Wednesday, April 29, 2015
Bill Gross Tweet Shorting German 10-Year Bunds
A week later, Janus' Gross' trade shorting German Bunds has already paid off big.
Gross: German 10yr Bunds = The short of a lifetime. Better than the pound in 1993. Only question is Timing / ECB QE
— Janus Capital (@JanusCapital) April 21, 2015Biggest Inventory Build In History Prevents Total Collapse Of The US Economy
http://www.zerohedge.com/news/2015-04-29/biggest-inventory-build-history-prevents-total-collapse-us-economy
The Fed continues to jawbone about "normalizing interest rates", i.e. raising interest rates to normal levels (historically 5-6%), from current near-zero levels.
FAT CHANCE is my retort. There is no way in Hades Janet Yellen will raise rates for the following reasons:
1) the economy is weakening, effectively into another recession, irrespective of whether the technical definition of a recession is negative GDP growth for two consecutive quarters. One could argue the US has been in a recession since 2008, even if it officially ended in June, 2009.
In any case, central banks don't raise interest rates when an economy sinks into recession because it further stagnates economic output. At least if they don't wish for the pitchforks to come out, and if congress wants to get re-elected. For those who argue the Fed is independent, you need to wake up.
Meanwhile, happy stacking!
In other words, if US inventories, already at record high levels, and with the inventory to sales rising to great financial crisis levels, had not grown by $121.9 billion and merely remained flat, US Q1 GDP would not be 0.2%, but would be -2.6%.Our take:
The Fed continues to jawbone about "normalizing interest rates", i.e. raising interest rates to normal levels (historically 5-6%), from current near-zero levels.
FAT CHANCE is my retort. There is no way in Hades Janet Yellen will raise rates for the following reasons:
1) the economy is weakening, effectively into another recession, irrespective of whether the technical definition of a recession is negative GDP growth for two consecutive quarters. One could argue the US has been in a recession since 2008, even if it officially ended in June, 2009.
In any case, central banks don't raise interest rates when an economy sinks into recession because it further stagnates economic output. At least if they don't wish for the pitchforks to come out, and if congress wants to get re-elected. For those who argue the Fed is independent, you need to wake up.
2) Debt levels,
whether national government. state, local, and household levels, have
never been higher. Imagine interest rates on mortgages, student, auto,
student, credit card debt rising. Servicing that debt becomes more
problematic. Austerity measures kick in, households hunker down, and
the economy would further sink.
Of course, the Fed would probably monetize more debt, plunging us further into debt.
In
fact, as Austrian school of economists have purported, Keynesian
economists will always choose the debt monetization route in a pinch,
solving nothing and merely extending the debt rabbit hole.
Which
leads to my next forecast: the Fed will re-institute QE in a reversal
of policy stance of tapering. As the saying goes: QE to infinity!
Few
are pointing to more QE, but history shows bankrupt governments and
central planners always choose MOAR DEBT, as long as they are in power.
Spend today, worry about tomorrow later.
3) With a
weakening economy, and a soaring dollar (at least relative to other fiat
foreign currencies), US exports are getting clobbered (due to US
exports being more expensive in other weaker foreign currencies). This
will kick in beggar-thy-neighbor currency devaluation wars, as Japan's
Abe is committing financial hara-kiri by destroying the yen, and the EU
is turning on the Euro QE spigot. Hence, the Fed will debase the dollar
in a misguided attempt to make exports more competitive. The upshot is
a sovereign central bank cannot weaken a currency by raising rates.
Weakening a currency requires more printing and lowering rates.
The
take away is more volatility, more money printing, more spending, more
geopolitical strife, and more social unrest domestically.
How
does that affect holders of gold and silver? With real (i.e.
inflation-adjusted) interest rates negative, keep accumulating physical
precious metals.
Despite Fed rhetoric of raising rates
either in June or October, the bond yield curve is handicapping a 2016
timeframe. I'm in the camp the Fed will NEVER be able to raise rates
intentionally, because it would further stagnate the economy.
But
I am acknowledging that the bond vigilantes will at some point emerge
and force market rates higher as the participants realize the US
government is insolvent and a high credit risk. Its IOU's will never be
repaid, and we will have our own Greek default moment. Obviously, this
points to the US Treasury bubble bursting, bringing down everything
with it, including a stock market bubble. Bond market collapse =
soaring bond yields (i.e. interest rates) = equities collapse.
Everything
collapses in a liquidity bidless meltdown, except of course, gold and
silver, the only sound money which has held its value for 6000 years.
The
overarching question becomes when this will happen. Only God knows.
Betting against the stock market is a foolish endeavor, as equities
could melt up in a world of competitive currency devaluations. In other
words, investing in companies can be a very good hedge against currency
debasement. The problem is it works well when it works well--until it
stops working when hyperinflation outstrips rising markets. Kinda like
leveraging up works extremely well in a rising real estate market, but
it is disastrous when the music stops (see 2008 financial crisis).Meanwhile, happy stacking!
Tuesday, April 28, 2015
The $18bn arms race helping to fuel Middle East conflict
The rapidly escalating arms race from the "civilized" world to the middle east is reaching unsettling proportions.
http://www.theguardian.com/world/2015/apr/23/the-18bn-arms-race-middle-east-russia-iran-iraq-un
http://www.theguardian.com/world/2015/apr/23/the-18bn-arms-race-middle-east-russia-iran-iraq-un
Gold surges: World's 'biggest pawnbroker' makes deal
Even though analysts assess the gold swap from Venezuela to Citicorp as the reason for gold's recent surge, I believe it will be bearish mid-term for gold. Now Citi has the physical gold to rehypothecate to manipulate prices lower via the paper COMEX exchange. This should give accumulators more opportunities to buy the dip in gold prices. Have some dry powder.
As an aside, the late Hugo Chavez must be rolling over in his grave. He worked hard to become the first leader to repatriate his country's sovereign gold, and now his successors are pawning it away.
On a more insidious note, bankrupt oil-exporting countries have been forced to sell their family jewels at discounted prices, whether these assets are drilling rigs or gold bullion. There is destructive price suppression in the energy markets as well as the precious metals mining markets. Extraction companies and state governments are either going out of business or panic selling their treasured assets in order to keep the lights on.
http://www.cnbc.com/id/102623775
As an aside, the late Hugo Chavez must be rolling over in his grave. He worked hard to become the first leader to repatriate his country's sovereign gold, and now his successors are pawning it away.
On a more insidious note, bankrupt oil-exporting countries have been forced to sell their family jewels at discounted prices, whether these assets are drilling rigs or gold bullion. There is destructive price suppression in the energy markets as well as the precious metals mining markets. Extraction companies and state governments are either going out of business or panic selling their treasured assets in order to keep the lights on.
http://www.cnbc.com/id/102623775
Sunday, April 26, 2015
Thursday, April 23, 2015
Wednesday, April 22, 2015
Monday, April 20, 2015
Sunday, April 19, 2015
Direct Evidence For The Supercycle
One of the take-aways is as Chinese industrial production peaked in 2007, as did foreign purchases of US Treasury assets.
My personal opinion is that supercycles tends to be more axiomatic. For example, one's cholesterol levels and blood pressure may fluctuate from minute to minute, so the snap shots may appear to be white noise. However, if one were to consume large amounts of saturated fats over years and decades, the "supercycle" trend of elevated cholesterol and blood pressure becomes more deterministic.
Investment supercycles 100% predictable in their occurrence--even if their timing and durations are not.
http://www.alhambrapartners.com/2015/04/16/direct-evidence-for-the-supercycle/
My personal opinion is that supercycles tends to be more axiomatic. For example, one's cholesterol levels and blood pressure may fluctuate from minute to minute, so the snap shots may appear to be white noise. However, if one were to consume large amounts of saturated fats over years and decades, the "supercycle" trend of elevated cholesterol and blood pressure becomes more deterministic.
Investment supercycles 100% predictable in their occurrence--even if their timing and durations are not.
http://www.alhambrapartners.com/2015/04/16/direct-evidence-for-the-supercycle/
What Bernanke's New Employer Had To Say About Him Just 2 Years Ago
And so the predictable revolving door between Washington and Wall Street continues.
http://www.zerohedge.com/news/2015-04-18/what-bernankes-new-employer-had-say-about-him-just-2-years-ago
http://www.zerohedge.com/news/2015-04-18/what-bernankes-new-employer-had-say-about-him-just-2-years-ago
Jade helm ? National guard in Ontario California
Yes, I happened to be here yesterday at the Ontario Mills complex during this military "training exercise."
https://www.youtube.com/watch?v=Hj7efDgGRH0
https://www.youtube.com/watch?v=Hj7efDgGRH0
Saturday, April 18, 2015
Citigroup's Gold "Expert" Demands A Cash Ban
Buiter is a shill for central bankers. And that's being kind.
http://www.zerohedge.com/news/2015-04-16/another-shill-statism-central-planning-demands-cash-ban
http://www.zerohedge.com/news/2015-04-16/another-shill-statism-central-planning-demands-cash-ban
FBI Uncovers Al-Qaeda Plot To Just Sit Back And Enjoy Collapse Of United States
This satire is hilarious, but disturbing because there is an element of truth to it.
http://www.theonion.com/articles/fbi-uncovers-alqaeda-plot-to-just-sit-back-and-enj,35788/
http://www.theonion.com/articles/fbi-uncovers-alqaeda-plot-to-just-sit-back-and-enj,35788/
No Matter Who Wins the White House, the New Boss Will Be the Same as the Old Boss
https://www.rutherford.org/publications_resources/john_whiteheads_commentary/no_matter_who_wins_the_white_house_the_new_boss_will_be_the_same_as_the_old
“What the government is good at is collecting taxes, taking away your freedoms and killing people. It’s not good at much else.”—Author Tom Clancy
Friday, April 17, 2015
"We're All Frogs In Boiling Water" Santelli Says After Lacy Hunt Warns "This Is Far From Over
http://www.zerohedge.com/news/2015-04-17/were-all-frogs-boiling-water-santelli-says-after-lacy-hunt-warns-far-over
debt is an increase in current consumption in exchange for a decline in future spending and we are not going to solve this problem by taking on more and more debt.
Thursday, April 16, 2015
Monday, April 13, 2015
Are These The "Everyday Americans" Hillary Clinton Is Running For?
For various reasons, I hope Hillary Clinton wins the Presidency next year. If the cleansing and reset processes have to occur, it might as well happen on her watch. Perhaps she will blame all her predecessors just like the current President has. The thing is, they may have a point, but they will have certainly contributed as well to the fiscal train wrecks.
http://www.zerohedge.com/news/2015-04-13/are-these-everyday-americans-hillary-clinton-running
http://www.zerohedge.com/news/2015-04-13/are-these-everyday-americans-hillary-clinton-running
Wells Fargo workers to protest company as 'unreasonable' sales quotas continue
Next time your bank abuses you with fees, don't take it out on your bank teller. They are probably in worse financial shape than you are, and in many cases, it wasn't their fault. They were following orders. Blame it on their executives and cronies on Wall Street.
In a nutshell, this sums up what's wrong with the US economy, despite the shiny veneer.
http://www.theguardian.com/business/2015/apr/12/well-fargo-workers-protest-sales-quotas?CMP=share_btn_link
In a nutshell, this sums up what's wrong with the US economy, despite the shiny veneer.
http://www.theguardian.com/business/2015/apr/12/well-fargo-workers-protest-sales-quotas?CMP=share_btn_link
“Nothing has changed,” said Michael Lewis, 46, who works as a financial crime specialist at Wells Fargo in Chandler, Arizona. Lewis has worked for the bank for three years and is one of the people who handle calls disputing charges and fees accrued by the bank’s customers.
“Basically, what I do all day is look at people’s bank statements,” he said. “I have kind of an unique experience knowing how America spends its money and knowing how broke everyone is.”
Cognitive Dissonance
I will let readers formulate their own cognitive dissonance on fiat currencies. And why they haven't taken action to prepare for what is becoming increasingly apparent.
http://psychology.about.com/od/cognitivepsychology/f/dissonance.htm
http://psychology.about.com/od/cognitivepsychology/f/dissonance.htm
Friday, April 10, 2015
Paul Craig Roberts – As Greece Pivots, Putin Unleashing Ultimate Move To Crush The EU And NATO
Roberts doesn't go further, but if the scenario he paints becomes true (he's been prescient up until now), then USDollar hegemony is toast, which would roil global capital markets. Everybody suffers short-term, but the global debt overhang would be repudiated. A necessary reset will have winners and losers. May the most competitive nations win.
http://kingworldnews.com/paul-craig-roberts-as-greece-pivots-putin-unleashing-ultimate-move-to-crush-the-eu-and-nato/
http://kingworldnews.com/paul-craig-roberts-as-greece-pivots-putin-unleashing-ultimate-move-to-crush-the-eu-and-nato/
HSBC's Long List of Troubles Just Got Even Longer
It is indeed very interesting that other bullion banks haven't been
indicted for manipulating commodities prices, including the precious
metals complex. Not to name names, but HSBC must be the only guilty
party. Surely, no US-based bullion banks are involved in the rigging of markets.
/sarcasm
http://www.bloomberg.com/news/articles/2015-04-10/hsbc-s-long-list-of-troubles-just-got-even-longer
/sarcasm
http://www.bloomberg.com/news/articles/2015-04-10/hsbc-s-long-list-of-troubles-just-got-even-longer
Precious metals: U.S. investigators have ordered HSBC to provide documents on its precious-metals dealings as part of criminal and regulatory probes into the markets. It’s also been named in several class actions alleging the bank conspired to manipulate gold and silver prices.
Thursday, April 9, 2015
FEDERAL RESERVE statistical release
According to the Federal Reserve Bank's balance sheet, as of April 1, 2015, it has total liabilities of $ 4,424,144,000,000 and total capital of $ 57,656,000,000. Hence, its leverage ratio is 76.73. It is massively over-leveraged and on the brink of insolvency should interest rates (i.e. bond yields) rise even slightly higher.
Just for grins, Lehman Brothers' leverage ratio was 30 before it collapsed.
http://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab1
Just for grins, Lehman Brothers' leverage ratio was 30 before it collapsed.
http://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab1
Tuesday, April 7, 2015
America's Poor Spend 60% Of Their Income On Food & Housing Proving CPI Is Meaningless
http://www.zerohedge.com/news/2015-04-06/americas-poor-spend-60-their-income-food-housing-proving-cpi-meaningless
For many Americans, the rise in food and housing prices is a tough squeeze. That’s because—even in an era with low overall inflation—low-income Americans spend a disproportionate share of their money on food and housing.
New data from the Labor Department show the extent of the discrepancy. The bottom 10% of Americans, by income, devote 42% of their spending to housing and an additional 17% to food–nearly 60% of their total spending, according to the Consumer Expenditures Survey. By contrast, the wealthiest 10% of Americans dedicate only 31% of their spending to housing and 11% to food–closer to 40% of total spending…
Saturday, April 4, 2015
Shanghai Gold Exchange Reports 45.719 Tonnes of Gold Withdrawn for Week Ending March 27
According to Ed Steer and Ted Butler, JPMorgan and the big silver shorts slapped on the biggest short positions in COMEX silver since he can remember. Meanwhile, they gobbled up all the available silver eagle and silver Canadian maple leaf coins.
We will see if this will lead to higher prices Sunday evening in Asian trading.
http://www.caseyresearch.com/gsd/edition/shanghai-gold-exchange-reports-45.719-tonnes-of-gold-withdrawn-for-week-ending-march-27
We will see if this will lead to higher prices Sunday evening in Asian trading.
http://www.caseyresearch.com/gsd/edition/shanghai-gold-exchange-reports-45.719-tonnes-of-gold-withdrawn-for-week-ending-march-27
Friday, April 3, 2015
Thursday, April 2, 2015
Israel applies to join China-backed AIIB investment bank
America's loss of face on the economic world stage is now complete. Two of America's biggest allies: the UK and now Israel have defied Washington's orders and have applied to become founding members of the Chinese-led Asian Infrastructure Investment Bank.
http://www.reuters.com/article/2015/04/01/us-asia-aiib-israel-idUSKBN0MS46J20150401
http://www.reuters.com/article/2015/04/01/us-asia-aiib-israel-idUSKBN0MS46J20150401
China pins hopes on China-Mongolia-Russia economic corridor — diplomat
It appears US-led economic sanctions have not isolated Russia. By contrast, they have emboldened Russia's trading partners to form tighter ties amongst themselves.
If anything, the sanctions have isolated the US in a classic case of unintended blowback, as one country after another (including in the EU) abandons trade sanctions, and in fact, become founding members of China's Asian Infrastructure Investment Bank.
http://tass.ru/en/economy/786634
If anything, the sanctions have isolated the US in a classic case of unintended blowback, as one country after another (including in the EU) abandons trade sanctions, and in fact, become founding members of China's Asian Infrastructure Investment Bank.
http://tass.ru/en/economy/786634
Merkel’s ‘Anti-Russian Front’ Falls Apart – German Newspaper
One has to wonder why Angela Merkel is so loyal to US-led economic sanctions against Russia--even against a sea of non-compliance from other Euro zone countries. After all, economic sanctions against Russia have impaired exports for said EU countries.
Perhaps Merkel recalls her discovery that the CIA was spying on her. Maybe Obama has Merkel's dirty laundry.
http://sputniknews.com/europe/20150402/1020366367.html
Perhaps Merkel recalls her discovery that the CIA was spying on her. Maybe Obama has Merkel's dirty laundry.
http://sputniknews.com/europe/20150402/1020366367.html
Wednesday, April 1, 2015
Iceland To Take Back The Power To Create Money
Bankers may soon declare Iceland a rogue state and drop nukes on them. Governments, instead of corrupt commercial banks being in charge of issuing their own money--what a concept.
http://www.theautomaticearth.com/2015/03/iceland-to-take-back-the-power-to-create-money/
http://www.theautomaticearth.com/2015/03/iceland-to-take-back-the-power-to-create-money/
Yanis Varoufakis: “Greece Will Adopt the Bitcoin If Eurogroup Doesn’t Give Us a Deal”
Global finance just went bizarre with Greece's Finance Minister planning to adopt Bitcoin. But then again, negative interest rates on sovereign bonds aren't exactly standard protocol. John Maynard Keynes is rolling over in his grave.
http://greece.greekreporter.com/2015/04/01/yanis-varoufakis-greece-will-adopt-the-bitcoin-if-eurogroup-doesnt-give-us-a-deal/
http://greece.greekreporter.com/2015/04/01/yanis-varoufakis-greece-will-adopt-the-bitcoin-if-eurogroup-doesnt-give-us-a-deal/
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