Bill Ackman: Tomorrow You Will Learn Why Herbalife Is about to Collapse (CNBC Video)

On CNBC today, Bill Ackman, founder of Pershing Square Capital Management, said "we are going to expose an incredible fraud tomorrow" and "you will learn why Herbalife is about to collapse." He gave more details in the video. HLF fell 11% today on the news. Holy sh*t.


President Obama: The Escalating Conflict in Eastern Ukraine Is Not Going to Be Localized and Not Going to Be Contained (Full Remarks)

Below are President Obama's full remarks on the Malaysian passenger plane that was shot down in eastern Ukraine yesterday and the situation in Gaza.
THE PRESIDENT: Well, I think that this certainly will be a wake-up call for Europe and the world that there are consequences to an escalating conflict in eastern Ukraine; that it is not going to be localized, it is not going to be contained. What we’ve seen here is -- just in one country alone, our great allies, the Dutch, 150 or more of their citizens being killed. And that, I think, sadly brings home the degree to which the stakes are high for Europe, not simply for the Ukrainian people, and that we have to be firm in our resolve in making sure that we are supporting Ukraine in its efforts to bring about a just cease-fire and that we can move towards a political solution to this.

Rick Santelli vs. Fast Money Half Time Report


S&P 500 and Federal Reserve in 2014 vs. 2007 ($SPX)

Don't these moves in the S&P look alike?

How John Law, Fiat Money and the Mississippi Bubble Caused France's Financial Crisis in 1720 (Videos)

This is important history on fiat money, gold and asset price bubbles. The Mississippi Bubble was one of the first modern financial crises. Great Britain's South Sea Bubble happened in the same year (1720).

OCC: Credit Risk Is Building in the Indirect Auto Market and Syndicated Leveraged Loan Market

Source: Office of the Comptroller of the Currency's Semiannual Risk Perspective for Spring 2014 (PDF, emphasis mine)
The OCC sees signs that credit risk is now building after a period of improving credit quality and problem loan clean-up. Examiners have observed erosion in the underwriting standards for syndicated leveraged loans, as well as loosening of standards and increased layering of risk in the indirect auto market. Recent examinations of commercial loan portfolios have identified an increase in policy and underwriting exceptions, including some examples of risk layering (e.g.,increasing collateral advance rates, waiving or loosening of guarantees, and more liberal repayment terms such as extended periods of interest-only payments). A recent horizontal review of midsize and community bank asset-based lending (ABL) found evidence of gradually loosening credit policies in response to competitive pressures. Further, bankers are speaking out increasingly regarding their concern with competitive pressures.

Here are important charts and information from the report:

Dvolatility Research Blog Is Back Up

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Someone Is Loading up on $VIX Upside Calls, Market Is Exhausted (June 16, 2014)

Someone saw the move in the sunspot cycle and decided to buy VIX upside calls in size! But seriously, based on my research and indicators, I think the market is extremely exhausted and could easily correct on more Fed action or talk, a spike in oil prices because of the instability in Iraq, or if negative news starts to spread in the credit market (read this Bloomberg article on subprime auto loan default rates).

According to Jamie Tyrrell of Group1 Trading, a total of 200,000 July 17 calls were bought during the last three trading sessions. The video below is courtesy of the optionMonster Volatility Sonar Report. The volume could be part of huge option spreads, but the activity is still interesting.

NASA Sees Sunspots Plunging in June, Cycle May Have Peaked

The sunspot cycle is expected to crash in June, according to Hathaway/NASA/MSFC.

Video: Putin Speaking with Obama after D-Day 70 Lunch (Elysee's Vine)

The Vacant, Damaged Pontiac Silverdome is Being Liquidated (Video)

The Pontiac Silverdome, the old home of the Detroit Lions and Detroit Pistons which was bought in 2009 for $583,000 (1% of the $55 million cost to build the place in 1973-1975), is being liquidated after its roof got severely damaged by winter storms. The place now looks like a mess, watch the videos. You can buy a seat for $100. See what it looked like in 2009.

Dvolatility Research: Technical Update on SPY, QQQ, DIA, IYT, MDY and IWM with Volatility Indexes, NH-NL%, PPO and RSI (4/28/2014)

Via Dvolatility Research (originally released on 4/28/2014)

Welcome to Dvolatility Research. It's time to have fun with some charts. This market and economic research blog is for risk managers, traders, investors, fund managers, market observers, economists, macro tourists, financial information and news addicts, and for educational purposes.

I want to chart out the major index ETFs and look at technical, breadth and sentiment trends and divergences in my first official DVR post. I think the market is in the process of pricing in the end of QE, but this time around the Fed is cutting its purchases slowly rather than abruptly, which could change the dynamic of the next move. The market corrected (or crashed) after QE1 and QE2 ended in March 2010 and June 2011 (combined with the negative debt ceiling catalyst), respectively. Here's a chart of the S&P 500 versus the U.S. Federal Reserve's total assets since 2009. It's clear what's been driving the market since the financial crisis and great recession ended.

ECB Watch (April 2014 Links and Videos)

  • The ECB betting on "creditless" recovery (4/29, Sober Look)
  • German Inflation Misses Estimates as ECB Pressure Mounts (4/29, Bloomberg)
  • Warning signals flash for ECB ahead of May meeting (4/29, Reuters)
  • ECB fails to fully offset bond buys again as money markets tighten (4/29, Reuters)

Dvolatility Research: The 2009-2014 Cyclical Bull Market Is Running on Fumes at Resistance in Real and Nominal Terms (4/11/2014)

Technical Update on the U.S Stock Market in Real and Nominal Terms

S&P 500: $SPX is way above its 2000 and 2007 highs, but its current cyclical uptrend looks overextended. Volume is starting to increase on down moves as well, so traders and investors are getting jittery at these levels. That uptrend line must stay intact for the bulls to survive, in my opinion.


FYI: $SPX pierced through its 50 day moving average yesterday.


Nomura's Richard Koo on Balance Sheet Recessions (Deleveraging), QE Traps and Economic Growth

Richard Koo, Chief Economist at the Nomura Research Institute, is an expert on deleveraging cycles (or what he calls "balance sheet recessions" after asset price bubbles burst), deleveraging's negative effect on the money supply, credit growth, spending and inflation, and how to manage these deflationary forces to prop up GDP growth and to avoid a depression.

NASA Expects Sunspot Cycle to Dip in April; S&P 500 and Sunspot Cycle Are Moving in Tandem

The sunspot cycle may have exhausted to the upside in March. NASA expects the sunspot cycle to fall in April and, based on its forward projection, to trend down in the months and years ahead. It's interesting that both the sunspot cycle and S&P 500 made new cycle highs in March. Here's a chart of the S&P in real terms versus the sunspot cycle since 1995. What are the odds that they continue to move in tandem? Read previous posts on the sunspot cycle.

Rising Dependency Ratios in Developed World and China Will Put Pressure on Credit Growth, Asset Prices and Economic Growth For Decades: Demographics Alert

After various credit and asset bubbles burst in the developed world (and now in China) and fueled deleveraging cycles, negative demographic forces could also put pressure on credit growth, asset prices and global economic growth going forward. The total dependency ratio, which, according to the United Nations, is the total number of people aged 0-14 and 65+ versus those aged 15-64, in most developed economies is going to bottom out and start rising between now and 2020 (or already has when looking at the graphs of Japan, the U.S. and many European countries). If you do a Google search on demographics, you can see that many advanced economies are facing what Harry Dent calls a "demographic cliff," which is mainly being fueled by the "elderly dependency ratio" (people retiring from the workforce).

Sunspot Count Prediction Hits New Cycle High in March 2014 (NASA)


Source: NASA

Chart of the Day: Ukraine's CDS Spread

Ukraine's credit default swap spread is testing the recent highs it looks like. The country could get bailed out soon by the IMF.

WASHINGTON—An International Monetary Fund team will visit Ukraine from Tuesday to March 14 to assess the economy and begin negotiations for a financial bailout, the IMF said Monday.

Source: S&P Capital IQ

The Dow's Low In 1932 Almost Tested Its High In 1835! Asset Price Deflation In The 1930s Took The Dow Back To The 1860s

These charts released by @Macro_Tourist in a PDF are a must see. I saw them all at Zero Hedge a few days ago (1, 2). There are charts of interest rates and commodity prices going back to 3,000 BC, a gold chart since 1263, and there's a chart of the "western stock market" since 1509. There was a also a chart that specifically showed the U.S. stock market (Dow Jones Industrial Average) since 1789, which I focused on below. In a previous post, I showed you that the Dow's low in 1942 (92.9) was below its secular bull market high of 103 in 1906 (-9.7% over 36 years). But @Macro_Tourist's chart showed an even better flatline. The Dow's low in 1932 (41.2) almost tested its high of 36.6 in 1835 (+12.5% over 97 years). For an analogy that's similar to my previous post, the Dow's low in 1932 (41.2) crashed through its high of 48.9 in 1869 (-15.7% over 63 years). That's how insane the asset price deflation (or deflation overall) was in the 1930s. It took stock prices back almost 100 years.