Time For The Plunge Protection Team: S&P Red For The Year, 10Y Under 1%, Europe Crashing. No Liquidity

A quick summary of where we have been this morning: VIX > 27 (3yr highs); S&P 500 -0.4% year-to-date (6mo lows); 2Y TSY yield < 25bps (17mo lows); 10Y TSY yield < 1.90% (17mo lows); European stocks -3% (11mo lows) lows; US HY credit 410bps (15mo wides); WTI Crude $80.01 (28mo lows). So that can mean only one thing… PPT is in the house, courtesy of USDJPY… and ultra-low levels of liquidity.

Where we've been…

 

and now…

 

which rescued institutional sellers to VWAP…

 

As Liquidty disappeared in bonds…

 

And stocks

But…

Charts: Bloomberg




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

Ebola Conspiracies: A Tale of Two Daily Mail Articles

HOW DID THEY KNOW?The Daily Mail‘s story about
Ebola conspiracy theories begins by describing a yarn in which the
epidemic’s victims are now literally rising from the dead. In the
Mail‘s usual write-first, ask-questions-later style, the
paper declares that this story “went viral” without bothering to
ask how many people who shared it knew damn well that it was a
joke. (The tale came from a
humor site
, and while I’ve
learned the hard way
that satire can zoom over people’s heads,
it’s not exactly unthinkable that people might forward a story
about zombies and even play at being frightened about it as a form
of fun.) The article then covers several other bits of online
hearsay, such as a YouTube video
that claims The Simpsons “predicted” the crisis with a
throwaway Ebola gag in 1997. (Put differently, the show made an
Ebola joke two years after the press heavily covered an Ebola
outbreak in Zaire.) This theory does not seem to be a
joke, though I suspect that somewhere between 90 and 99 percent of
the people sharing it just think it’s funny.

The other items in the Mail piece are more serious,
though one of them—a rumor that drinking salt water can prevent or
cure the disease—doesn’t really qualify as a conspiracy theory,
given that no one is conspiring in it.

But there’s one Ebola conspiracy theory that’s missing from the
report. It
goes like this
:

Terrorist group Isis may be considering using Ebola as
a suicide bio-weapon against the West, according to a military
expert.

The virus is transmitted by direct contact with an infected person
who is showing the symptoms—and it wouldn’t be difficult for
fanatics to contract it then travel to countries they want to wreak
havoc in, according to a military expert.

Capt. Al Shimkus, Ret., a Professor of National Security Affairs at
the U.S. Naval War College, said that the strategy is entirely
plausible.

That’s The Daily Mail again. To the reporter’s credit,
he goes on to quote several people explaining why this would be a
rather stupid and difficult terror strategy that isn’t likely to
work, but of course the headline highlights the alleged threat, not
the debunkers.

The ISIS scenario is a conspiracy theory by any
reasonable standard—terror cells are conspiracies, right?—and it
isn’t a very plausible one. But it’s one that
the Mail takes seriously, so it doesn’t get listed
with the others. An old saying comes to mind, something about motes
and beams.

Bonus link: I wrote a book about conspiracy theories,
and it
just came out in paperback
.

from Hit & Run http://ift.tt/1qsQwIp
via IFTTT

Sexting Didn’t Ruin This Girl’s Life, But an Arrest Might Have

SextingMichaela Snyder, a 15-year-old girl from
Woodbury, Minnesota, was in seventh grade when her boyfriend asked
her to sext with him. She complied—sending him semi-nude pictures
of herself—but eventually her mother found the photos on her
phone. 

Michaela then became the subject of intense bullying at school
because rumors spread that she had deliberately ratted out her
boyfriend. (While I don’t think every bad experience at school
counts as bullying, this sounds like the real deal: Kids tripping
her, boycotting her at lunch, and telling her she should
“die.”)

The whole ordeal sounds just horrible. So here’s the ironic
part, according to Ruben
Rosario in TwinCities.com
:

If you think this could not happen to your child, consider that
Michaela is the daughter of Grant Snyder, a veteran Minneapolis
police sergeant in the crimes against children unit who has spent
most of his career busting pimps and trying to help sexually
exploited young girls and women.

“I talked openly with her about the cases I worked on, how
(pimps) manipulate girls into (doing drugs and performing sex for
money),” he said. “I believe if you gave information, that was
protection enough. It wasn’t.

It’s not just ironic that her dad deals with sex crimes. It’s
ironic that he could have arrested his daughter for creating and
disseminating child porn had he wanted to. Then she would have
ended up on the sex offender registry.  That’s how easy it is
to ruin a life.

Sext arrests among minors aren’t theoretical.
Remember this
story
? A 17-year-old boy and his 15-year-old girlfriend were
exchanging sexts. The boy was arrested and photographed—sans
undies—to certify him as the miscreant. But that wasn’t enough. The
authorities actually wanted to take him to a hospital and give him
an erection drug (vodka?) to make absolutely sure he was
the—forgive me—hardened criminal in the original photo that they
were calling child porn.

free-range-kidsOnly universal
ridicule
stopped them
.

The happy ending to Michaela’s trauma is that she did not end up
on the sex offender list. What’s more, she rose above the shame,
realized that other young people are probably in her same
situation, and has gone public with her story as a sort of
motivational cautionary tale. Right on!

I hope she takes her story to law enforcement agencies next, to
remind them that often teens make regrettable choices when it comes
to sex. That doesn’t make them sex offenders. It makes them young,
horny, dumb. In other words, human.

from Hit & Run http://ift.tt/1wGPDQ4
via IFTTT

A. Barton Hinkle on Craft Beer and Crony Capitalism

Craft brewing is one of the great entrepreneurial
success stories of the past few decades. For the longest time,
America’s beer industry was dominated by a few big corporate
brewers that produced little but watery swill. But a few small
entrepreneurs who loved good beer thought there might be a market
for it. Turns out they were right.

Yet as A. Barton Hinkle explains, crony capitalism now threatens
to strangle that entrepreneurial spirit. Last week, Virginia
officials decided to hand out more than $30 million in government
subsidies to Stone Brewing Co., which will soon open its first
brewery east of the Mississippi in Richmond. As Hinkle notes, the
special favors conferred upon Stone must make central Virginia’s
longtime craft brewers gag.

View this article.

from Hit & Run http://ift.tt/1sM00Eu
via IFTTT

Get Used to the War Against ISIS, Says Obama. It’s a ‘Long-Term Campaign’

President and his new friendsWhen it comes to gifts that keep on
giving, we all probably could have done without yet another
extended war in the Middle East. But that’s what we seem to have as
President Obama emerged from a meeting with military officials from
countries that have joined the coalition aganst ISIS to
announce
, “this is going to be a long-term campaign. There are
not quick fixes involved.  We’re still at the early
stages.  As with any military effort, there will be days of
progress and there are going to be periods of setback.”

Oh goody. I’d hate to think my son would reach enlistment age
too late to participate in the fun.

How committed that coalition is to an open ended effort to
battling ISIS and “communicating an alternative vision for those
who are currently attracted to the fighting inside Iraq and Syria”
is an open question. Turkey’s
rapid repudiation
of White House insistence that the country
had agreed to coalition use of its military bases may be only the
tip of the iceberg. Foreign Policy‘s Gopal Ratnam and John
Hudson describe it as a “kiss
and tell problem
.” Like a high school nerd desperate for a
girlfriend, the Obama administration is so eager to interpret the
slightest kindness as a total commitment that it immediately
trumpets its new relationship to the world—and scares its new
friend away. Write Ratnam and Hudson:

The conflicting versions of events from the two allies have one
of two causes. One is political: The White House is eager to show a
war-weary American public that the United States won’t be fighting
alone, but many Middle Eastern countries don’t want to rile up
their own populations by advertising their roles in the coalition.
The other is a more basic and troubling one: that Washington may be
consistently misreading its partners and overestimating just how
committed they are to the fight.

The governments of Georgia and Slovenia also backpedaled from
U.S. announcements of deeper relationships than either country was
willing to acknowledge in world-wide press releases.

Now that the Obama administration is insisting on a long-term
commitment instead of a military quicky, the problem can only get
worse.

from Hit & Run http://ift.tt/1vvinhS
via IFTTT

This is a Recipe For a Crash

Over the last 30 years, the US has built up record debts on a personal, state, and national level. Consumers thought they were financially stable so long as they could cover the interest payments on their credit cards, states created program after program few if any of which they could afford, and the Federal Government issued $30-50 trillion in debt and liabilities (counting Social Security and Medicare).

 

This all came to a screeching halt when the housing bubble (arguably the biggest debt bubble in history) imploded in 2007.  Since that time, stocks have staged one of their worst years on record (2008), one in five us mortgages has fallen underwater (meaning the mortgage loan is worth more than the home itself), and some trillions in US household wealth has evaporated.

 

These issues seem to be distinct, but in reality they all stem from a debt problem. And as you know, there is only one legitimate way to deal with a debt problem:

 

Pay it off.

 

However, instead of doing this, the Feds (the Federal Reserve, Treasury Dept, etc.) have been producing EVEN MORE DEBT.

 

In a nutshell, The Feds have tried to combat a debt problem by ISSUING MORE DEBT. They’re pumping trillions of dollars into the financial system, trying to prop Wall Street and the stock market. They’ve managed to kick off a rally in stocks…

But they HAVE NOT ADDRESSED THE FUNDAMENTAL ISSUES PLAGUING THE FINANCIAL MARKET.

 

Stocks are headed for another Crash, possibly as bad as the one we saw in October-November 2008. As you know, that Crash wiped out $11 trillion in household wealth in a matter of weeks. There’s no telling the damage this Second Round will cause.

 

The Feds have thrown everything they’ve got (including the kitchen sink) at the financial crisis… and things are fundamentally no better than they were before: most major banks are insolvent, one in five US mortgages is underwater, and the stock market is being largely propped up by in-house trading from a few key players (Goldman Sachs, UBS, etc).

 

Regarding stock investing, it’s important to take a big picture of stocks as an asset class. The common consensus is that stocks return an average of 6% a year (at least going back to 1900).

 

However, a study by the London Business School recently revealed that when you remove dividends, stocks’ gains drop to a mere 1.7% a year (even lower than the return from long-term Treasury bonds over the same period).

 

Put another way, dividends account for 70% of the average US stock returns since 1900. When you remove dividends, stocks actually offer LESS reward and MORE risk than bonds. If you’d invested $1 in stocks in 1900, you’d have made $582 with reinvested dividends adjusted for inflation vs. a mere $6 from price appreciation.

 

So as much as the CNBC crowd would like to believe that the way to make money in stocks is buying low and selling high, the reality is that the vast majority of gains from stocks stem from dividends.

 

The remaining gains have come largely from inflation.

 

Which brings us to today. According to official data, the S&P 500 is currently trading at a CAPE ratio of 25 and yields 2.3%. In plain terms, stocks are expensive (historic average for CAPE is 15) and paying little.

 

In other words, there is little incentive, other than future inflation expectations, for owning stocks right now.

 

By most historic metrics, the market is showing signs of a significant top. Here are just a few key metrics:

 

1)   Investor sentiment is back to super bullish autumn 2007 levels.

2)   Insider selling to buying ratios are back to autumn 2007 levels (insiders are selling the farm).

3)   Money market fund assets are at 2007 levels (indicating that investors have gone “all in” with stocks).

4)   Mutual fund cash levels are at a historic low.

5)   Margin debt (money borrowed to buy stocks) is at a new record high.

 

This final point is key. Mutual funds are the “big boys” of the investment world. If they have become fully invested in the market, this means there are few buyers left to push stocks higher. This is evident in the fact that every time mutual fund cash levels dropped, stocks collapsed soon after.

 

In plain terms, the odds are high that a Top is forming in stocks. With that in mind,

if your portfolio is heavily invested in stocks, now is a time to be taking some profits. If you can, consider moving a sizable chunk into cash.

 

The market is extremely tired and the systemic risks underlying the Financial Crisis are in no way resolved. With investor complacency (as measured by the VIX) at record lows, the Fed withdrawing several of its more significant market props, and low participation coming from the larger institutions, this market is ripe for a serious correction.

 

The systemic risks underlying the Financial Crisis are in no way resolved. With investor complacency (as measured by the VIX) back to pre-Crash levels, the Fed withdrawing several of its more significant market props, and low participation coming from the larger institutions, this market is ripe for a serious correction.

 

This is a recipe for a Crisis.

 

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.

You can pick up a FREE copy at:

http://ift.tt/1rPiWR3

Best Regards

Graham Summers

Phoenix Capital Research

 

 




via Zero Hedge http://ift.tt/1w2xSLX Phoenix Capital Research

For Bond Shorts, The Pain Has Only Just Begun

Speculative short positioning in 10Y Treasury futures, according to CFTC, is at its highest since 2007 as traders added to shorts last week. Net positioning in 10Y Treasuries overall is its most short since June as shorts piled on in the last 2 weeks by the most since the Taper Tantrum.

 

 

Net positioning

 

with the last 2 weeks shorts piling on the most since the Taper Tantrum.

 

Charts: Bloomberg




via Zero Hedge http://ift.tt/1zarib1 Tyler Durden