QE Ends in the US… And Won’t Begin in the EU…

The markets continue to operate based on complete delusions.

 

The single biggest driver of stock prices has been the Fed’s QE programs. QE has accomplished nothing other than a higher stock market. EVERY-time that the Fed was not engaged in QE, the markets have fallen as the below chart shows.

 

 

QE is over. It just ended. And the Fed will not be launching it anytime soon. The media is finally catching on that QE increases wealth concentration (note the slew of stories recently pointing this out in mainstream media outlets).

 

Between this and the statements on income inequality from various Fed officials, it is clear that the political climate has changed regarding QE as a monetary policy. Barring an absolute stock collapse, QE is off the table for now.

 

Beyond this, the market is rallying based on hopes of… QE… from the ECB. This is impossible. The ECB cannot and will not engage in QE based on the current legal framework of the EU. It can corporate bonds and other securities, but NOT EU sovereign bonds.

 

The reason is simple: Germany will not stand for it. Germans still remember the hyperinflation that buying sovereign bonds induced in the past. Any attempt by the ECB to buy sovereign bonds will be political fuel for the anti-Euro party in Germany… which could give Angela Merkel real trouble.

 

Politics drives everything in Europe. Without Germany’s approval that suggestion is dead in the water. So the market is misguided there too.

 

Be warned…

 

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

 




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Senate Democrat Candidate: My Party Is Sabotaging My Campaign

The Democratic Party is not having much luck in
the midterm elections. Public opinion
polls
and statistical models
have been showing a clear path to victory for Republicans in both
houses of Congress.

One of the most interesting Senate races has been, of all
places, in South Dakota, where a three-way battle between Democrat
Rick Weiland, Republican Mike Rounds, and Independent
(ex-Republican) Larry Pressler is taking place. The Huffington
Post
has highlighted the “wildly inconsistent polls,
flood
of new advertising money
 from the national parties and
PACs, and renewed interest in an immigration
and corruption
 scandal from Rounds’ gubernatorial days,”
and the National Journal points out the
tipping power
of the state’s Native American vote, all of which
indicate this election could come down to a photo finish.

The race just got even more interesting, because Weiland has
accused his own party of sabotaging his campaign. From the

Argus Leader
:

Weiland said the Democratic Senatorial Campaign Committee’s ads
attacking Republican incumbent Mike Rounds have backfired and hurt
him.

“You put negative on a candidate and you put your disclosure at
the bottom that says ‘Paid for by the Democratic Senate Campaign
Committee,’ the Democratic candidate’s going to get blamed for
that,” Weiland said.

But Weiland went a step further and said this wasn’t just an
inadvertent side effect of the negative ads. He said it was
deliberate — an attempt to sabotage him and boost independent Larry
Pressler.

“My national party — that I’m a member of — (was) trying to
drive votes to Larry Pressler and trying to drive up my negatives,”
Weiland said.

A spokesman for the DSCC declined to comment on Weiland’s
charges.

The DSCC announced earlier this month that they
would spend
$1 million in the South Dakota Senate race
 — but that the
money would be spent primarily on attacking Rounds. Experts
speculated that the party would be content with either Weiland or
Pressler winning, as Pressler, though an independent, could be
persuaded to caucus with the Democrats.

Significantly, Weiland does not
have a good relationship with Senate Majority Leader Harry Reid,
whereas Pressler does. Weiland went so far as to say last week
during a debate that if he were elected he wouldn’t vote for Reid
to maintain his position as majority leader.

The Washington Post
states
that Weiland has raised only about one-fourth the funds
of his Republican counterpart. This morning Politico

reported
that the National Republican Senatorial Committee is
cancelling over $300,000-worth of advertisement cash from Rounds,
not because they’re sabotaging him, but because they figure he’s
already won. 

from Hit & Run http://reason.com/blog/2014/10/28/senate-democrat-candidate-my-party-is-sa
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The Spooky Economics of “Sexy” Halloween Costumes

Former Reason intern Jeff Winkler has an
interesting piece over at Maxim that drills down into the economics
of “sexy” Halloween costumes:

The costume industry is a serious business that the
International Council of Shopping Centers expects to bring in $11.3
billion this year. That number drops to $7 billion if you
believe the National Federation of Retailers’ figures. Either way,
it’s a lot of money and the $1.2 billion spent on adult
costumes (roughly $77 per paying customer) is nothing to
sneeze at.

And Yandy can’t reliably make more by selling less fabric.
According to company execs, “cute and cuddly” costumes have been
gaining traction. A spokeswoman for Spirit Halloween, confirmed the
trend, saying the market “saw sexy costumes reach their peak about
4 to 5 years ago.” That has to do with both sexual politics and
popular culture. Game of
Thrones
 and The Walking Dead are
massively popular and neither lends itself particularly to adult
role play.

Mainstream fashion also affects the market.
“We’ve seen a trend of people moving away from short skirts and
more towards rompers and shorts,” said Horstman, adding
reassuringly that “They’re still sexy but just a different
kind.”


Read the whole thing here.

And here’s a Buzzfeed list of “25
Sexy Halloween Costumes for Men that Shouldn’t Exist
.” Buzzfeed
may be the least reliable news source on the planet but as this
image makes clear, it got this story dead-to-rights.

from Hit & Run http://reason.com/blog/2014/10/28/the-spooky-economics-of-sexy-halloween-c
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Spot The Odd “Market” Out (Again)

Today’s Sesame Street stock ‘market’…

 

Mission Accomplished – Stocks are up and the S&P is green for October…

 

BUT… nothing else is.

JPY carry…

Credit…

Bonds…

 

Just remember what happened into and after the last FOMC…

 

Charts: Bloomberg




via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/s7h59w6UWl0/story01.htm Tyler Durden

SCOTUS to Weigh ‘Collision Between the Imperatives of State Sovereignty and Free Markets’

Next month the U.S. Supreme Court will hear oral argument in
Comptroller v. Wynne, a case arising out of Maryland’s
efforts to collect personal income tax from state residents whose
income is partially earned—and taxed—outside of the state. As Santa
Clara University law professor Bradley W. Joondeph
observes at SCOTUSblog
, this case presents a “collision between
the imperatives of state sovereignty and free markets—between the
states’ autonomy in matters core to their separate existence, and
the axiom that commerce among the states must be protected from
parochial trade barriers.”

The constitutional issue presented by this case is what’s known
as the dormant Commerce Clause. It says that in addition to
granting Congress the power to regulate interstate commerce, the
Commerce Clause also imposes an independent and judicially
enforceable limit on the power of the states to erect interstate
trade barriers. Under this reading of the Constitution, the dormant
Commerce Clause mandates what we might call a domestic free trade
zone. If a state law trumpets intrastate commerce at the expense of
interstate commerce, it should be struck down.

Maryland residents Brian and Karen Wynne are part-owners of a
business called Maxim Healthcare Services. They earn income from
that business, and pay taxes on it, in more than 30 states. Yet
Maryland expects them to pay personal income taxes on 100 percent
of that income, regardless of the taxes they’ve already paid on it
in other states. To give some perspective, unlike Maryland, most
states offer a tax credit to their residents when it comes to
personal income earned and taxed elsewhere.

The Wynnes argue that Maryland is violating the dormant Commerce
Clause because it imposes a harsher tax regime on people like them
than it does on those residents whose income is earned entirely
within the state. “The State’s tax scheme discourages interstate
commerce,” the Wynnes argue in their
brief
to the Supreme Court, “by penalizing tens of thousands of
small businesspeople and business owners for operating across state
lines.”

Maryland, by contrast,
asserts
that “the Constitution does not require a state to
subordinate its own legitimate taxing authority to the taxing
authority of other states.” In effect, the state argues, if
Maryland (or any other state) wants to impose multiple taxes on the
personal income of its residents, the Supreme Court has no business
standing in the way.

How might the Supreme Court settle this dispute? At the Law
& Liberty blog, Michael S. Greve worries that the Court may
well let
“the Taxman Cometh, Twice.”
He writes:

Barring a major revamp of this jurisprudence, it’s hard to see
how the Wynnes can lose. The state court got this right, and
there’s no conflict with binding decisions elsewhere. So why did
the Supreme Court—which grants cert to state courts only
in exceedingly rare cases—yank this case up?

I have a fear: in a string of cases, Justice Thomas and Justice
Scalia have argued, both with characteristic force and clarity,
that the entire dormant Commerce Clause is completely made up.
(Justice Thomas seems prepared to jettison it altogether.) To their
minds, the doctrine is an extra-textual invention—an interstate
version of Lochner, and a constitutional common law rule
of the sort that we’re not supposed to have. The Chief has
expressed sympathy with that view. Maybe they found a fourth vote
to grant cert.”

We’ll see. Oral argument in Comptroller v. Wynne is
scheduled for November 12.

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Terry Michael Says Vote Democrat in 2014: An Election About Nothing

Vote for inertia. Vote to keep bad public
policy from getting worse. Vote Democrat November 4. Because,
like Seinfeld, made-for-cable Decision
2014
 is a political show about nothings,
says former Democratic National Committee Press Secretary and
current Washington Center for Politics & Journalism
Director Terry Michael. Short of a coup d’etat assault on The
Homeland (über alles!) by The Terrorists or collapse of Western
Civilization from failure to fully fund the “we’re all gonna die”
Ebola Fighters at the CDC/CNN (same thing), we will have a
Democratic president and a Republican House of Representatives from
January 3, 2015. But what about the Senate, though? Michael argues
that believers in free markets and free minds would be served best
by keeping the upper house under modest Democratic control.

View this article.

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“Asset forfeiture, drug legalization, and the mainstreaming of libertarian ideas”

The “Libertarian Moment” proceeds apace, writes
Ilya Somin at The Washington Post‘s Volokh Conspiracy
blog, as asset forfeiture takes center stage in policy debates:

As in the case of drug legalization, asset forfeiture reform is
a cause long-championed by libertarians, which has recently hit the
mainstream. The Institute for Justice,
a prominent libertarian public interest law firm,
has highlighted the issue for years, and is currently
spearheading both legal and legislative challenges to the system.
Similarly, libertarians have for decades advocated abolishing the
War on Drugs; at times, they were almost the only ones doing so,
with the exception of a few on the far left. But only recently has
this idea begun to attract widespread
mainstream public and elite support.

Somin, who teaches law at George Mason University, occasionally
contributes
to Reason, and is regularly cited in our
pages
, sagely notes:

…libertarians have successfully helped put these issues on the
political agenda, it remains to be seen whether they and their new
allies on the left and right will be able to push through effective
reforms. In both cases, there is a danger that newfound public
interest in the issue will be quiesced by merely cosmetic changes
that only marginally improve the situation. And, obviously, the
majority of non-libertarians do not – so far – fully endorse the
libertarian approach to these issues, which calls for the complete
abolition of both civil asset forfeiture and the War on Drugs.
Still, the two cases are dramatic examples of previously
marginalized libertarian ideas becoming a part of mainstream
political discourse.


Read the full thing.

He’s right to fret that real reform will be difficult to achieve
(often a pessimist, he remains a skeptic of whether state-level
eminent-domain reforms have worked).

But his larger point about libertarian ideas being mainstreamed
is inarguable and cause for optimism. It’s essential to recognize
that what we at Reason.com call the Libertarian Moment (or
Era
) is not fundamentally about politics but about larger
currents in American and society that will ultimately
inform politics and policy.


Growing out a huge set of
massive and inter-connected social, demographic, economic, and
technological changes, the Libertarian Moment is about power being
spread throughout the system and end-users making more and more
decisions about how they want to live. When Matt Welch and I first
started yapping about the Libertarian
Moment back in December 2008
, we were in the throes of the
financial panic. George W. Bush was launching TARP and auto
bailouts, both of which came only after endless incursions on
choice and freedom in the political arena. Barack Obama had just
won the White House (giving the Democrats full legislative control
of the federal government) on the promise of massive stimulus
spending and a national health system. The point isn’t that there
are not endless examples of expansive government.
It’s that

folks are still getting on with their lives regardless, asking
less permission and figuring out workarounds to live the lives they
prefer (this is the large point of my and Matt
Welch’s Declaration
of Independents
). And if you don’t understand that such
attitudes are growing and flourishing in every aspect of
contemporary America—in churches, in business, in education, in
entertainment, you name it—you’ll never understand that it’s coming
soon to politics too.

This is where we are, even as a largely unreconstructed GOP is
poised to capture the Senate. Libertarian issues and sentiments are
popping up all over the place in spite of attempts by pols and
partys and vested interests to maintain the status quo. Such issues
and sentiments have already swept through virtually all aspects of
American life: work, love, family, culture, you name it—all are
more varied, expressive, and accommodating of difference and choice
than ever before. Politics is the endgame and it’s already
underway.

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US Homeownership Rate Drops To 1983 Levels: Here’s Why

The last time US homeownership declined down to 64.4% (which the Census Bureau just reported is what US homeownership declined to from 64.7% in Q2), was back in the fourth quarter of 1983.

It goes without saying that this is about the bearishest news possible for those few who still believe in the American homewonership dream.

Of course, those who have been following real-time rental market trends would be all too aware there is no rebound coming to the homeownership rate. The reason is simple: increasingly fewer can afford to buy, instead having no choice but to rent, which in turn has pushed the median asking rent to record highs. In fact in the past two quarters, the asking rent was just $10 shy of its time highs at $756 per month.

 

But capital allocation preferences aside, while explaining the disparity between rental and homeownership in a world where Renting is the new American Dream, what the charts above don’t explain is why there is no incremental demand from all those millions of young Americans who enter the population and, eventually, the workforce. At least on paper.

Earlier today, Bank of America in its Chart of the Day earlier was confused by precisely this:

Population growth of 25-34 year olds outpacing growth in the housing stock: The primary driver of household formation is population growth among 25 to 34 year olds. There is notable divergence with the growth in this age group and the growth in the housing stock. This suggests greater doubling up of households as a result of the recession and weak recovery. Unless doubling up turns into tripling up, household formation should recover over time, creating a need for greater building. Given tight credit conditions, this will tend to drive apartment construction more than single family construction. Either way, the housing stock is lagging well behind demographic fundamentals.

 

Yes, in theory, in a normal world, demand should increase over time. But the world is anything but normal.

Enter: the Millennials.

For the benefit of a very confused Bank of America, and everyone else who missed out weeked chart porn on the financial state of the Millennial, here are some of the key charts which explain why owning a home in the US has become a mirage for an entire generation of Americans. Incidentally, the largest generation in US history.

This is what is happening:

 

And this is why:

 

Bottom line: they may be homeless, but Millennials sure love their smartphones…

Much more here.




via Zero Hedge http://ift.tt/1wyUrZ1 Tyler Durden

Cramer Does It Again: 4 “Irresistible” Stocks

Just 7 short weeks ago, no lesser guru of gains than CNBC’s Jim Cramer proclaimed for all retail-stock-investing moms-and-pops that “through the end of the year, I am pegging Twitter, GoPro, Tesla and Netflix as the four stocks that investors will find irresistible.” Things are not going well…

 

Via CNBC from September 2nd 2014,

Given circumstances, Cramer sees money rotating out of multinationals, especially those with significant European exposure. Therefore, he’s skeptical of big industrial giants as well as many global technology companies.

 

Cramer believes companies with little to no exposure to the crisis in Ukraine, or the resulting ripple in Europe, are most likely to attract investment.

 

“Therefore, through the end of the year, I am pegging Twitter, GoPro, Tesla and Netflix as the four stocks that investors will find irresistible,” Cramer said.

 

Not only are they relatively isolated from overseas woes, but Cramer says they each have specific catalysts that should drive gains.

 

Twitter’s turned the corner ever since CFO Anthony Noto got there to add discipline and ways to make money. GoPro’s got an eco-system with the hottest product for the holiday season and we always jump that gun in September. Tesla’s just a really well-run company, and unlike the other car companies I follow, it is almost all domestic. And, As more movies are added to streaming and more productions come on line I can see Netflix powering higher.”

*  *  *

And then this happened… TWTR -17%, TSLA -18%, NFLX -21%, GPRO +20% (but collapsed from +70%)

 

*  *  *

Of course Mr.Cramer was not alone in this call…




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A Modern ‘Baptist and Bootleggers’ Coalition Fights Arkansas Liquor Initiative

Ark. MapIn my recent analysis of

voter initiatives
appearing on November ballots across the
country, I took very brief note of a pending decision in Arkansas.
Voters in the state will decide whether to change the law to
require all counties to allow the
sale, distribution and transportation of alcohol
. Currently,
counties and communities call the shots. About half allow and half
do not. 

Naturally, this means that those who serve or sell alcohol in
the “wet” counties financially benefit from being next to “dry”
counties that prohibit it. Therefore existing liquor stores and
bars in the state are fighting the ballot initiative, and they’re
teaming up with local religious leaders, according to Bloomberg
news. One liquor store estimates it will lose ten percent of its
sales if nearby counties are required to allow booze. Opponents of
the ballot initative are attempting to argue its about choice,

not about bans
:

Larry Page, a Southern Baptist pastor and director of the
Arkansas Faith and Ethics Council, which traces its roots to the
Anti-Saloon League of Arkansas in 1899, said the initiative is
about more than just the dangers of alcohol.

“We’re not saying, ‘Hey, instead of voting the whole state wet,
let’s vote the whole state dry,'” he said. “We’re just saying, ‘Let
people locally continue to make the decision.'”

It’s not the first time political issues have made for strange
bedfellows, Page said, recalling when his group joined with
feminists to oppose pornography and cooperated with Mississippi
casinos to fight gambling in Arkansas.

A defense of bans that can be summarized as “Let’s let the
community decide whether certain types of commerce should be
allowed,” has been used elsewhere. Colorado Democratic Rep. Jared
Polis used such an argument when he introduced (but later
withdrew
) ballot initiatives in his state that would allow
cities to
ban fracking
. After California legalized medical marijuana
dispensaries, individual cities had battles on their hands to
decide whether they would allow them.

“Let the community decide” has a certain small government appeal
to it, but let’s not forget that sometimes what the community is
deciding is whether they’ll respect the rights of others to engage
in commerce or to do what they wish with their own property. And as
in this case, we generally see the argument used to curtail
people’s rights, not to advance recognition of them.

(Hat tip to Scott
Lincicome
)

from Hit & Run http://reason.com/blog/2014/10/28/a-modern-baptist-and-bootleggers-coaliti
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