The Year Of The Red Monkey: Volatility Reigns Supreme
By Tyler Durden
Submitte dby Charles Hugh-Smith via PeakProsperity.com,
In the lunar calendar that started February 8, this is the Year of the Red Monkey.
I found this description of the Red Monkey quite apt:
“According to Chinese Five Elements Horoscopes, Monkey contains Metal and Water. Metal is connected to gold. Water is connected to wisdom and danger. Therefore, we will deal with more financial events in the year of the Monkey. Monkey is a smart, naughty, wily and vigilant animal. If you want to have good return for your money investment, then you need to outsmart the Monkey. Metal is also connected to the Wind. That implies the status of events will be changing very quickly. Think twice before you leap when making changes for your finance, career, business relationship and people relationship.”
(Source)
In other words, the financial world will be volatile. And few will have the agility and wile to outsmart the market-monkey.
For those who don’t believe in astrological forecasts, there are plenty of other reasons to anticipate sustained volatility in 2016 that strips certainty and cash from bulls and bear alike.
What’s the Source of Volatility?
Why are global markets now so volatile? The basic answer is as obvious as it is officially verboten: the global growth story is unraveling, and central banks and governments are desperate to re-ignite stagnating growth.
When solid evidence of flagging trade, sales and profits surfaces, markets drop. When central banks and states talk up monetary and fiscal stimulus, markets leap higher, as seven years of stimulus programs have rewarded those who “buy the dips.”
The relatively brief downturns and quick recoveries of the past seven years have led many to believe that this tug of war will resolve itself one way or the other in a few months. But the past seven years may not be a good guide to the next year or two: volatility might persist, month after month, with no clear resolution.
Indeed, the past 25 years may not be a good guide to the next few years, as there are no analogous periods of sustained volatility in recent history. Rather, the current period shares characteristics with each crisis and crash of the past 25 years, but combines all these causal factors in one overlapping series. This makes the present volatility unique.
Another causal factor is also unique to this era: after seven long years of zero interest rate policy (ZIRP), central banks have started pursuing an unprecedented policy of financial repression: negative interest rates (NIRP), in effect punishing savers for holding capital.
The uncertainties generated by these policies are fueling rapid cycling between selling and buying in both human and machine (trading bots) participants. Money managers fear losing capital in a crash, but are forced to seek yield in a zero or negative interest world.
No wonder volatility will reign supreme for some time to come: never before have all these causal factors been mixed together in a toxic brew …read more
Source: The Year Of The Red Monkey: Volatility Reigns Supreme
Trump Blames "Organized Thugs" For Violence, Establishment Blames Trump
By Tyler Durden
Amid confusion over the cancellation (due to more security concerns) of today's rally in Ohio – since denied by Trump campaign officials – the finger of blame for last night's violent protests is wending its way through the mainstream media. First Cruz, then Rubio, followed this morning by Hillary, Kasich, and even Bernie (among various talking heads and 'spinners') all point to Trump's campaign “for creating an environment of division.” Trump (and his supporters) see the sudden eruption of 1000s of well coordinated protesters as oddly coincidental ahead of Super Tuesday 3 next week noting that, rather against the establishment's hopes, “The organized group of people, many of them thugs, who shut down our First Amendment rights in Chicago, have totally energized America!”
Following Chicago's chaos, it appears, as Reuters reports, today's Ohio rally was also under pressure from security concerns, but the cancellation has been denied:
A spokeswoman for U.S. Republican presidential front-runner Donald Trump on Saturday denied a media report that he had canceled an Ohio rally because of security concerns.
The Cincinnati.com news website had quoted Eric Deters, a local spokesman for Trump's campaign, as saying the candidate's Secret Service security detail could not complete preparations in time to hold the event on Sunday at Cincinnati's Duke Energy Convention Center.
But Trump spokeswoman Hope Hicks said in an email: “We don't know Eric Deters. There has been no cancellation.”
Trump says on Twitter that, “The rally in Cincinnati is ON. Media put out false reports that it was cancelled.”
“Will be great — love you Ohio!” he adds.
Trump had said in an interview with MSNBC on Friday that, “You can't have a rally in a major city in this country anymore without violence or potential violence.”
However, the squabbles continue – over who is to blame (as Slate.com reports)
Five people were arrested Friday night and two officers were injured in skirmishes that broke out after Donald Trump abruptly canceled a Chicago rally on Friday.
Rivals quickly pointed the finger at Trump, saying that the violence at his rallies reflect the tenor of the frontrunner’s campaign.
“A campaign bears responsibility for creating an environment,” said Ted Cruz. “The predictable consequence of [Trump’s comments] is it escalates. Today is unlikely to be the last such instance.”
Sharp words from Marco Rubio about Donald Trump and the mess at Trump's canceled rally in Chicago: “I believe Donald Trump as our nominee is going to shatter and fracture the Republican Party and the conservative movement,” Rubio says that some of the blame for what happened Friday night in Chicago lies with the protesters, but he says much of the divisiveness is in Trump's hands. Rubio says Trump is feeding into some voters' anger and bitterness and is manipulating that for votes…“You saw those images last night of people … often divided up on racial lines in many cases. Police officers bleeding from the head reminiscent of images from …read more
Source: Trump Blames "Organized Thugs" For Violence, Establishment Blames Trump
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CBS reporter arrested at Trump rally
The president of CBS News tweeted that a CBS journalist arrested during a Trump rally did not resist arrest.
Source: CBS reporter arrested at Trump rally
Gold Is The Only Sound Money
By Tyler Durden
Submitted by Alasdair Macleod via GoldMoney.com,
This article notes that the technical situation for the gold price has sharply improved, to the evident surprise of many mainstream analysts. It discusses possible reasons behind the turnaround, and implications for the future.
Technicals
The technical situation is shown in the chart below.
A “golden cross”, with the 55 day moving average crossing above the 200 day moving average with both of them on a rising trend, and the share price above both these moving averages, has now occurred. This is generally taken by traders to indicate the bear trend has reversed, and a bull market is now in place.
More interestingly, this change of direction is combined with a bullish pennant pattern, which commenced on 11th February and completed on 3rd March, taking precisely three weeks. This is shown by the dotted lines. The intraday price movements (not shown) conform exactly to the pattern, and the break-out on 4th March saw high volume with an increase to a record amount of outstanding Comex contracts.
The other technical qualifications for a pennant are also fully satisfied. It follows a sharp rise, is a consolidation lasting no more than three or at most four weeks, volume diminished while the pattern played out (taking Comex volumes as proxy), and the break-out was a resumption of the trend. It therefore appears to be a text-book example.
Pennants give us a price objective, which equates to the preceding rise from its breakout point. This yields a minimum price target of approximately $1400, which with pennants can happen quite quickly. And that helps explain, from a purely technical point of view, the seemingly unstoppable strength in the gold price.
Technical analysis is the justification for investors to consider and take action in capital markets, without having to understand the underlying reasons why prices change. Indeed, in these days of seemingly infinite quantities of bank credit being applied to financial speculation, price trends are being driven day-to-day by charts, making prices dependent on the application of credit rather than fundamental appraisals of prospective values.
Technical analysis is notoriously fallible, encouraging action independent from rational thought. We are told that flows into gold ETFs have been positive for the last forty days. But if we ask the question, whether or not the buyers of physical gold represented by paper entitlements are doing so for financial protection, or alternatively are energised by the hope of rising prices, one must conclude that it is most probably the latter.
Put another way, technical analysis is justified on the basis that by encouraging the madness of crowds, it works, and there is plenty of loose money slopping around the markets to ensure it might. This really is not good enough. A reasoned understanding of what gold actually is, an appreciation of vested interests, and an analysis of the practical consequences of investment flows, is vital for us as individuals if we are not to be whipsawed in volatile markets.
The …read more
Source: Gold Is The Only Sound Money
JPMorgan: "The ECB Could Purchase Equities Next"
By Tyler Durden
On Thursday, after the ECB’s stunning announcement that it would for the first time start monetizing corporate debt, we joked – or so we thought – that “within 6-9 months we expect to add a chart showing Europe’s junk bond market which will be next on the monetization menu, followed shortly after by equities and kitchen sinks.“
As it turns out, this wasn’t a joke, and overnight JPM’s Nikolaos Panigirtzoglou explained what to “expect” next from the ECB:
To the extent this week’s ECB decision marks a shift towards private sector asset purchases, the ammunition the ECB has expands hugely.
Assuming the ECB will be willing to navigate eventually into other private sector asset classes, the asset universe for QE purchases could expand to include uncovered bank bonds, bank loans and equities.
Will the ECB buy equities outright? Of course: after all the reason for all the “helicopter money” and cash ban talk is because central banks are now utterly desperate and have their backs against the wall. They will try anything, including what until just years ago was considered absolutely insanity: buying stocks outright.
Incidentally, at just the same time as the above “joke”, we said something else which we thought was sarcasm: that corporations would take advantage of the ECB-guaranteed IG bid to issue debt and, having nothing else to do with the proceeds, use the funds to buyback their own stock, a rerun of what has been happening in the US for the past 4 years.
What happened:
– ECB buys corporate bonds
– Corporations use proceeds to buy back stock
– Market rises— zerohedge (@zerohedge) March 10, 2016
This too was not a “joke”, and here is JPM again explaining that we were spot on:
The ECB’s corporate bond program will result to lower financing costs and more limited financial distress over time. This coupled with elevated Equity Risk Premia will increase the incentive for European companies to buy back their own shares. We thus see a higher chance that share buyback activity will improve in Europe from its current dormant phase.
Finally, we predicted that the most acute impact of the ECB’s corporate QE action would be to impair an already painfully illiquid corporate bond market: “ECB purchases of company securities could serve to limit liquidity in a market where investors say it’s become harder to trade after banks cut their bond holdings to preserve capital in response to tougher rules.“
And, lo and behold, JPM just confirmed this as well, estimating that the ECB can purchase at most €3.5 -€6 BN in bonds per month before it damages the market, and that in general “ECB corporate bond purchase program will be more difficult and more fragmented from an implementation perspective, than either the government bond or the covered bond purchase program“:
Another implication …read more
Source: JPMorgan: "The ECB Could Purchase Equities Next"
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"Gloom" Returns To China’s Economy: Industrial Production, Retail Sales Miss Lowest Estimates
By Tyler Durden
After an unprecedented surge in Chinese attempts to stimulate the economy in late 2015, mostly on the fiscal side, coupled with recent monetary easing by the PBOC which cut the banks’ reserve ratio recently and unleashed a tsunami of new loan creation in January, many expected that this unprecedented credit impulse would translate into at least a modest rebound for the economy, prompting a stable pick up in spending for the economy which many are touting is now consumer-spending driven as opposed to export and production.
However, that did not happen: according to data released overnight by the National Bureau of Statistics, Chinese factories and retailers not only missed expectations, but slowed down materially from the December prints, as anemic demand and excess capacity continued to bear down on the world’s second-largest economy.
Specifically, Jan-Feb factory output grew just 5.4% in January and February from a year earlier, data released by the National Bureau of Statistics (NBS) showed, slowing from a 5.9% rise in December to the weakest since November 2008; the print matched the lowest Wall Street estimate.
Meanwhile, retail sales rose 10.2% over the two-month period from a year ago, below the lowest Wall Street estimate of 10.5%, and far below the December’s 11.1% increase, pushing the trend growth in this series to lows not seen since early 2015.
“Overall, the picture is still quite gloomy,” said Commerzbank AG economist Zhou Hao. “Normally, because of Chinese New Year, there’s a big drop and a big jump. This year there’s only a big drop.”
The retail data was particularly disappointing because as the WSJ writes “while industries have been battered by the economic slowdown, retail sales have been relatively buoyant, so the downtick surprised some economists, especially since it occurred around the Lunar New Year holiday when consumption is usually strong.”
And to think record, if fake, box office numbers were supposed to carry China’s economy in the aftermath of the absolutely disastrous trade data released earlier in the month.
To be sure, the commentary immediately explained that the weak data will mean even more stimulus, even though it was just last week when the Congress laid out all the measures that China will adopt to assure “GDP growth” of 6.5%-7.0%.
Here’s Reuters: “China’s activity data remained weak in the first two months of 2016, with factory output growth hitting the weakest since the global financial crisis, keeping pressure on policymakers to do more to avert a sharper showdown in the world’s second-largest economy.“
Unlike the recent collapse in Chinese exports and imports, the overnight data could not be “explained away” due to calendar effects as it combines the January and February timeframe: China’s government combines some economic data for January and February to minimize distortions tied to the Lunar New Year holiday, which falls during those two months. It was in early February this year.
It wasn’t all bad news: one area that did pick up was investment in factories, buildings and …read more
Source: "Gloom" Returns To China’s Economy: Industrial Production, Retail Sales Miss Lowest Estimates
Google computer beats world ‘Go’ champion
A Google computer just beat the long-reigning global champion of the world’s most complex board game.
Source: Google computer beats world ‘Go’ champion
China continues to hold fire on stimulus
China is experiencing its slowest growth in 25 years, but the government is still holding fire on its giant stimulus bazooka.
Source: China continues to hold fire on stimulus
Democracy, Be Damned – The "Sea Island" Conspiracy Reveals The Deep State
By Tyler Durden
Submitted by Patrick Buchanan via Buchanan.org,
Over the long weekend before the Mississippi and Michigan primaries, the sky above Sea Island was black with corporate jets.
Apple’s Tim Cook, Google’s Larry Page and Eric Schmidt, Napster’s Sean Parker, Tesla Motors’ Elon Musk, and other members of the super-rich were jetting in to the exclusive Georgia resort, ostensibly to participate in the annual World Forum of the American Enterprise Institute.
Among the advertised topics of discussion: “Millennials: How Much Do They Matter and What Do They Want?”
That was the cover story.
As revealed by the Huffington Post, Sea Island last weekend was host to a secret conclave at the Cloisters where oligarchs colluded with Beltway elites to reverse the democratic decisions of millions of voters and abort the candidacy of Donald Trump.
Among the journalists at Sea Island were Rich Lowry of National Review, which just devoted an entire issue to the topic: “Against Trump,” and Arthur Sulzberger, publisher of the Trumphobic New York Times.
Bush guru Karl Rove of FOX News was on hand, as were Speaker Paul Ryan, Majority Leader Mitch McConnell and Sen. Lindsey Graham, dispatched by Trump in New Hampshire and a berserker on the subject of the Donald.
So, too, was William Kristol, editor of the rabidly anti-Trump Weekly Standard, who reported back to comrades: “The key task now, to … paraphrase Karl Marx, is less to understand Trump than to stop him.”
Kristol earlier tweeted that the Sea Island conclave is “off the record, so please do consider my tweets from there off the record.”
Redeeming itself for relegating Trump to its entertainment pages, the Huffington Post did the nation a service in lifting the rug on “something rotten in the state.”
What we see at Sea Island is that, despite all their babble about bringing the blessings of “democracy” to the world’s benighted, AEI, Neocon Central, believes less in democracy than in perpetual control of the American nation by the ruling Beltway elites.
If an outsider like Trump imperils that control, democracy be damned. The elites will come together to bring him down, because, behind party ties, they are soul brothers in the pursuit of power.
Something else was revealed by the Huffington Post — a deeply embedded corruption that permeates this capital city.
The American Enterprise Institute for Public Policy Research is a 501(c)(3) under IRS rules, an organization exempt from U.S. taxation.
Million-dollar corporate contributions to AEI are tax-deductible.
This special privilege, this freedom from taxation, is accorded to organizations established for purposes such as “religious, educational, charitable, scientific, literary … or the prevention of cruelty to children or animals.”
What the co-conspirators of Sea Island were up at the Cloisters was about as religious as what the Bolsheviks at that girls school known as the Smolny Institute were up to in Petrograd in 1917.
From what has been reported, it would not be extreme to say this was a conspiracy of …read more
Source: Democracy, Be Damned – The "Sea Island" Conspiracy Reveals The Deep State
What The Average Zhou Thinks Of China’s Housing Bubble: "Only After War Breaks Out, We’ll Be Able To Afford It"
By Tyler Durden
Chinese home prices are soaring. In fact, according to the latest data, the bubble among China's top, or “Tier 1” cities has never been bigger entirely at the expense of all other cities.
And while this appears at first glance a positive, for central-planners and leveraged speculators, we wondered what the man on the street of Beijing thought of it.
Policies by Chinese authorities to stimulate the country’s housing market have contributed to sky-high prices in some big cities such as Beijing, Shanghai and Shenzhen – with developers and real estate agents adding to the craze. What do Beijing residents make of the current market? Do they fear that a property bubble might be on the horizon?
The Wall Street Journal hit the streets to find out, and discovered the average Zhou is not happy…
Hu Xiaolin, 56, retired worker from Beijing
Do you currently own a house? If not, do you plan to buy one in the future?
No, I don't own a house. I don't plan to buy one; I can't afford it. My parents had a house, but my brother and sister live in it now. I just saw the news today about a “school district house:” an 11-square-meter bungalow was sold at 460,000 yuan ($71,000) per square meter. In total it's 5 million yuan ($770,000). It's just a game for the rich!
Why do you think real estate prices are so high? Do you expect them to decline or keep rising?
A few years ago the high prices were due to real demand. Gradually there was speculation, and now even regular people know that real estate is more valuable than stocks; the value just keeps rising. A house originally worth 4-500,000 yuan ($62-$77,000) might now be worth 2-3 million yuan ($300-$460,000). You can survey how many houses have owners living in them by counting the lights at night. Why so many empty houses? They belong to the real estate speculators, the hoarders and the corrupt officials.
Have you ever used a housing agent in Beijing? What was your experience like?
Yes. They're unreliable. Most talk rubbish, especially those working for small agencies. They always go back on their word and the staff are low quality; all they think about is selling houses and drawing a commission.
With “destocking” one of this year’s economic targets, what kind of change do you hope to see? What is the role of the housing market in China’s economy, in your opinion?
I hope the bubble can be eliminated more or less. What worries me is that if there are no purchasing requirements for outsiders and the rich flood into Beijing, the pressure will be overwhelming. The home-purchase policy isn't implemented strictly. Beijing isn't a livable city at all.
Liu Na, 32, garment trader from Shandong
“Chinese people want a house after they get money. It’s a fixed asset and can …read more
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