Federal Reserve Meeting Minutes: Stronger than Oak

Today, for your pre-Thanksgiving delectation, I have for you an Outside the Box with deep roots in my West Texas homeland. It comes from fellow Texan Danielle DiMartino Booth, who has graced these pages more than once this year. You’ll recall that she was a key advisor on monetary policy to Dallas Fed President Richard Fisher until his retirement last year, whereupon Danielle struck out on her own (and landed here). She has a book coming out early next year, called Fed Up: An Insider’s Take on Why the Federal Reserve Is Bad for America. I have already preordered my copy on Amazon, and it’s scheduled to be delivered to my iPad on Valentine’s Day.
In addition to cooking amazing meatballs for 250 of her closest friends at Christmas, Danielle has a wonderful knack for weaving contemporary cultural references into her financial analysis, and today’s piece is no exception. Would you believe a highly critical take on the Fed’s most recent meeting minutes (and what they say and don’t say about upcoming Fed policy), all wrapped up – and oh so aptly – in a reprise of a key scene from the movie Jerry McGuire? Well, believe it, because that’s my good friend Danielle. I’ll say no more but just let you savor her sharp, lively prose.

This post was published at Mauldin Economics on NOVEMBER 23, 2016.

The Gold Bears Are in For a Massive Surprise

If you’re serious about making money from investing in the financial markets, you need to be able to read the crowd… and go against it.
Let me give you an example… Currently one of the consensus views is that the Gold rally is over and gold is dead as an investment.
Right off the bat, you know this sentiment is at an extreme. Despite its recent sell-off, Gold is still crushing stocks in terms of performance year to date.

This post was published at GoldSeek on 23 November 2016.

Risky Parity Panic Strikes As Correlations Crash To Record Low

Having exploded higher in the run-up to the election, market expectations of the correlation between stocks within the S&P 500 have completely collapsed since to new record lows.
Simply put, massive systemic overlays were placed ahead of the election event, and were forced to be unwound increasingly aggressively as the post-Trump rally caught everyone offside (the unwind would mean relatively heavy selling of Index protection relative to single-name protection).

This post was published at Zero Hedge on Nov 23, 2016.

Startling Look At How Much Money Food Stamp Recipients Spend On Junk Food

A new study just released by the USDA, offers a very detailed look at exactly how participants in the “Supplemental Nutrition Assistance Program” (SNAP, aka Food Stamps) spend their taxpayer-funded subsidies. Unfortunately for taxpayers, the amount of money spent on soft drinks and other unnecessary junk foods/drinks is fairly staggering. But, we suppose it’s a nice taxpayer funded subsidy for the soda industry…so score one for Warren Buffett and the Coca Cola lobbyists.
Per the study, nearly $360mm, or 5.4% of the $6.6BN of food expenditures made by SNAP recipients, is spent on soft drinks alone. In fact, soft drinks represent the single largest “commodity” purchased by SNAP participants with $100mm more spent on sodas than milk and $150mm more than beef.

This post was published at Zero Hedge on Nov 23, 2016.

Will Trumponomics Save Us From A Bust?

Can Trump-economics prevent the asset price inflation now infecting the global economy – with its origins in the radical monetary experiment under the Obama Administration – from moving on to its late deadly phase?
Two Options: “Economic Miracle” or “More of the Same” According to many popular narratives in the market-place since Election Day, the implicit answer is yes. Either an economic miracle (i.e., a period of renewed economic growth) or a dose of old-style monetary stimulus will do the trick, we are told.
Neither of these reprieves would likely be permanent. But, as the advocate told K in Kafka’s ‘The Trial,’ full acquittal is not an option; the best outcome to be hoped for is indefinite postponement, the second best is provisional postponement.
An economic miracle would achieve the best outcome – at least until the Fed again inserted a monkey wrench into the machinery of the economy (as Alan Greenspan did in the late 1990s); further inflationary monetary easing could bring about the second best option (though this will make the final bust even worse in the end).
Judging by the market’s response to the election, it appears the idea of a reprieve (and an economic miracle) continues to be popular among those hoping for a “soft landing.” Fewer seem to be placing their trust in more monetary inflation (at least if we’re judging by the weakness of gold and the strength of the dollar found in the market right now).

This post was published at Ludwig von Mises Institute on November 23, 2016.

Politically-Driven S.O.D. (sons of Druckenmiller) to Lose Again

You know who they are; they are the ones who denied and denied the ginned up bull market in US stocks that nearly tripled under the socialist regime, circa 2009-2016. They are the ones who clung to gold well past the caution point last summer. They are (yes, it’s another snappy buzz phrase to either entertain, bore or annoy you… ) the S. O. D., AKA the Sons of Druckenmiller, AKA politically biased and newly activated market participants. Reference…
Druckenmiller: Get out of the stock market, own gold (this helped load the boat full of ill-fated gold bugs in the spring).
The night Trump was elected president, Stanley Druckenmiller dumped gold (this signaled the beginning of reparations to gold’s sentiment profile). He also became very bullish on the stock market; go figure.
Still feel like following the MSM and these media stars they shove down gullible peoples’ throats?
So the well known and much respected Druck was bullish on gold and bearish on the US stock market until he famously flipped his script literally upside down in a knee-jerked response to the presidential election, which cast off the commies and brought in a man who promised to ‘reshore’ America’s outsourced industries (folks, the smoke stacks are gone and they are not coming back, although more Robots may well be, in time).* He has promised to cut taxes including especially, corporate taxes, and he has promised myriad other fixes to help the economy trickle down to the long-abused middle class.
This is not an article about the future efficacy of these changes; it is an article about a contrarian setup, in which market sentiment is all tied up with politics to finally bring on the climax that any major cyclical bull market needs to experience before it flames out.

This post was published at GoldSeek on 23 November 2016.

Strongest Pillar of Shaky US Economy has Cracked

‘Car Recession’ now expected to spread to 2017.
A ‘car recession,’ as the industry is calling it, or the ‘so-called car recession,’ as Ford called it on July 28 in its 10-Q filing, is taking hold. The more politically correct term that Ford also used is the ‘plateauing’ of industry volume. Which means, after six boom years, sales are going down.
They’re not crashing, for the moment. They’re facing tough headwinds, and so they’re drifting lower, despite enormous industry efforts to prevent it, and they’re now expected to drift lower next year as well.
Steven Szakaly, chief economist of the National Automobile Dealers Association (NADA), which represents about 16,500 new vehicle dealers in the US, forecast that sales of new cars and light trucks in 2017 will drop to 17.1 million.
‘We are headed toward a stable market for US auto sales, not a growing market,’ he said. ‘The industry has achieved record sales, and pent-up demand is effectively spent.’

This post was published at Wolf Street by Wolf Richter ‘ November 22, 2016.

Fear The Federal Reserve Meeting Minutes

Authored by Danielle DiMartino Booth,
Ever heard of an Alpha quote? That’s how best to classify, ‘Show me the money!!!’
It didn’t take you but a nanosecond to picture Jerry Maguire screaming that line into his phone. The shame, for lack of a better word, is that another quote from the same movie, that’s almost as good, will only live on to minor fame.
Getting to the not quite as famous quote requires that you navigate not one, but two scenes in the 1996 Tom Cruise blockbuster. Sports agent Maguire has landed an Odessa, Texas high school superstar quarterback. In perfect stereotypical form, the boy’s father is chief negotiator. Out Maguire drives to dusty West Texas to seal the deal, on paper, to which the father replies: ‘You know I don’t do contracts, but what you do have is my word. And it’s stronger than oak.’ One firm handshake later, we see an elated Maguire driving off singing and pounding his steering wheel to the beat of Tom Petty’s ‘Free Falling.’
Of course, a betrayal follows as sure as night follows day and the father signs, yes signs, with a rival agent offering a sweeter as in ‘Sugar’ deal. But what about the strength of that oak? A pumped-up Maguire arrives for the young star’s big moment and learns that in all likelihood Cushman Senior does sign contracts. To that Maguire bitterly retorts, ‘I’m still sort of moved by your, ‘My word is stronger than oak’ thing.’ The moral we saw coming: Always get it in writing.

This post was published at Zero Hedge on Nov 23, 2016.

Fannie-Freddie Conforming Loan Limits Increasing for First Time in a Decade

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
Even with the worst post-recession wage growth since 1965, national home prices are back to June 2007 levels, thanks in part to the massive monetary stimulus from The Federal Reserve. (Bloomberg) – Joe Light and Prashant Gopal- The definition of a jumbo mortgage is changing for the first time in more than a decade.
Fannie Mae and Freddie Mac in 2017 will back mortgages of up to $424,100 in most of the U. S., an increase from $417,000, the Federal Housing Finance Agency said Wednesday. The change, which will increase the limit for areas with the most expensive homes to $636,150 from $625,500, comes after home prices in the third quarter pushed past their level of a decade ago.

This post was published at Wall Street Examiner on November 23, 2016.


Gold closed at $1189.10 down $21.90
silver closed at $16.38: down $0.24
Access market prices:
Gold: 1187.50
Silver: 16.36
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 23 (10:15 pm est last night): $ 1230.45
NY ACCESS PRICE: $1214.70 (AT THE EXACT SAME TIME)/premium $15.75
Shanghai afternoon fix: 2: 15 am est (second fix/early morning):$ 1231.70

This post was published at Harvey Organ Blog on November 23, 2016.

How (Slightly) Higher Mortgage Rates Maul Housing Bubble 2, Affordability, and the Rest of the Universe

A subsidy that is now reversing. After the brutal beating following Election Day, US Treasuries took a breather early this week. But today, the beating resumed and will continue until the mood improves.
Mid-day, the 10-year Treasury fell so hard that its yield, which moves in the opposite direction of price, spiked to 2.42%. By the end of the day, the 10-year yield was at 2.36%, up 4 basis points for the day, and up an entire percentage point from July this year (via StockCharts.com).
The market is 100% certain that the Fed will stop flip-flopping in mid-December and raise rates by moving the upper limit of the Fed funds target range to 0.75%. The markets see more rate hikes next year. A Fed funds rate with the first ‘1’-handle since 2008 would be a phenomenon a whole generation of Wall Street gurus has never seen in their professional lives.
Mortgage rates are chasing after Treasury rates. The Mortgage Bankers Association reported today that the 30-year fixed-rate conforming mortgage ($417,000 or less) reached 4.16%, its ‘highest weekly average since the beginning of 2016.’

This post was published at Wolf Street on November 23, 2016.

Illinois Stiffing Vendors To Fund Budget Deficits – It’s A “Financial Time Bomb”

Anyone who has ever invested in distressed securities is intimately familiar with the many games that companies play to avoid a bankruptcy filing. The easiest game, and the most obvious red flag for investors to spot, involves stretching out payables and managing down receivable days to build cash so you can live to fight another day. While this may provide a temporary cash boost, it’s typically the beginning of the end as vendors simply move payment terms to COD and the game quickly comes to an end.
Well, this is exactly the game that the state of Illinois seems to be playing right now to cover its budget shortfalls. As we just pointed out a couple of days ago (see “Illinois Pension Funding Ratio Sinks To 37.6% As Unfunded Liabilities Surge To $130 Billion“), with a $130BN pension underfunding and minimum annual contributions of $10BN, it’s no surprise that Illinois needs every dollar they can squeeze out of vendors.
So, in response to their budget crisis, Illinois has done what every responsible, insolvent debtor does, namely raise more debt. Under the program, Illinois vendors are able to sell their receivables to a consortium of lenders who have decided to provide seemingly perpetual loans to the state at a cost 1% per month. As Reuters points out, the balance of the program is currently around $13.5BN right now but is expected to surge to $47BN by 2022, or nearly double the amount of GO bonds the state has outstanding.

This post was published at Zero Hedge on Nov 23, 2016.

Time For The Gold Bulls To Step Up – If There Are Any Left

First published Sat Nov 19 for members: Two weeks ago, I noted that we had a completed pattern to the downside in the equity market and it was time for the equity market bulls to step up. And, boy, did they ever. Now, it is time for the metals bulls to do the same. But, it seems I cannot find them.
Last weekend, I noted that the bulls have gone into hiding. This past week, they were scared even further into their shell. Yes, bullish sentiment in the complex has dropped to almost nothing. For those that review market sentiment readings, you will know that we have almost no bulls left in this market, or at least bulls who are willing to admit it. That is often a strong indication that we are bottoming, and not collapsing.
I also noted in my last weekend report that, if our pattern was going to hold for potential bottoming in the complex, we would need to see a ‘bounce’ early in the week, which would then likely lead to a lower low later in the week. The market has followed through quite nicely with this bottoming pattern thus far.
Moreover, the positive divergences we are seeing on all time frames is quite stark and strongly suggestive of waning selling pressure. If we review the silver charts, we see positive divergences on all time frames from 5 minutes up to daily. Our 144-minute chart, which has given us the strongest indications of impending tops and bottoms in this complex all year, is strongly suggesting that we are now bottoming. Will it be the first false signal we have seen all year? I cannot answer that. All I can do is work on probabilities and the probabilities are strongly in favor of us bottoming very soon.

This post was published at GoldSeek on 23 November 2016.

Gold and Monetary Populism: The Oligarchs’ Mortal Enemies – The Peoples’ Salvation

Desperation is setting in. The blatant attacks on gold are occurring almost exclusively during the Comex floor-trading hours now. Every night gold pushes higher as Asia’s appetite is seemingly voracious. The two most systemically dangerous banks right now, it was revealed according to the IMF, are JP Morgan and Citibank. I’m sure part of the smash is in response to that. All this action between gold and the dollar means is that the counter-force reaction to what the Fed is doing is going to be even more forceful. They already can’t control the dollar and the strong dollar is going to decimate Q4 revenues and earnings. Give it 6 months and I bet they start talking about the need to print more money. Gold will sniff that out well ahead of time.
Stewart Dougherty has provided another guest post for IRD. I think this is his best commentary yet.
The people hold in their hands the key that can unlock the door to financial independence and steadily increasing wealth, but they do not realize it. An obvious truth, being clear, is the hardest thing for people to see. They look right through it, as though it were not there, even though it is. Once they do see a truth, they never overlook it again. It becomes an invaluable fixture of their thinking.
Like the adult elephant taught from youth that the light chain around its leg cannot be broken, the people believe that the strangulating government currency chain around their necks is unbreakable. The fact is that if the grown elephant pressures the chain, it will snap, setting him free. The people, too, have the power to break the currency chain that chokes them and reclaim their financial freedom from the plunderers who have usurped it, if only they would study, understand and act.

This post was published at Investment Research Dynamics on November 23, 2016.

World Marketplace Quieter Ahead Of U.S. Thanksgiving Holiday

(Kitco News) – World equity markets were mixed in quieter trade Wednesday. U. S. stock indexes are pointed toward slightly lower openings when the New York day session beings. The U. S. Thanksgiving holiday on Thursday will keep the world marketplace somewhat muted the rest of this week. The major U. S. stock indexes have this week hit record highs, in the aftermath of the surprise U. S. presidential election that resulted in a win by Donald Trump.
Gold prices are trading near steady in early U. S. dealings.
There is a heavy slate of U. S. economic data due for release Wednesday, including the weekly jobless claims report, the weekly mortgage applications survey, durable goods orders, the monthly house price index, the U. S. flash manufacturing PMI, the University of Michigan consumer sentiment survey, new residential sales, the weekly DOE liquid energy stocks report, and the FOMC November meeting minutes.

This post was published at Wall Street Examiner on November 23, 2016.

US Crude Production Rises As Rig Count Reaches 10-Month Highs

For the 24th week of the last 26, oil rigs rose (by 2) to 474, the highest since January 2016. US crude production rose again last week tracking the lagged trend of rising rig counts in the US.
Notably US crude production looks set to rise given the rig count moves (and if OPEC agrees a deal and spooks prices higher, that production may well arrive sooner).

This post was published at Zero Hedge on Nov 23, 2016.

The Most Important Bond Trendline Is Broken: “Now It Gets Interesting”

After the presidential election, the liberal Hampshire College in Amherst, Massachusetts made the decision to lower its U. S. flag on campus to half-staff due to, at least according to president Jonathan Lash, “a range of views on campus, including people whose experience growing up have made the flag a symbol of fear, which was strengthened by the toxic language during the campaign.”
According to CBS Boston, the “gesture” quickly sparked outrage on campus among veterans and their families which ultimately resulted in someone removing the flag on Veterans Day to burn it.
He said the trouble started with a gesture meant to help provoke ‘meaningful and respectful dialogue’ on campus – a stance he outlined in a post on the college’s Facebook page. In that post, he said the Board of Trustees decided to fly the flag at half-staff due to the ‘environment of escalating hate-based violence’ in the wake of the election.

This post was published at Zero Hedge on Nov 23, 2016.

Gold and Silver Market Morning: Nov-23-2016 — Gold and Silver consolidating at a bottom!

Gold Today -New York closed at $1,212.00 yesterday after the previous close of $1,208.30 London opened at $1,211.00.
Overall the dollar was stronger against global currencies.
– The $: was stronger at $1.0603: 1 from $1.0644: 1 yesterday.
– The Dollar index was a weaker at 101.20 from 100.74 yesterday.
– The Yen was weaker at 111.06: $1 from yesterday’s 110.58 against the dollar.
– The Yuan was weaker at 6.9055: $1 from 6.8910: $1 yesterday.
– The Pound Sterling was weaker at $1.2380: 1 from yesterday’s $1.2491: 1.
Yuan Gold Fix
Gold prices in Shanghai are $11 higher than New York’s close and $12 higher than London’s opening [allowing for the difference in the quality of gold priced in the different markets].
The dollar has started to rise again, climbing over the 101 dollar index level. Will it go higher and move into a bull market again? More importantly, will it cause gold to fall further? To us we see it building a base at $1,210 at the moment, which, if it holds is positive for gold!

This post was published at GoldSeek on 23 November 2016.