banks
by
Chris Martenson
Executive Summary
- The central-planning Status Quo will fight to the bitter end in order to keep stock and housing prices elevated
- HFT algorithms dramatically increase the odds of immediate "air pockets" in stock prices
- Persistently high gasoline prices are choking economic growth
- A parade of economic headwinds (weakening GDP growth, higher taxes, the impact of Obamacare, sequester cuts, chronic unemployment) are blowing increasingly stronger
- Powerful TBTF ("too-big-to-fail') interests are likely supporting the Fed's current efforts to boost asset prices
- Both near-term and long-term history tell us that the more asset prices are artificially increased, the farther they eventually fall, as intervention hits its point of diminishing returns
- Why you don't want to be long in this market when that happens
If you have not yet read Part I: Warning: Stocks Likely to Crater from Here, available free to all readers, please click here to read it first.
Hey, Where's My Cheap Gasoline?
Expensive energy is a serious drag on economic growth. It always has been and always will be, for obvious reasons.
The average person can be forgiven for being confused by the recent spike in gasoline prices. Since early 2012, there has been a concerted effort to tell the tale that the U.S. is producing more oil than it has in a long time and is on track to rival Saudi Arabia.
Literally hundreds of articles have breathlessly repeated the same information over and over again, like all good marketing programs should. But here in 2013, gasoline is on track to set price records and possibly make this year the most expensive one in history for gas prices:
How can this be? What is going on? How do we reconcile all the reports of record-breaking advances in U.S. oil production with these concurrent record-high gasoline prices?
The answer starts with the fact that the U.S. still imports 40% of its daily oil supply and is nowhere near energy independence when it comes to petroleum. This means that the U.S. remains wedded to the world price of oil, which remains quite elevated in price – with Brent crude remaining stubbornly elevated between $110 and $120 a barrel over the majority of the past year…
How the Market Failure Will Happen
PREVIEW by Chris MartensonExecutive Summary
- The central-planning Status Quo will fight to the bitter end in order to keep stock and housing prices elevated
- HFT algorithms dramatically increase the odds of immediate "air pockets" in stock prices
- Persistently high gasoline prices are choking economic growth
- A parade of economic headwinds (weakening GDP growth, higher taxes, the impact of Obamacare, sequester cuts, chronic unemployment) are blowing increasingly stronger
- Powerful TBTF ("too-big-to-fail') interests are likely supporting the Fed's current efforts to boost asset prices
- Both near-term and long-term history tell us that the more asset prices are artificially increased, the farther they eventually fall, as intervention hits its point of diminishing returns
- Why you don't want to be long in this market when that happens
If you have not yet read Part I: Warning: Stocks Likely to Crater from Here, available free to all readers, please click here to read it first.
Hey, Where's My Cheap Gasoline?
Expensive energy is a serious drag on economic growth. It always has been and always will be, for obvious reasons.
The average person can be forgiven for being confused by the recent spike in gasoline prices. Since early 2012, there has been a concerted effort to tell the tale that the U.S. is producing more oil than it has in a long time and is on track to rival Saudi Arabia.
Literally hundreds of articles have breathlessly repeated the same information over and over again, like all good marketing programs should. But here in 2013, gasoline is on track to set price records and possibly make this year the most expensive one in history for gas prices:
How can this be? What is going on? How do we reconcile all the reports of record-breaking advances in U.S. oil production with these concurrent record-high gasoline prices?
The answer starts with the fact that the U.S. still imports 40% of its daily oil supply and is nowhere near energy independence when it comes to petroleum. This means that the U.S. remains wedded to the world price of oil, which remains quite elevated in price – with Brent crude remaining stubbornly elevated between $110 and $120 a barrel over the majority of the past year…
by
Adam Taggart
Not everyone is a morning person. And few people like Mondays.
But if you're a precious metals investor, mornings – especially Mondays – are brutal.
The Evidence
The precious metals are routinely sold off at or soon after the 8am morning open of the New York NYMEX exchange.
Below are the daily gold price charts (source: Kitco) for each Monday (or Tuesday, if Monday was a holiday) since early this year. The current day's gold price is noted by the bright green line. The morning takedown is highlighted by the orange oval.
Gold’s Regular Morning Mugging
by Adam TaggartNot everyone is a morning person. And few people like Mondays.
But if you're a precious metals investor, mornings – especially Mondays – are brutal.
The Evidence
The precious metals are routinely sold off at or soon after the 8am morning open of the New York NYMEX exchange.
Below are the daily gold price charts (source: Kitco) for each Monday (or Tuesday, if Monday was a holiday) since early this year. The current day's gold price is noted by the bright green line. The morning takedown is highlighted by the orange oval.
by
Adam Taggart
by
Alasdair Macleod
There was yet another European Union summit at the end of June, which (like all the others) was little more than bluff. Read the official communiqué and you will discover that there were some fine words and intentions, but not a lot actually happened. However, there are some differences when compared with past meetings that need explaining:
- The European Council is being asked to consider permitting the European Central Bank to have a regulatory role alongside national central banks “as a matter of urgency by the end of 2012.” When this new super-regulator is eventually established, perhaps the ECB might be able to recapitalize banks directly. This was needed three years ago; the Eurozone will be lucky not to have a new banking crisis in the next few months, let alone by the year-end.
- A bail-out for Spain’s banks is agreed in principle, but it is to be funded by the European Financial Stability Facility (EFSF) until the European Stability Mechanism (ESM) is up and running. The EFSF has no money and relies on drawing down funds from all member states including Greece, Spain, Italy, Ireland, and Portugal, and the chances of the ESM being ratified by the individual Eurozone parliaments is very slim. We are told that Spain’s banks need about €100bn, but how much they really need is not known.
- The ESM will not rank as a prior creditor to the disadvantage of bond holders. This is a positive step, but makes it more difficult for national parliaments to authorize the ESM.
The big news in this is the implication the ECB will, in time, be able to stand behind the Eurozone banks because it will accept responsibility for them. This is probably why the markets rallied on the announcement, but it turned out to be another dead cat lacking the elastic potential energy necessary to bounce.
e another dead cat lacking the elastic potential energy necessary to bounce.
The Growing Pressures Likely to Blow the Eurozone Apart
by Alasdair MacleodThere was yet another European Union summit at the end of June, which (like all the others) was little more than bluff. Read the official communiqué and you will discover that there were some fine words and intentions, but not a lot actually happened. However, there are some differences when compared with past meetings that need explaining:
- The European Council is being asked to consider permitting the European Central Bank to have a regulatory role alongside national central banks “as a matter of urgency by the end of 2012.” When this new super-regulator is eventually established, perhaps the ECB might be able to recapitalize banks directly. This was needed three years ago; the Eurozone will be lucky not to have a new banking crisis in the next few months, let alone by the year-end.
- A bail-out for Spain’s banks is agreed in principle, but it is to be funded by the European Financial Stability Facility (EFSF) until the European Stability Mechanism (ESM) is up and running. The EFSF has no money and relies on drawing down funds from all member states including Greece, Spain, Italy, Ireland, and Portugal, and the chances of the ESM being ratified by the individual Eurozone parliaments is very slim. We are told that Spain’s banks need about €100bn, but how much they really need is not known.
- The ESM will not rank as a prior creditor to the disadvantage of bond holders. This is a positive step, but makes it more difficult for national parliaments to authorize the ESM.
The big news in this is the implication the ECB will, in time, be able to stand behind the Eurozone banks because it will accept responsibility for them. This is probably why the markets rallied on the announcement, but it turned out to be another dead cat lacking the elastic potential energy necessary to bounce.
e another dead cat lacking the elastic potential energy necessary to bounce.
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