Why One Hedge Fund Is Once Again Preparing For The End Of The Euro

Our friends at Fasanara Capital have released a new report, which in keeping with the Mayfair fund’s recent trend of gloomy predictions, has looked beyond the current set of adverse socioeconomic development jarring Europe, and looks forward to the “last act of the Euro”, explaining why “whatever it takes” is now over, and why the time to panic about the future of the common currency is once again nigh.
Here is their latest analysis:
The last act begins for the EUR peg
Why the EUR-peg is likely to break
Why new QE is deflationary and counterproductive, so it may soon be up for review
We have long been negative on the prospects for the EUR peg to survive the test of global structural deflation and local ineffective policymaking. Back in 2013, we wrote of the instability and unsustainability of a currency construct set for failure. At the time, we highlighted three big problems with it.

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

Anti-Gold Wealth Manager Buys Gold For the First Time

The gold price traded quietly sideways until around 1:40 p.m. China Standard Time on their Friday afternoon. At that point ‘da boyz’ showed up – and it was mostly down hill for the rest of the day – and through the after-hours market as well. Gold was closed just off its low tick.
The high and low were reported as $1.343.60 and $1,331.20 in the December contract.
Gold was closed in New York on Friday at $1,327.80 spot, down $10.40 from Thursday. Net volume, which includes both October and December, was just under 145,000 contracts.

This post was published at GoldSeek on 10 September 2016 — Saturday.

Visualizing The (Massive) Size Of The US National Debt

When numbers get into the billions or trillions, they start to lose context. As Visual Capitalist’s Jeff Desjardins notes, the U. S. national debt is one of those numbers. It currently sits at $19.5 trillion, which is actually such a large number that it is truly difficult for the average person to comprehend.
How big is the U. S. National Debt?
The best way to understand these large numbers? We believe it is to represent them visually, by plotting the data with comparable numbers that are easier to grasp.

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

Vanderbilt University Name Placards For Faculty Offices Will Now Include “Preferred Pronouns”

A few weeks back we warned that Princeton University was fed up with people using “gender binary” hate speech like “freshman” (see “Princeton University Kindly Requests You Stop Using “Gender-Binary” Hate Speech Like “Freshman”“) and had released an official guide on how to develop “gender-inclusive” speech.
Now it seems as though the lunacy of the educated elitists in New England is spreading like an infectious disease to schools south of the Mason-Dixon line. As pointed out by the Daily Caller, Vanderbilt University’s “Faculty Senate Gender Inclusivity Task Force” recently started posting the following flyers around campus urging students and faculty to announce their “preferred pronouns” when introducing themselves.
Offer your name and pronoun in faculty meetings, committees, and other spaces where students may not be present ‘I’m Steve and I use he/him/his pronouns. What should I call you?’ ‘My pronouns are they/them/theirs. May I ask yours?’ People who “identify” as “gender-fluid” are encouraged to use newly created pronouns “Ze/Zir/Zirs” or “Ze/Hir/Hirs.” We have absolutely no clue what that means and have exactly 0 interest in trying to figure it out so if you desire more info then you’re on your own.

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

Out of critical medicines, people in Venezuela turn to black magic to treat ailments

September 2016 – VENEZUELA – Socialism is the real voodoo economics, and in Venezuela, the metaphorical has become an actuality. Out of medicines, Venezuelans turn to black magic. Jaime Otrupo chanted a solemn prayer then wrenched a chicken’s head from its body, allowing the blood to pump into a ceremonial clay pot as an offering to the gods. At his feet were the sacrificed corpses of a dove and a chick, both of which were beheaded with a kitchen-knife while his wife and young daughter looked on.

This post was published at UtopiatheCollapse on September 10, 2016.

Exposing How China “Cheats On Trade” In The Aluminum Industry

Since entering the Presidential race last year, Trump has made international trade a cornerstone of his campaign and has promised to go after countries like China that “cheat on trade”. In fact, the Trump website promises that “day one” his administration will take steps to “designate China as a currency manipulator’ and crack down on“illegal export subsidies [that] intentionally distorts international trade.”
On day one of the Trump administration the U. S. Treasury Department will designate China as a currency manipulator. This will begin a process that imposes appropriate countervailing duties on artificially cheap Chinese products, defends U. S. manufacturers and workers, and revitalizes job growth in America. We must stand up to China’s blackmail and reject corporate America’s manipulation of our politicians. The U. S. Treasury’s designation of China as a currency manipulator will force China to the negotiating table and open the door to a fair – and far better – trading relationship. China’s illegal export subsidies intentionally distorts international trade and damages other countries’ exports by giving Chinese companies an unfair advantage. From textile and steel mills in the Carolinas to the Gulf Coast’s shrimp and fish industries to the Midwest manufacturing belt and California’s agribusiness, China’s disregard for WTO rules hurt every corner of America.

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

Iconic Hedge Fund Perry Capital Loses 60% Of AUM As Investors Flee

The slow-motion trainwreck that is the hedge fund investing world, which as we documented one month ago has failed miserably – if predictably – to compensate LPs for its 2 and 20 model, and generate outsized returns during a regime of central planning, having created zero alpha since 2011…

…. took its latest casualty in the form of the once-iconic hedge fund Perry Capital. While it has not unwound just yet, the 28-year-old hedge fund run by Goldman alum Richard Perry, has lost more than half of its assets in less than a year after posting declines since 2014.

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

Time To Get Real, Part 1: Central Banks

Via NorthmanTrader.com,
In a world where fair value is a central bank veiled enigma it’s frankly a challenge to keep things real, but I’ll have a go at it in what will be a 3 part series covering central banks, the underlying fundamental picture, and a technical assessment of charts. In this part I’ll be covering central banks and putting their actions into context of the realities of a changing world and will aim to address some of the implications.
Part I: Central banks
After years of watching central bankers do their bidding I’ve come to the conclusion that they are the designers of the ultimate Pokemon Go game by leading investors to ever more extreme locations to find little yield nuggets on their screens.
My largest criticism of this game has been that free market price discovery is largely dead and nobody knows what is real any longer, producing a false sense of security as, at any signs of trouble, central banks feel compelled to intervene ever further removing markets from their natural balance. In short: Creating a bubble with devastating consequences we will all end up paying for in one form or another.

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

Fed Dove Frets about Asset Bubbles, Wall Street Freaks out

The Fed hawks don’t matter. The doves do!
Doubtlessly, the Fed will flip-flop in its elegant manner about rate increases as it has been for over two years, but this time a reliable dove flipped. That itself is scary to the markets. And the reason he mentioned for flipping sent cold chills down their spine.
He named one of the biggest and riskiest asset bubbles, commercial real estate. It doesn’t plateau. But it either booms, driven by cheap credit, lots of liquidity, and endless hype. Or it crashes. And he worried that banks and other coddled investors, including holders of commercial-mortgage backed securities, will get hit by the shrapnel.
When Boston Fed governor Eric Rosengren, a voting member of the Federal Open Markets Committee, where monetary policy is decided, shared some aspects of his worries on Friday morning, markets tanked instantly.

This post was published at Wolf Street by Wolf Richter ‘ September 10, 2016.

Friday Was Just The Start: Here Are Goldman’s 5 Reasons Why The Selling Will Continue

After 40 days of the S&P going virtually nowhere on muted volume, cross-asset correlations soaring to all time highs, and quant funds leveraging to record levels, it all just snapped on Friday the “volatility on the sidelines” finally made a grand entrance right back into the market, which tumbled the most since Brexit, and closed below its 2015 highs.

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

JUBILEE JOLT: DOW DOWN 400, STOCKS SMASHED IN BIGGEST DROP SINCE BREXIT

It was just two days ago that we wrote, ‘Gold Has Biggest One Day Rally Since Brexit as Elites Rush Into Gold’.
Now, to end the week, US stocks had their biggest drop since Brexit on Friday.
The Dow Jones Industrial Average fell 394.46 points, or 2.1%, to 18085.45, and the S&P 500 declined 2.45%, while the Nasdaq Composite lost 2.5%.
The media blamed concern over a potential 0.25% rate hike by the Federal Reserve at the upcoming September 20th-21st meeting.
Federal funds futures, which are used by traders to place bets on central bank policy, on Friday showed a 24% chance of a US interest-rate rise in September, compared with an 18% chance as of Thursday.
Eric Rosengren, President of the Federal Reserve Bank of Boston said Friday that ‘a reasonable case can be made’ for raising interest rates to avoid overheating the economy.
Of course, no one asks, ‘how does an economy overheat’? An economy isn’t a cake. If an economy is ‘overheating’ it would mean that trade is going well, profits are being made and capital accumulated. Why would one want to avoid ‘overheating’ the economy?
Well, the US and other Western monetary systems are run by a communist-style central planning agency that deems it necessary to manipulate interest rates and counterfeit money in response to the perceived ‘overheating’ or ‘cooling’.

This post was published at Dollar Vigilante on SEPTEMBER 9, 2016.

Incompetent But Not Weak: “The Fed Doesn’t Know Whether To Shit Or Go Blind”

The outlook for the US economy is deteriorating, yet the Fed is trying to raise overnight rates to keep unseen inflation from rising. Success in its strategy could force consumption lower, unemployment higher, and exacerbate real output contraction. But, as Macro-Allocation.com ‘s Paul Brodsky explains, we should not mistake apparent incompetence for weakness.
The August Purchasing Managers Index (PMI) came in at 49.4 last week, a level that signals contraction, not just slower growth. Within the PMI, new orders fell 7.8%, production fell 5.8%, and employment dropped 1.1% from July. Only six of eighteen industries reported an increase in new orders while only eight reported an increase in production. The report followed PMI plunges in Chicago (to 51.5 from 55.8), Richmond (to a 3-year low of -11.0 from 10.0), Dallas (to -6.2 from a 19 month high of -1.3), and New York (to -4.21 from 0.55). The weak manufacturing report follows a weaker than expected service sector report in August, which now hovers only slightly above the level of contraction.

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

Deutsche Warns Of 10% Decline as Market Reaches “Mania” Level

Realized volatility in the US equity markets has been extremely low, and much discussed, but, as Deutsche Bank’s David Bianco warns this is “the quiet before the storm.” There are five catalysts for increased vol through Autumn but most worrying is the “High P/E, Low VIX” scenario is very risky having reached “mania” levels.
Current volatility is a poor indicator of future risk: High PE / low VIX very risky The standard deviation of annualized daily S&P price moves has been 6% since August started.

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

Negative Interest Rates & The War On Cash, Part 3: “Beware The Promoters”

Read Negative Rates & The War On Cash, Part 1: “There Is Nowhere To Go But Down” here
Read Negative Rates & The War On Cash, Part 2: “Closing The Escape Routes” here
Bitcoin and other electronic platforms have paved the way psychologically for a shift away from cash, although they have done so by emphasising decentralisation and anonymity rather than the much greater central control which would be inherent in a mainstream electronic currency. The loss of privacy would no doubt be glossed over in any media campaign, as would the risks of cyber-attack and the lack of a fallback for providing liquidity to the economy in the event of a systems crash. Electronic currency is much favoured by techno-optimists, but not so much by those concerned about the risks of absolute structural dependency on technological complexity. The argument regarding greatly reduced socioeconomic resilience is particularly noteworthy, given the vulnerability and potential fragility of electronic systems.
There is an important distinction to be made between official electronic currency – allowing everyone to hold an account with the central bank – and private electronic currency. It would be official currency which would provide the central control sought by governments and central banks, but if individuals saw central bank accounts as less risky than commercial institutions, which seems highly likely, the extent of the potential funds transfer could crash the existing banking system, causing a bank run in a similar manner as large-scale cash withdrawals would. As the power of money creation is of the highest significance, and that power is currently in private hands, any attempt to threaten that power would almost certainly be met with considerable resistance from powerful parties. Private digital currency would be more compatible with the existing framework, but would not confer all of the control that governments would prefer:

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

Doug Noland’s Credit Bubble Bulletin: Reversals

Commenting on Friday’s jump in global bond yields, a fund manager on Bloomberg Television downplayed the move: ‘Yields are back to where they were last week.’ Such thinking badly misses the point.
Greed and Fear ensure that markets have an inherent tendency to ‘overshoot.’ Over-liquefied markets can significantly overshoot on the upside. Markets for years dominated by ultra-low rates and massive central bank buying should be expected to overshoot in historic fashion. And that’s exactly what has unfolded. Major market Reversals tend to be violent and unpredictable affairs, catching almost everyone unprepared.
At the minimum, summer complacency ended rather abruptly Friday. Bloomberg: ‘Stocks, Bonds Spiral Lower Together in Replay of Past Hawk Raids.’ Long-bond Treasury yields jumped 13 bps Friday, with a two-day surge of 20 bps (‘biggest two-day rise since August 2015′). Ten-year Treasury yields rose seven bps this week to the highest level (1.67%) since June. German 10-year bund yields rose 13 bps (‘biggest slide since March’) in two sessions to the first positive yield (0.01%) since July 15.
September 8 – Bloomberg (Kevin Buckland, Wes Goodman and Shigeki Nozawa): ‘One of the pillars of 2016’s record-setting global bond rally is starting to buckle. Japan’s sovereign debt is suffering its worst rout in 13 years, handing investors bigger losses over the past two months than any other government bonds amid speculation the Bank of Japan plans to change its asset-purchase strategy. The reversal is spurring concern the second-largest debt market is the vanguard for a broader selloff… The impact of the BOJ’s stimulus is that the bond markets worldwide are becoming one market,’ said Chotaro Morita, the chief rates strategist at… SMBC Nikko Securities Inc., one of the 21 primary dealers that trade directly with the central bank. ‘If there’s a reversal of policy, you can’t rule out that it would roil global debt.’

This post was published at Wall Street Examiner on September 10, 2016.

A Reminder On Leverage

So 25 basis points (which is now “anticipated”) is good for a ~300 point DOW selloff?
No. What’s good for the selloff is the recognition that is slowly seeping into people’s minds that 40 years of generally declining interest rates are over.
Here’s why it matters.
Let’s say the rate of interest is 10% (and it was not all that long ago — the 1980s.)
You borrow $1 million. Your interest payments are $100,000 a year.
Now the rate of interest drops to 5%. Your interest payment is now $50,000 a year, which sounds great. But what sounds even better is borrowing another million dollars for the same $100,000 a year, and so that’s what you do.

This post was published at Market-Ticker on 2016-09-10.

Chinese Gold Bar Photos – Lost in Translation

China is now in pole position as regards annual global gold mining output. Much if not all of Chinese domestic gold mining output is refined into standard gold by Shanghai Gold Exchange (SGE) approved refiners and then sold through the SGE. A lot of recycled gold in China also flows through the same refineries. As of 2013, there were at least 35 refiners across China accredited by the SGE to deliver gold ‘Ingots’ (bars of weights 12.5 kg, 3 kg and 1 kg) on the Exchange. The list is probably longer now, and although the sheer scale of the Chinese gold refining sector is hard to keep track of, you get the picture as to its size.
It was therefore surprising that recently, while working on a particular task that required images of gold bars produced by Chinese refiners, I found that the selection of Chinese branded gold bar images on ‘the web’ (i.e. Google.com) seemed extremely limited. As it turns out, there are many many images of Chinese brand gold bars, you just need to know how and where to look. Nearly all of these images have never been seen before in ‘Western search engines’.
The ‘limited results’ Approach
Some of the large Chinese gold refineries are owned by, or affiliated with, large Chinese gold mining companies. My first approach was to determine the largest gold mining companies in China. These gold mining companies are: China National Gold Group Corporation, also known as China Gold or CNG. CNG’s major gold mining asset is Zhongjin Gold. CNG also has a 39% stake in ‘China Gold International Resources Corporation’ which is basically its international arm (it also mines gold in China).

This post was published at Bullion Star on 9 Sep 2016.

Gold And Silver Are Money. Everything Else Is Debt. Globalist’s Biggest Scam.

Last week, in ‘Fiat ‘Dollar’ Says Gold And Silver Will Struggle,’ we said the following:
[See 4th paragraph] Money does not exist in this country. In fact, money does not exist anywhere in the world. What is money? So few people know, and many who profess to know do not. Money is a commodity with a recognized value. Gold and silver remain the last known standard of real money. Remember J P Morgan’s famous words: ‘Gold is money. Everything else is credit.’
The globalists, through their creation of the Federal Reserve, have sold the biggest lie ever to the world and continue to get away with it. People everywhere believe the fiat-created Federal Reserve Note, falsely called the ‘dollar,’ is actually a monetary dollar. We have often stated how Federal Reserve Notes are evidences of debt issued by the Fed. We also always add that debt is not and can never be money, yet almost every American wrongly believes debt is money because they believe the Fed ‘dollar’ is money.
Only gold and silver are money!
Gold and silver each are a commodity. They have universal recognition and acceptance. Their value is determined by the market by what people choose to accept as payment for goods and services offered. By contrast, the Fed ‘dollar’ is not money. It is a currency. A currency represents the actual money. In today’s world, there is no currency that represents actual money. Fiat is imaginary. It does not exist except in one’s mind. Yet, around the world, everyone’s imagination believes their local currency is money.
Only gold and silver are money!

This post was published at Edge Trader Plus on September 10, 2016.