China’s War On Speculators (Closing The Gap) – A Million To Yuan

The Wall Street Journal has an excellent piece on China’s currency, the Yuan (or Renminbi).
China has declared war on offshore speculators betting against its currency. But it is merely attacking a symptom, not the root causes, of its currency woes.
Over the past two days, China’s central bank has intervened aggressively in the market for yuan traded offshore – mostly in Hong Kong – known by traders as CNH. Acting through state-owned banks, it has bought massive quantities of CNH, successfully closing the yawning gap that had opened up between the yuan’s value in Hong Kong and in mainland China.
This gap – the CNH last week was trading at a discount of more than 2% – was a source of embarrassment to the People’s Bank of China. It showed that international markets were spooked, and didn’t believe its assurances that there is ‘no basis’ for continued yuan depreciation.

This post was published at Wall Street Examiner by anthonybsandersgmu ‘ January 12, 2016.

Canadian Stocks in Bear Market, Loonie Swoons, Crude Crashes to $16, Consumer & Business Confidence Dives…

‘Investment and hiring intentions lowest since 2009′: Bank of Canada
Since Christmas Eve, the Toronto Stock Exchange index has dropped every single day, 10 trading days in a row, including so far today as I’m writing this, the longest losing streak since 2002. Now at 12,210, it’s down 21% from its 52-week high, set on April 17, and thus in bear market purgatory.
Beaten down energy producers, at about 20% of the index, have had a big impact. But the problems are broader. Among the standouts is the must-own, super-growth, TSX mega-cap Valeant, whose shares have plunged 65% from their 52-week high.
The Canadian dollar just dropped below US$0.70 for the first time since spring 2003, to US$0.6996. It now takes C$1.43 to buy a US dollar, up from about parity in 2011, 2012, and much of 2013. That year, Stephen Poloz became governor of the Bank of Canada. His solution was to demolish the currency. So he took it down 28% against the US dollar, with a big supporting hand from the collapsing prices of the commodities that Canada exports. Oil joined them in mid-2014.
The US benchmark WTI is trading just above $30 a barrel. Pundits at major investment banks have their eyes set on $20. Doom-and-gloomers see $10.
Canadian producers aren’t so lucky. Alberta’s heavy crude blend, Western Canada Select, plunged 30% so far this year, and on Monday hit US$16.51 a barrel, according to PSAC. ‘Lowest close on record,’ according to the Globe and Mail.

This post was published at Wolf Street by Wolf Richter ‘ January 12, 2016.

20th Largest Bank In The World: 2016 Will Be A ‘Cataclysmic Year’ And ‘Investors Should Be Afraid’

The Royal Bank of Scotland is telling clients that 2016 is going to be a ‘cataclysmic year’ and that they should ‘sell everything’. This sounds like something that you might hear from The Economic Collapse Blog, but up until just recently you would have never expected to get this kind of message from one of the twenty largest banks on the entire planet. Unfortunately, this is just another indication that a major global financial crisis has begun and that we are now entering a bear market. The collective market value of companies listed on the S&P 500 has dropped by about a trillion dollars since the start of 2016, and panic is spreading like wildfire all over the globe. And of course when the Royal Bank of Scotland comes out and openly says that ‘investors should be afraid’ that certainly is not going to help matters.
It amazes me that the Royal Bank of Scotland is essentially saying the exact same thing that I have been saying for months. Just like I have been telling my readers, RBS has observed that global markets ‘are flashing the same stress alerts as they did before the Lehman crisis in 2008’…
RBS has advised clients to brace for a ‘cataclysmic year’ anda global deflationary crisis, warning that the major stock markets could fall by a fifth and oil may reach US$16 a barrel.
The bank’s credit team said markets are flashing the same stress alerts as they did before the Lehman crisis in 2008.
So what should our response be to these warning signs?
According to RBS, the logical thing to do is to ‘sell everything’ excerpt for high quality bonds…

This post was published at The Economic Collapse Blog on January 12th, 2016.

Oil Plunges toward $30, Dallas Fed President Sucker-Punches any Leftover Oil Bulls

‘Even lower for even longer’
You’d expect at least some artificial optimism when the president of the Dallas Fed talks about oil. You’d expect some droplets of hope for that crucial industry in Texas. But when Dallas Fed President Robert Kaplan spoke on Monday, there was none, not for 2016, and most likely not for 2017 either, and maybe not even for 2018.
The wide-ranging speech included a blunt section on oil, the dismal future of the price of oil, the global and US causes for its continued collapse, and what it might mean for the Texas oil industry: ‘more bankruptcies, mergers and restructurings….’
The oil price plunge since mid-2014, with its vicious ups and downs, was bad enough. But since the OPEC meeting in December, he said, ‘the overall tone in the oil and gas sector has soured, as expectations have decidedly shifted to an ‘even lower for even longer’ price outlook.’
So how low is ‘even lower?’

This post was published at Wolf Street by Wolf Richter ‘ January 12, 2016.

The Entire Economy Is Collapsing Except For Unemployment – Episode 865a

The following video was published by X22Report on Jan 12, 2016
A record number of retirees are now working part time jobs. New retail numbers have been released and the spending habits of Americans is now showing the holiday season was terrible. Retail sales are now signalling a recession/depression. Baltic Dry Index hits a new low, ships are in port and ship building has come to a complete halt. Silver and gold have sold as much on the first day of 2016 as all of January 2015. The FED is crippling American and a new bill was introduced to audit the FED, the Senate just voted it down.

Why Gold Prices Could Rocket in 2016

The chaos of the first trading week of 2016 was unprecedented in modern history. There hasn’t been an opening week like that since 1928.
Panic is starting to creep in as all U. S. indexes hurtle towards a ‘classic’ 10% correction.
Millions of investors are looking for the exits and a reliable safe haven. And with Middle East tensions flaring and perpetual uncertainty over Chinese markets, millions more are sure to follow.
But… all that bad news on the markets is terrific news for gold – and everyone holding it.
As those reactions intensify, I think we’ll see gold hit these levels in 2016…
A Record-Breaking Week Boosted Gold’s Rise
Over these last five trading days, including the first three of 2016, the S&P 500 lost about a substantial 4%, while oil reversed about 8%. Gold and gold equities were among the few sectors to buck the overall trend and move higher.
On Jan. 4, before the sun even came up on the American East Coast, gold gradually rose from $1,065 an ounce to $1,071.
Then suddenly, near 8:30 a.m., it shot higher to $1,078. It seems to have been for a combination of reasons, but the main reasons look like dollar weakness combined with stocks and geopolitics.

This post was published at Wall Street Examiner by Peter Krauth ‘ January 12, 2016.

JAN 12/ANOTHER RAID ON GOLD AND SILVER/HIBOR RATES IN HONG KONG ON THE OFFSHORE YUAN RISES TO 66%/BOMB BLAST IN ISTANBUL/OIL BREAKS THE 30 DOLLAR BARRIER/BALTIC DRY INDEX FALLS AGAIN TO 401/

Gold: $1085.50 down $11.60 (comex closing time)
Silver $13.74 down 12 cents
In the access market 5:15 pm
Gold $1086.50
Silver: $13.79
At the gold comex today, we had a poor delivery day, registering 0 notices 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 200.28 tonnes for a loss of 103 tonnes over that period.
In silver, the open interest fell by 1526 contracts down to 166,440. In ounces, the OI is still represented by .832 billion oz or 118% 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 fell by a monstrous 16,413 contracts to 407,544 contracts as gold was down $1.30 in yesterday’s trading. (although down around 15 dollars from the access price)
We had no change in inventory at the GLD, / thus the inventory rests tonight at 651.68 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 changes to inventory/Inventory rests at 316.368 million oz.
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on January 12, 2016.

National Mortgage Foreclosure Rate Falls To 1.2% (Here Comes The Judge!)

ConreLogic’s National Foreclosure Report is out for November 2015 and it reveals that the national foreclosure rate fell to 1.2%, a dramatic improvement over where the US mortgage market stood in 2009-2010.
Of course, rising home prices have helped lower the national foreclosure rate as well as foreclosure filings. This is especially remarkable given that real median household income is lower today than in 2007

This post was published at Wall Street Examiner by anthonybsandersgmu ‘ January 12, 2016.

This Is The Biggest EBITDA Drop Outside Of A Recession Since 2000

To finance professionals, EBITDA is a proxy for corporate cash flow, while Adjusted EBITDA is a proxy for telling investors whatever they want to hear. Most of the time it involves a unjustifiably high cash flow number, one which has no basis in reality.
To be sure, we have railed against “adjusted” numbers, be they EBITDA, EPS or revenue (in the case of Tesla) for years, culminating past summer “The Non-GAAP Revulsion Arrives: Experts Throw Up All Over “Made Up, Phony, Smoke And Mirrors” Numbers“, at which point we got tired of repeating the same story over and over (with the occasional exception like yesterday’s Alcoa numbers which as we showed were a GAAP debacle, something perhaps reflected in the stock price today which has just dropped to a new post-crisis low).
That said, we were very surprised to find that overnight none other than Bank of America, through its chief HY Credit Strategist Michael Contopoulos, picked up this torch with a scathing report on the farcical nature of “adjusted” financials, in which the author warns that “from our seat, we see global and US economic growth that is slowing and corporate earnings growth that has diverged more and more from revenue growth. We are increasingly concerned with the number of companies (non-commodity) reporting earnings on an adjusted basis versus those that are stressing GAAP accounting, and find the divergence a consequence of less earnings power.”
Here are the facts:

This post was published at Zero Hedge on 01/12/2016.

Sexual Assaults Are Taking Place Throughout Germany

Reports are now starting to surface that sexual assaults on young German women by Arab refugees have been taking place throughout the country. Retaliation unfolded against foreign refugees following the sexual assaults in Cologne on New Year’s Eve.
Meanwhile, Angela Merkel stated publicly, ‘The euro and the free movement of movement across borders are directly related.’ The issue of open borders is a prerequisite for the survivability of the euro itself. ‘No one should pretend that you can have a common currency without that one has a reasonably simple crossing of frontiers,’ Merkel stated. The border will eventually collapse for she has championed the demise of the Eurozone by allowing millions of refugees to enter.
SOURCE

This post was published at Armstrong Economics on January 12, 2016.

Decoupling Ridiculousness; US Rail Traffic Is Outright Recessionary

Global shipping traffic is awful. Worse yet, US rail traffic is downright recessionary looking.
Recessionary Decline in Rail Traffic
Bloomberg reports Rail Traffic Is Saying Something Worrying About the U. S. Economy.
It’s not the jobs report or the latest housing data but railway cargo that has analysts at Bank of America concerned.
Railroad cargo in the U. S. dropped the most in six years in 2015, and things aren’t looking good for the new year.
“We believe rail data may be signaling a warning for the broader economy,” the recent note from Bank of America says. “Carloads have declined more than 5 percent in each of the past 11 weeks on a year-over-year basis. While one-off volume declines occur occasionally, they are generally followed by a recovery shortly thereafter. The current period of substantial and sustained weakness, including last week’s -10.1 percent decline, has not occurred since 2009.”
BofA analysts led by Ken Hoexter look at the past 30 years to see what this type of steep decline usually means for the U. S. economy. What they found wasn’t particularly encouraging: All such drops in rail carloads preceded, or were accompanied by, an economic slowdown (Note: They excluded 1996 due to an extremely harsh winter).

This post was published at Global Economic Analysis on January 12, 2016.

OPEC Threatens, Market Yawns

It seems that at least some OPEC members are starting to panic:
War of words breaks out among OPEC members (CNN Money) – Is the pain of low oil prices becoming unbearable for OPEC?After watching the price of crude oil collapse by more than 65% to a 12-year low, there are signs that OPEC may have had enough.
Nigeria’s top oil official and OPEC President Emmanuel Kachikwu said the cartel is considering an emergency meeting, perhaps as soon as next month. At issue is whether OPEC would agree to cut production, a move that could help stop the crude price freefall.
‘I expect to see one. … There’s a lot of energy currently around that,’ he told CNN.

This post was published at DollarCollapse on January 12, 2016.

WTI Crude Crashes Under $30 After EIA Cuts Demand, Increases Production Forecast

In yet another hit for the energy complex, EIA just cut their global oil demand forecast to 95.19 million barrels a day this year (down from 95.22 million in December’s outlook). The energy agency alsoincreased its forecast for global production to 95.93 million barrels a day (up from 95.79 million last month). This pressured WTI Crude back off a brief bounce and pushed it to a 20-handle at $29.97 for thefirst time since December 2003.
Despite a short-term bounce after Jeff Gundlach suggested today would be a short-term bottom in crude,
Jeffrey Gundlach, the widely followed investor who runs DoubleLine Capital and was prescient in his call for lower oil prices last year, said oil has hit a short-term bottom on Tuesday.
As oil prices per barrel flirt with the $30-mark, Gundlach told Reuters: “Fundamentals are lousy but the technicals call for a short term bottom today.”
we reverted back lower after this:

This post was published at Zero Hedge on 01/12/2016.

The Real Value of a Powerball Ticket

Alex Tabarrok has a fun post calculating the monetary value of a Powerball ticket. He estimates that, as of the most recent drawing, each $2 ticket carries an expected monetary value of roughly $2.73. Superficially then, it’s worthwhile to buy one. However, Tabarrok also points out this is only true for a simple expected value calculation; after accounting for taxes and the possibility of a shared prize, a ticket’s monetary value is actually substantially lower (around $.75), making it a poor investment.
So why do people buy them? Are consumers hapless rubes throwing away their hard-earned money in exchange for nothing? Not necessarily.
The reason is simple: there’s much more to valuation and choice than expected monetary value. In fact, I suspect almost no one buys a ticket with any such calculation in mind. Rather than a cold estimate of the probability of future returns, the Powerball actually illustrates the subjective theory of value.
There are many ways for people find value in the Powerball beyond its expected monetary payoffs. Tabarrok observes, for example, that people find pleasure in anticipating the drawing. Such excitement is actually a major attraction of games of chance, where players have no control over the outcome.
In fact, I doubt most people playing the Powerball seriously believe they’ll win. Instead, people treat a ticket as the price of daydreaming about what they’d do with an enormous pile of cash.

This post was published at Ludwig von Mises Institute on JANUARY 10, 2016.

Gold Daily and Silver Weekly Charts – Utopia for the Paper Gold Alchemists

“An acute shortage of readily marketable physical gold is developing that we believe will deepen in years to come. This possibility seems to be unrecognized by those who are short the gold market through paper contracts.
The relentless dumping of synthetic or paper gold contracts since 2011 by speculators in Western financial markets has caused the shortage. The steady selling has driven down the price of physical gold, hobbled the gold-mining industry, and drained the stores of gold held in the vaults of Western financial centers.
We believe that the shortage will worsen because (1) the precursors of production (exploration, discovery, reserve life) are very negative, (2) the mining industry has little financial credibility and seems unlikely to attract capital even with a big rise in gold prices, and (3) refining capacity limitations tend to create supply bottlenecks when physical demand spikes.”
John Hathaway, Utopia For the Paper Gold Alchemists
John Hathaway of Tocqueville Funds has a newsletter, which supplied the quote above, that is worth reading here.
There were no deliveries in precious metals at The Bucket Shop yesterday.
And there was little net movement in the warehouses either.

This post was published at Jesses Crossroads Cafe on 12 JANUARY 2016.

BILL GATES COULD END WORLD HUNGER, INSTEAD GIVES $36 BILLION TO CORPORATE AMERICA

Editor’s Note: What exactly do people expect from one of the world’s richest eugenicists?
Via The Pontiac Tribune:
37% of Bill Gates’ net worth would end world hunger. Instead, he invests billions of dollars into corporations blamed for many of the same health issues the Gates Foundation seeks to cure. The Los Angeles Times revealed back in 2007 that the Bill and Melinda Gates Foundation has made millions of dollars each year from companies blamed for many of the same social and health problems the Foundation seeks to address.
The LA Times investigation revealed the Gates Foundation’s humanitarian concerns are not reflected in how it invests its money. In the Niger Delta – where the Foundation funds programs to fight polio and measles – the Foundation has also invested more than $400 million dollars in companies including Royal Dutch Shell, Exxon Mobil Corp, and Chevron. These oil firms have been responsible for much of the pollution many blame for respiratory problems and other afflictions among the local population.

This post was published at The Daily Sheeple on JANUARY 12, 2016.

State Of The U.S. Housing Market 2016

Today I spoke with David Lyyken about the state of the housing market in America.
Some questions that we discussed were:
1. Where will mortgage rates go?
2. Will home prices in America rise again?
3. How will the Fed impact long term rates?
4. What should one make of the oil crash in America and how will it impact oil states?
5. Where have all the first time buyers gone?
6. What is really causing the shortage of homes? Hint: It is not an inventory problem.
The housing pundits have failed this country by lying that low inventory has kept national sales from growing .

This post was published at Wall Street Examiner on January 11, 2016.

Open Letter to the Banks

Jamie Dimon, JP Morgan Chase
Brian T. Moynihan, Bank of America
Michael Corbat, Citigroup
Gentlemen:
On Friday, I attended a digital money summit at the Consumer Electronics Show. I am writing to you to warn you about the disruption that is about to occur in banking. There are many startups (and larger companies too) that are gunning for you. Perhaps you have watched what Uber has done to the taxi business? Well, these guys are planning the same thing for the banking business.
Banks used to allow even a child with a $10 deposit to spread his risk across a large portfolio of loans. At the same time, banks made it possible for a corporate borrower to raise $10,000,000 from a large group of depositors. In short, the banking business is investment aggregation and risk management.
That business cannot be disrupted. The bigger it gets, the more difficult to displace. It’s like eBay, all the depositors come to the bank because that’s where they can earn interest. All the borrowers come, because that’s where they can get the money they need. The bigger the bank gets, at least in a free market under the gold standard, the safer it is for depositors.

This post was published at GoldSeek on 12 January 2016.