I Love The Smell Of Napalm In The Market

Authored by Sean Corrigan, originally posted at TrueSinews.com,
That usually perceptive and always interesting observer of the financial Zeitgeist, Bloomberg’s estimable Mark Gilbert, recently penned an article entitled: ‘Milton Friedman’s ‘Helicopter Money’ Is Looking Less Crazy.’ In response, I mailed him the comments which follow (with light editing) here.
After running through the standard complaints of the serial interventionists about how ineffective monetary policy has become (read: how we ordinary people keep frustrating their Olympian schemes), Mark concluded his piece:-
‘Zero or negative interest rates are failing to stir consumer prices, while the Fed’s attempt to normalize monetary policy looks likely to backfire embarrassingly. Because the money-machine isn’t doing what the rule book suggests it should, the engines of economic growth continue to splutter and misfire. So the argument that might in the end have the most appeal for Friedman is the one that, intellectually at least, appears to be the weakest: If everything else is failing, why not try helicopter money? ‘ Why not, indeed? Well, here is a by no means exhaustive list of several reasons for not crossing yet another bridge too far in the mindless pursuit of a specific annual rate of change in a smoothed, filtered, hedonised, sampling of a wholly arbitrary collection of consumer goods and services, to the exclusion of all other goals, the repudiation of the lessons of past experience, and the complete abnegation of common sense.

This post was published at Zero Hedge on 03/26/2016 –.

Krugman Goes To Japan, Scolds Abe For Worrying About Quadrillion Yen Debt Pile, Leaves

Much like BoJ governor Haruhiko Kuroda, Paul Krugman thinks that the key for Japan when it comes to overcoming decades of deflation is a positive outlook.
‘Japan needs to reach a point where everyone believes that it has pulled out of deflation. And then if that can be believed, then it may be able to stay out of trouble thereafter,’ he told an audience in Tokyo last September.
That rather ridiculous pronouncement is reminiscent of something Kuroda said last summer: “I trust that many of you are familiar with the story of Peter Pan, in which it says, ‘the moment you doubt whether you can fly, you cease forever to be able to do it.’ Yes, what we need is a positive attitude and conviction.”
In other words, Krugman and Kuroda believe that Japan can wish its way out of deflation. Krugman’s comments in Tokyo came around 10 months after he visited Japan in 2014. On that trip, he’s said to have helped convince PM Shinzo Abe to delay a planned sales tax hike. ‘That nailed Abe’s decision — Krugman was Krugman, he was so powerful,’ Japanese economist Etsuro Honda said, recounting a meeting between the economist and the premier.

This post was published at Zero Hedge on 03/26/2016 –.

Macro Changes and Future Inflation Problems

Ever since beginning the ‘Macrosom’ theme in July (and updating it here), NFTRH has been managing macro changes that would positively affect the gold sector, and quite possibly have a negative effect on broad stock markets. Early on in the precious metals bear market we noted they were ‘in the mirror’ and opposite the stock market, which on the post-2011 cycle has been the beneficiary of the Fed’s inflation, instilling confidence in their policies by conventional market participants (after all, the right assets were going up on this cycle). In August, it appeared that the first real thrust in the direction of our macro theme kicked in as the stock market cracked.
The mechanism of this confidence racket, which allowed the promotion of inflation right through QE 3, has been a global deflationary force muting inflation signals and providing the US with a Goldilocks benefit as the US dollar strengthened. To this day the economy continues to ‘service itself’. Manufacturing and exports weakened under the regime of the strong USD, but those strong dollars bought a lot of services (which make up the vast majority of the economy) and consumer-related commodities.
Against this backdrop, investor confidence had been on display every time the market reacted in line with a Central Banker’s speech or action. In 2016 the market still seems to be taking them halfway seriously, but there are cracks in the foundation as global policy makers enact negative interest rate policy (NIRP) and the US Fed, for the first time, actually admitted it could be open to it as well.
Speaking of which, in February Janet Yellen actually made the case for continued rate hikes and stated that NIRP is a possibility for the US… within a 2 day period! That kind of waffling is definitely not what the market is looking for in its Interest Rate Manipulator in Chief. Confidence took another hit.

This post was published at GoldSeek on Sunday, 27 March 2016.

Cycle Screening Data Teeters on Going Intermediate Term Negative

Cycle screening data weakened on Thursday for the fourth straight day. The aggregate measure fell to a trendline from the January low. It had turned down from a pattern of negative divergence versus the SPX. While it broke its 29 day MA, it stayed in positive territory. It would need to go negative to signal a significant and possibly sustained drop. Otherwise, the market trend would remain to the upside.
New 6 month cycle signals continue to weaken, but remain on the buy side. When they flip to the sell side on balance, it would suggest that the 6 month cycle has topped out.

This post was published at Wall Street Examiner by Lee Adler ‘ March 25, 2016.

This Is What’s Happening To People Who Live Near The Worst Gas Leak In US History

Submitted by Carey Wedler via TheAntiMedia.org,
On February 18, SoCalGas and the national media declared the ‘worst methane gas leak in U. S. history’ permanently sealed, but just over a month later, hundreds of Porter Ranch residents who evacuated – and are now returning home – are suffering the same symptoms they suffered when the gas leak was active. They are experiencing nausea, dizziness, fatigue, headaches, nosebleeds, and many, including children, are also experiencing a new ailment: irritated skin rashes across their bodies.
Neither SoCalGas, which owns the Aliso Canyon facility, the Los Angeles County Department of Public Health, nor any other government agency has provided a concrete explanation for these continued symptoms. In fact, one of Los Angeles County’s top medical officials recently told local physicians to refrain from performing tests to determine what is causing the symptoms. Late last week, preliminary lab tests from an independent UCLA study found evidence of benzene, a carcinogen, in at least two Porter Ranch homes. Benzene was reported to have been released in the 100 metric tons of methane that spewed into the Los Angeles basin for four months – a fact SoCalGas previously attempted to downplay and withhold.

This post was published at Zero Hedge on 03/26/2016 –.

Are Corporate Profits Fed Dependent?

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
Today’s report of corporate profits sinking by -11.50% in Q4 was pretty bad.
But here is an even worse graph. This was the WORST corporate profit print since The Federal Reserve began quantitative easing in late 2008.

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ March 25, 2016.

It’s Not The Economy, Stupid; Barron’s Admits “It’s A Bullard Market”

It appears the complete decoupling from economic reality of the so-called US equity ‘market’, combined with the collapse in a data-dependent Fed’s credibility – topics we have extensively covered – has reached the mainstream. Barron’s always-insightful Randy Forsyth exposes the ugly reality that this is a “Bullard” market and we are just living in it as the flip-flopping Fed head is “the most visible telltale of the shifting winds of Fed expectations. Investors navigating the choppy waters of the financial markets are forced to change tacks accordingly.”
Only one thing matters..
Macro-economy? Nope…

This post was published at Zero Hedge on 03/26/2016 –.

Japan’s Finance Minister Accidentally Reveals How It All Ends: “War”

While this all started with a currency “war,” it seems – according to a stunningly candid transcript of Japan’s finance minister’s conversation with none other than Paul Krugman – that the real endgame here is actual war. Aso remarked that “a similar [deflationary mindset] had occurred in the US in the 1930s. What solved the question? War! Because World War II had occurred during the 1940s and that became the solution for the United States. [We] have to switch [the Japanese] mindset… we are looking for the trigger.“
Japanese Prime Minister Shinzo Abe has been the most hawkishly militaristic PM of a generation, shifting from the passive society to an aggressor, beginning around 2013. This has only been emboldened by rising nationalism and escalatuing tensions in the South China Sea.
We note this by way of background as just-released transcripts of a conversation between Japanese finance minister Aso and Uber-Keynesian Paul Krugman reveal perhaps the reality that Japan faces as its economic and social structure collapses…

This post was published at Zero Hedge on 03/26/2016.

The Week in Review: March 25, 2016

Terrorism gripped the headlines again this week as terrorists struck the airport and metro station in Brussels, Belgium. Naturally, as Jeff Deist points out, this massive failure in government security will lead to calls for more government funding, and more control over the lives of citizens. Unfortunately, it’s the ordinary citizens who suffer the most from the West’s tone-deaf foreign policy that helps the terrorists

This post was published at Ludwig von Mises Institute on March 25, 2016.

China “Disappears” A Dozen People For Plotting Coup: “There’s No Excuse For Taking Away My Parents And Brother”

Several weeks ago, Chinese President Xi Jinping paid a visit to CCTV and People’s Daily to tell them what a great job they’re doing. The feeling, The Shanghaiist quipped, was mutual.
The media, Xi said while making the rounds, should ‘reflect the will of the Party, mirror the views of the Party, preserve the authority of the Party, preserve the unity of the Party and achieve love of the Party, protection of the Party and acting for the Party.’
So what you’re saying is that it’s all about the Party?
As unequivocal as that might sound, someone at Wujie News, which is jointly owned by SEEC Media Group, Alibaba and the government of Xinjiang, didn’t get the message because on March 4, an open letter signed by ‘loyal Communist party members,’ was published to Wujie’s website. Among other things, it accused Xi of ‘indulging in a personality cult,’ criticized the President’s handling of the economy, and, perhaps most notably, contained threats against the Party leaders family.
“We are loyal communist. On the occasion of the “two sessions” held, we write this letter to you, asking you to resign from all party and state leadership positions,” the letter reads. “Made this request, out of consideration of the Party’s cause, out of the country and nation’s future to consider, too, it is out of consideration for you and your family own security.”

This post was published at Zero Hedge on 03/26/2016.

High Deductible? As Doctor: Here’s what Doctors Can do to Save You Money. Hospitals, Health Insurers Hate it

‘Just tell me the effing price.’
‘There’s something happening here. What it is ain’t exactly clear.’ – Buffalo Springfield, ‘For What It’s Worth.’
Dateline 2000. You go to the doctor. At the end of the visit you are asked to pay your co-pay. The doctor files a claim with the insurance company for the rest. You might not even have to pay the co-pay at the time of the visit if you have a naive doctor who is unaware of how many people don’t pay their bills.
Dateline 2016. You go to the doctor. After the visit you have a discussion as to whether you want to use your insurance or pay cash (actually credit card, etc., not cash-in-fist).
That’s different, to say the least.
In days of yore, insurance paid a high percentage of the costs. After the advent of managed care, many people figured a doctor visit cost $20 or so. Insurance covered most of the fee, and the patients were blissfully ignorant of what medical care really costs. You could get a one month supply of medication for a co-pay of $10-20.
In recent years, we have evolved a system where deductibles have risen in order to keep premiums from rising. This allows employers to offer health insurance at lower rates, with the cost being passed to the employee. After a certain point, rising deductibles turn everything upside down.

This post was published at Wolf Street on March 26, 2016.

Gold trader’s arrest puts President Erdogan in the spotlight again

A Turkish gold trader at the centre of a corruption scandal that engulfed President Recep Tayyip Erdogan has been arrested in Miami and charged with laundering millions of dollars.
Reza Zarrab, also known by the name Riza Sarraf, was accused in 2013 of bribing senior ministers from Turkey’s ruling party with cash and lavish gifts as part of a scheme to bypass US sanctions on Iran.
On Saturday, the 33-year-old was arrested while on holiday in Florida with his wife and daughter. The arrest was made public late on Monday night when US prosecutors unsealed an indictment that charged him with fraud, money-laundering and sanctions-busting.
The arrest threatens to reopen a case that reached right into Mr Erdogan’s inner circle and to tarnish the party that he founded. It will also deepen existing tensions between Turkey and the United States. The US attorney in charge of prosecuting the case, Preet Bharara, became an overnight sensation after tweeting that Mr Zarrab would ‘soon face American justice in a Manhattan courtroom’.
Mr Bharara was bombarded with messages of support from Turkey, where opponents of the government have increasingly turned to social media in the face of a crackdown on critical news outlets. Mr Zarrab, an Iranian-born Turkish citizen, was detained and charged in Istanbul in 2013 in a huge corruption case that posed the biggest challenge to Mr Erdogan, the man who has dominated Turkish politics for more than a decade as Prime Minister and then as President.

This post was published at TruthinGold on March 23, 2016.

China owns the Canadian real estate market: Chinese account for one-third of all Vancouver home sales volume in 2015.

The Canadian housing market makes the U. S. housing bubble seem like a tiny pricing discrepancy. There have been talks for years that Chinese investors were buying up desirable properties around the globe and many pundits pushed these fears aside. Their claim was that only a tiny portion of the market was made up by investors. Well in Vancouver, one-third of all sales in 2015 went to Chinese buyers based on cash volume. That is absolutely not a small group and enough to make home prices in many Canadian cities go into even deeper bubble territory. There is no doubt the Canadian housing market is deep in a bubble. Themiddle class in America now realize that owning a home is a pipe dream given stagnant incomes. Do you want to own a home? Too bad. You are too broke unless you go into big debt and become a slave to our banking overlords. In Canada, local households have zero chance of competing in places like Vancouver unless they go into comedic levels of debt. How big is the Canadian real estate bubble?
U. S. versus Canada housing
The U. S. had a major correction in housing. We all know this and lived through it. But home values in many U. S. metro areas are now back in bubble territory. But Canada never had a correction and in fact, prices continued to move up:

This post was published at MyBudget360 on MAR 25 2016.

“Dirty Bomb” Fears Rise After Belgian Nuclear Guard Murdered, Access Badge Stolen

Hours after brothers Khalid and Ibrahim El-Bakraoui and two other men (one of whom may or may not have been bombmaker Najim Laachraoui) detonated explosives-laden vests and luggage at the Brussels airport and metro murdering nearly two dozen people and wounding scores more, we were alarmed but not entirely surprised to see Belgium evacuate the Tihange nuclear power plant.
We say we weren’t entirely surprised because way back on November 30, a raid on an Auvelais home rented by Mohamed Bakkali – who was arrested four days earlier and may have used the residence to shelter the Paris attackers including the supposed leader of the Brussels cell Abdelhamid Abaaoud – turned up an hours-long (some reports had suggested it was a mere 10 minutes long, an apparently incorrect assessment) surveillance tape that appeared to show a top Belgian nuclear official (see here).
‘A small video camera stashed in a row of bushes silently recorded the comings and goings of the family of a Brussels-area man with an important scientific pedigree last year, producing a detailed chronology of the family’s movements,’ Foreign Policy wrote, late last month. ‘At one point, two men came under cover of darkness to retrieve the camera, before driving away with their headlamps off, a separate surveillance camera in the area revealed later.’
If, as some suspect, those two men were the Bakraoui brothers, it would suggest that the Brussels cell which is now well on its way to going down in jihadist lore as the most ‘successful’ sleeper cell in the history of radical Islam, was in the advanced stages of trying to procure the materials needed to build a dirty bomb.

This post was published at Zero Hedge on 03/26/2016.

Manufacturing Staving Off Recession but Automotive & Durables Keep Slumping

The Federal Reserve’s belatedly released detailed industrial production data show that real manufacturing output growth slowed in February on a monthly basis, from an upwardly revised 0.56 percent to 0.16 percent. Other revisions were generally positive as well, but too small to prevent both the durable goods and automotive sectors from extending their technical recessions to seven months each. The new statistics showed that manufacturing’s real growth in 2015 was marginally weaker (0.46 percent instead of 0.49 percent) than previously reported, and that industry’s after-inflation production remains 1.07 percent lower than when the last recession began – more than eight years ago.
Here are the manufacturing highlights of the Federal Reserve’s new release on February industrial production:
>Inflation-adjusted manufacturing production rose in February by 0.16 percent sequentially but still remained perilously close to a technical recession – a six- month cumulative decline in real output.
>Revisions were generally positive. In fact, January’s monthly rise – which was upgraded from 0.49 percent to 0.56 percent – resulted in the best sequential increase since July’s one percent. December’s after-inflation performance was revised down from a 0.18 percent shrinkage to 0.21 percent decline, but November’s fall-off was upgraded from 0.27 percent to 0.22 percent.

This post was published at Wall Street Examiner on March 21, 2016.

Healthcare Is About To Surpass Housing As The Biggest Source Of American “Growth”

Following yesterday’s breakdown of 2015 GDP growth components, there was little surprise that the biggest source of “growth” for the US economy in the past year was healthcare growing at an absolute dollar pace nearly double that the second highest category (recreational vehicles of all things, because in the eyes of the BEA the US has gone on unprecedented Winnebago spending spree).
It was also no surprise that the biggest source of “growth” within healthcare was the tax known as the “Affordable Care Act”, which of course is woefully named: as we reported yesterday, a recent report from Freedom Partners Health found that health insurance premiums have increased faster than wages and inflation in recent years, rising an average of 28 percent from 2009 to 2014 despite the enactment of Obamacare, “or rather “because of.”
Ironically, without the Obamacare tax, US growth in 2015 would have been as much as 0.5% lower, pushing GDP down from the upwardly revised 2.4% to 1.9% or lower.

This post was published at Zero Hedge on 03/26/2016.

Ted Butler Quote of the Day 03-26-16

As I mentioned on Saturday, the key 50 day moving averages in gold and silver have been racing higher and combined with today’s sell-off, the distance to a downside penetration of the averages is narrower today than it has been in months. I don’t care a whit about these moving averages, but the technical funds seem to be governed by them and that’s why I mention them so frequently. Unless the technical funds decide suddenly to radically alter their basic methodology, the probabilities favor that they will be aggressive sellers as and when the moving averages get penetrated to the downside.

If that plays out, then we revert to ‘The Count’ mode in which we try to measure the maximum probable extent of technical fund selling and commercial buying. For a number of reasons, this promises to be a particularly tricky count, probably because it may be the last count (where have you heard that before?). I recognize that I am suggesting a short term down into a long term up, but you should not rely on that. Instead, look directly at the reason behind the suggestions, namely, that such a move would seem to benefit the bad guys.

It is possible that the flushing of the technical funds may have started on Wednesday, but that is less important than the potential extent of the flushing. We are, in many ways, at historical extremes in negative COT readings. In fact, Friday’s report is likely to set new extremes in the total commercial net short positions in both silver and gold for this year’s price advance. Because so many technical fund contracts were bought on the price move up, that suggests nearly as many could be sold on the way down. Complicating matters is the role that JPMorgan plays in all this. If JPM covers enough of its short positions quickly, silver prices could surge before a complete technical fund flushing. In any event, I would refine my guesses for this week’s increase in the total commercial net short headline number to between 10,000 to 15,000 contracts in gold and 5,000 to 7,000 contracts in COMEX silver futures.

A small excerpt from Ted Butler’s subscription letter on 23 March 2016.

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

Local Responses to Federal Insolvency

The federal government will default. We don’t know when or in what sequential order, program by program. But it will default. The numbers are clear.
No one in power acknowledges what the numbers reveal. The leaders ignore it. The masses assume it can’t happen to them. They don’t deserve this, they conclude, so it just cannot happen. But it will happen.
When the checks stop coming from Washington, what will local regions do?
COUNTIES
I start with Pareto’s law. About 80% of the population resides in 20% of the counties/cities. This means that in 80% of the counties/cities, residents’ lifestyles will not change much. There will be no riots. The residents are not rich. Their sense of deprivation will be limited.
These regions will be left alone. The Feds and the states will have their hands full in the cities. Resources will flow where the votes are. This will not be rural counties.
There will be liberty in these counties. The good old boys will face new challenges. They have built their regimes with state and federal money. The locals can challenge them. That’s when we will see how strong the Tea Party is.
Inner cities will be cordoned off during violent riots. There are few streets in or out. Police cars will block the outlets. The riots will not spread. They will burn themselves out. Riots do not go on for months. People get tired. They run out of stores to loot.
The ghettos are dependent on those outside. Either the residents of the ghettos cool it, or else they starve. It’s simple. The rest of us really don’t need them, economically speaking. They need us.
Liberals need these dependents in order to justify their employment in the welfare state’s bureaucracies. They also want to feel needed. But when the checks stop coming, liberals will have to get jobs in the private sector. They will run out of other people’s money.

This post was published at Gary North on March 23, 2016.

The Saudi Arabia Debt Crisis in 2 Charts

There’s a Saudi Arabia debt crisis brewing, and the Kingdom is desperately trying to fix it.
Saudi Arabia ran a massive $98 billion budget deficit in 2015, and it’s expected to grow. The International Monetary Fund (IMF) predicts the country will be broke in five years if oil prices don’t improve.
Now the world’s largest oil exporter has agreed to meet with over a dozen other OPEC and non-OPEC members on April 17. They will hopefully agree to freeze output in order to boost oil prices and ease each country’s economic problems.
This shows just how desperate the Saudi Arabia debt crisis has become…
The country has always refused to work with other exporters. Throughout 2015, the country ignored the 44% drop in oil futures and maintained high production. The nation thought this would help it keep its big share of the global oil market. As of February, the Saudis produce roughly 10% of the world’s oil supply every day.

This post was published at Wall Street Examiner on March 22, 2016.