Day: March 12, 2016

The Opportunity in the Eurozone’s 650 Billion Leak

Jon

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
A funny thing happened while central banks were racing to make money cheap as free…
U. S. bank loan and deposit growth continues to go bonkers at annual growth rates of more than 8% for loans and around 6% for deposits.
Across the Atlantic, where negative-interest-rate policy (NIRP) is an ugly reality, loan and deposit growth in Europe is near zero – and that’s in spiteof the fact that Mario Draghi and his merry band of central bankers have thrown everything but the kitchen sink at their system to try to get it to grow.
But Draghi & Co. don’t seem to realize their actions are killing Europe’s markets while propping ours up.
It’s going to end badly for the Europeans, but this insanity tends to create tremendous opportunities in American markets.
‘NIRPitrage’ Is Killing Europe… Draghi is so barking mad right now that he’s forgotten the first lesson they teach you in banker school…

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

Jeffrey Snider: US$ STRENGTH IS A MANIFESTATION OF A US$ SHORTAGE

Jon

FRA Co-Founder Gordon T. Long and Jeffrey Snider, Head of Global Investment Research at Alhambra Investment Partners discuss a broad array of Global Macro subjects in this 48 minute video discussion with supporting slides.
As Head of Global Investment Research for Alhambra Investment Partners, Jeff spearheads the investment research efforts while providing close contact to Alhambra’s client base. Jeff joined Atlantic Capital Management, Inc., in Buffalo, NY, as an intern while completing studies at Canisius College. After graduating in 1996 with a Bachelor’s degree in Finance, Jeff took over the operations of that firm while adding to the portfolio management and stock research process.
In 2000, Jeff moved to West Palm Beach to join Tom Nolan with Atlantic Capital Management of Florida, Inc. During the early part of the 2000’s he began to develop the research capability that ACM is known for. As part of the portfolio management team, Jeff was an integral part in growing ACM and building the comprehensive research/management services, and then turning that investment research into outstanding investment performance. As part of that research effort, Jeff authored and published numerous in-depth investment reports that ran contrary to established opinion. In the nearly year and a half run-up to the panic in 2008, Jeff analyzed and reported on the deteriorating state of the economy and markets. In early 2009, while conventional wisdom focused on near-perpetual gloom, his next series of reports provided insight into the formative ending process of the economic contraction and a comprehensive review of factors that were leading to the market’s resurrection. In 2012, after the merger between ACM and Alhambra Investment Partners, Jeff came on board Alhambra as Head of Global Investment Research.

This post was published at GoldSeek on Sunday, 13 March 2016.

The Status Quo Plan – Convince The American Public To Accept Serfdom

Jon

Submitted by Mike Krieger via Liberty Blitzkrieg blog,
Earlier today we came across a fantastic article published at Naked Capitalism by a writer known as Gaius Publius.
Yves Smith introduces the piece with the following poignant passage:
Let us not forget that the ‘things are going to get worse for you’ story also conveniently diverts attention from the degree of rent extraction and looting that is taking place. US corporate profit share of GDP has been at record levels, depending on how you compute if, of 10% of 12% of GDP, when no less than Warren Buffett deemed a profit share of over 6% of GDP as unsustainably high as of the early 2000s. That higher profit share is the direct result of workers getting a far lower share of GDP growth than in any post-war expansion. So the increased hardships that ordinary people face is not inevitable, but is to a significant degree due to the ruling classes taking vastly more than their historical share out of greed and short-sightedness.

This post was published at Zero Hedge on 03/12/2016.

The Dow For the week of 03/14/2016

Jon

While the markets have cheered the public admission that the central banks have completely failed in their quantitative easing and they will now buy more for longer, the technical profile is not as buoyant as it might appear on the surface. We have at least begun to enter the resistance area, but we have still NOT ELECTED any Weekly Bullish Reversal which stands at 17750.50. We have also not broken above the standard downtrend line on the weekly level. We have a turning point due next week. The general view in the USA is that the Fed should now raise rates since the market has recovered. If the Fed does not separate from the ECB and begins to focus on the US domestic policy objectives, then the future will be far worse.

This post was published at Armstrong Economics on Mar 11, 2016.

Deutsche Bank: Negative Rates Confirm The Failure Of Globalization

Jon

Negative interest rates may or may not be a thing of the past (many thought that the ECB had learned its lesson, and then Vitor Constancio wrote a blog post showing that the ECB hasn’t learned a damn thing), but the confusion about their significance remains. Here is Deutsche Bank’s Dominic Konstam explaining how, among many other things including why Europe will need to “tax” cash before this final Keynesian experiment is finally over, negative rates are merely the logical failure of globalization.
Misconceptions about negative rates
Understanding how negative rates may or may not help economic growth is much more complex than most central bankers and investors probably appreciate. Ultimately the confusion resides around differences in view on the theory of money. In a classical world, money supply multiplied by a constant velocity of circulation equates to nominal growth. In a Keynesian world, velocity is not necessarily constant – specifically for Keynes, there is a money demand function (liquidity preference) and therefore a theory of interest that allows for a liquidity trap whereby increasing money supply does not lead to higher nominal growth as the increase in money is hoarded. The interest rate (or inverse of the price of bonds) becomes sticky because at low rates, for infinitesimal expectations of any further rise in bond prices and a further fall in interest rates, demand for money tends to infinity. In Gesell’s world money supply itself becomes inversely correlated with velocity of circulation due to money characteristics being superior to goods (or commodities). There are costs to storage that money does not have and so interest on money capital sets a bar to interest on real capital that produces goods. This is similar to Keynes’ concept of the marginal efficiency of capital schedule being separate from the interest rate. For Gesell the product of money and velocity is effective demand (nominal growth) but because of money capital’s superiority to real capital, if money supply expands it comes at the expense of velocity. The new money supply is hoarded because as interest rates fall, expected returns on capital also fall through oversupply – for economic agents goods remain unattractive to money. The demand for money thus rises as velocity slows. This is simply a deflation spiral, consumers delaying purchases of goods, hoarding money, expecting further falls in goods prices before they are willing to part with their money.

This post was published at Zero Hedge on 03/12/2016.

Gold Commitments of Traders : Worrisome

Jon

To sum up my view of this week’s COT report in one word…. WORRISOME.
I use that word because of what we saw happen to the safe haven trades today on account of that monster rally in the US equity markets.
Gold was under pressure for the entirety of the session today but seemed to especially weaken into the late afternoon hours as the US equity markets kept pushing higher and went out near the highs of the day. That more than likely will translate into additional downside followthrough in Asian trade Sunday evening. Where it goes after that will depend on whether or not dip buyers show up.
Let me show you why I am concerned.

First of all, on this TWO HOUR CHART, you can see that there was a huge spike in volume last Friday during which gold ran to $1280. Recall that was the day that the payrolls data was released. Yesterday, the day of the announcement by the ECB of additional stimulus measures to be implemented, gold spiked higher but then faded. Notice that the volume was lower. That is a warning that bulls should not ignore.

This post was published at Trader Dan on March 11, 2016.

Doug Noland’s Credit Bubble Bulletin- Thesis Update

Jon

This is a syndicated repost courtesy of Credit Bubble Bulletin. To view original, click here. Reposted with permission.
With global risk markets staging a significant rally, it’s an appropriate time to update my bursting global Bubble thesis. Three weeks ago I titled a CBB ‘Crisis Management.’ My view was that mounting global market instability had reached the point where concerted policy measures would be employed in an effort to bolster faltering global Bubbles. I do not expect stimulus measures to succeed in resuscitating the global Bubble that inflated out of the 2009 crisis response. At the same time, policymakers obviously still retain some power to incite rallies in a grossly speculative marketplace.
Let’s try to put things into context. We’ve witnessed history’s greatest financial Bubble. The Bubble has been fueled by a confluence of extraordinary financial innovation (i.e. securitized finance, leveraged speculation, derivatives, state-directed finance, etc.), unmatched debt growth, unprecedented central bank Credit expansion and market manipulation and the global adoption of all of the above. Especially since 2009, global central bankers have adopted extreme monetization and rate measures specifically to target rapid Credit expansion and securities market inflation.

This post was published at Wall Street Examiner by Doug Noland ‘ March 12, 2016.

“This Will End Badly” Grant Williams Warns “The Probability Of War Is Increasing”

Jon

“The problem that many people have is that they think that 2008 was ‘the event’ and that it cleared the brush and we’re back to a sustainable path,“ but, as TTMYGH’s Grant Williams explains toMacroVoices’ Erik Townsend, “nothing could be further from the truth.”
What is more troublesome is that, as Williams exclaims, “the glue that binds all of this together, unfortunately for everybody, is faith in central bankers,” and ‘Laws of Nature’ dictate that “this will end very badly, but end it will.”
And most worryingly, for everyone, “wars are, unfortunately, a very convenient solution to a lot of the problems that governments face.”
Erik and Grant’s conversation is must-view as they discuss:
The likelihood of a US recession The unsustainability of global credit growth

This post was published at Zero Hedge on 03/12/2016.

Has Crude Oil Bottomed? Ask China! (Japan Accounts For 60% Global Negative Yields)

Jon

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
Calling a bottom to a commodity in a highly volatile, Central Bank manipulated world is difficult. But that didn’t prevent the International Energy Agency (IEA) from calling a bottom in the crude oil bottom.
Of course, it MAY be the bottom for crude oil. But let’s look at one of the world’s largest economies to see if the bottom is really here.
China’s industrial production YoY keeps falling from 2010 highs. Please note that the last couple of times the Japan’s IP YoY has slumped this low the US entered a recession or was mired in a recession.

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ March 12, 2016.

Seniors lead the charge in household formation: Household formation in 2015 was at the slowest rate since 2008.

Jon

You want to know why homebuilders are still reluctant to build even though real estate prices are up? The first reason is the demand in housing is coming for rental properties and building in multi-unit housing is up. Good assessment on that one builders. The other reason is that high priced metro areas are seeing Millennials move in with mom and dad. What is interesting is that the group leading the charge in new household formation is seniors. Yes, older folks are driving the creation of new households but this may not be what will sustain a long-term healthy market. After all, it is unlikely that a 75-year old is going to be buying a crap shack with a 30-year mortgage. What was interesting is that in 2015 net household formation came in at the lowest rate in a generation only behind the epic disaster year of 2008. So what does this mean for housing overall?
Household formation collapses
We keep hearing that Millennials are entering their procreation years and that somehow this is going to unleash an epic wave of buying. A wave so big long board surfers will have a smile from ear to ear. Yet it never happened. Instead a large portion of Millennials moved back home mired by student debtand incomes that simply do not support manic levels in housing prices. The slowdown in housing was real and household formation highlights this.

This post was published at Doctor Housing Bubble on 12 Mar, 2016.

North America’s Most Expensive Housing Markets

Jon

Courtesy of Point2Homes
When the average home price in San Francisco went over the $1 million threshold in the first half of 2015, it was pretty obvious for most people that the Bay city secured the top position as the most expensive housing market in the U. S. This is exactly what happened. According to records released at the end of last year, San Francisco is the superstar housing market not only in the U. S., but for the entire North America as well.
But what may really surprise some people when looking at the top 15 list of the most expensive housing markets in North America is seeing Vancouver – the third most expensive city in the world – down in the 6th position, behind a less expected entry … Brooklyn, N. Y.! The reason for this is the same one which pushed Toronto out of the top 10 list and to #11: a weaker Canadian dollar. And guess who comes right after Toronto? Well, it’s Queens, N. Y.

This post was published at Zero Hedge on 03/12/2016.

More Economic Roots of Political Anger

Jon

This is a syndicated repost courtesy of RealityChek. To view original, click here. Reposted with permission.
Some more data has just come out from the government on how much Americans have been making at the workplace lately, and if you work with them with a little intelligence, you can see what a lousy economic recovery the middle and working classes have experienced. P. S. Do you think that at least some in their ranks might be supporting Republican presidential front-runner Donald Trump?
The statistics come from the Labor Department’s series on total employee compensation. They’re not adjusted for inflation, but they include everything from wages and salaries to benefits to the monetary cost of paid leave, vacations, and the like.
For the broadest groups examined – like ‘all private sector workers’ – the numbers provide some support for widespread claims that low recent jobless rates are finally tightening the labor market enough to drive up pay strongly. For example, although overall compensation between the fourth quarters of 2014 and 2015 rose by a mediocre 1.21 percent, the two previous comparable annual increases of 2.63 percent and 5.70 percent respectively. These average out to advances that are quite respectable by historical standards. (The data, though, only go back to 2004.) They certainly represent a faster advance than that for the three years before – 1.20 percent, 2.95 percent, and 1.05 percent respectively.

This post was published at Wall Street Examiner by Alan Tonelson ‘ March 12, 2016.

Why Oil Producers Don’t Believe The Oil Rally: Credit Suisse Explains

Jon

For the past month, the price of oil has soared by a 50% on no fundamental catalyst; in fact, the “fundamental” situation has gotten progressively worse with the record oil inventory glut increasing by the day even as US crude oil production posted a modest rebound in the past week after two months of declines, while the much touted OPEC/non-OPEC oil production freeze has yet to be discussed, let alone implemented.
With or without a valid catalyst, however, the short squeeze price action has drastically changed not only investor psychology, but that of the IEA as well, which on Friday announced that oil may have bottomed (if the agency’s predictive track record is any indication, oil is about to crash).
But while traders, algos and CNBC guest “commodity experts” may be certain that oil will never drop to $27 again, someone else is not at all convinced that oil prices will not drop again: oil producers themselves.
We first noted this earlier this week, since January, the spread between Brent for delivery on the 2020 end of the curve and crude for prompt supply has dropped by nearly $8 to around $10.71 a barrel. “Brent’s flattening contango since January comes as many producers want to cash in immediately on recent price rises. They’ve been heavily selling 2017/2018 and beyond, and it shows that they don’t quite trust the higher spot prices yet,” said one crude futures trader.

This post was published at Zero Hedge on 03/12/2016.

Greenspan Explains The Fed’s Miserable Track Record: “We Didn’t Forecast Better Because We Can’t”

Jon

On March 11, the National Archives announced its first opening of Financial Crisis Inquiry Commission (FCIC) records, along with a detailed 1,400-page online finding aid (yes, just the index is 1,400 pages). The records which are available via DropBox, seek to identify the causes of the 2008 financial crisis.
Among the numerous materials are interviews with key players in Washington and on Wall Street, from Warren Buffett to Alan Greenspan. The documents also include minutes of commission meetings and internal deliberations concerning the causes of the financial crisis.

This post was published at Zero Hedge on 03/12/2016.

Caught On Tape: Secret Service Agents Storm Stage To Protect Donald Trump

Jon

Shortly after beginning his speech at a rally in Dayton, Ohio, Donald Trump was rapidly surrounded by Secret Service agents after an audience member grew increasingly raucous to the point of Trump appearing to duck at hearing a noise. Trump did not leave the stage and carried on with his speech, adding “I was ready for him, but it’s much easier if the cops do it, don’t we agree?” This comes after last night’s violent protests (which Soros-funded MoveOn.org have taken credit for) and this morning’s misinformation about the cancellation of the Ohio rally.


This post was published at Zero Hedge on 03/12/2016.

WHAT NIXON WROUGHT

Jon

I’m sure glad Nixon only ‘temporarily’ suspended the convertibility of the dollar into gold. When a politician or banker uses the word temporarily to describe some un-Constitutional act they are taking to protect you, be sure it’s permanent and you are getting screwed on behalf of the establishment. Nixon closing the gold window in 1971 allowed him to continue the welfare/warfare state.
Bernanke temporarily reduced interest rates to 0% eight years ago to avert some sort of financial disaster (Wall Street banks reaping the consequences of their actions and going bankrupt). Rates are still essentially 0%, supposedly 7 years into an economic recovery. Obama and his minions temporarily were going to run huge budget deficits to jump start our economy with Keynesian magic. It’s seven years later and the budget deficit will exceed $600 billion this year and on path to exceed $1 trillion in the next few years. Temporarily is code for bend over citizens.
The de-linking of the dollar to gold allowed politicians to promise free shit to their constituents in order to buy votes, with no immediate consequences for their re-election campaigns. Politicians gone wild led to the national debt going from $370 billion in 1971 to $19.1 trillion today. It allowed these treasonous bastards to promise $200 trillion of goodies to the people, which they won’t honor.

This post was published at The Burning Platform on 12th March 2016.

Welcome To The Currency War, Part 22: China Devaluation Watch

Jon

Not so long ago, a big Chinese currency devaluation seemed both inevitable and imminent. The story went like this: China had borrowed tens of trillions of dollars in response to the Great Recession and squandered much of it on uncompetitive factories and ghost cities. The companies and governments that own these worthless assets were about to go broke en masse.
China would, as a result, have no choice but to cut the yuan’s value by as much as 40% to make domestic debts manageable and export industries competitive. Hedge funds, led by Hayman Capital’s Kyle Bass, were gearing up to bet billions on this event.

This post was published at DollarCollapse on on March 11, 2016.

The Week in Review: March 12, 2016

Jon

This weekend, Americans move forward their clocks for daylight saving time, one of the more absurd (outdated) examples of insane government control. Notes James Alexander Webb, the government mandated spring forward is simply another example of ‘disrespect for the principle of simply leaving people alone.’ Unfortunately the principle of lassiez-faire is one too often ignored in today’s world. The consequences of our government’s rigged society are all around us, be it the increasing reliance on food stamps, a far reaching tax system, or the gratuitous examples of well-connected elites enriching themselves from state intervention.

This post was published at Ludwig von Mises Institute on MARCH 12, 2016.