Category: zerohedge

87-year-old Lew Manchester has just returned from a 3-week trip touring Buddhist temples in Laos and cruising the Mekong Delta in Vietnam. His 61-year-old daughter Lee lives year-round in the basement of her friend’s Cape Cod cottage, venturing into the winter cold to get to the bathroom. As Bloomberg reports, Lew is making the most of his old age. Lee is paring back and lightening her load as she looks ahead to her later years. Both worked all their lives, both saved what they could. “Timing is everything and my dad’s timing with jobs, real estate and retirement benefits was better,” said Lee. A rising tide of graying baby boomers is less secure financially and has a lower standard of living than their aged parents.

Via Bloomberg,

The median net worth for U.S. households headed by boomers aged 55 to 64 was almost 8 percent lower, at $143,964, than those 75 and older in 2011, according to Census Bureau data. Boomers lost more than other groups in the stock market and housing bust of 2008, and many also lost their jobs in the aftermath at a critical point in their productive years.

 

…

 

“Baby boomers are the first generation without the safety net of pensions and other benefits their parents have,” said Alicia Munnell, director of the Center for Retirement Research at Boston College. “They’re facing a much more challenging old age.”

 

…

 

Lee said she harbors no resentment for her dad, who she credits with instilling her with a strong work ethic. “I was never allowed to dream,” she said. “My parents and then my husband expected me to work, and I couldn’t really think about what I most wanted to do.”

 

…

 

Lee is hardly the only baby boomer who didn’t save enough, worked for companies without 401(k) accounts or lost significant amounts in the financial crisis. Today, her retirement savings of $120,000 are right at the median 401(k) balance for households headed by baby boomers, according to 2011 data from the Center for Retirement Research at Boston College.

 

That will provide just $4,800 a year to boomers when they turn 65, assuming they take out 4 percent annually, the limit financial planners say should be withdrawn to assure retirees don’t run out of money in their lifetimes.

 

…

 

Had boomers like Lee been thriftier, they would have still been hurt by a shift to 401(k) accounts from pensions in the 1980s. Thirty-seven percent of the elderly in the U.S. collect pensions, which provide some guaranteed income until they die. Fewer than 10 percent of boomers collect pensions, and that number is quickly shrinking.

 

…

 

“She has never complained to me about not having enough money,” he said. “But if she needs it, I’ll advance it.”

 

Lee, who has repaid the money she borrowed, avoids dwelling on her difficulties during her weekly calls to her dad.

 

“I know he’ll help me if I fall off the ledge, but he taught me to be self-sufficient,” she said.

 

…

 

“It’s liberating finally getting to a point in my life where I don’t need a lot of stuff,” she said. “I felt like I was getting rid of the baggage of life that I’d kept dragging behind me and which was just weighing me down.”

 

…

 

Lee doesn’t regret downsizing her life. She has more time than ever to enjoy the outdoors, read and spend time with her friends.

 

“There’s so much pressure to keep up, to keep buying things, to stay on the treadmill always hoping to have more,” she said. “Well, less can be better.”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/c9pfGvWHRmU/story01.htm Tyler Durden

If Yesterday’s 2 Year auction was strong to quite strong, with a soaring Bid to Cover and a yield stopping through the When Issued, today’s 5 Year auction of $35 billion in 5 Year paper was ugly to very ugly. With a When Issued trading at 1.578% at 1 pm, there appears to have been an air pocket at the time of pricing, which concluded at a high yield of 1.600%, a rather massive 2.2 bps tail, and a surprising outcome for auctions on this side of the belly. Additionally, this yield was just shy of the 2013 auction highs which hit 1.624% at the peak of Taper Tantrum mania in August. Furthermore, while Bids to Cover in the short end of the spectrum have been steadily rising in recent months, today’s auction saw a pronounced drop in the BTC from 2.61 to 2.42, the lowest since August, and well below the TTM average of 2.67. But the real story was in the internals, where Directs took down 11.8%, just shy of the 14.6% TTM average, but it was the Plunge in Indirects from 50% to half that number, or 25.8% that was the true surprise, as it was the lowest Indirect take down since December of 2008!

This meant that the natural backstop, Primary Dealers, had no choice but to buy 62.4% of the final allocation, the highest allotment since April of 2009. In other words, while the near end of the curve is well bid, things are starting to go bump in the night at or around the belly of the curve. Look for much more pain if indeed the Fed were to announce the start of tapering today.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/V39B3z7_5Rs/story01.htm Tyler Durden

Residents of this city woke on Wednesday to a third day of thick gray smog which has disrupted dozens of flights and train services and caused a rash of health complaints. As Reuters reports, the toxic levels of pollution, fuelled by industrial growth a surge in the numbers of vehicles crowding their roads, are more than 7x what the nation deems safe and what the US EPA calls “hazardous”. But it’s not in China…

 

 

 

The answer…

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

Despite yesterday’s exuberant spike in optimism from the NAHB sentiment index to 8 year highs, the delusion from reality appears to growing ever wider. This morning’s “if we build them, they will buy’em” false headline spike in housing starts (seasonally-adjusted) is yet another delusional divergence as the mortgage applications index collapses (down 60% from 2013 highs) to a new 13-year low.

New 13-year lows in mortgage applications…

 

but, hey, seasonally-adjusted we’ll just keep building…

 

Charts: Bloomberg

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

Q. “How does it feel to be back in the “New Normal” USSR?”

A. “Horosho”

Photo credit: Reuters

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

Ben Bernanke speaks today, and the markets are aquiver. Will the Fed taper? Will it not taper? If it does taper how much will it taper?

 

Stocks have entered a blow off top from the wedge triangle we’ve been following for the last few years. If the Fed does not taper today, we’ll likely see a blow off top begin. Traders are hungry for a reason to push the market higher into year-end (thereby ending the year with the highest possible returns).

 

 

Alternatively, we could see a small taper today. We now know that Janet Yellen will be the next Fed Chairman. The question remains who will be the Vice Chair. The frontrunner is Stanley Fisher, the former Central Banker for Israel.

 

Fisher is urging a small taper begin immediately. He then suggests gradually increasing it.

 

But then again, Janet Yellen, who will be the next Fed President is a raging dove and believes that QE should be done forever. So it’s a toss up.

 

All I can say with certainty is that stocks are in a dangerous position. They’ve been in one for a while now and the higher they go the more dangerous it becomes.

 

For a FREE Special Report on how to beat the market both during bull market and bear market runs, visit us at:

 

http://phoenixcapitalmarketing.com/special-reports.html

 

Best Regards

 

Phoenix Capital Research

 

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/2k47cP-MAlc/story01.htm Phoenix Capital Research

Last Friday we reported of a freak near-incident in the South China Sea, when a US warship nearly collided with a Chinese navy vessel, operating in close proximity to China’s only aircraft carrier, the Liaoning, although details were scarce. Today, with the usual several day delay, China reported what was already widely know, admitting that “an incident between a Chinese naval vessel and a U.S. warship in the South China Sea, after Washington said a U.S. guided missile cruiser had avoided a collision with a Chinese warship maneuvering nearby.” According to experts this was the most significant U.S.-China maritime incident in the disputed South China Sea since 2009. Which naturally warranted the question: whose actions nearly provoked a potential military escalation between the world’s two superpowers. Not surprisingly, China’s version is that it was all the US’ fault.

Reuters reports:

China’s Defense Ministry said the Chinese naval vessel was conducting “normal patrols” when the two vessels “met”.

 

“During the encounter, the Chinese naval vessel properly handled it in accordance with strict protocol,” the ministry said on its website (www.mod.gov.cn).

 

“The two Defense departments were kept informed of the relevant situation through normal working channels and carried out effective communication.”

 

But China’s official news agency Xinhua, in an English language commentary, accused the U.S. ship of deliberately provocative behavior.

 

“On December 5, U.S. missile cruiser Cowpens, despite warnings from China’s aircraft carrier task group, broke into the Chinese navy’s drilling waters in the South China Sea, and almost collided with a Chinese warship nearby,” it said.

 

“Even before the navy training, Chinese maritime authorities have posted a navigation notice on their website, and the U.S. warship, which should have had knowledge of what the Chinese were doing there, intentionally carried on with its surveillance of China’s Liaoning aircraft carrier and triggered the confrontation.”

On the other hand, and just as logically, the US said it was China’s fault as the US ship had to take evasive action:

Washington said last week its ship was forced to take evasive action to avoid a collision.

Then again, one wonders just what a lone US warship was doing in such close proximity to China’s aircraft carrier on its maiden voyage: “The Liaoning aircraft carrier, which has yet to be fully armed and is being used as a training vessel, was flanked by escort ships, including two destroyers and two frigates, during its first deployment into the South China Sea.”

The United States had raised the incident at a “high level” with China, according to a State Department official quoted by the U.S. military’s Stars and Stripes newspaper.

 

China deployed the Liaoning to the South China Sea just days after announcing its air Defense zone, which covers air space over a group of tiny uninhabited islands in the East China Sea that are administered by Japan but claimed by Beijing as well.

Leaving aside the question of what the US’ response would be if a Chinese warship was circling just outside of the San Diego Naval Base, even if in “international waters”, assuming China’s account of the story is correct, and if indeed the US chain of command did tongue-in-cheekly suggest the creation of a modest incident (with or without escalation), then one should pay very careful attention to the development in the South China Sea, which the US apparently has picked as the next hotzone of geopolitical risk flaring.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/RAiAyTwT6Fc/story01.htm Tyler Durden

Last Friday we reported of a freak near-incident in the South China Sea, when a US warship nearly collided with a Chinese navy vessel, operating in close proximity to China’s only aircraft carrier, the Liaoning, although details were scarce. Today, with the usual several day delay, China reported what was already widely know, admitting that “an incident between a Chinese naval vessel and a U.S. warship in the South China Sea, after Washington said a U.S. guided missile cruiser had avoided a collision with a Chinese warship maneuvering nearby.” According to experts this was the most significant U.S.-China maritime incident in the disputed South China Sea since 2009. Which naturally warranted the question: whose actions nearly provoked a potential military escalation between the world’s two superpowers. Not surprisingly, China’s version is that it was all the US’ fault.

Reuters reports:

China’s Defense Ministry said the Chinese naval vessel was conducting “normal patrols” when the two vessels “met”.

 

“During the encounter, the Chinese naval vessel properly handled it in accordance with strict protocol,” the ministry said on its website (www.mod.gov.cn).

 

“The two Defense departments were kept informed of the relevant situation through normal working channels and carried out effective communication.”

 

But China’s official news agency Xinhua, in an English language commentary, accused the U.S. ship of deliberately provocative behavior.

 

“On December 5, U.S. missile cruiser Cowpens, despite warnings from China’s aircraft carrier task group, broke into the Chinese navy’s drilling waters in the South China Sea, and almost collided with a Chinese warship nearby,” it said.

 

“Even before the navy training, Chinese maritime authorities have posted a navigation notice on their website, and the U.S. warship, which should have had knowledge of what the Chinese were doing there, intentionally carried on with its surveillance of China’s Liaoning aircraft carrier and triggered the confrontation.”

On the other hand, and just as logically, the US said it was China’s fault as the US ship had to take evasive action:

Washington said last week its ship was forced to take evasive action to avoid a collision.

Then again, one wonders just what a lone US warship was doing in such close proximity to China’s aircraft carrier on its maiden voyage: “The Liaoning aircraft carrier, which has yet to be fully armed and is being used as a training vessel, was flanked by escort ships, including two destroyers and two frigates, during its first deployment into the South China Sea.”

The United States had raised the incident at a “high level” with China, according to a State Department official quoted by the U.S. military’s Stars and Stripes newspaper.

 

China deployed the Liaoning to the South China Sea just days after announcing its air Defense zone, which covers air space over a group of tiny uninhabited islands in the East China Sea that are administered by Japan but claimed by Beijing as well.

Leaving aside the question of what the US’ response would be if a Chinese warship was circling just outside of the San Diego Naval Base, even if in “international waters”, assuming China’s account of the story is correct, and if indeed the US chain of command did tongue-in-cheekly suggest the creation of a modest incident (with or without escalation), then one should pay very careful attention to the development in the South China Sea, which the US apparently has picked as the next hotzone of geopolitical risk flaring.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/RAiAyTwT6Fc/story01.htm Tyler Durden

Submitted by Bill Bonner via Acting Man blog,

Today is the big day. Investors are on the edges of their seats, waiting to find out what the Fed will do. Taper? No taper? Or maybe it will taper on the tapering off?

Our guess is the Fed will not commit to a serious program of reducing its support to the bond, equity and housing markets. It's too dangerous. Ben Bernanke – the man who didn't see the housing crash coming – won't want to see the stock market collapse just before he leaves office. He'll want to go out on a high note…

…and that means guaranteeing more liquidity.

Investors don't seem worried. On Monday, the Dow rose 130 points. Gold was up $10 an ounce. Most of the reports we read tell us the economy is improving. Unemployment is going down. Meanwhile, manufacturing levels are rising. Compared to Europe, the US is a powerhouse of growth and innovation, they say. Compared to emerging markets, it is a paragon of stability and confidence.

How much do investors love the US? Let us count the ways:

1. GDP per capita is running 7% – ahead of where it was in 2007. Among the world's major developed economies only Germany can boast of anything close. All the rest are falling behind.

2. The budget deficit – which was running at about 10% of GDP – is now down to just 4% of GDP.

3. Unemployment is going down, too. Heck, just 7 out of 100 Americans are officially jobless. Didn't Bernanke say he would tighten up when it hit that level?

4. And look at prices. Consumer price inflation is running at just 1% over the last 12 months. No threat from inflation, either.

Statistical Folderol

But wait …

What if all these things were delusions… statistical folderol… or outright lies? What if the true measures of the economy were feeble and disappointing? What if the US economy was only barely stumbling and staggering along?

Well, dear reader, you surely expect us to tell that the US economy is a hidden disaster… and we won't disappoint you. GDP? Carmen Reinhart studied the performance of rich economies following a financial crisis. Her paper, "After the Fall," showed that, six years after a crisis, per capita GDP was typically 1.5 percentage points lower than in the years before the crisis. But in the US, per capita GDP growth is running 2.1% lower than its pre-crisis level – significantly worse than average.

Deficits? Super-low interest rates have helped debtors everywhere. "Never have American companies brought a greater share of their sales to the bottom line," writes Bill Gross. How did they do that? Largely by taking advantage of the Fed's interest rate suppression program. But hey, the US government is the world's biggest debtor. It is the primary beneficiary of the Fed's miniscule rates.

That's part of the reason why deficits are low. Let the yield on the 10-year T-bond return to a "normal" 5%, and we'll see deficits soar again. (Interest payments, under this scenario, would add an additional $360 billion a year to the deficit.) Besides, it's not only the deficit that counts. It's also the total level of debt… and particularly the debt financed with funny money from the Fed.

Only twice in US history has the ratio of US Treasurys held at the Fed gone over 10% – once in 1944 and again today. The first time, it was a national emergency: World War II. Now, the Fed is merely fighting to protect a credit bubble.

Inflation? Yes, consumer price inflation is low. But what that shows is that real demand is still in a deleveraging trough. The money multiplier – the ratio of money supply to the monetary base – collapsed in 2008. It has not come back. Neither has the economy.

Unemployment? The rate has been doctored by removing people from the labor pool. The workforce is now smaller – as a percentage of the eligible pool – than at any time since 1978.

Besides, what is important is not the rate, but what people get from employment. On that score, it is a catastrophe. According to a Brookings Institution study, the average man of working age earns 19% less in real (inflation adjusted) terms today than he did during the Carter administration!

A Strange Kind of Recovery

What kind of economy is it that reduces a man's wages over a 43-year period? We don't know. But it's not likely to win any prizes. But why, with so many strikes against it, does the US economy still have the bat in its hands?

It's partly because the Fed has pumped up stock, bond and house prices – not to mention net corporate profit margins (by reducing the interest expenses on corporate debt) and consumer spending (through entitlement programs funded through the Treasury with ultra-low interest rates). So, the averages look pretty good… and they mask the ugliness beneath them.

The rich got richer on the Fed's EZ money. But the average "capita" is actually poorer. The bottom 90% of the population – people in 9 houses out of 10 – have 10% less income than they had 10 years ago.

This is not a success story. It's a disaster. And not one that tempts us into an overvalued US stock market.

 

As Rick Santelli previously raged…

On CNBC and all the channels that cover business, we have person after person after person, buy side, sell side, upside, downside:

• How is the economy? Economy is great.
• What about stocks? You got to buy them.
• What if they break? You have to buy the dips.
• What's wrong with the economy? I don't hear these people saying anything is wrong with the economy.

So what's wrong, Ben? Why can't we get out of crisis management mode?

 

There's always going to be something.

 

…

 

Why don't these people kick the tires?

 

They take a press release from the Federal Reserve and they think it was written by God.

 

 

Santelli demands we ask Bernanke – "what are you scared of," that keeps you pumping this much money into the system for this long?

Simply put, Santelli's epic rant is the filter that every investor (or member of the public) should be viewing financial media and the Fed today (or in fact every day).

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

Submitted by Bill Bonner via Acting Man blog,

Today is the big day. Investors are on the edges of their seats, waiting to find out what the Fed will do. Taper? No taper? Or maybe it will taper on the tapering off?

Our guess is the Fed will not commit to a serious program of reducing its support to the bond, equity and housing markets. It's too dangerous. Ben Bernanke – the man who didn't see the housing crash coming – won't want to see the stock market collapse just before he leaves office. He'll want to go out on a high note…

…and that means guaranteeing more liquidity.

Investors don't seem worried. On Monday, the Dow rose 130 points. Gold was up $10 an ounce. Most of the reports we read tell us the economy is improving. Unemployment is going down. Meanwhile, manufacturing levels are rising. Compared to Europe, the US is a powerhouse of growth and innovation, they say. Compared to emerging markets, it is a paragon of stability and confidence.

How much do investors love the US? Let us count the ways:

1. GDP per capita is running 7% – ahead of where it was in 2007. Among the world's major developed economies only Germany can boast of anything close. All the rest are falling behind.

2. The budget deficit – which was running at about 10% of GDP – is now down to just 4% of GDP.

3. Unemployment is going down, too. Heck, just 7 out of 100 Americans are officially jobless. Didn't Bernanke say he would tighten up when it hit that level?

4. And look at prices. Consumer price inflation is running at just 1% over the last 12 months. No threat from inflation, either.

Statistical Folderol

But wait …

What if all these things were delusions… statistical folderol… or outright lies? What if the true measures of the economy were feeble and disappointing? What if the US economy was only barely stumbling and staggering along?

Well, dear reader, you surely expect us to tell that the US economy is a hidden disaster… and we won't disappoint you. GDP? Carmen Reinhart studied the performance of rich economies following a financial crisis. Her paper, "After the Fall," showed that, six years after a crisis, per capita GDP was typically 1.5 percentage points lower than in the years before the crisis. But in the US, per capita GDP growth is running 2.1% lower than its pre-crisis level – significantly worse than average.

Deficits? Super-low interest rates have helped debtors everywhere. "Never have American companies brought a greater share of their sales to the bottom line," writes Bill Gross. How did they do that? Largely by taking advantage of the Fed's interest rate suppression program. But hey, the US government is the world's biggest debtor. It is the primary beneficiary of the Fed's miniscule rates.

That's part of the reason why deficits are low. Let the yield on the 10-year T-bond return to a "normal" 5%, and we'll see deficits soar again. (Interest payments, under this scenario, would add an additional $360 billion a year to the deficit.) Besides, it's not only the deficit that counts. It's also the total level of debt… and particularly the debt financed with funny money from the Fed.

Only twice in US history has the ratio of US Treasurys held at the Fed gone over 10% – once in 1944 and again today. The first time, it was a national emergency: World War II. Now, the Fed is merely fighting to protect a credit bubble.

Inflation? Yes, consumer price inflation is low. But what that shows is that real demand is still in a deleveraging trough. The money multiplier – the ratio of money supply to the monetary base – collapsed in 2008. It has not come back. Neither has the economy.

Unemployment? The rate has been doctored by removing people from the labor pool. The workforce is now smaller – as a percentage of the eligible pool – than at any time since 1978.

Besides, what is important is not the rate, but what people get from employment. On that score, it is a catastrophe. According to a Brookings Institution study, the average man of working age earns 19% less in real (inflation adjusted) terms today than he did during the Carter administration!

A Strange Kind of Recovery

What kind of economy is it that reduces a man's wages over a 43-year period? We don't know. But it's not likely to win any prizes. But why, with so many strikes against it, does the US economy still have the bat in its hands?

It's partly because the Fed has pumped up stock, bond and house prices – not to mention net corporate profit margins (by reducing the interest expenses on corporate debt) and consumer spending (through entitlement programs funded through the Treasury with ultra-low interest rates). So, the averages look pretty good… and they mask the ugliness beneath them.

The rich got richer on the Fed's EZ money. But the average "capita" is actually poorer. The bottom 90% of the population – people in 9 houses out of 10 – have 10% less income than they had 10 years ago.

This is not a success story. It's a disaster. And not one that tempts us into an overvalued US stock market.

 

As Rick Santelli previously raged…

On CNBC and all the channels that cover business, we have person after person after person, buy side, sell side, upside, downside:

• How is the economy? Economy is great.
• What about stocks? You got to buy them.
• What if they break? You have to buy the dips.
• What's wrong with the economy? I don't hear these people saying anything is wrong with the economy.

So what's wrong, Ben? Why can't we get out of crisis management mode?

 

There's always going to be something.

 

…

 

Why don't these people kick the tires?

 

They take a press release from the Federal Reserve and they think it was written by God.

 

 

Santelli demands we ask Bernanke – "what are you scared of," that keeps you pumping this much money into the system for this long?

Simply put, Santelli's epic rant is the filter that every investor (or member of the public) should be viewing financial media and the Fed today (or in fact every day).

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