Copper Continues To Crumble Amid Record China Inventories

Having bounced miraculously off the early January lows – despite no significant fundamental shift – scrambling all the weay up to its 200-day moving-average, copper prices have been tumbling for the last 7 days, the longest losing streak since early Jan. “Worries over Chinese demand is still weighing on the market,” warns one analyst and rightly so as, just like the oil complex, copper inventories (in China) just hit a record high.
Miracle ramp…

This post was published at Zero Hedge on 03/31/2016.

‘Are We Prepared to Impose Temporary Debt Standstills?’

In a remarkable turnaround, foreign investors are estimated to have pumped over $35 billion into emerging market (EM) stocks and bonds in March, the highest monthly inflow in nearly two years, according to the Institute of International Finance. One of the biggest beneficiaries is Latin America, which for months had been shunned by investors. The region took in $13.4 billion, with equities in even crisis-hit Brazil receiving over $2 billion.
But is this the beginning of an enduring rally or is this ‘hot money,’ which can change direction without notice, about to get cold feet again?
‘Over the past 15 years there has been a very large increase in the presence of foreigners in domestic equity, bond and deposit markets of developing countries,’ says Dr. Yilmaz Akyuz, the chief economist of the South Centre, an intergovernmental organization of developing and emerging economies representing 52 countries, including four of the BRICS nations (Russia excluded). Akyuz was speaking at a briefing of delegates at the UN’s Geneva headquarters.
This influx of foreign funds may seem like a blessing until the tide suddenly turns. Then it becomes a curse.

This post was published at Wolf Street by Don Quijones ‘ March 31, 2016.

“There Are No More Hotel Beds At All”: Sweden’s Tourism Industry Collapses As Resorts Become Refugee Centers

‘Whichever way we slice the data, the growth in working age population stands out as a key driver of economic growth for most countries. A healthy dependency ratio, a skilled workforce, together with strong institutions and an absence of major resource imbalances is usually the formula for country-level success. But with most DMs weighed down by ageing populations, a key question is this – can people inflows counter challenging demographics? The short answer is yes.’ That’s what Goldman said last autumn as Europe’s refugee crisis began to spiral out of control. We’re not sure if it had occurred to the bank just how large the people flows into Western Europe would end up being because the implication in the excerpted passage above is that the influx of people may actually be a good thing economically speaking if it ameliorates negative demographic shifts.
Of course Goldman may be proven right in the long-run, but in the short-term the mass migration is straining Western Europe’s resources and now looks set to drive up the unemployment rate in Germany.

This post was published at Zero Hedge on 03/31/2016.

Imploding Pensions Take The Rest Of US Down With Them

It’s the same story pretty much everywhere: Cities and states promised ridiculously generous (by today’s standards) pensions to teachers, cops and firefighters, failed to sufficiently fund the plans and invested the money they did have very badly. And now the weight of the resulting unfunded obligations are crushing not just plan recipients but entire communities. Here’s a representative case:
Oregon PERS unfunded liability swells to $21 billion (KTVZ) – This week, Oregon’s Public Employee Retirement System Board received an earnings report on the status of the PERS fund investment. The report said Oregon’s PERS fund fell by 4 percent in 2015, a loss of nearly $3 billion – and a Central Oregon lawmaker said that means major reforms are more urgent than ever.’The blow to PERS from the Moro court case left Oregon with an additional $5 billion in unfunded liability,’ Sen. Tim Knopp, R-Bend, said Tuesday. ‘Now PERS is an additional $8 billion short of its target.’
In that ruling nearly a year ago, the state Supreme Court overturned the vast majority of the PERS reform cost-saving provisions enacted by the 2013 Legislature.
The current unfunded PERS liability now exceeds $21 billion, up from $18 billion last year, he noted.

This post was published at DollarCollapse on March 31, 2016.

The Path to the Final Crisis

Reader Questions on Negative Interest Rates
Our reader L from Mumbai has mailed us a number of questions about the negative interest rate regime and its possible consequences. Since these questions are probably of general interest, we have decided to reply to them in this post.
Before we get to the questions, a few general remarks: negative interest rates could not exist in an unhampered free market. They are an entirely artificial result of central bank intervention. The so-called natural interest rate is actually a non-monetary phenomenon – it simply reflects time preferences. Time preferences are an inviolable category of human action and are always positive.
Market interest rates consist of the natural interest rate plus two additional components: a price (or inflation) premium that reflects the expected decline in money’s purchasing power, and a risk premium or entrepreneurial profit premium that reflects the perceptions of lenders of a borrower’s creditworthiness and generates an entrepreneurial profit for those engaged in lending.
One often reads that interest is the ‘price’ of money, but that is actually not quite correct. It is really a price ratio, the difference between the valuation of present against that of future goods. An apple one can obtain today will always be worth more than a similar apple one can obtain at some point in the future. If time preferences were to decline to zero, people would stop consuming altogether. All efforts would be directed toward providing for the future, but they would never see that future, because they would starve to death before it arrives.
In theory, time preferences can rise almost to infinity: for instance, if an asteroid were to hit Earth in two week’s time and we knew for sure that it would destroy the planet, it would no longer make sense to provide for the future. Saving, investment and production would stop, and everybody would confine himself to consumption. But the opposite can never happen, since we cannot just stop consuming. As long as time passes and there is a ‘sooner’ and a ‘later’, there simply cannot be zero or negative interest.

This post was published at Acting-Man on April 1, 2016.

Euro-area Deflates for 2nd Month Before ECB Beefs Up QE (Will More QE Help US Homeownership?)

The quantitative easing (QE) thing isn’t going the way Mario Draghi had hoped.
(Bloomberg) Euro-area inflation was negative for a second month in March, in data released on the eve of the European Central Bank’s first day of expanded debt purchasing to fight deflation.
The consumer price index in the 19-nation bloc fell 0.1 percent from a year earlier after a 0.2 percent drop in February, according to data published Thursday. That matches the median prediction in a Bloomberg survey of economists. Core inflation, which strips out volatile elements such as food and energy, was at 1 percent, up from 0.8 percent in the prior month.
‘We have seen energy putting a lot of downward pressure on headline inflation,’ said Marco Valli, chief euro-area economist at UniCredit Bank AG in Milan. ‘Monetary policy cannot do it all, but in the short term it’s basically the only game in town. That’s how it is now, and probably how it will be if a further shock hits the economy in next months.’

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ March 31, 2016.

JPM “Shaves” First Half GDP By 0.5% Due To Weaker Durable Goods And Consumer Spending

Remember when 2016 was the year when the US economy was finally supposed to take off on “above trend” growth? Make that 2017.
Here is JPM’s chief economist Michael Feroli doing what banks are so good at doing: cutting their own US GDP growth forecasts.
Shave and a haircut, first half
We are shaving about a half percentage point off of our estimate for first half US real GDP growth. We estimate Q1 GDP increased at a 1.2% annualized pace (down from 2.0%), and we project Q2 GDP growth at 2.0% (down from 2.25% prior). The downward revision to Q1 follows a string of softer source data, starting with the February durable goods report and punctuated by the downward revision to January real consumer spending.
The downward revision to Q2 owes to slightly lower expectations for consumer spending — thanks to the rebound in gasoline prices and the corresponding hit to real disposable income — as well as to somewhat weaker momentum on capital spending.

This post was published at Zero Hedge on 03/31/2016.

Gold Daily and Silver Weekly Charts – You Ain’t Seen Nothing Yet

“Full fathom five thy father lies,
Of his bones are coral made,
Those are pearls that were his eyes,
Nothing of him that doth fade,
But doth suffer a sea-change,
into something rich and strange.”
William Shakespeare, The Tempest
Let’s see how we do through the Non-Farm Payrolls Report tomorrow.
Like most of the really big, substantial changes, this one continues on, moving slowly, lulling almost everyone into a false sense of continuity. And then the sea-change comes.
According to Bloomberg, even with this sluggish March trading, this was the ‘best quarter for gold in 30 years.’
We live in a time of great trend changes, in finance, in politics, and power.
You ain’t seen nothing yet.

This post was published at Jesses Crossroads Cafe on 31 MARCH 2016.

MARCH 31/GLD WITHDRAWS 1.19 TONNES FROM ITS INVENTORY TODAY/JOBS REPORT TOMORROW/CHINA AGAIN PLACES YUAN HIGHER WHICH TRAMPLES THE SHORTS/OFF SHORE CHINA COMPANY GUOSEN, SUB. OF STATE OWNED COMPA…

Gold: $1,234.20 up $7.30 (comex closing time)
Silver 15.46 up 25 cents
In the access market 5:15 pm
Gold $1232.60
silver: 15.43
Tomorrow is the FOMC report and we always see huge volatility on this report. The April report for March generally sees a lower plug for seasonal adjustments so we might see a better atmosphere for gold and silver. Also options expiry is over so we may have a good day in our precious metals.
Let us have a look at the data for today.
At the gold comex today, we had a poor delivery day, registering 58 notices for 5800 ounces on first notice day for gold, and for silver we had 2 notices for 10,000 oz for the active March delivery month.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 213.10 tonnes for a loss of 90 tonnes over that period.
In silver, the open interest ROSE by 1556 contracts UP to 176,801 despite the fact that the silver price was down 9 cents with respect to yesterday’s trading . In ounces, the OI is still represented by .884 billion oz or 126% of annual global silver production (ex Russia ex China).
In silver we had 2 notices served upon for 10,000 oz.
In gold, the total comex gold OI was obliterated as the complex fell by 10,057 contracts down to 470,384 contracts as the price of gold was DOWN $8.90 with yesterday’s trading.(at comex closing).
We had a small change in the GLD, a withdrawal of 1.19 tonnes from the GLD/ thus the inventory rests tonight at 819.28 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 had no changes in inventory tonight and thus the Inventory rests at 330.389 million oz..
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on March 31, 2016.

What the Federal Reserve Could Do

The financial media is abuzz with speculation about what the Fed will do next, and whether it will decide to hike the federal funds rate target at its April Federal Open Market Committee (FOMC) meeting. There is a lot of speculation too as to what the Fed might do in the event of another recession or financial crisis. Some recent articles at the Brookings Institution delve into that possibility. And what is the first potential policy action discussed? Negative interest rates.
Ben Bernanke was the first to bring it up, with his first article in a series on ‘What Tools Does the Fed Have Left?’Although Bernanke mentioned that the Fed might return to quantitative easing also, he speculated that the Fed might even consider negative interest rates before more QE. Perhaps not surprisingly, Bernanke was more worried about whether the Fed has the legal authority to introduce negative interest rates than with the practicality of negative interest rates. His overall assessment is that ‘a policy of modestly negative interest rates might be a reasonable compromise between no action and rolling out the big QE gun.’
Brookings also held a conference last week to discuss some of the Fed’s possible policy options. Among those discussed were:
1. Negative interest rates – We’ve critiqued negative interest rates here and here. The only good thing about negative interest rates in the US is that they are still only under discussion. By the time they become a serious policy proposal, there will hopefully be enough negative feedback from Europe and Japan regarding negative interest rates there that it will scuttle any attempts to take them seriously as a policy tool in the US.

This post was published at Ludwig von Mises Institute on MARCH 31, 2016.

Goldman Admits It Was Wrong About The “Yellen Call”: Offers Test To Check If It Is Finally Right

Back in November, when it was laying out its (five out of six wrong) Top Trades and predictions for 2016, Goldman strategists forecast that because the “US will be the first to grow GDP demand above potential”the stock market party would be over and that the “Bernanke Put” would be replaced with the “Yellen Call.”
Specifically, this is what Goldman predicted:
We see a risk that the ‘Bernanke put’ will gradually be replaced by the ‘Yellen call’. The ‘Bernanke put’ captured the intuition that when the risks to growth, inflation and market sentiment are skewed to the downside and the Fed has an easing bias, monetary policy reacts aggressively to bad news. Now that these risks have receded, we expect the Fed will shift to an easing bias, implying that monetary policy will likely begin to react more aggressively to good news. The inflection point for this shift to an easing bias will arguably arrive in 2016, beyond which rallies in risk sentiment may be met by less accommodative monetary policy – the ‘Yellen call’. We did not see things this way and said the following:

This post was published at Zero Hedge on 03/31/2016.

NOT SAFE! China’s Central Bank Starts Buying Stocks (Via SPV) – A New Low For Manipulation

‘Global Central Banks have gorged themselves on sovereign debt in their attempt to jumpstart a sick global economy. Now China has gone one step further – buy stocks too.
(Reuters) China’s foreign exchange regulator has bought mainland stocks worth over 27 billion yuan ($4.18 billion) via three low-profile investment firms it controls, the official Shanghai Securities News reported on Thursday.
Buttonwood Investment Platform Ltd, 100 percent owned by the State Administration of Foreign Exchange (SAFE), and Buttonwood’s two fully-owned subsidiaries, have bought shares in a total of 13 listed companies, the newspaper reported, citing top 10 shareholder lists in the companies latest earnings reports.
Shanghai Securities News said the investments are part of SAFE’s strategy to diversify investment channels for the country’s massive foreign exchange reserves.

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ March 31, 2016.

Should You Load Up On Brazilian Stocks? Lessons From Nixon And Watergate

Well, bad news is still good news in Brazil, apparently.
Despite the fact that a complete political meltdown is less than two months away, the market is excited about what’s being viewed as a possible turning point for the country’s economic fortunes.
Of course the notion that things are about to get better isn’t based on the data or on anything that even approximates an upturn in the fundamentals. Indeed it was just yesterday when the country reported its largest primary budget deficit in history, underscoring just how silly it was when officials suggested late last summer that the government would somehow manage to report a 0.5% surplus.

This post was published at Zero Hedge on 03/31/2016.

SP 500 and NDX Futures Daily Charts – Beauty Is Only Skin Deep….

…but ugly goes down to the bone.
Stocks were running out of gas today.
Traders were continuing to sit on their hands for the most part, judging by the volumes, waiting to see what unfolds from the Non-Farm Payrolls Report tomorrow.
The market has had a nice upwards bias thanks in large part to Chairperson Yellen and her dovish cooing about easy money. The problem is that most if not all of this easy money is being used to inflate financial assets bringing profits to the top ten percent.
The real economy continues to languish.
And so I think that risk is grossly underpriced, right now.
Earnings season is dead ahead, and I suspect that they will not be all that good.

This post was published at Jesses Crossroads Cafe on 31 MARCH 2016.

This Indicator Suggests A Bear Market Is Now Underway And It’s Likely To Be A Painful One

NYSE margin debt fell again during the month of February. After the selloff in stocks that kicked off 2016, this should come as no surprise. Investors are usually forced to reduce leveraged bets during these sorts of episodes in the stock market. In fact, this forced selling can actually exacerbate the volatility. And because margin debt is only now beginning to come down from record highs, surpassing those seen at the 2000 and 2007 peak, this should be of concern to most equity investors.
To fully appreciate this risk, I prefer to look at margin debt relative to overall economic activity. When leveraged financial speculation becomes large relative to the economy, it’s usually a sign investors have become far too greedy. As Warren Buffett would say, this is usually a good time to become more fearful, or conservative towards the stock market.
Not only did margin debt recently hit nominal record-highs, it hit new record-highs in relation to GDP, as well. In other words, over the past several decades, investors have never become so greedy as they did recently. And yes, this includes the dotcom bubble.

This post was published at Wall Street Examiner by Jesse Felder ‘ March 31, 2016.