Europe’s Fragile and Bad-debt Ridden Banking System (Happy Columbus Day!

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
In honor of Italian explorer Christopher Columbus, here is review of Italian banks (as well as a benchmark, Deutsche Bank).
Here are two notable Italian banks: Uni Credit (a global systemically important bank – Bucket 1) and Banca Monte dei Paschi di Siena (a domestic systemically important bank). And for comparison, my former employer Deutsche Bank. What do the three of them have in common? Yes, they all peaked in 2007 and all have plummeted since.

This post was published at Wall Street Examiner by Anthony B Sanders ‘ October 9, 2017.

The Tale Of Two Americas – Urban Rise, Rural Demise, & The Rationale To Hyper-Monetize

Authored by Chris Hamilton via Econimica blog,
(The following was written as an outline for a potential book. To this point no publisher has shown interest and time and funds have run out.)
America is in the midst of an ongoing and accelerating shift in demographics and population growth. These trends, long in place, are at a tipping point that are simultaneously driving urban economic growth (plus associated asset bubbles) and rural economic declines (plus associated asset collapses). The spin up and spin down are mutually interconnected, the result of movement in a zero sum game. But for select regions (and rural America in general), there is a surging quantity of sellers and a dwindling quantity and quality of buyers that will result in the primary asset of most Americans, their home, transitioning from an asset to an outright liability.
Many will point to record stock market valuations as an indicator of positive economic and/or business activity to refute my claims. Instead, I argue it is the Federal Reserve and federal government policies, in place as a quasi “life support” for the negatively affected regions and rural America at large, that are driving the asset valuation explosions of equities (chart below, representing all stocks publicly traded in the US) and urban housing. I will outline why the situation in the affected regions will only get worse and thus the Fed believes its hands are tied. Why any amount of normalization will only induce localized collapses across much of the nation. The total market capitalization ($ value) of the Wilshire has nearly doubled the acknowledged “bubbles” of 2000 and 2008 and is likely to continue rising further, precisely due to the worsening issues I detail below.

This post was published at Zero Hedge on Oct 9, 2017.

The Gold Price Is Heading Higher Before 2018 – Here’s Why

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
The gold price fell last week, continuing a correction that’s now nearly one month old. The metal dropped 0.7% from Friday, Sept. 29, to Friday, Oct. 6.
The recent correction, which began on Sept. 12, continues to frustrate the gold bulls. After pushing all the way up to a one-year high of $1,351 on Sept. 12, gold prices were poised to fall from there.
In fact, gold’s climb above $1,300 on Sept. 25 and back below that price the following session, as I discussed last week, caused even more sentiment damage.
Given the price action since then, it’s looking like that might not last…
By Friday, Oct. 6, the price of gold had dipped to ‘test’ an intraday low of $1,260, just as I had predicted. But that lasted little more than minutes, as bargain hunters stepped in to boost the price to $1,275 by the close.
Have we now seen gold’s interim bottom? I think it’s set for a rebound from here, which is why I’m going to share with you my gold price targets for the rest of 2017.
First, let’s examine last week’s 0.8% decline and how it plays into the broader gold picture…

This post was published at Wall Street Examiner by Peter Krauth ‘ October 9, 2017.

S&P Dips As Bitcoin Rips On 10th Anniversary Of Stock Market Peak

There’s a chance tax reform may not get done!!! Inconceivable!!

10 years ago today, The Fed minutes were released sparking a buying frenzy pushing The Dow above 14k to a new record high – supported by a dovish Fed and a convinced public that job growth was recovering and all would be well. It turns out that the peak for the market that was followed a greater-than-50% plunge in stocks.
That week, U. S. President George W. Bush said the figures signaled ‘a vibrant economy’ but a poll of top Wall Street economists found more than half still think the Fed will trim rates again this month to help the economy get past a housing slump and a surge in mortgage defaults. U. S. employers added 110,000 jobs in September and August’s job losses were revised into a gain in a Labor Department report on Friday that lifted some worry about a recession in the near term.


This post was published at Zero Hedge on Oct 9, 2017.

Public Pensions – Biggest Financial Crisis Since the Great Depression?

The following is a summary of our FS Insider podcast with Lawrence McQuillan (see ‘America’s Public Pension Crisis’ Part 1 and Part 2) which can be accessed on our site here or on iTunes here.
The rapid growth of government debt is a serious problem, with an increasing part of that growth coming from public pensions squeezing funds from essential government services, including America’s neglected and nearly failing infrastructure.
‘It’s the biggest financial crisis since the Great Depression,’ Lawrence McQuillan, a public pension expert and author of California Dreaming, told Financial Sense Newshour. ‘I think most people are understating the problem. … Something’s got to change, because the costs are just going to keep squeezing out more and more services.’
McQuillan, a Senior Fellow and Director of the Center of Entrepreneurial Innovation at the Independent Institute, recently attended a forum hosted by Stanford on Understanding the Public Employee Pension Debate. His takeaway from that meeting: the problem is growing and many leading financial economists – those that have studied the numbers closely – say the problem is much bigger than the official numbers.
According to the most recent data, if we look at all state and local pension systems combined, the unfunded liability is about $4 trillion. And it continues to grow, because of insufficient contributions and large, unsustainable payouts.

This post was published at FinancialSense on 10/09/2017.

Feud Breaks Out Between Melania And Ivana Trump Over Who Is “First Lady”

It was only a matter of time before an episode of “Real House Wives of the White House” played out before the entire world.
On Monday morning Donald Trump’s ex-wife, Ivana Trump, appeared on Good Morning America where jokingly she said that “I’m basically first Trump wife. I’m first lady.’
Ivana Trump says she has Pres. Trump's direct White House number: "I'm basically first Trump wife. I'm first lady." pic.twitter.com/0DQ5AMQ311
— Good Morning America (@GMA) October 9, 2017

This post was published at Zero Hedge on Oct 9, 2017.

Stocks and Precious Metals Charts – Wooly Bully

‘Politicians were mostly people who’d had too little morals and ethics to stay lawyers.’
George R. R. Martin
‘The main problem in any democracy is that crowd-pleasers are generally brainless swine who can go out on a stage and whip their supporters into an orgiastic frenzy – then go back to the office and sell every one of the poor bastards down the tube for a nickel apiece.’
Hunter S. Thompson
“This idea that you can’t be an honest man and a Washington politician is a myth, a crock made up by sellouts and careerist hacks who don’t stand for anything and are impatient with people who do. It’s possible to do this job with honor and dignity.”
Matt Taibbi
It was a less risk prone day in the markets, with the trading light because of the Bank and Bond holiday in honor of Christopher Columbus.
Bully seems to be engaging in some retrospection just ahead of earnings.

This post was published at Jesses Crossroads Cafe on 09 OCTOBER 2017.

Original ‘Dr. Doom’ Says Next Fed Chair Must Break Up Banks “To Be Small Enough To Fail”

Henry Kaufman, the former chief economist of Salomon Brothers in the 70’s and 80’s who earned the moniker of “Dr. Doom” for his frequent criticisms of the Fed’s interest rate policies, has some advice for President Trump on how to pick the next Fed Chair: find someone willing to break up the “too big to fail” banks.
‘You’ve got to be small enough to fail’ without that failure causing problems that cascade through the financial system, Kaufman said in the question-and-answer session of an Economic Club of New York breakfast on Oct. 5 at the imposing University Club on Fifth Avenue. As it is now, Kaufman said, ‘We are trying to preserve conglomeration.’
It’s more important for the next Fed chief to have a good understanding of how markets work than it is to own a Ph. D. in economics or to have been a business titan, Kaufman said.
William McChesney Martin, who ran the Fed from 1951 to 1970, never earned a graduate degree in economics. But he ‘turned in a good performance’ in overseeing a period of healthy economic growth, Kaufman said. In contrast, he said, the two Fed chiefs who followed Martin allowed high inflation to become embedded in the U. S. economy in the 1970s. The first, Arthur Burns, was a distinguished Ph. D. economist from Columbia University. The second, G. William Miller, came to the Fed from Textron Inc., where he was chief executive officer.

This post was published at Zero Hedge on Oct 9, 2017.

Market Talk- October 9th, 2017

Generally a very quiet day in the markets, no real game changing events shocked the major markets today. German industrial production was announced with 2.6% MOM gain as opposed to a 0.7% forecast. ECB’s Lautenschlaeger did have a speech and hinted at scaling back asset repurchasing next year with the view to scrap the program altogether. This caused very little action to the EURUSD, with the rate holding around the 1.17 area.
The biggest shock of the day occurred in the Turkish markets, with 10 year bond yields increasing by +43bps today bringing yields up to 11.23%, this was due to the Turkish diplomatic row with the US. The two nato countries, suspended each other’s visas for their citizens. The Turkish lira subsequently lost 2.8% against the dollar – however since has regained some of its lost ground. The Turkish Borsa 100 temporally slipped below 100,000, it did manage to close above but still -2.73% for the day. When confidence is lost in an economy we see a ‘true bearish’ market where both the currency and the stock market decline.

This post was published at Armstrong Economics on Oct 9, 2017.

The Blow-Off Top: “More S&P Delta Was Bought In Last 2 Weeks Than At Any Point Since 2007”

Last week, BofA chief investment strategist Michael Hartnett summarized the current market as follows: the “best reason to be bearish in Q4 is there is no reason to be bearish.” He also observed that tha market’s “blow off top” phase, which he dubbed the Icarus Rally previously, had been activated and was approaching its final thrust, with BofA’s Q4 targets for this final push in risk assets as follows: S&P 2630, Nasdaq 6666, 10-year Treasury 2.85%, EUR 1.15.
And yet, some have argued that Hartnett’s designation is not accurate, as there simply is not enough exuberance and euphoria to defined this phase of the market as a blow off top. Which, of course, is also debatable: for one, CNN’s frequently noted Fear and Greed index closed last week at a level of 95, indicating of near widespread euphoria.

This post was published at Zero Hedge on Oct 9, 2017.

“All-In” Hedge-Funds Turn Cautious Ahead Of OPEC As Oil Prices Stumble

With WTI back below the Maginot Line of $50, speculative investors are growing increasingly anxious about their record extreme bullish positioning across the energy complex.
As Reuters’ John Kemp reports, hedge fund bullishness towards crude oil and refined products including gasoline and diesel appears to have peaked for now, according to an analysis of regulatory and exchange records.
Speculative traders’ positioning across crude and especially refined fuels had looked increasingly lopsided in recent weeks as fund managers turned from very bearish in June to super-bullish by the end of September.

This post was published at Zero Hedge on Oct 9, 2017.

“Investing Is Not A Competition… It’s A Game Of Long-Term Survival”

Authored by Lance Roberts via RealInvestmentAdvice.com,
Melt-Up Gains Traction Back in November, just following the election of President Trump, I wrote about the market entering into potentially the final ‘melt-up’ phase of the cyclical bull market.
However, while economic and fundamental realities HAVE NOT changed since the election, markets are pricing in expected impacts of changes to fiscal policy expecting a massive boost to earnings from tax rate reductions and repatriated offshore cash to be used directly for stock buybacks.
To wit:
‘We expect tax reform legislation under the Trump administration will encourage firms to repatriate $200 billion of overseas cash next year. A significant portion of returning funds will be directed to buybacks based on the pattern of the tax holiday in 2004.’ – Goldman Sachs

This post was published at Zero Hedge on Oct 9, 2017.

GATA: Those Who Deny Gold / Silver Manipulation Won’t Answer Basic Questions

IRD Note: For nearly two decades, GATA has seized on Frank Veneroso’s original research which provided first-hand evidence that Central Banks were actively operating to suppress the gold and has presented direct evidence of precious metals manipulation. Beyond this, there are public admissions from Henry Kissinger and Alan Greenspan acknowledging this fact. Unfortunately, those who deny that gold/silver are manipulated have never offered any response to the direct proof that Central Banks intervene directly in gold trading. The article below presenting just the facts was published by GATA.
Newsletter writer Steve Saville of The Speculative Investor, who long has denied that manipulation of the monetary metals markets means much, has seized on the recent essay by Keith Weiner of Monetary Metals as the conclusive refutation of silver market analyst Ted Butler’s longstanding complaint that JPMorganChase has been rigging the silver market.
Weiner’s analysis, headlined ‘Thoughtful Disagreement with Ted Butler’ and posted here – LINK – argued that JPMorganChase is undertaking only ordinary arbitrage in the silver market, exploiting spreads between bid and ask prices.
Saville, in commentary headlined ‘A Silver Price-Suppression Theory Gets Debunked’ – LINK – cheers Weiner’s essay and goes on to remark: ‘Entering a debate with someone who is incapable of being swayed by evidence that invalidates his position is a waste of time and energy, so these days I devote no commentary space and minimal blog space to debunking the manipulation-centric gold and silver articles that regularly appear.’

This post was published at Investment Research Dynamics on October 9, 2017.

OCT 9/GOLD AND SILVER ADVANCE: GOLD UP $8.00 AND SILVER IS UP 23 CENTS/COMEX GOLD OPEN INTEREST FALLS BY OVER 2,000 CONTRACTS BUT SILVER DOES THE REVERSE AS SILVER LONGS REFUSE TO BUDGE/TRUMP IN …

GOLD: $1282.50 UP $8.00
Silver: $16.93 UP 23 CENT(S)
Closing access prices:
Gold $1284.80
silver: $16.98
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: $1300.79 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1281.60
PREMIUM FIRST FIX: $19.19 (premiums getting larger)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1300.79
NY GOLD PRICE AT THE EXACT SAME TIME: $1282.30
Premium of Shanghai 2nd fix/NY:$19.49 (PREMIUMS GETTING LARGER)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est $1282.15
NY PRICING AT THE EXACT SAME TIME: $1281.90
LONDON SECOND GOLD FIX 10 AM: $1278.75
NY PRICING AT THE EXACT SAME TIME. 1279.90

This post was published at Harvey Organ Blog on October 9, 2017.

Dutch Central Bank Warns Of Market Calm Before The Storm:

With one foot out of the door of Germany’s finance ministry, the former head of the German economy, Wolfgang Schuble, 75, delivered a fire and brimstone warning over the weekend, telling the FT in an interview that there was a danger of “new bubbles” forming due to the trillions of dollars that central banks have pumped into markets. Schuble also warned of risks to stability in the eurozone, particularly those posed by bank balance sheets burdened by the post-crisis legacy of non-performing loans, something we warned about since 2012, and an issue which remains largely unresolved.
Taking a broad swipe at the current financial regime – which he helped design – Schauble warned that the world was in danger of ‘encouraging new bubbles to form’.
“Economists all over the world are concerned about the increased risks arising from the accumulation of more and more liquidity and the growth of public and private debt. I myself am concerned about this, too,” he said echoing the concern voiced just one day earlier by IMF head Christine Lagarde, who said the world was enjoying its best growth spurt since the start of the decade, but warned of ‘threats on the horizon’ from ‘high levels of debt in many countries to rapid credit expansion in China, to excessive risk-taking in financial markets’.
And while Schauble’s dramatic warning was not surprising – prominent economists have a habit of telling the truth once their tenure is over, and once they start selling books warning about all the consequences of policies they helped adopt – one day later a more surprising, and just as urgent warning was delivered by the Dutch central bank, DNB, which on Monday said that ultra-loose monetary policy in the euro zone has run its course, and excessive risks seem to be building up in financial markets making the financial sector vulnerable to a sudden correction.

This post was published at Zero Hedge on Oct 9, 2017.

The Geopolitical Consequences Of U.S. Oil Exports

Authored by Kent Moors via OilPrice.com,
Two crucial things happened last week.
The first you may have noticed – oil prices moved back up briefly.

As for the second, most so-called ‘experts’ seemed to have missed.
See, the environment we’re seeing in energy markets is very different from what we saw only a week ago, when oil prices were also rising.

This post was published at Zero Hedge on Oct 9, 2017.

Even Wall Street’s Biggest Bull Calls It: “Q3 Earnings Are A Sell The News Event”

How do you know stocks are a little overextended? A good indicator is when even the most bullish sellside analyst on Wall Street, Morgan Stanley’s Michael Wilson, whose year-end price target of 2,700 is the highest of all his peers, warns that stocks may see “pullback or consolidation” and that the coming earnings season may be a “sell the news event.”
Looking at the recent surge in the S&P, Wilson writes that broad stock index had gotten ahead of itself, reaching the low end of the bank’s short term target (2550-75) for the index prior to earnings beginning (it hit 2,552 earlier this morning). He attributed this rush to buy stocks on the “too low” consensus forecast for Q3 EPS:
The consensus bottom-up forecast for 3Q S&P 500 is just 2.6% and appears too low. A strong 1H and a reluctance of corporates to raise guidance meant that mechanically 2H numbers needed to drift lower. With continued strength in economic growth and momentum in our proprietary leading earnings indicator we think companies will once again deliver versus consensus expectations. Look for continued contribution to overall earnings growth from Tech, Energy, and Financials (ex-Insurance). Accounting changes may also bring forward some earnings recognition, further supporting earnings growth. While the market will be focused on earnings over the next few weeks, bigger picture, NTM EPS estimates continue to rise, which should be a bigger driver of the market’s direction. Looking past calendar year 2017, Wilson underscores the departure observed previously in that twelve month forward earnings have continued their upward trend, instead of being dragged sharply lower, “so the upward trend in NTM EPS is an important factor to consider when thinking about the primary direction of the market.” Indeed, 2017 and 2018 so far appear different from the past three years, which saw zero EPS growth and the only upside in the S&P was due to multiple expansion, i.e., central bank liquidity. This time may be different… unless of course there is a sharp economic decline, which would lead to – you guessed it – an earnings drop.

This post was published at Zero Hedge on Oct 9, 2017.