Speculators Place Biggest Bet EVER Against US Treasury 5Y Note Futures (It Will Be Powell As Fed Chair and 83.6% Prob Of A Dec Rate Hike)

(Bloomberg) – Hedge funds and other large speculators extended their net-short positions on five-year U. S. Treasury note futures to a record last week, data from the Commodity Futures Trading Commission through Oct. 17 show. They’re making the bets as speculation ramps up over who will be nominated as the next Federal Reserve chief and as odds increase that the central bank will raise interest rates again in December. The five-year note yield ended last week at 2.02 percent, the highest since March.

This post was published at Wall Street Examiner on October 23, 2017.

BofA: “The Market Implies There Is No Way A Shock Can Happen”

For today’s moment of volatility zen, we go to BofA’s Nikolay Angeloff who drew the short straw to be the (un)lucky pundit whose comments on record complacency, low volatility, etc publicized.
Angeloff starts with pointing out what we noted over the weekend , namely that we have now recorded 334 days without a 5% or more pullback (and 335 after today’s close), the fourth longest period on record since 1928.

In another market distortion, whether due to ETFs or central banks, equity vol has fallen so far in October, historically the most volatile month of the year, and if it continues at this pace, it will be the least volatile October in history…

This post was published at Zero Hedge on Oct 24, 2017.

Einhorn Vents his Frustrations about the Crazy Markets

Why trying to bet against this madness is a widow-maker trade. Logic has nothing to do with it.
Investors who’ve approached this stock market and its ludicrous valuations over the past few years from a point of view of fundamentals and ‘value’ – thus, often on the side of short-selling those stocks – have gotten clobbered, or were at least left in the dust by buy-buy-buy fundamentals-don’t-matter automatons.
This has become an exercise in frustration-management for many – including, apparently, David Einhorn, founder and president of Greenlight Capital, a $7 billion hedge fund that became successful by searching for overvalued and undervalued companies and betting one way or the other. This strategy has hit the rocks in recent years. So far this year, the fund is up 3.3% while the S&P 500 is up 14%.
In a letter to Greenlight’s clients, reported by Business Insider, he unloaded his frustrations about this crazy market.

This post was published at Wolf Street on Oct 24, 2017.

Passive Should Never Laugh At Active

I have been meaning to write this post for quite some time. As an ex-ETF trader, I have watched with bemusement as investors have both embraced and shuddered at the wide adoption of ETFs. But most pundits are missing the larger picture. ETFs are just a symptom of the bigger phenomenon. The true battle lies in the passive versus active debate.
Let me get this out of the way right off the bat. I have no dog in this hunt. I see both the benefits and the negatives to each side. Yet as a trader, I definitely have a view on which end of the boat is leaning lopsided right now.
Lessons from triple witching
But first, let me tell you a story. I was lucky enough to have a ringside seat for the coming of age of equity index derivatives. Sure they existed before my time, but the true widespread global adoption occurred in the 1990’s. In Canada, when I first sat down on the institutional desk, clients had little interest in what the young kids with their fancy SUN workstations were doing. Yet as money flowed into the derivatives complex, what had first just been a strange little science experiment, suddenly started moving the underlying market. Our index arbitrage flows became significant, and regular plain vanilla clients began took notice.
Along with the increased index arbitrage flows came this bizarre triple witching expiry. When open interest was small, these expiries were minor. But as the usage of derivatives expanded, one morning we experienced an imbalance that was uncomfortably large. Being index traders, we instantly understood what had happened. Someone was letting a whole bunch of exposure expire into the open, and therefore there was a very large, and very real, index sell basket to execute at the open.
Many institutional clients were not used to trading on the open. Most often, they let retail orders and market makers set the price, and then after it settled down, they would give us their orders.
Given that institutional clients were not interested in trading at the open, there was little liquidity for the large expiring sell basket. Sensing an opportunity, we bid spec for a decent portion of the sell imbalance, hoping to get a good fill which we could then offset in the futures market. The trouble was, not nearly enough market participants joined us, and the market gapped down huge. It was a terrific trade as the opening settlement was many hundreds of basis points below the previous close.

This post was published at Zero Hedge on Oct 24, 2017.

This Bubble Gets Its ‘Alternative Paradigm

Towards the end of financial bubbles, asset prices behave in ways that can’t be explained with rational/historical metrics. So new ones are invented to make sense of things. In the 1990s tech stock bubble, earnings were ‘optional’ and ‘eyeballs’ – that is, the number of visitors to a dot-com’s website – were what determined value. In the 2000s housing bubble, home prices would always rise, which justified pretty much any selling price and asset backed security structure.
Now David Einhorn, a high-profile (and highly frustrated) hedge fund manager, has offered an explanation for today’s bubble:
David Einhorn: ‘We wonder if the market has adopted an alternative paradigm’
(Yahoo! Finance) – Hedge fund billionaire David Einhorn is struggling to make sense of the stock market. In his latest investor letter, the founder of Greenlight Capital raised an interesting question about valuation.
‘Given the performance of certain stocks, we wonder if the market has adopted an alternative paradigm for calculating equity value,’ Einhorn wrote in a letter to investors dated October 24. ‘What if equity value has nothing to do with current or future profits and instead is derived from a company’s ability to be disruptive, to provide social change, or to advance new beneficial technologies, even when doing so results in current and future economic loss?’
Einhorn, who identifies as a value investor, said the market ‘remains very challenging’ for folks like himself as growth stocks with speculative earnings prospects outperform value stocks.

This post was published at DollarCollapse on OCTOBER 24, 2017.

OCT 24/GOLD AND SILVER WITHSTAND ANOTHER ATTACK/GOLD DOWN $2.55 AND SILVER IS DOWN 10 CENTS/FINALLY HOUSE COMMITTEES LOOKING INTO CLINTON FOUNDATION/URANIUM ONE SCANDAL/HOUSE COMMITTEE NOW LOOKIN…

GOLD: $1277.10 DOWN $2.55
Silver: $16.95 DOWN 10 cents
Closing access prices:
Gold $1277.00
silver: $16.95
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: $1290.44 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1281.80
PREMIUM FIRST FIX: $8.64(premiums getting larger)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1291.54
NY GOLD PRICE AT THE EXACT SAME TIME: $1281.30
Premium of Shanghai 2nd fix/NY:$10.24 PREMIUMS GETTING LARGER)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est $1278.30
NY PRICING AT THE EXACT SAME TIME: $1277.90
LONDON SECOND GOLD FIX 10 AM: $1276.45
NY PRICING AT THE EXACT SAME TIME. 1276.90
For comex gold:
OCTOBER/
NOTICES FILINGS TODAY FOR OCT CONTRACT MONTH: 562 NOTICE(S) FOR 56,200 OZ.
TOTAL NOTICES SO FAR: 3005 FOR 300,500 OZ (9.346TONNES)
For silver:
OCTOBER
167 NOTICES FILED TODAY FOR
835,000 OZ/
Total number of notices filed so far this month: 965 for 4,825,000 oz
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Bitcoin: $5693 bid /$5713 offer DOWN $166.00 (MORNING)
BITCOIN CLOSING;$5665 BID:5685. OFFER DOWN $191.00

This post was published at Harvey Organ Blog on October 24, 2017.

Kotlikoff: America in Worse Financial Shape than Russia or China

America’s 2017 fiscal gap will come in near $6 trillion, nine times higher than the $666 billion deficit announced by the US Department of the Treasury week, says Laurence Kotlikoff, an economics professor at Boston University.
‘Our country is broke,’ says Kotlikoff, who estimates total US government debts at more than $200 trillion, when unfunded liabilities are included. ‘We are in worse shape than Russia, China or any developed nation.’
Worse, says Kotlikoff, who has testified before Congress, government officials are well-aware that many of America’s debts and accruing liabilities are being written off the books.
However, for the most part, they are keeping their mouths shut.
A two-tier reporting system
The upshot is a de facto ‘two-tier’ financial reporting system, in which politicians and insiders have access to key data buried in footnotes about unfunded liabilities, which indicate that there are huge problems in the economy.
The public, on the other hand, in slews of Presidential and Congressional Speeches and publications, is led to believe that while things are tough, overall everything is OK.
According to Kotlikoff, a long-time activist for fiscal rectitude, the problem stems in large part from the fact that the US government has been spending almost all of Americans’ approximately $795 billion in social security payroll taxes to pay current bills, rather than investing them to fund retirees’ benefits.
The upshot is that on a net basis, the US government has no money to pay all the benefits that have been promised. Politicians know that defaults will occur, they just haven’t figured out how to finesse this.

This post was published at GoldSeek on 24 October 2017.

These Five Cognitive Biases Hurt Investors The Most

There is no shortage of cognitive biases out there that can trip up our brains.
By the last count, Visual Capitalist’s Jeff Desjardins notes there are 188 types of these fallible mental shortcuts in existence, and they constantly impede our ability to make the best decisions about our careers, our relationships, and for building wealth over time.
BIASES THAT PLAGUE INVESTORS
In today’s infographic from StocksToTrade, we dive deeper into five of these cognitive biases – specifically the ones that really seem to throw investors and traders for a loop.
Next time you are about to make a major investing decision, make sure you double-check this list!

This post was published at Zero Hedge on Oct 24, 2017.

Bill Blain: “Some Of The Ongoing Market Evolution Really Scares Me”

‘Rate yourself and rake yourself, take all the courage you have left, wasted on fixing all the problems that you made in your own head.’
All the usual uncertainty, but are global stocks really so highly overvalued relative to GDP?
I’ve just spent the last week in the US, and it’s been a fascinating experience talking with clients and colleagues in the Big Apple. The key takeaway is I’m going to have to spend less time in the office and more time on the road listening (note – key word: LISTENING) to clients. There is a danger sitting comfortably here in my Canary Wharf eyrie means I’m missing much of the good and bad market evolution that’s going on.
I’ve come back with a whole host of new ideas, opportunities and contacts, but also a whole Pandora’s box of new things to worry about…
Some of the ongoing market evolution really scares me. Like the significance of the fragmentation of markets into smaller and smaller liquidity pools. Combined with trade-frustrating regulation, it’s just downright dangerous. But, that’s why we have market crisis – nothing a good punch in the nose for regulators to learn just how absolutely ferking wrong they have been. Problem is, much of danger lies so far below the visible surface, I’m not convinced markets really understand how potentially one-way current stock trading has become.
It’s not the regulators fault. They are just trying to make a safer world, based on what they know. Which sadly means cleaning up the last crisis – and fighting the next war with the weapons of the last one is never conducive to victory.

This post was published at Zero Hedge on Oct 24, 2017.

Ad Giant Interpublic Tumbles, Drags Sector Lower After Warning About State Of Ad Industry

Amid the Dow Jones making fresh all time highs on the back of solid earnings by key Dow components, a largely unreported adverse development for the critical – for tech companies – ad sector has gone largely unnoticed this morning, when ad giant Interpublic reported a miss on 3Q adjusted EPS and revenue estimates, with CEO Michael Roth warning that “organic revenue was negatively impacted by broader trends that are being felt throughout much of the industry.”
Interpublic now sees FY organic revenue growth of 1%-2%, below Jefferies’ estimate of 2.1%.
IPG shares fell as much as 7.0, sliding to the lowest since October 2015, and dragging key peer names lower with Omincom shares down 2%, while WPP slides as much as 2.9% and Publicis down as much as 1.8%. IPG’s commentary on ominous advertising industry trends, excerpted below, comes on the heels of disappointing results from Publicis last week.
Here is the concerning language in the press release about the deteriorating state of the ad industry, which in recent months has gathered significant attention especially when it comes to online advertising, as one after another client has warned they may pull slash their online ad spending budgets on disappointing returns:

This post was published at Zero Hedge on Oct 24, 2017.

2017 – The Year Without Corrections – Echoes of 1995

How rare is a year without corrections of more than 3%? 1995 was the last period of incredibly persistent optimism without a hiccup in price to afford a paltry decline beyond 3%. Most consider a pullback of 5 to 10% to be modest and a normal expectation at least once a year. A 3% drop is hardly more than a blink of an eye in a bull market. For the past 12 months, we have not teased the bare minimum 5% drop in the stock market to give investors a chance to climb aboard this runaway train powered by earnings and increasing economic optimism.
No correction for 12 straight months is impressive, but in 1995 stocks ran higher for 15 months without exceeding a 3% correction before scaring traders with a 3-week plunge of over 11% intraday. A similar replay of 1995 would keep the buying frenzy going until about January 2018 before a ‘real’ correction begins.

This post was published at FinancialSense on 10/24/2017.

Stocks and Precious Metals Charts – As Greed Turns Slowly to Fear

‘Every single empire in its official discourse has said that it is not like all the others, that its circumstances are special, that it has a mission to enlighten, civilize, bring order and democracy, and that it uses force only as a last resort. And, sadder still, there always is a chorus of willing intellectuals to say calming words about benign or altruistic empires, as if one shouldn’t trust the evidence of one’s eyes watching the destruction and the misery and death brought by the latest mission civilisatrice .’
Edward Said
“The wealth of another region excites their greed; and if it is weak, their lust for power as well. Nothing from the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the rich. Robbery, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace.”
Tacitus

This post was published at Jesses Crossroads Cafe on 24 OCTOBER 2017.

Are Markets Being Driven by Fun-Durr-Mentals?

This past weekend, I discussed how the current rally since the election has been based on ‘hopes’ for tax cuts and tax reforms as there was little evidence currently to suggest it was based on fundamental underpinnings. To wit:
‘Do not be mistaken, this ‘rally’ IS all about tax cuts. Despite many who are suggesting this has been a ‘rational rise’ due to strong earnings growth, that is simply not the case as shown below. (I only use ‘reported earnings’ which includes all the ‘bad stuff.’ Any analysis using ‘operating earnings’ is misleading.)’
‘Since 2014, the stock market has risen (capital appreciation only) by 35% while reported earnings growth has risen by a whopping 2%. A 2% growth in earnings over the last 3-years hardly justifies a 33% premium over earnings.’
The chart below expands that analysis to include four measures combined: Economic growth, Top-line Sales Growth, Reported Earnings, and Corporate Profits After Tax. While quarterly data is not yet available for the 3rd quarter, officially, what is shown is the market has grown substantially faster than all other measures. Since 2014, the economy has only grown by a little less than 9%, top-line revenues by just 3% along with corporate profits after tax, and reported earnings by just 2%. All of that while asset prices have grown by 29% through Q2.

This post was published at Zero Hedge on Oct 24, 2017.

Silver on Sale! Take Advantage of the Buying Opportunity

The price of silver is at extremely low levels compared to gold. That makes this a perfect time to invest in the white metal.
Indians seem to recognize this buying opportunity. According to the Economic Times, silver demand was up 15% during this Dhanteras and Diwali festival season on increased purchases of coins, idols, and silverware. Analysts attributed the surge in silver buying to lack of consumer confidence in the economy and silver’s relatively low price.
SchiffGold has the perfect way for you to take advantage of this silver buying opportunity. We have obtained a limited supply of 2013 and 2014 1-ounce Silver Britannia bullion coins minted by the British Royal Mint. These beautiful coins are ready to ship right now for as little as $1.49 over spot per coin.
This is a bullion coin at better than bullion coin price but has the upside of potentially garnering collectible value in the future. Because they have a mint privy mark on edge of the coin the 2013 has a snake on the edge and the 2014 year has a horse on the edge.

This post was published at Schiffgold on OCTOBER 24, 2017.

Federal Bureaucrats Have Millions Of Dollars Worth Of Guns And Ammo, Whom Are They Planning To Battle?

During the last two years of the Obama administration (Fiscal Year 2015 – 2016), law enforcement agencies such as the Department of Homeland Security spent $138 million on new guns and ammunition. But what’s strange, is that $20 million was spent on guns and ammunition for federal bureaucrats.
Four notable examples of paper pushers and bureaucrats arming up, according toForbes, are as follows:
1) The 2,300 Special Agents at the Internal Revenue Service (IRS) are now carrying AR-15’s, P90 tactical rifles, and other heavy weaponry. Recently, the IRS armed up with $1.2 million in new ammunition. This was in addition to the $11 million procurement of guns, ammunition, and military-style equipment procured between 2006-2014. What could go wrong when tax collectors have guns?
2) The Small Business Administration (SBA) spent tens of thousands of taxpayer dollars to load its gun locker with Glocks last year. The SBA wasn’t alone in the purchase of guns either. The U. S. Fish and Wildlife Service modified their Glocks with silencers. And recently a vote on the bill to allow civilians the freedom to hunt with a silencer was ‘indefinitely postponed.’

This post was published at shtfplan on October 24th, 2017.

Caterpillar Soars 7% To All Time High After Smashing Earnings, Boosting Guidance

Dow futures are higher by over 100 points following a spate of big beats among Dow components including 3M, GM, UTX, but none more so than Caterpillar which just announced blockbuster Q3 EPS of $1.95, nearly 50% higher than the $1.22 consensus estimate (and above the highest forecast), on revenue of $11.4 billion, which also was well above the $10.73 billion expected, which also was at the top end of the range.
More importantly, CAT also boosted its earnings and revenue forecast for the full year: the company now sees FY revenue $44 billion, up from a previous range of $42 billion to $44 billion, and 2% above the consensus estimate of $43.13 billion. It also expects this to translate into profit per share of about $4.60, or adjusted profit per share of about $6.25, far above the previous outlook for 2017 which was about $3.50 per share and adjusted profit per share of about $5.00
The company reported that Machinery, Energy & Transportation (ME&T) operating cash flow was about $600 million during the third quarter, and ME&T’s debt-to-capital ratio improved to 36.1 percent, down from 38.6% at the end of the second quarter. The company ended the third quarter of 2017 with an enterprise cash balance of $9.6 billion.
“Higher sales volume and our team’s focus on cost discipline resulted in improved profit margins across our three primary segments,” said Caterpillar CEO Jim Umpleby.

This post was published at Zero Hedge on Oct 24, 2017.

Hunger Game: Venezuela’s Behind on Its Debt and Facing Two Huge Payments

(Bloomberg) Ever since the price of oil collapsed in mid-2014, there’s been a broad consensus among the bond-market crowd that Venezuela was going to default. Not immediately, they said, but at some point down the road.
Three years on, that time may have arrived. On Friday, the government-run oil giant PDVSA owes $985 million. Six days later, it’s on the hook for another $1.2 billion. Not only is that a daunting sum for a country whose foreign-currencyreserves recently dipped below $10 billion for the first time in 15 years, but it figures to be a logistical nightmare too.
Increasingly isolated by U. S. financial sanctions that have spooked banks and other intermediaries in the bond payment chain, Venezuela has alreadyfallen behind on interest payments worth $350 million that were due earlier this month. Those payments had a grace period – a buffer of sorts that gives the country an additional 30 days to work out the technical glitches and deliver the cash. The principal portions of the payments owed over the next two weeks contain no such language. Miss the due date and bondholders can cry default. Prices on the notes due Nov. 2 acutely reflect those risks: They’re at just 92 cents on the dollar.

This post was published at Wall Street Examiner on October 23, 2017.

1987 Stock Market Crash Anniversary Predictions; Rubbish as usual

Stubbornness does have its helpful features. You always know what you’re going to be thinking tomorrow.
Glen Beaman
Expert after expert is busy proclaiming that the world is about to come to grinding halt again. They never seem to let up on pushing this sewage onto the unsuspecting masses. This is aclear example of insanity in action; mouthing the same nonsense over and over again with the desperate hope that this time the outcome will be different. The outcome will not be different this time, at least not yet. These guys should focus on writing fiction for reality seems to elude them completely. For years we have stated (and rightly so) that until the sentiment changes, this market will continue to soar higher and higher.
Here is a small sample of the flood of articles that were pushed out this month. If one simply glances through them, one would almost be compelled to think that the writers shared the same notes. There is almost no originality in these articles. The theme is the same, justbecause it’s October the focus is on the disaster aspect of the 1987 crash. Almost no one mentions that it proved to be a monumental buying opportunity. The focus is oh the financial world came to a grinding halt. Only it did not, the only that came to a halt was the rubbish the predecessors of today’s experts were uttering back in 1987. This reinforces the view that most financial writers have chosen the wrong profession One word sums all this nonsense ‘Rubbish.’

This post was published at GoldSeek on 24 October 2017.

UBS Slams “#FakeEconomics” As PMI Surveys Suggest Economy At 9-Month Highs

Preliminary prints for October Services and Manufacturing in America beat expectations and rose to 2017 highs pushing the composite index to its highest since January.
Commenting on the flash PMI data, Tim Moore, Associate Director at IHS Markit said:
‘The US economy seems to have made a strong start to the final quarter of 2017. Resilient service sector growth and an encouraging rebound in manufacturing production combined to generate one of the sharpest rises in private sector output for twoand-a-half years during October.

This post was published at Zero Hedge on Oct 24, 2017.