“Nothing Makes Sense Anymore” Traders Fear Debt Market Distortions Signal “Something Big Is Brewing”

In the last few months we have warned of the “perversions” in US money markets (here, here, and most recently here) adding that “to ignore them at your own peril.” And now, as Bloomberg reports, it appears the mainstream is beginning to recognize that something very strange is going on in debt markets. Across developed markets, the conventional relationship between (‘risk-free’) government debt and other ‘more risky’ assets has been turned upside-down. “Everybody in the fixed-income market should care about this,” warns a rates strategist and in fact, it’s hard to overstate how illogical it is when swap spreads are inverted, as JPM warns the moves in swap-spreads “should be viewed as symptomatic of deeper problems.”

This post was published at Zero Hedge on 11/16/2015.

Austerity And Anarchy: Tying Budget Cuts To Riots, Assassinations, And Attempted Revolutions

If you’ve been paying attention, you know that the PIIGS are restless.
By PIIGS, we of course mean the EU periphery where over the past month or so, things haven’t exactly been playing out the way Brussels would prefer from a political perspective.
Take Portugal for instance where, earlier this month, after what amounted to inconclusive elections in October, Socialist leader Antonio Costa joined up with the Left Bloc and the Communists to overthrow the Passos Coelho government just days after the PM was reappointed by President Anibal Cavaco Silva.
Whatever you want to say about the likelihood that Portugal sticks by its explicit and implicit promises to the troika, the odds that some manner of break with Brussels over austerity, debt, or both occurs down the road are now exponentially higher.
This is precisely what Brussels and Berlin were hoping to deter by adopting a hardline stance towards the Greeks over the summer and indeed we may have gotten the first shot across the bow last week when some analysts reminded the world that should Portugal lose its last investment grade rating at DBRS, the ECB could theoretically cut Lisbon off from PSPP.

This post was published at Zero Hedge on 11/16/2015.

Gold Withdrawals On The Shanghai Gold Exchange At A New Record High

For the week ending November 6, gold withdrawals from the SGE were 44.97 tonnes. This put the YTD total withdrawals at 2,210 tonnes. Gold withdrawals YTD from the SGE are running 29% higher than last year and 20% higher than 2013, which was a record year for withdrawals:

Smaugld.com has compiled an excellent summary of the gold withdrawal statistics on the SGE plus some data on Central Bank holdings globally. You can read his post here: China and Gold.
China’s ‘consumption’ of gold this year is on track to exceed the total amount of gold produced this year by mines globally. India is on track to import close to 50% of world gold production this year. Russia adds to its Central Bank gold holdings every month. In June alone it added 800,000 ozs, over 23 tonnes.

This post was published at Investment Research Dynamics on November 17, 2015.

Gold Daily and Silver Weekly Charts – World Gold Council China Gold Demand Figures Called ‘Fallacious’

“The amount of gold withdrawn from the vaults of the Shanghai Gold Exchange (SGE), which equals Chinese wholesale gold demand, accounted for 45 tonnes in the trading week that ended on 6 November. Year to date SGE withdrawals have reached an astonishing 2,210 tonnes, which is more than the full year record set in 2013 at 2,197 tonnes. With nearly two months of trading left in the Chinese gold market, SGE withdrawals are estimated to reach more than 2,600 tonnes…
How can so much gold be supplied to China without someone buying it and thus being genuine demand? It cannot. Chinese gold demand as disclosed by the World Gold Council (WGC) is fallacious…
Does the mainstream media ever investigate this odd discrepancy? Of course not. According to them gold is just a commodity, a pet rock. Nobody cares about 2,500 tonnes of gold that have vanished into a black hole somewhere in China…
Koos Jansen, SGE Withdrawals Break Yearly Record – World Gold Council Hides Insatiable Chinese Gold Demand
It will be interesting to see how this difference of opinions in the precious metals markets resolve.
Gold is trading inversely to the dollar here.
That is not how it always happens, but that is what is happening now, more or less.
There were no deliveries at The Bucket Shop on Friday.
The warehouses saw a little action, with a dribble of gold coming in and about 420,000 ounces of silver bullion leaving.

This post was published at Jesses Crossroads Cafe on 16 NOVEMBER 2015.

TDV Interview Series: Eric Sprott on the False Recovery and Precious Metals Manipulation

The following video was published by TheDollarVigilante on Nov 16, 2015
Jeff interviews billionaire Eric Sprott, topics include: the real level of government debt, when is reality going to hit? treasury yields going up, the impact of the fed raising interest rates mean they cannot raise them, negative interest rates, and cashless societies, the comex and precious metal price manipulation, options and commodity contracts, naked shorts, massive increase in silver and gold purchases especially in India and China, governments lying about financial data, individuals in the US facing increasing financial stress, government programs all under funded, protecting yourself from what is coming, gold mining stocks massively undervalued, Sprott products backed fully buy physical metal.

IMF Ready To Accept The Chinese Yuan Into The SDR Basket To Challenge The Dollar – Episode 819a

The following video was published by X22Report on Nov 16, 2015
Empire Fed misses again, this is the 4th month in a row, signalling a depression. The economy is about to roll over and the retail sales are imploding. The FED might signal a interest rate increase which will mean they are ready to bring down the economy. IMF gives China the go ahead to become a reserve currency and be included in the basket of SDRs. Obamacare is a disaster and it is a hindrance on the people of America.

Foreign Investors Bail out of Canada’s Money Machine

First net outflow from Canadian securities since 2008.
On first sight, it wasn’t that bad. Statistics Canada reported today that in September, foreign (non-resident) investors purchased C$3.3 billion of Canadian securities – adding C$3.2 billion in equities and C$0.9 billion in bonds to their holdings while getting rid of C$0.8 billion in money market instruments.
But in July and August, foreign investors had dumped large quantities of equities. While they bought Canadian bonds during those two months, it wasn’t enough.
So for the third quarter overall, foreigners dumped C$9.2 billion of Canadian equities; ‘the highest such decline since the first quarter of 2013,’ Statistics Canada pointed out. They also dumped C$4.5 billion of money market instruments (private corporate paper and federal government business enterprise paper). And they picked up C$12.8 billion of bonds.
This makes for a total outflow of C$0.9 billion in the third quarter, the first such outflow of foreign investment from Canadian securities since 2008.
The data is very volatile, as the chart by NBF Economics and Strategy, a division of the National Bank of Canada, shows. But it had been volatile only with positive numbers, with increases of foreign investment, ever since that ignominious year 2008. So when this net quarterly outflow does occur, as it did in 2008 and in Q3 2015, it’s a sign of something larger:

This post was published at Wolf Street by Wolf Richter ‘ November 16, 2015.


Gold: $1083.70 up $2.90 cents (comex closing time)
Silver $14.20 up 2 cents
In the access market 5:15 pm
Gold $1084.20
Silver: $14.27
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a very poor delivery day, registering 0 notice for nil 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 209.83 tonnes for a loss of 93 tonnes over that period.
In silver, the open interest surprisingly rose by a tiny 474 contracts despite silver being down by 2 cents in Friday’s trading. The total silver OI now rests at 165,802 contracts In ounces, the OI is still represented by .829 billion oz or 118% of annual global silver production (ex Russia ex China).
In silver we had 0 notices served upon for nil oz.
In gold, the total comex gold OI rose by a huge 3752 contracts to 427,799 contracts despite gold being down 10 cents in Friday’s trading. It seems the modus operandi of the bandits is to liquefy gold/silver OI as be approach first day notice on Monday, November 30. We had 0 notices filed for nil today.
We had no change in gold inventory at the GLD / thus the inventory rests tonight at 661.94 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. Our 670 tonnes of rock bottom inventory in GLD gold has been broken. 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, after they deplete the GLD will be the FRBNY and the comex. In silver, we had another huge deposit of in silver inventory to the tune of 2.145 million oz / Inventory rests at 317.256 million oz.
We have a few important stories to bring to your attention today…

This post was published at Harvey Organ Blog on November 16, 2015.

Black Market For Black Gold Ignites As Jobless Roughnecks Resort To Oil Theft

The allure of ill-gotten oil money remains strong. The lull in drilling has given oil companies more time to scrutinize their operations — and their losses. As Bloomberg reports, during booms “they are moving at such a rapid pace there’s not a lot of auditing and inventorying going on,” said Gary Painter, sheriff in Midland County, Texas, in the oil-rich Permian Basin; but “whenever it slows down, they start looking for stuff and find out it never got delivered or it got delivered and it’s gone.” From raw crude sucked from wells to expensive machinery that disappears out the back door, drillers from Texas to Colorado are struggling to stop theft that has only worsened amid tens of thousands of lost roughneck jobs.
The moon was a waning crescent sliver Sept. 9 when a man emerged from an oil tanker, sidled up to a well outside Cotulla, Texas, and siphoned off almost 200 barrels. Then, he drove two hours to a town where he sold his load on the black market for $10 a barrel, about a quarter of what West Texas Intermediate currently fetches. As Bloomberg reports, Oil theft is as old as Spindletop, the East Texas oilfield that spewed black gold in 1901 and began the modern oil era… but once again, amid soaring unemployment, it is getting worse…

This post was published at Zero Hedge on 11/16/2015.

Robots to Take 80 Million U.S. Jobs – Is Yours at Risk?

Automation is a great thing – except for a lot of people looking for U. S. jobs.
Over the next 10 to 20 years, half of all working Americans could find themselves replaced by some type of robot. That’s what the Bank of England’s chief economist, Andy Haldane, said in a speech last week to the Trades Union Congress in London.
Haldane said the United States stood to lose as many as 80 million jobs to automation, and the UK 15 million. In October, the total number of non-farm jobs in the United States stood at 142,654, according to the U. S. Bureau of Labor Statistics.
The ‘robots taking jobs’ trend is already underway in many low-skill sectors such as retail and restaurants.

This post was published at Wall Street Examiner by David Zeiler – November 16, 2015.

Ominous Parallels: The Roman Empire, The European Union, And Mass Migration

This weekend’s Paris attacks, occurring in the middle of one of history’s largest mass-migrations, has the feel of uncharted territory. But it’s actually an eerie echo of something that happened nearly two thousand years ago in more-or-less the same place.
According to some historians, the fall of the Roman Empire wasn’t pre-ordained. By AD 300 it had its problems, including far-flung, hard-to-defend borders and recurring currency crises, but was generally stable and prosperous. Then a new power arose in the East. The Huns were horse archers who could out-ride and out-shoot their neighbors, and they terrorized the Vandals and Goths who lived in what is now Germany and the Balkans, driving them west to Rome’s borders.
Rome chose to let half a million ‘barbarians’ enter, hoping to use them as soldiers and laborers. Instead, it found itself with invading armies and unstable, uncontrollable political coalitions. The complete story is winding, convoluted and full of unfamiliar names, but it ends with the division of the Empire into two parts and the destruction of the original, Italian half. Here’s a History Channel synopsis of the process:

This post was published at DollarCollapse on November 16, 2015.

DoubleLine’s Gundlach Warns “These Markets Are Falling Apart”

The odds of a December rate hike have slipped in recent days from over 70% intraday to 64.0% today as, while economists remain convinced that rates will rise in December, traders appear a little less confident. One of the most outspoken – having doubted The Fed (and questioned the economy’s ability to handle even a 25bps rate hike) since Spring – DoubleLine Capital co-founder Jeffrey Gundlach said on Sunday that the Fed may hesitate to raise rates given rocky economic and financial conditions making it clear, as Reuters reports, “certainly [a Fed] No-Go is more likely than most people think. These markets are falling apart.”

This post was published at Zero Hedge on 11/16/2015.

“The Next Big Move In Stocks Is Down” August’s Crash-Whisperer Warns “Nothing Has Been Solved”

“I don’t fault anyone for taking some money off the table here. The stock market is not cheap,” warns one portfolio manager as valuations that have been above historical averages for months are being pushed higher even as revenue and profits decline. “The correction didn’t really solve a whole lot,” notes Leuthold CIO Doug Ramsey – whose bearish research foreshadowed the U. S. stock market’s first correction since 2011 in August – warning, as Bloomberg reports, that “you have all the same underlying market fissures in place, yet they will have lasted another six months,” forecasting the S&P 500 will be 20 percent to 25 percent lower in 2016 from its record high in May of this year.
The rebound that has lifted equities since August doesn’t mean the mispricings that drove the rout have gone away. As Bloomberg reports,

This post was published at Zero Hedge on 11/16/2015.

The Dark Money Behind the Elizabeth Warren ‘Commie’ Ad

The Consumer Financial Protection Bureau (CFPB), the federal agency created after the 2008 crash to protect the little guy from Wall Street predators, which has done a top-flight job of it, was portrayed as a commie organization in a advertisement that ran repeatedly during the Republican Presidential debate on November 10. To enhance the communist theme of the ad (see full video below) giant banners of CFPB Director, Richard Cordray, and Senator Elizabeth Warren, who pushed for the creation of the agency, hang on the wall in a nod to Soviet dictators.
The advertisement is grossly misleading, overtly suggesting that the job of the CFPB is to deny car loans and mortgages to regular folks seeking credit. The agency, in fact, has absolutely nothing to do with approving credit applications. Its job is to root out and punish financial institutions that are ripping off customers. For example, in July of this year, the serial looter, Citigroup, was ordered by the CFPB to reimburse an estimated $700 million to 7 million of its credit card customers for deceptive marketing and billing for services that were never provided. The agency has also recently gone after student loan and mortgage servicers for ripping off borrowers with excessive fees and unwarranted interest payments.
The CFPB’s main threat to Wall Street’s padding of its bottom line through ever-creative frauds against millions of small borrowers is that the CFPB is both educating consumers and making it easy for them to file a complaint on how they’ve been fleeced. Even more dangerous, the CFPB is actively inviting whistleblowers inside financial corporations to blow the whistle directly to them on the lawbreaking.
There is one more reason that a much broader swath of corporate America is fighting the CFPB than just financial firms. According to the New York Times, a corporate front group that funded the ad has admitted that keeping private justice systems alive for corporations, known as mandatory or forced arbitration, is one reason behind the $500,000 outlay for the ad. The Times notes:

This post was published at Wall Street On Parade on November 16, 2015.

The Last Time Bond Bears Were This Short, Treasury Yields Collapsed

Bond traders have not been this speculatively short Treasuries since early 2010. Since The Fed turned uber hawkish at the last FOMC, and convinced the market that it will raise rates in December – despite dismally dropping data everywhere, speculators have drastically increased their short positions across the entire Treasury spectrum. The last time the world was this short Treasuries, the 10Y yield collapsed from 3.94% to 2.39% in just 3 months.
Simply put, The Fed has created – through its constant communication and confusion – the biggest bear trap for bond traders… if a hike does not come in December, 2010’s yield collapse could look like a stroll in the park, especially in the newly illiquid normal.

This post was published at Zero Hedge on 11/16/2015.

Bloodletting 8 Trading Days in a Row: Junk Bonds Go to Heck

‘Large amounts of potential and realized losses’: Moody’s
The US junk-bond market, after years of record-breaking issuance, has nearly doubled to $1.8 trillion since late 2008, one of the miracles the Fed’s QE and ZIRP performed. Those were the good times. Now Fed-blinded investors are cracking open their eyes.
It didn’t help that the week was punctuated by some juicy bankruptcies, including steelmaker Essar Steel Algoma, which filed in the US and Canada – for the second time in two years and for the third in 25 years – as it struggles with over $1 billion in debt. And Millennium Health, a malodorous mess I wrote about in July [‘Leveraged Loan’ Time Bomb Goes Off, JP Morgan Did It].
Energy junk bonds are sinking deeper into the mire. For example, natural-gas driller Chesapeake Energy’s 6.625% notes due in 2020 fell 7 points last week to 58 cents on the dollar. Or the misbegotten Occidental Petroleum spin-offCalifornia Resources; according to S&P Capital IQ LCD, its 6.00% notes due 2024 dropped to 64.50 cents on the dollar.
Beyond energy, specialty chemicals maker Hexion’s 6.625% notes due 2020 fell to about 81 cents on the dollar. And Mallinckrodt Pharmaceuticals, based in Ireland, with its US headquarters in St. Louis, Missouri, got hit by a tweet from short-seller Citron Research, after it took a break from eviscerating Valeant. As Mallinckrodt’s shares plunged, its 5.625% notes due 2023 dropped from 94 before the tweet into ‘price discovery,’ with quotes around 85.
When tire-maker Titan International reported sharply declining revenues, its 6.875% secured notes due 2020 fell three points to 82.25. Scientific Games, which caters to lottery and gambling organizations, also reported crummy quarterly results; its 10% notes due 2022 plunged six points early in the week, to about 81.

This post was published at Wolf Street on November 16, 2015.