Australia Is “Going Down Under”: “The Bubble Is About To Burst”, RBS Warns

Thanks to a variety of idiosyncratic political crises and country-specific stumbling blocks, Brazil, Turkey, Malaysia, and to a lesser extent Russia, have received the lion’s share of coverage when it comes to assessing the EM damage wrought by the comically bad combination of slumping commodities prices, depressed Chinese demand, slowing global trade, and a ‘surprise’ yuan devaluation.
Put simply, the intractable political stalemate in Brazil, the civil war in Turkey, the 1MDB scandal in Malaysia (and the fact that the country was at the center of the 1998 meltdown), and the hit Russia has taken from depressed crude prices mean that if you want to pen a story about emerging market chaos, those four countries have plenty to offer in terms of going beyond the generic ‘falling commodities a decelerating China = bad news for EM’ narrative.
But just because other vulnerable countries aren’t beset with ethnic violence and/or street protests doesn’t mean they too aren’t facing crises due to falling commodity prices and the slowdown of the Chinese growth machine.
One such country is Australia, which in some respects is an emerging market dressed up like a developed economy, and which of course has suffered mightily from the commodities carnage and China’s transition away from an investment-led growth model.
Out with a fresh look at the risks facing Australia is RBS’ Alberto Gallo. Notable excerpts are presented below.

This post was published at Zero Hedge on 10/02/2015.

Yes, This Is A Financial Crisis – 11 TRILLION Dollars In Stock Market Wealth Was Wiped Out In The 3rd Quarter

Did you know that 11 trillion dollars in global stock market wealth was wiped out during the third quarter of 2015? When I was emailed this figure by a friend, I was stunned for a moment. I knew that things were bad, but were they reallythis bad? When I first received this information, I had just finished a taping for a television show in which I had boldly declared that 5 trillion dollars of stock market wealth had been wiped out around the world. Unfortunately, the final number has turned out to be much larger than that. Over the past three months, the stock markets of all major global economies have been crashing simultaneously, and 11 trillion dollars of ‘paper wealth’ has now completely vanished. The following comes from Fortune…
Global equity markets suffered a bruising third quarter, shedding $11 trillion worth of global shares over three months, according to Bloomberg.
It was the market’s worst quarter since 2011. The prolonged slump was due to low prices for commodities such as oil, instability in China’s markets, and the anticipation that the U. S. Federal Reserve will soon raise interest rates.
In light of this number, how in the world is it possible that there is still anyone out there that is claiming that ‘nothing happened’ over the past few months?
In China, they sure aren’t claiming that ‘nothing happened’. Chinese stocks are down about 40 percent from the peak of the market.
In Germany, they sure aren’t claiming that ‘nothing happened’. As of a few days ago a quarter of all German stock market wealth had been wiped out since the peak earlier this year.

This post was published at The Economic Collapse Blog on October 2nd, 2015.

A Spot of Unenjoyment

No Lipstick Can be Thrown on this Pig
The markets have been hit with yet another negative economic surprise today, this time concerning the indicator that is thought to have the full attention of the representatives of Anglo-Saxon central banking socialism huddling in the Eccles building. The professional soothsayer class has once again failed to foresee this development, but we hereby predict that won’t keep it from continuing to apprise us of the results of its entrails readings.
Oh well, at least we will continue to get to make fun of the economic theory challenged ‘science is prediction’ class of econometrists.

This post was published at Acting-Man on October 2, 2015.

“It’s Revolting” French School Probed After Marking Non-Pork-Eaters With Yellow Tags

Amid the migrant crisis in Europe, and the Czechs pulling people off trains and writing on their arms, a French municipality launched a probe into an Auxerre elementary school’s use of yellow tags to identify students who do not eat pork. “It’s revolting. It brings back memories of dark times,” noted one member of the Auxerre town council, but the mayor’s office said it was “an isolated, clumsy and unfortunate initiative.”
As Haaretz reports,
The city of Auxerre, located 105 miles southeast of Paris, opened the investigation on Friday after parents complained to local media about the school’s initiative, in which neck strings bearing red and yellow plastic discs were placed on pupils ahead of lunchtime at the school cafeteria.
The pupils wore the tags for one day before the faculty was instructed to stop using them.

This post was published at Zero Hedge on 10/02/2015.

Hikes Keep On Slippin’, Slippin’, Slipin’ Into the Future; Treasury Yields Sink Again

Treasury Yields Drop Again
Curve Watcher’s Anonymous notes a further plunge in yields today following the disastrous payroll and factory order reports.
Yield on the 30-year long bond fell to 2.80% from 2.85% yesterday. Yield on the 10-year note once again sports a 1-handle at 1.97%, down from 2.03%.
Duration Current Yield Yield Month Ago Yield Year Ago Yield vs. Month Ago Yield vs. Year Ago 3-Month -0.01 0.02 0.02 -0.03 -0.03 6-Month 0.05 0.26 0.05 -0.21 0.00 1-Year 0.22 0.35 0.10 -0.13 0.12 2-Year 0.57 0.73 0.27 -0.16 0.30 5-Year 1.27 1.55 1.73 -0.28 -0.46 10-Year 1.97 2.18 2.42 -0.21 -0.45 30-Year 2.80 2.99 3.18 -0.19 -0.38

This post was published at Global Economic Analysis on October 02, 2015.

2/10/15: BRIC Manufacturing PMI: 7th month of Sectoral Recession in September

Manufacturing PMIs for BRIC countries for September generally remained on the downward trend established some 7 months ago.
I have covered Russian Manufacturing PMI earlier here with index reading signalling slower rate of decline in the sector activity in September, rising to 49.1 from 47.9 in August. This is the highest reading in the series since February 2015, but marks 10th consecutive month of sub-50 readings. China Manufacturing PMI was covered in detailhere showing a strong signal of continued deterioration in the economy. Meanwhile, Brazil posted a rise in Manufacturing PMI from horrific 45.8 in August to ugly 47.0 in September. This was the eighth consecutive month of sub-50 readings in Brazil Manufacturing sector, with extremely weak performance setting in back in Q 2014 and continuing basically without interruption since then.

This post was published at True Economics on October 2, 2015.

If You Are Not Prepared For The Economy Crashing Please Do So Now – Episode 781a

The following video was published by X22Report on Oct 2, 2015
Payroll and jobs report was a complete disaster. High paying jobs are continually being replaced by lowing paying jobs. Manufacturing jobs are declining and they are being replaced by part time jobs. Participation rate drops to the lowest since 1977. Factory orders decline and flash recession. US mint reports silver coins are in high demand. There is not enough currency to pay off the debt because there is 5 time more claims on dollars than there are dollars

Why The US Running Out Of Cash In 4 Weeks Is Good News

Over the past several weeks, Americans (not to mention the market) were forced to grapple with the latest example of congressional infighting and outright legislative gridlock as US lawmakers narrowly averted a government shutdown in the wake of House Speaker John Boehner’s surprise resignation.
Now, the debt ceiling battle looms ahead of Boehner’s October 30 exit and according to Treasury Secretary Jack Lew, the US will run out of money to pay its bills far sooner than originally expected – November 5, to be exact. Here’s WSJ:
The government will run out of money to pay its bills sooner than previously thought, forcing Republican lawmakers who are already scrambling to elect new leaders to immediately confront a series of unpopular fiscal deadlines. Treasury Secretary Jacob Lew said the government would be left with just $30 billion cash on or around Nov. 5. Government outlays can be twice that level on certain weekdays, underscoring the need to raise the federal borrowing limit, Mr. Lew said in a letter late Thursday to House Speaker John Boehner (R., Ohio).
‘Without sufficient cash, it would be impossible for the United States of America to meet all of its obligations for the first time in our history,’ Mr. Lew said in the letter.
The new debt-ceiling deadline falls less than a week after Mr. Boehner will leave Congress, putting pressure on him – and an incoming Republican leadership team – to pass legislation raising the limit before that transition. Some congressional estimates had indicated the government could get by without action until December. Traders and Wall Street analysts are watching the timeline closely due to the turbulence that hits financial markets as debt-limit deadlines approach.

This post was published at Zero Hedge on 10/02/2015.

Fed’s Serious Inflation Risks

Traders today universally believe inflation is dead, that there is no persistent decline in the purchasing power of money. That’s what government price indexes around the world are indicating. But this false notion is one of recent years’ main Fed-conjured illusions. Price inflation is the result of rising money supplies, and they have been skyrocketing. Serious risks are mounting that they will spill into price levels.
As simple as money seems, it is very complex in both theory and practice. We all understand the idea of working to earn money to buy goods and services. But the seminal treatise on money, the legendary economist Ludwig von Mises’ ‘The Theory of Money and Credit’ published in 1912, weighed in at 445 pages! Money is a topic that endlessly preoccupies elite central bankers with doctorates in economics.
Money is ultimately a commodity, its value determined by its own fundamental supply and demand. If demand exceeds supply for any given currency, its price will rise relative to other currencies. As this money grows more valuable, it takes relatively less to buy goods and services. The persistent increase in the purchasing power of money, resulting in a persistent decrease in general price levels, is deflation.
Today systemic deflation is assumed and feared by traders around the world. They look at the various price indexes published by governments, which show either slowing increases in general price levels or slight decreases. They worry incessantly that the former disinflation will decay into the latter deflation. So the idea that there are big risks of serious inflation breaking out is hyper-contrarian heresy, widely ridiculed.
Yet think about the commodity of money. Deflation requires demand growth to exceed supply growth, which is clearly not happening. In this era of extreme central-bank easing globally, money supplies all over the world are literally skyrocketing! With supply growth radically outpacing demand growth, the only possible ultimate outcome has to be big inflation. There is always a reckoning for huge monetary expansion.

This post was published at ZEAL LLC on October 2, 2015.

Meet Seth Carpenter – Janet Yellen’s Choice Of “Fed Leak” Scapegoat

With the “above the law” Federal Reserve coming under increasing pressure to answer a Senate investigation’s questions about the 2012 “leak”, it appears the proximity of the probe to Janet Yellen, has forced The Fed to ‘fess up and throw someone under the bus. Meet Seth Carpenter, a nominee for assistant Treasury secretary for financial markets…
As The Wall Street Journal reports, probes into the 2012 leak of sensitive Federal Reserve policy information are widening further, with a Senate committee scrutinizing a former Fed official nominated for a position in the Obama administration.
The Senate Finance Committee has been looking into whether the official, a Treasury Department nominee who worked as a top Fed economist at the time of the leak, relayed market-sensitive information from the Fed to policy research firm Medley Global Advisors, which in turn shared the details with its Wall Street clients, according to people familiar with the matter. …
The Senate committee is looking into whether Seth Carpenter, a nominee for assistant Treasury secretary for financial markets, played a role in the 2012 leak. The panel is charged with approving nominees to senior-level positions at the Treasury Department.

This post was published at Zero Hedge on 10/02/2015.

Argentina Forces ‘Pesofication’ of Dollar Assets – to Avoid Bond Payment due Monday?

US$5.9 billion are due, but dollars are very tight at the moment.
Last Tuesday, Argentina’s securities regulator, the CNV, shocked markets by announcing Resolution 646 requiring that mutual funds price dollar-denominated assets in pesos at the official government rate rather than the market rate that is closer to the parallel or blue dollar. Despite efforts from banks and industry organizations to organize a longer time period in which to react to this change, Economy Minister Axel Kicillof refused to meet with representatives, and the law came into force on Friday.
Unlike other government interventions in the parallel market, this sudden ‘pesofication’ of somewhere to the tune of US $15 billion worth of investor assets came as a real shock to the industry – as in, no one saw it coming.
So what would entice this government to force the conversion of dollar-priced assets held by mutual funds into pesos at the official rate? Mutual funds are investment vehicles created for small and medium savers. They have a low minimum entry point and up until last week were a way for Argentines to save money without squirreling away physical dollar bills in boxes buried under stairs. This measure actually hurt small savers and helped no one.
Previous interventions in the market have served to bring both the blue dollar and the bond-linked contado con liquidacion (ccl) or ‘blue chip swap’ rates down. This shock caused bond prices to temporarily plunge and the blue-dollar rate to shoot up to record highs of 16.05 ARS/USD. Furthermore, the effects on the ccl market were short-lived. Before the announcement, the ccl rate was at 14.05 ARS/USD. It dropped to 13.19 before and has rebounded back to 13.85 ARS/USD. So in this case, the government temporarily brought down bond prices at the expense of small savers and the blue dollar. What gives?

This post was published at Wolf Street on October 2, 2015.

The Slippery Slope Of Denial

The ISM Manufacturing PMI was ‘unexpectedly’ weak yet again in September. Continuing the theme spelled out by theregional manufacturing surveys (the Fed’s and the Chicago BBI), economic momentum has clearly stalled right where the ‘dollar’ said it would. The pattern is blindingly obvious, with a huge slowdown to start the year (coincident to the first ‘dollar’ disruptions including crude oil prices), a pause around May/June (with the ‘dollar’ much quieter after the March FOMC) and then a pickup in August and now more dramatic deceleration in September (after the July start to the latest ‘run’).
At just 50.2, the headline ISM estimate was the lowest since May 2013. New orders fell sharply from 51.7 in August (which was a multi-year low) to just 50.1. While most fixate on the assumed 50 level as an actual dividing line between growth and contraction, these sentiment surveys aren’t nearly that precise and at most offer relative interpretations about the economic direction, trends and the perhaps even the strength of those directions and trends.

This post was published at Zero Hedge on 10/02/2015.

OCT 2/SILVER CONTINUES TO LEAVE THE SILVER COMEX/HUGE JOBS DISAPPOINTMENT CAUSES GOLD AND SILVER TO SHOOT NORTHBOUND/USA LABOUR PARTICIPATION NUMBER FALLS BY 579,000 PEOPLE/USA HAS 94.6 MILLION P…

Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1136.60 up $22.90 (comex closing time)
Silver $15.26. up 76 cents.
In the access market 5:15 pm
Gold $1137.90
Silver: $15.24
I wrote the following last night and I guess I was right:
‘As an alert to you, tomorrow is the FOMC jobs report. Although we all know that the results are phony, the bankers always use this opportunity to manipulate gold/silver. However judging from the poor regional surveys, the job growth number should be quite subdued.’
First, here is an outline of what will be discussed tonight:
At the gold comex today, on first day notice we had a very poor delivery day, registering 0 notices for nil ounces Silver saw 7 notices for 35,000 oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 213.08 tonnes for a loss of 90 tonnes over that period.
In silver, the open interest rose by 281 contracts despite the fact that silver was unchanged in price yesterday. The total silver OI now rests at 157,625 contracts In ounces, the OI is still represented by .788 billion oz or 113% of annual global silver production (ex Russia ex China).
In silver we had 7 notices served upon for 35,000 oz.
In gold, the total comex gold OI rose to 419,016 for a gain of 1937 contracts. We had 0 notices filed for nil oz today.
We had another huge addition in tonnage at the GLD to the tune of 1.78 tonnes; thus the inventory rests tonight at 689.20 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 318.529 million oz.
We have a few important stories to bring to your attention today…

This post was published at Harvey Organ Blog on October 2, 2015.

‘Panic’ As Investors Lose Their Appetite: ‘Reliving Market Jitters of the Great Recession’

There is further indication that we are swinging dangerously close to another financial collapse.
While markets were spooked in September about the possibility of a Fed rate hike, and the stock market took several dives, things have so far not gone headlong into crisis.
But there are plenty of indications that investors are wary of taking too much risk in the current financial climate. Increasingly, the only real returns are in high risk, high-yield markets.
But most investors are not thrill seeking at the moment, and are shying away from the dismal landscape and numerous scenarios for diasaster. King World News just reported that ‘frightened investors withdrew a staggering and near Record $63 billion out of mutual funds in the past 3 months.’
The World Bank warned that any decision to raise rates would risk ‘triggering panic and turmoil,’but with Janet Yellen’s recent mention of a possible rate hike this year, we see that even talking about the rate is driving panic. Yellen exuded a queasy feeling that negates any hunger for investment.
Panic and fright are bad news. The stuff instability is made of. Without ready and willing suckers, err investors, the market cannot stay afloat. There is a panic level index, recognizing the spoiled ‘appetite’ of investors, that has preceded all of the last few crises on the global stage… and here we go again… we have again reached the danger threshold for panic in global risk appetite.
Via Market Watch:

This post was published at shtfplan on October 2nd, 2015.

A Hapless Brazil Incurs Massive Losses On FX Swaps Amid Currency Carnage

As we’ve documented extensively of late, a host of idiosyncratic political factors have served to exacerbate what was already a very, very bad situation for emerging markets.
This dynamic is most readily apparent in Brazil and Turkey, and although Ankara probably has a leg up in the race for ‘most at risk from domestic turmoil’, Brazil isn’t far behind as President Dilma Rousseff battles abysmal approval ratings and a recalcitrant Congress in an effort to shore up the country’s finances by convincing lawmakers to sign off on much needed austerity measures.
Meanwhile, a confluence of exogenous shocks that include slumping commodity prices, depressed Chinese demand, the PBoC yuan devaluation, and the threat of an imminent Fed hike have conspired with country-specific political turmoil to send the BRL plunging and that, in turn, has put Copom in what former Treasury secretary Carlos Kawall calls ‘crisis mode.’
Of course crises are often costly to combat, especially when you’re an emerging market in the current environment and when it comes to Brazil, the use of alternative measures (like effectively selling dollars in the futures market) to avoid FX reserve liquidation is now weighing heavily on the fiscal outlook. As Goldman noted earlier this week on the heels of the latest monthly budget data, ‘the overall fiscal deficit is tracking at a disquieting 9.2% of GDP, driven in part by the surging net interest bill, which was exacerbated by the large losses on the central bank stock of Dollar-swaps.’ Here’s what Capital Economics had to say after an emergency swaps auction was called by Copom in a desperate attempt to shore up the BRL last week:

This post was published at Zero Hedge on 10/02/2015.

Gold and Miners Jump as Dollar Dumps

This morning’s dismal jobs report pushed Treasury prices sharply higher and bond yields lower. The 10-Year Treasury Note Yield plunges to the lowest level since August. Treasury bond prices saw the biggest gains, while investment grade corporate bonds also bounced. High yield bonds, which are highly correlated to stocks, are falling. Gold shares are also having a strong day on the back of a strong commodity. That’s being helped by lower rates and a weaker dollar. Stocks also opened lower on the jobs report.
Gold and gold miners benefit from falling bond yields today. Gold is a non-yielding asset. As a result, its appeal increases when bond yields fall. That’s especially true if the dollar is dropping as well (more on that shortly). Gold may also be benefiting from increased tensions in the Mideast. The daily bars on the first chart show the Gold SPDR (GLD) jumping the equivalent of $23 dollars today ( 2.2%). Gold is recovering from a five-year low, and has a long way to go to reverse its major downtrend. The same is true of gold miners.

This post was published at GoldSilverWorlds on October 2, 2015.

Gold Daily and Silver Weekly Charts – Fashionably Lean of Thought

“Rudeness is the weak man’s imitation of strength.”
Eric Hoffer
And the imitation of wisdom, or at least superior knowledge, as well.
We are in an age when it is fashionable to be lean of thought, and long of bravado.
At least it seems to be doing very well in the polls, and is all the rage on financial and social matters.
People have lost all sense of who we are. I expect that history and nature will be providing us some reminders of how we count in the bigger scheme of things in the not too distant future.
The veneer of respectability has worn so thin on the Comex that they barely make the effort to keep up the appearances of price discovery.
All that heavy pressing down on the prices all week was released in a single realization this morning that there is no sustainable recovery in the US.
And further, that the Fed will be hard pressed to raise rates by any significant amount. It is more likely that they will continue to degrade the currency in order to prop up the miserable distortion of an economy that we have today in which a very few are garnering the lion’s share of all the proceeds for themselves.

This post was published at Jesses Crossroads Cafe on 02 OCTOBER 2015.