Record High Lease Returns Set To Wreak Havoc On Used Car Prices

About a month ago we warned that declining used car prices could spell disaster for subprime auto securitizations (see “Slumping Used Car Prices Spell Disaster For Subprime Auto Securitizations“). While it’s always difficult to predict the exact timing of when bubbles will burst, a combination of record-high lease returns in 2017 and 2018, combined with rising interest rates could imply that the auto bubble is on the precipice.
As Bloomberg recently pointed out, strong used car pricing is a critical component required to prop up the overall auto market. While American’s love their brand new cars, if used car prices become too soft then substitution can hurt new car sales. Add to that the impact of falling residual values on the finance arms of the auto OEMs and you have all the ingredients required for an auto market meltdown.
Thanks in part to low interest rates, leasing has become an increasingly popular way to drive away a new car. It accounts for almost a third of all new car transactions in the U. S. and it’s also huge in the U. K., as I explained here. For BMW and Mercedes-Benz in particular, it’s been a boon for sales. Typically a lease lasts about three years, after which the customer returns to the showroom for another vehicle — which is when things could get difficult for the industry.
“There’s going to be a lot of units coming back over the next several years,” Ford Motor Co. warned last month. “They’re going to get to levels that we have never seen on an absolute basis in the industry before”.
In 2017, about one million more off-lease vehicles will be available in the U. S. compared with 2015. That additional volume will put downward pressure on used car prices.

This post was published at Zero Hedge on Dec 9, 2016.

Will the Gold Standard Return in 2017 Under Donald Trump?

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
A return to the gold standard, long a goal of many conservatives, is a lot less far-fetched now that Donald J. Trump is headed to the White House in January 2017.
It’s been 45 years since the United States used any form of the gold standard. Proponents of the gold standard – tying the U. S. dollar to gold – say it would stop the erosion in the currency’s value, limit runaway government spending, and foster economic growth.
But apart from a few vocal fans, such as retired Rep. Ron Paul (R-TX), most policymakers in recent years have viewed the gold standard as an outdated idea. Or, as iconic economist John Maynard Keynes famously called it, a ‘barbarous relic.’
The election of Trump has changed the calculus, however. Judging by what he has said and who he has consulted with, it’s clear that Trump is at least willing to entertain the idea of a return to the gold standard.

This post was published at Wall Street Examiner by David Zeiler ‘ December 9, 2016.

Don’t Be Fooled. The Trump Rally Is Not A Sign Of Economic Health

Submitted by Steven Horowtiz via The Foundation for Economic Education,
The headlines tell us that the Dow Jones is up around 1,000 points since Donald Trump won the election on November 8th. The conventional wisdom is that this shows how much confidence people have in Trump’s ability to generate a healthy American economy. The argument is that if people are willing to buy stock in American firms, this indicates their belief that those firms will see improving profits over the next few years. They then draw the conclusion that more profitable firms indicate a healthier American economy.
Although this argument is correct about stock prices reflecting an increasing belief in the profitability of US firms, it makes a major error in assuming that profitable firms necessarily mean a better economy. The Economy Isn’t A Thing
First, it’s important to understand that phrases like ‘a healthier economy’ are themselves problematic. The ‘economy’ is not the thing we should be concerned about. In fact, in some fundamental sense there’s no such thing as ‘the economy.’ As Russ Roberts and John Papola memorably put it in the music video ‘Fight of the Century:’
The economy’s not a car.
There’s no engine to stall.
No experts can fix it.
There’s no ‘it’ at all.
The economy is us Things are not ‘good/bad for the economy.’ They are good or bad for the people who comprise the market process, specifically in our capacity as consumers. All the economy amounts to is people engaging exchanges in order to better satisfy their wants. What we should care about is whether or not people are able to better satisfy those wants.

This post was published at Zero Hedge on Dec 9, 2016.

Cash Is No Longer King: The Phasing Out Of Physical Money Has Begun

Submitted by Shaun Bradley via,
As physical currency around the world is increasingly phased out, the era where ‘cash is king’ seems to be coming to an end. Countries like India and South Korea have chosen to limit access to physical money by law, and others are beginning to test digital blockchains for their central banks.
The war on cash isn’t going to be waged overnight, and showdowns will continue in any country where citizens turn to alternatives like precious metals or decentralized cryptocurrencies. Although this transition may feel like a natural progression into the digital age, the real motivation to go cashless is downright sinister.
The unprecedented collusion between governments and central banks that occurred in 2008 led to bailouts, zero percent interest rates and quantitative easing on a scale never before seen in history. Those decisions, which were made under duress and in closed-door meetings, set the stage for this inevitable demise of paper money. Sacrificing the stability of national currencies has been used as a way prop up failing private institutions around the globe. By kicking the can down the road yet another time, bureaucrats and bankers sealed the fate of the financial system as we know it.

This post was published at Zero Hedge on Dec 9, 2016.

Satellite Imagery Reveals Sharp Retail Spending Slowdown After The Election

According to various anecdotal reports, in addition to launching the stock markets on an unprecedented meltup, Trump’s presidential victory has also boosted consumer confidence, leading to a spike in post-election spending.
That, however, is not only not validated by the actual data, but according to evidence, retail spending – a key component of the Trump “hope” trade – has actually slowed down.
One snapshot of what consumers did pre- and post-elections comes from the latest Bank of America credit and debit card data. The bank pulled daily card data and calculated ‘core control’ sales which it defines as retail sales ex-autos, building materials, gasoline and groceries. It then indexed this spending on election day and compared it to the trends after the 2012 and 2008 elections. Noting the weekly pattern where sales pick up on the weekend, it finds that spending after the election was in line with the prior two election years. This year, sales accelerated a bit more as we approached the holiday season, however slowed down modestly in the days after. Overall, as BofA says, “there is little evidence of a particularly strong post-election boost in spending this year.”

This post was published at Zero Hedge on Dec 9, 2016.


Gold at (1:30 am est) $1159.40 DOWN $10.40
silver at $16.90: DOWN 12 cents
Access market prices:
Gold: 1160.00
Silver: 16.88
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.

This post was published at Harvey Organ Blog on December 9, 2016.

Michael Moore Warns “Something Crazy Could Happen To Stop Trump Becoming President”

Submitted by Paul Joseph Watson via,
Film maker Michael Moore, who correctly predicted that Trump would win Michigan, Wisconsin, Ohio and Pennsylvania, is now predicting that something ‘crazy’ could happen to stop Trump from being sworn in as president on January 20.
Appearing on Late Night With Seth Myers, Moore continually emphasized the point that Hillary won the popular vote, using that reasoning to argue that Trump’s presidency was illegitimate.

This post was published at Zero Hedge on Dec 9, 2016.


As momentum feeds on itself, it appears Trumphoria is in full swing…
Donald Trump’s election has fueled one of the broadest rallies in history as the number of stocks making new highs on the New York Stock Exchange climbed to the highest on a closing basis since May 2013.

This post was published at Zero Hedge on Dec 9, 2016.

Weekend Reading: The Trump Train Continues To Roll

Submitted by Lance Roberts via RealInvestment,
The market rally on Wednesday was quite a stunner given the already full extension of the market advance following the election. However, as Art Cashin noted in his latest note to his clients (courtesy of Zerohedge)
‘Around 11:45, a series of electronic buy programs helped lift the Dow and S&P out of the morning’s narrow range. I noted that in an email to some friends around noon: What many of us did not realize at the moment was the probability that the buy programs may have been triggered by events in another sector. Just before the buy programs kicked in, the rally in the Dow Transports was shifting up a gear as the index was on the verge of punching through to a new record high. If the Transports made a new record high, it would confirm the record high in the Industrials, thus giving a Dow Theory buy signal.
As that realization spread, the algorithms kicked in with buy program after buy program and the race was on.’

This post was published at Zero Hedge on Dec 9, 2016.

Trump Picks Goldman President Gary Cohn To Be Chief Economic Advisor

It appears that vampire squids are quite adaptable to living inside the swamp that Trump promised to be draining.
Following the appointment of former Goldman partner Mnuchin as Treasury Secretary, NBC News reports that Goldman Sachs President and COO Gary Cohn has been selected as National Economic Council Director.
onald Trump has offered Goldman Sachs executive Gary Cohn a key economic post, which would add to the administration another veteran of the powerful firm he bashed during his campaign, sources close to Cohn told NBC News.

This post was published at Zero Hedge on Dec 9, 2016.

Company Issues Press Release To Report Its Market Cap Hits $1 Billion

How to confirm that the market is in all-out euphoria mania mode? Perhaps one way is when a company issues a press release – a means of communicating with one’s investors and the broader public traditionally reserved for important updates – in which the only “news” is boasting that it has surpassed $1 billion in market cap, that may be as good a signal as any.
Customers Bancorp, Inc. Achieves Market Capitalization of $1 Billion Wyomissing, PA (December 7, 2016) – Customers Bancorp, Inc. (NYSE:CUBI), the parent company of Customers Bank (collectively referred to as “Customers” or the “Company”), today reported that the Company achieved a market capitalization of $1 billion on December 6, 2016.
“Reaching a market capitalization of $1 billion is an important milestone for us,” said Jay Sidhu, Chairman and CEO of Customers. “In the seven years since we started the Company, Customers has grown its market value from roughly $10 million – a testament to the success of our customer-focused banking model.”
The Company’s recent gains partly resulted from a 7.6 percent jump of Customers shares on the New York Stock Exchange (“NYSE”) on December 5, 2016. The Company’s shares also traded at a volume higher than the average daily volume, with more than 600,000 shares traded compared to the daily average of less than 200,000. The $1 billion market capitalization announcement comes after Customers reported third quarter 2016 record earnings and record net income to common shareholders of $18.6 million, up 30.3 percent over Q3 2015.

This post was published at Zero Hedge on Dec 9, 2016.

The Consumer Is Broke: ‘Restaurant Sales Worst Since July’

At -1.3 percent, disappointing restaurant sales growth in November was the ninth consecutive month of negative same-store sales; and the worst sales growth since July… Same-store sales for third and fourth quarters, at the end of November, are both -1.1 percent. – Black Box Intelligence
That’s the restaurant industry. Here’s a retail sales report from Dollar General, which would represent about 40-50% income and spending demographic:
Interestingly, we talk to our consumers each and every quarter through panel data as well as we bring them in and talk to them in general and I can tell you as late as mid third quarter, they were telling us that their sentiment – feeling – is even more dire than it was in previous quarters in early 2016 – Dollar General CEO in response to an analyst question on the quarterly earnings conference call.
Granted, DG’s core customer is low-income. However, as more Americans slide into the ‘low income’ segment, it will affect overall retail sales, especially with regard to disposable income. My point here is that, despite the sense of ‘hope’ signaled by the ‘Trump rally,’ in general the average American is not feeling optimistic about the economy and I believe this will translate into a poor holiday season for both retailers and the overall economy. – Short Seller’s Journal, Dec 4 issue

This post was published at Investment Research Dynamics on December 9, 2016.

A Major Red Flag? Chinese Oil Demand Growth Could Shrink 60% In 2017

Chinese growth of crude oil imports may likely shrink by more than 60 percent next year, as storage facilities are filling in and smaller refiners face more scrutiny over taxes and licenses, according to a Bloomberg survey of analysts.
According to Energy Aspects analyst Michal Meidan, Chinese crude oil imports are expected to grow by 5 to 9 percent in 2017, compared to an estimated growth of 11 to 14 percent this year.
According to customs data quoted by Bloomberg, Chinese imports increased by 14 percent to average 7.5 million bpd between January and November this year. The median estimate of 8 analysts in the survey showed that China would increase oil purchases by 4.8 percent on the year in 2017.

This post was published at Zero Hedge on Dec 9, 2016.

Gold-Futures Selling Exhausting

Gold has suffered brutal, withering selling pressure in the month following the US presidential election. The stock markets’ surprise surge after Trump’s surprise win has led speculators and investors alike to rush for the gold exits. As usual the former group’s extreme selling came largely through gold futures. But this gold-futures dumping has been so severe that it is rapidly exhausting itself, a bullish omen for gold.
Gold’s stunning post-election selloff resulted from a united mass exodus by gold’s two dominant groups of traders. Speculators ferociously dumped gold futures with an intensity rarely witnessed, while stock investors jettisoned shares in the leading GLD gold ETF far faster than gold itself was falling. With so much gold being spewed into the markets so rapidly, this metal didn’t have a chance of staying on its feet.
Gold futures had actually skyrocketed on election night, up 4.8% to $1337 as Trump’s perceived odds of winning started to soar. But once the plummeting stock markets rebounded violently, the gold selling began. And it soon intensified after the election. Not only did stock markets shockingly surge to new all-time record highs, but the US Dollar Index blasted up to a major new 13.7-year secular high of its own.
Gold has always been a contrarian anti-stock trade. As a rare asset that moves counter to stocks, gold’s critical investment demand is heavily dependent on stock-market fortunes. Investors alternatively flock to gold to diversify their stock-heavy portfolios when stock markets fall, and then abandon it as stocks soar again. The exceedingly-strong post-election stock markets swiftly slayed gold investment demand.

This post was published at ZEAL LLC on December 9, 2016.

Gold fools, dollar bulls and the long term outlook for both Markets

If pleasures are greatest in anticipation, just remember that this is also true of trouble.
Elbert Hubbard
Many experts penned numerous articles this year proclaiming that the Gold market was ready to take off and that 2016 would be the year that the Gold bull resumed its upward trend. They spoke of our high debt, a weak economy and listed a plethora of reasons as to why Gold was ready to soar. Needlessly to say, their fear mongering proved to be fruitless for instead of taking off, Gold nose dived. Early in the year we stated that we did not expect much from Gold this year; we wrote several articles but will highlight points from one of them as it adequately sums our overall theme for 2016.
In April 2016 we stated the following
From Feb to March of 2016, Gold responded in the correct manner, as the dollar traded lower, it traded higher. After that, the situation changed, and Gold has been putting lower highs while the dollar has traded to new lows. This indicates that one market is out of sync, and this market is Gold. Thus, the dollar is likely to bottom and rally again, while the rally in Gold is likely to fizzle out. This initial strength in Gold is the perfect setup to knock the early bulls out; we would not be surprised if Gold experiences one final move down to the $1000 ranges, before putting in a multi-year bottom. We are not ready to jump on the Gold bandwagon yet and have maintained this position since we bailed out in 2011. The trend would need to turn positive before we turn bullish on gold and so far the trend based on our trend indicator is neutral. Tactical Investor
What does the future hold in store for the dollar and Gold?

This post was published at GoldSeek on 9 December 2016.

Market Insanity Reaches Record Highs As Investors Flock Into The Biggest Bubble In History

Investors have forsaken all reason, logic and wisdom by rushing into the biggest stock and financial bubble in history. Even some precious metals investors are selling their gold and jumping into the markets hoping to make big profits as President Trump takes over the White house in six weeks.
Unfortunately, the worst time to jump into a market is when everyone else is doing the same thing. Of course, this doesn’t mean the Dow Jones Index won’t continue higher for some time, but the fundamentals of the economy continue to rot from the inside out.
No one really notices this as automobile dealers are now selling cars with zero interest rates, nothing down and no payment for 6 months. If this is the sort of business model the automobile industry has to resort to in order to continue sales, we are in big trouble.

This post was published at SRSrocco Report on December 9, 2016.

Market Report: Gold steadies

Gold and silver are showing signs of support this week, with silver notably recovering its poise, as the chart above shows.
Today gold is unchanged from last Friday’s close at $1170 and silver is up 34 cents at $17.10, in mid-morning European trade this morning.
However, bearish commentary is increasing, with increasing numbers of know-it-alls always ready to dream up stories as to why gold has fallen, and why it will collapse further. While no one knows future prices, when increasing numbers of ill-informed commentators profess to, it can usually be taken as a contrary indicator, rather like an oversold index. So the few who say they are bullish at current levels have a reasonable chance of being right, though it may take a little time to be proved.
More seriously, the bullion banks which are short have an interest in encouraging bearish talk, because they do not appear to have loaded up on long positions yet. The net position of swaps on Comex as proxy for them, shown in our next chart, confirms, with net swaps at -80,000 contracts.

This post was published at GoldMoney on DECEMBER 09, 2016.