12/9/2014: Bank of Russia Leaves Rates Unchanged

So Bank to Russia decided to maintain its benchmark rate at 8% today. The announcement is here This was expected by majority of analysts: 17 expected no hike, 7 expected a 50bps hike and 1 expected a 25bps hike. My own view – tweeted out yesterday – that the decision could have gone in favour of a hike. My rationale was (and remains the same for the next two-three months):
1. Russian sanctions against Western exports of food pushed up inflation and inflationary expectations. I wrote about this before on a number of occasions. As far as we know, early September CPI accelerated upward momentum. In July, when inflation shot up to 7.5% (well ahead of 5% annual target), the CBR responded with a hike and the Government revised its outlook for inflation (July decision raised rates from 7.5% to 8%). August figures (through September 8) suggest inflation has increased to around 7.7% and core inflation hit 8.0%

This post was published at True Economics on September 12, 2014.

Indian traders sit & wait in the short term

Domestic gold buyers may be missing out on softening prices of the metal in the international market thanks to a weaker rupee but punters are still mounting bearish bets on the metal in the local commodity bourse to gain from the downside.
Gold and silver futures contracts on the MCX witnessed a sharp jump in bearish bets as the yellow metal in the overseas market, which local markets track, fell to a near nine-month low and silver plunged to a 15-month low. However, unlike in the overseas market, both MCX gold and silver futures traded above their lows because of a weaker rupee.
Overseas spot gold made a nine-month low and silver dipped to a 15-month low on expectations of a stronger dollar in intraday trading on Thursday. But, MCX gold at Rs 27,026 per 10 gm traded 4.5 per cent above its low on June 6 and silver 4.6 per cent above its low on May 5 this year. This is attributable towards high duty (10 per cent) and a weaker rupee. The rupee, which closed at 60.93 to the dollar on Thursday, was stronger at 59.18 on June 6, when the gold near-month futures contract made its year-to-date low. On May 30, when the silver near-month contract hit its year-to-date low, the rupee was at 59.10 to the dollar.

This post was published at TruthinGold on September 12, 2014.

Jamie Dimon Gets a Personal Call from the Prez; Seniors Get Garnished

Sometimes we have to pinch ourselves to make sure we are not sleepwalking in a Dickensian dream. Earlier this week we heard Senator Elizabeth Warren tell a Senate Banking session how JPMorgan’s CEO, Jamie Dimon, got a $8.5 million raise after craftily negotiating away all of the bank’s crimes with the payment of billions in shareholders’ money. (Two of those crimes, by the way, were felony counts for aiding and abetting Bernie Madoff in his Ponzi scheme – also craftily settled under a deferred prosecution agreement with the Justice Department, which effectively puts the bank on probation for two years.)
Last night, the Wall Street Journal informed the public that, apparently, none of this criminal activity at JPMorgan has dulled President Obama’s fondness for its CEO Jamie Dimon, who has recently been undergoing treatments for throat cancer. The Journal reported: ‘During one of his earliest treatments, Mr. Dimon received a call on his cellphone from President Barack Obama, who wished him a healthy recovery, the bank confirmed.’
A President with a kind heart toward those experiencing health issues is, of course, a virtue. But it is more than likely that the President hasn’t similarly dialed up the victims of JPMorgan’s various and sundry wealth transfer assaults when they fall ill.
One day before the news of the President’s phone call to Dimon emerged, we learned from the U. S. Senate’s Special Committee on Aging and the Government Accountability Office (GAO) that some senior citizens are having their Social Security payments garnished over unpaid student loan debt, forcing them below the poverty threshold.

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

Examining the net worth of renters and homeowners: Most Americans stash their wealth in home equity. Many housing markets affordable, just not the area you are looking at.

12 Sep, 2014
The nation is undergoing a radical transformation where renting is currently outpacing homeownership. The reasons are complex including the multi-year investor orgy into single family homes. Since the crisis hit 7,000,000 homes have been lost due to the long and drawn out process of foreclosure. No need to worry since investors picked up a solid portion of the slack here. Americans are notoriously bad savers and addicted to debt. For most, housing is a forced savings account. This is why when net worth data is pushed out we find that homeowners clearly outperform renters. It is important however to keep in mind most of the net worth is tied up in equity. That is, you will need to tap your home somehow to get the money flowing out. This is how we end up with dumpster diving baby boomers scrounging the local Whole Foods for goodies while living in amillion dollar crap shack. The hipster kids don’t seem to mind since they are now living with mom and dad, unable to afford the high rents in places like California. Yet housing overall does end up being a big forced savings account and that is why the net worth figures between homeowners and renters are not even close. If anything, it adds more evidence to the feudal landlord nation we are witnessing.
Net worth – homeowners and renters
One of the more in depth surveys done on net worth comes from the Federal Reserve. The data is comprehensive and shows a clear win for homeowners on the net worth front. In fact, as a nation, renters are one paycheck away from eating Kibbles ‘n Bits. Yet this doesn’t paint a very clear picture for say a place like San Francisco where the majority of households rent but you have tons of high paid tech workers.
First, let us examine the data:

This post was published at Doctor Housing Bubble on Dr. Housing Bubble /.

Scotland Can Become The New Switzerland of Europe

Even within each nation, there is a divide that centers on the stark difference between the HAVES and those who want to take by law whatever they have without working for it – the INDUSTRIOUS v the LAZY. This conflict is emerging everywhere in California and even in New Jersey. So in Scotland, this is true between Glasgow and Edinburgh.
Independence is the first step. This would shake things up even in London and force reform. Scotland could then move to become the New Switzerland of Europe since the Swiss gave up everything that made them Swiss to start with – TAX REBELLION of William Tell after the tax collector made him shoot the apple from his son’s head. The neutrality of the Swiss worked in war ONLY because they held the money for everyone while they fought. Today, the Swiss gave up everyone and their mother trembling in fear of the USA, Germany, and France not to forget Italy. If war comes to Europe, I seriously doubt that chocolate and watches will secure their neutrality this time.

This post was published at Armstrong Economics on September 12, 2014.

How long until the bulls stop laughing at Marc Faber?

Marc Faber famously predicts that US stocks will lose 30 percent of their value – a prognostication, needless to say, that has not proven particularly prescient over the years, and that gold prices are set to rocket while they continue to fall.
Still, the author of the Gloom, Boom & Doom report continues to see bubbles everywhere he looks, especially in US equities…

This post was published at Arabian Money on 12 September 2014.

Harsh Austerity Sends Italian, Spanish Debt To Record Highs

Damn you debt-reducing austerity-that-is-blamed-for-everything-that-is-wrong-with-Europe’s-triple-dip-recessionary-economy-when-it-is-the-corrupt-socialist-incompetent-politicians’-fault. Damn you to hell! Oh wait a minute:
Italy’s government debt rose to a record 2.169 trillion in July from 2.168 trillion in June, the Bank of Italy says in its public-finances supplement. Spain total govt debt amounted to a record 1.01 trillion in 2Q, up from 995.9b in 1Q, Bank of Spain says; 2Q Total Govt Debt Rises to 98.9% of GDP From 97.4% in 1Q With austerity like this, who needs to spend like a drunken sailor?

This post was published at Zero Hedge on 09/12/2014.

Speculator ‘Insurance Shorts’ and Swap Dealer Shorts Likely to Spark a Counter Rally in Gold

HOUSTON – (Got Gold Report) — Just a little ‘thinking out loud’ on the Managed Money, what I call ‘insurance short’ positions. Doing so shows a considerable amount of gun powder laying on a large wooden box of short covering dynamite, metaphorically speaking.
That’s because while The Funds piled on new shorts Swap Dealing banks hung onto most of their record high shorts.
An imbalance is an understatement. See if you agree…
Recall that as of August 12, with gold then $1309, Managed Money, aka, The Funds, held a smallish 21,930 short contracts for gold futures on the COMEX bourse.
Recall that The Funds are trend followers that will generally continue to add to their positions in the direction of the trend until they ‘break’ that trend (or it breaks of its own volition). Below is (are?)* the Managed Money data since July 8 for reference.

This post was published at GotGoldReport on September 12, 2014.

The Game Of Thrones & The Game Of Markets

A few brief thoughts on an Epsilon Theory connection between modern capital markets and the NFL (and between Central Bankers and Roger Goodell). The connection is solipsism – a pathological egocentrism where reality is defined by an individual’s mental perceptions and constructs.
For individuals like Goodell and Yellen we’re talking about good old-fashioned individual solipsism. These are people who have never been proven wrong about anything in their professional lives. I know that sounds weird to professional investors and allocators, because we are demonstrably wrong aboutsomething every single freaking day, and it’s a hard concept to describe effectively to someone who’s never lived within a sheltered organization where empirical outcomes are either pre-ordained or immaterial. But both Goodell and Yellen have spent their entire professional careers as the modern equivalents of cloistered monks or nuns, the former within the Holy Order of the National Football League and the latter within the High Church of UC Berkeley.

This post was published at Zero Hedge on 09/12/2014.

Stocks Slump As Hawkish Fed Fears Send 10Y Yields Back Over 2.60%

It appears the upwards revisions for retail sales and not missing expectations for the headline data is thegood news that is bad news for markets. With just a few days until the FOMC, it seems market perceptions of potential fed hawkishness (no good excuses recently not to be) is weighing on bonds and stocks. Treasury yields are accelerating higher (10Y above 2.60% for first time since July) tracking oddly perfectly with USDJPY and stocks, having entirely decoupled from JPY, are tanking on the rising rates/Fed hawkishness concerns. Of course, it’s Friday so anything goes before we close.

This post was published at Zero Hedge on 09/12/2014.

Will The Real Silver Commercials Stand Up?

Sep 11, 2014
One of the more persistent flaws in the world’s most important price discovery mechanism comes down to a simple question.
How did it come to pass that banks were given access to the commercial category of traders?
It’s a given that the market is rigged to high heaven. And it’s completely obvious by now how it is accomplished. They only folks left in denial about it have a direct incentive for ignoring it – usually an obvious one.
The nature of the players should tell one all they really need to know about price discovery and a system that is corrupt through to the core. They have 24/7 access to a paper market that is a gamblers den, and a faint shadow of that which it is purported to represent: fair price discovery.
What you have in the silver market is an extreme continuation of a policy from long ago. The commercials that operate these massive illegal and naked short positions are simply an extension of the users, the original CBOT board members whose positions were threatened by the Hunts.
Of course, the Hunts were easy scapegoats. The users were protecting themselves long before the Hunts. The users have been around since the days before silver was officially demonetized.
By extension, they opened the avenue for big finance.
The users could now operate in the background, while financial conglomerates could do what all giant trusts strive to accomplish – dominate with deep pockets, tentacles spread everywhere. Completely above the law by sheer size and political revolving door connection.

This post was published at Silver-Coin-Investor on Dr. Jeffrey Lewis /.

Market Report: Strong dollar undermines precious metals

Precious metals have had to endure a week of gathering dollar strength, which is at least partly the result of problems specific to the euro, yen and sterling. The result is gold has fallen a further $30 over the week, and silver by about $0.70c. The first chart is of gold and open interest on Comex. Over the last two weeks the gold price has been falling while open interest has been rising: in other words paper gold has been flooding the market. This is illustrated in the second chart, of Managed Money short positions.
Last Tuesday’s position (not yet in this chart) will be released after-hours tonight, and I expect these shorts to rise to about 70,000 contracts. Given the action of the last few days I would expect this short interest to currently be at a new record. For the third time in a year, hedge funds and other fund managers are betting the ranch on a falling gold price.

This post was published at GoldMoney on 12 September 2014.

Schrodinger’s Confidence: US Consumers Both More And Less Confident At The Same Time

Despite Gallup’s poll showing consumer confidence going nowhere this year, and Bloomberg’s consumer comfort level for high-income earners collapsing, the government’s UMich Consumer Sentiment measure has soared to its highest since last July’s exuberance (at 84.6). Take your pick which data you trust…
UMich beats and surges to 15-month highs…

This post was published at Zero Hedge on 09/12/2014.

How the Government Deliberately Understates Inflation as Rents and Housing Costs are Soaring

It’s hard these days to worry about inflation amidst a maelstrom of voices claiming that there isn’t enough inflation to begin with, and that the world will end if prices stop rising for a moment. Whatever inflation we may encounter in daily life, whether for healthcare, tuition, beef, gas, or cars, we’re told not to worry about it because the higher prices are either annulled by an elegant scheme called hedonic regression, or they’re only temporary, or the amounts are too small to impact the overall budget.
But when it comes to housing, which now accounts for 33.6% of what Americans spend [What’s Draining American Wallets? Interactive Chart], none of these excuses fly. Because inflation in housing has been red-hot.
Actually, it hasn’t been red-hot, the way the Bureau of Labor Statistics measures it. Its CPI contains two housing components: Owners’ equivalent rent of primary residence (OER) and Rent of primary residence (Rent). They purport to measure the cost of ‘shelter,’ which is the ‘consumption item’ that a home provides and is thus included in CPI. The cost of the home itself and any improvements to the home are considered an investment, not consumption, and therefore not part of CPI.
Owners’ equivalent rent accounts for 23.83% of the CPI and rent for 5.93%, for a combined weight in the CPI of about 30%. It is by far the largest and most important component.
Inflation in these two categories was contained, as they say at the Fed. In July, owners’ equivalent rent rose 2.7% and rent rose a minuscule 1.0%.

This post was published at Wolf Street by Wolf Richter ‘ September 12, 2014.

Gold’s best days are still to come say professional investors

Gold prices may be low again right now but this is just a temporary buying opportunity in the view of some experts.
Chris Watling, CEO of Longview Economics, and Jim McCormick, head of asset allocation research at Barclays, discuss the prospects for gold with both suggesting prices could rise in the next couple of years…

This post was published at Arabian Money on 12 September 2014.

BofA Warns “Risk Of Selloff” After September’s FOMC

While BofAML’s Michael Hanson expects Yellen’s overall tone to remain dovish, market perception will be key. The combination of changes to the forward guidance language, upward drift of the dots, and any comments seen as potentially hawkish, could lead to a selloff…
Via BofAML,
Risk of a hawkish read
The September FOMC meeting may be the most anticipated in nearly a year. We expect no fundamental changes in Fed policy, despite revising the statement to clarify policy data dependence and some upward drift in the dots. The FOMC should taper by another $10bn as well. Fed Chair Janet Yellen’s press conference will set the tone for the market reaction. While we anticipate she will continue to support a patient and gradual normalization process, the risk is that markets may sell off on the perception of a less dovish Fed.

This post was published at Zero Hedge on 09/12/2014.

Weekly Gold Chart – Updated

I have posted this chart fairly regularly now for some time to give a more intermediate term look at the gold market for those who are interested. Not a single thing has changed for gold in over a year now. The metal is still trapped within a broad range defined on the chart. It is now working its way down toward the bottom of the range having failed to make any new weekly high. As a matter of fact, the pattern for gold has been one of LOWER HIGHS for over a year now within that range. That is suggestive of weakness. This week the HIGHER LOW was broken and while it is still not the end of the trading session for Friday, the metal is threatening to put in a LOWER LOW within the range compared to the May close. That is a sign that the odds favor a move down towards $1200 unless it swiftly reverses and regains the $1240 level in a convincing fashion.

This post was published at Trader Dan Norcini on Thursday, September 11, 2014.

Antidote to an Equity Realignment? Invest in Fundamentally New Industries

Professional Investors Are Preparing For A Stock Market Crash … It looks like a growing number of professional investors are preparing for a stock market crash, as hedge fund filings for the second quarter show a spike in defensive positions. In particular, legendary billionaire George Soros made a huge bet against the market. He increased his short position on the Standard & Poor’s 500 by a startling 605%. The 9.69 million new shares of SPDR S&P 500 ETF Trust (NYSE Arca: SPY) put options gave Soros a total of 11.29 million shares and made it the biggest holding in his portfolio. – ETFDailyNews
Dominant Social Theme: This market is going down, down, down … Or maybe not …
Free-Market Analysis: According to this article, there may be a crash in the fall, but investors should protect themselves, stay in the market and treat a crash as a buying opportunity.
The market is having a long-term bull run, according to this article, and investors should be expecting to take profits for many years to come.
This may be an overly optimistic perspective about what’s going on. But that’s the takeaway …

This post was published at The Daily Bell on September 12, 2014.

RBS, 4 Other Banks Warn of Relocation to England if Scots Vote Yes; Catalans Stage Mass Protest for Independence

Tale of Two Countries
Fearmongering in Scotland hits fever pitch as RBS and four other banks threaten to leave the country if Scotland votes “Yes” for independence.
In Spain, Catalans staged a huge protest in favor of independence. The Spanish government hopes Scotland will vote “No” even though it seeks to halt a Catalan vote altogether.
Let’s take a close look at these stories starting with Scotland.
RBS, 4 Other Banks Warn of Relocation to England if Scots Vote Yes
On the fearmongering front, RBS warns it would relocate to England if Scots vote Yes.
Royal Bank of Scotland led a host of banks employing more than 35,000 people in Scotland who warned that they would relocate their headquarters south of the border in the event of a Yes vote in the Scottish independence referendum next week.
‘RBS believes that it would be necessary to re-domicile the bank’s holding company and its primary rated operating entity (The Royal Bank of Scotland plc) to England,’ it said in a statement on Thursday.

This post was published at Global Economic Analysis on Friday, September 12, 2014.

What If the Easy Money Is Now on the Bear Side?

Complacent melt-ups aren’t just boring–they’re not very profitable.
File this under Devil’s Advocate: what if the easy money in the stock market is no longer the “guaranteed” Bull melt-up but the Bearish bet on a sudden air pocket?Just as a thought experiment, put yourself in the shoes of the money managers who have the leverage to move the markets.
You probably know the drill: program your trading bots to recognize every technical trading scheme’s key support and resistance levels, and then unleash huge futures/options buys after hours or pre-open so the market jumps in the direction that makes you the most money. Unleashing a tsunami of buy orders forces Bears to cover their bets on a decline (shorts), goosing the market higher. The melt-up depends not just on trading bots hammering the market in the desired direction with massive buy orders–it depends on a supply of nervous Bears to cover their shorts by buying stocks. This buying triggers others’ trading bots to buy into the rally.
Short-covering is an essential source of the self-reinforcing buying that has kept the U. S. market melting up for years without any gyrations down of more than a few percentage points.

This post was published at Charles Hugh Smith on THURSDAY, SEPTEMBER 11, 2014.