The woods decay, the woods decay and fall,
The vapours weep their burthen to the ground,
Man comes and tills the field and lies beneath,
And after many a summer dies the swan.
Alfred Lord Tennyson, Tithonus
There will be a precious metals option expiration tomorrow on the Comex. It may be more significant for gold rather than silver.
This post was published at Jesses Crossroads Cafe on 25 SEPTEMBER 2017.
One of the great parts of writing this letter is the people I get to meet. Among those I enjoy hearing from is former NYSE floor trader, Clay Tompkins. His years spent on a trading floor gives Clay a certain insight about markets that is tough to describe. It involves a willingness to fade consensus accompanied with a healthy respect for the power (madness?) of the crowd.
Clay sends me tidbits from time to time, with a few wise words that always seem to resonate with me. In the heat of the summer, he started sending warnings about Apple.
Kev, There’s an interesting piece on Novo Nordisk in the WSJ today, about how they improved their insulin and raised prices accordingly, with the result that customers opted for the older, cheaper formulation.
Apple is doing the same, and I think the results will be the same. My daughters scoff at the idea that they or their friends would seriously pay $1100-1400 for the new phone. Andy Kessler called this the ‘ radial tire’ problem, whereby radials, getting 50,000 between replacement killed the bias ply model which needed changing every 12,000.
Buffett and Tepper and all the rest are too rich to get it.
I know your site says ‘ macro’, but at 3.6% of the S&P, a falling Apple will have real repercussions.
This post was published at Zero Hedge on Sep 25, 2017.
Electricity, internet access and cell phone service have been offline in parts of Puerto Rico for a whole week. And with the island still struggling to rescue people stranded in remote villages, those managing the emergency recovery effort have yet to focus their attentions on the monumental task that looms ahead: Rebuilding the island’s devastated infrastructure, from communications to sewers and water treatment plants that have been damaged by flash flooding and 155 mph winds that Hurricane Maria visited upon the island.
The damage, as Bloomberg reports, has essentially knocked Puerto Rico’s economy back into the 1950s. For locals who’re struggling to begin the process of rebuilding their damaged homes, shops across the island are only accepting cash.
The cash economy has reigned in Puerto Rico since Hurricane Maria decimated much of the U. S. commonwealth last week, leveling the power grid and wireless towers and transporting the island to a time before plastic existed. The state of affairs could carry on for weeks or longer in some remote parts of the commonwealth, and that means it could be impossible to trace revenue and enforce tax rules. The situation further frustrates one of the many challenges already facing a government that has sought a form of bankruptcy protection after its debts swelled past $70 billion: boosting revenue by collecting money that slips through the cracks.
This post was published at Zero Hedge on Sep 25, 2017.
Janet Yellen has quipped that the Fed’s balance-sheet reduction program, which will start at $10B/month in October-2017 and steadily ramp up to $50B/month over the ensuing 12 months, will be as boring as watching paint dry. However, like many financial-market pundits she is underestimating the effects of the Fed’s new monetary plan.
In the old days, hiking the Fed Funds rate (FFR) involved reducing the quantity of bank reserves and the money supply, but that is no longer the case. Hiking the FFR is now achieved by raising the interest rate that the Fed pays to banks on reserves held at the Fed, which means that hiking the FFR now leads to the Fed injecting reserves into the banking system. This was explained in previous blog posts, including ‘Tightening without tightening (or why the Fed pays interest on bank reserves)’, ‘New tools for manipulating interest rates’, and ‘Loosening is the new tightening’.
In other words, under the new way of operating that was implemented in the wake of the Global Financial Crisis, hiking the FFR does not tighten monetary conditions. In fact, given that hikes in the FFR now result in more money being pumped INTO the banking system, an argument could be made that a hike in the FFR is now more of a monetary loosening than a monetary tightening. It is therefore not surprising that the rate hikes implemented by the Fed over the past two years had no noticeable effect on anything.
This post was published at GoldSeek on 26 September 2017.
Same phenomenon leading up to the last housing bust?
The toxic combination of ‘competition from other lenders’ and slowing mortgage demand is cited by senior executives of mortgage lenders as the source of all kinds of headaches for the mortgage lending industry.
Primarily due to this competition amid declining of demand for mortgages, the profit margin outlook has deteriorated for the fourth quarter in a row, according to Fannie Mae’s Q3 Mortgage Lender Sentiment Survey. And the share of lenders that blamed this competition as the key reason for deteriorating profits ‘rose to a new survey high.’
And demand is down for all three types or mortgages:
Mortgages eligible for guarantees by Government Sponsored Enterprises, such as Fannie Mae and Freddie Mac (‘GSE Eligible’), indirectly backed by taxpayers. Mortgages not eligible for GSE guarantees (‘Non-GSE Eligible’), not backed by taxpayers Mortgages guaranteed by Government agencies, such as Ginnie Mae, directly backed by taxpayers.
This post was published at Wolf Street on Sep 25, 2017.
If a surge in covenant-lite levered loans is any indication that debt and equity markets are nearing the final stages of their bubbly ascent, then perhaps now is a good time for investors to take their profits and run. As the Wall Street Journal points out this morning, levered loans volumes in the U. S. are once again surging, eclipsing even 2007 levels, despite the complete implosion of bricks-and-mortar retailers and continued warnings that “the market is getting frothy.”
Volume for these leveraged loans is up 53% this year in the U. S., putting it on pace to surpass the 2007 record of $534 billion, according to S&P Global Market Intelligence’s LCD unit.
In Europe, recent loans offer fewer investor safeguards than in the past. This year, 70% of the region’s new leveraged loans are known as covenant-lite, according to LCD, more than triple the number four years ago. Covenants are the terms in a loan’s contract that offer investor protections, such as provisions on borrowers’ ability to take on more debt or invest in projects.
This post was published at Zero Hedge on Sep 25, 2017.
Last month, Anti-Media reported that some of the biggest institutions on Wall Street have issued warnings to investors that planet-wide financial markets are nearing a downturn. From an August 22 article by Bloomberg:
‘HSBC Holdings Plc, Citigroup Inc. and Morgan Stanley see mounting evidence that global markets are in the last stage of their rallies before a downturn in the business cycle.
‘Analysts at the Wall Street behemoths cite signals including the breakdown of long-standing relationships between stocks, bonds and commodities as well as investors ignoring valuation fundamentals and data. It all means stock and credit markets are at risk of a painful drop.’
This post was published at The Daily Sheeple on SEPTEMBER 25, 2017.
It’s hanging around someone’s neck…
This post was published at Zero Hedge on Sep 25, 2017.
GOLD: $1308.45 UP $14.00
Silver: $17.11 UP 16 CENT(S)
Closing access prices:
Gold $1311.25
silver: $17.17
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1299.46 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1292.68
PREMIUM FIRST FIX: $6.78 (premiums getting larger)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1298.02
NY GOLD PRICE AT THE EXACT SAME TIME: $1293.70
Premium of Shanghai 2nd fix/NY:$4.32
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est $1295.50
NY PRICING AT THE EXACT SAME TIME: $1293.19 ????
LONDON SECOND GOLD FIX 10 AM: $1293.30
NY PRICING AT THE EXACT SAME TIME. 1293.95
For comex gold:
SEPTEMBER/
NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 0 NOTICE(S) FOR NIL OZ.
TOTAL NOTICES SO FAR: 83 FOR 8300 OZ (0.2581 TONNES)
For silver:
SEPTEMBER
67 NOTICES FILED TODAY FOR
650,000 OZ/
Total number of notices filed so far this month: 6,303 for 31,515,000 oz
This post was published at Harvey Organ Blog on September 25, 2017.
Well that all escalated rather quickly…
Brent spiking (Kurds and Korea), Gold spiking (Korea), AAPL tumble (weak orders), FANG bloodbath… large into small and growth into value.
The day’s broad activity was driven by North Korean headlines which sparked a bid for gold (and early anxiety over Europe after Germany’s election)…
Gold regains the lead year-to-date…
This post was published at Zero Hedge on Sep 25, 2017.
When Pres. Trump signed a bill raising the debt ceiling limit for the next three months, it instantly added approximately $318 billion to the national debt, raising it to $20.16 trillion. And Trump wants to do away with the debt ceiling altogether.
It’s hard to even conceptualize $20 trillion. What does that mean to the average person? Just the Facts Daily put together some interesting data that helps put the soaring national debt into perspective.
The national debt is currently over 105% of total GDP. That’s the highest level in history except for a two-year spike at the end of World War II.
To personalize the debt a bit, consider this. It currently totals $61,889 for every person in the United States, or $160,247 per household. Looking at it in terms of household debt, its currently 35% higher than the average consumer household debt of $118,271. Household debt includes mortgages, student loans, credit card balances, and auto loans.
This post was published at Schiffgold on SEPTEMBER 25, 2017.
Over the weekend, several key aspects of Trump’s tax plan were leaked, including a reduction in the tax rate for the wealthiest Americans to 35% as well as plans to cut the top tax rate for ‘pass through” businesses from 39.6% to 25%. While these would be welcome developments for US corporations, they would be relevant only if confirmed in the coming days as the “fluid” Trump tax plan is formalized and, of course, if it were to pass the Senate, which may very well not happen. As Rafiki Capital’s Steven Englander writes, “the inability to find 50 Republican Senators who can agree on anything and the diminished authority of the tax reform Gang of Six plus the sense that even at this late stage the Six are not on the same page on tax reform versus tax stimulus makes it hard to take the ‘over’ on significant tax reform.”
As Deutsche Bank also notes over the weekend, “regular legislation would take 60 votes in the Senate and bipartisan support and allow for proper tax reform. However this is seemingly impossible. The reality is that any changes will likely be made through the reconciliation process. However this first requires a budget being passed by Congress which hasn’t been achieved since the Democratic super-majority in 2009-10.”
Which is why despite the recent surge in market sentiment that Trump’s tax reform is suddenly far more likely, analysts caution investors not to expect too much detail with the release of President Donald Trump’s tax framework this week, let alone passage. As Bloomberg summarizes, the rollout may be designed to show Trump and Congress are unified and committed to aggressive tax reform, Evercore ISI says, while “distractions” (including NFL protests and healthcare repeal) may be helping, as the “Big Six” negotiators stay out of the spotlight, according to Height Securities.
This post was published at Zero Hedge on Sep 25, 2017.
Blain’s Morning Porridge EXTRA: ‘WHAT ABOUT THE GERMANS’
It’s unusual for me to write a follow up to the Morning Porridge – but following some conversations and reading about the end of ‘Peak Merkel’, I fear I’ve considerably underestimated the risks raised by the inconclusive German Election.
We are now facing a period of intense political bargaining, weak government and even the potential of a second German vote.
As a result, the prospects for more volatile European peripheral markets, particularly Greece and Italy, are likely to be exacerbated, and we might well see some of the currency and European stock market froth blow away in coming days as the scale of the ‘German Problem’ becomes clearer.
My worst case Germany scenario is a second election early next year, political uncertainty as Mutti Merkel finds herself squeezed out, and a scramble to build a new coalition government in her aftermath. The best case scenario isn’t much better: that Merkel manages to forge a new coalition, but it will be a long drawn out affair and the resulting administration will be vulnerable, weak and fraxious.
This post was published at Zero Hedge on Sep 25, 2017.
As last week ended, VIX was crushed back near record lows to ensure the S&P 500 closed above 2500 and to prove all is well in the world – despite quakes, storms, floods, nukes, and worst of all… Fed balance sheet unwind plans.
And VIX speculators have never been more short (implicitly levered long stocks)…
So why, given all this exuberance and complacency, is uncertainty around VIX’s future trajectory at relative record highs?
This post was published at Zero Hedge on Sep 25, 2017.
The stock market narrowly avoided a major collapse this weekend as the mysterious Planet X (aka Nibiru) failed to collide with earth and blast us all to smithereens.
However, things didn’t start off so well on Monday with North Korea claiming that President Trump’s tweet amounted to “a declaration of war“.
Looking at broader economic and financial trends, RenMac’s Neil Dutta gave a mostly favorable review on the strength of the US economy on FS Insider citing synchronized global growth and other factors still supportive of the stock market.
For example, financial conditions, he pointed out, are extremely loose and not yet showing any signs of deterioration consistent with a market top or oncoming recession. The chart below calculates “financial stress” by measuring interest rate spreads and short-term financing conditions.
This post was published at FinancialSense on 09/25/2017.
Retailers rarely survive bankruptcy, second filings are common, and Toys ‘R’ Us has not solved what is killing it.
Bankruptcy indicators first started swirling publicly around Toys ‘R’ Us on September 6. Unlike other retailers that have been dogged by bankruptcy rumors for years, such as Sears Holdings, Toys ‘R’ Us threw in the towel only 12 days later, when its suppliers, fearing steep losses, reacted just as the company was trying to build its inventory before the crucial holiday sales period.
It wasn’t bondholders or banks that pulled the ripcord, but trade creditors. The US and Canadian entities filed for bankruptcy protection in order to be able to restructure their debts and stock up for the holidays with a proposed $3.1 billion in debtor-in-possession (DIP) financing.
TRU’s overall sales and same-store sales have been declining, even as the toy industry has seen growing sales for five years in a row, hitting $20.4 billion in 2016, up from $16 billion in 2012. It’s respectable growth of around 5% a year. But TRU is getting clobbered by its competitors, including Walmart and Target, and particularly by the relentless shift to online shopping.
This post was published at Wolf Street on Sep 25, 2017.
As it turns out, President Donald Trump may have been on to something when he said NFL players were turning off viewers by kneeling during the National Anthem. As Deadline reports, both the NBC and NFL took a hit during Sunday Night Football last night when ratings dropped, as some Americans appeared to heed Trump’s call to boycott the NFL unless owners agree to fire or suspend players who don’t stand during the anthem.
In metered market numbers, the primetime match-up between the 27-10 winning Washington Redskins and the Oakland Raiders snared an 11.6/20. That’s the worst rating for SNF so far this season, marking an 8% dip from the early numbers of last week’s Atlanta Falcon’s 34-23 win over the Green Bay Packers, and a 10% dip from the same week last year.
This post was published at Zero Hedge on Sep 25, 2017.
Fundamentally the US economy is strong enough to withstand an interest rate hike. Central banks stance of various economic matters like interest rates also tell us their currency stance. Currency market moves in the third quarter will be the key to precious metals and base metals. The third quarter of the year favored US dollar bears. If fundamentals dictate currency markets in the final quarter, the final quarter should belong to US dollar bulls.
German election results are the key for euro.
This post was published at GoldSeek on 25 September 2017.
Sports fans should never condone players that do not stand proud for their National Anthem or their Country. NFL should change policy!
— Donald J. Trump (@realDonaldTrump) September 24, 2017
It baffles me how some people can continue to say that Donald Trump is politically inept and doesn’t understand how Washington works.
He crushed both the Bush and Clinton dynasties on his path to election, he’s got a significant and heavily-armed support base willing to literally fight and die for him if he’s ever impeached, and his ability to use wedge issues to manipulate support puts even David Brock to shame. His political bullshitting IQ is off the charts. He was born for this.
A wedge issue is a heavily politicized topic emphasized with the goal of splitting a sector of the population and rendering them politically impotent. While wedge politics can sometimes be used by political parties to try and sow division within a rival party, in America it’s far more common to see them used to neuter anti-establishment sentiment within both parties simultaneously. Since America is a corporatist oligarchy and both parties are more or less controlled by the same plutocrats, the goal is not to ensure victory of one party or another but to disrupt all anti-establishment sentiment.
This post was published at Zero Hedge on Sep 25, 2017.
