The Single Most Important Chart in the World is Breaking Down

While everyone continues to focus on stocks, a much larger, far more important situation is brewing in the single most important asset class in the world.
That situation involves the US Dollar ($USD).
While CNBC and the financial media love to talk about stocks, the reality is that stocks are actually one of the smallest asset classes in the world.
Consider the following…
Globally, the stock market is around $70 trillion.
Bonds, by way of contrast, are over $217 trillion.
Currency markets dwarf even this. While it’s impossible to know their full size (every currency trade involves two currencies so the net size is impossible to measure), we do know that the currency markets trade an astonishing $4-$5 trillion per day (by way of contrast, the NYSE trades less than 4% of this per day).
Put simply, the currency markets are the largest, most liquid markets in the world. So when a major change occurs, it hits these markets first.
On that note, the single most important currency in the world, the US Dollar ($USD) is imploding.
Thus far in 2017, the greenback has fallen like a brick. As I write this it’s down 9% this year alone.

This post was published at GoldSeek on 28 August 2017.

AUGUST 28/GOLD AND SILVER BREAK THROUGH RESISTANCE: GOLD FINISHES UP $16.95 TO $1309.65 /SILVER ENDS UP 38 CENTS AT $17.45/HURRICANE HARVEY UNLEASHES HAVOC ON HOUSTON AND SURROUNDING TOWNS/HOUSTO…

GOLD: $1309.85 UP $16.95 *BREAKS RESISTANCE OF $1300.00
Silver: $17.45 UP 38 CENTS *BREAKS RESISTANCE OF $17.25
Closing access prices:
Gold $1310.40
silver: $17.46
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: $1299.64 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1204.25
PREMIUM FIRST FIX: $5.38
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1300.33
NY GOLD PRICE AT THE EXACT SAME TIME: $1295.03
Premium of Shanghai 2nd fix/NY:$5.03
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est $closed/holiday
NY PRICING AT THE EXACT SAME TIME: $xxx
LONDON SECOND GOLD FIX 10 AM: $closed/holiday
NY PRICING AT THE EXACT SAME TIME. xx
For comex gold:
AUGUST/
NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 38 NOTICE(S) FOR 3800 OZ.
TOTAL NOTICES SO FAR: 4622 FOR 462,200 OZ (14.376 TONNES)
For silver:
AUGUST
70 NOTICES FILED TODAY FOR
350,000 OZ/
Total number of notices filed so far this month: 1248 for 6,240,000 oz

This post was published at Harvey Organ Blog on August 28, 2017.

Treasury’s Cash Balance Lowest Since Debt-Limit Reinstatement (Take It To The Limit)

(Bloomberg) – We’re still over a month away from Treasury Secretary Steven Mnuchin’s ‘critical’ deadline for Congress to raise the debt limit, but the government’s coffers are already starting to feel the squeeze. With auctions cut back, the Treasury’s cash balance has fallen to $50.6 billion, below the Department’s quarter-end forecast of $60 billion and the lowest since the end of the debt-ceiling suspension period back in March. A smaller cash balance means the government has less of a buffer to pay its bills in case of disruptions in debt markets.

This post was published at Wall Street Examiner by Anthony B Sanders ‘ August 28, 2017.

‘Social Justice Collective’ Urges Universities To “Ban Veterans”

A flyer recently appeared at the University of Colorado-Colorado Springs (UCCS) declaring that ‘in order to protect our academic institutions we must ban veterans from four-year universities.’

The flyer is part of a new ‘Social Justice Collective Weekly’ newsletter, which is not affiliated with the school, and is aimed at ‘promoting justice in our society.’ The first issue of the newsletter includes an article titled ‘Should Veterans Be Banned From UCCS and Other Universities?’

This post was published at Zero Hedge on Aug 28, 2017.

Albertsons Gets Clocked by Amazon Whole Foods Entry into Supermarket-Meltdown Price War

IPO hopes re-crushed. Customer traffic, same-store sales spiral down.
Something ugly happened to Albertsons Companies, Inc., the owner of Albertson’s, Safeway, and smaller supermarket chains totaling 2,329 stores, 27 distribution centers, and 18 manufacturing facilities: Amazon, on its first day as new owner of Whole Foods, slashed prices on many items by the double digits, some of them by over 30%, and reportedly by up to 43%.
Ferocious price competition from Amazon – a stock market darling that doesn’t need to make money on grocery sales – is the last thing Albertsons Companies needs.
But that’s what it got. Amazon’s $13.7-billion acquisition of Whole Foods and the price cuts slammed all grocery store chains, and their shares took a beating, but Albertsons Companies is particularly vulnerable, and this comes at a very inconvenient time.
Private equity firms led by Cerberus acquired the supermarket chain Albertson’s in a 2005 leveraged buyout. In January 2015, it acquired Safeway in another LBO, which it hoped would eliminate much of the competition. It also acquired regional supermarket chains. Then in 2015, the PE firms wanted to sell the whole schmear, now named Albertsons Companies, via an IPO to the unsuspecting public. But in October 2015, as brick-and-mortar retail began to melt down, it scrapped the IPO.
But they’re still trying to unload their investment – now bogged down in $12 billion in debt – to the public. On August 22, just a couple of days before news of Amazon’s price cuts at Whole Foods clobbered the industry, Albertsons Companies filed an amended S-1 Registration Statement with the SEC, showing that it wants to keep its hopes for an IPO alive.
The filing’s two most revealing operational eye-openers are ongoing nasty losses and declining same-store sales on plunging customer traffic.
First the losses:

This post was published at Wolf Street on Aug 28, 2017.

How Much Harvey Damage Can Insurers Face Before They Crack?

Hurricane Harvey has unleashed unparalleled devastation on southwest Texas, flooding Houston, the fourth largest city in the US, and many towns along the Gulf coast from Galveston, to Port Lavaca and beyond. But even Harvey’s 130 mph winds aren’t strong enough to threaten the ironclad balance sheets of America’s largest insurers, which have amassed a ‘fatter-than-ever’ capital cushion capable of absorbing any payouts related to what looks to be, by several measures, one of the worst hurricane in US history, according to the Wall Street Journal. Insurers have benefited from years of moderate damages from natural disasters in the US, which have kept payouts to a minimum.
‘The damage from the Category 4 storm, which hit the Texas coast on Friday, is far from being tallied. It is the first major hurricane to make landfall in the U. S. in more than a decade, and torrential rain will continue this week to cause widespread flooding. Harvey’s timing is good for insurers and insurance customers from one perspective: Personal and commercial insurers have record levels of capital, the money they have on hand that isn’t required to back obligations. With insurers’ overall strong capital position, Harvey is unlikely to cause extensive damage to the industry’s financial strength, though it could hurt quarterly earnings for those carriers with blocks of business in hard-hit areas.’

This post was published at Zero Hedge on Aug 28, 2017.

Fed Chairs & Credit Bubbles

New York | Fed Chair Janet Yellen’s defense of the benefits of regulation last week in Jackson Hole probably killed her chances for reappointment, but the more pressing reason to see Yellen return to the private sector is visible in the US real estate market. Chair Yellen and her colleagues have created large bubbles in many assets classes from residential homes to commercial real estate to construction lending. As in the 2000s, this latest bout of asset price inflation will not end well for banks or investors.
In this issue, The Institutional Risk Analyst looks at the most recent bank portfolio data from the Federal Deposit Insurance Corp for Q2 2017 to see what it says about asset prices and inflation. For some quarters now, the credit statistics for the $16 trillion asset banking system has been too good to be true, in some cases suggesting that credit events have no cost. The last time that this circumstances existed was the mid-2000s, when several large mortgage banks were reporting a negative cost – that is, a profit – from default events.
The same real estate market dynamic that allows growing numbers of Americans to take cash out of their homes is depressing the cost of loan defaults to half century lows. Even faced with this rather striking situation, our faithful public servants on the Federal Open Market Committee can actually stand up in public and say that inflation is too low. The skews in the credit world are so large that some banks are actually earning a profit on recoveries after a loan balance is repaid in full.

This post was published at Wall Street Examiner on August 28, 2017.

Grocery Bonds Plunge As Amazon Slashes Whole Foods Prices

Amazon has officially owned Whole Foods for less than a day but early channel checks suggest they’ve already slashed in-store prices by nearly 50% on certain products which is causing some heartburn for grocery bond investors. Of course, if we owned 6-8 year paper in a business competing with a company who has a demonstrated willingness to consistently lose money for as long as it takes to gain market share, we’d be a little worried too.

This post was published at Zero Hedge on Aug 28, 2017.

It’s Goldman vs JPMorgan As ISDA’s Noble Indecision Roils CDS Market

Several years ago, the International Swaps and Derivatives Association, or ISDA, lost much of its credibility when during the peak of the Eurozone debt crisis, it first refused to determine that CDS on Greece had been triggered (i.e., that an event of default had taken place) only to eventually concede – following substantial outside pressure – that Greece had, in fact, defaulted (if only on bonds not held by a certain central bank), but not before penning a “petulant” blog post in which it claimed amusingly that the “credit event/DC process is fair, transparent and well-tested”. The fiasco prompted many, this site included, to dub sovereign Credit Default Swaps as “Schrodinger’s CDS”, contracts which may or may not pay out in case of a default, depending on which way the political winds were blowing at any given time.
Fast forward to today when not only is ISDA in hot water again, but the entire corporate CDS market has been roiled by another indecision by ISDA, which said “it was unable to determine” if Singapore-listed Noble Group, formerly Asia’s largest independent commodity trader was in default or not, creating a vacuum similar to what happened with Greece 5 years ago, and which, according to the FT, has resulted in mass confusion in the corporate bond and CDS market. What is more striking, however, is that this is “the first time ISDA has dismissed a question of default without making a ruling either way.”
Specifically, on August 9, ISDA ruled the following:

This post was published at Zero Hedge on Aug 28, 2017.

SWOT Analysis: Gold Reacts to Jackson Hole

Strengths
The best performing precious metal for the week was gold, closely followed by silver, up in tandem 0.56 percent and 0.47 percent, respectively, after a see-saw week in price action for the metals. Prices have been choppy over the last seven trading sessions but have held onto recent gains. As reported by ZeroHedge, the price of gold started moving up on Friday after Dallas Federal Reserve Bank President Robert Kaplan spoke on Bloomberg TV. Kaplan, who shared his thoughts ahead of Janet Yellen’s speech, said that a market correction wouldn’t necessarily hurt the economy, but instead could be healthy. The dollar also headed lower Friday after Yellen’s speech that left the possibility of a rate hike up to interpretation. Some investors have been pulling money from ETFs betting on gold, but hedge funds are flocking to gold, reports the Financial Times. According to the article, buying of gold futures contracts by hedge funds and other speculators has surged a record $19 billion or 474 tonnes over the past month. Analysts say this movement is spurred by concern over ‘lofty equity market valuations and geopolitical tensions.’ Just prior to Yellen’s speech on Friday, futures contracts representing 2 million ounces of gold crossed hands, keeping the trend alive.

This post was published at GoldSeek on 28 August 2017.

The average American had a bigger savings account… in 1997!

Quite literally as a I write these words to you, the heads of the world’s largest central banks are packing their bags and heading home after a three-day symposium in Jackson Hole, Wyoming.
Central bankers aren’t exactly mega-celebrities, so their conferences don’t make international news outside of financial circles.
But if people understood what was at stake, they’d probably pay more attention.
Central bankers wield totalitarian authority over their nations’ interest rates.
Setting interest rates means they have direct influence over the price of money. In other words, they influence the price of EVERYTHING –
How much you pay for your mortgage. The price of your home. How cheap (or expensive) it is for a business to borrow money for expansion… which directly affects how many people they hire.
Their influence over rates helps determine how much interest the government pays each year on its debts, which ultimately impacts tax rates and other spending programs.
It’s extraordinary power.

This post was published at Sovereign Man on August 28, 2017.

Wall Street Cries Wolf on Stocks – Economy

There is no question that the stock market is richly valued and the economic expansion since the 2008 mortgage debt panic has endured far longer than normal cycles. Recent pessimism has arisen with major Banks and analysts warning that the sky may start falling soon. (Bloomberg: Wall Street Banks Warn Downturn Is Coming:8-22-2017). Increased negative forecasts can be a positive contrary opinion signal, so let’s look at some of the concerns the major bulge banks are propagating.
Recently $30 Billion in funds flowed out of US equities and the current mid-2017 outflow is at record levels which are being portrayed as a scary signal of impending doom. Oddly past extreme spikes in Fund outflows were good times to begin buying stocks. In particular, the 2 most impressive rush for the exits occurred in mid-2004 and early 2016. In hindsight, these were a couple excellent points to buy stocks hand over fist. Apparently many institutions equate this extreme proxy of equity fund outflow and today’s high priced stock market as a valid correlation when their own evidence would indicate otherwise.

This post was published at FinancialSense on 08/28/2017.

Hurricane Harvey Dominates the Stock Market News Today

Damage from Harvey leads the DJIA news today as the storm shuttered oil and natural gas production refineries and pushed gasoline futures to two-year highs. Dow Jones futures are flat – up just 20 points before trading – as the nation’s fourth-largest city is submerged under flood water.
The Dow Jones news today will also focus on the results from the Fed’s Jackson Hole summit last week, updates on Uber’s new CEO, and major earnings reports…
Here are the numbers from Friday for the Dow, S&P 500, and Nasdaq:

This post was published at Wall Street Examiner on August 28, 2017.

Missouri’s New Minimum Wage Law Will Be… Complicated

Generally when we see news of a new minimum wage law it relates to a city or state raising it. Missouri went in the opposite direction recently, instituting a rule which forbids any local government entities from instituting a minimum wage which is higher than that state minimum. (Currently sitting at $7.70 per hour.)
That’s going to cause considerable consternation for people in St. Louis who only recently received a raise to $10.00 per hour because of a municipal law. (Associated Press)
Thousands of workers in St. Louis will likely see smaller paychecks starting Monday, when a new Missouri law takes effect barring local government from enacting minimum wages different than the state minimum.

This post was published at Zero Hedge on Aug 28, 2017.

US Debt Ceiling, The Wall, Runaway Spending And The Lack Of Evidence Of Concern … So Far (Low US CDS)

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
The US Statutory Debt Limit, a failed tool to halt the endless growth of Federal debt issuance, is once again in play at nearly $20 trillion. It was only at $6 trillion in 2002.
***
The problem, of course, is runaway Fed spending which is currently at around twice that of Federal current tax receipts, requiring that the deficit be funded by issuing Federal debt (or raising taxes and/or cutting Federal spending).

This post was published at Wall Street Examiner on August 28, 2017.

Skepticism of Experts and the End of Libor

For decades, the public generally placed its trust in technocrats, the people perceived to be skillful and knowledgeable managers of economically and politically important institutions (including banks). The thinking was that aspects of the economy and politics had become too complex for ordinary citizens to understand and that the best way to handle this complexity was to allow the experts to take over. The events of 2008 – 09 shattered that belief.
Its demise has swept away some of the old ways, and the next casualty is Libor, the London Interbank Offer Rate. This is the benchmark interest rate that many of the largest banks in the world charge one another for loans. It underlies an estimated $350 trillion in debt and debt-related derivatives worldwide, including everything from mortgages to corporate loans to student debt.
In July, the Financial Conduct Authority, which regulates Libor, announced that the rate would be phased out over the next four years, ending in 2021. It’s unclear what will replace it, but whatever it is won’t be as easy for bankers to manipulate.
Nearly a decade later, the 2008 – 09 financial crisis is still reverberating through the system, demanding the attention of regulators and affecting the global political environment. It is for this reason that the true impact of the crisis can’t be understood in purely economic terms.

This post was published at Mauldin Economics on AUGUST 28, 2017.

Chinese Shares Surge As Beijing “Plunge Protection Team” Boosts Stock Holdings

Having repeatedly met with resistance around 3,300, over the past week China’s Shanghai Composite finally broke out, and overnight rose another 0.9% to 3,362.65, its highest level since December 2015, following a sharp move higher in both the Chinext small-caps index, but mostly due to a spike in Chinese broker stocks.
***
There have been various explanations for this move, with Bloomberg focusing on recent strong earnings, mostly out of China’s big caps, where recent consolidation has pushed profits and ROE higher.
Companies on MSCI’s China and Hong Kong indexes have beaten earnings estimates by the most among major emerging markets this year, underpinning rallies of 40 percent and 25 percent respectively… Profit at China Shenhua Energy Co. more than doubled in the first half as coal prices soared. Shenhua’s Hong Kong-traded shares have provided a 58 percent return to investors so far in 2017, aided by a bumper special dividend declared in March. There are plenty of other examples. In the liquor industry, Wuliangye Yiban Co. and Kweichow Moutai Co. now control more than 60 percent of the high-end market, giving them oligopoly power over retail prices. Their shares have soared 61 percent and 48 percent.

This post was published at Zero Hedge on Aug 28, 2017.

The Value of Low Interest Rates and Tom Brady

The bull market for stocks is more than eight years old now, which makes it the second-longest bull market since the end of World War II. There has been a lot of change in the last 8+ years, yet the one constant throughout has been the persistence of low-interest rates.
Low-interest rates, which have been an offshoot of low inflation, low growth, and a high level of asset purchases by the Federal Reserve, have been the root of the stock market’s success.
They have been the basis for every buy-the-dip effort and they have been the signpost for pundits who have suggested there is no better investment alternative than stocks.
Low rates have helped rationalize lofty equity valuations and they have helped underpin corporate earnings expectations.
In brief, low rates are as important for the equity market as Tom Brady is at quarterback for the New England Patriots.

This post was published at FinancialSense on Via Briefing.com / 08/28/2017.