For The First Time In 26 Years, US To Put Nuclear Bombers On 24 Hour Alert

The unexpected decision by President Trump to amend an emergency Sept 11 order signed by George W Bush, allowing the Air Force to recall up to 1,000 retired air force pilots to address what the Pentagon has decribed as “an acute shortage of pilots” caught us by surprise. After all, this was the first time we have heard of this particular labor shortage – perhaps there was more to this executive order than meets the eye. Indeed, a just released report may help explain the reasoning behind this presidential decision.
According to Defense One, the US Air Force is preparing to put nuclear-armed bombers back on 24-hour ready alert, a status not seen since the Cold War ended in 1991.
That means the long-dormant concrete pads at the ends of Barksdale Air Force Base’s 11,000-foot runway – dubbed the ‘Christmas tree’ for their angular markings – could once again find several B-52s parked on them, laden with nuclear weapons and set to take off at a moment’s notice.

This post was published at Zero Hedge on Oct 22, 2017.

22/10/17: Italian North: another chip off Europe’s Nirvana

Having just written about the Czech electoral pivot toward populism last night, today brings yet another news headline from the politically-hit Europe.
In a non-binding referendums in two wealthiest Italian regions, Veneto and Lombardia, the voters have given local governments strong mandates to push for greater autonomy from Rome and the Federal Government. Both regions are dominated by the politics of Lega Nord, a conservative, autonomy-minded party with legacy of euro scepticism, strong anti-immigration sentiment and the past promotion of outright independence for the Northern Italy.
In both referendums, turnout was relatively strong by Italian standards (58% projected for Veneto and over 40% for Lombardia). And in both, exit polls suggest that some 95% of voters have opted for stronger regional autonomy.
The referendums were not about outright independence, but about wrestling more controls over fiscal and financial resources from Rome. Both regions are net contributors to the Italian State and are full of long run resentment over the alleged waste of these resources. Both regions want more money to stay local.

This post was published at True Economics on October 23, 2017.

Asian Metals Market Update: October-23-2017

Gold and silver can fall further if there is no geopolitical risk. Economic data releases for the next two weeks will affect global financial markets only if they are below expected lines. The Bank of England is expected to raise interest rates next month. Sterling could nosedive if there is anything to indicate that the Bank of England will not raise interest rates.
Bond yields in Asia will affect the global flow of funds into different instruments. Interest rate hikes (if any) for the rest of the year with different nations have already been factored in by the markets. Interest rate cuts in Asian nations (except Japan) will depend on the inflation cycle.
I hear a lot of chatter that global stock markets will correct anytime soon. A correction in global stock markets can result in a fall in industrial metals but a rise in gold prices.
How to trade in silver
On Diwali day I received a call from Bhai Patel from Rajkot saying that over the past few years he has been making losses in silver trading. The concerned person has good knowledge about technical trading as well as silver’s fundamental aspects. Bhai Patel only trades in MCX silver futures and nothing else. Still he makes losses. Below are some of the points as per my experience which one needs to keep in mind for silver trading.

This post was published at GoldSeek on October 22, 2017.

Time for Caution in Gold Miners

Last week we noted the likely negative impact of a sustained rebound in the US Dollar on Gold. Recent weakness in precious metals has not been much of a surprise considering the sector’s relative weakness months ago amid a weak US Dollar. While the greenback has bottomed, it has yet to push above resistance at 94. Nevertheless, Gold and in particular the gold stocks are threatening more losses even before a push higher in the greenback. It is time to be defensive and cautious.
Although GDX is holding its 200-day moving average and has yet to pierce its October low, GDXJ already has. The juniors (GDXJ) closed below their October low and broke their uptrend line from May. This, after failing twice at the 200-day moving average. The break below $33.50 projects down to $32.00. The juniors lack strong support until $30 while GDX’s initial support levels are $22 and $21.

This post was published at GoldSeek on 22 October 2017.

US Treasury Rates Hit Nine-Year Highs

But the yield spread collapses to lowest since early in the Financial Crisis. Even the Fed is worried.
Prices of US government bonds fell across the board on Friday, and their yields rose and set a number of nine-year highs, in some cases nine years to the day.
Many people have pointed at the Senate where the prospects of the tax cut are said to have ‘brightened’ when the Senate approved a budget resolution. The tax cuts, if they make it, are said to lower government revenues by $1.5 trillion over 10 years. So maybe the bond market is starting to pay attention to government deficits and the national debt once again. But the bond market hasn’t paid attention in many, many years, and until the proof is in, I doubt it.
There are, however, other factors that predate Friday by many months. In fact, the moves in Treasury yields for maturities up to two years have been fairly consistent: yields have been surging.
On Friday, the three-month Treasury yield rose to 1.11%, the highest since the brief spike around July 25, when the debt ceiling issue hit a speed bump. At the time the thinking was that in late September – when these securities would mature and the government would have to come up with the money to redeem them – the government might not be able to come up with enough money due to the debt ceiling. But this scare passed, the debt ceiling was extended temporarily, and the trajectory of the three-month yield returned to normal. Except for this spike, the three-month yield, at 1.11%, is now at the highest level since October 20, 2008 (let’s remember that date, it keeps cropping up):

This post was published at Wolf Street on Oct 22, 2017.

Working-Age Depopulation Is Hugely Bullish For Assets… Bearish For Mankind

Population growth is the primary, if not sole, contributor to growth in consumption and the resultant economic growth. But not simply any population, but it is the growing population of the working age or “core” population of 20 to 65 year olds (particularly among the wealthy or developing nations) that is hyper-critical. The chart below shows the average household income and expenditures by the age of the head of the household. Not surprisingly, the 35 to 64 year old age group makes and spends more than double the younger or older age groups. Although the dollar amounts vary, this principle is true worldwide.
The rise, peak, and deceleration of core population growth among the nations with income, savings, and/or access to credit goes an awful long way in explaining the deceleration of economic growth. That decelerating growth explains the interest rate cuts, rise in debt, and now the rise in central bank monetization. This change in core growth (and the central banks reactions to it) explains the great and accelerating divergence of negative economic activity vs. positive asset valuations. The charts below show core population growth (which is determined through 2035, and estimates from there on all taken from the United Nations).

This post was published at Zero Hedge on Oct 22, 2017.

“Great Rotation” Ahead; Will it Be Inflationary or Deflationary?

[edit] This article ultimately leans toward the view that the reasons for a rising curve will be inflationary. But I woke up in the middle of the night and my thoughts drifted to the components of the article (yeah, that’s pretty sad, I know), and with further consideration I am leaning toward neutral or even a bit into the deflationary camp. The reasons will be the stuff of another article.
Think back to the blaring headlines about the Great Promotion Rotation in the financial media in 2013. Perhaps the media circus started in January of that year when The Economist asked the question of whether the rise in bond yields signaled a ‘flight’ out bonds and into equities. It was probably an earnest and right minded question asked by The Economist, but you know our friends in the greater financial media; get a good story and flog the hell out of it to harvest eyeballs. Reality be damned, man, it’s the eyeballs that matter!
As the mini hysteria grew that year we called it a ‘Great Promotion’ (by the financial media) in expectation that the Continuum’s limiter (the red monthly EMA 100 on the 30 year bond yield chart below) would hold once again, just as it had during Bill Gross’s inflation hysterics that signaled a top in inflationary angst in early 2011. By the end of 2013, our ears were ringing with the media buzz and drone about the ‘Great Rotation’.

This post was published at GoldSeek on 22 October 2017.

California Attorney General Dodges Question About ‘Calexit’ Referendum

Two days after former White House chief strategist Stephen Bannon warned that California may attempt to secede from the US over the next decade if Republicans failed to reassume control of the state, the state’s attorney general played down speculation that the state would make a credible attempt at leaving the US in the coming years.
During an interview on “Fox News Sunday,” Becerra evaded a question about whether he would allow a ‘Calexit’ referendum on the ballot even though it’s unconstitutional, saying only that the state would do everything it can to be the “leading force” in this country, rather than becoming an independent state.
Becerra said there are people in California who are frustrated with the Trump administration “constantly taking digs and hurting California’ – but despite these frustrations, California needs the US as much as the US needs California.


This post was published at Zero Hedge on Oct 22, 2017.

One River CIO “We’re Willing Participants In Our Own Demise”

With the world’s focus falling on Beijing this week, where president Xi Jinping give a glowing account of China’s future during the 19th Party Congress, boasting that ‘the banner of scientific socialism with Chinese characteristics is now flying high and proud for all to see,” not all are impressed by China’s vision of the world in which China sees itself as increasingly taking over from the US as the world’s superpower. And it’s not just stories about China’s neverending behind the scenes bailouts of anything that may telegraph a hard landing for the economy (as decribed in “China’s Government Is Expected To Buy 24% Of All Residential Real Estate For Sale In 2017“); it’s the country’s entire financial system, which Kyle Bass has been shorting for nearly two years now but which he has failed to recognize now holds the entire world hostage: if it goes, so does the global financial system, unleashing a worldwide depression the likes of which have not been seen.
Here is Eric Peters, CIO of One River Asset Mgmt, explaining why everyone is wrong about the $35 trillion Chinese financial system, and yet how Beijing has figured out a way to become a parasite on the global financial system, resulting in an outcome in which “we’re willing participants in our own demise.”
Excerpted from One River’s latest Weekend Notes:

This post was published at Zero Hedge on Oct 22, 2017.

The Fed’s Everything Bubble And The Inevitable Asset Crash

Do not mistake outcomes for control – remember, there is no such thing as control – there are only probabilities. – Christopher Cole, Artemis Capital
Central Banks globally have created a massive fiat currency fueled asset bubble. Stock markets are the largest of these bubbles – a bubble made worse by the Fed’s attempt to harness the ‘power’ of HFT-driven algo trading. At least for now, the Fed can ‘control’ the stock market by pushing the buttons that unleash hedge fund black box momentum-chasing and retail ETF buy orders whenever the market is about to head south quickly.
However, the ability to push the stock market higher without a statistically meaningful correction is a statistical ‘tail-event’ in and of itself. The probability that the Fed can continue to control the market like this becomes infinitesimally small. The market becomes like a like a coiled spring. The laws of probability tell us this ‘spring’ is pointing down.


This post was published at Investment Research Dynamics on October 22, 2017.

Here Is The IMF’s Global Financial Crash Scenario

Hidden almost all the way in the end of the first chapter of the IMF’s latest Financial Stability Report, is a surprisingly candid discussion on the topic of whether “Rising Medium-Term Vulnerabilities Could Derail the Global Recovery”, which is a politically correct way of saying is the financial system on the verge of crashing.
In the section also called “Global Financial Dislocation Scenario” because “crash” sounds just a little too pedestrian, the IMF uses a DSGE model to project the current global financial sitution, and ominously admits that “concerns about a continuing buildup in debt loads and overstretched asset valuations could have global economic repercussions” and – in modeling out the next crash, pardon “dislocation” – the IMF conducts a “scenario analysis” to illustrate how a repricing of risks could “lead to a rise in credit spreads and a fall in capital market and housing prices, derailing the economic recovery and undermining financial stability.”
* * *
From the IMF’s Financial Statbility Report:
“Could Rising Medium-Term Vulnerabilities Derail the Global Recovery?”
This section illustrates how shocks to individual credit and financial markets well within historical norms can propagate and lead to larger global impacts because of knock-on effects, a dearth of policy buffers, and extreme starting points in debt levels and asset valuations. A sudden uncoiling of compressed risk premiums, declines in asset prices, and rises in volatility would lead to a global financial downturn. With monetary policy in several advanced economies at or close to the effective lower bound, the economic consequences would be magnified by the limited scope for monetary stimulus. Indeed, monetary policy normalization would be stalled in its tracks and reversed in some cases.

This post was published at Zero Hedge on Oct 22, 2017.

Housing Isn’t Just About Real Estate

The National Association of Realtors (NAR) reported today that sales of existing homes (resales) were up slightly in September 2017 on a monthly basis. At a seasonally-adjusted annual rate of 5.39 million last month, that was practically unchanged from the 5.35 million estimate for August that was the lowest in a year.
On an annual basis, resales in September were 1.5% less than those in September 2016. It was the first contraction for existing home sales since July 2016.
There may be some storm effects to consider in these figures, but for yet another economic account softness, weakness, or however you wish to classify the trend started long before Harvey and Irma were superheated winds blowing across the Sahara. Perhaps some house closings were delayed in process by them, but the lack of significant rebound in September suggests underlying fundamentals rather than anything else.

This post was published at Wall Street Examiner on October 20, 2017.

Are Cryptocurrencies Inflationary?

There’s a debate raging over what, exactly, bitcoin and the thousand or so other cryptocurrencies actually are. Some heavy-hitters are weighing in with strong, if not always coherent opinions:
Jamie Dimon calls bitcoin a ‘fraud’
JPMorgan Chase CEO Jamie Dimon did not mince words when asked about the popularity of virtual currency bitcoin.
Dimon said at an investment conference that the digital currency was a ‘fraud’ and that his firm would fire anyone at the bank that traded it ‘in a second.’ Dimon said he supported blockchain technology for tracking payments but that trading bitcoin itself was against the bank’s rules. He added that bitcoin was ‘stupid’ and ‘far too dangerous.’
– – – – – – – –
Peter Schiff: Even at $4,000 bitcoin is still a bubble
One of the best-known among the bears, investor Peter Schiff, is now making his case in even stronger terms for why bitcoin has advanced ever farther into bubble territory.
Schiff, who predicted the 2008 mortgage crisis, famously referred to bitcoin as digital fool’s gold and compared the cryptocurrency to the infamous bubble in Beanie Babies.

This post was published at DollarCollapse on OCTOBER 22, 2017.

Big Tech’s Dangerous Influence: “Coming Between Us And Reality”

Author Franklin Foer reflects on the dangers of losing ourselves in a society dependent on a handful of tech firms.
French philosopher Rene Descartes famously said ‘I think, therefore I am.’ But in the digital age, what we think and how we live are being influenced in a big way by just a handful of tech firms: We are informed by Google and entertained by Apple; we socialize on Facebook and shop on Amazon. It’s time to reclaim our identities and reassert our intellectual independence, according to Franklin Foer, a national correspondent for The Atlantic and former editor of The New Republic, in his book, World Without Mind: The Existential Threat of Big Tech.
He recently joined the Knowledge@Wharton show, which airs on SiriusXM channel 111, to explain why these firms’ hold on society is a cautionary tale for the future.
An edited transcript of the conversation follows.
Knowledge@Wharton: Tech companies such as Amazon have truly transformed themselves over the last couple of decades [and become a big part of our lives].
Franklin Foer: Amazon is really one of the most impressive specimens in the entire history of American business. It started off as a bookstore, then it morphed into becoming the ‘everything’ store. And it’s morphed beyond that. We know about Amazon Web Services and how it powers the cloud. We’ve seen how it just keeps expanding, culminating most recently in its decision to purchase Whole Foods. The same could be said for Google, which set out to organize knowledge but then became Alphabet, which has this massive portfolio, including a life-sciences company that aims to make us immortal.

This post was published at Zero Hedge on Oct 22, 2017.

Into the Cold and Dark

It amuses me that the nation is so caught up in the sexual mischief of a single Hollywood producer when the nation as a whole is getting fucked sideways and upside down by its own political caretakers.
Behind all the smoke, mirrors, Trump bluster, Schumer fog, and media mystification about the vaudeville act known as The Budget and The Tax Cut, both political parties are fighting for their lives and the Deep State knows that it is being thrown overboard to drown in red ink. There’s really no way out of the financial conundrum that dogs the republic and something’s got to give.
Many of us have been waiting for these tensions to express themselves by blowing up the artificially levitated stock markets. For about a year, absolutely nothing has thwarted their supernatural ascent, including the threat of World War Three, leading some observers to believe that they have been rigged to perfection. Well, the algo-bots might be pretty fine-tuned, and the central bank inputs of fresh ‘liquidity’ pretty much assured, but for all that, these markets are still human artifacts and Murphy’s Law still lurks out there in the gloaming with its cohorts, the diminishing returns of technology (a.k.a. ‘Blowback’), and the demon of unintended consequences

This post was published at Wall Street Examiner on October 20, 2017.

Maxine Waters Threatens To “Go And Take Out ‘Moron’ Trump”, The Most “Dangerous President Ever”

It’s been a big weekend for California Congresswoman Maxine Waters.
Having slammed White House Chief of Staff John Kelly on Saturday for defending President Donald Trump’s conversation with a Gold Star family, demanding that he apologize for his remarks toward Democratic Rep. Frederica Wilson of Florida…
“Gen. Kelly has been tainted by Trump lying in the face of facts. Hasn’t he seen the same video of Rep. Wilson that everyone else has seen?”
‘If the wife and family of Sgt. Johnson feel they were disrespected by Trump, then they were disrespected. Period!’


This post was published at Zero Hedge on Oct 22, 2017.

“It Could Open A Pandora’s Box”: Italy’s 2 Richest Regions Are Voting In Historic Autonomy Referendums

Voters in Italy’s two wealthiest northern regions of Lombardy and Veneto are voting on Sunday in referendums for greater autonomy from Rome, in which a positive outcome could fan regional tensions in Europe at a time when neighboring Spain is cracking down to prevent Catalonia from breaking away.
***
Lombardy, which includes Milan, and Veneto, which houses the tourist powerhouse Venice, are home to around a quarter of Italy’s population and account for 30% of Italy’s economy, the Eurozone’s third largest. Unlike Catalonia, the consultative votes are only the beginning of a process which could over time lead to powers being devolved from Rome. Also unlike Catalonia, which held an independence referendum on Oct. 1 despite it being ruled unconstitutional, the Italian referendums are within the law. Like Catalonia, however, Lombardy and Veneto complain they pay far more in taxes than they receive.

This post was published at Zero Hedge on Oct 22, 2017.

Examining The Most Hated Bull Market Ever

From last week:
‘The seemingly ‘impervious’ advance since the election last November, has had an interesting ‘stair step’ pattern with each advance commencing from a breakout of a several month 3%-ish consolidation range. Furthermore, each advance then pushes to a 3-standard deviation extreme, black circles, of the 50-dma before beginning the next consolidation trading range.’
***
The last leg higher has been directly responsive to the ramp up in the political ‘marketing surge’ surrounding ‘tax cuts and tax reform.’ With the House having already passed their respective budget resolutions, late Thursday, the Senate passed a budget blueprint for the next fiscal year. With both of the ‘budget resolutions’ in place, it was seen as clearing a hurdle to the goal of overhauling the tax code.

This post was published at Zero Hedge on Oct 22, 2017.