Brexit-Beleaguered Bankers Back to Begging for Bailouts!

Nothing is more shameless in a bedazzling sort of way than rich banksters standing on the public curb with their hands out. First, we had the admission this past week by a major French bank that Italian banks are so sick (and so too big to fail) they could cause systemic banking failure throughout Europe if not bailed out by over-taxed taxpayers.
Lorenzo Bini Smaghi – who was a member of the European Central Bank’s executive board and who is now Chair of French megabank Societe Generale – said the only way to save European banks, if they start to fall like dominoes due to Italy’s banking problems, is with taxpayer-funded bailouts.
Europe’s banking market faces the risk of a systemic crisis unless governments accept the idea of taxpayer money as the ultimate recourse in a crisis, Bini Smaghi said. Any intervention should be as swift as possible, he said. (Newsmax)
A French CEO says his massive bank and others could fall like dominoes due to Italy’s problems? That has to be good for his falling stocks. So, you ask yourself, why would he say something to spook an already scared stock market?
Then we had Italy’s prime minister, Matteo Renzi, pressuring Europe to bail out Italy’s banks by pointing out that Italian bank problems with bad loans pale in comparison to Deutsche Bank’s towering derivatives problem over in Germany.

This post was published at GoldSeek on 11 July 2016.

Sugar Daddy FED Creates Generation of Prostitutes

Economics is based on human behavior. ‘One of the central tenets of economics is that people want certain things and will change their behavior to get those things – in other words, people will respond to incentives.’
Applying this to the FED’s policies, and ramifications, should then yield logical connections between the results of the FED’s policies, and their intentions in implementing them, then, right?
Stated differently, the FED intends the consequences of their actions, correct?
If the consequences are unintended, then, it means that the FED’s actions were lacking intellectual rigor, meaning they stupidly did not consider the outcome before acting. Or, nefariously, instead, the FED’s claim that the consequences were not intended is but a lie, as the reality is that the FED intended that which occurred all along.
So, with this backdrop, let’s look at some consequences of the FED easy money, in a way that exposes the FED as a corrupt organization hell bent on saving the too big to fail banks at all costs.
The FED’s easy money policies have given those with first access to the money enormous sums of paper fiat, which has in turn driven up asset prices, boosted the stock market, allowed big corporations to buy back their own shares, artificially boosting price and giving those corporate big wigs outsized bonus payments and stock option windfalls. This reality of artificially boosting stock prices has not worked to stimulate the economy, but instead has only created a larger gap between the haves and the have nots.

This post was published at TF Metals Report on July 9, 2016.

I Can’t Believe What Investors Just Did

Investors bid the S&P to a near record high while simultaneously bidding benchmark Treasury yields to a record low. This is not supposed to happen in functioning markets, and the fact that it transpired illustrates how central banks are destroying markets. They are actively aided and abetted in this endeavor by the financial media, which […] Investors bid the S&P to a near record high while simultaneously bidding benchmark Treasury yields to a record low.
This is not supposed to happen in functioning markets, and the fact that it transpired illustrates how central banks are destroying markets. They are actively aided and abetted in this endeavor by the financial media, which distorts the news to fit a bullish narrative that has little relationship to reality.
Take, for instance, the June jobs report…

This post was published at Wall Street Examiner by Michael E. Lewitt ‘ July 10, 2016.

“The World Is Walking From Crisis To Crisis” – Why BofA Sees $1,500 Gold And $30 Silver

With both stocks and US Treasury prices at all time highs the market is sensing that something has to give, and that something may just be more QE, which likely explains the move higher in gold to coincide with both risk and risk-haven assets. As of moments ago, gold rose above $1,370, and was back to levels not seen since 2014. Curiously, the move higher is taking place after Friday’s “stellar” jobs report, suggesting that someone does not believe the seasonally-adjusted numbers goalseeked by the BLS.

This post was published at Zero Hedge on Jul 10, 2016.

Chart of the Day – Gold and the Dollar

While I’m expecting some kind of pullback at the $1390-$1400 level, I don’t think gold’s intermediate cycle will top until at least retracing the 50% Fibonacci level and probably back to $1550 by September. This will almost certainly be driven by an aggressive moved down in the US Dollar as it really starts to accelerate into the next 3 year cycle low due sometime net summer or fall.

This post was published at GoldSeek on 11 July 2016.

China To Use Pension Funds As $300 Billion “Plunge Protection Team”

One of the more troubling stories to hit the tape last week was that despite, or rather due to, roughly $100 billion in losses in the past 5 quarters, Japan’s gargantuan $1.4 trillion state pension fund, the GPIF, which has desperately been selling Japan’s best performing asset – Japanese Government Bonds – in order to buy local stocks and the Nikkei at its decade highs only to see its equity investment plunge, is now forced to buy even more stocks, i.e. double down, as part of a ridiculous rebalancing which will lead to even more losses.
Japan is not alone.
After China did everything to prop up its own stock market, including arresting hedge funders, sellers, “rumormongers”, halting short selling, eliminating futures trading, and ultimately culminating with the “Buttonwood SPV” in which the PBOC finally threw in the towel and admitted it was directly buying stocks, we now learn that Chinese pensioners are about to become unwitting stock funds.
As Bloomberg reports, “China’s pension funds are about to become stock investors.”

This post was published at Zero Hedge on Jul 10, 2016.

Who’s Most Afraid of Contagion from Italy’s Bank Meltdown?

Contagion is the reason Italy’s banking crisis is all of a sudden Europe’s biggest existential threat. Greece’s intractable problems are out of sight, out of mind; Brexit momentarily spooked investors and bankers; but Italy’s banking woes have the potential to wipe out investors and undo over 60 years of supranational state-building in Europe.
The last few days have seen growing calls for taxpayer-funded state intervention, a practice that was supposed to have been consigned to the annals of history by Europe’s enactment of new bail-in rules on Jan 1, 2016. The idea behind the new legislation was simple: never again would taxpayers be left exclusively holding the tab for European banks’ insolvency issues while bondholders were getting bailed out. But even before the new rules have been tried out, they are about to be broken, or at least bent beyond all recognition.
A loophole has already been found in the rules that would allow the Italian government and European authorities to raid European taxpayers in order to prop-up Italy’s third largest publicly traded bank, Monte Dei Paschi, while leaving bank bondholders and creditors whole, as Reuters reported a few days ago:

This post was published at Wolf Street by Don Quijones ‘ July 10, 2016.

Oilmageddon, Central Banks And Liquidity: The 3 “Feedback Loops” Keeping Citi Up At Night

In recent months we have seen a dramatic spike in visualizations by sellside analysts, who appear to have finally grasped the reflexive nature of markets first noted so many years ago by none other than George Soros, which – with the Fed involved in all of them – show just why Janet Yellen is trapped.
First, it was Bank of America who in early may sketched the not-so-merry-go-round framing the relationship between the Fed and the market as follows (for our commentary read here):

This post was published at Zero Hedge on Jul 10, 2016.

First Post-Brexit Bailout Looms As Bank Of England Mulls UK Property Fund ‘Measures’

Who could have seen that coming? While many have questioned the “suitability of daily-traded, open-ended property funds that are giving investors access to an illiquid asset,” all the time the price is rising, no one wants to rock the boat. However, now that Brexit has rocked the boat, spoiling the party for UK property investors and asset managers alike, it’s time for Carney to ride to the tax-payer-funded bailout rescue to ensure Bear Stearns 2.0 does not become Lehman 2.0…
Following the gating – or forced haircuts – of eight large UK property investment funds this week, fears have grown rapildy of the risk of contagion, which, as The FT reports, is much greater than first feared, with detailed analysis showing that a wide pool of funds have been caught up in the gates imposed on investors withdrawing cash.

This post was published at Zero Hedge on Jul 10, 2016.


The following video was published by on Jul 10, 2016
Silver is one of the top performing global assets of 2016. The fact that silver is now leading gold higher is a very significant technical development which suggest far higher prices. But even as silver is vaulting to two year highs, the precious metals stocks are attracting huge Wall Street money. Is it too late for silver bulls to participate in this new bull phase of precious metal mining stocks, or is this just the beginning of a new multi-year cycle that will create fortunes for those who are correctly invested? First Majestic Mining CEO returns to SGT report to discuss the latest.

Why Deutsche Bank Expects A Collapse In Monthly Job Growth To Under 60,000

Deutsche Bank’s stock price has crashed to all time lows, while its market-implied default risk is back to just shy of record levels…

… which is what likely prompted its chief economist to admit today that all is not well in the state of European banking, asking for a 150 billion (to start) bailout for European banks (of which DB is a member).

This post was published at Zero Hedge on Jul 10, 2016.

With Over $13 Trillion In Negative-Yielding Debt, This Is The Pain A 1% Spike In Rates Would Inflict

Friday’s unprecedented surge to all time highs in both stock and treasury prices, has got analysts everywhere scratching their heads: which is causing which, and what happens if there is a violent snapback in yields like for example the infamous bund tantrum of May 2015.
But first, the question is what exactly will pause what the WSJ calls the “Black Hole of Negative Rates” which is dragging down yields everywhere. Here is how the WSJ puts it:
The free fall in yields on developed-world government debt is dragging down rates on global bonds broadly, from sovereign debt in Taiwan and Lithuania to corporate bonds in the U. S., as investors fan out further in search of income. Yields in the U. S., Europe and Japan have been plummeting as investors pile into government debt in the face of tepid growth, low inflation and high uncertainty, and as central banks cut rates into negative territory in many countries. Even Friday, despite a strong U. S. jobs report that helped send the S&P 500 to a near-record high, yields on the 10-year Treasury note ultimately declined to a record close of 1.366% as investors took advantage of a brief rise in yields on the report’s headlines to buy more bonds.

This post was published at Zero Hedge on Jul 10, 2016.

The Shellacking Continues as Britain is Just the Tip of the Real Estate Iceberg

The absolutely bull whipping of investors in foreign real estate continued today as 2 more property funds in the United Kingdom froze redemptions after Standard Life started the ball rolling on July 4th.
M&G became the third company to shut down redemptions from its property fund as it stated (viaBloomberg):
‘Investor redemptions in the fund have risen markedly because of the high levels of uncertainty in the U. K. commercial property market since the outcome of the European Union referendum.
Redemptions have now reached a point where M&G believes it can best protect the interests of the funds’ shareholders by seeking a temporary suspension in trading.’
This means that not only are people trying to flee the British real estate investment market before the English Pound declines even further versus the U. S. Dollar, but before the government stops investors from fleeing so as to give these companies enough time to liquidate assets to fill redemption requests.
But the United Kingdom is not the only problem.
Italy is on the verge of a major banking crisis so severe that Prime Minister Renzi is considering unilateral action outside of the legal parameters acceptable to the European Union and European Central Bank. There is even discussion among the minority parties in Italy, and Renzi is listening, about calls for a referendum on Italy to withdraw from the European Monetary Union, attempt to negotiate the trade agreements to remain at status quo, and reintroduce the Italian Lira to replace the Euro!
Such a course of action or even the European Union mandated ‘bail-in’ process, will lead to all foreign investment in that country to flee starting with real estate holdings and equities, eventually leading to a rush for the exits to liquidate Italian government and corporate bonds.

This post was published at John Galt Fla on July 5, 2016.

Gundlach Reveals His Portfolio Which Is “Outperforming Everyone Else’s”

With the S&P touching new all time highs on Friday, Barron’s took the opportunity to ask the recently rather skeptical Jeff Gundlach what he thinks of stocks here. Not surprisingly, DoubleLine’s new “bond king”, was less than enthused: “Look, I wouldn’t be surprised if the S&P hit a new high. But every time the S&P 500 gets to 2100, you hear, ‘This is it, this is the one, it is time to buy,’ which is the strangest way to think about the market. It has gone from 1100 to 2100, so now is the time to buy? If the stock market really is such a great buy at 2100, it will still be a very good buy at 2200. I want the market to prove itself. I would rather miss that 100 points than be the fool who bought at 2100 only to watch it go to 1900.”
And while fundamentals leave much to be desired, especially with bond yields in the US slamming new all time lows suggesting a deflationary environment as far as the bond market can see, stocks continue to gain. Gundlach’s reasoning for this relentless levitation: central banks in general and the ECB in particular.

This post was published at Zero Hedge on Jul 10, 2016.

This Company Is Stealing Value From Its Shareholders

To celebrate the second anniversary of the Great American Oil Bust.
Wolf here: In the oil bust saga, and in particular the chapter on North Dakota’s Bakken Shale, where miracles occurred on a daily basis, according to analysts during the boom, Whiting Petroleum plays a specially glorious role.
It’s stock soared during the boom to a high of over $90 a share by July 2014. It did a big acquisition that made it the ‘King of the Bakken.’ Then during the bust, it was long considered one of the survivors. It would remain unscathed. All the old metrics were dragged out to explain why – how low its production costs were, etc. etc.
Now it’s trying to restructure its huge mountain of debt by using the carrot-and-stick method on its bondholders rather than resorting to bankruptcy. Meanwhile, shareholders have gotten mauled – shares have plunged 90% in two years to $8.44 today – and the mauling may not be over just yet.
So here’s Matt Badiali, on what’s happening right now with Whiting Petroleum, to celebrate the second anniversary of the Great American Oil bust….
Bankruptcies in the oil industry have slowed down. But there are still huge pitfalls awaiting investors. Take Whiting Petroleum (WLL), for example.
About two years ago, the Denver-based petroleum and natural gas exploration and production firm diluted its shares by 30% in a merger with rival Kodiak Oil and Gas. And today, Whiting is destroying the value of its shares… again.

This post was published at Wolf Street on July 6, 2016.

Debt Is Dragging Down American Consumers

In May, we reported on the rising level of credit card debt in the US after the Wall Street Journal reported that credit card balances are on track to hit $1 trillion this year.
Now we have evidence it might be even bleaker. A study released in June by CardHub reveals US consumers did worse than expected in the first quarter of 2016. And the study confirms that at this pace, by year-end, Americans will have accumulated more than $1 trillion in credit card debt.
According to the study, Americans paid off $26.8 billion in credit card charges through the first quarter. That represents just 38% of the $71 billion in debt added during 2015. It was the smallest Q1 debt reduction since 2008, falling almost 25% below the post-recession average.
There was even more bad news last month. According to a Kitco report, an increasing number of Americans can’t keep up with their payments:

This post was published at Schiffgold on JULY 7, 2016.