With the President taking vacations as of today, his Jobs Approval Chart is breaking the support level, while the disapprove trend is breaking new highs. More from Gallup;

Implications

Although the new lows in Obama’s job approval rating represent only a slight drop from his previous low readings, they symbolically underscore the weaker position the president is in as he begins a “listening tour” of the Midwest this week.

Ten incumbent presidents have sought re-election since World War II, and none has won a second term with final pre-election job approval ratings below 48%. The last two presidents who lost their re-election bids — George H.W. Bush and Jimmy Carter — had job approval ratings in the 30% range in the fall of the election year. Thus, Obama’s challenge is not only to move his rating back above 40%, but also to push it close to or above 50%.

The crucial period for Obama will begin after Labor Day, given the relative quiet on the political front that should be the case before then. Obama will generate some news coverage this week with his bus tour through Minnesota, Iowa, and Illinois, but after that, he has a scheduled vacation on Martha’s Vineyard, during which he will be largely out of the news — barring some major crisis. Republican candidates will continue campaigning over the next several weeks, but with no major debates or other events scheduled until September, they too will not be generating as much news as they have during the past week.

September will bring more GOP debates and an increasing focus on the budget situation, as the new congressional “supercommittee” begins its work and as Congress and Obama return to Washington. If the president is not able to turn around the negative momentum in his ratings during the fall months, it may be more and more difficult for him to do so as the presidential campaign begins in earnest next year.

The “best” growth is supposedly in the Emerging World, but what about the risks in that space? Can we hedge the Fat Tails? Some good points on those Fat Tails in the Emerging Markets. From PIMCO;

PIMCO’s secular view speaks to an evolving, multi-speed world where emerging market (EM) countries are poised to lead global economic growth. This strong multi-year story is likely to be punctuated, however, by periods of volatility as policymakers respond to inevitable cyclical challenges. These potential headwinds argue for an approach that is designed to help investors manage their downside risks while still maintaining their overall exposure to EM equities.

Full article, click here.

Today’s Philly Fed figure was rather disappointing. Markets totally tanked, with some of our risk markets pretty much collapsing. OMX, which is a great risk market to watch, ended down almost 7%. People still have a hard time realizing, the US market is still relatively high. With the Philly Fed figure today, one should try to remember where we were last time Philly was so bad. Unless Apple will employ everybody, the jobs market is to resume the free fall. Chart from Zero Hedge.

and don’t forget where SPX traded back then…..

Markets have started playing games with people’s minds. The HFT Machines are dominating all trading activity, while the average Joe is left on his own. With the extreme volatility, but still no real panic, expect things to get worse. It is a question of time, before we hear some big short gamma hedge fund/bank blow up, and then we will go into the second part of this extreme market volatility, unless of course Buffett doesn’t provide some more SPX puts to the market. Everybody (almost) is now long and wrong. Presented without comment.

Welcome to Collapsomania 2.0. Philly Fed missing so big. Dax -6,2%. Expect riots spreading to Germany soon.

With Expiration coming up tomorrow, things could get very nasty.

From Gold Core;

All major currencies have fallen sharply against gold again today but especially the ‘commodity’ fiat currencies of the Australian, New Zealand and Canadian dollar. Swiss francs are also under pressure again today.

Gold is trading at 1,808 USD, 1,259.10 EUR, 1,096.40 GBP, 1,436.90 CHF and 138,510 JPY per ounce.  

The London AM fix was a second consecutive record nominal high in USD. Gold’s London AM fix this morning was USD 1,794.50, EUR 1,246.44, GBP 1,087.12 per ounce (from yesterday’s USD 1,792.00, EUR 1,240.39, GBP 1,089.96 per ounce).

In my interview this morning on Bloomberg, the interviewer picked up on our recent suggestion that gold could go parabolic soon. Indeed, we said that it is likely not a question of if – but rather when.

A short interview is not conducive to informing people and therefore we wish to elaborate about a possible parabolic move.

Bull markets almost always end in a mania phase where there is a near universal belief that an asset class or security is going to rise and there is no risk involved.

This has been seen throughout history and was seen with the Nikkei, the Nasdaq and more recently with property markets in Ireland, the UK and the U.S.A.

It was also seen with gold in the 1970s when gold increased 128% in 1979 alone. On January 2nd 1979 gold’s London AM Fix was $227/oz. By the 31st of December, gold’s London AM fix was $524/oz.

21 days later gold had increased another 60.9% to $843/oz.

This is parabolic.

Today’s 27% rise year to date in dollar terms is very tame in comparison. 

The blind belief that an asset class, security or currency is a one way path to financial nirvana always leads to a bubble and the bursting of that bubble.

Today there is no such blind belief. Gold remains the preserve of the smart money – those who know their financial and economic history. 

It is also the preserve of those who understand the importance of real diversification due to the risks posed by currency debasement and inflation. 

Continue reading →

Despite the Short Ban imposed by some countries, the markets are once again showing real weakness. The increasing number of mini flash crashes should make investors rather nervous. Below some rules to think about before shorting. From the French regulators AMF;

1- Following the publication of the Decision, what does an investor need to check before selling any of the securities concerned? Before selling, the investor must make sure that the quantity of securities sold does not create or increase a net short position.

Opening a net short position during the trading day is prohibited, even if the investor intends to close the position before close of business on that day.

2- How will this Decision affect deferred settlement of net short positions taken in the securities concerned before the publication of the Decision? Short deferred-settlement-and-delivery positions in the securities concerned are not affected. However, the said positions must not be extended beyond the monthly settlement for August 2011.

3- Is an investor allowed to create a net short position in one of the securities concerned by using derivatives? No, investors are not allowed to use derivatives to create a net short position; they may only use derivatives to hedge, create or extend a net long position.

Net short positions taken before the publication of the Decision (11 August 2011, 22:45) through derivatives are not affected until the expiry date of the said derivatives. Investors must nonetheless reduce their exposure before the end of the day if their net short position increases as a result of the variation in volatility. In addition, investors holding a net short position in relation to one of the securities concerned through expiring derivatives are not allowed to roll forward their position where such a rolling would result in the creation of a net short position with a further expiry date, even if the net short position so created is analogous to the one held previously.

4- What should be done about orders in the order book that are not executed when the Decision is published if executing them would initiate or increase a net short position? The investor shall cancel the orders in question.

Full reading, AMF_france short ban doc

Another day another flash crash. For those who still believe the markets function, take a look at today’s Dax move earlier today. The trader has argued, the ultimate collapse is still to come, when the HFT Algo Machines eventually spread the ultimate Panic, where nobody will be able to manage their risks. Welcome to Algomania.

For those interested in the HFT Trend, please read further on Nanex.net;

Lately, readers have sent us links to a few research papers extolling the virtues of HFT, namely, that they provide liquidity, reduce spreads, and probably cure cancer. At first, it appeared that some of these papers were written based on data from another planet, but, upon closer inspection, we realized that they were simply based on very old data. You see, as HFT races towards zero, the data it generates decays just as fast. In other words, any research paper written just 6 months ago, or one that does not take into account recent data, might as well have been written for people on another planet, because it won’t accurately describe what is going on in the market today.

Take a look at the images below, which show just how much, and how quickly trading has change since 2007. We plot U.S. equity quote and trade data for each minute of the trading day, from the beginning of 2007 through August 16, 2011 (about 1165 trading days). Charts are colored according to dates which are shown in the legend in the format M/YY: so 8/11 indicates August 2011. The most recent data on all the charts is colored red, with older data using colors towards the blue end of the spectrum.

Note the significant changes from late 2009 (light green/aqua-marine). That was a year that many Pro-HFT research papers are based on. If the research paper predates 2011, or worse, ignores recent data, it’s probably not worth the paper it’s printed on.

As we argued two days ago, the market reached the projected bounce resistance around the 1200 level on the S&P. The no volume melt up has once again “fooled” people into buying the dip, as the shorts have been covering. The market is very illiquid, and all trading dominated by HFT Algo Machines, destroying the market microstructure for all “real” fund flows. With yesterday’s news of the “central bank put” gone, we should be revisiting the “below 1100″ level on shortly. Some charts from Macro Story. Back then we had Lehman etc and now we have Soc Gen etc. It looks similar, but don’t get fooled by rushing into buying…..

…..as more trouble is around the corner.

A Whistleblower is accusing SEC of systematically destroying thousands of documents covering up the dirty business of Finance. Must read article by Taibbi;

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – “Hey, chief, didja know this guy had two wives die falling down the stairs?” No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation’s worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – “18,000 … including Madoff,” as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

Is the SEC covering up Wall Street Crimes?–Taibbi