The Market Reacts To Mark Zandi’s “I Don’t Believe It” Jobs Data

While Mark Zandi may not “believe the data,”
It appears the market does (for now). The dismal jobs data sparked a kneejerk bond rally, sending yields plunging from the week’s highs, and stocks and gold jumped higher (we assume on hopes that bad news is great news for assets as Yellen will have an excuse to be more dovish). The initial moves are fading (as always) but stocks are still pushing higher.

This post was published at Zero Hedge on 09/05/2014.

Gold Miners to Gold ratio rolling over

It has become axiomatic, for good reason, that the mining shares tend to lead the gold price whether they are moving higher or moving lower. For whatever reason, the connection is fairly solid and has been for many years. That being said, the combination of a deteriorating chart for the metal and the fact that the ratio ( HUI to Gold) is rolling over, does not bode well for gold at the moment. Take a look at the following chart noting the HUI/Gold ratio and comparing that to the Gold price ( dark blue line). Can you see the very close connection? You can almost lay the gold price atop this ratio and see where it is generally headed as the lines follow each other quite closely.

This post was published at Trader Dan Norcini on September 4, 2014.

A Lie that serves the rich – Roberts, Titus, Kranzler

The labor force participation rate has declined from 66.5% in 2007 prior to the last downturn to 62.7% today. This decline in the participation rate is difficult to reconcile with the alleged economic recovery that began in June 2009 and supposedly continues today. Normally a recovery from recession results in a rise in the labor force participation rate.
The Obama regime, economists, and the financial presstitutes have explained this decline in the participation rate as the result of retirements by the baby boomers, those 55 and older. In this five to six minute video, John Titus shows that in actual fact the government’s own employment data show that baby boomers have been entering the work force at record rates and are responsible for raising the labor force participation rate above where it would otherwise be. It is not retirees who are pushing down the participation rate, but those in the 16-19 age group whose participation rate has fallen by 10.4%, those in the 22-14 age group whose participation rate has fallen by 5.4%, and those in the 24-54 age group whose participation rate is down 2.5%.

This post was published at Paul Craig Roberts on September 4, 2014.

President Obama’s Post-NATO, Putin-Punishing, ISIS-Igniting Press Conference – Live Feed

After two solid days of ‘discussions’ at a gold course in Wales, President Obama is ready to make some new comments this morning. With a cease-fire agreed in Ukraine, and no ISIS beheadings yet today, we wonder where his ire will be pointed (or perhaps it’s back to the Republicans’ fault we had such a weak jobs print?)…
CLICK HERE TO WATCH

This post was published at Zero Hedge on 09/05/2014.

Market Report: Short-sellers driving prices

Gold and silver had a bad week, with gold falling $25 to a low of $1262 by the Comex close yesterday, and silver by $0.50. This morning UK-time prices opened a little better on overnight physical demand, no doubt stimulated by those lower prices. The background to this poor performance was dollar strength relative to weak currencies, with the yen, euro and pound all declining sharply. It feels like the market is drained of all positive sentiment, which is reflected in the very low level of open interest in the futures market. These conditions are more consistent with a market that is bottoming out than one that is about to fall sharply. Meanwhile retail demand seems to be stabilising, with growing interest for coins in the west, and weekly physical deliveries in Shanghai have quietly doubled over the last two months. Demand for physical gold has the stealthy effect of increasing the gearing of the shorts in the paper markets.
However, it looks like the short sellers have returned in some force, with good Comex volume last Tuesday and healthy turnover again yesterday (Thursday). Open interest in gold rose, which with a falling price confirms futures are being driven by an increase in short positions, most probably in the managed money category. This is shown in the chart below, and is particularly noticeable since 27th August, the start of the current decline.

This post was published at GoldMoney on 05 September 2014.

The Fed Just Imposed Financial Austerity on the States

The Federal Reserve Board of Governors, together with the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency – the top regulators of Wall Street’s largest banks – finalized liquidity rules yesterday that make absolutely no sense to anyone with a historical perspective on how Wall Street operates in a crisis.
The Federal regulators adopted a new rule that requires the country’s largest banks – those with $250 billion or more in total assets – to hold an increased level of newly defined ‘high quality liquid assets’ (HQLA) in order to meet a potential run on the bank during a credit crisis. In addition to U. S. Treasury securities and other instruments backed by the full faith and credit of the U. S. government (agency debt), the regulators have included some dubious instruments while shunning others with a higher safety profile.
Bizarrely, the Fed and its regulatory siblings included investment grade corporate bonds, the majority of which do not trade on an exchange, and more stunningly, stocks in the Russell 1000, as meeting the definition of high quality liquid assets, while excluding all municipal bonds – even general obligation municipal bonds from states with a far higher credit standing and safety profile than BBB-rated corporate bonds.
This, rightfully, has state treasurers in an uproar. The five largest Wall Street banks control the majority of deposits in the country. By disqualifying municipal bonds from the category of liquid assets, the biggest banks are likely to trim back their holdings in munis which could raise the cost or limit the ability for states, counties, cities and school districts to issue muni bonds to build schools, roads, bridges and other infrastructure needs. This is a particularly strange position for a Fed that is worried about subpar economic growth.

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

Here’s Why the Market Could Crash–Not in Two Years, But Now

Markets crash not from “bad news” but from the exhaustion of temporary stability.
Yesterday I made the case for a Financial Singularity that will never allow stocks to crash. We can summarize this view as: the market and the economy are not systems, they are carefully controlled monocultures. There are no inputs that can’t be controlled, and as a result the stock market is completely controllable.
Today I make the case for a crushing stock market crash that isn’t just possible or likely–it’s absolutely inevitable. The conceptual foundation of this view is: regardless of how much money central banks print and distribute and how much they intervene in the markets, these remain complex systems that necessarily exhibit the semi-random instability that characterizes all complex systems. This is a key distinction, because it relates not to the power of central banks but to the intrinsic nature of systems. One of the primary motivators of my work is the idea that systems analysis can tell us a great deal about the dysfunctions and future pathways of the market and economy. Systems analysis enables us to discern certain pathways of instability that repeat over and over in all complex systems–for example, the S-Curve of rapid growth, maturation and diminishing returns/decline.

This post was published at Charles Hugh Smith on THURSDAY, SEPTEMBER 04, 2014.

The return of the stock market bubble: In a world with clear risk, investors are acting as if the market is completely risk free.

Some investors tend to believe the stock market is a perfect and balanced barometer of the underlying economy. Even with the recent bubbles in technology stocks and real estate, some still have this misguided assumption that stock values are always priced right. Most of the movement in the market is being driven by institutional investors since roughly half of Americans own absolutely no stocks outright. It should be rather obvious to those that read a few newspapers outside of the country that there are some major risk factors hitting the world right now: the Ebola outbreak, the conflict between Ukraine and Russia, and the Middle East. You also have anemic economic growth in Europe. In the US 92 million Americans have dropped out of the labor force. Yet somehow, the stock market is making new highs. Why? A large part of profits have come from firing workers, slashing wages, cutting benefits, and using cheap QE funding to juice up stocks. The market cares only about profits, not long-term sustainability. Yet if you were looking at the volatility index you would think that there was absolutely no risk in the current market. This market is looking very bubbly.
Bubble trouble
Bubbles are hard to define and spot. Bubbles are largely driven by psychology and emotions and move in an eradicate fashion. A bubble occurs when an asset, commodity, or stock for example moves up in price with very little economic fundamentals to support it. For example, real estate moving up with no actual income growth but people using leverage to go deep into debt. Some tech companies today are looking very bubbly based on their earnings.
The stock market is looking extremely frothy at the moment:

This post was published at MyBudget360 on September 5, 2014.

August Jobs Tumble To Only 142K, Lowest Monthly Print Of 2014 And Below Lowest Forecast; Unemployment Rate 6.1%

So much for the latest recovery: with not a single analyst expecting a NFP print below 190K, the BLS just reported that August payrolls tumbled from a revised 212K to only 142K, which was not only below the lowest Wall Street estimate of 190K, but it was also the the lowest monthly jobs print in all of 2014 and the biggest miss to expectations since the “polar vortex”! The Unemployment rate dripped modestly from 6.2% to 6.1% confirming yet again it has become a completely meaningless metric.

This post was published at Zero Hedge on 09/05/2014.

Goldman Sachs is the world’s worst gold forecaster so go long when they say short

Thank you to our friends in the London gold trading community for reminding us this summer that Goldman Sachs has one of the worst records as a forecaster of the gold price, so when they say to short gold like today it is almost always a time to go long.
The Ukraine-Russia crisis and economic weakness in Europe and Japan have been supporting gold somewhat, but prices are being pressured by Federal Reserve policy, said Jeffrey Currie, head of commodities research at Goldman Sachs. That’s why he sees the precious metal falling 17 per cent from current levels by year end.

This post was published at Arabian Money on 04 September 2014.

The Truth About Where Gold Price Is Headed

I will be honest, it has been a long time since I have been excited about gold, but I am starting to like gold once again. I had grown too bored to care what gold did. With the bull market top in 2011, and four years later price continues to founder can you blame me?
Let me start out by painting a picture for you. This is my technical analysis overlaid on the price of gold. This simply gives you a visual of were the price of gold is trading.
But first, if you have not yet seen this ‘Gold in the USA’ infographic you must check it out… it shows the history of gold in a visual format, and you will likely learn something from it – Click Here
GOLD HOLDS LONG-TERM BEARISH PATTERN Gold peaked around 1900 in September 2011 and quickly fell to the 1550 area. The metal then consolidated for 18 months before it broke support. The sharp decline triggered a drop in price to $1200 in April 2013. Since then gold has been in another consolidation, which is a bearish continuation pattern.
The lower highs in 2013 and 2014 reflect weakening demand and increasing selling pressure at lower price levels. A break down in price below support would trigger further weakness and a drop to roughly $900 oz. If you want more of a bearish visual; see my August gold report – Click Here

This post was published at Gold-Eagle on September 4, 2014.

A difficult question

In a radio interview recently* I was asked a question to which I could not easily give a satisfactory reply: if the gold market is rigged, why does it matter? I have no problem delivering a comprehensive answer based on a sound aprioristic analysis of how rigging markets distorts the basis of economic calculation and why a properly functioning gold market is central to all other financial prices. The difficulty is in answering the question in terms the listeners understand, bearing in mind I was told to assume they have very little comprehension of finance or economics.
I did not as they say, want to go there. But it behoves those of us who argue the economics of sound money to try to make the answer as intelligible as possible without sounding like a committed capitalist and a conspiracy theorist to boot, so here goes.
Manipulating the price of gold ultimately destabilises the financial system because it is the highest form of money. This is why nearly all central banks retain a holding. The fact we don’t use it as money in our daily business does not invalidate its status. Rather, gold is subject to Gresham’s Law, which famously states bad money drives out the good. We would rather pay for things in government-issue paper currency and hang on to gold for a rainy day.

This post was published at GoldMoney on 05 September 2014.

Labor Participation Rate Drops To Lowest Since 1978; People Not In Labor Force Rise To Record 92.3 Million

It is almost as if the Fed warned us this would happen. In a note released yesterday, a Fed working paper titled “Labor Force Participation: Recent Developments and Future Prospects“, looked at the US labor force and concluded that “while we see some of the current low level of the participation rate as indicative of labor market slack, we do not expect the participation rate to show a substantial increase from current levels as labor market conditions continue to improve.” But don’t blame it on the greatest recession/depression since 1929: “our overall assessment is that much – but not all – of the decline in the labor force participation rate since 2007 is structural in nature.”
Well that’s very odd, because it was only two months ago that the Census wrote the following: “Many older workers managed to stay employed during the recession; in fact, the population in age groups 65 and over were the only ones not to see a decline in the employment share from 2005 to 2010 (Figure 3-25)… Remaining employed and delaying retirement was one way of lessening the impact of the stock market decline and subsequent loss in retirement savings.”

This post was published at Zero Hedge on 09/05/2014.

Gold Monetisation Scheme Aims to Treat Gold as Currency in India

Gold should be treated as a currency, according to India's top gold refiner, MMTC-Pamp. The organisation is working on a gold metal account scheme that would help small retail gold consumers deposit their gold, melt and earn interest on it. 
In a move aimed at mitigating the meagre gold supply situation across the country, which has led to a high current account deficit (CAD) and leading to high imports, the organisation has proposed a Gold Monetisation Scheme (GMS).
The scheme will ensure that gold deposits will be treated just as currency deposited in a bank and earn interest.

This post was published at Mineweb

Hugo Salinas Price: How the Dollar Will Die

The existence of fiat currencies depends on their ability to acquire dollars. In the case of the fiat dollar, the dollar will continue to exist as long as dollars can be used to acquire gold.
The condition under which no quantity of dollars can acquire a gram of gold, is known as “permanent backwardation”. (There will always be individuals who will be disposed to part with a small quantity of gold, in exchange for dollars or other fiat currencies. But the purchase of gold in quantity can only be done on world markets, and while “backwardation” is temporary. This possibility disappears when “backwardation” becomes permanent).
In “backwardation” – which has presented itself momentarily, in recent times – gold goes into hiding (its owners do not wish to part with it) and in the markets there has been no one willing to purchase gold for future delivery, even though its future price is lower than the price of physical gold for immediate delivery. So far, this condition has been temporary and not permanent.

This post was published at Plata.com.mx

Canadian Banks Got $114 Billion from Governments During Recession

Canada's biggest banks accepted tens of billions in government funds during the recession, according to a report released today by the Canadian Centre for Policy Alternatives.
Canada's banking system is often lauded for being one of the world's safest. But an analysis by CCPA senior economist David Macdonald concluded that Canada's major lenders were in a far worse position during the downturn than previously believed.
Macdonald examined data provided by the Canada Mortgage and Housing Corporation, the Office of the Superintendent of Financial Institutions and the big banks themselves for his report published Monday.

This post was published at CBC News

Why You Might Be Saving Too Much for Retirement

As I approached the final life-cycle stage of retirement, I naturally began to think back to the retirement of my parents and marveled about how well they did without much retirement income.
With little more than 40% or 50% of their pre-retirement income, largely from Social Security, they lived well and even managed to multiply their net worth in retirement. This seemed to fly in the face of much of the fear promoted by the financial services industry that retirement isn't possible unless people could generate 75% or even more of what they earned in their last years of work.
Something didn't jibe.

This post was published at Market Watch