It’s a GLOBAL sovereign debt crisis: ‘When you have a jar of honey, you lick your fingers.’

Jon

Overdose: The Next Financial Crisis. Award-winning youtube hit giving fresh insight into the greatest economic crisis of our age: the one still awaiting us.
For downloads and more information visit: Follow us on Facebook (or Twitter (With the US raising their debt ceiling, are we in a global bail-out bubble that will eventually burst? This doc offers a fresh insight into the greatest economic crisis of our age: the one still awaiting us.
The financial storm that has rocked the world began brewing in the US when congress pushed the idea of home ownership for all, propping up those who couldn’t make the down payments. When it all went wrong the government promised the biggest financial stimulus packages in history and gargantuan bailouts. But what crazed logic is that: propping up debt with more debt? ‘They’re giving alcohol to a drunk: it just sets him up for a bigger hangover.’


This post was published at Investment WatchBlog on December 20th, 2014.

Sick Market Moves While Gold Remains Weak

Jon

A wild week for markets as they were very weak…but then rallied hard and fast and did so without much of a break, which meant I could never really pull the trigger and feel comfortable doing so. Consequently, I missed much of the rally higher.
We do need a rest here and then we should get some buy points, the problem is, we saw a very similar correction back in October. In October, we rallied hard and fast initially and then we slowly moved higher from there up until this most recent correction. And while the trend was solidly higher, many stocks did setup and give great moves quickly, but then they slowed or faded. That just means we may have to buy the breakout and only hold for a day or three before locking in gains.
It looks like it will remain a stock picker’s market…and also an active trader’s market. We will make great gains no doubt, but we do have to be active and on the ball, not just using a buy and hold strategy.
As for the metals, they did show some strength briefly two weeks ago, but that faded and they are still pointing to lower prices from what I see. From what I am seeing, gold will still hit $1,000 and silver should coincide by hitting $10 at the same time. This could come within weeks, or months. I have no way of knowing when lows will come, but they are not yet in I can all but guarantee you.

This post was published at Gold-Eagle on December 20, 2014.

What Are Technical Indicators Saying About the Market?

Jon

It was just a week ago that financial headlines bemoaned the market having suffered its worst week in 2 years. The bears came out of hiding with scary forecasts. Plunging oil prices, previously thought to be a positive for global economies, were suddenly seen as a major negative, along with the collapse of Russia’s economy and currency. Warnings of a potential global meltdown, perhaps even a 1998 style mini-crash, grew in number.
Bullish investor sentiment and confidence plunged. The weekly poll of its members by the American Association of Individual investors (AAII) fell to only 38.7% bullish.
The VIX Index, aka the Fear Index, spiked up into its fear zone again.
However, here we are just a week later, with the financial headlines celebrating the market’s biggest two-day gain in years (709 points by the Dow). Back is confidence of new highs for the year, and rising forecasts for 2015.
Yet, oil is still under $60 a barrel, and Russia’s problems have certainly not gone away.
It’s being said the rally is due to the Fed leaving language in its FOMC statement assuring it will be ‘patient’ in deciding when to begin raising interest rates. That is not a change, since markets were not expecting the Fed to act before next summer anyway.
[Check Out: The Burning Questions for 2015] It is difficult to determine market direction by analyzing surrounding conditions, even those as dramatic as the collapse of oil prices, or guessing what the Fed might be planning.

This post was published at FinancialSense on 12/19/2014.

20/12/2014: Russia’s Black Monday: The Debate is On

Jon

It is a hazardous task to attempt to explain fast spikes in Forex markets pressures during the ongoing currency crises. And hence few attempt. One very interesting – and I suspect rather correct – try is by Sergei Guriev Guriev directly links the Russian Ruble’s Black Monday (and I would add Black Tuesday too) on Rosneft debt redemption that takes place this weekend.
He is right on all points, including, probably, the suspicion that CBR delayed rate hike to allow Rosneft debt deal to go through, with a caveat.

This post was published at True Economics on Saturday, December 20, 2014.

A Funny Thing Happened To Oil Prices When Nixon Killed The Gold Standard

Jon

For the past 150 years, crude oil prices have varied between around $10 per barrel and around $120 per barrel. For many decades, oil prices were relatively “stable” but a funny thing happened in the early 70s and everything changed – whether coincidental or causative the linkages between the oil crisis and Nixon’s Gold-Standard-busting of Bretton Woods are clear in the chart below. Goldman expectscontinued high oil price volatility with risks skewed to the downside as the market searches for a new equilibrium… and a period of macroeconomic adjustment to structurally lower oil prices. Is oil adjusting to a new ‘gold-standard-esque’ normal?

This post was published at Zero Hedge on 12/20/2014.

Evolution of YouTube: Will it Supplant Mainstream TV, Vanish, Evolve, or Languish?

Jon

What will become of YouTube?
It started from nowhere about 10 years ago as an idea with no revenue and no content, then pretty quickly lots of content coupled with a plethora of copyright infringement lawsuits.
Today, YouTube gets 300 million hours of watching every day. Top content producers have millions of followers and make millions of dollars.
But where to from here?
New Play Button
The New York Times tackles that question in a fascinating story YouTube’s Chief, Hitting a New ‘Play’ Button.
The article is about Susan Wojcicki, the chief executive of YouTube, how she got her start, and in turn how Google got its start. Wojcicki was Google’s 16th employee, and she is still with Google.

This post was published at Global Economic Analysis on Saturday, December 20, 2014.

Credit Doesn’t Care What the FOMC Says: The “Recovery” That Never Was Is Over

Jon

Authored by Alhambra Partners’ Jeffrey Snider, via Contra Corner blog,
The stock market takes off in holiday celebration of the FOMC being even less clear than it really has been in some time; perhaps going all the way back to Alan Greenspan’s intentional mush. Equity ‘investors’ are happy that the Fed may be happy about the economy, even though there is nothing in actual markets (outside of stocks) to suggest that anything the Fed proclaims carries even the slightest validity. Growth and inflation are going to be good, so the philosopher kings in DC say for the sixth year in a row, this time enough to end ZIRP (after almost seven years) and get to tightening.
Axiomatically, ambiguity is not certainty but the degree to which ambiguous language is taken as a comfortable conviction shows exactly the game being played here. Stock investors expected this exact vagueness and since the received abstruseness was as expected it was certainly reassuring to bid equity prices. This is how far rational expectations theory has devolved.
It is very curious, then, to see vastly larger markets unperturbed by anything that occurred at the FOMC this week. Sure, nominal yields rose in the treasury market a bit, though only slightly after an immense buying spree. Overall there was a distinct lack of distinction, and thus positive conviction, in credit and funding. The eurodollar market is only slightly tighter in the shorter tenors to where it was before the FOMC’s ‘radical’ and ‘revolutionary’ semantical modification.

This post was published at Zero Hedge on 12/20/2014.

Bond Yields Set To Plunge In 2015: Next Year Global Treasury Supply Will Tumble By 20% As ECB Joins The Party

Jon

Back in May 2013, when we wrote “How “Modern Money” Really Works” and noted that in the current environment, as a result of prudential regulation, derivative clearing requirements, bilateral margin requirements and general economic uncertainty including deflationary scares and other flights to quality/safety, there could be a gargantuan shortage of “high-quality collateral” amounting to as much as $11.2 trillion, we explained that demand for Treasury paper will increase with every passing month as the market realizes that traditional supply/demand dynamics in the rates market no longer exist and have been supplanted by regulatory demand-side technicals coupled with supply calculus which is predicated almost exclusively by what central banks do, or rather, how much Treasurys they monetize.
In retrospect, our observation also explains why everyone got the bond trade wrong in 2014, as everyone – most certainly Goldman Sachs and its clients – not only expected a global economic rebound (clearly that did not happen in 2014, when Chinese growth hit the brakes to record lows, and when both Japan and Europe re-entered recession absent GDP-fudging semantics), but were oblivious to the key considerations behind the high-quality collateral theme. Why, none other than Goldman in its Global Economics Weekly from June 27, 2012 and Fixed Income Monthly from July 2012 concluded that “there is not much evidence in favor of the explanation” of the high-quality collateral (HQC) thesis as a driver of Treasury demand. To see just how wrong Goldman was, compare the 10Y’s Friday close with Goldman’s 3.50% year-end target, and now add some 30x Total Return Swap leverage.
Which bring us to Friday afternoon, when as Goldman observes in a new note, “since then, the regulatory environment has further developed, with Dodd Frank now in place. Also, given this year’s rally in fixed income, the topic has become of interest again.”
So where do we stand now that there is still trillions of explicit demand of HQC. Well, it seems that contrary to all expectations that the global recovery will stabilize inflation (or maybe deflation now plunging oil prices are actually a good thing: it seems Keynesian dogma was only kidding after all)?

This post was published at Zero Hedge on 12/20/2014.

So-Called ‘Dumb Money’ Flees Junk Debt. The Market Quakes

Jon

High-Yield Bond Funds, Loan Funds Hit by ‘Market Conditions’ The phenomenal Fed-triggered feeding frenzy in stocks on Wednesday and Thursday was paralleled in the junk-bond market. Energy related junk bonds had gotten shredded over the past couple of months, as the price of oil has collapsed. The sell-off started spilling over to non-energy junk bonds. Tuesday, the day before the Fed’s announcement, junk bonds suffered their largest drop since October 2011. And just as all heck was breaking loose, and as yields were getting painfully high for our spoiled zero-interest-rate conditions, the Fed rode to the rescue once again to bail out the markets with its vague verbiage about being ‘patient.’
The markets interpreted this to mean whatever they wanted to: The stock market thought rates would stay at zero forever, sending stocks into a frenzy. The Treasury market thought rates would rise sooner than expected, sending 10-year Treasuries into a rout. And the junk-bond market had its own interpretation, in line with stocks, not Treasuries, unleashing the sharpest rally since August 16, 2011. It more than filled the hole left behind by Tuesday’s massacre and allowed junk bonds to end the week with a gain. Halleluiah, thank you Fed.
OK, it wasn’t enough. Over the two-week period, the average remains 157 basis points in the hole. And it’s down 536 basis points for the year. This chart of S&P’s High-Yield Corporate Bond Index, via LCD, goes back to the peak of the junk-bond bubble in June. Since then, junk bond values have dropped nearly 8%.

This post was published at Wolf Street by Wolf Richter ‘ December 20, 2014.

20/12/2014: Remembering that Debt Pile on Our Shoulders

Jon

Three charts to illustrate the extent of Ireland’s debt problem… that’s right, the one that has not gone away with all the recovery talk.
Let’s start in the happy days of 2007, when Irish Government’s sustainable debt per capita was running at EUR10,775 and we ranked 11th most indebted nation (on per capita basis) in the today’s EA18.

And fast-forward to 2014, when, based on the IMF projections, our Government debt per capita will amount to an eye-watering ‘sustainable’ EUR42,469 ranking us a run-away 1st in the debt load:

This post was published at True Economics on Saturday, December 20, 2014.

Chart Points To Massive Slow Down: ‘This Is The Biggest Collapse In The ‘Trade’ Indicator Since Records Began’

Jon

Prior to the crash of 2008 global trade was rocking. It was a boon for shipping companies around the world who are responsible for moving raw materials, commodities and consumer products from one country to another. Wall Street, of course, had devised a way to track all of this movement and often pointed to the Baltic Dry Index (BDI) as the primary indicator for health in the global trade business.
The index itself tracks the cost of transporting one metric ton of raw materials from one place to another. The numbers behind the BDI can essentially be translated into the cost of moving that cargo.
During the collapse in late 2008 we saw the Baltic Dry Index drop from over 9,000 points to under 1,000 in a matter of months. So, in essence, when the world economy was supposedly booming the cost for moving raw materials was around $9,000 per metric ton. After credit markets locked up and companies stopped ordering inventory the price dropped below $1,000 for moving the exact same raw materials to the exact same place.
What happened to the cost of transporting raw materials and cargo is exactly what you might expect with respect to the economics of it all. When businesses around the world are ordering inventory you’d expect shippers to raise the price of transporting that cargo as demand for their services increases. Likewise, if businesses don’t sell their products they will order less in raw materials, forcing shipping companies to lower their costs as demand for their services drops.
It is for this reason that the Baltic Dry Index has become such a key indicator of economic health and stability.
It would stand to reason, then, that if the value of the BDI is falling then a slow-down in global trade is taking place.

This post was published at shtfplan on December 20th, 2014.

“Save us, Oh FED”

Jon

I was on an anniversary vacation (27 years) in lovely Sedona Arizona yesterday, named after Sedona Schnebly whose hospitality and kindness was renowned in the early 1900s, when I noticed the headline on the USA Today weekend edition praising the FED for saving the stock markets. (ZH has noticed too with a different angle on the headline) I had to stop and read. Two things jumped out at me from the image below: 1) that the images and quotes are lying to the American people, 2) that we have come to expect the Fed to save us!

But wait just a minute… this “correction” started a lot higher! As I look at that newspaper image, it would appear that stocks are now stronger than before the pullback began. A look at the full chart, glancing back five more days, shows that indeed we have only recovered a portion of the losses. Is someone trying to deceive me?
Let’s say I am an investing novice, (‘Jerome is an investing novice…’) with my money in a TIAA-CREF mutual fund, and I have been watching the economic headlines, like a diligent mutual fund investor always does, wondering if I should cash out for a while. Then I see this headline. ‘Wow’ I think, ‘Looks all clear to me. I’m stayin’ in.’ Then I look a little deeper at the front page and see that it’s a 709 point gain in two days – best since 2008. ‘Damn,’ I say, ‘That’s when all the recession began. It really is over. And look at that graph, stocks are going up!’ Then I read a bit more. ‘Wow. This expert says the correction in over.’

This post was published at TF Metals Report on December 20, 2014.

Gold Investors Weekly Review – December 19th

Jon

In his weekly market review, Frank Holmes of the USFunds.com summarizes this week’s strengths, weaknesses, opportunities and threats in the gold market for gold investors. Gold closed the week at $1,196.35 down $26.15 per ounce (-2.14%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, fell 0.41%. The U. S. Trade-Weighted Dollar Index slipped 1.40% for the week.
Gold Market Strengths Gold traders were bullish for the fourth-consecutive week. The increased optimism related to gold prices stems from the recent turmoil in global markets as well as the continued dovish stance by the Federal Reserve.
Gold exports out of Switzerland reached the highest level this year. Furthermore, in order to meet rising demand from Asia, Swiss refineries are working at full capacity.
The Swiss National Bank introduced a negative interest rate on deposits this week. The move, aimed at relieving upward pressure on the franc, should make gold relatively more attractive than franc-denominated assets.
Gold Market Weaknesses President Barack Obama indefinitely withdrew more than 52,000 square miles of waters off Alaska’s coastline in order to protect the wildlife in the area. However, miners should get some leeway when it comes to the new law if the Republican-backed proposal bans the Endangered Species Act from applying to the sage grouse for one year.
Barrick Gold Corp. is suspending its Lumwana operations in Zambia following a newly established increase in the mining royalty rate. The rate is set to increase from 6 percent to 20 percent for all open-pit mines.

This post was published at GoldSilverWorlds on December 20, 2014.

Dollar Reserve Currency Dying But Meantime No Respite For Precious Metals

Jon

An eminent collapse of the US fiat petrodollar? China and Russia, with their enormous build-up of physical gold over the last several years, waiting in the wings to lead a new gold-backed currency? The growing BRICS alliance to unseat the elite’s Western NWO and its banking system?
A growing likelihood on the first question, and no and no to the latter two questions. In fact, the elites are probably doing more to destroy the fiat Federal Reserve ‘dollar’ than any other group or alliance. There has been talk about the US destroying the dollar for at least the past four years. Kyle Bass even made the pronouncement whereby a senior Obama administration official told him, ‘We’re just going to kill the dollar.’ That is exactly what is happening and coming from ‘inside information.’
What most people refuse to understand, if not even acknowledge, is the extent to which the elites have an utter stranglehold on the world’s financial system, and by world we do not mean just the Western world. China and Russia are included. There is no single country that can exist without the machinations of the elite’s banking system. They have been running the world for a few hundred years and are masters at it.
Russia has enough gold to back its ruble in some way. Understand that the current price for gold does not represent a fair standard of value. It is vastly undervalued, and one day, the reality of what should be a fair value for gold and silver will occur. They are both money and measures of value. Most people have reversed their thinking and measure the value of PMs by valueless fiat. This is a huge mistake and reflects how well the elites have successfully exercised mind control over the masses to maintain this false belief.
The agenda for a New World Order is at least 100 years old, when bankers and corporate presidents were all aiming to control every aspect of industry via financial manipulation, straight from the well-established Rothschild ‘game book,’ as it were. This unabated zeal for world control is not something that has been in the works for just the past several decades. Knowledge of this does not come from an announcement in the New York Times or Wall Street Journal; rather, one has to diligently read through a myriad of source material and then see how the dots are connected.
In a nutshell, if the elites have their way, and to date they remain unopposed, the fiat Federal Reserve Note, aka the debt ‘dollar,’ will be replaced with some form of a new international currency, or perhaps SDRs [Special Drawing Rights], an international basket of currencies. All money may exist as computer credits that can be readily tracked. If anyone dare oppose the bankers, poof, your credits just disappeared, and you have nothing. Bankers rely on debt largesse and fear.
There will be no sovereign nations. All countries will be held accountable to the new Wizard Of OZ bankers behind the curtain, much like the experiment called the European Union. The EU may fall apart, but the lessons learned will not be lost, and in fact they will be honed to format what is to come. The handful of banking elite that rule the Western economies will become ‘elite-er’
What of China and Russia? Both have advocated respect for the IMF with expressed desires to be participants in the system. The system will change, to be sure: no more Federal Reserve fiat ‘dollar’ as the world’s reserve currency. Not a few hold out the errant belief that the BRICS nations, primarily China and Russia, will replace the elite’s banking system. Absolutely not! The elites are redesigning the next phase of their control over the financial world to include the BRICS, all eager to join the ‘club’ for the first time and be major participants on the financial world stage.

This post was published at GoldSilverWorlds on December 20, 2014.

Coming Emerging Market Debt Meltdown

Jon

It seems the one primary area that people disagree with the view of the future is the rise in the dollar that is on the horizon. I have warned that in discussions behind the curtain, there will be a move to replace the dollar as the reserve currency. I have also stated that the only possible solution will be a new world currency that is composed of a basket. There are three subtle events that confirm this view is a lot sooner than anyone suspects. We may be looking at the rapid change in the world monetary system after 2015.75 with what we have called BIG BANG.
Obama’s former Economic Adviser has stated now the US should gove up the reserve dollar status The IMF is holding discussions on expanding SDRs World Bank is also not suggesting a new currency for reserve purposes needs to be established

This post was published at Armstrong Economics on December 20, 2014.

Mortgage Rate: 3.8% for 30 Years

Jon

The rate of price inflation (median CPI) was up a tiny 0.1% last month. The CPI was down by -0.3%.
The 30-year mortgage rate is at 3.8%
There is no ‘inflation premium’ in the mortgage rate today. This sends a signal: ‘Don’t worry about price inflation. Lend!’ This will prove to be a misleading signal for lenders, and a bonanza for borrowers.
The price of homes could fall in a recession. But the Federal Reserve will inflate. It will not tolerate recession. So, home buyers over the next 30 years will see the nominal value of their homes rise until the FED stops inflating for fear of mass inflation. That is years away. Keynesians inflate.
To lock in 3.8% for 30 years is a give-away. Nave lenders are handing over their money to borrowers. The FED will smash them.
Do not lend at 3.8% Borrow.
Continue Reading on http://www.katu.com

This post was published at Tea Party Economist on December 19, 2014.

Defiant North Korea Says Can Prove It Is Not Behind Hack “Without Resorting To Torture Like The CIA”

Jon

Just hours after the FBI announced that, with absolute certainty, it had determined that North Korea was behind the Sony hack, a “theory” that has become the butt of global jokes, we learned, in a far less prominent release, that according to an internal inquiry, FBI evidence if “often mishandled.” According to the NYT, “F. B. I. agents in every region of the country have mishandled, mislabeled and lost evidence, according to a highly critical internal investigation that discovered errors with nearly half the pieces of evidence it reviewed.
The evidence collection and retention system is the backbone of the F. B. I.’s investigative process, and the report said it is beset by problems.
It gets better: according to the report, the F. B. I. was storing more weapons, less money and valuables, and two tons more drugs than its records had indicated. Almost as if the FBI was siphoning off cash, while hoarding guns and blow.
The report’s findings, based on a review of more than 41,000 pieces of evidence in F. B. I. offices around the country, could have consequences for criminal investigations and prosecutions. Lawyers can use even minor record-keeping discrepancies to get evidence thrown out of court, and the F. B. I. was alerting prosecutors around the country on Friday that they may need to disclose the errors to defendants.
A majority of the errors identified were due in large part to human error, attributable to a lack of training and program management oversight,’ auditors wrote in the report, which was obtained by The New York Times.
F. B. I. officials on Friday said that they decided on their own to conduct the review after discovering during an internal audit that there might be issues with the record keeping for evidence.

This post was published at Zero Hedge on 12/20/2014.

Ted Butler Quote of the Day 12-20-14

Jon

From the close on Friday, December 12 through Tuesday’s low, the price of silver fell $1.50, or close to 9%. No other commodity, including crude oil, fell as much as silver did over that time. Generally, such a large percentage decline in any world commodity in less than two trading days is a pretty big deal and would only occur if there was some easily documented major supply/demand development. I follow silver pretty closely—and not only was I not able to uncover any major change in silver’s actual supply/demand situation, I couldn’t find even a minor development that would have accounted for the sudden large price decline. I would ask you to think about that for a moment.

Any investor or analyst of any world commodity must be able to account for and rationalize a 9% price move in less than two trading days; otherwise he or she couldn’t possibly understand the dynamics of that commodity. Yet I received virtually no requests to explain the price drop. The facts are clear – the price of silver did decline by nearly 9% and there were no actual supply/demand developments to explain the decline. Therefore, something else had to account for the sudden silver price decline and judging by the lack of readers questioning why, the actual cause of the decline must have been fairly widely known.

Of course, the only possible explanation for what would normally be a massive price drop in any world commodity is trading activity on the COMEX. While this is nothing new to subscribers, my sense is that COMEX price rigging has reached such an incredibly dominant influence over the price of silver (and other commodities, like gold and copper) that it is more widely understood than ever before. I believe it has gotten to the point where it is impossible to even attempt to offer an alternative plausible explanation for large price moves in silver and other metals apart from COMEX trading without looking like a fool. I also believe that the growing and widespread recognition that prices are set on the COMEX greatly undermines the life expectancy of continued future price manipulation.

A small excerpt from Ted Butler’s subscription letter on 12-17-14.

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