“Your Debt Bubble Is Here” – The Updated Leverage Cycle Map

As we head into December and the market anxiously awaits an FOMC decision which, if the Fed were truly ‘data dependent’, should tell us something about what the PhD economist cabal thinks about the state of the US economy, the market is bracing for a significant monetary policy divergence between the US and the rest of the developed world.
According to the standard and oft-repeated narrative, the US is the so-called ‘cleanest dirty shirt.’ Growth is abysmal, especially in a historical context, but at least America didn’t just enter its fifth recession in as many years (like Japan).
Similarly, inflation expectations may not be where Janet Yellen wants them to be (understated rent inflation and $170 million Modiglianis notwithstanding), but hey, at least the US isn’t sinking into deflation (like Japan and Europe).
Of course it’s not just about the US vs. Europe and Japan. The world’s emerging economies are at another point in the cycle entirely and are in many cases (e.g. Brazil and China) facing an outright meltdown.
For those looking to make sense of it all, SocGen is out with an updated ‘leverage clock’ which shows where the world’s economies are in the ‘deleveraging-no bubble-leverage-bubble burst’ cycle.

This post was published at Zero Hedge on 11/24/2015.

Gold Daily and Silver Weekly Charts – Quiet Option Expiration

Gold and silver both caught a bid this morning on a flight to safety after the key US ally Turkey shot down a Russian jet allegedly infringing on their border with Syria for a matter of less than seventeen seconds.
Russia disputes this as one might imagine. They claim that the jet was one mile within the Syrian border.
Turkmen on the ground then shot the defenseless pilots as they descended by parachute. And put a bow on it by shooting down a rescue helicopter that came searching for them.
Shooting a parachuting air crew member from a distressed aircraft is a violation of Article 42 of the Geneva Convention, It is abhorred by professional military organizations as a despicable and dishonorable act. And it is a war crime.
No worries. Nothing to see here. Move along.
Nothing much happened in The Bucket Shop yesterday. There were no deliveries, and only some silver leaked out of the warehouses.
Tomorrow the US markets will be open, but ‘unless something happens’ the markets will hit their objective by 1 PM, and the adults will leave the algos in the capable hands of junior traders.
Let’s see if gold and silver get any gut checks in advance of the December contract after today’s option expiration.
Here is a modest proposal.

This post was published at Jesses Crossroads Cafe on 24 NOVEMBER 2015.

Goldman Finally Looks At The Freight Charts, Raises Alarm About The “Broader Health Of The US Economy”

In the first days of November, we showed that global trade is in freefall with “China Container Freight At Record Low; Rail Traffic Tumbles, Trucking Slows Down.” Now, Goldman has finally caught up, and writes that “indicators of freight activity – the volume of goods carried by truck, rail, air or ship – have slowed recently, raising concerns about the broader health of the US economy.“
This is how Goldman finally admits what we have been saying for the past two years: the biggest threat to the US, and global, economy is the gradual and ever faster slowdown in trade, something which central banks are incapable of “printing.”
Freight transportation data can be a useful gauge of activity in the goods-producing sectors of the economy, for obvious reasons. Products need to move from manufacturers to end consumers, and will be carried along the way by at least one of the four modes of transportation – truck, rail, air or ship – and frequently by multiple types (‘intermodal’ transport). The economic indicators measuring US transportation activity are also relatively transparent – counting things like the number of containers or rail cars – and in some cases quite timely. They are therefore popular among investors. Recently some of these measures have slowed, raising concerns about the broader health of the US economy. And here is Goldman doing its best recap of our charting, using its own words:

This post was published at Zero Hedge on 11/24/2015.

Apple Accounted For 20% Of All U.S. Margin Expansion Since 2010 – Why This Matters

Earlier we explained why Goldman believes that in 2016 the market, which is now about 1% higher than where it closed in 2014, will also go exactly nowhere.
The reason for this pessimism can be summarized in three bullet points:
i) bifurcated thematic returns. Goldman thinks that due to divergent monetary policies (Fed tightening vs. ECB and BoJ easing) the USD will strengthen and benefit some stocks and harm others. Some of those impacted the most will be multi-nationals and luxury retail companies (see Tiffany earnings today). Overall, the biggest headwind cited by companies in Q3 has been the strong dollar – expect this to continue and to further depress revenues, and thus earnings.
ii) higher rates. According to Goldman, “when fund managers eventually realize the tightening process will be more sustained than originally anticipated the P/E multiple will contract and offset the otherwise positive impact of 10% earnings growth.”
iii) margin expansion stories. If companies can’t rely on top line growth, and multiple expansion is not available, there is just one source of growth: margin expansion.

This post was published at Zero Hedge on 11/24/2015.

Ted Butler Quote of the Day 11-24-15

Silver prices can’t and won’t go down forever—and sooner or later prices will turn higher. That means it won’t be long before the technical funds get buy signals on higher prices, in the same way they always get buy and sell signals—and how they just got sell signals these past three weeks. Timing aside, this is as inevitable as the tides. Right now, we have a lot of pent up potential buying power in the form of new managed money buying and short covering – it’s already baked into the cake.

Since the potential technical fund buying is certain at some point and price, attention must be directed to the other side of that certain buying, namely, who will sell to the technical funds when they come into buy and more importantly, at what price? As I’ve described previously, the technical funds buy and sell, effectively, with ‘at the market’ or stop orders. These funds are not so much interested in the exact price they get filled at, as they are to complete buying their position on up markets—and selling their position on declining prices. That’s part of their essence.

By comparison, the commercials who take positions opposite to the technical funds are all about extracting every penny of every fill, since they control prices to begin with. It’s a great racket – the commercials get to take the right position always and do it at the most advantageous prices. The extent of any silver (and gold) rally is always what the commercials, particularly JPMorgan, decide it will be. If JPMorgan decides to add silver short positions around $16 (for example) and cap the price; the price will be capped there. But by the same reasoning, should JPMorgan decide to add sufficient shorts to cap the price at $25 or $50, then the price of silver will go to $25 or $50. Such is the power of JPMorgan in silver.

A small excerpt from Ted Butler’s subscription letter on 18 November 2015.

  More precious metals news & information available at
Ed Steer’s Gold & Silver Digest.

Recession Watch: Falling Commodity Prices to Hurt America

US exports, a problem that even the Fed warned about, depend on the health of other economies that are buying US products. The emerging markets are important customers for US goods, growing as they evolve from exporters to have more balanced trade. Trade figures from emerging markets (EMs) are only somewhat reliable, but imports’ share of EM’s seaborne trade has grown, and equaled that of exports for the first time in 2014.
So falling commodity prices are now a mixed blessing for the US economy. It multiplies exposure to slowing growth in China, the third largest buyer of US exports, with a 7% share of total exports year-to-date (Census, through September) – as China’s slowing continues to depress commodity prices. Several nations that rely on commodity exports are big customers of the US: Canada, Mexico, Brazil, and Australia – totaling 38% of total exports. All are slowing; Brazil might implode.
The other commodities exporters are in aggregate significant to the US, and some of them are hurting, such as Russia and Venezuela.
As a secondary effect, falling commodity prices slow growth throughout the emerging and developing nations. Their GDP grew 6.3% in 2011, slowed to 5.0% in 2013, 4.6% in 2014, and 4.0% this years. Next year will be worse if China continues to slow and commodity prices continue to fall.

This post was published at Wolf Street by Larry Kummer ‘ November 24, 2015.

It’s Time To Seriously Prepare For The Economic Collapse – Episode 826a

The following video was published by X22Report on Nov 24, 2015
Consumer confidence tanks as the economy declines further. Real estate narrative is crossing between Case-Schiller and NAR, one says home prices are falling and the other says rising. Manufacturing has hit a 25 year low. Manufacturing not helping the economy and the US cannot be propped up on service oriented jobs. GDP revised and pushed up to 2.05%. Richmond Fed show 3rd month of wages declining. Central banks have run out of steam and the economy is now collapsing at a accelerated rate.

The Triumph Of Materialism: The Average American Will Spend 830 Dollars On Christmas In 2015

Has there ever been a major holiday more focused on materialism than the modern American Christmas? This year, Americans are planning to spend an average of 830 dollars on Christmas gifts, which represents a jump of 110 dollars over the average of 720 dollars last year. But have our incomes gone up accordingly? Of course not. In fact, real median household income in the United States has been experiencing a steady long-term decline. So in order to fund all of our Christmas spending, we have got to go into even more debt. We love to pull out our credit cards and spend money that we do not have on lots of cheap, useless stuff made on the other side of the world by workers making slave labor wages. We do the same thing year after year, and most of us have grown accustomed to the endless cycle of growing debt. In fact, one Pew survey found that approximately 70 percent of all Americans believe that ‘debt is a necessity in their lives’. But then we have to work our fingers to the bone to try to make the payments on all of that debt, not realizing that debt systematically impoverishes us. It may be hard to believe, but if you have a single dollar in your pocket and no debt, you have a greater net worth than 25 percent of all Americans. I know that sounds crazy, but it is true.
Overall, when you add up all forms of debt (consumer, business, local government, state government and federal government), Americans are more than 60 trilliondollars in debt.
Let that sink in for a bit.
40 years ago, that number was sitting at about 3 trillion dollars.
We have been on the greatest debt binge in the history of the world. Even though we were ‘the wealthiest, most prosperous nation on the entire planet’, we always had to have more. We just kept on borrowing and borrowing and borrowing from the future until we completely destroyed it.
And we still haven’t learned anything. Instead, this Christmas season we will be partying like it’s 2007…

This post was published at The Economic Collapse Blog on November 24th, 2015.

No End In Sight For Commodity Carnage As Chinese Fear Fed Hike Blowback

Today’s 1.75% rally in copper (ripping vertical at the US open) broke a record 14-day losing-streakafter COMEX futures tested towards a ‘1’ handle numerous times for the first time since March 2009 (when the S&P 500 traded around 800). The metals market appears to be increasingly pricing concurrent and/or future weakness in China’s old economy, according to Goldman, as China futures open interest surges, but discussions at the 2015 Shanghai CESCO conference last week exposed the extremely bearish views of Chinese market participants regarding Chinese metals demand in 2016 (notably sentiment was worse than that expressed by investors outside of China) specifically citing a Fed rate hike before year-end as a further bearish factor for metals.

This post was published at Zero Hedge on 11/24/2015.

Switzerland Gold Export China October 29t, 34% m/m

First, withdrawals from the vaults of the Shanghai Gold Exchange (SGE), our best measure for Chinese wholesale gold demand, accounted for 49 tonnes in week 44 (9 – 13 November), up 9 % from the previous week. Year to dateSGE withdrawals have reached 2,259 tonnes, which is already more than any previous yearly total.

Seasonally, SGE withdrawals are the highest around new year, therefore I expect them to increase from current levels before the end of 2015 – perhaps transcending 60 tonnes a week. Chinese people traditionally exchange gifts during new year and lunar year, often in the form of gold.
As SGE vaults have likely been depleted from July until September – after the crash in the Chinese stock marketwithdrawals skyrocketed – I don’t expect Chinese gold imports will decline until the January 2016. Year to date China has net imported 1,058 tonnes, according to lagging data released by various customs departments around the world.

This post was published at Bullion Star on 24 Nov 2015.

Technically Speaking: The Real Value Of Cash

“Technically Speaking” is a regular Tuesday commentary updating current market trends and highlighting shorter-term investment strategies, risks, and potential opportunities. Please send any comments or questions directly to me via Twitter.
With the “inmates running the asylum” during a holiday-shortened trading week, the upward bias to the market is set to continue. However, as I addressed last week:
“As we progress through the last two months of the year, historical tendencies suggest a bias to the upside. This is particularly the case given the weakness this past summer which has left many mutual and hedge funds trailing their benchmarks. The need to play ‘catch-up’ will likely create a push into larger capitalization stocks as portfolios are ‘window dressed’ for year end reporting.
This traditional ‘Santa Claus’ rally, however, does not guarantee the resumption of the ongoing ‘bull market’ into 2016. The chart below lays out my expectation for the market through the end of the year.”

This post was published at StreetTalkLive on 23 November 2015.

24/11/15: Over-skilled & Under-Employed: Welcome to the Brave New World of Europe

Irish policymakers are keen telling us that jobs creation has been robust and of high quality in recent years. Which, thus, begs a question: why does OECD data show Ireland as having one of themost severe mismatches between workforce skills and employment?

Apparently, based on OECD data, Irish economy is not exactly offering jobs on par with our fabled skills. And, apparently, based on OECD data, our illustrious workforce holds a big untapped potential for productivity gains that are not being realised by the inflows of MNCs and FDI and domestic economy jobs creation to-date.
OECD doesn’t quite offer an Ireland-specific explanation of this paradox, but it does offer an insight as to why the same phenomenon plagues virtually all of Europe:

This post was published at True Economics on November 24, 2015.

The Evil Genius Behind the General Motors Streetcar Conspiracy

The electric streetcar did not die a natural death. It was callously murdered – by General Motors Co.(NYSE: GM).
Thus begins the tale of the ‘General Motors streetcar conspiracy,’ otherwise known as ‘the great American Streetcar scandal.’
According to the theory, the American streetcar system did not die out in the 1920s due to the automobile’s rise in popularity; instead, it was systematically dismantled by GM. The company wanted to monopolize American surface transportation.
The mastermind behind GM’s grand plan was then Vice President Alfred P. Sloan, Jr. – a business man lauded for his innovative corporate ideas at the time. He would eventually become GM’s president. Not many people realized then – nor do they today – that some of Sloan’s ideas often included bribery and terror.
Here’s a look at how the General Motors streetcar conspiracy played out, thanks largely to Sloan’s ‘power of persuasion’…

This post was published at Wall Street Examiner by Money Morning Staff Reports ‘ November 24, 2015.

NOV 24/TURKEY SHOOTS DOWN RUSSIAN JET/TWO RUSSIAN PILOTS JETISON OUT OF THEIR PLANE BUT KILLED BY REBEL FIRE/ALSO RUSSIAN RESCUE HELICOPTER BROUGHT DOWN BY MISSILE/MONSTROUS 5.06 TONNES OF GOLD L…

Gold: $1074.30 up $7.50 (comex closing time)
Silver $14.17 up 13 cents
In the access market 5:15 pm
Gold $1075.50
Silver: $14.16
At the gold comex today, we had a very poor delivery day, registering 0 notice for nil ounces. Silver saw 1 notice for 5,000 oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 200.26 tonnes for a loss of 103 tonnes over that period.
In silver, the open interest surprisingly rose by 675 contracts despite the fact that silver was down 6 cents in yesterday’s trading. The total silver OI now rests at 174,199 contracts In ounces, the OI is still represented by .871 billion oz or 124% of annual global silver production (ex Russia ex China).
In silver we had 1 notice served upon for 5,000 oz.
In gold, the total comex gold OI was hit again as this time another 1079 contracts were liquidated as the OI fell to 417,546 contracts. Gold was down by $9.60 in yesterday’s trading. It seems the modus operandi of the bandits is to try and liquefy gold/silver OI as we approach first day notice on Monday, November 30. They are succeeding in gold but not silver. The bankers get very nervous when OI is rising despite awful prices for the metals. We had 0 notices filed for nil today. As I know everybody is aware that we are now in the options expiry for: a) the comex gold/silver contracts, b) LBMA contracts and c) OTC contracts.
We had a monstrous withdrawal in gold inventory at the GLD to the tune of 5.06 tonnes and this was done with respect to the downing of a Russian fighter jet???/ thus the inventory rests tonight at 655.69 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 no change in silver inventory, / Inventory rests at 318.209 million oz.
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on November 24, 2015.

Presenting SocGen’s 5 Black Swans For 2016

If you’re the type who likes black swans this has been the month for you.
On the political front, Portugal’s Socialists, led by Antonio Costa, formed an alliance with the Left Bloc and the Communists on the way to overthrowing the Passos Coelho government and presaging a repudiation of Berlin’s brand of fiscal rectitude. This throws the country’s austerity program into doubt and sets up not only a confrontation with the troika, but also the potential loss of access to ECB QE should a deteriorating fiscal situation prompt a DBRS downgrade.
In Spain, Catalonia is in the midst of a secession bid which, depending on Catalan political infighting and how far Rajoy wants to push things ahead of national elections set for next month, could see a fifth of Spain’s GDP separate, causing Spanish debt-to-GDP to jump by some 25%.

This post was published at Zero Hedge on 11/24/2015.

Gold and Silver Market Morning: Nov-24-2015

Gold Today -New York closed at $1,068.70 down from $1,077.20. In Asia prices were lifted to $1,171.65 as the dollar’s rise paused. The LBMA price setting fixed it at $1,073.00 up from yesterday’s $1,068.35. The dollar Index is almost unchanged at 99.78 this morning. The dollar is at $1.0621 up from $1.0625 against the euro. In the euro the fixing was 1,007.13 up from yesterday’s 1,005.008. Ahead of New York’s opening gold was trading in the dollar at $1,075.15 and in the euro at 1,008.91.
Silver Today – The silver price closed at $14.11 down 4 cents on yesterday. At New York’s opening, silver was trading at $14.17.
Gold (very short-term) The gold price will again look for direction today, in New York.
Silver (very short-term) The silver price will again look direction today, in New York.
Price Drivers With markets now on edge we are waiting for the dollar index to break above 100, or pull back. Worse still, the dollar is unlikely to do much if it holds below 100, just move sideways. But the importance of it holding current levels and not rising is enormous. As we say repeatedly, the U. S. suffers if the dollar gets much stronger and yet the E. U. wants the euro lower against the dollar.

This post was published at GoldSeek on 24 November 2015.

“We Are Gone… Now!” – Dennis Gartman Stopped Out As Oil Surges

On Friday, just as oil tumbled below $40 for the first time in months, we were amazed to learn that 6 weeks after being “the most bullish on crude he has ever been” (when crude was trading at $50), Gartman decided that “it is time to sell crude again” to which we said that “Andy Hall’s thank you note to Dennis is now in the mail.”

This post was published at Zero Hedge on 11/24/2015.

Stocks, Bonds, & Bullion Bid As Geopolitical Risk Soars Most In 62 years

Ok – where to start…
1) GDP met improved expectations thanks to a huge inventory build (which we know from sales since remains at cycle extremes)
2) Richmond Fed weak for 3rd month in a row (signalled last 2 recessions)
3) Consumer Confidence collapsed (worst in 14 months)
4) Americans have given up hope for more employment opportunities

This post was published at Zero Hedge on 11/24/2015.

And Now The Slime

Am I supposed to be surprised?
Trump Card, which would not have to disclose donors, wants $250,000 from the other GOP presidential campaigns to run anti-Trump TV, radio and web ads and to pitch opposition research to local stations in early-voting states.
Mair, who also used to work for the Scott Walker presidential campaign, wrote, ‘In the absence of our efforts, Trump is exceedingly unlikely to implode or be forced out of the race,’ according to a memo obtained by The Journal.
‘The stark reality is that unless something dramatic and unconventional is done, Trump will be the Republican nominee and Hillary Clinton will become president,’ Mair continued.
So now we have an “anonymous” Super PAC taking money in for the explicit purpose of attacking Trump — and it’s not Democrats funding it, it’s the other Republicans.

This post was published at Market-Ticker on Nov 24, 2015.