Oil Rally Overdone? Positioning Hits ‘Bullish Extremes’

Since February, major investors have predicted that oil prices were poised for a huge rally. Hedge funds and money managers piled into bets on rising oil prices, going long on the crude rally.
Short sellers were squeezed, and the stampede become too much for many, resulting in a large liquidation of shorts. The short selling drove the rally, increasing oil prices by about 50 percent since early February.
That has fueled optimism that the worst of the oil bust is over. And there is good reason to think that a rally is justified. U. S. oil production is off by about 600,000 barrels per day since the April 2015 peak. Disruptions in Nigeria and Iraq have caught the markets by surprise, knocking off another several hundred thousand barrels per day. Gasoline demand is at record highs in the United States, and OPEC is a few weeks away from meeting to discuss its production freeze deal, which may not cut into oversupply, but has nevertheless given the markets some hope.
But there are warning signs on the horizon. The fundamentals are still very weak. Inventories are at record highs in the U. S. and still rising, and global oil production continues to exceed demand. As I wrote last week, the rally could be overdone.

This post was published at Wolf Street by Nick Cunningham ‘ March 29, 2016.

SILVER vs. GOLD: 2 Must See Charts

What is the better investment? Silver or Gold? Well, if we look at the following two charts below, we can spot some interesting trends. The U. S. Mint has been producing Gold and Silver Eagles for over thirty years now. Since 1986, the U. S. Mint has sold 21.7 million Gold Eagles versus 463.4 million Silver Eagles. The overall Silver-Gold Eagle Ratio from 1986-2016 is 21.1:

This post was published at SRSrocco Report on March 29, 2016.

China Innovates: A New Way to Lie with Numbers

An Unexpected Improvement…
The Wall Street Journal has just run an article about the latest data manipulation coming out of China. China is experiencing strong currency outflows. This is a combination of ‘hot money’ from outside China, which came into the country to bet on an appreciating currency (the yuan) and is now retreating, and domestic money that is looking for a foreign home now that the Chinese bubble is appearing less and less sustainable.
In a reversal of the process that I described here, this is causing China to spend huge amounts of its foreign exchange holdings to prop up the yuan. This is the exact opposite of what China had been doing, which was to accumulate foreign exchange reserves as it depressed the yuan. China is holding up the value of the yuan now because, although it ultimately wants to see the currency fall, it is worried that a sharp decrease will cause a self-fulfilling and destabilizing flight.
Investors have therefore been watching the monthly reports of China’s foreign exchange holdings with interest to gauge the amount of capital flight and the ability of the Chinese government to support the currency. The numbers have not been comforting: foreign exchange holdings dropped from a peak of almost $4 trillion in March 2014 to $3.2 trillion in February 2016.
During most of 2015, the fall was running at about $80 to $100 billion per month, even though China was running a large balance of payments surplus, which would normally increase the amount of reserves. Traders were beginning to speculate on how much longer China could continue to bleed.
And then it stopped: in February 2016, the monthly drop equaled $29 billion, down from $99 billion in January. Investors breathed a sigh of relief. It looked like the yuan wasn’t going to detonate, which was one of the possible ‘black swans’ behind the fall in global markets at the end of 2015 and the beginning of 2016.

This post was published at Acting-Man on March 30, 2016.

Update on the Boston Marathon Bomb Case – Paul Craig Roberts

Movies are used to set official stories in stone, and a movie is going to be made about the heroic capture of a badly wounded 19 year old kid, not old enough to buy a beer, who, despite being shot up and severely wounded, is alleged to have written a confession in the dark on the side of a boat under which he was hiding to escape execution. Apparently, the 10,000 troops who violated the US Constitution and searched the houses of a shutdown Boston without warrants are going to be credited for ‘saving America from terrorism.’
I find it difficult to believe that a shot-up kid, who had to be put into intensive care when he was discovered, who was hiding from execution under an upturned boat, spent what little energy and life force he had left writing a confession in the dark on the inside of a boat. What convenient instrument to write with did he happen to have on hand?
Why would we believe assurances of such an unlikely confession from the same lying government that assured the world that Saddam Hussein had weapons of mass destruction justifying a multi-trillion dollar invasion that destroyed a county? We know for a fact that Saddam Hussein most certainly did not have weapons of mass destruction as President Bush later admitted, and even if he had, such possession is no justification for illegal US aggression that destroyed a country. Why would we believe a government that assured the world that Assad used chemical weapons against his own people, which we know for a fact was Washington’s made up excuse for invasion?

This post was published at Paul Craig Roberts on March 29, 2016.

The World Economy Is Drifting Into A Full Blown Collapse – Episode 931a

The following video was published by X22Report on Mar 29, 2016
Japanese retail sales decline for the 4th consecutive month. Russia has become the top buyer of gold in February. Saudi Arabia is loosing the oil market share in key countries. Government Conference Board for consumer confidence jumps while the Gallup consumer confidence declines. Case Shiller reports increase in home prices but when you take an actual look around the country house prices have been dropping. Corporate defaults are at catastrophic levels. David Stockman reports that the world economy is doomed. Obamacare enrollment misses by 24 million. Business will be dropping health care plans and people will have to pick up the tab.

Sell In March And Go Away? There’s Something About April During Election Years

We will be the first to admit that in the current centrally-planned world, where nothing but the words and deeds of central bankers matter, fundamentals, seasonals, technicals and charts are a laughable anachronism from days gone by when the market – as traded by humans and not vacuum tubes with laser beams – could drop 10% without the Federal Reserve collapsing into a panicked mess.
However, there are those who still believe that what used to work in the past still does, and trade according to the patterns observed in the Trader’s Almanac.
While that is clearly folly (as it does not account for what any given central banker had for dinner the night before – a key variable in this “New Normal”, ridiculous age) for their benefit we point out something curious about the month of April, traditionally the strongest month of the year… except during presidential election years, when it slides from the best month to the second worst.
Additionally, as Evercore ISI technician Rich Ross points out, there are several other patterns which suggest that, in the absence of central bankers, one would be advised to trade, and tread, carefully in the coming months.
This is what Ross writes in a note explaining why he maintains his defensive, bearish stance:

This post was published at Zero Hedge on 03/29/2016.

MARCH 29/JANET YELLEN BACKS DOWN AGAIN AS SHE BECOMES DOVISH ON RATE INCREASES/ THE MESSAGE FROM CHINA MUST HAVE BEEN QUITE CLEAR TO HER!/WE HAD A 3.27 TONNES OF GOLD WITHDRAWAL FROM GLD AND YET …

Gold: $1,235.60 up $15.70 (comex closing time)
Silver 15.23 UP ONLY 4 CENTS*
(*a huge clue that a raid on gold/silver coming tomorrow).
In the access market 5:15 pm
Gold $1242.00
silver: 15.35
Let us have a look at the data for today.
On Thursday I told you that after China devalued their yuan on 4 consecutive day, the POBC was sending a strong message to the USA not to engage in any interest rate rise. Although three of the Fed governors were pounding the table that the USA needed to raise rates, it was obvious that if China devalued their yuan say by 20% to 8:1 (8 yuan/USA) to stay competitive, then everything would hit the wall: the Euro would collapse, the dollar skyrocket, then dollar scarcity, commodities collapse in price and then emerging market collapses together with their sovereign bonds. Today, Yellen got the message as she again goes extremely dovish. The USA can never raise rates again.
Today we saw gold advance $15.70 in regular hours and a further 7 dollars in the access market finishing at $1142.00. Although we lost considerable OI as we enter our next active month, it sure looks like the OI for tomorrow’s reading will advance. The silver price did not rise with gold which is their usual signal that a raid has been called for by our banker crooks. First day notice is on Thursday and that is the last day for LBMA and OTC gold options and the raids should end by Thursday night but for only a short time until they start with their criminal antics again. The game ends when they are carried out on a stretcher (when the East can no longer receive physical metal)
At the gold comex today, we had a good delivery day, registering 27 notices for 2700 ounces and for silver we had 61 notices for 305,000 oz for the active March delivery month.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 212.75 tonnes for a loss of 90 tonnes over that period.
In silver, the open interest ROSE by 1292 contracts UP to 171,872 DESPITE the fact that the silver price was unchanged with respect to yesterday’s trading . In ounces, the OI is still represented by .864 billion oz or 123% of annual global silver production (ex Russia ex China).
In silver we had 61 notices served upon for 305,000 oz.
In gold, the total comex gold OI fell as expected by 14,886 contracts to 482,636 contracts as the price of gold was down $1.50 with yesterday’s trading.(at comex closing) and also the fact that we are entering the new active month of April. However, I was expecting a larger contraction in OI in gold. With today’s announcement of a more dovish Yellen, our new OI for tomorrow will no doubt be sky high.
we had a huge change in the GLD with gold’s drubbing for the past 3 days a withdrawal of 3.27 tonnes./ thus the inventory rests tonight at 820.47 tonnes. No doubt that will change tomorrow considering Yellen’s dovish comments today with regards to the raising of rates. 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, strangelywe had a huge deposit in inventory tonight of 1.475 million oz, and thus the Inventory rests at 330.389 million oz. It is interesting that silver does not move and yet inventory continually rises.
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on March 29, 2016.

“Made Out Of Sand” – A Dramatic Look Inside A Newly Built Chinese Apartment

While real estate is all about “location, location, location,” it appears there are sometimes more prescient factors that any prospective buyer should pay attention to. Amid yet another government-fueled housing bubble, it seems in their haste to fulfil a rapacious demand for property in which to gamble their hard-grafted assets, Chinese construction companies have cut a few corners. As the following stunning video shows, a “newly constructed apartment” crumbles before the owners’ eyes as the ‘concrete’ walls turn to sand…
LiveLeak exposes, in the following video, just how poor the standards can be of so-called ‘new’ properties. LiveLeak footage shows two men in a supposedly ‘new apartment building’ in China where the concrete walls crumble like sand.

This post was published at Zero Hedge on 03/29/2016.

The Pitfalls of Currency Manipulation – A History of Interventionist Failure

The G-20 and Policy Coordination
Readers may recall that the last G20 pow-wow (see ‘The Gasbag Gabfest’ for details) featured an uncharacteristic lack of grandiose announcements, a fact we welcomed with great relief. The previously announced ‘900 plans’ which were supposedly going to create ‘economic growth’ by government decree seemed to have disappeared into the memory hole. These busybodies deciding to do nothing, is obviously the best thing that can possibly happen.
There have been rumors though that they did at least strike some sort of sub rosa agreement with respect to the future course of yuan manipulation. In other words, some kind of policy coordination between China and other major currency issuers has quite possibly been agreed upon, even if only tacitly. Officially, China merely used the occasion to ‘reassure trading partners on foreign exchange’:
‘Chinese policymakers on Thursday ruled out an imminent devaluation of the yuan as they seek to reassure trading partners ahead of the G20 summit that they can manage market stability while driving structural reforms.’
When global stock markets swooned in late August 2015 and again in January 2016, the decline in the yuan’s exchange rate was widely blamed as the cause. Considering various central bank policy decisions announced since the G20 meeting, it does appear as though a coordinated move aimed at halting the yuan’s slide and support wobbly risk asset prices has been underway.

This post was published at Acting-Man on March 30, 2016.

Mises Daily Tuesday: Price Controls May Be On the Way

If you thought negative interest rates were as bad as it could get with central banks, you might be in for a surprise. Central banks have been so spectacularly unsuccessful with their accommodative monetary policies that they are discussing pulling out all the stops to get the results they want. They fail to realize that the reason prices aren’t rising is because they really want and need to fall. Bad debts weren’t liquidated during the last financial crisis, the debtors were merely bailed out. Overpriced assets weren’t allowed to be reduced in price. Central banks pumped trillions of dollars into the economy to attempt to paper over the recession. Market forces want to drive prices down, while central banks attempt to prop them up. So what to do when central banks aren’t getting their way?
Central bankers may very well recommend price controls in an attempt to ‘jolt the economy out of its doldrums.’ Of course, economies don’t go into doldrums and they can’t be jolted out of them. Recessions are not something endemic to the economy but are rather the result of central bank monetary intervention. Because central banks refuse to acknowledge their culpability for causing recessions, their methods for responding to recessions end up being more of the same thing that caused them in the first place: monetary easing. And now that those methods are proving ineffective, more drastic measures might be on the way. Remember that the last time all-out wage and price controls were implemented in the United States was in the early 1970s, also a time of great monetary turmoil. In fact, the price controls were instituted by President Nixonat the same time as he closed the gold window in 1971.
As Ludwig von Mises pointed out many decades ago, once you begin to institute price controls, you inevitably lead to socialism.

This post was published at Ludwig von Mises Institute on MARCH 29, 2016.

Gold Daily and Silver Weekly Charts – Bubble Up To the Bar – As Time Goes By

Today Fed Chair Janet Yellen said that ‘caution should be advised in raising rates.’
And the markets went off in the ‘risk on’ direction as the dollar slumped, stocks soared, and gold caught a bid as the smell of easy money for the foreseeable future was in the air.
This is nuts.
I suspect that the financial class is celebrating the end of the first quarter, or at least trying to give their fund performance that luster that attracts more investors and bigger bonuses.
It is just as likely some other Fed head will come out tomorrow and say things about the improving economy and the need to guard against wage growth and the kind of inflation that does not put money directly into the pockets of the money masters and their friends.
Do you ever get the feeling that the powers-that-be are no longer treating the US as a ‘going concern?’
Lest we forget, the Non-Farm Payrolls report is coming out on Friday. If it comes in hot, we might see some reversals. And if it comes in weakly, perhaps more rally. Let’s see if they can steer this number through the Scylla and Charybdis of their credibility trap. And don’t forget to look for the prior month revisions.

This post was published at Jesses Crossroads Cafe on 29 MARCH 2016.

How The BLS’ Ignores The Fact That Inflation Is Crushing Young Families

Recently the Bureau of Labor Statistics (BLS) released inflation figures for February. Being a statistics geek, I immediately went to the source data and combed through the figures.
As I looked through the numbers, from the single reading of the Consumer Price Index (CPI), all the way through the individual price changes, I found myself wondering what it all means.
I understand the data, and have analyzed it for almost two decades. But does this report give us any useful information at all? Or is it so divorced from reality that we should just junk the whole thing and start over?
The more I dug into the numbers, the less useful they became.

This post was published at Wall Street Examiner by Rodney Johnson ‘ March 28, 2016.

Keiser Report: Helicopter Money (E894)

The following video was published by RT on Mar 29, 2016
In this episode of the Keiser Report, Max and Stacy discuss billions from heaven as more economists, bankers and pundits plead for helicopter money. They also look at three charts which show the ‘fundamentals’ are not, in fact, improving; only the illusion is getting bigger. In the second half, Max talks to Michael Betancourt about his new book, The Critique of Digital Capitalism in which all is about flow, not real trade and where wages are considered a cut into profits – so online ‘work’ no longer receives wages.

Goldman’s Take On Yellen’s Dovish Deluge: “A Less Confident Take On Rate Normalization”

In recent weeks, Goldman Sachs has gained prominence by being the only bank left standing in its confidence that the Fed’s forecast of 2 rate hikes in 2016 is wrong, and instead is sticking with its hawkish prediction of at least 3 rate hikes for 2016. This also explains why Goldman has been pounding the table on long US dollar bets, which incidentally have led to major losses in the past three major central bank announcements, two from Mario Draghi and one from Yellen.
Which is why we were curious how Goldman would reconcile the latest “dovish” shocker from Yellen which has unleashed a dramatic buying spree of all risk assets (as of this moments the S&P500 is trading at a 23x LTM GAAP P/E), with Goldman’s hawkish bias.
For those strapped on time, this is the summary: stocks are currently surging because the Fed is “less confident it can normalize rates” and sees a “weaker global growth environment.”
What can one say: perfectly new normal.
Here is the full note:

This post was published at Zero Hedge on 03/29/2016.

Apple-FBI Kerfuffle in One Interactive (Now Funny) Timeline

It’s over. The FBI, likely with the help of one or more hackers that had approached it, figured out how to get into the iPhone of Syed Rizwan Farook, one of the San Bernardino attackers. The FBI now has what it needs:
The data on Farook’s iPhone A way to get into all iPhones with this version of the operating system. Problem solved – for the FBI, and it is dropping the case with a shortfiling that lacked all the details we really wanted to know.

This post was published at Wolf Street by Wolf Richter ‘ March 29, 2016.

Clash Of The (Gov’t) Mortgage Titans: FHA Versus Fannie Mae / Freddie Mac

On February 11, Ed Golding, Principal Deputy Assistant Secretary, Office of Housing, U. S. Department of Housing and Urban Development, testified in the US House of Representatives on ‘The Future of Housing in America: Examining the Health of the Federal Housing Administration.’
They are 1/3rd of the mortgage Titans in the Washington DC area. They are government mortgage insurers.
Let me show you a chart that Ed Golding didn’t share. Typically, the FHA has a 3x and greater serious delinquency rate than the government sponsored enterprises Fannie Mae and Freddie Mac.

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ March 29, 2016.