Chinese Economists Have No Faith In 7% Growth “Target”

Earlier today in ‘The Truth Behind China’s GDP Mirage: Economic Growth Slows To 1999 Levels’, we pointed out that Beijing may be habitually understating inflation for domestic output, which has the effect of making “real” GDP less “real” than nominal GDP.
This is what we’ve called the ‘deficient deflator math’ problem and it raises questions about whether China is netting out import prices when they calculate the deflator. If they’re not, then the NBS is likely overstating GDP during periods of rapidly declining commodities prices.
If Beijing is indeed understating the deflator it’s not entirely clear that it’s their fault, as robust statistical systems take time to implement, especially across an economy the size of China’s. That said, there are plenty of commentators who believe that the practice of overstating GDP is policy and exists with or without an understated deflator. Put simply: quite a few people think China is simply lying about its economic output.


This post was published at Zero Hedge on 10/19/2015.

Saudi, US Oil Inventories Hit Record High as Demand Fizzles

The amount of oil in storage globally, not including the various ‘strategic petroleum reserves’ in the US, China, Europe, Japan, and other locations, has grown to staggering proportions this year, as oversupply drowns out tepid demand.
In the US, oil storage is seasonal. A big buildup starting late fall gets Americans and their favorite gas or diesel sipping or guzzling toys or clunkers through ‘driving season’ – late spring and summer – when somehow everyone has to drive somewhere. After driving season, petroleum stocks fall. This pattern has played out this year as well, but with a difference.
Last week, the EIA reported that crude oil stocks rose 7.6 million barrels to 468.6 million barrels, the highest for this time of the year since records have been kept. Crude oil stocks are now 98 million barrels higher than they were last year at this time, when they were already bouncing into the upper end of the 5-year range.

This post was published at Wolf Street by Wolf Richter ‘ October 19, 2015.

Chinese Officials Say “Unnecessary To Be Anxious” About Economy As Margin Debt Rises Most Since June Bubble Peak

As everyone opined on China’s ‘goldilocks’ GDP data all day long, perhaps the biggest news this evening was US Treasury’s softer stance towards China’s currency ‘manipulation’, as we noted earlier, saying Yuan is merely “below appropriate medium-term valuation,” and sure enough offshore Yuan has strengthened since the report. China’s ‘official’ mouthpiece Xinhua told the people it is “unnecessary to be anxious about China’s economic growth.” And finally, for the 8th straight day, Chinese margin debt rose today to its highest in over a month. This is the longest stretch of releveraging in 4 months – since the peak of the bubble. “Will they never learn?”
He’s back…
GEITHNER: YUAN CAN BE SIGNIFICANT RESERVE CURRENCY IN LONG TERM *GEITHNER: CHINA CAN TRANSITION ITS ECONOMY WITHOUT CRISIS Offshore Yuan is strengthening since US Treasuries Yuan Report…

This post was published at Zero Hedge on 10/19/2015.

HUGE VOLATILITY IN THE GLD INVENTORY SUGGESTS STRESS (GOLD IS STILL IN BACKWARDATION IN LONDON)

Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1172.50 down $11.10 (comex closing time)
Silver $15.83 down 27 cents.
In the access market 5:15 pm
Gold $1170.60
Silver: $15.83
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a very poor delivery day, registering 3 notices for 300 ounces Silver saw 0 notices for nil oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 208.52 tonnes for a loss of 94 tonnes over that period.
In silver, the open interest rose by a considerable 571 contracts despite the fact that silver was down by 5 cents on Friday. I guess in silver nobody of importance wants to leave the arena. The total silver OI now rests at 168,186 contracts In ounces, the OI is still represented by .842 billion oz or 120% of annual global silver production (ex Russia ex China).
In silver we had 0 notice served upon for nil oz.
In gold, the total comex gold OI rose to 460,290 for a gain of 1890 contracts. We had 3 notices filed for 300 oz today.
We had a huge increase in tonnage at the GLD to the tune of 3.57 tonnes / thus the inventory rests tonight at 697.32 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 315.152 million oz.
We have a few important stories to bring to your attention today…

This post was published at Harvey Organ Blog on October 17, 2015.

“Shadow Convexity” Means The Death Of Modern Portfolio Theory

Do not call upon spirits you are not capable of controlling… risk in risk parity

The story of the sorcerer’s apprentice is a tale about the dangers of non-linearity and ‘shadow’ convexity. In the story, the apprentice became massively short ‘broom’ convexity resulting in a dangerous overflow of liquidity. In fixed income terminology, the word ‘convexity’ describes the degree to which a bond is negatively exposed to rising interest rates in a non-linear fashion. Central banks and regulators have decided to invoke their own sorcery by buying bonds through quantitative easing and requiring stringent capital requirements for ‘too big to fail’ banks. The unintended consequence is that systemically important institutions are now warehousing massive amounts of convexity risk in assets with negative real returns. What would happen if rates increased 300 basis points in a year the way they did between 1979 and 1980? The result would be a -20% mark-to-market loss on a portfolio of supposedly ‘safe haven’ securities!

This post was published at Zero Hedge on 10/19/2015.

“If America Doesn’t ABOLISH the FED, the FED will ABOLISH America” | G. Edward Griffin (Encore)

The following video was published by FinanceAndLiberty.com on Oct 19, 2015
On December 23rd 1913, Woodrow Wilson signed into effect the Federal Reserve Act. This interview was published on the 100th anniversary of the Federal Reserve and is being brought back today as an encore presentation. Author of “The Creature from Jekyll Island: a Second Look at the Federal Reserve,” G. Edward Griffin exposes the Fed’s hidden objective over the past 100 years and why “if America does not abolish the Federal Reserve, the Federal Reserve will abolish America.”

Deflation = Debt Demographics Disruption… But Mostly Debt

One week ago, we showed a quick and simple primer by Bank of America explaining why the pervasive global deflationary wave (in the monetary sense, not in the soaring rent and unprecedented tuition and drug costs – remember, those are simply hedonically adjusted away by the CPI to where they cease to exist) blanketing the world can be explained by the three Ds: debt, demographics and disruption.
This is what BofA said:
Disruption: Technological innovation and disruption are driving many goods & service sector prices lower (rent & health care are two important exceptions); extending human life and the propensity to save; fostering wage and job insecurity. Demographics: The size of the working population of the developed world peaked in 2011 and will fall from 833 million to 799 million by 2025, putting downward pressure on potential growth and inflation (Chart 3). And by 2050, the world’s ‘Silver Generation’ will increase by 885 million people, many of whom will save more in anticipation of old age. Debt: Minimal deleveraging since the GFC and a large debt overhang remain impediments to nominal growth; global debt as a % of GDP actually rose from 162% in 2001 to 211% in 2013, an all-time high.

This post was published at Zero Hedge on 10/19/2015.

So Far In Earnings…

The reality is that the “big banks” have seen very poor earnings.
The problem is that most of these firms are zombies. So-called “wealth management” is for the most part a chimera; certainly there is a service there to be sold, but fundamentally if you’re not cheating in some way what you’re selling is a mechanical function, more-or-less. In this world of everything data, all the time there’s little true innovation you have available to you — just the ability to package things up and try to entice people to pay your fee rather than play another round of golf.
But boy, is that an expensive round of golf when you start getting into the “I have real money” category.
Big banks have, for years, used two forms of leverage to get around this problem, as those who have “real money” tend toward also having brains. First, there is a perception (whether true or not) that they use inside information to trade, and thus can “outperform” the market. Second, they can and do provide access to certain things that are very hard to get at otherwise — such as IPO allocations.

This post was published at Market-Ticker on Oct 19, 2015.

Gold Daily and Silver Weekly Charts – Retracement

Gold and silver were under light pressure most of the day, and slid a little in the afternoon to finish slightly lower.
The Bucket Shop was very quiet as usual, with only a little movement in the silver warehouses.
Gold bullion continues to act as though it was under lockdown.
As you know I was looking for a retracement here. The depth and shape of it will inform us on what sort of chart formation, if any, we have in play.
I have included the chart of the three scenarios and a ‘worst case’ below. We are now in the ‘shallow retracement’ area, probably from here down to 1170ish. The other levels are down to about 1150, and deeper down to 1130. If gold breaks down below 1120 and sticks a solid close for a couple days at least then this formation is off the table.
Much of the commentary I am reading these days about gold and silver is junk food for the mind. If you take in too much of it, you may become a fathead.

This post was published at Jesses Crossroads Cafe on 19 OCTOBER 2015.

US Treasury Folds? Softens Stance On Yuan From “Significantly Undervalued” To “Below Appropriate” Valuation

We presume the ‘threat’ of selling hundreds of billions of dollars of US Treasuries has prompted a softening in the “Currency manipulator” rhetoric from The US Treasuy department. Having previously said the Yuan is “significantly undervalued,” today’s report shifts the comment to stating that the Yuan is “below appropriate medium-term valuation.” Of course, The US Treasury would know exactly how all of the world’s currencies should trade in this centrally-planned world.
From “significantly undervalued”… then this happens…

This post was published at Zero Hedge on 10/19/2015.

Donald Trump’s Advice to Investors …

Trump: ‘We’re in a Bubble’
‘What’s with this Donald Trump character?’ asked a French friend over dinner.
‘I don’t know,’ we replied. ‘But at least he lives in the real world… or at least in his version of it. Not the make-believe world of most politicians.
‘He has actually made money, in a real business. He has hired people and fired people. He has bills to pay. He has enough money so he can say what he thinks. And he hasn’t been in politics long enough to keep his mouth shut.’
What does Donald Trump think about the stock market? Investors, he recently told political website The Hill, are ‘being forced into an inflated stock market and at some point they’re going to get wiped out… We’re in a bubble right now.’
As far as we know, this comment is as honest and accurate as anything that has been said thus far in the race for president. But no one has a keener knowledge of hand grenades than the man who has had one blow up in his face.
‘The Donald’ knows a bubble when he sees one. And he knows what happens when it runs into a sharp object. In the exploding debris of 2009, he was knocked flat. Lying on his back, briefly, he was perhaps the world’s poorest man – with debts towering into the billions.

This post was published at Acting-Man on October 19, 2015.

In Latest Humiliation For Illinois, Fitch Downgrades State’s Credit Rating To BBB

Last week, beleaguered Illinois Comptroller Leslie Geissler Munger admitted that, thanks to the bitter budget battle going on in Springfield, the state would miss a $560 million pension payment in November.
The news came as no surprise to those who have followed the story.
A state Supreme Court decision in May effectively ruled out pension reform (it’s the whole “implicit contract” argument) prompting Moody’s to cut Chicago to junk and thrusting the state’s financial crisis into the national spotlight.
As we noted when the news hit, despite hiring an “all star” budget guru (for $30,000 a month no less), governor Bruce Rauner has been unable to pass a budget in a timely fashion leading directly to all types of absurdities including everything from the possibility of shortened school years to lottery winners being paid in IOUs.
Now, Fitch has cut the state’s GO rating citing the budget impasse. The move affects some $27 billion in debt.
Still no word on when lottery winners can trade in their Rauner bucks for real cash.

This post was published at Zero Hedge on 10/19/2015.

COLLAPSE OF THE WESTERN FINANCIAL SYSTEM: Shown In One Silver Chart

The collapse of the Western Financial System already occurred years ago. Even though the top banks continue to behave as if they are solvent institutions with functioning balance sheets, they are totally bankrupt without Fed & Central Bank intervention.
This was explained in detail in the video: FED AUDIT SHOCKER: They Came From Planet Klepto. I posted this video on my site last month and I continue to urge readers to watch it as it provides actually data showing how the Federal Reserve propped up the top U. S. banks with trillions of Dollars in sweetheart deals.
While the majority of Western Investors fell for this scam, HOOK, LINE & SINKER, a small percentage of the population realized this signaled the peak and end of the U. S. Fiat Dollar Monetary System. We can see this huge world-changing event take place in chart below.
This chart is one of the few I have made public from my THE SILVER CHART REPORT. Chart#36 shows total sales of Canadian Silver Maples from 1988 to 2014. There is no other chart of its kind on the internet. I broke down Canadian Maple Leaf sales in two periods.
As you can see in the chart, total Silver Maple sales were 21,398,000 from 1988-2007. Thus, sales during this 20-year period averaged a little more than one million Silver Maples (1,069,900 @ year):

This post was published at SRSrocco Report on October 19, 2015.

Global Trade Is Collapsing As The Worldwide Economic Recession Deepens

When the global economy is doing well, the amount of stuff that is imported and exported around the world goes up, and when the global economy is in recession, the amount of stuff that is imported and exported around the world goes down. It is just basic economics. Governments around the world have become very adept at manipulating other measures of economic activity such as GDP, but the trade numbers are more difficult to fudge. Today, China accounts for more global trade than anyone else on the entire planet, and we have just learned that Chinese exports and Chinese imports are both collapsing right now. But this is just part of a larger trend. As I discussed the other day, British banking giant HSBC has reported that total global trade is down 8.4 percent so far in 2015, and global GDP expressed in U. S. dollars is down 3.4 percent. The only other times global trade has plummeted this much has been during other global recessions, and it appears that this new downturn is only just beginning.
For many years, China has been leading the revolution in global trade. But now we are witnessing something that is almost unprecedented. Chinese exports are falling, and Chinese imports are absolutely imploding…
Growth of exports from China has been dropping relentlessly, for years. Now this ‘growth’ has actually turned negative. In September, exports were down 3.7% from a year earlier, the ‘inevitable fallout from China’s unsustainable and poorly executed credit splurge,’ as Thomson Reuters’ Alpha Now puts it. Most of these exports are manufactured goods that are shipped by container to the rest of the world.
And imports into China – a mix of bulk and containerized freight – have been plunging: down 20.4% in September from a year earlier, after at a 13.8% drop in August.
This week it was announced that Chinese GDP growth had fallen to the lowest level since the last recession, and that makes sense. Global economic activity is really slowing down, and this is deeply affecting China.
So what about the United States?
Well, based on the amount of stuff that is being shipped around in our country it appears that our economy is really slowing down too. The following comes from Wolf Richter, and I shared some of it in a previous article, but I think that it bears repeating…

This post was published at The Economic Collapse Blog on October 19th, 2015.

Trump Extends Lead Over Jeb & The GOP Field, But Carson Looms

The Donald, crushing the hopes of the status quo, has extended his lead among GOP Primary voters with 25% of the support (up from 21% in September). However, the latest WSJ/NBC poll finds Ben Carson coming on strong with 22% support. Aside from Rubio (13%, up from 11%), this leaves “the rest” of the crowd lagging horribly with Chris Christie, Rand Paul, Mike Huckabee, and John Kasich looking to go the way of ‘the Walker’.

This post was published at Zero Hedge on 10/19/2015.

This is a Tipping Point: Robots ‘Cheaper Than Any Human Worker’ Means the End of Jobs

Before future-history brings us a dark and grim reality pitted against a killer Terminatorrobot army, humanity will have to face job killing robots.
And that may be the bloodiest period of human history, after unemployment leads to riots, unrest and bitter aftermath scenarios play out as a consequence.
Robotic labor is now literally cheaper than human labor, and it is poised to undercut work forces and drive layoffs in even in the most exploitative, slave-wage factories in the world.
Mass unemployment, destroying jobs in every conceivable sector, is a growing danger. Truckers, factory workers, waitresses, teachers, bureaucrats and bosses are all directly threatened by robotic labor, with millions and millions of Americans facing a 90-99% chance of termination (check out your odds in this jobs calculator). In a short span of time, employment could go from bad to virtually non-existent.
The system is already strained to the max, and millions of Americans are struggling just to get by. Those in the Middle Class are endangered. The poor and nearly-poor are the most dependent on government that they’ve ever been in history, and tens of millions more will soon join them, and become almost completely dependent on the State for their livelihood.
Now, South Korea is making a huge move to undercut China on labor costs by displacing humans once and for all in their production facilities, in a bid to edge up on their Asian rival. Samsung has vowed to create robots – who do the work automatically, and without the need for breaks, meals, or days off – that are literally ‘cheaper than any human worker.’
This is the tipping point. Things will not get better from here without a great and painful struggle.
The Metro reports:

This post was published at shtfplan on October 19th, 2015.

SWOT Analysis: Gold Breaks Above Its 200-Day Moving Average

Strengths
Platinum was again the best performing precious metal, rising 3.31 percent for the week. Platinum historically has traded at a premium to gold, so perhaps there is still further room to go. Gold is beginning to shed its reputation as a dead asset thanks to the string of lukewarm economic reports in recent weeks. As a result, there is speculation that the Federal Reserve probably missed its window to hike in 2015. Gold has now managed to rise above the technically important 200-day moving average for the first time in five months. Furthermore, the world’s largest gold ETF recorded its highest daily inflow since early February with an addition of 7.7 tonnes. The gold price, which typically trades inverse to the U. S. dollar, may have some real room to run as the recent dollar weakness has put in a ‘death cross,’ with its 50-day moving average price plunging beneath its 200-day average price. Australia and New Zealand Banking Group said it expects gold to reach the bottom of the recent range in the next couple of months. It said its physical demand barometer for China rose to a 2-year high in September, suggesting demand before Golden Week is very strong. The group expects sharp increases in China’s gold imports in September. Lastly, its forecast for the fourth quarter is $1,110 per ounce.

This post was published at GoldSeek on 19 October 2015.

Russian College Dropout Busted For 1,316 Spoofs Of Everything From E-Minis, To Copper, To VIX

Another day, another “crackdown” by the CFTC on an “evil spoofing mastermind.”
No, not Virtu, not Citadel acting as a proxy agent for the Federal Reserve Bank of New York, not any of the thousands of frontrunning HFT firms operating behind the scenes as prop-traders pretending to provide liquidity, and not even even your token Indian working out of his parents’ London basement blamed for the May 2010 flash crash, but a 33-year old college dropout called Igor Oystacher, co-founder of Chicago-based 3 Red Group.
At his various trading firms, Igor, who came to Chicago from Moscow and who entered Northwestern Universiry in 1999 to drop out after three semesters, had acquired various nicknames including “Snuggles” and “The Pig”, but his best one was also the simplest: “The Russian.”
According to an previous profile of Oystacher by the WSJ whose legal case had been in the public domain for months, “he started an internship at Gelber Group LLC, a prominent Chicago trading firm that cultivated a laid-back atmosphere where traders often dressed in T-shirts and flip-flops, say people who knew him at the time. Brian Gelber, the firm’s founder, declines to comment.”
Mr. Oystacher stood out for his quick grasp of market psychology. ‘He was successful within a year of starting,’ a former Gelber trader says. ‘He was putting up numbers it takes people three or four years to get to when they are starting out.’ His aggressive trading, often in stock-index futures, drew attention in the trading community, where some dubbed him ‘The Russian.’
‘He’s been talked about for years,’ says John Lothian, a former Chicago futures broker who publishes an exchange-industry newsletter.
Within Gelber, he earned nicknames like ‘Snuggles’ and ‘The Pig,’ although former colleagues say they aren’t sure why. He had down periods: After the 2010 Flash Crash, when the Dow Jones Industrial Average fell nearly 1,000 points before recovering, he told friends he lost significant money on a series of trades.

This post was published at Zero Hedge on 10/19/2015.

A Key Employment Report was a Bit Different Than it Looked

I’m steadily getting less convinced that the Labor Department’s monthly JOLTS report is such a great measure of the job market’s health any more. After all, one of the main trends tracked in this data series on turnover on the employment scene is job openings – which have been very strong lately. At the same time, it’s getting clearer and clearer that many businesses are getting ridiculously picky in their actual hiring, so the gap between the positions they say are available and jobs they are actually likely to create keeps getting wider and wider. (Businesses, for their part, insist that the labor market isn’t supplying the workers they want.)
Nonetheless, it’s one of the favorite labor market indicators of Fed Chair Janet Yellen, (a leading labor economist) and therefore is crucial to the central bank’s decisions to raise (or, at some point, re-lower) interest rates. So since the tightness or easiness of credit clearly bears on employment levels, and the entire economy’s performance, ignore the JOLTS findings at your peril!
August’s results came out on Friday – when yours truly was tied up with personal matters – but it’s worth noting that they broke a pretty reliable recent pattern: The headline figure on job openings was a good deal worse than one crucial internal figure. As always, the internals speak volumes on job quality.
Overall nonfarm openings fell by 5.27 percent month-to-month from July levels. The latter total admittedly was the latest in a series of new monthly records set recently, but the drop-off was the biggest proportionately since July, 2012. The story was similar, though not quite as ominous, in the private sector. The August openings decrease of 5.08 percent – also from a new record July level – was only the steepest since last September. These August findings could improve, as they are still preliminary. But September’s (also still preliminary) monthly jobs report was so dreary that upcoming JOLTS reports could feature even weaker openings numbers.

This post was published at Wall Street Examiner on October 19, 2015.