It Begins, Negative Interest Rates On Deposits In The Largest Dutch Bank – Episode 1031a

The following video was published by X22Report on Jul 25, 2016
Greece has a new class of people, the neo-poor. Subprime financial corporation is holding back its earning report. Caterpillar sees 43 months of declining sales. Dallas Fed contracts again, the only thing that’s keeping it moving up is hope it will get better. Baltic Dry Index falls again. More European banks now need a bailout. The largest Dutch bank is now including depositors in their negative interest rate scheme.

Biotech Bellwether Gilead Slides After Cutting Guidance, Harvoni Sales Miss

With biotech stocks experiencing a mini renaissance of sorts in recent weeks, many traders were eagerly looking forward to profitable industry bellwether Gilead to set the tone for the next few days and weeks of trading. And while moments ago the company reported Q2 EPS of $3.08, down from $3.15 a year ago, it beat expectations of $3.02 as revenue of $7.77 billion came in line with expectations (down from $8.24 billion a year ago), the reason why the stock is currently sliding after hours is because while the biotech giant did beat, it cut its full year guidance by $500 million on the top line while boosting its R&D expense forecast by $300-$400 million.

This post was published at Zero Hedge on Jul 25, 2016.

Did Debt Exist Before Money? It Doesn’t Matter

Did credit precede money? Maybe. Does it matter? Nope.
One hundred years ago A. Mitchell Innes rejected the standard story on the origins of money, whereby money spontaneously emerged as barter became progressively costly with the increasing division of labor and greater abundance of goods on the market. Money was the solution to the costliness of barter: a common medium of exchange was used, rather than searching for another person with the thing you wanted who also wanted the thing you wanted to trade. Today Innes’ argument is most popularly championed in David Graeber’s book Debt: The First 5,000 Years. The debate between Mengerians and Innesians has resulted in several published books and exploded onto the blogosphere where Bob Murphy (here, here, here), George Selgin (here, here), David Henderson (here), and Brad DeLong (here) attack David Graeber’s book, with responses from the proponents of Innes.
Innes argued that credit existed before a common medium of exchange and thus the Mengerian timeline of the emergence of money was out of order. The timeline for the emergence of money usually goes like this: barter, money, and then credit. But Innes and Graeber argue that barter was so rare as to be irrelevant and credit existed prior to any common medium of exchange. They also claim that credit-instruments (IOUs) were used like money, where IOUs were used to purchase goods. In their view the Mengerian story is an ahistorical account with no relevance to the facts of history and is of little-to-no use.

This post was published at Ludwig von Mises Institute on July 25, 2016.

Crude Oil Markets Smell a Rat

‘It will be hard to find investors that are willing to go long.’
‘The worst is over.’ That has been the meme in the oil business in the second quarter. Folks in Houston’s and Calgary’s office sector, companies that supply the oil patch, and everyone else associated with the industry, including hundreds of thousands of employees, are counting on it. But markets are deteriorating at breath-taking speed, with the recovery hype leeching out of it, in face of the enormous obstacles of oversupply and flagging demand.
Oil dropped again today, with WTI skidding 2.4%, settling at $43.13 a barrel on the Nymex, the lowest close since April. It is now down 16% from its oil-bust recovery peak of $51.23 on June 8.
In the US, the bloodletting continues. Today, Standard & Poor’s reported that another four US companies that it rates defaulted on their debt payments last week – including two oil and gas companies, Atlas Resource Partners and Forbes Energy services. It brought the total defaults on debt rated by S&P to 71 so far this year, over twice the 34 defaults at the same time last year. The default rate in the oil & gas sector has spiked to higher levels than even during the Financial Crisis, while it has been ticking up at a more leisurely pace in other sectors.
And the layoffs continue.

This post was published at Wolf Street by Wolf Richter ‘ July 25, 2016.

Subprime Snaps: Largest US Subprime Auto Lender Delays Earnings Due To “Accounting Matters”

We first introduced readers to Skopos Financial, a company which we dubbed “The new king of deep subprime” which we have long expected to become ground zero for the upcoming subprime auto crisis, and which is run by Santander Consumer USA veterans, last April.
This is what we said about the company that has become increasingly more prominent: “Skopos Financial, a four-year-old auto finance company based in Irving, Tex., sold a $149 million bond deal consisting of car loans made to borrowers considered so subprime you might call them – we dunno – sub-subprime?”
As Bloomberg noted at the time, the details from the prospectus showed a whopping 20 percent of the loans bundled into the bond deal were made to borrowers with a credit score ranging from 351 to 500 – the bottom 6 percent of U. S. borrowers, according to FICO. As a reminder, the cut-off for “prime” borrowers is generally considered to be a credit score of around 620. More than 14 percent of the loans in the Skopos deal were made to borrowers with no score at all. That means the Skopos deal has a slightly higher percentage of no-score borrowers than the recent subprime auto securitization recently sold by Santander Consumer, which garnered plenty of attention for its dive into “deep subprime” territory.”

This post was published at Zero Hedge on Jul 25, 2016.

The Truman Show

Bubbles are bursting everywhere for the Truman’s of this world today, previously coddled in whatever version of reality TV they resided – waking up to the scary truth we are trapped in a forgotten episode of the Twilight Zone (but never forgotten by Orwell) – the one where psychopath fascists take control of the world and kill us all. That’s what happens when you’re a nave idiot like Truman, getting all your information from a bankrupt society attempting to preserve itself through lies, script, and authority. This characterization of ‘life’ for increasing numbers of the disenfranchised middle class is much like Truman’s awakening as the lies were exposed, again, much like what you should be seeing in your circumstance today as the psychopaths attempt to take complete control of our lives.
I say ‘attempt to take control of our lives’ when the deed has already been done, because they have accomplished this is spades. What’s happening now is the undoing – with no more colonies to conquer and exploit they turn on their own – you – until that party gets too violent as well. That’s the authoritarian part of the story, the part where they show you how crazy they are and why you should be afraid. That’s why the cops keep shooting people and they have been getting away with it up until now. But they can’t get away with their bulling ways on the other ‘big boys’ in the game – China and Russia. Their astute leaders are too smart for that. They have been on to the vulgarities associated with American Empire since the ‘financial crisis’, echoes of which are becoming visible again with the resurgent credit binge post 2008.
As you should know, the status quo has been on a ‘mission from hell’ since then to turn the world into their own version of the Truman Show, so they can continue on in the dream world in which they reside. But times are getting tough even for these types again, never mind honest and civilized people, so they are becoming increasingly desperate. Because not only is the real economy in trouble, the subsidized economy (think ZIRP. NIRP, etc.) is visibly feeling the pain now despite all the money printing, reminiscent of the 2008 financial crisis. But so far the status quo has been able to stay ahead of the curve, stepping up the interventions, leaving any vestiges of reality in the rear view mirror. The stock market at all time highs is testament to this fact – a fiction completely removed from reality by the machines.

This post was published at GoldSeek on 25 July 2016.

Decision Time for Silver Investors?

What I will say comes with some reservation, mainly because the future is unwritten. However, based on the notion that markets will rhyme rather than repeat, I present a scenario in which a decision has to be made by silver investors in the near future. That decision is whether to hold onto silver, sell some of it or sell all of it.
This is not because I foresee this nascent silver bull being strangled at birth, but rather because of the nature of the silver bull. The problem is silver in the past 13 years has seen some volatile action followed by periods of inactivity. These periods can be so volatile that some silver investors may wish to reduce their positions at such a time. Contrast the two charts below which compare periods of silver volatility (first chart) against the same time window for gold (second chart).

This post was published at SilverSeek on July 25, 2016.

Our Monetary System Favors the Rich and Hurts the Poor

Last month, Philipp Bagus and Andreas Marquart released their new book Blind Robbery!: How the Fed, Banks, and Government Steal Our Money, now available from FinanzBuch publishers. (See Karl-Friedrich Israel’s full review on We recently spoke with Dr. Bagus about the new book and how certain politically influential groups benefit from our modern monetary system. Mises Institute: In your new book, you contend that our economic system increases wealth inequality by favoring the wealthy. Can you briefly summarize what you mean by this?
Philipp Bagus: Always when new money is produced, there is a redistribution in favor of those who receive the new money and spend it at the old, still low prices and to the detriment of those who receive the new money later and see prices rise faster than their income. In our fiat money system new money can and is produced at almost zero cost. Those actors, who are in position to receive the new money first benefit. Among them are the government and the financial system. The new money is usually introduced into the market in form of loans. Those, who receive a higher percentage of these loans profit at the cost of those who do not. The super rich have an advantage in this respect. They have an easier access to the new money produced by the banking system in form of loans, because they can offer collateral. They can offer real estate as a collateral for new loans using these loans to buy even more real estate or stocks pushing up prices. A poor person has more difficulties to get a loan in normal times because he does not own assets. Only in dangerous bubble times will he get easy and cheap access to loans. Thus, someone like George Soros may easily give a call to his banker and get a million dollar loan in an instant to buy more assets. A poor or even middle-class person will not get such a million dollar loan so easily, rather they will observe how asset prices are being pushed up and they keep getting relatively poorer. Thus, our fiat monetary system is one often neglected reason for an increasing wealth inequality.

This post was published at Ludwig von Mises Institute on July 24, 2016.


Gold:1319.30 down $3.80
Silver 19.62 down 4 cents
In the access market 5:15 pm
Silver: 19.58
For the July gold contract month, we had ANOTHER HUGE 54 notices served upon for 5400 ounces. The total number of notices filed so far for delivery: 6445 for 644500 oz or 20.046 tonnes
In silver we had 20 notices served upon for 100,000 oz. The total number of notices filed so far this month for delivery: 2279 for 11,395,000 oz
Friday night, I took a look at the daily bulletin which is an estimated OI and then I knew the reason for the raid that was forthcoming today!
the high open interest for silver (ESTIMATED at 222,000)
the front July contract month in gold saw a huge gain in an amount standing. (20.189 TONNES). Now we have over 20 tonnes standing in this a non active month. It sure looks like August will be exciting.
We are now entering options expiry month for gold and silver:
i)The comex options expiry on Tuesday July 26.
ii)The OTC options in London expire Friday at noon July 29.
So expect downward drafts in gold and silver trading until both of these contracts expire.
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 311.698 tonnes for a gain of 9 tonnes over that period
In silver, the total open interest FELL BY ONLY 813 contracts DOWN to 220,433, AND CLOSE TO AN NEW ALL TIME RECORD EVEN THOUGH THE PRICE OF SILVER FELL CONSIDERABLY BY 12 CENTS IN FRIDAY’S TRADING. In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.102 BILLION TO BE EXACT or 157% of annual global silver production (ex Russia &ex China).
In silver we had 20 notices served upon for 100,000 oz.
In gold, the total comex gold FELL BY A CONSIDERABLE 10,042 contracts as the price of gold FELL in price FRIDAY to the tune of $7.40. The total gold OI stands at 597,411 contracts. The higher contango price seems to be having an effect as holders prefer to liquidate rather than roll. The higher contango makes no sense with libor at extreme low levels and thus the spread between months is higher than it ought to be.
With respect to our two criminal funds, the GLD and the SLV:
we had A HUGE WITHDRAWAL in gold inventory TO THE TUNE OF 4.45 TONNES. /
Total gold inventory rest tonight at: 958.69 tonnes
we had no changes into the SILVER INVENTORY TO THE SLV
Inventory rests at 348.580 million oz.
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on July 25, 2016.

Stocks Redline As Key Sentiment Metric Leaves “Complacency” And Enters “Mania” Phase

Ever since the unprecedented Brexit bounce in markets, underpinned by loud guarantees from central bankers around the globe that risk assets will simply not be allowed to sell off, increasingly more vocal concerns have emerged about trader complacency, culminating this morning in an article by Mohamed El-Erian titled “Calm markets raise big risks for complacent investors” in which the chief economic advisor to Allianz says that “A sustained period of low volatility manufactured by central banks cannot disguise growing problems.” True, but it can and always does help ignore them until such time as the central-bank induced complacency goes away, usually amid cries that central bankers are losing control.
However, is it really complacency? According to one of our favorite charts by Deutsche Bank’s Jim Bianco which looks at the ratio of the trailing S&P500 PE to the quarterly average VIX, the market was not actually complacent. Instead, it went almost overnight from “Realistic and disciplined”, skipping “Complacency”, and is now on the cusp of “Mania.”

This post was published at Zero Hedge on Jul 25, 2016.

WHAT’S GOING ON??? Record Swiss Gold Flow Into The United States

There was a huge trend change in U. S. gold investment in May. Something quite extraordinary took place which hasn’t happened for several decades. While Switzerland has been a major source of U. S. gold exports for many years, the tables turned in May as the Swiss exported a record amount of gold to the United States.
How much gold? A lot. The Swiss exported 50 times more gold in May than their monthly average (0.4 mt) since 2015:

As we can see, the Swiss gold exports to the United States are normally less than 0.5 metric ton a month. And for many months there weren’t any gold exports. However, something big changed in May as Swiss gold exports surged to 20.7 mt (665.500 oz)

This post was published at SRSrocco Report on July 25, 2016.

Foreign Central Banks Flee From Ugly, Tailing 2Y Treasury Auction, Lowest Bid To Cover Since 2008

We classified last month’s 2Y auction as “lacklustre.” This month, the best word to describe today’s sale of $26 billion in 2Y paper is “dreadful.”
While the yield on the auction was almost unchanged from last month, coming at 0.760%, it tailed by 1.2bps to the 0.748% When Issued, compared to last month which came on the screws at 0.745%. This was the biggest tail for this maturity going back over a year.

This post was published at Zero Hedge on Jul 25, 2016.

The Coup and Turkey as a Great Power

In my book The Next 100 Years, I argued that Turkey is going to become a major regional power. Recent events would seem at odds with this prospect. But in fact, they confirm it.
Emerging as a regional power puts great pressure on a nation. The shift in the external reality forces shifts internally as well. The result is what we have seen so far in Turkey: a clash between rival factions with diverse visions, a coup of some sort, and for now, a dictatorship.
Rising power in the world flows from greater domestic strength. But it feeds back into the internal system and creates strain on social and political fault lines. We can see examples of this throughout history.
How the US and Japan Emerged as Global Powers
The Mexican-American War turned the US into the leading regional power in North America. The war also spurred the early stages of industrialization. Railroads, the telegraph, and various forms of hydrocarbon-powered factories began to change the very nature of commerce.
So, one part of the US (the North) began quickly evolving its economic and social systems. The South wanted to retain its plantation-based economy and social system. The split led to the Civil War and the deaths of over half a million.
Some believed the Civil War would end the regional power status of the US and cripple its economy. It was a fair outlook, but it was wrong. From 1865 onward, the US grew its economic and global power.

This post was published at Mauldin Economics on JULY 25, 2016.

Yen Tumbles On Spurious Nikkei Headline, Stocks Shrug

When you asbolutely, positively need to get stocks higher, unleash a spurious Nikkei headline (at 220am local time)… “Japan to Double Planned Spending in Stimulus Package: Nikkei” and sure enough USDJPY spikes back above 106.00… but S&P futures algos are ignoring it for now…
Goldman earlier said that 3 trillion was too small…

This post was published at Zero Hedge on Jul 25, 2016.

What Now?

I got an email last week that read, ‘What do I do now?’ I replied, ‘I don’t know what you mean.’ She wrote back, ‘I didn’t buy the February lows that your model told us to buy and I didn’t buy any of the stocks on your ‘buy list’ the Monday following the Brexit Bashing. So what do I do now?’ I told her I continue to think we remain in the same secular bull market that began in March of 2009 and I think it has a lot farther to go. Yes, I know the equity markets get overbought from time to time. Yes, I know there will be pullbacks. Yes, I know certain valuation metrics are historically expensive, but I also know how secular bull markets work. I have written many times about the fact that there are not many of us left. There are not many of us that have seen a secular bull market. I don’t know where the market mantra came from that a 20% rally is a bull market and a 20% decline is a bear market, but I do not believe that’s the case. Well, it might be the case in the shorter term for tactical bull and bear markets, but it’s not the case for secular bull markets!
Secular bull markets tend to last 14 – 15 years and compound at 16% per year (on average). Study the Dow Jones Industrial Average chart (chart 1). Since the 1929 ‘crash’ there has been just two secular bull markets: 1949 to 1966 and 1982 to 2000. Were there pullbacks during those secular ‘bulls?’ You bet there were. The President Kennedy ‘steel crisis’ of 1962 lopped ~26% off of the D-J Industrials in a pretty short time. Then there was the slight accident in October of 1987 that left the Industrials off 22.6% in a single day, but it was not the end of either of those secular bull markets. Again, study the chart. Every time the D-J Industrial Average (INDU/18570.85) has emerged from a multi-year trading range (1933 – 1949, 1966 – 1982, 2000 – 2013) the markets has entered a secular bull market. I don’t think it is any different this time.

This post was published at FinancialSense on 07/25/2016.