Market “Paralysis” Confirmed – Squeezed Shorts And Anxious Longs Are Fleeing Stocks

For the last two years, short interest in the US stock market’s largest ETF has collapsed as bears have been squeezed back to their lowest level of negativity since Q2 2007 (the prior peak in the S&P). But, there’s a bigger issue – despite record highs and ‘no brainer’ dip-buying, anxious longs have dumped S&P ETF holdings for four straight months – the longest streak since 2009 – seemingly confirming Canaccord‘s recent finding that “it’s not complacency, it’s paralysis.”
Bearish investors say they are scaling back on these bets not because their view of the market has fundamentally changed, but because it is difficult to stick to a money-losing strategy when it seems stocks can only go up.
‘There seems to be an overall view that people are invincible, that things will always go up, that there are no risks and no matter what goes on, no matter what foolishness is in play, people don’t care,’ said Marc Cohodes, whose hedge fund focused on shorting stocks closed in 2008.

This post was published at Zero Hedge on Jul 22, 2017.

What To Do With Your Cash?

Have you moved a material percentage of your financial portfolio to cash? Have you become so concerned about the meteoric ramp upwards in asset prices that you find it wiser instead to move to the sidelines, build “dry powder”, and wait to re-enter the markets at saner valuations?
If so, you have my sympathies.
The past 5+ years have been brutal for savers pursuing this strategy. I know this well, as I’m one of those folks, too.
The Mother Of All Financial Bubbles As we’ve chronicled for years here at PeakProsperity.com, the global central banking cartel started flooding the world with liquidity (aka, money printed from thin air) in response to the arrival of the Great Financial Crisis in late 2008. And they never stopped.

This post was published at PeakProsperity on Saturday, July 22, 2017.

How Accurate Are CBO Forecasts? The Answer In Two Charts

Even as the Republican effort to repeal Obamacare in recent months has suffered one humiliating loss after another, at the hands of none other than the very same Republican party, one government agency has been repeatedly scapegoated for the GOP’s failure to come up with a credible and passable alternative to Obamacare: the Congressional Budget Office. Then agan, while hardly an excuse for their sheer incompetence, the GOP is certainly right to point the finger at the CBO’s track record of “forecasts”, one which we have mocked here on occasion after occasion after occasion.
And here, in just two charts, is why when it comes to matters of predictive accuracy, the CBO is almost as bad as the Federal Reserve.

This post was published at Zero Hedge on Jul 22, 2017.

Three Black Swans

‘The world in which we live has an increasing number of feedback loops, causing events to be the cause of more events (say, people buy a book because other people bought it), thus generating snowballs and arbitrary and unpredictable planet-wide winner-take-all effects.’
– Nassim Nicholas Taleb, The Black Swan
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‘What do you do?’ is a common question Americans ask people they have just met. Some people outside the US consider this rude – as if our jobs define who we are. Not true, of course, but we still feel obliged to answer the question.
My work involves so many different things that it isn’t easy to describe. My usual quick answer is that I’m a writer. My readers might say instead: ‘He tells people what could go wrong.’ I like to think of myself as an optimist, and I do often write about my generally optimistic view of the future, but that optimism doesn’t often extend to the performance of governments and central banks. Frankly, we all face economic and financial risks, and we all need to prepare for them. Knowing the risks is the first step toward preparing.
Exactly 10 years ago we were months way from a world-shaking financial crisis. By late 2006 we had an inverted yield curve steep and persistent enough to be a high-probability indicator of recession 12 months later. So in late 2006 I was writing about the probability that we would have a recession in 2007. I was also writing about the heavy leverage in the banking system, the ridiculous level of high-yield offerings, the terms and potential turmoil in the bond and banking markets, and the crisis brewing in the subprime market. I wish I had had the money then that a few friends did to massively leverage a short position on the subprime market. I estimated at that time that the losses would be $400 billion at a minimum, whereupon a whole lot of readers and fellow analysts told me I was just way too bearish.

This post was published at Mauldin Economics on JULY 22, 2017.

XIV Hits All Time Highs As The VIX Sets Records That May Never Be Broken

In last week’s article, I had noted that as long as the XIV was able to hold the 83.93 level, I expected to see it hit the 87.76 – 91.53 zone into this week with the potential to see a move into the mid 90’s prior to making a large degree top.
On Tuesday of this week, the XIV closed at the upper end of this 91.53 zone and then on continued to extend higher into Wednesday, and as of Thursday’s close is now trading at the 93.83 level having so far been contained by the 238.2 Fibonacci extension level of the move up off of the 7/6 low.
While the XIV is so far following through on the smaller degree pattern and is tracing out a very clean impulsive pattern off of the 7/6 low, it is now starting to push the limits of the upper end of what I still prefer to count as a large Ending Diagonal pattern off of the April 12th low.
The price action over the next several trading sessions should be key in helping give further clues as to where the XIV is heading in the near term.
As I noted in the title of this article, the CBOE Volatility Index or the VIX index has set some records in 2017 that have been truly remarkable and may never be seen again. Not only in ultra-low price levels but in the frequency that these ultra-low price levels have occurred.

This post was published at GoldSeek on Friday, 21 July 2017.

Mueller Tries To Turn Manafort In Trump Russia Probe

Special Counsel Robert Mueller’s full-court press on anyone and everyone involved with the Trump campaign has finally begun – and the first target in his sights is, of course, former Trump Campaign Manager Paul Manafort, by far the easiest mark. According to Reuters, Mueller and his team are trying to recruit Manafort as a cooperating witness in the Russia investigation in exchange for immunity for possible money laundering charges.
The focus on Manafort isn’t a surprise. Not only did Manafort attend the now-infamous June 2016 Russia meeting organized by Donald Trump Jr., but investigators have already been scrutinizing his ties to deposed Ukrainian President Viktor Yanukovych, along with several shady real-estate deals.
‘U. S. investigators examining money laundering accusations against President Donald Trump’s former campaign manager Paul Manafort hope to push him to cooperate with their probe into possible collusion between Trump’s campaign and Russia, two sources with direct knowledge of the investigation said.
Special Counsel Robert Mueller’s team is examining Manafort’s financial and real estate records in New York as well as his involvement in Ukrainian politics, the officials said.’
Specifically, Special Counsel Robert Mueller’s team is investigating several New York City real estate deals involving Manafort for evidence that the properties might have been paid for with money funneled to Manafort by former Ukrainian President Viktor Yanukovych. The former Ukrainian leader hired Manafort’s firm to do political consulting work. Last summer, ledgers found by Ukrainian investigators surfaced purporting to show millions of dollars in undisclosed payments to Manafort’s firm, though they haven’t been proved genuine.

This post was published at Zero Hedge on Jul 22, 2017.

These Job Trends in Silicon Valley, San Francisco Bay Area Will Hit Real Estate, the Economy, Municipal Budgets & Hype

An ugly red flag for all of California goes up. The labor force in California fell by 19,900 in June from May on a seasonally adjusted basis, the second month in a row of declines. Nonfarm employment fell by 21,300. When was the last time when the labor force and employment fell in that period? 2009.
The California Employment Development Department also reported on Friday that year-over-year, the labor force still rose by 52,600 and employment by 198,000. That looks like a lot, but it was the smallest increase for any year-over-year period since August 2011.
This is an early red flag. But it still looks pretty good compared to what is transpiring in the San Francisco Bay Area. By some measures, there are nine counties in the Bay Area. We’ll look at the six counties that are part of the tech-jobs machine of San Francisco and Silicon Valley.
In San Francisco, nonfarm employment dropped to 542,100 jobs in June. This is the number of people working in San Francisco regardless of where they live, including the many who commute from other areas. This was down 5,100 from the employment peak in December and the lowest since June 2016.

This post was published at Wolf Street on Jul 22, 2017.

U.S. SMASHES RECORD: Highest Production Of Lowest Quality Fuel In The World

Yes, it’s true… the United States smashed another fuel production record this year. According to the U. S. Energy Information Agency (EIA), the country produced over one million barrels per day of this liquid gold in the first six months of 2017. Unfortunately, this isn’t something to brag about. It would be wise just to keep this lil record to ourselves, rather than broadcast it loudly across the energy news wires and Mainstream media.
Why do I say that? Because the U. S. produced a record 1.02 million barrels per day of corn-based ethanol, the lowest quality fuel in the world. Corn ethanol’s EROI – Energy Returned On Invested is so low, it barely provides one net barrel of fuel to the market for one barrel worth of energy that it took to produce it. I get into that in a moment, but let’s look at U. S. ethanol production since 2010:
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U. S. ethanol fuel production was 870,000 barrels per day (bd) in 2010, fell to 852,000 bd in 2013 and then continued to increase to a new record of 1.02 million bd in the first six months of 2017. We must remember, corn ethanol is blended into gasoline which is called ‘E10.’ All E10 means is that gasoline you buy at the pump can be blended up to 10% with ethanol.

This post was published at SRSrocco Report on JULY 22, 2017.

David Stockman Warns The Market’s “Chuck Prince Moment” Has Arrived… “Only More Dangerous”

On July 10, 2007 former Citigroup CEO Chuck Prince famously said what might be termed the ‘speculator’s creed’ for the current era of Bubble Finance. Prince was then canned within four months but as of that day his minions were still slamming the’buy’ key good and hard:
‘When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,’ he said in an interview with the FT in Japan.
We are at that moment again. Only this time the danger of a thundering crash is far greater. That’s because the current blow-off top comes after nine years of even more central bank policy than Greenspan’s credit and housing bubble.
The Fed and its crew of traveling central banks around the world have gutted honest price discovery entirely. They have turned global financial markets into outright gambling dens of unchecked speculation.
Central bank policies of massive quantitative easing (QE) and zero interest rates (ZIRP) have been sugar-coated in rhetoric about ‘stimulus’, ‘accommodation’ and guiding economies toward optimal levels of inflation and full-employment.

This post was published at Zero Hedge on Jul 22, 2017.

Doug Noland: New Age Mandate

This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
A journalist’s question during Mario Draghi’s ECB post-meeting press conference: ‘… There was a sharp reaction from financial markets to your Sintra speech. You must have looked at the Fed experience of 2013. Is there any concern in the Governing Council that the so-called tantrum or a similar reaction can happen in the eurozone when you start discussing changes in your stance?’
Draghi: ‘I won’t comment on market reactions, but let me give you the bottom line of our exchanges: basically, inflation is not where we want it to be, and where it should be. We are still confident that it will gradually get there, but it isn’t there yet, and that’s why the Governing Council reiterated the forward guidance, the asset purchase programme, the interest rates and all this package of monetary accommodation; and reiterated that the present very substantial monetary accommodation is still necessary. Let me read the introductory statement: ‘Therefore a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline inflation developments in the medium term.’
Draghi continued: ‘But let me just make clear one thing: after a long time, we are finally experiencing a robust recovery, where we only have to wait for wages and prices to move towards our objective. Now, the last thing that the Governing Council may want is actually an unwanted tightening of the financing conditions that either slows down this process or may even jeopardise it; and that’s why we retain the second bias, or let’s call it, reaction function. ‘If the outlook becomes less favourable or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset purchase programme in terms of size and/or duration.’ And I think the Governing Council has given enough evidence that when flexibility is needed to achieve its objectives, it has been very able to find all that was needed. So that’s why we keep this bias.’
This exchange gets to the heart of a momentous issue. Recall the swift market reaction to ‘hawkish’ Draghi’s comments from Sintra (June 26-28 ECB Forum on Central Banking) and, soon after, ECB officials expressing that markets had misinterpreted his remarks. Markets this week were awaiting ‘dovish’ clarification. Draghi soundly beat expectations.

This post was published at Wall Street Examiner on July 22, 2017.

Market Report: Classic bear squeeze conditions

Gold and silver recovered well this week, continuing a rally which is now two weeks old. Gold, priced in dollars, rose by another $13 to $1247.50 in early European trade this morning (Friday), up $31 from the lows of 7 July. Silver has now recovered $1.75 from the lows of the flash-crash two weeks ago, to $16.40 this morning.
Comex futures volume has been normal, but there’s something unusual happening, best exemplified by silver. We know that the bullion banks have shaken out the speculators (mostly hedge fund longs), and the flash-crash referred to above will have taken out the speculators’ stops, enabling the banks to close their short positions profitably. This (as of Tuesday, 11 July) left the managed money category (i.e. hedge funds) net short of 6,361 contracts, representing 31.8 million ounces. The extremeness of this position is shown in our next chart, only exceeded once, in mid-2015.

This post was published at GoldMoney on July 21, 2017.

Broke And Bleeding Cash, DNC Ends June $3.3 Million In Debt

After spending a truly obscene amount of money on the Georgia special election last month, money that was proven to be completely wasted after Jon Ossoff was destroyed by Karen Handel, the DNC’s balance sheet is looking a little deflated. Of course, spending $22 million dollars for a seat where candidates usually spend about $1 million each tends to take a toll on your political war chest.
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Unfortunately, even $176 per vote, or roughly 7.6x more than what Karen Handel spent, wasn’t enough to buy a Georgia House seat. Oops.

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

The Never-Ending Woes of a Government “Enterprise”

History is something one can try to escape, but sometimes you can’t as millions of train riders find out every day.
They can’t escape Penn Station falling apart along with Amtrak, New York City commuter railroads, and the New York City subways. They all have the same problem: Every day they are reminded of the sordid history of government enterprise with derailments, delays and the billions of dollars of red ink of these dysfunctional systems. The bill is handed to the taxpayers whether they ride these trains or not.
As the New York City subways, Amtrak, and other government enterprises continue to fail, mainstream media and our political class have consistently missed how we reached this point of rail disasters as the norm. That’s because few of them have time for history. The management of Amtrak, New York Subways is actually a story of generations of the limitless failures of government. Indeed, most of the analyses and criticisms of government ownership and management of the subways are hopeless.
Among the lost are the Goo-Goo groups of the 1930s – who called for public subway ownership – and their scions, the Straphangers Campaign of today. And then there’s the allegedly laissez-faire Manhattan Institute. All reject the privatization discussion. That’s because they work from a proposition that Albany and Washington, owing to their ability to tax and spend, are omnipotent and should continue to run transit systems; that they are part the solution. History proves the opposite.

This post was published at Ludwig von Mises Institute on July 22, 2017.

Chapter 43: Medicine

Christian Economics: Teacher’s Edition
And the Lord will take away from you all sickness, and none of the evil diseases of Egypt, which you knew, will he inflict on you, but he will lay them on all who hate you (Deuteronomy 7:15).
AnalysisHealing is an aspect of covenantal ethics, according to the Bible. Health is a blessing of God; sickness is a curse. This is why the early church in the New Testament used healing as a way to demonstrate God’s new work of redemption, which was evidence of the church as God’s ecclesiastical representative in history, the replacement of Israel.
Now Peter and John were going up to the temple at the hour of prayer, the ninth hour. And a man lame from birth was being carried, whom they laid daily at the gate of the temple that is called the Beautiful Gate to ask alms of those entering the temple. Seeing Peter and John about to go into the temple, he asked to receive alms. And Peter directed his gaze at him, as did John, and said, ‘Look at us.’ And he fixed his attention on them, expecting to receive something from them. But Peter said, ‘I have no silver and gold, but what I do have I give to you. In the name of Jesus Christ of Nazareth, rise up and walk!’ And he took him by the right hand and raised him up, and immediately his feet and ankles were made strong. And leaping up, he stood and began to walk, and entered the temple with them, walking and leaping and praising God (Acts 3:1 – 8).
The ability to heal miraculously has always been regarded by the masses as evidence of a person’s special relation to God. This same attitude prevails today in an era of scientific medicine. Medical missionaries are granted access into nations that are otherwise closed to missionaries. Political leaders regard the benefits of healing as outweighing the negatives of evangelism. Jews understood this principle in the Middle Ages. They became physicians to gain acceptance in the gentile world. Moses Maimonides, the Rambam, was the most famous Jewish theologian and philosopher of the Middle Ages. He was also the senior physician of the sultan of Cairo in the late twelfth century. Christian hospitals in the later Middle Ages were ministries of churches and ecclesiastical orders. Then there is the remarkable account written by lvar Nez Cabeza de Vaca of his eight-year trek from Florida through Texas into Mexico, 1528 – 1536. He describes the strange fact that he and his companions gained the power of healing halfway through their journey. They were welcomed by Indian tribes from Texas country to Mexico because of this. Word spread in advance that they were coming, tribe by tribe. They would probably have been killed had they not possessed this power. Instead, they were supported with food and water.

This post was published at Gary North on July 22, 2017.

Prepare for a 30-year bull market

Heading into 2017, Wall Street was excited by the prospect of a U. S. president who sympathized completely with business. His promised tax and healthcare reforms were widely cheered by investors in the wake of his election. Yet the Congress has so far failed to deliver on those promises and investors are no longer giving the Trump administration a free pass based on the assumption that tax breaks are on the way.
This loss of enthusiasm is reflected in the long periods of dullness the market has experienced since March. While the bull market leg which began with the November election remains intact, the market has proceeded in a halting fashion and has gradually lost some of its erstwhile momentum. The following graph illustrates this principle.
Along these lines, a number of Wall Street economists have expressed the belief that if Trump’s promised reforms fail to materialize, the stock market’s current valuation precludes a continuation of the bull market. There are a number of reasons why this statement is likely false, however, not the least of which is that the market doesn’t need a political excuse to rally. Indeed, if that were the case then China’s equity market, in view of the country’s Communist government, would forever be stuck in neutral. The pace of innovation and productivity in countries with a market-driven economy is consistently high enough to always provide some justification for higher valuations and stock prices, regardless of the political climate.

This post was published at GoldSeek on 21 July 2017.

Trumptopian Markets – Where Hope Triumphs Over History

Since the election of Donald Trump as President, ‘hope’ has triumphed over reality…
As this Trumptopia has evolved (and as yet achieved very little in reality), hard data – real actual economic output – has collapsed to two year lows, as surveys of economic activity reached record levels of delusion… and over the last couple of months fell back somewhat to reality.

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

Dollar Slide Continues

The US dollar lost ground against all the major currencies, save sterling, over the past week, and also fell against most emerging market currencies. There is little from a technical or fundamental perspective, including next week’s FOMC meeting, that suggests a reversal is at hand.
Investors accept that the US economy rebounded in Q2 from another below average Q1 performance. They accept that the jobs market is still healthy. What they doubt is that the Federal Reserve will raise interest rates in the face of price pressures that have moderated. The fiscal course of the Trump Administration is also doubted. Not to put too fine a point on it, but the mess over health care, has left investors with a bad taste of what the legislative meal will look like.
At the same time the trajectory of the US policy mix moves away from the very supportive tighter monetary/looser fiscal policy, negative considerations for Europe have been lifted or substantially reduced. Looking at the charts, the turn came in late April when it became clear the National Front challenge in was going to be repulsed. The political threat in Europe dissipated. The regional economy is enjoying the broadest and strongest expansion in a decade. Given the improvement in the balance of risk, the ECB began adjusting its communication to help prepare the markets for an adjustment in the accommodation. This spurred rise in market rates.
The Dollar Index fell for a second consecutive week. It has fallen in six of the past seven sessions. The week’s 1.25% decline took it blow 94.00, its lowest level since June 2016. This area is important from a technical perspective, and a convincing break could open the door to another 3-5% decline. Daily and weekly technical indicators are over-extended as one would imagine, but only the Slow Stochastics have stopped falling. Given the pace and extent of the Dollar Index slide, and the positioning, we want to be sensitive to any reversal pattern in the coming sessions, but our point is that there is not much nearby chart-based support.

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

Should Libertarians Care about the Constitution?

The following video was published by misesmedia on Jul 21, 2017
Lysander Spooner called it “The Constitution of no authority.” Conservatives fetishize it, but don’t follow it. Progressives want it annulled. So, what should libertarians think about America’s founding document?
Our guests Brion McClanahan and Allen Mendenhall give us the unadulterated history and unpleasant truths about constitutionalism – but also consider its underappreciated benefits. This is a discussion of the Constitution you won’t hear anywhere else.

Congress’s Radical Plan to End Illegal Money

What Constitution?
One of the many downfalls of being the United States Secretary of the Treasury is the requirement to place one’s autograph on the face of the Federal Reserve’s legal tender notes. There, on public display, is an overt record of a critical defect. A signature endorsement of a Federal Reserve note by the Treasury Secretary represents their personal ratification of unconstitutional money.
There it is, plain as day. The former treasury secretary clearly put his signature on money with highly dubious legal credentials. Evidently he must have found it agreeable though. [PT] If you recall, Article I, Section 8, of the U. S. Constitution empowers Congress – not the Federal Reserve – to coin money and regulate its value. What’s more, Article I, Section 10, specifies that money be coined of gold and silver and cannot consist of bills of credit – such as paper legal tender notes.
As far as we can tell, paper dollars are illegal money on two counts. First, they’re issued by the Federal Reserve. Second, they’re bills of credit with no ties to gold or silver.
What gives? Isn’t the U. S. Constitution supposed to be the supreme law of the land? Don’t be silly. Anyone with half their wits about them knows the U. S. Constitution has been reduced to a mere artifact of history. Does this bother you?

This post was published at Acting-Man on July 21, 2017.