Bull or Bear?

Submitted by William Bonner, Chairman – Bonner & Partners

The Bull Market in Stocks May Have Ended Already

GUALFIN, Argentina – As expected, Wall Street’s shills were out in force on Wednesday. And the Dow rebounded from Tuesday’s rout – up 293 points. CNBC assured investors that the “U.S. is a place you should be investing.”


The can and the road …

And Bloomberg explained that, “based on history,” investors could expect to wait no more than four months until the stock market fully recovers:

“The S&P 500 rally that began in March 2009 has been marked by two previous corrections: a 16% sell-off from April to July in 2010, and a 19% slump over seven months a year later. The benchmark recovered within about four months of each. So if history is any guide, the market may not be back at its May peak until late December.”

Nikkei, LTBased on Bloomberg’s “history”, the Nikkei is about 25 years “late”, and it looks like it will be even later before everything is said and done – click to enlarge. Continue reading

Troubled History For Depending On The Fed To Save The ‘Dollar’

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

The relevant part about eurodollars these days is that the term itself is a misnomer, or at the very least not a comprehensive description. “Eurodollar” itself is not necessarily a dollar (or even “dollar”) that originates from Europe, though it has been European banks that have formed the backbone participation for decades. The word is shorthand for any “dollar” that lives wholesale offshore of the US, as a creature of bank balance sheet mechanics. The root “euro” was given in its infancy because of the concentration around London.

The fact of the global “dollar short” is that there is likely every bit an Asian eurodollar as those emanating from Europe. Given that European banks are themselves withdrawing significant wholesale resources (in native euro wholesale too) it may have been inevitable that the marginal eurodollar would turn East across the Pacific. It was, after all, Japanese banks that were the second largest group of dollar swap users during the panic in 2008 and then again even in late 2011. That history is actually long, as there was evenwholesale “dollar” disruption surrounding Japan’s banks into the worst parts of the Asian flu in 1997 and 1998.

It seems simply assumed that any Asian eurodollar branch is still exclusively Japanese, which is becoming clear as a big mistake. The PBOC’s experience with the “dollar” run of late is being confirmed more by the day, with yesterday’s nod toward reserve requirements for banks “trading” forex is, in my view, nothing but a veiled cover forexpected “dollar” liability shortages.

That all would seem to suggest an already-in use solution that could, in theory, have avoided some or all of this mess. As noted yesterday, the Federal Reserve still maintains an open and unlimited dollar swap with several central banks, including the Bank of Japan, but nobody has yet asked why the PBOC wasn’t included or at least added in early August when all the real trouble started to break open (across the world; LIBOR, repo rates and other “dollar” indications were surging before the PBOC “devaluation”). Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

Central Banks Can Do Nothing More To Insulate Us From An Asian Winter (Guardian)
Europe’s Biggest Bank: Is The Fed Preparing For A ‘Controlled Demolition’? (ZH)
China FinMin: Growth Of About 7% Is The New Normal
Don’t Forget China’s “Other” Spinning Plate: Trillions In Hidden Bad Debt (ZH)
China Stock-Market Correction Almost Done, Says PBOC Governor (Bloomberg)
Barclays Warns On Massive Cost Of China’s FX Intervention (Zero Hedge)
Hundreds Of 3-Year-Old Toddlers Have Died As A Result Of The Syrian War (WaPo)
Hungary PM Orban: Tens Of Millions Of Refugees Coming To Europe (Reuters)
The Huge Wave Of Syrian Refugees To Europe Has Only Just Begun (Haaretz)
First Trainloads Of Syrian Refugees Reach Germany (WaPo)
Elation As Migrants Received With Open Arms In Austria And Germany (Reuters)
We Are People – The Façade Of European Values (MSF-Doctors Without Borders)
Refugees Who Could Be Us (Nicholas Kristof)
Germany At Fault In Europe’s Tragic Refugee Crisis (MarketWatch)
Migration Crisis Tears At EU’s Cohesion And Tarnishes Its Image (Reuters)
East And West Europe Split As Leaders Resent Germany For Waiving Rules (Guardian)
Greece Still Needs To Build Trust: Eurogroup Head Dijsselbloem (CNBC)
Varoufakis Might Come Back To Greek Politics To Give ‘Bitter Medicine’ (BBG)
Spain Set For Secessionist Clash As Catalonia’s Election Looms (Guardian)

Read much more here: Debt Rattle September 6 2015 – TheAutomaticEarth.com