The Fed’s Doomsday Device

Bezzle
BALTIMORE – Barron’s, in a lather, says the market is facing the ‘Two Horsemen of the Apocalypse.’ Huh?
Supposedly, the so-called Brexit – the vote in Britain this Thursday on whether to leave or remain in the European Union (EU) – and uncertainty over where the Fed will take U. S. interest rates are cutting down stocks faster than a Z-turn mower.
But Brexit is a side show. As our contacts in London explained in last week’s issue of Bonner & Partners Inner Circle, Britain will do just fine outside of the EU. It will even thrive.
As for the Fed’s fumbling, it is a consequence, not a cause, of falling stock prices. The real threat to this market is more basic, more dangerous… and completely unavoidable. It is a ‘doomsday device’ – hidden in plain view – in the feds’ fiat money system.
It took us a long time to understand how this works. For many years, we referred to the Fed’s EZ money policies as ‘printing money.’ Finally, we realized that this metaphoric description of the Fed’s role probably hides more than it reveals.
The Fed is not printing money. If it were printing money, we’d have more money around and higher consumer prices. Instead, when the feds went to a ‘paper’ money system in 1971, they did it very cleverly.
Yes, their new system is totally fraudulent and absolutely ruinous – just like an old fashioned money-printing scheme. But the fraud takes much longer to uncover, and the ruin is only obvious at the end. It is a ‘bezzle’… where you only become aware that you’ve been had when it blows up.

This post was published at Acting-Man on June 21, 2016.

Anatomy of a Successful Short Sale

I get a lot of questions about short selling, probably because most investors have never done it.
Short selling is the sale of a stock that is not owned by the seller in anticipation that the stock’s price will decline, enabling it to be bought back at a lower price to make a profit. If you can identify stocks before they fall, you can make a bundle of money via short selling.
To help you understand the mechanics and opportunity of short selling, I want to walk you through my most recent successful short sale to help you decide if short selling is right for you.
On April 7 of this year, I sent out this alert to my Rational Bear subscribers, telling them to ‘short’ Conn’s, Inc. (CONN).
Conn’s is a large furniture and appliance retailer, but what’s unusual about it is the fact that it both sells furniture/appliances and loans its customers the money to buy its furniture/appliances. Sort of like General Motors and General Motors Acceptance Corporation (GMAC).
On the surface, Conn’s appeared to be growing quite well by selling an increasing number of products, but it was doing so by extending credit to just about any deadbeat that walked through its doors.
You and I may not need to borrow money to buy a washing machine or a color TV… but 80% of Conn’s customers do. Those are the kind of people I grew up with, and while they may be decent people, they are not the kind of people I’d want to loan money to.
That strategy started to backfire when the Conn’s finance division reported a massive $43.2 million quarterly loss. At the time, I said, ‘Those credit losses are going to get worse.’
How did I know that?

This post was published at Mauldin Economics on JUNE 21, 2016.

And Now Jose Canseco: “Brexit Will Crater The UK Into A Recession; Pound Will Faceplant”

Make no mistake Brexit will crater the UK into recession and the pound will do a 25% faceplant. Capital will flee like its pants are on fire
— Jose Canseco (@JoseCanseco) June 21, 2016

Back in February, in the aftermath of the BOJ’s shocking foray into negative rates, an unexpected monetary policy pundit emerged when none other than famous baseball slugger Jose Canseco said that NIRP in Japan is “blowing my mind”

This post was published at Zero Hedge by Tyler Durden – Jun 21, 2016.

Yellen’s Senate Hearing: Fed’s Forecasting Has Lost All Credibility

Today Janet Yellen came before the Senate Banking Committee to answer questions following last week’s announcement that the Fed will keep the Federal funds rate steady in light of May’s devastating job numbers. While the big media headline focused on Yellen echoing the Bank of England’s warnings against Brexit, the biggest take away may be Yellen’s tacit admission that the Fed’s consistently poor track record of projecting rate increases has crippled its credibility in financial markets.
Yellen’s confession was the result of questioning from Senate Banking Chairman Richard Shelby, who asked whether the Fed’s ‘frequently incorrect predictions of interest rate increases’ have damaged the effectiveness of the Fed’s forward guidance. For those unfamiliar with the term, ‘forward guidance’ is a communications technique employed by the Fed as a policy tool. As the Federal Reserve’s website explains:
When central banks provide forward guidance about the future course of monetary policy, individuals and businesses will use this information in making decisions about spending and investments. Thus, forward guidance about future policy can influence financial and economic conditions today.
While this may seem like standard practice for new Fed watchers, it’s important to note that forward guidance is a relatively new weapon in the Fed’s arsenal and seen by some as one of the lasting legacies of the Bernanke-led Fed.
But forward guidance only works if people believe the signals the Fed is showing and, as Senator Shelby noted, Yellen has become the Chairman Who Cried Wolf when it comes to raising interest rates. So when pushed on the issue, Chairman Yellen downplayed the notion the Fed was offering forward guidance anymore anyway. As she put it:

This post was published at Ludwig von Mises Institute on June 22, 2016.

Musknado – Tesla Tumbles After Offering To Acquire SolarCity

Desperate, or Distracted? Elon Musk’s Tesla has offered to acquire Elon Musk’s cousin’s SolarCity for 0.122 to 0.133 Tesla shares. Tesla shares are tumbling on the news, as perhaps they read the five reasons why SolarCity pain is only just beginning? As Herb Greenberg asked, “is this even legal?”
From Tesla’s blog,
Tesla’s mission has always been tied to sustainability. We seek to accelerate the world’s transition to sustainable transportation by offering increasingly affordable electric vehicles. And in March 2015, we launched Tesla Energy, which through the Powerwall and Powerpack allow homeowners, business owners and utilities to benefit from renewable energy storage.
It’s now time to complete the picture. Tesla customers can drive clean cars and they can use our battery packs to help consume energy more efficiently, but they still need access to the most sustainable energy source that’s available: the sun.

This post was published at Zero Hedge by Tyler Durden – Jun 21, 2016.

JUNE 21YELLEN SPEAKS AND THUS THE SIGNAL TO WHACK GOLD AND SILVER/SURPRISINGLY DESPITE INCREASE MARGINS, THE SILVER OPEN INTEREST SKYROCKETS TO ITS HIGHEST EVER OI AT 201,266 CONTRACTS/BREXIT VOT…

Good evening Ladies and Gentlemen:
Gold: $1,270.50 DOWN $19.50 (comex closing time)
Silver 17.31 down 19 cents
In the access market 5:15 pm
Gold: 1268.50
Silver: 1731
The June gold contract is an active contract. Last night we had a good sized 64 notices filed last night, for 6400 oz to be served upon today. The total number of notices filed in the first 14 days is enormous at 15,220 for 1,522,000 oz. (47.34 tonnes)
ii) in silver we had 0 notices filed for nil oz.. Total number of notices served in the 14 days: 489 for 2,445,000 oz
Today, both gold and silver could not withstand another vicious attack. Generally when Yellen speaks they always whack. Yesterday, the bankers called on their broker friends to raise margin levels on gold and silver contracts and their excuse was the volatile conditions because of the British vote on whether to leave the EU or not. The gold/silver equity shares held up pretty good.
Let us have a look at the data for today.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 274.57 tonnes for a loss of 28 tonnes over that period
In silver, the total open interest ROSE by 4924 contracts UP to 210,266 DESPITE THE FACT THAT THE PRICE OF SILVER WAS up by only 10 cents with respect to YESTERDAY’S trading. We have now a new all time silver oi record and a low price to boot. In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.051 BILLION TO BE EXACT or 150% of annual global silver production (ex Russia &ex China)
In silver we had 0 notices served upon for NIL oz.
In gold, the total comex gold OI fell by a tiny 774 contracts down to 581,190 even though the price of gold was DOWN $2.50 with YESTERDAY’S trading (at comex closing)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
With respect to our two criminal funds, the GLD and the SLV:
GLD
Fascinating!! on a huge whack job the GLD has a huge deposit!
We had one deposit:
this afternoon: 3.56 tonnes were added into the GLD
Total gold inventory: 912.33 tonnes
SLV
THIS MAKES NO SENSE!!
We had A HUGE WITHDRAWAL FROM inventory to the tune of 1.426 million oz; silver inventory tonight rests at 333.069 million oz. If they did have some physical silver that inventory was used to ship to China which has been massively importing silver..
Both the GLD and SLV are massive frauds as they have no metal behind them!
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on June 21, 2016.

Oh Look, Another Microphone On In Your House!

Give me a break…
As expected, this new version of macOS will finally bring support for Siri to the desktop. To bring up Siri, which is getting its own improvements today, too, all you have to do is say ‘hey Siri,’ and Apple’s modestly useful AI assistant will be at your beck and call.
Siri will be able to help you find files on your Mac and send messages, and because it works in the background, it’ll also help you perform tasks while you are using other apps in full-screen mode, Apple says.
And, of course, it will be transmitting your speech back to Apple whenever it feels like it.
Welcome to spying corporate-style. Well, at least until the government “asks”, at which point it will be open season.
My only question to Apple would be this: Can I shut that piece of crap off and actually know it’s off or do I need to open up the Mac and snip the microphone connector wire physically?

This post was published at Market-Ticker on 2016-06-21.

Toward Freedom: Will The UK Write History?

Mutating Promises
We are less than one week away from the EU referendum, the moment when the British people will be called upon to make a historic decision – will they vote to ‘Brexit’ or to ‘Bremain’? Both camps have been going at each other with fierce campaigns to tilt the vote in their direction, but according to the latest polls, with the ‘Leave’ camp’s latest surge still within the margin of error, the outcome is too close to call.
It is a rare moment in history. The British haven’t had their say since they voted to join the European Community back in 1975. What was initially thought of as a project to unite Europe into one common market, with the benefits of free trade and great promises of increasing national wealth, has mutated into a completely different entity.
The British have, instead, found themselves being dragged into a regional economy of zero growth, a weak currency and heavily indebted states. You may have come across the arguments of both camps, but here we wish to address what a ‘Brexit’ or ‘Bremain’ scenario would mean for Britain.
If the UK Bremains…
If the British vote to ‘Bremain’, Britain will start to operate with a ‘special status’ within the union, after Prime Minister David Cameron reportedly renegotiated Britain’s relationship with the EU, in anticipation of the referendum. Cameron tried to change some of the rules of the agreement, to address the concerns of the British public that made them favor a Brexit in the first place.

This post was published at Acting-Man on June 22, 2016.

Trump Responds To Press Mockery Of “Terrible” Fundraising Report

The political press is abuzz today following a report that in a month in which Hillary Clinton raised $26.4 million for her fundraising campaign, leaving her with $42.5 million in cash on hand, Donald Trump managed to raise only $3.1 million, and only had $1.3 million in the bank thanks to another $2.2 million personal loans he made to his campaign. The fundraising report, posted late Monday night, received a mocking reception from political press and set off alarms among Republicans, who worry he’s not interested in raising money for himself or the national party and will get swamped by Hillary Clinton in the general election.
To be sure, the counterargument is whether and how aggressively Trump has been seeking outside funding to subsidize a campaign which has largely been self-funded to date, in keeping with Trump’s committment to keeping outside financial influence to a minimum.
And in typical fashion Trump has beaten back criticism over his “terrible” May fundraising report, by saying that he has “unlimited” cash on hand to fund his campaign because he can put up as much of his own money as he wants. And the punchline: “If need be, there could be unlimited ‘cash on hand’ as I would put up my own money, as I have already done through the primaries, spending over $50 million dollars,’ Trump said in a statement. ‘Our campaign is leaner and more efficient, like our government should be.”
In a statement released on Tuesday, Trump also argued that ‘June represents the first full month of fundraising activity for the campaign’ and that next month’s FEC filing should be used as a benchmark.

This post was published at Zero Hedge by Tyler Durden – Jun 21, 2016.

S&P Analyst Admits: Central Banks Have Destroyed Any Chance Of Fiscal Reform

We have said for many years that accommodative monetary policy completely removes the burden from politicians that would require them to actually make difficult decisions around fiscal reforms, and now Standard & Poor’s is saying the same thing.
Speaking in London on Tuesday, S&P’s top EMEA analyst Moritz Kraemer said that there was a strong relationship between government bond yields, an indicator of how much countries must pay to borrow, and their willingness to undertake structural reforms. “All of these (reform) efforts from the governments have really fallen by the wayside under the palliative that the ECB is providing” Kramer told the Euromoney Global Borrowers & Bond Investors Forum.
As the ECB policymakers have been urging governments to take advantage of the easy financing conditions to implement reforms, Kramer points out what everyone other than central planners have already figured out, which is that as long as the central banks monetize the debt, why face political difficulties and enact reforms – “The moment the pressure goes away, the action goes away as well” Kramer said.

This post was published at Zero Hedge by Tyler Durden – Jun 21, 2016.

Goldman Responds To Yellen’s Testimony: “Little New Ground”

In a report that was perhaps most surprising for the fact that someone actually managed to stay awake during Yellen’s entire 1st day of congressional tesitmony, not so much for its conclusion, Goldman summarizes what Yellen said and concludes that “she broke little new ground”, which is to be expected: as long as stocks keep rising, why change anything, and why pretend that anything can change if needed?
From Jan Hatzius:

This post was published at Zero Hedge by Tyler Durden – Jun 21, 2016.

THE IRS JUST ADMITTED IT STOLE MILLIONS FROM INNOCENT PEOPLE… AND THEY’RE GIVING IT BACK??

It’s the stuff of libertarian dreams. The IRS admits that it wrongfully took money from innocent citizens, and it gives the money back.
This is actually happening to victims of a little-known form of civil asset forfeiture carried out by the IRS on the premise of ‘structuring’ violations. In case you didn’t know, depositing or withdrawing just under $10,000 from your bank account multiple times is viewed as suspicious and possibly criminal activity.
In a victory for lawmakers working to make it harder for the government to take property from innocent Americans, the Internal Revenue Service plans to give people who have had money seized over the last six years the chance to petition to get their money back, The Daily Signal has learned.
According to a GOP source, the IRS told the House Ways and Means Oversight Subcommittee that it will send letters to everyone the agency seized money from for alleged structuring violations, which involves making consistent cash transactions of just under $10,000 to avoid reporting requirements, starting in October 2009.
One petition has already been granted, and others are likely to follow.

This post was published at The Daily Sheeple on JUNE 21, 2016.

Britain Doesn’t Need the EU to Thrive

The United Kingdom will on Thursday vote either to leave or remain in the European Union. This is the most important European event of this century since it will likely have important domino effects for the rest of Europe.
A recent poll showed that if the UK could keep free trade with EU nations, the British people would vote overwhelmingly to leave the EU. To drum up support for staying in the EU, the UK government and quasi-government agencies, like the IMF and OECD, have issued continuous warnings about the costs of such a divorce. The IMF recently reiterated its forecasts that Brexit would have a significant negative effect on the UK economy with a drop in GDP anywhere between 1% and 9% over the long term.
The reality is that Brexit would probably only have a minor initial impact on trade or GDP and, on the contrary, would open up vast possibilities for the UK to exploit trade relations with other faster growing regions of the world without having to reach complex trade agreements that satisfy the vested interests of the other 28 members of the EU.
The impact of Brexit on trade has been grossly exaggerated. In today’s world, a product has parts coming from all over the world. A BMW is only called German because of historical association. In reality, the steel in a BMW may come from Brazil or China, the upholstery from the UK, the engine from France, and the electronics from the USA. Labor costs are only 10% of a car and some may even be foreign labor. Also, profits are distributed to BMW shareholders and bondholders which are more likely to be sent to a hedge fund in Japan than to the mechanic in Dusseldorf. The world is massively economically integrated. Relatively free trade and free movement of capital is no longer an option for most countries, whether it is the UK or any of the other countries in the EU. That boat sailed years ago!

This post was published at Ludwig von Mises Institute on June 21, 2016.

Clinton Foundation “Hacked By Russians”, “Foundation Vulnerabilities” Document Leaked

#Guccifer2 Dossier on #HillaryClintonpic.twitter.com/qweBMKR1Qg
— GUCCIFER 2.0 (@GUCCIFER_2) June 21, 2016

Moments ago the newswires lit up with news that the Clinton Foundation was among the organizations breached by suspected Russian hackers in a dragnet of the U. S. political apparatus ahead of the Nov. election, Bloomberg reports.
CLINTON FOUNDATION SAID TO BE BREACHED BY RUSSIAN HACKERS As Bloomberg adds, the attacks on the foundation’s network, as well as those of the Democratic Party and Hillary Clinton’s presidential campaign, compound concerns about her digital security even as the FBI continues to investigate her use of a personal e-mail server while she was secretary of state.
A spokesman for the foundation, Brian Cookstra, said he wasn’t aware of any breach. The compromise of the foundation’s computers was first identified by government investigators as recently as last week, the people familiar with the matter said. Agents monitor servers used by hackers to communicate with their targets, giving them a back channel view of attacks, often even before the victims detect them.
That’s the official version, and one which accurately focuses on the porous security at both the DNC and Clinton Foundation servers.

This post was published at Zero Hedge by Tyler Durden – Jun 21, 2016.

The Top 100 Hedge Funds Of 2016 According To Barron’s

Household hedge fund names such as Bill Ackman’s Pershing Square, Daniel Loeb’s Third Point Capital and David Einhorn’s Greenlight Capital are nowhere to be found in the Barron’s 2016 List of Best 100 hedge funds. Instead, these firms which bet heavily, and incorrectly, on a handful of investments, have been replaced by a variety of newer, smaller, nimbler, and in the case of the top fund for 2016, algo-driven, hedge funds.
As Barron’s notes, even on Wall Street, “the name of the Barron’s Penta No. 1 hedge fund this year is one that many serious investors wouldn’t recognize. Parametrica Management, a small Hong Kong – based firm, posted a three-year compound annualized return of nearly 30% by the end of 2015, about double the return of the Standard & Poor’s 500 index. A remarkable gain of 45% in 2015’s occasionally frightening market helped the stock-focused quants at Parametrica’s Global Master fund leap 58 spots from its previous ranking.”
Appropriate for the times, Parametrica ignores fundamental analysis entirely and instead specializes in stat arbitrage, a strategy that relies on quantitative analysis to identify instantaneously mispriced asset classes anywhere in the world – think Jim Simmons flagship Renaissance Medallion fund. These market-neutral funds feed on the kind of instability and dispersion in prices that overtook markets for much of 2015 in the U. S., Europe, and especially emerging markets.
Some more details on this year’s winner.

This post was published at Zero Hedge by Tyler Durden – Jun 21, 2016.

Has China Reached its Debt Limit?

Half of the worlds economies (emerging and the developed) are seeing a slowdown in their economic growth. This could potentially be a sign of a new global crisis. Are we at the doorstep of a new global recession?
We have already reported in a previous article and in our reports that there exists little risk of a global recession. This time the analysis will take in account the debt accumulated by the private sector (households and businesses).
Usually, recessions stem from an economic boom marked by an enormous increase in credit extended to the private sector, however, credit extended to private sectors in the leading economies of the world has not seen recently a significant increase. This situation goes in clear contrast with that of 2007. The obvious exception is China, which sees huge growth in credit extended to the private sector.

This post was published at Ludwig von Mises Institute on June 21, 2016.

Short-Term VIX Premium Soars To Highest Since August Crash

Despite the exuberant rally in stocks following the dreadful murder of UK lawmaker Jo Cox last week, investors are anything but convinced that everything is awesome. As polls show the Brexit vote remains very evenly-matched, sotraders have piled into short-term VIX protection (covering the next few days) spiking from 11 to 22 in the last week. This is the widest spread to ‘normal’ VIX since the August crash following China’s turmoil-inducing currency devaluation.

This post was published at Zero Hedge by Tyler Durden – Jun 21, 2016.