Trade vs Growth or Trade & Growth?

Much has been written down recently about the dramatic slowdown in growth in global trade flows. For example, after rebounding post-Global Financial Crisis (global trade volumes fell 10.46% in 2009) in 2010-2011 (rising 12.52% and 7.1% respectively), trade volumes growth slowed to below 4% per annum in 2012-2016, with 2017 now projected to be the first year of above 4% growth in trade (4.16%).
This has prompted many analysts and academics to define the current recovery as being, effectively, trade-less growth (see, for example This is plainly false. In fact, growth in global trade volumes has outpaced growth in real GDP (based on market exchange rates) in every year since 2010, except for 2016. As the chart below clearly shows, the difference between the rate of trade volumes growth and the rate of real GDP growth remained positive in average terms:

This post was published at Wall Street Examiner on October 28, 2017.

A Technical History Of Market Melt-Ups

Melt-Up, FOMO, and Other Climaxes – A Technical History of Good Times
Bottom Line:
Many strategists are calling for a year-end melt-up: I believe it already happened There have been 76 melt-ups since 1900: the current one is already the second longest on record Stocks have achieved a Sharpe ratio of 4.5 this past year – better than 99.7% of the times since 1900 There is little sidelines cash and leverage levels are high – A re-allocation from bonds into equities could push the market higher I’d rather bet on higher rates than on a continuation of this over-extended bull run Warren Buffett famously joked that ‘bull markets are like sex. It feels best just before it ends’. Based on my sometimes-unlucky experience of sex and bull markets, I would add another commonality: the climax is sometimes reached before every participant realized that the party had even started.

This post was published at Zero Hedge on Oct 29, 2017.

It’s The United States of SCAetna Too

I don’t know why I bother, to tell you the truth. There is simply zero outrage over what goes on in corporate America these days, no matter the facts.
And let’s remind of those facts, including that every American family has a middle-class house payment stolen from them every single month.
I just got my “Obamacare” renewal “offer.” The gross increase for their generous offer is +24%. The “net” increase cannot be determined because they can’t yet tell me what the APTC will be. If it was to be the same the “net” increase would be 19,000%.
No, I didn’t mis-type that.
I think it’s rather obvious I won’t be “accepting” their “generous” offer. In a few days I will have the “new” APTC amount available, which I remind you is only available to me because I have decided that I’m not going to work any more for any material amount of money, will live on a much small income level, and this of course means that I don’t buy all the fancy stuff (which by the way included quite a few fancy things over the years in both goods and services) that I used to buy.
Yes, I take the APTC from all of you who still go to work every day to make as much money as you can and thus pay all those taxes. It’s several thousand dollars a year and I make no apology for it. In fact I put my middle finger up toward you daily for you are the ones who could choose to raise hell and withdraw your consent (exactly as I did), and if you did in concert it would force peaceful political change and an end to these scams. Since you choose not to I will instead take the money that you fund the government with and smile in wry bemusement as you mewl out yet another repetition of “Please sir, just the tip this time…..” toward Mordor on the Potomac, smug in the knowledge that just as you didn’t get “just the tip” last time you won’t this time either.

This post was published at Market-Ticker on 2017-10-29.

Hysteria Used to Censor Progressive and Counter-Corporate Messaging

“The ruling elites, who grasp that the reigning ideology of global corporate capitalism and imperial expansion no longer has moral or intellectual credibility, have mounted a campaign to shut down the platforms given to their critics. The attacks within this campaign include blacklisting, censorship and slandering dissidents as foreign agents for Russia and purveyors of ‘fake news.’
No dominant class can long retain control when the credibility of the ideas that justify its existence evaporates. It is forced, at that point, to resort to crude forms of coercion, intimidation and censorship. This ideological collapse in the United States has transformed those of us who attack the corporate state into a potent threat, not because we reach large numbers of people, and certainly not because we spread Russian propaganda, but because the elites no longer have a plausible counterargument.”
Chris Hedges, Silencing Dissent
This is the logical progression of the credibility trap.

This post was published at Jesses Crossroads Cafe on October 28, 2017.

“Both Cannot Be Right” – The Yield Curve’s Ominous Message: Something Is Very Broken

Two weeks ago, Deutsche Bank’s credit analyst Aleksandar Kocic explained that with the yield curve becoming increasingly flatter, the Fed has roughly two more rate hikes left before it loses control as the curve first flattens completely and eventually inverts, a precursor to virtually every historical recession. As the DB strategist explained, given where long rates are the “Fed appears overly hawkish – it has only two more hikes to go and, for volatility and risk premia to reprice higher, the gap has to widen. As it appears unlikely that the Fed will be cutting rates any time soon, the gap could widen only if the Long rates sell off.”
The problem – as observed here virtually every day for the past year – is that long rates have refused to sell off, and while they did move modestly higher last week in the US, other developed nations have seen even more flattening to compensate for the move in the US.

This post was published at Zero Hedge on Oct 29, 2017.

Technical Scoop – Weekend Update Oct 29

Can stock markets fly? Or is it really different this time? As we outlined last week, in celebration of the 30th anniversary of the 1987 October stock market crash, stock markets, it appears, can fly or soar as you may wish to call it. Just when you think the stock market couldn’t go any higher it does. Last week we noted the Dow Jones Industrials (DJI) had soared 30% since the US election on November 4, 2016. When compared with other stock market blow-offs such as the ‘Roaring Twenties,’ the dot.com bubble of the 1990s, or the Tokyo Nikkei Dow (TKN) of the 1980s it was a rather puny performance, so far.
A more appropriate start point might actually be the February 11, 2016 low. That low came following six months of stock market gyrations mostly to the downside because of the ending of quantitative easing (QE). The DJI only fell about 15% during that time but it was the steepest correction since the 2011 EU/Greece crisis and only the second time the DJI fell more than 10% since the financial crisis of 2007 – 2009. The DJI fell 6% during the Brexit mini-panic and was down just over 4% into the November election. Pullbacks since then have been even shallower. So, given no correction over 10% maybe we should be looking at this blow-off as having started with the February 2016 low.
Since then the DJI is up just under 52% over a period of 624 days. We noted last week the average of six blow-offs we examined had seen gains of 176% over a period of 658 days. Based on this we are doing well time-wise but not so well on the gains. The longest period seen for a blow-off was about 1,050 days. There is no denying the stock market could rise further and longer than many expect.

This post was published at GoldSeek on 29 October 2017.

Trump Confirms “All JFK Files Are Released” After Latest Clash With Spy Agencies

Update: Following Friday’s disappointing release of some, but not all, remaining files related to the death of President John F. Kennedy, President Trump just confirmed, via tweet, that the rest of the files are released, well ahead of schedule…
JFK Files are released, long ahead of schedule!
— Donald J. Trump (@realDonaldTrump) October 28, 2017

Of course, given that this is the government – and the government does not work weekends – the files are unlikely to be released on to the official National Archives site until Monday.
This appears to be a victory for Trump in his never-ending battle with the intelligence agencies.
* * *
As we detailed earlier, The Deep States’ ‘war’ with President Trump may sink from the headlines every so often, but there is little doubt that it continues to bubble away, battle after battle. This week’s delayed, reduced… and now soon-to-be-complete release of the rest of the previously classified JKF files is yet another clash with the spy agencies… and this time President Trump may have won…

This post was published at Zero Hedge on Oct 28, 2017.

Quantitative Easing Lives on in the EU

Central bank quantitative easing is a little like a zombie. It dies – but it never really dies.
There’s been a lot of focus on the Federal Reserve raising interest rates and unwinding its balance sheet. Sometimes it’s easy to forget the Fed isn’t the only game in town. While most people consider QE dead and buried in the US, it remains alive and kicking in other parts of the world.
Yesterday, the European Central Bank (ECB) announced it would extend its bond-buying program deep into 2018, continuing the flow of easy money into the European Union. ECB President Mario Draghi said the central bank would cut its bond purchases in half beginning in January, a faint hint at eventual normalization. But the central bank president left the door open to backtracking.
Draghi said the EU’s economy is improving, but still needs support.
Domestic price pressures are still muted overall and the economic outlook and the path of inflation remain conditional on continued support from monetary policy. Therefore, an ample degree of monetary stimulus remains necessary.’

This post was published at Schiffgold on OCTOBER 27, 2017.

Trump Will Own The Next Fed But “All Their Models Are In Ruins”

President Trump is expected to nominate the next Federal Reserve chair within a matter of days.
As I’ve explained before, Donald Trump has the opportunity to appoint a higher percentage of the Board of Governors of the Federal Reserve system at one time than any president since Woodrow Wilson.
President Wilson signed the Federal Reserve Act during the creation of the Fed in 1913 when they had a vacant board. At that time, the law said the secretary of the Treasury and the comptroller of the currency were automatically on the Fed’s board of governors. But besides that, President Wilson selected all of the other participating members.
Due to vacancies he inherited and key resignations, Trump now has the opportunity to fill more seats on the Fed’s Board of Governors than any president since then.
That’s pretty amazing when you think about it.
To review, the Federal Reserve’s Board of Governors is made up of seven appointees. That means that they can make a majority decision with four votes. If you’re reading about the Fed, you might also see reference to ‘regional reserve bank presidents.’ These are roles within the Federal Reserve System, but the real power is found on seven-member Board of Governors.
Trump will own the Fed.
Meaning, whatever the president wants monetary policy to be, he’ll get. In other words, Donald Trump will be able to shape the Fed’s majority. But the tricky part is figuring out how he plans to shape it…

This post was published at Zero Hedge on Oct 28, 2017.

Vertical Phase Update

We are now in the very early stage of the stock market’s vertical phase. Price has recently broken out above the bull market channel and is beginning to move aggressively higher. It is unlikely we will see a top in this vertical phase until late next spring. This video explores the dynamics that will propel the stock markets to heights most cannot imagine.


This post was published at GoldSeek on 29 October 2017.

US Homes Have Never Been More Unaffordable

Just under a year ago, US home prices finally surpassed their prior all time highs, one decade after the 2006 bubble…

… and haven’t looked back since. Which, all else equal, would be great news for America, where the bulk of middle-class wealth is not in the stock market contrary to conventional wisdom, but in its biggest, and most illiquid asset-cum-investment: one’s home.
There is just one problem: while house prices are once again hitting new all time highs every month, household incomes have failed to keep up; in fact, as the Political Calculations blog shows, in the past two years there has been a distinct trend in home affordability, or lack thereof.
As the first chart below shows, starting in September 2015, the TTM average median new home sale price in the U. S. has been rising at an average rate of $906 per month.
READMORE

This post was published at Zero Hedge on Oct 28, 2017.

Oil For Gold – Real Or Imagined?

By having control of the physical market for gold, China can threaten to use it to destabilize the dollar, without destabilizing the yuan. As such, it is potentially devastating, and used carelessly could trigger an economic collapse in Western capital markets, wreaking financial and economic havoc in America and other advanced nations. China will never be wholly independent from trade with these nations, and severe financial and economic damage to the advanced economies will rebound upon her to some extent. For this reason, she has so far held off using gold as an economic and financial weapon, while she continues to insulate herself from periodic crises in Western economies. – Alasdair Macleod (Oil For Gold)
In response to questions about when China would finally cast aside the dollar and run the price of gold up, I’ve always replied that China would be shooting itself in the foot if it tried to replace the dollar too quickly. Don’t forget, China holds about $1.2 trillion in the form of Treasuries. Note: this ratio does not include the market value of its gold holdings, the actual amount of which is unknown outside of a small circle of Chinese officials.
When the idea of a gold-backed yuan-denominated oil futures contract surfaced, it became en vogue for those unable to analyze their way out of a paper bag to issue commentary refuting the idea. For some, if an event has not already occurred, they are unable to ‘see’ it.

This post was published at Investment Research Dynamics on October 29, 2017.

Financial Disaster and The Fed Chair

From Peter Dickmeyer:
‘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.
However even in the best of cases, Kotlikoff is correct on one crucial point: America is unable to meet its obligations as they become due. That is the definition of bankruptcy.
In a sense, it should hardly come as a surprise that politicians are hiding this fact.’

This post was published at Deviant Investor on October 28, 2017.

Trump To Release “All JFK Files” After Latest Clash With Spy Agencies

Update: Following Friday’s disappointing release of some, but not all, remaining files related to the death of President John F. Kennedy, President Trump just confirmed, via tweet, that the rest of the files are released, well ahead of schedule…
JFK Files are released, long ahead of schedule!
— Donald J. Trump (@realDonaldTrump) October 28, 2017

Of course, given that this is the government – and the government does not work weekends – the files are unlikely to be released on to the official National Archives site until Monday.
This appears to be a victory for Trump in his never-ending battle with the intelligence agencies.
* * *
As we detailed earlier, The Deep States’ ‘war’ with President Trump may sink from the headlines every so often, but there is little doubt that it continues to bubble away, battle after battle. This week’s delayed, reduced… and now soon-to-be-complete release of the rest of the previously classified JKF files is yet another clash with the spy agencies… and this time President Trump may have won…

This post was published at Zero Hedge on Oct 28, 2017.

Mnuchin Says White House Is “Focused On Finding A Successor To Yellen”

President Donald Trump is a showman whose love for spectacle has transformed even mundane personnel decisions into elaborate pageants – as the New York Times pointed out last night.
And of all the turmoil in the administration’s process of hiring, and firing, employees, nothing has quite underscored this fact more clearly than Trump’s quest to select Fed Chairwoman Janet Yellen’s successor before he term ends in February.
In the race to rack up the largest number of ‘scoops’ during the meandering ‘will-he-or-won’t he’ process, which has created a seemingly endless stream of stories about whom Trump might be leaning toward that day. In recent weeks, Politico and Bloomberg – or rather, their sources – have begun including a telling caveat: Until the final decision has been made, everything we’ve reported is subject to change.
Which brings us to the latest news. Reuters and CBS both reported late this week that Trump has ruled out asking Yellen to stay on for another term. Despite ‘collaborating’ to push stocks to record highs, Yellen is a vestige of the Obama-era – and that alone probably sealed her fate, despite reportedly meeting with both Trump and his daughter Ivanka.

This post was published at Zero Hedge on Oct 28, 2017.

Natixis Warns, US Economy Will “Slow Down Substantially” In 2018

As US GDP growth rises at 3% or more for the second quarter in a row, French investment bank Natixis urges investors to
Patrick Artus, chief economist at Natixis, warned that the current level of corporate investment is “abnormally high” and suggested a downward correction.
“The US economy will in all likelihood slow down substantially: there is a limit to the rise in the participation rate and the employment rate; real wages are slowing down,“ prepare for the U. S. economy to “slow down substantially” as early as 2018.

This post was published at Zero Hedge on Oct 28, 2017.