What Could Possibly Go Wrong

Did Senator McCain Violate NDAA by Hanging Out with Syrian Rebels?

"In fact, the same day President Obama announced our recognition of the opposition, rebel groups across Syria signed a petition pledging allegiance to the Jihad and asking America by name not to intervene. It’s hard to imagine that twelve years after 9/11, Senator McCain would be calling for US foreign and military aid be given to 'the Jihad.' Interestingly enough, this is the same Senator McCain who championed NDAA 2012, which gives our government the right to indefinitely detain Americans for doing exactly what he did: supporting elements aligned with al-Qaeda." Continue reading →

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Reality Check: Sen. McCain Visits Rebels In Syria, Congressman Questions Al-Qaeda Ties

"A secret visit to Syria over Memorial Day weekend by Senator John McCain. The Senator, meeting with leaders of the Free Syrian Army, as Washington debates whether or not to arm the rebels. But is arming the rebels a good idea?" Continue reading →

Continue ReadingReality Check: Sen. McCain Visits Rebels In Syria, Congressman Questions Al-Qaeda Ties

Understanding Gold Market Dynamics

"While the big institutions are driven by momentum into gold, they also relied on fears related to inflation and economic uncertainty. However, many have now abandoned these concerns. In reaching its bearish conclusion on gold, Goldman Sachs cited low global inflation, and surging equity markets in the U.S. and Japan as reasons to believe that the bull run in gold had come and gone. However, their conclusions are hasty." Continue reading →

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The Obamacare Shell Game (Part 1)

"The Affordable Care Act establishes a transitional reinsurance program in each state to help stabilize premiums for coverage in the individual market due to individuals with higher cost needs gaining insurance coverage during the first three years of Exchange operation (2014 through 2016). All health insurance issuers, self-insured group health plans, and third party administrators on their behalf, will make contributions to support reinsurance payments to individual market issuers that cover individuals with high medical costs." Continue reading →

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QE Exit to Rattle U.S. Bond Markets, Warns OECD

"'Exit from unconventional monetary policy, when needed, may be difficult to manage and less smooth than desirable, possibly leading to sharp rises in bond yields and serious negative consequences for growth in a number of advanced and emerging economies,' Pier Carlo Padoan, OECD’s deputy secretary-general and chief economist, said in the report. 'A leap in U.S. government bond yields would result in capital losses for investors, and prices on other assets would most likely follow suit, with mortgage-backed securities and corporate bonds most strongly affected. [..] In comparison with 1994, this could be more disruptive given current higher leverage." Continue reading →

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Caitlin Long: Vulnerability of Fed’s Balance Sheet

"Several companies have recently asked us for an analysis of the Federal Reserve tapering its quantitative easing programs. One factor that is not widely analyzed is the Fed’s own balance sheet, which could be a constraint on how far and how fast the Fed permits interest rates to rise in the US. We calculate that a 143bp parallel rise in the yield curve would cause a drop in the market value of the Fed’s assets that exceeds the Fed’s own equity capital (as of May 15). The Fed balance sheet’s capacity to absorb higher interest rates has deterioriated quickly, as the 143bp capacity is down from 185bp as of last October." Continue reading →

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Chinese Tourists with Pockets Full of Dollars

"Chinese tourists have become the highest-spending overseas visitors, reports LaTi. Chinese tourists spend an average of $2,932 per visit to California compared with $1,883 for other overseas visitors, according to the latest statistics by the U.S. Office of Travel and Tourism Industries. 'What we know about Chinese visitors is they don't like to lay on the beaches,' said Ernest Wooden Jr., president of the Los Angeles Tourism and Convention Board. 'What they do like is shopping.' The outpouring of Chinese money helped set a record for spending by foreign visitors to the U.S. — $168.1 billion in 2012, says LaTi." Continue reading →

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Europe Opens $80 Trillion Shadow Banking Pandora’s Box: Will Seek To Collapse Repo “Collateral Chains”

"Banks and brokers face a clampdown on using assets they hold for clients as collateral for their own trades as part of European Union moves to bolster market stability and rein in shadow banking. The handing over of collateral is an integral part of repurchase agreements, or repos -- one of the activities under review by global regulators as part of their efforts to regulate shadow banking. The reuse of clients’ assets poses a potential threat to financial stability should one of a chain of firms that handled the securities go bankrupt, according to the document prepared by commission officials and dated May 15." Continue reading →

Continue ReadingEurope Opens $80 Trillion Shadow Banking Pandora’s Box: Will Seek To Collapse Repo “Collateral Chains”

Schizophrenic investors expect slump, bet on boom

"Some 57pc think there will be no escape from the 'twilight' conditions afflicting the western world, and 20pc expect an full-blown global recession. That is a remarkably bearish set of views. Yet the same investors are overwhelmingly bullish on stocks and property. This schizophrenic exuberance seems entirely based on the assumption that QE and central bank largesse will keep the game going, flooding asset markets with liquidity. Indeed, 80pc think the ECB will cut rates again, and half think it will have to swallow its pride and join the QE club in the end. Four fifths think equities will gallop on upwards over the next year. Complacency is rife." Continue reading →

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