Waiting For The Other Made-In-China Shoe To Drop

Macroliquidity continues to rise at a slow pace, mostly on the strength of the Fed’s regular mid month settlements of MBS purchases. The trend is still slightly positive, but slow money growth is effectively tight money in a system excessively burdened with free interest carry trades. Under the circumstances, concurrent rallies in stocks and bonds are not sustainable. It’s either one or the other, and it remains to be seen if even that is sustainable. The answer, for now is yes, but the rotation from one to the other is clear. If stocks rally, bonds are weak and vice versa.
The media and The Street like to attach meaning to this rotation, claiming that investors see a strengthening economy if stocks rally and bonds sell off, or that they see a weaker economy if the opposite is true.

This post was published at Wall Street Examiner by Lee Adler ‘ March 7, 2016.

The Collapse Of Italy’s Banks Threatens To Plunge The European Financial System Into Chaos

The Italian banking system is a ‘leaning tower’ that truly could completely collapse at literally any moment. And as Italy’s banks begin to go down like dominoes, it is going to set off financial panic all over Europe unlike anything we have ever seen before. I wrote about the troubles in Italy back in January, but since that time the crisis has escalated. At this point, Italian banking stocks have declined a whopping 28 percent since the beginning of 2016, and when you look at some of the biggest Italian banks the numbers become even more frightening. On Monday, shares of Monte dei Paschi were down 4.7 percent, and they have now plummeted 56 percent since the start of the year. Shares of Carige were down 8 percent, and they have now plunged a total of 58 percent since the start of the year. This is what a financial crisis looks like, and just like we are seeing in South America, the problems in Italy appear to be significantly accelerating.

So what makes Italy so important?
Well, we all saw how difficult it was for the rest of Europe to come up with a plan to rescue Greece. But Greece is relatively small – they only have the 44th largest economy in the world.
The Italian economy is far larger. Italy has the 8th largest economy in the world, and their government debt to GDP ratio is currently sitting at about 132 percent.
There is no way that Europe has the resources or the ability to handle a full meltdown of the Italian financial system. Unfortunately, that is precisely what is happening. Italian banks are absolutely drowning in non-performing loans, and as Jeffrey Moore has noted, this potentially represents ‘the greatest threat to the world’s already burdened financial system’…

This post was published at The Economic Collapse Blog on March 7th, 2016.

Average Wall Street Bonus Drops 9%; Lowest Since 2012

When it comes to concerns about their professional future, few things faze Wall Streeters: mass layoffs – no big deal, someone else will hire; empty steakhouses – that’s ok, Hustler Club is packed (and expense accounts are accepted just fine). But lower compensation and all hell breaks loose. Which is why quite a few hearts must have been pounding today when New York state Comptroller Thomas DiNapoli released hisannual Wall Street compensation report in which we revealed that average Wall Street bonuses for 2015 will drop by a quite substantial 9% to “only” $146,200, the second consecutive year of declines, and the lowest since 2012 when average bonuses were $142,860.
According to DiNapoli, “Wall Street bonuses and profits fell in 2015, reflecting a challenging year in the financial markets. While the cost of legal settlements appears to be easing, ongoing weaknesses in the global economy and market volatility may dampen profits in 2016.” This is bad news for New York because “both the state and city budgets depend heavily on the securities industry and lower profits could mean fewer industry jobs and less tax revenue.
The total bonus pool for securities industry employees declined by 6 percent to $25 billion in 2015 during the traditional December-March bonus season. The Comptroller’s estimate includes cash bonuses for the current year and bonuses deferred from prior years that have been cashed in.

This post was published at Zero Hedge on 03/07/2016.

Turning The Corner Or Just More Central Bank Stimulus Ahead? Eurozone 2 Yr Sov Yields FALLING

Has the global economy turned the corner? Or is everyone expecting MORE stimulus from Central Banks?
(Bloomberg) U. S. stocks erased a decline, while commodities rallied on speculation China stimulus will boost demand for resources from iron ore to copper. Brent crude topped $40 a barrel for the first time since December.
We do see increases in the Baltic Dry (Shipping) Index, WTI Crude Oil Prices, and a BIG jump in iron ore delivered to China. Yet the 10Y-2Y US Treasury Yield remains hovering around 100

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ March 7, 2016.

Iran Billionaire Who Pioneered “PetroGold” Sentenced To Death

Two months back, in a series of lengthy exposes (see here and here), we profiled the ins and outs of the ‘petrogold’ trade that allowed Iran to skirt international sanctions that froze Tehran out of the banking system by way of conduits and shady go-betweens in Turkey and Dubai.
The tale is long and winding and should probably be adapted for the silver screen, but really, the mechanics were pretty simple. Couriers simply carried briefcases full of bullion through Istanbul’s Ataturk Airport and flew to Dubai where the gold was then carted off to Iran.
The Dubai intermediary became necessary because gold exports to then-pariah state Iran were becoming too suspicious. Here’s a bit from Reuters ca. 2012 that details the switch: ‘Turkey exported a total $2.3 billion worth of gold in August, of which $2.1 billion was gold bullion. Just over $1.9 billion, about 36 metric tons, was sent to the UAE, latest available data from Turkey’s Statistics Office shows. In July Turkey exported only $7 million of gold to the UAE. At the same time Turkey’s direct gold exports to Iran, which had been fluctuating between $1.2 billion and about $1.8 billion each month since April, slumped to just $180 million in August.’

This post was published at Zero Hedge on 03/07/2016.

Oil Fundamentals Deteriorate, Prices Should Fall Hard

Oil prices should fall, possibly hard, in coming weeks. That is because fundamentals do not support the present price.
Prices should fall to around $30 once the empty nature of an OPEC-plus-Russia production freeze is understood. A return to the grim reality of over-supply and the weakness of the world economy could push prices well into the $20s.
A Production Freeze Won’t Reduce the Supply Surplus
An OPEC-plus-Russia production cut would be a great step toward re-establishing oil-market balance. I believe that will happen later in 2016 but is not on the table today.
In late February, Saudi oil minister Ali Al-Naimi stated categorically, ‘There is no sense in wasting our time in seeking production cuts. That will not happen.’
Instead, Russia and Saudi Arabia have apparently agreed to a production freeze. This is meaningless theater but it helped lift oil prices 37 percent from just more than $26 in mid-February to almost $36 per barrel last week. That is a lot of added revenue for Saudi Arabia and Russia but it will do nothing to balance the over-supplied world oil market.

This post was published at Wolf Street on March 7, 2016.

This Is What JPM Meant When It Said The “Market Is Trapped”

Two weeks ago, JPM’s Marko Kolanovic put out a very interesting observation, according to which further gains in the S&P500 are capped to the upside due to one very popular reason: the US Dollar. What he said, in a nutshell, is that while a weaker dollar is beneficial for energy (clearly) and multinational stocks, it is a stronger dollar that has been driving the broader S&P 500 higher (which correlates ~30% with the USD) due to the dominant influence of Momentum and Low Volatility stocks in the index.
In other words, as the dollar weakens, it supports the most beaten down, energy, sector (which has now undergoing a record short squeeze), but it ultimately will pressure the broader market lower through Tech and Momo. As Kolanovic called it: “a market trapped by the USD.”
This is what Kolanovic said exactly:

This post was published at Zero Hedge on 03/07/2016.

Silver Prices Today Showing This Bullish Pattern Shift

Thanks to very bullish action in gold, silver prices have been able to gather the same kind of momentum over the past week.
While gold surged early on Friday, March 4, to $1,280, a nearly $55 gain in the past five trading days, the silver price has also mustered a similar 5% gain at its peak of $15.80 the same day.
But over the past three months, gold priceshave outpaced silver prices by an astonishing 12%, leaving some to wonder about silver’s viability in this renewed precious metals bull.
In order to address that very question, we’ll look at the relationship between these two precious metals to determine what just might be in store for theprice of silver over the coming months and even years.
Here’s what I see ahead for silver…
What’s Driving Silver Prices Now
First, let’s take a look at what the silver price has done in the past week.
Silver started out on Monday, Feb. 29, at $14.75 and gradually worked its way higher through the day to end at $14.90.

This post was published at Wall Street Examiner by Peter Krauth ‘ March 7, 2016.

Pssttt…. Trump Was Right (Again)

There’s a nasty little statistic that Trump predicted, the pundits said were wrong, yet has been true thus far.
He wins in places with high unemployment and minority (black, in particular) representation.
Think about that for a minute in the context of the General election. These are people who almost-always vote Democrat, but in the contests that are open-primary (or nearly-so, where you can switch on election day) and have these two characteristics…… Trump has won all of them.

This post was published at Market-Ticker on 2016-03-07.

The Business Media Is Sounding More Socialist Every Day

Here in the U. S. election season is in full swing, and it’s near impossible to find relief from the minute by minute relentless political ads, along with the ever-present media commentary. However, I never contemplated when I previously prayed, then begged for relief from the incessant pharmaceutical ads that bombarded me daily that my calls would be answered in the form of replacing them with ads of the political sort. Now I find myself again pleading or begging to return those intestinal discomfort or dysfunction et al ads. It truly gives credence to that old saying: ‘Be careful what you wish for!’ Which is fitting to the topic of not only today’s politics, but business in general.
One of the newest (although it’s as old as time itself) idea dynamics to openly enter the U. S. political/business debate in my lifetime has undoubtedly been: Socialism.
What has baffled me is not only the rapid acceptance of the idea, rather, the call for it to be implemented here in the U. S. on a grand scale. We currently not only have politicians publicly advocating it, we also have many ‘business leaders’ demanding varying forms of its implementation throughout sectors of the economy.
Whether or not one agrees with what is being called for, as well as, what has already been implemented, is up to you. Understanding the how, why, and where it leads based on prudent contemplation and where you’ll fit in as an entrepreneur, business leader, or solo-practitioner is quite another. For no matter what the political theme-of-the-day is currently being touted (i.e., Get the 1%! et al.) The people directly in those cross-hairs of ‘other people’s money’ are going to be aimed squarely on the business communities balance sheets, as well as profits. Regardless if they have any. Remember that.

This post was published at Zero Hedge on 03/07/2016.

MARCH 7 C/NO CHANGE IN GLD BUT SLV ADDS 2.856 MILLION OZ/BIG STORY OF THE DAY: BLACKROCK’S IAU GOLD TRUST ISSUED 25 MILLION OZ WITH NO REGULATORY BACKING/NO DOUBT THEY WILL ALSO HAVE PROBLEMS OBT…

Gold: $1,263.20 down $6.70 (comex closing time)
Silver 15.62 down 6 cents
In the access market 5:15 pm
Gold $1267.40
silver: 15.65
At the gold comex today, we had a fair delivery day, registering 54 notices for 5400 ounces and for silver we had 5 notices for 25,000 oz for the active March delivery month.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 212.04 tonnes for a loss of 91 tonnes over that period.
In silver, the open interest rose by 4854 contracts up to 169,655. In ounces, the OI is still represented by .848 billion oz or 121% of annual global silver production (ex Russia ex China). Generally as we go into an active delivery month the liquidation is much bigger.
In silver we had 102 notices served upon for 510,000 oz.
In gold, the total comex gold OI rose by a huge 8727 contracts to 491,655 contracts as the price of gold was up $12.50 with Friday’s trading.(at comex closing)
We had a tiny change in gold inventory at the GLD, a withdrawal of .21 tonnes and gold / thus the inventory rests tonight at 793.12 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 again had a major change in inventory/this time another huge deposit of 2.856 million oz and thus the Inventory rests at 322.632 million oz
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on March 7, 2016.

Gold Daily and Silver Weekly Charts – Dj Vu

I imagine that this very clumsy market manipulation will continue until market participants regain their confidence in the ever-blundering central bankers, crooked financiers, and time-serving politicians.
Or until they completely run the economy off the rails.
Apparently the sophisticates at the ECB are expected to deepen their negative interest rates and war on cash and savings as a cure for the looming Depression in Europe when they meet later this week.

This post was published at Jesses Crossroads Cafe on 07 MARCH 2016.

Why European Leaders Hate Trump

It’s really quite simple.
Trump has put on the table a promise to stop them from stealing from the United States.
Yes, stealing.
First, in national defense. Europe steals something around $100 billion in national defense spending that they ought to be spending every year, but we end up covering.
Trump has made clear he intends to put a stop to that crap whether it’s Mexico by stopping their citizens, including their drug dealers, from invading the United States or other nations that enjoy our personnel and weaponry protecting their land and people instead of them expending their own money and personnel.
But second, and far more importantly, is found in medical care and drugs which Europe uses to make their “socialized” schemes workable.

This post was published at Market-Ticker on 2016-03-07.

“In The Last Seven Years, China Accounted For 40% Of All Global Debt Creation”

Back in November 2013, when few had an idea just how massive China’s debt bubble truly was, we explained “How In Five Short Years, China Humiliated The World’s Central Banks” and said the following:
In order to offset the lack of loan creation by commercial banks, the “Big 4” central banks – Fed, ECB, BOJ and BOE – have had no choice but the open the liquidity spigots to the max. This has resulted in a total developed world “Big 4” central bank balance of just under $10 trillion, of which the bulk of asset additions has taken place since the Lehman collapse.
How does this compare to what China has done? As can be seen on the chart below, in just the past 5 years alone, Chinese bank assets (and by implication liabilities) have grown by an astounding $15 trillion, bringing the total to over $24 trillion, as we showed yesterday. In other words, China has expanded its financial balance sheet by 50% more than the assets of all global central banks combined!
And that is how – in a global centrally-planned regime which is where everyone now is, DM or EM – your flood your economy with liquidity. Perhaps the Fed, ECB or BOJ should hire some PBOC consultants to show them how it’s really done.
To give a sense of perspective of the numbers involved, we showed the following chart:

This post was published at Zero Hedge on 03/07/2016.

Will Italian Banks Spark Another Financial Crisis?

In the 14th century, the Medici family of Florence began its rise to prominence, investing profits from a thriving textile trade to fund what would become the largest banking institution in Europe. The success of the legendary banking family helped to usher in the Italian Renaissance and thus change the world. Now, Italian banks seem poised to alter the world yet again.
Shares of Italy’s largest financial institutions have plummeted in the opening months of 2016 as piles of bad debt on their balance sheets become too high to ignore. Amid all of the risksfacing EU members in 2016, the risk of contagion from Italy’s troubled banks poses the greatest threat to the world’s already burdened financial system.
At the core of the issue is the concerning level of Non-Performing Loans (NPL’s) on banks’ books, with estimates ranging from 17% to 21% of total lending. This amounts to approximately 200 billion of NPL’s, or 12% of Italy’s GDP. Moreover, in some cases, bad loans make up an alarming 30% of individual banks’ balance sheets.

This post was published at Zero Hedge on 03/07/2016.

Myth: Half of Americans Don’t Pay Federal Taxes

It’s getting near tax time, again, and the conservative press is busy repeating Mitt Romney’s favorite hobby-horse, namely, that nearly half of Americans don’t pay enough in taxes.
This drive for driving up the nation’s tax burden usually originates with the contention that “only” 55 percent of Americans pay income taxes, and then proceeds from that to the insistence that more people pay taxes. Just last week, Investor’s Business Daily complained about the relative dearth of taxpayers, contending that “All of us need to share in the misery of filing and paying income taxes.”
How things have changed. Once upon a time, the income tax was sold as a tax primarily for rich people, and – the people were told – ordinary folks would never pay more than one or two percent. The assumption was that any expansion of the income tax would be a betrayal.
That promise was abandoned almost immediately since, by the 1920s, the middle classes were already paying marginal rates of ten percent or more, in many cases. (Although actual tax burdens were often far less than that.)
Now we’re being told that the right thing to do is demand more people pay the income tax.
Uncle Sam sure won that battle of ideas.

This post was published at Ludwig von Mises Institute on MARCH 7, 2016.