Month: September 2014

With Janet Yellen set to remove the ‘wealth-creating’ nutrients of QE within a month, it appears there is only way left to The American Dream… latch on to a billionaire (or their son or daughter). As a patriotic courtesy to our readers we provide the dummies guide to befriending a wealthy benefactor… everything from their marital status and demographic to the most critical factor for success – where to hang out in 2015 to catch their eye.

Globally, over 9,000 individuals have access to billionaire resources: 86% of all billionaires are married and, on average, have just over two children each.

Generally speaking, billionaires form bonds and relationships with individuals who share their interests and abilities. As a result, billionaires tend to have large social circles, and often associate with other billionaires or other ultra-high-net-worth (UHNW) individuals.

In fact, we find that billionaires typically have business or personal relationships with another nine UHNW individuals, three of which are billionaires. The typical billionaire has a social graph (defined as the total net worth of a billionaire’s UHNW and billionaire known associates) worth US$16 billion.

Certain events are “must-go” for many billionaires and those in their social circles, while other events are of interest only to a specific group of billionaires with particular hobbies and passions. For example, for those billionaires who have an interest in golf, the US Masters and PGA Championship are likely to feature prominently in their 2015 social calendar. Likewise, at least 23% of the world’s billionaires are likely to attend at least one, if not more, of the many elite art shows held annually around the world.

So how do find them?

You’re Welcome.

Source: UBS WealthX

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

Gold bullion in Singapore climbed $9.29 to $1230.29 and was on track for a gain of almost 0.8% for the week prior to concentrated and continual selling in London and then on the COMEX pushed gold lower. Euro gold rose to about €960 and continues to consolidate below the €1,000 level.

Friday’s AM fix was USD 1,222.25, EUR 958.70 and GBP 749.11 per ounce.

Thursday’s AM fix was USD 1,210.50, EUR 950.61 and GBP 742.05 per ounce. 

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Gold fell to as low as $1212.44 at about 10AM EST on the COMEX. It then bounced higher in late trade and ended with a loss of just 0.3%. Silver was stronger and ended with a gain of 0.63%. 

Gold had rebounded on Friday in Asia was was aiming to break a three week losing streak, as equity markets dipped. A higher close for the week would have been technically bullish and could have led to follow through buying next week.

Certain market participants seemed determined not to allow gold to have a higher weekly close. Trading action had all the hallmarks of the Gold Anti Trust Action Committee’s (GATA) ‘gold cartel’ and their determination to keep gold prices capped and “animal spirits” low in the gold market. 

In London this morning spot gold was up 0.1% at $1,223.10 an ounce by 0959 GMT and on track for a marginal weekly gain. U.S. gold futures gained $1.50 to $1,223.50 an ounce.

Overhead resistance is now at $1,240 and if the price weakens to below $1,200, it would be expected to test the $1,184 level which is the December 2013 low. The $1,184 level is also a July 2013 low, so is being currently labelled as a ‘triple bottom’.

Below this is the $1,155 price level which is a technically important Fibonacci 61.8% retracement level. Technical levels are important in the commodity and metal markets since various trading strategies take these levels into account when deciding when to buy and sell.

The Fibonacci 61.8% retracement level represents a 61.8% pullback from the entire 2008-2014 upward gold price  move which saw gold rose from the $690 area in October 2008 up to above $1,900 in early September 2011, a move of about $1,210.

A 61.8% pullback of this upward move brings the price approximately back to the $1,155 level.

Silver traded very differently from gold on Froday and was 11 cents higher. It was already down significantly for the week so the small gains that were managed Friday meant that silver was still down 1.5% for the week.

On the downside, the $17.27 level is a key technical level since this represents a Fibonacci 78.6% retracement of the entire move up in the silver price since 2008.

The Gold/Silver ratio is currently about 69.7 and could breach 70, which is an important trading level. If this were to happen, it would mean that the silver price should continue to weaken slightly relative to the gold price over the short term.

Palladium is currently trading at $805. After rising above $900 at the beginning of September, the palladium price has now fallen back to its current level very close to $800.

The continued long term move up in the palladium price this year has been made on the back of mining strikes in South Africa and strong industrial demand for palladium in the global automobile market. Palladium is currently trading near its 200 day moving average of 803.

The weakness in the palladium price this week is due to news that Norilsk, the big Russian palladium producer, is in talks to buy $2 billion worth of palladium from a stockpile of palladium that is maintained by the Russian government / Russian central bank. The size of this stockpile is not publicised.

Some of the current supply deficit in the palladium market would be solved if Norilsk was to be able to gain access to the Russian state’s stockpile, hence the uncertainty in the palladium price.

If it palladium price makes a move down below the $800 level, it could fall to the March 2013 high of $786.  Palladium however, is still in a long term uptrend that began in 2008, but  since the price has fallen back from $900 to $800 so quickly, the 200 day moving average near $800 is an important level.

Platinum is currently trading at $1314, near the lows over the last year. The 2013 low, in June 2013, was $1,288 so this is a critical level over the short term. The December 2013 low was $1,311 which has now been breached.

Watch video here

Palladium was down 2.18% for the week, from $823 at last Friday’s London PM close.

Platinum was 2.45% lower compared to last Friday’s PM platinum fix price of $1,347 in London.

Momentum remains to the downside and the short term technicals remain poor. We would caution against buying until we see a higher weekly or indeed monthly close.

The lower weekly close yesterday is technically bearish and would make us slightly nervous for next week. However, the fundamentals remain very sound as physical demand is picking up in India and China ahead of festival season. The wider financial and geopolitical backdrop also remains supportive – especially near zero percent interest rates throughout the western world. Dollar cost averaging remains prudent.

by Ronan Manly , Edited by Mark O’Byrne

 

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via Zero Hedge http://ift.tt/1ni6dX0 GoldCore

Gold bullion in Singapore climbed $9.29 to $1230.29 and was on track for a gain of almost 0.8% for the week prior to concentrated and continual selling in London and then on the COMEX pushed gold lower. Euro gold rose to about €960 and continues to consolidate below the €1,000 level.

Friday’s AM fix was USD 1,222.25, EUR 958.70 and GBP 749.11 per ounce.

Thursday’s AM fix was USD 1,210.50, EUR 950.61 and GBP 742.05 per ounce. 

* Sign Up For Breaking News And Research Here *

Gold fell to as low as $1212.44 at about 10AM EST on the COMEX. It then bounced higher in late trade and ended with a loss of just 0.3%. Silver was stronger and ended with a gain of 0.63%. 

Gold had rebounded on Friday in Asia was was aiming to break a three week losing streak, as equity markets dipped. A higher close for the week would have been technically bullish and could have led to follow through buying next week.

Certain market participants seemed determined not to allow gold to have a higher weekly close. Trading action had all the hallmarks of the Gold Anti Trust Action Committee’s (GATA) ‘gold cartel’ and their determination to keep gold prices capped and “animal spirits” low in the gold market. 

In London this morning spot gold was up 0.1% at $1,223.10 an ounce by 0959 GMT and on track for a marginal weekly gain. U.S. gold futures gained $1.50 to $1,223.50 an ounce.

Overhead resistance is now at $1,240 and if the price weakens to below $1,200, it would be expected to test the $1,184 level which is the December 2013 low. The $1,184 level is also a July 2013 low, so is being currently labelled as a ‘triple bottom’.

Below this is the $1,155 price level which is a technically important Fibonacci 61.8% retracement level. Technical levels are important in the commodity and metal markets since various trading strategies take these levels into account when deciding when to buy and sell.

The Fibonacci 61.8% retracement level represents a 61.8% pullback from the entire 2008-2014 upward gold price  move which saw gold rose from the $690 area in October 2008 up to above $1,900 in early September 2011, a move of about $1,210.

A 61.8% pullback of this upward move brings the price approximately back to the $1,155 level.

Silver traded very differently from gold on Froday and was 11 cents higher. It was already down significantly for the week so the small gains that were managed Friday meant that silver was still down 1.5% for the week.

On the downside, the $17.27 level is a key technical level since this represents a Fibonacci 78.6% retracement of the entire move up in the silver price since 2008.

The Gold/Silver ratio is currently about 69.7 and could breach 70, which is an important trading level. If this were to happen, it would mean that the silver price should continue to weaken slightly relative to the gold price over the short term.

Palladium is currently trading at $805. After rising above $900 at the beginning of September, the palladium price has now fallen back to its current level very close to $800.

The continued long term move up in the palladium price this year has be
en made on the back of mining strikes in South Africa and strong industrial demand for palladium in the global automobile market. Palladium is currently trading near its 200 day moving average of 803.

The weakness in the palladium price this week is due to news that Norilsk, the big Russian palladium producer, is in talks to buy $2 billion worth of palladium from a stockpile of palladium that is maintained by the Russian government / Russian central bank. The size of this stockpile is not publicised.

Some of the current supply deficit in the palladium market would be solved if Norilsk was to be able to gain access to the Russian state’s stockpile, hence the uncertainty in the palladium price.

If it palladium price makes a move down below the $800 level, it could fall to the March 2013 high of $786.  Palladium however, is still in a long term uptrend that began in 2008, but  since the price has fallen back from $900 to $800 so quickly, the 200 day moving average near $800 is an important level.

Platinum is currently trading at $1314, near the lows over the last year. The 2013 low, in June 2013, was $1,288 so this is a critical level over the short term. The December 2013 low was $1,311 which has now been breached.

Watch video here

Palladium was down 2.18% for the week, from $823 at last Friday’s London PM close.

Platinum was 2.45% lower compared to last Friday’s PM platinum fix price of $1,347 in London.

Momentum remains to the downside and the short term technicals remain poor. We would caution against buying until we see a higher weekly or indeed monthly close.

The lower weekly close yesterday is technically bearish and would make us slightly nervous for next week. However, the fundamentals remain very sound as physical demand is picking up in India and China ahead of festival season. The wider financial and geopolitical backdrop also remains supportive – especially near zero percent interest rates throughout the western world. Dollar cost averaging remains prudent.

by Ronan Manly , Edited by Mark O’Byrne

 

* Sign Up For Breaking News And Research Here *

via Zero Hedge http://ift.tt/1ni6dX0 GoldCore

For the longest time anyone suggesting that Europe’s economic collapse was nothing short of a deflationary collapse (which would only be remedied with the kind of a money paradopping response that Japan is currently experiment with and where, for example, prices of TVs are rising at a 10% clip courtesy of the BOJ before prices rise even more) aka a “Japan 2.0” event, was widely mocked by the very serious economist establishment, and every uptick in the EuroSTOXX was heralded by the drama majors posing as financial analysts as the incontrovertible sign the European recovery has finally arrived. Well, they were wrong, and Europe is now facing if not already deep in a triple-dip recession. Which also explains why now it is up to the ECB to do all those failed things that the BOJ did before the Fed convinced it it needs to do even more of those things that failed the first time around, just so the super rich can get even richer in the shortest time possible.

So we were a little surprised when none other than Goldman Sachs today diverged with the ranks of the very serious economists and the drama major pundits, and declared that “recent trends in some European economies already qualify as a Japanese-style stagnation.”

Oops.

Full note from Goldman:

The Costs of Euro area Stagnation

 

Over the course of 2014, there have been important changes in the global growth outlook. The most noticeable of these have been mark-downs in GDP growth forecasts for some of the largest economies, including the US, Euro area, Japan and China. Within that set, the persistent sluggishness of growth in the Euro area has become an increasing source of concern in market discussions, as it appears to be tracking unpleasant patterns associated with the Japanese experience of the 1990s—leading commentators to hypothesize about a so-called ‘Japanization’ of the Euro area.

 

But the phenomenon of stagnation belongs to some continental European economies as much as it belongs to Japan. Recent trends in France, Italy, Spain and other countries in the region already qualify as stagnation experiences. Moreover, our historical analyses show that Western Europe has featured prominently in the list of the most serious stagnations.

 

In this Daily, we discuss three of the main costs associated with these experiences: (1) Growth wedges with respect to peers; (2) market underperformance; and (3) shortfalls in competitiveness. Our focus is on the most recent stagnation experiences looming over the Euro area, in an attempt to contribute to the debate with a more concrete assessment of how costly these experiences can be. This also has global ramifications: Consider that Japan’s weight in global output was around 9% when its stagnation started, compared with roughly 15% for the Euro area in the aftermath of the financial crisis. Thus, continued stagnation in the Euro area would be potentially more damaging for the global economy than Japan’s experience was back in the 1990s—because of its larger economic weight and the stronger financial linkages with the rest of the world. 

 

More Continental European Countries in ‘Stagnation’

 

Three years ago we argued that the risks that some of the largest economies would fall into a long period of stagnant growth had increased following the macro contractions and stock-market crashes we had just seen (GEW, ‘From the ‘Great Recession’ to the ‘Great Stagnation’?’, September 2011). Back then, we identified five countries in stagnation (Canada, France, Italy, New Zealand and Portugal) and noted that several more were at risk (including Austria, Australia, Belgium, Japan and even the US).

 

Fast-forward to today, and our most recent analysis finds three new cases of actual stagnation: Belgium, Spain and Norway (for the latter, the distinction between a non-stagnant mainland and a stagnant offshore economy are, however, relevant). On the brighter side, New Zealand is no longer in stagnation, while the US, the UK and Japan (for a change) appear to have come out of stagnation (GEW, ‘Still wading through ‘Great Stagnations’’, September 2014).

 

From that perspective, concerns around the stagnation of the Euro area are not entirely unwarranted: Average GDP growth in the Euro area over the 10 years leading to 2014 will likely print below 0.8% (or below 0.7% if we only take the last 5 years), which is similar to Japan’s 0.9% average growth during its stagnation experience (1992-2003). A large economy like Italy has experienced very little growth in GDP per capita even in the decade preceding the great financial recession.

 

Historical analysis shows that around two-thirds of stagnation experiences have occurred in developed economies, with a large fraction of these occurring in Western Europe. Moreover, among the most recent experiences, the most notable are precisely those of European economies (ordered by growth shortfall with respect to peer group): Spain (2008-13), Italy (2002-13), Portugal (2002-13), Belgium (2008-13) and France (2002-13).

 

The growth discontent: Wedges in GDP per capita between 10-30%

 

Recently stagnating economies in the Euro area have been growing at rates that are not only lower than their post-WWII average, but also substantially lower than their peers (economies of similar level of development judged by income quartiles). Over time, these differences in growth rates have opened sizeable wedges in levels of GDP per capita with respect to what they would have attained if they had grown at the average rate of their peers.

 

As of 2013, our calculations show that those wedges in GDP per capita are substantial: Spain (18%), Italy (27%), Portugal (21%), Belgium (13%) and France (18%). Among these, Italy is noteworthy. IMF data show that Italy’s GDP per capita as a share of Germany’s GDP per capita went from 96% in 2002 to 76% in 2013; the same share with respect to the US went from 69% to 57%; and even with respect to Spain it went from 109% to 102%. As a reflection of this stagnation, combined with the ascent of emerging economies to the global stage, Italy’s share of the world’s output has declined from 3.2% to 2.1% over the same period.

So with that in mind are you going to buy European stocks? Think again suggests Goldman:

The market’s discontent: Lower stock returns, higher bond returns

Our historical analyses show that stagnations tend to be characterized by lower stock returns and higher bond returns than normal (GEW, ‘A Market View of Stagnations’, October 2011). Recently stagnating economies fit those patterns. Total returns on stocks for these economies average -1.4% per year in real terms, considerably below the historical average of around 8%. In turn, total bond returns for these economies average 3.7%, above the historical average of around 3%. Finally, total bill returns have been slightly negative, at -0.2%, compared with a historical average of around 1%.

So the overall picture of financial returns in recently stagnating economies has been unfavorable for risky assets, with relatively low valuations (average Price/Earnings ratio at 13.9) and inflation lower than nominal yields (particularly once the zero bound has been reached), resulting in real rates above those in some countries’ trading partners. While global events over the past few years have affected the performance of the broadest asset classes across these and other developed economies, the underperformance of stocks in stagnant economies is a sign that market pricing reflects shortfalls in growth.

Wait, Goldman not pitching a buy? That can only mean one thing: the Goldman prop desk is buying European equities hand over fist ahead of the ECB’s QE, even as Goldman has been selling US equities with both hands over the past few months.

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

For the longest time anyone suggesting that Europe’s economic collapse was nothing short of a deflationary collapse (which would only be remedied with the kind of a money paradopping response that Japan is currently experiment with and where, for example, prices of TVs are rising at a 10% clip courtesy of the BOJ before prices rise even more) aka a “Japan 2.0” event, was widely mocked by the very serious economist establishment, and every uptick in the EuroSTOXX was heralded by the drama majors posing as financial analysts as the incontrovertible sign the European recovery has finally arrived. Well, they were wrong, and Europe is now facing if not already deep in a triple-dip recession. Which also explains why now it is up to the ECB to do all those failed things that the BOJ did before the Fed convinced it it needs to do even more of those things that failed the first time around, just so the super rich can get even richer in the shortest time possible.

So we were a little surprised when none other than Goldman Sachs today diverged with the ranks of the very serious economists and the drama major pundits, and declared that “recent trends in some European economies already qualify as a Japanese-style stagnation.”

Oops.

Full note from Goldman:

The Costs of Euro area Stagnation

 

Over the course of 2014, there have been important changes in the global growth outlook. The most noticeable of these have been mark-downs in GDP growth forecasts for some of the largest economies, including the US, Euro area, Japan and China. Within that set, the persistent sluggishness of growth in the Euro area has become an increasing source of concern in market discussions, as it appears to be tracking unpleasant patterns associated with the Japanese experience of the 1990s—leading commentators to hypothesize about a so-called ‘Japanization’ of the Euro area.

 

But the phenomenon of stagnation belongs to some continental European economies as much as it belongs to Japan. Recent trends in France, Italy, Spain and other countries in the region already qualify as stagnation experiences. Moreover, our historical analyses show that Western Europe has featured prominently in the list of the most serious stagnations.

 

In this Daily, we discuss three of the main costs associated with these experiences: (1) Growth wedges with respect to peers; (2) market underperformance; and (3) shortfalls in competitiveness. Our focus is on the most recent stagnation experiences looming over the Euro area, in an attempt to contribute to the debate with a more concrete assessment of how costly these experiences can be. This also has global ramifications: Consider that Japan’s weight in global output was around 9% when its stagnation started, compared with roughly 15% for the Euro area in the aftermath of the financial crisis. Thus, continued stagnation in the Euro area would be potentially more damaging for the global economy than Japan’s experience was back in the 1990s—because of its larger economic weight and the stronger financial linkages with the rest of the world. 

 

More Continental European Countries in ‘Stagnation’

 

Three years ago we argued that the risks that some of the largest economies would fall into a long period of stagnant growth had increased following the macro contractions and stock-market crashes we had just seen (GEW, ‘From the ‘Great Recession’ to the ‘Great Stagnation’?’, September 2011). Back then, we identified five countries in stagnation (Canada, France, Italy, New Zealand and Portugal) and noted that several more were at risk (including Austria, Australia, Belgium, Japan and even the US).

 

Fast-forward to today, and our most recent analysis finds three new cases of actual stagnation: Belgium, Spain and Norway (for the latter, the distinction between a non-stagnant mainland and a stagnant offshore economy are, however, relevant). On the brighter side, New Zealand is no longer in stagnation, while the US, the UK and Japan (for a change) appear to have come out of stagnation (GEW, ‘Still wading through ‘Great Stagnations’’, September 2014).

 

From that perspective, concerns around the stagnation of the Euro area are not entirely unwarranted: Average GDP growth in the Euro area over the 10 years leading to 2014 will likely print below 0.8% (or below 0.7% if we only take the last 5 years), which is similar to Japan’s 0.9% average growth during its stagnation experience (1992-2003). A large economy like Italy has experienced very little growth in GDP per capita even in the decade preceding the great financial recession.

 

Historical analysis shows that around two-thirds of stagnation experiences have occurred in developed economies, with a large fraction of these occurring in Western Europe. Moreover, among the most recent experiences, the most notable are precisely those of European economies (ordered by growth shortfall with respect to peer group): Spain (2008-13), Italy (2002-13), Portugal (2002-13), Belgium (2008-13) and France (2002-13).

 

The growth discontent: Wedges in GDP per capita between 10-30%

 

Recently stagnating economies in the Euro area have been growing at rates that are not only lower than their post-WWII average, but also substantially lower than their peers (economies of similar level of development judged by income quartiles). Over time, these differences in growth rates have opened sizeable wedges in levels of GDP per capita with respect to what they would have attained if they had grown at the average rate of their peers.

 

As of 2013, our calculations show that those wedges in GDP per capita are substantial: Spain (18%), Italy (27%), Portugal (21%), Belgium (13%) and France (18%). Among these, Italy is noteworthy. IMF data show that Italy’s GDP per capita as a share of Germany’s GDP per capita went from 96% in 2002 to 76% in 2013; the same share with respect to the US went from 69% to 57%; and even with respect to Spain it went from 109% to 102%. As a reflection of this stagnation, combined with the ascent of emerging economies to the global stage, Italy’s share of the world’s output has declined from 3.2% to 2.1% over the same period.

So with that in mind are you going to buy European stocks? Think again suggests Goldman:

The market’s discontent: Lower stock returns, higher bond returns

Our historical analyses show that stagnations tend to be characterized by lower stock returns and higher bond returns than normal (GEW, ‘A Market View of Stagnations’, October 2011). Recently stagnating economies fit those patterns. Total returns on stocks for these economies average -1.4% per year in real terms, considerably below the historical average of around 8%. In turn, total bond returns for these economies average 3.7%, above the historical average of around 3%. Finally, total bill returns have been slightly negative, at -0.2%, compared with a historical average of around 1%.

So the overall picture of financial returns in recently stagnating economies has been unfavorable for risky assets, with relatively low valuations (average Price/Earnings ratio at 13.9) and inflation lower than nominal yields (particularly once the zero bound has been reached), resulting in real rates above those in some countries’ trading partners. While global events over the past few years have affected the performance of the broadest asset classes across these and o
ther developed economies, the underperformance of stocks in stagnant economies is a sign that market pricing reflects shortfalls in growth.

Wait, Goldman not pitching a buy? That can only mean one thing: the Goldman prop desk is buying European equities hand over fist ahead of the ECB’s QE, even as Goldman has been selling US equities with both hands over the past few months.

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

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

Wyland Stanley Studebaker motor car in repair shop, San Francisco 1919

There are substantial and profound changes developing in the global economy, and in my view we should all pay attention, because everyone will be greatly affected. Some more than others, but still.

‘Metal markets’, be they gold, silver, copper or iron, exhibit distress and uncertainty, prices are falling, or at least seem to be. Partly, that is because of the apparently still ongoing investigation in the Chinese port of Qingdao, through which a $10 billion ‘currency fraud’ is reported today, ostensibly related to the double/triple borrowing that has been exposed, in which the same iron ore and copper shipments were used as collateral multiple times.

This could soon bring such shipments to the market and add to the oversupply already in place. Combined with ever more evidence of a slowdown in Chinese growth numbers, this doesn’t look good for iron, copper, aluminum.

But the Slow Boat To – or from – China is by no means the only reason metal prices are dropping. The main one is, plain and simple, the US dollar. Gold, for instance, hasn’t changed much at all when compared to a year ago, against the euro. Whereas it’s lost 8-9% against the dollar over the last 2-3 months, about the same percentage as that same euro. The movement is not – so much – in gold, it’s in the dollar.

To claim that this is the market at work makes no sense anymore. Today central banks, for all intents and purposes, are the market. As Tyler Durden makes clear once again for those who still hadn’t clued in:

Bank Of Japan Buys A Record Amount Of Equities In August

Having totally killed the Japanese government bond market, Shinzo Abe has – unlike the much less transparent Federal Reserve, who allegedly use their proxy Citadel – gone full tilt into buying Japanese stocks (via ETFs). In May, we noted the BoJ’s aggressive buying as the Nikkei dropped, and in June we pointed out the BoJ’s plan to buy Nikkei-400 ETFs and so, as Nikkei news reports, it is hardly surprising that the Bank of Japan bought a record JPY 123.6 billion worth of ETFs in August.

 

The market ‘knows’ that the BoJ tends to buy JPY 10-20 billion ETFs when stock prices fall in the morning. The BoJ now holds 1.5% of the entire Japanese equity market cap (or roughly JPY 480 trillion worth) and is set to surpass Nippon Life as the largest individual holder of Japanese stocks. And, since even record BoJ buying was not enough to do the job, Abe has now placed GPIF reform (i.e. legislating that Japan’s pension fund buys stocks in much greater size) as a primary goal for his administration. The farce is almost complete as the Japanese ponzi teeters on the brink.

Shinzo Abe wants the yen to fall, and he gets his (death)wish, because the Japanese economy and the financial situation of its government are in such bad shape, there’s nowhere else to go for the yen. That doesn’t spell nice things for the Japanese people, who will see prices for imported items (energy!) rise, but for all we know Abe sees that as a way to push up inflation. That’s not going to work, what we will push up instead is hardship. And that plan to force pension funds into stocks is just plain insane, an idea he got from US pension funds which are 50% in stocks – which is just as crazy.

Draghi talks down the euro, says a headline today, but I don’t see it; I wonder why that would be supposed to work now, and not in the preceding years, when it was just as obvious how poorly Europe was doing. Sure, there’s a new ‘threat’ in the AfD (Alternative for Germany), a right wing anti-euro party, but that’s not – for now – enough to cause the euro slide we’re seeing. The movement is not – so much – in the euro, it’s in the dollar.

Why the Fed moves the way it does, the moment it does, in its three pronged combo of fully tapering QE, hiking rates (or at least threatening to) and pushing up the greenback, is not immediately clear, but a few suggestions come to mind, some of which I mentioned earlier this month in The Fed Has A Big Surprise Waiting For You and in What Game Is Being Played With the US Dollar?.

My overall impression is that the Fed has given up on the US economy, in the sense that it realizes – and mind you, this may go back quite a while – that without constant and ongoing life-support, the economy is down for the count. And eternal life-support is not an option, even Keynesian economists understand that. Add to this that the -real – economy was never a Fed priority in the first place, but a side-issue, and it becomes easier to understand why Yellen et al choose to do what they do, and when.

When the full taper is finalized next month, and without rate rises and a higher dollar, the real US economy would start shining through, and what’s more important – for the Fed, Washington and Wall Street -, the big banks would start ‘suffering’ again. Just about all bets are on the same side of the trade today, and that’s bad news for Wall Street banks’ profits.

The higher dollar will bring some temporary relief for Americans, in lower prices at the pump, and for imported products in stores, for example. Higher rates, however, will put a ton and a half of pressure bearing down on everyone who’s in debt, and that’s most Americans. The idea is probably that by the time this becomes obvious and gets noticed, we’re far enough down the line that there’s no going back. Besides, we could be in full-scale war by then. One or two IS attacks in the west would do.

The higher dollar – certainly in combination with higher rates – will also mean a very precarious situation for the US government, which will have to pay a lot more in borrowing costs, but our leadership seems to think that at least in the short term, they can keep that under control. And then after that, the flood. Maybe the US can start borrowing in yuan, like the UK wants to do?

To reiterate: there is no accident or coincidence here, and neither is it the market reacting to anything. That’s not an option in this multiple choice, since there is no market left. It’s all central banks all the way (like the universe made up of turtles). It’s faith hope and charity, and the greatest of these is the Federal Reserve. Is they didn’t want a higher dollar, there would not be one. Ergo: they’re pushing it higher.

The Bank of England will follow in goose lockstep, while the ECB and Bank of Japan can’t. That’s earthquake and tsunami material. The biggest richest guys and galls will do fine wherever they live. The rest, not so much. Wherever they live . At the Automatic Earth, we’ve been telling you to get out of debt for years, and we reiterate that call today with more urgency. Other than that, it’s wait and see how many export-oriented US jobs will be lost to the surging buckaroo. And how a choice few nations in the northern hemisphere will make through the cold days of winter.

Whatever you do, don’t take this lightly. A major move is afoot.

via Zero Hedge http://ift.tt/1uOej8e Tyler Durden