Day: March 19, 2016

China Electricity Consumption to Sag in 2016: Chairman of Power Company

Jon

It already fell in 2015. A growing economy?
OK, we’ve heard the official story. China is transitioning from a manufacturing economy to a consumption-based economy. Consumers are king. They’re going to buy stuff. And that’s going to heat up the economy.
Imports and exports have been plunging for months, but no big deal, Chinese consumers – and there are a lot of them – are going to pull the economy forward. That’s the official story.
So now we stumble on a report on the Facebook page of the People’s Daily, the official newspaper of the Chinese Communist Party. The report was helpfully in English. And it was a peculiar location for a report on China: Facebook is still blocked in China.
So the fact the Communist Party rag published it in English and on a venue that is blocked in China makes it seem like this piece of information is not for the Chinese. Maybe it was slipped in by some underling over the weekend while supervisors weren’t paying attention.

This post was published at Wolf Street by Wolf Richter ‘ March 19, 2016.

A Strange Pattern Emerges When Trading The US Dollar In 2016

Jon

One of the more surprising market developments of 2016 has been the violent obliteration of those who had taken part in the biggest consensus trade of 2015, namely long the USD. As the Fed finally admitted earlier this week, the US economy is sputtering and is woefully incapable of handling 4 rate hikes, or 3 for that matter. In fact, the Fed will be lucky to push through even one more rate hike without the Chinese Yuan collapsing and unleashing even more capital outflows (which precipitated the major market swoons in the summer of 2015 and early 2016) arguably the main topic during the alleged Shanghai G-20 “central bank accord.” The result: this week saw the biggest two-day USD collapse against a basked of foreign currencies in years, and currently the DXY is trading at a lower level than a year ago.
However, to say that the dollar selloff is a development would be incorrect: as Bank of America points out, Dollar selling has been going on for the past three months.
But what is more curious is when during the day this selling has taken place.
As Bank of America’s FX quant strategist, Vadim Iaralov writes, “ahead of the Fed, the USD was already trending lower against 8 out of 9 G10 currency pairs with GBP being the only exception. The surprisingly-dovish Fed has only further accelerated the decline in the US dollar. The decline started in late January and has occurred during the critical local New York trading hours. The US hours downtrend looks likely to continue in the near future.”
What becomes immediately visible when one looks at the chart below is that all of the USD selling in 2016 has taken place during US hours.

This post was published at Zero Hedge on 03/19/2016 –.

19/3/16: Shares Buy-Backs: The Horror Show of QE Cash Excesses is Back

Jon

Remember the meme of the ‘recovery’?
The story of years of rising shares buy-backs by corporate desperate to do something / anything with all the debt they could get their hands on from the lending banks, whilst having no interest in investing any of these loans in real activity.
Well, back at the end of 2011 and the start of 2014, pumped up on hopium of the so-called imminent recovery in global demand, we witnessed two dips in shares buy-backs, with resulting volatility going the flat trend taking us through some 12 months before lifting off the whole circus to new highs.

This post was published at True Economics on Saturday, March 19, 2016.

Los Angeles County is becoming a renter’s paradise: Building permits for multi-unit properties in Los Angeles soars to meet renting demand.

Jon

People are surprised to hear that Los Angeles County is the most unaffordable location in the entire United States when it comes to renting. Isn’tSan Francisco or New York more expensive? Of course they are but affordability is based on income and Los Angeles has a much lower household income base to draw from. Unlike creative mortgage financing, you actually need to pay yourrent out of your net income each month. What has happened since the housing bubble popped is that more families in Los Angeles are now renters and rents have soared causing arental Armageddon in the area. Families are being squeezed in what I would like to call housing purgatory. They have no way of buying an inflated crap shack but at the same time are unable to do anything about rising rents. For those with Taco Tuesday baby boomer parents, many Millennials are opting to move back home. And builders realize this trend is only going to continue and that is why builders are going after multi-unit permits at a much higher rate than single family permits. Los Angeles County is now becoming a renter’s paradise assuming you like cramped living areas, high traffic, and sky high rents. I don’t see permits for new freeways coming online at the rate of multi-unit permits.

This post was published at Doctor Housing Bubble on March 19, 2016.

Free Markets are Nature’s Design

Jon

Everything is connected in nature including how our economy functions. A reader who grasped my piece on how everything is interconnected in markets sent this in. He made the connection with his non-linear observation. Something small can have profound impacts; the essence of Chaos Theory. The reintroduction of wolves in Yellowstone National Park changed even the geography of the region.
We each have our role in society and in nature. The rich and the poor are part of the whole. This idea that everyone must be ‘materially’ equal I have noted even violates the Ten Commandments. In nature, one species preys upon another. It may be horrible to watch, but you cannot pass a law to make it all fair and nice in nature. So why do we think we can do that among ourselves?
By attacking the rich, we are undermining the economic system that flourishes for the alternative is only government as the creator of jobs. Disturbing our economic balance has serious implications especially when those who love to seize power over the rest of us great ‘unwashed’ masses in their view, freely admit they are incompetent to forecast anything. So how do they know what they are doing will not destroy the entire economic system? As in negative interest rates.

This post was published at Armstrong Economics on Mar 18, 2016.

This Is How Venezuela Exported 12.5 Tonnes Of Gold To Switzerland On March 8, 2016 Via Paris

Jon

Submitted by Ronan Manly of Bullionstar Blogs
Following on from last month in which BullionStar’s Koos Jansen broke the news that Venezuela had sent almost 36 tonnes of its gold reserves to Switzerland at the beginning of the year, ‘Venezuela Exported 36t Of Its Official Gold Reserves To Switzerland In January’, there have now been further interesting developments in this ongoing saga.
It has now come to light that on Tuesday 8 March, the Banco Central de Venezuela (BCV) sent another 12.5 tonnes of gold by air freight to Switzerland (via Paris), and fascinatingly in this instance, the exact details of the transfer are already available, including the cargo manifest, courtesy of Venezuelan newspaper El Cooperante which broke the news on 11 March.
As per the January gold exports to Switzerland, which most likely were part of a gold swap to generate much-needed financing for the crisis-ridden Venezuelan economy, this latest shipment appears likewise.
Air France flight AF 385 and Brinks Switzerland
The BCV’s 12.5 tonne gold shipment was flown out of Caracas International Airport (Maiquetia Simon Bolivar) on Air France flight AF 385 to Paris, leaving at 5:49pm local time on Tuesday 8 March, and arriving into Paris Charles de Gaulle Airport at 7:54am on Wednesday 9 March.

This post was published at Zero Hedge on 03/19/2016 –.

Market Talk – March 17, 2016

Jon

The Asian markets responded quite positively to the FED’s unchanged decision yesterday with HSI and China Main trading a little over 1% higher across the board. The Exporters did not fare so well, as such, Japan closed a little lower (-0.22%) on the back of a stronger JPY ( 1%). China moved the yuan mid-point from 6.5172 to 6.4961; which really was not much of a talking point.
In Europe, we saw the initial burst from cash markets reflecting the FED’s decline from four to two potential rate rises but from then most core indices drifted into the close. DAX and CAC both closed lower on the day whilst the IBEX and FTSE managed small gains. Confidence was hit after the Norwegian CB cut rates from 0.75% down to 0.5%, especially after the FED’s reflection on rates the night before! Energy was the main support throughout exchanges given its renewed vigour over the past two months but that has been dented by banks sudden realization that lower rates will eventually hurt! The peripheral banks are waking to the point that the ECB will need to draw a line, at some stage, in asset quality purchases. Now that the Central Bank is competing directly with corporates for cash the depletion of the middle ground will accelerate. The Italian Bank Banco Popolare fell over 10% today.

This post was published at Armstrong Economics on Mar 17, 2016.

“Nobody Is Making Money” – Hedge Fund “VIP Basket” Obliterated, Plunges To Record Low

Jon

Exactly one month ago, when we learned that Goldman was looking to package its Hedge Fund VIP basket of stocks into an ETF we said, half jokingly, that we have discovered a “guaranteed way to make money: Short Goldman’s “Hedge Fund VIP” ETF“, adding that “with 5 of their Top 6 trades for 2016 already stopped out, and their recent heavy losses from swing-trading Gold, one might question the demand for an ETF that tracks Goldman Sachs’ hedge fund research tips, but, as Bloomberg reports, David Kostin’s “Hedge Fund Trend Monitor” report – tracking the 50 companies that matter most to hedge funds – is about to be launched.”
But more importantly we said that given the dismal performance, “one can only imagine that creating this ETF enables Goldman Sachs’ clients to offload huge blocks of their positions into a muppet-friendly investment vehicle that every Tom, Dick, and Day-Trader will scoop up. For now the ETF has not been assigned a ticker symbol – may we suggest ‘LOSE’ or ‘MUPT’ or ‘FUKT’?”
And then, just for good measure, we added that “this being Goldman – the company which brought you the Made for Shorting Abacus CDO – the guaranteed way to make money with this ETF would be to short

This post was published at Zero Hedge on 03/19/2016 –.

LYIN’ YELLEN IS FORCED TO TELL THE TRUTH AT FEDERAL RESERVE MEETING: GOLD UP, ECONOMY DOWN

Jon

The meeting is over! The FOMC has spoken, and the reality has been recognized: The US economy is a disaster and as a result gold will benefit as it always does from fiat’s misery.
Janet Yellen didn’t say that of course. She is trying to pretend that there is a ‘recovery’ going on in the US economy.
But by backing off serial rate hikes, she made her and the Federal Reserve’s real feelings clear. The economy is not recovering. Jobs are not returning. Industry is not recovering. The only thing that is recovering is the price of gold against the dollar. The rest of the economy is in a recession verging on depression. In fact, ‘depression’ is a better word. But mainstream’s presstitutes have been taught not to use it. Just the way they’ve been taught to cover these horrible FOMC meetings. Sonorous monetary and economic phrases are employed in their articles to ensure the results sound deeply thoughtful.
Actually, the entire process is ridiculous. Fed members look at falsified government numbers, white paper analyses based on those fake numbers and maybe an article or two – also unrepresentative of the truth – before making up their minds about the single, idiotic question that they have to decide. Up or down.

This post was published at Dollar Vigilante on MARCH 19, 2016.

Another Major Index At A Crossroads

Jon

By Dana Lyons of J. Lyons Fund Management
As with many indices we’ve mentioned recently, the NYSE Composite has rallied up to a potentially significant convergence of resistance.
Continuing with the weekly theme yet again, another major index – the NYSE Composite – has seen its rally reach a potentially consequential area of resistance. It’s actually been 2 weeks now that we’ve been on this series highlighting various indices reaching a potential stalling point in their post-February rally. Of course, this is based strictly on chart-based analyses, which now appear poised to do battle with the still positive forces that we’ve noted in breadth, momentum and sentiment.
This resistance theme that we’ve focused on seems to have been validated as, for the most part, the indices which we’ve highlighted have struggled to make much headway since hitting the identified areas on their charts. This includes some broader and small-cap indices that we noted 2 weeks ago which, despite the large-cap indices continuing to make rally highs this week, have themselves been unable to make much progress. Next in line in this battle appears to be the NYSE Composite. Similar to prior indices covered this week, the NYSE is just now reaching the convergence of its broken post-2009 Up trendline and the post-May Down trendline.

This post was published at Zero Hedge on 03/19/2016 –.

19/3/16: Danske’s forecasts for Russia: Mild with little chance of a surprise

Jon

Danske’s latest forecasts for Russia are out this week. In contrast to 2015 forecasts, Danske is now running a relatively moderately bearish outlook on Russia. Remember, Danske forecast – as late as of September 2015 – the Russian GDP to shrink 6.2% y/y in real terms (it ended the year with a decline of 3.7%), while projecting USDRUB exchange rate at 72-74 for 3mo-12mo horizon (it is now at around 68.1 and the bank’s new forecasts are for 62.2-66.4 over the next 3mo-12mo horizon).
Per latest, ‘The path of economic contraction continues to slow. GDP shrank 2.5% y/y In January 2016 versus a 3.5% y/y fall in December 2015. We expect the economy to shrink 2.1% y/y in 2016 if the crude price stays at USD31/bl on average, while we would expect expansion to happen if the oil price climbs to USD59/bl on average.’
Overall, Danske’s view is that supply side of growth equation is now close to / already in expansionary territory, while demand (and investment) sides are both still struggling.

This post was published at True Economics on Saturday, March 19, 2016.

Trump “Would Be Impeached” Over China, Mexico Tariffs, Chamber Of Commerce CEO Says

Jon

Donald Trump is going to make America great again. But you already knew that.
The question many voters have, is how exactly he plans to do it. The frontrunner has thrown some rather vague ideas out there, some of which focus on trade. Everyone has by now heard the ‘Trump stump’: ‘We don’t win anymore. We’re getting killed on trade. We make terrible deals. We’re losing to China.’
Trump’s solution – at least as it relates to China and Mexico – is to impose tariffs. Specifically, he’s suggested he would slap a 35% import tax on goods from Mexico and a 45% tax on goods from China.
As The New York Times noted earlier this month, Trump’s trade policy is a throwback to the mercantilism of a bygone era. It’s a simplistic way of looking at trade wherein running a deficit is equivalent to running a money losing company.
Of course to call it simplistic isn’t necessarily to call it misguided or completely wrong. The US manufacturing sector has been gutted. It’s one thing to build a services-driven economy wherein consumer spending accounts for the majority of economic output. It’s another entirely to create a kind of feudal society wherein the labor market becomes a waiter and bartender creation machine that exists to serve the 1% and in which breadwinner jobs all but vanish along with the country’s capacity to actually produce anything tangible.

This post was published at Zero Hedge on 03/19/2016 –.

New CCTV Footage Shows Moment Of Deadly Istanbul Suicide Attack

Jon

Update: Here is the latest CCTV footage of the attack. Caution: graphic.

For the fourth time this year and the second time in seven days, one of Turkey’s major cities has been hit with a deadly suicide bombing.
Just six days after an explosion ripped through a transit hub in Ankara’s Kizilay neighborhood killing 34 people and wounding more than 100, a bustling shopping street in Istanbul was shaken by a powerful blast on Saturday.
The death toll now stands at 5 and frankly, it probably would have been much, much worse had the blast come later in the day. ‘The attack took place on Istiklal Caddesi, a pedestrian street that was relatively quiet Saturday morning but is usually thronged with shoppers, strollers and buskers later in the day,’ AFP reports. ‘The street, which adjoins Taksim Square in the European part of the city, was evacuated after the attack.’


This post was published at Zero Hedge on 03/19/2016.

The Week in Review: March 19, 2016

Jon

Janet Yellen was forced to wave a white flag this week, admitting what was long obvious – the Federal Reserve overestimated the strength of the global economy and will not be able to go through with its planned four rate hikes in 2016. As David Stockman noted in his take down of the FOMC announcement, ‘Listening to even a small portion of Simple Janet’s incoherent babble makes very clear that the nation’s central bank is well and truly impaled on its own petard.’ Meanwhile, Ryan McMaken notes that diminishing foreign government holdings of US debt creates another issue for the Fed, possibly requiring the central bank to resume monetarizing public debt.

This post was published at Ludwig von Mises Institute on MARCH 19, 2016.

Doug Noland’s Credit Bubble Bulletin- Q4 2015 Flow of Funds

Jon

This is a syndicated repost courtesy of Credit Bubble Bulletin. To view original, click here. Reposted with permission.
I’d been waiting patiently for the Fed’s Q4 2015 Z.1 ‘flow of funds’ report. The fourth quarter was a period of financial instability and tightened financial conditions. What tracks would be left in the data? Moreover, would the report confirm a continuation of the broadening Credit slowdown that had turned more pronounced during Q3, a slowing that would portend weak GDP and corporate earnings. Would the data support the thesis of mounting financial fragility? This Z.1 did not disappoint.
Importantly, Credit did slow almost across the board. For starters, weak Corporate borrowings were evidence of a meaningful tightening of Credit conditions. Q4’s growth rate of 2.7% was the weakest Corporate Credit growth since Q4 2010 and was down significantly from Q3’s 4.6%, Q2’s 8.6% and Q1’s 8.5%. Household Mortgage Debt slowed to 1.5%, verses Q3’s 1.7% and Q2’s 2.5%. The fourth quarter’s 5.9% pace of Consumer (non-mortgage) Credit growth compared to Q3’s 7.2%, Q2’s 8.5% and Q1’s 5.6%. There was even a marked stalling in State & Local borrowings, with Q4’s flat growth down from Q3’s 1.7%, Q2’s 1.0% and Q1’s 4.3%.

This post was published at Wall Street Examiner by Doug Noland ‘ March 19, 2016.

Buyback Blackout Period Starts Monday: Is This The Catalyst That Ends The S&P Rally?

Jon

Last week, one day before the Fed unleashed a statement that stunned Wall Street by its dovishness and admission that the Fed had been far too optimistic on the state of the US (and global) economy, when it slashed its forecast on the number of rate hikes from 4 to 2, we said that “while everyone’s attention is on the Fed, the biggest danger to the S&P500 has little to do with what Janet Yellen may say tomorrow, and everything to do with the marginal buyer of stocks being put into a state of forced hibernation”, namely the start of the stock buyback blackout period during Q1 earnings session.
As a reminder, even Bloomberg recently acknowledged the unprecedented role corporate stock repurchases play in the current market when it penned “There’s Only One Buyer Keeping S&P 500’s Bull Market Alive.” Of course, our readers have known the identity of the “mystery, indescriminate buyer” for two years.
Today, it is Deutsche Bank’s turn to warn about the imminent end of buybacks for the next 6 weeks. From Parag Thatte’s latest Asset Allocation and Flows report:
Buyback blackout period starts Monday. An increasing number of S&P 500 companies will enter into their blackout period starting next week, about a month before the earnings season kicks into high gear in the third week of April

This post was published at Zero Hedge on 03/19/2016 –.

Catalonia Nears Default, Threatens Spain’s Debt

Jon

The Central Government blinks. By Don Quijones, Spain & Mexico, editor at WOLF STREET. When Catalonia’s regional government announced a road map to independence from Spain in November last year, Madrid’s response was to threaten to cut off the financial supply lines to the region. It was the equivalent of a declaration of economic war, riddled with risks, especially with an acutely cash-strapped Catalonia facing over 4.6 billion of bond redemptions in 2016.
Madrid’s strategy was economic madness, as we warned at the time: Catalonia’s economy accounts for 20% of Spain’s GDP. And international investors would freak out if roughly one-fifth of Spain’s economy suddenly plunged into a deep recession or became ungovernable. Investors might question the ability of the Spanish government to service its over 1 trillion in debt.
Now, that scenario might be in the process of coming true.

This post was published at Wolf Street by Don Quijones ‘ March 19, 2016.