Here’s How to Profit Off the Real Brains of the Market

Stocks paused from their post-election rally last week as the Dow Jones Industrial Average gained a paltry 18.28 points, or 0.1%, to end the week at 19,170.42. The S&P 500 fell 1% to 2,191.96, while the Nasdaq Composite Index fell 2.65% to 5,255.65. Further gains or losses may be less dependent on news from Trump Tower and more responsive to Italian voters’ rejection of constitutional reformon Sunday, Dec. 4.
The ‘no’ vote in Italy bodes poorly for Italian banks, which are insolvent and in need of government support, and is potentially a movement toward exiting the European Union. Despite a wider than expected margin of defeat (‘no’ votes were nearly 60% of the total), markets surprised in Europe and the United States by rallying. I have to confess that while I expected the ‘no’ vote, I did not expect markets to greet the result by rallying and am scratching my head at the response.
Italian voters are the latest to embrace populism and reject the elites governing their country. Following the Brexit vote and Donald Trump’s victory, Italians rejected much-needed constitutional reforms that could improve governance and chances for economic reform because they were focused on rejecting the heavy hand of the European Union and the straitjacket of the single currency that is suffocating their economy.

This post was published at Wall Street Examiner on December 8, 2016.

Time to Take Trump Seriously on Infrastructure Spending?

Earlier I shared with you that when it comes to President-elect Donald Trump, the media takes him literally but not seriously. His supporters, on the other hand, take him seriously but not always literally.
We saw an example of this polarity Tuesday morning when Trump took a shot at Boeing, tweeting to his nearly 17 million Twitter followers that the jet-manufacturer ‘is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!’
When journalists sought clarification, Trump said he wants Boeing to make money, ‘but not that much money.’
As the Wall Street Journal pointed out, the current Air Force One has been in use for 30 years – since Ronald Reagan’s administration – and includes many cutting-edge modifications for communications and defense. It’s designed to withstand a nuclear blast. For the value we get out of the president’s main ride, in other words, the exorbinant sticker price might not be so exorbinant as it initially appears.

This post was published at GoldSeek on 8 December 2016.

Presenting SocGen’s “Most Frightening Credit Chart”

“I sometimes feel like ‘The Grim Reaper’, scouring the research savannah in a ghoulish quest to harvest bad news with a forceful sweep of my scythe. Imagine then my perverse delight when our credit team produced what is one of the scariest charts I have seen for a very long time. Markets shrugged off the Brexit vote in a couple of days. They shrugged off Donald Trump’s election in a single day. They shrugged off the Italian Referendum result in a couple of hours. Heck, in this mood they would shrug off an alien invasion of planet Earth. But global political risk is now at such elevated levels that investors must surely be on another planet.”
– Albert Edwards
Has the reflationary blow to bond markets from ‘Trumpflation’ and the euphoria in global equities tempered Soc Gen’s Albert Edwards’ decades long “Ice Age” bearishness? Not a chance, as he explains in his latest note ‘Presenting our credit team’s most frightening chart’. In contrast, Edwards admits to the ‘perverse delight’ at his discovery of the aforementioned chart which reassures him that global risk is at such elevated levels that ‘investors must surely be on another planet.’
While our take has generally been that it’s central bankers that are on another planet – the rest of us merely forced to play on it – we know what he means.

This post was published at Zero Hedge on Dec 8, 2016.

Who the Heck are these Households that are Worth $90 Trillion?

Stalled Economy Performs Wealth Miracle, reports the Fed
One thing is working in this economy that has been stuck for years in a slow-growth mire: the inflation of asset prices. And the Federal Reserve, which has been engineering this miracle so adroitly, just released its latest progress report.
It reported today that the net worth of household and non-profits – they’re lumped together – rose in the third quarter by 1.8% or $1.59 trillion, to a record $90.2 trillion. That’s up 6% or $5.2 trillion from a year ago.
That 12-month increase of $5.2 trillion is larger than the GDP of Japan. Just by inflating asset prices. Why even bother to work? We’ll get to that in a moment.
Total household net worth is now nearly five times the size of US GDP. In 2007, at the top of the prior bubble, household net worth was $66.5 trillion, or about 4.5 times the size of GDP, before it all blew up.

This post was published at Wolf Street on Dec 8, 2016.

China’s Latest Capital Control: A Crackdown On Macau ATM Cash Withdrawals

Casino stocks have plunged following a report in the South China Morning Post that in China’s latest crackdown on capital outflows, Beijing is cutting in half the amount of money account holders of China UnionPay can withdraw from ATMs in Macau, the world’s largest gambling market.
The Monetary Authority of Macau’s ATM withdrawal cut is understood to be a reaction to attempts by illicit money movers to circumvent Beijing’s move at the beginning of this year to cap at 100,000 yuan (HK$112,600) the annual amount that UnionPay card holders could withdraw.
The limit imposed by the Monetary Authority of Macau takes effect Saturday, cutting the withdrawal limit from 10,000 to 5,000 patacas, and follows the discovery that as much as 10 billion patacas in China UnionPay ATM withdrawals were made in one month alone. The latest capital control also comes amid so far unanswered claims that the customer voucher scheme run by Marina Bay Sands casino resort in Singapore – which allows China UnionPay card users to buy gaming chips in breach of China’s strict currency controls, a scheme we profiled over a year ago – has seen billions of yuan flow out of the mainland.

This post was published at Zero Hedge on Dec 8, 2016.

Gold Daily and Silver Weekly Charts – ‘Smoking Gun’ In Bank Silver Rigging

The precious metals turn in a weaker performance today based on dollar strength versus the euro.
The markets had a little difficulty in determining whether the action taken this morning with regard to their version of QE was hawkish or dovish.
Dovish finally won the day, and the euro slumped against Uncle Buck.
The most interesting news of the day is the discovery of a ‘smoking gun’ in the papers from the Deutsche Bank lawsuit and settlement that names a group of other Banks as active manipulators in manipulating the silver market.
You may read about that here and in a few other articles in today’s selected reading. I particularly enjoyed the Wall Street On Parade piece that refers to the Banks as being a Silver Market Mafia.
Most informed participants could see the obvious price rigging in the gold and silver markets over the past several years. Normal trading does not instruct one to dump billions of dollars in contract into the quiet market off hours.

This post was published at Jesses Crossroads Cafe on 08 DECEMBER 2016.

Putting the Boot into Italy

When Charles Gave, paterfamilias of Gavekal, chooses to express displeasure over an economic trend, an asset class, or what have you, he does not exactly mince words. If you happen to be in the room when he does so, he can sound like the Voice of God Himself, declaring from on high. And with his longish flowing white hair, he actually looks like central casting setting over to play the part.
Today Charles is exercised about Italy. He first reminds us that when Italy adopted the euro in 1999, he had argued that Italy would change from being an economy with a high probability of many currency devaluations to one with the certain probability of eventual bankruptcy. Now, he says, the fateful moment is not far off.
He gives us a couple of before-and-after charts: before March 1999 and from March 1999 to the present, in which he compares Italian and German industrial production and the performance of their respective stock markets. He notes that from 1979 to 1998, Italian industrial production outpaced Germany’s by more than 10%, and Italian equities outperformed German equivalents by 16%. That’s after taking into account the devaluations. Northern Italy is actually a production powerhouse, or was…

This post was published at Mauldin Economics on DECEMBER 7, 2016.

Job Market Nearing Full ‘Recovery?’ Here’s a Dose of Reality

The unemployment rate beat expectations by dropping from 4.9% to 4.6%, and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) was above forecast at 178,000. A decline in the unemployment rate is a good thing, right? Not in the November employment report.
The Shrinking Unemployment Rate
The closely watched headline unemployment rate is a calculation of the percentage of the Civilian Labor Force, age 16 and older, that is currently unemployed. Let’s put this metric into its historical context. The first chart below illustrates this monthly data point since 1990.
In the latest data this indicator dropped to 4.6%. The age 16 population grew by 219,000, but the labor force (the employed and unemployed actively seeking employment) more than offset that growth with a shrinkage of 226,000. The the number of employed grew by 160,000 while 387,000 unemployed vanished. How can that be? Obviously, the lion’s share of the unemployed didn’t join the ranks of the employed. They simply disappeared from the labor force.

This post was published at Wolf Street on Dec 8, 2016.

DEC 8/SMOKING GUN EVIDENCE SUPPLIED BY DEUTSCHE BANK IN THIS STUNNING DEVELOPMENT/NEW CHARGES ARE FILED NOW AGAINST OTHER PLAYERS IN THIS CASE/ THE ECB TAPERS (HAWKISH) BUT ALSO EXTENDS THE QE PU…

Gold at (1:30 am est) $1169.50 DOWN $5.20
silver at $17.02: DOWN 18 cents
Access market prices:
Gold: 1171.30
Silver: 17.03
THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON
The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning
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:
THURSDAY gold fix Shanghai
Shanghai morning fix Dec 8 (10:15 pm est last night): $ 1204.95
NY ACCESS PRICE: $1177.95 (AT THE EXACT SAME TIME)/premium $27.00
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Shanghai afternoon fix: 2: 15 am est (second fix/early morning):$ 1206.50
NY ACCESS PRICE: 1174.70 (AT THE EXACT SAME TIME/2:15 am)
HUGE SPREAD 2ND FIX TODAY!!: $31.80
China rejects NY pricing of gold as a fraud
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
London Fix: Dec 8: 5:30 am est: $1174.75 (NY: same time: $1175.60 5:30AM)
London Second fix Dec 8: 10 am est: $1171.05 (NY same time: $1171.10 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.
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 December 8, 2016.

SP 500 and NDX Futures Daily Charts – Excelsior

I wish that the Fed and their ilk and the politicians and professional class would concern themselves with the serial bubbles they have been creating in financial paper asset (and studiously ignoring or denying) about half as much as they seem to be worried about increases in wages and employment.
The stock market has left the building called reality and is heading for euphoria.
It may keep going.

This post was published at Jesses Crossroads Cafe on 08 DECEMBER 2016.

Shiller Warns: Stocks Are Partying Like Its 1929!

Careful not send the investing into a panic, Robert Shiller appeared on CNBC this morning to explain just how insane the valuation levels of the market are currently…
And MarketWatch.com’s Brett Arends lays out the details…
I hate to rain on this parade. But the latest lurch upwards in stock prices has just taken market valuations up into the skybox levels, according to the market timing measure with the longest pedigree on Wall Street. It’s just gone from flashing amber to flashing red – meaning, if it’s right, that there is now a significant and rising risk of a crash, and a bigger risk of simply very poor returns.
This has little to do with President-elect Donald Trump, by the way – and much more to do with President Ulysses S. Grant and all his successors.
Wall Street’s jump this week has taken the S&P 500 to an eye-watering 27.9 times the corporate earnings of the past 10 years. That’s according to data compiled by Yale finance professor Robert Shiller and some simple math.

This post was published at Zero Hedge on Dec 8, 2016.

Housing Bubble Floating Towards Sharp Drop in Demand

On Wednesday, the Mortgage Bankers Association released data showing a sharp drop of 0.7% in mortgage applications from a week prior. The MBA’s report blamed higher interest rates on fixed-rate mortgages as the cause for the downturn. Currently, these rates are at a two-year high.
The housing industry watchdog said 30-year fixed-rate conforming mortgages averaged 4.27%, up from 4.23% the previous week. Conforming loans with balances of $417,000 or less are guaranteed by Fannie Mae and Freddie Mac; however, interest rates on ‘jumbo loan’ mortgages greater than $417,000 were also at a two-year high.
The announcement comes on the heels of statements last week by MBA chief economist, Mike Fratanatoni, who expressed optimism for new purchase mortgages despite a recent 9.4% drop in applications. Fratanatoni attributed the downturn to higher interest rates and a 16% drop in refinances for existing homeowners.

This post was published at Schiffgold on DECEMBER 8, 2016.

JPMorgan Employee Tried To Steal $5 Million In 22 Wire Transfers To Cover Gambling Debt

It appears JPMorgan has employee screening – or perhaps retention – problems.
According to Reuters, a (now former) JPMorgan employee, who was ordered to attend counseling for gambling, is facing criminal charges that he engaged in a scheme to steal $5 million from the bank in order to pay personal debts.
That in itself would not be exciting, however the details of how he planned on stealing from the bank to repay his debt, is.
Lawrence Obracanik, who worked as an operations manager for JPMorgan’s broker-dealer services, was charged in a criminal complaint made public on Wednesday in federal court in Manhattan with wire fraud and attempted wire fraud. According to the filed complaint, from July 2014 to February 2016, Obracanik made or tried to make 22 wire transfers for more than $5 million from an account at JPM to an account at another bank belonging to an unnamed individual.

This post was published at Zero Hedge on Dec 8, 2016.

Euro Devaluation Accelerates – Millions Of Europeans Wishing They’d Bought Gold

ECB Chairman Mario Draghi’s announcement of bigger and better QE this morning should have surprised no one. The fact is that the eurozone is coming apart at the seams and the only tool left to delay the inevitable is easier money. As the following chart illustrates, the euro has been declining since 2008, with the descent accelerating lately.
And more is coming. The only way for Italy, Greece and possibly France to keep it together is for their currency to plunge relative to those of their trading partners, thus making it easier to sell domestically-produced stuff abroad. So euro parity with the dollar will generate headlines when it happens but will just be a way-point on a journey to much lower numbers. That is, if the whole global financial system doesn’t blow up first.
What’s a European saver to do? Sitting on a euro-denominated bank account generated a 30% loss of real purchasing power during this ‘recovery,’ which for the average European more than offset the trade benefits of a cheaper currency (hence the recent political turmoil). So going forward, cash is clearly not an attractive way to preserve capital.

This post was published at DollarCollapse on DECEMBER 8, 2016.

Protectionist Trump Policies To Crash Dollar, Gold and Bitcoin to Soar

Many people seem to think Trump is going to ‘fix’ the US by invoking the isolationist, nationalist, and oft failed economic policy of protectionism. But, as Ludwig von Mises put it in Nation, State and Economy, ‘From the purely economic point of view nothing speaks against free trade and everything against protectionism.’ In other words, there is no economic argument in favor of protectionism. It is not a viable economic policy.
Any basic economics class will inform you that protectionism is the opposite of free trade and the opposite of the harmony of nations. ‘The philosophy of protectionism is a philosophy of war. The wars of our age are not at variance with popular economic doctrines; they are, on the contrary, the inescapable result of consistent application of these doctrines.’ Mises said.
There is no fixity in that direction. Trump’s protectionist policies are sure to fail!
And they are sure to dismantle all the benefits of free trade that have accumulated over the decades, even if through somewhat dysfunctional government created trade agreements.


This post was published at Dollar Vigilante on December 7, 2016.

The Economic Indicators Turn To The Dark Side- Episode 1147a

The following video was published by X22Report on Dec 8, 2016
Deutsche bank points the finger at other banks that were involved in the precious metal manipulation. Wells Fargo created fake accounts using forged signatures, millions of defrauded people are trying to sue Wells, and Wells is arguing that the binding arbitration agreements on accounts that you didn’t open are also binding. Schiller warns stocks are partying like 1929 and it’s not going to end well. Eric Sprott warns that the Fed is pumping billions into the market. JP Morgan quant warns we are moving towards the dark side. The next domino to fall is the Italian banks and it will spread.

Waiting For The Trump Fiscal Stimulus To Hit? Forget About 2017

That the market has soared since the Trump election on hopes of a fiscal stimulus splurge, sending the Dow Jones to just 300 points away from 20,000 is by now familiar to most. However, what few may realize is that even in a best case scenario, one where Congress does not throw up on Trump’s vague stimulus plan which is expected to add as much as $5 trillion to the already soaring US debt, little if any of the actual spending and economic boost will take place in 2017.
As Goldman writes in a note from this morning, “most market participants appear to be expecting fiscal policy to become more expansionary next year, but the timing of such a shift remains unclear.” In fact, according to Goldman calculations, the most likely phase in period is the very end of 2017, if not early 2018 at the earliest, to wit: “Our preliminary expectation is that the growth effects from looser fiscal policy would be concentrated in Q4 2017 and the first half of 2018.”
In our view, there are three factors that will influence the timing of any fiscal boost. First, the legislative process will take months, at least, and could push some priorities like tax cuts to the second half of 2017. Second, implementation can take longer, particularly if it involves a new program, as might be the case regarding infrastructure. Third, once a policy change has been made and implemented, it can take time for economic activity to respond; consumers might initially save some of their tax windfall before spending, and infrastructure spending can take several quarters after contracts are signed.

This post was published at Zero Hedge on Dec 8, 2016.