Technical Scoop – Weekend Update Nov 5

Weekly Update
To the moon, Alice!
Ralph Kramden, The Honeymooners
And at the current rate it might not be too long before it’s actually there. The moon, that is. No, not Alice – Bitcoin. Yes, Bitcoin crossed $7,000 this week. It was less than a month ago Bitcoin passed $5,000. The riches are dazzling as Bitcoin is up 640% this year alone. Bitcoin now has a market cap of $100 billion. How much longer before it’s bigger than Amazon or Apple or worth more than the entire gold stock market? But the question continues to beg – is Bitcoin an historic bubble? Until it bursts, the question is strictly academic. And don’t forget, not only is there Bitcoin but there are now over 1,000 other cryptocurrencies. And Bitcoin has forks as well called Bitcoin cash and Bitcoin gold.
Okay, we are not going to get into a huge discussion of Bitcoin and how it is structured and what blockchains are all about. It is mind boggling enough trying to figure all of that out. We will have further comments on our weekly ‘Bitcoin Watch!’ commentary.
The stock markets made new all-time highs again this past week. That comes against the backdrop of the terrorist attack in New York City, indictments in the Russia investigation including former top aides of President Donald Trump, and possible brewing trouble in the Mid-East. There is also the escalating crisis in Catalonia in the heart of the EU, ongoing trouble between Kurds and Iraq/Iran/Turkey, and continued moves afoot to lessen the use of the US$ in world trade. As well, a new Fed chairman has been proposed. But all the stock market cares about is the potential to pass the tax bill that could put billions into corporations and the 1% even as it could create deficits estimated at up $1.5 trillion over the next decade.
Maybe the stock markets are also headed for the moon, albeit at a much slower pace. Still, the records just keep on falling and there seems to be little in the way of stopping it. We may wring our hands over the alleged terrorist attack that killed 8 and injured many more but largely ignore an attack in a Walmart in Colorado that left 3 dead that occurred not long after the NYC attack. And I might add as we prepare this for distribution another attack in some small Texas town in a church that has left multiple fatalities.

This post was published at GoldSeek on 5 November 2017.

Matt Taibbi Exposes The Great College Loan Swindle

How universities, banks and the government turned student debt into America’s next financial black hole…
On a wind-swept, frigid night in February 2009, a 37-year-old schoolteacher named Scott Nailor parked his rusted ’92 Toyota Tercel in the parking lot of a Fireside Inn in Auburn, Maine. He picked this spot to have a final reckoning with himself. He was going to end his life.
Beaten down after more than a decade of struggle with student debt, after years of taking false doors and slipping into various puddles of bureaucratic quicksand, he was giving up the fight. “This is it, I’m done,” he remembers thinking. “I sat there and just sort of felt like I’m going to take my life. I’m going to find a way to park this car in the garage, with it running or whatever.”
Nailor’s problems began at 19 years old, when he borrowed for tuition so that he could pursue a bachelor’s degree at the University of Southern Maine. He graduated summa cum laude four years later and immediately got a job in his field, as an English teacher.
But he graduated with $35,000 in debt, a big hill to climb on a part-time teacher’s $18,000 salary. He struggled with payments, and he and his wife then consolidated their student debt, which soon totaled more than $50,000. They declared bankruptcy and defaulted on the loans. From there he found himself in a loan “rehabilitation” program that added to his overall balance. “That’s when the noose began to tighten,” he says.
The collectors called day and night, at work and at home. “In the middle of class too, while I was teaching,” he says. He ended up in another rehabilitation program that put him on a road toward an essentially endless cycle of rising payments. Today, he pays $471 a month toward “rehabilitation,” and, like countless other borrowers, he pays nothing at all toward his real debt, which he now calculates would cost more than $100,000 to extinguish. “Not one dollar of it goes to principal,” says Nailor. “I will never be able to pay it off. My only hope to escape from this crushing debt is to die.”

This post was published at Zero Hedge on Nov 5, 2017.

The New Fed Next Year Could Be Off the Charts

Dudley to Quit. 5 Vacancies on the FOMC. No one knows what the Fed will look like.
The next slot on the Fed opens up: New York Fed President William Dudley will announce his retirement as soon as next week, ‘several people familiar with his plans’ told CNBC. He may stay on till his replacement is found and approved, likely to happen in the spring or summer next year. The New York Fed has already formed a search committee, the people said.
This is unexpected; his 10-year term will expire in 2019. He could have stayed on for the sake of stability. He is one of the most influential figures on the Fed’s policy-setting Federal Open Markets Committee (FOMC) and is considered a ‘dove.’
The 12-member FOMC is composed of:
The seven members of the Board of Governors which is in the process of being nearly completely turned over The president of the New York Fed who is retiring. And on a one-year rotating basis four presidents of the remaining 11 regional Federal Reserve Banks. The president of the New York Fed is special among the heads of the regional Fed banks: That person always serves as vice chair of the FOMC and, unlike the rest of them, votes at every meeting.
So next year the FOMC will be a different animal.

This post was published at Wolf Street on Nov 5, 2017.

Doug Noland: End of an Era

Of the diverse strains of inflation, asset inflation is by far the most dangerous. A bout of consumer price inflation would be generally recognized as problematic and rectified through a tightening of monetary conditions. On the other hand, asset price inflation is both celebrated and venerated. There is simply no constituency calling for a tightening of conditions to ward off the deleterious effects of rising asset prices, Bubbles and attendant economic maladjustment. And as we’ve witnessed, the bigger the Bubble the more powerful the constituencies that rationalize, justify and promote Bubble excess.
About one year ago, I was expecting a securities markets sell-off in the event of an unexpected Donald Trump win. A Trump presidency would create disruption, upheaval and major uncertainties – political, geopolitical, economic and social. Instead of a fall, the markets experienced a short squeeze and unwind of hedges. Over-liquefied markets and a powerful inflationary bias throughout global securities markets won the day – and the winning runs unabated. We’ve come a long way since 1992 and James Carville’s ‘I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.’ New age central banking has pacified bond markets and eradicated the vigilantes. These days it’s the great equities bull market as all-powerful intimidator.

This post was published at Wall Street Examiner on November 4, 2017.

Financial Storm Clouds Gather Over Italy

Wishful thinking may not be enough.
The financial markets have been exceedingly calm in Italy of late. At the end of October the government was able to sell 2.5 billion of 10-year debt at auction at a yield of 1.86%, the lowest since last December – an incredible feat for a country that four months ago witnessed a major bank bailout and two bank resolutions, and that has so much public debt that it spends 70 billion a year to service it, the world’s third-highest.
And there’s the ECB’s recent decision to slash its bond buying from roughly 60 billion a month to 30 billion as of Jan 1, 2018. Then there’s the over 432 billion of Target 2 debt the government owes the ECB, the growing likelihood of political instability as elections approach in 2018, the recent referendums for greater fiscal and political autonomy in Lombardy and Veneto and serious unresolved issues in the banking sector.
Monte dei Paschi di Siena may still be alive as a bank, but it’s not out of the woods. Last week its stock resumed trading after ten months of being suspended from Italy’s benchmark index, the FTSE MBE. Shares opened on Wednesday at 4.10, then rose 28% to 5.26. But it didn’t stick. On Friday, shares closed at 4.58.
It’s a far cry from the 6.49 a share the Italian government paid in August when it injected 3.85 billion into the bank to keep it alive. It spent another 1.5 billion shielding some of the bank’s junior bondholders, whose debt was converted into equity. As part of the rescue, the Tuscan bank was forced to present a plan to cut 5,500 jobs and close 600 branches until 2021, in addition to transferring 28,600 million euros in unproductive loans and divesting non-strategic assets. Investors clearly have their doubts.

This post was published at Wolf Street on Nov 5, 2017.

Texas Church Shooting Leaves 26 Dead; Suspect Was Dishonorably Discharged From Air Force

Update (8:50 pm ET): Trump offered his condolences for victims and their families after today’s “horrific” shooting during a press conference in Japan.
“Victims and their families were in their sacred place of worship. We cannot put into words the pain and grief we all feel,” Mr. Trump said in televised remarks.
“In dark times such as these, Americans do we what do best and we pull together. We lock hands and we joins arms. Through the tears and through the sadness we stand strong.”
Meanwhile, a new photo of the shooter has been released…


This post was published at Zero Hedge on Nov 5, 2017.

The Results of Financialization – Part III

THE BIG REVERSAL
After three and half decades the global economy has now entered a three and half year period of slow rotational change which will likely be seen in future years as the “Great Reversal”.
DEBT + DEMOGRAPHICS + DISRUPTION = DEFLATION
We are leaving an era which as witnessed unprecedented global debt growth, work force demographics and the emergence of profoundly disruptive technologies. These trends through globalization, labor arbitrage, and oversupply have coupled to deliver slow inflation, disinflation and even deflation in various areas of the world.
What we have experienced during this era on a global basis is:
A decline in real interest rates (which have been a prime supporter of asset prices), A drop in real labor earnings in advanced economies, and, A meteoric rise in inequality within countries alongside a drop in inequality between them.

This post was published at GoldSeek on 5 November 2017.

ONLY CONTRARIANS WILL SURVIVE

We are currently standing before one of the most unique and frightening periods in history. Never have there been so many extremes in so many different areas. In the last 100 years everything seems to have developed so much faster, including population, technology, inflation, debt, money printing, budget deficits, stock, bond and property prices, crypto currencies etc.
All of these areas are now in an exponential growth phase. The final stage of exponential growth is explosive and looks like a spike that goes straight up. A spike for a major sample like global population or the Dow never finishes with just a sideways move. Once a spike move has finished, it always results in a spike move down.
It seems that everything in the world is developing much faster today like computers and mobile phones or robots. The world assumes that this exponential growth in so many areas will continue or even accelerate further. But sadly, that is unlikely to be the case.
EXPONENTIAL MOVES ARE TERMINAL
There is a more scientific illustration how these exponential moves occur and also how they end.

This post was published at GoldSwitzerland on November 3, 2017.

Tocqueville on the Welfare State

In 1961, Robert Schuettinger, then a graduate student under F. A. Hayek at the University of Chicago, wrote an article: “Tocqueville and the Bland Leviathan.”
It was published in the second issue of a new publication, New Individualist Review. This was a student publication: a quarterly small magazine. It was the best student publication I had ever seen. I still think so. I was a subscriber from the beginning. It was published for seven years.
The Foundation for Economic Education has reprinted the essay here. I offer extracts.
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[The power of government] covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power… does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, until each nation is reduced to nothing better than a flock of timid and hard-working animals, of which the government is the shepherd.’ – Alexis De Tocqueville
Alexis De Tocqueville was an aristocrat who was at the same time the most perceptive critic and the truest friend that democracy ever had; he loved liberty, as he himself said, with “a holy passion,” and his greatest fear was that in the new Age of the Common Man the ideal of equality would become the means by which freedom would be extinguished.
His two books, Democracy in America and The Old Regime and the French Revolution, earned for Tocqueville a lasting reputation primarily because he did not think that the historian’s role should be confined to relating facts or that the sociologist should be merely a statistician; he was interested in something more than in what the “scientific” historians called wie es gewesen (what actually happened). What he wanted to do was to understand why institutions grew up and why events came about. Describing America he regarded as much less important than the task of analyzing democracy. . . .

This post was published at Gary North on November 02, 2017.

Synchronized Global Not Quite Growth

This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
Going back to 2014, it was common for whenever whatever economic data point disappointed that whomever optimistic economist or policymaker would overrule it by pointing to ‘global growth.’ It was the equivalent of shutting down an uncomfortable debate with ad hominem attacks. You can’t falsify ‘global growth’ because you can’t really define what it is.
Japan was common then among the world’s various economies to be relying so much on it. As I wrote that September:
The curious part about that ‘pick-up in global demand’ is exactly what I am driving at. What he [BoJ Deputy Governor Kikuo Iwata] is saying is that the economy in Japan will get better because some nebulous notion of the global economy will get better; or, if you want to be specific, they expect the economy to improve because the economy is expected to improve. While he (and those like him) will not admit to engaging such circular logic, that is what it really amounts to…
It became a staple of mainstream analysis because it was easy and non-specific. And in many ways it has become so again, in 2017 perhaps even to that much more of an impressive (sounding) degree. This time around not only is ‘global growth’ supposedly picking up, it is doing so in synchronizedfashion. Being applied to Japan again and more so China, it’s the first time in seven or perhaps ten years, apparently, that this has happened – therefore we are meant to be very impressed by it even if it still remains undefined.

This post was published at Wall Street Examiner on November 3, 2017.

Ahead, Not Behind

This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
Back in September, the FOMC announced that it was in October going to start normalizing its balance sheet. The policy statement issued that day included all the usual qualifications of ‘solid’, ‘strengthen’, and ‘picked up.’ The near-term risks to the economy, it was written, ‘appear roughly balanced.’
Not all was well with the economic situation, however, as the central bank’s policymaking body continues to wrestle with inflation. They might wish for political relief to their dual mandate, but in this case they have no choice but to live with the results – especially since they are largely of their own making. After mentioning economic risks, the statement then throws out there, ‘but the Committee is monitoring inflation developments closely.’

This post was published at Wall Street Examiner on November 3, 2017.

NY Fed President Bill Dudley Retiring

The Federal Reserve’s “smooth transition” from Janet Yellen to Jay Powell is set for a major speedbump.
Just two short days after Donald Trump confirmed what weekly trial balloons had reported for weeks, namely that Janet Yellen is being replaced with most “dovish” alternative possible in the face of former Carlyle partner and 5 year Fed governor Jerome Powell, the person who according to some is even more instrumental to Fed policy than Janet Yellen, NY Fed president Bill Dudley is reportedly leaving.
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Late on Saturday evening, CNBC’s Steve Liesman reported that Fed vice chairman Bill Dudley, a former Goldman managing director and chief economist, not to mention a key figure in “the unprecedented government response to the financial crisis”, is set to join Janet Yellen among the ranks of the unemployed (if only until he hits the speaking circuit and writes a book explaining that the Fed is the cause of the world’s problems) and announce his retirement as soon as next week.

This post was published at Zero Hedge on Nov 5, 2017.

We’ll Look Back At This And Cringe, Part 1: European Junk Bonds Yield Less Than US Treasuries

Financial bubbles are the office Christmas parties of the investment world. They start slowly, with a certain amount of anxiety. But they end wildly, with acts and decisions that in retrospect seem really, really stupid.
Millions of people out there still bear the psychic scars of buying gold at $800/oz in 1980 or a tech stock at 1,000 times earnings in 1999 or a Miami condo for $1,000 per square foot in 2006.
Today’s bubble will leave some similar marks. But where those previous bubbles were narrowly focused on a single asset class, this one is so broad-based that the hangover is likely to be epic in both scope and cumulative embarrassment.
This series will create a paper trail for the morning after, starting with a truly amazing anomaly: European junk bonds now yield less than US Treasury bonds.

This post was published at DollarCollapse on NOVEMBER 5, 2017.

Commuters & Computers: Mapping America’s Megaregions

From California’s Bay Area to the highly-integrated Great Lakes Economy, megaregions are a dominating aspect of human geography and commerce. It should be no surprise then, that 85% of corporate head offices in the US and Canada are overwhelmingly concentrated in the core cities of great megaregions.
We tend to think of cities as individual economic units, but as they expand outward and bleed together, defining them simply by official jurisdictions and borders becomes difficult. After all, as Visual Capitalist’s Nick Routley notes, many of the imaginary lines divvying up the country are remnants of decisions from centuries ago – and other county and state lines exist for more counterintuitive reasons such as gerrymandering.
What if there was a more data-driven approach to examine America’s urban networks?

This post was published at Zero Hedge on Nov 4, 2017.

“All We Want Is Respect” – NYC’s Strippers Are Going On Strike

Wealthy Wall Street finance types are going to need to find a new way to entertain their wealthy asset-management clients – at least for the time being – because the strippers are going on strike.
The source of the dispute is a simmering dispute between New York City dancers and a growing cohort of Instagram-famous ‘startenders’ who wear outfits that are almost as revealing as the strippers’ outfits, but also promote the club on social media – bringing in a loyal following of customers – while also serving drinks.
The club owners, not wanting to lose the revenue that the bartenders are bringing in, have stood idly by while the bartenders’ influence inside the clubs has grown, while the strippers, who typically pay clubs a house fee to dance, are seeing their nightly earnings dwindle.

This post was published at Zero Hedge on Nov 4, 2017.