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Whatever is going on in the daily stock market, you can’t call it “price discovery” or even remotely rational.

In fact, it amounts to grinding in harms’ way, and measures the degree to which the Fed and other central banks have turned the Wall Street casino into a giant litter of sick puppies who are bent on rolling the dice until they self-destruct.

Even MarketWatch has noted that the S&P 500 has climbed above 2100 on more than 30 occasions during the last 18 months, but has retreated each and every time.

So buying the dips in that context is based on eyes wide shut speculation; it essentially implies there is no material downside, and that one of these days the market will bust loose from its 2130 top of May 2015 and soar to spectacular new highs.

Why is the MSM Covering Up Recessionary Data?

April 14, 2016

WHY IS THE MSM COVERING UP RECESSIONARY DATA?

The Census Bureau put out their monthly retail sales report this morning. During good times, the MSM would be hailing the tremendous increases as proof the consumer was flush with cash and all was well with the economy. Considering 70% of our GDP is dependent upon consumer spending, you would think this data point would be pretty important in judging how well Americans are really doing.

It’s not perfect, because the issuance of debt to consumers to purchase autos, furniture, appliances and electronics can juice the retail sales numbers and create the false impression of strength. That’s what has been going on with auto sales for the last two years.

The retail sales figures have been propped up by the issuance of subprime auto loans to deadbeats, 7 year 0% interest loans to good credit customers, and an all-time high in leases (aka 3 year rentals). Despite this Fed induced auto loan scheme, retail sales have still been pitiful, as the average American has been left with stagnant wages, 0% interest on their minuscule savings, surging rent and home prices, and drastic increases in their healthcare costs due to Obamacare.

The retail sales for March, reported this morning, were disastrous and further confirmed a myriad of other economic indicators that the country is in recession. GDP for the first quarter will be negative. And this time they can’t blame it on snow in the winter. They have already doubly seasonally adjusted the figures, and they will still be negative. Retail sales in the first quarter were atrocious. It might make a critical thinking person question the establishment storyline of solid job growth being peddled by politicians and their MSM mouthpieces. If people had good paying jobs, they would be spending money.

…click on the above link to read the rest of the article…

Why a selloff in European banks is ominous

February 8, 2016

Why a selloff in European banks is ominous

Europe’s bank index has posted its longest weekly string of losses since 2008

Dark clouds are gathering around Europe’s banking sector.

European banks have been caught in a perfect storm of market turmoil, lately.

Lackluster profits and negative interest rates, have prompted investors to dump shares in the sector that was touted as one of the best investment ideas just a few months ago.

“The current environment for European banks is very, very bad. Over a full business cycle, I think it’s very questionable whether banks on average are able to cover their cost of equity. And as a result that makes it an unattractive investment for long-term investors.”

Peter Garnry, head of equity strategy at Saxo Bank.

The region’s banking gauge, the Stoxx Europe 600 Banks Index FX7, -5.59% has logged six straight weeks of declines, its longest weekly losing stretch since 2008, when banks booked 10 weeks of losses, beginning in May, according to FactSet data.

“The current environment for European banks is very, very bad. Over a full business cycle, I think it’s very questionable whether banks on average are able to cover their cost of equity. And as a result that makes it an unattractive investment for long-term investors,” warned Peter Garnry, head of equity strategy at Saxo Bank.

The doom-and-gloom outlook for banks comes as the stock market has had an ominous start to the year.

East or west, investors ran for the exit in a market marred by panic over tumbling oil prices CLH6, -3.01% and signs of sluggishness in China. But for Europe’s banking sector, the new year has started even worse, sending the bank index down 23% year-to-date, compared with 13% for the broader Stoxx Europe 600 index SXXP, -3.54%

European banks have underperformed the broader regional market

…click on the above link to read the rest of the article…

Venezuela fails to persuade Saudis to cut oil production

February 8, 2016

Venezuela fails to persuade Saudis to cut oil production

Meeting called ‘successful,’ but no word of agreement to help boost prices

Venezuela’s minister of petroleum and mining, Eulogio Del Pino, seen in December.

DUBAI — Saudi oil minister Ali al-Naimi met with his Venezuelan counterpart on Sunday but didn’t announce any plans for the production cut the South American country says is needed to prop up crude prices.

Venezuela’s Eulogio del Pino traveled to Riyadh this weekend as part of a tour of oil-producing countries both within and outside of the Organization of the Petroleum Exporting Countries, including Iran and nonmember Russia. Del Pino wants Saudi Arabia, the world’s largest oil exporter, to come around to his call for an output reduction that could bring the world’s vast supply of oil back in line with demand.

Naimi called the meeting “successful,” with a “positive atmosphere,” according to the state-run Saudi Press Agency. Del Pino, on his official Twitter page, said the meeting was productive and focused on cooperating to “stabilize the international oil market.”

OPEC and non-OPEC “countries must reach a consensus to bring stability to the global oil market,” del Pino said on Twitter. But neither said there was an agreement to slash oil output. Neither mentioned del Pino’s call for an emergency OPEC meeting to discuss such a cut, an idea Saudi Arabia has opposed.

An expanded version of this report appears on WSJ.com.

The Lull Before The Storm—–It’s Getting Narrow At The Top, Part 2

December 2, 2015

The Lull Before The Storm—–It’s Getting Narrow At The Top, Part 2

The danger lurking in the risk asset markets was succinctly captured by MarketWatch’s post on overnight action in Asia. The latter proved once again that the casino gamblers are incapable of recognizing the on-rushing train of global recession because they have become addicted to “stimulus” as a way of life:

Shares in Hong Kong led a rally across most of Asia Tuesday, on expectations for more stimulus from Chinese authorities, specifically in the property sector…….The gains follow fresh readings on China’s economy, which showed further signs of slowdown in manufacturing data released Tuesday (which) remains plagued by overcapacity, falling prices and weak demand. The dimming view casts doubt that the world’s second-largest economy can achieve its target growth of around 7% for the year. The central bank has cut interest rates six times since last November.

More stimulus from China? Now that’s a true absurdity—-not because the desperate suzerains of red capitalism in Beijing won’t try it, but because it can’t possibly enhance the earnings capacity of either Chinese companies or the international equities.

In fact, it is plain as day that China has reached “peak debt”. Additional borrowing there will not only prolong the Ponzi and thereby exacerbate the eventual crash, but won’t even do much in the short-run to brake the current downward economic spiral.

That’s because China is so saturated with debt that still lower interest rates or further reduction of bank reserve requirements would amount to pushing on an exceedingly limp credit string.

To wit, at the time of the 2008 crisis, China’s “official” GDP was about $5 trillion and its total public and private credit market debt was roughly $8 trillion. Since then, debt has soared to $30 trillion while GDP has purportedly doubled. But that’s only when you count the massive outlays for white elephants and malinvestments which get counted as fixed asset spending.

…click on the above link to read the rest of the article…

Privacy Advocates Raise Alarm Over Snapchat’s Updated Terms of Service – Calling it “Scary”

October 31, 2015

Privacy Advocates Raise Alarm Over Snapchat’s Updated Terms of Service – Calling it “Scary”

Snapchat related concerns aren’t new to Liberty Blitzkrieg readers. In case you missed the following previously published posts:

HBO and Snapchat are Actively Working with the U.S. Government to Create Propaganda

Snapchat Hacked – At Least 100,000 Photos at Risk

Today there’s a new controversy, related to the company’s updated “privacy policy,” which was recently unveiled along with an update to the app. Privacy advocates are sounding the alarm.

From MarketWatch:

Snapchat on Wednesday released a new update for its app and, with it, a new privacy policy that dramatically changes what the social network can do with the images users post.

First launched in 2011, the social networking app became popular among young people in particular for its “disappearing” photo messages that can’t be viewed again once they have been opened.

But an update to the Snapchat Terms of Service indicates that Snapchat has the rights to reproduce, modify and republish your photos and save those photos to Snapchat’s servers, specifically in relation to the ‘Live Story’ feature.

“You grant Snapchat a world-wide, perpetual, royalty-free, sublicensable, and transferable license to host, store, use, display, reproduce, modify, adapt, edit, publish, create derivative works from, publicly perform, broadcast, distribute, syndicate, promote, exhibit, and publicly display that content in any form and in any and all media or distribution methods,” the Terms of Service state.

Snapchat users are being asked to accept the updated terms after downloading the new version of the app, but the details of the new privacy policy aren’t immediately visible. Users must go to a different page to dig into those details.

Some Snapchat users expressed outrage over the fact that their “snaps” may no longer be as private as they once were. People are saying the update is “scary” and makes them want to delete their accounts.

…click on the above link to read the rest of the article…

Why Don’t You Explain this to Me Like I’m 5….

September 10, 2015

Why Don’t You Explain this to Me Like I’m 5….

Soc Gen’s global head of research, Patrick Legland, has gone on record, according to a MarketWatch article yesterday as saying that the selloff in developed equity markets has gone too far, and he provides reasons to support his claim. First, he suggests the Chinese market rout has further to go but believes the fallout will be limited to EM and commodities. Second, Legland believes that the US and other developed nations are protected by “well-armed central banks” evident by the 3.7% economic growth and the 5.1% unemployment rate and the Eurozone’s 3 year low unemployment. Lastly, he suggests that due to central banks having created a bond market bubble bonds are no longer a safe haven and thus no longer a viable alternative to equities. I will point out that Leon Cooperman also discussed on CNBC yesterday morning the fact that there are no viable alternatives to equities anymore and so equities remain in the secular bull.

Let me explain this to Legland like he is an 8 year old.

Ok like he’s 5.

While I admire Legland’s optimism I simply do not accept his claims. They are full of tragic flaws. Allow me to colour code this for all those market ‘pros’ and PhD ‘economists’ who haven’t been able to follow the premise over the past several months.

The chart depicts that this rout has just begun. As EPS rolled over in the first half of this year, it signaled that ‘The Tide has Finally Turned‘ as I explained in a recent piece published Aug 2nd (just weeks before the selloff began). In that research piece I told readers to “prepare for an imminent equity valuation reset” and explained why it would occur. The above chart provides an explanation as if we are a 5 year old.

…click on the above link to read the rest of the article…

3 major hurricanes recorded over the Pacific for first time ever

August 31, 2015

3 major hurricanes recorded over the Pacific for first time ever

In a historic development this weekend, three major hurricanes were recorded over the Pacific Ocean for the first time since records have been kept.

Hurricane Kilo, Hurricane Ignacio and Hurricane Jimena were all classified as Category 4 storms on Sunday, according to the National Hurricane Center (NHC), the second highest classification on the Saffir-Simpson scale.

It was the first time on record that there were three Category 4 hurricanes in the Pacific at the same time, and the first time three major hurricanes—defined as Category 3 or higher—were recorded over the Pacific, according to Weather.com.

“Sea surface temperatures are extremely warm, averaging 2 to 5 degrees above normal,” said meteorologist Chris Robbins, a former NHC forecaster and founder of Robbins Meteorological Consulting and iWeatherNet.com. “This anomaly is well north of the oceanic warming associated with a typical El Niño.”

The rare event was greeted with some enthusiasm by hurricane expert Eric Blake of the NHC on Twitter:

Eric Blake @EricBlake12

Historic central/eastern Pacific outbreak- 3 major hurricanes at once for the first time on record! #ElNino #climate pic.twitter.com/t4fdIZwhOO

4:52 PM – 29 Aug 2015

J Whitehead @ntxweathersoonr

@EricBlake12 i sense some drooling

Follow

Eric Blake @EricBlake12

@ntxweathersoonr one can’t use enough superlatives to talk about how unusual it is. Cpac has no business looking like this

4:56 PM – 29 Aug 2015

By 8 a.m. Eastern time Monday, Hurricane Jimena, still classified as Category 4, was moving west with maximum sustained winds of 150 miles per hour. The hurricane was not expected to lose much strength in the next couple of days, according to the NHC’s latest advisory.

Hurricane Kilo also remained a Category 4 and was heading toward the international dateline, according to the NHC. The storm was located about 1,370 miles west of Honolulu and had maximum sustained winds of 135 miles per hour.

…click on the above link to read the rest of the article…

The Chilling Thing Gartner Just Said About a Once Hot Engine of Global Growth

July 8, 2015

The Chilling Thing Gartner Just Said About a Once Hot Engine of Global Growth

Hope took another hit from the reality of fickle, strung-out consumers.

Apple sold 1.5 million watches during the first week, about 200,000 a day, its most successful product launch ever. Before the launch, media hype had become a total-immersion program. No company has ever dominated the media like this. Today,MarketWatch reported that sales, based on data from Slice, might have plunged 90% since that week, to fewer than 20,000 watches a day, and on some days fewer than 10,000.

“The value of a smartwatch for the average user is still not compelling enough,” explained IT research and advisory company Gartner in its report on worldwide electronic device shipments.

But it’s not just smartwatches.

The other beacon of hope in the electronic device sector, the smartphone, got broadsided today by Samsung, which cut its Q2 guidance, expecting revenues to drop 8% from a year ago. Yet, in April, the company had launched its flagship Galaxy S6 which was supposed to boost sales. Samsung didn’t give details, but there are a few culprits, such as lousy S6 performance against its competitors, weak demand in China and Europe, and the old standby, currency headwinds.

Gartner now expects shipment growth in the once sizzling mobile phone market to slow to a barely perceptible 3.3% in 2015. The report points at China:

The global market has been affected by a weaker performance in China. We have witnessed fewer and fewer first time buyers in China, a sign that the mobile phone market there is reaching saturation. Vendors in China will have to win replacement buyers and improve the appeal of their premium offerings to attract upgrades, if they want to maintain or increase their market share.

So it’s going to get tough in the Promised Land of 1.36 billion consumers. Hence, hope has to move beyond China:

…click on the above link to read the rest of the article…

Recession time bomb ticking faster, louder

June 28, 2015

Recession time bomb ticking faster, louder

Americans are unprepared for the trillions they will lose again

America is its own enemy, trapped in new irrational exuberance

What’s even more disturbing than the near certainty of Grantham, Cook and the Economist in the dark predictions is what’s driving them, America’s self-delusional narcissism, overoptimism and irrational exuberance from the happy-talking bulls, which sets us up for huge losses, as in the recessions of 2000-2003 and 2007-2009, with trillions in lost market cap.

Individually and collectively, whether Washington, Corporate America, Silicon Valley or Main Street, most Americans, secretly believe in the American Dream, at least for themselves, perpetual opportunity, perpetual growth, perpetual prosperity. When we surveyed Wall Street years ago we found a 93% bias toward positive thinking, and a tendency to ignore or substantially discount bearish signals, to “accentuate the positive, minimize the negative.”

This behavioral tendency puts individual investors, stock markets, even nations at great risk. Harvard financial historian Niall Ferguson, author of “Colossus: The Rise and Fall of the American Empire,” asked rhetorically in a Los Angeles Times column:

“America, a Fragile Empire: Here today, gone tomorrow … could the United States fall that fast?” Yes. America could fall very, very fast, triggering an economic collapse with losses in trillions, the historic game-changer demanding a political course correction, like the 1908 antitrust laws, the 1932 banking and securities laws … or today’s massive takeover of American government by an anarchistic oligarchy of superrich billionaires.

Next crash, an ‘accelerating sports car … a thief in the night!’

The point, it’s sudden, fast, and you won’t see it coming. Nor will America’s leaders. Unprepared, says the Economist, unable to act in time to avoid the recession dead ahead.

Says Ferguson, “for centuries, historians, political theorists, anthropologists and the public have tended to think about the political process in seasonal, cyclical terms … we discern a rhythm to history. Great powers, like great men, are born, rise, reign and then gradually wane.”

…click on the above link to read the rest of the article…

The Rich Get Richer: Titanic Stock Bubble Fueled by Buyback Blitz

May 6, 2015

The Rich Get Richer: Titanic Stock Bubble Fueled by Buyback Blitz

Why are stocks still flying-high when the smart money has fled overseas and the US economy has ground to a halt?

According to Marketwatch:

“For the eighth week in a row, long-term mutual funds saw more money flowing out of U.S. stocks and into international stocks, according to the Investment Company Institute……For the week ended April 22, U.S. stocks saw $3.4 billion in net outflows from long-term mutual funds…For the year to date, net outflows for U.S. stocks are $13.79 billion, while inflows for international stocks are $41.12 billion.

Those figures, however, don’t count exchange-traded funds. In April alone, mutual funds and ETFs that focus on international stocks saw $31.8 billion in net inflows, while U.S.-focused funds and ETFs shed $15.4 billion, according to TrimTabs Investment Research.” (“Why U.S. stocks are near highs even as fund investors flee“, Marketwatch)

So if retail investors are moving their cash to Europe and Japan (to take advantage of QE), and the US economy is dead-in-the-water, (First Quarter GDP checked in at an abysmal 0.1 percent) then why are stocks still just two percent off their peak?

Answer: Stock buybacks.

The Fed’s uber-accommodative monetary policy has created an environment in which corporate bosses can borrow boatloads of money at historic low rates in the bond market which they then use to purchase their own company’s shares. When a company reduces the number of outstanding shares on the market, stock prices move higher which provides lavish rewards for both management and shareholders. Of course, goosing prices adds nothing to the company’s overall productivity or growth prospects, in fact, it undermines future earnings by adding more red ink to the balance sheet. But these “negatives” are never factored into the decision-making which focuses exclusively on short-term profits. Now get a load of this from Morgan Stanley via Zero Hedge:

…click on the above link to read the rest of the article…

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