Archive for the ‘Uncategorized’ Category
The Unintended Consequences Of Greenspan’s "Frankenstein" Markets
By Tyler Durden
A better way at looking at equity valuations, which does not entail a flawed GDP concept, is to compare it with other asset classes. Our next chart depict US farmland and residential real estate compared to the S&P 500. The idea is that these all reflect somewhat the productive capacity of society and should therefore yield more or less the same. And throughout history they did. While they clearly diverged now and then, such as the equity boom of the 1960s, farmland bubble in the 1970s and housing in the 2000s, the massive divergence in equity valuations starting with Greenspan’s reigns stands out.
And this is not because farmand productivity suddenly fell. On the contrary, from the 1940s output per acre has steadily risen. This is central bankers herding investors into stocks by altering the risk/reward balance. 
As a side note, with the latest bout of monetary madness farmland prices has indeed reached a new bubble; a bubble so severe that it makes the folly of the 1970s look like good old fashioned mid-western prudence. Turns out there were some unintended consequences of printing trillions of currency units after all.
As we have shown here before, the S&P500 is extremely dependent on what happens around FOMC days.
Excluding trading on the day of and after an FOMC decision shaves more than 40 per cent off the index.
Source: The Unintended Consequences Of Greenspan’s "Frankenstein" Markets
"The European Project Was Always Bound To Fail" – Europe Without The Union
By Tyler Durden
By Mark Fleming-Williams of
Crises abound, and though they all have different facades, each stems from the same underlying issue: Citizens ultimately prize their national and regional identities over the supranational dream. The sovereign debt crisis and repeating Grexit scares, born of the introduction of the euro in 1999, have exposed Northern Europe's unwillingness to subsidize the south. TheBrexit referendum, scheduled for June, can trace its roots to the 2004 enlargement of the European Union, and the ensuing wave of Polish migration to the United Kingdom. Meanwhile, amid the ongoing immigration crisis, national leaders are appeasing their populations by bypassing European rules and re-erecting border controls to stem the flow of refugees across their territory. In all of these situations, the same factors are at work: The driving forces within Europe are national in nature, and countries will ultimately put their own interests first.
Today's problems were both predictable and predicted. The next step, however, is harder to foresee. Having identified a system's inherent flaw, one can very well state that it is unsustainable, but unfortunately the flaw provides no guide as to the exact circumstances of the system's end. There are still many different ways that the demise of the European Union's current form could come about. For example, the project could unravel via market forces, as it nearly did in 2012 when investors tested the commitment of the core to save the periphery and found it to be (barely) willing to do so. Or a disaffected populace could elect a nationalist party such as France's National Front, which could either lead the country out of the European Union or make the bloc so unmanageable that it ceases to function. Perhaps the most likely scenario at this point would be for the European Union to survive as a ghost of its former self, with its laws ignored and stripped back to the extent that it holds only a loose grip on its members.
Where Integration Will Persist
The exact circumstances of the European project's end are not yet clear, but there are certain fixed, underlying truths that are sure to outlast the European Union's current form. With them, a forecast can still be made of the shape of things to come. These fundamental realities stem from deeper, unchanging forces that will bring countries together according to their most basic goals; they are the same forces that limited the European project's lifespan in the first place. By looking at these underlying factors, one can predict which countries will emerge from a weakened or collapsed European Union with close ties, and which are likely to drift apart in pursuit of their own interests once they are freed from the binding force of the European Union and its integrationist ideals.
The best place to start is the Benelux region. Belgium, the Netherlands and Luxembourg have long played a key role in European geopolitics, situated as they are on the flat and traversable land between Europe's two great Continental …read more
Source: "The European Project Was Always Bound To Fail" – Europe Without The Union
United CEO returning 2 months after heart transplant
United Airlines CEO Oscar Muñoz to return to work ‘full-time’ on March 14 after five month medical leave and undergoing heart transplant surgery on January 6.
Source: United CEO returning 2 months after heart transplant
Saudis Awarded France’s "Highest National Honor" For "Fight" Against Terrorism
By Tyler Durden
There is perhaps no more perverse relationship in the world than that which exists between the West and Saudi Arabia – or, “the ISIS that made it,” as Kamel Daoud, a columnist for Quotidien d’Oran, and the author of “The Meursault Investigation” calls the kingdom.
We’ve been over and over the glaring absurdity inherent in the fact that the US and its partners consider the kingdom to be an “ally” in the fight against terrorism and you can read more in the article linked above, but the problem is quite simply this: the Saudis promote and export an ultra orthodox, ultra puritanical brand of Sunni Islam that is virtually indistinguishable from that espoused by ISIS, al-Qaeda, and many of the other militant groups the world generally identifies with “terrorism.”
Wahhabism – championed by the Saudis – is poisonous, backward, and fuels sectarian strife as well as international terrorism. That’s not our opinion. It’s a fact.
But hey, Riyadh has all of the oil, so no harm, no foul right?
Even as the very same ideals exported by Riyadh inspire the ISIS jihad, the kingdom is so sure it has the political world in its pocket that it sought a seat on the UN Human Rights Council, even as the country continues to carry out record numbers of executions.
They even had the nerve to establish what they called a 34-state Islamic military alliance against terrorism in December. Of course the members don’t include Shiite Iran (the Saudis’ mortal enemy) or Shiite Iraq, both of which are actually fighting terror rather than bombing civilians in Yemen and engaging in Wahhabist proselytizing.
But while everyone in the world is well aware of just how silly the “alliance” is, the farce will apparently continue as French President Francois Hollande on Friday awarded Crown Prince Mohammed bin Naif France’s highest national honor, the Legion of Honor for “for his efforts in the region and around the world to combat extremism and terrorism.”
This is the same Francois Hollande whose country was attacked not four months ago by fighters inspired by the very brand of Islam the Saudis teach.
This would be like pinning a Blue Ribbon on Kim Jong-Un for his efforts to promote sanity and maturity in international relations.
There are no words.
Source: Saudis Awarded France’s "Highest National Honor" For "Fight" Against Terrorism
"Idiot, Clown, Or Hero?": Europe Ponders The Donald
By Tyler Durden
It was just seven weeks ago when
Initially that move was seen as cruel and Orban was cast by some as a kind of first European mover in the effort to strip away refugees’ basic human rights in the name of preserving Western Europe’s “Christian heritage.”
Fast forward nine months and the mood has changed. Dramatically. Fears of terrorism, rape, assault, and rampant violence plague everyday life for many Europeans and more European equivalents of Trump’s Mexican border wall have been erected in countries other than Hungary.
In many ways, Trump is the leader many Europeans want, even though most would never say so aloud as it flies in the face of everything the bloc is supposed to stand for and recalls the region’s rather uncomfortable past.
Trump has been called a populist, a nationalist, and at worst, a fascist. All of those movements are once again on the rise in Europe largely as a response to the refugee crisis (just look at PEGIDA, and the Soldiers of Odin). Of course there are still those Europeans who find Trump repugnant – the antithesis of an Angela Merkel.
CBC is out with some interesting commentary on all of the above.
“As hundreds of thousands of asylum-seekers continue to land on Europe’s shores, and as an opposing sentiment rises, for some, Trump’s sturdy wall can’t be built here quickly enough,” Foreign Correspondent Nahlah Ayed writes. “The Republican leadership contender’s tough talk on migration, on Muslims, and on Europe’s approach to both, is giving Trump strange but tangible traction on the non-voting side of the Atlantic.”
Here, for instance is what Jean-Marie Le Pen tweeted late last month:
Si j’étais américain, je voterais Donald TRUMP… Mais que Dieu le protège !
— Jean-Marie Le Pen (@lepenjm) February 27, 2016
And then there is of course the incomparable right-wing Dutch politician Geert Wilders (see more on Geert here), who said this:
I hope @realDonaldTrump will be the next US President. Good for America, good for Europe. We need brave leaders. pic.twitter.com/FWJSaQdClM
— Geert Wilders (@geertwilderspvv) December 7, 2015
“The immigration issue and the position he’s taken on Mexico, you know, it resonates with many on the European continent,” Peter Trubowitz, director of the London School of Economics’ United States Centre told CBC. “They’re worried about immigration, worried about refugees and it’s probably no surprise that Le Pen endorsed Donald Trump.”
On the other side, are those who say Europeans that support Trump are just as misguided as the Americans who have pledged their vote to the bellicose billionaire. Here’s the front page of last month’s Libération. It reads: “the big idiot on the rise.”
And here’s Der Spiegel with the headline: “Madness: America’s Agitator”
Finally, CBC warns that Trump’s affinity for Vladimir Putin has some Europeans concerned that the US may abandon the “losers” …read more
Source: "Idiot, Clown, Or Hero?": Europe Ponders The Donald
Key Equity Index Climbs Back Up The Elevator Shaft
By Tyler Durden
The Value Line Geometric Composite, which broke critical support in early January leading to an immediate 12% drop, has climbed all the way back to the breakdown level.
The Risk Model that orients our investment posture utilizes market inputs other than simply price in its construction. However, if we were to choose one price plot to guide our investment decisions, it would most certainly be the Value Line Geometric Composite (VLG). The VLG, as we have explained many times in these pages, is an unweighted average of approximately 1700 stocks. Thus, in our view, it serves as the best representation of the true state of the U.S. equity market. It has also historically been very true to technical analysis and charting techniques which is quite remarkable considering there are no tradeable vehicles based on it. And it has been remarkably accurate of late in offering guideposts for trading this market – something to keep in mind based the current level of the VLG.
Consider some of our posts this year focusing on the VLG:
January 6: “BREAKING!: The Bull Market?”
The VLG breaks what we had labeled the “pass/fail” line around 436, signified by a cluster of key Fibonacci Retracement lines stemming from the major post-2009 bull market lows. The break of this level, besides perhaps dealing the fatal blow to the cyclical bull market, opened up an immediate 12% of further downside to the 382 level.
January 20: “UPDATE>>Just 2 Weeks After Breakdown, Key Index Hits Ground Floor”
Just 2 weeks later, the VLG tags the 382 level. This level, signified by the next sequential Fibonacci Retracement levels, also proves to be accurate, not only as a magnet but as support. The index would test the level again in February, ultimately forming a closing low of 383.82. From there, it has bounced, just as it was drawn up.
February 23: “Is The Stock Rally Glass Half Full Or Half Empty?”
About 8 days into the February bounce, the VLG came to a crossroads halfway between the 382 and 436 level. The area included several potential points of resistance; however, based on some of the proprietary indicators that we track, there were suggestions that the rally was not over and that the VLG could push through the potential resistance. Based on that, we surmised that the VLG glass was half full and the index was more likely to rally another 6% to the 436 level than it was to visit 382.
Fast forward 8 more days to today and we find the VLG hitting a high of 437, confirming our short-term inclination and recovering all the way up the elevator shaft to where it broke down on January 6.
Short-term view:
Long-Term view:
So what now? Well, after rallying 14% in just …read more
Source: Key Equity Index Climbs Back Up The Elevator Shaft
‘Zootopia’ has Disney Animation’s biggest opening ever
“Zootopia,” Disney Animation Studios’ new film, hopped to a big box office this weekend.
Source: ‘Zootopia’ has Disney Animation’s biggest opening ever
