Even Lloyd Blankfein Is Getting Worried: “Things Have Been Going Up For Too Long”

Earlier today, we reported that Deutsche Bank CEO John Cryan called for an end to Europe’s cheap-money policies and asked that the European Central Bank not use the strengthening euro as an excuse to keep printing money.
According to Bloomberg, Cryan said that the bank is ‘seeing signs of bubbles’ across capital markets while low interest pummel European banks’ earnings.
‘We are now seeing signs of bubbles in more and more parts of the capital market where we wouldn’t have expected them,” Cryan said, adding that the interest-rate policy has been partly responsible for the decline in earnings at European banks. ‘I welcome the recent announcement by the Federal Reserve and now also from the ECB that they intend to gradually bring their loose monetary policy to an end.’

This post was published at Zero Hedge on Sep 6, 2017.

Barbuda “Totally Demolished” After Hurricane Irma Levels 90% Of All Dwellings

Having mauled the Caribbean island of St. Martin overnight, where this morning the French government said that the four “most solid” buildings have been destroyed, Hurricane Irma – now at 185mps for a record 33 straight hours – has just passed north of Puerto Rico, buffeting the US island territory’s capital, San Juan, with heavy downpours and strong winds that scattered tree limbs across roadways, but not before ‘totally demolishing’ the island of Barbuda, with 90% of all dwellings leveled, Prime Minister Gaston Browne said.

This post was published at Zero Hedge on Sep 6, 2017.

Gold is Headed to $1,500 by Year End

A confluence of factors has been pushing the price of gold higher over the past few weeks and I believe it is headed for $1,500 by the close of 2017. After hitting a low around $1,200 in July, the price of gold has since advanced by more than 10% or $140 to $1,340.
The chart shows a significant breakout through both the 100 and 200-day moving averages over the past month. More importantly, gold pierced trend-line resistance that had been in place for over a year.

This post was published at GoldSeek on 6 September 2017.

Key Labor-Day Analogies in Gold

It was not so long ago, when we wrote about the record-breaking volume in gold. We described the implications of the extreme monthly volume and we discussed the very high readings in case of the individual sessions. We even described these sessions as the most important sessions of the year – at that time. Well, ‘at that time’ those volume readings were indeed extreme, but what we saw yesterday made the previous sessions seem regular. The Tuesday’s volume in gold was the highest that we’ve seen ever (in case of daily upswings). The volume was even higher than the one that accompanied the results of the Brexit voting. With extreme volume, likely come extreme implications.

This post was published at GoldSeek on 6 September 2017.

Is Copper Signalling inflation or Higher Stock Market Prices

An idealist is one who, on noticing that a rose smells better than a cabbage, concludes that it is also more nourishing.
L. Mencken Many pundits associate higher copper prices with inflation. While this is true to a degree, that is the wrong metric to focus on. Higher copper prices are usually associated with an improving economy. For the past few years, Copper which is a leading indicator did not trend in sync with the markets. It was marching to a different drum beat, but a new trend could be in the works.
Copper has traded past a key resistance point ($3.00), and it has managed to close above this important level on a monthly basis. The long term outlook for copper is now bullish and will remain so as long as it does not close below $2.80 on a monthly basis. Copper is facing resistance in the 3.20-3.25 ranges and as it is now trading in the extremely overbought ranges. As copper is now trading in the extremely overbought ranges, it is more likely to let out some steam before trading past this zone. A healthy consolidation should provide copper with the force needed to challenge the $3.20 ranges and trade as high as $3.80 with a possible overshoot to $4.00, provided it does not close below $2.80 on a monthly basis.

This post was published at GoldSeek on 6 September 2017.

The Coming Run On Banks And Pensions

‘There are folks that are saying you know what, I don’t care, I’m going to lock in my retirement now and get out while I can and fight it as a retiree if they go and change the retiree benefits,’ he said. – Executive Director for the Kentucky Association of State Employees, Proposed Pension Changes Bring Fears Of State Worker Exodus
The public awareness of the degree to which State pension funds are underfunded has risen considerably over the past year. It’s a problem that’s easy to hide as long as the economy is growing and State tax receipts grow. It’s a catastrophe when the economic conditions deteriorate and tax revenue flattens or declines, as is occurring now.
The quote above references a report of a 20% jump in Kentucky State worker retirements in August after it was reported that a consulting group recommended that the State restructure its State pension system. I personally know a teacher who left her job in order to cash completely out of her State employee pension account in Colorado (Colorado PERA). She knows the truth.
But the problem with under-funding is significantly worse than reported. Pensions are run like Ponzi schemes. As long as the amount of cash coming in to the fund is equal to or exceeds beneficiary payouts, the scheme can continue. But for years, due to poor investment decisions and Fed monetary policies, beneficiary payouts have been swamping investment returns and fund contributions.

This post was published at Investment Research Dynamics on September 6, 2017.

Catastrophe Bond Investors Face Wipe Out As Hurricane Irma Approaches

With Hurricane Irma expected to make landfall in Florida sometime on Sunday according to the latest NHC forecast, investor attention is shifting to Catastrophe Bonds, which at least in some cases already, have lost as much as 50% of value in the past few days.
For those unfamiliar, Catastrophe bonds (or CAT bonds) are a major category in the security class known as insurance-linked securities or ILS. Their purpose is to securitize, or crowd-source in the parlance of our times, reinsurance coverage, in order to reduce reinsurers’, insurers’, and self-insurers’ reserve requirements and reduce their cost of coverage. At the same time they are attractive to investors, because the risks they cover are virtually uncorrelated with other risks such as equity market risk, interest rate risk, and credit risk, and effectively offer a “prop bet” on catastrophic events taking place over a given time horizon, usually three years.
Catastrophe bonds – which are typically used by insurers as an alternative to traditional catastrophe reinsurance – emerged from the need by insurance companies to alleviate some of the risks they would face if a major catastrophe occurred, which would incur damages that they could not cover by the premiums. An insurance company issues CAT bonds through an investment bank, which are then sold to investors. These inherently risky bonds are usually rated BB, and have maturities less than 3 years. If no catastrophe occurs, the insurance company pays a coupon to the investors. However, if a catastrophe does occur, then the principal would be shaprly reduced or forgiven and the insurance company would use this money to pay their claim-holders. Traditional investors in CAT bonds include hedge funds, catastrophe-oriented funds, and various other return starved asset managers.

This post was published at Zero Hedge on Sep 6, 2017.

Binary Event Conflicts Don’t Sink Stock Markets, But This Could

I was originally going to publish the latest article in our option series today, wrapping up our discussion on getting paid to buy stocks, but the market reaction to North Korea seems more pressing, so we’ll discuss that instead.
When most people think about potential events that could derail financial markets quickly, war seems to be near the top of that list. But counterintuitively, the prospect of war is not necessarily bad for stocks. In order to appreciate this, we need to take a look at how some prior conflicts have unfolded.
As we get into this discussion, the first thing I’d like to point out is that this is all conjecture. None of us know what events lay ahead, and therefore none of us can have any certainty in how to proceed. But the goal with any analysis is to assign probabilities to various events as accurately as possible, thereby illuminating the most advisable path forward.
With that in mind, it’s important to recognize that the financial markets have a long history of ignoring North Korea’s provocations. Consider the chart below, courtesy of the Wall Street Journal.

This post was published at FinancialSense on 09/06/2017.

On paper gold has never looked better…

A faltering economy, creeping inflation and ongoing geopolitical issues are feeding a resurgence in demand for the yellow metal – and best of all it has cracked a critical six year chart resistance levels. If gold is really “the sum of all fears” then the gold price is saying that not all is rosey in the garden – best of all gold seems to have momentum behind it too.
Year-to-date the US dollar index is off 10.3% and conversely gold in dollar terms is up 16.7% (or 10% for UK investors) and the market is eyeing the 12 month high of $1345 and the 2016 high of $1375 as the next targets. What could possibly go wrong ?
Well the problem is that word “paper” again.
Not all buying is equal – some is sticky and other types are flighty … and it is the flakey end of the market that has driven the market higher, not the physical markets. Mints, refiners and brokers around the world report the same thing … physical demand is weak. Meanwhile we have seen unprecedented buying on the futures markets – and it is an open question whether these typically short-termist buyers will stay the course, or succumb to the temptation to take profit.

This post was published at GoldSeek on 6 September 2017.

SEPT 6/SMALL FLASH CRASH KNOCKS GOLD DOWN $4.90 TO $1334.14 AND SILVER DOWN ONE CENT TO $17.86/USA TELLS UN ITS 5 WISHES TO CURTAIL KIM OF WHICH BOTH RUSSIAN AND CHINA DISAGREE WITH THOSE SANCTIO…

GOLD: $1334.15 DOWN $4.90
Silver: $17.86 DOWN 1 CENT(S)
Closing access prices:
Gold $1334.20
silver: $17.88
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: $1342.93 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1339.90
PREMIUM FIRST FIX: $3.03
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1344.02
NY GOLD PRICE AT THE EXACT SAME TIME: $1338.00
Premium of Shanghai 2nd fix/NY:$6.02
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est $1340.15
NY PRICING AT THE EXACT SAME TIME: $1339.90
LONDON SECOND GOLD FIX 10 AM: $1337.85
NY PRICING AT THE EXACT SAME TIME. 1338.85 ???
For comex gold:
SEPTEMBER/
NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 0 NOTICE(S) FOR nil OZ.
TOTAL NOTICES SO FAR: 49 FOR 4900 OZ (0.1524 TONNES)
For silver:
SEPTEMBER
160 NOTICES FILED TODAY FOR
800,000 OZ/
Total number of notices filed so far this month: 3,078 for 15,390,000 oz

This post was published at Harvey Organ Blog on September 6, 2017.

Dow – Is It Back To Buy The Dip or Time To Sell The Rip

Last week The Dow Jones Industrial Average saw a peek high that was up just over 400 points off of the August 21st lows. This move represented a percentage gain of just under 2% during this 2-week period. Furthermore, this move higher off of the August 21st low retraced exactly 76.4% of the move down into those August 21st lows off of the August 8th highs. The Dow then turned down at that 76.4% retrace level almost to the tick on Friday, September 1st ending the session at 21,987.
So the question for this post-holiday week is will the Dow continue to reward traders who have been buying every dip or is it finally time to sell the Dow on this rip back higher?
I’ve been writing about how the press loves to assign exogenous news events to the price movement within the financial markets. Since the run up off of the January of 2016 lows, we have seen several of these news events occur. From Brexit to the U. S. Election to the Russia Scandal we have seen several “bombshell” news events that were all supposed to crash the market. None of these news events did crash the market as the pundits were so sure that they would as the market continued to grind away higher and higher.
Now that the Dow has finally moved lower after so many months of just grinding away higher and higher, the pundits are now assigning the escalation with North Korea as the reason for the Dow’s move down off of the 22,179 high. This 22,179 high had been an ideal target zone for quite some time and long before the most recent Escalation with North Korea had even been in the news.

This post was published at GoldSeek on 6 September 2017.

Toronto Home Price Bubble Descends into Bear Market

With surprise rate hike, Bank of Canada turns against housing market.
Home sales in the Greater Toronto Area, the largest housing market in Canada, plunged 34.8% in August compared to a year ago, to 6,357 homes, with sales of detached homes and semi-detached homes getting eviscerated:
Sales by type:
Detached houses -41.6% Semi-detached houses -37.3% Townhouses -27.5%: Condos -28.0%. Even as total sales plunged, the number of active listings of homes for sale soared 65% year-over-year to 16,419, with 11,523 new listings added in August, according to the Toronto Real Estate Board (TREB).
‘The relationship between sales [plunging] and listings in the marketplace today [soaring] suggests a balanced market,’ the report explained, adding hopefully:
‘If current conditions are sustained over the coming months, we would expect to see year-over-year price growth normalize slightly above the rate of inflation. However, if some buyers move from the sidelines back into the marketplace, as TREB consumer research suggests may happen, an acceleration in price growth could result if listings remain at current levels.’

This post was published at Wolf Street on Sep 6, 2017.

Gold-Backed ETF Holdings Surge in August Signaling Strong Demand for Gold

Gold flowed into gold-backed exchange-traded funds in August, signalling robust demand for the yellow metal.
According to the World Gold Council, gold-backed ETF holdings increase by 31.4 tons in August to 2,295 in total global gold holdings.
Gold ETFs account for a significant part of the gold market. ETF holdings are on par with the foreign reserve gold holdings of France and Italy.
North America led inflows in August. Investors added 27.8 tons of gold through funds listed in the region. That represents a dollar increase of $1.3 billion.
Funds based in Europe also saw a net increase, taking in 6.4 tons, or $322 million last month. Asian funds saw a net decrease of 2.4 tons.
The combined liquidity of gold ETFs rose month-over- month to $1.23 billion per day, near its annual average of $1.22 billion per day.

This post was published at Schiffgold on SEPTEMBER 6, 2017.

De-escalation? Trump Says Military Action In North Korea “Not His First Choice”

NEW: On military action in North Korea, President Trump tells me it's not a first choice, but "we'll see what happens."
— Trey Yingst (@TreyYingst) September 6, 2017

In yet another attempt at de-escalation by the US, moments ago as president Trump was leaving the White House, he responded to a reporter question on whether there will be military action in North Korea, saying that “it’s not his first choice”, but adding that “we’ll see what happens.”
TRUMP: WILL HAVE TO SEE WHAT HAPPENS WITH NORTH KOREA TRUMP: MILITARY ACTION IN NORTH KOREA NOT FIRST CHOICE The announcement prompted a modest relief rally in the USD, as well as a knee jerk reaction across other markets, with gold and Treasurys both ticking lower, while the USDJPY has rebounded by 25 pips to just shy of 109.00.

This post was published at Zero Hedge on Sep 6, 2017.

Irving Fisher and Japan

Outside the Box, for a number of new readers who have joined us, is a letter in which I feature someone else’s work each week, and often it is a view contrary to mine. I have to continually remind readers that just because I include something in an Outside the Box doesn’t mean that I agree with it. I think it pays us to read people we don’t agree with.
John Maynard Keynes was an enormously influential economist, but some of his detractors complained that the opinions he expressed tended to change over the years. Once, during a high-profile government hearing, a critic accused him of being inconsistent, and Keynes reportedly answered with one of the following lines (accounts vary):
When events change, I change my mind. What do you do?
When the facts change, I change my mind. What do you do, sir?
When my information changes, I alter my conclusions. What do you do, sir?
When someone persuades me that I am wrong, I change my mind. What do you do?
I am rather well-known for suggesting that Japan was a bug in search of a windshield and in predicting that the yen would go 200 to the dollar. About four years ago, when the yen was at 100, I even purchased 10-year options, which were ridiculously cheap, with strike prices 20 to 30 yen higher. I was willing to be patient and wait for 10 years, if I had to.

This post was published at Mauldin Economics on SEPTEMBER 6, 2017.

Government Crackdowns and Regulation Could Take Shine Off Cryptocurrencies

Bitcoin has risen meteorically in recent months. Many investors call cryptocurrency the ‘new gold.’ But at least one analysts sees trouble on the horizon for cryptocurrencies in the form of government crackdowns. A recent announcement in China lends credibility to his warning.
Bloomberg reports emerging markets fund manager Mark Mobius warned that governments will begin clamping down on digital currencies because of their use in illicit financing, terrorism, and drug trafficking. He said that’s going to mean a rush back to gold.
Cryptocurrencies are beginning to get out of control and it’s going to attract the attention of governments around the world. You’re going to get a reversion back to gold because people are going to wonder, can I really trust these currencies?’

As if to confirm Mobius’ prophecy, on Monday the People’s Bank of China announced initial coin offerings (ICOs) are now illegal and ordered the halt of all related fundraising activity. In an ICO, digital currency based on blockchain technology is sold publicly and often traded on secondary exchanges.

This post was published at Schiffgold on SEPTEMBER 6, 2017.

Gold Bullion +16% YTD vs Weak Dollar Yet European Gold ETFs Grow Faster

Gold bullion held $5 below yesterday’s late spike to 12-month highs in Asian and London action on Wednesday, trading at $1340 per ounce after a key US Fed policymaker said weak inflation warns against raising interest rates and new data showed gold-backed ETFs expanding strongly in August.
Consumer demand and physical buying in the wholesale bullion market remained weak, however, with the Shanghai premium, over and above comparable London quotes, slipping below $3 per ounce as the Chinese Yen rose to new 14-month highs against the Dollar.
That was the weakest level incentive for new gold bullion imports to China – the world’s No.1 miner, importer and consumer market – since September last year, and barely 30% of the last 18 months’ average.
Demand in the No.2 consumer market of India also remained weak Wednesday as prices rose for a fifth day running, with dealers reporting wider discounts to the global benchmark of London quotes from last week’s $6 level despite the approaching peak festival season.
Asian stock markets meantime followed New York lower after Tuesday’s drop in US equities as reports said North Korea’s latest nuclear weapons tests “caused numerous and widespread landslides“.

This post was published at FinancialSense on 09/06/2017.

One Trader’s “Pathetic Attempt To Justify A Bond Short”

For bond bears like myself, yesterday was an ugly day. Fixed income prices ripped higher, egged on by continued escalations of the North Korea situation with an added dose of poor economic reports for good measure. Some dovish Fed talk was the icing on the cake, and there was no mercy shown for bond shorts.
Although I am licking my wounds, the hedge fund community is relatively well positioned for this move.
The long end of the bond futures curve has rather large net long speculative positions.
Hedgies and other speculators have more than 284,000 net contracts of 10-year futures.
And they are net long 56,500 of the longer dated contract.

This post was published at Zero Hedge on Sep 6, 2017.