Taper Time – No matter what the Fed says today, markets are probably going to get crazy

This morning, the S&P 500 Index e-mini futures (ES-U3) are trading higher by just 0.50 points to 1705.50 per contract. Most institutional traders and investors are eagerly awaiting the FOMC announcement. Later today, the Federal Reserve is expected to start tapering its QE-3 program. QE-3 is a program where the central bank buys $85

“Crash Alert”! S&P 500 Fell 50% Last Two Times Margin Debt Was This High! Bank of America: Three “Shocks” That Could Set Off The Next Crisis

Bank Of America: “We Hope None Of These Three Shocks Reaches A Crisis Level”

…Unfortunately, we seem to be entering another of those periods of elevated risk. Three concerns are emerging.

Interest rate shock: The Fed’s tapering talk has caused about a 100 bp rise in longer term interest rates. Clearly this puts economists on high

The U.S. ‘Recovery’ Is Coming To An End?

Nearly half of modified mortgages are in default


Nearly half of the mortgages modified in 2009 under the Obama administration’s signature homeowner rescue effort are in default again, according to a report on Wednesday that raised concerns about the program’s effectiveness.


The report from the Special Inspector General for the Troubled Asset Relief

While homebuilder confidence has been coming in strong, we’ve had some disappointing housing data more recently

The FHFA home price index climbed 0.7% month-over-month in May.


This was just shy of expectations for a 0.8% rise.

Meanwhile, April’s reading was revised down to show a 0.5% rise in the HPI, down from an initial estimate of 0.7%.

While homebuilder confidence has been coming in strong, we’ve had some disappointing housing data more

This Week’s Economic Data Was Okay, But Two Big Leading Indicators Have Turned Negative

May monthly data reported this past week included the Index of Leading Indicators, up 0.1 and showing no imminent recession, the Empire State and Philly manufacturing indexes, both of which improved, consumer prices up slightly, housing starts and existing home sales up, and permits down. The 6 month trend in housing is up, but at

Pettis on China, Europe, Japan: Bad News for Those Looking for Growth

Via email here is another update from Michael Pettis at China Financial Markets. What follows is from Michael Pettis.

Special points

Europe is attempting to resolve domestic imbalances by forcing them onto their trade partners. This will end badly, especially for Germany. China’s new lending, exports, investment, housing starts and GDP growth all continued to slow in

Suddenly Everyone Sells Everything For Dollars: Stocks Fall, Oil Tanks, Gold Gets Crushed, Volume Exploded. Fed Officials Divided On Future of QE. Is the Big Reset Imminent?


Things got ugly.


First the scoreboard:

Dow: 13,927, -108.1 pts, -0.7 percent S&P 500: 1,511, -18.9 pts, -1.2 percent NASDAQ: 3,164. -49.1 pts, -1.5 percent

And now the top stories:

There was a hodge-podge of news today, and for the most

GOLDMAN PRESENTS: A Roadmap For Weak First Quarter Growth

We got another bout of strong data today.

Initial claims came in well below expectations.

And housing starts came in well above expectations. Housing is the primary bullish tailwind for the US economy, so this is particularly gratifying.

That being said, the economy is not growing blazing fast just yet.

In a note out this

Shiller – Housing Market Could Take 50 Years to Fully Recover

From housing starts to home prices, renowned economist Robert Shiller acknowledged “there are a lot of positive signs” for the U.S. housing market right now, but told CNBC Wednesday it’s still unclear if a recovery is actually in place.

After all, Shiller noted the housing futures market for single-family homes was only “mildly optimistic” before superstorm Sandy struck the

Must-read: Don’t let anyone tell you Hurricane Sandy will be good for the economy – Bloomberg

From Bloomberg:

Before the nonsense gets too far out of hand, let’s review very briefly why natural disasters aren’t a net plus for an economy.

Don’t laugh. Every time some region of the world suffers the ravages of nature, economists pump out silly reports outlining the benefits.

They all read pretty much the same:


Housing Starts Drop, Permits Jump; Jobless Claims Rise

Groundbreaking on new U.S. homes unexpectedly fell in July and gains from the prior month were revised lower, a reminder of the housing markets weakness despite some recent signs of recovery.

The Commerce Department said on Thursday that housing starts dropped 1.1 percent last month to a seasonally adjusted annual rate of 746,000 units.


Promises to build houses soar as actual holes dug plunge!

Housing Starts MISS EXPECTATIONS, Fall To 708K (Exp. 722K)



Housing starts declined 4.8 percent to an annualized pace of 708,000, even as building permits sharply outpaced expectations, jumping to 780,000.

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Central Banks Favour Gold as IMF Warns of “Collapse of Euro” and “Full Blown Panic in Financial Markets”

From GoldCore:

Gold’s London AM fix this morning was USD 1,646.50, EUR 1,258.41, and GBP 1,030.80 per ounce. Friday’s AM fix was USD 1,652.00, EUR 1,255.51 and GBP 1,035.54 per ounce.

Silver is trading at $31.61/oz, €24.16/oz and £19.78/oz. Platinum is trading at $1,577.25/oz, palladium at $656.90/oz and rhodium at $1,350/oz.

Cross Currency Table –

PIMCO founder and co-CIO Bill Gross

On Gross’s view that we may see a sign from Bernanke in April that QE3 will be rolled out:


“I think [Chairman Bernanke] is very satisfied…I think the Fed is outcomes-oriented. They want an outcome in terms of a higher stock market, in terms of housing starts and lower unemployment. What [Bernanke] said

While much of the recent economic data appear upbeat, Irwin Kellner writes that rising prices are making some statistics look better than they really are.

By Irwin Kellner, MarketWatch

PORT WASHINGTON, N.Y.  — Rising prices are making some statistics look better than they really are.

Now that inflation is beginning to pick up, it is vital to distinguish between what is real and what is just an illusion caused by inflation. If one does not, one might very

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