Bundesbank Warns European Investors: “We See Risks, Despite Calm Markets”

A day after the Federal Reserve warned that “low level of expected volatility implied by some financial market prices might also signal an increase in risk appetite” and this complacency; the Bundesbank has decided to try and jawbone back investors’ exuberance across Europe. As Die Welt reports, while stocks and bonds are near record highs across Europe – thanks to the ECB’s Mario Draghi’s promises, Bundesbank board member Andreas Dombret warned “we see risks – despite the fact that markets are calm,” and perhaps incredibly suggested investors “flatten all risks now to avoid the herd behavior.”

 

Via Die Welt (via Google Translate),

The Bundesbank is the spoilsport. While stocks and bonds of the euro-zone haussieren and politics everywhere knocks on the shoulder just before the European elections, how great the euro crisis has been mastered, the highest German monetary authorities appear suddenly as a stern warning voice. They warn of speculative excesses in the markets, drag the new risks to financial stability by itself.

 

“We see risks – despite the fact that the markets are calm,” Bundesbank board member Andreas Dombret said the financial agency Bloomberg. In many European countries, the real estate prices are very high. An exuberance is also reflected in the ratings of corporate bonds, he said. “The small fluctuations in the markets entice the market players to weigh in safety.”

 

“We must not again flatten all risks now. Transported the herd behavior”, Dombret said, referring to the market developments. The word of the 54-year-old certainly has weight. So Dombret care at the Bundesbank been responsible for financial stability.

 

And the Bundesbank board is not the only high-ranking central bankers, who warns against a false sense of security for investors. On Tuesday already U.S. central bankers Richard Fisher had raised the alarm. “I am disturbed by the fact that there is no volatility in the markets. This is not a healthy development.” Fisher’s concern is not unfounded. The last time that the financial markets moved in as quiet lanes, was in 2007, shortly before the outbreak of the financial crisis.

 

 

monetary authorities seem to be trying to counteract with verbal interventions. Financial stability plays an increasingly important role in the monetary policy. Thus, the financial crisis has shown in 2008 that bursting speculative bubbles entire economies can tear into the abyss.

Remember though – don’t fight the Fed (unless they say to sell)




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The US Government Explained In One Chart

Presented with little comment – the oligarchic pilfering and squandering network…

 

 

As Bill Bonner explains, via Acting Man blog, Government’s primary concern is not to protect its citizens or their economy. Instead, it aims to transfer more power, status, and wealth to the elite who control it (the oligarchs).

And to do that, it must keep the masses (the poligarchs) sedated. As Charles Hugh Smith, chief writer at OfTwoMinds.com, explains:

The State has two core mandates: enforce quasi-monopolies and cartels for private capital, and satisfy enough of the citizenry’s demands for more benefits to maintain social stability. If the State fails to maintain monopolistic cartels, profit margins plummet and capital is unable to maintain its spending on investment and labor. Simply put, the economy tanks as profits, investment and growth all stagnate. If the State fails to satisfy enough of the citizenry’s demands, it risks social instability.”

The feds will be the borrowers of last resort. But the money won’t be invested in a brighter future. It will be pilfered and squandered.

And then what?




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Zenon Evans Says School Sucks! ‘Maker Culture’ Is Literally Making Learning Better

Perched in a watchtower above a live-sized
game of Mouse Trap, MythBusters host Adam
Savage announced, “When you make something … you’re telling
a story about your desires. … You’re using your tools to improve
yourself and the world around you.” He was directing the point to
the younger attendees in his crowd of hundreds at Maker Faire in
San Mateo, California, this past weekend. Their stories and desires
are varied, but there was a consistent theme among many makers:
They want to make life and learning more liberated, more fun, and a
bit more rugged. Why do they want this? Because, as millennials
know all too well from zero tolerance policies and restrictive
“free speech zones,” school sucks. Zenon Evans says that the class
of 2014 could learn something from the eclectic maker movement
about visceral, hands-on opportunities to succeed (or fail),
because they can teach an individual more about herself and her
abilities than any standardized test or mandatory general education
course ever could. 

View this article.

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NSA Sort-of-Reform Bill Passes House, VA Horrors Just ‘Tip of the Iceberg,’ New Coup in Thailand: P.M. Links

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This Is Why Hewlett Packard Just Announced Another 16,000 Job Cuts

The biggest scandal in today’s release of Hewlett Packard Q2 earnings was not that it hit 30 minutes prematurely, catching algos unaware and unable to BTFD when the stock tumbled on what was a revenue miss and 1% decline from last year, nor that the company guided below estimate, pushing its stock some 3% lower in the last minutes of trading.

The biggest scandal was this disclosure in the second quarter results press release: “As HP continues to reengineer the workforce to be more competitive and meet its objectives, the previously estimated number of eliminated positions will increase by between 11,000 to 16,000. This is in addition to the 34,000 layoffs already noted previously, meaning HP will fire a total of 50,000 in the near future.

Want to know why HPQ is forced to fire so many well-paying jobs it once again makes a mockery of anyone who claims there is some economic recovery going on?

The chart below, which compares the company’s quarterly CapEx, declining (so no, not increasing as some clueless sellside analyst hacks claim) by 16% from last quarter and down 4.5% from a year ago to $840 million and thus leading to less growth opportunities for the company and resulting in tens of thousands of pink slips, and the soaring amount of stock buybacks, which rose by nearly 50% in Q2 from Q1 to $831 million and by 27,600% (!) from a year ago, the most since 2011, should provide all the answers.

So dear soon to be laid off Hewlett Packard employees, if you want to direct your anger somewhere, please direct it at the company’s “activist” shareholders who have forced management to invest not in growth for the future, and thus you, but to reward its shareholders immediately, right now with what otherwise would have been your future salary.




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VIX Hits 14-Month Low As Stocks Rally On Lowest Volume Of The Year

Another day, another melt-up on the lowest volume of the year and VIX collapse. The Dow and the Nasdaq almost made it back to unchanged for the year; The Dow almost made it back to unchanged for May; but as the S&P surged towards its record highs once again, "most shorted" stocks led the way with a massive squeeze (almost 4% in the last 2 days). VIX broke back below 12 once again trading at its lowest in 14 months. Equity markets decoupled notably once again from bonds. Treasury yields rose once again at the long-end (30Y +8bps on the week, 5Y -1bps) but the steepening trend stalled today. The USD rose today (+0.2% on the week) led JPY weakness. USDJPY was in charge of stocks with a correlation over 90% once again. Commodities all closed higher with WTI testing $104 again. HP's 'early' release of earnings appeared to take the shine off things into the close as VIX gapped higher back above 12 to close…

 

This is the lowest NYSE volume in at least a decade – even for this holiday time of year…

 

Spot the down-day in the volume chart…

 

"Most Shorted" stocks have surged almost 4% in the last few days – almost tripling the broad market as hedge funds have yet another bad week…

 

Squeeze-a vu…all over again…

 

As the Momo stocks have exploded higher since last Thursday's lows…

 

Which is what supported the Russell and Nasdaq in their epic ramp of the last few days…

 

A close-up of today…

 

VIX was run even lower – to its lowest intraday since March 2013… (still room to go for the 9.39 all-time intraday lows on 12/15/06)

 

But look at the illiquidity in VIX… and a very ugly close once the HP reesults hit…

 

USDJPY was in charge of stocks…

 

Once again – stocks decoupled from bonds… that hasn't worked out so well recently for stocks…

 

Commodities rose on the day – despite a higher USD

 

 

 

Charts: Bloomberg

Bonus Chart: The spread between Q1 GDP and Q2 GDP expectations is now over 4percentage points as Q2 jumped this week to +3.5% consensus…

 

Bonus Bonus Chart: Looks like the Fed's transmission mechanism to housing has finally broken…




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Why Are Boomers Cashing Out In Droves? Because “Everyone Understands The Market Went Crazy Last Year”

“This issue of participation in the labor force is a highly contentious one,” notes RDG’s Jon Ryding and has been extensively discussed here as some people leave the labor pool and retire after giving up on the job search (do people really want to work past age 65 given the choice? Are that many people doing what they love?) But, as Bloomberg reports, there is a growing segment of boomers who are paying for retirement with the proceeds of rallying stocks. For the select few, last year’s 30% surge in the S&P500 capped a bull market now in its sixth year (with ‘wealth’ trickling down to 401(k)s), but as one wealth manager warned “everyone understands that the market went crazy last year,” and while 8 million people aged 65 and older are working, a 72% jump from a decade ago; there are a lucky few who are cashing out with the view that “if I need to, I can go back to work, but right now I’m going to enjoy life.”

 

As Bloomberg reports, most economists agree that boomers will drive declines in the labor force for years to come. The Bureau of Labor Statistics projects that the aggregate participation rate will be 62.5 percent in 2020, 1.8 percentage points below the level in 2010.
 
But as UBS’ Drew Matus notes, wealth effects and retirement aren’t just coincidence…

“You’ve seen a drop in the participation rate for people over 55, and you look at it in the context of a rebound in wealth, and it all makes sense,” he said.

 

Do people really want to work past age 65 given the choice? Are that many people doing what they love? Let’s put it this way: I’ve got an 8-year-old son, and he doesn’t exactly say, ‘When I grow up, I want to be an economist.’”

And the result is an increasingly bifurcated boomer population

Some people leave the labor pool and retire after giving up on the job search. Others pay for it with the proceeds of rallying stocks. Joblessness and labor participation levels reaching pre-recession lows are stoking debate among Federal Reserve policy makers and politicians about what’s behind the swings in data underlying the most important economic barometer, employment.

 

“This is not some abstract discussion about sociology or demography, it’s really a discussion about interest rates. The stakes are huge.”

And a pumped up stock market has enabled some to exit…

What’s not in dispute: the sheer size of the aging baby-boomer generation and that an unprecedented demographic shift distorts statistics. It means, for instance, that retirees can play a significant role in the shrinking labor force even as people are staying on the job longer than ever. About 8 million people aged 65 and older are working, a 72 percent jump from a decade ago.

 

It is the sharp rise of departing retirees from the workforce in the past two years that suggests more is at play, according to an analysis by Shigeru Fujita, a senior economist at the Federal Reserve Bank of Philadelphia. While demographic trends have headed this way since about 2000, retirees became a more prominent block of the drop in the participation rate in 2010, and then grew to account for 80 percent of the decline since early 2012, he found.

 

Last year’s 30-percent surge in the Standard & Poor’s 500 Index capped a bull market now in its sixth year, while the benchmark gauge reached a record high this month. Wealth has trickled into 401(k) accounts and home valuations, tempting those who may have delayed retirement during the financial crisis, said financial adviser Jay Barish.

However, this is limited to a lucky few…

Stock market gains haven’t helped everyone. Those who want a job but have given up looking reached 783,000 in April, almost triple a low in 2007. That figure has remained stable since the beginning of 2012, ruling it out as a key factor behind the drop in participation rate, Fujita said.

 

Further complicating matters: Stock holdings are concentrated among the top 20 percent of the wealthiest boomers, who have 96 percent of all the equities owned by the group

The bottom line… if stocks rise – don’t expect boomers to stick around…

“Everyone understands that the market went crazy last year,” said Barish, who advises 155 clients as a partner at Murphy Matza Wealth Management in Raleigh, North Carolina. “If they’re not in love with their career, the natural question is, ‘Can I go?’”

Read more here…




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At The New York Times, a Sudden Appreciation for Media Censorship with Greenwald

Being free to publish what the government approves is a type of free press, right?Michael Kinsley, an editor
known for his work at The New Republic, the Los
Angeles Times
, Crossfire, and for helping found
Slate, was handed the
high-profile task of penning the New York Times
review
 of Glenn Greenwald’s book about the Edward
Snowden affair, No Place to Hide.

Kinsley does not appear to be a fan of Greenwald’s somewhat
grandiose personality and sense of self-importance, and there’s
certainly room to judge him for such flaws. But those traits are
also fairly common in prominent media figures. Kinsley points out
that for all of Greenwald’s complaining about the media kowtowing
to government requests to withhold information from Edward
Snowden’s documents, Greenwald certainly hasn’t been prevented from
providing this information and the public hasn’t been denied the
chance to hear about it.

But then Kinsley turns around and justifies all of Greenwald’s
fears, arguing that some sort of authority figure should have some
sort of control or oversight over what sort of leaks the press
should be allowed to publish. In some analysis that is getting a
bit of
attention
(and not of the positive kind), Kinsley writes:

The question is who decides. It seems clear, at least to me,
that the private companies that own newspapers, and their
employees, should not have the final say over the release of
government secrets, and a free pass to make them public with no
legal consequences. In a democracy (which, pace Greenwald,
we still are), that decision must ultimately be made by the
government. No doubt the government will usually be overprotective
of its secrets, and so the process of decision-making—whatever it
turns out to be—should openly tilt in favor of publication with
minimal delay. But ultimately you can’t square this circle. Someone
gets to decide, and that someone cannot be Glenn Greenwald.

In a democracy, the decision on whether to release secret
information showing illegal or corrupt behavior by the government
should ultimately be made by the government? What does
that even mean? Several paragraphs before, Kinsley acknowledged
that Snowden’s leaks were a valid exposure of bad behavior by the
National Security Agency (NSA). He even calls the NSA’s actions
“lawbreaking.”

And it wasn’t actually Glenn Greenwald who decided.
The first person to decide that the information should be published
was Edward Snowden, and the United States government is trying to
put him in prison for providing information Kinsley himself thinks
should have been made public. Snowden chose Greenwald to receive
the information.

Kinsley seems to think there’s a piece missing in the checks and
balances of revealing government misbehavior. He concludes his
review:

As the news media struggles to expose government secrets and the
government struggles to keep them secret, there is no invisible
hand to assure that the right balance is struck. So what do we do
about leaks of government information? Lock up the perpetrators or
give them the Pulitzer Prize? (The Pulitzer people chose the second
option.) This is not a straightforward or easy question. But I
can’t see how we can have a policy that authorizes newspapers and
reporters to chase down and publish any national security leaks
they can find. This isn’t Easter and these are not eggs.

My response: The free press and freedom from government prior
restraint is the check and balance here. We don’t have a
“policy” that authorizes the media to publish leaks. We have a
constitutional right to do so, and it horrifies me to
see an editor who thinks that the First Amendment is some sort of
government “policy” and not a carefully worded restriction of
government authority. Greenwald is the balance.The
existence of a media able to publish whatever information it can
get its ink-stained hands on is intended to discourage a secretive
government.

If the government doesn’t want people leaking what it’s doing,
the solution is actually pretty simple: Don’t be the kind of
government that secretly does the kind of things that horrify your
own citizens to the point that they’re willing to risk prison and
flee to horrible countries to expose to the public what the
government is doing. To believe that the lesson from the Snowden
affair is more government authority over the media—even after
agreeing that Snowden’s fears were legitimate—is simply
embarrassing.

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NYPD Mulls Using Microphone-Equipped Drones

Do you ever get that creepy feeling like you’re
being watched in public? That your conversations are being bugged
and transmitted to the shadowy headquarters of an organization just
looking for ways it can catch you? Well, good news: The New York
City Police Department (NYPD) is thinking about justifying your
paranoia.

At a city council meeting on Tuesday the boys in blue discussed
the possibility of buying some drones. The New York
Daily News
reports
:

Police Commissioner Bill Bratton said the unmanned machines
equipped with cameras and tiny microphones could help spy on crime
hotspots—like housing projects, where shootings are up about 32%
this year.

“Myself, I’m supportive of the concept of drones, not only for
police but for public safety in general,” Bratton said Tuesday.
“It’s something that we actively keep looking at and stay aware
of.”

Bratton, speaking in front of the City Council’s Public Safety
Committee, said the drones could also help the FDNY more quickly
determine the extent of a fire.

John Miller, the NYPD’s head of intelligence, said cops have
been studying flying drones. They’re looking at “what’s on the
market, what’s available.”

The NYPD doesn’t have plans in motion yet, but there’s good
reason to be concerned about adding another piece of technology to
any police department’s arsenal. Other surveillance enablers, like
GPS trackers, have been used around the country to trample on
people’s
reasonable expectations of privacy
and, in the case of license
plate readers, have put
innocent lives at risk
 when has equipment
malfunctioned. 

Regarding drones in particular, the Electronic Frontier
Foundation has warned that
“privacy law has not kept up with the rapid pace of drone
technology, and police may believe they can use drones to spy on
citizens with no warrant or legal process whatsoever.” The American
Civil Liberties Union adds that
agencies should be restricted from indefinitely holding data
gathered by drones.

Even if you buy into the awful argument that you’ve got nothing
to worry about if you’ve got nothing to hide, is the NYPD really an
organization that should be trusted with constantly recording
people’s movements and conversations? The department known for

infiltrating
political dissident groups,
smashing kids through storefront windows
,
drunkenly shooting people
, and even
flouting international law
?

Watch Reason TV’s coverage of
police drones
and the privacy concerns they raise:

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