What Wall Of Worry? Goldman Finds Investors Are “Unusually Bullish”

One month after Goldman’s proprietary crash indicator rose to 67%, the highest level since the financial crisis and dot com bubble, and suggesting a crash may be imminent, stocks continue to hit new all time highs, stumping anyone who still believes there is such a thing as an efficient market.
So has Goldman thrown in the towel on its bearish posture (recall Goldman’s 2017 year-end price target for the S&P is still just 2,400 rising to only 2,600 by the end of 2019, less than 50 points away from where it is now)? Well no, because in a note from Goldman’s options strategists, John Marshall and Katherine Fogerty, the two caution that “investor positioning is unusually bullish” ahead of earnings season.

This post was published at Zero Hedge on Oct 12, 2017.

Are You Better Off Than You Were 17 Years Ago?

We tend to measure what’s easily measured (and supports the status quo) and ignore what isn’t easily measured (and calls the status quo into question).
If we use gross domestic product (GDP) as a broad measure of prosperity, we are 160% better off than we were in 1980 and 35% better off than we were in 2000. Other common metrics such as per capita (per person) income and total household wealth reflect similarly hefty gains.
But are we really 35% better off than we were 17 years ago, or 160% better off than we were 37 years ago? Or do these statistics mask a pervasive erosion in our well-being? As I explained in my book Why Our Status Quo Failed and Is Beyond Reform, we optimize what we measure, meaning that once a metric and benchmark have been selected as meaningful, we strive to manage that metric to get the desired result.
Optimizing what we measure has all sorts of perverse consequences. If we define “winning the war” by counting dead bodies, then the dead bodies pile up like cordwood. If we define “health” as low cholesterol levels, then we pass statins out like candy. If test scores define “a good education,” then we teach to the tests.

This post was published at Charles Hugh Smith on OCTOBER 12, 2017.

What Not To Buy In Today’s Stock Market

Dear reader, if you are overcome with fear of missing out on the next stock market move; if you feel like you have to own stocks no matter the cost; if you tell yourself, ‘Stocks are expensive, but I am a long-term investor’; then consider this article a public service announcement written just for you.
Before we jump into the stock discussion, let’s quickly scan the global economic environment.
The health of the European Union did not improve in the last year, and Brexit only increased the possibility of other ‘exits’ as the structural issues that render this union dysfunctional went unfixed.
Japan’s population has not gotten any younger since the last time I wrote about it – it is still the oldest in the world. Japan’s debt pile got bigger, and it remains the most indebted developed nation (though, in all fairness, other countries are desperately trying to take that title away from it). Despite the growing debt, Japanese five-year government bonds are ‘paying’ an interest rate of – 0.10 percent. Imagine what will happen to its government’s budget when Japan has to start actually paying to borrow money commensurate with its debtor profile.
Regarding China, there is little I can say that I have not said before. The bulk of Chinese growth is coming from debt, which is growing at a much faster pace than the economy. This camel has consumed a tremendous quantity of steroids over the years, which have weakened its back – we just don’t know which straw will break it.

This post was published at Zero Hedge on Oct 12, 2017.

Stocks and Precious Metals Charts – It’s a Livin’ Thing

“Sin has many tools, but a lie is the handle which fits them all.”
Edmund Burke
‘And in the Incarnation the whole human race recovers the dignity of the image of God. Henceforth any attack, even on the least of men, is an attack on Christ, who took the form of man, and in his own Person restored the image of God in all that bears a human form.
Through fellowship and communion with the Incarnate Lord, we recover our true humanity, and at the same time we are delivered from that perverse individualism which is the consequence of sin, and retrieve our solidarity with the whole human race.’
Dietrich Bonhoeffer, The Cost of Discipleship
“For what does it profit a man, to gain the whole world, but lose his soul?”
Mark 8:36
Stocks were off a bit today, while the precious metals remained steady.
The markets were perturbed a bit by the geopolitical events, as well as some new domestic disappointments with the triumph of corporatism in the form of tax relief at the expense of the working and middle class.

This post was published at Jesses Crossroads Cafe on 12 OCTOBER 2017.


GOLD: $129200 up $6,20
Silver: $1717 up 9 cents
Closing access prices:
Gold $
silver: $
PREMIUM FIRST FIX: $11.31 (premiums getting larger)
Premium of Shanghai 2nd fix/NY:$9.00 (PREMIUMS GETTING LARGER)
LONDON FIRST GOLD FIX: 5:30 am est $xx
For comex gold:
For silver:
620,000 OZ/
Total number of notices filed so far this month: 516 for 2,580,000 oz

This post was published at Harvey Organ Blog on October 12, 2017.

Energy Analyst: “Meaningful Upside” for Oil Prices, Market Being Driven by “Fake News”

While oil markets haven’t been experiencing much love of late, there’s a strong case to be made based on the fundamentals for the energy sector.
Recently, on Financial Sense Newshour, we spoke with Marshall Adkins, Director of Energy Research at Raymond James, on why he sees a “meaningful upside” for oil prices and how “fake news” is dominating the energy markets currently.
For audio, see
The Topping Process; Perfect Storm Coming to EnergyReductions in Capex Spending May Drive Depletion
We’ve definitely seen capital expenditures (capex) slow, and when we see cuts to international and offshore spending by 50 percent, it’s obviously going to have an impact on the price of oil.
It’s also important to keep in mind that in the case of offshore and international projects, the lead time is very long.

This post was published at FinancialSense on 10/12/2017.

The “Missing Slide”: JPM Credit Card Charge-Offs Just Shy Of Four Year Highs

While JPM was quick to provide all the favorable data in its earnings presentation (and not so favorable when it comes to the unexpectedly sharp, 27% drop in its fixed income revenues) one thing was conspicuously missing: the slide on “Mortgage Banking And Card Services” which has traditionally been part of the bank’s earnings presentation and was certainly featured prominently in Q1, if dropped last quarter.
Of course, it is possible that JPM simply forgot to include it, or perhaps it did not want to bring attention to a troubling trend: the concerning increase in net credit card charge-offs, which earlier in the year rose to just shy of $1 billion, and which prompted JPM to report an unexpected increase in credit costs (driven also by JPM’s write-down in its student loan portfolio).
So we decided to recreate the chart using data JPM disclosed in its earnings supplement, and which may explain why JPM “forgot” to add that particular slide. It shows that after rising to the highest level since March 2013 last quarter, JPM’s net credit card chargeoffs remained over $1 billion as of Sept 30, at $1.019BN to be precise, and just shy of the highest level going back to March 2013, suggesting that contrary to Jamie Dimon’s commentary, the US consumer is not doing all that hot after all.

This post was published at Zero Hedge on Oct 12, 2017.

Bill Blain: Is Today The Day?

‘When Black Friday comes, I’ll stand by the door and catch the grey men when they dive from the fourteenth floor..’
I’m sorry, but this morning’s porridge isn’t fresh. It was slammed together yesterday afternoon. As you receive this I’ll be doing some showy-off stuff in the City. No freshly scribbled early morning porridge today – just this ‘warmed up in the micro-wave’ pap. (Incidently, one of my favourite words is Poppity-Ping – Welsh for microwave. Don’t say you don’t learn something every day…)
If I write anything profound last night, it might well be mediocre by this morning..
But… today is the day… finally it has arrived. It’s time to suffer..
For the past couple of months, I’ve been confidently predicting October 12th as the day Global stock markets stagger, tumble and correct. It started as a little joke – my primary reason for picking October 12th was simply that it’s the day before a Friday the 13th.. meaning it’s a great day to really ruin everyone’s anticipation of the weekend!

This post was published at Zero Hedge on Oct 12, 2017.

GM to Lay Off 1,500 More Workers, as its Car Sales Plunge Twice as Fast as Rest of Industry

Hounded by overcapacity. But other automakers do just fine with cars.
Starting in mid-November and going through the rest of the year, General Motors will close its Detroit-Hamtramck assembly plant – its only remaining factory in its hometown – and lay off about 1,500 workers, ‘people familiar with the plan’ told the Wall Street Journal. When the plant does resume production, output will be cut by 20%, and 200 people will be out of a job.
Back in 1999, the plant produced over 200,000 Cadillacs and Buicks a year. This year, it might barely produce 80,000 vehicles.
The Detroit-Hamtramck plant has already been subject to temporary layoffs earlier this year when an evening work shift was eliminated – part of the 10,000 layoffs that were announced last December.
In July, the plant cropped up in discussions between the UAW and GM. At the time, six passenger car models were ‘under review’ at GM. And there was talk that they might get cancelled after the 2020 model year. The models: Chevrolet Volt (the hybrid, not the Bolt, an EV), Buick LaCrosse, Cadillac CT6 (the brand’s new luxury flagship sedan), Cadillac XTS, Chevrolet Impala, and Chevrolet Sonic.

This post was published at Wolf Street on Oct 12, 2017.

Trump “Angry” After Learning What State And Local Tax Repeal Really Means

In what may be the final nail in President Trump’s tax reform proposal, months after the White House proposed ending a tax break for people in high-tax states – which would suggest Trump had more than enough time familiarize himself with how it all works – Trump reportedly “grew angry” when he learned that the change would hurt some middle-income taxpayers, Bloomberg reports citing people familiar with his thinking.
As Bloomberg amusingly adds, “It’s not clear why the president didn’t know the implications of the SALT deduction for middle-class taxpayers when the plan was released.”
Trump’s confusion appears to have led to even more confusion everywhere else: according to Bloomberg, Trump’s concerns led him to say this week that ‘we’ll be adjusting’ the tax-overhaul framework, but it’s not clear how he and congressional leaders would make up for the $1+ trillion in revenue that would be lost without ballooning the deficit or torpedoing support for the plan among hard-line conservative Republicans. Meanwhile, Trump’s top economic adviser Gary Cohn said Thursday morning that the president “is not rethinking his position on repealing the state and local tax deduction” contradicting what Trump himself said previously.
In any case, while the plan to eliminate State and Local tax deductions may have been prompted by an initial assumption that such a move would mostly hit blue states as shown below…

This post was published at Zero Hedge on Oct 12, 2017.

Asian Metals Market Update: October-12-2017

Gold and silver rose as the FOMC did not say anything new on the economy or interest rate cycle. Low inflation could derail the Federal Reserve interest rate cycle. Physical gold and silver demand will be on the higher side in Asia as well as Europe if prices rise today. I also expect short positions to get converted into long positions if gold and silver rise. There are all of the ingredients for a new gold rally: (a) Extreme geopolitical risk never before seen in decades (b) Global growth hitting peak growth with very high chance of a reversal (c) The US dollar moving towards its last phase of its death (d) Last but not the least, new technologies are using gold and will use gold. Till now gold’s rise was attributed to safe haven status and traditions in Asia. The double whammy for gold bulls is industrial demand.
Higher global interest rate cycle will only slow down the pace of rise of gold and silver and not the rise

This post was published at GoldSeek on 12 October 2017.

How The Euro Keeps Defying Doomsayers

In his latest Macro View, Richard Jones, an FX strategist who writes for Bloomberg, explains the resilience behind the common currency which has ignored every adverse piece of news thrown at it, and identifies the one main reason it keeps “deying the doomsayers.”
Euro Can Keep Defying Doomsayers, Thanks to Draghi
The euro rally is sustainable even amid the latest flare up of European political uncertainty.
A buoyant macro-economic environment partially explains the resilience, but most credit should go to the backstop offered by the ECB.

This post was published at Zero Hedge on Oct 12, 2017.

Outgoing German Finance Minister Warns Global Policies Are Causing Bubbles

We live in a world full of bubbles. We’ve reported extensively on the stock market bubble, the student loan bubble, and the auto bubble. We even told you about a shoe bubble. Last summer, US Global Investors CEO Frank Holmes called global debt ‘the mother of all bubbles.’
So what happens when these bubbles start to burst?
In a recent interview, outgoing German Finance Minister Wolfgang Schuble warned about bubbles and said global debt could set off the next financial crisis.
The IMF and others agree with us that we are in danger of encouraging new bubbles to form. We have no idea where the next crisis will happen but 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.’

This post was published at Schiffgold on OCTOBER 12, 2017.

Global Stocks Hit New Record High, Dollar Mixed After Dovish Fed

In a trend observed every day this week, S&P futures are slightly in the red ahead of a post-open ramp with the VIX rising to 9.91, as Asian shares climb, European stocks are little changed. WTI crude pares recent gains, slipping below $51 after API showed an unexpected crude build. Earnings season launches with bank earnings reports from JPMorgan and Citigroup, while Economic data include PPI figures, jobless claims.
As Reuters notes, broader investor risk sentiment has improved this week after Catalonia dialed back plans to break away from Spain, with MSCI’s 47-country world stocks index reaching a record high. Global equities now appear to be taking geopolitical developments such as the secessionist push in Spain and tensions on the Korean peninsula in their stride, to reach those record tops.
Analysts will be keeping a close eye on banks Q3 reports: Trading probably dropped from the same period a year earlier. Executives from JPMorgan, Citigroup and Bank of America Corp. told investors last month to expect declines ranging from 15 percent to 20 percent. Goldman Sachs Group Inc., coming off its worst first half for the trading business in more than a decade, said the third quarter remained challenging. Subdued volatility, especially compared with the turmoil from Brexit and the U. S. election a year earlier — made the period particularly tough.

This post was published at Zero Hedge on Oct 12, 2017.

Was It Worth It?

On the grand scene of financial innovations, the exchange-traded fund was fairly innocuous at first. It took a good 15 years of slow realization for people to figure out how disruptive they would ultimately be. ‘Exchange-traded fund’ isn’t even a very good name, since closed-end funds were also exchange-traded.
And the ETF wrapper still isn’t the ideal investment vehicle, at least for the purposes of traditional active management. For active strategies, the open-end fund structure is still superior.
I’d argue that the ETF revolution is less about ETFs and more about indexing; about how people have come to view stocks less as stocks and more as blobs of stocks.

This post was published at Mauldin Economics on OCTOBER 12, 2017.

Goldman Is Allowing Its Clients To Bet On The Next Financial Crisis

Just over a decade ago, as the S&P was hitting all time highs and there was a line around the block of 30-some year old hedge fund managers, desperate to put other people’s money in various ultra risky investments just so they could pick a few excess bps of yield over Treasurys – a situation painfully familiar to what is going on now – Goldman had an epiphany: create new synthetic products that have huge convexity, i.e., provide little upside (such as a few basis points pick up in yield) versus unlimited downside, link them to the shittiest assets possible and sell them to gullible, yield-chasing idiots (collecting a transaction fee) while taking the other side of the trade (collecting a huge profit once everything crashes). The instruments, of course, were CDOs, and not long after Goldman sold a whole of them, the financial system crashed and needed a multi-trillion bailout from which the world has not recovered since.
Ten years later, Goldman is doing it again, only instead of targeting subprime mortgages, this time the bank has focused on quasi-insolvent European banks.
And just like right before the last financial crash, Goldman is once again allowing its clients to profit from the upcoming collapse, or as Bloomberg puts it, “less than a decade after the last major banking crisis, Goldman Sachs and JPMorgan are offering investors a new way to bet on the next one.”
The trade in question is a total return swap, a highly levered product which is similar or a credit default swap but has some nuanced differences, which targets what are known as Tier 1 , or AT1 or “buffer” notes issued by European banks, and which usually are the first to get wiped out when there is even a modest insolvency event (just ask Banco Popular), let alone a full blown financial crisis.

This post was published at Zero Hedge on Oct 12, 2017.

Black Swan Anxiety: CBOE SKEW Index Near All-time High (120 Day Moving Average)

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
The Mr Obvious Award goes to …
Concern is building that years of record-setting gains for U. S. stocks may give way to a market plunge, according to Jim Paulsen, Leuthold Group Inc.’s chief investment strategist. In a report Monday, he cited the Chicago Board Options Exchange’s SKEW Index, which shows the perceived risk for a so-called black-swan event that’s reflected in S&P 500 Index option prices. Paulsen cited a six-month moving average, similar to the 120-day version displayed in the chart. The latter average is just below a record set in August.

This post was published at Wall Street Examiner by Anthony B Sanders ‘ October 11, 2017.

The European Countries With The Most Psychiatrists

If Europe is driving you nuts, we have some simple advice… head to Finland!
As Statista’s Niall McCarthy notes, according to new Eurostat data released to mark World Mental Health Day, the European Union has about 90,000 psychiatrists in total and Finland has the most per 100,000 inhabitants (23.60) followed by Sweden (23.19) and the Netherlands (22.95).

This post was published at Zero Hedge on Oct 12, 2017.

Germans Have Quietly Become the World’s Biggest Buyers of Gold

When I talk about Indians’ well-known affinity for gold, I tend to focus on Diwali and the wedding season late in the year. Giving gifts of beautiful gold jewelry during these festivals is considered auspicious in India, and historically we’ve been able to count on prices being supported by increased demand.
Another holiday that triggers gold’s Love Trade is Dussehra, which fell on September 30 this year. Thanks to Dussehra, India’s gold imports rose an incredible 31 percent in September compared to the same month last year, according to GFMS data. The country brought in 48 metric tons, equivalent to $2 billion at today’s prices.
As I’ve shared with you many times before, Indians have long valued gold not only for its beauty and durability but also as financial security. Indian households have the largest private gold holdings in the world, standing at an estimated 24,000 metric tons. That figure surpasses the combined official gold reserves of the United States, Germany, Italy, France, China and Russia.
A New Global Leader in Gold Investing?
But as attracted to gold as Indians are, they weren’t the world’s biggest investors in the yellow metal last year, and neither were the Chinese. According to a new report from theWorld Gold Council (WGC), that title shifted hands to Germany in 2016, with investors there ploughing as much as $8 billion into gold coins, bars and exchange-traded commodities (ETCs). This set a new annual record for the European country.

This post was published at GoldSeek on Thursday, 12 October 2017.