Selling Of French Bonds Accelerates As Le Pen Extends Lead, Macron Tumbles In Latest Poll

Another day, another headache for owners of French bonds. In the latest French presidential poll, conducted by Elabe for TV broadcaster BFMTV, Marine Le Pen extended her lead by another 2-3 points, while support for her primary centrist challenger Emmanuel Macron, tumbled by 5 points in the last week.
The poll, released today, showed that Le Pen’s lead rose by either 1.5 points to 27% or by 2 points to 28%, depending whether centrist candidate Francois Bayrou would take part in the election…
… or withdraw.

This post was published at Zero Hedge on Feb 21, 2017.

The Trump Triumph Changes Economic Predictions for 2017

The triumph of Donald Trump as the champion of a revolution against the status quo assures huge economic changes in the coming year, which I’ll list below. His victory struck a shocking upset to the globalists who have steered the last sixty or more years of world history, as I reported in an earlier story about George Soros mourning over the damage Trump will bring to global governance by unelected elitists.
For a short time, we should see some improvements. However, numerous structural flaws in the US economy ultimately assure economic collapse because those flaws have not been dealt with for decades, are not being dealt with in any of the Donald’s plans, and are most likely too far gone now to ever deal with. Trump’s plan will even make some of those structural flaws much worse in the long run.
What I describe in these economic predictions has considerable contagion possibilities for the rest of the world. While emerging economies have grown to where the US does not have the near-total economic dominance it once had over the world, it is still the world’s greatest economy (at least, in size). So, it is still true that, when the US sneezes, the rest of the world catches a cold … if not pneumonia.
What Trump’s victory changes most is the timing of economic collapse because his economic plan is bound to bring temporary lift, even as it worsens some of the structural flaws. The effect of the flaws I wrote about will take more time to develop than the improvements, but probably not much more time.
Let’s start with the positives:
Positive economic changes that are certain to result from the Trump triumph
Here is a list of economic changes, which I think are certain to bring some boost to the US economy in 2017 and will likely delay my epocalyptic predictions:
It is certain that Trump’s tax plan will happen. While it may not happen entirely, something very close to it will certainly happen because Republicans have never seen a tax-reduction plan they didn’t like. Republicans hold certain economic convictions as tightly as religious dogma: they believe tax cuts will pay for themselves and so will not create huge worsening of the national debt. Every time they make tax cuts, they claim the cuts will stimulate investment, which will stimulate the economy, which means more businesses will produce more revenue, which means there will actually be more tax revenue, not less. They have never been right about this yet. We have NEVER made tax cuts without increasing the federal deficit under any president. That fact, however, never kills this dogmatic belief. Republicans also believe with religious fervor that targeting tax cuts to the rich in the form of corporate breaks and particularly capital gains cuts will create new jobs and trickle wealth down to the middle class and the poor. The fact that real middle class wealth has stagnated or even shrunk during every past episode of trickle-down economics never matters. Belief trumps truth. Since Republicans control the entire legislature and the executive branch and will be changing the balance of the Supreme Court, it is absolutely certain we will see major tax reductions that will come as our third and greatest round of trickle-down economics. The plan coauthored by Larry Kudlow has all of his support with conservatives and Republicans, too. Even if Trump were removed from office, most of his plan would become law.

This post was published at GoldSeek on 21 February 2017.

Richard Breslow: “How Much Central Bank Money Has Poured Into The S&P 500?”

Authored by Richard Breslow, a former FX trader and fund manager who writes for Bloomberg
With the U. S. back from the long weekend, the week can start in earnest. The rest must have done some people good, because the feel of the market is a bit punchy as we start out of the gate. I’ve no strong explanation why other than it wasn’t entirely clear why things looked so squishy at the end of last week. Perhaps the natural desire to not carry a lot of risk over the holiday contributed to the moves. While, perhaps, also revealing people’s positioning at the same time.
The moves today are nothing dramatic, to be sure. But the dollar feels all right, Treasuries seem comfortable having held the probe lower in yields, equities are equities, and even the Bloomberg commodity index is trying to take heart after finding support at its 55-day moving average.
It’ll be interesting to see if this mood has any staying power, but for a trade, I’m using the levels we saw on Thursday and Friday as very short-term pivots.
I don’t think this has anything to do with March being ‘live’. But until we get a piece of data that takes it off the table, it won’t hurt.

This post was published at Zero Hedge on Feb 21, 2017.

US PMIs Tumble, Catch Down To ‘Hard Data’ Disappointment As “Post-Election Upturn Loses Momentum”

Despite soaring ‘soft’ survey data from around the world, US manufacturing and services PMI printed disappointing drops in February – catching down to the ‘hard’ data declines since Trump’s election.
The Soft data hope is fading fast… (Manufacturing dropped from 55.0 to 54.3, Services slumped from 55.6 to 53.9).
The composite PMI dropped 1.50 points – the biggest drop in a year.
Digging into the details exposes some ugly realities…

This post was published at Zero Hedge on Feb 21, 2017.

World Stock Markets, Bond Yields Rise Amid Ideas of U.S. Rate Hike In March

(Kitco News) – Asian and European stock markets were mostly higher Tuesday. U. S. stock indexes are pointed toward higher openings and fresh record highs when the New York day session begins.
Gold prices are under pressure Tuesday morning, in part due to hawkish comments from the Federal Reserve Bank of Philadelphia President Patrick Harper, who said Monday he could support a U. S. interest rate increase at the next FOMC meeting in March, if inflationary pressures are apparent.

This post was published at Wall Street Examiner on February 21, 2017.

Gold and Silver Market Morning: Feb 21 2017 – Gold is consolidating again!

Gold Today – New York closed at $1,239.00 on the 20th Februaryafter closing at $1,235.60 on the 17th February. London openedat $1,233.00 today.
Overall the dollar was stronger against global currencies early today. Before London’s opening:
– The $: was stronger at $1.0558: 1 from $1.0619: 1 onyesterday.
– The Dollar index was stronger at 101.37 from 100.87 onyesterday.
– The Yen was weaker at 113.56:$1 from yesterday’s 113.17 against the dollar.
– The Yuan was weaker at 6.8866: $1, from 6.8783: $1, yesterday.
– The Pound Sterling was weaker at $1.2423: 1 from yesterday’s $1.2462: 1.
Yuan Gold Fix
LBMA price setting: The LBMA gold price was set today at$1,228.70 down from yesterday’s $1,235.35.
The gold price in the euro was set higher at 1,166.30 after yesterday’s1,163.12.

This post was published at GoldSeek on 21 February 2017.

Satyajit Das Warns Financial Engineering “Has Masked The Global Economy’s Precarious Health”

Too much of economic growth and the accompanying bull market in stocks is the result of financial engineering. Increasingly, companies seek to improve earnings or increase their share price by means that are not necessarily directly linked to their actual business.
Companies have increased the use of lower-cost debt financing, taking advantage of the tax deductibility of interest. In private equity transactions, the level of debt is especially high. Complex securities have been used to arbitrage ratings and tax rules to lower the cost of capital.
Mergers and acquisitions as well as various types of corporate restructurings (such as spin-offs and carve-outs) have been used to create ‘value.’ Given the indifferent results of many such transactions, the major benefits appear to have accrued financially to corporate insiders, bankers, and consultants.
Share buybacks and capital returns, sometimes funded by debt, have been used to support share prices. In January 2008, prior to the global financial crisis, U. S. companies were using almost 40% of their cashflow to repurchase their own shares. Ominously, that position is similar today.
Tax arbitrage, especially by international companies operating in multiple jurisdictions, has increased post tax earnings. The use by many companies of special vehicles in low tax jurisdictions, like Ireland, evidences this trend.

This post was published at Zero Hedge on Feb 21, 2017.

The Mother Of All Financial Bubbles

We are now living through the mother of all financial bubbles. We’ve been living with it so long now that we have to take three giant steps backwards to even detect its broad outlines.
As a reminder, a bubble exists when asset prices rise beyond what incomes can sustain. Florida swampland in the 1920’s, tech stocks in the late 1990s, or Toronto real estate today — all are fine examples of this.
The US government and the private banking cartel known as the Federal Reserve, in cahoots with a very compliant and complicit mainstream media, are doing everything in their vast and considerable power to convince us that we are living in an golden era of risk-free prosperity. And that tomorrow will be even better.
Now, regular readers of PeakProsperity.com’s reports will know there’s a mountain of evidence contracting this. But it’s critical to understand that this is the same public perception management style as we’ve recently seen at Oroville: Deny, deny, deny… and then finally admit the obvious.
So let’s take those three giant steps backwards and see if we can spot the flaw in the ‘everything is awesome!’ meme that the Fed et al are trying to paint for everyone by flooding the ‘markets’ with so much thin-air liquidity (between $150-$200 billion a month) that nobody has any clue what anything is truly worth anymore.
Giant Step Backwards #1: Infinite growth is impossible.
This is such an easy concept that I’m continually surprised at how poorly appreciated it is and how much resistance it receives when raised. But it works like this: the earth is a sphere and therefore has a defined surface area and a defined amount of resources available for use.
The availability of these resources ranges across a spectrum from dense/concentrated on one end to dilute/useless at the other. Humans have already extracted and consumed most of the easily obtainable stuff. Now it gets harder.
Regardless of the economics of these resources, they are finite. And as our economic requires resources to function, if we want our economy to grow from here, that means consuming more resources at a faster rate then we have been. If resources are finite, then growth will one day prove finite, too.
This should be utterly, blindingly obvious to everyone. But it’s not, apparently. The Federal Reserve and the central banks in other nations are unified in their call for more economic growth, always and forever. That’s plan A. There is no plan B.

This post was published at PeakProsperity on February 17, 2017,.

Greek Bonds Rally On Revived Bailout Hopes

The yield on Greece’s bonds have tumbled the most since June after creditors agreed on Monday to resume talks in Athens over steps needed to continue a bailout of the nation, driving expectations that Greece will be able to meet its deadline for debt redemption by July.
As The FT reports, bailout monitors are now due to return to Greece following a meeting of finance ministers and IMF officials in Brussels yesterday, where creditors claimed a partial breakthrough in talks.
In return, the Greek government has agreed to examine ways in which it can raise its income tax threshold and reduce pension spending – measures the IMF has pushed for if the country is to meet its budget targets over the next decade or so. Investors seem to be taking cheer in the developments…

This post was published at Zero Hedge on Feb 21, 2017.

Eurozone PMI Jumps To 56, Highest Since April 2011; Job Creation Best In A Decade As Inflation Surges

Eurozone private sector and manufacturing growth unexpectedly jumped to the highest in six years in February and job creation reached its fastest since August 2007, propelled by strong demand and optimism about the future, the latest Markit PMI survey found. The Markit Eurozone PMI registered 56.0 in February, up from 54.4 in January , the highest reading since April 2011.
“The pace of eurozone economic growth improved markedly to hit a near six-year high in February, according to PMI survey data. Job creation was the best seen for nine and a half years, order book growth picked up and business optimism moved higher, all boding well for the recovery to maintain strong momentum in coming months.”
The broad-based acceleration, which showed France’s momentum getting close to Germany’s, suggests that if sustained, economic growth could hit 0.6 percent in the first quarter, according to Markit. That is faster than the 0.4 percent economists predicted in a Reuters poll earlier this month and suggests an economy in rude health before key national elections this year in France, Germany and the Netherlands.

This post was published at Zero Hedge on Feb 21, 2017.

Gold And The Inflationary Firestorm

Hardly a day goes by now without more good news for gold investors appearing, and the pace of this news flow is accelerating. Please click here now. Former Fed chairman Alan Greenspan was interviewed by the World Gold Council in the February edition of their influential ‘Gold Investor’ magazine. That’s a snapshot of some of the interview. The former head of the Fed gives a magnificent report card to gold as the ultimate asset and currency. Please click here now. In India, the restrictions on cash withdrawals from banks are set to end on March 13. That’s just two days ahead of the ultra-important US debt ceiling deadline on March 15. March 15 is also the date of the next interest rate decision from the Fed. The bottom line: Gold-obsessed Indians will soon have the ability to purchase significant amounts of gold to bet on ongoing problems for the US government. America is the world’s largest debtor nation, and as Alan Greenspan notes, the country desperately needs enormous infrastructure spending, but it can’t afford it. President Trump is almost certainly going to press congress to put even more debt on the backs of ageing American citizens to get that infrastructure spending done. That’s going to create significant inflationary pressure, and the US central bank’s rate hikes are going to exacerbate the problem. That’s because the bank is in ‘uncharted waters’; the enormous QE money ball sitting at the Fed has been a huge cause of deflation. It’s put a drag on money velocity by incentivizing banks to hold reserves at the Fed. Trump is killing the Dodd-Frank bank reserve requirement rules at roughly the same time as the Fed hikes rates again. That creates a powerful incentive for the banks to move money out of the Fed and put it into the fractional reserve banking system.

This post was published at GoldSeek on 21 February 2017.

Canary In A Contained Coalmine? HSBC Crashes Most Since Crisis On ‘Surprise’ Revenue Plunge

Just over 10 years ago, HSBC was the first canary in the world’s financial crisis coalmine to signal trouble ahead. Today’s 7% bloodbath in the banking behemoth is the biggest drop since the financial crisis after reporting fourth-quarter profit that missed estimates on a surprise drop in revenue, which it warned could fall again this year.
As we recently noted, 10 years ago this month, HSBC Holdings, the world’s third-largest bank at the time (and one of the most aggressive players in the U. S. market for low-quality mortgages), sent a chill through the financial world with news that its bad-debt charges will be 20% higher than forecast… and became the first canary in the coalmine of what would become the worst financial crisis of a generation.

“This is a material negative surprise for HSBC,” said John-Paul Crutchley, an analyst at Merrill Lynch. Foreclosures jumped 35% in December versus a year earlier, according to recent data from RealtyTrac. For the fifth straight month, more than 100,000 properties entered foreclosure because the owner couldn’t keep up with their loan payments, the firm noted.
For its part, HSBC said its overall charge will be about $10.56 billion, about 20% higher than the average analyst forecast of $8.8 billion.
In explaining the outcome, the bank said its own risk projections had failed to predict how many borrowers would fall behind on mortgages as interest rates climbed and saddled them with higher monthly payments.

This post was published at Zero Hedge on Feb 21, 2017.

SPAIN SETS MASSIVE PRECEDENT – CHARGES ITS CENTRAL BANKERS IN COURT

First, Iceland, and now Spain has taken on the Big Bankers responsible for financial calamity, as the country’s highest national court charged the former head of Spain’s central bank, a market regulator, and five other banking officials over a failed bank leading to the loss of millions of euros for smaller investors.
This, of course, markedly departs from the mammoth taxpayer giveaway – commonly referred to as the bailout – approved by the U. S. government ostensively to ‘save’ the Big Banks and, albeit unstated, allow the enormous institutions to continue bilking customers without the slightest fear of penalty.
Errant bankers and financiers, it would seem, typically manage to either evade actually being charged, or escape hefty fines and time behind bars.
Spain’s Supreme Court last year ruled ‘serious inaccuracies’ in information about the listing led investors to back Bankia in error, thus the bank has since paid out millions of euros in compensation.
But Spanish authorities could not abide the telling findings of a yearslong investigation into the failed listing, as Wolf Street explains,
‘As part of the epic, multi-year criminal investigation into the doomed IPO of Spain’s frankenbank Bankia – which had been assembled from the festering corpses of seven already defunct saving banks – Spain’s national court called to testify six current and former directors of the Bank of Spain, including its former governor, Miguel ngel Fernndez Ordez, and its former deputy governor (and current head of the Bank of International Settlements’ Financial Stability Institute), Fernando Restoy. It also summoned for questioning Julio Segura, the former president of Spain’s financial markets regulator, the CNMV [National Securities Market Commission] (the Spanish equivalent of the SEC in the US).
‘The six central bankers and one financial regulator stand accused of authorizing the public launch of Bankia in 2011 despite repeated warnings from the Bank of Spain’s own team of inspectors that the banking group was ‘unviable.”

This post was published at The Daily Sheeple on FEBRUARY 21, 2017.

New Protest Idiocy Lows: “Resisting” By Not Paying Federal Taxes

If you thought the last round of protest idiocy was counterproductive, you ain’t seen nuthin’ yet. Just when you think they’ve hit rock bottom, the liberal protests hit new lows. The Guardian recently published an article detailing a revival in ‘tax resistance,’ which is a practice of not paying your taxes to ‘resist’ government:
Andrew Newman always pays his taxes, even if he hates what the government is doing with them. But not this year. For him, Donald Trumpis the dealbreaker. He’ll pay his city and state taxes but will refuse to pay federal income tax as a cry of civil disobedience against the president and his new administration. Newman is not alone. A nascent movement has been detected to revive the popularity of tax resistance – last seen en masse in America during the Vietnam war but which has been, sporadically, a tradition in the US and beyond going back many centuries.
‘My tax money will be going towards putting up a wall on the Mexican border instead of helping sick people. It will contribute to the destruction of the environment and maybe more nuclear weapons. I think there will be a redistribution of wealth from the middle class to the wealthy elite and Trump’s campaign for the working man and woman was an absolute fraud. If you pay taxes you are implicated in the system,’ said Newman, an associate professor of English and history at Stony Brook University on Long Island, part of the State University of New York.
It is quite amusing that an educator from SUNY academia, which is in part financed by federal funding, managed to list everything he had issue with, while at the same time omitting everything the state does that he does not object to… notably paying his salary.

This post was published at Zero Hedge on Feb 21, 2017.

SWOT Analysis: Perth Mint Reports Rising Sales on Geopolitical Issues

Strengths
The best performing precious metal for the week was silver, up 0.31 percent, just edging out the gains in gold. Bloomberg reports that China’s holdings of U. S. Treasuries have dropped by the most on record last year. The second-largest economy has been seeking to rely less on U. S. currency. Japan, which is the largest holder of Treasuries, also sold nearly $202 billion in Treasuries last year. These countries seem to be backing away from financing the U. S. government in the era of the Donald Trump presidency, and concerned about the prospects of rising inflation. Flows into the largest exchange-traded debt fund, featuring Treasury Inflation Protected Securities, increased to $547 million during the past two weeks. Meanwhile, China’s gold reserves have held steady. Gold has rallied in seven out of eight weeks lately on concerns that the stock rally is done and investors are anticipating that inflation will take off. Analysts at Commerzbank commented that gold is ‘finding support from a weaker U. S. dollar and falling bond yields. In addition, rate hike expectations have declined.’ The Perth Mint reports rising sales this year. Neil Vance from The Perth Mint said, ‘Certainly in terms of geopolitical issues, we still see people moving into precious metals for that safe haven.’ In addition to strong sales in the U. S., the mint reported exceptional sales in China, partly due to a popular rooster coin in conjunction with the Lunar New Year. Weaknesses
The worst-performing precious metal for the week was palladium, down 0.87 percent. Hedge fund managers boosted their bullish bets on palladium this week to the highest level in three weeks. Jonathan Butler, a precious metals strategist at Mitsubishi in London, commented that ‘U. S. equities continue to ride high in expectation of Trump’s corporate tax reform, and this has weighted on gold.’ Butler went on to say, ‘Gold is probably going to be on the defensive this week,’ based on Federal Reserve Chair Janet Yellen’s testimony.

This post was published at GoldSeek on 21 February 2017.

Housing affordability shows that most Americans are too broke to buy a home: The American Dream moves further out of reach.

More Americans are finding it harder to afford a home. In fact, a closely followed housing affordability index is now back to where it was in 2008. Not exactly a prime time for buying homes. Most Americans are too broke to afford a home. Which is somewhat contrary to the narrative that is pumped out via pro housing propaganda. Buying a home is always a good deal! Real estate never falls! Only fools rent! So goes the story about buying real estate. Yet given current prices, many families find the dream of owning a home more of a far flung aspiration than a reasonable financial reality. We can see this trend unfolding with the vast number of new renter households over the last decade. Younger Americans are saddled with mountains of student debt and many are making lower wages. Taking on a large mortgage simply isn’t appealing or feasible when an albatross of debt is already being carried.
Housing affordability index screaming red
Home prices are getting out of sync with wages and economic growth. In order to purchase a home today many people need to take on a massive mortgage. Wages are simply not keeping up and people are using debt to maintain the pretense of middle class living.

This post was published at MyBudget360 on February 20, 2017.

US Futures, European Stocks Rise Despite HSBC Plunge; Dollar, Oil Jump

European stocks rose again with S&P futures higher, while Asian stocks were mixed. The dollar rose jumped on hawkish comments by Philly Fed’s Harker, oil rose following optimistic OPEC comments, while gold dropped. Markets have largely ignored the negative result by financial heavyweight HSBC, which posted its largest fall since mid-2015 after reporting a 62% plunge in pretax profit, weighing on UK financials, with the FTSE 100 modestly underperforming.
The Bloomberg Dollar Spot Index rose the most in more than three weeks after a Federal Reserve policy maker reinforced the chances for a U. S. interest-rate increase as soon as next month. The U. S. currency advanced against most of its major peers after Philly Fed President Patrick Harker told MNI in a Friday interview he ‘would not take March off the table at this point.’ Recent comments from policy makers have leaned on the hawkish side. A voting member of the rate-setting Federal Open Market Committee this year, Harker had said Feb. 15 that he sees three 25-basis point rate increases as appropriate for 2017.

This post was published at Zero Hedge on Feb 21, 2017.

Wal-Mart Rises After Earnings, Comps, Guidance Beat Expectations, Sales Miss

With concerns over the state of the US consumer – especially the low- and middle-income shopper base – lingering, analysts were looking forward to today’s Q4 results by America’s largest retailer for some further clarity, and they were not disappointed with what they saw: WalMart reported non-GAAP Q4 EPS of $1.30, beating expectations of $1.29 by one cent. The adjusted number included 8 cents in non-GAAP addbacks to a GAAP number of $1.22.
Total revenue of $130.9 billion, an increase of 1.0% from a year ago, marginally missed estimates of $131.2 billion. Excluding currency WMT reported adjusted revenue was $133.6 billion, an increase of 3.0%. Net sales at Walmart International were $31.0 billion, a decrease of 5.1%, however when excluding currency, net sales were $33.7 billion, an increase of 3.0%.
More important than just the top and bottom line, analysts were expecting Wal-Mart’s same-store sales to increase for the 10th consecutive quarter, putting it on stable footing compared with many other retailers, and WMT did not disappoint, reporting comps of 1.8%, higher than the 1.3% expected, and better than the company’s November forecast of 1.0%-1.5%. In the US, store traffic was up 1.4% Y/Y, while the average ticket increased 0.4%. Meanwhile, e-Commerce sales were up 29%. Sam’s Club comps ex-fuel were 2.4%, more than double the 1.1% expected, while both traffic and average ticket rose 1.2%. Ahead of earnings, there were concerns that a delay in income-tax refunds may push some shopper spending into the following quarter, Barclays said earlier in a research note.

This post was published at Zero Hedge on Feb 21, 2017.

The Stock Market Is Not Even Close To A Major Top – So Don’t Believe The Hype

The stock market is too high. The fundamentals don’t support these heights. This rally is completely ‘fake’ because it has been ‘manipulated.’ The market is in ‘nosebleed’ territory. We are in a blow-off rally. The market is about to crash. Yes, we have heard it all for months now. Maybe even for years. And, such perspectives have caused many to miss one of the best rallies we have seen in years, as they expect the market to top ‘any day now.’
But, the simple truth is that the market is in the heart of what us Elliotticians call a ‘3rd wave’, and they are relentless and the most powerful segment of a 5-wave Elliott structure. In fact, we have been within the heart of a 3rd wave since early November when we went against the common ‘market-think’ and called for a strong rally to 2300 and beyond, even though Trump won the election. But, it also means that we still have to complete waves 3, 4 and 5 before a long-term top is seen, as I have been noting since early 2016, as you can see from the chart of our market calls during 2016.
While I have clearly been quite bullish since February of 2016, it seems I was not bullish enough over the last few weeks. Although my target has been 2400-2440 on the SPX for this current run, I had initially expected some kind of pullback this month before we made the run towards my target. But, with so many market participants continually shorting this market, thinking it is about to crash, the short covering has certainly propelled us higher and faster than even I had immediately expected.

This post was published at GoldSeek on 21 February 2017.