Tag: finance

While the world is watching US stocks and breathing a sigh of relief that they are not crashing (yet) today, there are some significant moves afoot in other critical markets. USDJPY has broken below 102 continuing its slide (JPY strength) on the heels of the BoJ’s disappointing lack of additional money-printing. Perhaps even more critically is the surge in prices of oil (Brent and WTI) as news break of tanks rolling once again in Eastern Ukraine. A glance at the charts below and one can’t help but wonder how long stocks can hold these gains today…

Brent and WTI surge after this…

• UKRAINE TANKS HEADING TOWARDS CITY OF LUGANSK, LIFE NEWS SAYS

 

 

Stock remain on their own compared t FX carry….

 

and Bonds…

via Zero Hedge http://ift.tt/R0ZdyT Tyler Durden

Originally posted at Economic Noise blog,

We live in a pretend economy. It is important to recognize this condition, especially if you are an investor.

Current market behavior is concerning.  Bonds and stocks remain volatile and near record levels. Markets ignore the continuing stagnation in the pretend economy, buoyed apparently by government liquidity injections.

To justify investing today in these markets, one must anticipate one or both of the following:

1. Economic growth is about to surge.
2. Market values can continue to rise from here, potentially further widening the already large gap between valuations and fundamental economics.

No reading of the economic tea leaves suggests a surge in economic growth is coming. Indeed, a critical analysis of the data makes one question whether there has been a recovery at all. Certainly any recovery has to be labeled as abnormal.

If economic conditions look like they will continue to be sub-par, then an investor has to believe that it is realistic to expect market valuations to continue to ignore economic conditions. That assumption worked last year when markets rose about 30%. Is it reasonable to expect the divergence to continue for another year?

No divergence can continue forever but that doesn’t mean it can’t persist for a while.

Recession, Not Recovery

The recession ended (according to the National Bureau of Economic Research) in June 2009. Rapid economic expansion normally occurs during the first three or four quarters after a recession ends. The typical recovery period is characterized by three to four quarters of unsustainably high growth rates. That take-off growth never occurred when this recession was declared over. Nevertheless, government went into full propaganda mode and the pretend economy began.

At no time in my recollection has the word “recovering” been used to describe an economy five years after a recession was declared over. Perhaps the term was borrowed from “recovering” alcoholic which I understand is a forever state. Either the government is lying about a recovery or something has radically changed in terms of the economy. Both are likely.

The current “recovery” does not conform to other recoveries. After five years, history suggests we may be close to the next recession, not still “recovering” from the previous one. However, history is not economics. It may repeat or rhyme, but it doesn’t rule.

Causal behavioral relationships determine economic decisions and outcomes — ALWAYS! These relationships, to the extent they remain stable, may appear to produce repetitive time cycles, but that is a secondary effect rather than a causal one.

Behavioral relationships are dependent on perceived incentives and disincentives. If the underlying incentives/disincentives are altered, decisions and outcomes will change. That will alter any macro measurements like those captured in growth rates, employment statistics, etc.

Incentives at the micro-economic level have been altered dramatically. Labor participation rates reflect the disincentives associated with ObamaCare and other regulatory nonsense. Anticipated tax increases to pay interest and government debt dampen people’s expectations regarding the future. Capital expenditures are slowed or canceled in order to get a clearer picture of what is coming and when. When aggregated, the macro-stats appear different.

GDP can be manipulated in terms of definitions and data. Government spending is counted as economic activity. Some of it may be, but most of it is not. Increasing government spending is a way to mask a declining standard of living, which has corrosively been occurring for arguably decades.

There has been no real economic recovery. What has occurred is a pretend recovery. The pretend is not limited to this recent cycle. It has been going on for many years. In a sense, what we now have and have had for the last decade or more is a pretend economy. Government interventions have been the driving force in this pretend economy.

Government Intervention

Government has no incentive to not have a real recovery. It would prefer one, but that is no longer possible as a result of an accumulation of distortions that have built up over decades. A pretend economy is the next best thing. Interventions cover up reality (for awhile) but they also add to the economic distortions and damage.

Every intervention is an attempt to create a situation that free markets and men do not want. Every intervention distorts market signals. Decisions made by economic actors based on wrong information must be erroneous, no matter how carefully executed.

Prices are the language of the marketplace and society itself. Prices provide signals to economic actors and non-actors. They provide information regarding career choices, when to purchase less or more of something and many other personal decisions often not considered economic. A properly functioning price system is the foundation for peaceful social interaction and cooperation in any society based on a economic freedom and the division of labor. The price system may be the most important element in society. It makes coexistence, cooperation and peace possible. Damaging it has ramifications well beyond the economic sphere.

When prices are distorted, incorrect decisions are made. These incorrect decisions can be hidden for a while by perpetuating the distortions but not forever. When prices eventually adjust to what they otherwise would have been, prior decisions are shown to have been wrong and unsustainable. This corrective process is referred to as a recession or a depression.

Government always wants to prevent recessions even though it is their policies which produce the distortions. Attempts to do so have been on-going as government policy since the 1960s. It was then when it became fashionable to believe that an economy could be centrally managed. To the extent that government succeeds in its efforts, it merely makes the next problem bigger because distortions are cumulative.

The US economy now contains a half-century of distortions that are now, or soon will be, too much to contain. It is not accidental that the two biggest interventions since World War II were for the last two recessions, both of which occurred in the first decade of this new century. The cumulative effect of covering over distortions lead to the inevitable point at which the system breaks apart. Ludwig von Mises observed:

There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.

What To Expect?

Valuations and economic conditions are inconsistent. They can remain in disequilibrium for a period of time but not forever. One of the two (or both) is going to change to reflect the other.

The economy and the nature of politics are such that policy regarding economic downturns will not be willingly changed. I agree fully with Doug Casey‘s assessment:

I don’t see a real recovery until they stop debasing the currency, radically cut government spending and taxation and eliminate most regulation. In other words, cease doing the things that caused this depression. And that’s not going to happen until there’s a collapse of the current order.

It is suicidal for either political party or any individual running for office to advocate policy changes that necessarily will produce a depression. Mr. Casey’s comment as to how the change will take place is both ominous and obvious: “That’s not going to happen until there’s a collapse of the current order.”

The economy will continue to be pummeled with interventions and distortions for as long as it can sustain the blows. Will the cover-up be able to be extended one more time? I doubt it, but it is easy to underestimate the survival instincts of institutions, especially powerful ones.

Attempts if they do in fact succeed will only serve to weaken the economy further.

Markets will correct before an economic collapse is apparent. This correction may or may not take place in advance of an economic debacle. Even if the economic debacle triggers the market collapse, it will appear that the markets corrected first. Markets react faster than changes in economic momentum and the lag in reported economic statistics.

When the market corrects it is unlikely to be to some fair value commensurate with economic fundamentals. Markets notoriously overshoot, especially on the downside. In the first decade of this century, markets twice dropped from highs to lows by more than 50%. The next correction may exceed this number.

It is impossible to time either a market or economic collapse. A market collapse is possible without an economic collapse, but not vice versa. Once the market begins its decline, it may be orderly (over several months) or nearly instantaneously (think the 23% decline in 1987). Even with “circuit breakers” on markets, a massive drop likely takes only a few days. The fact that it occurs over three days does not mean you or the many others who want to get out on day one or two will be successful in doing so.

Playing these markets in any conventional manner is akin to writing insurance policies for suicide bombers.

They are, in my opinion, ridiculously detached from economic reality. “Bubble” is not too strong a word and a reasonable description. The term “bubble” never appears before an adjustment, whether it be stocks, bonds, housing, student loans or whatever. It is always an after-the-fact description, used matter-of-factly, suggesting everyone could see it. No one wants to be labeled a fool when the bubble bursts.

via Zero Hedge http://ift.tt/PZBb6m Tyler Durden

Update: as expected the denial of the propaganda didn’t take long: PROTESTERS IN LUHANSK, UKRAINE, DENY HAVING EXPLOSIVES AND  HOLDING HOSTAGES IN STATE SECURITY BUILDING

* * *

While the source of the most recent developments in the Ukraine is the country’s state security services and should thus be taken with the usual mine of salt, Reuters is reporting that pro-Russian separatists have placed explosives in a building they seized in the eastern city of Luhansk and are using weapons to hold around 60 people against their will.

Pro-Russian separatists occupied the SBU building on Sunday evening in one of a series of attacks in the east of the country.

 

“The anti-terror group of the security services of Ukraine (SBU) .. has established that the criminals have mined the building … and are holding around 60 people, threatening them with weapons and explosives,” the SBU said in a statement.

As a reminder Luhansk, together with Donetsk and Harkiv, is among the cities in which violent anti-Kiev protests took place over the weekend culminating the the state building being taken over by pro-Russian protesters, and where the local population is increasingly demanding a referendum to follow in Crimea’s footsteps into the safety of Russian borders.

As a further reminder, Russia reminds the world at every opportunity that while it would never invade Ukraine outright, protecting ethnic Russians in the east of the country is a paramount responsibility, which means that should the crackdown against “separatists” accelerate and lead to even more violence and/or casualties, it simply makes the Russian offensive incursion case that much stronger.

And a building lined with explosives, not to mention dozens of hostages held at gunpoint, could be precisely the pretext needed to step up local instability by just the wrong amount of notches.

What is worst is that the lay of the land is now such that all sides – Ukraine, Russia and the US – stand to gain by escalating the stand off to a more weaponized level.  Don’t believe us? Just out from the US senator of war:

• MCCAIN SAYS UKRAINIANS HAVE MADE CLEAR THEY NEED WEAPONS

And guess who will be happy to supply not only the weapons by the Blackwater experts, dressed in flamboyant local garb of course, trained in using them.

via Zero Hedge http://ift.tt/1jqWk3E Tyler Durden

While we are sure the men of the world are applauding quietly from the background, President Obama’s plan for equal pay is likely to appeal to the females in his audience – especially those who might vote… it is perhaps ironic that the President brings this up once again – and for good reason is the gender pay inequality gap is indeed worsening – when it is the women of America that have regained all their jobs (and then some) since the recession while men have not…

 

 

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

Orienteering – Lost in the Wilderness

The Sovereignty Series

By

Cognitive Dissonance

 

 

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Because our personal memory cannot extend beyond our lifetime, neither before our birth nor after our death, we tend to view the world with narrow blinders on. In addition, since we alone occupy our mind (unless of course we are of two minds) we tend to perceive the world interpreted through our conditioning, training and experience. We believe ourselves to be credible and intelligent, even though nearly all our working capital, our knowledge, is corrupt and seriously tainted.

This is the functional equivalent of seeing the world through a pin hole camera lens while wearing dark sunglasses. Essentially this leaves us myopic at best, and functionally blind at worst. We stumble and bumble through life believing we have near perfect vision when in fact we have been sleepwalking since birth. Seen from this point of view is it any wonder “We the People” can be so easily herded and controlled?

But it gets worse, much worse. While we see ourselves as a large community, a nation of individuals gathered together under a common cause, on a day to day basis the reality we experience is far different. The problem we face as a nation of individuals is that while we ‘perceive’ ourselves as part of a greater group, we myopically pursue our own goals and aspirations and leave the bus driving to someone else, mostly those who claim authority to drive in our stead.  

As anyone who has participated in “Orienteering” will tell you, one must constantly be aware (mindful is the term I like to use) of where you are in relation to where you wish to go. And might I add, where you have been. Spatial awareness is of utmost importance when navigating the four axis (longitude, latitude, altitude and time) of unfamiliar terrain, something modern men and women have mostly ceded to GPS enabled Garmin, smart phone mapping apps and a benevolent government who would never steer us wrong on the really important stuff. 

When attempting to efficiently navigate to a destination there are several items, tools let’s call them, of utmost importance we must possess. One, we must know where we presently are in relation to where we want to go. This requires not only a map or some other type of document displaying a ‘concept’ of ‘reality’, almost always created by others, but also the proper mindset, one that requires (demands) curiosity, critical thinking and creativity in order to adapt to an ever changing set of circumstances and terrain.   

In addition, on this map of reality there must either be an ‘X’ to mark the spot where we presently reside (you are >here<) or some method must be offered that is used to determine where we are in space (and equally importantly time) and how that relates to the map in hand. Most often we are ‘told’ where we are by way of signposts, route numbers, word of mouth information, intuitive guesstimating or a benevolent government (and its lackeys, sycophants and mainstream media) who would never steer us wrong on the really important stuff.

Two, we must know where we wish to go and the route or routes we will travel beginning from where we are now. As obvious as this may sound to someone who thinks they know where they are and where they are going, after some careful consideration and reflection it becomes increasingly apparent that our spatial knowledge is mostly derived from group think and common ‘beliefs’ than by a careful examination of available information and a critical and suspicious eye towards disseminated propaganda.

 

 

All too often we willingly absorb and act upon untested ‘truths’ simply because they come from ‘trusted’ sources we have been ‘told’ are impeccable. Examples of this are our primary school system, the mainstream media, experts such as lawyers, doctors, scientists and institutions such as corporations, governments and centers of higher education. And lately for those who claim increased awareness, the vast universe of alternative ‘news and information’ sources of equally dubious credibility and quality.

We accept with little suspicion and rarely question that the map as it is laid out before us is complete and accurate, that the reality depicted is as it actually exists just beyond the horizon. See, it’s clearly marked here on the map. This way be dragons and monsters, but that way over there is the land of milk and honey. Those bad brown, yellow, red or black people just beyond the mountains are our enemies and these folks over here are our white friends and companions. You know….the good guys with central banks and natural resources to exploit.

This brings us to number three in our orienteering exercise, that of understanding where we have been before ‘now’. Of critical importance to us is learning, and then applying to the present situation, where and why we were previously back there and what we have learned from that journey. Without (fully) understanding where we have been and the lessons learned, any subsequent journey we undertake is always a first time for us, virgin territory in all aspects for us novices.

The time of greatest risk of failure is when we have never gone before, even if we really have and just don’t remember….or are deliberately misinformed. Not knowing ‘our’ history (actually more often the history of those who came before) dooms us to endlessly repeat past mistakes, wrong turns, dead ends and abject failures.

If the map has been subtly modified or altered (or even worse, continuously changed) yet we are repeatedly assured it is true and accurate, a ‘fact’ confirmed by group think, consensus opinion and official authority proclamation, we are left to aimlessly wander the landscape, begging equally befuddled random passersby for clear directions or possibly even a better map.    

Under these conditions who among us can declare with any degree of certainty that they ‘know’ that the reality spread out before them as depicted on the map is true and accurate, an honest representation of what lies over the hill, thus alleviating the need to actually travel there to confirm the authenticity of the map in hand. How could anyone trust a document of such dubious pedigree and lineage to do anything other than to help start a camp fire on the side of the road and warm our hands while we gather our bearings?

And yet even those among us who claim to be awake, to see more clearly through the cognitive fog than the average Joe, still use the same pin hole camera lens and cheap sunglasses to view the world. They attribute their new found clarity to the discovery of several flaws in their map or possibly a new and improved map produced by others who also claim excellent vision and insight. Oftentimes the new map is declared better simply because it is different, the more radical the change the better in some eyes.

 

 

Since we no longer trust the presently popular Oracle of Delphi, the one worshiped by the surging herd as the purveyor of the one true map, instead of attempting to widen our field of vision and remove our Ray Ban’s in order to properly see and perceive, we cast about for another self proclaimed authority to declare with utmost confidence that dry land is most assuredly that-a-way.

By swapping one leader for another rather than seeking truth independently, who is to say another wild card hasn’t been slipped into the deck to wreck havoc and poison the well. Trading dependencies accomplishes nothing for the dependent and everything for the entity(s) depended upon.

Being personally sovereign requires the complete removal of any and all visual impairments and the application of critical thinking to new information presented to the sovereign as truth. Since ‘our’ history has been, and continues to be, repeatedly obscured, edited and rewritten over countless generations to suit the control needs of each map maker, to simply swap maps is to swap problems, not find solutions let alone the truth. 

To declare that because we have found our map defective, therefore we need a new one, simply invites the control system to infiltrate the process at any point along the way and once again obscure the results, leaving us in even more precarious straits. At least before with known damaged goods in hand, we cast doubt upon the validity of the old map and ventured forward carefully, deliberately. Now that we have embraced the substitute we are even more easily led astray because our faith and belief has been restored and the chain is again secured around our neck.

Once again sleepwalking through life, though this time with the belief we are wide awake, the damage we subsequently do to ourselves and to others by our cries of Eureka is magnitudes greater than before. Every rebel voice, every rebellion, contains its own seeds of destruction when it finally 'wins' and goes mainstream. And make no mistake about it; the alternative press is ‘our’ mainstream media. The personally sovereign never declares victory when still surrounded by the enemy, for to do so is to be quickly overwhelmed and assimilated.

 

04-08-2014

Cognitive Dissonance

 

www.TwoIceFloes.com is unlike anything you will find on the web, a truly unique destination. There you will find distinctive Premium Members only articles as well as discussions on wellness and health, homesteading, spirituality & philosophy and most importantly ‘safe’ forums not found anywhere else. Come by for a peek and stay a while.

 

via Zero Hedge http://ift.tt/1lIaGxA Cognitive Dissonance

Presented with no comment…

 

US Open pump-and-dump… and then dump-and-pump on POMO

Bonds and FX carry ain’t buying it…

 

 

In case you were wondering why the S&P 500 futures ramped as they did… and stopped where they did – simple, VWAP!!

 

And Europe is about to close…

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

As we noted previously, the US remains convinced that “there is strong evidence suggesting some of [the pro-Russian] demonstrators were paid,” and Russia, in the same vein, responded that they “are particularly concerned that the operation involves some 150 American mercenaries from a private company Greystone Ltd., dressed in the uniform of the [Ukrainian] special task police unit Sokol.” So, this morning’s ‘claims’, substantiated, we presume, by YouTube clips and CIA promises, that John Kerry blasted to his Twitter followers is remarkable: “it is clear that Russia special forces and agents have been the catalysts behind the chaos of the last 24 hours in Ukraine.” Clear… proof?

 

Kerry explains it all…

.@JohnKerry: It is clear that #Russia special forces and agents have been the catalysts behind the chaos of the last 24 hours in #Ukraine.

— StateDept Live (@StateDeptLive) April 8, 2014

.@JohnKerry: #Russia’s unmistakable involvement in destabilizing, separatist activities in the East of #Ukraine are more than disturbing.

— StateDept Live (@StateDeptLive) April 8, 2014

And Russia’s response…

#Lavrov: Situation in Ukraine will not be stable unless Kiev stops ignoring interests of Russian-speaking citizens http://t.co/f0wwI9T6Kd

— MFA Russia (@mfa_russia) April 8, 2014

via Zero Hedge http://ift.tt/PM6PEv Tyler Durden

We wonder: why does the truth about the broken system, as witnessed and experienced by individual employees, always wait until said employee is about to depart their employer or just after? Obviously that is rhetorical. However, it is worth mentioning, because in the latest such revelation, a retiring SEC trail attorney veteran, James Kidney, who had been with the agency since 1986 and retired this month, just crucified his now former employer for doing precisely all those thing that outside critics – notably Zero Hedge – have accused the most co-opted, clueless, corrupt and criminal regulators of doing. Only he said it in a way that not even we could have phrased.

From Bloomberg:

The SEC has become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” Kidney said, according to a copy of his remarks obtained by Bloomberg News. “On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”

 

Kidney said his superiors were more focused on getting high-paying jobs after their government service than on bringing difficult cases. The agency’s penalties, Kidney said, have become “at most a tollbooth on the bankster turnpike.”

Wow: another “erudite” former cog in the systemic wheel goes off the reservation and gets all tinfoil bloggy on us. He goes on:

In his speech, Kidney also hit the agency for using misleading statistics to showcase its enforcement efforts. The SEC should focus on the quality of its actions, rather than try to file as many as possible just to tout its record to lawmakers and the media, he said.

 

“It is a cancer,” Kidney said of the agency’s use of numbers. “It should be changed.”

His name was James Kidney.

Kidney said in the interview that he will always be an SEC loyalist and was trying to offer constructive criticism that could help the agency. He said he wasn’t singling out any specific cases or officials in his comments.

 

“I don’t think we did a very aggressive job with all the major players in the crash of ’08,” he said, noting that as a civil enforcement agency, the commission does not need to prove its cases beyond a reasonable doubt like the Justice Department does. “The SEC has a lower burden of proof and we should be pushing the envelope a bit.”

You mean, pretending to regulate the same people where SEC staffers wish to work will no longer fool most of the people all of the time? The horror… The horror.

A quick reminder on the Goldman wrist slap deal with the SEC, where Kidney was part of the initial, if not final team.

Kidney, who was part of the initial team that was building the Goldman Sachs case, pressed his bosses in the enforcement division to go higher up the chain. He later took himself off the team after being given a lesser role, according to people familiar with the matter.

 

In particular, the people said, Kidney argued that the commission should sue Tourre’s boss, Jonathan Egol. Kidney also wanted to bring a case against Paulson & Co. or some executives at the hedge fund, which helped pick the portfolio of securities that were underlying the Abacus vehicle and then bet against it.

 

The SEC ultimately decided not to sue Egol, the Paulson firm or any individuals from the hedge fund.

Yes, it was all the not even 30 year old Tourre’s fault. All of it. And the person who dared to point out this criminal disdain for justice by the SEC? He was demoted by the most corrupt of all: Mary Schapiro.

The punchline – the SEC is a regulator only for optical purposes. It’s true role is not to shake up the status quo.

In his retirement speech, Kidney noted that he had been “involved in a high-profile case or two” and said he had gotten a message from above not to take too many risks.

 

“I have had bosses, and bosses of my bosses, whose names we all know, who made little secret that they were here to punch their ticket,” Kidney said. “They mouthed serious regard for the mission of the commission, but their actions were tentative and fearful in many instances.”

Simply said: disgusting and pathetic – both the sad truth about the US market “regulator”, which most were already aware of, and that an SEC employee has to wait until the day he quits to express it.

Oh, and if anyone still wants to know why the perfectly legal parasitism of HFT has turned off the retail investors for the last time, and why everyone knows the market is rigged – it is not the vacuum tubes. Nope. It is the criminals at the SEC who made it legal for 25 year old math PhDs to rig stocks in the first place, and who allowed the TBTF banks to make the marketplace into their own personal no risk, all return piggy bank. Them, and of course Congress – because when the day comes that all those idiotic trades blow up and the banks have to pay the penalty, why – they just get another taxpayer bailout, courtesy of America’s democratically elected “representatives.”

via Zero Hedge http://ift.tt/1mZ3OM8 Tyler Durden

Presented with little comment aside to ask if 4th time is the charm for the ‘hoped for’ earnings recovery in Europe…

 

Chart: Citi

And just in case you were gloating over the US… their analysts are just as bad…

via Zero Hedge http://ift.tt/PLSKa6 Tyler Durden