Pentagon Worried about Hackers Causing Stock Market Crash

The Pentagon?! But no one’s worried when stocks get manipulated higher.
It’s funny, the all-out government effort to prevent a major decline of the stock market, or of individual stocks, via manipulation or hacking. Now even the Pentagon is looking into it.
What’s funny is that everyone cheers when manipulation, hacking, and other shenanigans cause the market or individual stocks to soar. It’s just declines they’re worried about at these precarious levels.
Manipulating stocks higher is a time-honored game that routinely receives kudos from all around. The Fed printed nearly $4 trillion and cut rates to zero for eight years – no matter what the damage to the real economy – for the sole purpose of manipulating up asset prices including stock prices. ‘Wealth effect,’ Ben Bernanke called it. Corporate executives and analysts exaggerate future earnings only to deflate them at the last minute, because stock prices are ‘forward looking’ and fake future earnings is all that matters, even if reality now sucks. And on and on. Whatever it takes to push stock prices up, by hook or crook, is cool. These are our heroes.
But when some lonely dude might hack into high-speed stock trading systems or spook the trading algos, quant-fund managers, and high-speed traders and throw algorithmic trading off track to where prices might actually fall in a major way, all heck breaks loose, and the Pentagon feels empowered to step in.

This post was published at Wolf Street by Wolf Richter ‘ Oct 15, 2017.

The Bullish Chartology for Gold

Tonight I would like to update you on some of the longer term gold charts we’ve been following which are still hanging in there from the bullish perspective. Keep in mind these are long term charts so changes come slowly.
Lets start by looking at the long term weekly chart for gold which shows its 2011 bear market downtrend channel we’ve been following for a long time now. Back in July of this year the price action broke out above the top rail and just recently the top rail was backtested from above and we are getting a bounce exactly where we needed to see a bounce.
Normally at the end of a long protracted bull or bear market you will find some type of reversal pattern buildout. As you can see the 2011 top built out the 6 point rectangle just below the all time highs. Currently gold has built out the blue triangle with the 5th reversal point falling just shy of reaching the bottom rail. I have seen in the past that sometimes when the 5th reversal point fails to reach the bottom rail it can be a sign of strength, meaning the bulls are not waiting around, red circle. If the bulls are truly in charge the next thing we’ll want to see is a new high above the previous high that was made on the initial breakout.

This post was published at GoldSeek on Sunday, 15 October 2017.

How The Elite Dominate The World – Part 1: Debt As A Tool Of Enslavement

Throughout human history, those in the ruling class have found various ways to force those under them to work for their economic benefit. But in our day and age, we are willingly enslaving ourselves. The borrower is the servant of the lender, and there has never been more debt in our world than there is right now. According to the Institute of International Finance, global debt has hit the 217 trillion dollar mark, although other estimates would put this number far higher. Of course everyone knows that our planet is drowning in debt, but most people never stop to consider who owns all of this debt. This unprecedented debt bubble represents that greatest transfer of wealth in human history, and those that are being enriched are the extremely wealthy elitists at the very, very top of the food chain.
Did you know that 8 men now have as much wealth as the poorest 3.6 billion people living on the planet combined?
Every year, the gap between the planet’s ultra-wealthy and the poor just becomes greater and greater. This is something that I have written about frequently, and the ‘financialization’ of the global economy is playing a major role in this trend.
The entire global financial system is based on debt, and this debt-based system endlessly funnels the wealth of the world to the very, very top of the pyramid.
It has been said that Albert Einstein once made the following statement…
‘Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.’
Whether he actually made that statement or not, the reality of the matter is that it is quite true. By getting all of the rest of us deep into debt, the elite can just sit back and slowly but surely become even wealthier over time. Meanwhile, as the rest of us work endless hours to ‘pay our bills’, the truth is that we are spending our best years working to enrich someone else.

This post was published at The Economic Collapse Blog on October 15th, 2017.

This $1.1 Million Silicon Valley Shack Is A Steal, But There’s A Bizarre Catch

The owner of one tiny, unassuming cottage in Mountain View, California just sold his house for well below the asking price of $1.6 million – but asked the new buyers to agree to one highly unusual condition: They must allow him to continue living there, rent free, for seven years, NBC News reported.
The Silicon Valley property went for $1.1 million after being on the market for only a few weeks, which is surprising, considering the house – little more than a shotgun shack – hardly has room for multiple tenants.
The property’s realtor said the home’s elderly former owner will continue living in the home for seven more years ‘rent back at no charge.’
Realtor Joban Brown said that while the price is not unusual for the hot spot location, the former owner’s request to continue living at the property is ‘not a typical situation.’

This post was published at Zero Hedge on Oct 15, 2017.

Days of Living Dangerously in Catalonia

Fractured communities, splintered families, broken friendships.
In Catalonia the economy is already beginning to feel the pinch from the rise in political tensions, as tourist numbers plunge 20% to 30% and as hundreds of companies, both domestic and foreign, move their headquarters to other parts of Spain, albeit in most cases only on paper.
But there’s one business that’s doing a brisk trade: the flag business.
Wherever you go these days, flags are everywhere. For years the esteladaflag, the starry symbol of Catalan independence, has been a ubiquitous feature of the urban landscape. But now the Spanish flag is doing its best to catch up. As Catalonia’s separatist movement grows in confidence, more and more balconies in Madrid, Valencia, Seville and other Spanish cities, including even Barcelona, are sporting the bold red and yellow of the Spanish flag.
I took these photos in Barcelona. The estelada draped from windows and balconies:

This post was published at Wolf Street on Oct 15, 2017.

Buffett’s Wrong – Why Market Valuations Are Not Justified By Low Interest Rates

As is his way, Billionaire investor Warren Buffett calmed an anxious nation earlier this month with his comments that:
“Valuations make sense with interest rates where they are.” And it seemed to work as stocks hit new record highs and Americans have never, ever been more sure that stocks will continue rising for the next 12 months…

This post was published at Zero Hedge on Oct 15, 2017.

Eric Peters: “This Is The Nightmare Scenario For The Next Fed Chair”

While we will have much more to share from the latest weekend letter by One River’s Eric Peters shortly, we found the following section on inflation vs asset bubbles – a topic which BofA’s Michael Hartnett has been focusing extensively on in the past year and which serves as the basis for the “Icarus Rally” – particularly notable as it explains all of today’s comments from Janet Yellen and other central bankers, discussing why it is only a matter of time before inflation returns, as the alternative, as Peters’ explains, is a world in which yields simply refuse to go up, leading to a nightmare scenario for the next Fed chair, who will be forced to pop the world’s biggest asset bubble.
Excerpted from the latest weekend notes by One River CIO, Eric Peters:
‘Why are we not experiencing deflation?’ he asked. ‘How can the top five stocks in the Nasdaq reduce US GDP but we feel better off?’ he asked. ‘Why are Americans buying no more cars today than in 1978 when our population is 100mm higher?’ he asked. ‘Why compare today to a world of combustion engines when we have so many more interesting things to do without moving an inch?’ he asked.

This post was published at Zero Hedge on Oct 15, 2017.

Is Bend, Oregon In A Bubble?

I grew up in Bend, Oregon and hope to retire there someday soon. I love everything Bend has to offer (if you don’t know Bend, think Boulder or Sun Valley…but better). I have family, friends, and rental properties in Bend.
So when a friend sent me a video with an economist (Bill Valentine) explaining why Bend was not in “a bubble” in mid-2017 and that residential property “prices were virtually permanently headed higher”, I was pleased but simultaneously more than a little curious.
My curiosity stemmed from the fact that since 1985, Bend’s property values have risen in excess of 6x’s. Since 2000, prices are up nearly 3 fold. Subsequent to the financial crisis lows, property values have nearly doubled and prices are now marginally higher than the ’07 peak. The same peak which economists unanimously agreed was an unsustainable speculative “bubble”. But this time is different???
To define our terms, “a bubble” is trade in an asset that strongly exceeds the asset’s intrinsic value. Mr. Valentine explained that Bend’s property values are not in “a bubble” and that “property prices (in Bend) are virtually permanently headed higher” because “more people want to and can move into Bend from cities with loftier property values than the future supply of homes (in Bend) can keep up with”. So, Mr. Valentine’s bet on Bend (or most highly desirable getaway destinations) is a bet on continual property value rises in the larger cities (alongside continued financial asset appreciation…whose ownership is concentrated in the cities). This will allow these “city folk” to ultimately sell high and buy high in relatively cheaper Bend. Plus Bend will be unable or geographically constrained from adding adequate supply of new housing to keep up with demand.

This post was published at Zero Hedge on Oct 15, 2017.

Bitcoin or Gold? Do I have to Pick Just One?

People seem to enjoy pitting gold and Bitcoin against each other. But do I really have to pick just one?
While cryptocurrency and precious metals have many similarities, in many ways they are polar opposites. And you can have both.
First the similarities.
Both gold and Bitcoin serve as a medium of exchange. They are currencies. They are both decentralized and don’t depend on the good faith and stability of any government to prop them up or give them value.
You can’t create cryptocurrencies or gold out of thin air. You can’t turn on a printing press, or push a button at a central bank to get them. You have to work to ‘create’ both. The mining process may fundamentally different. You mine gold through good-old fashioned manual labor. You mine Bitcoin with a computer. But the principle is the same. Cryptos and precious metals are both inherently scarce.
Gold and Bitcoin also serve similar investment functions. They are both assets. Investors tend to buy them as a safe haven. Both their prices tend to rise during times of crisis.

This post was published at Schiffgold on OCTOBER 13, 2017.

Colin Kaepernick Reportedly Files Grievance Against NFL Owners For “Collusion”

I am told that @Kaepernick7 has filed a grievance under the CBA for collusion against the owners. If accurate, this is huge.
— mike freeman (@mikefreemanNFL) October 15, 2017

Despite playing poorly in his last season, having undergone multiple surgeries, and being a public relations time-bomb, Colin Kaepernick is upset that he is still unsigned through six weeks of the 2017 NFL season.

This post was published at Zero Hedge on Oct 15, 2017.

Technical Scoop – Weekend Update Oct 15

Weekly Update
‘The bull market in everything’ – so blared the headline of the latest issue of The Economist(October 7th – 13th 2017). The full article can be found atWell, we don’t wish to fully embrace the alarmists but the bull market since the bottom of March 2009 is not yet the granddaddy of all bull markets. So far, the current bull market is 104 months old, having experienced only two pullbacks, both less than 20% in 2011 and 2015/2016. The ‘Roaring 20s’ bull market lasted 97 months with only one significant correction under 20% and few other milder pullbacks. The ‘biggest bull’ still belongs to the 1990s and tech boom that lasted 112 months with only one major correction under 20% in 1998. So the current one still has potentially a few months to go to overtake that bull market.
In terms of gains, the current bull is up (Dow Jones Industrials (DJI) 254%, certainly an impressive gain. But the ‘Roaring 20s’ bull gained 495% and the 1990s bull tagged on 396%. The current bull still has a ways to go to equal either one. Both bull markets ended with the collapse from 1929 to 1932 seeing the DJI lose 89% while the collapse of 2000 – 2002 dropped 38% only to be followed five years later with the financial crisis of 2007 – 2009 that saw the DJI collapse almost 54%. A reminder that roaring bull markets rarely end well.
The Economist article referred to the bull market in everything. The stock market has not been the only bull market. Bonds too experienced a powerful market that may well have peaked in 2016. The bond bull wasn’t limited to just government bonds but to all credits, especially what is referred to as ‘junk bonds’ as credit spreads narrowed sharply. Our chart below shows the spread between Baa corporate bonds relative to 10-year US Treasury notes at the lowest level in a decade (currently 1.97%). The only time the spread has been lower was in the run-up to the top in 2007. While higher, the spread between US 10-year Treasury notes and ‘junk’ bonds (rated BB or lower by S&P, and Ba or lower by Moody’s) is also at or near record lows.

This post was published at GoldSeek on 15 October 2017.

Drone Footage Reveals “Utter Devastation” As Nearly 6,000 Buildings Destroyed In Cali Wildfire

Hurricane force winds returned to Northern California on Saturday, revitalizing the massive Tubbs fire that’s destroyed much of Santa Rosa. With the fire headed toward the few neighborhoods in the city of 140,000 that haven’t already been destroyed, state authorities ordered thousands more residents to evacuate as residents in some of the hardest hit neighborhoods began venturing back into the city to see what, if anything remains of their homes.
An estimated 3,000 people in Santa Rosa and at least 250 people in Sonoma evacuated their homes before dawn, the Associated Press reported.
Meanwhile, the death toll for what was the deadliest week for wildfires in California history has climbed to 40, while 5,700 homes and businesses have been destroyed.
Fortunately, the winds that have stoked the fires started to die down Saturday afternoon. And with temperatures dropping on Sunday, firefighters have finally been able to go on the office and make meaningful advances in their attempts to contain the flames.

This post was published at Zero Hedge on Oct 15, 2017.

The Gold-Backed-Oil-Yuan Futures Contract Myth

On September 1, 2017, the Nikkei Asian Review published an article titled, ‘China sees new world order with oil benchmark backed by gold’, written by Damon Evans. Just below the headline in the introduction it states, ‘China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry’. Not long after the Nikkei piece was released ‘the story’ was widely copied in sensational analyses throughout the gold space. However, ‘the story’, as presented by Nikkei, doesn’t make sense at all. Allow me to share my 2 cents in addition to what I shared previously on the Daily Coin.
All the rumours and analyses on gold, oil and yuan that are making rounds now in the blogosphere are based on the Nikkei article. But the Nikkei article itself contains zero official sources. Basically, the whole story has been invented by Damon Evans. So, let’s start addressing the claims made in the Nikkei piece.
It’s true that the Shanghai Futures Exchange (SHFE) – not to be confused with the Shanghai Gold Exchange (SGE) – has recently set up a subsidiary called the Shanghai International Energy Exchange (INE), for foreign enterprises to trade a new oil futures contract denominated in yuan which is expected to be launched later this year (product symbol: SC). Specifications of the contract can be read here. In all official sources, though, there is no mention of gold. Officially this contract is not ‘convertible into gold’.

This post was published at Bullion Star on 15 Oct 2017.

DARPA Asks HFT Traders How Hackers Will Crash The Market

Having been responsible for the biggest flash crashes in recent years, it is no surprise that when it comes to the market’s growing structural vulnerabilities, high frequency traders have emerged as the primary authority on how to crash the market in the blink of an eye. Which is perhaps why none other than the Pentagon is seeking advice from HFTs on how hackers could “unleash chaos” in the US financial system.
According to the Wall Street Journal, the Department of Defense’s research arm, the Defense Advanced Research Projects Agency, better known as DARPA, has been consulting with executives at HFT firms and quant hedge funds as well as people from exchanges and other financial companies, over the past year and a half. Officials described the effort as an early-stage pilot project aimed at “identifying market vulnerabilities.” The WSJ notes that meeting participants described meetings as informal sessions in which attendees brainstorm about “how hackers might try to bring down U. S. markets, then rank the ideas by feasibility.”
Why approach HFTs? Because of all market participants, it is the “high freaks” who, better than anyone, know how to force a market crash at will. The WSJ was a bit more diplomatic:
High-speed traders and quant-fund managers, who use sophisticated computer programs to buy and sell stocks, sometimes in fractions of a second, form the core of the group. Such traders tend to have deep expertise in the inner workings of financial markets and the automated systems that account for huge swaths of trading activity today.
Among the potential scenarios probed by the Pentagon: Hackers could cripple a widely used payroll system; they could inject false information into stock-data feeds, sending trading algorithms out of whack; or they could flood the stock market with fake sell orders and trigger a market crash.

This post was published at Zero Hedge on Oct 15, 2017.

Really Bad Ideas, Part 5: The Fed Should Have – And Defend – An Inflation Target

Central banks in general and the Fed in particular are struggling to understand a world in which they’ve thrown everything they have at the economy without generating ‘beneficial’ inflation. Their confusion can be traced back to some profoundly false assumptions.
Here’s a good overview of the current debate:
Fed ‘should defend’ inflation target or risk losing credibility: Bullard (Reuters) – The Fed needs to mount a clear defense of its 2 percent inflation target and stop raising rates until the pace of price increases strengthens, St. Louis Fed President James Bullard said on Thursday. The central bank risks losing credibility, and perhaps triggering a recession, if it continues to insist on ‘normalization’ and higher interest rates without better evidence that prices are firming, he said in an interview with Reuters.
‘If you are going to have an inflation target you should defend it. If you say you are going to hit the inflation target then you should try to hit it and maintain credibility,’ Bullard said.
Persistent weakness this year in the Fed’s preferred measure of inflation means ‘we more or less lost all the progress that we made the last two years’ toward the 2 percent goal, Bullard said. Continuing to raise interest rates in that environment ‘can send a signal to markets that the inflation target is not that important.’

This post was published at DollarCollapse on OCTOBER 15, 2017.

Mike Rowe: It’s Time To Make Hard Work Cool Again

Work was a supporting pillar in my family dynamic growing up, instilling a foundation that would ultimately propel me to achieve all of my career and financial goals I had set for my 25 year benchmark. Those goals are personal and private, but I am ecstatic that with just about five months to spare, I’ve exceeded them all.
That foundation was built by years of watching and learning from my father, Joseph Merse, who has taught – and continues to teach me – what it means to work hard and provide for a family.
Americans like my father that take pride in their work propelled Mike Rowe to become ‘the dirtiest man on TV’ with his notorious show Dirty Jobs and one of the leading American men tackling the issues related to the widening skills gap through his foundation, mikeroweWORKS Foundation, which awards scholarships to students pursuing a career in the skilled trades.

This post was published at Zero Hedge on Oct 15, 2017.

Trump And McConnell Make A “Truce Of Necessity” To Save Tax Reform

Inbetween firing off tweets and defending his decision to end cost-sharing payments to insurance companies, sending healthcare stocks sliding and eliciting accusations of sabotage, president Trump reportedly swallowed his pride and did something he’s been loath to do for months: he called Mitch McConnell.
Axios is reporting that, after months of frosty distance that was the subject of an anonymously sourced New York Times scoop back in August and has occasionally spilled into public view, President Trump picked up the phone yesterday and called the Senate Majority Leader ahead of what’s looking like a make-or-break weak for Trump’s legacy defining, narrative sustaining tax-reform program.
While it may come as a surprise to some – such as Goldman, which still says odds of a tax deal are well over 50% – Axios says Republican insiders privately believe the future of tax reform looks bleak. But if Trump and McConnell can patch things up and work together, even temporarily, the GOP has a better chance at avoiding an embarrassing legislative shutout that could imperil the republican majority in Congress.

This post was published at Zero Hedge on Oct 15, 2017.

Watching the Semi’s

There is zero chance of a significant pull back in the stock markets until the semi conductor index ($SOX) reaches its all-time 2000 high of 1350. The index closed this week some 11% lower than 1350 at around 1220. I expect we will now see a runaway move that slowly grinds higher, forcing shorts who are trying to pick a top to cover, and keeping longs on edge.

This post was published at GoldSeek on Sunday, 15 October 2017.

Europe’s Weight In Gold and Silver

Gold, and silver, have always been valuable. Through upturns in fiat currency, downturns in commodities, and everything in between, the precious metals have always been a useful indicator and base level for the worth of things internationally.
Learn How to Exploit the Gold Frenzy! Far from being the hallmark of huge institutions, like the Federal Reserve, you can take advantage of the evergreen currency to secure your own ‘reserve’.
Why Use Gold?
There have been few occasions where government has been criticized for keeping hold of gold reserves. Quite apart from it, in fact, with the British government panned for selling back in 2002.
Buy Silver Quarters – In Stock, Ships Fast! There has never been a better time in fact, with measures over the world being taken up that can threaten your ‘liquid’ cash flow. Over in Europe, there has been legislation introduced as the EU attempt to prevent bank runs that threatens your ability to withdraw your own cash in the event of adverse economic conditions.

This post was published at GoldSilverWorlds on October 12, 2017.

15/10/17: Concentration Risk & Beyond: Markets & Winners

An excellent summary of several key concepts in investment worth reading: “So Few Market Winners, So Much Dead Weight” by Barry Ritholtz of Bloomberg View. Based on an earlier NY Times article that itself profiles new research by Hendrik Bessembinder from Arizona State University, Ritholtz notes that:
“Only 4 percent of all publicly traded stocks account for all of the net wealth earned by investors in the stock market since 1926, he has found. A mere 30 stocks account for 30 percent of the net wealth generated by stocks in that long period, and 50 stocks account for 40 percent of the net wealth. Let that sink in a moment: Only one in 25 companies are responsible for all stock market gains. The other 24 of 25 stocks — that’s 96 percent — are essentially worthless ballast.” Which brings us to the key concepts related to this observation: Concentration risk: This an obvious one. In today’s markets, returns are exceptionally concentrated within just a handful of stocks. Which puts the argument in favour of diversification through a test. Traditionally, we think of diversification as a long-term protection against risks of markets decline. But it can also be seen as coming at a cost of foregone returns. Think of holding 96 stocks that have zero returns against four stocks that yield high returns, and at the same time weighing these holdings in return-neutral fashion, e.g. by their market capitalization.

This post was published at True Economics on Sunday, October 15, 2017.