Rationality Versus The Market

The late stages of financial bubbles are always tough for rational analysts. Focused as they are on the numbers, such analysts are relatively immune to the emotion that drives the action at market extremes, so they find themselves making predictions that turn out to be ‘wrong’ for months and sometimes years.
Then the cycle turns and the rational analyst is vindicated – though often far too late for his bruised ego and diminished client base to easily recover.
[Recall the scene in The Big Short where hedge fund manager Michael Burry, after suffering months of abuse from his clients for shorting the 2006 housing bubble a bit early, is lambasted by a client who can’t believe Burry has, after the crash, gone long equities – because they’re clearly going to zero. In both cases Burry was right and his clients wrong, but he nevertheless closed up shop and quit the business.] Anyhow, we’re there again, with governments manipulating all major markets to valuation levels at which previous crashes have occurred. This is leading analysts who focus on historical norms to issue warnings, which turn out to be wrong (stocks are setting new records as this is written), which draw derision from people who see no reason why the party ever has to end.
A good example is John Hussman, whose eponymous family of funds has been on the wrong side of this market for an uncomfortably long time. Yet he persists, because the numbers don’t lie. From his most recent report to clients:

This post was published at DollarCollapse on OCTOBER 5, 2017.

Which American Cities Will File Bankruptcy Next?

We harp on the massive, unsustainable, yet largely unnoticed, debt burdens of American cities, counties and states fairly regularly because, well, it’s a frightening issue if you spend just a little time to understand the math and ultimate consequences. Here is some of our recent posts on the topic:
America’s Pension Bomb: Illinois Is Just the Start Stanford Says Soaring Public Pension Costs Devastating Budgets For Education And Social Services Pension Consultant Offers Dire Outlook For Kentucky: Freeze Pension And Slash Benefits Or Else Luckily, for those looking to escape the trauma of being taxed into oblivion by their failing cities/counties/states, JP Morgan has provided a comprehensive guide on which municipalities haven’t the slightest hope of surviving their multi-decade debt binge and lavish public pension awards.
If you live in any of the ‘red’ cities below, it just might be time to start looking for another home…

This post was published at Zero Hedge on Oct 5, 2017.

Office Depot Mimics Dunder Mifflin (Sales Continue To Tumble)

While the paper supply firm Dunder Mifflin from the TV show ‘The Office’ is fictional, the outcome for Office Depot is similar. Both experienced declining sales in this on-line world. Office Depot said it would close 300 more stores in the next three years to cut costs by the end of 2018. The brand already closed 400 U. S. stores by the end of 2016.
Office Depot Inc. investors are skeptical that a technology makeover can help the chain rebound from a punishing retail slump.
Shares of the retailer suffered their worst decline in two months after Office Depot delivered a grim forecast and announced plans to buyCompuCom Systems Inc. for about $1 billion, giving it a platform to sell tech services to business customers.
The company described the acquisition as the first step toward a becoming a seller of business services and technology – rather than a traditional retailer of paper, pens and staplers. But the plan wasn’t enough to reassure shareholders, who see a glum retail landscape continuing to cloud Office Depot’s future.

This post was published at Wall Street Examiner on October 4, 2017.

These U.S. Companies Have The Most Cash Parked Overseas

While many US companies, especially those in the Russell 2000, have seen their stocks surge in recent days on renewed hopes that Trump tax reform may pass in the coming months (Goldman assigned a 65% probability of Trump tax passing), the reality is that for a vast majority of US corporations a tax cut to 30% or even 25% will have little marginal impact: after all, while US companies may have some the highest statutory tax rate in the world…

This post was published at Zero Hedge on Oct 5, 2017.

Six Top-Secret Experiments That Could Have Extinguished Humanity

Governments of the world have long been in the business of manipulation and power accumulation. This is ever evident in the current events we are seeing. But there were some instances in which top-secret experiments could have wiped out humanity.
It is rather scary and equally disturbing to know that the governments of the world are playing with the weather and diseases. The powers that be seem to only seek to find ways to destroy and not many want to create anything. It’s pretty sad that these six experiments were done with intentions of seeking the destruction of other human beings.

This post was published at shtfplan on October 5th, 2017.


GOLD: $1272.10 DOWN $1.60
Silver: $16.60 DOWN 10 CENT(S)
Closing access prices:
Gold $1268.00
silver: $16.60
PREMIUM FIRST FIX: $8.24 (premiums getting larger)
Premium of Shanghai 2nd fix/NY:$13.00 (PREMIUMS GETTING LARGER)
LONDON FIRST GOLD FIX: 5:30 am est $not important
For comex gold:
TOTAL NOTICES SO FAR: 2314 FOR 231,400 OZ (7.197 TONNES)
For silver:
155,000 OZ/
Total number of notices filed so far this month: 370 for 1,850,000 oz

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

Is This The Biggest Housing Bubble Ever?

In September of 2015, not long after Sweden followed the SNB and ECB in going “full NIRP”, we warned that “Sweden Goes Full Krugman, Gets Massive Housing Bubble“, in which we first showed the unprecedented surge in Swedish home prices, which have been the one asset class to “benefit” the most from the Riksbank’s ultra loose monetary policy hoping to stimulate inflation, even as broader economic inflation failed to materialize.
Since then things turned increasingly more surreal for Swedish home prices, culminating with a very explicit warning from Moody‘s in March of 2016, in which the rating agency warned that as a result of NIRP, the country is most at risk of an “ultimately unsustainable asset bubble.”

This post was published at Zero Hedge on Oct 5, 2017.

“There Are No Bears Left… None… Not A Soul”

Think back six months. Do you remember all the warnings from the legendary hedge fund managers about the impending stock market doom?
Paul Tudor Jones, Scott Minerd, Larry Fink, Seth Klarman, the list is long but distinguished. At the time I penned It’s too easy to write bearish pieces. Even in late summer, gurus like Gundlach were bragging about the 400% he would make on his S&P 500 put purchases – Billionaire Bears. Given the atmosphere, I knew posts about the coming collapse would be greeted with tons of words of encouragement. Yet if I wrote something about the stock market continuing higher, crickets… Or worse yet, remarks about my cluelessness regarding the problems in the global financial system.
I didn’t think stocks were going higher because everything was roses, no in fact just the opposite. Stocks were being pushed higher because everything was so FUBAR’d. Central Bank balance sheet expansion was pushing risk assets higher, and for the longest time, everyone wanted to fade it.
Fast forward to today. Even the most ardent bears have given up and embraced the idea Central Bank buying will push stocks higher. Investors that were previously doom and gloomers are now speaking of blow off-tops. I can hear the capitulation in their voices. No more brave predictions of the coming collapse. Instead, meeker forecasts of a high volume runaway euphoria. There are no bears left. None. Not a soul.

This post was published at Zero Hedge on Oct 5, 2017.

Committee Forming to Establish Indian Spot Gold Exchange

The World Gold Council has announced plans to form a committee that will help set up India’s first physical gold exchange. Officials say they hope to have the exchange up and running in 12 to 18 months.
The committee will not actually set up the exchange, but will provide guidance. WGC Indian operations managing director PR Somasundaram told Bloomberg the council is in the process of creating an industry committee of jewelry trade associations, dealers, miners, regulators, foreign and Indian banks, and eventually some consumers.

Indians have a love affair with gold. The country ranks as the second largest consumer of the yellow metal in the world. It’s not just a luxury. Even the poor buy gold in India. The yellow metal is interwoven into the country’s marriage ceremonies, and cultural and religious rites. Indians also value gold as a store of wealth, especially in poor rural regions. According to the World Gold Council, Indian households hold over 22,500 tons of gold.

This post was published at Schiffgold on OCTOBER 5, 2017.

Defying Spanish Defense Ministry’s Civil War Threat, Catalans To Hold Debate Monday

Spanish (and European) stocks surged this afternoon as headlines crossed that Catalan separatists were hoping to ‘stall’ proceedings in hope of negotiating with Madrid. That hopeful headline appears to have been crushed now as Bloomberg reports the Catalan regional parliament intends to meet as planned Monday, defying a suspension by Spain’s Constitutional Court.
As Bloomberg reports, Jordi Sanchez, who heads the Catalan National Assembly, said that lawmakers may need to gather in an alternative venue, but that the debate on an illegal referendum on independence from Spain will take place. Sanchez collaborates closely with Regional President Carles Puigdemont and the speaker in the Catalan legislature, Carme Forcadell. He helped organize the vote on Oct. 1.
‘There will be some formula for the Catalan Parliament to convene and hold its meeting as planned,’ Sanchez said in an interview in Barcelona.
‘There will be a plenary session.’

This post was published at Zero Hedge on Oct 5, 2017.

Investment advice from Paris Hilton

Angelina Umansky, a 39-year-old spa owner from San Francisco, was visiting a friend in Miami two weeks ago when she heard about a new condo development downtown.
Hoping to find a vacation home, but worried that others were interested, too, Ms. Umansky arrived at the sales office at 8 a.m. the day after seeing some model units.
About 50 other buyers were already in line. Two hours later, a sales agent summoned her and said she had four minutes to decide which unit to buy. She acted fast, offering $350,000 for a two-bedroom, two-bathroom unit.
Ms. Umansky thinks she got a bargain; when she called on behalf of a friend less than eight hours later, she was told the asking price on a unit like hers had climbed to $380,000, a nearly 9 percent price increase.’
Above is the opening story from a New York Times article published February 3, 2005, pretty much the very TOP of the biggest real estate bubble in history.
But very few people realized at the time that the market was such a bubble, even though it was exhibiting all the classic signs:
People were literally lining up to buy overpriced assets. Nobody thought you could lose money in real estate back then.
And prices kept rising. Quickly.

This post was published at Sovereign Man on October 4, 2017.

Thoughtful Disagreement with Ted Butler

Dear Mr. Butler, in your article of 2 October, entitled Thoughtful Disagreement, you say:
‘Someone will come up with the thoughtful disagreement that makes the body of my premise invalid or the price of silver will validate the premise by exploding.’
I will take you up on your request. You state your case in this paragraph:
‘Here are the issues. Silver (and gold) prices are set by paper dealings on the COMEX by a few large speculators (banks and managed money traders), to the exclusion of input from real producers and consumers, making the price discovery process and the resultant price artificial. For the past nearly ten years, CFTC data have indicated that JPMorgan has been the dominant paper silver short seller, along with a few other large banks and as a result of that dominance and control none have ever taken a loss when adding short positions. In addition, for the past six and a half years, JPMorgan has accumulated a massive amount of actual silver (650 million oz) at rock-bottom and self-created depressed prices, all while never taking a loss while shorting silver on the COMEX.’
In other words, the four issues are:
the price of silver is set exclusively in the futures market (throughout my article, I will refer to silver but what I say is equally applicable to gold also)

This post was published at Acting-Man on October 5, 2017.

Is The Small-Cap Rally Over-Extended?

No, it’s not a trick question…
Despite tumbling fundamentals…
And being the most overbought in 20 years…
Many investors continue to pile into Small Cap stocks in the hope that Trump Tax reform will save the world.
However, as Dana Lyons writes, the current inexorable stock market rally has some folks wondering where it will at least take a breather, if not put the breaks on. The small-cap segment of the market has been particularly relentless, with the Russell 2000 (RUT) up 8 days in a row, 15 of the last 18 and 24 of the last 30. Based on one piece of charting analysis, however, it is now reaching a level that may finally produce at least a pause in its breathless advance.

This post was published at Zero Hedge on Oct 5, 2017.

Everybody Wants Duration Even as Fed Normalization Draws Near (75% Prob of Dec Rate Hike)

Recently, US Treasury bonds are like peanuts … investors can’t just eat one.
Investors can’t get enough of the longest maturity U. S. bonds even with the Federal Reserve set to embark on its next step toward normalizing interest rates.
While higher rates usually erode the value of long-dated debt more, expectations for only a gradual increase in yields and tepid inflation have investors such as pension funds seeking to put money to work in a low-return world.
‘There is still really, really strong demand for Treasury bonds out there,’ said Ben Emons, chief economist and head of credit portfolio management at Intellectus Partners. ‘There’s a mix of structural factors – from pension funds who remain underfunded – to global investors faced with low or negative yields abroad and given inflation is low. This would all be different if inflation was higher – but it’s not.’

This post was published at Wall Street Examiner on October 5, 2017.

As Good as it Gets; Like 2000 With a TWIST

With the Semiconductor sector below but hailing its all-time highs, a lot of images come to mind; chief among them the 1999-2000 stock market bubble…
In early 2013 we noted a progression that would go on to birth the current economic expansion and stock market boom (of course, I didn’t come close to envisioning the extent of the boom that followed). I’ve belabored it often since, but here’s the short version of the progression yet again…
Fiscal Cliff drama resolves into market relief after Q4 2012 and this occurs right around the time we noted that Semiconductor Fab equipment bookings were ramping up which projected a ramp in the cyclical Semiconductor industry which would lead general manufacturing which projected broader economic firming which projected improving employment and with ISM currently booming and the Semi cycle in full swing, voila, we are still on that continuum.
Speaking of which, and considering I am not one for subtlety, here’s the Continuum again so you have a cartoon to consider while digesting the rest of this post.

This post was published at GoldSeek on 5 October 2017.

Asian Metals Market Update: October-05-2017

Incoming US jobs numbers suggest robust consumption and growth. A December interest rate hike by the Federal Reserve has been factored in by the markets. There can be two interest rate hikes before March of next year if the US economy adds over 180,000 jobs every month in the October to December period. The only risk is that instead of Yellen some moron is made the Federal Reserve chief. I am bullish on gold and silver on an overall basis for the next six months as war loving American politicians will never digest peace for long. Geopolitical risk will rise and will continue to support gold and silver at lower prices.
The world will move from 4G technology to 5G internet technology in the next five years.

This post was published at GoldSeek on 5 October 2017.

Gold-Backed ETF Holdings Climb Again in September on North American Demand

After surging in August, gold continued to flow into ETFs last month, signaling continued strong demand for the yellow metal – specifically in North America.
According to the World Gold Council, gold-backed ETF holdings increased by 22.4 tons in September. This follows on the heels of a 31.4 ton increase in August.
With the price of gold surging in early September, the combined liquidity of gold ETFs rose sharply month-over-month to $1.51 billion per day, an increase of 20% versus the year-to-date average liquidity of $1.26 billion per day.
North American ETFs drove the increase with other regions seeing slight outflows.

This post was published at Schiffgold on OCTOBER 5, 2017.

House Passes Budget, Jumps First (Smallest) Hurdle Towards Tax Reform

The House passed its 2018 budget resolution Thursday (with 18 Reps voting against) crossing the first threshold toward its goal of sending tax reform legislation to President Trump.
As WaPo reports, the House budget resolution includes major spending cuts demanded by the party’s conservative wing, but the party’s focus is now on passing a tax bill that could add as much as $1.5 trillion to the budget deficit. Special procedures set out in the legislation would ultimately allow Republicans to pass the bill over a potential Democratic filibuster in the Senate.
“Our budget specifically paves the way for pro-growth tax reform that will reduce taxes for middle class Americans and free up American businesses to grow and hire,” House Budget Committee Chairman Diane Black (R-Tenn.) said during floor debate.

This post was published at Zero Hedge on Oct 5, 2017.