Month: September 2014

Bank CEOs are the New Drug Lords. Here is a list of some of the banks managed by Bank CEOs, aka the new Drug Lords, that were fined billions of dollars for fixing LIBOR rates and stealing money from clients: Lloyds Bank, RP Martin, Barclays, Deutsche Bank, Royal Bank of Scotland, Société Générale, JP Morgan, Citigroup, Barclays, United Bank of Switzerland and Rabobank. Here is a list of some of the banks in which the Bank Lords fixed FX rates and are currently negotiating fine amounts with the UK Financial Conduct Authority (FCA): Citigroup, HSBC, Royal Bank of Scotland, Barclays, JP Morgan and United Bank of Switzerland. HSBC had to pay nearly $2B in fines after its Bank CEO was allegedly caught overseeing the laundering of $7B in drug money for the notoriously violent and ruthless Sinaloa drug cartel and committing a wide array of other crimes like laundering $290MM from Russian mobsters that told HSBC bankers that their vast profits came from a “used car business”. I say “allegedly caught”, because every time this happens, the bank CEO, in this case, HSBC CEO Stuart Gulliver, inevitably denies ever knowing that the cartel he was overseeing was laundering dirty blood money. The Bank Lords issue these ridiculous denials despite the fact that every independent investigator not on a Bank’s payroll that investigates banks’ money laundering schemes arrive at the same conclusion as Jose Luis Marmolejo, the former head of the Mexican attorney general’s financial crimes unit: “[The money laundering] went on too long and [the bank CEOS] made too much money not to have known.” And what about HSBC’s $2B assessed fine for laundering this blood money? In response to meaningless fines like this that never change banker behavior, Martin Woods, former senior anti-money laundering officer at Wachovia bank, implored, “What does the settlement do to fight the cartels? Nothing – it doesn’t make the job of law enforcement easier and it encourages the cartels and anyone who wants to make money by laundering their blood dollars. Where’s the risk? There is none.“ That is why HSBC is not the only cartel that houses bankers who have been caught laundering blood money in recent years. Wachovia Bank, Citigroup, Banco Santander, and Bank of America bankers have all been caught leading their banks in participation of this dirty deed as well. According to Paul Campo, head of the U.S. Drug Enforcement Administration’s financial crimes unit, drug traffickers used Bank of America to finance their drug smuggling operations for 10 tons of cocaine and laundered drug money through Bank of America accounts in Atlanta, GA, Chicago, IL, and Brownsville, TX from 2002 to 2009.

 

So how do Bank Lords get away with their dirty deeds scot-free? This month, explosive evidence contained in 47.5 hours of secret recordings from Goldman Sachs whistleblower and former New York Federal Reserve employee Carmen Segarra provides the answers we already knew. Bank Lords have been buying off judges and regulators after already buying off cops (JP Morgan CEO Jamie Dimon “Gifts” Largest Donation Ever to NYPD of $4.6MM). When Fed regulators asked Segarra to alter minutes of meetings in which Goldman Sachs bankers’ immoral behavior was discussed in order to cover up the truth and to lie about the content of these meetings, Segarra decided to secretly record her meetings with her bosses. Below are some of the revelations contained in the transcripts of those secret recordings:

 

In one meeting Segarra attended, a Goldman employee expressed the view that “once clients are wealthy enough, certain consumer laws don’t apply to them.”

After that meeting, Segarra turned to a fellow Fed regulator and expressed how surprised she was by that statement — to which the regulator replied, “You didn’t hear that.”

When Segarra discovered multiple conflicts of interest in Goldman Sachs deals between Goldman Sachs bankers and their clients that led to deals being struck that would be the equivalent of insider trading in the stock market and consequently discovered Goldman Sachs had no “conflict of interest” policy, her boss harassed her and demanded of Segarra, “Why do you have to say there’s no policy?”

When Segarra complained to her legal and compliance manager, Jonathon Kim, of how her discoveries were being handled and told Kim that “even when I explain to [my superiors at the New York Federal Reserve] what my evidence is, they won’t even listen”, Kim reacted in an equally morally bankrupt manner as Segarra’s superiors, advising Segarra “to be patient” and to “bite her tongue.”

 

So now that we know that Bank Lords buy out morally-challenged regulators, cops and judges in return for carte-blanche to continue committing crimes, rig markets to collect undeserved and unearned kickbacks, and launder drug cartel money from violent cartels that murder 10,000 people a year (the Sinaloa drug cartel), is there really even a line in the sand that separates Bank Lords and Drug Lords, or have Bank Lords become the new Drug Lords?

 

Let’s take a closer look into the increasingly similar worlds of drug cartel and bank cartels. The last market bubble will not be Chinese or Thai real estate bubble, the US stock market, the US student loan bubble or the Social Media bubble. If we take a look at the political cartoon to the left, drawn more than a century ago in 1907, we find that Bank CEOs have been engaging in the same nefarious deeds ever since they were able to put the global banking system on the fractional reserve banking platform. Banker immorality, having multiplied and grown for over a century, will be the last bubble to pop. To illustrate what I am talking about, let me pose this singular question: “Is it possible to prove that a notoriously violent Drug Lord provided more positive value to society during his reign of terror than criminal Bank Lords like Jamie Dimon, Lloyd Blankfein & Stuart Gulliver are providing during theirs?” If we can make a strong case for a Drug Lord providing more social value and benefits than the largest Bank CEOs in the world, all else being equal, then this is the point when we know our future is dire, especially if we refuse to collectively revolt right now against the very banking system that enslaves us.

At first you may think that my aforementioned question is a ludicrous question. After all, how can the positive social benefits provided by a violent, murderous Drug Lord possibly exceed the social benefits, as non-existent as they may be, provided by the heads of the largest bank crime syndicates? Before we dismiss this question, let’s seriously explore it and see what conclusions we may draw from this exercise
.

 

Every large drug cartel in the world, whether it was Pablo Escobar’s infamous Colombian Medellín cartel in the 1980s or El Chapo Guzman’s notorious Mexican Sinaloa cartel of today, has required the logistical support of a sophisticated banking division not just to survive, but to truly thrive. In fact, without the support of a large global Bank CEO, the largest drug cartels in the world would quickly crash and burn and the Drug Lords would disappear. As we explain in the next section, it is simple to conclude that without the consent and help of global Bank CEOs, the world’s largest drug cartels would not be viable. In the 1980s through the early 1990s, Pablo Escobar chose the Italian Banco Ambrosiano and allegedly the Vatican Bank as well to launder billions of his dirty money, while in more contemporary times, El Chapo Guzman handpicked HSBC Bank USA as his preferred bank to launder his billions.

 

Murder and Crime: Drug Cartels v. Global Banks

During his reign of terror, Pablo Escobar ordered the murder of an estimated 4,000 people, including hundreds of police officers, judges, lawyers, journalists and anyone that dared to oppose his violent drug cartel. Escobar even allegedly tortured his own associates that proved to be disloyal to him. However, of the thousands of murders committed by Pablo’s cartel, it was likely that he did not commit the murders himself. Drug Lords are notoriously careful about committing homicidal acts that would provide the evidence prosecuting attorneys need to put them behind bars for a very long time. It is more than likely that a man like Pablo Escobar paid others to carry out his murders for him. However, Banco Ambrosiano and Vatican Bank executives, if they did indeed knowingly launder Pablo’s billions as has been alleged, share a significant measure of complicity in Pablo’s murders. Without having a bank to launder his money, there would have been no reason for Escobar to continue operating his cocaine cartel and murdering the people that opposed him. Likewise, one can successfully argue that HSBC CEO Stuart Gulliver and top HSBC bankers enabled many more murders than even Escobar. The Mexican Sinaloa drug cartel, whose money HSBC laundered, murdered an estimated 80,000 people during a four-year period, far more murders than Escobar’s empire ever carried out. Even though Banco Ambrosiano and HSBC Bank CEOs were not directly giving the orders to murder people, you must connect the dots between the Bank CEOs that launder drug cartel money and the crimes committed by these drug cartels because the dots can NOT be separated. Both actions are inextricably linked to one another, and without the services of money laundering willingly provided by the bank CEOs, the 80,000 murders committed by the Sinaloa drug cartel criminals would not occur.

 

Former anti-money laundering officer Martin Woods wholly supports the above argument: “Is it in the interest of the American people to encourage both the drug cartels and the banks in this way? Is it in the interest of the Mexican people? It’s simple: if you don’t see the correlation between the money laundering by banks and the 30,000 people killed in Mexico (actually, the Sinaloa drug cartel is thought to have murdered 80,000 as we’ve stated above), you’re missing the point.” After presenting evidence to Wachovia bank executives of their employees willingly laundering drug traffickers’ blood money, to which Wachovia bank executives responded by telling him to shut up and by trying to get him fired, Woods understandbly quit his position with Wachovia in disgust, stating, “It’s the banks laundering money for the cartels that finances the tragedy.”

Here is a list of complaints Woods filed with the UK House of Commons, including accusations that the very regulatory agency that was supposed to aid his investigations to uncover truth, the UK Financial Services Authority (FSA), worked more against him than with him to clean up the crimes of the banking industry.

 

The only redeeming excuse that HSBC, Citigroup, Wachovia, and other Bank CEOs may have (that have collectively laundered billions upon billions of drug cartel blood monry) is a proven ignorance of these activities occurring within their banking operations. However, as I previously stated, this excuse as a legitimate one is extremely unlikely. An abundance of journalists and law enforcement agencies that have studied internal bank documents to understand the complexity of drug laundering operations of big global banks always reach the same conclusion. US Customs Agent Robert Mazur and Mexican journalist Anabel Hernández, after years of meticulous research, both concluded that bankers at the highest levels of the drug-laundering bank – the CEOs, COOs, and CFOs – all know about these operations beyond any reasonable doubt and that ignorance of these immoral and illegal activities is nearly impossible. When I was as a Private Banker for a large global banking firm many years ago, the top policy that was always stressed for all accounts, but in particular, any account that involved a steady stream of large and frequent cash deposits, was KYC, or Know Your Client. It was absolutely incumbent upon the banker to visit the operations, and “kick the tires” per se, of any account that generated large cash deposits to confirm the legitimacy of the cash flow. If the source of these large cash deposits could not be determined, then all such accounts were to be immediately terminated. Thus when men like HSBC CEO Stuart Gulliver professes complete ignorance of laundering billions of cash for drug cartels, I have to concur with Mazur and Hernández’s assessment, as the top experts in money laundering schemes, that it would have been nearly impossible for Gulliver not to know.

In conclusion, I would place Escobar in the category of “violence inflicted upon society”, just slightly above global Bank CEOs because the drug lords are the ones giving the direct orders to murder tens of thousands while Bank CEOs are only enabling these murders through their drug laundering operations. However, banks must receive a black mark for willingly participating in extremely profitable, criminal drug laundering operations that leave a trail of tears and misery, as people like Martin Woods, Robert Mazur and Anabel Hernánde have all made it crystal clear through their work that it is near impossible for a Bank CEO not to willingly approve these types of extremely profitable operations that create tens of thousands of homicides. Furthermore, the comparison between Bank Lords and Drug Lords is made even more apropos when we examine some of the “turf wars” Bank Lords engage in when committing their crimes. Drugs never leave a drug-infested neighborhood when a corner dealer or even a regional distributor is murdered. Rather, a competing Drug Lord will fill the void left by a competitor’s demise and opportunistically expand his criminal empire by providing product distribution in regions where a void may develop. Likewise, when Deutsche Bank was recently forced to vacate one of the 12 seats in the gold & silver rigging game in London, Citigroup swooped in and took control over Deutsche Bank’s vacated turf.

 

Quality of Life/Social Contributions: Drug Cartels v. Global Banks

Cocaine cartel Drug Lord Pablo Escobar, at the height of his cartel, was believed to have supplied an astoundi
ng 75% of the entire world’s cocaine, as strong a monopoly on cocaine as is the US military-protected Afghan poppy fields that recently supplied between 95% to 98% of all heroin distribution today. Pablo’s cocaine empire was so far reaching that Roberto Escobar, one of Pablo’s closest brothers, estimated Pablo’s annual profits to be in the range of $20 billion a year. According to the United Nations Commission on Narcotic Drugs, in 1982, cocaine usage peaked in the United States at about 10.5 million users. Historically, the US has accounted for roughly 40% of all global cocaine users. Using these figures, we can roughly estimate total global recreational cocaine use at 26.25 million users at the height of cocaine’s popularity in the early 1980s. Now let’s factor in the worst possible case scenario for every single one of these 26.25 million cocaine users. Let’s assume, in the worst possible case scenario, that not a single one of them was a functional recreational cocaine user and that every single one of these global cocaine users caused stress and trouble for at least 10 other family members and friends, so that 26.25 million X 10, or 262 million people were adversely affected in some social manner by cocaine users. Since Escobar supplied 75% of all cocaine users at the peak of his operations, in a worst possible case scenario with ludicrous worst possible case assumptions, one would conclude that Escobar had a negative social impact on 75% of 262 million, or 196 million people, in this world. Now you may think to yourself, “Wow, that is a lot of people for one cartel to negatively affect” and you would be correct.

 

But yet, if we compare the negative social value of Pablo Escobar’s drug cartel versus that of the criminal Central Bank cartel, it simply pales in both magnitude and lasting effect. In 1982, during the peak years of Escobar’s operations, the global population was about 4.6 billion people. The decisions that the Central Banking cartel made back then negatively affected not 196 million people as did Pablo’s empire under a worst-case scenario, but exceeded this worst-case scenario by 4,404,000,000 people. Why does the negative reach of the Central Banking cartel extend so much further than that of a drug cartel? To begin, the Central Banking cartel’s fractional reserve banking policies drain the purchasing power from the savings of every single person on on the planet – fathers, mothers, sons, and daughters, aunts, uncles, grandmothers, and grandfathers. Ever since their existence, Central Bankers have created massive amounts of new money through a process called fractional reserve banking that has created annual inflation rates that far exceed any annual cost of living adjustments (COLA) that any nation’s citizens receive from their employers. Thus every year, the Central Banking cartel robs the wealth of every single man, woman and child on earth and deliberately makes every single human being’s life on this planet less enjoyable and more difficult. To compare apples to apples, we simply use the 4.6 billion global population figure that existed at the height of Escobar’s drug empire to estimate the negative-reach of the Central Banking cartel. Fractional reserve banking policies employed by every global commercial banker on earth makes it impossible for large percentages of people that dwell in poverty to ever move out of poverty, and these policies adopted systemically by Bank CEOs in the global banking system cause millions of people worldwide to lose homes, jobs, and emotional stability.

 

Most people don’t understand the above facts about fractional reserve banking policies because governments release bogus “official” inflation statistics through the banker-owned press and media. For example, in the US, the official government rate of inflation in September 2013 was 1.5% and was reported by the US government to be 1.6% for the entire 2013 fiscal year. However, the inflation rate in the US is only so low because, as ludicrous as this sounds, bankers literally have stripped out the largest components of inflation from the equation they use to calculate inflation. A comparable lie would be if you stripped out all components of heat from a heat index and reported that it was -30 Celsius at noon in the Saharan dessert during the hottest month of the year. If you take an honest equation for inflation, as others like John Williams of shadowstats.com have done, then we know inflation rates were more than 9%, or more than 6 times higher than the “official” US government inflation rate of 1.5%. In 2002, none other than the Chairman of the US Central Bank, Alan Greenspan, stated, “The price level in 1929 was not much different, on net, from what it had been in 1800. But in the two decades following the abandonment of the gold standard in 1933, the consumer price index in the United States nearly doubled. And in the four decades after that, prices quintupled. Monetary policy, unleashed from the constraint of domestic gold convertibility, had allowed a persistent over issuance of money.” In essence, Greenspan stated that in just 60 years, prices had increased by 10 times due to fraud committed by Central Bankers and their deliberate “persistent over issuance of money” – fraud that negatively affected every human being on Planet Earth.

 

If you were a 20-year-old young adult that had just graduated college with a starting $30,000 a year salary in 1933, by 1993, just 60 years later, you would have to be earning an annual salary of $300,000 just for your salary to have the SAME purchasing power as your 1933 salary. In other words, you would have had no better a quality of life in terms of purchasing power, earning $300,000 a year in 1993 than you would have had earning just $30,000 a year in 1933 due to the Central Bank cartel’s destruction of currencies. Furthermore, since Alan Greenspan was using the bogus US government “official” rates of inflation to make his calculations, the above example I’ve provided actually UNDER-ESTIMATES the reality of the negative social impact of the Central Banking cartel as $300,000 1993 dollars would actually have LESS purchasing power than $30,000 1933 dollars. Of course, other tangibles such as better technology in 1993 versus 1933 would grant one a better overall quality of life, but technological advances that create improvements in quality of life are certainly not attributable to bankers.

 

If you’re old enough to remember growing up in a time where your father was the sole breadwinner of your household, your mother stayed at home and raised you, you had 2, 3, or even 4 other siblings, and no one was ever without food or clothes and you were considered middle class, that “middle class” life today has all but vanished and has become extinct thanks to the global scam of fractional reserve banking. And we can all thank the criminal Central Bank cartel, as well as their shills and misinformation agents such as Warren Buffet, Charlie Munger, Bill Gates, Jamie Dimon, etc. for this new, much more miserable reality. It amazes me that even when ex-bankers like Greenspan make admissions of their criminal negative impact upon society, that those working within the banking industry still refuse to process the inherently immoral nature of the crime syndicate for whom they work, such is the utter success of bankers’ centuries-old propaganda campaigns.

 

Economic/GDP Contributions, Drug Cartels v. Global Banks

Let’s assume that the creation of debt has a net negative overall affect on society (as debt creation drains the wealth of individuals) while the creation of GDP has a net positive affect on society. In the past 15 years, G7 Central Bankers created $7 of debt for every $1 of GDP that they contributed to society, resulting in a net negative [-$6] contribution. In the late 1980s through the early 1990s, drug lord Pablo Escobar “came to control 75 percent of the global [cocaine] market, with [drug] revenues from trafficking equivalent to [a positive] +5 percent share of the country’s GDP.” (Source: Garcio -Bario, Constance. “U.S. War on Drugs in Colombia is Ravaging Farmers and Land”, 2 March 2004. Common Dreams Newscenter). In fact, Pablo Escobar always declared, at every opportunity afforded him, his belief that he was helping Colombia’s economy more than he was hurting it: “The entire economy benefits from drug money; those who traffic and those who do not. If a drug trafficker builds a house, the peasant who cuts the wood for it benefits from that.” Unfortunately, it is exactly this flawed belief of Escobar’s that valued money over all other factors, including morality, that the vast majority of today’s global Bank CEOs have embraced. Though there is no honor in the above statement, whether you agree with it or not, in regards to economic contributions to society, it is obvious that Escobar’s drug cartel produced far more value in terms of GDP for society than bank cartels.

 

Goodwill, Drug Cartels V. Global Banks

Pablo Escobar, during the height of his drug cartel’s success, was credited with being directly responsible for pulling thousands of his countrymen out of poverty and providing them with jobs. With his billions of drug cartel money, Escobar built schools, hospitals, fútbol fields, and churches and even sponsored many little-league community fútbol teams. Escobar even built housing developments with his blood money and gave thousands of units to poor people rent-free. Of course, these actions were not all altruistic by any means as Pablo’s dealers also were known for widely distributing cocaine in the same housing developments that Escobar built for the poor. Thus, by giving away these apartments, Escobar was ensuring himself of a steady supply of customers. Despite these obvious contradictions, for all the goodwill that Pablo generated in Colombia, he was revered by thousands in his country as a saint during the height of his empire and still is today. However, to many others, he was and still is a monster.

 

While I am sure that Jamie Dimon, Lloyd Blankfein, Brian Moynihan, Stuart Gulliver, Michael Corbat, Hank Paulson, Ben Bernanke, Peter Zöllner, Christine Lagarde, Mario Draghi, and Mark Carney have all made sizeable donations in their communities at some point and to civic-minded organizations like hospitals and schools and the arts, their more prominent donations seem to be to the police state that can ensure that their rule of corruption will continue. JP MorganChase CEO Jamie Dimon’s well–publicized 2011 $4.6 million payoff to the New York Police Department coincided with a violent police crackdown on Occupy Wall Street protests of Wall Street’s biggest and most corrupt banks, including JP Morgan. Never in a thousand years would hundreds of thousands of the poorest people in any community anywhere in the world call Bernanke, Saint Ben, Blankfein, Saint Lloyd, Moynihan ,Saint Brian, or Dimon, Saint Jamie. Exploring this topic exposes the ludicrous nature of the inseparable relationship between Drug Lords and Bank Lords. If Bank CEOs did not launder Pablo’s money, Pablo would not have been able to build his schools, churches, medical facilities, homes and community recreational centers. Thus, are Bank CEOs contributing to society because they enable Drug Lords to provide thousands of jobs in their communities?

 

Global Wars: Drug Cartels v. Global Banks

In the category of war and war crimes, who inflicts more harm upon humanity – Drug Lords or Bank CEOs? Though we know that Drug Cartels are drains on the financial resources and budgets of many governments worldwide due to the “War on Drugs” that governments wage upon them, these wars are limited in scope and finances, and are just a drop of water in the ocean when compared to the wars that are financed by Central Banks. Furthermore, the “War on Drugs” is a false war whose true purpose is not to eradicate drugs from neighborhoods but to enrich various parties involved in executing the War on Drugs, namely the military industrial complex, government officials and bankers. Criminal bank cartels are the first enablers of every major war in world history, and other than defense contractors, the largest war profiteers of any global industry. In some instances, the Central Bankers are even alleged to have instigated and encouraged wars to fulfill their own political agendas.

 

In Tragedy and Hope: A History of the World in Our Time (1966), Dr. Carroll Quigley, a Professor of History at Georgetown University, and US President Bill Clinton’s mentor, wrote:

 

“[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the Central Banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.”

Dr. Quigley stated that the key to the Banking Cartel’s success was to control and manipulate the currency supply of a nation while lying to and informing the public that their government was in control of the currency supply. Thus it is no coincidence that five countries the US has invaded in the last decade – Lebanon, Iraq, Libya, Somalia and Sudan – all are not member states of the Bank for International Settlements (BIS), the Central Bank of Central Banks – while a sixth the US attempted to invade before being rebuffed by Russia’s Putin, Syria, is also NOT a member state of the BIS.

 

Although many American children have falsely been taught in schools that the Revolutionary War started with a protest against prohibitive taxes on tea and stamps known as the Boston Tea Party, Benjamin Franklin correctly explained that it was the inability of the Colonists to get the power to issue their own money, permanently out of the hands of King George III and the international bankers, that was the prime reason for the Revolutionary War. However Ben Franklin was incorrect about his perceived success of the American Revolutionary War, because the Rothschild banking families still maintained control over America’s currency supply after the so-called “revolutionary” war ended.

 

French leader Napoleon Bonaparte stated: “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” In response to Napoleon’s rich understanding of the nefarious objectives of powerful banking families, the Rothschild banking cartel funded the Franco-Prussian war to allegedly put an end to Napoleon’s rule of France.

 

During the Civil War, US President Abraham Lincoln stated: “The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies all who question its methods or throw light upon it
s crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe.” President Lincoln was murdered on April 14, 1865, less than two months before the Civil War ended.

 

35th US President John F. Kennedy was intent on shutting down the US Federal Reserve and the IRS due to the same realizations of his predecessors that the Central Banking cartel was nothing more than a crime syndicate posing as a legitimate entity and signed Executive Order 1110 on June 4, 1963 that stopped the creation of US Federal Reserve Notes, removed the power of the Rockefellers, JP Morgan, Rothschilds, Warburgs, et al from creating currency in the United States, and returned the power of coining currency to the US Treasury, with the intent of forever retiring criminal fractional reserve currency from use inside the United States. Just five months later, JFK was murdered and his successor, Lyndon B. Johnson, immediately cancelled Executive Order 1110 and reinstated criminal fractional reserve banking in the United States.

 

To this day, the private banking families that own the US Federal Reserve are the principal financiers of all modern wars, including wars in Libya, Somalia, Iraq, Afghanistan, etc. , providing the war appropriation funding to governments for which governments must pay these bankers interest. When estimates of the US-Iraq War alone have been in the $2 trillion range, it is self-evident that bankers are making out like bandits from funding such wars. Furthermore, as Central Bankers create massive amounts of money (debt) out of thin air to fund major wars, it is self-evident that the creation of 2 trillion new dollars just to fund the Iraqi War has a hugely negative impact upon world citizens as it destroys the purchasing power of all existing dollars in circulation. In other words, every major war leaves the citizens of the nations involved in that war, as well as all global holders of the two currencies used in the warring nations, poorer and in a worse economic state. Though it is beyond the scope of this article, if you research current global geopolitical tensions between Russia, China and the US by following the trail of money, you will discover that this too has originated from disputes over the desire of Federal Reserve bankers to maintain US dollar hegemony and to prevent the petro-Yuan from replacing the petro-dollar in international trade.

 

Furthermore though we have informed you earlier in this article that Pablo Escobar was believed to have been responsible for over 4,000 murders whereas El Chapo Guzman was believed to have been responsible for over 80,000 murders, these despicable inhumane statistics still pale in comparison to the more than 4,486 US soldiers killed, more than 1 million Iraqis killed, 3.5 to 5 million refugees, and 15 million Iraqis living in poverty, created from the singular US-Iraq War (Source: http://ift.tt/WVAo8V). Since Drug Wars to bring down Pablo Escobar don’t come anywhere close to creating the massive level of debt from just one war that Central Banks fund, nor do they come close to the numbers of murders that intense political wars cause, it is apparent that not even Drug Lords can compete with Bank Lords when it comes to spreading misery through the vehicle of global war.

 

Just a hundred years ago, it was common knowledge among the people that any war in which their leaders entangled them was going to cheapen the currency held in their savings, and consequently, the majority of people always fiercely contested every war and insisted on diplomacy over war whenever possible. Today, it is a sad state of affairs when bankers, through the vehicle of nationalism, have been able to convince people to cheer for their own economic demise, as state announcements of war against other nations are often met with zombie-conditioned, nationalistic chants of “[insert country name here]” versus the thoughtful intelligent protests over currency devaluations that used to meet every single build-up to war just a couple of generations ago.

 

In conclusion, we have summed up the societal value of a drug cartel like Pablo Escobar’s cocaine empire versus the societal value of Global Banking/ Central Banking Crime Syndicates in the below chart.

 

 

In every category above, the Drug Lord causes less damage to humanity than Bank Lords. When the negative social value of a violent murderous Drug Lord can be successfully argued to be far less than the negative social value created by a sociopathic Bank Lord, we have truly reached the crossroads to determine our future. Either we all stand united and take action starting today to topple the current immoral and misanthropic global banking system, or we resign ourselves, our children and our grandchildren to another century of slavery and tyranny. The collective choice is ours to make.

If you really care about the future of this world and the future of your children and grandchildren, I implore you to please send this article to every single person you know that works for a large global bank to enlighten them about the atrocious, horrific crimes that are being committed by their leaders. Robert Mazur, an anti-money laundering expert that works closely with US law enforcement agencies is on record as stating that “the only thing that will make the [bank CEOs] properly vigilant to what is happening is when they hear the rattle of handcuffs in the boardroom.” As there could not have possibly been a stronger, air-tight case made in the favor of pre-meditation and prior knowledge of money laundering against HSBC CEO Stuart Gulliver and other top executive HSBC bankers, and even this “can’t fail” case failed to jail any HSBC banker, it is obvious that the only way to stop the crimes of the new Bank Lords is through grass-roots activism.

 

As I have repeatedly stated in this article, when the Bank CEOs know that there is zero risk of going to jail, even after they are caught, or of suffering any negative repercussions from continuing to bathe in blood money, they will never cease engaging in the types of crimes that drags the world further into darkness. And even if Nanex’s Eric Scott Hunsader did say tongue-in-cheek that he would “put everything he had in Goldman Sachs because these guys can do whatever they want” after listening to the secret tapes whistleblower Carmen Segarra made of her conversations with her bosses and between her colleagues and Goldman Sachs executives, there are surely a lot of people that will act on such knowledge to help these Bank CEOs become even more powerful and wealthy (i.e. buying their stock instead of divesting, closing deals with them, etc.). In fact, today’s Bank Lords enjoy a level of special immunity from prosecution against their crimes that no Drug Lord in history ever was able to secure, and this makes the Bank Lords even more powerful than the Drug Lords they are replacing in the global crime syndicate. And this is why only we can really force significant change and stop the transformation of the big bank CEOs into the next Pablo Escobars and El Chapo Guzmans. Please participate in raising awareness about this extremely important issue and help us to light up the darkness by sending this article to every friend or acquaintance you know that works for a large global bank and ask them to follow their consciousness and morality.

 

 

A
bout the author: JS Kim is the Managing Director of SmartKnowledgeU, a fiercely independent investment research, consulting and education firm. Learn how to combat banking corruption with targeted wealth preservation strategies and read our SmartWealth fact sheet to learn how you can win a free membership to our newest service, the SmartKnowledgeU SmartWealth Progra (an alternative educational program that breaks down how global capital markets really operate), coming soon. Follow us on Twitter, subscribe to ourYouTube Channel and join our LinkedIn group.

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• Yuan-Euro Direct Trading Begins Tomorrow as China Promotes Usage (BBG)
• Geneva Report warns record debt and slow growth point to crisis (FT)
• Greenberg Team to Grill Bernanke, Geithner on AIG Bailout (BBG)… sadly only metaphorically
• Draghi Devaluing Euro Cheers ECB as Inflation Seen Fading (BBG)
• EU to Publish Details of Probes of Tax Deals Benefiting Apple, Fiat (WSJ)
• UBS does what it does best. rat: Swiss bank UBS says it has started FX settlement talks (Reuters)
• Iran builds surface-to-surface missile (AP)
• More hookers, more blow: Sex and drugs boost UK economy  (Telegraph)
• Phoning ‘home’: what your mobile may be giving away (Reuters)

 

Overnight Media Digest

WSJ

* Pimco suffered roughly $10 billion of withdrawals following the Friday departure of co-founder Bill Gross, a sign of how quickly Gross’s surprise move is reshaping the bond-investing landscape. (http://on.wsj.com/1vmHXnE)

* Large banks generate more than $1 billion a year in revenue by helping hedge funds and other clients reduce taxes through a complicated trading strategy that has drawn criticism from U.S. authorities. Known as “dividend arbitrage,” the strategy is run largely from London, where the banks temporarily transfer ownership of a client’s shares to a lower-tax jurisdiction around the time when the client expects to collect a dividend on those shares. (http://on.wsj.com/1uVARnQ)

* Maurice “Hank” Greenberg is challenging the government’s crisis-era bailout of American International Group, the company he built into a global financial-services powerhouse. (http://on.wsj.com/1rwxyVf)

* Marvel Entertainment LLC has settled a lawsuit bound for the Supreme Court that pitted the comic-book company against the family of the artist who helped create superheroes such as Spider-Man, Iron Man and the Incredible Hulk. (http://on.wsj.com/1mETzAT)

* Microsoft Corp’s first Manhattan flagship store is coming to Fifth Avenue. The software company confirmed that it will be setting up shop at 677 Fifth Ave. as it continues to expand its retail presence and take more control over its consumers’ shopping experience. The Fifth Avenue store has been five years in the making, Microsoft executives said. (http://on.wsj.com/1plh0L8)

* SoftBank Corp is in talks to buy or otherwise link up with DreamWorks Animation SKG Inc, people familiar with the negotiations said, a deal that could help the Japanese company and the Hollywood studio as they seek new ways to compete with rivals world-wide. (http://on.wsj.com/1mF34jn)

 

FT

* The European Commission will accuse Apple Inc of benefiting from illicit state aid in Ireland, based on preliminary findings of an investigation into tax deals.

* Air France-KLM pilots called off on Sunday a two-week strike that had cost the airline more than 250 million euros($317.18 million).

* Sophie Turner Laing, former managing director of content at BSkyB, is to head the world’s largest independent TV production group, formed by the three-way merger of Endemol, Shine and Core Media.

* The London Stock Exchange Group Plc is attempting to increase the number of listings of African companies in the UK, which follows strong interest coming from institutional investors from the region.

* British entrepreneur Hugh Osmond has acquired restaurant chain Strada from Tragus Group through his investment vehicle Sun Capital in a 37 million pounds deal.

 

NYT

* Tobacco companies are putting out among the strongest health warnings in the fledgling e-cigarette industry, going further even than the familiar ones on actual cigarettes, a leading cause of death. It has left the industry’s critics scratching their heads and deeply skeptical. (http://nyti.ms/ZjEBpI)

* The United States Department of Agriculture plans to announce Monday that it will spend $52 million to support local and regional food systems like farmers’ markets and food hubs and to spur research on organic farming. (http://nyti.ms/1rwtFj6)

* Facebook Inc plans to roll out a rebuilt ad platform, called Atlas, on Monday that will allow marketers to tap its detailed knowledge of its users to direct ads to those people on thousands of other websites and mobile apps. (http://nyti.ms/ZjCCBM)

* A third Allergan Inc’s shareholder, Jackson Square Partners has come forward to insist that the Botox maker not agree to an all-cash acquisition that would thwart a takeover offer before a special meeting scheduled for Dec. 18. (http://nyti.ms/1Czp1EA)

* A group of New York hedge funds that sued Argentina is now asking a New York court to lower the temperature a little on the long-running and acrimonious dispute. The group, led by Paul Singer’s NML Capital, appealed on Friday to Judge Thomas Griesa of the Federal District Court in Manhattan to allow Citigroup Inc to make a $5 million payment to bondholders by a Tuesday deadline. (http://nyti.ms/1plit4a)

* Hundreds of other writer, who publicly protested Amazon.com Inc’s actions, now want the Justice Department to investigate Amazon for illegal monopoly tactics. (http://nyti.ms/1ywgvYn)

* An audience measurement system being introduced on Monday will allow individual magazines to capture broad consumer engagement for the first time, whether it is a fan watching a Cosmopolitan fashion video on a mobile phone or a reader looking at a favorite new recipe from Bon Appétit on Pinterest. (http://nyti.ms/1mFdjV8)

 

Canada

THE GLOBE AND MAIL ** Canadian opposition MPs are expressing concerns about the government’s handling of Canada’s deepening role in the war against Islamic State militants as Prime Minister Stephen Harper appe
ars ready to seek parliamentary approval to once again send the country into a Middle East conflict. (bit.ly/1taQ2r9)

** Promising a “fresh start” for Ontario’s Progressive Conservatives party after four election losses, Barrie MP Patrick Brown is making his leadership bid official. Brown has been steadily building his bid in recent months, with a formal launch in his riding on Sunday. (bit.ly/1plDHz3)

** Canada’s big tobacco companies are accusing the plaintiffs in a Quebec lawsuit of attempting to use the courts to do what Parliament doesn’t dare: ban the sale of cigarettes. (bit.ly/1mFTxIV)

NATIONAL POST

** Canadian taxpayers will likely be on the hook for millions of dollars to keep the country’s aged CF18 fighter jets flying into the next decade because of delays in finding a replacement aircraft, secret documents show. (bit.ly/1vpaG9q)

** A week after the Scottish referendum, German President Joachim Gauck has created a minor stir in Quebec by remarking that he is happy Quebec never separated from Canada. Gauck underlined the importance of Quebec in a united Canada in a speech on Saturday in Quebec City. (bit.ly/1vpbviD)

** Canadian warehouse retailer XS Cargo Co began its final liquidation sale over the weekend and will close its 50 stores in eight provinces across Canada after making a failed bid to restructure this summer. (bit.ly/1nxYWTh)

 

China

PEOPLE’S DAILY

– The ruling Communist Party of China and the State Council, the cabinet, in a joint decree banned party and government officials from holding meetings at scenic spots in the latest official move to crack down on corruption.

CHINA SECURITIES JOURNAL

– The government is likely to step up its targeted monetary easing in the fourth quarter of this year after it posted a slew of weak economic data of late, analysts say.
 
SHANGHAI SECURITIES NEWS

– Preparations have been completed for the launch of the Shanghai-Hong Kong connect, which will allow investors in the two cities to invest in each other’s stock market, after the Shanghai Stock Exchange conducted the third round of tests in its computer system designed for the programme over the weekend.

CHINA BUSINESS NEWS

– The value of assets managed by 100-plus Chinese brokerages is expected to exceed 10 trillion yuan ($1.6 trillion) next year after it jumped to more than 7 trillion yuan around the end of July from 5 trillion yuan by the end of last year, thanks to the government’s efforts to encourage innovations by securities houses.

CHINA DAILY

– Participants at the ongoing Beijing-Tokyo Forum have called upon media professionals in China and Japan to provide a more balanced and objective view of each other’s country to help prevent Sino-Japanese relations from deteriorating further.

– Yuan activities are accelerated across European financial centres, including London, Paris and Luxembourg, signalling a big step forward in the internationalisation of the Chinese currency and Europe’s crucial role in supporting the process.

SHANGHAI DAILY

– U.S. lingerie brand Victoria’s Secret, owned by L Brands Inc, has won 500,000 yuan and a public apology from a Chinese investment management firm that used its trademark at a store and at lingerie shows, a Shanghai court ruled.

 

Britain

The Times

** British Prime Minister David Cameron suffered a double hammer blow last night as he lost a second MP to Ukip and a minister to a sex scandal on the eve of the Conservative party conference. In a move that pitched the prime minister’s European policy into turmoil, Mark Reckless defected to Nigel Farage’s party and immediately called a by-election, accusing Cameron of “letting the country down”. (thetim.es/1qLfMse)

** General Lord Richards, former head of the UK military warned this weekend that ISIS, also known as Islamic State, will never be defeated by air attacks alone and western governments are wrong to rule out deploying their own ground troops. (thetim.es/1yvWHo7)

The Guardian

** Air strikes continued to target Islamic State positions near the Kurdish town of Kobani and hubs across north-east Syria on Sunday, as the terror group moved towards a new alliance with Syria’s largest al-Qaida group that could help offset the threat from the air. (bit.ly/1DOd9js)

** Hong Kong police fired teargas grenades and launched baton charges as tens of thousands of protesters flooded the streets around the government complex in Admiralty – a bustling commercial area in downtown Hong Kong – leading authorities to divert bus routes and shut down a subway station late on Sunday. (bit.ly/1vozGh5)

The Telegraph

** The investigation into a 250 million pound black hole in Tesco’s profits is centring on the culture of the retailer, with concerns that managers may have been pressurised into using improper practices. A source said there were fears there had been a “corruption of virtues” among staff and that the key to the investigation was establishing “what led people to do these things” and “why people didn’t say things earlier.” (bit.ly/1vo0UV9)

** Crossrail, the high-speed train service that will stretch across central London, is already adding value to homes along its route, even though it is not due to open for business for four years. Europe’s largest infrastructure project has driven house prices up by 96 pct over the past decade, according to a study by the online estate agent eMoov, which also estimated that the average price of property near the route would rise another 36 pct by 2020. (bit.ly/1pkS9Hq)

Sky News

** A monster truck crashed into a crowd in the Netherlands, killing two adults and a child and wounding a dozen more. The vehicle had been attempting a stunt during a car show in the eastern city of Haaksbergen. (bit.ly/1vozT3U)

** Defence Secretary Michael Fallon has rejected claims Britain’s role in the fight against Islamic State is a “token” gesture, as he confirmed RAF Tornados are now flying daily over northern Iraq. He told Sky’s Murnaghan programme the United States welcomes the contribution of six aircraft to the mission. (bit.ly/1rt0MD7)

The Independent

** Belgrade was placed under lockdown on Saturday night as Serbia’s first Gay Pride march in four years took place under the watchful eye of tanks and special forces. (ind.pn/1pl6zHr)

** Mark Reckless, the ex-Conservative MP that defected to Ukip on Saturday, looked to have cancelled a planned walkabout to celebrate his move with leader Nigel Farage after a negative reaction in his Rochester constituency. (ind.pn/YzALrj)

 

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS
Domestic economic reports scheduled for today include:
Personal income for August at 8:30–consensus up 0.3%
Personal spending for August at 8:30–consensus up 0.4%
Pending home sales index for August at 10:00–consensus down 0.5%

ANALYST RESEARCH

Upgrades

Akorn (AKRX) upgraded to Outperform from Sector Perform at RBC Capital
Baidu (BIDU) upgraded to Buy from Neutral at UBS
Chico’s FAS (CHS) upgraded to Outperform from Perform at Oppenheimer
Energy Transfer Partners (ETP) upgraded to Overweight at Morgan Stanley
FedEx (FDX) upgraded to Outperform from Market Perform at Cowen
Janus Capital (JNS) upgraded to Equal Weight from Underweight at Morgan Stanley
LRR Energy (LRE) upgraded to Buy from Hold at Stifel
Nationstar (NSM) upgraded to Buy from Neutral at Sterne Agee
Nike (NKE) upgraded to Outperform from Neutral at Credit Suisse
Pearson (PSO) upgraded to Outperform from Underperform at Macquarie
Philips (PHG) upgraded to Buy from Hold at ING Group
Rent-A-Center (RCII) upgraded to Buy from Hold at KeyBanc
Sonic Automotive (SAH) upgraded to Overweight from Equal Weight at Morgan Stanle
y
Universal Health (UHS) upgraded to Outperform from Market Perform at BMO Capital
Voya Financial (VOYA) upgraded to Strong Buy from Outperform at Raymond James

Downgrades

Avery Dennison (AVY) downgraded to Neutral from Overweight at JPMorgan
EV Energy (EVEP) downgraded to Hold from Buy at Stifel
F5 Networks (FFIV) downgraded to Neutral from Outperform at RW Baird
KapStone (KS) downgraded to Hold from Buy at KeyBanc
QR Energy (QRE) downgraded to Hold from Buy at Stifel

Initiations

L’Oreal (LRLCY) initiated with a Market Perform at Wells Fargo
McKesson (MCK) initiated with an Overweight at Barclays
NTT DoCoMo (DCM) initiated with an Underweight at JPMorgan

COMPANY NEWS

Encana (ECA) said it will acquire Athlon Energy (ATHL) for $58.50 per share or $5.93B
Lenovo (LNVGY) to close acquisition of IBM’s (IBM) x86 server business on October 1
Standard Chartered Hong Kong (SCBFF) temporarily suspended certain branches until further notice
Daiichi Sankyo to acquire Ambit Biosciences (AMBI) in a transaction valued up to $410M
Allergan (AGN) holder Jackson Square Partners against large acquisition (VRX, ACT, SLXP)
NiSource (NI) announced plans to separate into two publicly traded companies

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Applied Genetic (AGTC)

Companies that missed consensus earnings expectations include:
Cal-Maine Foods (CALM), Cesca Therapeutics (KOOL)

NEWSPAPERS/WEBSITES

EU to accuse Apple (AAPL) of illegal Irish tax dealings, FT reports
Softbank (SFTBF) in talks to acquire DreamWorks Animation (DWA), Hollywood Reporter says
Citigroup (C), JPMorgan (JPM) meet with FCA to settle forex rigging probe, WSJ reports (BCS, HSBC, UBS, RBS)
Microsoft’s (MSFT) CEO vows to fully cooperate in China’s antitrust probe, Reuters says
Demand for Apple’s (AAPL) iPhones waning in China, NY Times reports
Amazon.com (AMZN) to launch grocery delivery in NYC, Re/code reports
Royal Dutch Shell (RDS.A), BP (BP) in running for Abu Dhabi oil deal, Telegraph says
JetBlue (JBLU) shares could jump 50% in about a year, Barron’s says
Constellation Brands (STZ) looks expensive, Barron’s says
Allianz (AZSEY) to suffer from PIMCO outflows, Barron’s says (JNS)

SYNDICATE

ConAgra (CAG) files automatic mixed securities shelf
Covenant Transportation (CVTI) files $100M mixed securities shelf
El Paso Electric (EE) files automatic mixed securities shelf
Retail Opportunity Investments (ROIC) files to sell 3.13M shares for holders
Sabra Health Care (SBRA) files to sell 6M shares of common stock

via Zero Hedge http://ift.tt/1taW7DR Tyler Durden

While the bond market is still reeling from Friday’s shocking Bill Gross departure, and PIMCO has already started to bleed tens of billions in redemptions (see “Billions Fly Out the Door at Pimco About $10 Billion Is Withdrawn After Departure of Gross“), stocks which may have been hoping for a peaceful weekend after Friday’s ridiculous no volume ramp in the last two hours of trading, got hit by a double whammy of first Catalan independence fears rising up again after Catalan President Mas signed a decree committing Catalonia to a referendum bid on November 9th, leading to a move wider in Spanish bond yields, and second the sharpest surge in Hong Kong violence in decades, which led to a 2% drop in the Hang Seng, are now solidly lower across the board, with the DAX dropping below its 50 DMA, while US equity futures are printing about 9 points lower from Friday’s close despite another epic ramp in the USDJPY which flited with 110 briefly before retracing to 109.50, and also threaten to push below the key technical support level unless the NY Fed’s “Markets group” emerges out of its new Chicago digs and buys up enough E-minis to restore confidence in a rigged market.

Turning to the Asian session overnight, the focus is mostly on the pro-democracy demonstrations in Hong Kong over the weekend in which protestors opposed Beijing’s decision to rule out fully democratic elections in HK in 2017. The protest later escalated into Sunday evening as tear gas and pepper sprays were used against demonstrators. Into Monday morning HK time, thousands of protestors are reported to still remain near government’s main offices although there are some signs that the unrest is spreading with fresh demonstration sites being sighted away from the Central/Admiralty district. Hong Kong has closed down schools in neighbouring districts affected by the demonstrations. More than 200 bus routes have been cancelled or diverted and some subway exits in protest areas have been blocked. Several banks have suspended operations in affected areas. China’s People’s Liberation Army (PLA) in Hong Kong said that it was confident the city’s administration could handle the protests (BBC). The movement in HK has also brought out supporters in Taiwan which saw hundreds of people gathering in Taipei in support of the movement in HK (WSJ). The situation remains rather fluid ahead of the China’s National Holiday 1 October.

Within the first hour of trade, the DAX-future fell below the 50DMA at 9496 and last Friday’s lows as political woes knock confidence across the continent. The possibility of Spain going through a phase of political uncertainty (as was the case in the UK throughout the Scottish Independence bid) rose over the weekend after the Catalan President Mas signed a decree committing Catalonia to a referendum bid on November 9th. This resulted in a widening of the SP/GE 10yr yield spread to the tune of 5bps and some underperformance in the Spanish IBEX-35 as large cap banks BBVA and Banco Santander lead the decline.

Looking at the day ahead, personal income/spending, pending home sales and the Dallas Fed Manufacturing survey are the main releases in the US. We have a fairly quiet day today in Europe but things will pick up over the course of this week. Indeed preliminary inflation readings for September are due today (for Germany) and tomorrow (for Euroland and Italy). Following the 0.4% final print on euro inflation in August today’s and tomorrow’s releases will attract much interest and could further stoke the QE debate (more below for DB’s change of view on this). Away from European inflation prints the other key release will be US payrolls on Friday. On that the market is expecting a +215k and +210k print for the headline and private payrolls in August whilst the unemployment rate is expected to remain unchanged at 6.1%. Staying in the US we will also get the Chicago PMI on Tuesday, the ISM manufacturing and ADP report on Wednesday, and factory orders on Thursday. Back to Europe, besides the inflation reading we also have the final PMI estimates (Wed for manufacturing and Fri for services) along with the revision to Euro area GDP (Wed) but the real focus will likely be on the ECB meeting this Thursday.

Market Wrap:

• Hang Seng down 1.9% to 23,229
• S&P 500 futures down 0.4% to 1968.5
• Stoxx 600 down 0.1% to 342.1
• US 10Yr yield up 1bps to 2.53%
• German 10Yr yield up 1bps to 0.99%
• MSCI Asia Pacific down 0.7% to 141
• Gold spot up 0% to $1218.9/oz

Bulletin headline summary from RanSquawk and Bloomberg

• Political disharmony rears its ugly head in Europe, as Catalan independence fears knock Spanish assets lower and the far-right gain access to the upper house of Parliament in France for the first time
• Regional German CPIs indicate the disinflation trend in Germany may have bottomed, however negative Spanish CPI affirms the argument for further action from the ECB
• Looking ahead, US Personal Income/Spending crosses the wires at 1330BST/0730CDT, followed by Pending Home Sales at 1500BST/0900CDT
• Treasuries mostly steady overnight after 2Y and 5Y closed higher Friday on speculation the departure from Pimco of Bill Gross, who favored those sectors in bond funds he managed, will be followed by redemptions.
• Stocks fell around the world and the dollar strengthened to a four-year high as U.S. economic data boosted the outlook for higher interest rates
• Daniel Ivascyn, Pimco’s new Group CIO, is about to go head to head with Bill Gross in the fastest-growing segment of fixed income: unconstrained funds
• The ruble weakened to a new record low, approaching the level at which Russia’s central bank said it would intervene to support the currency
• Pro-democracy protesters vowed to press ahead with demonstrations unless Hong Kong’s top official steps down, with thousands of people surrounding government offices after violent clashes paralyzed the city center
• Standard Chartered and HSBC were among banks that shuttered some branches in Hong Kong as pro-democracy protesters remained on the streets following weekend clashes with police
• Turkish President Recep Tayyip Erdogan called for the establishment of a “secure zone” inside Syria to repatriate Kurdish refugees who fled to Turkey to escape an Islamic State onslaught
• President Obama said U.S. airstrikes in Iraq are an example of the country leading a coalition to aid an ally, not a direct confrontation with Islamic State militants
  Sovereign 10Y yields mostly higher, led by Greece, Italy and Spain. USD strengthens to highest since June 11, 2010. Asian, European stocks mostly lower. U.S. equity-index futures drop. WTI crude lower, gold higher, copper falls

US Event Calendar

• 8:30am: Personal Income, Aug., est. 0.3% (prior 0.2%)
  • Personal Spending, Aug., est. 0.4% (prior -0.1%)
  • PCE Deflator m/m, Aug., est. -0.1% (prior 0.1%)
  • PCE Deflator y/y, Aug., est. 1.4% (prior 1.6%)
  • PCE Core m/m, Aug., est. 0.0% (prior 0.1%)
  • PCE Core y/y, Aug., est. 1.4% (prior 1.5%)
• 10:00am: Pending Home Sales m/m, Aug., est. -0.5% (prior 3.3%)
  • Pending Home Sales y/y, Aug., est. -1.4% (prior -2.7%)
• 10:30am: Dallas Fed Manufacturing Activity, Sept. 10.5 (prior 7.1)
• 11:00am: Fed to purchase $2b-$2.5b notes in 2021-2024 sector

ASIA

Asian equity markets traded mixed with notable underperformance in the Hang Seng (-1.9%) after pro-democracy protests in Hong Kong dramatically escalated after riot police resorted to using force including firing tear gas at crowds. The Nikkei 225 (+0.5%) was underpinned by a weaker JPY after trading at a 6yr low against the greenback.

FIXED INCOME

Following German regional CPIs, the German
curve trades a touch steeper ahead of the National figure at 1300BST/0700CDT as the modest uptick in most of the inflation numbers lessens the case for immediate intervention from the ECB. As such, focus shifts to the ECB press conference on Thursday, where Draghi is expected to be quizzed on the most recent dismal TLTRO take up. The political uncertainty has not been limited to Spain though, as the FR/GE spread had widened by as much as 0.4bps (circa 1.1%) after Marine Le Pen’s right-wing National Front party gained further ground in the 170 seat French upper house of parliament on Sunday.

Pan Euro Agg month-end extensions +0.08yrs (Prev. +0.03yrs), 12-month average +0.07yrs (IFR)

RANsquawk sources report large Sterling month-end extensions, ranging between +0.28yrs to +0.31yrs – Unconfirmed. Note, that this is much higher than the monthly average of +0.05yrs, but broadly in-fitting with this time last year at +0.33yrs.

EQUITIES

Within the first hour of trade, the DAX-future fell below the 50DMA at 9496 and last Friday’s lows as political woes knock confidence across the continent. The possibility of Spain going through a phase of political uncertainty (as was the case in the UK throughout the Scottish Independence bid) rose over the weekend after the Catalan President Mas signed a decree committing Catalonia to a referendum bid on November 9th. This resulted in a widening of the SP/GE 10yr yield spread to the tune of 5bps and some underperformance in the Spanish IBEX-35 as large cap banks BBVA and Banco Santander lead the decline.

COMMODITIES

After holding their ground for much of last week, the energy complex has stayed the course on Monday, within USD 1.00/bbl of last week’s highs at USD 93.86/bbl. Overnight, copper slumped 0.8% to its lowest level in 3 months as broad-based USD strength and doubts over growth in Chinese demand continue to weigh on the industrial metals complex. This was particularly evident in Dalian iron ore, which fell 3.8% to a fresh contract low on ongoing oversupply and Chinese slowdown worries. Nickel fell further after Philippine lawmakers clarified last week they won’t seek an ore-exporter ban for at least 7 years and aluminium fell 0.2%, its first monthly drop in 8.

* * *

DB’s Jim Reid completes the weekend event recap

Apart from still decent fundamentals and ultra low defaults, everything seems to have transpired against HY in the last few weeks and months. Friday again saw the US credit market under some pressure due to concerns about the future direction of funds formerly managed by Bill Gross. His career move shocked the market and left it selling first and asking questions later. The US CDX IG index widened 4bps (a big intra-day move in this environment) on the news before settling 2bps wider on the day at around 63.5bp. The CDX HY was nearly a point lower before closing broadly unchanged at a cash price of around 106. In Europe we saw Main and Xover moved by around 3bps and 10bps respectively. Quarter end pressures in what is already a balance sheet constrained world in fixed income also seems to be weighing on the credit at the moment. In other markets, equities ended Friday on a positive note with the S&P 500 (+0.86%) perhaps supported by an upward revision in US Q2 GDP and also a rebound in Apple’s share price (+2.9%). The Dollar continued to rise whilst Treasuries were a little softer supposedly not helped by good data and Gross’ move.

Turning to the Asian session overnight, the focus is mostly on the pro-democracy demonstrations in Hong Kong over the weekend in which protestors opposed Beijing’s decision to rule out fully democratic elections in HK in 2017. The protest later escalated into Sunday evening as tear gas and pepper sprays were used against demonstrators. Into Monday morning HK time, thousands of protestors are reported to still remain near government’s main offices although there are some signs that the unrest is spreading with fresh demonstration sites being sighted away from the Central/Admiralty district. Hong Kong has closed down schools in neighbouring districts affected by the demonstrations. More than 200 bus routes have been cancelled or diverted and some subway exits in protest areas have been blocked. Several banks have suspended operations in affected areas. China’s People’s Liberation Army (PLA) in Hong Kong said that it was confident the city’s administration could handle the protests (BBC). The movement in HK has also brought out supporters in Taiwan which saw hundreds of people gathering in Taipei in support of the movement in HK (WSJ). The situation remains rather fluid ahead of the China’s National Holiday 1 October.

The market reacted negatively to the above with the Hang Seng and the HSCEI benchmarks both down around 1.7%. Although off their intraday lows, the move has also effective unwound all of the Hang Seng’s YTD gains so far. The declines have been largely led by Consumer and Property sectors on concerns of weaker retail and investment sentiment ahead. China, however, is holding up fairly well with the Shanghai Composite up 0.4% as we type. Indonesia is also underperforming with both local equity and currency markets weaker after the outgoing parliament passed a law last Friday to scrap direct elections for mayors and governors.

Credit markets are also weaker overnight with Asian benchmark IG curves around 4-5bps wider across the board. China CDS and benchmark cash bonds are around 5bps wider not helped by the situation in HK. In currency markets, the NZD fell below 78 cents against the USD for the first time in about a year after the RBNZ told the market that it sold a net NZ$521m in August (the biggest sale of such since July 2007). The AUD is also under pressure as the currency tested its January lows at around 87 cents against the Greenback. On the brighter side of things, India’s BBB- sovereign rating was reaffirmed by S&P with its Negative outlook also revised to Stable. Whilst this helps remove any lingering uncertainty of a potential downgrade by the rating agency the situation in HK/China is still largely the key market driver in Asia for now.

Looking at the day ahead, personal income/spending, pending home sales and the Dallas Fed Manufacturing survey are the main releases in the US. We have a fairly quiet day today in Europe but things will pick up over the course of this week. Indeed preliminary inflation readings for September are due today (for Germany) and tomorrow (for Euroland and Italy). Following the 0.4% final print on euro inflation in August today’s and tomorrow’s releases will attract much interest and could further stoke the QE debate (more below for DB’s change of view on this). Away from European inflation prints the other key release will be US payrolls on Friday. On that the market is expecting a +215k and +210k print for the headline and private payrolls in August whilst the unemployment rate is expected to remain unchanged at 6.1%. Staying in the US we will also get the Chicago PMI on Tuesday, the ISM manufacturing and ADP report on Wednesday, and factory orders on Thursday. Back to Europe, besides the inflation reading we also have the final PMI estimates (Wed for manufacturing and Fri for services) along with the revision to Euro area GDP (Wed) but the real focus will likely be on the ECB meeting this Thursday.

via Zero Hedge http://ift.tt/10d8DvF Tyler Durden

The Hong Kong protests, which we covered over the weekend, and which took a dramatic turn for the worse overnight when thousands of students camped out and demand universal suffrage on the city streets and were in turn tear-gassed and arrested en masse by the local riot police demanding students disperse or else, and where the leader of the student protest, Joshua Wong – who had been previously arrested and was released on Sunday night – has openly called for the resignation of Hong Kong Chief Executive Leung Chun-ying in an interview with Hong Kong Cable TV, have done the unthinkable: they have impacted financial markets and the “wealth effect” transmission mechanism of the local billionaires.

Here as a summary of the latest market activity via Bloomberg:

• Hang Seng Index declines 2.25% after falling as much as 2.5%, most since Feb. 4; erases YTD gains
• MSCI Hong Kong Index drops as much as 3.2%, most since Nov. 2011
• HSI Volatility Index surges as much as 27%, most since Aug. 2011
• HKD weakens as much as 0.09% against USD to HK$7.7648, most since Dec. 2011
• Hong Kong 1-yr rate swap rises 3 bps, most since June 2013
• Chinese Yuan falls 0.24%, most since March 20, to 6.1415 per dollar.
• Yuan 12-mo. forwards drop 0.25% to 6.2596 per dollar after falling by as much as 0.34%, most since March 12
• Fitch says events in past 24 hrs won’t significantly affect ratings;
  says unlikely that protests will be on wide enough scale and last long
  enough to have material effect on H.K.’s economy and financial
  stability: Fitch’s Colquhoun

SECTORS, COMPANIES

• Galaxy Entertainment leads decline in Macau casinos
• Luk Fook leads drop in retailers, developers amid protests; Luk Fook shuts 4 stores, Chow Sang closes 6 stores
• Protests will have negative impact on retailers: UBS
• Wharf tumbles most in 16 months amid protests
• Swire Beverages workers strike to support protesters
• Ctrip sees mainlanders’ travel to HK unaffected by protests
• 36 bank branches closed as of 10:30 HK time: HKMA
• Quicktake: Hong Kong Tries to Cut Path From Liberty to Democracy: QuickTake

PRE-MARKET ANALYST REACTION

• H.K. dollar will “inevitably” be under pressure on weakened investor confidence amid political instability, says Daniel Chan, analyst at Brilliant & Bright Investment; interest rates could spike amid potential fund outflows
• “Sentiment will be bad,” said Arthur Kwong, HK-based head of Asia Pacific equities at BNP Paribas Investment Partners. “Unfortunately, the macro fundamentals are weak already.”
• Retailers and tourism-related cos. may be among most affected on speculation protests will deter mainland tourists from visiting H.K. during National Day holidays, said Gavin Parry, managing director of Parry International Trading
• Financial shares may also come under pressure, said Ronald Wan, chief China adviser at Asian Capital Holdings
• Dickie Wong, executive director of research at Kingston Financial, said HSI may fall to about 23,000, or 2.9% below its last close, in the “short term”
• “The markets were not counting on anything extreme to happen,” said Govert Heijboer, HK-based chief investment officer of True Partner Advisor. “Whether it immediately moves or not, implied volatilities will rise in Hong Kong given this additional uncertainty.”
• Protests may deter mainland investors from buying Hong Kong shares when the exchange link starts, said Daniel Chan, analyst at Brilliant & Bright Investment
• “If this concludes in a few days, impact on markets and the economy will be limited, especially with a few holidays ahead,” says Mari Oshidari, strategist at Okasan Securities Group. “But this will make it hard for people to buy in a market that’s lacking positive news to begin with. People in Hong Kong are serious about this issue, and there’s a political risk this may happen again.”

In fact, the threat to the wealth effect is so big, the local central bank had to step in. From the FT:

Hong Kong’s quasi central bank implemented emergency measures on Monday morning as the battle between Hong Kong democracy activists – many of whom spent the night camped on the streets – and police made itself felt on the territory’s businesses and markets.

 

The Hong Kong Monetary Authority acted after a tense night that saw tear gas and pepper spray used in a failed bid to clear tens of thousands of protesters from a central business district.

 

Several banks, including HSBC and Standard Chartered, shuttered a handful of branches. The Hong Kong dollar weakened 0.07 per cent against the greenback – to which it is tightly pegged – in early trading, bringing it to a six-month low. The benchmark Hang Seng Index opened 1.4 per cent down at 23,359.

The locals appear undaunted by a possible Beijing crack down. At least undaunted for now:

For most of Sunday, the situation inside the barricaded area had been peaceful. Martin Lee, the founder of the Democratic party, and Jimmy Lai, the media tycoon who owns the anti-Beijing Apple Daily, joined the thousands of students present.

 

“We don’t expect them [Beijing] to back down but we have to persist with our civil disobedience,” said Mr Lai. “If we don’t persist or resist, then there’s no hope.”

 

While people in Hong Kong frenetically used social media to spread news about the protests, there was much less reaction on Weibo as the Chinese government blocked any mention of “Occupy Central” on the Twitter-like service.

 

During the afternoon, it was difficult to use mobile phone services in the protest area, leading to speculation that the government had blocked networks to prevent reporting from the scene.

Finally, while the US was quick to share in its punditry when Ferguson happened in Ferguson, when it moves to China and any word out of place can put US-Sino relations back years, suddenly the White House is all too quiet on the topic of human rights:

So far the US and UK have said very little about protests. Many people believe that the UK wants to avoid hurting trade relations with China. The Foreign Office said it was “important for Hong Kong to preserve and exercise them [rights and freedoms] but it needs to be done within the law”.

 

Rory Stewart, the Conservative chairman of the cross-party defence committee, said: “We have a special relationship with Hong Kong and we need to find a way of putting as much energy as we can, politically and diplomatically, into supporting them.”

Yes, yes, now… how does one say BTFD in Hong-Kongese(sic)?

via Zero Hedge http://ift.tt/1vnGMnQ Tyler Durden

Extracted from John Hussman’s “The Ingredients of a Market Crash“

Why take the concerns of a “permabear” seriously?

The inclination to ignore these concerns is understandable based on the fact that I’ve proved fallible in the half-cycle advance since 2009. That’s fine – my objective isn’t to convert anyone to our own investment discipline or encourage them to abandon their own. Somebody will have to hold equities through the completion of this cycle, and it’s best to include those who have thoughtfully chosen to accept the historical risks of a passive investment strategy, and those who have at least evaluated our concerns and dismissed them. The reality is that my reputation as a “permabear” is entirely an artifact of two specific elements since the 2009 low, but that miscasting may not become completely clear until we observe a material retreat in valuations coupled with an early improvement in market internals.

For those who understand and appreciate our work, I discuss these two elements frequently because a) I think it’s important to be open about those challenges and to detail how we’ve addressed them, and b) it’s becoming urgent to clarify why we view present conditions as extraordinarily hostile, and to distinguish these conditions from others that – despite an increasingly overvalued market – our current methods would have embraced or at least tolerated more than we demonstrated in real-time.

For us, the half-cycle since 2009 has involved the resolution of two challenges.

The first: despite anticipating the 2007-2009 collapse, the timing of my decision to stress-test our methods against Depression-era data – and to make our methods robust to those outcomes – could hardly have been worse. In the interim of that “two data sets” uncertainty, we missed what in hindsight was the best opportunity in this cycle to respond to a material retreat in valuations coupled with early improvement in market internals (a constructive opportunity that we eagerly embraced in prior market cycles, and attempted to embrace in late-2008 after a 40% market plunge).

The second: I underestimated the extent to which yield-seeking speculation in response to quantitative easing would so persistently defer a key historical regularity: that extreme overvalued, overbought, overbullish market conditions typically end with tragic market losses. Those extremes have now been stretched, uncorrected, for the longest span in history, including the late-1990’s bubble advance. My impression is that the completion of the present market cycle will only be worse as a result.

The ensemble approach we introduced in 2010 resolved our “two-data sets” challenge, and was more effective in classifying market return/risk profiles than the methods that gave us a nice reputation by 2009, but our value-conscious focus gave us a tendency to exit overvalued bubble periods too early. During the late-1990’s, observing that stock prices were persistently advancing despite historically overvalued conditions, we introduced a set of “overlays” that restricted our defensive response to overvalued conditions, provided that certain observable supports were present. These generally related to an aspect of market action that I called trend uniformity. In the speculative advance of recent years, we ultimately re-introduced variants of those overlays to our present ensemble approach.

As I observed in June, the adaptations we’ve made in recent years have addressed both of these challenges. See the section “Lessons from the Recent Half-Cycle” in Formula for Market Extremes to understand the nature of these adaptations. When we examine the cumulative progress of the stock market in periods we classify as having flat or negative return/risk profiles (and that also survive the overlays), the chart looks like the bumpy downward slope of a mountain. Present conditions are worse, because they feature both a negative estimated return/risk profile and negative trend uniformity on our measures. The cumulative progress of the stock market under these conditions – representing less than 5% of history – looks like the stairway to hell, and captures periods of negative market returns even during the bull market period since 2009. The chart below shows cumulative S&P 500 total returns (log scale) restricted to this subset of history. The flat sideways sections are periods where other return/risk classifications were in effect than what we observe today.

Though we’ve validated our present methods of classifying market return/risk profiles in both post-war and Depression-era data, in “holdout” validation data, and even in data since 2009, there’s no assurance they’ll be effective in the current or future instances. As value-conscious, historically-informed investors, we remain convinced that the lessons of history are still relevant. Our efforts have centered on embodying those lessons in our discipline.

While all of these considerations are incorporated into our approach, we’ve had little opportunity to demonstrate the impact we expect over the course of the market cycle. Applied to a century of historical market evidence, including data from the present market cycle, we’re convinced that the adaptations we’ve made have addressed what we needed to address.

Our concerns at present mirror those that we expressed at the 2000 and 2007 peaks, as we again observe an overvalued, overbought, overbullish extreme that is now coupled with a clear deterioration in market internals, a widening of credit spreads, and a breakdown in our measures of trend uniformity. These negative conditions survive every restriction that we’ve implemented in recent years that might have reduced our defensiveness at various points in this cycle.

My sense is that a great many speculators are simultaneously imagining some clear exit signal, or the ability to act on some “tight stop” now that the primary psychological driver of speculation – Federal Reserve expansion of quantitative easing – is coming to a close. Recall 1929, 1937, 1973, 1987, 2001, and 2008. History teaches that the market doesn’t offer executable opportunities for an entire speculative crowd to exit with paper profits intact. Hence what we call the Exit Rule for Bubbles: you only get out if you panic before everyone else does.

Meanwhile, with European Central Bank assets no greater than they were in 2008, and more fiscally stable European countries quite unwilling to finance the deficits of unstable ones, the ECB has far more barriers to sustained large-scale action than Draghi’s words reveal. Moreover, to the extent that the ECB intends to buy asset-backed securities (ABS), which have a relatively small market in Europe, the primary effect (much like the mortgage bubble in the U.S.) will be to encourage the creation of very complex, financially engineered, and ultimately really junky ABS securities that can be foisted on the public balance sheet. Watch. In any event, even if such monetary interventions continue indefinitely, I have no doubt that we’ll have the opportunity to respond more constructively at points where we don’t observe upward pressure on risk-premiums and extensive deterioration in market internals.

I should be clear that market peaks often go through several months of top formation, so the near-term remains uncertain. Still, it has become urgent for investors to carefully examine all risk exposures. When extreme valuations on historically reliable measures, lopsided bullishness, and compressed risk premiums are joined by deteriorating market internals, widening credit spreads, and a breakdown in trend uniformity, it’s advisable to make certain that the long position you have is the long position you want over the remainder of the market cycle. As conditions stand, we currently observe the ingredients of a market crash.

via Zero Hedge http://ift.tt/YyDUrH Tyler Durden

Extracted from John Hussman’s “The Ingredients of a Market Crash“

Why take the concerns of a “permabear” seriously?

The inclination to ignore these concerns is understandable based on the fact that I’ve proved fallible in the half-cycle advance since 2009. That’s fine – my objective isn’t to convert anyone to our own investment discipline or encourage them to abandon their own. Somebody will have to hold equities through the completion of this cycle, and it’s best to include those who have thoughtfully chosen to accept the historical risks of a passive investment strategy, and those who have at least evaluated our concerns and dismissed them. The reality is that my reputation as a “permabear” is entirely an artifact of two specific elements since the 2009 low, but that miscasting may not become completely clear until we observe a material retreat in valuations coupled with an early improvement in market internals.

For those who understand and appreciate our work, I discuss these two elements frequently because a) I think it’s important to be open about those challenges and to detail how we’ve addressed them, and b) it’s becoming urgent to clarify why we view present conditions as extraordinarily hostile, and to distinguish these conditions from others that – despite an increasingly overvalued market – our current methods would have embraced or at least tolerated more than we demonstrated in real-time.

For us, the half-cycle since 2009 has involved the resolution of two challenges.

The first: despite anticipating the 2007-2009 collapse, the timing of my decision to stress-test our methods against Depression-era data – and to make our methods robust to those outcomes – could hardly have been worse. In the interim of that “two data sets” uncertainty, we missed what in hindsight was the best opportunity in this cycle to respond to a material retreat in valuations coupled with early improvement in market internals (a constructive opportunity that we eagerly embraced in prior market cycles, and attempted to embrace in late-2008 after a 40% market plunge).

The second: I underestimated the extent to which yield-seeking speculation in response to quantitative easing would so persistently defer a key historical regularity: that extreme overvalued, overbought, overbullish market conditions typically end with tragic market losses. Those extremes have now been stretched, uncorrected, for the longest span in history, including the late-1990’s bubble advance. My impression is that the completion of the present market cycle will only be worse as a result.

The ensemble approach we introduced in 2010 resolved our “two-data sets” challenge, and was more effective in classifying market return/risk profiles than the methods that gave us a nice reputation by 2009, but our value-conscious focus gave us a tendency to exit overvalued bubble periods too early. During the late-1990’s, observing that stock prices were persistently advancing despite historically overvalued conditions, we introduced a set of “overlays” that restricted our defensive response to overvalued conditions, provided that certain observable supports were present. These generally related to an aspect of market action that I called trend uniformity. In the speculative advance of recent years, we ultimately re-introduced variants of those overlays to our present ensemble approach.

As I observed in June, the adaptations we’ve made in recent years have addressed both of these challenges. See the section “Lessons from the Recent Half-Cycle” in Formula for Market Extremes to understand the nature of these adaptations. When we examine the cumulative progress of the stock market in periods we classify as having flat or negative return/risk profiles (and that also survive the overlays), the chart looks like the bumpy downward slope of a mountain. Present conditions are worse, because they feature both a negative estimated return/risk profile and negative trend uniformity on our measures. The cumulative progress of the stock market under these conditions – representing less than 5% of history – looks like the stairway to hell, and captures periods of negative market returns even during the bull market period since 2009. The chart below shows cumulative S&P 500 total returns (log scale) restricted to this subset of history. The flat sideways sections are periods where other return/risk classifications were in effect than what we observe today.

Though we’ve validated our present methods of classifying market return/risk profiles in both post-war and Depression-era data, in “holdout” validation data, and even in data since 2009, there’s no assurance they’ll be effective in the current or future instances. As value-conscious, historically-informed investors, we remain convinced that the lessons of history are still relevant. Our efforts have centered on embodying those lessons in our discipline.

While all of these considerations are incorporated into our approach, we’ve had little opportunity to demonstrate the impact we expect over the course of the market cycle. Applied to a century of historical market evidence, including data from the present market cycle, we’re convinced that the adaptations we’ve made have addressed what we needed to address.

Our concerns at present mirror those that we expressed at the 2000 and 2007 peaks, as we again observe an overvalued, overbought, overbullish extreme that is now coupled with a clear deterioration in market internals, a widening of credit spreads, and a breakdown in our measures of trend uniformity. These negative conditions survive every restriction that we’ve implemented in recent years that might have reduced our defensiveness at various points in this cycle.

My sense is that a great many speculators are simultaneously imagining some clear exit signal, or the ability to act on some “tight stop” now that the primary psychological driver of speculation – Federal Reserve expansion of quantitative easing – is coming to a close. Recall 1929, 1937, 1973, 1987, 2001, and 2008. History teaches that the market doesn’t offer executable opportunities for an entire speculative crowd to exit with paper profits intact. Hence what we call the Exit Rule for Bubbles: you only get out if you panic before everyone else does.

Meanwhile, with European Central Bank assets no greater than they were in 2008, and more fiscally stable European countries quite unwilling to finance the deficits of unstable ones, the ECB has far more barriers to sustained large-scale action than Draghi’s words reveal. Moreover, to the extent that the ECB intends to buy asset-backed securities (ABS), which have a relatively small market in Europe, the primary effect (much like the mortgage bubble in the U.S.) will be to encourage the creation of very complex, financially engineered, and ultimately really junky ABS securities that can be foisted on the public balance sheet. Watch. In any event, even if such monetary interventions continue indefinitely, I have no doubt that we’ll have the opportunity to respond more constructively at points where we don’t observe upward pressure on risk-premiu
ms and extensive deterioration in market internals.

I should be clear that market peaks often go through several months of top formation, so the near-term remains uncertain. Still, it has become urgent for investors to carefully examine all risk exposures. When extreme valuations on historically reliable measures, lopsided bullishness, and compressed risk premiums are joined by deteriorating market internals, widening credit spreads, and a breakdown in trend uniformity, it’s advisable to make certain that the long position you have is the long position you want over the remainder of the market cycle. As conditions stand, we currently observe the ingredients of a market crash.

via Zero Hedge http://ift.tt/YyDUrH Tyler Durden