Higher Rates – More Trick Than Treat

Low interest rates have been the bane of savers, retirees, pensioners and many others for a number of years now. With interest rates on the verge of rising, these folks are starting to breathe a sigh of relief.
But rising interest rates are a double-edged sword, and are unlikely to provide as much benefit as many people expect. To understand why, we need to look at why interest rates are rising, and also understand the potentially negative side effects.
Much of our discussion today is going to focus on the chart below. This chart shows the annual inflation rate as measured by the Consumer Price Index in blue, and the yield on the 10-year Treasury in red.

The first thing to notice is that there is a strong correlation between inflation and interest rates. This should come as no surprise since anyone who is lending money wants to make sure that they’re adequately compensated for the expected loss in purchasing power (inflation).

This post was published at FinancialSense on 11/01/2016.

FBI Unexpectedly Releases Documents Related To 2001 Probe Into Clinton Foundation

Update: According to NBC’s Tom Winter, the FBI Vault twitter account “released all files pertaining to Donald Trump’s father, Fred Trump, a few weeks ago. That was response to FOIA” and adds that “the release of WJC FBI files was sent by the FOIA office under normal guidelines. A proper requested was made -Pete Williams rpts…. The account, @FBIRecordsVault started tweeting several days ago after not tweeting for a year. The first tweet…. about Fred Trump’s files.” And now, it is tweeting about the Clinton Foundation.
NBC News: The release of WJC FBI files was sent by the FOIA office under normal guidelines. A proper requested was made -Pete Williams rpts.
— Tom Winter (@Tom_Winter) November 1, 2016

then, the following choice piece: “the young federal prosecutor who ultimately decided not to charge Clinton or anyone else in “pardongate”… James Comey.”
Is it time for Comey to come clean?

This post was published at Zero Hedge on Nov 1, 2016.

Venezuela’s Currency Disintegrates: Bolivar Plummets 20% In One Week

When we reported last week that Venezuela’s government has finally thrown in the towel on the hyperinflation plaguing the bankrupt nation…
… and would agree to print bills with a denomination as much as 200x greater than the current, most “valuable” bank note, the 100 bolivar, we speculated that “by doing so the government will tacitly admit that it has lost control over prices, [and] will also create a self-fulfilling prophecy of even higher prices, sending the country’s hyperinflation into overdrive.”
We didn’t have long to wait for this prediction to be confirmed, and as the website tracking the value of the Bolivar on the black market (recall there are three separate prices for the Venezuela currency; the only one that matters is the Dolar Today black market value), the local currency has imploded, crashing by 22% in just the past week.
The spectacular chart below – one which awaits every fiat currency at some point – shows how many Bolivars one USD buys: as of today it is 1,567. It was 1,222 seven days ago.

This post was published at Zero Hedge on Nov 1, 2016.

The Monetary System Is About To Transition & It Will Cause Havoc On The Streets – Episode 1116a

The following video was published by X22Report on Nov 1, 2016
Reuters is laying off 2000 employees. GM sales are continually declining and sales are now worse than last year. US trucking slash fleets as their is no consumer demand. Rents are declining as landlords are giving away free months just to fill the vacancies. Construction spending contracts and is now in the range of the great recession. The bond bubble is bursting and we are seeing signs it is getting worse. The monetary system is about to enter a transition and when we enter it people are going to lose most of their wealth.

SWOT Analysis: The Potential Drivers for Gold Demand in China and India

Strengths
The best performing precious metal for the week was platinum with a price surge of 5.09 percent. On Tuesday, South African news reported that plans are underway to manufacture more forklifts powered by hydrogen for local and international markets. Legislation in 2007 created the Hydrogen South Africa Strategy to develop vehicles powered by hydrogen through the utilization of the country’s platinum group metal resources. In a drop that could signal a buying opportunity, the net-long position in gold futures and options held by hedge funds and large speculators fell to the smallest level in more than seven months, in the third straight week of contraction. China raised bullion imports from Hong Kong for the first time in four months in September, according to data from the Hong Kong Census and Statistics Department. Investors have sought to diversify their assets while facing a weakening yuan. Net purchases were 44.9 metric tons, compared to 41.9 tons in August. This weekend is a key time for gold demand, with the Hindu festival of Diwali and Dhanteras on October 28, which is considered the most auspicious day of the year to buy gold. Goldman Sachs also noted that Chinese demand has potential to rise if the yuan continues to decline. Also supporting the potential for strong demand is the Indian government’s consideration of reducing its import tax on gold to 6 percent from 10 percent. This decision may take place in the third week of November.

This post was published at GoldSeek on 1 November 2016.

How Politics Poisoned the Economy

Deep State in Control
BALTIMORE – What is going on in the markets? Well, nothing much. The U. S. stock and bond markets have been as dull as a teetotaler’s funeral. No dancing. But no teary breakdowns, either.
Investors seem to be awaiting the results of the upcoming elections as if they were waiting for him to die. They look at their watches. They check their cell phones. Pollsters tell us it is a ‘done deal.’ But you never know; the old boy might surprise us.
So, while we’re waiting, let us continue – rounding on our subject, trying to understand it, trying to see how the dots connect. Today, we step back to get a better view.
We have been looking at the way the feds’ post-1971 fake money changed our whole society: our economy, our government, and our home life, too. Gone is the wealth-producing economy; now we have one that adds debt and subtracts real wealth.

This post was published at Acting-Man on November 1, 2016.

Jim Willie: UNPRECEDENTED US BOND DUMPING – Dollar Collapse Ahead!

The following video was published by FinanceAndLiberty.com on Nov 1, 2016
Jim Willie editor of the Hat Trick letter found on GoldenJackass.com joins Silver Doctors to sound the alarm foreign governments are getting concerned about the Federal Reserve devaluing the U. S. dollar. As a result, foreign governments are dumping U. S. debt at an unprecedented rate.
Regarding the U. S. presidential election, Willie says the polls and voting machines are rigged. However, Willie remains hopeful that after the election we will be released from this ‘fascist dictatorship.’

Gundlach: “We Got The Bearish Signal; Stocks Are Going Down – You Can Feel It”

After nearly three consecutive years of inflows, an unheard of feat, Jeff Gundlach’s $61.6 billion DoubleLine Total Return Bond Fund finally experienced its first outflow since January 2014, as investors took out $33 million from the California fund. With that the streak of 33 consecutive months of inflows was broken Reuters reports.
Repeating a position he has held for several months, Gundlach told Reuters that “bonds are headed toward outflow territory … rising rates mean negative returns are developing. Even DoubleLine is having ‘day in’ and ‘day out’ flows. It is not an inflow day every day.” Unless, of course, the market suffers a long-loverdue equity selloff, in which case the flow will be in the other direction as debt of any kind will be immediately is seen as a “flight to safety” and the cycle will begin from scratch.
According to the new bond king, a few advisers in October made allocation and model changes away from the intermediate-term sector of the bond market, resulting in a few large redemptions in the DoubleLine TRBFwhich however moved into DoubleLine’s Flexible Income, Low Duration Bond and Core Fixed Income funds.

This post was published at Zero Hedge on Nov 1, 2016.

Done in by Overcapacity, Stagnant World Trade, and China, Korean Shipbuilders Collapse on Top of Taxpayers

Orders plunge 87% from an already terrible 2015.
The ravaged shipbuilding industry in South Korea, deemed too big to fail, is getting its largest taxpayer bailout yet, totaling $9.6 billion, on top of the bailout funds already handed out last year, and on top of another $9.6 billion this year to bail out state-owned banks that were getting slammed by defaulting loans extended to the shipping industry.
Their problem: according to trade ministry, cited by the Wall Street Journal, orders for new ships to be built in South Korea have collapsed by 87% over the past nine months from the already terrible 9-month period last year, to almost nothing.
South Korean container carrier Hanjin was allowed to collapse in August. It ‘shattered the complacency’ that TBTF carriers ‘are immune to failure.’ It is now getting chopped into pieces to be sold off under bankruptcy court orders. Its rival, Hyundai Merchant Marine, was bailed out and restructured earlier this year. Other carriers around the globe have been sunk by two years of excruciating low shipping rates, triggered by rampant overcapacity and stagnating world trade. Larger carriers are consolidating to survive. Just on Monday, Japan’s Big Three – Nippon Yusen, Mitsui O. S. K. Lines, and Kawasaki Kisen Kaisha – announced that they would merge to form the world’s sixth largest container carrier.

This post was published at Wolf Street by Wolf Richter ‘ November 1, 2016.

NOV 1/ITALY CLOSER TO A NO VOTE ON THE REFERENDUM AND ALSO MAY BE THE FIRST TO LEAVE THE EURO/TRUMP TAKES THE LEAD IN THE POLLS AS GOLD/SILVER SKYROCKET AND THE MEXICAN PESO PLUMMETS/MORE FALLOUT…

Gold $1286.40 up $14.90
Silver 18.39 UP 63 cents
In the access market 5:15 pm
Gold: 1288.40
Silver: 18.36
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 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 Nov 1 (10:15 pm est last night): $ 1280.84
NY ACCESS PRICE: $1276.75 (AT THE EXACT SAME TIME)
Shanghai afternoon fix: 2: 15 am est (second fix/early morning):$ 1283.95
NY ACCESS PRICE: 1279.75 (AT THE EXACT SAME TIME)
HUGE SPREAD TODAY!! 4 dollars
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
London Fix: Nov 1: 5:30 am est: $1284.40 (NY: same time: $1282.10: 5:30AM)
London Second fix Nov 1: 10 am est: $1288.45 (NY same time: $1289.00 , 10 AM)
Shanghai premium in silver over NY: 57 cents.
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.

This post was published at Harvey Organ Blog on November 1, 2016.

RBC: “Be Prepared For Another ‘Vol-Control’ Deleveraging Wave”

Confused by the suddenly “loud noises” emerging from what until very recently was a quiet, peaceful equity market? Then here is one of the best possible explanations of what is happening today, courtesy of RBC’s cross-asset guru, Charlie McElligott.
LIVE DE-RISKING: The de-risking is real so far today into this US election scenario re-pricing / hedging scramble (VIX 17.0% & VVIX 9.8%, while intraday CBOE equity put / call ratio is at 2nd highest level of the year at 1.52)…and with it, a re-pricing of Dec Fed hike probabilities as well. The global equities ‘US as a hiding-spot’ is now being exposed, with HF-heavy small cap significantly underperforming large cap (again, nearly 2% underperf in Russell vs S&P over past six sessions as a de-leveraging ‘tell’); HY CDX is at four-month wides; Yen, Swiss Franc and Gold are all at highs of the day and contributing to the USD being hammered with DXY -0.8% (again, as I believe the market re-prices now a lower probability of December hike).
‘TRUMP HEDGE’ SCRAMBLE IS REAL – USDMXN 1M VOL:

This post was published at Zero Hedge on Nov 1, 2016.

Will the Stock Market Crash?

This is one question that haunts every investor: ‘Will the stock market crash?’
A stock market crash can happen at any time, so investors should always be prepared. There are proven strategies to protect your investments in the event of a stock market crash. And you can even make a profit during a market crash, too…
Today, we’re examining past stock market crashes and will identify a key 2016 stock market crash trigger. Then, we’ll tell you what you can do to survive, and profit, during a crash.
What History Can Tell Us About Stock Market Crashes
Looking at history can help us see the importance of protecting your investments before a stock market crash. Here, we’ll examine two of the biggest crashes of the last century and what caused them.
The stock market crash of 1929 was the most infamous financial crisis in American history.
This stock market crash was brought on by rampant speculation in the 1920s. When the speculative bubble burst in the fall of 1929, the Dow plunged 48%. It sank another 86% between early 1930 and the middle of 1932 and, by 1933, about half of all U. S. banks had closed their doors.
This crash kicked off a 10-year depression, with more than 30 million people left jobless. Stock prices eventually recovered, but it took more than two decades to reach pre-crash levels. Investors who weren’t prepared lost everything.

This post was published at Wall Street Examiner by Money Morning News Team ‘ November 1, 2016.

Rosenberg on Heightened Political Risks, US Economic Downturn

While some economic data has improved this year, David Rosenberg of Gluskin Sheff questions the likelihood of a sustained cyclical upturn and cites specific political risks in the weeks and months ahead, which could rattle the markets.
Recession Isn’t Imminent, But Growth Is Weak
In a recent interview with FS Insider, Rosenberg said there’s nothing in the tea leaves to suggest a recession is imminent, but with growth being so weak, some sort of shock could trigger a recession.
This could take the form of a negative shock from abroad, such as a hard Brexit, or fragility beneath China’s GDP numbers becoming apparent. Both could affect US exports. Alternatively, Rosenberg stated, it’s possible the Fed makes a policy mistake, upsetting markets in the process.
‘The reality is that we don’t have an economy right now with a big growth cushion like we’ve had in the past,’ Rosenberg said.
He sees the underlying trend in the US economy around 1 to 1.5 percent GDP growth, well below previous growth cushions.

This post was published at FinancialSense on 10/31/2016.

SP 500 and NDX Futures Daily Charts – Risk Off

Today was a ‘risk off’ day for whatever reasons one wishes to cite.
But it was a risk averse day. Take a look at the VIX.
It could be the uncertainty of the FOMC meeting and the Non-Farm Payrolls number coming out.
But it could also be Donald Trump’s rise in the polling to have an even to slight edge chance against Hillary in the ‘popular vote.’
So, as I said, the punters were pulling in their lines a bit, although stocks certainly came off the afternoon lows.

This post was published at Jesses Crossroads Cafe on 01 NOVEMBER 2016.

Gold Daily and Silver Weekly Charts – Gold and Silver Rally on Uncertainty, Worries For the Status Quo

The VIX spiked higher today, and gold and silver rallied with the Swiss franc as the market felt a chill of Winter run up their backs.
Conventional wisdom points to the sudden rise of Donald Trump in the polls, pulling even with Hillary, at least in the popular vote.
To sharpen it down to a fine point, today was all about the fear of the unknown, for those who are so comfortable and accustomed to be winning.
The ‘establishment’ does not care one bit for this added uncertainty.
But we also have the central banks mucking about, and plenty of global tensions to go around that are normally pushed aside by the market mavens.
But every once in a while they pause in their exceptional giddiness, and begin to wonder, and to think about the real future may hold for them.
Let’s see if gold and silver can add to the gains, or at least get past the FOMC and the NFP numbers on Friday unscathed.

This post was published at Jesses Crossroads Cafe on 01 NOVEMBER 2016.

VIX Hedges Building Fast After Scare-less October

Octobers are supposed to be the scary, and not only because of Halloween. Market observers like to point out how much more volatile October is relative to other months. Not so in 2016 as Goldman notes this was the 4th lowest average VIX since records began. However, the last few days have seen hedgers extremely active ahead of next week’s election (despite one of the lowest levels of S&P 500 realized volatility recorded).
Via Goldman Sachs,
Typical VIX level on election day = 17.6
VIX in-line with past elections but the vol risk premium is high
The VIX closed on Monday October 31 at 17.1, up four points ( 31%) over the last week. The VIX has a history back to 1990, which covers six U. S. presidential elections. Exhibit 1 shows the typical VIX level heading into election day and compares that with the recent VIX pattern. The median closing VIX level on election day has been 17.6 back to 1992. By those numbers, an argument could be made that the VIX had been traveling 3-4 points low relative to past election patterns before catching up a bit over the past few days.

This post was published at Zero Hedge on Nov 1, 2016.

Asian Metals Market Update: November-1-2016

Diwali holidays are over. Indians are going back to work. It’s trading time. Incidentally November will be the best time to trade and make a quick buck. The FOMC meeting, US monthly jobs numbers, US election result and its spillover effect on global financial market and global political scenario. There are lots of possible reasons for gold and silver bulls to cheer and also attract new investors. Uncertainty brings the best in gold. November is a month of uncertainty. Gold and silver should rise.
Investment demand for gold and silver will be dependent on the price outlook till March 2017. The FOMC will raise interest rates either tomorrow or next month. Gold and silver will see another big crash if and only if the FOMC meets of tomorrow and December indicates a second interest rates hike before March 2017 (First one being tomorrow of December). Focus of investors is now of new policy changes which the new president will make. There is a policy division between the USA and other NATO member nations. This divide will only widen next year which should support higher bullion prices.

This post was published at GoldSeek on 1 November 2016.