“Off The Grid” Economic Indicators – Q4 2014

Jon

Drones are ‘In’; laptops are ‘out’. Demand for pickup trucks, guns, and used cars are all still hot, but food stamp participation is climbing once again. Sales of gold and silver coins remain weak, but the same goes for U. S. equity mutual funds. And forget worries about deflation if you like bacon cheeseburgers, which are 7% pricier to make now than a year ago. Those are some of the headline observations in our quarterly review of ‘Off the grid’ economic indicators. Taken in total, they tell a story somewhat less sanguine than the typical government data. Confidence is returning, yes. But consider just how low it got: the top 3 Google autofills for ‘I want to sell my …’ featured ‘kidney’ for the first 3 quarters of this year. It was replaced in the current quarter with ‘Laptop’. Progress, of a sort… Every quarter since the beginning of 2011 we have assembled a variety of ‘Off the grid’ economic indicators. The original idea stemmed from the burst of demand for gold coins and guns during and after the Financial Crisis. After all, the typical long gun costs several hundred dollars, and even fractional ounce American Eagles are more than that. Americans clearly had money to spend, but it wasn’t going into traditional products and services. There was clearly more to the state of the U. S. consumer psyche than the headline government economic data showed.
Over the years we have collected a wide array of repeatable, large sample datasets with an eye to tracking how real people think about their economic conditions. Take, for example, the Supplemental Nutrition Assistance Program (SNAP, better known as ‘Food Stamps’). The U. S. Department of Agriculture releases participation data monthly – the last numbers available date from September 2014. Here’s a snapshot of what they tell us:
There are 46.5 million Americans in the SNAP program. That is 15% of the entire U. S. population. In late 2006, before the Great Recession, that number was 43% lower at 26.3 million. Government expenditures on the program currently run $5.7 billion/month or $124/person/month.
The number of people in the SNAP program makes it the largest ‘State’ in the Union. California, by way of comparison, has just 37 million inhabitants.
The number of SNAP participants rose from March 2014 to September by over 300,000. The program grew in the wake of the last recession, but that trend had tailed off by 2012. Now, the program is growing again, even though Congress reduced its funding in late 2013.

This post was published at Zero Hedge on 12/23/2014.

Turd on With Jason Burack

Jon

About an hour ago, I spoke with Jason Burack of WallStForMainSt. Thanks to Jason for the quick turnaround and almost immediate posting!
In this call, Jason and I discuss:
The failed Swiss Gold Initiative Ongoing gold repatriation requests Eastern gold demand and the potential of a dollar alternative The fraying of the physical–paper connection Thanks again to Jason for the quick turnaround and be sure to visit his site: TF


This post was published at TF Metals Report on December 23, 2014.

The $330 Billion Global Tax Break

Jon

In an October 2008 op-ed in the New York Times, Warren Buffett famously advised: ‘Be fearful when others are greedy, and be greedy when others are fearful.’
Whereas most investors during that time of financial panic were dumping their freefalling U. S. equities, Buffett was snatching them up at such great volume that he imagined his personal, non-Berkshire Hathaway portfolio would soon be composed only of domestic stocks.
‘I haven’t the faintest idea as to whether stocks will be higher or lower a month – or a year – from now,’ he continued. ‘What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up.’
The same is true for oil prices. I can’t say when oil will begin to recover or by how much. What I can say is this: For far too many investors, by the time they gain back the confidence to put money into oil stocks again, the rally might have already taken off, making it challenging to capture the full benefit of the upswing.
Think of it this way. Every Black Friday, merchandise is discounted to such an extent that thousands of bargain shoppers are willing to camp overnight in parking lots to be the first inside. When the doors open, people literally get pushed, shoved, elbowed and trampled on.
But too often, the stock market works in a curiously opposite way. When certain stocks drop in price, investors scramble for the exit instead of picking up the bargains.
Oil Extremely Oversold
Oil tycoon T. Boone Pickens recently told Mad Money’s Jim Cramer that oil would return to $100 within 12 to 18 months. Again, there’s no guarantee that this will happen – and keep in mind that it’s in Pickens’ self-interest that oil reach these figures again – but if it does, the most opportune time to participate in the oil trade could be now when stocks are at a discount.
Pickens’ prediction aside, there are sound reasons to believe that oil prices will be normalizing sooner rather than later.
For one, oil prices are currently below many countries’ breakeven prices. This could finally encourage the Organization of the Petroleum Exporting Countries (OPEC) to cut production, so long as Saudi Arabia gets assurances from fellow members that they would comply with the cuts. Where they are right now, prices simply aren’t sustainable. According to Business Insider, oil rigs in the Permian Basin have fallen by nine; those in Williston by seven; and those in Marcellus by one.

This post was published at GoldSeek on 22 December 2014.

Banksters’ Bullion-Crisis At New Extreme?

Jon

Another day goes by. Another day of the West’s (the One Bank’s) economic terrorism against Russia: an overt attack on that nation’s currency, and thus the economy itself. As noted in the commentary which preceded this; such economic terrorism against the ruble damages Russia’s economy, on a percentage-for-percentage basis.
Another day of defiance: by Russia itself, and (increasingly) the Rest of the World. We now know that part (and perhaps most) of the motive for this escalation of Western terrorism against Russia is gold.
What is the best way to identify such motives, when this rapacious crime syndicate launches one of its major ‘operations’? Let them tell us, themselves. Having a megaphone of unparalleled proportions (the Corporate media propaganda machine); the Banksters – as the serial extortionists that they are – will inevitably broadcast their demands, loudly and unequivocally.
When they manufactured a global economic collapse in the Crash of ’08; they broadcast their demands (to Western governments), loudly and unequivocally: pledge $10’s of trillions to them (the real price-tag of their ‘bail-outs’) or they would complete the destruction of the global economy. The bail-outs were utter and complete fraud, as there were no ‘losses’, merely sham-debts engineered between tentacles of the same crime syndicate (the One Bank).
When the Banksters manufactured a currency-crisis in India last year; they also broadcast their demands loudly, although admittedly in a more indirect manner. The Corporate media merely ‘predicted’ (again and again and again) that India’s currency crisis (and the mythological ‘current account crisis’ which supposedly caused it) would magically disappear as soon as India blocked its gold imports – to a population which was (at that time) buying gold at a ravenous and unprecedented rate.
Now, as 2014 draws to a close; we see more economic terrorism from the One Bank, and once again its ‘demands’ are broadcast loudly and unequivocally by the Corporate media. Again (as with India) the extortion is more indirect than the shake-down of Western governments that took place in 2008.

This post was published at BullionBullsCanada on 22 December 2014.

Exposing The Deception: How The US Economy “Grew” By $140 Billion As Americans Became Poorer

Jon

This is simply stunning.
Regular readers will recall that last month, at the same time as the US Bureau of Economic Analysis reported was a far better than expected 3.9% GDP (since revised to 5.0% on the back of the previously noted Obamacare spending surge), it also released its Personal Spending and Income numbers for the month of October, or rather revised numbers, because as we explained exactly one month ago “Americans Are Suddenly $80 Billion “Poorer“” thanks to (upward) revised spending data and (downward) revised income. What this meant a month ago is that as a result of a plunge in the imputed US savings rate, some $80 billion in personal savings was revised away from the average American household and right into the US economy.
After all, something had to grow the US GDP by a massive amount in order to give the Fed the green light it needs to hike rates eventually, just so it can then ease when the global dry powders from all the other central banks is used up.

This post was published at Zero Hedge on 12/23/2014.

UMich Consumer Confidence Near 8-Year High, Inflation Expectations Hit 4-Year Lows

Jon

Despite the collapse of inflation expectations in last month’s UMich confidence, the push to 7-year highs was unstoppable (though missing expectations)…after soaring confidence amid Ebola scares and crashing stocks in October, even the surveyers were questioning the respondents’ replies “it would be surprising if recent declines in household wealth did not reverse some of the recent gains in optimism in the months ahead.” But sure enough, to maintain the magic, UMich consumer confidence rose from November’s missed expectations to the highest since Jan 2007 at 93.6. Inflastion expectations for the next year fell from the preliminary to the lowest in over 4 years.

This post was published at Zero Hedge on 12/23/2014.

Why gold and silver will continue to be the perfect hedge in 2015

Jon

Gold’s up 12 per cent against the yen this year, 9.5 per cent against the euro and for Russian holders up 80 per cent. It’s been the perfect hedge in a very imperfect world of currency wars and money printing. Investors stocking up on bullion at current depressed prices know what they are doing.
It is of course never quite that simple. ArabianMoney can see three different scenarios for gold and silver prices in 2015.
2015 gold scenarios
First, US stock markets crash in anticipation of a rate rise in June. Falling markets will briefly pull the price of bullion down with them. QE4 is launched. Then prices recover sharply by the end of the year and actually exceed all other asset classes in performance. That’s something of a repeat of 2008-9. In addition, QE4 might crash the bond market and send gold prices to the moon.
Secondly, the global economic contractions becomes so bad by mid-year that the Fed abandons rate rises as impossible. Stock markets correct as the profit outlook is also therefore bleak. But as the threat of higher interest rates to bullion is gone then gold and silver have a positive year alongside bonds which have another surprisingly good year.

This post was published at SilverSeek on December 22, 2014 –.

The Housing Recovery Remains Cancelled Due To 6 Months Of Downward Revisions

Jon

Following last month’s surge to record high home prices, it is perhaps no surprise that for the 6th month in a row, home prices have been revised lower. New Home Sales printed 438k, down from prior revised lower 445k and missing expectations of a surge to 460k… missing for 8 of the last 10 months. However, the key focus should be on the epic revisions of the (by now useless) home sales. For the period May – November, the initial new home sales prints amount to 2.779MM houses. Post revision, the number plunges by 22% to 2.168K. There goes the housing pillar of recovery (let’s hope economists are wrong and rates don’t rise next year eh?)

This post was published at Zero Hedge on 12/23/2014.

Ted Butler Quote of the Day 12-23-14

Jon

Because it controlled the price of silver, JPMorgan profited handsomely on its COMEX manipulation thru 2010—and not even an ongoing CFTC investigation interfered with JPM’s control on silver prices. However, in late 2010, investor demand for physical silver caused silver prices to break above the highs of early 2008 and JPMorgan could no longer control the price of silver through excessive paper short selling on the COMEX. Physical silver conditions tightened so much by the end of April 2011 that the price reached nearly $50 and, quite literally, JPMorgan (along with other collusive CME traders) were staring into a financial catastrophe, the same as undid Bear Stearns three years earlier.

But no bailout of JPMorgan was possible—and instead, the bank along with interested parties at the CME Group, arranged for a disorderly take-down of silver prices, almost assuredly with the approval of U.S. regulatory officials. The disorderly take-down proved successful and the big shorts, particularly JPMorgan, escaped what would have been an epic financial catastrophe had they been forced to cover their massive silver short positions.

It is said that one learns more from failure, especially near disaster, than from success. It is my belief that at the time of JPMorgan’s near catastrophe in being short silver into April 2011 that the bank realized just how limited and critical the supply of silver in the world was and decided to use that near-death experience to their advantage. It was at that time that the bank decided to buy as much physical silver as it could in order to profit even more to the upside than it did previously to the downside.

A small excerpt from Ted Butler’s subscription letter on 12-20-14.

  More precious metals news & information available at
Ed Steer’s Gold & Silver Daily.

How Walgreen EPS Just Beat Consensus Even As Its Revenues Missed

Jon

Moments ago Walgreen reported that it was the latest company to confirm that despite endless propaganda, the retail weakness in the most recent quarter – one ending November 30 – has spread to virtually all product lines, and as a result it missed revenue estimate of $19.59 billion, printing $19.55BN instead. Yet despite the top-line weakness, the stock is higher pre-market for one simple reason: as usual the algos were fooled by the bottom line, which beat by a whopping 6 cents, printing at $0.81 on $0.75 expected. But unlike most of its peers buying back their stock at a record pace, Walgreen barely engaged in the now generic stock repurchasing gimmicks.

This post was published at Zero Hedge on 12/23/2014.

Will the Fed Intervene in the Oil Market?

Jon

In a larger sense, the Fed is already intervening in the oil sector via its zero interest rate policy (ZIRP) and its unlimited liquidity for financial speculation.
The problem with financializing a critical sector of the economy is the financialization process transforms it into a systemic risk. The trajectory of every financialized sector is the same: debt and leverage are piled ever higher on a base of collateral that eventually collapses as heightened risk becomes the Monster Id of a crowded trade. Once the Monster Id burns through the firewalls that were supposed to limit risk, the crowded “safe” trade blows up and the conflagration quickly spreads throughout the financial system.
Every financialized sector thus has the potential to take down the entire financial system.
The mortgage sector is a prime example of this dynamic. The financialization of the mortgage industry created the subprime mortgage firetrap, which inevitably caught fire and threatened to burn down the entire global financial system.
The central bank that encouraged the financialization then has no choice but to intervene to save the system from the toppling dominoes of leverage and risk. Once the mortgage sector was fully financialized–securitized, tranched, packaged into collateralized debt obligations and other derivatives–the implosion of the weakest link (subprime mortgages backed by bogus collateral and liar loans) was baked into the financialization process.

This post was published at Charles Hugh Smith on MONDAY, DECEMBER 22, 2014.

If Energy Prices Remain Near Current Levels, Canada’s Economy Is in Trouble

Jon

And so it begins… Collapsing crude prices are starting to make their way through the North American energy sector, as the most unprofitable oil & gas rigs are mothballed. Those flashing red numbers are not just on your screen any more.

The closures have been particularly acute in Canada, where some 40 oil & gas rigs have been taken out of operation recently. In fact it’s not clear if economists fully appreciate what’s about to transpire with the Canadian economy. This decline in rig count is just the beginning.

This post was published at FinancialSense on 12/22/2014.

Fed Tightening On Deck After Q3 GDP Soars To 5% On Revisions, Highest Since 2003

Jon

And just like that Q3 GDP, the one for the quarter ended Sept.30, was revised from 3.9% (which in turn was revised higher from 3.5%) to a mindblowing 5% – the highest print since Q3 2003 when GDP rose by 6.9%. This was above the highest Wall Street forecast of 4.7%, higher even than Joe Lavorgna’s. The drivers: unprecedented revisions to Personal Consumption which supposedly rose by 3.2% in Q3 as opposed to the 2.2% prior reported, and 2.5% expected. Consumption accounted for 2.21% of the final 5.0% GDP print: this was the highest since Q4 2010 when it rose 2.8%. In fact, everything was revised higher: fixed investment rose 1.21% compared to the 0.97% reported previously; private inventories were virtually unchanged after allegedly subtracting 0.6% from growth in the original Q3 GDP estimate; net trade was unchanged adding 0.77% to GDP and finally the government boosted GDP a little as well, contributing 0.8%.
In other words, it is all downhill from here, as the subprime fueled boom in consumer spending in the late summer will certainly not be repeated any time soon, Q4 capex is crashing (as the durables report just confirmed), and inventory restocking took place far earlier than expected, meaning expectations of a low 2% pring for Q4 GDP will now have to be revised lower as consumption was pulled aggressively into the present.
GDP breakdown by component:

This post was published at Zero Hedge on 12/23/2014.

Crude Oil, US National Debt, and Silver

Jon

Conclusion:
Crude oil and silver prices have crashed before, and they will again. But the one constant in our financial universe that seems inevitable, for the foreseeable future, is increasing debt. Crude oil and silver prices will follow increasing debt.
*****
Examine the following chart of monthly crude oil prices. In the past 26 years crude oil prices have crashed 65%, 59%, 54%, and 76%. The current crash is about 51% so far.

Examine the following chart of monthly silver prices. You can see similar crashes of 64%, 46%, 51%, and 68% since 1986. Prices rallied after these crashes and went considerably higher. Sometimes it took years, but like the national debt, silver prices have substantially increased since 1913.

This post was published at Deviant Investor on December 23, 2014.

Here Is The Reason For The “Surge” In Q3 GDP

Jon

Back in June, when we were looking at the final Q1 GDP print, we discovered something very surprising: after the BEA had first reported that absent for Obamacare, Q1 GDP would have been negative in its first Q1 GDP report, subsequent GDP prints imploded as a result of what is now believed to be the polar vortex. But the real surprise was that the Obamacare boost was, in the final print, revised massively lower to actually reduce GDP!

This post was published at Zero Hedge on 12/23/2014.

Financial Times Lex: Russia is a Creditor to the World – Default Risk Non-existent

Jon

Quote of the day from Financial Times’ Lex Column that sums it all up:
“Officially, Russia is a creditor to the rest of the world. This may have been easy to forget during the last week.
Extreme volatility in the ruble, rising bond yields, and panic in its money markets: all suggest a country about due for a visit from the International Monetary Fund.  Well, the reception from President Vladimir Putin would probably be rather frosty.
Also, the net international investment position (external assets versus liabilities) is $180bn.
So – even given $120bn in external debt owed by Russian banks and companies maturing next year – what’s the problem?”

This post was published at Russia Insider