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Shitty data, worse earnings, worst volume, new highs. Among the lowest volume days in NYSE single-stocks, S&P futures trading, and VIX options saw stocks levitate back to overnight highs during the day only to slide lower to around unch by the close. Trannies have managed 11 up days in the last 13 and gained 10.3% – sure why not? S&P 500 hit new all-time highs but ended the day well off its highs. Gold hit 5-week highs but faded back to modest gains. The USD rallied early and faded to unch by the close. Treasuries rallied early on but faded into close +/1bp on the day… The pattern was the same across most assets but a very last minute 4.5 point rampapalooza closed the S&P at all-time highs.

The S&P was resecued from a red close by a 5 poinrt vertical ramp into the close…

Treasuries rallie early on dismal data (moar un-Taper) but faded back to unch into the close…

And it weas all the USD into the close…

Charts: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/AkxrXHBIk5Q/story01.htm Tyler Durden

The National Republican Senatorial Committee has laucnhed a bumper sticker campaign to “remind Americans of the same error messge they are seeing each day when trying to log on to Healthcare.gov.”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/RtBDr9hQ_zY/story01.htm Tyler Durden

One has to wonder if somewhere deep down a change is occurring in America. While stock prices soar to record highs, it is clear a growing number of ‘real’ people are realizing the nonsense that watching a ‘market’ as anything indicative of reality has become. The latest ‘shift’ is the appearance on New Orleans local TV of a two-minute primer on an “alternative” school of economic thought – Austrian Economics. While the anchor is careful to add the caveat that the mainstream economists think the world would be a terrible place if they didn’t help us along, the brief clip begins with some useful common sense, “the market alone should decide the value of products and services. If a company is not successful, it should go bankrupt.” Indeed…

Click image for 2-minute clip…

 

 

Via NBC33 TV New Orleans,

…

 

Dr. Walter Block holds an endowed chair at Loyola University and is a faculty member of the Mises Institute. He has taught at several universities and written books about controversial economic topics.

 

…

 

“If government is bad, then a shut-down government is good,” he stated. “I wish they would’ve shut more of it down, they didn’t shut enough of it down for long enough.”

 

The Austrian School of economic thought was devised by a handful of economists in Austria in the 15th century; otherwise, it has nothing to do with the country. Free enterprise is the school’s main tenet. Austrian theory says regulation is bad for the general welfare, as well as for economic growth and stability.

One thing Block mentioned he would do if tasked with improving the U.S. economy would be to eliminate the minimum wage, because it unnecessarily raises unemployment.

 

“We believe,” he said, “that it really is a law that when you have a minimum wage, you’ll create unemployment for people whose productivity is below that level stipulated by the minimum wage.”

 

According to Austrian theory, the market alone should decide the value of products and services. If a company is not successful, it should go bankrupt. Another change Block suggested is to end subsidies for American farmers. If agriculture is not profitable for enough farms, some of them should go out of business, allowing supply to balance out demand and creating prices that are more sustainable.

 

Austrian economics holds that people should be allowed to make whatever choices they feel are best for them, so long as they do not hurt other people.

 

…

 

Austrian theory is not a mainstream section of economics. Americans tend to believe there is a need for regulation, especially in the financial sector. But Washington state and Colorado have already legalized marijuana for recreational use, and a recent poll suggested that a majority of Americans want marijuana to be decriminalized. Combined with legalized prostitution in Nevada, Block said Americans are pushing for greater personal freedoms.

 

Politically, Austrian economics lines up closely with libertarianism

 

The most famous current practitioner of Austrian economics is former presidential candidate Ron Paul. He also wants to shrink the government, get rid of the Federal Reserve, and let people make the decisions that are best for them.

 

If it is good enough for clothing companies, “why don’t we apply it to everything?” Block asked.

 

The most common criticism of Austrian economics is that it relies solely on logic, and does not seek statistical validation for its claims.

 

Some people also claim that allowing the economy to move unchecked allows for greater volatility and longer recessions.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/O63-CiDClUA/story01.htm Tyler Durden

JPM’s Nikolaos Panigirtzoglou, editor of the “Flows and Liquidity” weekly research piece, is one of the greater experts on, not surprisingly, global monetary flows and liquidity. Which as we noted back in 2009, is all that matters in a world in which the micro, and recently the macro, have all been made obsolete by one simple thing: credit-money creation by the monetary authorities. Which is why we read with interest his latest edition in which he sets off to answer a not so simple question: “how much liquidity is there?” What he finds is disturbing.

From JPM:

Excess money supply is currently at record high positive territory. The residual of the regression turned positive in May 2012 and has risen steadily since then. This is both because of real money supply increasing and money demand decreasing due to lower uncertainty (Figure 3). In particular, global M2 is up $3tr or 4.6% since the beginning of the year (to September), outperforming the Global CPI inflation index which is up by only 2% since then. Global M2 reached $66tr in September this year.

 

Of the $3tr increase in global M2 money supply in the first three quarters of the year, around $1tr is due to G4 countries, i.e. US, Euro area, UK and  Japan. The remaining $2tr is due to EM countries, driven by strong bank lending growth in EM. As we highlighted last week, EM bank loan credit creation has been unaffected by the EM selloff in the summer and was running in July/August at a $170bn per month pace. So strong credit growth in EM economies continues to boost our measure of excess liquidity.

 

And the conclusion:

The rise in excess liquidity, i.e. the residual in the model of Figure 4, is supportive for risky assets especially when we compare the past nine months with the period between the end of 2010 and the beginning of 2012 when excess money supply was negative. Looking further back in Figure 4, we can see three major episodes of excess liquidity (i.e. positive residual): 1993-1995, 2001-2006 and Oct 2008-Sep 2010. These were periods of strong asset price inflation suggesting that excess liquidity could have been a factor supporting markets at the time. The current episode of excess liquidity, which began in May 2012, appears to have been the most extreme ever in terms of its magnitude.

To summarize:

• In just the first 9 months of 2013, DM countries have injected $1 trillion in liquidity sourced exclusively by central banks; EMs have injected another $2 trillion driven by bank loan demand.
• The total global M2 is over $66 trillion, growing at an annualized pace of over 6%.
• The amount of excess liquidity, i.e. the infamous “liquidity bubble” in the global fungible system is “the most extreme ever in terms of its magnitude”

And that’s really all there is to know: the music is playing and everyone has to dance… just don’t ask what happens when the music ends.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/2_miu_Qiel4/story01.htm Tyler Durden

JPM’s Nikolaos Panigirtzoglou, editor of the “Flows and Liquidity” weekly research piece, is one of the greater experts on, not surprisingly, global monetary flows and liquidity. Which as we noted back in 2009, is all that matters in a world in which the micro, and recently the macro, have all been made obsolete by one simple thing: credit-money creation by the monetary authorities. Which is why we read with interest his latest edition in which he sets off to answer a not so simple question: “how much liquidity is there?” What he finds is disturbing.

From JPM:

Excess money supply is currently at record high positive territory. The residual of the regression turned positive in May 2012 and has risen steadily since then. This is both because of real money supply increasing and money demand decreasing due to lower uncertainty (Figure 3). In particular, global M2 is up $3tr or 4.6% since the beginning of the year (to September), outperforming the Global CPI inflation index which is up by only 2% since then. Global M2 reached $66tr in September this year.

 

Of the $3tr increase in global M2 money supply in the first three quarters of the year, around $1tr is due to G4 countries, i.e. US, Euro area, UK and  Japan. The remaining $2tr is due to EM countries, driven by strong bank lending growth in EM. As we highlighted last week, EM bank loan credit creation has been unaffected by the EM selloff in the summer and was running in July/August at a $170bn per month pace. So strong credit growth in EM economies continues to boost our measure of excess liquidity.

 

And the conclusion:

The rise in excess liquidity, i.e. the residual in the model of Figure 4, is supportive for risky assets especially when we compare the past nine months with the period between the end of 2010 and the beginning of 2012 when excess money supply was negative. Looking further back in Figure 4, we can see three major episodes of excess liquidity (i.e. positive residual): 1993-1995, 2001-2006 and Oct 2008-Sep 2010. These were periods of strong asset price inflation suggesting that excess liquidity could have been a factor supporting markets at the time. The current episode of excess liquidity, which began in May 2012, appears to have been the most extreme ever in terms of its magnitude.

To summarize:

• In just the first 9 months of 2013, DM countries have injected $1 trillion in liquidity sourced exclusively by central banks; EMs have injected another $2 trillion driven by bank loan demand.
• The total global M2 is over $66 trillion, growing at an annualized pace of over 6%.
• The amount of excess liquidity, i.e. the infamous “liquidity bubble” in the global fungible system is “the most extreme ever in terms of its magnitude”

And that’s really all there is to know: the music is playing and everyone has to dance… just don’t ask what happens when the music ends.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/2_miu_Qiel4/story01.htm Tyler Durden

Submitted by Pater Tenebrarum of Acting-Man blog,

Skew Index Rises Sharply

One of our readers pointed out to us last week that the recent strong rise in the so-called CBOE SKEW index should also be counted among the various divergences that make the stock market's current advance suspect. Skew  measures the perceived tail risk of the market via the pricing of out-of-the-money options. Generally, a rise in skew indicates that 'crash protection' is in demand among institutional investors (institutional/professional investors are the biggest traders in SPX options). The basic idea is similar to the CSFB 'fear index' or the Ansbacher index (which compares the premiums paid on equidistant calls and puts).

A unusual move in the skew index (which historically oscillates approximately between a value of 100 and 150) is especially interesting when it diverges strongly from the VIX, which measures at the money and close to the money front month SPX option premiums.

Basically what a 'low VIX/high skew' combination is saying is: 'the market overall is complacent, but big investors perceive far more tail risk than usually' (it is exactly the other way around when the VIX is high and SKEW is low). In other words, a surprising increase in realized volatility may not be too far away. Below is a chart showing the current SKEW/VIX combination.

SKEW is rising strongly, even as the VIX is very low – click to enlarge.

Next is a long term chart which we have taken from the CBOE website. This chart looks a bit 'crowded', but it shows that the current level of the SKEW index is historically on the high side:

SKEW vs. VIX, long term. As can be seen, the perception of increased tail risk can be 'early', but it is definitely a warning sign.

And lastly, here is a chart showing two divergences between VIX and SPX – a bullish and a (potentially) bearish one:

The VIX and the SPX – two divergences (lower high in VIX vs. lower low in SPX at the 2011 low, and currently a higher low in VIX vs. a higher high in SPX) – click to enlarge.

So here we have some additional evidence that the risk-reward equation in the stock market has recently shifted toward 'risk'. Once again, these are not precise timing signals – as the longer term chart of the SKEW index shows, investors are at times too early worrying about growing tail risk. On the other hand, it is definitely a 'heads-up', and lead and lag times are bound to vary. This is to say, we cannot state apodictically that they are once again 'too early' or how long exactly the lead time of the rise in the SPX options skew will actually turn out to be before the market gets into trouble this time.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/UPOSfNEWZiA/story01.htm Tyler Durden

.

Ben’s Adam and Janet is Eve

These morons are simply naïve

The forbidden fruit

Is infinite loot

But the serpent named Keynes they believe

The Limerick King

.

Visual Combat Fine Art Prints

Inquiries: banzai7institute@gmail.com

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/nOxv0E3x9R8/story01.htm williambanzai7

Ohio said on Monday that it does not have enough of the lethal injection drug pentobarbital to carry out a scheduled execution next month. As Reuters reports, Ohio is the latest U.S. state to face a scarcity after the European manufacturer banned its sale for lethal injections of prisoners sentenced to death. The European Union is opposed to the death penalty (physical as opposed to economic) and has put pressure on US States to stop the practice. If only there was an anonymous online exchange where ‘drugs’ could be bought and sold to meet the demands of those looking for a quick fix (or multiple executions) despite the oversight of various freedoms by governments.

Via Reuters,

Ohio said on Monday that it does not have enough of the drug pentobarbital to carry out a scheduled execution next month, the latest U.S. state to face a scarcity after the European manufacturer banned its sale for lethal injections of prisoners sentenced to death.

 

Ohio is one of a number of U.S. states which have been forced to look to new suppliers such as lightly regulated “compounding pharmacies,” or turn to new drugs for executions because major pharmaceutical companies are opposed to use of their drugs in carrying out the death penalty.

 

…

 

The Danish manufacturer of pentobarbital, Lundbeck LLC , has banned its sale to prisons or corrections departments for the death penalty. The European Union, of which Denmark is a member, is opposed to the death penalty and has put pressure on U.S. states to stop the practice.

 

On Monday, Ohio prison officials notified the state that Ohio does not have “sufficient quantity” of pentobarbital to carry out the execution of Ronald Phillips on Nov. 14, according to Department of Rehabilitation and Correction spokeswoman JoEllen Smith.

 

She said the state will turn to the drugs midazolam and hydromorphone, which are not commonly used in lethal injections, for the Phillips execution.

We almost hesitate to note the irony that perhaps as retribution for pervasive US spying, Europe will make sure America’s terminal convicts are relegated to more obsolete methods of “expiration” – gallows, drawing and quartering, firing squad are just some that spring to mind.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/9nT8uSta9nU/story01.htm Tyler Durden

Ohio said on Monday that it does not have enough of the lethal injection drug pentobarbital to carry out a scheduled execution next month. As Reuters reports, Ohio is the latest U.S. state to face a scarcity after the European manufacturer banned its sale for lethal injections of prisoners sentenced to death. The European Union is opposed to the death penalty (physical as opposed to economic) and has put pressure on US States to stop the practice. If only there was an anonymous online exchange where ‘drugs’ could be bought and sold to meet the demands of those looking for a quick fix (or multiple executions) despite the oversight of various freedoms by governments.

Via Reuters,

Ohio said on Monday that it does not have enough of the drug pentobarbital to carry out a scheduled execution next month, the latest U.S. state to face a scarcity after the European manufacturer banned its sale for lethal injections of prisoners sentenced to death.

 

Ohio is one of a number of U.S. states which have been forced to look to new suppliers such as lightly regulated “compounding pharmacies,” or turn to new drugs for executions because major pharmaceutical companies are opposed to use of their drugs in carrying out the death penalty.

 

…

 

The Danish manufacturer of pentobarbital, Lundbeck LLC , has banned its sale to prisons or corrections departments for the death penalty. The European Union, of which Denmark is a member, is opposed to the death penalty and has put pressure on U.S. states to stop the practice.

 

On Monday, Ohio prison officials notified the state that Ohio does not have “sufficient quantity” of pentobarbital to carry out the execution of Ronald Phillips on Nov. 14, according to Department of Rehabilitation and Correction spokeswoman JoEllen Smith.

 

She said the state will turn to the drugs midazolam and hydromorphone, which are not commonly used in lethal injections, for the Phillips execution.

We almost hesitate to note the irony that perhaps as retribution for pervasive US spying, Europe will make sure America’s terminal convicts are relegated to more obsolete methods of “expiration” – gallows, drawing and quartering, firing squad are just some that spring to mind.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/9nT8uSta9nU/story01.htm Tyler Durden

Given the Presidential Twitter attack, this material from July 14th 2012 may be relevant for some:

There is a real fear in the markets now and it is not being caused by Europe, LIEbor, Linda Green, London Whales, etc.  The fear is focused on the structure of how prices are discovered and assets/risk are transferred to willing participants.  Bad algorithms have been treacherous in the past, to put it lightly.  The debate has been focused so much on the ways exchanges have destroyed their reputations by selling enhanced data feeds with your trade information in it.  Every time you trade, your order is routed to a given location to be matched and whether it executes AON, filled 100 blocks in 5 minute intervals at VWAP, cancelled and readjusted stop limit, adjustments to limit order prices/sizes, etc, is recorded and given an account number. 

 

This data is grouped and sold by exchanges and market centers to participants with computer capable of processing and utilizing the encoded “enhanced data feed”.  This insight into quantifiable market participant behavior is on a material level and could be argued as being insider information.

 

Now imagine the smartest minds we have focused on and picture their intent not being keen on ROI but on chaos and havoc.  Imagine someone has all this information regarding given perceptions of all participants within the US capital market structure, from equities to futures to commodities to currency to bonds for any given millisecond.  Imagine that the Russian gov’t, Chinese gov’t, and Iran gov’t had access to this information and in a coordinated effort decided to attack and manipulate the US markets through high speed access and rapid flows of orders that could trick machines and send errant signals regarding the reality of the market at any given time. 

 

The recent mess with Facebook and BATS have shown the vulnerabilities of our exchange centers and regulators.  Most of the national focus here in the US has been portrayed as something that is contained with our boarders, however should something more sophisticated (Stuxnet and Flame?) be deployed within our market structure (perhaps through those shell brokerages tied to Al-Queada we’ve heard about) only then will the focus change.  We need to recognize and consider the probability of something like this happening.

 

Page 2, Paragraph 3 of Economic Warfare: Risks & Responses:

Perhaps its time we pressure the CFTC and SEC to reach a definition already on HFT and get their shit in line.  This whole mess of a capitalist market is primed to collapse at any moment.  No one is ready, not the exchanges, not the regulators, not the participators, not the governments, no one.  We have no back up should assets prices drop like they did on May 6, 2010 and not rebound.  Imagine more MFG’s and PFG’s vaporizing client money as commodity prices go haywire, like the Oil Complex did.  As “normalcy bias” continues to grip those involved in the debate, we must focus on the shared vulnerability to damage by a rouge nation or coordinated behavior by nations fighting a battle that isn’t on a the typical battlefield.  Picture World War 3 being a financial war, not a weaponry war.

 

Think about it.

 

The Department of Defense Irregular Support Warfare Program is:

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/TqRugNB373Q/story01.htm CalibratedConfidence