Month: May 2016

It appears as though the ECB has had enough of the thorn in its side that is Germany in this latest round of back and forth, and has taken to what it does best: jawboning. In an article published today in the Frankfurter Allgemeine Sonntagszeitung newspaper, executive board member Benoit Coeure writes a rambling article defending ECB's policies, tells Germany that the ECB is the reason for its economic success, and downplays the issues that any savers may be having under NIRP.

Leading up to the article, Germany's finance minister Wolfgang Schauble has been increasingly vocal with his displeasure at Draghi's policies, first by saying that the loose monetary policies would end in disaster, and hinting that Berlin would consider taking the ECB to court if ever Draghi introduced the "very interesting concept" of helicopter money (bypassing the banking sector and distributing money directly to companies, consumers, and states). Then, a few days later, Schauble said that monetary policy was largely exhausted globally, and that the ECB is causing extraordinary problems in reference to negative interest rates that are hammering savers. This was apparently enough to expose the ever so thin skin of the European central planners.

Benoit's article opens by ironically asking if the ECB is stubborn because its continuing policies that aren't working.

Is the ECB stubborn because we are adhering to our monetary policy despite strong criticism? No. We are complying with a precise task that was conferred on us. The EU treaties gave the ECB a narrow price stability mandate.

Then, a bit of posturing is done to separate Germany's influence in the public court of opinion by whining that other institutions (i.e. Bundesbank and German Finance Ministry) shouldn't impact ECB's decision making.

To pursue this deliberately narrow objective, the ECB has been given a great amount of independence, building on the successful experience of the Deutsche Bundesbank. This focus is in line with the economic concept of “monetary dominance”. To ensure this, central banks must be assigned a well-defined objective. They must also be granted sufficient discretion when determining and carrying out their measures.

 

Monetary dominance implies that in carrying out its mandate a central bank may not make itself dependent on the specific decisions of other institutions. A fundamental assumption underlying European monetary union is therefore that different institutions must act independently within their mandates.

The article goes on to defend the ECB policies that aren't working, and even uses "global developments" as a scapegoat as to why printing money doesn't lead to any actual demand in the real economy (thus no inflation).

Our latest package, with its increased size of purchase volumes and its emphasis on credit to households and companies, is proving effective, as recently confirmed by our bank lending survey and, more generally, by the recovery of economic activity throughout the euro area.

 

We are confident that our measures will bring inflation back on a sustainable path consistent with our objective of price stability. However, there are compelling reasons to suggest that inflation in the euro area will go up only gradually. They include a legacy of private and public debt that was too high, which led to a fall in economic activity and an increase in unemployment. More recently, global developments which are having a negative impact on inflation have added to this.

After the very mediocre attempt at setting up the ECB's independence as paramount, and defending policies that don't work, the focus then turns to Germany, where Benoit boldly says that without the ECB's policies, Germany's economic success wouldn't be attainable.

But even under a very flexible interpretation of our medium-term inflation objective, I am convinced that not acting would have meant failing in our mandate. Without our measures, current inflation would be much lower and the inflation outlook would be much worse. Moreover, economic activity would be subdued, there would be fewer jobs, and a sound public budget would be more difficult to achieve, even in Germany.

If that wasn't enough to get under the Germans skin, Benoit sprinkles on a few nuggets of socialism…

In Germany, the ECB has recently been repeatedly criticised for hurting savers through the currently very low interest rates. But people are not just savers – they are also employees, taxpayers and borrowers, as such benefiting from the low level of interest rates. Thanks to improved economic conditions, stimulated not least by monetary policy, real income and employment in Germany have increased in recent years. In other words, we need low interest rates now to ensure a normalisation of economic conditions, including higher returns on savings in the future.

 

Read more here.

In other words –  savers are not the only people impacted by monetary policy, and in essence, if they need to suffer for the greater good of everyone else, than so be it.

*  *  *

Incidentally, if the article was titled "Only The Dumb Save",

Then it would have been much more appropriate.

Spiegel headline article: Only the dumb savehttps://t.co/FWJmMruF9u http://pic.twitter.com/DH7rSbqq4w

— Northy (@NorthmanTrader) May 1, 2016

Of course the satirical bent of the article takes nothing away from the fact that they are saying savings is of course the right thing but in a world of NIRP it's stupid.

via http://ift.tt/1Z0t7zX Tyler Durden

Submitted by John Rubino via DollarCollapse.com,

China’s historic post-2009 debt binge flew largely under the radar – fooling most observers into thinking the global economy was recovering rather than just re-leveraging.

Now Beijing is back at it, borrowing over $1 trillion in this year’s first quarter, buying up commodities and creating the illusion of global growth. But this time the scam hasn’t gone unnoticed. Reporters, editors and money managers seem, at last, to be catching on. Some representative headlines:

George Soros warns of credit crisis in China

Chinese cities dive back into debt to fuel growth even as defaults rise

China debt climbs to US$25 trillion

China’s banks cut bad debt buffer as profits flatline

Doug Noland, meanwhile, goes to the heart of the problem in last night’s Credit Bubble Bulletin:

I recall an early-1998 Financial Times article highlighting the explosive growth in Russian ruble and bond derivatives. Not only had the “insurance” market for risk protection grown phenomenally, Russian banks had become major operators in what had evolved into a huge speculative Bubble in Russian debt exposures. That was never going to end well.

 

There was ample evidence suggesting Russia was a house of cards. Yet underpinning this Bubble was the market perception that the West would not allow a Russian collapse. With such faith and the accompanying explosion in speculative trading, leverage and a resulting massive derivatives overhang, any break in confidence would lead to illiquidity, panic and a devastating bust. Just such an outcome unfolded in August/September 1998.

 

From a recent Financial Times article: “The [Chinese] market for pledge-style repos — short-term, bond-backed loans — is currently bigger than the stock of outstanding debt”. Within this undramatic sentence exists the potential for a rather dramatic global financial crisis. And, to be sure, seemingly the entire world has operated under the assumption that Chinese officials (and global policymakers in general) have zero tolerance for crisis – let alone a collapse. So Credit, speculation and leverage have been accommodated – and they combined to run absolute roughshod.

 

The Financial Times article includes a chart worthy of color printing and thumbtacking to the wall: “China’s Use of Bonds as Loan Collateral Rises Sharply”. The pink line shows “Onshore Market Bonds” having almost doubled since mid-2011 to about 40 TN rmb ($6.17 TN). The Red Line – “Pledge-Style Repos” – has ballooned four-fold since just early 2014 to surpass 40 TN rmb. So basically, in this popular market for inter-bank borrowings, borrowing banks have pledged bond positions larger than the entire market as collateral for their (perceived safe) short-term borrowing needs.

 

 

 

China has an historic Credit problem. It as well suffers from an unfolding “money” fiasco of epic proportions. My analytical framework attempts to differentiate the two, as each comes with its own set of (related) issues. A Credit Bubble is a self-reinforcing but inevitably unsustainable expansion of debt. Money (the contemporary variety) is a financial claim perceived as a safe and liquid “store of nominal value.” Importantly, systemic risk expands exponentially when risky borrowings are financed by an expansion of “money-like” instruments/financial claims. This typically occurs late (“terminal phase”) in the Credit Bubble Cycle.

If the critics of China’s recent let-it-all-hang-out financial excess are right, a crisis of some sort is coming to a market near you. For instance, a fair bit of that Q1 $1 trillion went to boosting Chinese stockpiles — and therefore the price of — oil…

…and other commodities like iron ore. From More iron ore price madness as China’s mom-and-pops pile in:

On Friday the Northern China benchmark iron ore price jumped to $65.20 per dry metric tonne (62% Fe CFR Tianjin port) bringing gains since Wednesday to 7.8% as commodity investment fever grips Chinese investors. Last week iron ore hit a 16-month high following an 11% jump over just two trading days according to data supplied by The Steel Index.

 

The steelmaking raw material has enjoyed a 52% rise in 2016 and a 76%-plus recovery from nine-year lows reached mid-December. On the Dalian Commodities Exchange the price swings are much wilder.

 

 

Despite a clampdown on rogue traders, higher margin requirements and trading fees, circuit breakers on Dalian iron ore futures to curb excessive price movement were triggered for the umpteenth time on Friday. That’s despite the exchange in northeast China “temporarily” upping the daily price change limit to 6%. The most traded contract ended Friday at its highs, exchanging hands for 462 yuan or $71.40 a tonne, duly up 5.97% on the day.

Based on supply/demand fundamentals, oil and iron ore remain in massive gluts. So when China’s stockpiling ends — as it mathematically must — these markets will lose a lot of their exuberance. The question then becomes, how many speculators will default on their loans, and what kind of banking trouble will ensue? That’s unknowable, but it’s safe to assume, given the numbers involved, that the rest of the world will find it distressing.

So think of today’s relative calm as the eye of yet another storm, and what’s coming as a return to the hyper-leveraged new normal.

via http://ift.tt/1r9zYMl Tyler Durden

Following yesterday’s dramatic escalation in Iraq’s suddenly very unstable political situation, when Beghdad was put under a state of emergency after supporters of popular Shiite cleric Muqtada al-Sadr breached the heavily fortified Green Zone and stormed both the parliament and government offices – an event which we dubbed the collapse of the US-created political system in Iraq – the situation has continued to deteriorate. 

Protesters reached the cabinet headquarters inside the Green Zone, storming the general secretariat of the cabinet building, al-Sumaria reported, citing security officials. Security has been boosted around the central bank, the Interior Ministry said in an e-mailed statement. The United Nations Assistance Mission for Iraq said it’s “gravely concerned” by Saturday’s developments and urged political leaders to work together to restore security in the country.

Followers of Iraqi Shi’ite cleric Moqtada al-Sadr hold a sit-in at Grand
Festivities Square within the Green Zone in Baghdad, Iraq, May 1, 2016.

“The situation in Iraq has become very dangerous,” said Wathiq al-Hashimi, a Baghdad-based political analyst said cited by Bloomberg. “No one will be able to control thousands of angry protesters while the rest of residents in Baghdad are in panic and living in real fear.” 

Iraq has been mired in a political crisis for months, hindering the government’s ability to combat ISIS, which still controls much of the country’s north and west, or address a financial crisis largely prompted by the plunge in global oil prices.  Sadr and his supporters want to reform the political system put in place following the U.S.-led invasion in 2003, in which entrenched political blocs representing the country’s Shiites, Sunnis and Kurds rely on patronage, resulting in widespread corruption and poor public services. The major blocs have until now stymied the reform attempts of Prime Minister Haider al-Abadi.

Meanwhile, Iraq’s prime minister has ordered the arrest of protesters who attacked security forces and assaulted MPs as they stormed the country’s parliament in Baghdad Saturday.  The protesters, who were responding to Sadr’s call to pressure the government to introduce reforms, left the parliament building on Saturday night and were holding a sit-in at the Saddam-era Grand Festivities Square.

“Security forces cannot force the protesters to leave the Green Zone. Therefore the only choice that is available and will help to calm down the situation is to cooperate with the protesters, not to stand against them,” an Iraqi security official told NBC on condition of anonymity.

As NBC adds, videos on social media showed a group of young men surrounding and slapping two Iraqi lawmakers as they attempted to flee the crowd on Saturday, while other protesters mobbed lawmakers’ motorcades. Jubilant protesters were also seen jumping and dancing on the parliament’s meeting hall tables and chairs and waving Iraqi flags. Amazingly, so far there has not been any notable violence or injuries.

“We are fed up, we are living a humiliated life,” Rasool Hassan, a 37-year old father of three told The Associated Press from inside the Green Zone. “We’ll leave here only when the corrupt government is replaced with another of independent technocrats that serves the people not the political parties,” Hassan added.

The only way to have prevented the protesters storming the Green Zone would have been to open fire, the security official told NBC News, which would have created “great chaos” throughout the country.

The U.S. Embassy said it’s monitoring the situation, adding that reports that embassy personnel are being evacuated are inaccurate. “Under the Vienna Convention, all diplomatic missions are protected by the host country’s security forces,” it said in a statement. “We have full confidence that the Iraqi Security Forces will meet its obligations.”

Former Prime Minister Nouri al-Maliki, who opposes Abadi, criticized attempts to force reform “the under threat of weapons and by preventing the representatives of the people to enter the parliament.” A meeting between Abadi, Iraqi president Fouad Masoum and Parliament Speaker Salim al-Jabouri didn’t yield an immediate resolution to the crisis. Instead, the three condemned the storming of the legislature and said those who assaulted lawmakers during the protest should be brought to justice.

Finally, according to a Reuters update moments ago, the committee organizing the sit-in inside Baghdad’s Green Zone called on protesters to leave the heavily fortified government district on Sunday, 24 hours after they overran security barriers and stormed into parliament. A spokeswoman speaking from a square outside the district said the people would exit “from a position of strength” out of respect for a Shi’ite Muslim pilgrimage underway in the capital but would return afterwards to follow up on their demands.

Followers of Iraq’s Shi’ite cleric Moqtada al-Sadr hold a sit-in at
Grand Festivities Square in Baghdad

 

Celebrations Square right now#Baghdad #Iraq
pic by Ali AlJazairy http://pic.twitter.com/YsInIJdlbM

— Hayder Al-Shakeri (@HayderSH) May 1, 2016

>

* * *

And in separate news, earlier today Iraq announced that its oil exports approached a record high in April, adding barrels to a worldwide supply glut, even as protests against public corruption threatened to paralyze the government of OPEC’s second-largest producer.

Shipments rose to 3.36 million barrels a day, or 100.92 million barrels for the month, Asim Jihad, a spokesman at the oil ministry, told Bloomberg on Sunday. The figures don’t include Kurdistan Regional Government exports. The exports rose from 3.29 million barrels a day in March and were close to the November all-time high of 3.365 million barrels a day, according to oil ministry figures.

Iraq produced 4.3 million barrels a day in April, Bloomberg also reported. Output has increased from 3.25 million barrels a day two years ago with companies including BP Plc and Lukoil PJSC boosting production at fields they operate in the south of the country.

It remains to be seen if the ongoing political turmoil will have an impact on oil production and exports: “Politically, things have worsened dramatically in Iraq,” Richard Mallinson, an oil analyst with Energy Aspects Ltd., said Sunday by phone from London. “It’s a negative for the country’s oil industry over the medium term. We’re going to see production plateau and start to decline later this year,” he said, as government turmoil and spending cuts affect projects needed to maintain output.

via http://ift.tt/1W197Qi Tyler Durden

Submitted by SM Gibson via TheAntiMedia.org,

As Donald Trump inches closer to the Republican nomination, GOP insiders scramble to put a halt to the billionaire’s run for the White House. A new lawsuit filed in the state of California could prove to be the ultimate act of desperation by a frantic establishment willing to go to any lengths to end Trump’s bid for the Oval Office. However, if the allegations contained within the court documents are found to be true, they would not only spell the end of Trump’s presidential aspirations, but most likely his brand as a whole.

On April 26, a woman residing in California named Katie Johnson filed a lawsuit against Donald J. Trump and Jeffrey E. Epstein – for the amount of $100 million – accusing the two billionaires of “forcing her to engage in various perverted and depraved acts by threatening physical harm.” The plaintiff, who describes herself as Trump and Epstein’s “sex slave” in the papers, also accuses the pair of having threatened to kill her family if she told anyone of their crime.

The incidents alleged to have taken place over a four-month span in 1994 in New York City, when Johnson was only 13-years-old.

Of the four separate encounters Johnson outlined in the documents, the last incident is described in the most detail:

“On the fourth and final sexual encounter with the defendant, Donald J. Trump, the Plaintiff, Katie Johnson, was tied to a bed by Defendant Trump who then proceeded to forcibly rape Plaintiff Johnson. During the course of this savage sexual attack, Plaintiff Johnson loudly pleaded with Defendant Trump to “please wear a condom.” Defendant Trump responded by violently striking Plaintiff Johnson in the face with his open hand and screaming that “he would do what he wanted” as he refused to wear protection. After achieving sexual orgasm, the Defendant, Donald J. Trump put his suit back on and when the Plaintiff, Katie Johnson, in tears asked Donald Trump what would happen if he had impregnated her, Defendant Trump grabbed his wallet and threw some money at her and screamed that she should use the money “to get a f*cking abortion.”

Jumping in front of the media blitz that accompanies rumors of this nature, Trump has already addressed the story, calling the events described by the woman a lie.

“The allegations are not only categorically false, but disgusting at the highest level and clearly framed to solicit media attention or, perhaps  are simply politically motivated. There is absolutely no merit to these allegations. Period,” Donald Trump told RadarOnline concerning the court papers.

A woman the documents refer to only as “Tiffany Doe” is said to be able to corroborate the events.

“Material witness Tiffany Doe fully confirms of all Plaintiff Katie Johnson’s allegations of physical and sexual abuse by Defendants Donald J. Trump and Jeffrey E. Epstein. Tiffany Doe was physically present at each of the four occasions by Defendant Trump upon the person of Plaintiff Johnson, as it was her job to witness all of the sexual escapades of Defendant Epstein’s guests at these underage sex parties and later reveal all of the sordid details directly to Defendant Epstein. Defendant Epstein also demanded that Tiffany Doe tell him personally everything she had overheard at these parties explaining to her that “knowledge was king” in the financial world. As a result of these underage sex parties, Defendant Epstein was able to accumulate inside business knowledge that he otherwise would never have been privy to in order to amass his huge personal fortune,” according to the court papers.

Jeffrey Epstein, who has already served 13 months in prison for a sexual encounter with a 14-year-old, is a registered Level 3 sex offender – considered by the state to be a “high risk” to repeat his offense and “a threat to public safety.” At one point, Epstein, who has been implicated in numerous sex crimes involving minors, was facing 10 years to life on multiple counts of statutory rape.

In 2010, the FBI seized a 194-page “little black book” belonging to Epstein that listed the identities of underage girls he was accused of keeping as sex slaves. Incidentally, the plaintiff, Katie Johnson’s name does not appear in the book.

 

 

According to Radar, the address listed as Ms. Johnson’s on the documents is a home in Twentynine Palms, California that has been foreclosed upon. The phone number listed as the plaintiff’s has been disconnected.

“To be clear, there is absolutely no merit to these claims and, based on our investigation, no evidence that the person who has made these allegations actually exists,” Trump attorney Alan Garten told the Daily Mail.

via http://ift.tt/1O75akI Tyler Durden

So much for QE as the answer to the EU’s problems.

 

In 2012, during the depth of the EU banking crisis which nearly took the entire EU financial system down, Mario Draghi stated that he would do “whatever it takes” to hold the EU together.

 

Anyone paying attention knew that this was a bluff. True, the ECB and EU leaders had already defied if not broken every condition of the Maastricht Treaty and the Schengen Treaty (the legislation that formed the EU proper). However, even to the most cynical analyst, Mario Draghi’s claim was pushing the envelope a little too hard.

 

Implementing capital controls and border controls limit freedom, but from the perspective of monetary policy, they’re secondary items. The REAL power is that of the printing press. 

 

This is how Draghi’s promise to save the EU was different from every other action: it addressed the structure of the EU in its most critical component, namely the control of the currency.

 

It took the EU two years to cobble together its reasoning for how something that went completely against the Maastricht Treaty would be permitted. As usual it was the Germans (the ultimate holders of the purse strings) who gave the “OK.”

 

Since being given the green light on QE, Draghi has spent over €600 billion. The ECB’s balance sheet is now approaching its former record high from 2012 after the massive LTRO and LTRO 2 programs.

 

And Draghi has accomplished?

 

Not much of note. The EU’s inflation rate is clearly trending lower. This is AFTER the first ever QE program was both launched and increased in pace form €60 billion to €80 billion per month.

 

 

For all intensive purposes, four cuts into NIRP and the first ever QE program represented nothing more than a tiny dead cat bounce in inflation. If you didn’t know the dates of those programs, looking at the above chart you’d be hard pressed to guess anything significant had happened in terms of monetary policy.

 

Why is this?

 

Because the structural problems for the EU absolutely DWARF the ECB’s current programs. The EU banking system is €46 trillion in size and leveraged at 26 to 1.

 

At these leverage levels, even a 4% decline in asset values renders the entire financial system insolvent. A 4% decline of €46 trillion represents €1.84 trillion. The ECB’s QE program is roughly a little more than half of this. 

 

The real issue is that the ECB is completely cornered. The best it can do is buy EU bonds to drive yields lower in the hope that somehow someone will actually use this to deleverage.

 

Unfortunately that is not human nature. The lower yields go, the more debt EU nations issue. Consider that Spain, Italy and other EU program nations have actually seen their Debt to GDP ratios increase since the 2012 crisis allegedly “ended.”

 

 

In short, the ECB’s extraordinary programs have done ZERO to address the structural issues facing Europe and its financial system. Bankrupt nations continue to issue bonds that bankrupt EU banks buy and use as collateral to backstop their derivatives books, which are in the ballpark of hundreds of trillions of Euros.

 

All the ECB has done is vacuum up this collateral and allow EU banks to continue to value this debt at 100 cents on the Euro. These “solutions” are imaginary at best.

 

At the end of the day, the EU banking system is one gigantic €46 trillion Lehman Brothers. Given the interconnected nature of the global banking system, this is not Europe’s problem… it is the WORLD’s problem.

 

Eventually this will trigger another 2008 type event. When, no one can say, but given that the ECB has failed to generate significant inflation, and that most EU nations have seen their Debt to GDP ratios increase since 2012, it’s not far off.

 

The next Crisis is just around the corner. And it will make 2012 look like a joke.

 

If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.

 

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Best Regards

 

Phoenix Capital Research

 

 

 

via http://ift.tt/24fGoLZ Phoenix Capital Research

One week after Austria was shocked by the news that its right-wing, anti-immigrant Freedom Party, had swept the competition, gathering over 35% of the vote and leaving the other five candidates far behind, Europe’s anti-immigrant juggernaut just added to its momentum when neighboring Germany’s populist AfD party adopted an anti-Islam policy on Sunday in a manifesto that also demands curbs to immigration according to AFP. The biggest surprise however, is that the three year-old party is now also Germany’s third strongest party.

Formed only three years ago on what was originally a eurosceptic platform, the Alternative for Germany (AfD) has gained strength as the loudest protest voice against Chancellor Angela Merkel’s welcome to refugees that brought over one million asylum seekers last year. However, with the migrant influx sharply down in recent months, the AfD has shifted focus to the signature issue of the xenophobic Pegida street movement, whose full name is Patriotic Europeans Against the Islamisation of the Occident.

“Islam is not part of Germany” ran a headline in the AfD policy paper agreed in a vote by some 2,400 members at the party congress in the western city of Stuttgart.

The paper demanded bans on minarets on mosques, the call to prayer, full-face veils for women and female headscarves in schools.

Frauke Petry, party leader of Alternative for Germany (AfD) votes at
a party congress on May 1, 2016 in Stuttgart

A proposal for a more nuanced formulation, to “stop Islamism but seek dialogue with Islam”, was rejected with boos in the mostly-male gathering, which was held in a hall decorated with banners that read “Courage. Truth. Germany.”

“Islam is in itself political,” retorted one speaker, while another linked the religion with “sharia, suicide bombings and forced marriages”.

As AFP adds, in a broader sense the AfD is presenting itself as a nationalistic conservative force that also questions climate change, promotes traditional gender roles and “family values”, would reintroduce military conscription and take Germany out of the euro. Co-leader Joerg Meuthen said the AfD stood for a “modern conservatism” and a “healthy patriotism” while it rejected “the Germany of 1968, infected by the (socialist and environmentalist) red-green left“.

Having soared to national prominence and entering half of Germany’s 16 state parliaments, the AfD, which many see as the country’s answer to France’s National Front and Austria’s Freedom Party, has now firmly set its sights on national elections next year.

“In the summer of 2015, they gave us up for dead,” a triumphant AfD co-chair Frauke Petry told the delegates, declaring that the party does not intend to settle for the role of opposition group or junior coalition partner. Instead, its new programme should allow the AfD “to win majorities”, she told the weekend meeting.

Support for the AfD stood at 13 percent, narrowly beating the ecologist Greens as Germany’s third strongest party, according to an Emnid institute survey for the newspaper Bild am Sonntag.

With its default right-wing bias, AfD has been at pains to distance itself from the hardcore far-right and neo-Nazi movements AFP adds, which are a stubbornly persistent but fringe phenomenon in a country where collective shame over the Nazi era and the Holocaust run deep. Alexander Gauland, leader of the party in Brandenburg state in the former communist East, cautioned delegates to generally temper their statements and “keep in mind that all of Germany is watching us”.

To drive home that message, the congress voted with 52 percent support to dissolve the Saarland regional party chapter because of its deep links with right-wing extremists groups.

To its many critics, however, the AfD represents xenophobia and a backward-looking isolationism. On Saturday hundreds of anti-fascist demonstrators rallied outside the convention centre, with some burning tyres and hurling firecrackers. Riot police used tear gas and temporarily detained 500 of them as officers escorted AfD members into the congress hall.

Hundreds of anti-fascist demonstrators rallied outside AfD’s
convention centre on April 30, 2016

German riot police is pictured during the AfD party congress in
Stuttgart, Germany, April 30, 2016

In another act of harassment, a left-wing media site overnight published the names, addresses and telephone numbers of some 2,000 party members. AfD co-leader Joerg Meuthen pledged to file criminal charges against the unknown hackers behind the data leak.

Aside from drawing the anger of far-left groups, the AfD has also attracted near-universal condemnation from Germany’s major parties.

The general secretary of Merkel’s Christian Democrats, Peter Tauber, told the Bild am Sonntag newspaper: “The debates at the party congress show that the AfD wants to return to a Germany that never existed in that form.

But while its critics rage, what is more important is that its fans and supporters are growing as yet another country sees a groundswell of popular support for a party whose platform is the latest expression of broad anti-establishment anger, pursuing a return of more conservative, traditional values.

* * *

Meanwhile, back in Austria, Chancellor Werner Faymann faced a barrage of boos and whistles at his Social Democratic Party’s May Day rally on Sunday as his opponents demanded that he resign after the party was thrashed in last week’s presidential election. According to Reuters, Faymann defended the course his coalition government has taken despite the drubbing both ruling parties suffered last Sunday, when the far right achieved a record result. “We need laws and measures that ensure humanity and order,” he said in a speech to tens of thousands of party supporters in front of Vienna’s city hall, a phrase he has often used when referring to the government’s hardening immigration policy.

Austria’s Chancellor Werner Faymann

Many present did not share his view and Faymann’s opponents at the Sunday rally held up placards saying “resign” and “party conference now”. They booed and blew whistles as he spoke and when his name was mentioned.

via http://ift.tt/1Z0c8O4 Tyler Durden

 

 

The FED is not made up of unintelligent clueless policy makers who have no idea what they are effecting.   They know exactly where their pre-calculated monetary programs are taking us.  After all, understanding the ramification of their monetary machinations is not rocket science.  The faltering economic and financial signs are everywhere for anyone to see that is actually looking.

To use an often sited droll analogy, they are doing “God’s work”.  Directed by a far reaching and pervasive power base derived from the merger of Multi National Corporate – Int’l Banking – SupraState interests and objectives.  A global monopolistic Goliath of insatiable voracity, which has achieved monumental control and influence over the daily economic affairs of the common man.

Most certainly, the end game is to eradicate the presently standing world’s reserve currency. he final pillar to be toppled, so as to introduce a one world currency backed by an SDR based multinational monetary regime, which will serve to further consolidate the grip on the sovereignty of man.

Clearly, to achieve this aim they need to completely destabilize the Dollar, and mark my words that IS coming.  At the end of the day, this will be yet another consolidating currency event, and nothing more.

The only remaining question is whether it will be orchestrated methodically through peaceful negotiations among the major trading nation’s central banks of the world, or violently and abruptly until the last standing military alliances are victorious…………..same as it ever was.

 

 

Got Gold?

via http://ift.tt/1NeCwTX Bruno de Landevoisin

By Nick Colas of Convergex

10 Stats About The Last 10 Years

The headline this week that Goldman Sachs’ stock has gone nowhere for a decade got us thinking about general market performance over the last 10 years. The key contours are straightforward: subpar price returns (a 4.9% compounded annual growth rate for the S&P 500) with increased volatility (a VIX that is 25% more volatile than average).  From there, things get funky.  Consumer Discretionary – not Tech or Health Care – is the top performing sector, up 137% over the decade, in no small part due to Amazon (up 1,600% over the period and in the S&P 500 since 2005). Only one sector is down over this timeframe: Financials, 28% lower (making Goldman an outperformer in its sector, funny enough).  And gold (up 87%) has trounced stocks (S&P 500 up 62%).  There’s more, and in this note we also look for where some of these anomalies may revert to a longer run mean.

Think back over the last 10 years – how different was your life in April 2006?  While you may think your daily existence is largely the same (maybe the kids are older or you’re married now, but that about it…), consider what was actually different about your life in the spring of 2006:

• No iPhone. Steve Jobs unveiled the first iPhone in January 2007, and it didn’t ship until June of that year.
• No Facebook (unless you were in college at the time). Facebook only opened to the general population in September 2006.
• No Twitter. The full version of the product launched in July 2006.
• No Instagram. The picture sharing site only launched in 2010.
• No Kim Kardashian. “Keeping up With The Kardashians” debuted in October 2007.
• No Uber. The company received its seed funding in 2009.
• No iPad. Apple started taking pre-orders on the first-gen product in March 2010.

It feels like April 2006 demarcates the last days of some Dark Age, or at least a simpler time without the manifold distractions of today.  And while you might opt for a world without the Kardashians, imagine it without your smartphone, Facebook/social media, and an iPad to entertain the kids (or yourself). It’s ok – don’t panic. You have them now.

The journey from April 2006 to April 2016 in financial markets has, of course, been a wild ride.  But just as it is hard to remember what daily life was like a decade ago, it is also easy to forget some of the important waypoints that capital markets took from there to here.  And sometimes looking in the rear view mirror is helpful to considering the road ahead.

Investing has a name for that exercise: “Reversion to the mean”.  Anomalies can exist for long periods of time, but eventually asset classes revert to some natural risk adjusted rate of return. In economics, policymakers look at long-cycle data to grade their efforts at managing the macro economy. The bottom line: an occasional glance backwards at the data is a useful exercise even if all you really care about is predicting tomorrow.

Here are 10 data points about the last 10 years we hope you will find useful:

#1 – U.S. Consumer inflation (as measured by the CPI) over the last 10 years: 18%.  That translates into a compounded annual growth rate of 1.67%, well below the Federal Reserve’s goal of 2%.  The most recent core inflation data from the CPI shows a little higher (2.2%), but the core PCE data is more in line with the long run headline average (1.7%).

Key takeaway: a decade – even one with a financial crisis in the middle of it – is a long enough period to assess structural inflation.  A 1.7% average rate may just be a new normal, at least until the next recession when it will presumably decline. 

 

#2 – Price appreciation for the S&P 500 over the last decade: 62%.  The compounded growth rate here is 4.9%.  The best performing major average over the last 10 years is the NASDAQ Composite, up 110% or a 7.7% compounded annual growth rate.

Key takeaway: no matter how you slice it, equity market returns are not double digits anymore even when you add 2% or so for dividend payments.  Now, pick the right entry point (mid crisis should do it) and they are obviously much higher.  But over a decade, 5-8% seems to be the market’s speed limit.  Not bad, but not the +10% numbers of the 1980s and 1990s.  

 

#3 – S&P operating earnings 10 years ago: $73/share on its way to $82 in 2006.  Inflation adjusted, those 2006 normalized earnings of $77.50 would be $91.45 today.  Actual trailing four quarter earnings for the S&P 500 right now are $100, or 29% higher than the operating earnings back in 2006/7.

Key takeaway: earnings are 29% higher than 2006, but the S&P 500 is 62% above the levels of a decade ago.  Earnings multiples have expanded because interest rates have declined; don’t forget that the U.S. 10 year Treasury had a yield of 5.0% in April 2006.  Now, it is 1.7%.

 

#4 – The best performing sector over the last 10 years: Consumer Discretionary, up 136%.  In December of 2005, the S&P Committee in charge of choosing companies to add to the large cap 500 index decided to include Amazon. Good choice, because over the last decade the stock has returned +1,600%. In their eyes, however, it was a Consumer Discretionary company, not a Tech concern. That decision, plus good returns from other large brand-name consumer companies, makes this industry the best performing major sector in the S&P 500.

Key takeaway: this sector seems ripe for some reversion-to-the-mean underperformance, unless the S&P Committee finds some other hyper-growth names to add to the collection.  Wonder where they would put Uber?

 

#5 – The price of a barrel of crude in April 2006: $75.  If crude oil prices had just kept up with inflation over the last decade, a barrel would cost $88.59. Instead it is $43/barrel.

Key takeaway:  What if I told you oil would trade for $30/barrel in 2026?  Or $130/barrel?  How would it change your long term outlook, and which do you believe is more likely?  My own thought is that oil will be higher in a decade and large cap energy stocks are a good long term hold. 

 

#6 – The best performing market cap range in U.S. equities over the last decade: mid-caps, up 87%.  Over a long period, you would expect to see risk and return scale as the textbooks tell us they should: more risk equates to higher return. Yet small caps are only up 52% (Russell 2000) to 78% (S&P Small Caps) and the S&P Mid Cap Index is 87% higher.

Key takeaway: another candidate for reversion to the mean underperformance over the next decade. 

 

#7 – Average daily VIX levels over the last 10 years: 21, barely higher than the long run average of 20, but with much higher volatility. The standard deviation of moves in the CBOE VIX Index since 1990 is 8; over the last decade it has been 10.  Simply put, volatility was more volatile in the last 10 years.

Key takeaway: One trend that should last for the next decade.  The average for the VIX may not move very much, but periods of market churn will elicit greater investor concern.  This should be especially true in the next recession, whenever that comes, if only because markets will worry about what policymakers will do to combat that next economic slowdown. 

 

#8 – Total venture capital raise in the last decade: $426 billion. It has been a golden age for VC investors and the companies they support.  Many of the new products we listed at the top of this note would have never come to market without this source of capital.

Key takeaway: VC money flows do seem to be waning.  Deal count receded in 2015, from 9,381 in 2014 to 8,097 in 2015.  Capital invested, however, was $77 billion – the highest in a decade and almost 3x the $26 billion invested in 2006.  See here: http://ift.tt/1W0U6hd

 

#9 – Total money flows out of U.S. equity mutual funds: $209 billion, according to the Investment Company Institute. 

Key Takeaway: We don’t have the 10 year numbers handy, but inflows into U.S. stock ETFs over the last 5 years total $368 billion.

 

#10 –   Gold has outperformed equities by a wide margin, +87% versus +59% for the S&P 500.

Key takeaway: one of the more surprising results from our 10 year lookback.  The contrarian in me wants to believe the performance here will converge, and equities will outpace gold for the next decade.  But consider this: which sounds more likely – gold at $1,860/oz (pretty much its 2011 highs) or S&P 500 at 3126?  They are both 50% higher than today’s close.

via http://ift.tt/1W0U6hb Tyler Durden

via http://ift.tt/1O6L2iy williambanzai7

In his final address to the White House correspondents dinner also known as “nerd prom”, Obama embraced his last chance at a snarky, hyperbolic, comic monologue and used the stage to unleash a series of one-liners at 2016 presidential candidates in both parties, the media and his own career as president.

 

“It is an honor to be here at my last, and perhaps the last, White House Correspondents’ dinner,” he said as he took the podium. “You all look great. The end of the Republic has never looked better. Next year at this time someone else will be standing here in this very spot, and it’s anyone’s guess who she will be,” Obama said.

At the end, Obama literally dropped the mic at the event where politicians, journalists, media moguls, Capitol Hill power brokers, Hollywood stars and even dogs (those belonging to Star Wars actress Carrie Fisher) gathered.

Obama didn’t spare his former secretary of State Hillary Clinton, quipping, “If this material goes well, I’m going to use it at Goldman Sachs next year. Earn me some serious Tubmans.”

He also joked her lack of popularity with young voters: “I’ve said I admire Hillary’s toughness, her smarts, her policy chops, her experience. You’ve gotta admit it though: Hillary trying to appeal to young voters is a little bit like your relative who just signed up for Facebook,” Obama said. “‘Dear America, did you get my poke? Is it appearing on your wall? I’m not sure I’m using this right. Love, Aunt Hillary.'”

Obama then took on 74 year old Bernie Sanders from Vermont, describing him as “the bright new face of the Democratic party.” “Bernie, you look like a million bucks. Or, to put in terms you will understand, you look like 37,000 donations of $27 each,” the outgoing jokester said, referring to a zillion small contributions to Mr Sanders’ campaign. 

“I am hurt though, Bernie, that you have distanced yourself from me. That’s not something that you do to your comrade.”

“8 years ago, I said it was time to change the tone of our politics. In hindsight, I clearly should have been more specific.” —@POTUS #WHCD

— The White House (@WhiteHouse) May 1, 2016

But much of Obama’s monologue focused on the Republicans, saying “we’re praying Cleveland makes it through July,” and noted the absence of GOP front-runner Donald Trump. “You know I’m gonna talk about Trump!” Obama told the crowd.

“Although I’m a little hurt that he is not here tonight. We had so much fun the last time,” Obama said referring to the same event in 2011, during which Trump was present. “And it is surprising. You got a room full of reporters, celebrities, cameras and he says ‘no.’ Is this dinner too tacky for The Donald. What could he possibly be doing instead? Is he at home, eating a ‘Trump Steak’, tweeting out insults to Angela Merkel? What is he doing?”  Obama wisecracked.

“The Republican establishment is incredulous that he’s their most likely nominee. Incredulous. Shocking. They say Donald lacks the foreign policy experience to be president,” Obama said. “But in fairness he has spent years meeting with leaders from around the world: Miss Sweden, Miss Argentina, Miss Azerbaijan.”

“And there’s one area where Donald’s experience could be invaluable and that’s closing Guantanamo, because Trump knows a thing or two about running waterfront properties into the ground,” the US president jibed.

He didn’t let Ted Cruz get by unscathed, reminding the audience that last week, the GOP presidential hopeful called a basketball hoop a “ring” at a campaign stop in Indiana. “He went to Hoosier country, called the hoop a basketball ring. What else is in his lexicon? Baseball sticks? Football hats? But sure, I’m the foreign one.”

Obama didn’t mention John Kasich by name but took a jab and the GOP candidate, saying “Some candidates aren’t polling high enough to qualify for their own jokes tonight.”

Obama appeared in a pre-recorded video with former Speaker John Boehner and mocked some Republicans’ hope that current Speaker Paul Ryan would become a “white knight” nominee at the Republican convention. “Dinner guests were asked to check whether they wanted steak or fish, but instead a whole bunch of you wrote in Paul Ryan. That’s not an option, people,” Obama said. “You may not like steak or fish, but that’s your choice.”

“Glad to see you feel you’ve earned the night off,” Obama said to RNC chair Reince Priebus. “Congrats on all your success. The Republican party, the nomination process, it’s all going great. Keep it up.”

Toward the end, Obama also poked fun at himself and his age: “Eight years ago I was a young man, full of idealism and vigor. And look at me know,” he said laughing. “Hillary once questioned whether I’d be ready for a 3 a.m. phone call. Now I’m awake anyway because I gotta go to the bathroom.”

And he threw in a few jabs at the media, saying “Jake Tapper left journalism to join CNN,” but ended on a serious note urging responsible reporting and chiding over-coverage of Trump.

“Uncovering truths is more important than ever. Taking a stand on behalf of what is true does not require you shedding your objectivity. In fact, it is the essence of good journalism,” he said.

Obama ended his final White House Correspondents’ dinner by pulling a Kobe Bryant, dropping the mic and saying “Obama out” before walking away from the podium.

The first gif president. http://pic.twitter.com/MCZqSge7BG

— Amy Argetsinger (@AmyArgetsinger) May 1, 2016

via http://ift.tt/1pVAmNt Tyler Durden