Goldman Sachs Crushes Hopes of Oil Price Recovery

Goldman Sachs has been extremely pessimistic about the oil market over the last year and a half, and the latest from their head of commodity research, Jeff Currie, is no exception. According to Currie, crude will continue to trade within the US$45-50 band over the next 12 months. Any improvement above US$50 is highly unlikely.
The analyst noted that the primary reason for the gloomy forecast is the simple lack of any upside potential for oil at present. He also suggested that the market may have already balanced itself at the current price levels, comparing the overall environment to that in the early 1990s when a barrel of crude sold for US$20.
Currie told Bloomberg that OPEC’s meeting in Algeria, scheduled for September 27, when the cartel will discuss a potential freeze with Russia, will not have any notable impact on oil prices, whatever the outcome. Shale, he said, has taken the upper hand, because production in the shale patch can be ramped up or reduced much quicker than conventional oil. This development, according to Currie, has taken much of the leverage that previously was at the disposal of conventional oil producers.

This post was published at FinancialSense on 09/15/2016.

The FED Is Ready For The Collapse, More QE, NIRP & Total Control Of The Economy – Episode 1076a

The following video was published by X22Report on Sep 15, 2016
UK retail decline more than originally thought. Initial jobless claims at all time lows which do not match the Fed labor market index. More factories are moving to Mexico. Wages are continually declining. Retail sales decline in the US. Business inventories signalling a recession. Empire Fed manufacturing rises when all other indicators are in the negative territory. Industrial production is signalling a recession. Bernanke signals that when the next recession hits the Fed is ready to go negative. More indicators pointing the the collapse of the economy so the Fed can take extraordinary measures and take full control of the economy.

GMO: The Market Is About 70% Overvalued

‘It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness …’
– A Tale of Two Cities by Charles Dickens
While all eyes were on Federal Reserve Chair Janet Yellen in Jackson Hole, we were watching something else. In August, the Shiller P/E, a well-regarded metric for measuring the valuation of U. S. equities, breached 27. Given that its normal range is something a bit above 16, valuations are looking rather stretched. Further, the last time the Shiller P/E was above 27 was in October … 2007. And we all know how that movie ended.
While nobody here at GMO is saying that a crash is imminent (and there’s no law that says stocks cannot become even more expensive), we continue to maintain our bias against U. S. stocks. We will also take this end-of-summer moment to point out the yawning disconnect between fundamentals (of the U. S. economy and even corporate America) and their stocks. It really is a tale of two cities, one of mediocre fundamentals versus a meteoric rise in markets (see the chart below).

This post was published at Zero Hedge on Sep 15, 2016.

‘Where’s the Money Gone?’ Rescue of Spain’s Biggest-Ever Corporate Bankruptcy Stumbles in Mexico

Fleeced Mexican investors against big banks, hedge funds.
After nine months of fraught negotiations with its senior creditors, Spain’s teetering green-energy giant Abengoa is tantalizingly close to a financial fresh start. In August, the firm announced that it expects to win the approval of at least 75% of its creditors for a restructuring plan by September 30. The banks and hedge funds that own most of its debt are already on board.
But not everyone’s convinced. The company’s B-shares have barely budged from the 0.20 level since the announcement. As WOLF STREET reported a couple of weeks ago, the US rating agency Moody’s played down the restructuring plan’s chances of success, citing three main causes for concern:
The firm’s precarious liquidity situation; Its unseemly high leverage ratio (even after the restructuring is completed) The towering list of conditions and obligations to which it will be bound once the agreement is finalized. The biggest issue was how two of Abengoa’s largest, most valuable markets – Brazil and Mexico – would react to the company’s announcement that it was seeking preliminary protection from creditors.

This post was published at Wolf Street by Don Quijones ‘ September 15, 2016.

Beware Central Banks’ “Illusion Of Control”; Spitznagel Warns “If The Fed Hikes, Markets Will Go Down Very, Very Hard”

Central banks have created a bubble in the stock market, which will come down “very, very hard” when it finally prices in a series of Fed rate hikes, said Universa’s Mark Spitznagel, warning that “the markets are absolutely not positioned for this.”
CNBC anchors were stunned into relative silence as Spitznagel unleashed truth-bomb after truth-bomb. Those ‘facts’ are just hard to argue with…

This post was published at Zero Hedge on Sep 15, 2016.

I’m Not Worried About This Round of Oil Price Volatility

I’ve been forecasting low-$60 oil by the first quarter of 2017 since earlier this summer. As I mentioned last week, the signals I saw in New York and London recently, which essentially telegraphed an end to the supply glut and a firming ‘floor’ of price support, only strengthen the case.
In the meantime, a bit of idle speculation by Boston Fed chief Eric Rosengren about an interest rate hike and news of lower demand have thrown some cold water on what had been a strong 23% rally.
Then, predictably, the scaremongers used weather as a reason to call for prices to slide even further.
Here’s the thing… None of that really makes a difference.
My prediction stands absolutely pat, because I’ve just seen a very convincing signal prove that we’re close to the mid-$50s already.

This post was published at Wall Street Examiner by Dr. Kent Moors ‘ September 15, 2016.

Bernanke Urges Use Of Negative Rates When Next Recession Strikes

Two months after Bernanke’s unexpected trip to Japan failed to unleash the “helicopter money” many expected his visit to the BOJ would deliver, Bernanke is back with another shocking policy appeal, this time not as a result of a trip to the Pacific Rim, but in a post on his Brookings Institute blog, titled “Modifying the Fed’s policy framework: Does a higher inflation target beat negative interest rates?”
The post, when one cuts out the noise, is nothing short of praise for NIRP as an alternative to inflation targeting, and a strong suggestion that it should be implemented in the US if and when the US economy slides into recession next.
Bernanke starts off by saying that while much of the recent “shift” in unconventional thinking has been to advocate a higher inflation target, he believes that negative rates present an as good if not better option. The former Fed chairman says that “when the next recession arrives, there may be limited room for the interest-rate cuts that have traditionally been central banks’ primary tool for sustaining employment and keeping inflation near target. That concerning possibility has led to calls for a new monetary policy framework, including by Fed insiders like John Williams, president of the San Francisco Fed. In particular, Williams has joined Olivier Blanchard and other prominent economists in proposing that the Fed consider raising its target for inflation, currently 2 percent. If the Fed targeted a higher average level of inflation, the reasoning goes, nominal interest rates would also tend to be higher, leaving more room for rate cuts when needed. ”
Here Bernanke expresses his surprise that some of his “erudite”, Ivy-educated peers have already dismissed the use of negative rates in the future. We assume he has purposefully ignored the repeated, ever louder complaints by Deutsche Bank and Credit Suisse as well as virtually every pension fund in the world, lamenting that they are slowly going out of business due to the twilight zone of unorthodox monetary policy:

This post was published at Zero Hedge on Sep 15, 2016.

US Industrial Production Fall -0.4% In August, Capacity Utilization Falls To 75.5%

Please don’t send me emails saying ‘But we are a service economy.’ Although Ford announced that it is going to build its small cars in Mexico. Hecho en Mexico!
The August industrial productions numbers were not good. Industrial production fell -0.4%. And capacity utilization fell to 75.5%. The benchmark target is 80%.
Here is a chart of capacity utilization and expected US GDP. A picture is worth a thousand words.

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ September 15, 2016.

More Jobs Shipped Out Of The Country: Ford Moves All Small Car Production To Mexico

What is going to happen when America finally doesn’t have any manufacturing jobs left at all? On Wednesday, we learned that Ford Motor Company is shifting all small car production to Mexico. Of course the primary goal for this move is to save a little bit of money. This hits me personally, because my grandfather once worked for Ford. He was loyal to Ford all his life, and he always criticized other members of the family when they bought a vehicle that was not American-made. When I was young I didn’t understand why making vehicles in America is so important, but I sure do now. By shipping jobs overseas, we are destroying jobs, we are destroying small businesses and we are destroying our tax base. If we want to be a wealthy nation, we have got to make things here, and hopefully we can get the American people to start to understand this.
In 1914, Henry Ford decided to start paying his workers $5.00 a day, which was more than double the average wage for auto workers at the time.
One of the reasons why he did this was because he felt that his workers should be able to afford to buy the vehicles that they were making. This is what he wrote in 1926…
‘The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers.’
These days Ford is going in the complete opposite direction. Pretty soon, Ford won’t be making any more small vehicles in the United States at all…

This post was published at The Economic Collapse Blog on September 14th, 2016.

A New Problem For Hillary Emerges

With Trump again surging in the polls, including key battleground states like Ohio, and having regained all the momentum from a suddenly slumping and vulnerable Hillary, the Democrats are panicking as her lead in the RealClearPolitics average has shrunk to just 1 points.
However, as the latest set of polls shows, the Donald is not the only thing Hillary’s campaign has to worry about as a new threat has emerged. Or rather two.
A new Quinnipiac University poll shows that is Clinton suffering thanks to third-party nominees Gary Johnson and Jill Stein, whose support has soared among millennial voters. In that poll, Clinton leads Trump by 48% to 43% in a two-way match-up. Her head to head lead is particularly pronounced among voters aged 18-34, who pick Clinton over Trump by a margin of 55% to 34%.

This post was published at Zero Hedge on Sep 15, 2016.


Gold $1315.00 down $8.00
Silver 18.96 down 2 cents
In the access market 5:15 pm
Gold: 1314.40
Silver: 18.99
The Shanghai fix is at 10:15 pm est and 2:15 am est
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
Shanghai morning fix Sept 15 (10:15 pm est last night): $ not available/holiday
Shanghai afternoon fix: 2: 15 am est (second fix/early morning):$ not available/holiday
London Fix: Sept 15: 5:30 am est: $1320.10 (NY: same time: $1321.20: 5:30AM)
London Second fix Sept 8: 10 am est: $1310.80* (NY same time: $1311.80 , 10 AM)*after a beautifully orchestrated criminal raid today.
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.
Also why would mining companies hand in their gold to the comex and receive constantly lower prices. They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.
For comex gold:The front September contract month we had 72 notices filed for 7200 oz
For silver: the front month of September we have a total of 94 notices filed for 470,000 oz
Yesterday, you could have bet the farm that there is going to be a raid on gold and silver today due to the Chinese festival. They will be on holiday until Monday. With no physical to draw on, it was relatively easy for our crooks to supply 70 tonnes of gold in seconds to cause gold to falter down to 1308.00 before recovering.
Let us have a look at the data for today

This post was published at Harvey Organ Blog on September 15, 2016.

Six Striking Observations About Corporate Debt

Here are a handful of striking observations on the real problem with the global debt bubble, courtsy of CLSA’s Damien Kestel, and why any spike in interest rates could lead to a global fiasco.
Extraordinary low interest rates around the world have delivered a monumental blow to many investors. Falling interest rates have translated into rising liabilities for (defined benefit) pension plans and, secondly, millions of retirees, who depend on income from savings to take them through retirement, are struggling to make a decent living. Consequently, investors take risks that they weren’t previously prepared to take, some of which I am comfortable with, and some of which I am not. Take US corporate high yield bonds. The prevailing view seems to be that US corporates (ex. energy) are in very good shape with loads of cash on their balance sheet, and that they therefore offer a relatively attractive, and a comparatively safe, investment opportunity.

This post was published at Zero Hedge on Sep 15, 2016.

BLS: 167 Of Largest Counties Had YoY Weekly Wage Decreases, Yet Real Median Household Income Rose By Most Since 1984

According to the Bureau of Labor Statistics, 167 of the largest counties in the US had ‘over-the-year’ weekly wage decreases. From Q1 2015 to Q1 2016.
Yet, according to the US Census Bureau, real median household income by the biggest amount since 1984.
Sentier Research uses the Census Bureau’s Current Population survey and finds a similar pattern.

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ September 15, 2016.

SP 500 and NDX Futures Daily Charts – Risk On

For whatever reasons, probably the poor economic data making the marketeers doubt that the Fed will be increasing rates anytime soon, it was a risk on day in the equity markets.
Tomorrow will be the September options expiration. Notice the big ‘wash and rinse’ swings we have been getting in the past few days after a couple week of a sideways chop snoratorium.

This post was published at Jesses Crossroads Cafe on 15 SEPTEMBER 2016.

Let’s Impose Some Transaction Costs on Government

One of the things I have said to my economics principles students for years is that economists don’t like the letter T. It has been a good way to reinforce an important idea to students, but this year, I am planning on flip-flopping a bit (in honor of the political season) and endorsing T in appropriate circumstances.
Economists’ dislike of the letter T is obvious when we remember that in economic analysis, T often stands for taxes. Between differences in subjective values and differences in opportunity costs of production, economists recognize that voluntary exchanges create wealth and that, therefore, anything that wipes out voluntary exchanges that would otherwise have been agreed to wipes out real wealth.
Higher Costs Imposed by Governments
To illustrate, say you value a widget at $5 of other goods and services and I value it at $3 (or it costs me $3 to make it as a producer). When we exchange, it increases wealth by the difference in our values (and each of us gain some of that wealth as long as it is voluntary). However, what if there was a tax of $2.50 imposed on such transactions? That tax wedge exceeds the potential gains to our exchange (and all others where the net gains are less than $2.50), and the exchange no longer take place, wiping out the wealth that would otherwise have been created.
To the extent that regulatory burdens act like taxes, economists extend their dislike of the letter T to the letter R.

This post was published at Ludwig von Mises Institute on Sept 15, 2016.

Gold Daily and Silver Weekly Charts – A Full Heart, A Heavy Mind

“While Elizabeth Warren attempted to deliver her keynote speech at the Democratic Convention in July, which included an unabashed endorsement of Hillary Clinton after Warren had failed to endorse Senator Bernie Sanders during the critical primary campaign, chants of ‘we trusted you’ could be heard reverberating through the cavernous hall in Philadelphia…
It’s long past the time for the U. S. Senate to stop conducting isolated, piecemeal investigations and undertake the type of in-depth hearings that the Senate held from 1929 to 1932 that led to the public’s understanding of the serial criminal activities on Wall Street that had produced the Great Depression and which led to the passage of the Glass-Steagall Act – legislation which protected this nation for 66 years until its repeal in 1999 during the Bill Clinton administration.”
Pam and Russ Martens, Elizabeth Warren Opens Up Pandora’s Box
‘You must picture me alone in that room in Magdalen, night after night, feeling, whenever my mind lifted even for a second from my work, the steady, unrelenting approach of Him whom I so earnestly desired not to meet. That which I greatly feared had at last come upon me. In the Trinity Term of 1929 I gave in, and admitted that God was God, and knelt and prayed: perhaps, that night, the most dejected and reluctant convert in all England.
I did not then see what is now the most shining and obvious thing; the Divine humility which will accept a convert even on such terms. The Prodigal Son at least walked home on his own feet. But who can duly adore that Love which will open the high gates to a prodigal who is brought in kicking, struggling, resentful, and darting his eyes in every direction for a chance of escape? The words compelle intrare, compel them to come in, have been so abused be wicked men that we shudder at them; but, properly understood, they plumb the depth of the Divine mercy.
The hardness of God is kinder than the softness of men, and His compulsion is our liberation.’
C. S. Lewis, Surprised By Joy
For those of you who have asked, the queen’s MRI was good, as good as it gets for someone with an incurable but ‘manageable’ illness, and I thank you for your thoughts and prayers.

This post was published at Jesses Crossroads Cafe on 15 SEPTEMBER 2016.

Cash Is an Asset Class

In this issue, I’m going to talk about something you never hear about on financial TV: the wisdom of holding cash.
But before we get to that, I’d like to briefly talk about the brand-new issue of Street Freak we published just two days ago.
There’s a mega-trend among investors – and it’s so ubiquitous, you probably don’t even know it’s a trend. (I’m tempted to call it a ‘fad.’)
This trend was started by academics, was then perpetuated by some of the smartest money managers in the world, and has since then completely taken over the psychology of the retail investor.
As a hardcore contrarian, when I see an omnipresent fad like this, it tells me that the time has come to run, not walk, the opposite way. To that end, we’re recommending a stock in this month’s Street Freak issue that seems to have nothing going for it right now. But it might just be the next big thing – or at the very least, it might prevent you from getting flushed.
To encourage you to join us in this ‘counter-trend’ investment, we’re lowering the subscription fee for a few weeks again. Until September 30, you can get Street Freak at a 33% discount, for just $199 a year.
I suggest you take advantage of this offer and just cancel for a full refund if you don’t like what you see. You have 90 days to do it. But do it soon, as long as the September issue is still hot off the press.
Now on to the issue.
Cash Is an Asset Class
Let’s start off with a game of ‘name that chart.’

This post was published at Mauldin Economics on SEPTEMBER 15, 2016.

Trumps Slams “Totally Politically Controlled” Fed, Sees No Rate Hike Until Obama Has Left

“The Fed is being totally controlled politically,” exclaimed Donald Trump. Interest rates will remain low until January 1st, Trump went on, “because Obama wants to go out with no stock market disruptions.” The stock market “will remain at artificially high levels,” until the end of the year.
“If it was a choice between the right decision and a political decision… The Fed would choose the political decision”

This post was published at Zero Hedge on Sep 15, 2016.