UPCOMING WEEK

It's a fairly light agenda next week. There is some Fed speak with the hawks and doves trading punches and a few big firms are reporting earnings like Pepsi,Yum and Monsanto.

Monday, October 6

US Economics (Time Zone: EST)

No major reports
11:00 Fed to purchase $1.4b-$1.7b notes in 7 to 10-year range
11:30 Treasury to sell $24b 3-month bills and $24b 6-month bills

Fedspeak:

8:30pm George (hawk, nonvoter) speaks in New Mexico

Global Economics (Time Zone: GMT)

06:00 EUR German Factory Orders
08:30 EUR Eurozone Sentix Investor Confidence
14:00 CAD Ivey PMI

Earnings

No major reports

Tuesday, October 7

US Economics (Time Zone: EST)

10:00 JOLTS Job Openings (Aug) - expected 4700, prior 4673
11:00 Fed to purchase $250m-$350m TIPS in 5 to 30-year range
3:00 Consumer Credit - exp $20B, prior $26B
11:30 Treasury to sell 4-week bills
1:00 Treasury selling $27b 3-year notes

Fedspeak

2:30pm Kocherlakota (dove, voter) speaks in South Dakota
3:00pm Dudley (dove, voter) speaks in New York

Global Economics (Time Zone: GMT)

03:30 AUD RBA Rate Decision
05:00 JPY Leading Index
06:00 EUR German Industrial Production
07:15 CHF CPI
08:30 GBP Industrial & Manufacturing Production
14:00 GBP NIESR GDP Estimate (Sep)

Earnings

Before:
Yum! Brands (YUM)

Wednesday, October 8

US Economics (Time Zone: EST)

07:00 MBA Mortgage Apps
2:00 FOMC Minutes
1:00 Treasury selling $21b in 10-year notes

Global Economics (Time Zone: GMT)

01:45 CNY HSBC China Services PMI
05:45 CHF Unemployment Rate

Earnings


Before:
Costco (COST)
Monstanto (MON)

After:
Alcoa (AA)

Thursday, October 9

US Economics (Time Zone: EST)

08:30 Initial Jobless Claims, expected 294k, prior 287k
08:30 Continuing Claims - exp 2440K, prior 2429k
10:00 Wholesale Inventories (Aug) - exp 0.3%, prior 0.1%
1:00 Treasury selling $13b 30-year bonds

Fedspeak

9:45am Bullard (hawk, nonvoter) speaks in St. Louis
11:00am Draghi (ECB head) and Fischer (dove, vice chair) speak in Washington
1:10pm Tarullo (moderate, board) speaks in Washington
1:15pm Lacker (hawk, nonvoter) speaks in North Carolina
1:30pm Fischer speaks in Washington
3:40pm Williams (dove, nonvoter) speaks in Las Vegas

Global Economics (Time Zone: GMT)

Japan Investors Purchases of Foreign Stocks/Bonds
00:30 AUD Employment Data
06:00 JPY Machine Tool Orders
06:00 EUR German Trade Balance
11:00 GBP BoE Rate Decision

Earnings

Before:
Pepsi (PEP)
Family Dollar (FDO)

Friday, October 10

US Economics (Time Zone: EST)

08:30 Import Price Index YoY (Sep) - expected -1.3%, prior -0.4%
08:30 Import Price Index MoM - exp -0.7%, prior -0.9%

Fedspeak

9:00am Plosser (hawk, voter) speaks in New York
1:00pm George (hawk, nonvoter) speaks Nebraska
3:00pm Lacker (hawk, nonvoter) speaks in Chicago

Global Economics (Time Zone: GMT)

CNY New Yuan Loans
00:30 AUD Home Loans
08:30 GBP Trade Balance
12:30 CAD Unemployment Rate

Earnings

No major reports
Twitter: @MichaelSedacca

GROWING DISENCHANTMENT

We've written before about Hong Kong before all the recent discord broke out, the rise of populism in Europe and the disgruntlement among many Americans who favor their states succeeding from the good ole U.S. 

The upcoming election in the U.S. notwithstanding, who carries the Senate will not change anything. 

The recent trend of what MSM is calling "trackers," people on the left and right who carry cameras with them and attend events where their opponents are appearing to film and record every word is taking a page from community organizations who film police during disturbances.

In other words, trackers are a political offshoot of Cop Watchers, while the former are new, the latter have been at it for a while. America Rising is the name of one Republican tracking group, American Bridge, founded by billionaire George Soros, the largest Democrat tracking outfit traces its origin to 2010.

If this sounds a bit childish to you, you probably don't recognize just how divided and decadent this nation has become. In Europe Italian Prime Minister Matteo Renzi recently sided with France in their objection to the EU's rules governing public finance.

Renzi didn't stop there. He poked fun at German Chancellor Angela Merkle in particular and the German people in general for their lockstep allegiance to fiscal probity, calling for Brussels and Berlin to go lighter on austerity and heavier on compassion.

Meanwhile, Renzi's Rome announced its own forecast, projecting a 0.3 percent contraction in GDP for 2014 followed by a stunning turn around to 0.6 percent next year that should excite the folks.

The Scottish No-vote that barely carried the day, much of it owing to rank scaremongering and the Catalonia situation that Spain is doing its best to block are hardly dead in the water, especially if the ECB can't pull the EU out of its economic dregs sooner rather than later.

The point is simple: The longer things stay this way, the more disenchantment will grow. We already have a Misery Index. Why not a Disenchantment Index?

Here's an interesting read that touches on some of these issues.

http://www.marctomarket.com/2014/10/four-recent-and-interesting-posts.html

BANKER GETS DEFENSIVE

 

Apparently, the dog that didn't bark is beginning to bite, if New York Federal Reserve Bank President William Dudley's recent comments at a New York University event are any indication.

Dudley pushed back against allegations that the Fed  is "weak and deferential' in its dealings with big banks.

"We are going to keep striving to improve, but I  don't think any one should question our motives or what we're trying to accomplish."

Some of the allegations surfaced after a recent report that a  2009 internal study at the bank suggested a culture where regulators were discouraged "from voicing worries about the banks they supervised," according to the Wall Street Journal. 

Dudley noted that the Fed in recent years has implemented several changes that, in his view, reduced risk in the financial system.

"I completely stand behind the integrity and work of our supervision staff at the New York Fed. These people are completely dedicated to the goal of the safety and soundness of the financial system and that's it. They are operating completely in the public interest," he concluded.

One of the issues in the 2009 report centered on a secret tape made by a former New York Fed bank examiner who taped meeting with her supervisors and bank executives. Some of tape apparently referenced an "examiner unwilling to challenge a big
Wall Street bank," the Wall Street Journal reported.

Someone needs to point out to Mr. Dudley it's fairly common business practice to be "weak and deferential" to your owners. So why is he getting so upset?
t. man hatter

THE ANTI-HYDROCARBON CROWD

Here's just one of several reasons we believe all the talk about the U.S. oil glut will keep energy prices low is wrong.

In case you don't recognize it, political risk's the name, good intentions the game. When so-called good intentions meet government regulations, business almost always suffers.

http://earthjustice.org/news/press/2014/145-000-public-comments-on-draft-federal-oil-train-regulations-cite-weak-safety-standards

THE EBOLA VIRUS THREAT

Be careful what you create.

American bureaucrats have created a huge bureaucracy known as the Center for Disease Control. Contrary to what many might think, the CDC is a potentially dangerous autocratic institution masquerading as a government agency that's here to help you.

Now that the MSM  has done what it does best, create sensationalism and fear to crank up ratings under the guise of reporting important news with stories about the Ebola virus, especially since one of its own has apparently contracted the virus in Africa and been transported back to the U.S., here's a read everyone should take note of.

This particular journalist who is now being referred to by members of the MSM as a hero has apparently been living in Africa for years tracking the Ebola story. It's the other side of the hero story MSM won't be telling you anytime soon.

http://theeconomiccollapseblog.com/archives/during-an-ebola-pandemic-all-of-your-rights-would-essentially-be-meaningless

 Meanwhile, in Texas officials are monitoring 50 people who were suspected of being exposed to someone with the virus. 

http://abcnews.go.com/Health/wireStory/health-officials-work-ebola-virus-us-25936670

Recent stories have even suggested the virus was affecting Wall Street which seems a bit implausible since few things ever effect Wall Street. 

OVER NIGHT

(Bloomberg) Asian stocks dropped for a sixth day as the yen held two days of gains, curbing the earnings outlook for Japanese exporters. Trading is due to resume in Hong Kong following a two-day holiday.
The MSCI Asia Pacific Index (MXAP) declined 0.1 percent to 138.35 as of 9:00 a.m. in Tokyo, before markets open in Hong Kong. The gauge is down 2.6 percent this week, on course for the biggest weekly drop in six months. The measure has retreated 7.4 percent from a six-year high in July.

LOS ANGELES (MarketWatch) -- Here are the latest trading levels for Asia's major stock markets: Tokyo (Nikkei Average) down 0.1% ; Hong Kong (Hang Seng Index) down 0.8% ; Shanghai (Shanghai Composite Index) closed ; Sydney (S&P/ASX 200) up 0.3% ; Seoul (Kospi) closed ; Mumbai (Sensex) closed Taipei (Taiex) up 1.5%L

SYDNEY (Reuters) - Asian stocks were poised for their fourth-straight weekly fall on Friday, with the regional index drifting in an aimless morning session as the civil unrest in Hong Kong and caution ahead of a closely-watched U.S. jobs report kept investors on edge.

Already disappointed by the European Central Bank, which gave no new hints of an imminent sovereign bond buying program, markets were further underwhelmed by a survey showing growth in China's services sector eased last month.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.06 percent, on track for a fourth straight week of declines. It has fallen more than 8 percent in the last four weeks, marking its worst performance in over a year.

Tokyo's Nikkei slipped 0.19 percent, Australia's S&P/ASX 200 index was a touch firmer, while Hong Kong stocks fell 1.36 percent. Markets in South Korea, India and China are closed for public holidays.

 Here are some shots that demonstrate vividly Venezuela's inflation problems.

Venezuela’s surreal prices

 

 By Carlos Garcia Rawlins

Finding images to accompany economic stories has always been a challenge. There’s a temptation to be repetitive and you sometimes end up illustrating, yet not informing properly. I wanted to do something more significant this time to really capture Venezuela’s economic crisis and the way it is hitting people’s pockets. I’ve been covering – and, as a Venezuelan, living! – this subject for a long time but I’m weary of the typical photo of an old lady spending her few resources on food at a supermarket.

So this time I wanted to create images that would really make people sit up and see the story at a glance – namely the crazily high prices for simple everyday products. The idea was straightforward: photograph an item with a price tag showing its equivalent in U.S. dollars and emphasizing that further by pasting up the notes. Executing it, though, proved complicated.

 http://blogs.reuters.com/photographers-blog/2014/10/02/illustrating-venezuelas-surreal-prices/

 If you're a Bank of America shareholder you might want to start getting upset.

The big bank just chose its CEO, Brian Moynihan, to also be chairman, probably not the best idea for shareholders. 

Moynihan's election to board chairman makes Citigroup the only large U.S. bank to have separate chairman and chief executive roles. 
Bank of America has just delivered good governance a solid kick in the teeth. The mega-bank announced late Wednesday that its directors have voted to add the chairmanship to Brian Moynihan’s duties as chief executive. The move not only puts too much power in one person’s hands, it also reduces the position to little more than a perk to be granted or taken away, depending on performance. 

http://blogs.reuters.com/breakingviews/2014/10/02/bofa-delivers-good-governance-a-kick-in-the-teeth/ 

Some common traits of billionaires. 
Billionaires invest a lot in real estate, at about $160 million per person. They tend to have four properties — it supports "the billionaire lifestyle," the report says. 

• Billionaires tend to have "non-real estate luxury assets." They sound really fun. " For example, one in 30 billionaires owns a sports team or a racehorse," the report says. "Other significant luxury assets include yachts, planes, cars, and art." 

• Billionaires are into matrimony. 65% of them are married.

• Billionaires love the Ivy League. While billionaires went to over 700 different universities, the Ivies have the most grads: 25 went to the University of Pennsylvania, 22 went to Harvard, and 20 went to Yale. 

• But a surprising number of billionaires don't have a college degree.  35% never finished undergrad.

• Billionaires tend to work in finance. Almost 20% of billionaires made their careers on Wall Street or its equivalents. 

http://finance.yahoo.com/news/14-mind-blowing-facts-worlds-204640399.html

BUT YOU FIRST

Who loves the International Monetary Fund?

That's really not meant to be a question, but here's the answer. The only people who love the IMF are fools, naves and poseurs.

One of their recent gems is buried in this quote.

Banks should consider paying bonuses in the form of debt and giving their creditors a greater voice in boardrooms in an effort to keep risk taking under control. 

One of this international collection of geniuses recent suggestions is what they called "a better mix of incentives" for banking executives, "including long-term illiquid bank debt as part of top employees' compensation, potentially with a long vesting period."

How long is long? If the word never comes to mind, give yourself an A-plus.  Executive bankers might want to respond with an: "OK. But you first."

Once upon a time capital equipment could be depreciated over five years. But that, according our illustrious elected officials, turned out to be too good a deal for those who purchase capital equipment and not so good a deal for government.

So our elected officials in their bottomless ignorance changed it. You could call it, if you want, a longer vesting period or less liquid.  Illiquid might also work.

A friend use to say life is a terminal illness. Markets are about risk taking. Take out the risk and they aren't markets anymore.

But you must hand to the IMF. God bless their generous little bureaucratic hearts.
t. man hatter

MISSED CALLING: PULPITS AND PLAYGROUNDS

Scare mongering is one of the tried and faithful techniques of any agenda crowd.

It worked well in the recent Scottish N0-vote victory. And it's a favorite of the climate-change group.

If you like Poland--and we're not Polish--you're probably Polish or you're a non-believer in the climate-change madness.

Martin Wolf, one of  the Financial Times political blowhards, recently wrote another article about one of his favorite subjects, climate change, "Clean growth is a safe bet in the climate casino."

All but  the most obdurate skeptics must recognize that the probability of irreversible climate change is much greater than zero. (How much greater Wolf doesn't risk postulating!). But the cost of buying insurance against that risk also matters. Fortunately, these costs might be quite low and , in some respects, even negative: eliminating reliance on coal-generated electricity, for example, would produce health benefits. So would building more compact cities.

If Wolf did any more parsing or hedging of his words in that paragraph, he'd quit his day job and trade commodities on the floor of the Chicago commodities exchange. Wolf then cites another one of those interminable studies from "the high level Global Commission on the Economy and Climate."

First off, any title with the term "Commission" in it should send up one's skeptic antenna. For the most part "Commissions" are how we got here. But we will leave that for another time. Forget love for now, what the globe needs now is one less commission.

Wolf then rolls out the obligatory scaremonger charts citing mortality ratios from outdoor pollution and the costs in  percent of GDP 2010 for various countries. Next come a trademark staple, his Keynesian love for government support, as if the the world isn't already garroted nearly breathless from GS. 

Yet the crucial point is that a low-carbon future need not be one of perpetual misery. With the right support from government (Who gets to define right?), the market culd deliver both greater prosperity and a far lower risk of a destabilised climate. It is unnecessary to persist in making massive unhedged bet in the climate casino. (How's that for some,dramatic verbiage?). It is possible instead to combine growth with a less environmentally risky future. Continuing with business as usual is irrational. But the changes we must make should come now.Later will be too late.

Now back to Poland and its newly elected prime minister, Ewa Kopacz, God bless her.  In her first speech to parliament, according to the Financial Times, since last month she "promised she would not allow Poland's energy costs to rise."

She went on to say that during next month's European Council meeting her government would oppose provisions "which will increase  costs and prices of energy." Go for it, girl. Earlier this year the bureaucrats at the European Commission (There's that word again.) urged the EU's 28 members to reduce carbon emissions by 40 percent from 1990 levels by the end of the next decade.

The big boys like the UK and Germany support the proposal but eastern European countries  claim the costs are prohibitive. According to some sources, Poland relies on coal for about 85 percent of its power needs though many of it facilities and mines are outdated.

Again, according to the Times, her speech  came one day after Poland, the Czech Republic, Hungary Slovakia and Bulgaria released an announcement skeptical of the 2030 EU deadline.

The whole thing sounds like the making a good prize fight. And we say, to quote a former famous American referee who is no longer with us, "Let's get it on!"

Forget pulpits and playgrounds. Today, the bullies are everywhere.

OTHER EMERGING MARKETS

Emerging markets have been much in the news of late, especially since the Fed's threatening to soon remove the net from its monetary high wire act.

Capital flight or the fear thereof now seems to be the name of the EM game. Asia and China are expected to slow down and some are suggesting that the last thing China needs with all its empty buildings and empty towns is more easy money.

China already has a still rising 230 percent credit to GDP ratio. To these observers the China problem owes its existence to easy money, not the other way around.

Suddenly Argentina's equity market is capturing investor attention. We wrote about this earlier mentioning billionaire George Soros and his recently purchased big chunk of oil company YPF.

As previously noted, an election is set for next year and as the old bromide goes, here it's more hope than reality at this point, a new broom sweeps clean. Money managers, as is their ilk, try to get in ahead of any on coming rush from the retail crowd.http://www.marctomarket.com/2014/10/emerging-markets-what-has-changed.

But Asia and Latin America are not the only emerging markets. In our view central and eastern Europe offer some interesting opportunities if a meteorite doesn't strike the planet anytime soon. 

There are prblems to be sure, but there are also good universities, an entrepreneurial spirit and, most important, a gaggle of young people who get it.

Here's just one source. If you look you'll find many more.

http://www.ft.com/intl/cms/s/0/5b2ed4c0-cf9a-11e3-bec6-00144feabdc0.html#axzz3F1z73X2h

t. man hatter

OUR VIEW

For a long time people who warned of elitist efforts to create a one world government got slammed by MSM and their apologists.

And to be exact, it's still going on. But for those who care to look the evidence is more than clear. Here's just one example from 2012 http://www.thedailybell.com/news-analysis/3629/EUs-Prodi-Admits-Leaders-Knew-Euro-Would-Cause-Ruin-but-Hoped-Political-Union-Would-Follow/.

It's almost impossible today even reading what most read, MSM palaver, not to see it. As they say, the bold get bolder. For a while MSM tried the subtle approach, but that didn't take fast enough, so  hand picked, "Yes.Sir!" politicians like Bush and Obama get shuffled to the fore.

Part of the MSM lore is to make voters believe there's a difference. There isn't. Collusion is a fact of like. The recent evidence that the Federal Reserve and Goldman Sachs are really Siamese twins in drag should come to mind.

That Congress in the late 1950s outlawed insider trading but omitted, you guessed it, members of Congress or more recently the Obama grand health insurance hoax that likewise omitted members of Congress and there staffs is some more evidence for those who need it.

And we're not even scratching the exterior here. That MSM's latest efforts to convince the rabble that U.S. debt has meaningfully declined since the stock market rally is another case of popular hoodwinking from the likes of the entrenched.

Global debt levels are exploding and even stodgy media shills like the IMF know it. Today Blackrock Chief Larry Fink blasted bureaucrats, central bankers and regulators for flapping their mouths without taking any of the responsibility for what they've created.

"Actually, if you look at the behavior of central banks, they've rewarded the debtors and crushed the savers."

Blackrock has more than $4 trillion under management. Implied in Fink's comments was the elitist attitude of these people with they constant scolding of markets as if they alone are above it all. Fink singled out low interest rates and tight regulations as part of the problem.

He concluded that he expects it will take longer to turn the EU mess around than most think and that interest rates will stay low longer than many believe.

Couple that with Chicago Fed President Charles Evans' call today for "patience on" raising interest rates, calling it "...a really challenging issue."

What most of this is telling you is the odds of the Fed's--despite all the concerns to the contrary--staying too long at the party grow daily.

That's our view. We hope you know yours.
t. man hatter