The $VIX Report: Upside Levels

Last week we noted: “The $VIX has failed to break 12 or rather more importantly, a level of 12 continues to be where selling in the equity markets takes place. I have contended that the inability of the $VIX to break below the 12 level is a sign that the current market rise is not sustainable, and this divergence has been going on for over 6 months now. In essence, the $VIX has failed to confirm the price action. More importantly, it appears that the rocky start by the equity markets this week will see the $VIX close above a prior key pivot point. This always suggests caution as the possibility of a trend change in the equity markets is very real.

Continue reading “The $VIX Report: Upside Levels”

Virginia AG Reverses State’s Position on Gay Marriage Recognition Toward Support

Yesterday, Virginia Attorney General Mark R. Herring’s office
filed an important notice in a lawsuit challenging the state’s
constitutional ban on gay marriage recognition. His office is

reversing course
under its new leadership. Herring has decided
that the ban is a violation of the Fourteenth Amendment of the U.S.
Constitution and “will not defend the constitutionality of those
laws, will argue for their being declared unconstitutional, and
will work to ensure both sides of the law are responsibly and
vigorously briefed and argued before the courts to facilitate a
decision on the merits, consistent with the rule of law.” He added
that his office will still enforce the ban during the challenge, so
gay Virginians should not go rushing off to their county clerks’
office just yet.

Herring, a Democrat, acknowledged that he originally voted for
this amendment himself when it was passed in 2006, but said in a
press conference that he was wrong. Watch his comments below:

 

Herring noted Virginia’s history of defending racial segregation
in schools, laws against mixed-race marriages and expressed the
desire to, for once, “be on the right side of history,” a phrase
that always used to baffle me but that I’ve now come to realize is
just simply code for “The polls have shifted and I don’t see them
shifting back anytime soon.”

Anyway, according to The Washington Post, some
Republican lawmakers are looking around for a way to
defend the law
without Herring’s support. Herring is also
accused of hypocrisy for criticizing former Republican Attorney
General Ken Cuccinelli as using the office for his own type of
activism. Indeed, the
petition
submitted by Herring’s office even uses Cuccinelli’s
refusal to defend a constitutional challenge to a law last year as
a precedent for Herring’s decision. Any attorney general candidate
claiming to want to reduce the politicization or activism of the
office should be laughed at in any event.

Meanwhile, also keep an eye on Indiana. Lawmakers there are
trying to buck the current trend toward recognizing gay marriages.
They are trying to put an
amendment to the state’s constitution
before voters in November
that would not only block recognition but also similar arrangements
like civil unions.

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S&P Futures Slide Under 1800; 50 DMA Support Breached; Taper “Gains” Gone For Most

S&P 500 futures just crossed below 1,800 – its lowest since the FOMC’s taper announcement on December 18th. The cash S&P 500 (and small cap S&P 600) have crossed below their crucial 50-day-moving average (with no sign of dip-buyers yet). This is the biggest drop through that historically critical technical support level since early October. Perhaps more notably, most of the go-go sectors that were heralded by all the talking head momo queens on mainstream media as leading the next leg of stock gains have seen their post-Taper gains gone. From Builders to Banks and Industrials, taper-gains are now a dim and distant memory.

 

Post-Taper gains collapsing…

 

S&P futures slide under 1800 back to taper levels and the furthest below the 50DMA since early October


    



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S&P Futures Slide Under 1800; 50 DMA Support Breached; Taper "Gains" Gone For Most

S&P 500 futures just crossed below 1,800 – its lowest since the FOMC’s taper announcement on December 18th. The cash S&P 500 (and small cap S&P 600) have crossed below their crucial 50-day-moving average (with no sign of dip-buyers yet). This is the biggest drop through that historically critical technical support level since early October. Perhaps more notably, most of the go-go sectors that were heralded by all the talking head momo queens on mainstream media as leading the next leg of stock gains have seen their post-Taper gains gone. From Builders to Banks and Industrials, taper-gains are now a dim and distant memory.

 

Post-Taper gains collapsing…

 

S&P futures slide under 1800 back to taper levels and the furthest below the 50DMA since early October


    



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Meanwhile, The US Public Is Distracted By This…

With emerging market currencies collapsing, US equity hopes fading, bond yields tumbling, and 1.4 million people having fallen off the government transfer receipts bandwagon this week; what better way to distract the US public from that awkward reality that it’s all fake…

 

 

Well… and of course this.

h/t @RudyHavenstein


    



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Obamacare’s Failure To Enroll the Young Gets Health Insurers Downgraded by Moody’s

Healthcare.govThe viability of the Affordable Care
Act—Obamacare—is premised on getting young, healthy people to pay
way too much for their health care in order to subsidize coverage
for older, sicker people. Unfortunately for the scheme, young,
healthy people have turned out to be less gullible than
anticipated. They’re enrolling in underwhelming numbers after
discovering that it’s
cheaper to pay a penalty
than to get milked by the government.
The likely result is financial woes for health insurers tasked with
making Obamacare’s impossible numbers work—which has led to a
credit downgrade by Moody’s.

According to a Moody’s
press release
:

Uncertainty over the demographics of those enrolling in
individual products through the exchanges is a key factor in
Moody’s outlook change, says the rating agency. Enrollment
statistics show that only 24% of enrollees so far are aged 18-34, a
critical group in ensuring that lower claim costs subsidize the
higher claim costs of less healthy, older individuals. This is well
short of the original 40% target based on the proportion of
eligible people in this cohort, says Moody’s.

The ratings agency also cited regulatory uncertainty and tax
issues among the reasons it “changed the outlook for US health
insurers to negative from stable.” The overall effect is a vote of
no confidence in the economic sustainability of the Affordable Care
Act, and in the industry which once thought it hit the jackpot with
a law that ordered Americans to buy its products, but now discovers
(as so many have before) that government is an unreliable business
partner.

Earlier this week, the conservative American Action Forum
released a
report which found
“that after accounting for subsidies and
cost-sharing, 6 out of 7 uninsured, young adult households will
find it financially advantageous to forego health coverage, and
instead pay the mandate penalty and cover their own health care
costs. As the penalty increases, that number will drop from 86
percent in 2014 to 71 percent in 2015 and 62 percent in 2016,
before ticking back up to 66 percent in 2019.”

Economic incentives. So politically inconvenient.

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Obamacare's Failure To Enroll the Young Gets Health Insurers Downgraded by Moody's

Healthcare.govThe viability of the Affordable Care
Act—Obamacare—is premised on getting young, healthy people to pay
way too much for their health care in order to subsidize coverage
for older, sicker people. Unfortunately for the scheme, young,
healthy people have turned out to be less gullible than
anticipated. They’re enrolling in underwhelming numbers after
discovering that it’s
cheaper to pay a penalty
than to get milked by the government.
The likely result is financial woes for health insurers tasked with
making Obamacare’s impossible numbers work—which has led to a
credit downgrade by Moody’s.

According to a Moody’s
press release
:

Uncertainty over the demographics of those enrolling in
individual products through the exchanges is a key factor in
Moody’s outlook change, says the rating agency. Enrollment
statistics show that only 24% of enrollees so far are aged 18-34, a
critical group in ensuring that lower claim costs subsidize the
higher claim costs of less healthy, older individuals. This is well
short of the original 40% target based on the proportion of
eligible people in this cohort, says Moody’s.

The ratings agency also cited regulatory uncertainty and tax
issues among the reasons it “changed the outlook for US health
insurers to negative from stable.” The overall effect is a vote of
no confidence in the economic sustainability of the Affordable Care
Act, and in the industry which once thought it hit the jackpot with
a law that ordered Americans to buy its products, but now discovers
(as so many have before) that government is an unreliable business
partner.

Earlier this week, the conservative American Action Forum
released a
report which found
“that after accounting for subsidies and
cost-sharing, 6 out of 7 uninsured, young adult households will
find it financially advantageous to forego health coverage, and
instead pay the mandate penalty and cover their own health care
costs. As the penalty increases, that number will drop from 86
percent in 2014 to 71 percent in 2015 and 62 percent in 2016,
before ticking back up to 66 percent in 2019.”

Economic incentives. So politically inconvenient.

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via IFTTT

Authoritarianism Persists Around the World, But Not Because of an American “Crisis of Confidence”

Freedom House’s
annual report
came out this week, and it’s pretty glum. Here’s
how the organization’s announcement of its findings begins:

A new report! Here! Take one!

The state of freedom declined for the eighth
consecutive year in 2013, according to Freedom in the World
2014
, Freedom House’s annual country-by-country report on
global political rights and civil liberties.

Particularly notable were developments in Egypt, which endured
across-the-board reversals in its democratic institutions following
a military coup. There were also serious setbacks to democratic
rights in other large, politically influential countries, including
Russia, Ukraine, Azerbaijan, Turkey, Venezuela, and
Indonesia.

The report itself notes that “the overall level of regression
was not severe,” with 40 countries getting freer and 54 getting
more authoritarian. Freedom House’s list of which countries are
“free,” “partly free,” or “not free” hasn’t changed much: The
number of countries in the “free” category declined by two, and the
numbers in the other categories went up by one apiece. The number
of electoral democracies actually increased by four. So while
there’s plenty of bad news here, the situation isn’t as dire as
that lede suggests.

The political scientist Jay Ulfelder, former director of the
Political Instability Task Force, makes an important
point
:

The dictator plots his next move.Freedom House looks at the data from a different
angle than I do, calling out the fact that the number of declines
in scores on its Political Rights or Civil Liberties indices
outstripped the number of gains for the eighth year in a row. This
is factually true, but I think it’s also important to note that
many of those declines are occurring in countries in the former
Soviet Union and the Middle East that we already regard as
authoritarian. In other words, this eight-year trend is not
primarily the result of more and more democracies slipping into
authoritarianism; instead, it’s more that many existing autocracies
keep tightening the screws.

I don’t think it’s accidental that this eight-year trend has
coincided with two waves of popular uprisings in the very regions
where those erosions are most pronounced—the so-called Color
Revolutions and Arab Awakening. A lot of that slippage has come
from autocrats made anxious by democratic ferment in their own and
neighboring societies. If we notice that correlation and allow
ourselves to think longer term, I think there’s actually cause to
be optimistic that these erosions will not hold
indefinitely, at least not across the board.

One more comment. While the report’s country-by-country data are
useful as usual, I think its introductory essay offers a misleading
idea of what’s needed for freedom to grow. Its author complains not
just about the decline of civil liberties and political rights in
various parts of the globe, but about a “crisis of confidence” in
the U.S.:

America. (If only!)

The democratic world was experiencing a period of
self-absorption much like today’s when Freedom House launched
Freedom in the World during the 1970s. Once it had
overcome its crisis of confidence, America helped propel a historic
surge of democratization in parts of the world where
self-government was almost unknown. A similar era of change could
be in the offing, and some democracies — including a number in
Europe — have done their best to play a constructive role. But if
there is no reassertion of American leadership, we could well find
ourselves at some future time deploring lost opportunities rather
than celebrating a major breakthrough for freedom.

Let’s be clear: The great force that “helped propel” a global
shift from authoritarianism was the end of the Cold War, a change
that certainly had a lot to do with American actions but is rather
different from the sort of “leadership” that Freedom House seems to
be asking for here. The idea that the oppressed of the world need
outsiders to “lead” them to freedom is condescending nonsense, a
point I made the last
time
I wrote about the notion that liberty is in retreat around
the globe. That time I was responding to a New
Republic
 essay by Joshua Kurlantzick:

In theory, the New Republic article is about
the prospects for liberty and democracy abroad. In practice,
roughly half of it is devoted to fretting about the freer
countries’ willingness to go on global crusades. India isn’t doing
as much as it used to do for Burma’s dissidents, Kurlantzick
complains. And the American public is “increasingly isolationist.”
And while the Obama administration has “maintained significant
budget levels for democracy promotion,” it also “eliminated
high-level positions on the National Security Council that, under
Bush, had been devoted to democracy.” And countries that had to
deal with American and Soviet subversion during the Cold War are
“uncomfortable joining any international coalition that could
undermine other nations’ sovereignty.”

As you read all this, some questions may occur to you. Did India’s
support for the Burmese dissidents actually accomplish anything? (I
can’t help noticing that the junta is still in power.) What was the
real-world record of Bush’s drive for democracy abroad, and might
that record have something to do with that revival of American
isolationism? And when countries that served as Cold War
battlefields are wary of inflicting a similar fate on other
nations, isn’t it possible that they have a point?

Generally speaking, movements against dictatorships are more likely to
succeed
when they’re rooted in civic action from below instead
of intervention from outside. The U.S. certainly hasn’t acquitted
itself very well in the Arab Spring: It’s been reluctant to cut off
aid to countries like Bahrain even as they crack down harshly on
peaceful protesters, and when it did intervene forcefully—in
Libya—it’s hard to argue convincingly that the big picture
improved. One of the most distressing changes in [the 2010] Freedom
House survey was the demotion of Mexico from “free” to “partly
free,” the result of a wave of violence in which “government
institutions have failed to protect ordinary citizens, journalists,
and elected officials from organized crime.” That violence is a
direct result of the War
on Drugs
, and one of the chief reasons Mexico is fighting that
war is pressure from its neighbor to the north. If Washington
really wants to help the spread of freedom around the world,
perhaps it should spend less time budgeting for “democracy
promotion” and more time thinking about where it’s standing in the
way.

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via IFTTT

Authoritarianism Persists Around the World, But Not Because of an American "Crisis of Confidence"

Freedom House’s
annual report
came out this week, and it’s pretty glum. Here’s
how the organization’s announcement of its findings begins:

A new report! Here! Take one!

The state of freedom declined for the eighth
consecutive year in 2013, according to Freedom in the World
2014
, Freedom House’s annual country-by-country report on
global political rights and civil liberties.

Particularly notable were developments in Egypt, which endured
across-the-board reversals in its democratic institutions following
a military coup. There were also serious setbacks to democratic
rights in other large, politically influential countries, including
Russia, Ukraine, Azerbaijan, Turkey, Venezuela, and
Indonesia.

The report itself notes that “the overall level of regression
was not severe,” with 40 countries getting freer and 54 getting
more authoritarian. Freedom House’s list of which countries are
“free,” “partly free,” or “not free” hasn’t changed much: The
number of countries in the “free” category declined by two, and the
numbers in the other categories went up by one apiece. The number
of electoral democracies actually increased by four. So while
there’s plenty of bad news here, the situation isn’t as dire as
that lede suggests.

The political scientist Jay Ulfelder, former director of the
Political Instability Task Force, makes an important
point
:

The dictator plots his next move.Freedom House looks at the data from a different
angle than I do, calling out the fact that the number of declines
in scores on its Political Rights or Civil Liberties indices
outstripped the number of gains for the eighth year in a row. This
is factually true, but I think it’s also important to note that
many of those declines are occurring in countries in the former
Soviet Union and the Middle East that we already regard as
authoritarian. In other words, this eight-year trend is not
primarily the result of more and more democracies slipping into
authoritarianism; instead, it’s more that many existing autocracies
keep tightening the screws.

I don’t think it’s accidental that this eight-year trend has
coincided with two waves of popular uprisings in the very regions
where those erosions are most pronounced—the so-called Color
Revolutions and Arab Awakening. A lot of that slippage has come
from autocrats made anxious by democratic ferment in their own and
neighboring societies. If we notice that correlation and allow
ourselves to think longer term, I think there’s actually cause to
be optimistic that these erosions will not hold
indefinitely, at least not across the board.

One more comment. While the report’s country-by-country data are
useful as usual, I think its introductory essay offers a misleading
idea of what’s needed for freedom to grow. Its author complains not
just about the decline of civil liberties and political rights in
various parts of the globe, but about a “crisis of confidence” in
the U.S.:

America. (If only!)

The democratic world was experiencing a period of
self-absorption much like today’s when Freedom House launched
Freedom in the World during the 1970s. Once it had
overcome its crisis of confidence, America helped propel a historic
surge of democratization in parts of the world where
self-government was almost unknown. A similar era of change could
be in the offing, and some democracies — including a number in
Europe — have done their best to play a constructive role. But if
there is no reassertion of American leadership, we could well find
ourselves at some future time deploring lost opportunities rather
than celebrating a major breakthrough for freedom.

Let’s be clear: The great force that “helped propel” a global
shift from authoritarianism was the end of the Cold War, a change
that certainly had a lot to do with American actions but is rather
different from the sort of “leadership” that Freedom House seems to
be asking for here. The idea that the oppressed of the world need
outsiders to “lead” them to freedom is condescending nonsense, a
point I made the last
time
I wrote about the notion that liberty is in retreat around
the globe. That time I was responding to a New
Republic
 essay by Joshua Kurlantzick:

In theory, the New Republic article is about
the prospects for liberty and democracy abroad. In practice,
roughly half of it is devoted to fretting about the freer
countries’ willingness to go on global crusades. India isn’t doing
as much as it used to do for Burma’s dissidents, Kurlantzick
complains. And the American public is “increasingly isolationist.”
And while the Obama administration has “maintained significant
budget levels for democracy promotion,” it also “eliminated
high-level positions on the National Security Council that, under
Bush, had been devoted to democracy.” And countries that had to
deal with American and Soviet subversion during the Cold War are
“uncomfortable joining any international coalition that could
undermine other nations’ sovereignty.”

As you read all this, some questions may occur to you. Did India’s
support for the Burmese dissidents actually accomplish anything? (I
can’t help noticing that the junta is still in power.) What was the
real-world record of Bush’s drive for democracy abroad, and might
that record have something to do with that revival of American
isolationism? And when countries that served as Cold War
battlefields are wary of inflicting a similar fate on other
nations, isn’t it possible that they have a point?

Generally speaking, movements against dictatorships are more likely to
succeed
when they’re rooted in civic action from below instead
of intervention from outside. The U.S. certainly hasn’t acquitted
itself very well in the Arab Spring: It’s been reluctant to cut off
aid to countries like Bahrain even as they crack down harshly on
peaceful protesters, and when it did intervene forcefully—in
Libya—it’s hard to argue convincingly that the big picture
improved. One of the most distressing changes in [the 2010] Freedom
House survey was the demotion of Mexico from “free” to “partly
free,” the result of a wave of violence in which “government
institutions have failed to protect ordinary citizens, journalists,
and elected officials from organized crime.” That violence is a
direct result of the War
on Drugs
, and one of the chief reasons Mexico is fighting that
war is pressure from its neighbor to the north. If Washington
really wants to help the spread of freedom around the world,
perhaps it should spend less time budgeting for “democracy
promotion” and more time thinking about where it’s standing in the
way.

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via IFTTT

As Gold Flows From West To East Singapore Emerges As Global Storage Hub

Find out why Singapore is now one of the safest places in the world to store gold in our latest gold guide – The Essential Guide To Storing Gold In Singapore 

Today’s AM fix was USD 1,259.25, EUR 920.44 and GBP 757.40 per ounce.
Yesterday’s AM fix was USD 1,244.25, EUR 912.88 and GBP 749.91 per ounce.
 
Gold fell $28.14 or 2.3% to $1,264.20/oz. Silver slipped 0.31 or 1.6% to $20.04/oz.

Gold has edged higher again today and is set for its fifth consecutive weekly higher close which is bullish from a technical and momentum perspective. Gold is 5.5% higher year to date.


Gold in U.S. Dollars, 30 Days – (Bloomberg)

Speculation the U.S. Fed will again cut stimulus next week and that higher gold prices will limit physical demand is being ignored.

Gold shot up yesterday on poor U.S jobs data and after murmurings that the punitive taxes on gold in India may be reduced. Congress party chief Sonia Gandhi has asked the government to review tough import restrictions on gold, which include a record 10% import duty.

South Africa’s government will chair talks between union officials and the world’s three biggest platinum producers as the strike begins its second day. Nearly 70,000 employees downed tools at Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc mines yesterday, where 70% of global platinum is produced. Platinum is 6% higher this month.

Shanghai Gold Exchange (SGE) contracts rose to their highest since January 6 yesterday, when levels hit an 8 month high.  Physical demand in China has fallen from elevated levels but is likely to remain very robust in the coming months.

Some of the world’s growing middle classes and the wealthy are moving their gold away from increasing financial repression in the western world to the Asian capitals of Hong Kong and Asia’s emerging precious metals trade hub, Singapore.


Singapore, Asia’s Emerging Precious Metals Hub, by night

Zurich remains the preferred destination for many western and international investors, both retail and institutional. However, we and other bullion specialists are seeing an increase in clients seeking secure storage in Hong Kong and Singapore.

We concur with the view of many of our American and European clients that storing gold in Perth, Zurich, Hong Kong and increasingly Singapore is safer than in London, New York or elsewhere in the U.S.

Throughout history, gold has flowed to where it is most favourably treated. Today there is a growing move to own gold outside of the massively indebted and nearly insolvent western banking system and sovereigns.

Singapore is fast positioning itself as Asia’s global precious metals hub. In large part, this is due to Singapore’s very dynamic economy, Singapore fast becoming one of the world’s leading financial capitals, and the government’s support to position Singapore as the precious metals hub of the world.

The key requirements allowing Singapore to slowly become a global precious metals hub are many of the key benefits of storing bullion in Singapore today.

They include political and economic stability, very favourable tax treatment of precious metals, world class physical infrastructure and storage infrastructure, being a global transportation hub, hosting leading storage providers, pools of liquidity, refining capacity and government support and sponsorship.

Find out why Singapore is now one of the safest places in the world to store gold in our latest gold guide – The Essential Guide To Storing Gold In Singapore 


    



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