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Interpretation

FOT409814

      by Larry Levin   After the morning dump, the market came back with the typical low volume, algo driven melt-up. While the economic news was bad (a decline in June existing home sales) and the geo-political situation continued to deteriorate, things weren’t bad enough to warrant new all-time highs, just a mostly positive close. With the VIX below 13, clearly there is not a care in the world! It will take more than a powder keg in the Middle East and the most tense US –Russian relations in years to spook these markets. So what economic data do … [Read more...]

More Bubbles

Bubble Mania

      by Larry Levin   Is the market properly priced, overpriced, or in a real bubble? According to John Hussman, http://www.hussmanfunds.com/wmc/wmc140728.htm, it is the latter. Make no mistake – this is an equity bubble, and a highly advanced one. On the most historically reliable measures, it is easily beyond 1972 and 1987, beyond 1929 and 2007, and is now within about 15% of the 2000 extreme. The main difference between the current episode and that of 2000 is that the 2000 bubble was strikingly obvious in technology, whereas the present one is … [Read more...]

Stockman

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      by Larry Levin   David Stockman recently penned an article "This Time is Not Different" that was interesting in light of the daily new highs in market indices, despite amazingly low volume and amazingly high apathy (read: zero volatility). All charts in the following text can be found here http://davidstockmanscontracorner.com/this-time-is-not-different-why-the-market-is-heading-for-a-fall/ The 2008 Wall Street meltdown is long forgotten, having been washed away by a tsunami of central bank liquidity. Indeed, the S&P closed yesterday at … [Read more...]

Unintended Consequences

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      by Larry Levin   You can’t keep a resilient market down. Sure, it seemed early on in the trading day that the markets were finally pricing in the geopolitical S#%T storm. But a midday rampfest erased much of the earlier losses. Sound familiar? Speaking of familiar, once again we see misguided foreign policies by intervening governments yielding unintended consequences. From Zero Hedge: • "Considering that the services industry probably kept expanding, seasonally and workday-adjusted gross domestic prodIt is no secret that the gist of … [Read more...]

Still Rigged

Oil-Field Services

        by Larry Levin   Last April the book “Flash Boys” was in the news. The author, Michael Lewis, had the nerve to expose the heretofore secret of HFT trading success: special access to the exchanges that are simply not available to everyone else. He specifically highlighted how HFT companies built a faster trading “pipe” that gives them the ability to see orders so quickly, that they could be acted on before they can be filled. Because of this, markets are littered with fake orders (so-called liquidity) and front-running of orders. In … [Read more...]

Janet Speak

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      by Larry Levin   The Oracle has spoken. After drinking another cup of coffee to wade through all the data and long sentences, I realized that what Janet Yellen told Congress Tuesday was the Fed's typical muddled message. Yes, the market sold off during Janet speak, but the fall wasn’t earth shattering or dramatic and with a VIX drop in the afternoon, the fear of a broad decline abated. But who better to summarize Yellen’s message than our friends at Government Sachs. From Goldman’sJan Hatzius The Q&A of Yellen's semi-annual … [Read more...]

Seven Billion

global-data

      by Larry Levin   A $7 billion fine sounds pretty dubious to most of us. Maybe if you had some way to collect one dollar from every single solitary person on the planet it would be manageable. Or you could just be Citigroup. The financial behemoth announced Monday that it has agreed to pay $7 billion for its shenanigans during the financial crisis including their shoddy mortgage practices. Under the terms of the settlement, Citigroup will pay a total of $4.5 billion in cash and provide $2.5 billion in consumer relief. The cash portion consists … [Read more...]

Goal

Euro 2012 predictions

      by Larry Levin   Given the lack of economic news I thought I would turn my attention to the just-ended  FIFA World Cup, where Germany won in extra time. If you had missed the prior games, Germany ran over most of its competition.  When Germany played the host team, Brazil, it annihilated them 7 to 1.  Sadness in Brazil turned to anger as reports claimed that after the end of the match, over 20 buses inside two Sao Paulo public bus stops at the stadium grounds were set on fire, as well as a commercial building.  There were even football fans … [Read more...]

Varney Victory

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      by Larry Levin   I don’t often reference my television appearances or use this newsletter to praise members of the media, but I have to give a shout out to Stuart Varney, the host of Varney & Co. on Fox Business for his deft handling of Nick Hanauer on his show Wednesday. I encourage you to watch this clip where Hanauer, a Seattle based entrepreneur and venture capitalist, espouses raising the minimum wage and taxing the super-rich (of which he includes himself). In the same breath Hanauer calls himself a vigorous capitalist but then goes on to … [Read more...]

Puerto Rico

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      by Larry Levin   Earlier in the year, when the Puerto Rican (PR) bond malady was close to spreading, I wrote about its dangers. Would there be a bail out? Would there be some special law drafted that allowed it to avoid bankruptcy? Or would the problem simply be ignored? It looks like the latter two are the answer. Future problems, like all risk in this centrally planned world, were ignored. A new law, however, was also passed and that allows certain public corporations to restructure its debt, which is essentially allowing them to bypass the fact of … [Read more...]