Barclays Slashes China GDP Projections After Weak Data

When looking at forecasts for China’s GDP growth it’s best to ignore the projection itself and focus on the direction of the revision.
That is, there’s still a certain degree to which the sellside has to retain some semblance of politeness when it comes to estimating Chinese output and indeed, even if some trailblazing research team were to decide to break decorum and officially cut estimates to between 0% and 4% (which probably represents a more accurate estimation of how the economy is actually performing) it would be largely pointless because there’s exactly zero chance of the NBS admitting anything like that. Given that, it’s not so much about whether the number is 6.8% or 6.7 or 6.6%, it’s about whether analysts see continued downside risks on the horizon.
With that in mind, and against the backdrop of the worst FAI growth in 15 years, we bring you the following excerpts from Barclays where the EM research team has cut its estimates for Chinese GDP growth in 2015/2016 (note the expectations for monetary policy and the bit about equity and FX turmoil weighing on sentiment).

This post was published at Zero Hedge on 09/14/2015.

Goldman Warns: VIX Is Not Going Back To Low-Teens, No Matter What Fed Does

While equities do tend to be lower one-, two-, and three-months after a Fed rate hike, S&P 500 realized volatility and VIX levels have been fairly well contained. However, Goldman Sachs warns not to expect VIX to calm down and settle back into the low teens like it was from 2013 to mid-August 2015. New normal trend VIX levels should now be 4-5 points higher than the average level of 14 experienced in 2013-2014 given the current state of the economy.
Via Goldman Sachs,
Question: Where are we now in terms of historical VIX levels and levels of S&P 500 realized market volatility?
Answer: The VIX is at 23.2, about 3 pts above its 1990-present average and 9 points above its 2013-2014 average.
The VIX landed at 23.2 last Friday. That is about three points below its median level of 26 over the last three recessions, 3.4 points above its long-run average of 19.8 back to 1990 and nine points above its 2013-2014 average of 14.2. S&P 500 one-month realized volatility currently stands at 31.7, ten-day at 26.7. A VIX trading well below short-term realized market volatility suggests the options market is expecting a moderation in market swings going forward relative to what we experienced in August. That may also mean that option investors are also expecting no hike this week. Question: If the Fed doesn’t hike this week will the VIX go down.

This post was published at Zero Hedge on 09/14/2015.

‘There’s Just No Cash’: Oil Bust in Canada Hits Creditors

‘There’s just no cash.’ That’s the Coles Notes from a senior banker describing the book of oil service loans he manages for one of Alberta’s leading lenders. There’s simply not enough cash flow to support current levels of debt.
Bankers and borrowers have kicked the can down the road about as far as they can as more oilfield service (OFS) and exploration and production (E&P) companies default on their loans and seek more relief on lending covenants. While a significant oil price increase to lift all the sinking boats will surely come, it won’t happen soon enough. More of the same won’t work.
Oil industry debt is everyday news. But the discussion is about the symptoms, not the ailment.
Companies cannot borrow their way out of debt. Equity capital is only available at distressed valuations. Specialized OFS assets will fetch only a fraction of replacement cost – if somebody actually wants them. Although oil and gas reserve valuations are down by half, borrowers are being forced to sell them anyway to repair balance sheets. The last four months of 2015 will be very difficult for any company with meaningful amounts of debt. Same for their lenders, the other signatories to the loan agreement.
As the banker said, ‘There’s just no cash.’ Here’s what it means.

This post was published at Wolf Street on September 14, 2015.

Gold Daily and Silver Weekly Charts – Extend and Pretend

Gold and silver took their usual price hits this morning in NY, afternoon in London. Gold managed to climb all the way back to a slight gain while silver remained slightly lower.
It is all about the Federal Reserve and China this week.
The Fed is considering finally getting off the ‘zero bound’ of interest rates, largely to reload their policy options for the next financial paper asset panic.
China has a real economy that is definitely slowing, and reaping the results of some bad policy decisions of their own.
I hope there is no doubt in your mind that the physical gold market is tight globally, with bullion available for immediate delivery commanding a premium.
We keep hearing different plans being proposed by the Anglo-Americanized government of India to monetize the gold held in their temples, and now, a program to stimulate domestic gold mining.
China, Russia and the Mideast are not relenting in their strong demand for physical gold at these prices, and the Indian officials are doing what they can to please the Western financiers who are struggling to sustain their gold pool.

This post was published at Jesses Crossroads Cafe on 14 SEPTEMBER 2015.

The Financial Bubble Is About To Burst Which Will Signal The Economic Collapse – Episode 765a

The following video was published by X22Report on Sep 14, 2015
Greece’s GDP improves even with tourism down by 1 billion euros and no production, and no one working. A senior banker in Canada says there is no cash flow to support the amount of debt. Deutsche Bank and UniCredit are laying of a total of 33,000 employees. Peter Schiller reports the financial markets are starting to look like a bubble. The BIS says central bankers are causing the problems in the economy. A FED rate increase most likely will crash the markets and then the economy. Obamacare needs to double the amount of enrollees to keep the system working.

Federal Tax Revenue Sets Record in August, Government is Still Broke

During the first eleven months of fiscal year 2015, the United States Federal Government generated more tax revenue than any previous year. According to the Bureau of the Fiscal Service, the feds have taken in $2,883,250,000,000, which amounts to an average of $19,346 for every full-time and part-time worker. And yet, our government is still pretty much broke.
Despite the fact that our government took almost 200 billion more dollars than they did at this time last year, the deficit is only projected to fall by $60 billion by the end of the year. And even those numbers may be wishful thinking at best.

This post was published at The Daily Sheeple on September 14th, 2015.

“Ineffective & Reckless” Fed Is An “Engine of Disaster”

The beauty of truth, and the beast of dogma
Other ‘relationships’ that are used to justify activist monetary policy have similarly weak support when one actually takes the effort to examine the data. You’ll find a similar shotgun scatter of uncorrelated points if you plot unemployment versus general price inflation, for example. It’s unfortunate that the Federal Reserve is actually allowed and even encouraged to impose massive distortions on the U. S. economy based on relationships that are indistinguishable from someone sneezing on a sheet of graph paper.
We do know one thing very clearly, and we should have learned it during the housing bubble – suppressed interest rates encourage yield-seeking speculation, enable low-quality creditors access to the capital markets, direct scarce savings toward unproductive malinvestment, subsidize leveraged carry-trades, and unleash a whole host of ‘structured’ products ‘engineered’ by financial institutions to directly or indirectly piggyback on the good faith and credit of Uncle Sam.
When you examine historical data and estimate actual correlations and effect sizes, the dogmatic belief that the Fed can ‘fine tune’ anything in the economy is utter hogwash. At the same time, the demonstrated ability of the Fed to provoke yield-seeking speculation and malinvestment is as clear as day. An activist Federal Reserve is an engine of disaster and little more. Even with the best intentions, a dogmatic Fed, unrestrained by reasonable rules and constraints, is a reckless and deceptive beast, constantly offering to heal the nation with precisely the same actions that inflicted the wounds in the first place.

This post was published at Zero Hedge on 09/14/2015.


Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1107.90 up $4.40 (comex closing time)
Silver $14.36 down 13 cents.
In the access market 5:15 pm
Gold $1108.80
Silver: $14.43
First, here is an outline of what will be discussed tonight:
At the gold comex today we had a poor delivery day, registering 0 notices for nil ounces Silver saw 13 notices for 65,000 oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 218.28 tonnes for a loss of 85 tonnes over that period.
In silver, the open interest rose by 2094 contracts despite the fact that silver was down in price by 15 cents on Friday. Again, our banker friends tried to use the opportunity to cover as many silver shorts as they could and failed. The total silver OI now rests at 155,698 contracts In ounces, the OI is still represented by .778 billion oz or 111% of annual global silver production (ex Russia ex China).
In silver we had 13 notices served upon for 65,000 oz.
In gold, the total comex gold OI fell to 412,026 for a loss of 5472 contracts. We had 0 notices filed for nil oz today.
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 another huge withdrawal in silver inventory at the SLV to the tune of 1.145 million oz /Inventory rests at 320.915 million oz.
We have a few important stories to bring to your attention today…

This post was published at Harvey Organ Blog on September 14, 2015.

A Panicked Brazil Promises Billions In Austerity, Does 180 On Budget After Downgrade

Exactly two weeks after conceding that a primary surplus was no longer in the cards after budget data in July came in meaningfully worse than expected, Brazil is scrambling to restore some semblance of confidence in the government’s ability to close a yawning budget gap by implementing austerity even as political turmoil has made embattled FinMin Joaquim Levy’s life a living hell of late.
On the heels of a painful S&P downgrade, Brazil now says it plans to enact some BRL26 billion in primary spending cuts for the 2016 budget on the way to achieving in a primary surplus that amounts to 0.7% of GDP.
In other words, a complete 180 from what the government said prior to the downgrade.
Needless to say, reconciling tax increases and budget cuts with the party mandate won’t be easy. ‘Budget cuts and tax increases discussed by govt in response to Brazil’s credit rating downgrade don’t agree with central tenets of Workers’ Party,’ Bloomberg notes, citing an unnamed party official.
Particularly divisive will be the CPMF revival which isn’t likely to be approved. Here’s Bloomberg with a bit more on the announcement:

This post was published at Zero Hedge on 09/14/2015.

Stunning Development In The U.S. Silver Market

Something quite interesting took place in the U. S. Silver Market over the past several months. Not only are we witnessing a shortage of silver investment products in the retail and wholesale markets, but there is also another interesting development that many are unaware. Actually, I was quite surprised by the recently released data.
According to the USGS, (U. S. Geological Survey), U. S. silver bullion exports to India exploded in June. Now, when I say, ‘Exploded’, this is not an overstatement at all. If we look at the chart below, we can see how U. S. silver bullion exports to India went from virtually nothing to 75 metric tons (mt) in June:

This post was published at SRSrocco Report on September 14, 2015.

VIX Has Not Done This Since The USA Was Downgraded

The VIX term structure has been inverted (spot higher than 3rd futures) for 17 days – that is the longest period of backwardation since August 2011, when uncertainty soared around the USA credit rating downgrade. In fact, much of the VIX term structure is higher today than it was at the peak of the crisis on Black Monday as both government shutdown and Fed rate hike fears dominate the forward curve…
The longest streak of VIX curve inversion since the USA credit rating downgrade in 2011…

This post was published at Zero Hedge on 09/14/2015.

A Flock Of Black Swans

In 1999, the Federal Reserve, under Alan Greenspan, convinced the US Congress to repeal the Glass-Steagall Act, which had been passed in 1932 to eliminate banks’ abilities to offer loans far beyond the actual level of their deposits.
When I learned of this development in 1999, I anticipated that it was put through to allow banks to once again recklessly loan money and that the outcome would be essentially the same as what occurred in 1929 – a depression of major proportions.
Major depressions do not occur overnight. They go in downward waves, interrupted at intervals by false recovery waves. The first major event of what would become the Greater Depression took place in 2007 with the housing crash. A year later, right on cue, came the first of the stock market crashes.
Since then, the US Federal Reserve and the governments and central banks of much of the world have been involved in Band-Aid solutions to postpone further crashes, in spite of the fact that the economy is, in fact, a ‘dead economy walking.’

This post was published at Zero Hedge on 09/14/2015.

Illinois Halts Payments to Dentists, Threatens to Stop All Health Insurance Payments

Illinois Threatens to Halt All Health Insurance Payments
Unpaid bills in Illinois now stand at $8.5 billion. Some project the total will reach an all-time high of $10.5 billion by December. Total accumulated liabilities counting pensions are on the order of $163 billion.
Illinois is flat out broke, and without a budget cannot legally pay some bills. In what I see as a sideshow, Illinois has not been paying lotto winners.
Far more serious issues are on the horizon. For example, the State Journal-Register reports Gov. Rauner threatens to halt health insurance payments to providers for state workers.
As Illinois approaches its 11th week without a state budget, Gov. Bruce Rauner has threatened to take the unprecedented step of stopping all payments to doctors, hospitals and others providing health care to the almost 363,000 state workers, university employees, retirees and others covered by the state’s group insurance plan.
“All health care services will continue to be paid as long as possible,” said Meredith Krantz, spokeswoman for the Illinois Department of Central Management Services.
“However, in the near future, we will no longer have the legal authority to continue to pay health care vendors for their services,” she wrote in an email Friday to The State Journal-Register.
“All applicable fiscal 2015 funding has now been exhausted,” she said. “Without a budget in place, there is no appropriation or legal authority to continue to pay health care providers.”

This post was published at Global Economic Analysis on September 14, 2015.

It All Comes Down To This

After months of speculation, debating and postulating, the Federal Reserve will hold their two-day Federal Open Market Committee confab to make their decision on raising the overnight “Fed funds” rate.
Morgan Stanley postulates four potential outcomes. To wit:
A Hawkish Pass (60% Probability): The Fed passes on liftoff in September, citing the recent tightening in financial conditions, while keeping the door open for liftoff at the October or December meetings. A Dovish Pass (30% Probability): The Fed passes on liftoff in September, citing both the recent tightening in financial conditions as well as a lack of confidence that inflation will move back to 2 percent over time. A Dovish Hike (9% Probability): The Fed hikes rates at the September meeting, but strengthens expectations for a gradual path thereafter by significantly lowering the 2016 and 2017 dots, introducing 2018 dots that are below the longer-run dots, and further lowering the longer-run dots. A Hawkish Hike (1% Probability): In this scenario, the Fed would hike at the September meeting while not decreasing the expected pace of hikes in 2016 and 2017 very much. This outlook very much corresponds with my own recent analysis where I have suggested the data simply doesn’t support hiking rates now.
“The Federal Reserve raises interest rates to slow economic growth to keep an economy from overheating which would potentially lead to a sharp rise in inflationary pressures. Since commodities are the basis of everything that is bought, consumed or other utilized; if there were indeed inflationary pressures on the rise commodity prices should be on the rise. As shown, this is clearly not the case.”

This post was published at StreetTalkLive on 14 September 2015.

“The Danger Is That It Bursts Just Like In The US”: Sweden Goes Full Krugman, Gets Massive Housing Bubble

Earlier this year, Riksbank Deputy Governor Per Jansson expressed his displeasure with comments made in April of last year by everyone’s favorite Nobel laureate Paul Krugman. The dispute revolves around Sweden’s decision in 2010 to raise rates, a move Krugman says turned the country into a Japan-style deflationary deathtrap. To wit, from Krugman’s blog:
“In 2010 Sweden’s economy was doing much better than those of most other advanced countries. But unemployment was still high, and inflation was low. Nonetheless, the Riksbank – Sweden’s equivalent of the Federal Reserve – decided to start raising interest rates.” “There was some dissent within the Riksbank over this decision. Lars Svensson, a deputy governor at the time – and a former Princeton colleague of mine – vociferously opposed the rate hikes. Mr. Svensson, one of the world’s leading experts on Japanese-style deflationary traps, warned that raising interest rates in a still-depressed economy put Sweden at risk of a similar outcome. But he found himself isolated, and left the Riksbank in 2013.”
“Sure enough, Swedish unemployment stopped falling soon after the rate hikes began. Deflation took a little longer, but it eventually arrived. The rock star of the recovery has turned itself into Japan.”
Krugman went on to accuse the Riksbank of being a bunch of job-hating heretics who don’t believe that printing mountains of fiat currency solves economic problems and who are motivated by an overwhelming desire to perpetuate global inequality by enriching creditors at the expense of impoverished debtors. They are, Krugman said, sadomonetarists.

This post was published at Zero Hedge on 09/14/2015.

The Fate Of The Bursting Tech Bubble Is In The Hands Of Just One Company

In a world in which everything is up if only one excludes all the things that are down, a favorite pastime of “strategists” has become announcing how high S&P500 earnings would be if only one excluded energy companies… and the impact of the dollar… and China’s economic slowdown… and the Emerging Markets currency crisis… and the [cold|hot|just right] weather… and rising labor costs… and everything else that stands between revenue (non-GAAP of course, just ask Tesla) and the bottom line.
What if one does the inverse: what if instead of eliminating the worst performing sectors (and all other factors that detract from performance in a priced to centrally-planned perfection world) one eliminates the biggest company in the world, Apple?
The result is troubling. As can be seen in the chart below, when it comes to second quarter earnings, Apple made all the difference in the world, literally, between gains and losses for what was otherwise one of the “best” performing sectors. In fact, AAPL provided a whopping 6% swing in IT sector EPS for Q2, pushing them from down 1.5% Y/Y without AAPL to 4.4% with AAPL.

This post was published at Zero Hedge on 09/14/2015.

Commissar Oettinger Wins Highly Coveted Prize

The Digital Commissar Beats Even Erdogan …
Austria boasts of a state-owned TV broadcasting company (the ORF), that similar to a handful of other European relics from the era when only governments were allowed to broadcast exists not on the commercial merits of its programming, but on the basis of coercion. Every owner of a device in the country that could conceivablyreceive broadcasts from a state-owned TV or radio station is forced to pay a monthly fee to the company, which not surprisingly pays some of the heftiest salaries available in the country (we have been told that it is also nigh impossible to get a job there unless one ‘knows someone’).
The impertinent demand for this compulsory fee is officially justified by the TV station’s important task of keeping the hoi-polloi informed about state-approved whatevers. As might be imagined, the company has come under pressure from the many private TV stations that have sprung up over time that can be viewed for free via satellite or cable (luckily governments all over Europe were eager to sell bandwidth/ licenses, etc., way back when). Then it came under even more pressure when the intertubes entered the scene – especially after the Constitutional Court told it that it could not, as its management had believed, also charge everyone who happened to own a device connected to the internet.
The day has only 24 hours, and anyone surfing the web is definitely not watching the state-owned TV station. This (presumably) caused one of its program directors, a certain Wolfgang Lorenz to remark during a debate over the ‘future of media’ in 2008 that ‘today’s youth are uninterested in education and are crawling into the f****** internet to communicate’ and that he actually wasn’t ‘f******* interested in what they watch’. Admittedly, if a TV program director’s salary depends on fees obtained by government coercion, he may in fact not be interested in what people watch, so we have to give him points for honesty. Be that as it may, ever since that time, there is the ‘Scheiss Internet Prize’ (i.e., the f****** Internet Prize, officially referred to as the ‘Wolfgang Lorenz Memorial Prize for Internet-Free Minutes’ or ‘WOLO’ for short), which is awarded annually.

This post was published at Acting-Man on September 14, 2015.

The Fed Shouldn’t Worry About Losing Credibility: It Already Lost It

This Thursday the Fed may or may not hike: either outcome has become a losing proposition. If the Fed hikes, the market will tumble (regardless of the initial PPT and algo-driven spike designed to set the mood that this is the “right thing to do”) after the Fed unleashes the next step in the Emerging Markets currency crisis, and the Chinese hard landing goes global. If the Fed does not hike, it will admit all its caveats about data-dependency (in an economy with 5.1% unemployment and a record high number of job openings) was nothing but a lie, and again expose itself as a muppet of the wealthiest market participants.
In other words, perhaps more than concerns about the market’s reaction, the Fed may be just as worried about losing any more credibility with a global market where QE has increasingly less impact.
But is it?
As RBS summarizes it, “the Fed’s dilemma is a trade-off between shaking the tree today, risking that volatility and capital flight in EM may ‘spill-back’ into developed economies, or waiting and watching the fault lines deepen. Claudio Borio uses some economist humour to describe the issue: ‘All this is reminiscent of the old joke about the stranded tourist who, having asked for directions, was told: “If I were you, I wouldn’t start from here.”
What should the Fed do?

This post was published at Zero Hedge on 09/14/2015.