Presenting 3 Chinese “Endgame Scenarios”

As we’ve tried to make abundantly clear in the wake of China’s adoption of a new currency regime in August, Beijing’s attempt to strike some kind of illusory compromise between a free floating currency and a currency that’s completely controlled by the PBoC was doomed from the word go. ‘Whereas the daily fix was previously used to fix the spot rate, the PBoC now seemingly fixes the spot rate to determine the daily fix, [thus] the role of the market in determining the exchange rate has, if anything, been reduced in the short term,’ BNP’s Mole Hau wrote last month, and as we said then, less of a role for the market means more of a role for the PBoC and that, in turn, means burning through FX reserves.
Complicating the situation further is the fact that FX reserve drawdowns work at cross purposes with RRR cuts by sucking liquidity from the market meaning each intervention necessitates some manner of short-term liquidity injection (e.g. reverse repos, etc.) or else more RRR cuts.
Of course policy rate cuts and liquidity injections are seen by the market for what they are: attempts to ease. And unfortunately for China, that’s true whether or not the net effect of the push and pull on money markets is easing or not, and that perception on the part of the market leads to downward pressure on the yuan at which point the entire thing starts over again in a nightmarish, FX reserve-depleting circle.
Add in stepped up efforts to close the gap between the onshore and offshore spot and you have yourself a rather untenable situation and as with all things untenable, there will, sooner or later, be an endgame.
Against this backdrop, we present Daiwa’s list of China’s three possible endgame scenarios (via Bloomberg):

This post was published at Zero Hedge on 09/10/2015.

Gold Daily and Silver Weekly Charts – Tightening

“Big squeeze with shortages starting now both on the wholesale/retail level and at the bulk level. Unless the paper price is reverting up, it may not subside this time around and then the paper fiat mess (including paper prices of gold and silver) is in trouble.
If it goes to the point of shortages at the bulk level like 1kg gold bars and 1000 oz silver bars, the emperor will stand without clothes.”
Torgny Persson, BullionStar CEO
Now is the time to get your own house in order, and to make the arrangements to protect any bullion you own as wealth insurance.
This means holding that bullion in private vaults to which you have personal access. It means owning your ‘insurance’ without leverage, sharing, or intervening third parties.
Insurance is for those instances when times get tough, and a deleveraging under duress is occurring.
While this is not a likely scenario normally, now it seems to be more possible than one might expect.

This post was published at Jesses Crossroads Cafe on 10 SEPTEMBER 2015.

Gold & Silver Market Morning: Sept-10-2015

Gold Today New York closed with the gold price at $1,107.40, down $15. This morning gold was trading at $1,107.00 still. In the euro this was 989.59 down 14.61. This morning the dollar index started the day at 96.09 up from 95.87 yesterday. The LBMA gold price was set at $1,007.75 down $14.55 from yesterday. The euro equivalent was 900.66 down 14.54. Ahead of New York’s opening gold was trading at $1,107.30 and in the euro at 989.72.
Silver Today The silver price was down slightly but firmer than gold at the close in New York at $14.75 down 5 cents. Ahead of New York’s opening silver was trading at $14.73.
Gold (very short-term)
The gold price will consolidate today, in New York.
Silver (very short-term) The silver price will be stronger today, in New York.
Price Drivers The gold price made the strong move we forecast yesterday to the downside. But it still remains in the consolidation range of trading pattern of the gold price between $1,100 and $1,140.

This post was published at GoldSeek on 10 September 2015.

Why Apple’s Launch Event Was “Creepy As Hell”

Apple’s Launch Event Was Creepy As Hell
Yesterday all eyes were on Apple’s product launch.
This is because Apple has become a bellwether for the stock market as a whole.
Legendary short seller Jim Chanos spoke candidly to CNBC, explaining that institutional investors and hedge funds are treating Apple stock as a ‘hedge fund hotel’ where they can buy a single name and ride it upwards as opposed to concocting complex trading systems as they did in the past. Indeed, SEC filings by hedge funds bear this out, and so the product launch attracted a huge audience, generating play-by-play reporting on CNBC and Yahoo Finance.
By the end of trading, Apple stock declined nearly 2%, indicating that investors were not impressed.
To paraphrase poet Horace, the mountain shuddered and gave birth to a ridiculous mouse.
I too watched the entire product launch. The Apple Watch doesn’t do much more than other devices and it looks ugly next to a Rolex; the new iPhone has a few tweaks that don’t amount to much; the new iPad Pro tablet is unwieldy with a humor-inducing stylus; and the Apple TV box is interesting for voice-activation but not that different from what others are already offering in streaming content.
That would be the end of my story.
But I am feel obliged to confess that I found the event creepy as hell from a psychological and cultural perspective.
After two hours of watching their best and brightest, my mind was reeling with associations of cults, lifestyle gurus, and new-age hokum.

This post was published at Zero Hedge on 09/10/2015.

The Economy Is Continually Showing Signs Of Collapsing – Episode 762a

The following video was published by X22Report on Sep 10, 2015
Greek unemployment increases. There are now more government workers employed than manufacturing workers in the US. US retail declines as retail continues to contract. Macy’s is now closing 35-40 stores. Puerto Rico is collapsing they will run out of cash soon. Baltic Dry Index drops again. The Stock Market is fluctuating up and down, this is what we have seen right before a crash. The economy is continually showing signs everywhere that the economy is about to crash. The FBI and Government are pushing for access and to do away with encryption.22% of Obamacare enrollees have now dropped their insurance.


Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1109.50 up $7.30 (comex closing time)
Silver $14.64 up 7 cents.
In the access market 5:15 pm
Gold $1111.75
Silver: $14.70
Today’s quote from our good friend Dennis Gartman:
*Dennis Gartman…
‘We also note a rising sense of interest on the part of the Gold Bugs that there is a growing dichotomy between deliverable supplies of gold against the COMEX futures and the futures themselves. We do not often allow ourselves to ‘throw in’ with the Bugs, but in this instance there may be something to the speculation.’
something stimulated his brain today!!
First, here is an outline of what will be discussed tonight:
At the gold comex today we had a poor delivery day, registering 1 notice for 100 ounces Silver saw 136 notices for 680,000 oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 218.81 tonnes for a loss of 84 tonnes over that period.
In silver, the open interest rose by 308 contracts despite the fact that silver was down in price by 18 cents yesterday. Again, our banker friends tried to use the opportunity to cover as many silver shorts as they could but failed. The total silver OI now rests at 155,923 contracts In ounces, the OI is still represented by .779 billion oz or 111% of annual global silver production (ex Russia ex China).
In silver we had 136 notices served upon for 680,000 oz.
In gold, the total comex gold OI fell to 417,895 for a loss of 3,837 contracts. We had 1 notice filed for 100 oz today.
Last last night we had a huge change in tonnage at the GLD, namely a withdrawal of 4.41 tonnes/ thus the inventory rests tonight at 678.18 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. It sure looks like 670 tonnes will be the rock bottom inventory in GLD gold. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold will be the FRBNY and the comex. In silver, we had no changes in silver inventory at the SLV /Inventory rests at 322.06 million oz.
We have a few important stories to bring to your attention today…

This post was published at Harvey Organ Blog on September 10, 2015.

“If It Bleeds, We Can Kill It” – Top Performing Hedge Fund Manager Compares China To The Predator

It is no accident that over the years, and especially in the past few months, we have been profiling what in our opinion is one of the few, truly worthy hedge funds, Horseman Global, which despite (or maybe due to) being net short stocks since the start of 2012 (and long bonds), has outperformed 99% of its peers and has generated tremendous returns during its lifetime.
Just last month, in “Short For Three And A Half Years And Outperforming 98% Of Traders: This Hedge Fund Did It“, we explained how in July the fund generated a 7% return, just as all the beta-levered, momentum-monkey, hedge fund hotel residents were losing steam.
One month later, and following a ghastly August in which virtually everyone lost money, the $2.5 billion Horseman was up a whopping 9.4%, and is now up 17.7% for the year.

This post was published at Zero Hedge on 09/10/2015.

How Can Buffett Love Trumpconomics And Still Be Faithful To Hillary?

Yesterday, an interview fromBloomberg gave us insight into what one legendary billionaire, Warren Buffett, thinks of the fiscal strategy of another legendary billionaire, Donald Trump…
A sound off from Warren Buffett on Trump’s economics: ‘In terms of policy, I haven’t heard [Trump] say anything yet that I disagree with.’
Warren Buffett on Trump Economics: Yes, Tax the Rich
Last week saw the release of Donald Trump’s economic plan for America, which included the elimination of a tax code rule that allows investment managers to pay lighter taxes. Specifically, this loophole makes it possible for these managers who get ‘carried interest’ to treat their profits as capital gains, which are taxed significantly lighter than wage income.

This post was published at Wall Street Examiner by Money Morning Staff Reports – September 10, 2015.

Asian Metals Market Update: Sept-10-15

Inability to rise resulted in fall in gold prices. Now gold desperately needs to trade over $1080 to prevent another sell off. Asian demand has to rise and Asian premiums has to start picking up for gold to prevent a fall below $1080. Asian gold prices will not fall by much due to a weaker currency. Firmness in industrial metals saved silver from another big crash.
Incoming US economic gauges suggest a sustained uptick in retail demand, higher retail incomes and continued increase in jobs hiring. Theoretical parameters are right for an interest rate hike by the FOMC next week. However these days economic decisions are made by the central banks on where they want the stock market and bond market over the next few quarters.
Use sharp fall in gold and silver before the FOMC meet (till 16thSeptember, Wednesday) to invest in gold and silver for the short term. In case gold and silver rise after the FOMC meet, then a medium term bottom may have been formed. On interest rates, I expect a firm view and not a hawkish view by the Federal Reserve next week.
NATO politicians have diverted people’s attention to migration issues in the European Union (EU). Under the garb of EU migration and they have loaded the EU with terrorists and taking all kinds of measures to ensure that we all live a state controlled life. When the people of EU realize this, there will be mass uprising. I hope to see this starting around next year September. Gold will get higher safe have demand from the EU over the coming weeks and coming months and could compensate for reduced Asian demand.

This post was published at GoldSeek on 10 September 2015.

Austrian Central Bank Warns Fed, “Rate Hikes Will Slow Global Growth”

The World When The Fed Raises Rates
The United States Federal Reserve is the world’s most powerful bank, and its most powerful component is the Federal Open Market Committee (FOMC), the twelve men and women who meet eight times a year to determine – essentially by setting interest rates – the monetary policy of the world’s largest economy. The last time the Fed raised interest rates was in 2006, before the growth-sapping impact of the global financial crisis persuaded it and other central banks to lower rates effectively to zero and to employ so-called quantitative easing (QE) to pump money into advanced economies.
But this year, for the first time since 2007, every advanced economy in the world is growing – including America’s. And that means that the FOMC, fearful of asset bubbles, will at some point decide that America’s interest rates must rise. That may (or may not, depending on the timing) be good for the US economy, but what will it mean for the rest of the world?
Our research shows why the world, especially emerging countries, will be paying nervous attention. In mid-2013, when the Fed announced that it would gradually reduce its unconventional monetary-policy measures (for example, large-scale purchases of mortgage-backed securities), emerging markets suffered large capital outflows. In other words, when the Fed even hints at tightening monetary policy, other countries suffer. Depending on just how much the FOMC decides to tighten at a future meeting, we foresee negative effects on world GDP in the medium term, not only for emerging markets but also for industrialized economies.

This post was published at Zero Hedge on 09/10/2015.

The Massive Debt Bomb is Going to Explode: ‘We Are Reaching a Limit’

Debt now defines us.
Personal and household debt is at unprecedented historical levels. Many Americans are stretched many times past their limit with no hope of getting out of the black. Student loan debt is its own huge bubble, waiting to burst, and perhaps big enough to trigger another crisis in its own right. Dozens of states and cities are on the verge of default, as are places like Puerto Rico.
Then there’s federal government debt. The next round of drama in the debt ceiling charade is coming up this fall. Partisan politics will be showcased, and programs targeted for cuts, before Congress once again rubber stamps putting the country into further rounds of endless debt. The Fiscal Times reports:
In July, Lew warned Congress that the government’s use of ‘extraordinary measures’ to continue to finance the government on a temporary basis without breaching the current $18.1 trillion debt ceiling would last through Oct. 30.
Fears of provoking yet another debt ceiling crisis that would threaten a first-ever default on U. S. borrowing have hung over Washington for months.

This post was published at shtfplan on September 10th, 2015.

Why Don’t You Explain this To Me Like I’m 5…

Soc Gen’s global head of research, Patrick Legland, has gone on record, according to aMarketWatch article yesterday as saying that the selloff in developed equity markets has gone too far, and he provides reasons to support his claim. First, he suggests the Chinese market rout has further to go but believes the fallout will be limited to EM and commodities. Second, Legland believes that the US and other developed nations are protected by ‘well-armed central banks’ evident by the 3.7% economic growth and the 5.1% unemployment rate and the Eurozone’s 3 year low unemployment. Lastly, he suggests that due to central banks having created a bond market bubble bonds are no longer a safe haven and thus no longer a viable alternative to equities. I will point out that Leon Cooperman also discussed on CNBC yesterday morning the fact that there are no viable alternatives to equities anymore and so equities remain in the secular bull.
Let me explain this to Legland like he is an 8 year old.

This post was published at Zero Hedge on 09/10/2015.

NAV Premiums – Comex Paper Ratio Rises to 228:1 – Sprott Gold Reports More Redemptions

“It is virtually impossible to get physical gold in London to ship to those countries now. We get permanent requests in Russia now. Would we please sell our physical gold to India and to China?
Because there is not enough physical about. There are endless promises. And I worry that the market, the paper market, could be stamped on and people say ‘sorry we’re going to have a financial closeout’ and it’s all over. If you want to be in the gold business, you ought to be in the physical business.”
Peter Hambro
“I just got off the phone with A-Mark which is one of the world’s largest wholesalers. They are reporting that they have no gold and silver at all live available, that they have stopped taking orders for Silver Maples and Silver Philharmonics altogether and that Silver Eagles are available first in the end of November. For Pamp, there is similarly long delivery times for all minted gold bars.
We still have most products in stock because we stocked up as massively as we could in the last weeks but for many products, we are unable to replenish as of now when we run out.”
Torgny Persson, BullionStar CEO
The ratio of potential claims per deliverable (registered) ounce of gold bullion has soared to 228:1.
How fortunate that September is not an ‘active month’ for gold at The Bucket Shop.

This post was published at Jesses Crossroads Cafe on 10 SEPTEMBER 2015.

San Francisco: Rent a Bunk Bed for $1,800 Per Month

As the cost of housing skyrockets in America’s largest cities, an unfortunate trend has emerged. Would be renters are starting to pay top dollar for the most marginal of living conditions. Whether it’s the proliferation of 370 square foot micro apartments in New York, or the backyard tent that was rented out for nearly $1000 a month in California, the trend is undeniable. In the future, Americans will have to pay everything if they want next to nothing.
The latest development in the housing crisis comes from San Francisco (big surprise), where a three story structure is now home to the ‘co-creative’ Vinyasa Housing Project, which is essentially just a hostel that is only advertised on Airbnb.

This post was published at The Daily Sheeple on September 10th, 2015.

10/9/15: 2Q 2015 National Accounts: External Trade

In the first post of the series covering 2Q national Accounts data, I dealt with sectoral composition of growth, using GDP at Factor Cost figures.
The second post considered the headline GDP and GNP growth data.
The third post in the series looked at the Expenditure side of the National Accounts, and Domestic Demand that normally more closely reflects true underlying economic performance,
Now, consider extern trade.
Exports of Goods and Services were up 13.56% y/y in 2Q 2015 previously having risen 14.17% y/y in 1Q 2015. Over the last 4 quarters, growth in exports of goods and services averaged 14.2% y/y. Most of growth in exports of Goods and Services is accounted for by growth in Goods exports alone. These rose 16.36% y/y in 2Q 2015 after rising 16.86% y/y in 1Q 2015. Average y/y growth rate in the last 4 quarters was 18.38%. In other words, apparently Irish exports of goods are doubling in size every 4 years. Which, of course, is simply unbelievable. Instead, what we have here is a combination of tax optimisation by the MNCs and effects of currency valuations on the same. Exports of Services also grew strongly in 2Q 2015, rising 10.34% y/y, having previously grown 10.94% in 1Q 2015 and averaging growth of 9.94% over the last 4 quarters. Again, these numbers are beyond any reasonable believable uptick in real activity and reflect MNCs activities and forex valuations.

This post was published at True Economics on September 10, 2015.

US Imports Biggest “Disinflationary Impulse” In 6 Years At Worst Possible Time

August’s import prices dropped a stunning 11.4% YoY, the biggest drop since September 2009. This faster-than-expected deceleration suggests “another leg lower” according to TD’s Millan Mulraine, as USD strength and renewed energy declines feed through the price channel and reverses a hope-filled mid-year drift higher. This is the 13th month of YoY drops (and 111th of last 12 MoM drops) flashing a recessionary warning.
Hope fades as Import Price drops re-accelerate…

This post was published at Zero Hedge on 09/10/2015.