Saturday, August 30, 2014

JPMorgan Warns Military Escalation In Ukraine “May Lead To A Lehman-Style Shock” / by Tyler Durden / 08/29/2014 09:31
The sudden military escalation in Ukraine in recent days has, according to JPMorgan’s Alex Kantarovich, reduced the earlier hopes that the high level meeting in Minsk on 26 August would help to defuse the conflict. As Kantarovich warns, the markets are now bracing for the US/EU responses. In the worst case scenario, now appearing more likely, severe pressure on stocks may extend. As he concludes, “we believe that with the significant deterioration in the Ukrainian situation, markets may treat this as a Lehman-style shock.”
Via JPMorgan Cazenove,
Lehman moment. We believe that with the significant deterioration in the Ukrainian situation, markets may treat this as a Lehman-style shock. We note there are substantial fundamental differences between the current situation and the 2008/09 crisis; the oil price is now holding up relatively well and the economic contraction may not be that deep. On the other hand, for traded stocks, the challenges and risks to investability presented by sanctions could be practically open-ended. We demonstrate that revisiting the post-Lehman lows would imply downside of 50% from an index perspective, and ~40% from the forward P/E perspective (Fig. 1 and 2).
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Short the Euro in 2014

There are many indications that the euro is preparing for a fall, but don't short the euro just yet.
Since hitting a 2014 peak on May 6 of $1.3929, the euro has lost close to $0.08 against the dollar, or 5.4% as of Tuesday's close. At $1.317, the euro is trading at its lowest levels since September 2013.
Now there are a handful of economic factors taking place in Europe that all point to a lower euro value.
But before you try to profit off the weakening currency, it would be wise to wait for the market to kick out some of the bears. The currency is likely to rise in the short-term before starting its long-term slump.
Here's why - but first, a look at what's driving the euro lower...(more)

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Corn And Soybeans Can Drop Much More

Lately, there is a statement I have heard quite often that is a misconception. "Prices have already dropped so far, they can't go down that much more." As far as I am concerned, there isn't much validity to the hopeful way of thinking and recent events clearly show why.
"Prices can't go down much more." This is wishful thinking for any farmer who has not priced their grain going into harvest. Based on facts, prices can fall much farther than current levels. Another way to look at it; grain prices since 2010, when corn started to rally in June with farmers selling bushel after bushel for $4.00 was an unprecedented super rally and it has come to an end.(more)

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Huge Gains Waiting in a Forgotten Corner of the Market

While every other investor on the planet is distracted by the S&P 500’s new highs, you have the opportunity to book serious gains in one forgotten corner of the market.

Metals are setting up to deliver traders and investors impressive returns. And I’m not talking about gold and silver. Instead, you need to check out the base metals. Sure, copper and aluminum are not as glamorous as gold and silver. But I doubt you’ll complain much when you see these powerful setups…(more)

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Why The Casino Is Dangerous: There Is Nothing Below

The algos and chart traders have succeeded in their run at 2000 on the S&P 500, and are now attempting to convince the wary investor one more time that buying on the dips is a no brainer. And in that proposition they are, ironically, correct.  To buy this utterly manipulated market at these nosebleed valuation levels is about as brainless of an undertaking as is imaginable.

Now we even have it in a back-handed way from Deutsche Bank. Its chief strategist, David Bianco, claims that the S&P 500 is now trading at 17X reported trailing earnings and that historically when the multiple has gotten into that zone after three years or more of market gains (we have had five) good things do not happen.  But, yes, this time is different according to perma-bull Bianco because even though above 17 PEs are rare after many years of EPS growth, very low interest rates are even more rare and support higher PEs: (more)

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Infographic – The Process For Printing US Currency

Recently, a story surfaced about counterfeiting US currency that would be good enough for Hollywood. The Secret Service brought down a ring of counterfeiters who produced at least $77 million worth of fake American green!
The gang consisted of thirteen Israelis and Americans who operated a money-printing factory out of a New Jersey warehouse. The Secret Service had been chasing this group for years and even watched it import a printing press via a semi truck to their facility.
The sophistication and end product of counterfeiters varies. The spectrum ranges from the curious individual trying to reproduce cash on their home scanner, to North Korea creating sophisticated counterfeits.
Interestingly, it turns out it costs even the Fed almost 13 cents to print out each $100 bill. That probably would mean that renting the copters would be the most expensive part of Helicopter Ben’s operation.
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