Employment vs. Business Conditions

An Addendum to Recent Data Points – The Message from Lumber
We have recently discussed the manufacturing sector’s problems several times, as well as the trends inemployment data. As a general remark to this, it seems that the sectors that have lately contributed especially strongly to employment growth were health care & social services, leisure & hospitality and construction.
The echo boom in construction may be running out of steam though. Interestingly, this is once again happening even before a rate hike cycle has begun – in a sector that traditionally benefits disproportionately from low interest rates. Data on housing starts, permits and construction are admittedly quite erratic from month to month. However, there are a number of signs that the sector may be about to cool down. Said erratic data on starts and permits have just nosedived again from what remains a historically low base.

This post was published at Acting-Man on November 21, 2015.

Shanghai Gold Exchange Withdrawals of 49 Tonnes in the Latest Week

There were about 49 tonnes, or 1,575,000 troy ounces, of gold delivered from Shanghai in the latest week.
No matter what the pundits say about ‘gold bugs’ and all that sort of nonsensical disparagement, the central banks of the world have been net buyers of gold since about 2007, and the major countries of The Silk Road are buying gold bullion by the tonne each and every week.
Are they all unenlightened idiots? Goldbugs? Bloomberg seems to imply that they are. China Savers Turn To Gold As ‘Rest of World’ Exits
Are the central bankers of the world fools and dupes?
Or are we being misled by the global Banks? Hard to believe, right?
Gold bullion is moving from West to East.

This post was published at Jesses Crossroads Cafe on 20 NOVEMBER 2015.

These Are The Stocks Most Hated By Hedge Funds (And Why You May Want To Buy Them)

Back in the summer of 2013 we revealed what the best “alpha-generating” strategy was in a New Normal where hedge fund clustering would ultimately lead to such dramatic hedge fund hotel implosions such as what was seen in the third quarter (described in detail in “What Hedge Fund Panic Looks Like“) and where central banks themselves do their best to crush anyone who dares to short single names courtesy of $13 trillion in excess liquidity.
But while buying the most shorted names (expecting furious central bank and HFT-catalyzed short squeezes) had been a great way to outperform the market in 2012 thru 2014, in 2015 this strategy took a back seat as suddenly the most hated names revealed that there was a reason why they were most hated, and plunged as the Fed’s determination to push stocks higher no matter the cost was put into question.
However, now that the Fed et al have made it beyond clear a downtick is unacceptable even as hedge funds are dramatically underperforming the market and are all – absolutely all of them – rushing to buy the same 5 stocks into year-end due to FOMO, even the tiniest deviation from a priced to perfection market will make the Valeant hedge fund hotel collapse of Q3 seem like a dress rehearsal if F, or A, or N, or G or all of them were to be Philidored.
It would also force a sequential scramble to cover shorts as margin calls are quietly and not so quietly administered on the increasingly underperforming hedge funds (for whom a crowdsourced margin call funding attempt will not be a feasible way out unlike novice E-traders).
What does all this mean?
Well, since central banks have made it abundantly clear they will not allow the S&P to drop even a few modest percent, and since going short the most beloved hedge fund names also carries with it the risk of substantial margin calls (not to mention inlimited downside) the best bearish trade into the year end is, paradoxically, to go long the most shorted names with the expectation that hedge fund blow ups will force domino-like, sequential short squeezes.

This post was published at Zero Hedge on 11/21/2015.

In China, Money Is Power… Literally

While recent market turmoil in China has meant the government has been burning through its cash reserves at a record pace, for the electric utility plant in Yancheng; money is quite literally power as 3 billion yuan of outdated or damaged bank-notes are incinerated to generate electricity for Jiangsu province each and every year…
Out with the old, in with the new: 3 billion yuan in outdated notes burned to provide electricity

This post was published at Zero Hedge on 11/21/2015 –.

NO WAY: Did Congress Just Do Something Right With the Fed? FORM Act Requires Transparency

21st Century Wire says…
If there’s one thing that the Federal Reserve of Counterfeiting hates – it’s allowing the American people to see what they’re doing.
They don’t like letting the plebs have a look in at how they create money for old rope (printing money out of thin air and then lending to the US gov’t at compound interest rates), and more importantly – who they are give our money away to under the table. It could be anyone, anywhere in the world. Lending money to their friends at 0%, or even less than zero percent interest? That’s just what they do…
Now Congress is threatening to end the party.
However, people should beware of cornering a rabid animal. What will the banksters do if their supremacy is challenged by lowly serfs and vassals of the keep (wars, famine, civil unrest, economic collapse)?

This post was published at 21st Century Wire on NOVEMBER 20, 2015.

El California Housing Adjustment: 17 of California’s 26 largest counties posted a monthly price decline.

The housing market in California has hit a plateau in 2015. The latest figures show that 17 of California’s 26 largest counties posted monthly price declines. In many parts of the state home prices are well out of the reach for regular families. What has transpired is a massive move towards renting or for many adults to move in with their parents. Purina Dog Chow Taco Tuesdays are a way to save a few pennies for that down payment on your dream drywall junker. The latest figures of a tepid market will cause more people to pause and reflect on the insanity of the current situation. People have made it an art to justify the price of your typical crap shack. Junk is junk and people are in a fog overstretching their budgets once again. So it is no surprise when we find out that notice of defaults also jumped up by 8 percent in October. Whoops. And keep in mind this is happening at the top of a six year uptrend in the stock market, tech wealth overflowing, and lustful investors buying up real estate like hipsters chasing after the latest food truck phase. I’ve had a few e-mails from people saying that El Nio is somehow going to revive housing prices again! Do people even remember 1997 and 1998?
Weak sales and reality kicking in
No one is excited about stagnant growth in California real estate. We need to be booming or busting. There is no middle in the state unfortunately. And we’ve just had a healthy boom. You would assume that people would learn this pattern but memories are short in the Golden State.

This post was published at Doctor Housing Bubble on Nov. 21, 2015.

The Manipulation In Silver Has Reached An Extreme

You think the silver reported as being held by the SLV ETF Trust is really all there? Really? I guess you’re probably expecting a visit from Santa Clause in about a month as well… Silver has been hammered by the paper market for 16 trading sessions in a row. This is the longest losing streak in the history of silver futures trading.
The manipulation of both the metals markets and the stock market has reached proportions that would have been unfathomable before the 2008 de facto financial system collapse. The Fed has been intervening in the markets since its inception, but the executive order signed by Reagan authorizing the Working Group on Financial Markets – a secretive subset of the U. S. Treasury Department, opened the door for the full-fledged near-continuous intervention in the markets we are now witnessing.

This post was published at Investment Research Dynamics on November 21, 2015.

Experts See Low Oil Prices for Decades to Come as US Shale Boom Goes Global

A book was just released that is sure to be the talk of energy executives, investors, and academics around the globe. It is named by the no-hype title, The Price of Oil, where experts Roberto Aguilera and Marian Radetzki argue quite persuasively that the world is likely to see low oil prices for decades to come.
For those betting on oil to quickly return to $100 or more, this is certainly bad news.

This post was published at FinancialSense on 11/19/2015.

Crude oil where is it headed?

All this talk and turmoil and noise and movement and desire is outside of the veil; within the veil is silence and calm and rest. Bayazid Al-Bistami
On the 19th of this month, two articles were published at the same time, one stating that oil could go to $26 and the other stating that oil is ready to trade to $80. Which one is it going to be, $26 or $80 and how is the average Joe going to be able to discern which one is a depiction of what lies ahead. This is the problem with today’s mass media, in their quest to attract eyeballs, bombastic and often conflicting articles are published simultaneously. One almost feels that most of the major sites have only one agenda, quantity over quality. The idea is to use emotions, Greed or Fear to trigger a reaction. Whether the data supporting the hypothesis is valid or not, appears to be irrelevant. Perhaps this is why more American drink coffee daily than invest in the markets.; over 50% of the public is still sitting on the sidelines.
Psychology is probably the simplest, most misunderstood and most underutilized tool when it comes to trading. The first rule of mass psychology dictates that one put aside one’s emotions. You have to cut the power of these useless forces. It is not easy, and it never becomes automatic. You have to fight it, but you know you are close to doing something right when you not overly confident about the decision you are going to make. The second factor is to get rid of the noise factor; use mass media as a source of entertainment or provide you information on what you should not be doing.

This post was published at GoldSeek on Friday, 20 November 2015.

El-Erian Says “The Market Believes Central Banks Are Our Best Friends Forever”, Just Don’t Show It “Figure 4”

A recurring theme we have covered here over the past few weeks and months (most recently here), is that while stocks have soared since the September lows (first on bad payrolls news suggesting no rate hike, then on a Fed hint a rate hike is imminent, go figure), most other asset classes have ignored the furious rally, and none other more so than junk bonds and ETFs.

This post was published at Zero Hedge on 11/21/2015 –.

Brussels Enters Lockdown, Warns of “Paris-Style” Attack, Airport and Sporting Events Closed

Officials in Belgium have “precise information” that Brussels faces a “Paris-Style” Attack. In response Brussels Enters Lockdown.
Brussels faces an imminent threat of a Paris-style Islamic State terrorist attack, authorities warned, as the city shut down its metro system and shopping malls, canceled sporting and cultural events and told people to avoid gathering in large groups.
‘We have precise information that outlines the risk of an attack similar to the one that unfolded in Paris,’ Belgian Prime Minister Charles Michel told a press conference Saturday morning in Brussels. ‘It is a threat based on the theory that it would take place with arms and explosives, maybe even in several places and at the same time.’
Authorities canceled sporting events and cultural activities around the Belgian capital. Professional soccer games were postponed, movie theaters, opera houses, libraries and galleries closed and shopping malls and department stores shut their doors. The city’s Atomium tourist venue didn’t open on Saturday, while night clubs and concert venues said they wouldn’t open in the evening.

This post was published at Global Economic Analysis on Saturday, November 21, 2015.

What A Negative Swap Spread Really Means (Spoiler Alert: Nothing Good)

Submitted by Eugen von Bohm-Bawerk via Bawerk.net,
SWAP spreads recently took a nosedive and are once again trading at negative levels, even for shorter maturities. As can be seen from the chart below, treasury yields, here represented by the 10 year maturity, rose during QE policies programs contradicting the very raison d’tre spouted by the central bankers. Interestingly enough we also see the same pattern in SWAP spreads. As QE programs were enacted SWAP spreads started to move upwards, just to rollover as the central bank program was getting close to a conclusion.

This post was published at Zero Hedge on 11/21/2015 –.

Shanghai Gold Deliveries and Deliveries on the Comex – The ‘Rest of the World’ According To Bloomberg

Gresham’s law is an economic principle that states ‘when a government overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation.’
Notice the ‘sea change’ that occurred with Shanghai gold flows starting in 2013.
And notice how the Western financial media views this phenomenon.
China Savers Buying Gold As ‘Rest of the World’ Exits
The ‘Rest of the World’ apparently does not include India, Russia, Turkey, much of the Mideast, and the European central banks who have been busy trying to repatriate their gold from New York and London.
I have included a chart showing ‘Silk Road’ gold consumption below.
In addition to all the wealthy individuals in the US and UK who are buying it for their own private vaults.
Who are the idiots who own most of the gold in the central bank crowd anyway? The numbers are a bit hard to come by because for some reason the bankers are notoriously secretive in response to questions.
The ‘official gold reserves’ of all central banks in the world is also included below. And the biggest goldbugs are the US, Germany, Italy, France, the IMF, Russia, China, Switzerland, Japan and the Netherlands.

This post was published at Jesses Crossroads Cafe on 20 NOVEMBER 2015.

The Mad Euro Project Just Got A Lot Madder

Feeding a Monstrous Pile of Debt.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
Under Mario Draghi’s radical stewardship, the ECB seems determined to push the limits of monetary experimentation. And by all accounts, it’s succeeding.
This week saw numerous eurozone governments sell bonds at negative rates, an economic anomaly that has no place in a rational world. Even some mainstream economists still seem confused by it. Unfortunately, thanks to the tireless efforts of central bankers around the globe, we stopped living in a rational world a long time ago.
Feeding a Monstrous Pile of Debt
The latest government to enjoy the perks of negative-interest-rate living is Portugal. That’s right, Portugal, a country that four years ago was selling 12-month notes with an average yield of 6% amidst fears about the government’s ability to service its monstrous debt pile, is now able to sell 1.1b billion of 12-month debt at a -0.06% yield. In other words, if investors hold the bonds to maturity they will actually pay the Portuguese government – a government that doesn’t yet exist – for the privilege of holding its debt.
This is despite the fact that Portugal has not only a perpetually stagnating economy but also one of the highest debt-to-GDP ratios in the world. After four years of so-called ‘austerity,’ Portugal’s combined public and private debt is now a mind-blowing 530% of GDP, with total corporate debt expected to reach 240% of GDP.

This post was published at Wolf Street by Don Quijones ‘ November 20, 2015.

Draghi Pulls the Rug out Again

ECB President Mario Draghi seems intent on making sure that his currency, the Euro, is not going higher. This is now the second consecutive speech he has recently made in which he has struck what can only be regarded as an ‘extremely dovish’ tone.
In today’s banking conference speech, the President of the ECB said the following:
‘If we conclude that the balance of risks to our medium-term price stability objective is skewed to the downside, we will act by using all the instruments available within our mandate’.
How’s that for clarity. Translation… SELL, SELL, SELL the euro.
This is what traders were looking for when I noted in yesterday’s post that we would need something on the economic data front or something coming from Draghi or the Fed ( Yellen_) that traders could run with as it would provide more clarity into expected bank policy before they got too aggressive selling the Euro ( or buying the Dollar).
Essentially we are back to Draghi and company saying, ‘whatever it takes’ to slay the dreaded deflation beast. It should be noted that the ECB’s own projections show inflation remaining below 2.0% even as far out as 2017. The actual projection that they are working with at the moment is 1.7%.

This post was published at Trader Dan on November 20, 2015,.

USA Losing Sovereignty to World Fiscal Mismanagement

The IMF and many economists (domestic and foreign) are now warning that a rate hike by the U. S. Federal Reserve, no matter when, will spark a major economic crisis in the emerging markets. They see this crisis being ripe for countries with high budget deficits, such as Turkey, as well as commodity-based economies. This includes the oil exporters such as Russia and even Saudi Arabia who has now begun to issue debt.
This is holding the Federal Reserve’s feet to the fire to the point that they are losing control of their own domestic policy objectives as a consequence of the dollar becoming the WORLD’S ONLY RESERVE CURRENCY no matter what the IMF inserts into the SDR. The emerging economies have issued debt worth nearly half that of the USA without the economic strength to back up that debt. True, there is going to be a debt explosion by 2017 and this is not going to look very nice at the end of the day. Clearly, the Fed is being pressured externally to give up its domestic policy objectives to help the debt burden of everyone else. And people keep saying the dollar will go into hyperinflation?

This post was published at Armstrong Economics on November 21, 2015.