Funds Managing $1.1 Trillion Are Dumping Junk Bonds

Even before Ray Dalio doubled down on his warning that the US has become as dangerously fragmented as during the pre-World War II days of 1937, prompting him to “tactically reduce” risk, some of the biggest names on Wall Street were selling.
Two weeks ago, T. Rowe Price made waves when it said that it had cut the stock portion of its asset allocation portfolios to the lowest level since 2000. The Baltimore-based money manager said it also reduced its holdings of high-yield bondsand emerging market bonds for the same reason. Roughly at the same time, in its mid-year review, Pimco said that “with the macroeconomic backdrop evolving in the face of potentially negative pivot points and considering asset prices generally are fully valued, we are modestly risk-off in our overall positioning” adding that ‘we recognize events could still surprise to the upside, but starting valuations leave little room for error.’
This followed a similar preannouncement by DoubleLine’s Jeff Gundlach who not only said that he is reducing his positions in junk bonds, EM debt and other lower-quality investments, but predicted – correctly – the volatility spike in the first week of August.
Then it was Guggenheim’s turn to make a similar warning: in its Q3 Fixed Income Outlook, the asset manager said that “the downside risk of a near-term market correction grows the longer volatility
remains depressed. Asset prices are at record highs while volatility has rarely been lower. Our Global CIO and Macroeconomic and Investment Research team believe these indicators point to a dangerous level of complacency in the market, which has shrugged off the Fed’s guidance that economic conditions support monetary tightening… given where asset prices are, they would have a long way to fall.”

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

Gold Stocks: Good Times Are Near

After rallying almost $100 an ounce from the July lows of about $1210 (basis December futures), gold is consolidating its gains. Fundamentally, there isn’t much immediate time frame news from either the fear trade or the love trade. That’s the root cause of this sideways price action, and its healthy. To get some technical perspective on the consolidation, please click here now. Double-click to enlarge this short term gold chart. A small head and shoulders top pattern has appeared, and it suggests more consolidation will occur before the upside action resumes. This scenario would see gold move down towards $1272, and then rally towards $1330. Please click here now. Double-click to enlarge. On this chart, a slightly bigger head and shoulders pattern is apparent. It suggests a deeper correction to about $1250 may occur. I’ve outlined the $1300 – $1330 price zone as a good place to book some light profits on positions bought into my $1220 – $1200 buy zone. From here, investors should be viewing the $1275 – $1245 price zone as a fresh buy zone. Please click here now. Double-click to enlarge this important dollar versus yen chart. The world’s biggest liquidity movers are major bank FOREX departments, and they tend to aggressively buy the dollar versus the yen when global risk is declining. When global risk rises, they will aggressively sell the dollar against the yen.

This post was published at GoldSeek on 22 August 2017.

XIV Makes New Lows As VIX Stays Elevated

Last week the XIV saw the largest price drop in over a year falling over 23% from the July 26th High. After bottoming on August 10th the XIV moved back higher stalling out just under the 61.8% retrace level in what counted best as a corrective move higher.
Since topping on August 15th the XIV has once again broken back below last week’s low at 72.44. The break of the 72.44 low has giving additional confirmation that the high that was struck on July 26th was indeed a larger degree top. This is suggestive that the XIV still has some work to do to the downside prior to this moving back to new highs once again.
The VIX Index has now closed over the 11 level for 8 consecutive sessions. From a longer-term perspective, this is not news as the VIX typically is well over the 11 level. This is, however, the longest streak that the VIX has closed over 11 since April of this year. On Friday, August 11th the VIX Index closed at 14.98 again still very low from a historical perspective.
What is interesting is that we are now beginning to see calls for the VIX to hit 60 by October of this year. Keep in mind these are levels that have not been seen since the 2008 financial crisis. While I do think it is very likely that we once again see some volatility return to the market into the fall done I do not think the VIX is quite ready to hit 60 just yet.

This post was published at GoldSeek on 22 August 2017.

Jackson Hole Preview: Market Reactions, And Why UBS Says “Don’t Skip Lunch”

Historically the annual Jackson Hole symposium has been a major market-moving event as it has traditionally been the venue where central banks make critical announcements such as Bernanke’s preview and hints of QE2 and QE3 in 2012, as well as Draghi’s suggestion of the ECB’s QE in 2014. As shown in the chart below, market reactions following these events have been material.

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

There’s A New Subprime Crisis, But It’s Not What You Think

The struggles of Provident Financial have fuelled concerns about a new sub-prime crisis Buyers of Provident’s car loans are up to their eyeballs in debt Regulation has discouraged big banks from offering affordable credit to the poor A decade on from the financial crisis, the reports today about the sub-prime lender Provident Financial have given us a nasty case of dj vu.
Within the space of a year, its loan repayment rates have fallen from 90 per cent to 57 per cent – leading to profit warnings, the departure of its chief executive, and a collapse in its share price.
It feels like a frighteningly familiar story. Overstretched customers at the bottom of the economic food chain rack up unaffordable loans from greedy financiers. When the music stops, the credit failures cascade upwards, bringing down lender after lender until the whole financial edifice comes apart.
So are we facing a new sub-prime crisis? There are two conflicting narratives.

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

AUGUST 22/DOW RISES 196 POINTS ON TALKS OF TAX REFORM & LACK OF WAR FEARS/GOLD FALLS $5.00 AND SILVER IS DOWN 3 CENTS/CHINA IN FIRST 6 MONTHS ALREADY REACH 80% OF LOAN QUOTA/USA SLAPS MORE S…

GOLD: $1286.00 DOWN $5.20
Silver: $16.98 DOWN 3 CENTS
Closing access prices:
Gold $1285.50
silver: $17.00
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1294.24 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1288.95
PREMIUM FIRST FIX: $5.29
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1293.21
NY GOLD PRICE AT THE EXACT SAME TIME: $1285.30
Premium of Shanghai 2nd fix/NY:$7.91
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est $1285.10
NY PRICING AT THE EXACT SAME TIME: $1285.90
LONDON SECOND GOLD FIX 10 AM: $1284.20
NY PRICING AT THE EXACT SAME TIME. $1284.40
For comex gold:
AUGUST/
NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 0 NOTICE(S) FOR nil OZ.
TOTAL NOTICES SO FAR: 4581 FOR 458,100 OZ (14.248 TONNES)
For silver:
AUGUST
14 NOTICES FILED TODAY FOR
70,000 OZ/
Total number of notices filed so far this month: 1089 for 5,445,000 oz

This post was published at Harvey Organ Blog on August 22, 2017.

It Begins, China Pulls West Investment Dollars & Redirects It East – Episode 1361a

The following video was published by X22Report on Aug 22, 2017
US workers wages collapse, people will now accept less for work. The NY Times is reporting that there is a housing crisis in Silicon Valley. Chicago’s national activity index went to zero unexpectedly. Mnuchin visited Fort Knox and lets the people know that the gold is safe without showing any proof. Norway government is purchasing more global stocks with the idea that the returns will help the government. China is now pulling investment dollars from the West and redirecting to the east.

The Gold Is Still There!

Shew. The gold is still there.
That’s a relief.
Treasury Secretary Steven Mnuchin paid a rare official visit to Fort Knox to check out the nation’s gold stash Monday.
Before visiting the Ft. Knox vault, the former Hollywood movie producer quipped about the possibility that the gold wasn’t even there any more.
I assume the gold is still there. It would really be quite a movie if we walked in and there was no gold.’
Well, it doesn’t appear there will be a movie in the works.
‘Glad gold is safe!’ Mnuchin tweeted after visiting the facility.
The Treasury secretary said the US has about $200 billion in gold stored at Ft. Knox. The last time anybody other than Ft. Knox staff actually laid eyes on the gold was in 1974 when several members of congress visited the facility. The last time anybody audited the gold was in 1953.

This post was published at Schiffgold on AUGUST 22, 2017.

One Trader’s Antidote To ‘Billionaire Bear’ Dalio’s Fearmongering

Yesterday, yet another Billionaire Bear issued a stark warning. This time it was Bridgewater Chief Investment Officer Ray Dalio who penned a piece comparing the current environment to 1937.
This was after an earlier in the month letter where Bridgewater warned that risks were rising, and that clients should have 5% to 10% of their portfolio in gold:
‘Most immediately, during the calm of the August vacation season, we are seeing 1) two confrontational, nationalistic and militaristic leaders playing chicken with each other, while the world is watching to see which one will be caught bluffing, or if there will be a hellacious war, and 2) the odds of Congress failing to raise the debt ceiling (leading to a technical default, a temporary government shutdown, and increased loss of faith in the effectiveness of our political system) rising. It’s hard to bet on such things one way or another, so the best that one can do is be neutral to such possibilities.

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

Crazy Train: Norway’s Wealth Fund Ordered To Increase Its Stock Holdings

All aboard the Central Bank Crazy Train!
(Bloomberg) – As many investors question a global stock-market rally that’s now in its eighth year, the world’s biggest wealth fund is prepared to splurge.
Norway’s $970 billion wealth fund has been ordered to raise its stock holdings to 70 percent from 60 percent in an effort to boost returns and safeguard the country’s oil riches for future generations. Any short-term view on growing risks will play little part, according to Trond Grande, the fund’s deputy chief executive.
‘We don’t have any views on whether the market is priced high or low, whether bonds and stocks are expensive or cheap,’ he said in an interview after presenting second-quarter returns in Oslo on Tuesday. The decision to add stocks ‘was made at a strategic level, on a long-term expected excess return that we’re willing to take risk to achieve. And parliament has said that they wish to spend some time to phase in that increase.’
The fund has doubled in value over the past five years and is continually adding risk to its portfolio. It returned 202 billion ($26 billion) kroner in the second quarter, and 499 billion kroner in the first half, the best on record for the period.

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

Short-Term Improvement, Long-Term Concerns

Most averages are creeping higher today, but the last couple of weeks of volatile price action has caused some significant damage to the charts. In particular, there are concerns developing in the S&P, the small-caps and the Transports.
Let’s begin with the S&P.
Below you can see a daily chart of the S&P 500 showing the development of a possible head and shoulders top. The left shoulder and head have been completed, with this latest downswing taking prices back to the neckline, near 2420. The index has also fallen below its 50-day moving average, which is starting to roll over.

This post was published at FinancialSense on 08/22/2017.

“The Perfect Storm Is Brewing”: Goldman Warns Italy Has The Lowest Capacity To Absorb Migrants

While Europe’s economy and capital markets have been spared any major shocks in the past year, and in fact European GDP has been on a surprisingly resilient uptrend in recent quarters led higher by the relentless German export-growth dynamo (courtesy of the very, very low Deutsche Mark and a lot of broke Greeks), an old and recurring problem has re-emerged, one which threatens the stability and cohesion of the European Union itself: the latest surge of refugees which, arriving mostly from North Africa in recent months, has made Italy its primary landfall target resulting in a surge in migrant arrivals on Italian shores. However, with the rest of Europe largely shutting its borders to this refugee influx forcing Rome to deal with what many in Italy see as an unwelcome presence, a distinct sense of bad-will has been floating around Europe in recent months as Rome’s pleas for more solidarity from its European peers have been stubbornly ignored. Meanwhile, Italy has accepted nearly 100,000 refugees in the first six months of the year and the number is rapidly rising.
Now, a new report issued by Goldman Sachs will likely pour even more gasoline on the fire, as it finds that just as Rome alleges, “Italy has the lowest capacity to absorb migrants among the major EU economies. This is measured using three indicators of integration: (1) economic integration; (2) social integration; and (3) policy effectiveness.”
While hardly new for regular readers, this is how Goldman lays out the problem:

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

Central Banks Are Starting To Worry Investors

The original article was posted on TimeMoney.com
Learn How to Exploit the Gold Frenzy! In previous articles (here and here), we’ve discussed how central banks are going to halt adding liquidity into the financial system which could cause a correction in the stock market. Many people scoff at that idea because they look at the current market and say, ‘what could possibly go wrong?’ This is recency bias at work as many investors have never experienced a sizeable market correction. Stimulus reached the highest level of this cycle. Quantitative easing has been among the most important drivers of the rally in asset prices for the past 8 years, once discontinued, the opposite will happen – namely a decline in asset prices.
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If you are an investor who is skeptical of the efficacy of central bank stimulus, you might be confused why anyone would believe that taking away the stimulus isn’t a big deal. The reason is because some bears have promoted a false narrative. You can see that narrative in the chart below. It shows the S&P 500 versus the Fed’s balance sheet. The balance sheet has stayed at the $4.5 trillion level while stocks have moved higher. There have been bears claiming the sky is falling since the Fed stopped its bond buying in 2015. Stocks had some volatility afterwards, but have since moved higher. The thesis that stocks would fall when the Federal Reserve stopped buying bonds was proven incorrect. This makes some investors think that global balance sheet shrinking won’t be a major factor for stocks. However, these investors are missing the chart above. The reason stocks have rallied since early 2016 is because of global QE in which the Fed didn’t participate.

This post was published at GoldSilverWorlds on August 22, 2017.

Mnuchin Visits Fort Knox, Says “Gold Is Safe”

Treasury Secretary Steven Mnuchin had a busy day today: shortly after warning once again that a US debt ceiling deal has to be done by late September or else the country would run out of cash and suffer a technical default, roughly around the time he hinted that Trump may keep carried interest tax breaks for some firms that create jobs (while eliminating it for hedge fund managers), the former hedge fund manager and Hollywood producer paid a rare official visit to Fort Knox to check out the nation’s gold stash on Monday, while – as Bloomberg put it – keeping an open mind for future film projects.
‘I assume the gold is still there,’ Mnuchin told an audience in Louisville, Kentucky some 40 miles north of the biggest U. S. Bullion Depository (except of course for the foreign gold stash at the NY Fed). ‘It would really be quite a movie if we walked in and there was no gold.’ It’s unclear if Mnuchin was envisioning a comedy or a drama.
After the visit, Mnuchin who was the first US Treasury Secretary to visit Fort Knox in nearly 70 years, “playfully” reassured Americans the treasure was still secure.

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

Keiser Report: ‘Bitcoin’s going to be worth a trillion dollars soon’ (E1113)

The following video was published by RT on Aug 22, 2017
In this episode of the Keiser Report Max and Stacy discuss the Trump administration starting some trade wars – from renegotiating Nafta to looking at China’s treatment of ‘intellectual property’. They also discuss the trillions in unexploited mineral resources in North Korea. In the second half Max interviews Dan Collins of TheChinaMoneyReport.com to discuss the ‘Doklam Transgression’ and the ‘Line of Actual Control’. The media has largely ignored the confrontation between India and China but will they notice if a hot war breaks out?

Asian Metals Market Update: August-22-2017

Factors which can affect markets
If gold starts to rise and manages to trade over $1300 for a few weeks then $2000 could be a remote possibility by the end of next near. At the moment downside risk is around $170 while the upside potential is infinity for gold. However a clear picture will be there only after September’s FOMC meet.
After a very long time I am hearing bullish whispers for gold all over the internet. The so called hardcore bears are now also bullish on gold. I am bullish on gold on political factors. The success of Islamic state actors in Europe also adds to the bullish cause for gold. The Islamic state is fighting a sort of guerilla war in Europe. A car ramming into a crowd and later blowing themselves up are just examples of guerilla war. The administration in Europe is now focused on reducing the success rate of Islamic state actors. Development money moves to security. Gold demand in Europe will continuously rise apart from Asia.

This post was published at GoldSeek on 22 August 2017.

The Latest Red Flag For U.S. Shale

The U. S. shale industry has had a rough few weeks, with a growing number of reports suggesting that the industry is facing much more financial trouble than many analysts had expected. Now, a new report adds further evidence to the notion that shale is losing its luster in a $50 per barrel market, with producers forgoing shale in favor of older wells.
U. S. shale was thought to be the most competitive source of oil out there, and indeed the industry appears to be ramping up production at today’s prices. Shale had adapted to a $50 per barrel market, producers had streamlined operations to make them almost resemble an assembly line, and in a volatile and unpredictable market, the short-cycle nature of shale drilling made it one of the least risky options for drillers.
But in just a few weeks’ time, investors are starting to ask major questions about the viability of shale drilling at such a large scale.

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

Young Facebook Users “Less Engaged” As Demographic ‘Time Bomb’ Looms

While Mark Zuckerberg is busy espousing virtues on Universal Basic Incomes, the deep divide in America, free-speech ‘control’, and what being president means; his billion-dollar-baby social network may have a problem.
This year, the world’s largest social network will see a decline among teen users in the U. S., according to a forecast by EMarketer. It’s the first time the research company has predicted a fall in Facebook usage for any age group.
Vanity Fair notes that for years Facebook has faced a lingering problem with one of its core constituencies: teenagers, the most fickle tech demographic, don’t think it’s cool.
Facebook, to its credit, saw the phenomenon coming: in a 2013 earnings call, then Chief Financial Officer David Ebersman acknowledged that teens were logging off the social network in growing numbers.

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