Yellen’s Poor Legacy – and Powell’s Challenges

The appointment of Jerome Powell as the new chair of the Federal Reserve must be interpreted by the markets as a sign of continuity. He is not the hawk that many market participants feared and neither holds a dovish and dangerous stance.
Yellen’s mandate has been widely criticized by many investors and economists. She inherited an economy where unemployment was at the Fed’s target levels, inflation was picking up and growth was strengthening, and yet she unnecessarily delayed raising rates and reducing the balance sheet for too long. The president’s confidence, despite nice words, was broken for months. The Trump team criticized the Federal Reserve for delaying the announced rate hikes ahead of the elections, but criticism intensified when Yellen raised cautionary messages about the economy after the nomination. Considered an ‘acknowledged dove’, she was criticized for delaying much-needed rate hikes, despite markets at all-time highs, yields at multi-decade lows, inflation rising and unemployment at 5%, and some hinted this was an ‘order’ from the Obama administration. Now that we see that the latest figures show a growth of 3% of the US economy, the critical voices have increased, accusing the now ex-president of the Federal Reserve of being unnecessarily dovish, ignoring the mounting risks in financial markets and not getting the diagnosis right.

This post was published at Ludwig von Mises Institute on Nov 3, 2017.

Kaepernick Seeks NFL Owners’ Cell Phone Records, Depositions To Prove Collusion

In a singificant escalation in the ongoing NFL feud, which one month ago was pushed into overdrive following Trump’s slamming of “anthem kneelers”, and which now threatens to set players against team owners, Dallas Cowboys owner Jerry Jones, New England Patriots owner Robert Kraft and Houston Texans owner Bob McNair will be deposed and asked to turn over all cellphone records and emails in relation to the Colin Kaepernick collusion case against the NFL, ESPN’s Adam Schefter reports quoting a league source.
Other owners as well as team and league officials also will be deposed in relation to the case, ESPN reports with ABC News adding that other owners to be deposed include the Seattle Seahawks’ Paul Allen and the San Francisco 49ers’ Jed York. The owners were reportedly selected for depositions based on their public statements about either Kaepernick or sideline protests during the national anthem.
As reported last month, Kaepernick’s attorney, Mark Geragos, said that the free-agent quarterback had filed a grievance under the collective bargaining agreement alleging collusion against signing him to an NFL contract.
The filing, which demands an arbitration hearing on the matter, says the NFL and its owners “have colluded to deprive Mr. Kaepernick of employment rights in retaliation for Mr. Kaepernick’s leadership and advocacy for equality and social justice and his bringing awareness to peculiar institutions still undermining racial equality in the United States.” After filing the grievance, Kaepernick tweeted that he did so “only after pursuing every possible avenue with all NFL teams and their executives.” In other words, Kapernick is certain that it is not only someone else’s fault he has been found not worth enough to be drafted by a team, but there is a grand conspiracy against him by evil club owners, meant to keep his great “talent” off the field just to spite him in retaliation for his “resistance” ways.

This post was published at Zero Hedge on Nov 3, 2017.

Where The October Jobs Were: Record Waiters And Bartenders

Following last month’s sharply upward revised jobs report, whose initial negative print of -33,000 was since revised to a positive 18K, there was a sharp jump in October jobs, which while failing to meet consensus estimate of a +310K print, was still a solid +261K. But which jobs contributed the most? The answer, not surprising, is that the single biggest contributor was the same job category which was devastated in the previous month.
Readers will recall that last month we pointed out that workers in “food service and drinking places” aka waiters and bartenders, suffered their biggest drop on record, plunging by a whopping 111K. Well, one month later it’s payback time, and according to the BLS, 88,500 waiters and bartenders found jobs in October, as the “plowhorse” sector of the so-called recovery found its spark. As shown in the chart below the monthly increase in waiters and bartenders was a record.

This post was published at Zero Hedge on Nov 3, 2017.

Stocks and Precious Metals Charts – Just Stand

“In our own times we see that politicians raised under neoliberalism are unwilling and unable to effectively use real Keynesian policies: they can’t do stimulus, when they try, they give the money primarily to the rich.
They grew to power by being neoliberals; faced with new times they cannot change. In France we saw the main center-left party (really a neoliberal party) implode because it would just not change, and throughout the West center-left neoliberal parties are dying for just this reason. The world has changed, the people who run those parties cannot change…
Our societies have failed to run themselves acceptably since 2008, and the youngs have no attachment to the status quo since it never ever worked for them. Change is thus not only possible, it is now inevitable.”
Ian Welsh, When People and Societies Change
Stocks were rallying off the jobs report.
The American dream is now a nation of low paid bartenders and waitresses, living from paycheck to paycheck, and preyed upon by corporate behemoths in healthcare, housing, and finance.

This post was published at Jesses Crossroads Cafe on 03 NOVEMBER 2017.

NOV 3/POOR JOBS REPORT BUT THAT DID NOT MATTER AS THE CROOKS RAIDED GOLD AND SILVER/COMEX SILVER OI CONTINUES TO RISE WITH ITS LATEST READING OVER 206,000 CONTRACTS/AFTER THE USA FINISHED OFF ISI…

GOLD: $1268.90 DOWN $8.65
Silver: $16.85 down 27 cents
Closing access prices:
Gold $1270.00
silver: $16.86
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: $1300.00 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1280.05
PREMIUM FIRST FIX: $19.90(premiums getting larger)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1292.04
NY GOLD PRICE AT THE EXACT SAME TIME: $1277.00

This post was published at Harvey Organ Blog on November 3, 2017.

US Links Erdogan To “Secret Gold” Trade With Iran; Lira, Bonds Tumble

While long forgotten for some, in the summer of 2014, we reported in detail on what appeared to be the biggest, most bizarre money-laundering scheme ever, involving Turkey trading “200 tons of secret gold” with Iran…
The topic of Turkey’s Oil-for-Gold ‘deals’ has not been far from our thoughts over the last few years (here, here, and here) but as Bloomberg reports, after accessing a report leaked on March 14 of a network that spanned Turkey, China, Dubai and Iran, the plot reveals “one of the most complex illicit finance schemes [prosecutors] have seen.” It included the classic money-laundering techniques of over-invoicing and false invoicing (exactly as in the case of the Chinese commodity financing scandal underway) but the secret government plan to juice Turkey’s exports goes much deeper; and if you think that the exposure of this scheme is slowing Turkey’s manipulation, think again. Turkey’s trade balance continues to fluctuate unpredictably as gold stocks flow out of the country in bursts. ‘Turkey’s going to continue it,’ the Turkish economy minister said. ‘If those casting aspersions on the gold trade are searching for immorality, they should take a look in the mirror.’ We first started noticing major ‘odd’ exports of gold from Turkey to Iran in May 2012. But in 2013, with a plunging currency, surging inflation, slowing growth, and specter of rapid QE-driven hot money outflows leaving his nation desperate; Zafer Caglayan, the minister in charge of Turkey’s $800 billion economy decided that the only way to ensure success in the looming election… was to cheat…
Read more here…
A farcical domestic investigation was undertaken and while the judges and officials who probed the money laundering scheme were either fired or reassigned, the findings in their report were leaked.
The leaked document that Erodgan tried so hard to hide, prepared by the Turkish National Police, shows that investigators probed the activities of a cast of characters that was both powerful and dependent upon each other for favors. There have been some arrests (but no politicians)

This post was published at Zero Hedge on Nov 3, 2017.

The Greatest Fear Today: The Lack Of Fear

Authored by James Rickards via The Daily Reckoning,
Market crashes often happen not when everyone is worried about them, but when no one is worried about them.
Complacency and overconfidence are good leading indicators of an overvalued market set for a correction or worse. Prominent magazine covers are notorious for declaring a boundless bull market right at the top just before a crash or correction.
October 19 saw the thirtieth anniversary of the greatest one-day percentage stock market crash in U. S. history – a 22% fall on October 19, 1987. In today’s Dow points, a 22% decline would equal a one-day drop of over 5,000 points!
I remember October 19, 1987 well. I was chief credit officer of a major government bond dealer. We didn’t have the internet back then, but we did have trading screens with live quotes. I couldn’t believe what I was watching at first, but by 2:00 in the afternoon we were all glued to our screens.
It was like being a passenger on a plane that was crashing, but you had no way out of the plane. Our firm was fine (bonds rallied as stocks crashed), but we were concerned about counterparties going bankrupt and not being able to pay us on our winning bets in bonds.
What’s troubling is that a lot of commentators said that the kind of crash that took place in 1987 couldn’t happen today and that markets were much safer. It’s true that circuit breakers and market closures could temporarily halt a slide better than we did in 1987. But those devices buy time, they don’t solve the underlying fear and panic that causes market crashes.

This post was published at Zero Hedge on Nov 3, 2017.

Spain Just Lit a Fuse Under Catalonia – its Richest Region

Acute uncertainty is like sand in the gears of the local economy.
It’s amazing how fast the wheels of the Spanish justice system go round when the establishment wants them to, and how slowly they revolve when it doesn’t, which is usually when members of the same establishment – senior politicians and civil servants, bankers, business owners, or even royalty – are in the dock, which is happening with disturbing regularity these days.
On Thursday we saw Spanish justice at its fastest. In the dock was the recently sacked vice president of Catalonia’s separatist government, Oriol Junqueras, and seven other elected representatives of the breakaway region who stand accused of a litany of charges, including rebellion, which carries a maximum sentence of 30 years’ imprisonment.
The counsel for the defence had less than 24 hours to prepare the case. After just a few hours of hearing preliminary evidence, the National Court Judge sent half of Catalonia’s suspended government to jail without bail. On Friday, the same judge issued an international arrest warrant for Carles Puigdemont, the disputed Catalan president who fled to Brussels on Monday, as well as four other former ministers who did not show up to court on Thursday.

This post was published at Wolf Street by Don Quijones ‘ Nov 3, 2017.

The End Is Near… Depopulation Is Out Of Control… So Buy Stocks (Seriously)

Authored by Chris Hamilton via Econimica blog,
The world economy is premised on a ludicrous idea – that Asia, then India, and then Africa will continue to drive economic growth.
So as not to turn this article into a book, lets consider this idea focusing on East Asia consisting of China, Japan, North and South Korea, Taiwan, and minor others. This region consists of 1.6 billion persons or about 22% of earths inhabitants. However, since 2008, it is this region that is responsible for nearly 100% of the global increase in demand for oil (best proxy available for true economic growth) and having primarily driven global economic growth. My point in this article is that the growth in this region is entirely a credit driven supernova against collapsing populations which will never be able to fill the 100+ million newly added apartments or pay back the debt incurred to achieve the “growth”. Contrarily, from an investor standpoint, this weakness is the green light to “invest” as aggressively as possible because as long as central banks exist, they have your back.
Consider, since 2000, China’s debt outstanding has risen something like 14x’s to 17x’s or from about $2 trillion to something between $30 to $35 trillion presently. As for Japan, who knows Japan’s true debt as Japan’s central bank is buying much or most of the debt and essentially throwing it in a black hole, never to be seen again(…monetization with a capital “M”).
Why the massive debt creation and central bank monetization? Depopulation with a capital “D”. First off, consider the collapse in fertility rates for these nations (chart below). To maintain a constant, zero growth population, the childbearing population needs to produce 2.1 children in order to replace themselves (dashed line, below). However, as the chart below shows, E. Asian nations have seen negative fertility rates for decades (Japan turning negative in ’74, S. Korea in ’83, China in ’92, and N. Korea in ’96).

This post was published at Zero Hedge on Nov 3, 2017.

Dear Jay… You Have A Problem

It is said that the markets will test a new Fed Chair early on and judging by the fact that financial conditions just tumbled to their ‘easiest’ in 24 years – despite four rate hikes – Jerome Powell will have his work cut out persuading the market that he is serious (before this bubble bursts).
The ‘market’ behaved as expected after the initial rate hike in Dec 2015 – financial conditions ‘tightened’ as The Fed ‘tightened’. However, since then The Fed has entirely lost control…

Sending financial conditions to their easiest since August 1993 (with Fed Funds at their highest in 9 years).

This post was published at Zero Hedge on Nov 3, 2017.

Gold is Stable But Market Moving Events Are Coming

Guest post from James Broth:
Gold dipped slightly as the new week get underway after breaking down below the important support level of $1,265 last Friday. The main reason behind last week’s decline in gold prices was that many investors exited gold investments to stay on the sidelines on rumors that President Trump was set to announce the next Fed chair. News concerning the Federal Reserve often affects gold prices because the Fed technically determines how the USD trade in the forex markets and gold is priced in USD. This piece examines how economic and forex developments could provide head and tailwinds for the yellow metal as the year draws a curtain.
The new week is data packed
Many investors buy gold because of its inherent stability; at least, in relation to other assets such as stocks. However, the underlying fundamentals of gold stability will be put to the test as different news of economic importance hit the newsstands. The economic calendar shows that the U. S. Federal Reserve will release the customary policy statement following its two-day meeting on Wednesday. The policy statement will provide insights into the Fed’s plan for interest rates going forward.

This post was published at Deviant Investor on November 3, 2017.

The Real Reason Broadcom Returned To The US: To Launch A Hostile $100BN Bid For Qualcomm

One day after Broadcom surprised markets, and the US public, when the $100 billion Singapore company announced it would legally relocated to the US, Bloomberg and the WSJ report that Broadcom is considering a $100 billion deal for Qualcomm. The two are linked.
As a reminder, on Thursday, Broadcom – which manufactures communications chips around the world – said it would relocate its legal address to Delaware once shareholders approve the move, bringing $20 billion in annual revenue back to the U. S. The move would allow Broadcom to avoid a cumbersome federal review process, while Donald Trump, who tied the Broadcom announcement with the release of congressional Republicans’ tax reform proposal (which in addition to slashing corporate rates, would also makes it easier for companies to deduct foreign taxes), boasted that the redomiciling was a sign of corporate approval of the Trump tax reform.
The company credits the GOP plan with making it easier to do business in the U. S. ‘America is once again the best place to lead a business with a global footprint,’ Broadcom CEO Hock Tan said. However, Broadcom’s move to the U. S. will take place regardless of whether the Republican plan passes, the company said.
One day later, we find that Broadcom’s decision to “return to the US” had nothing to do with any seal, either approving or disapproving, of Trump’s tax plan, of any other political statement of the ongoing tax process in Congress, but had far simpler, and more ulterior motives.
As both Bloomberg and the WSJ report, Broadcom is considering an unsolicited bid of more than $100 billion for Qualcomm – which has had a falling out with Apple in recent months – in what would be the biggest-ever takeover of a chipmaker.

This post was published at Zero Hedge on Nov 3, 2017.

The Consumer Staples Sector Is No Place To Hide

Authored by Bryce Coward via Knowledge Leaders Capital blog,
The Consumer Staples sector is often viewed as a safe haven; a sector that, because of its inherent cash flow stability, market participants can turn to as a place of refuge when things get shaky. Yet, persistent fundamental decline among North American Staples companies may well be throwing a wrench in these companies’ abilities to weather a broad market downturn.
In this post we’ll briefly touch on financial statement and valuation indicators that suggest Staples may not be as risk averse as they used to be.
One highly important quality factor is long-term debt as a percent of capital.
As the first chart below demonstrates, North American Staples companies have been loading up on debt year after year for the entirety of this recovery. Long-term debt as a percent of capital is now at levels not seen in at least 18 years.

This post was published at Zero Hedge on Nov 3, 2017.

Malls and their Hapless Investors Keep Getting Crushed

(Creative) Destruction in the brick-and-mortar meltdown.
Investors in retail malls didn’t need another wake-up call. They’ve been wide awake all year, hearing from Wall Street that there’s no brick-and-mortar meltdown even as the shares of their real estate investment trusts (REITs) have gotten crushed by the travails of brick-and-mortar retail and the over-malling of America. But late Thursday, mall investors got another unneeded wake-up call.
CBL Properties, a mall REIT with 119 mostly retail-oriented properties, reported earnings, and shares plunged 26% on Friday, to $5.92. They’d already been dropping for years because the brick-and-mortar retail meltdown is structural, and not new, and will not turn around before it’s finished melting down. Shares of CBL are down 50% year-to-date and 75% from May 2013.
‘This quarter’s results fell below our expectations as our revenues were impacted by additional bankruptcies, store closures and rent concessions,’ CEO Stephen Lebovitz summarized it in the third-quarter earnings report.

This post was published at Wolf Street by Wolf Richter ‘ Nov 3, 2017.

Dollar Rebounds, Futures Rise Ahead Of Surge In Payrolls

One day after the dollar slumped sharply on initial disappointment with the GOP tax plan, the greenback has rebounded ahead of a nonfarm payrolls report that is expected to show the US economy gained over 300,000 jobs in the post-hurricane rebound, and as investors reassessed the latest news on U. S. tax-cut plans. Stocks in Europe and Asia advanced, US equity futures were as usual in the green, while oil headed for an eight-month high on signs OPEC will agree to extend supply cuts.
In an otherwise quiet session, the biggest overnight news was President Nicolas Maduro announcing Venezuela will seek to restructure its global debt after the state oil company makes one more payment. While the risk of contagion is low, the emerging-market index of currencies declined for the first time this week. In early trading, the PDVSA dollar bonds maturing 2027 plunged at the start of trading, slumping 10 cents on the dollar to 20 cents in early London trading. As a result, EMFX weakened across the board with some analysts noting the Venezuela debt restructuring as a driver, though most weakness occurred after Turkey’s inflation report.
In global macro, markets are in their usual pre-NFP lull, with most G-10 currencies staying within yesterday’s ranges. The weakest quarter for Australian retail sales in seven years sent the Aussie lower and bonds climbing. The Aussie dollar dropped as much as 0.5 percent back below 77 U. S. cents and bond yields extended declines as traders pushed back bets on the timing for an interest-rate increase. The Bloomberg Dollar Index was steady in Asia, amid modest moves in most G-10 currencies, before edging higher with the start of the London session as fast-money names added dollar longs before U. S. jobs report. Treasury futures were stuck in tight ranges through Asian hours, on very muted volumes, just 37% of recent averages, with cash markets closed for a Japan holiday; as Bloomberg reports, TSYs came under pressure in London, widening vs Germany.

This post was published at Zero Hedge on Nov 3, 2017.

Fun on Friday: Apple Files Patent on Process to Make Solid Gold Cases

A few weeks ago, I told you about a company that is offering a 22-karat gold version of the iPhone. Yes. for a mere $69,995, you can strut about town with a gold phone pressed against your ear.
Well apparently, the folks at Apple want to get in on this action. Maybe they are worried the profit margin isn’t going to big enough on the $1,000 iPhone X. Whatever the reason, the company has reportedly filed a patent for making ‘enclosures for electronic devices’ out of hardened gold. According to the CNBC report, the process will create a stronger metal suitable for enclosing Apple gadgets.
Since 18-karat gold has low hardness, Apple has an idea for hardening the precious metal into a crystalline form by mixing it with other metals and putting it through a special process of mixing, rolling, heating, cooling and aging the metal. t could also be used to process 24-karat gold, the patent said, and in combinations that have more or less of the total weight in gold.’
The patent application says, ‘The disclosure provides gold alloys with improved yield strength and improved hardness. With such an improved hardness, the gold alloys can have very good scratch resistance and improved durability for use as enclosures for electronic devices.’

This post was published at Schiffgold on NOVEMBER 3, 2017.

Frontrunning: November 3

House GOP Readies for Tax-Bill Battle (WSJ) GOP’s United Front on Tax Cuts Masks Divisions (BBG) Republican tax plan a blow to Democratic states, officials say (Reuters) As Trump Embarks on Asia Tour, North Korea Looms Large (WSJ) Apple Store Lines Return as iPhone X Debuts (WSJ) There’s Some Good News About 401(k)s in the Tax Bill (BBG) iPhone Xs Are Already Being Resold in Hong Kong (BBG) CNN to Launch Subscriptions for Digital News (WSJ) Mr. Ordinary: Who Is Jerome Powell, Trump’s Fed Pick? (WSJ) U. S. bomber drills aggravate North Korea ahead of Trump’s Asia visit (Reuters) Bitcoin Is the ‘Very Definition’ of a Bubble, Credit Suisse CEO Says (BBG) Goldman Retreats From Options as Stock Derivatives Trading Struggles (WSJ) Here’s a Juicy Tax Break. Now, How to Keep Everybody From Claiming It? (BBG) Dark Side at Fidelity: Women Describe a Culture of Revenge (BBG) Get Ready for an Appalachian Gas Bonanza (BBG) PDVSA Bonds Slump After Venezuela Calls for Restructuring: Chart (BBG) Drug Deaths Rose More Last Year Than in the Previous Four Combined (BBG) Overnight Media Digest
WSJ
– Two U. S. B-1B bombers flew near North Korea on Thursday, alongside Japanese and South Korean jet fighters, provoking anger from Pyongyang ahead of President Donald Trump’s closely watched trip to Asia. on.wsj.com/2gZ02qP
– The Justice Department is laying the groundwork for a potential lawsuit challenging AT&T Inc’s planned acquisition of Time Warner Inc if the government and companies can’t agree on a settlement, according to people familiar with the matter. on.wsj.com/2ipyGuh
– T-Mobile US Inc and Sprint Corp are working to salvage their potential blockbuster merger, people familiar with the matter said, days after Sprint Chairman Masayoshi Son appeared to call off the talks. on.wsj.com/2gZNq2Q

This post was published at Zero Hedge on Nov 3, 2017.

Gold Stocks’ Winter Rally 2

The gold miners’ stocks have largely ground sideways this year, consolidating their massive 2016 gains. That lackluster trading action, along with vexing underperformance relative to gold, has left gold stocks deeply out of favor. But these uninspiring technicals and resulting bearish sentiment should soon shift. The gold stocks are just now entering their strongest seasonal rally of the year, the super-bullish winter rally.
Gold-stock performance is highly seasonal, which certainly sounds odd. The gold miners produce and sell their metal at relatively-constant rates year-round, so the temporal journey through calendar months should be irrelevant. Based on these miners’ revenues, there’s little reason investors should favor them more at certain times of the year than others. Yet history proves that’s exactly what happens in this sector.
Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.
Gold stocks exhibit strong seasonality because their price action mirrors that of their dominant primary driver, gold. Gold’s seasonality generally isn’t driven by supply fluctuations like grown commodities experience, as its mined supply remains fairly steady all year long. Instead gold’s major seasonality is demand-driven, with global investment demand varying dramatically depending on the time within the calendar year.

This post was published at ZEAL LLC on November 3, 2017.