Mohamed El-Erian: “The World Is Nearing A Tipping Point”

Mohamed El-Erian, chief economic adviser at Allianz, expects a fundamental shift in the global economy that will either result in a powerful economic boom or in renewed tremors at the financial markets.
In the world finance, there are few people as highly respected as Mohamed El-Erian. Not only is the chief economic adviser at Allianz well versed when it comes to navigating the global financial markets, he’s also brilliant at explaining complex developments in a comprehensible way. The most prominent example is the concept of the New Normal which he and his colleagues developed in early 2009 when he was at the helm of Pimco together with Bill Gross. Today, this concept of a new economic reality, defined by slow growth and super low interest rates, is widely accepted. However, Mr. El-Erian predicts that the New Normal won’t continue much longer. He sees significant changes ahead that will either lead to a powerful economic boom or to a recession with renewed tremors in the financial markets.

This post was published at Zero Hedge on Thu, 12/28/2017 –.

The Ghosts of Crashes Past, Recent, and Future as they Appeared on this Blog

It’s not boasting to state plainly that you were right if you are equally direct about your errors. I have until now rightly predicted all of the stock market’s major downturns, starting with the one in 2007 that gave us the Great Recession. The first of those led to the writing of this blog. The next two were predicted and recorded as they happened on this blog, and the latest, whether it proves right or wrong, waits shortly in the future. Each time I made such a prediction here, I bet my blog on it. The blog is still here, but will it continue to be?
I am using the term ‘crash’ loosely in this article because one time I clearly stated the impending plunge would not technically amount to a crash (a sudden drop of more than 20%) but it would be much more significant than just a correction (a decline of 10%) because of how drastically it would change the nature of the market. I’ll show here how it did. The next time, I predicted a ‘crash’ that did not quite turn out as significant as I claimed it would be, but it was an historic event in that the Dow fell further in January than it had ever done in its entire history, and it did so exactly the timing (to the day) that I laid out in advance.
I let myself off easy on that one as being both a hit and a miss because, after all, getting timing of a major plunge right to the exact day as well as the counter-intuitive manner by which it would start on that day is not something one typically sees.
Now we are about to see whether I will survive the prediction I made many months ago for January 2018.
The ghost of crashes past
On September 3rd, 2014, I wrote an article titled ‘Will There be a 2014 Stock Market Crash?’ In that article I predicted something big and wicked appeared to be coming right around the corner:

This post was published at GoldSeek on 28 December 2017.

Citi Fined $11.5 Million For Telling Retail Investors To “Buy” Stocks When It Meant “Sell”

In a fine that is on one hand bizarre, and on the other vindication for all those who claim that nearly two decades after the Henry Blodget fiasco banks still tell their customers to do one thing (i.e. “buy”) while meaning the opposite, Citigroup was ordered to pay at least $11.5 million in fines and restitution to settle charges it displayed the wrong research ratings on more than 1,800 stocks, “causing many customers to own shares they never would have bought” a market regulator ordered on Thursday.
FINRA fined Citigroup $5.5 million and ordered it to pay at least $6 million to retail customers over errors that occurred between February 2011 and December 2015, and involved more than 38% of the equity securities that the New York-based bank covered. From the filing:
FINRA found that from February 2011 through December 2015, Citigroup Global Markets Inc displayed to its brokers, retail customers and supervisors inaccurate research ratings for more than 1,800 equity securities -more than 38 percent of those covered by the firm. Because of errors in the electronic feed of ratings data that the firm provided to its clearing firm, the firm either displayed the wrong rating for some covered securities (e.g., ‘buy’ instead of ‘sell’), displayed ratings for other securities that CGMI did not cover or failed to display ratings for securities that CGMI, in fact, rated. The firm’s actual research reports, which were available to brokers, and the research ratings appearing in those reports, were not affected by these errors.

This post was published at Zero Hedge on 12/28/2017 –.

“Too Much Tech” – The Growing Peril Of Passive Investing

“Too much of a good thing…” – That’s the message that many passive investors are unknowingly dealing with as they approach the year-end.
In 2012, FANG Stocks (Facebook, Amazon, Netflix, and Google) accounted for less than 3% of the market cap of the S&P 500.
At the end of 2017, those four stocks now account for over 8% of the S&P’s market cap…
And, as WSJ reports, this is not limited to a small handful of stocks, it is worldwide – investors who loaded up on U. S. and Asian stock-index funds might be surprised to learn just what they own now: technology stocks – a lot of them.
Led by Apple Inc., Facebook Inc. and their peers, the weighing of technology stocks in the S&P 500 index has climbed to 23.8% as of Dec. 26, from 20.8% at the end of last year, according to S&P Dow Jones Indices.

This post was published at Zero Hedge on Thu, 12/28/2017 –.

Renewable Electricity Generation Surpasses Nuclear For First Time Since 1984

U. S. monthly electricity generation from utility-scale renewable sources exceeded nuclear generation for the first time since July 1984, in March, and again in April, the EIA reports.
This outcome reflects both seasonal and trend growth in renewable generation, as well as maintenance and refueling schedules for nuclear plants, which tend to undergo maintenance during spring and fall months, when overall electricity demand is lower than in summer or winter.
Record generation from both wind and solar as well as recent increases in hydroelectric power as a result of high precipitation across much of the West over the past winter contributed to the overall rise in renewable electricity generation this spring, while nuclear generation in April was at its lowest monthly level since April 2014. However, EIA’s latest Short-Term Energy Outlook (STEO) projects that monthly nuclear electricity generation will surpass renewables again during the summer months of 2017 and that nuclear will generate more electricity than renewables for all of 2017.

This post was published at Zero Hedge on Thu, 12/28/2017 –.

Natural Time Cycles: A Dow Forecast For 2018-2020

‘TIME is the most important factor in determining market movements and by studying the past records of averages or individual stocks you will be able to prove for yourself that history does repeat and that by knowing the past you can tell the future.’ W. D. Gann, 1939
The analysis and forecasts presented in this article are based on the analytical framework of W. D. Gann. Gann is an investing legend, labeled as genius by many financial historians. He reportedly accumulated $50 million in profits during his trading career. His superior track record and those of others using his methods argues that, regardless of our opinion of his methodology, we should heed the advice of his work.
A more detailed explanation of his analytical framework is included in the last section of this article.

This post was published at Zero Hedge on Thu, 12/28/2017 –.

As The Yield Curve Crashes To 10 Year Lows, Trader Shows “How To Put On A Steepener”

Yesterday saw the US Treasury yield curve collapse to a fresh cycle low – the flattest curve since Oct 2007 – erasing the hoped-for trend change shift from last week…
And this is occurring as net positioning in the long-end has never been more bullish.
Between that and the effect of Trump’s tax reform plan, The Macro Tourist’s Kevin Muir lays out his thesis for getting long a steepening trade into the new year and details how to do it…
Over the Christmas break, there has been a lot of chatter about this great chart from 13d Research that has been labeled, ‘the most important chart in the world.’

This post was published at Zero Hedge on Thu, 12/28/2017 –.

WTI Algos Confused As Crude Production Drops For First Time In 2 Months

WTI/RBOB had roundtripped off initial API gains into the DOE data this morning which confirmed the sixth weekly crude draw, gasoline build in a row. Production dropped for the first time in 2 months, but WTI limped lower after the data.
Bloomberg Intelligence Energy Analyst Vince Piazza notes that attention turns to 2018 after a relatively quiet holiday season. Concerns for production growth with stout hedging likely places a ceiling on WTI in the $60 range. Domestic storage remains elevated heading into a benign 1Q, even with the tailwind of crude exports.
It’s difficult to appreciate how it gets much better for global crude with the OPEC/Russia accord in the rear view and North Sea and Canadian pipeline issues largely transitory curtailments. Regime intrigue in Saudi Arabia and broader geopolitical concerns in the region aid uncertainty and boost risk premiums, but the WTI benchmark is likely to be range bound next year on higher domestic upstream production.

This post was published at Zero Hedge on 12/28/2017 –.

Trump Warns China – “No Friendly Solution” If They Keep Cheating On Korean Oil Exports

Caught RED HANDED – very disappointed that China is allowing oil to go into North Korea. There will never be a friendly solution to the North Korea problem if this continues to happen!
— Donald J. Trump (@realDonaldTrump) December 28, 2017

President Trump took aim at President Xi this morning in a very clear tweeted warning that follows US spy satellite evidence that showed China allowing oil exports to North Korea.
Trump exclaimed “caught red-handed” and said he was “very disappointed” by China’s actions. Perhaps more notable is that he explained “there’s no friendly solution” if this continues…
As a reminder, this is what President Trump is upset about, according to South Korea’s Chosun Ilbo, U. S. recon satellites have photographed around 30 illegal transactions involving Chinese vessels selling oil to North Korea on the West Sea in October. The images allegedly showed large Chinese and North Korean ships transacting in oil in a part of the West Sea closer to China than South Korea. The satellite pictures even showed the names of the ships.

This post was published at Zero Hedge on Thu, 12/28/2017 –.

Even the Government Knows the Stock Market Is a Huge Bubble

Last month, we reported on a Bank of America survey that indicated the mainstream has started to acknowledge that the stock market is a big, fat, ugly bubble.
The latest fund-manager survey by Bank of America Merrill Lynch found that a record 48% of investors say the US stock market is overvalued. Meanwhile, 16% of investors say they are taking on above-normal risk. BoA chief investment strategist Michael Hartnett called this ‘an indicator of irrational exuberance.’
Now, even the government has taken notice, acknowledging asset prices are floating in dangerous bubble territory.
The Office of Financial Research (OFR) recently released its 2017 Annual Report. According to its analysis, market risk is flashing red, with stock market valuations at historic highs based on several metrics.

This post was published at Schiffgold on DECEMBER 28, 2017.

The Wall Street Journal Does a Hit Piece on Trump’s Vacations

The Wall Street Journal is trying to match The Washington Post for anti-Trump investigative journalism.
Consider this article: President Trump Spent Nearly One-Third of First Year in Office at Trump-Owned Properties. It is a screed on Trump’s time spent vacationing.
It has a subhead: “Unlike his predecessors, president traveled frequently to places he owns but where others pay to stay.” That is because his predecessors did not own several billion dollars’ worth of prime vacation real estate.
Would you rather stay at a Motel 6 or Mir-a-Lago if someone else was picking up the tab? To ask the question is to answer it.
I, for one, applaud the time that he spends vacationing. Any time that a politician spends doing anything other than legislating is time well spent. When they are busy “making things better” by expanding the government, citizens are losers. They lose a little more of their liberty.
Earlier this year, The Washington Examiner reported this.

This post was published at Gary North on December 28, 2017.

NY Gov Rips Trump Tax Bill: “Let’s Pillage The Blue To Give To The Red”

It seems that Trump’s tax plan has officially turned New York Governor Andrew Cuomo into a “trickle down” economics guy.
Apparently unhappy that the new tax legislation will result in higher taxes for the “millionaire, billionaire, private jet owners” of his state who have mortgages over $750,000 and annual property taxes of over $10,000, Cuomo said that the White House’s efforts to “spread the wealth around” are nothing more than an effort to “pillage the blue to give to the red.”
“Look, there’s always politics in crafting of legislation. But, this was an egregious, obnoxious…what the Senate was saying is because we have no Senators from the ‘Blue States’ we don’t care. So let’s pillage the blue to give to the red.”
“That’s never been done in this nation before. That’s partisan politicking over any semblance of good government.”

This post was published at Zero Hedge on Thu, 12/28/2017 –.

2017: A Record Smooth Ride For Stocks

As measured by the VIX, stocks have never enjoyed a less volatile year than 2017.
Undoubtedly the most notable phenomenon of 2017 was the extremely smooth ride enjoyed by U. S. stocks – unprecedented, in fact. One way to measure just how smooth (or volatile) the market was is by looking at the readings of stock volatility expectations, in this case the S&P 500 Volatility Index, aka, the VIX. And based on VIX readings, 2017 was the least volatile year ever in the stock market.
Specifically, the average daily closing price of the VIX in 2017 was 11.10 (through 12/26/17).

This post was published at Zero Hedge on Thu, 12/28/2017 –.

What Happens When A Russiagate Skeptic Debates A Professional Russiagater

Authored by Caitlin Johnstone via Medium.com,
Have you ever wondered why mainstream media outlets, despite being so fond of dramatic panel debates on other hot-button issues, never have critics of the Russiagate narrative on to debate those who advance it? Well, in a recent Real News interview we received an extremely clear answer to that question, and it was so epic it deserves its own article.
Real News host and producer Aaron Mat has recently emerged as one of the most articulate critics of the establishment Russia narrative and the Trump-Russia conspiracy theory, and has published in The Nation some of the clearest arguments against both that I’ve yet seen. Luke Harding is a journalist for The Guardian where he has been writing prolifically in promotion of the Russiagate narrative, and is the author of New York Times bestseller Collusion: Secret Meetings, Dirty Money, and How Russia Helped Donald Trump Win.
In theory, it would be hard to find two journalists more qualified to debate each side of this important issue. In practice, it was a one-sided thrashing that The Intercept’s Jeremy Scahill accurately described as ‘brutal’.
The term Gish gallop, named after a Young Earth creationist who was notoriously fond of employing it, refers to a fallacious debate tactic in which a bunch of individually weak arguments are strung together in rapid-fire succession in order to create the illusion of a solid argument and overwhelm the opposition’s ability to refute them all in the time allotted. Throughout the discussion the Gish gallop appeared to be the only tool that Luke Harding brought to the table, firing out a deluge of feeble and unsubstantiated arguments only to be stopped over and over again by Mat who kept pointing out when Harding was making a false or fallacious claim.


This post was published at Zero Hedge on Thu, 12/28/2017 –.

What Has Made America’s Inner Cities Into A Violent Warzone

The stories coming out from Chicago and Baltimore paint an increasingly pessimistic picture: that America’s inner cities are transitioning into a warzone, where violence has returned to levels not seen since the drug wars of the early 1990s.
Take for example Chicago, five men were killed and at least 20 people shot over the four-day Christmas holiday weekend. Last year, 59 people were shot over the same period, leaving 11 dead.
Across the United States, homicides rose about 9% last year with more than one-third of the increase concentrated in Chicago neighborhoods, according to the Federal Bureau of Investigation (FBI). Despite the overall deterioration of American inner cities, there was some improvement in areas such as Los Angeles and Washington, D. C., where declines in violent crimes have been in downward trajectories since the 1990s.

This post was published at Zero Hedge on Thu, 12/28/2017 –.

How To Go Bankrupt: Slowly Then Suddenly

In Hemingway’s, ‘The Sun Also Rises,’ one of the characters, Bill, asks his friend, ‘Mike,’ how he went bankrupt. Mike replied, ‘I had a lot of friends. False friends. Then I had creditors…’ This passage from the novel comes to mind when I hear ads during the local sports radio programming from mortgage brokers urging listeners to use a cash-out refi or home equity loan to take care of credit card debt that piled up during the holidays. Beneath the surface is the message, ‘c’mon in, the water is fine, go ahead and take on even more debt.’
If in fact the retail sales turn out to be as strong as projected, it’s because the average household has tapped into its savings and used an unusually large amount of credit card debt to fund holiday spending this year:

This post was published at Investment Research Dynamics on December 28, 2017.

Do The Double-up! As Rents Rise, More Renters Turn to Doubling Up (L.A. The Worst!)

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
Zillow has a fascinating, yet troubling study. It says that rent consumes a growing share of household income in many cities, some people must relocate or find ways to offset rising prices. An increasingly popular way to cut costs is by adding a roommate. Nationally, 30 percent of working-age adults – aged 23 to 65 – live in doubled-up households, up from a low of 21 percent in 2005 and 23 percent in 1990.
Doubing up is a close relative of young adults continuing to live with their parents. Even though U-6 unemployment is at 8%, wage growth continues to be considerably lower than before the financial crisis. This offers a partial explanation for the doubling-up phenomenon.
Of course, doubling-up is typical is high cost of living areas like Los Angeles, San Francisco, New York City, Chicago and Washington DC. Not surprising is the doubling-up trend in Mexican border cities like El Centro California, Tucson and Yuma Arizona and El Paso and Laredo Texas.

This post was published at Wall Street Examiner by Anthony B Sanders ‘ December 27, 2017.

Trump Tax Cuts – The Spark That Burns Down The EU

Authored by Tom Luongo,
For most of this year I’ve been wondering what would the spark that would set off a banking panic in the European Union.
I know, but what do I do for fun, right?
I’ve chronicled the political breakdown of the EU, from Brexit to Catalonia to Germany’s bitch-slapping Angela Merkel at the ballot box. All of these things have been open rebukes of EU leadership and it’s insane neoliberal push towards the destruction of national sovereignty and identity.
And what has propped up this slow train-wreck to this point has been the world’s financial markets inherent need to believe in the relative infallibility of its central bankers.
Because without competent people operating the levers of monetary policy, this whole thing loses confidence faster than you can say, ‘Bank run.’
The confluence of these things with the big changes happening politically here at home with President Trump are creating the environment for big trend changes to begin unfolding.
And, as always, you have to look to the sovereign bond and credit markets to see what’s coming.

This post was published at Zero Hedge on Thu, 12/28/2017 –.