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A Preview to the Fed Decision Today

“Here’s what to look for when the Federal Open Market Committee releases its policy statement at 2 p.m. today inWashington. Federal Reserve officials won’t provide new economic projections, and Chair Janet Yellen isn’t scheduled to give a post-meeting press conference.

— Steady tapering: The FOMC will probably trim monthly bond purchases for a sixth straight meeting, to $25 billion, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. That would keep the Fed on pace to announce an end to purchases in October, he said.

— Labor slack: At the same time, the panel will discuss signs of persistent labor-market weakness to maintain its view that interest rates should stay low for a “considerable time” after quantitative easing ends, according to Jonathan Wright, an economics professor at Johns Hopkins University in Baltimore.

— While the jobless rate is down to 6.1 percent, that’s partly because the proportion of working age people in the labor force is the lowest since 1978. “Unemployment is falling faster than expected, but they can still say that other labor-market indicators are mixed,” said Wright, an economist at the Fed’s division of monetary affairs from 2004 until 2008.

— Lagging wages: The FOMC’s most vocal supporters of continued stimulus will probably also cite weak wages, said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York.

The FOMC wants “clear evidence of firming wage inflation” before determining that the U.S. is approaching full employment, LaVorgna said in a note to clients. After adjusting for inflation, average hourly earnings last month fell 0.1 percent from a year earlier.

Price Goal…”

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Bund Yield Falls to Record, Surpassing Euro-Crisis Levels

“German 10-year government bonds rose, sending yields to thelowest on record, surpassing levels set at the worst of the European sovereign-debt crisis.

Unprecedented European Central Bank stimulus measures imposed to stave off deflation are boosting bonds across the region, with yields on debt from Finland to Italy falling to new lows today. Investors have been lured to the relative safety of German and so-called semi-core euro-area bonds as the U.S. and European Union prepare new sanctions against Russiafollowing the downing of a Malaysian airliner over Ukraine and as Israel steps up its bombardment of Gaza.

“Yields are going lower because the market expects the ECB to do more in the low-growth, low-inflation environment that we are in,” said Lyn Graham-Taylor, a fixed-income strategist at Rabobank International in London. “Month-end demand also helps. It’s a bit of a function of low inventories and everyone being careful about being short heading into month end.”

A short position is a bet an asset’s value will drop.

Benchmark 10-year yields fell two basis points, or 0.02 percentage point, to 1.13 percent at 9:45 a.m. London time after sliding to 1.119 percent, the least on record according to data compiled by Bloomberg dating back to 1989. The 1.5 percent bund due May 2024 rose 0.195, or 1.95 euros per 1,000-euro ($1,344) face amount, to 103.435.

Unsustainable Finances….”

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Should Individual Investors Zig Instead of Zag?

“Main Street and Wall Street are moving in opposite directions.

Individual investors are plowing money back into the U.S. stock market just as professional strategists say gains for this year are over. About $100 billion has been added to equity mutual funds and exchange-traded funds in the past year, 10 times more than the previous 12 months, according to data compiled by Bloomberg and the Investment Company Institute.

The growing optimism contrasts with forecasters from UBS AG to HSBC Holdings Plc, who say the stock market will be stagnant with valuations at a four-year high. While the strategists have a mixed record of being right, history shows the bull market has already lasted longer than average and individuals tend to pile in at the end of the rally.

“If Wall Street, after poring over all known data, comes up with a target and we’re already there, and you still see individual investors buying and they’re typically the ones that are late to the party, it would seem there is limited upside,” Terry Morris, a senior equity manager who helps oversee about $2.8 billion at Wyomissing, Pennsylvania-based National Penn Investors Trust Co., said in a July 8 phone interview.

U.S. stocks slid from record highs last week, sending the Standard & Poor’s 500 Index to the biggest drop since April, amid concern over financial stress in Europe and the timing of higher U.S. interest rates. The Chicago Board Options Exchange Volatility Index jumped 17 percent from a seven-year low.

Steady Gains

The S&P 500 is still up 6.5 percent for 2014, compared with a 3.5 percent advance in the Bloomberg Commodity Index of 22 raw materials and 3.3 percent gain for the Bloomberg U.S. Treasury Bond Index.

For most of this year, equity investors have seen little volatility and steady gains, giving them confidence to put money back into the market. Individuals deposited about $9.5 billion in June to stock funds and have added cash in eight of the past 10 months, data compiled by ICI and Bloomberg show. That’s a reversal from the five years through 2012, when $300 billion was withdrawn.

Professional investors, such as Nick Skiming of Ashburton Ltd., say that individuals investors are attracted to stocks after seeing others getting rich from a big rally, a time when equities are usually overpriced. The bursting of the technology bubble in March 2000 was marked by mutual funds absorbing a record $102 billion in the first quarter.

Blue Skies

“As institutional investors, we’re always concerned when the retail investor is actually arriving in the market,” Skiming, who helps manage $10 billion at Ashburton, said by telephone from Jersey, the Channel Islands. “The retail investor arrives when they can only see blue skies.”

For Laszlo Birinyi of Birinyi Associates Inc., stocks have entered what he calls the exuberance phase…”

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A Heads Up on Some Stocks Going Into Earnings Season

“After the worst U.S. winter in decades, scores of companies will show plenty of quarter-over-quarter sales and earnings improvements starting this week.

But looking beyond the weather will be of more interest, because many companies that suffered the worst earnings declines in the first quarter are also expected to show hugeyear-over-year earnings growth for the second quarter.

To highlight those, we began with the S&P 1500 Composite Index, which includes the components of the S&P 500 SPX -0.76% , the S&P MidCap 400 MID -1.02%  and the S&P SmallCap 600 SML -1.28% . In order to show which companies posted the worst earnings decreases during the first quarter, we limited the list to stocks with positive earnings per share for both periods.

So here are the 10 profitable S&P 1500 companies showing the worst year-over-year EPS declines for the first quarter:

Enlarge Image

Investors might have expected to see a list of retailers, because shoppers stayed at home during the frigid temperatures. But the list is varied, in part, because we focused on EPS. Many of these companies reported lousy results that had nothing to do with the weather.

Here’s where it gets interesting: Seven of those stocks are expected to show year-over-year EPS growth for the second quarter, based on consensus estimates among analysts polled by FactSet. Six may report double-digit increases in EPS:

Here’s more on all 10 companies, beginning with the ones showing the largest year-over-year EPS declines for the most recently reported quarter….”

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Make No Mistake That De-Dollarization is Chugging Along Underfoot

“While numerous massively indebted administrations around the world hope to divert the attention of what’s left of their struggling middle class away from its daily impoverished existence and distract it with flashing lights and glitzy animations showing another all time market high on a daily basis, a significantly more important shift taking place behind the scenes is appreciated by very few: the ongoing de-dollarization of the world. For the latest example of how increasingly more countries are setting the stage for the final currency war, we go again to Russia where VOR’s  Valentin Mândr??escu explains that slowly but surely the BRICS – that proud Goldman acronym which was conceived to perpetuate the great American way of life by releasing trillions in US-denominated debt in heretofore untapped markets – are morphing into an anti-dollar alliance.

BRICS is morphing into an anti-dollar allianceFrom VOR

Before the crucial visit to Beijing next week, the governor of the Russian Central Bank, Elvira Nabiullina met Vladimir Putin to report on the progress of the upcoming ruble-yuan swap deal with the People’s Bank of China and Kremlin used the meeting to let the world know about the technical details of its international anti-dollar alliance.

On June 10th, Sergey Glaziev, Putin’s economy advisor published an article outlining the need to establish an international alliance of countries willing to get rid of the dollar in international trade and refrain from using dollars in their currency reserves. The ultimate goal would be to break the Washington’s money printing machine that is feeding its military-industrial complex and giving the US ample possibilities to spread chaos across the globe, fueling the civil wars in Libya, Iraq, Syria and Ukraine. Glaziev’s critics believe that such an alliance would be difficult to establish and that creating a non-dollar-based global financial system would be extremely challenging from a technical point of view. However, in her discussion with Vladimir Putin, the head of the Russian central bank unveiled an elegant technical solution for this problem and left a clear hint regarding the members of the anti-dollar alliance that is being created by the efforts of Moscow and Beijing:

“We’ve done a lot of work on the ruble-yuan swap deal in order to facilitate trade financing. I have a meeting next week in Beijing”, she said casually and then dropped the bomb: “We are discussing with China and our BRICS parters the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed. A part of the currency reserves can be directed to [the new system].” (Prime news agency)

It seems that Kremlin chose the all-in-one approach….”

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Low Vol Sparks Massive Carry Trades

“Volatility in the currency market is near a record low, and that has led market participants to bulk up on carry trades, which involve borrowing in a currency with low interest rates to invest in another with high rates of return.

But experts warn that those trades can be quite dangerous if volatility kicks up or interest rates suddenly shift.

The low interest rate environment worldwide has investors scouring the globe for decent returns. “Essentially, ‘carry’ has returned in the pursuit of yield,” Anjun Zhou, head of multi-asset research at Mellon Capital Management, told The Wall Street Journal.

As for the risk of carry trades, “there’s a fear that it’s based on unsustainable market factors, like low interest rates and volatility in both [foreign exchange] and fixed income,” Steven Englander, head of developed-market foreign-exchange strategy at Citigroup, told the paper.

And some experts say it’s too late to place carry trades anyway. “If you haven’t put on the ‘carry’ already, it’s become a harder trade,” Alan Ruskin, head of developed market foreign-exchange strategy at Deutsche Bank, added.

Others agree with Ruskin…..”

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Have We Reached Peak Leverage ?

“This week has not been sleepy when it comes to the news. It feels like a firecracker out there just waiting for a match in my opinion. There have been too many issues to cover them all but here are a few TedBits for you:

  • Surrender
  • GDP collapse
  • Explosive divergence between volume and price
  • MORAL HAZARD written large
  • Leverage peak in stocks?
  • SOME People aren’t DUMB
  • EU elites pull another FAST ONE   


One hundred years ago this week World War I commenced and the specter of World War III is at our doorstep. Secretary of State John Kerry unilaterally surrendered to ISIS in Iraq by stating unequivocally to regional powers that the conflict will not be solved by military means. The very idea that ISIS will sit down at any table and peacefully resolve any issues is a fairytale. The ISLAMIC Caliphate is on a mission from GOD and will not be dealing with infidels in any manner other than their demise or the threat of their own demise. It is as simple as that. As I have said previously: World War III has commenced, it just hasn’t been publically admitted yet. Kerry’s statements are the height of irresponsibility to the American people.

GDP collapse

Yesterday’s revision to GDP was a nightmare on Main Street both on the headline number and internally looking at its components. Originally called at up 2%, then the first report of up .1%, first revision was down 1% and this revision taking it to down 2.9%. We were told over and over it was the weather. NOPE.

US First Quarter GDP

Look closely at the HORROR show the revision has been. It was a collapse in healthcare spending as a result of OBAMACARE (healthcare spending down over 6%), a collapse in private investment, a surge in imports (surge in liabilities) and a collapse in exports (collapse in income and sales). FOUR knock out blows to Keynesian linear thinking and highly questionable projections of a recovering economy. The economy is real terms is not recovering, in nominal terms the piles of debt and leverage keep expanding and then called GROWTH.

This is tens of billions of dollars economic activity that has disappeared. It foreshadows the coming bailout of the health insurance industry as its business is collapsing from the GOVERNMENT MANDATED policy cancellations in 2013 that HAVE NEVER RETURNED. Obamacare is higher priced and delivers much less services. Private sector investment will not return as there is no reward for doing so. Why would a company or individual invest when there is no INCOME GROWTH after real inflation? Incomes and revenues must rise for investment to become attractive. It’s why M&A is on FIRE, it is easy to buy existing business and customers rather than BUILD NEW ONES. Why would an entrepreneur risk his hard earned dollars, blood, sweat and tears to get to a level of success over $250,000 dollars a year when he or she can expect the taxman to confiscate it as soon as he reaches success? Washington has removed the incentives to produce. We are its vassals not its master.

Add to this, Dodd Frank restricting credit to the private sector, mandated health care benefits, EPA attacks on affordable energy and the hoax of climate change, the affordable care act and its 20 new taxes, runaway regulations of the small business sectors. Most readers don’t understand the damage done by the regulators. As Cicero once said:

“The more corrupt the state the more it legislates.”

You can extend that to regulation which is a result of the laws. This administration learned its craft at the knee of Richard Daly and the Chicago style of POLITICS. Everything in the United States has been on sale to the highest bidder for the last 6 years since the chosen one was elected in 2008 with supermajorities in Congress. Pay the right price and that business becomes the turf of the crony capitalist who PAID UP. The regulations regulate the demand to their cronies and place impossible hurdles in the path of the entrepreneurs who wish to knock off the crony’s by providing more for less. People aren’t stupid contrary to Washington’s belief. They can spend their money, choose what’s right for themselves and their families in a far wiser manner than a bureaucrat or would be mandarin in the District of Corruption.

So they try and pass a law or regulation removing your ability to choose for yourself. It is an epidemic of INCONSTITUTIONAL government.

The world is unraveling at an astonishing pace. Today I will call it chart porn day. That is a day when we look at charts. Make brief comments and thoughts about them and move on to the next thought and chart.

Explosive divergence between volume and price

The first chart is brought to us by www.Zerohedge.com and it is an overlay of the vix gauge which has become totally disconnected from an perception of risk by options writers and investors complacency levels about negative events impacting the stock market such as the rise of the caliphate in Iraq;

NYSE Volume Chart

Talk about a bear market in trading volume since the peak before the financial crisis commenced. It should also be noted that as bad as the collapse in participation has been in reality it is much worse as High Frequency traders account for 50 to 70% of the trading on any particular day. I promise you that if the markets start to crash those programs will stop trading and liquidity will be reduced accordingly (50 to 70%). A mighty small door for weak handed investors that have entered late to exit. It doesn’t matter whether it is the bond markets or stocks the exits in event of a moment of panic appears very very small to me.

MORAL HAZARD written large

Moral Hazard and Complacency is at epidemic levels. Investors and Markets are TOTALLY DISCONNECTED from reality and potential risks in the global markets. They believe central banks will do anything NECCESARY to support asset values and stock markets. It is actually a correct assumption in my opinion. This is why the Middle East and ISIS taking over IRAQ dealt no blows to the markets? Let’s keep in mind that between the Federal Reserve and the Bank of Japan 110,000 million dollars is being printed each MONTH. QE is, has and will be the dominant investment theme for the foreseeable future from one central bank or another.

“The best way to destroy the capitalist system is to debauch the currency. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.” – John Maynard Keynes, 1920

The BIS has reported that Thirty Trillion dollars of new debt (30 million million) has been created since the Global Financial Crisis struck in 2008 and this is a picture of it in ACTION. Powerful medicine for insolvent sovereigns, financial and mortgage markets and that money now sits in accounts around the world looking for YIELD and opportunity. All in short supply in a world where growth is OUTLAWED by socialist governments disguised as DEMOCRACY.

Currency and Equity Implied Volatilities Chart

The Federal Reserve has gone to great lengths over the last 3 years EMPHASIZING that financial system stability is firmly one of their mandates along with unemployment and inflation. We inhabit asset backed economies with Reserveless banking systems. A move similar to 2008 will BANKRUPT the biggest financial players in banking, institutions, pensions and insurance. This anomaly and perception of a goldilocks economy and market will get eaten by the three bears before this latest episode in runaway leverage resolves itself. When this leverage fails…. THEY WILL PRINT THE MONEY.

Leverage peak in stocks?

Margin debt has always peaked before major market tops and we are now into month five since the margin peak was seen. This chart was done bywww.dshort.com;

NYSE Investor Credit and the market

Using data compiled by Lance Roberts of STA wealth advisors. Lance and Doug are some of the finest chart makers on the web and their work must always be kept in mind. Both are Keynesians and accept official numbers as accurate. The message at this time; be afraid, be very afraid…..”

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Argentina Faces Default Again

“Argentina is poised to miss a bond payment today, putting the country on the brink of its second default in 13 years, after a U.S. court blocked the cash from being distributed until the government settles with creditors from the previous debt debacle.

The nation has a 30-day grace period after missing the $539 million debt payment to seek an accord with a group of defaulted bondholders led by billionaire Paul Singer’s NML Capital Ltd. and prevent a default on its $28.7 billion of performing global dollar bonds. Both Argentina and NML have said that they’re open to talks.

A decade-long battle between Argentina and holdout creditors from the country’s $95 billion default in 2001 is coming to a head. The U.S. Supreme Court on June 16 left intact a ruling requiring the country pay about $1.5 billion to holders of defaulted debt at the same time it makes payments on restructured bonds. Argentina last week transferred funds to its bond trustee to pay the restructured notes, only to have U.S. District Court Judge Thomas Griesa order the payment sent back while the parties negotiate…..”

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The Most Overbought Stocks in the S&P 500

“Even though we are witnessing all-time highs on the S&P 500 , there are a few stocks that are extremely overbought, in particular, five names, three on the NYSE and two on the Nasdaq. While the index itself may not need to be sold at this point, knowing which individual issues are overbought can help an investor know when to reallocate some cash.

In order, the following names are the most overbought…..”

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Gazprom is Considering All Contracts in Yuan or Rubles

“A little over a month ago, when Russia announced the much anticipated “Holy Grail” energy deal with China, some were disappointed that despite this symbolic agreement meant to break the petrodollar’s stranglehold on the rest of the world, neither Russia nor China announced payment terms to be in anything but dollars. In doing so they admitted that while both nations are eager to move away from a US Dollar reserve currency, neither is yet able to provide an alternative. This changed rather dramatically overnight when in a little noticed statement, Gazprom’s CFO Andrey Kruglov uttered the magic words (via Bloomberg):


In other words just as the US may or may not be preparing to export crude – a step which would weaken the dollar’s reserve status as traditional US oil trading partners will need to find other import customers who pay in non-USD currencies – the world’s two other superpowers are preparing to respond. And once the bilateral trade in Rubles or Renminbi is established, the rest of the energy world will piggyback.

But wait, there’s more. Because only now does Gazprom appear to be unveiling all those “tangents” that were expected to hit the tape in May. Among Kruglov’s other revelations were that Gazprom is in talks on a Hong Kong listing and is weighing the issuance of Yuan bonds. Gazprom is also considering selling bonds in Singapore dollars, the CFO said at briefing in Moscow. Wait, you mean that by alienating and embargoing Russia from western (USD, EUR-denominated) funding markets, it has pushed the country to turn to its pivoting partner, China and thus further cementing the framework for the next Eurasian strategic alliance?


But wait, there’s still more….”

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Nobelist Merton: 401ks Face a Crisis

“Since the dark days of 2008, employers have taken some steps to fix the 401(k), the backbone of the nation’s private retirement-savings system. But Nobel laureateRobert C. Merton says that in the rush to upgrade these plans, plan sponsors and administrators have overlooked one big problem: They are managing these plans with the wrong goal in mind.

Bloomberg News
Merton says a crisis is coming for 401(k) investors.

“The seeds of an investment crisis have been sown,” the MIT professor of finance writes in an article in the July-August issue of Harvard Business Review, which was published Tuesday. “The only way to avoid a catastrophe is for plan participants, professionals, and regulators to shift the mind-set and metrics from asset value to income,” writes Merton, who won the Nobel Prize in Economics in 1997.

In recent years, employers have tried to improve 401(k)s by introducing features such as automatic enrollment and products including target-date funds. But in his article and in a recent interview with Encore, Merton said these moves weren’t likely to be sufficient. To fix the 401(k), he argues, employers and the financial services companies that manage these plans must get past the ongoing obsession with two things: Account balances and annual returns. These metrics, Merton says, are far less important than one other: The amount of sustainable income an employee can expect to receive in retirement.

By disclosing annual income, instead of (or in addition to) an account balance, Merton says, employers will help employees quickly and easily calculate how much of their annual salary they can expect to replace in retirement, together with Social Security. As a result, employees will be better able to take action to ensure they are on track to retire as planned.

But that’s only half the battle. In order to accurately calculate how much retirement income a participant’s 401(k) balance will purchase, the plan sponsor must assume the money will be invested in an inflation-adjusted deferred annuity or long-term U.S. Treasury bonds. These investments, Merton writes, ensure “spendable income” that’s “secure for the life” of the bond or annuity and are “the very assets that are the safest from a retirement income perspective.”

That’s not to say that 401(k) money shouldn’t be invested in stocks. In fact, Merton says, 401(k) investment managers should invest participants’ savings in a mixture of “risky assets,” including equities, and “risk-free assets,” such as long-term U.S. Treasuries and deferred annuities…..”


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$GS Presents 15 Cheap Stocks for an Expensive Market

Compustat, I/B/E/S, FirstCall, Goldman Sachs

Even if the week didn’t start with the bang it ended with last week, the “this-market-is-looking-expensive” chatter will not be put down against the backdrop of a dovish Fed and an S&P 500 SPX -0.01% that has 22 record closes under its belt for the year so far. (The current bull market still has a below-average number of highs, read on.)

Goldman Sachs, for one, doesn’t see much standing in the way of more stock-market gains. In a note to clients on Friday, chief U.S. equity strategist David Kostin and his team said they expect the S&P 500 to grind up over the next two-plus years as earnings growth continues, and rolling forward their 12-month price target to 2,000 — 2,100 in 2015 and 2,200 in 2016 are further-out targets. (Note that of the most bearish Wall Street analysts, Deutsche Bank’s David Bianco also thinks stocks are looking pricey, but doesn’t see the S&P 500 reaching 2000 until end 2015.)

From Goldman comes the question and answer of how to find a happy meeting place at the intersection of value and growth.

Goldman Sachs

The forward p/e ratio for the S&P 500 is at 16.5, an 18% premium to the average seen during similar real interest-rate environments of 1% to 2%, notes Kostin. The average seen since 1976 is 13.5 times along with real interest rates of between 1% and 2%. And margins have also stagnated at a record high level since 2011….”

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Options and Arbitrage Funds Become the New Hedge for Investors

“Investors are seeking new defenses against possible falls in European stocks as indexes plateau near multi-year highs and traditional hedges prove ineffective in a market anesthetized by near-zero interest rates.

These alternative tools range from option strategies aimed at minimizing the cost of holding a hedge to investing in funds which aim to generate some returns irrespective of the stock market’s direction, such as arbitrage hedge funds.

A 50 percent rally in European shares over the past two years has left investors fretting about high valuations and seeking to protect their gains against a possible selloff.

However, hedging tactics which worked during the jittery days of 2008 and 2011, such as straight bets on rising volatility, have proved inadequate in the current, becalmed market conditions, leading fund managers to look for alternatives.

“A direct exposure to volatility may hurt investors because volatility can still fall or stay at a low level for a long period of time,” said Bruno Pannetier, chief investment officer of London-based hedge fund Old Park Capital. “Investors have to find new ways of hedging.”

Hedging equity positions via futures on the Euro STOXX Volatility index, which gauges the prices of options on eurozone blue-chips and tends to move inversely to cash equities, has cost investors dearly over the past two years.

Firstly, the VSTOXX has fallen roughly 65 percent since the Federal Reserve and the European Central Bank made plain in 2012 that they were prepared to pursue radical measures. The index has shown no sign of revival because the magnitude of swings in the Euro STOXX 50 index has been even lower than option prices imply.

Furthermore, since futures with longer-dated maturities tend to be more expensive than shorter-dated ones at times of low volatility, investors would often have to stump up when selling an expiring contract to buy a new one.

To reduce this cost…..”

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BoE Warns Rate Hikes May Come Sooner Than Expected

“Yesterday, the head of the Bank of England did something very funny: Right as the World Cup was kicking off, he issued the warning that people have been waiting for for years. He said that rate hikes might come sooner than expected.

Of course, like any good central banker, Mark Carney talked about how no decisions have been made and how everything is “data dependent” but the language he use definitely caught people by surprise.

In a note to clients last night, Citi FX guru Steven Englander explained why investors might extrapolate Carney’s comments to the US as well. Basically, just a month ago, Carney was sticking to dovish language (like his counterparts in the US). Then the UK got another month of strong economic data (like the US). And in the past, the BOE has been ahead of the curve in terms of policy, with the US close behind. So you can’t blame investors who now might worry similar language could come from the Fed at a moment’s notice.

Here’s Englander’s take:

[It is] possible that the shift in the BoE stance may also be affecting how investors are viewing the likely evolution of Fed monetary policy. The worry may be that just as UK forward guidance proved to be less guiding than investors had earlier thought, the Fed may turn around, and use the same language….”

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America’s Middle Class in Terms of Wealth Ranks Low Among Industrialized Nations

“Rich Americans. That’s our global reputation.

The numbers seem to back it up. Americans’ average wealth tops $301,000 per adult, enough to rank us fourth on the latest Credit Suisse Global Wealth report.

But that figure doesn’t tell you how the middle class American is doing.

Americans’ median wealth is a mere $44,900 per adult — half have more, half have less. That’s only good enough for 19th place, below Japan, Canada, Australia and much of Western Europe.

“Americans tend to think of their middle class as being the richest in the world, but it turns out, in terms ofwealth, they rank fairly low among major industrialized countries,” said Edward Wolff, a New York University economics professor who studies net worth.

Why is there such a big difference between the two measures?

Super rich Americans skew average wealth upwards. The U.S. has 42% of the world’s millionaires, and 49% of those with more than $50 million in assets.

This schism secures us the top rank in one net worth measure — wealth inequality.

There’s one main reason why the average Spaniard or Italian has more to his name than the typical American: real estate.

Home ownership rates are higher in many European countries than in the U.S., giving Joe European more assets to his name than his American counterpart. Plus, it’s easier for Americans to borrow money, which eats away at their net worth, said Jim Davies, an economics professor at Western University in Ontario, Canada, and co-author of the Credit Suisse report…..”

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State of the Union: Welcome to McDonalds, May I Take Your Order?

“A plethora of recent studies show that when it comes to retirement, we definitely don’t have our financial house in order.

And it’s an issue near the top of many Americans’ minds. An April poll from Gallup http://www.moneynews.com/Personal-Finance/retire-savings-Gallup-debt/2014/04/23/id/567278/ indicated that 59 percent of adults are moderately or very worried about not having enough money for retirement.

For example, the National Retirement Risk Index from Boston College’s Center for Retirement Research shows that 53 percent of households risk falling at least 10 percent short of the retirement income needed to maintain their standard of living. 

In addition, the Employee Benefit Research Institute (EBRI) finds that more than 40 percent of retirees are at risk of running out of money for daily needs, out-of-pocket spending on healthcare or long-term care, according to The Fiscal Times.

The three areas that many of us expected to fund our retirement now appear at risk, The Times reports. That’s Social Security, personal savings and employer-sponsored pensions…..”

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Russian Companies Seek Renminbi to Avoid Sanction Turmoil

“As we have been reporting (and forecasting for the past several years), the Eurasian anti-US Dollar axis is rapidly taking shape, with recent events catalyzed and certainly accelerated by US foreign policy in Ukraine, which has merely succeeded in pushing Russia that much closer, and faster, to China. The latest proof of this came overnight when the FT reported that Russian companies are preparing to switch contracts to renminbi and other Asian currencies amid fears that western sanctions may freeze them out of the US dollar market, according to two top bankers.

According to Pavel Teplukhin, head of Deutsche Bank in Russia, cited by the Financial Times, “Over the last few weeks there has been a significant interest in the market from large Russian corporations to start using various products in renminbi and other Asian currencies and to set up accounts in Asian locations.”

Andrei Kostin, chief executive of state bank VTB, said that expanding the use of non-dollar currencies was one of the bank’s “main tasks”. “Given the extent of our bilateral trade with China, developing the use of settlements in roubles and yuan [renminbi] is a priority on the agenda, and so we are working on it now,” he told Russia’s President Vladimir Putin during a briefing. “Since May, we have been carrying out this work.”

“There is nothing wrong with Russia trying to reduce its dependency on the dollar, actually it is an entirely reasonable thing to do,” …..”

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State of the Union: You are Fucked!

“If you make more than $27,520 a year at your job, you are doing better than half the country is.  But you don’t have to take my word for it, you can check out the latest wage statistics from the Social Security administration right here.  But of course $27,520 a year will not allow you to live “the American Dream” in this day and age.  After taxes, that breaks down to a good bit less than $2,000 a month.  You can’t realistically pay a mortgage, make a car payment, afford health insurance and provide food, clothing and everything else your family needs for that much money.  That is one of the reasons why both parents are working in most families today.  In fact, sometimes both parents are working multiple jobs in a desperate attempt to make ends meet.  Over the years, the cost of living has risen steadily but our paychecks have not.  This has resulted in a steady erosion of the middle class.  Once upon a time, most American families could afford a nice home, a couple of cars and a nice vacation every year.  When I was growing up, it seemed like almost everyone was middle class.  But now “the American Dream” is out of reach for more Americans than ever, and the middle class is dying right in front of our eyes.

One of the things that was great about America in the post-World War II era was that we developed a large, thriving middle class.  Until recent times, it always seemed like there were plenty of good jobs for people that were willing to be responsible and work hard.  That was one of the big reasons why people wanted to come here from all over the world.  They wanted to have a chance to live “the American Dream” too.

But now the American Dream is becoming a mirage for most people.  No matter how hard they try, they just can’t seem to achieve it.

And here are some hard numbers to back that assertion up.  The following are 15 more signs that the middle class is dying…

#1 According to a brand new CNN poll, 59 percent of Americans believe that it has become impossible for most people to achieve the American Dream…”

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Petrodollar Monopoly About to be Shattered

“Is the petrodollar monopoly about to be shattered?  When U.S. politicians started slapping economic sanctions on Russia, they probably never even imagined that there might be serious consequences for the United States.  But now the Russian media is reporting that the Russian Ministry of Finance is getting ready to pull the trigger on a “de-dollarization” plan.  For decades, virtually all oil and natural gas around the world has been bought and sold for U.S. dollars.  As I will explain below, this has been a massive advantage for the U.S. economy.  In recent years, there have been rumblings by nations such as Russia and China about the need to change to a new system, but nobody has really had a big reason to upset the status quo.  However, that has now changed.  The struggle over Ukraine has caused Russia to completely reevaluate the financial relationship that it has with the United States.  If it starts trading a lot of oil and natural gas for currencies other than the U.S. dollar, that will be a massive blow for the petrodollar, and it could end up dramatically changing the global economic landscape.

The fact that the Russian government has held a meeting to discuss “getting rid of the US dollar in Russian export operations” should be front page news on every mainstream news website in the United States.  That is how big this is.  But instead, we have heard nothing from the big mainstream news networks about this so far.  Instead, we have only heard about this from Russian news sources such as the Voice of Russia

Russian press reports that the country’s Ministry of Finance is ready to greenlight a plan to radically increase the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. Governmental sources believe that the Russian banking sector is “ready to handle the increased number of ruble-denominated transactions”.

According to the Prime news agency, on April 24th the government organized a special meeting dedicated to finding a solution for getting rid of the US dollar in Russian export operations. Top level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia.

The “de-dollarization meeting” was chaired by First Deputy Prime Minister of the Russian Federation Igor Shuvalov, proving that Moscow is very serious in its intention to stop using the dollar.

So will Russia go through with this?….”

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