The Mess That Greenspan Made - Part 32

Monday Morning Links

Alibaba IPO now the world’s biggest IPO – Reuters
The market’s next Fed fear: The exit strategy – CNBC
10 warning signs of global financial meltdown – Telegraph
G-20 Warns of Potential Market Risks Amid Uneven Growth – Bloomberg
Joe Oliver says G20 sees ‘significant economic challenges ahead’ – Financial Post
In Scotland and Beyond, a Crisis of Faith in the Global Elite – NY Times
Head of Germany’s central bank criticises ECB stimulus plan – Reuters
Is the Shale Revolution a ‘Ponzi Scheme’ or the End of Peak Oil? – reason
After Surgery, $117,000 Bill for Doctor He Didn’t Know – CNBC
Tax refunds will be cut for ACA recipients – USA Today
Why Warren Buffett hates gold – USA Today
Only for Wonks – Noland, Prudent Bear
The Ponzi Economy – Hussman Funds

World stock markets slip on China growth jitters – AP
Metals malaise weighs on equity markets – CNBC
Rosenberg: Market volatility is back; here’s how to play it – FP
Insider Buying Dries Up Defying $275 Billion of Buybacks – Bloomberg
U.S. Households Are Most Heavily Invested In Stocks Since 2000 – Yahoo! Finance
Treasuries Hold Two-Day Gain on Inflation Outlook, G-20 Growth – Bloomberg
Gold, silver tumble as Fed outlook fuels selling – Reuters
Silver hits four-year lows, gold open week in the red – MarketWatch
Chinese Gold Demand 41t in week 37, 1331t YTD – BullionStar
Gold could fall to 1180/1184 levels on dollar strength: Barclays – BullionStreet
China Moves To Dominate Gold Market With Physical Exchange – GoldCore

Study: Recovery eludes long-term unemployed – USA Today
Poverty data show results of economic policy gone wrong – LA Times
China focuses on comprehensive growth target – xinhuanet
Affluence eludes poor crowding into Asian cities – AP
Four myths about the cost of living crisis – Telegraph
Europe must ‘boost demand’ to revive economy, US warns – BBC
Germany’s Ailing Infrastructure: A Nation Slowly Crumbles – Spiegel
Boom to Bust: Irrational Exuberance Down Under – Bloomberg
Housing market update: rents up, prices up, sales down – OC Housing News
Draghi Effect Subsides as Pressure Builds on ECB Chief – Bloomberg
China’s shadow banking shows signs of stabilizing – China Daily
Stanley Fischer Hubris and the Next Fed-Created Crisis – Forbes


Misunderstanding the Fed

Here’s an entertaining clip of Bill Fleckenstein on CNBC in which Futures Now host Jackie DeAngelis begins by pointing out that the continuing market rise is evidence bearish investors simply don’t understand Federal Reserve policy.

Fleckenstein notes, “If you want to pursue idiots like the Fed doing crazy policies, and if you think you can get out in time, go for it. I don’t want to try to do that … When markets decline, how fast will it be taken away from you?” after which there is an awkward silence.

Friday Morning Links

Relief for Europe as Scotland stays put – Reuters
Scotland votes “no” on independence, spurring relief rally – USA Today
Rush to Invest in Alibaba, but Concerns Linger – Dealbook
In Alibaba’s IPO, where did the skepticism go? – MarketWatch
Market Frets Over Hawkish Dots Despite Dismissive Yellen – WSJ
Fed Signals No Hurry to Raise Interest Rates – NY Times
Yellen says poor Americans live in ‘sobering’ conditions – MarketWatch
Do you have $2,385,036? No? Then you’re not in the wealthiest 1% – Vox
Food-stamp enrollment in Illinois outpaces job creation by nearly 2-to-1 – Illinois Policy
Fed’s Q2 Flow of Funds: Household Net Worth at Record High – Calculated Risk
Shale Fracking Is “This Decade’s Version of The Dotcom Bubble” – Washington’s Blog
Eric Holder’s Shameful Legacy on Wall Street Fraud – Fiscal Times
Retirement savings gap widens between rich and poor – CNN/Money

World stocks rise as Scotland votes to stay in UK – AP
Oil Clogging U.S. Railways Seen Limiting Exports of Grain – Bloomberg
Seth Klarman: “We Are Recreating The Markets Of 2007″ – Zero Hedge
Be like Calpers: Dump your hedge funds – MarketWatch
Treasuries Little Changed Before U.S. Data – Bloomberg
Gold poised for third weekly drop on strong dollar, equities – Reuters
Super-rich rush to buy ‘Italian Job’ style gold bars – Telegraph
China Opens Gold Market to Foreigners Amid Price Ambition – Bloomberg
Asian gold demand to kick in here – Suchecki – Mineweb
Why is the Price of Gold Falling? – PragCap
China’s long term gold plans – Mineweb

America’s Self-Inflicted Economic Wounds – Reason
No inflation, no problem. US not turning into Japan – CNBC
U.S. Economic Confidence Index Remains on Plateau – Gallup
It’s not too soon to worry about the US economy – Fabius Maximus
Who Wins the Battle Between Indian and Chinese Billionaires? – WSJ
Venezuela Default Naysayers Undermined by S&P Downgrade – Bloomberg
Time to give the housing market a shot of adrenaline – Fortune
Mom-and-Dad Banks Step Up Aid to First-Time Home Buyers – Bloomberg
If Builder Sentiment Is So Bullish, Why Are Housing Starts So Low ? – WSJ
Lacker Would Prefer Fed Sell Mortgage-Backed Securities During Policy Exit – WSJ
Fed: Forget “Escape Velocity,” Not Gonna Happen, Ever – Wolf Street
Yellen: Fed balance sheet to take years to shrink – AP
The Fed and Inequality – CEPR


The U.S. dollar has become about the only thing that matters for precious metals these days as, along with the rest of the natural resource sector, gold and silver are being pummeled by investors and traders with each move higher for the dollar. This is consistent with the well established inverse correlation between these asset classes and, absent a substantive change in course for the dollar, it’s hard to see how precious metals can rebound.

Gold and SilverThe Federal Reserve policy committee gathers this week and it is possible that the central bank could present a more dovish stance than expected.

This could bolster the metals market and commodity prices in general, as could renewed safe haven demand arising from U.S. military action in the Middle East or a buying surge in Asia at the beginning of a seasonally strong time of the year. But, for the time being at least, the dollar is in charge.

The gold price saw its biggest weekly decline since a drop of 3.6 percent in late-May and it now sits at its lowest level since early-January. This comes after the trade-weighted dollar strengthened for the ninth consecutive week, rising to a six-year high against the Japanese yen in the process. Given the surge in the dollar and gold’s response as shown below, it seems it could have been much worse for the yellow metal in recent weeks.

[To continue reading this article, please visit Seeking Alpha and to access precious
metals commentary that Tim only shares with subscribers, join Iacono Research.]

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