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Americans get only filtered news from the mainstream media. So here’s the big picture:
By the way, here's a little history you never learned from MSNBCNNABCCBSFOX news:
Postscript: Former Israeli Minister: Calling people who criticize Israeli policy “anti-semitic. It’s a trick … we always use it”
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It started as a discussion about the reality of inflation versus propagandized “noise” and devolved into what is possibly Rick Santelli’s most epic rant. First, Santelli says the Fed has done enough (and it hasn’t worked “but to get the market higher”) to which Liesman’s “but higher interest rates won’t help” argument is backed up by more counterfactuals of “just think how bad it would have been” without the Fed. Santelli’s screamfest rightly attests that we do not know – we might have been well on our way to recovery by now… and adds that – despite Liesman’s imploring, “the Fed was not created to be a feel-good institution.”
Finally, slamming the herd of zombified analysts and talking-heads that follow sheep-like the Fed’s every word off the inevitable cliff, Santelli blasts (unafraid to stand up for the jobless Americans not driving their new Rolls-Royce on the back of levered ‘wealth creation’ in stocks), “This is America! We don’t follow consensus, we set it!”
This is what Santelli is upset about… Who is the Fed working for? Main Street or Wall Street?
The “people” never caused the crisis that the Fed bailed the banks out of… Liesman cannot let “low rates” go and Santelli explains how capital will come out if it can get a decent return and the status quo thinkers have it backwards… “The Fed was not created to be a feel good instituion”
And as the CNBC anchor says the Jury is still out on whether the Fed should pull back, Santelli explodes… who is “judging” the success… not America’s jobless or hordes of part-time workers… Liesman jibes “it’s impossible for you to have been more wrong” but as the chart above shows… Santelli was entirely correct – the Fed did nothing for the people…
The real issue with QE and Yellen’s “Social contribution” to America…
Simply put – the market’s unstoppable rise provides any and every talking head status-quo apologist with the ammunition to “prove” the fed was right… when all the data shows it has done little if anything but bail out banks, enrich the wealthy, increase inequality, and shows no signs of stopping…
* * *
Santelli is right no matter how loud his screamfests grow; frustration with the ever-more blinkered mainstream who know just how “high on supply” we have become but also know just how devastating another fall will be for it will expose the truth that nothing the Fed does is real… or creates lasting wealth…
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It appears His word is losing its omniscience. Speaking to the European Parliament, ECB’s Mario Draghi unleashes a torrent of negative-now-but-positive-just-around-the-corner attempts to talk down the Euro… and it’s not working…
For now, EURUSD dropped 5 pips and rallied back to unch… not exactly what he hoped for…
Draghi’s demands…
Well how’s that going to happen when markets signal politicians that everything’s fixed?
via Zero Hedge http://ift.tt/1yhUWHl Tyler Durden
Submitted by Omid Malekan via Visual Stories blog,
Last week, the stock of an otherwise unknown company named Cynk Technology went parabolic, even though per its own filings the company had only 1 employee, no income or revenues and a poor looking website as its only asset. Although this sort of shenanigan is common in the shadowy world of micro-cap penny stocks, what caught everyone’s attention was the fact that at one point the company reached a value of over $5 billion, reminding some of similar moves in worthless stocks at the peak of the last stock market bubble.
A few weeks before that, the cost of borrowing money for the Spanish government collapsed to an all-time low. The biggest determinant of what interest a borrower has to pay is its perceived ability to repay the loan, and it was only a few years ago that Spanish rates spiked to almost triple what they are today on account of an economic crisis born out of too much debt and not enough growth. So what changed for Spain that led the market to suddenly believe its now safer than ever? It certainly wasn’t the amount of debt the country still carries:
Nor was it a rebound in economic growth, or a significant drop in unemployment:
The only explanation that remains is a sharp appetite for risk.
Turning to something less pedantic, the contemporary art market has gone parabolic as well, and whispers of a bubble abound. What is unusual about the current art boom is the fact that buyers are tripping over themselves to bid up the works of living and active artists, where theoretically there is endless supply.
Some may argue that contemporary art is the playground of stuffy society types and has nothing to do with the rest of society, and they would mostly be right. So what’s the furthest place we can go from the confines of a fancy auction house? How about a mechanic’s garage. The classic car market is also on fire, and the gains are not limited to just fancy German sports cars:
It wasn’t that long ago that everyone – including the hardcore car guys – understood a car to be a “depreciating asset” – something that almost always lost value over time and should only be purchased as a toy by those with cash to burn. Now any old Porche is an investment in your kids future.
If real estate is more your speed, then there is the booming New York City luxury apartment market. Current stories of people entering complex contracts to buy expensive housing a few days after only seeing a floor plan are unheard of, except for right at the peak of the last property bubble. One57, the building made famous by its crane collapsing during Hurricane Sandy, will be the tallest residential building in New York when its finished this year, and it reportedly has multiple units in contract to be sold for over $90 Million. Rumors have it that some brokers are pitching the units to be as safe as Treasury Bonds. Not to be outdone, a few blocks away is 432 Park Ave, which when completed in 2015 will not only be the tallest residential building in New York, but its tallest building period. Since no real estate bubble is complete without plans in the works for something even more outlandish, enter the proposed Nordstrom Tower, also on 57th street. This one will not only top all other buildings in New York, but all residential buildings anywhere on the planet.
Its hard to have an asset bubble without a concurrent debt binge, so here we are. Don’t worry if you don’t understand the technical details of the latter article. The main takeaway is that what is happening now is one of the few things that most people agreed was a major cause of the last financial crisis, so much so that the wildly popular This American Life radio program dedicated a full episode to it.
Exactly 50 years ago last month the US Supreme Court ruled on the now famous case of Jacobellis v. Ohio. At stake was whether a French movie with graphic sexual content could be outlawed by the state via its obscenity laws. The court ruled that it could not because the film wasn’t hardcore pornography. How could they tell? In an explanation that has now turned into one of the most famous quotes in court history, Justice Potter Stewart explained that although he could not define exactly what hardcore porn was, “I know it when I see it”
Like porn, asset bubbles are also hard to define, but given our economic history, and especially our recent economic history, we know it when we see it, and now we see it everywhere. There is a good reason why this was one of the most emailed stories in the New York Times recently. We all see it. Apparently the only people that don’t see the bubbles are the people creating them.
The one common diagnosis by experts in the worlds of stocks, art, cars, real estate and debt is the the role central bank money printing is playing in their industry. Since the start of the financial crisis 6 years ago banks like the Federal Reserve, the European Central Bank and the Bank of Japan have printed trillions of dollars. We know that money has not gone towards much of the real economy because growth remains weak, jobs remain scarce and wages remain low. But the money had to go somewhere, and the asset bubbles listed above show us where. Although we’ve all seen the destruction that bubbles cause when they burst first hand, the Central Banks go on pumping.
When the last bubble burst, only 8 years after the previous one, many asked why the Fed and other Central Banks didn’t see the problem coming. Then Fed Chairman Ben Bernanke, the godfather and primary architect of the current money printing regime, had this to say on the subject: “Although the house price bubble appears obvious in retrospect – all bubbles appear obvious in retrospect.” In other words, you can’t see the bubble when its happening. Bernanke’s professional and philosophical heir Janet Yellen has recently said its too hard to see if Federal Reserve policies are leading to bubbles, so they’ll just keep printing as if everything is fine.
When our current asset bubbles finally burst and cause the usual havoc, the central bankers and economists that helped create them will yet again claim they could not have seen this coming. This time around we will know they are lying, and would be wise to ask what drove their willful ignorance.
via Zero Hedge http://ift.tt/1yhQWGT Tyler Durden
The Fed is a money-printing machine that wants stocks to go higher.
That’s effectively all anyone needs to know regarding the Fed’s monetary policies. Every other statement regarding the Fed is only accurate for a brief period of time as the Fed continually changes its goals, thresholds, and responsibilities almost every other month.
Throughout this time period only two things thing have been constant:
1) The Fed has continued to print money expanding its balance sheet.
2) Stocks have moved higher.
The reason we suggest this is because, based on the Fed’s actions, these are the only sensible conclusions one can come to. The Fed obviously doesn’t have any forecasting ability. It didn’t predict the Tech bubble, Housing Bubble, 2008 Crisis, Arab Spring, EU Crisis or Housing Bubble 2.0.
Moreover, we’ve been hearing that “growth would pick up in the second half of the year” for 5 years now. It has never shown up. Neither has income, full-time employment, the labor participation rate, or anything else that would indicate a strong economy.
Secondarily, the Fed has proven that it is only too happy to A) ignore reality in the form of any data that contradicts its theories and B) ignore any “threshold” that the Fed itself might establish as a target for stopping the printing presses or raising interest rates.
After all, the Fed suggested it would stop QE and raise interest rates when unemployment hit 6.5%. The Fed predicted this would happen in 2015 (that terrible forecasting record again). Unemployment hit 6.5% back in the first quarter of 2014. So the Fed dropped its unemployment threshold because said threshold was “no longer meaningful.”
Then there’s the Fed’s 2% inflation threshold, which we hit last month. The Fed again ignored this, claiming that the inflation numbers were “noise.” Now Fed Presidents are claiming that inflation might remain below 2% for several years or that inflation might go above 2% and it wouldn’t be a “catastrophe.” The way things are going, Janet Yellen should predict that inflation will be between negative infinite and positive infinite sometime in the next 10 years. At least that would be an accurate forecast.
At this point, one can surmise that the Fed has absolutely no idea what it’s doing and is simply making things up as it goes. Moreover, there’s little hope of reining in the Fed because even if Congress implementing a “balance sheet size threshold” or “number of QE programs threshold” for the Fed, the Fed would simply ignore them.
If the notion that the single most powerful entity in the world economy is ignoring warnings signs everywhere and continues to operate based on debunked and delusional academic theories worries you, you’re not alone. After all, it takes a special type of ignorance or delusion to ignore the fact that the cost of living is soaring throughout the US today.
Here are Food prices.
Here are energy prices:
Here are home prices:
And in case you don’t own your home, here are rents:
Inflation is already a reality. It’s only a matter of time before it gets out of control and crashes the economy and markets. Stocks love inflation at first, but eventually the rising costs destroy profit margins. We’re currently in the first half of this. The second half will be a doozy.
This concludes this article. If you’re looking for the means of protecting your portfolio from the coming collapse, you can pick up a FREE investment report titled Protect Your Portfolio at http://ift.tt/170oFLH
This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.
Best Regards
Phoenix Capital Research
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“Stocks are going up for reasons [investors] don’t really want to understand,” warns Titanium Capital’s Philip Manduca. The main reasoning, reflecting on the market’s shrug at Portugal’s problems is “We have survived so many crises. What is another,” but Manduca blasts “It’s a cynical approach. The real problem is the guys who have got the dice in their hands keep changing them. They can do whatever they want. They are making new rules all the time.” With that background he say there are good reasons for this market to fall and “nothing can make [him] bullish stocks now.” While Janet Yellen should “introduce two-way risk” this week, he reminds us that “she is a political appointee… whose job is make sure they stay in power as long as possible.” The problem is – US monetary policy is the world’s lowest common denominator and has consequences…
via Zero Hedge http://ift.tt/U4CWky Tyler Durden
Yup: strong corporate profits. Strong like bull(shit).
from BofA:
Contribution to annualized nominal 1Q GDI growth: Real Gross Domestic Income plunged 2.6% in 1Q, nearly matching the decline in GDP. Looking at the components (only available in nominal terms), the biggest driver of the decline was a collapse in corporate profits, which offset a trend-like increase in wages and salaries. The decline in corporate profits is indicative of weaker aggregate demand and a drop in productivity.
All, conveniently predicted right here. But… but… 5% non-GAAP EPS growth!
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Earlier today, we reported that in addition to getting a new executive team, the “Espirito Santo family sold some 4.99% of its stake in Banco Espirito Santo the company to an unknown party, using the proceeds used to repay a margin loan, issued during the bank’s capital increase in May.” Subsequently, Bloomberg reported the identity of the lender: “Espirito Santo Financial Group borrowed more than 100 million euros from Nomura to buy shares in Banco Espirito Santo, Portuguese newspaper Expresso reported, without saying how it got the information.”
Moments ago Bloomberg followed up with what could be a further dose of cold water to one of Portugal’s most powerful families and certainly the holding company at the very top, Espirito Santo Financial Group…
…when it reported that Nomura threatened to seek the immediate repayment of at least €100 million of loans to Espirito Santo Financial Group, prompting today’s sale by the Portuguese co. of a stake in Banco Espirito Santo, according to people with knowledge of the talks who asked not to be identified.
It also explains why while the market has since moved on, BES bonds tumbled once again to record lows earlier as we reported previously, and Senior CDS blew out by 48 bps to 448 bps: the widest since October.
And while the market is once again convinced there are no concerns of contagion, Bloomberg added that “failure to repay the loan could have triggered multiple defaults across cos. within Espirito Santo group, said the people.” In other words, precisely the kind of liquidity waterfall (in the wrong direction) that took out AIG and put the Lehman financil crisis into overdrive.
Officials at Nomura declined to comment.
So will an Espirito Santo collapse be indeed “contained” and not spread to other banks? Stay tuned for the answer.
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Submitted by James H Kunstler of Kunstler.com,
For public consumption, the fatuous haircut-in-search-of-a-brain, a.k.a. Secretary of State John Kerry, hauled out the dog-eared playbook for “negotiating a ceasefire” between the Palestinian Hamas leadership and Israel. Neither side takes him seriously, of course. In this historic moment of Islamic uproar across the entire region, Hamas is just following the larger script: act up and act out.
They would like to catch the momentum of rampaging ISIS next door, but Hamas is not a mobile force of mostly young male psychopaths. They’re stuck in Gaza embedded among their women and children doing what they can to eliminate Israel and replace it with an Islamic state. For the moment that means lobbing rockets from launch sites planted among the homes and institutions of daily life in the densely urbanized Gaza strip.
So far in the current offensive, they’ve launched over 700 missiles at Israel. Some of the rockets, purchased through the world’s arms bazaar from China, are powerful enough to reach Tel Aviv and Jerusalem. But they are poorly-targeted and Israel’s “iron dome” anti-missile system can intercept some of them before they land on anything.
Unlike previous offensives, when Hamas rocketeers could set up mobile Qassam missiles in alleyways or rooftops, and beat it a few minutes after firing, the new larger rockets require sturdier installations. Thus they can be systematically discovered and targeted. Hamas is quite willing to sacrifice the women and children who eat and sleep around their rocket installations for the propaganda value of pretending that they were not deliberately put in harm’s way.
Israel has accepted the reality that Hamas deliberately uses its own people as human shields and has opted to destroy the missile-launch sites in any case, because the alternative is to give Hamas free reign in bombarding Israel. One would think that world opinion would understand this equation. But there is little sympathy for Israel’s predicament, and little appreciation for Hamas’s calculated ruthlessness vis-à-vis its own people.
The birth-rate in Gaza is among the highest in the world. If it is a deliberate result of social policy, it is a cruel bargain for the Palestinians, who are apparently regarded as expendable by the Hamas leadership. In a culture that glorifies suicide bombings, routine human sacrifice must be normal, though to a Western sensibility it seems tragic.
It shapes up as a struggle to the death that will not be impeded by reason, the good intentions of others, or sentimentality. What Israel remembers is that nobody was on the side of its people in 1939 and they’ll be damned to make the same mistake of not fighting back again. This certainly sets up a situation of extreme political danger in the region, but no more now than the ISIS juggernaut, or the larger beef between the two basic branches of Islam, or the fate of the fragile Saud monarchy.
This is not a region of the world than can support large populations of human beings of any religious persuasion, and in the new age of extreme resource limits blind circumstance itself more than personalities or doctrines will determine who gets to inhabit what rockpile.
What’s changed is the perception that the USA has any role to play any longer even in the diplomatic theatrics. The Middle East is disintegrating faster than any polity in historical memory. It appears that, if anything, the USA has only succeeded in accelerating the process wherever we turn our attentions. Since the 1970s, we haven’t felt the ultimate consequence of trouble in that part of the world, which would be an interruption in the oil supply coming out of there.
Back then, there might have been something we could do about it. Now there is nothing we can do but stand on the sidelines and wait. In the meantime, wouldn’t it be a good idea to attend to our own problems, especially the critical need to prepare for American life in a post-oil world?
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When we look back there are a ton of things that have been said to have changed since the financial crisis wafted in like a bad smell into our lives. The bankers have learnt their lessons. The fraudsters that were there to make billions from us, while we were bending over toiling to make ends meet, have changed and now are there to share the money. The government has brought the financial markets under stringent controls. You can wake up since that is what we have been told, but we all know that it’s Wall Street that is pulling the punches and the bankers that are telling us still to toe the line. The latest fabulous myth to have been released with data to back it up is that published today by the Financial Conduct Authority in the UK that is asking us to believe that there is now less insider trading than before the financial crisis occurred. Insider Trading has become a thing of the past, so we are told.
Market Cleanliness in the UK as the Financial Conduct Authority calls it (measuring abnormal share-price changes prior to the public announcement of takeovers) has fallen from 30% of takeovers that took place in2009 to today’s level of just 15.1%. The question should be raised as to why it’s being allowed at all; but that’s another matter entirely. However, the Financial Conduct Authority admits that last year the number increased; although the average increase over the last four years works out to 15.1%. Perhaps a case of ‘let’s release the figures quickly, because the number will be back to its usual level of 30% next year’. Corruption is impossible to avoid, isn’t it? Wasn’t it Aristotle that said that where there’s power there’s the possibility of corrupting someone?
The report states: “The most significant drop in the statistic occurred from 2009 to 2010 while subsequent drops do not differ statistically from the preceding year. The tests therefore suggest that our indicator for market cleanliness decreased in 2010 and remained low thereafter”. Oh! So the drop was only significant between 2009 and 2010? That’s when they were still dusting themselves down from the financial melt-down. Plus, there have been few takeovers in the past few years. It’s only now that the number is starting to increase again.
As the table below shows, there were 181 takeovers in 2008 and a percentage of 29.3% of abnormal price changes prior to the announcements. In 2013 there were only 53 takeovers. Obviously, fewer takeovers means less possibility of insider trading, doesn’t it?
It wasn’t until 1985 that insider dealing was made a criminal offense anyhow. It was the norm before that and the source of income that was exploited by traders. It wasn’t really until 2009 that the first insider-dealing prosecutions actually took place too. Before that it was just fines.
Worse still from the report is that the UK regulator is not even sure why there has been a drop in insider dealing. The report states: “We recognise that, at this stage, we do not know whether the FSA/ FCA’s actions are driving the improvement in the measure but the increase in the FSA’s enforcement activity and educational agenda and decrease in the market cleanliness statistic are roughly contemporaneous”. So, they don’t know, but they’ll take the credit anyhow. That way everyone’s a winner.
The measures are taken in a two-day period prior to the public announcement. All it would take is for the insider dealing to occur outside that two-day window for it to go unchecked; or alternatively for the insider dealing to take place but on a lower scale than in the past. It’s only abnormal and significant changes in share prices that are measured.
Attempting to make a profit by trading shares before any announcement has been made public is as old a profession as the oldest profession in the world you might seem to think these days. The oldest professions are still there and insider dealing is too. Whether the Financial Conduct Authority is trying to pull the wool over our eyes or whether it actually believes that there is less insider dealing is impossible to tell. But, one thing is for sure, the prostitutes of the financial sector, the ones that have sold their souls to refurbish their soles are still there. They are just doing it more covertly these days for fear of rocking the boat of social unrest too much.
Originally posted: Insider Trading? A Thing of the Past
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