SP 500 and NDX Futures Daily Charts - Bounce by Day, Miss By Night - Wage Against the Machine

Unemployment claims came in high today, and pending home sales slumped.

After the bell GOOG missed earnings, but tickled the Street with clicks, and AMZN missed just about everything, and took a little tumble.

VIX remains elevated, and the global economy remains shaky.

Excelsior!

Have a pleasant evening.

Five Myths About Raising the Minimum Wage

Matt Taibbi Asks Why Obama's Regulatory Strategy in Reforming the Banks Is Such a Joke

I was glad to see someone talk about this, because for whatever reason I did not see a strong reaction in the media to this arrogant defiance by the board of JPM. In fact, there were several 'stop picking on Jamie' sessions led by the pom pom spokesmodels on financial TV.

It is always hard, and often dangerous and unfair, to judge someone's motives.  But we can assess the effects.

The lack of actual reform led by the Obama Administration, and of course a corporate compliant Congress, is hard to understand except in terms of the corrupting power of campaign funding that is pretty much out of control, and undermining the character of the Republic.  

Yes, Mitt 'would have been worse.'  But that does not make Obama good, or effective. It makes him Brand Y to Mitt's Brand X.  But the hearts of both brands belong to the same Daddies.  And the same can be said of much of the governance of the developed nations, especially the English speaking peoples and their client states.

As outlined in This Town by Mark Leibovich, the primary occupation in Washington DC is now putting on the feedbag during and after your 'public service.'  This has always been a problem, but now it is widely accepted, and even fashionable.

Is Obama driven by ideology, bad advice, amoral ambivalence, or just plain old personal greed, a desire to 'get paid?' With Bush et al. there was no question about it. And pretty much the same goes for the Clintons, who accepted Wall Street's proposal of ongoing partnership.  

But Obama presented himself as something new to Washington, someone different, someone offering big changes from the past.

And then he proceeded to bring in the same old people, and the same old failed policies towards financial regulation, and even continued quite a few Bush Administration policies.   And despite promises of transparency, he doubled down against whistleblowers. 

As a 'socialist' he is a moderate Republican, ideologically driven to bad policy decisions like Herbert Hoover, with a tinge of Nixonian insularity. 

It is funny but in rereading some pieces about Herbert Hoover, a basically decent man of significant personal accomplishments, I came across denunciations of him as a 'socialist' by the extreme neo-liberal Austrio-whacky wing of the economic spectrum.   He did blame the Democrats in the House for distracting him, and impeding his policies of fostering confidence by persuading business and the Banks to do more for the public good.

Hoover was bound by a particular ideology with regard to government that was basically laissez-faire in its character.  He just did not have the heart to actually starve people and throw out the victims of the financial system into the cold when push came to shove.  But some of his advisors certainly did, and their ideological descendants still do, and will.

Too often Obama seems to be a well-positioned corporate brand, promoted like any other product.  And this is what makes him particularly disappointing.  Bush, Carter, and Clinton could not have been tragic, because they had no heights from which to fall.  A manager makes peace with his times and situation, seeking the best he can get; a leader changes them,  including the tone of the conversation and the assumptions and direction of the deal.   

As for Obama, like Herbert Hoover, his presidency verges on the tragic, but the ending has yet to be written. 

Rolling Stone
Jamie Dimon's Raise Proves U.S. Regulatory Strategy is a Joke
By Matt Taibbi
January 30, 2014

If you make a big show of punishing someone, and when you're done they still don't think they have a behavior problem, you probably picked the wrong punishment. Every parent on earth knows this implicitly – but does the Obama White House finally get it, too, now, after Jamie Dimon's raise?

When the board of JP Morgan Chase gave its blowdried, tirelessly self-regarding CEO a whopping 74 percent raise – after a year in which the Justice Department blasted the bank with $20 billion in sanctions – it was one of those rare instances where Main Street and Wall Street were mostly in agreement.

Everyone from the Financial Times to Forbes.com to the Huffington Post decried the move. The Wall Street pundits mostly thought it was a dumb play by the Chase board from a self-interest perspective, one guaranteed to inspire further investigations by the government. Meanwhile, the non-financial press generally denounced the raise as a moral obscenity, yet another example of the serial coddling of Wall Street's habitually overcompensated executive class.

Both groups were right. But to me the biggest news was how brutal an indictment Jamie's raise was of the Obama/Holder Justice Department, which continues to profoundly misunderstand the mindset of the finance villains they claim to be regulating.

Chase's responses to Holder's record penalties have been hilarious. Their first move was to make sure people outside the penthouse boardroom took on all the pain, laying off 7,500 employees and freezing salaries for the non-CEO class of line employees.

Next, Chase's board members sat down, put their misshapen heads together, considered the impact of this disastrous year of settlements, and decided to respond by more than doubling the take-home pay of the executive in charge, giving Dimon about $20 million in salary and equity.

In the end, the fines left the decision-making class of the company not just uninjured but triumphant. Dimon's raise was symbolic of a company-wide boost in compensation following the mass layoffs, as average per-employee expenses rose four percent overall, to $122,653, despite the $20 billion burden imposed upon the firm by the state...

People like Holder still don't understand that the leaders of these rogue firms have no problem blowing up their own companies and/or imperiling the world economy, so long as they continue to personally get paid.

Regulators have been blind to this for years, decades. It's why the Fed, the OCC, the OTS, the Justice Department and a host of other agencies missed incoming icebergs like the AIG and Lehman disasters, once upon a time.

In fact, since the days of Alan Greenspan and his halcyon dreams of a future of pure self-regulation, the notion that corporate leaders will always act in the interest of their own firms – that they'll behave according to the principled corporate egoism that was an article of faith both for Ayn Rand and acolytes like Greenspan – has been a core basis for broad policies of regulatory restraint...

Take some time to read the entire article by Matt Taibbi here.

Renewed Calls From China For a Global Super-Currency To Replace "Bretton Woods II"

They are talking about a 'super-currency' for international trade, and not to replace any currencies for domestic use.

I have been reporting on this for quite a few years. It is a movement whose time has come as the US dollar reserve currency falters, and the Fed expands the monetary base for domestic concerns. 

You can click on either of the subject headings at the bottom of this blog entry, and all of the past postings with those subjects will be selected for your reading.

The major countries will no longer tolerate the monetary manipulation with the global currency in the same unilateral manner with which Nixon changed the Bretton Woods agreement back in 1971 by ending dollar convertibility to gold, rather than devaluing against it.

For lack of a better alternative or term, I settled on the SDR, made up of a new basket of currencies and commodities, almost certainly including gold, and quite possible silver, if China, Russia, et al. have their way.

Right now the nations are in the 'negotiation stage,' with the Anglo-American banking cartel putting up a strong resistance for any changes to their 'exorbitant privilege.'  I would not be surprised to see more forex and precious metal games played as the Lords of Finance flex their monetary muscles.

And then there is the question of the tangled web of rehypothecation of bullion without public disclosure.  It could prove to be very embarrassing to some.

But change is coming, one way or another.

China Daily
Replace dollar with super currency
By Michael Barris in New York,
Fu Jing in Brussels and
Chen Jia in Beijing
2014-01-29 09:04

The World Bank's former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.

"The dominance of the greenback is the root cause of global financial and economic crises," Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank. "The solution to this is to replace the national currency with a global currency."

Lin, now a professor at Peking University and a leading adviser to the Chinese government, said expanding the basket of major reserve currencies — the dollar, the euro, the Japanese yen and pound sterling — will not address the consequences of a financial crisis.

Internationalizing the Chinese currency is not the answer, either, he said.

Lin urged the international community, especially the US and European Union, to play a leading role in currency and infrastructure initiatives. To boost the global economy, he proposed the launch of a "global infrastructure initiative" to remove development bottlenecks in poor and developing countries, a measure he said would also offer opportunities for advanced economies.

"China can only play a supporting role in realizing the plans," Lin said. "The urgent thing is for the US and Europe to endorse these plans. And I think the G20 is an ideal platform to discuss the ideas," he said, referring to the group of finance ministers and central bank governors from 20 major economies.

The concept of a global "super currency" tied to a basket of currencies has been periodically discussed by world leaders as well as endorsed by 2001 Nobel Memorial Prize-winner Joseph Stiglitz. A super currency could also be tied to a single currency, but the interconnectedness of world financial markets and concerns about the volatility that can occur as a result of the system being tied to one currency have made this idea less popular...

Arguments in favor of a global currency resurfaced during October's US budget impasse, which forced the government to shut down.

"It is perhaps a good time for the befuddled world to start considering building a de-Americanized world," a Xinhua News Agency commentary said on Oct 14. The piece argued that creating a new international reserve currency to replace reliance on the greenback, would prevent government gridlock in Washington from affecting the rest of the world.

In March 2009, China's central bank governor, Zhou Xiaochuan, called for the creation of a new "super-sovereign reserve currency" to replace the dollar. In a paper published on the People's Bank of China's website, Zhou said an international reserve currency "disconnected from individual nations" and "able to remain stable in the long run" would benefit the global financial system more than current reliance on the dollar.

On that note, David Bloom, global head of FX research at HSBC, said US monetary policy change "will bring fluctuations for emerging countries' currencies and lead to financial instability".

Chen Wenling, chief economist at the China Center for International Economic Exchanges, a government think-tank, said, "A supranational currency may be a new direction for development of the global financial system. It also requires different countries to cooperate in coordinating macroeconomic policies..."

Gold Daily and Silver Weekly Charts - Bounce on FOMC Day - 2014 Comex Options Calendar

Gold caught a bid today, largely driven I think by the exceptional weakness in the emerging market currencies and sustained buying of physical in Asia and the Mideast.

Silver lagged gold once again, which gives some credence to the 'flight to safety' idea.

The miners caught a serious bid which was a nice change of pace. It was interesting to see a news item that some ex-JPM bankers have raised $375 million to make some investments in the mining sector.   Cheat 'em, beat 'em, and eat 'em.  You keep what you kill is the creed of the Economic Hitmen.  

There is quite significant overhead resistance to gold both in terms of the downtrend and the 100 day moving average.

I am sorry that I failed to mention the February gold options expiration this week.   I have included the calendar for the rest of the year below.

The Comex warehouses saw no movement of gold bullion in or out.

Have a pleasant evening.