ; US Markets “Crossed”

US and European stock markets (and European sovereign bond markets) have been sliding since early in the European morning overnight. The blame for the weakness appears to be coming from a double-whammy in Germany. First the German government resolved to push for the financial transaction tax (despite banks rejection of the proposal – well they would wouldn’t they) and then later in the day when Germany’s emerging coalition rejected the last-best-hope for shared sacrifice (or using more of Germany’s balance sheet) – The Debt-Redemption Fund – leaving more pressure back on Draghi to save the day. Anxiety in the US is clear with VIX (and credit spreads) rising as hedgers are active – and of course, markets are broken with NASDAQ options prices ‘crossed’ acording to some sources.

 

Europe’s markets are falling rapidly…

 

And the US is unhappy…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/oqnRtxinDL0/story01.htm Tyler Durden

Average Job Creation "Cost" In 2013: $553,000

There was a time when the Fed’s QE was, at least on paper, supposed to generate jobs (the broad inflation will come on its own, in due course). After all, the prospect of injecting $85 billion in liquidity into a market with the sole goal of pushing the stock markets that benefit the purchasing power of about 10% of the population would hardly have received broad approval even by the co-opted Congress.

So, to all those who still naively claim Fed is not the sole reason for the market’s relentless march higher, those billions in liquidity must go into the economy, and specifically into job creation, right?

As a result, we decided to back into what the average private sector job has ended up costing the US population in pure dollar terms (which in turn ultimately manifests itself in terms of unsustainable government debt and pent up inflation) via the Fed’s monetary pathway. Well, according to the ADP data released earlier, in which a paltry 130K private sector jobs were created in a month in which the Fed, as always, injected $85 billion, the bottom line came to a whopping $654K per job (since government jobs are always a net drain, we exclude those from the calculation). And taking the average job growth throughout 2013, this number, as can be seen on the chart below, is a laughter-inducing $553K!

Obviously, the above “analysis” is merely a placeholder to show just how absurd modern policy has become, and yes – we do realize that all of that money has ended up solely into capital markets boosting risk assets, as we have been saying since 2009 and as JPM, Pimco and BlackRock now admit.

However, since the next and final tool in the Fed’s arsenal is Nominal GDP targeting on the back of direct monetary injections whose purpose is to unanchor inflationary expectations, crush savers, and take the wealth effect to the next level (as we predicted would happen recently), perhaps instead of pretending QE even remotely works on the economy, Bernanke can finally make it rain, and just hand over half a million each month to every man, woman and child… and just brace for the Weimar collapse that would inevitable follow.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/9GhcPepRBmU/story01.htm Tyler Durden

Average Job Creation “Cost” In 2013: $553,000

There was a time when the Fed’s QE was, at least on paper, supposed to generate jobs (the broad inflation will come on its own, in due course). After all, the prospect of injecting $85 billion in liquidity into a market with the sole goal of pushing the stock markets that benefit the purchasing power of about 10% of the population would hardly have received broad approval even by the co-opted Congress.

So, to all those who still naively claim Fed is not the sole reason for the market’s relentless march higher, those billions in liquidity must go into the economy, and specifically into job creation, right?

As a result, we decided to back into what the average private sector job has ended up costing the US population in pure dollar terms (which in turn ultimately manifests itself in terms of unsustainable government debt and pent up inflation) via the Fed’s monetary pathway. Well, according to the ADP data released earlier, in which a paltry 130K private sector jobs were created in a month in which the Fed, as always, injected $85 billion, the bottom line came to a whopping $654K per job (since government jobs are always a net drain, we exclude those from the calculation). And taking the average job growth throughout 2013, this number, as can be seen on the chart below, is a laughter-inducing $553K!

Obviously, the above “analysis” is merely a placeholder to show just how absurd modern policy has become, and yes – we do realize that all of that money has ended up solely into capital markets boosting risk assets, as we have been saying since 2009 and as JPM, Pimco and BlackRock now admit.

However, since the next and final tool in the Fed’s arsenal is Nominal GDP targeting on the back of direct monetary injections whose purpose is to unanchor inflationary expectations, crush savers, and take the wealth effect to the next level (as we predicted would happen recently), perhaps instead of pretending QE even remotely works on the economy, Bernanke can finally make it rain, and just hand over half a million each month to every man, woman and child… and just brace for the Weimar collapse that would inevitable follow.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/9GhcPepRBmU/story01.htm Tyler Durden

Waiting on the Fed at the Top of our Range

By Phil Davis of Phil’s Stock World

Yes, a RISING channel!

That’s why we are long-term BULLISH but short-term BEARISH.  As noted by TraderStewie (chart credit, click on to enlarge), this is a movie we’ve seen before, with the S&P making a power-move to the top of the channel, only to find resistance there.  

Original_16851280 

 If we break out over that channel (for more than a spike), I will be HAPPY to play a new channel higher but let’s just make sure we get there first!  In this chart of the Equal Weight Index, each company is treated as 0.2% of the S&P to eliminate the distortions of runaway Momentum Stocks.

On our Big Chart (below), the S&P is already off to the races, over the 1,760 line (+10%) that marks the top of the range we’ve been following since early 2009. Overdue for a 10% correction is an understatement here!  

It’s very hard to quantify where we should be as the Dollar has been diving – all the way from 84.96 in July to 79.06 last week. That’s a 5.8% drop in the currency, which is the measuring stick we use to put a PRICE (not a value) on the stock market. In early July, the S&P was at 1,600 and, wouldn’t you know it, 1,760 is EXACTLY 10% over that line (the Must Hold line on our Big Chart).  

 

The Federal Reserve’s stance on QE makes its announcement tomorrow at 2pm so important. Its actions will determine whether or not the Dollar is bottoming here and, if the Fed is not looser than it has been, we are likley to see the Dollar move back over 80, most likely to 81, which is a 2.5% move up in the Dollar. There is is roughly a 2:1 relationship between the Dollar and the indices, so if the Dollar moves up 2.5%, I think we’re looking at a 5% pullback in stocks. Oil and other commodities might also begin to break down against a stronger Dollar.

As it stands, these are the last few POMO days of the month and the Fed has already blown through over $50Bn in October (out of $45Bn it is supposed to spend on Treasury Purchases). The Fed has nothing left to contribute in the last few days other than a couple of Billion they found in the couch cushions. We don’t get the new schedule until 3pm on Thursday, but yesterday’s $5Bn injection was essentially it for the week.  

We got a bit shorter on the Nasdaq into AAPLs earnings last night, in case it disappointed.  AAPL did come through with strong numbers and gave a pretty good conference call so we’re very happy with our long AAPL position but still happy we took the money and ran on our bullish QQQ spread in our Short-Term Portfolio

So we’re going to be liking both the S&P’s 1,760 line (/ES) and the Russell’s 1,120 line (/TF) for shorting spots in the Futures. Very simply, we play those lines bearish with tight stops over the line, hoping to catch a good move down. It’s going to be tricky today and tomorrow as there will be rumors flying about what’s going on in the two-day Fed meeting but the Dollar is rising and, as long as it’s over 79.50, we should be getting a bit of market correction. 

We’re NOT playing oil short, other than our standing SCO spread in the STP, until we see the inventories this week. We hit our $96.50 target last week and below that is $92.50 (after bouncing at $95, of course) and, below that is $87.50 and below that is what oil would be trading at if not for all the shenanigans at the NYMEX – $82.50!  That’s the VALUE of oil based on supply/demand and cost of extraction in today’s economy – the rest is just fluff. Still, there’s plenty of fluff and professional fluffers at the NYMEX to keep prices pumped up but we may be approaching a major breakdown here – especially if the Dollar gathers strength.  

China is going the oppositie direction, injecting 13Bn Yuan ($2.13Bn) into their money markets this morning in an attempt to keep their one-week repo rates under 5% after 9 consecutive days of gains. Their overnight rate hit 4.5% and that’s a deadly combo that prompted emergency measures today and probably did a lot to bounce the Buck. India went the other way, RAISING their key lending rate from 7.5% to 7.75% as they attempt to put a lid on inflation, which is hitting 6.5%, 30% over the RBI’s 5% target cap.  

This is what happens when Central Banks attempt to control the economy. In fact, there was only a brief period in which India had inflation under control – out of control is “normal” for India but the people have reached a breaking point – not good in a Democracy of over 1Bn people!  Of course, as you can see from charts of our own economic idiocy – it’s not good in a Nation with 300M people either.  Thank goodness we don’t have a Democracy or people would be pissed!  

It’s sad that it doesn’t matter what AAPL does or what FB does or what IBM does, etc. this earnings season. All that matters is what the Fed does tomorrow (now today), in Bernanke’s last meeting as Chairman. Conventional wisdom is that he will punt and leave policy changes to Yellen’s crew next year, assuming Yellen gets confirmed. I think it makes more sense for Bernanke to be the bad guy and call for a teeny, tiny taper – just to see how the market reacts – and then Yellen can “save us” if it doesn’t work.  

No way to call it though, we’ll just have to wait and see. 

Click on this link to try Phil’s Stock World FREE! 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/JexoUGrljds/story01.htm ilene

Broken Markets – NASDAQ/BATS Declares Self-Help Vs ISE

Another day, another broken market microstructure:

  • *BATS OPTIONS HAS DECLARED SELF-HELP VS INTL SECURITIES EXCHANGE
  • *NASDAQ OMX PHLX HAS DECLARED SELF HELP AGAINST ISE, ISE GEMINI

Perhaps we should rename the US equity (stock and options) markets – NasdaCare

 



    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/JvwOV_42KE8/story01.htm Tyler Durden

What Real Estate Bubble? Oh, You Mean The One That's Bigger Than The 2007 Bubble?

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

It's painfully obvious that real estate valuations are once again at asset-bubble extremes.

Correspondent Mark G. submitted a chart of the Wilshire REIT (real estate investment trusts) index that sums up the current real estate market in one image: it's painfully obvious that real estate valuations are once again at asset-bubble extremes, one that's even bigger than the last RE bubble that popped in 2008 with devastating consequences to the global economy.

Defenders of current real estate valuations can draw upon an array of justifications, but they boil down to the same one used to justify valuations in every asset bubble: this time it's different.

Is there anything in this chart that suggests this belief might be misplaced, for example, that credit/asset bubbles burst with a rough time/amplitude symmetry?


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0mwaQUSBjpE/story01.htm Tyler Durden

What Real Estate Bubble? Oh, You Mean The One That’s Bigger Than The 2007 Bubble?

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

It's painfully obvious that real estate valuations are once again at asset-bubble extremes.

Correspondent Mark G. submitted a chart of the Wilshire REIT (real estate investment trusts) index that sums up the current real estate market in one image: it's painfully obvious that real estate valuations are once again at asset-bubble extremes, one that's even bigger than the last RE bubble that popped in 2008 with devastating consequences to the global economy.

Defenders of current real estate valuations can draw upon an array of justifications, but they boil down to the same one used to justify valuations in every asset bubble: this time it's different.

Is there anything in this chart that suggests this belief might be misplaced, for example, that credit/asset bubbles burst with a rough time/amplitude symmetry?


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0mwaQUSBjpE/story01.htm Tyler Durden

Sebelius Faces The Music – Live Webcast

In yesterday's stage-setting drama, "coming in mid-November" replaced of the often heard "plead the fifth" as response of choice for Marilyn Tavenner (CMS Administrator). Today brings the main event, amid another server crash, as Kathleen Sebelius (HHS Secretary) takes the stand to explain healthcare.gov's shortcomings and how great it will all be at some point in the future if we just have some patience, spend a few more billions of taxpayer money on lines of code, and ignore the fact that the website is just the start of the problems with Obamacare… Her initial remarks (released early – below) are almost exactly the same as her testimony to Congress (and a carbon copy of Tavenner's remarks): “I want to assure you that HealthCare.gov can be fixed, and we are working around the clock to give you the experience that you deserve.”

 

Tavenner's remarks yesterday:

 

Via FOX,

Sen. Lamar Alexander, R-Tenn., speaking on the Senate floor, called Tuesday for Sebelius' resignation. Alexander is the top Republican on the Senate health panel.

 

"Mr. President, at some point there has to be accountability. Expecting this secretary to be able to fix what she hasn't been able to fix during the last three-and-a-half years is unrealistic," he said. "It's throwing good money after bad. It's time for her to resign — someone else to take charge."

 

 

In written testimony released ahead of today's hearing, Sebelius vowed to improve the website and said the consumer experience to date is "not acceptable." But she defended the law itself and said extensive work and testing is being done.

 

"We are working to ensure consumers' interaction with HealthCare.gov is a positive one, and that the Affordable Care Act  fully delivers on its promise," she said in the prepared remarks.

 

Sebelius blamed the website contractors and the "initial wave of interest" for the glitches, but expressed confidence in the experts and specialists working to solve "complex technical issues."

 

"By enlisting additional technical help, aggressively monitoring errors, testing to prevent new issues from cropping up, and regularly deploying fixes to the site, we are working to ensure consumers’ interaction with HealthCare.gov is a positive one, and that the Affordable Care Act fully delivers on its promise," she said.

 

Live Stream:


Live streaming video by Ustream

 

Full statement from Sebelius:

 

HHRG-113-IF00-Wstate-SebeliusK-20131030.pdf

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/aw6u7O0x3ug/story01.htm Tyler Durden

CPI Drops, Misses By Most In 14 Months

If there was another reason for the Fed to keep its foot ‘through’ the floor, it is the fact that despite a record growth in the Fed balance sheet YoY, CPI (ex food and energy) dropped to 1.7% and missed by its biggest margin in 14 months. This is the 2nd lowest print in two-and-a-half years. Perhaps most dismally, real hourly wages rose at only 0.9% year-over-year – around half the rate of inflation. Overall, energy costs rose the most MoM (+0.8%) while Apparel fell 0.5% MoM (its biggest drop in 6 months as we suspect the JCP-driven sales deflation has begun already); and given Sebelius’ testimony today we note that healthcare costs are up 2.4% YoY (almost triple the rate of wage increase).

CPI YoY Ex Food and Energy saw its biggest miss in 14 months…

 

As overall CPI also dropped with Energy and utilities costs rising the most…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_xVQxN0CGbs/story01.htm Tyler Durden