Corporations in Rate-Hike Panic, Sell Bonds like there’s No Tomorrow, Investors Blissfully Eager

Telecom operator Frontier Communications came out of the ‘shadow calendar’ with a $6.6 billion three-part bond offering to fund its acquisition of Verizon’s wireline operations in Florida, Texas, and California. The roadshow was supposed to start on September 10, and pricing was supposed to take place on September 15 or 16, S&P Capital IQ’s LCD reported on Wednesday.
But yesterday, Frontier accelerated pricing of the bonds and moved it forward to today (September 11). Why the sudden panicky hurry?
On September 16-17 is the FOMC meeting. The fateful one. The Fed might decide to kick off the cycle of monetary tightening by raising interest rates from nearly nothing to practically nothing. It doesn’t sound like a big deal, but the cacophony about it has reached a deafening level. With this move, the Fed would kill the Wall Street illusion of ZIRP Infinity, just like it killed the illusion of QE Infinity. And for our over-indebted corporate heroes, such as Frontier Communications, it is a big deal.
Frontier’s bonds are expected to be rated at BB-/Ba3, so junk bonds. It’s not exactly cheap money. But according to LCD, there’s demand for the three-part deal, and this morning guidance on pricing has tightened:

This post was published at Wolf Street by Wolf Richter – September 11, 2015.

The Petroyuan Cometh: Launch Of Renminbi-Denominated Oil Futures Contract Imminent

Whenever one talks about the death of the petrodollar, the unspoken question lurking just beneath the surface is this: is the rise of the petroyuan just around the corner?
This year, we’ve gotten quite a bit of evidence to suggest that the answer to that question may indeed be a resounding ‘yes.’ In May for instance, Russia surpassed Saudi Arabia as the largest oil supplier to China and what’s especially notable there is that beginning in 2015, Gazprom began settling all of its crude sales to China in yuan meaning that, at least partly, the petrodollar was supplanted just as soon as its death became inevitable.

This post was published at Zero Hedge on 09/11/2015.

Gold Outlook by Global Gold

Why Central Banks Are Forcing Investors To Hold Gold
It has been nearly three years since we published our first Outlook Report in December 2012. Since the beginning of our publication, we have focused on different aspects of the gold market and have analyzed what moves the gold market. In this article, we would like to re-examine some of the topics that we had previously discussed and analyze whether any of our assumptions have changed.
Financial Repression
Financial repression has been a frequently discussed topic since our first publication. During that period, many of the measures we have warned about are now in place. A good example are capital controls. In 2012, a discussion about the possibility of capital controls in a Western country seemed like a conspiracy theory. In the meantime, they have become a reality in both Cyprus and Greece. Could a major Western country be next?
We also warned about negative interest rates. At that time, they were only observable in some short dated government bonds. The ECB and the Swiss National Bank have now both lowered deposit rates into negative territory. The results: Swiss government yields are negative for terms up to 10 years. Imagine! As an investor you have to actually pay the Swiss government so that you can lend it money for 10 years. It is absurd, if you think about it. The same is true for several other European government bonds.
One thing that we have predicted hasn’t become reality yet: consumer price inflation. Although asset price inflation is very prevalent and real estate and equity prices have increased rapidly, we did expect consumer prices to pick up more quickly. However, this can always change … very quickly.

This post was published at Acting-Man on September 11, 2015.

SEPT 11/RAID ON GOLD AND SILVER TRYING TO GET GOLD BELOW $1100 AND SILVER BELOW 14.00 DOLLARS/ATTEMPT FAILED/SOUTH AFRICAN MINING STOCKS IN DISARRAY/HONG KONG COMEX HAS ONE DAY WITHDRAWAL OF 19.1…

Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1103.50 down $6.00 (comex closing time)
Silver $14.49 down 15 cents.
In the access market 5:15 pm
Gold $1107.70
Silver: $14.58
Before beginning, I would like to point out that all the South African mines tonight are in severe trouble. The country mines a considerable 145 tonnes per year. However many mines are mining at 5,000 ft. The miners want an increase in their wages. I would also like to point out that the temperature inside these mines at 5,000 ft can rise to 130 degrees F. Generally speaking, all of South African mines are operating in the red.
First, here is an outline of what will be discussed tonight:
At the gold comex today we had a poor delivery day, registering 3 notices for 300 ounces Silver saw 77 notices for 385,000 oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 218.80 tonnes for a loss of 84 tonnes over that period.
In silver, the open interest fell by 2319 contracts despite the fact that silver was up in price by 7 cents yesterday. Again, our banker friends tried to use the opportunity to cover as many silver shorts as they could. The total silver OI now rests at 153,604 contracts In ounces, the OI is still represented by .768 billion oz or 109% of annual global silver production (ex Russia ex China).
In silver we had 77 notices served upon for 385,000 oz.
In gold, the total comex gold OI fell to 417,487 for a loss of 397 contracts. We had 3 notices filed for 300 oz today.
Last last night we had no changes in tonnage at the GLD, 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 11, 2015.

Apocalypse Illinois: IOUs Projected to Hit $10.5 Billion, $163 Billion Total Accumulated Liabilities

Flat Out Broke
Illinois is in serious fiscal trouble. Unpaid bills will hit about $10.5 billion later this year, counting unpaid lotto winners and state university bills.
Lotto is a small problem overall, yet symbolic of the mess the state is in.
Because Illinois has no current budget, the state does not pay lotto winners. Instead it sends the winners IOUs. Yesterday, two Illinois lottery winners filed a class action lawsuit over unpaid prizes.
Promises, Promises
Unpaid bills do not count additional promises that politicians seek. For example, Chicago Mayor Rahm Emanuel wants a half billion dollars from the state to shore up the Chicago school budget.
Where is that supposed to come from?
The list of “wants” is endless; the reality is “Illinois is flat out broke”.
When will multiple downgrades from Moody’s, Fitch, and the S&P hit the overall state, not just the city of Chicago?

This post was published at Global Economic Analysis on September 11, 2015.

It’s Official: The Next Recession Will Definitely Not Happen In 2018

Last month we remarked on PhD economists’ uncanny ability to make bad predictions.
As a rule, the only people worse at their jobs than weathermen are economists and the only real difference between the two professions is that when the weatherman gets it wrong, you get caught in the rain without an umbrella, but when an economist that someone installed in the Eccles Building gets it wrong, there’s the very real potential for the financial universe to collapse. Here’s how we summed up the profession:
If PhD economists were serious about getting things right, they would have a tough job. That goes double for PhD economists charged with making policy decisions based on their conclusions. That’s because economics (like sociology and political science and astrology) isn’t a real science. It’s a pseudo-science. And as is the case with other pseudo-sciences, it’s flat out impossible to discover laws and immutable truths, no matter what anyone told you in your undergrad economics course.
Of course PhD economists aren’t really serious about getting things right, which means that in reality, their jobs are remarkably easy. Here’s the job description: make predictions that are almost never right and then make up any reason you want to explain away the fact that you were wrong. These explanations run the gamut from intentional obfuscation via opaque statistical tinkering (‘residual seasonality’) to comically absurd attempts to turn common sense into an excuse for poor outcomes (‘snow in the winter’).
We delivered that stinging indictment of the pseudoscience that is economics on the way to noting that back in January, some 75% of experts said the Fed would have hiked by now. Considering that rather abysmal track record, we encourage you to take the following with a grain of salt (or two grains, or a whole shaker full).
Via Bloomberg:

This post was published at Zero Hedge on 09/11/2015.

Bank Of Japan Buying Power Runs Dry: “If They Don’t Increase Now, It’s Going To Be A Shock!”

Since 2010, The Bank of Japan has ‘openly’ – no conspiracy theory here – been a buyer of Japanese stock ETFs. Their bravado increased as the years passed and Abe pressured them from theirindependence to ‘show’ that his policies were working to the point that in September 2014, The BoJ bought a record amount of Japanese stock ETFs taking its holdings to over 1.5% of the entire market cap, surpassing Nippon Life as the largest individual holder of Japanese stocks.
Having stepped in a stunning 76% of days to ensure the market closed green, it appears, as Bloomberg reports, time (or money) is running out for Kuroda and the BoJ having spent 78 percent of its allotment as of Sept. 7. “They’ve only got a little bit left in their quota,” notes one trader, “The BOJ had a big role in supporting the market,” he implored, “if they don’t increase purchases now, it’s going to be a shock.”

This post was published at Zero Hedge on 09/11/2015.

Gold Daily and Silver Weekly Charts – Heart of Gold

“Capable of giving alms, perhaps, but incapable of stripping themselves bare, the comfortable will be moved to the sound of beautiful music, at Jesus’s sufferings, but His Cross, the reality of His Cross, will horrify them.
They want it all out of gold, bathed in light, costly and of little weight; pleasant to see, and hanging from a beautiful woman’s throat.”
Lon Bloy
There will be quite a bit more economic data released next week compared to this holiday shortened trading week we have just seen.
The big event will be the FOMC rate decision on Thursday the 17th.
This has become more of a psychological issue than a substantial policy action. 25 basis points will not be making or breaking anything, but it does signal a ‘change’ in the long period of easy money, policy errors, and financial bubbles which we have seen since the big bailouts of the one percent and Wall Street since 2008.
Can you believe that this was over seven years ago, and here we still are, muddling along?
The draining of gold from West to the markets of the East continues, and physical bullion is becoming remarkably ‘tight’ particularly in that bastion of bullion, the storied vaults of London.
‘Free gold’ is unemcumbered physical bullion that can be utilized for immediate physical delivery. It is more commonly called ‘the float.’ And there is just not enough of it.

This post was published at Jesses Crossroads Cafe on 11 SEPTEMBER 2015.

The American Dream Is Over And It Will Not Improve Any Time Soon – Episode 763a

The following video was published by X22Report on Sep 11, 2015
Euro zone is to weak to create jobs. UMich consumer confidence declines. Energy is sector has laid off approximately 200,000 employees. Baltic Dry Index implodes. Children of America are in poverty. The American dream is over for many people, more retail stores close down. German finance minister says the economies cannot last like this.

Visualizing China’s Mind-Boggling Consumption Of The World’s Raw Materials

Over the last 20 years, the world economy has relied on the Chinese economic growth engine more than it would like to admit. The 1.4 billion people living in the world’s most populous country account for 13% of global GDP, which is significant no matter how it is interpreted. However, in the commodity sector, China has another magnitude of importance. The fact is that China consumes mind-bending amounts of materials, energy, and food. That’s why the prospect of slowing Chinese growthis likely to continue as a source of nightmares for investors focused on the commodity sector.

This post was published at Zero Hedge on 09/11/2015.

Silver’s Vexing Slumber

Silver has had a rough year, slumping to major new secular lows. After sliding on balance for years now, even the diehard silver bulls are losing faith in their metal. But despite its vexing slumber, silver’s price-appreciation potential from today’s levels remains enormous. Between radical underinvestment and very-high speculator silver-futures shorting, silver is poised to see massive buying as gold recovers.
Silver has proven very disappointing in 2015. Late last year, it was battered down near $15.50 as gold plunged into the $1140s on extreme futures shorting. That looked to be a decisive low, as silver spent the next 8 months forming a strong technical base around $16. But unfortunately in early July, silver fell to new lows near $15 as gold was crushed by an epic futures-shorting attack. Silver was collateral damage.
Despite silver’s unique and compelling investment merits, it has always been slaved to gold. Investment demand on the margin is the dominant driver of silver’s price, despite only being around 1/5th of total global demand. The 4/7ths of silver’s demand from industrial fabrication, and 1/5th from jewelry, is relatively stable year in and year out. The only demand category that shifts dramatically comes from investors.
And their silver buying and selling is overwhelmingly driven by the fortunes of gold. Capital floods into silver when gold is strong, catapulting the white metal higher. And investors flee when gold is weak, pummeling silver lower. Thanks to this ironclad sentiment link, silver is simply a leveraged play on gold technically. The correlation between silver prices and gold prices has proven incredibly high historically.
So with gold weak so far in 2015, silver had the deck stacked against it. By late August when silver hit a major 6.0-year secular low just above $14, it was down 9.9% year-to-date. Over that same span, gold had fallen 5.0%. That 2x ratio of silver’s price movement relative to gold’s is actually the dominant rule of thumb historically. Silver tends to double the gains and losses in gold, and gold hasn’t fared well this year.

This post was published at ZEAL LLC on September 11, 2015.

Interbank Credit Risk Is Rising Ominously Again In America

We have been anxiously reminding investors of the drip-drip-drip increases in market-perceived credit risk for US financials for much of 2015. Having risen to almost 90bps amid the chaos of 2 weeks ago (almost double the lowest levels post-Lehman hit in June of last year), it appears systemic counterparty risk is very much on the rise. What is more concerning however, as Alhambra’s Jeffrey Snider notes, the TED spread has exploded higher (since China’s devaluation) indicating, as convention has it, a marked increase in perceptions of interbank credit risk.
“Credit” risk perceptions have risen rapidly…

This post was published at Zero Hedge on 09/11/2015.

Weekend Reading: Rooting For The Bull?

This past week has seen a continuation of market volatility unlike anything witnessed over the last several years. Of course, this volatility all coincides at a time where market participants are struggling with a global economic slowdown, pressures from China, collapsing oil prices, a lack of liquidity from the Federal Reserve and the threat of rising interest rates. It is a brew of ingredients that would have already likely toppled previous bull markets, and it is only by a hairsbreadth the current one continues to breathe.
However, as I addressed yesterday:
‘Since the ‘debt ceiling debt default’ crisis in 2011, the markets have traded within a much defined bullish trend.
That trend was decisively broken this summer, and the market has yet to regain its footing. While the market ‘bulls’ expect the markets to recover and move back to all-time highs, there is also a possibility of failure that should not be ignored.”

This post was published at StreetTalkLive on 10 September 2015.

Inside Ground Zero Of Canada’s Recession

n the past year, we have extensively profiled the collapse of ground zero of Canada’s oil industry as a result of the plunge in the price of oil, in posts such as the following:
“Canada Crude Contagion: Calgary Home Prices Drop Most In 2 Years“ “Canada’s Biggest Oil Casualty To Date: Calgary’s Nexen Shutters Oil Trading Desk“ “The Canadian Housing Bubble Has Begun To Burst“ “Canada’s Oil Patch Confidence Crashes“ “Canada Mauled by Oil Bust, Job Losses Pile Up – Housing Bubble, Banks at Risk“ “The Stage Is Set For A Massive Housing Market Correction in Canada’s Oilpatch“ Since then it has gotten far, far worse for Canada. In fact, as of September 1 it culminated with the first official recession in 7 years.

This post was published at Zero Hedge on 09/11/2015.

Petrobras “Century” Bond Prices Collapse As ‘June Plan’ Already “Obsolete”

Remember June – when everything was (apparently) awesome in BRIC-land and somehow a large group of duration-seeking greater-fools used Other-People’s-Money to buy Petrobras bonds that mature in 100 years! Well those bonds are now trading less than 70c on the dollar (with yields pushing 10%) as Brazil’s state-run oil company Petrobras, which slashed its five-year spending plan by 40% in June, admits that plan is already obsolete (two company sources told Reuters on Thursday). Petrobras will likely cut back further as growing debt costs, falling oil prices and a weak currency are the perfect storm for the company.
Still “money good”? Only another 99.75 yearsd to hold them on your balance sheet to find out…

This post was published at Zero Hedge on 09/11/2015.

The US Has Already Tightened – Which Explains A Lot

Next week we’ll find out if the longest-ever will-they-or-won’t-they drama involving a virtually insignificant quarter-point interest rate change will amount to anything. But either way, US monetary policy is already a lot tighter than it was a year ago.
The Fed’s balance sheet, for instance, is a measure of how much new currency it is pumping into the banking system. And it’s up only $79 billion, or 1.8%, in the past year. In real terms, that’s flat to slightly negative.
Much bigger in the scheme of things is the dollar, which is up by about 20% versus most other major currencies (and a lot more versus emerging market currencies like the Brazilian real). A stronger currency makes loans harder to pay back (just as would a higher interest rate), exports harder to sell (because they’re priced in a more expensive currency) and imports correspondingly cheaper.

This post was published at DollarCollapse on September 11, 2015.