GDP – Even Less Than Meets the Eye

The most common statistic used to measure the size and growth rate of a nation’s economy is Gross Domestic Product (GDP). However, GDP as most commonly used can be a flawed measurement if one tries to infer that the size or growth of economic activity is well correlated to the prosperity of its people. Consider China and the United States for example. The U. S. has a GDP of approximately $16.5 trillion and a population of roughly 325 million while China has a GDP of nearly $11 trillion and a population of approximately 1.4 billion. One could say that China’s economy is about two-thirds the size of the U. S. economy, however when one considers how that activity is spread amongst the citizens, China’s economy is only one-seventh that of the U. S. Accordingly, Chinese citizens are clearly less productive and prosperous than U. S. citizens
GDP per capita (per citizen), as demonstrated above, is a valid way to measure the efficiency of one nation’s economic output versus another and is also an important statistic to gauge the productivity and prosperity trends in one country.

This post was published at Wall Street Examiner by 720global ‘ September 7, 2016.

Italy Funding Panic? Target2 Liabilities Unexpectedly Soar To Record High

During the peak days of the European credit crisis in 2011 and 2012, one of the unfalsifiable indicators used by market watchers to observe the state of Italy’s banking system and regional fund flows (mostly outflows from the periphery, inflows into Germany and northern states), was the monthly Target2 balance. Positions within the Target2 system, which settles cross-border payments in the euro zone, are monitored because in a world where all other market signals are corrupt and distorted by central banks (Spanish 10Y bonds yield less than US bonds), they remain a reliable, concurent indicator of financial stress, for example when banks in a country lose foreign funding.

This post was published at Zero Hedge on Sep 7, 2016.

The Great Debt Unwind Beneath the Surface: US Commercial Bankruptcies Soar

They’d believed in six years of Wall Street hogwash.
Not that you would have guessed from the stock market, hovering at all-time highs, or from soaring junk bonds, even the riskiest paper: CCC-and-below rated junk bonds skyrocketed since their February 12 low as their average yield plunged from 21.6% to 13.5%. Even the S&P US Distressed High Yield Corporate Bond index has soared 57% since February 12.
Those are miracles to behold.
At the slightest squiggles of the market, the Fed goes into bouts of by now embarrassing flip-flopping on rate increases that demonstrate to the world that they have absolutely nothing else in mind than keeping the stock market inflated and keeping the biggest credit bubble in US history from unceremoniously imploding.
And the ECB is out there with its scorched-earth monetary policies, with negative interest rates and bond purchases, including asset backed securities and corporate bonds, that it has been caught buying directly from issuers. It’s driving even corporate bond yields into the negative. Just now, French drugmaker Sanofi and German household products maker Henkel issued bonds with negative yields, thus getting paid by these hapless investors to borrow.

This post was published at Wolf Street by Wolf Richter ‘ September 7, 2016.

OPEC Needs This One Country to Boost Oil Prices – and They’re About to Cave In

On September 26-28, the biannual meeting of the International Energy Forum (IEF) will take place in Algiers. Ministers, officials, and CEOs from the IEF’s 72 members (including both OPEC countries and the European Union and United States) will be in attendance, with several panel discussion scheduled.
But the most interesting meetings will be the informal ‘side-bar’ conversations between OPEC and other oil producers.
Once again, they’ll be talking about ‘production stability’ – in other words, a production cap to help support globaloil prices.
Now, whenever meetings between OPEC members and other oil producers are mentioned, the conversation always shifts to one particular country – and for good reason.
Without them, no production cap deal is possible.
And this country now has a very good – and very urgent – reason to support a push for higher oil prices.
Here’s what I mean…

This post was published at Wall Street Examiner by Dr. Kent Moors ‘ September 7, 2016.

SEPT 7/HUGE RISE IN SILVER INVENTORY (3.134 MILLION OZ ) INTO SLV/GOLD AND SILVER TAKE A LITTLE BREATHER BEING WHACKED A BIT BY OUR BANKER FRIENDS/THE FLASH BOYS (IEX) ARE TAKING ON THE BANKERS W…

Gold:1344.30 down $5.10
Silver 19.76 down 29 cents
In the access market 5:15 pm
Gold: 1345.20
Silver: 19.80
THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON.
The Shanghai fix is at 10:15 pm est and 2:15 am est
The fix for London is at 3 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 45 minutes before London’s first fix.
And now the fix recordings:
Shanghai morning fix Sept 7 (10:15 pm est last night): $1352.07
NY ACCESS PRICE: $1349.21 (AT THE EXACT SAME TIME)
Shanghai afternoon fix: 2: 15 am est (second fix/early morning):$1353.00
NY ACCESS PRICE: 1351.70 (AT THE EXACT SAME TIME)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
London Fix: Sept 7: 3: am est: $1348.25 (NY: same time: $1351.05: 3 AM)
London Second fix Sept 7: 10 am est: $1348.25 (NY same time: $1349.63 , 10 AM)
It seems that Shanghai pricing is higher than the other two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex
For gold:The front September contract month we had 399 notices filed for 39900 oz
For silver: the month of September we have a total of 429 notices filed for 2,145,000 oz
Let us have a look at the data for today

This post was published at Harvey Organ Blog on September 7, 2016.

These Two Signals Are Pushing My Crude Price Forecast Upward

There are many ways to estimate where oil prices are going: reported inventory levels, imports and exports, production figures, and a myriad of ways to estimate demand.
With oil prices swinging up and down around the $40 a barrel range, business news outlets are full of people calling on these numbers to predict the price of oil.
Ignore them.
Because at the end of the day, there are two – and only two – good ways to really tell where the oil market is going.
Either one is a good indicator. But right now, both are telling us the same thing…

This post was published at Wall Street Examiner by Dr. Kent Moors ‘ September 7, 2016.

There Is No Default Or Fraud Committed On The Xetra-Gold Securities

Anyone who purchases paper gold with the belief that it is and investment in gold is an imbecile.
Last week Zerohedge broke a story about an investor who tried to redeem shares in Xetra-Gold ‘notes’ in exchange for the designated amount of gold represented by those notes. The story gained legs on the internet as a ‘refused delivery’ and a ‘delivery default.’ I received several inquiries about this and my only response was that someone needs to go through the prospectus in order to determine what type of event has occurred.
I went through the prospectus and so far, everything published on the internet, including any claims made by Zerohedge, are reckless, useless and incorrect. Here’s a link to the prospectus: Xetra-Gold Notes. Ultimately, there has not been a legal default. Furthermore, here has not been any fraud committed because there has not been any breach of contract.
Let’s start with some facts directly from the prospectus. 1) The Issuer is Deutsche Borse Commodities GmbH; 2) The Custodian is Clearstream Banking AG; 3) The Debtor of the Gold Delivery Claims is Umicore AG. That latter aspect is interesting. Umicore is a Swiss metals refiner and trader. Any claims of failure to deliver should be directed at Umicore. The securities in question are unsecured Notes of the Issuer and the only ‘asset’ of the Issuer is a ‘claim for delivery of one gram of Gold in accordance with the Terms and Conditions.’ That’s it, there are not any other assets in Deutsche Borse Commodities GmbH.

This post was published at Investment Research Dynamics on September 7, 2016.

NYC Luxury Real Estate Weakness Spreading As Lower Pricing Tiers Tank

A few weeks back we wrote about how luxury real estate markets around the country were tanking (see ““I’ve Never Seen Anything Like This Before” – The Housing Markets In The Hamptons, Aspen And Miami Are All Crashing“). Turns out other price tiers may be at risk of contagion as lower-priced real estate is also starting to crash, at least in NYC.
Per Bloomberg, the number of listed dwellings, in the top 20% pricing tier, that have experienced price cuts from their original listing price has spiked over the past couple of months. While most price reductions are only coming in at around the 5% level, that is a huge deterioration for a market where sellers have become accustomed to selling at or above listing price.

This post was published at Zero Hedge on Sep 7, 2016.

WHY YOU SHOULD BE PAYING ATTENTION TO AMERICA’S QUIET WAR ON CASH

Government campaigns of intimidation – like the wars on drugs, terror, and poverty – have been used to extort the public for decades. Despite the previous failures of institutional ‘wars,’ a new war on cash is being waged that threatens freedom in a more subversive way than ever before.
Banks and governments around the world are cracking down on the use of paper money, and in turn, eliminating any anonymity left in the current system. Through strict rules on cash transactions and civil asset forfeiture laws, for example, the system has already instituted penalties for using cash. But as payments evolve into a purely digital network, the consequences of this new paradigm are being brought into the spotlight.
The ability to track, record, and mediate transactions of all individuals is a power that dictators throughout history could have only dreamed of. Those who value privacy are turning to alternatives like cash, cryptocurrencies, and precious metals, but these directly threaten central bank dominance. This ongoing tug-of-war in financial innovation will determine whether we enter an age of individual empowerment or centralized enslavement.

This post was published at The Daily Sheeple on SEPTEMBER 7, 2016.

Developing Countries Emulate The US, Turn Citizens Into Debt Slaves

One of the big advantages of being a Latin American or Asian country used to be – somewhat counter-intuitively – the lack of credit available to most citizens. The banking system in, say, Brazil or Thailand simply wasn’t ‘advanced’ enough to offer credit card, auto, or mortgage loans on a scale sufficient to turn the locals into US-style debt slaves.
But that, alas, is changing as those countries adopt their rich cousins’ worst habits.
Brazil, for instance, was once seen as a Latin American success story and future world power. But then it ramped up government spending and started encouraging its people to become ‘consumers.’ And the rest is familiar, if depressing, history.
The following article is from 2015, about the Brazilian government’s response to its suddenly-overleveraged middle class:

This post was published at DollarCollapse on SEPTEMBER 7, 2016.

IEX Set To Revolutionize Gold Trading With Blockchain-Based Exchange

The IEX Group, which shocked market participants on August 19 when it became the first official exchange to offer a mechanism to bypass HFT predatory algos and frontrunning against all odds, including vocal complaints by established players like Nasdaq and Citadel, now seeks to revolutionize the more than $5 trillion-a-year gold market with a new exchange being created by its spinoff TradeWind Markets, Reuters reports.
The proposed gold exchange would be a fascinating departure from convention, as it would use elements of blockchain technology to improve transparency and the clearing and settling of trades, an aspect missing in legacy offerings, said Matt Harris, a managing director at Bain Capital Ventures. Bain has an investment in IEX. Blockchain is a tamper-proof shared ledger that can automatically process and settle transactions using computer algorithms.
The new gold exchange is said to leverage the technology used by IEX for its new equities exchange, The Investors’ Exchange, which launched last month after operating for more than two years as a dark pool. TradeWind plans to utilize the distributed settlement system in blockchain to eliminate the need for third party verification by giving participants an up-to-the-minute record of all transactions.

This post was published at Zero Hedge on Sep 7, 2016.

Janet Yellen Is Choosing the President: Rate Hike Would ‘Give Trump the White House’

The next president is not being determined by voters, but by the elite.
More specifically, it has been the economic data that has swung more than a few of the 20th Century elections, with good times solidifying the incumbent, and bad times ushering in a new face.
Right now, the way this economic data is handled and presented is being largely determined by the Federal Reserve and central bank action in general. The market has signaled for a policy change, but that change has been forestalled in order to keep up appearances.
As Michael Covel explains, Trump’s recent surge in the polls makes a Fed rate hike even less likely – especially because it could help him win, and the powers-that-be do not want that:
The odds of a Trump presidency shot higher this week. And that means the odds of a Fed interest rate hike before Election Day got lower…
The fix is in… […] I don’t see how Yellen can raise rates between now and Election Day… if Trump can win.
If she did, it would tank the stock market, nail the economy and give Trump the White House.

This post was published at shtfplan on September 7th, 2016.

“Brutal Price Action” Looms As Stocks & Bonds Correlation “Warning Sign” Flashes

The correlation across asset-classes over the past few months – as global central banks ramp up QE to $200bn per month – is near record highs.
Massive central bank stimulus with below zero rates and quantitative easing has led to increasingly dysfunctional markets, with even the negative correlation between stocks and bonds breaking down. As we have noted previously, they are now largely moving in the same direction as markets have become more driven by central banks, leaving investors with no place to hide.

This post was published at Zero Hedge on Sep 7, 2016.

The Global Economy Is Sinking Fast & There Are Not Enough Life Boats – Episode 1069a

The following video was published by X22Report on Sep 7, 2016
The housing bubble is popping and it is spreading. US job opening jump unexpectedly. It is worse than the Great Depression, 1 out of 6 working age adults are out of the work force. Class 8 trucking orders continue to decline. The consumer auto loan bubble is about to pop and it will hit hard. The central bank is backed into a corner, it almost time for the entire economy to come crashing down. We now know who is in power when you are not allowed to mention the Federal Reserve while President or running for the Presidency.

SP 500 and NDX Futures Daily Charts – Sittin’ On Top of the World

Stocks were struggling to make a silk purse out of the sow’s ear of an economy today.
The pivotal point was the ability to turn APPL around, despite their so-so announcement of the iPhone today which was largely technical improvements, some of which matter, but which may not compel anyone to upgrade.
And so we saw the Nasdaq pushing to another new high, as the broader market in the SP 500 does not really confirm the move.
Tomorrow we will see what the ECB has up their sleeves rates-wise.

This post was published at Jesses Crossroads Cafe on 07 SEPTEMBER 2016.

“Clinton Foundation Is Charity Fraud Of Epic Proportions”, Analyst Charges In Stunning Takedown

In early May, we introduced readers to Charles Ortel, a Wall Street analyst who uncovered financial discrepancies at General Electric before its stock crashed in 2008, and whom the Sunday Times of London described as “one of the finest analysts of financial statements on the planet” in a 2009 story detailing the troubles at AIG. Having moved on beyond simple corporate fraud, Ortel spent the past year and a half digging into something more relevant to the current US situation:”charities”, and specifically the Clinton Foundation’s public records, federal and state-level tax filings, and donor disclosures.
Four months ago, Ortel began releasing his preliminary findings in the first of a series of up to 40 planned reports on his website. His allegation was simple: ‘this is a charity fraud.’
To learn more about the Clinton Foundation, Ortel decided to “take it apart and see how it worked” and he has been doing that ever since February 2015.
‘I decided, as I did with GE, let’s pick one that’s complicated,’ said Ortel. ‘The Clinton Foundation is complicated, but it’s really very small compared to GE.’

This post was published at Zero Hedge on Sep 7, 2016.

Fed’s Beige Book Repeats “Modest Economic Growth”, No Rate Hike Odds Reaction

The Fed’s most boring report, the Beige Book, once again offered its ubiquitous “modest” to “moderate” growth outlook with little insight into whether the Fed is considering any rate hike in the immediate future, with the following summary of the Fed’s two non-market mandates: “Labor market conditions remained tight in most Districts, with moderate payroll growth noted in general. Upward wage pressures increased further and were moderate on balance, with more rapid gains reported for workers with selected specialized skill sets. Price increases remained slight overall”

This post was published at Zero Hedge on Sep 7, 2016.

The False Promises Behind Quantitative Easing

It has been almost eight years since former U. S. President George W. Bush warned the world that ‘without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold.’ The government’s response to the crisis was a $700 billion rescue package that would prevent U. S. banks from collapsing and encourage them to resume lending, which was soon to be followed by a series of Quantitative Easing (QE) packages injecting money into the economy. The rationale of government intervention was to boost spending, restore confidence in the market and revamp economic growth to everyone’s benefit – but did it succeed in doing so?
QE: Faith-Based Monetary Policy
With QE still ongoing (albeit tapered), it is no longer part of a ‘rescue’ package – it has now become the new normal – despite a complete lack of positive results. Since end-2007, the Federal Reserve’s balance sheet expanded from about $890 billion to more than $4.5 trillion! And yet, U. S. growth rates have remained in the vicinity of 2 percent since 2010 (see chart below). Europe is no different. The European Central Bank (ECB), which first embarked on QE in March 2015, raised the monthly amount for asset purchases from EUR60 billion to EUR80 billion, and expanded the range of assets to include corporate bonds – but despite that, the growth outlook remains dim with 1.4 percent in 2016, and 1.7 percent in 2017 (source: Bloomberg). So why are governments still clinging to an approach that simply doesn’t deliver?

This post was published at Ludwig von Mises Institute on Sept 7, 2016.

Barclays Highlights “Conundrums Of A Policy Maker” – Helicopter Money Only Option Left

Over the weekend we wrote about Goldman’s “Great Dilemma“ and now Barclays offers the “Conundrums Of A Policy Maker” but the conclusions are both the same, namely that the ability of central banks and sovereign governments to control asset prices through reckless monetary and fiscal policy is reaching the end of its useful life.
Per Barclays, the “conundrum”, whereby every “typical” stimulus option at the disposal of central banks has been stretched to its absolute max, leads to only one logical conclusion when the next exogenous market shock threatens bubbly asset prices and calls for central banking action: helicopter money.
As Barclays points out, economic stimulus from central bank rate policies were “maximized” long ago with over $13 trillion of sovereign debt now trading with negative yields.

This post was published at Zero Hedge on Sep 7, 2016.