Here’s Why Jack Lew Is A Shameless Fearmonger

Like the author Stephen King, US Treasury Jacob Lew is trying to scare the hell out of people. ‘We are a nation that pays our bills. We shouldn’t let partisan brinkmanship lead us into default.’
Excuse me Mr. Lew, but not passing a debt ceiling has nothing to do with default. Here is why.
Tax receipts for the Federal government is over 3 times higher than our interest payments on Federal debt. We have plenty of tax receipts to make debt payments already.

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ October 26, 2015.

What Recovery? Record Number Of Americans Become Blood Plasma “Sellers” To Make Ends Meet

Having previously explained President Obama’s recovery in charts, we thought words and pictures would be a better indicator of the dire situation facing so many Americans that get missed by the business media’s spotlight. With 9.4 million more Americans below the poverty line than before the crisis, as The LA Times reports, it’s disturbing to see so many people so destitute – even if they’re working – that they’ve resorted to selling body fluids to make ends meet. The going rate for plasma donation, which can take a couple of hours, is about $25 or $30. But Octapharma is offering $50 for the first five visits, “when you get that $50, you feel good,” one plasma ‘seller’ said, “I paid my gas bill.”
Despite the Fed continuing to kick this down the road, they continue to claim that we are in the middle of an ongoing recovery. There’s just one problem with that: things are getting worse than pre-crisis levels for millions of the poorest Americans.

This post was published at Zero Hedge on 10/26/2015.

Bernanke Flunks Crisis History 101

Because America is unlikely to avoid a rerun of the last financial crisis and recession without recognizing why they broke out in the first place, it can’t be good news that former Fed Chair Ben Bernanke still apparently hasn’t learned the main lesson of this near-catastrophe (and its still punishing aftermath): The crisis was rooted ultimately not in failures of the American financial system, but in weaknesses in the real economy that remain largely neglected.
I say ‘apparently’ because this judgment is based on interviews Bernanke has granted to tout his new memoir on the crisis, and I haven’t read the volume. But it must be significant that both Bernanke and the leading financial journalists who questioned him have concentrated exclusively on the role played by Wall Street’s behavior and structures on the one hand, and lax regulation on the other, in nearly destroying the global economy. No attention whatever has been paid to the deteriorating ability of the Main Street economy to generate adequate levels of real wealth and income; to decisions made going back to the early 2000s to mask these deficiencies with crackpot credit-creation practices; or to the reckless lending and investment patterns to which this artificial credit glut led.
Not that Bernanke is the last word in crisis-ology. Yes, he spearheaded Washington’s efforts to contain the meltdown and spark recovery. But since his tenure at the central bank began in 2002, just about when the bubbles began inflating, and his Chairmanship began in 2006, just before they started bursting, he clearly was as much part of the problem as he’s been part of what’s so far passed for a solution. So his memoir is obviously an opportunity for reputation-burnishing. But finance has so completely dominated America’s views of the crisis and its origins that Bernanke’s perspective can’t simply be dismissed as self-serving.

This post was published at Wall Street Examiner by Alan Tonelson ‘ October 26, 2015.

Is The Yield Curve Still A Dependable Signal?

Over the last 30 years, there has been a widely held belief, supported by data, in the predictive powers of the ‘slope’ of the yield curve. The slope of the yield curve is a simple calculation comparing interest rates of various maturity terms. Traditionally, the slope of the yield curve is measured by the difference between interest rates of shorter term government debt, such as the 3-month Treasury Bills or 2-year Treasury Notes, and long-term government debt such as 10-year Treasury Notes and 30-year Treasury Bonds. A steep yield curve, where long term government yields are significantly higher than short ones, implies economic expansion in months and quarters ahead. A flat or inverted yield curve, where long term government yields are not much higher or are even lower than short term ones, implies economic weakness and heightened recession risks ahead.
The past is not always prologue for the future so we ask the following question: Do the normal rules apply when the Federal Reserve (Fed) has lowered the Federal Funds rate to unprecedented levels for over 7 years and quadrupled the money supply? Questioning the value of traditional analysis is not only appropriate, it is necessary, if one is to effectively perform economic analysis given the unique nature of central bank actions.
Traditional Yield Curve Analysis
Below we graphically represent the slope of the yield curve and recessionary periods to demonstrate the predictive relationship. The first chart plots the yield on 2-year Treasury notes and the yield on 10-year Treasury notes. The subsequent chart shows the difference between 2-year Treasury Note yields and 10-year Treasury Note yields, otherwise known as the ‘2’s-10’s curve’. To highlight the predictive nature of the yield curve, periods where the curve was inverted are plotted in red and recessions are highlighted with yellow bars.

This post was published at Zero Hedge on 10/26/2015.

Alarm Bells Are Ringing Louder And Louder That The Economy Is Collapsing – Episode 801a

The following video was published by X22Report on Oct 26, 2015
Federal employees make 78% more than private company employees. Housing recovery is non existent, as each week passes the housing market continues to collapse. US economic data has never been this week for so long. US companies are signalling recession/depression, sales and revenue are down. Overstock CEO is preparing for a collapse, they have purchased gold and food. Banks are now discussing negative interest rates on the people which means the banks are ready to take money from you. Iran is looking to join the BRICS.

Dark Suspicions over Draghi’s New QE

A Changing World
LAUSANNE, Switzerland – European Central Bank chief Mario Draghi set off a riot on Thursday. Investors rushed the stock market, like looters hoping to score a new TV set. By the end of the day, the Dow was up 320 points, or nearly 2%.
It was actually a case of selective looting as this comparison between the DJIA and the Russell 2000 (RUT) shows. While a handful of big cap stocks the performance of which is decisive for the price-weighted DJIA (e.g. high-priced MCD) or the cap-weighted COMPX and NDX (GOOGL, AMZN et al.) soared, the broad mass of small capitalization stocks essentially did nothing. The ratio between the RUT and SPX is in a steep downtrend and made a new low for the move at the end of last week. It’s a rally of the generals only – click to enlarge.
The proximate cause of this hullabaloo was Draghi’s hint that the ECB may go back into the market with more QE. That and a good report from Mickey D’s was enough to erase the last of this autumn’s losses. But why would Draghi be ready to expand euro QE?
Maybe he’s been looking at sales figures for the yellow machines. Caterpillar tells us that not only have sales been falling every month for the last three years, but also that its losses are becoming more widespread. In September, not one of its reporting regions saw an increase. Either CAT is a terribly mismanaged company (unlikely)… or something else is going on.

This post was published at Acting-Man on October 26, 2015.

Trump Sliding? Ben Carson Takes Commanding 14 Point Lead Over The Donald In Latest Iowa Poll

Polling for the GOP presidential primary has begun to stretch even the most flexible limits of reality and credibility.
It was just on Friday when we reported that according to “insiders” polled by Politico, the most likely candidate poised to snatch the presidential nomination was Donald Trump. And then everything changed today, when according to a Monmouth University poll Ben Carson now has a 14-point lead over Donald Trump among likely GOP caucus-goers in Iowa.
As reported by CBS, 32% said they back Carson compared to 18% for Trump.
This is a dramatic jump for Carson, who is up 9% compared to last month’s Monmouth Iowa poll, while Trump has slid by 5%. Marco Rubio was also up by 6 percentage points.
According to the latest poll, 10 percent said they support Sen. Ted Cruz, R-Texas, 10 percent said they back Sen. Marco Rubio, R-Florida and 8 percent said they back former Florida Gov. Jeb Bush. Five percent said they back former Hewlett Packard CEO Carly Fiorina, three percent support Sen. Rand Paul, R-Kentucky, two percent back former Arkansas Gov. Mike Huckabee, two percent support Louisiana Gov. Bobby Jindal and two percent support Ohio Gov. John Kasich.
What is more surprising is how broad Carson’s lead appears to be across practically all verticals:

This post was published at Zero Hedge on 10/26/2015.

This Liquidity/Sentiment Indicator Shows Little Enthusiasm For This Rally

The market’s vicious October rally has been lifted on a rising tide of liquidity, with only a tepid rise in bullish attitudes leveraged to that.
The Equities/Cash Preference Index (ECPI) is a ratio of the S&P 500 to total cash-like (both demand and time) deposits in the US banking system. By measuring how much stock prices rise or fall relative to the total level of banking system liquidity, it helps us to identify when trader sentiment is overextended with or against the trend.

This post was published at Wall Street Examiner by Lee Adler – October 26, 2015.

Peak Housing 2.0: Sam Zell Dumps 23,000 Apartments In 2007 Deja Vu

If you’ve been apartment shopping in the US lately, you might have noticed that rents are becoming more and more unaffordable seemingly by the month.
We’ve documented the inexorable rise in the cost of renting on too many occasions to count, but for those who need a refresher, we recommend rereading one of our more lengthy treatments in ‘The Mystery Of The ‘Missing Inflation’ Solved, And Why The US Housing Crisis Is About To Get Much Worse’, published late last month. In it, we explained why riotous laughter invariably ensues every time the Fed tells Americans that inflation is negligible.
In short, the collapse of the housing bubble transformed America into a nation of renters as the following chart of the homeownership rate makes abundantly clear:

This post was published at Zero Hedge on 10/26/2015.


Gold: $1167.00 up $3.70 (comex closing time)
Silver $15.90 up 8 cents
In the access market 5:15 pm
Gold $1164.30
Silver: $15.83
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a very good delivery day, registering 34 notices for 3400 ounces Silver saw 4 notices for 20,000 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 2290 contracts as silver was unchanged cents on Friday. The total silver OI now rests at 169,611 contracts In ounces, the OI is still represented by .849 billion oz or 121% of annual global silver production (ex Russia ex China).
In silver we had 4 notices served upon for 20,000 oz.
In gold, the total comex gold OI rose by a considerable 2,290 to reach 169,611 contracts. We had 34 notices filed for 3400 oz today.
We had no change in gold inventory at the GLD / thus the inventory rests tonight at 695.54 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, no change in silver inventory / Inventory rests at 315.553 million oz.
We have a few important stories to bring to your attention today…

This post was published at Harvey Organ Blog on October 26, 2015.

Complacency Reigns At Epic Levels: “Few Are Ready For What Is Coming”

Ben Bernanke’s memoir is out and the chatter about it inevitably turns to the sickening moments in September 2008 when ‘the world economy came very close to collapse.’ Easy to say, but how many people know what that means? It’s every bit as opaque as the operations of the Federal Reserve itself.
There were many ugly facets to the problem but they all boiled down to global insolvency – too many promises to pay that could not be met. The promises, of course, were quite hollow. They accumulated over the decades-long process, largely self-organized and emergent, of the so-called global economy arranging itself. All the financial arrangements depended on trust and good faith, especially of the authorities who managed the world’s ‘reserve currency,’ the US dollar.
By the fall of 2008, it was clear that these authorities, in particular the US Federal Reserve, had failed spectacularly in regulating the operations of capital markets. With events such as the collapse of Lehman and the rescue of Fannie Mae and Freddie Mac, it also became clear that much of the collateral ostensibly backing up the US banking system was worthless, especially instruments based on mortgages. Hence, the trust and good faith vested in the issuer of the world’s reserve currency was revealed as worthless.

This post was published at Zero Hedge on 10/26/2015.

Crime Doesn’t Pay (In Iceland)

I was born in the wrong part of the world….
In a move that would make many capitalists’ head explode if it ever happened here, Iceland just sentenced their 26th banker to prison for their part in the 2008 financial collapse.
In two separate Icelandic Supreme Court and Reykjavik District Court rulings, five top bankers from Landsbankinn and Kaupping – the two largest banks in the country – were found guilty of market manipulation, embezzlement, and breach of fiduciary duties. Most of those convicted have been sentenced to prison for two to five years. The maximum penalty for financial crimes in Iceland is six years, although their Supreme Court is currently hearing arguments to consider expanding sentences beyond the six year maximum.
Market manipulation, embezzlement and breach of fiduciary duties.

This post was published at Market-Ticker on Oct 26, 2015.

“Giant Wave Of Money” Heads For Sweden, As Draghi Creates “Nightmare” For Riksbank

Early on September 3, we warned that the Riksbank was at risk of making a meaningful policy ‘error’ by not cutting rates ahead of the ECB announcement expected later that morning.
It wasn’t that we were anxious to see Sweden plunge further into the Keynesian Twilight Zone by taking the repo rate further into negative territory. Indeed, we never recommend going full-Krugman as Sweden did starting late in 2011 after marking a sharp policy reversal. For its trouble, the Riksbank has been left with a massive housing bubble and successive rate cuts have had only a minimal effect on inflation expectations.

This post was published at Zero Hedge on 10/26/2015.

Operational & Financial Stress Unavoidable For Energy Names, Goldman Warns Distillate Storage “Too Full For Comfort”

Distillate storage utilization in the US and Europe is nearing historically high levels, following near record refinery utilization, only modest demand growth (especially relative to gasoline), and increased imports from the East on refinery expansion and Chinese exports. As Goldman warns, this raises the spectre of 1998/2009 when distillate storage hit capacity, pushing runs and crude oil prices sharply lower. This also raises the question of whether today’s oil market can rebalance through financial stress – prices remaining near their current low level through 2016 – or if operational stress – breaching storage capacity and forcing prices below cash costs – is unavoidable.
As Goldman details, the build in Atlantic distillate inventories this year has been large, following near-record refinery utilization in both the US and Europe, only modest demand growth, especially relative to gasoline, and increased imports from the East on refinery expansion and rising Chinese exports.
As a result, and despite a cold winter in both Europe and the US last year, European and US distillate storage utilization is reaching historically elevated levels, driving a sharp weakening in heating oil and gasoil time spreads.

This post was published at Zero Hedge on 10/26/2015.

Tesla – Exploiting Cognitive Deficiencies

Good Car, Overvalued Stock
I occasionally like to short[1] stocks for fun and profit. One of my recent shorts is Tesla[2], the maker of electric vehicles (‘EV’) and energy storage systems. This one gives me particular pleasure because it is a great opportunity to take some money off the politically correct (‘PC’) crowd precisely because of their cognitive deficiencies. Let me explain.
Tesla’s model S. A nice car, if a little expensive (we mainly regard it as a plaything for people with too much money, which is not meant to detract from its undoubted ‘cool’ factor). Lately doubts about its reliability have been raised, and in spite of the car being heavily subsidized (see also caption under the Model X picture further below), Tesla still loses $4,000 on every Model S it sells. Last quarter, the company burned $360 million in cash.
I have nothing against the Tesla car. Although I have never owned or even driven one, by nearly all accounts it is a pretty good machine (although clearly with some build-quality issues and probably some long-term reliability ones, too). Tesla has almost single-handedly revived electric automobiles[3] and brought some useful practices to the automotive field from the technology sector, such as over-the-air software updates.
The Tesla car is also the darling of the chattering classes, particularly the West Coast variety. Sleek, fast, expensive and electric, nothing announces ‘I have arrived…but I am still the same laid-back, eco-friendly[4] and PC guy I used to be’ like a Tesla. This has made it a celebrity favourite, as demonstrated by, for example, this six-minute long free commercial on The Late Show with Stephen Colbert which raves about Tesla’s recently downloaded auto-driving features.
These features are common or garden variety for cars in this price category but we can’t apply normal standards to a Tesla. We are talking about a revolution here. Well, you know we all wanna change the world.
Shares in Tesla benefit from the same cult following. I can’t prove this mathematically, but you only have to spend a little time in the Tesla section at e.g. Seeking Alpha, a popular investment website, to realize that the proponents of Tesla are on a PC mission. And like with their politics, these evangelists will not allow logic to distract them.

This post was published at Acting-Man on October 26, 2015.

The Inherent Problem Of Eternal Bullishness

This past weekend, Akin Oyedele penned an article via Business Insider entitled “I went to a seminar with one of the world’s largest banks and almost everything said there was really bearish.”
“At HSBC’s global-investment seminar in New York last week, some of the top strategists from Europe’s largest bank laid out their outlook for global markets and economies.
Many strategists are not expecting the current recovery from the financial crisis to be as impressive as what has come before, while some investors aren’t expecting double-digit returns in the near term.
Additionally, strategists are losing faith that the Federal Reserve will actually raise interest rates anytime soon.“
Akin seems genuinely shocked the data suggests economic growth may not be on the cusp of surging and stocks might fail to deliver double-digit returns.
However, since I was long ago excised by the media for allowing the “data to speak,” let me clarify, for both you and Akin, why HSBC is likely correct in their analysis.
Economic Hopes To Be Disappointed
Despite ongoing hopes of a resurgence of economic growth over the past six years, each year has only led to disappointment. As I discussed previously:

This post was published at StreetTalkLive on 25 October 2015.

SP 500 and NDX Futures Daily Charts – Chilly Today, Apple Tomorrow

Stock were largely unchanged after a fluttering day on very light volumes.
No major central bank announced a new stimulus initiative today, so stocks will have to wait for the Apple results tomorrow for an excuse to do something perhaps.
New housing sales came in very light for September.
Perhaps the trend towards higher prices against stagnant wages for most potential homebuyers has something to do with that.
Notice how nicely the bubble in median housing prices tracks the expansion of the Fed’s balance sheet.
If only that stimulus was directed at median wages. But that would empower the 99%.

This post was published at Jesses Crossroads Cafe on 26 OCTOBER 2015.