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Reaction to the Fed minutes from Gary and Chris

July 30, 2014

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82 Comments
    LPG
    Jul 30, 2014 30:03 PM

    If I may on the GM topic:
    Sub-prime quality unsurprisingly attracts sub-prime borrowers… 🙂

      Jul 30, 2014 30:16 PM

      What a GREAT point, although I kind of like some of the Cadallacs.

      Jul 30, 2014 30:19 PM

      What a GREAT point, although I kind of like some of the Cadillacs.

    Jul 30, 2014 30:07 PM

    LET ME GET THIS RIGHT….MORE PEOPLE ARE IN DEBT THAN EVER, FEWER PEOPLE ARE WORKING THAN EVER, NET WORTH IS DOWN 35%+/-, MORE PEOPLE THAN EVER WORK PARTTIME (2 JOBS) AND ON AND ON AND ON!!!! AND THEY (ELITE) WANT ME TO THINK, NO BELIEVE, THE GDP IS UP 4%!!! WHAT PLANET AM I ON? TO ACCEPT THAT AS TRUTH IS MORE THAN THE IMAGINATION CAN ACCEPT. I DO NOT ACCEPT THEIR NUMBERS AS A REAL MEASURE OF GDP…TOO MUCH GOV INVOLVED. YOU DO A GOOD JOB AL AND FRIENDS.

    ‘simply said’…wyn

      Jul 30, 2014 30:11 PM

      keep in mind GDP includes spending on healthcare and electricity! Inventories were also replenished. They will revise lower. They needed to put out a positive print to continue with their “recovery” narrative
      There is none but they can’t admit they blew $4 trillion and that they are tapering into negative growth.

      BTW wasn’t housing supposed to lead the recovery? (not too bright counting on people moving in and out of houses to drive an economy- but that is what they said QE would do and its not happening)

      LPG
      Jul 30, 2014 30:17 PM

      I think “good” data is a necessary condition to continue the taper. Without it, it’s tough to justify it.
      So if tapering is an utmost objective, then it’s legitimate to think that the data “has to fit”.
      My 2cts on it…
      Best,
      LPG

        Jul 30, 2014 30:33 PM

        Worth a buck and not two cents!

      Jul 30, 2014 30:19 PM

      You don’t buy the numbers?

        LPG
        Jul 30, 2014 30:25 PM

        Like Marc Faber, I don’t buy them at all. Whether from the US, or from China, or from some countries in Europe. But, as he does, I look at how the market reacts to them.

        I don’t remember who said: there are 3 types of lies: “lies, damned lies, and statistics.” And for me this is all what these stats are about. If real numbers were coming out, people will be on the streets by the millions with pitchforks…

        All these eco indicators/statistics are way too easy to manipulate for political purposes… and they are – cause the cost of doing so is inconsequential (nobody has ever been fined/fired/jailed for putting out bogus rosy statistics)…

        Best,

        LPG

          Jul 30, 2014 30:37 PM

          And That is sad LPG

        Jul 30, 2014 30:26 PM

        Not at the prices they are selling them at!

        Jul 30, 2014 30:46 PM

        Al? Wolfgang Puck, Mario Batali, Bobby Flay, Jamie Oliver, Rachel Ray and Paula Deen all put together couldn’t have done a better job of cooking this number than did these statistics-foisting criminals.

        Rob
        Jul 30, 2014 30:10 PM

        How is the fed gonna end the QE program and keep enough bids under the treasuries to prevent the the yields from going up?

          Jul 30, 2014 30:38 PM

          It is not!

      Jul 30, 2014 30:26 PM

      Wyn,
      see my post in the previous thread – GOLD AND SILVER ARE FINALLY GETTING WHAT YOU JUST SAID……..the tide is turning and crack in the DYKE is getting bigger, much bigger!! Then……..WATCH OUT!!

      Jul 30, 2014 30:32 PM

      Thanks Wyn

      We also find it hard to believe!

    Jul 30, 2014 30:09 PM

    Great job guys. Just remember inflation is noise and we still need hoily accaulmadative paulicy

    Jul 30, 2014 30:14 PM

    zn>M?

    Jul 30, 2014 30:15 PM

    Your t/a on gold is appreciated Gary

    Jul 30, 2014 30:25 PM

    They weren’t going to release a negative GDP print. It’s an election year. They have to keep rolling with “the economy is firing on all cylinders” story until November. After that, who knows.

      Jul 30, 2014 30:26 PM

      And they couldn’t blame it on the weather, like they did with the previous GDP print.

        Jul 30, 2014 30:40 PM

        Agree and agree Chris!

    Jul 30, 2014 30:26 PM

    Bingo Chris. NOTHING stops the Recovery! A Five year media event

    Jul 30, 2014 30:27 PM
      Jul 30, 2014 30:30 PM

      Booby,
      Thanks for the link….very sobering and VERY true….yikes….2,000 years after Christ and we still dont get it….we never will…..

        Jul 31, 2014 31:22 AM

        Here is a second chart to think on. It is the total number of battle deaths between 1946 and 2002 for the globe. Notice anything about this one? We are again at the bottom of the chart as of that year going all the way back to the conclusion of the Second Great War. Only ask yourself this one single question….after a chart hits its bottom then what happens next?

        Number of Battle Deaths Globally 1946 to 2002 (in thousands)
        http://filipspagnoli.files.wordpress.com/2008/06/humansecurityreport_number_of_battle-deaths1.jpg

      Jul 31, 2014 31:11 AM

      Thanks Bobby. That is a roundup of the most famous names discussing the topic. They have a point we need to acknowledge of course. The war cycle has indeed bottomed. Let me show you a chart that helps put it in perspective. It is the Average number of international conflicts since 1950 (or just 5 years after the end of the Second World War).

      Average number of violent world conflicts since 1950
      http://filipspagnoli.files.wordpress.com/2008/08/average-number-of-violent-conflicts-e1313935841485.jpg

      You will notice immediately that the chart is almost at the bottom by 2008 and the conclusion we derive is obvious…..war will ramp again as this trend reverses. The first world war took some 8 million lives, the second was 60 million. Should we doubt the third might take more than 400 million through direct conflict and disease? Lets not be surprised. Each new peak will exceed the one prior to it just as stock markets do over long periods of time. A sevenfold rise in the aggregate death rate cannot be ruled out. Nobody is safe when it comes.

        Jul 31, 2014 31:34 AM

        And one last chart to make sense of it all and prove we are at the bottom of the cycle and therefore on the verge of an uptrend in war making (unless human nature has changed and this time is different of course!). This chart which runs from 1940 to present should tell us everything we need to know about the future….it is going to be marked by increasing conflicts and wars across the globe and we need to brace for more bloodshed than has been seen in many decades prior.

        Worldwide Battle Deaths per 100,000 people. Chart ends at 2008 where it begins to tick up.
        http://filipspagnoli.files.wordpress.com/2008/08/battle-deaths-evolution-by-types-of-war.jpg

          Jul 31, 2014 31:32 AM

          Thanks for the charts, bird!

    Jul 30, 2014 30:30 PM

    So here is a long term chart of the Dow from 2000 to present.
    http://stockcharts.com/freecharts/historical/djia2000.html

    You know what the current period looks like to me Gary? Look how the chart is slowly curling over from about the beginning of 2013 to present. It has not really gone vertical at all but rather has started to form an arch near the top.

    Anyway, on the same chart we have an almost identical pattern for the period of July 2006 to February 2007. See what I mean? Right after that there came a sharp correction and then the Dow did actually follow through and go parabolic before an abrupt decline in mid 2007.

    What I am seeing indicates and probably confirms a corrective period is very near but that the parabolic move is still yet to come. After that….well nobody knows the outcome but it should be a dogs breakfast and a nasty depression (that’s about when the bail-ins kick in, we get our pensions confiscated or gated, banks go on a holiday and housing completes its reversion to the mean.

    Be sure to sell your house before then!

      Jul 30, 2014 30:51 PM

      Sell my house before then?? Even my Kelvinator Karton Kondo here under the I-35 overpass with the gorgeous view of the landfill and considerate neighbours who do all their drug deals in sign language ( usually the extended middle finger ) and the drive-by shooters all use silencers on their Saturday Night Specials?? Whever will I go? Whatever will I do? This is….. home!

        Jul 30, 2014 30:12 PM

        Exactly. Sell it now and get the hell out MAD. With the cash in hand you can rent a sprawling mansion in Palm Springs and hire a maid and a gardener once the credit bubble bursts. Hell, why even wait. Start now. I’ve got my maid and gardener already.

          Jul 30, 2014 30:22 PM

          Say, that’s a great idea. The maid and gardener will probably be the former owners, right? So they’ll know where everything is and everything that needs doing. ‘Bird? As they say in the Guinness commercials………. “Brilliant!”

          Jul 30, 2014 30:19 PM

          Former owners? Not a chance. I would boot them out day one. Everyone is too proud and too entitled if they grew up in NA. You need to find a few of those South American’s who keep sneaking across the border. First thing I learned about hiring servants….never choose a local. They just bring trouble. Better yet if the don’t speak the local language.

      Jul 30, 2014 30:42 PM

      We don’t want to get wet when it rains!

    Jul 30, 2014 30:51 PM

    Ebola could be the coming black swan.

      Jul 30, 2014 30:54 PM

      I HOPE NOTE ! DT !

      Jul 30, 2014 30:56 PM

      Ebola meets Obama care, it reminds me a science fiction movie.

        Jul 30, 2014 30:06 PM

        YES ( OUTBREAK 1995 ) Dustin hoffman !

      Jul 30, 2014 30:49 PM

      This Ebola outbreak is scary! I hope it will be contained soon. I still think the black swan will come out of the financial sector but then again that should not be considered a black swan because there are so many signs already.

    Jul 30, 2014 30:12 PM

    I don’t know about Ebola, but Argentina just defaulted. Could this be the Black Swan that kicks everything off? http://www.zerohedge.com/news/2014-07-30/argentina-defaults#comments

      Jul 30, 2014 30:18 PM

      No boring times to live IN ! Don’t forget day have TRILLIONS !

      Jul 30, 2014 30:12 PM

      Argentina has defaulted SO MANY TIMES no one CARES, any more. Everyone EXPECTS Argentina to default, it’d be a Black Swan if they DIDN’T default. No, the “Big One” will be kicked off by a country NO ONE would EVER suspect of defaulting… like the United States, or something. [/sarcasm]

        Jul 30, 2014 30:22 PM

        True, MAD. But that was then, this is now. You don’t know this time around which dominoes Argentina is going to drag down along with it. Rumours are floating that Citi Bank might be in trouble because of this. I don’t know if it’s true or not; would like to know if anybody has heard anything about that, or it’s just a bunch of baloney.

          Jul 30, 2014 30:31 PM

          Citi, huh? Kewl! I always wanted to max out my Citi M/C, now I have a perfect excuse for doing so.

        Jul 30, 2014 30:47 PM

        We don’t want to get wet when it rains!

        Jul 30, 2014 30:48 PM

        That’s not really so sarcastic Dallas!

          Jul 30, 2014 30:58 PM

          You’re right, Al, more along the lines of ironic.

        Jul 30, 2014 30:03 PM

        Good point MAD. Argentina seems to default every 10 years give or take. Using Gary’s cycles it seems like we should be shorting the Argentina every 8 years haha.

    Jul 30, 2014 30:03 PM

    Last week Chris Mayer made a point that I think is valid, and also ties in with Alan Greenspan. You may recall when Greenspan said the US will never default because the Fed can always print more money. Chris’ point was similar: no matter how high interest rates go the Treasury can service the debt because the Fed can always print more money. It was a forehead slapping moment for me. What do you think?

      Jul 31, 2014 31:58 AM

      Rod, yes the FED can print currency units until there are literally no trees left to mix with the cotton fiber and wood pulp.

      The problem with that thesis is the dollar becomes completely worthless as a national currency devoid of any purchasing power long before the natural supply of wood and cotton are used up.

      The MSM and the PTB are now trying to convince the public that the FED is above the natural law of physics and mathematics.

      I can assure you they are not, and neither is the purchasing power of their private central banks Federal Reserve Notes.

    Jul 30, 2014 30:14 PM

    The dollar looks ready to turn down —even if only for a month.
    http://stockcharts.com/h-sc/ui?s=UUP&p=D&yr=0&mn=5&dy=0&id=p31873262882&a=361825427

      Jul 30, 2014 30:50 PM

      Minor pullback at most. The dollar is trending up. That is all you need to know.

      Jul 31, 2014 31:41 AM

      Dollar Index will top out at about 82.6 where no less than three interlocking Fibonacci relationships going all the way back to the Dollar Index top in 2001 come into play. At that point it’s The Short Sale Of A Lifetime. There will NOT be the sort of knee-jerk run to the Dollar as we saw at this time in 2008. ( history “rhymes” )

    CFS
    Jul 31, 2014 31:03 AM

    I would suggest to members of this blog; the Fed CANNOT raise interest rates, and because it cannot raise rates, it will not. We will have herds of donkeys crawling around on only front legs before the Fed stops saying it will raise interest rates. Judge not their speech; only their actions. Chris and the Big One are, of course, correct.

    Argentinia defaulted on its bonds today; now we should watch to see the effect on interest rate default swaps, or will the definition oif default be changed yet again?

    Jul 31, 2014 31:19 AM

    You are correct. The Fed cannot easily move rates up. Market forces will take over in the end. We just don’t know when that will be but I suspect it is when defaults send lenders running for the hills and money dries up until risk premia on offer outweigh the hazard. Who are the lenders in any case? They are you and I who own bonds and debt instruments and expect to be repaid in our retirement. When sovereigns default it is pensioners and savers who withdraw and thus cause rates to rise. There is no getting around it.

    cfs
    Jul 31, 2014 31:17 AM

    OFF TOPIC:

    Anyone interested in Fracking might be interested in:
    http://vimeo.com/101748838

    This company and MDU Resources and its new refinery (almost built already) will change economics in the Dakotas.

    See also Denbury (DNR)

      cfs
      Jul 31, 2014 31:55 AM

      The Calumet referred to is CLMT a limited partnership ( 8% yield.)

    cfs
    Jul 31, 2014 31:22 AM

    I do not own any stock i9n Argentinian companies.

    Can anyone explain why on the day of default on its bond the FTSE index for argentina goes up?!?

    ARGT is the index stock symbol.

    THURS……….8:30……….GOLD DOWN……games continue………….smashers at work.

    Jul 31, 2014 31:06 AM

    Morning survey: since we won’t hear from the talking heads until 10 or 11 am est

    Given the events this morning …. What do you expect from Gold in the next 1-3 months?

      Jul 31, 2014 31:16 AM

      I don’t know Goldman, you’re the insider with the skinny. 😉

      Who knows where gold is going. No use in trying to figure out these manipulated markets. Nothing makes sense anymore.

    Jul 31, 2014 31:45 AM

    I wish I knew. China demand for jewelry dropped but likely imports being hidden in Shanghai.

      Jul 31, 2014 31:02 AM

      My gut feeling is telling me we might be in for one last major smackdown.

    Jul 31, 2014 31:51 AM

    If anything is going to be the great reckoner in Africa and the world it will be pestilence and disease and ebola is making this look like a prophecy from the bible.

    How terrible it must be to have to die alone and what if people aren’t buried in time and their bodies as in Africa. This situation is getting way out of hand. The educated people who were helping with this outbreak are leaving the infected areas. This is a very serious situation that can soon spread around the world.

      Jul 31, 2014 31:55 AM

      DT, the situation is out control. Every time I read about what is happening there I think about the 1918 flu pandemic. I hope they get it under control before it becomes a global problem.

    Jul 31, 2014 31:00 AM

    Chris Temple, Re interest rates: I attended a Cubs game last night… No sign of a World Series in sight!