Why this Spike Will Perforate Yield Chasers

Record moneys suddenly pile into the material of debt crises.
The Institute of International Finance opined last week that ‘the ‘low for long’ interest rate outlook now looks more like ‘low forever’ – an outcome that has unleashed a powerful renewed search for yield.’
They’re all doing it.
Japanese investors, such as pension funds and insurance companies, are swarming into US Treasuries now more than ever.
According to the Ministry of Finance, for the week ended July 16, Japanese investors bought a net 1.718 trillion ($16.2 billion) of foreign ‘long-term’ debt (everything except ‘short-term’ debt). The week before, they’d bought a net 2.55 trillion, the highest on record. And according to the MOF, they were mostly buying US Treasuries.
For them it makes sense: the 10-year punishment yield of the Japanese Government Bond is a negative -0.22%. But the 10-year Treasury yield is still a positive 1.57%. And with the Bank of Japan being outspoken about wanting to crush the yen, the hapless Japanese have even more reason to seek refuge in US paper. We can’t blame them.
Europeans are doing the same thing, buying US Treasuries, but also US corporate bonds, and even US junk bonds.

This post was published at Wolf Street by Wolf Richter ‘ July 24, 2016.

“It’s Not Panicking If You’re First” – China Devaluation Is Closer Than Anyone Thinks

Once again – ahead of the G-20 meetings – China’s currency mysteriously abated its incessant plunge suggesting ‘stability’. As Bloomberg notes, history shows that the Chinese currency usually strengthens ahead of major political or economic events, such as President Xi Jinping’s state visits to the U. S. and the Boao Forum.
The People’s Bank of China raised its daily reference rate for the yuan in each of the last three days, spurring speculation it is acting to limit losses in the currency.
Howeber, as Mark St. Cyr notes, lately there have been quite a few warning signs pertaining to China. Yet, concern seems anathema to not only the ‘markets,’ but the media in general. However, I’m of the opinion that is all about to change. And that ‘change’ is not years away, but rather, sooner (and much sooner at that) than later.

This post was published at Zero Hedge on Jul 24, 2016.

Did Verizon Just Signal The Top?

The last time AOL (bought by Verizon in May 2015) was involved in a mega merger was January 2000, when AOL acquired Time Warner for $182 billion in what was the mega deal of the last tech bubble, creating a $350 billion behemoth… which nearly dragged down both companies a few years later. The timing could not have been more perfect as it marked the tech bubble top…
Will it happen again?

This post was published at Zero Hedge on Jul 24, 2016.

Belize’s leading newspaper warns its citizens to prepare for the imminent collapse of the EU – and the onset of World War III

July 2016 – BELIZE – Last weekend, Prime Minister Renzi said that while Italy has a banking crisis that could end in collapse at any time because of the more than 360 million euros in non-performing debt; he should warn that the crisis surrounding Deutsche Bank is ‘a hundred times worse.’ Deutsche Bank is sitting on a pile of non-performing loans and some US $ 72.8 trillion in current derivatives contracts. Germany’s entire GDP is US $ 4 trillion, and the entire European countries produce some US $ 18 trillion dollars per year. Deutsche has a leverage ratio of 40:1. Remember Lehman at the time of its collapse had a leverage ratio of 31:1. In the last 12 months, Deutsche Bank’s balance sheet fell some 48%. Now it’s at 8% of its value in the year 2007.
But another bubble is about to burst in Europe. According to Bloomberg, as of July 17th major real estate funds in London were facing major investors’ run; and the prospect of an imminent blowout of the entire British real estate bubble is very real. Standard Life Investments has suspended its UK Real Estate fund so as to stop investors’ pulling out money. The panic was clearly shown Monday when it was announced that Andrea Leadsom was strong-armed to withdraw from the race for leader of the British Conservative party so that Theresa May can be installed today (Wednesday) as Prime Minister. Why? The Brits needs a government in place to deal with the onrushing crisis.
On Sunday, David Folkerts-Landau, chief economist of Deutsche Bank, gave an interview in which he called on Europe to immediately emit an emergency 150 billion euros bailout. At the same time RT reported that George Soros had written an op-ed in which he said that the collapse of the EU was ‘almost inevitable’ since the Brexit vote. Taken together, the current conditions in Italy, Deutsche Bank and the London real estate market are certainly more than enough to blow up the entire trans-Atlantic financial sector. Leading political figures in Germany are now calling for a one-time capital injection to save Deutsche Bank and thus save Germany, Europe and the United States.

This post was published at UtopiatheCollapse on July 24, 2016.

Is the ECB out of Control?

How much money could be made to disappear in Italy’s bank bailout?
It all began with an early morning police raid. On July 6, Slovenian Police, acting on an insider tip, stormed the headquarters of the country’s central bank, the Bank of Slovenia, and seized information stored on the bank’s internal network. It also raided the headquarters of the major state-owned bank Nova Ljubljanksa and the local offices of international accountancy firms (and prolific enablers of corporate misbehavior), Ernst & Young and Deloitte.
The police were investigating allegations that some ‘legal entities’ had abused their office in valuing equity at Nova Ljubljanksa during its bailout by the state in 2013. 257 million is alleged to have been misappropriated, during the 3.2 billion bailout of the banks.
The action provoked a furious backlash from ECB chairman Mario Draghi, who wrote the following in a strongly worded letter:
The ECB deplores that there was no attempt to find a solution reconciling the conduct of the pre-criminal investigations with the ECB’s privilege on inviolability of its archives…
The ECB also regrets that the actions of the Slovenian Police risk putting into question the fulfilment of the Bank of Slovenia’s tasks as a member of the Eurosystem, as well as that of its governor in his personal capacity as a member of the Governing Council of the ECB.

This post was published at Wolf Street by Don Quijones ‘ July 24, 2016.

How Do We Make America Strong Again? Start Telling the Truth

You want to make America strong again? The only way to do so is to start telling the truth and insisting on the truth.
“Making America Strong Again” is a potent political narrative. But what does “being strong” mean? For some, it’s a code-phrase for bullying–forcing other nations to do our bidding.
For others, it describes a re-emergence of widespread domestic economic vitality.
Another audience sees the rebuilding of a social contract and social cohesion as the essence of strength. As laudable as some of these interpretations of strength might be, to me “being strong” boils down to one principle, and only one principle: tell the truth, however painful and unwelcome as it might be. The essence of weakness is the cowardice of avoiding the truth. We as a nation have grown accustomed to the cowardice of half-truths, half-confessions, half-apologies and a financial system that rewards fraud in all its variations of artifice, deception and lies.
What’s presented as “fact” is actually a spectrum of manipulation and lies. Does anyone with a basic grasp of the economy really believe unemployment is 5% or less? Does anyone seeking the truth believe that a person working one hour a week is equivalent to someone working 40 hours a week? Isn’t counting both of these positions as equally statistically important jobs a form of not telling the truth?

This post was published at Charles Hugh Smith on JULY 24, 2016.

Does Popeye know best?

You can’t beat something with nothing, Gary North has said repeatedly, and I think he’s right in the realm of ideas. Bad ideas, once entrenched, hang around until a crisis brings the roof down. Even then the guilty will be standing in the wreckage pointing fingers elsewhere, usually toward anything that hints at freedom.
Evil systems eventually break down [North writes]. We have seen this in our day: the three-day disintegration of the Communist Party of the Soviet Union, and the Soviet Union itself: August 19-21, 1991. Impossible, we would have said in early 1991.
Our goal is to promote positive change at a local level while we wait for today’s evil systems to break down. This waiting goes on for years. Then, without warning, the transformation comes in short order.
It is our job to be ready to accept responsibility and then implement local changes in terms of the ideas we profess to be true.
We can’t beat something with nothing.
But when it comes to elections, ‘nothing’ may be a very sane option to take – as in choose A, B, a minor party candidate, or none of the above.
As we know the last choice is not found on the ballot. Ever wonder why?
For every voter terrified that Hillary will win there’s at least one voter apoplectic over a possible Trump victory.
But voters aren’t the only ones suffering. If someone wants less government, there are no realistic choices. He stays home on Election Day. He figures the federal government will grow until it collapses, and his vote won’t stop that from happening. Worse: His vote will provide much-needed legitimacy to state expansion. There are those who take the Atlas Shrugged approach – voting for the candidate most likely to bring about the collapse first – but that’s a crap shoot. Voters have no way of knowing what the candidate will do after the election. People who refuse to vote know a more authoritarian government is on the way regardless of who wins. Their only hope is gridlock.

This post was published at GoldSeek on 24 July 2016.

Making The Wrong Choices For The Wrong Reasons

Why we’re on a collision-course with crisis
Life is full of examples where folks make bad choices for noble reasons. Not every decision is a winner: sometimes you make the right call, sometimes you don’t.
In 1962, Decca Records passed on signing a young new band because it thought that guitar-based groups were falling out of favor. That band was The Beatles. Napolean Bonaparte calculated he could conquer Russia by assembling one of the largest invading forces the world has ever seen. He marched towards Moscow in the summer of 1812 with over 650,000 troops. Less than six months later, he retreated in failure, his forces decimated down to a mere 27,000 effective soldiers. 1985 217 separate investors turned down an entrepreneur trying to raise the relatively modest sum of $1.6 million to fund his vision of transforming a daily routine shared by millions around the world. That company? Starbucks. In these cases, those making the decision made what they felt was the best choice given the information available to them at the time. That’s completely understandable and defensible. Fate is fickle, and no one is 100% right 100% of the time.
But what’s much harder to condone — and this is the focus of this article — is when people embrace the wrong decision even when they have ample evidence and comprehension that doing so runs counter to their welfare.
Really? you might be skeptically thinking. Do people really ever do this?
Yes, sadly. Absolutely they do.
Because decision-making isn’t just based on data. It’s also influenced by beliefs. And when our beliefs don’t align with the data, we humans can be woefully stubborn against changing our behavior, even in spite of mounting evidence that our beliefs are incorrect and possibly even detrimental to us.
The fascinating field of behavioral economics is dedicated to studying why people are capable of making bad decisions despite have access to good data (if you’ve got the time, listen to our past interviews with behavioral economist Dan Ariely here. They’re riveting.)
So, yes, we humans are easily capable of being our own worst enemies.
For a prime example, let’s turn to one of the greatest basketball players of all time.

This post was published at GoldSeek on 24 July 2016.

With Italy’s Bank Stress Test “A Near-Term Risk”, Who Is Most Exposed?

With the S&P500’s relentless surge, once which even Goldman is no longer able to contain its amazement at what it has dubbed an unprecedented multiple expansion (the other two times that saw a comparable increase in forward multiples ended with the Black Monday crash of 1987 and the 2000 dot com crash, respectively), it appears as if nothing matters: fundamentals, technicals, geopolitics, or frankly any newsflow aside from what central banks may (or may not) do in the near future. Still, as Deutsche Bank reminds us, one key risk-event is coming up in the form of the European Banking Authority’s stress test results that will be released on July 29 which “present another near-term risk to markets.”
As Italy’s Il Sole 24 reported earlier today, Monte dei Paschi capital is most ‘at risk’ in the stress tests, citing preliminary indications of tests that will be released on July 29. Perhaps in an attempt to difuse fears of upcoming bank failures, the paper reported that the other 4 Italian banks – Intesa, Banco Popolare, UBI, UniCredit – “show resilient capital level under stressed scenario.”

This post was published at Zero Hedge on Jul 24, 2016.

Gold Demand Remains Stable During Sector Weakness

My favorite indicator for real time Gold demand is the amount of Gold in the GLD and its fluctuations over time. As we wrote in our book, the driving force for Gold is investment demand which is driven by changes in real interest rates. Western-based investment demand from big money (i.e Stan Druckenmiller and George Soros) shows up mostly in the ETFs and specifically, GLD. The amount of Gold in GLD has risen steadily even as Gold consolidated a few months back and has been stable in recent weeks even as Gold and gold stocks correct their Brexit breakouts.
The chart below includes the price of Gold, the amount of Gold in GLD (bottom) and the rolling quarterly change in the amount of Gold in GLD. Even as Gold consolidated for several months in the spring, the amount of Gold in GLD increased. Over the past few weeks Gold has retreated by $65/oz yet the GLD has only lost 2% of its Gold. Moreover, note that the recent demand surge (quarterly change) is the second strongest of the past 10 years.

This post was published at GoldSeek on 24 July 2016.

“Billionaires For Billary”: Mike Bloomberg Will Endorse Hillary

First The Koch Brothers switch sides and now Michael Bloomberg backs Clinton as it appears America’s oligarchy is showing its true colors as ‘Billionaires for Billary’ emerge from the RNC woodwork…
As The NY Times reports, Michael R. Bloomberg, who bypassed his own run for the presidency this election cycle, will endorse Hillary Clinton in a prime-time address at the Democratic convention and make the case for Mrs. Clinton as the best choice for moderate voters in 2016, an adviser to Mr. Bloomberg said.

This post was published at Zero Hedge on Jul 24, 2016.

G-20 Meeting Ends With Rising Discord Between China And US

Over the weekend, the Group of 20 convened in yet another meeting in Chengdu, China, where they reiterated a long-running pledge to use all policy tools to help boost confidence and growth, but instead of emphasizing monetary policy the group said they would focus on fiscal and structural measures. Then again, since incremental fiscal stimulus would likely result in additional central bank monetization in order to avoid a steep selloff in government bonds and risk a yield spike, what the G-20 really did is set the stage for even more central bank-funded deficit spending, aka soft helicopter money.

This post was published at Zero Hedge on Jul 24, 2016.

A Device the Size of a Postage Stamp Could Store Every Book in Existence

Data storage is rapidly shrinking. Now, a team of nanoscientists led by Sander Otte at Delft University of Technology in the Netherlands has just announced the densest method ever developed to store re-writable digital data. The method of moving around individual chlorine atoms on a flat sheet of copper can write a 1 kilobyte message at 500 terabits per square inch. Well, for those unfamiliar with these computer measurements, that is about 100 times more info per square inch than the most efficient hard drive can store.
So, the NSA just spent a lot of money on that huge facility to store everyone’s text and phone calls for life, but it could have been 100 times smaller. With this method, you could theoretically fit every book ever written onto a flat copper sheet the size of a postage stamp. The new storage device was outlined in the journal, ‘Nature Nanotechnology.’

This post was published at Armstrong Economics on Jul 23, 2016.

The 3 Big Stories NOT Being Covered – Part 1

Anyone who has read this publication for any length of time knows that topics range from mainstream to the totally uncovered stories. As we look out not just across the economic landscape, but across the world in general, we are seeing an alarming increase of serious situations that are receiving little or no coverage at all from the western media. Thankfully there are hundreds if not thousands of reliable people who chip in with analysis and stories of their own on some of these topics.
We’ll start out by saying there many, many more uncovered stories, but these are the three we feel could be game changers in the near to medium term. We picked these three themes because, in terms of magnitude, they will have the biggest impact on the world if they continue on their present trajectories. Given the length of each analysis, we are going to break this into a three-part series.
PART 1 – Russia: Tensions, Turmoil, and Western Hubris
It will be hard not to sensationalize this topic. It will be harder still to explain the delicate intricacies of foreign relations and the consequences of missteps without scaring the daylights out of people. So if you get scared and wake up, that’s a good thing. We have nothing to sell you. There will be no newsletter offering at the end of this piece that promises to save you and your family – and make you rich off this crisis – for a mere $49.
Russia and its dealings with the world is perhaps one of the most misunderstood constructs in modern economics and current events. The reason for this disconnect is likely because many people have yet to leave the mental model of the Cold War. Let’s arrange some things before we get in too deep. That day in 1989 when the Berlin Wall fell and East and West Germany were reunited didn’t end the Cold War despite what you heard on television. Granted, relations between Russia and the US became slightly more amicable, but there were many instances during the Cold War where there was at least a modicum of cooperation – the SALT (Strategic Arms Limitation Talks) meetings coming immediately to mind.

This post was published at GoldSeek on 24 July 2016.

It’s About To Get Ugly: ‘You Better Have Some Exposure To Hard Assets’

How much longer can insider machinations keep financial markets propped up? And how will they keep markets from collapsing when the world panics like it did at the start of the year and again following the Brexit vote?
According to K92 Mining President Bryan Slusarchuk, there’s not much ammunition left for central bankers and governments because they’ve already taken excessive and unprecedented steps in an attempt to contain the situation. Unfortunately for the masses, there really is no plan other than to continue destroying the value of currencies around the world. And that, says Slusarchuk in his latest interview with SGT Report, is why you need to act before the crowd and position yourself for the inevitable:
You’ve seen these fiat currencies around the world intrinsically become worth less and less… and at the same time you have smart money that understands this isn’t going to end well and when it doesn’t end well you better have some exposure to hard assets like gold and silver. Gold has withstood the test of time as a store of value and as a currency, in fact, for thousands of years… Just because a group of central bankers in the last 50 years has thought contrary to that fact doesn’t make them right.
It’s going to be very challenging for them to dig the world economy out of the hole when it starts to retreat hard. And that’s when the big payday will come for investors that have taken the prudent position of looking at gold as a hedge against all of this economic uncertainty.

This post was published at shtfplan on July 24th, 2016.

MINING PHYSICAL GOLD — Bryan Slusarchuk

The following video was published by SGTreport.com on Jul 24, 2016
Gold and silver mining companies are enjoying a resurgence in 2016 as their stocks attract deep pocketed Wall Street money. The trend is clear, the best precious metal mining companies have the potential to compound the returns of the rising prices of gold and silver, by many multiples. Bryan Slesarchuk, the President of K92 Mining Inc returns to SGT report to provide a detailed update about the company which is now trading in the United States. K92’s mine and mill was purchased from Barrick Gold at the very low point in the mining stocks bear market – and now K92 will begin pulling PHYSICAL gold out of the ground in the next 30-45 days. Perhaps that’s why K92 stock has doubled in price since Bryan was last on SGT report on May 24th.

Plutocracy, Then and Now – The Lesser of Two Evils

Plutocracy, Then and Now – The Lesser of Two Evils
The world being what it is, we sometimes have to choose between two less than desirable options. The problem with choosing the lesser of two evilsthat are distasteful enough is that one has to numb their conscience to do it. This is what is known as a ‘Faustian bargain.’ We may lie to others and especially ourselves about it, but there it is.
But the individual will find that if they choose to make this kind of rotten deal with their own conscience enough times, and put their inner voice aside to make an expedient, practical choice rather than a moral one, and pile lie upon lie to ease the pain of their betrayal, eventually their conscience will fail them when it matters the most. Or they may simply find themselves too compromised to do anything but overtly choose what is objectively wrong or suffer serious personal consequences. They have intertwined their fingers with the power of darkness so deeply that now they are his.
And this is how the banal, time serving functionaries familiarize themselves into eventually doing otherwise unthinkable, and sometimes monstrous things.
The road to hell is paved, not with one climactic choice, but a long series of increasingly bad choices and lies, that eventually grow into a complete betrayal of duty, and our honour, and our sacred oaths of service.
We Americans are not usually thought to be a submissive people, but of course we are. Why else would we allow our country to be destroyed? Why else would we be rewarding its destroyers? Why else would we all – by proxies we have given to greedy corporations and corrupt politicians – be participating in its destruction?
Most of us are still too sane to piss in our own cistern, but we allow others to do so and we reward them for it. We reward them so well, in fact, that those who piss in our cistern are wealthier than the rest of us. How do we submit? By not being radical enough. Or by not being thorough enough, which is the same thing.
Wendell Berry

This post was published at Jesses Crossroads Cafe on 24 JULY 2016.