Dramatic Drone’s-Eye View Of The Record Upstate New York Snowfall

With half the nation covered in snow, according to ABC, nowhere appears to have had it worse (or more suddenly) than upstate New York. As images pour in from lake-effect snow, to The Buffalo Bills stadium, and from scenes caught in a snow storm to pandas playing, we thought the following stunning drone's-eye-view over Erie County were incredible in their beauty and GDP-destroying cruelty

 

 

 

 

A Drone's eye view of the beauty (and GDP cruelty) of a snow-buried upstate New York

 

This is what it's like to be stuck in a snowstorm in Buffalo…


More ABC US news | ABC World News

*  *  *

With The National Guard being deployed to help, the situation is dramatic…

Buffalo's first snowstorm of the season could give the area a year's worth of snow — around 8 feet — in just three days.

 

More than 5 feet of snow was already on the ground Wednesday, and another round of lake-effect snow is forecast to bring an additional 3 feet of snow to the Buffalo area on Thursday and Friday. The average snowfall for an entire year: 93.6 inches, or close to 8 feet.

 

"This is a historic event. When all is said and done, this snowstorm will break all sorts of records, and that's saying something in Buffalo," Gov. Andrew Cuomo said during a visit to the city.

*  *  *

Some amazing images from Buffalo and surrounding areas…

*  *  *

But there is a silver lining… Broken Windows… can only mean one thing for future Keynesian-dogma GDP growth…




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The Wrath of Draghi: Bailed-Out German Megabank Imposes “Negative Interest Rates”

Wolf Richter   www.wolfstreet.com   http://ift.tt/Wz5XCn

Commerzbank, Germany’s second-largest bank, a toppling marvel of ingenuity during the Financial Crisis that was bailed out by ever dutiful if unenthusiastic taxpayers, will now reward these very folks with what Germans have come to look forward to: the Wrath of Draghi.

It started with Deutsche Skatbank, a division of VR-Bank Altenburger Land. The small bank was the trial balloon in imposing the Wrath of Draghi on savers and businesses. Effective November 1, those with over €500,000 on deposit earn a “negative interest rate” of 0.25%. In less euphemistic terms, they get to pay 0.25% per year on those deposits for the privilege of giving their money to the bank.

“Punishment interest” is what Germans call this with Teutonic precision.

The ECB came up with it. In June, it started charging a “negative interest rate” of 0.1% on reserves. In September, it doubled that rate to 0.2%.

“There will be no direct impact on your savings,” the ECB announced at the time. “Only banks that deposit money in certain accounts at the ECB have to pay.” It even asked rhetorically: “But why punish savers and reward borrowers?” And it added helpfully: “This behavior is not specific to the ECB; it applies to all central banks” [here’s Part I of the saga… The Wrath of Draghi: First German Bank Hits Savers with ‘Negative Interest Rates’].

On November 6, as rumors were swirling that even the largest banks would inflict punishment interest on their customers, Commerzbank CFO Stephan Engels came out swinging in an interview to assuage these fears. He said point blank, “We cannot imagine negative interest rates on deposits of our individual and business customers.”

On November 11, it was Martin Zielke, member of the Commerzbank’s Board of Managing Directors, who recited the same corporate script in his interview with Focus: “We cannot imagine at the moment that private customers pay a negative interest rate on their deposits with us.”

At the moment? So, “you cannot definitely exclude a negative interest rate?” he was asked.

“I cannot imagine it,” he said.

Eight days later, Commerzbank confirmed that it too would inflict punishment interest on “some large corporate customers with high balances as well as on large corporations and institutional investors.” It used the term “deposit charge” instead of “punishment interest.” December would be the propitious month. And thus, the first large bank in the Eurozone is starting to inflict the Wrath of Draghi on its customers.

At this point, Commerzbank doesn’t have a flat punishment rate. It wants to negotiate the rate with each affected customer individually, it said. But private individuals, business customers, and medium-sized corporate customers would “categorically” not be affected, the bank said. Or at least, it cannot imagine it.

Deutsche Bank, Germany’s largest and most scandal-infested bank, is also moving in that direction, according to an unnamed source of the Wall Street Journal Deutschland. However, a spokesman non-denied this, saying carefully that the bank “at this time” was not planning “to introduce deposit fees in the general banking business.”

At this time….

Some US banks, including Bank of New York Mellon, Goldman Sachs, JP Morgan Chase, along with the Swiss bank Credit Suisse and British bank HSBC have also told some clients that punishment interest – they probably didn’t use that term – was going to hit their euro deposits.

The writing has been on the wall. On November 5, another banker gave an interview, the most revealing yet. Asoka Wöhrmann, Chief Investment Officer at Deutsche Bank’s asset management division, told the Welt that people “should finally stop saving more and more, and think about spending the money.”

The Draghi solution: flog savers until their mood improves.

He explained how German savers were getting screwed by interest rates that had been pushed below inflation. So, instead of trying to save for retirement or illness or periods of joblessness, they should just blow the money now.

But wait, even if inflation eats that money ever so slowly, “at least the number in their savings account doesn’t get smaller, and that’s enough for many people,” the Welt pointed out.

“That’s about to change,” Wöhrmann said, and you could almost see him grin.

Banks would sooner or later pass the ECB’s “punishment interest” – he actually used that term – on to their customers. So far, only business customers are getting hit, he said. “But soon, it will hit individual customers.”

And it would good for them: it “should trigger the aha-effect,” he said. “It will hopefully become clear that it’s not worth it to leave your money lying around at the bank. When every individual spends money, it helps all.”

And with the money they can’t spend despite their efforts, they should take “greater risks” and invest it “primarily in stocks….”

Just when the DAX, which has been soaring for years despite a so-so economy, pierced the 10,000-mark for the first time last summer. After having missed the phenomenal 160% run-up since February 2009, and after having missed the peak in July, German savers are now suddenly told by none other than the most scandal-infested bank in Germany, if not the world, to plow their dear savings into stocks.

To stop stocks from sliding further? Turns out, since that peak in July, they’d tumbled over 14% by mid-October and are still down 6%. But if all savers follow Wöhrmann’s ingenious and well-meaning advice, they could perhaps drive stocks to new highs so that the smart money can get out at the top.

This is the new strategy of the ECB: to use the banks under its umbrella to confiscate in bits and pieces – now that inflation is too low to accomplish this mission with adequate speed – the wealth and liquidity that prudent people and businesses have painstakingly accumulated. Their only escape: the fangs of risky assets in an environment where nearly all assets are overpriced.

Punishment interest started with tiny Skatbank. Now it’s spreading to the largest Banks in Germany. Soon all banks will do it, and customers can’t choose one bank over another to escape it; the ECB doesn’t want competition on this issue. Soon the trigger levels will come down, until everyone gets hit. And if Draghi has his way, the ECB, seeing how successful money confiscation really is, will raise the punishment interest rate further. After all, as the ECB and Deutsche Bank pointed out, mauling savers and businesses is in some magic way good for them. They should just enjoy it.

And the risks? There’s some new thinking about the markets in this crummy global economy where nearly all assets are overvalued. Read…  It’s Official: Party Now, Apocalypse Later




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Multiple Expansion Is Over, Goldman Warns, “US Stocks Will Close 2015 Only 5% Higher”

The reason why moments ago we showed a chart demonstrating that all of the surge in the S&P500 from the October lows can be explained with multiple expansion…

… Is that in a world in which there is no more multiple-expansion – which is merely hope of cheap and easy money – and where the S&P has to grow solely on the back of EPS growth, there would be no all time high S&P, and now relentless diagonal increase in the nominal value of stocks. This is also the basis behind the chart that “amazes” SocGen how the Fed has broken the market.

Which begs the question: will P/E multiple expansion, which at last check was just about 19x on a GAAP basis, continue, and will it hit David Tepper’s mythical “20X”, or are the days of growth pulled from the future over?

Well, according to Goldman’s chief strategist David Kostin, who initially had forecast a 1900 price target on the S&P500 for year end 2014 only to boost it to 2050 in the summer, the days of multiple expansion are now over. As a result, Kostin suggests that the best the S&P will do in 2015, which trading at 2052 at last check is is already above his year end target,  is rise a modest 5% to 2100.

Here is David Kostin’s take:

We forecast US stocks will deliver a modest total return of 5% in 2015, in line with profit growth. The US economy will expand at a brisk pace. Corporations will boost sales and keep margins elevated allowing managements to both invest for growth and return cash to shareholders via buybacks and dividends. Investors will cheer these positive fundamental developments.

 

However, 2015 will prove to be another challenging year for active equity managers. Volatility will remain low. Stock return dispersion will stay in a narrow range making alpha generation difficult. Mutual funds and hedge funds typically lag the S&P 500 during low dispersion regimes. This year is a good example: S&P 500 realized volatility has averaged 11 YTD (37th percentile since 1962) while rolling three-month return dispersion has averaged in the second percentile versus the past 35 years. Just 14% of large-cap core mutual funds has outperformed the S&P 500. Equity long/short hedge funds have returned an average of 1% YTD, lagging the index for the sixth consecutive year.

 

Strategically, the multiple expansion phase of the current bull market ended in 2013. The strong S&P 500 YTD price gain of 10% roughly matches the realized year/year EPS growth of the index. The index has climbed by 17% annually during the past three years as the consensus forward P/E multiple surged by nearly 60% from 10x to 16x.

 

From a tactical perspective, the S&P 500 will continue its upward trajectory during the first-half of 2015. The index will climb by 5% to 2150, corresponding with a forward P/E multiple of 17x our top-down EPS forecast or 15.8x on a bottom-up basis.

 

However, we expect the P/E will contract and the index will slip during the second-half of 2015 as the Fed takes its first step in the long-awaited tightening cycle. Our S&P 500 year-end 2015 target of 2100 implies a modest 5-10% P/E multiple compression to
16.0x our top-down 2016 EPS estimate or 14.6x bottom-up consensus earnings estimates.

 

Every recent investor discussion centers on the question of how stocks will trade when interest rates start to rise. We expect multiples will compress while volatility and stock return dispersion remain low. Our forecast of solid US GDP growth underpins our expectation of low volatility, low dispersion, and low stock returns in 2015.

 

We expect a benign equity market reaction to the first Fed rate hike. Fed funds have been anchored near zero for six years. The Fed has been transparent in communicating the timing and slow trajectory of its planned exit from the unconventional monetary policies it has pursued since 2008. Goldman Sachs Economics expects the first hike will occur during 3Q and short-term rates will end 2015 at 0.6% while the 10-year yield will rise to 3%.

 

Not everyone agrees with Kostin:

Many fund managers disagree with our view and believe higher equity volatility will accompany higher interest rates. They argue that once the Fed begins to hike uncertainty will abound regarding the pace of further tightening and volatility will jump. Our response to those arguments is that the interest rate swaption market implies a relatively steady and shallow path of future hikes with volatility remaining quiescent.

Where we disagree is two places: i) the Fed will not hike, at least not voluntarily, as the economy will continue to deteriorate and with a cold, snowy winter already in the works, look for 2015 to be a replay of 2014, when everyone predicted solid growth, only for total GDP to post another year of declines; ii) if indeed multiple expansion ends, the resultant selling will be so vicious and rapid that it will immediately result in a contraction in end demand, leading to a double whammy by making buybacks impossible, crushing EPS and forcing fabricated non-GAAP numbers to finally catch up with GAAP.

The only question is whether once the market tumbles when all this materializes, if Bullard will once again jawbone the algos to BTFATHD, or if this time, the Fed will indeed welcome higher vol as the minutes yesterday warned.

Sadly, after 6 years of constant parental supervision by the Fed of its deformed, mutant “market” baby, which as John Hussman correctly said is 100% overvalued thanks to $11 trillion in global central bank liquidity, we somehow fail to see Aunt Janet allowing stocks go to trade on their own, and in the process crushing 6 years of centrally-planned “wealth effect” efforts.




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The New Federation

Jeff Nielson for Sprott Money

 

In previous commentaries, readers have seen scoffs of derision with respect to (arguably) the two, most-important propaganda myths of the 21st century: the New Normal, and the New World Order. The gist of that criticism is that we rarely see anything truly “new” in our lives, in conceptual terms.

The declaration (through propaganda and/or disinformation) that we have two all-encompassing, new paradigms which supposedly comprise our current reality is patently ludicrous, on its surface. Context changes. Principles are immutable.

The “New Normal” is nothing but a lie of the Corporate media designed to (supposedly) justify the fact that the lives of the masses are getting steadily worse every day, while the lives of the Privileged get steadily better every day. The “New World Order” is nothing but a disinformation lie, spread through the Alternative Media, to cover-up the fact that our societies are currently ruled/dominated by an Old World Order – the same Old World Order which has been pulling the strings of our government for over a century.

Proof of this assertion comes in the form of a book. The Economic Pinch was written by Charles Lindbergh Sr. in 1924. Not to be confused with the famed aviator (who was his son); Lindbergh Sr. was a Republican Congressman, an unknown hero of his era. As noted in a previous piece; he is purported to have presented The Bankers’ Manifesto of 1892 to the U.S. Congress, some time between 1907 and 1917.

Lindbergh himself identifies the Old World Order which already ruled our societies in his era:

Shortly after the [American] Civil War a group of men formed a selfish plan to rule the world by the manipulation of finances.

profiteers

Regular readers are very familiar with this cabal which seeks to “rule the world by the manipulation of finances”, and know it today as the One Bank. Lindbergh labels the members of this cabal “profiteers”. Nearly 100 years ago; he warned the world of the current peril posed by the profiteers of this Old World Order:

So far as [the profiteers] go there is but one hope for them – not that they will save themselves – but that the people will take action to save the people from the impending peril of the super-wealthy gone wealth crazy.  [emphasis mine]

Lindbergh is very explicit that even in his own era, the economic oppression imposed by the psychopaths of the Old World Order was already worse than the oppression which existed in pre-Revolutionary times, when “the United States” was nothing but a colony of the British Empire.

 

If we take into account the conditions of the people, we see more injustice imposed by the profiteers and politicians of these times than is stated in the Declaration of Independence against the Imperial Government we were then under.

He is also explicitly clear that the U.S. “Two-Party Dictatorship” frequently described/alluded to in previous commentaries (and controlled by the Old World Order) was already a reality in his own era:

There is no material difference now in the old political parties, except which shall control patronage.

It is with the knowledge that “the New Normal” and “the New World Order” are nothing but propaganda fiction, and we are ruled by the same Old World Order today which ruled us 100 years ago, that we can look back to Lindbergh’s time (and Lindbergh himself) for “new ideas” on how we can fight back against this oppression.

The starting point here is to refer to Lindbergh’s own economic paradigm. He states that our societies are roughly broken down into Four Groups:

Diverse-Workers

a)    the Three Useful Groups

b)    the One Useless Group

profiteer

He describes the Three Useful Groups as the Farmer, the Wage Worker, and the Business group (what we would call today “small business”). Naturally the One Useless Group is the Profiteers, economic parasites who create/produce nothing themselves, but leech all of the wealth out of our societies to appease their own, insatiable greed.

Here Lindbergh identifies an economic truth which is oblivious to all of the charlatans of our own era who have the audacity to call themselves “economists”. He points out that the Three Useful Groups share strong, mutual interests. Specifically; it is in the best interests of each group that all Three Groups be prosperous.

If the Farmer is prosperous; he/she can produce abundant crops, at reasonable prices. If the Wage Worker is prosperous; he/she will tend to be well-educated, well-dressed, and a generally more productive employee. If the Small Business group is prosperous; it can hire more workers, or even pay its Wage Workers higher wages – which they will then spend buying the crops of the Farmer and the goods of the Small Businesses.

It is only the One Useless Group – the Profiteers – whose (selfish) interests are contrary to the interests of all other groups. Thus, he notes, the Three Useful Groups can/should/must unite, to collectively promote and represent their enormous mutual interests.

Already, in Lindbergh’s time; the Old World Order was heavily involved in divide-and-conquer politics. It continually attempted to drive political/economic wedges between these groups, in a never-ending effort to manufacture antagonism (or at least mistrust) between the Three Useful Groups.

Already, in Lindbergh’s time; there were independent associations of one form or another, by which the Three Useful Groups sought to separately promote their interests. But already, in Lindbergh’s time (just as we see today); these “associations” had been infiltrated and/or corrupted by the Old World Order. Thus not only were (are) those associations unsuccessful at collectively protecting the interests of the Three Useful Groups, they were (are) completely ineffectual in even representing their interests individually.

It was time, Lindbergh declared (in 1924), for a new idea, a new way of doing things: a New Federation. The Three Useful Groups uniting in a collective federation, to collectively promote their mutual interests, or (to steal a line from Alexandre Dumas) “One for all, and All for one”.

 

divide

It is because the Three Useful Groups have always sought to promote their interests separately that it has been so easy for the puppet-masters of the Old World Order to play their game of divide-and-conquer politics. Conversely, a larger, united Federation would/could not only do a better job of protecting the individual interests of the Three Useful Groups, it would also (for the first time) promote their collective interests.

In our own (corrupt) paradigm; it is only the One Useless Group which is united. Its vehicle for our political/economic oppression and the parasitic looting of our societies is the One Bank.

Standing against this political/economic oppression, on behalf of the Three Useful Groups? We have nothing. Our governments, our “representatives”, are nothing but paid stooges of the One Bank. Our (individual) associations which represent the Three Useful Groups are weak, ineffectual, and (often) corrupt as well.

With representation inside the political system now nothing but a hollow joke; the Three Useful Groups, who collectively represent the vast majority of our societies, need to organize themselves outside of the current, corrupt political framework. United we stand; divided we fall.

As acknowledged in numerous, previous commentaries; it is already far, far too late to prevent an economic “fall”, of monumental proportions. The One Bank, the Old World Order, has already crippled and hollowed-out our present economic system (and even our political/social infrastructure) to such a grievous extent with its systemic plundering that an economic Day of Reckoning is now inevitable.

What is of paramount importance as we approach this (inevitable) precipice is that control of our economies, governments, and societies no longer remain solely in the hands of the same cabal of psychopathic oligarchs who have nearly completed the destruction of the wealthiest, most prosperous societies our species has ever built.

We need the New Federation which Charles Lindbergh Sr. described/explained to us over 90 years ago. Not to protect the societies we have built, and the wealth we have amassed. The Old World Order has already destroyed and stolen that, respectively. We need a New Federation so that when these psychopaths have reduced our current system to nothing but rubble and ashes with their rapacious looting that we can rebuild something better in its place.

 

Jeff Nielson for Sprott Money




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Schools to Parents: Pick Up Your Kids from the Bus Or We’ll Sic Child Services on You

Chris FarleySchool administrators in Tampa,
Florida, are insisting that parents pick up their kids from the bus
stop after school lets out. And if they fail to comply, they could
receive a visit from child services.

According to the Tampa
Bay Times
, district policy forbids kindergartners to walk
home and requires bus drivers to bring them back to school if their
parents don’t appear on time. The story treats child autonomy as an
obvious evil and punishable offense:

It happened about 1,600 times in the last school year: Bus
drivers in Hillsborough County arrived at the bus stops in the
afternoon with kindergarten students who had no parents or
guardians to meet them. …

More than half the incidents involved repeat offenders. And they
happened most often on Mondays, Fridays or the work days before and
after a holiday. …

They’ve drafted an “initial KG bus letter” that school
administrators can use as often as they like to get the message
across. If the violations continue, a second letter orders the
parent to come into the school for a meeting to try and pinpoint
the reasons.

As a last resort, the district’s chief of security will get
involved. After sending out yet another letter and meeting with the
parent, the chief will determine whether the district can handle
things or child welfare officials need to get involved.

When parents merely forget to pick up their kids, that causes a
headache for school personnel. I can understand why officials want
to do something about that.

But it isn’t a crime—or shouldn’t be a crime—to
let your child walk home on his own if you live just around the
block. As Reason’s Lenore Skenazy
frequently points out, contrary to media hysteria, we do not live
in uniquely dangerous times for kids. In fact, the great outdoors
is a safer place for children than ever before in human history. On
this specific story, Skenazy
writes
:

Parents who trust their kids and their communities are being
treated like criminals. And yet, the way to solve this whole
problem is so obvious: Scrap the policy and let the PARENTS decide
if their kids are ready to walk home from the bus stop.

Regardless, the worst thing the district can do for children is

sic child services
on their parents.

More from Reason on the war on moms here.

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Four countries you need to know about that will revolutionize food production

Agriculture New Crop Four countries you need to know about that will revolutionize food production

November 20, 2014
Sovereign Valley Farm, Chile

As we discussed yesterday, the world has certainly gotten itself into a serious pickle.

World population growth and economic trends are causing food demand to soar.

Demographers tell us that over 200,000 people will be present at the dinner table tonight who weren’t even alive yesterday.

And with over a billion people having been lifted out of poverty in the developing world (and more to follow), people are eating more food (and more resource intensive foods like meat) than ever before.

At the same time, farm yields have peaked in the developed world. Science has managed to extract from the ground as much as the earth can give.

Many farmers are quitting the business altogether thanks to rising input costs and absurd regulation, and the amount of farmland is in clear decline.

The arithmetic here is quite simple: the demand for food Calories is rising while the ability to provide those food Calories is falling.

This suggests rising food prices over the long-term, and potentially even shortages.

But behind this uncomfortable data is a clear opportunity: if demand for food is increasing while the supply of farmland is in decline, then high quality farmland is an obvious asset to own.

The question is: where? Not all farmland is created equal.

In fact, much of the farmland in the developed West is already at or near an all-time high, and much of it lacks available water.

Having traveled to over 110 countries, I’ve looked at farmland across the world to see where is the best mix of soil quality, secure water, land title rights, favorable weather, developed infrastructure, labor and land costs, etc.

Far and away the best opportunities lie overseas. And below are some of my top picks which are presently underdeveloped:

CHILE

Farmland in Chile is already inexpensive when compared to North America or Europe; what would cost $15,000 per acre in California would cost barely $5,000 in Chile.

Yet at the same time, the productive output is just as high, if not higher. The weather here is temperate, the soil quality is off the charts, and the all-important land title rights provide clear protection for foreign owners.
PERU

If land in Chile is cheap, it’s even cheaper in Peru. That said, the two countries are entirely different. Peru is still the wild west; there’s very little infrastructure and a million ways to get screwed by locals.

But by comparison, Perus is enormous. And climatically Peru is like a natural greenhouse– steady, constant temperatures year-round that in many cases can double or triple an annual crop yield.

(The downside of this is that Peru lacks the cold hours necessary to properly grow certain stone fruits or develop the sugars which sweeten many foods).
COLOMBIA

As you can imagine, land in Colombia is even cheaper than in Peru. And if you believe the conventional wisdom about the country’s stability, Colombia is even more Wild West.

One of the reasons that Colombia is so full of opportunity is because it’s on few people’s radars as an agriculture option. Yet many of the highland areas provide ideal climate, soil, and water conditions for an abundance of crops to thrive, yet with ultra-low investment costs.

And the government is on an all-out rampage trying to attract investment dollars with generous incentives for foreigners who brave the “Colombia stigma” and come to the country.

MYANMAR

Asia’s greatest agricultural treasure trove is in Myanmar right now; the country is vast and boasts climate zones as diverse as Chile’s, so you can grow just about anything.

Labor costs are almost nothing, and the government is on a clear push to lift restrictions on foreign asset ownership (foreign companies can already lease land for up to 70 years based on a 2012 law).

It’s still completely virgin; Myanmar lacks critical infrastructure or even a functioning financial system, so it’s toally ground floor. But the long-term potential is enormous.
Each of these places has the potential to become an agricultural powerhouse and slow this disturbing food production trend. And this is important.

All the traditional food exporters in the world (like the US) are tapped out. So if there is to be any serious growth in global food production, it absolutely MUST be from up and coming locations that are currently off the radar.

Chile, Peru, Colombia, and Myanmar are four among some of the top countries (there are others) which have all of the right characteristics, including CHEAP LAND. This is a critical variable.

And from my vantage point as a fund manager overseeing agricultural investments, I’m already noticing hundreds of millions of dollars being raised by funds to acquire land in these areas.

And these are the early ones. I expect much more capital will follow behind.

Given this surge of funds, I have no doubt that that the market will eventually correct this anomaly, and we’ll see much higher land prices in the coming years.

The global land rush has begun. So if you’re interested in investing in agriculture, these are some of the places to start looking.

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This Morning’s Buying Panic Brought To You By AUDJPY Fun-Durr-Mentals & VIX Fat Fingers

Because nothing says rational human stock-buying like the entire world's PMIs collapsing to multi-month lows. Thank the lord of the markets for AUDJPY which took over the mantle from USDJPY as US equities opened… Of course, it is OPEX tomorrow, so this all makes perfect sense. Now all we need is for a stock exchange to break and the unrigged game is complete…

 

 

VIX was smashed higher at the open…

 

and with OPEX tomorrow that will never do…

 

As a reminder – China PMI is at 6-month low, Europe at 16-month low, Japan dropped and is in a quadruple-dip recession, and now US manufacturing is at 10-month low… seems like QE really worked eh!?




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Here Is The Reason For The Market’s Vertical Rebound From The October Lows

Not a day passes without some book-talking pundit coming on financial comedy TV with an attempt to explain that it wasn’t James Bullard’s hint of QE4 that sent the market soaring after the near-500 point Dow Jones drop on October 15, you see it was the great results from Q3 earnings season that were the catalyst for the unprecedented, near vertical surge over the past month. Well, they are not completely wrong. As the chart below shows, of the 165.3 point jump in the S&P, EPS growth has accounted for 1.24 of those S&P points, or about 0.7%. The rest, or 164 points is due to nothing less than Multiple expansion, i.e. the “Bullard effect”.

Or, said otherwise, faith that the Fed (or BOJ or ECB) will do even more to save the BTFD algos from a deflationary bust.




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European Consumer Confidence Tumbles To 9 Month Lows

Despite record low bond yields and all the promises one can bear from politicians and central bankers, the people of Europe are the least confident since February. At -11.6, missing expectations of a slight improvement from -11.1 to -10.7, this is the biggest miss since August 2011. It’s perhaps not surprising given the near-record highs in unemployment but oddly, confidence seems highly correlated to EUR strength (or weakness)… the opposite of what the market hopes for.

 

EU Confidence at 9 month lows…

 

As Confidence correlates rather too strongly with a weaker EUR…

 

Charts: Bloomberg




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Ebola Remains a Risk – Deaths in Nebraska and New York

Ebola Remains a Risk – Deaths in Nebraska and New York

The Ebola crisis has faded from headlines but remains a risk after the death of another Ebola patient in Nebraska and the death of a suspected victim in New York yesterday. This brings the number of confirmed deaths to two in the U.S. and possibly three if the New York victim is confirmed as having had Ebola.

The toll in the Ebola epidemic has risen to 5,420 deaths out of 15,145 cases in eight countries, the World Health Organization (WHO) said today. Transmission of the deadly virus still “intense and widespread” in Sierra Leone.

The figures, through November 16, represent a jump of 243 deaths and 732 cases since those issued last Friday. Cases continue to be under-reported, the WHO said in its latest update.

Tragic scenes unfolded in Brooklyn yesterday afternoon when a woman collapsed, dead, in a salon with reports of bleeding from her mouth and nose. This is frequently how Ebola victims die as Ebola disables the body’s coagulation system, leading to uncontrolled bleeding. By the time the body can rally its second line of defense, the adaptive immune system, is frequently too late.

The unfortunate woman, who had travelled from Guinea three weeks ago and was on a watch list of the New York Health Department, showed no prior symptoms of having Ebola and was apparently being checked daily.

Her remains were collected by an emergency medical team wearing hazmat suits and the salon was later sterilized. While she is believed to have died of a suspected heart attack it seems protective measures to prevent the spread of the virus, if tests determine that Ebola was indeed the cause of death, were rather lax. 

The salon remained open for business and none of the staff were decontaminated.

A death also occurred yesterday of Martin Salia, a doctor who was flown into the U.S. on Saturday for treatment. Initial tests for the virus came back negative but as his condition deteriorated he was found to have contracted Ebola.

Salia is the second person to die of Ebola in the United States. Thomas Eric Duncan, a Liberian man living in Texas, contracted the disease in his native country but was not diagnosed until after his return to Dallas.

“We are reminded today that even though this was the best possible place for a patient with this virus to be, that in the very advanced stages, even the most modern techniques that we have at our disposal are not enough to help these patients once they reach the critical threshold,” said Jeffrey Gold, chancellor of the University of Nebraska Medical Center, lamenting Salia’s death.

The latest Ebola death shows danger remains and the fact that U.S. trained doctors working in west Africa have been contracting Ebola demonstrates the virulent nature of the virus. It also contradicts the suggestion that it is the incompetence on the part of African healthcare professionals that has allowed Ebola to get out of hand.

It also suggests that the means by which Ebola spreads are not fully understood. The government of Liberia have achieved some success in bringing the epidemic under control. Public transport is rigorously monitored. Bus passengers are scanned with laser thermometers. Those with high or low temperatures are not admitted and are reported. Passengers must wash their hands upon boarding. 

The statistics relating to the epidemic are difficult to interpret. In the three countries where Ebola has been most prevalent there is quite a discrepancy between the death rates of those that contract the virus.

In Guinea the death rate has been about 60%, in Sierra Leone it has been around 21% and in Liberia it has been 40%. One would expect Guinea to have the least proportion of fatalities given the dire poverty suffered by the other two nations who are emerging from civil wars.

In war-ravaged Congo the fatality rate is very high although the number of incidents has been quite low at 66. 

Ebola has spread from Africa to the U.S, UK, France, Germany, Italy and Spain. 

All the focus has rightly been on the medical implications and the tragic human consequences in Africa. Understandably, there has been little attention on the financial and economic consequences of a pandemic. Unless it is contained in the U.S. and Europe, it will likely soon impact consumer confidence and already fragile economic growth.

The outbreak and spread of Ebola is a worrying development and should remind people and companies, the world over, to be aware of the risks and become prepared. 

A primary focus of ours is on financial and economic risk which we believe is underestimated by people, companies and governments. Our modern financial and economic systems are more complex and this more fragile than is realised.

We warned of this prior to the Irish and global financial crisis and believe there are many unappreciated financial and economic risks again today – one of which is a global pandemic. 

Global economic growth remains weak and vulnerable and the global financial system remains fragile. Confidence and psychology is key.

Concerns about the Ebola virus and the likelihood of a pandemic are likely overblown. However, more cases in the western world will likely badly impact on already fragile economic confidence.  This has the potential to be the straw that breaks the proverbial camel’s back with ramifications for financial markets and the global economy.

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MARKET UPDATE

Today’s AM fix was USD 1,194.00, EUR 953.60 and GBP 762.65 per ounce.
Yesterday’s AM fix was USD 1,200.75, EUR 957.61 and GBP 766.08 per ounce.

Gold prices fell $13.80 or 1.15% to $1,183.00/oz yesterday. Silver slipped $0.08 or 0.49% to $16.14/oz.

Gold in USD – 5 Days (Thomson Reuters)

Gold declined for a second day in volatile trade. The market rose following the Russian central bank gold announcement but priced were then capped in mid morning trading in London.

Some attributed the weakness to the negative gold poll in Switzerland. However, gold had fallen prior to the release of the Swiss poll and was trading below $1,180/oz and near the lows of the day at 1600 BST when the poll results were released.

The poll yesterday showed Swiss voters will likely reject an initiative that would require the nation’s central bank to boost bullion holdings. 47% percent of voters are seen as voting “no” on the Nov. 30 Swiss gold proposal and 15 percent were undecided, according to a gfs.bern poll for Swiss public broadcaster SRF. It was conducted Nov. 7 to Nov. 15 and had a margin of error of 2.7 percentage points.

Although many such polls favouring the establishment position have been very wrong in recent years.

Silver in USD – 5 Days (Thomson Reuters)

One way or another, gold and silver quickly bounced higher again. Gold retested $1,200/oz prior to further weakness set in once again in less liquid markets after the close in New York.

Besides ongoing manipulation, gold’s weakness may also be related to traders selling as the dollar remains firm and oil prices weak.  For now they are ignoring the continuing ultra loose monetary policies globally and focussing on the Fed’s ‘jawboning’ and signalling that they will increase interest rates. We will believe it when we see it.

Monetary policies globally have actually become looser in recent days due to Japan’s monetary ‘bazooka’ and the threat of ‘Super Mario’s’ bazooka.

Futures trading volume on the Comex was more than double the 100-day average for this time of day, data compiled by Bloomberg show. Holdings in gold ETFs fell 1.9 metric tons to 1,616.7 tons yesterday, the lowest since May 2009 as traders and weak hands sell and gold flows to stronger hands in allocated storage and in Asia.

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