ADP Private Payrolls Miss, Add Only 204K Private Jobs, Lowest Since March

In what will hardly be a good sign for tomorrow’s “critical” non-farm payrolls report, moments ago ADP reported that in August only 204K private payrolls were created in the US economy, below the downward revised 212K in July, and below the consensus estimate of 220K. The good news, as Carlos Rodriguez, president and chief executive officer of ADP said, is that “August marks the fifth straight month of employment gains above 200,000, continuing an encouraging trend for the U. S. labor market.’ Just barely. The bad news: this was the lowest ADP print since March, and hardly the “lift off” trend that many were expecting. Notably, the June 281K jobs print was revised even higher to 297K the highest in years and makes one wonder how much forward demand was pulled back into Q2 as a result of abnormally easy credit conditions and generous government spending.
Some of the key details:
Change in Nonfarm Private Employment (in thousands)

This post was published at Zero Hedge on 09/04/2014.

Silver in the channels

Silver is following an interesting bearish channel at present and it is likely to consolidate before testing the trend line and rejecting off it.
The silver market certainly looks bearish at the moment and that looks set to continue. Within the channel we can see various periods of consolidation before large movements. We can see low volatility at present which signals consolidation and it is likely to test the trend line before it moves any lower.

This post was published at TruthinGold on September 4, 2014.

Mario Draghi’s “If You Like Your Negative Rates, Here’s More” ECB Press Conference – Live Feed

Mario Draghi broke new ground once again this morning by pushing rates even negative-er. We are sure the ECB’s top man will further explain how ABS purchases, TLTRO, and even sovereign QE are just around the corner (so keep buying)…
*** Here are five questions from Bloomberg for Mario Draghi this morning…
Is more easing on the way?
After the ECB unveiled an unprecedented stimulus package in June, most analysts had expected officials to hold off on new measures until the end of the year. An economy that stalled in the second quarter, slowing inflation and the crisis in Ukraine changed the picture. Draghi acknowledged these developments, and their effect on inflation expectations, in a speech at Jackson Hole, Wyoming on Aug. 22, setting the stage for more stimulus, including quantitative easing.

This post was published at Zero Hedge on 09/04/2014.

ECB Meets To Tackle Deflation While Ignoring Shrinkflation

ECB Meets in Frankfurt
As the Governing Council of the European Central Bank (ECB) convenes today in Frankfurt for its monthly policy meeting, markets are focusing on how the ECB will signal the initiation of its quantitative easing (QE) programme which is aimed at countering deflationary forces in the Eurozone.
In August, the annual inflation rate in the Eurozone hit a precariously low rate of 0.3% per annum. This is far below the ECB’s target rate of 2% and also far below the average rate of inflation in the Euro area over the period 1991-2014, which was 2.18%.
Financial markets are already pricing in an ECB round of QE after ECB president Mario Draghi signalled such a move last month at the Jackson Hole central banker conference in the US, where he stated that the ECB would use ‘all available instruments’ to counter deflation.
European sovereign bond yields have fallen since Draghi’s August comments and the Euro has weakened against the US dollar. It is assumed that European QE would be in the form of a bond buying programme, much like the US and UK versions of QE that have already been implemented.
The ECB is already providing cheap liquidity to commercial banks in Europe though long-term refinancing operations, and since this is not providing the necessary stimulus to boost the Eurozone inflation rate, markets will be hanging on every word of Draghi’s speech today in Frankfurt so as to attempt to predict the exact timing of the commencement of the ECB’s quantitative easing programme.
While there is plenty of evidence that governments aim to minimise headline inflation figures for political reasons, financial markets still tend to fixate on these headline figures. Financial markets also get very concerned about deflation.

This post was published at Gold Core on 4 September 2014.

Are US Consumers Evil Hoarders?

Another Keynesian Meme Dragged Up A recent Fed paper reports that the Fed’s wild money printing orgy has failed to produce much CPI inflation because ‘consumers are hoarding money’. It is said that this explains why so-called ‘money velocity’ is low.
The whole argument revolves around the Fisherian ‘equation of exchange’, as you can see here. Now, it may be true that the society-wide demand for money (i.e., for holding cash balances) has increased. Rising demand for money can indeed cancel some of the effects of an increasing money supply. However, it should be obvious that there is 1. no way of ‘measuring’ the demand for money and 2. the ‘equation of exchange’ is a useless tautology.
Consider for instance this part of the argument:
‘Though American consumers might dispute the notion that inflation has been low, the indicators the Fed follows show it to be running well below the target rate of 2 percent that would have to come before interest rates would get pushed higher.
That has happened despite nearly six years of a zero interest rate policy and as the Fed has pushed its balance sheet to nearly $4.5 trillion.
Much of that liquidity, however, has sat fallow. Banks have put away close to $2.8 trillion in reserves, and households are sitting on $2.15 trillion in savings-about a 50 percent increase over the past five years.’
(emphasis added)
First of all, banks have not ‘put away’ $2.8 trillion in reserves; in reality, they have no control whatsoever over the level of excess reserves. They are solely a function of quantitative easing: when the Fed buys securities with money from thin air, bank reserves are invariably created as a side effect. Credit can be pyramided atop them, or for they can be used for interbank lending of reserves, or they can be paid out as cash currency when customers withdraw money from their accounts. That’s basically it.

This post was published at Acting-Man on September 4, 2014.

Australian Gold Output Up 9% in 2013-2014

Australian gold production totaled 9.1 million ounces in 2013-2014, up 9% from 2012-2013 output and worth some A$12.5 billion at the current spot price, said Melbourne-based Surbiton Associates.
Production for the June 2014 quarter was also up as Australia’s gold output totaled 71 tonnes (2.3 million oz) compared to 67 tonnes in the June 2013 quarter.

This post was published at Mineweb

Ukraine to Buy 1M tonnes of Coal from South Africa – PM Yatseniuk

Ukraine will buy one million tonnes of coal from South Africa because the military conflict in its Donbass region has disrupted domestic coal production, Prime Minister Arseny Yatseniuk said on Wednesday.
Pro-Russian separatists are battling Kiev's forces in eastern Ukraine, which is home to much of the country's heavy industry and coal mines and accounts for about 18 percent of the economy's output.
"They (the rebels) bombed our main coal mines … and so the government has already signed an agreement on the supply of one-million tonnes of coal from South Africa," Yatseniuk told a televised cabinet session.

This post was published at Mining Weekly

Atlantic City Casino Closures Bring Mass Unemployment Filing

Carrying identification documents and bitterness over their sudden joblessness, hundreds of ex-casino workers began filing for unemployment Wednesday morning, the first attendees at an assistance center that expects to process 5,000 newly laid-off workers over the next three days.
The session at the Atlantic City Convention Center came after a brutal weekend that saw two casinos, the Showboat and Revel, close. Officials from the state Department of Labor and the main casino workers' union, Local 54 of Unite-HERE, helped displaced workers file for unemployment and gave them information on signing up for health insurance and other benefits.

This post was published at Fox News

Underwater in Southern California and trend reversals: 10 percent of SoCal homeowners remain underwater despite recent increase in home prices.

You would think that the recent rise in home prices across Southern California would be enough to bring most homeowners into a positive equity position. However, we still have 1 out of 10 homeowners in a negative equity position. The total number of homes underwater in SoCal is estimated to be at 288,000 according to CoreLogic. This is a far cry from the 1.1 million underwater homes going back to 2009. Since that time many foreclosures have occurred and many homes have now shifted into the hands of investors. 288,000 is a large number of homes especially in a market with limited inventory. Now that we are entering into the slower fall selling season, you will likely see inventory pullback and buying demand slow down. Investor demand has pulled back dramatically already. Buying a home is a big deal and running the numbers on a crap shack is important in making sure you are seeing the bigger picture. There still seems to be this amnesia as to what happened only a few years ago. Millions of homeowners lost out in the supposedly safe investment vehicle of housing. Why? Because they took on too much debt and paid too much for a property. As prices soared in the last year, we are starting to see a deeper questioning of current values now that investors are pulling back and foreclosure resales make up a small portion of the market. Regular buyers did not push this market up. It was investors. Many regular households have been pushed into renting.
Trend shift
If we look at a housing market and define ‘health’ via foreclosures, the current market appears to be reaching a new balance. Yet these trend shifts can be deceptive. Keep in mind that in 2007 foreclosure volume was still weak and year-over-year price increases still looked spectacular. Things turn around slowly in housing. Things are good until they aren’t.
California has been boom and bust for a generation. Take a look at price increases for the LA and OC metro areas:

This post was published at Doctor Housing Bubble on September 3rd, 2014.

Icahn, Soros, Druckenmiller, And Now Zell: The Billionaires Are All Quietly Preparing For The Plunge

“The stock market is at an all-time, but economic activity is not at an all-time,” explains billionaire investor Sam Zell to CNBC this morning, adding that, “every company that’s missed has missed on the revenue side, which is a reflection that there’s a demand issue; and when you got a demand issue it’s hard to imagine the stock market at an all-time high.” Zell said he is being very cautious adding to stocks and cutting some positions because “I don’t remember any time in my career where there have been as many wildcards floating out there that have the potential to be very significant and alter people’s thinking.” Zell also discussed his view on Obama’s Fed encouraging disparity and on tax inversions, but concludes, rather ominously, “this is the first time I ever remember where having cash isn’t such a terrible thing.” Zell’s calls should not be shocking following George Soros. Stan Druckenmiller, and Carl Icahn’s warnings that there is trouble ahead.
Billionaire 1: Sam Zell
On Stocks and reality…
“People have no place else to put their money, and the stock market is getting more than its share. It’s very likely that something has to give here.” “I don’t remember any time in my career where there have been as many wildcards floating out there that have the potential to be very significant and alter people’s thinking,” he said. “If there’s a change in confidence or some international event that changes the dynamics, people could in effect take a different position with reference to the market.”

This post was published at Zero Hedge on 09/03/2014.

Frankenstein Fed…The Modern Prometheus

If Mary Shelly were around today, she might have a cause of action against the Federal Reserve for copyright infringement. The Fed has stolen the storyline Shelly’s 1818 gothic novel, Frankenstein, The Modern Prometheus. The case against the Fed’s criminal usurpation of intellectual property is strong; any schoolboy would see the obvious plagiarism, including the plot, the central characters, and even some of the dialog of the original science fiction horror story. Here is a summary of the plaintiff’s brief of the case:
A prominent alchemist living in the Washington DC area, Dr. Alan Greenspan, frustrated by his inability to turn lead into gold, turns to economics to find fame and for-tune. Economists have a much easier task than metallurgists or other scientists that must deal with laws of physics. Greenspan reasoned, ‘Economists can just make up their ‘laws’ out of whole cloth; intuition and whimsy are much easier to document than any scientific experiment. I’ll just have to mumble, to make it difficult for others to truly understand what I am saying.’
So, to reach his altruistic goal of prosperity for all US citizens, Dr. Greenspan decided to create a benevolent protg, The Modern Prometheus, out of a sleepy quasi-government agency, The Federal Reserve. By cobbling together a few cast-off, and defunct economic policies, many taken verbatim from an ancient tome written by J. M Keynes, the eccentric Dr. G. patches together a snip of low interest rate, a massive chunk of long term bonds, marinated in a special sauce which he called ‘ Phillips Curve Elixir and Healing Tonic’. At the critical moment, Dr. Greenkenstein pulls the lever sending a massive electrical charge through his ‘creature’, that twitches, then opens his yellow eyes, causing the Dr. to shout ‘It’s alive!’ The creature grows taller and more massive when Dr. G. feeds it billions of long term bonds each month, eventually reaching $4 Trillion in the weighty, long term assets.

This post was published at Gold-Eagle on September 3, 2014.

Equity/Bond Markets At Overnight Highs On Hopes Of More ECB Stimulus; Geopolitics On Back Burner

Even as the NATO summit began hours ago in Wales, conveniently enough (for Obama) at the venue of the 2010 Ryder Cup, so far today geopolitics has taken a backseat to the biggest event of the day – the ECB’s much hyped and anticipated announcement. So anticipated in fact that even as it has been priced in for the past month, especially by BlackRock which is already calculating the Christmas bonus on its “consultancy” in implementing the ECB’s ABS purchasing program and manifesting itself in record low yields across Europe’s bond market, Reuters decided to milk it some more moments ago with the following blast:
Plans to launch an asset-backed securities (ABS) and covered bond purchase programme worth up to 500 billion euros are on the table at Thursday’s European Central Bank policy meeting, people familiar with the discussions say. ECB President Mario Draghi will likely announce such a programme at his news conference unless it comes up against strong opposition at the Governing Council’s policy meeting. The programme would have a duration of three years and comprise both ABS and covered bond purchases. The ECB could begin buying the assets this year, the people familiar with the discussions told Reuters.
The ECB declined to comment.
The notable being the size of the program, which at 500 billion, is precisely what Deutsche Bank said a week ago the size of the ABS program would be. Almost as if the bank with the world’s biggest derivative exposure is helping coordinate the “Private QE”…

This post was published at Zero Hedge on 09/04/2014.

Is The Gold Bear Market Really Over?

I have made no effort to hide the fact that I am very bullish of gold. I am, after all, writing this for a site called GoldStockBull, and in fact my debut submission to the site was a piece in which I make the case for $10,000/oz. gold.
But just because I am bullish long term doesn’t mean I don’t think that the price can drop further. Now generally I am reluctant to make shorter term trading predictions because that’s not the sort of analysis that interests me, yet I think there are various signs that indicate that gold bulls may have to endure one more capitulation to the downside before the next leg of the bull market begins. In what follows I will point these signs out for the reader, and I will follow them with some investment strategies.
What Could Send the Gold Price Lower?
1 – Gold Didn’t Test Its 2009 Breakout Point
Gold has experienced two significant corrections since the bull market began at the turn of the century. The first was in 2008 and the second began in 2011 and many investors believe ended at the end of 2013. One thing that differs between the two besides their durations is that when the market bottomed in 2008 it hit a major support level – about $700/oz. – that had previously been resistance from April, 2006 through August, 2007. But we have not seen this in the recent bear market. The last breakout point was the resistance level of about $1,000/oz. where the market peaked in 2008 and under which the market consolidated until the end of 2009. The breakout led to the subsequent rally all the way to $1,900/oz. in 2011. Now if the pattern were going to repeat the gold market should test the $1,000/oz. level, but as you can see on the following chart of the SPDR Gold Trust (GLD) we haven’t seen this.

This post was published at Gold-Eagle on September 3, 2014.

In Shocking Move, ECB Cuts By 10 Bps, Sends Deposit Rate Further Into Negative Territory

While everyone was expecting Mario Draghi to announce ABS purchases, few if any had expected the ECB to also cut rates. Which it just did whacking its corridor rates across the board by 10 bps, in the process sending the Deposit Facility rate even further into negative territory, now down at -0.2%.
From the ECB’s monetary policy decision:
At today’s meeting the Governing Council of the ECB took the following monetary policy decisions: The interest rate on the main refinancing operations of the Eurosystem will be decreased by 10 basis points to 0.05%, starting from the operation to be settled on 10 September 2014. The interest rate on the marginal lending facility will be decreased by 10 basis points to 0.30%, with effect from 10 September 2014. The interest rate on the deposit facility will be decreased by 10 basis points to -0.20%, with effect from 10 September 2014.

This post was published at Zero Hedge on 09/04/2014.

Have We Reached a Financial Singularity?

Encouraging and supporting asset bubbles is essentially the only force remaining to keep the system intact as we know it.
The Singularity is based on the idea that machine intelligence will soon exceed human intelligence, and human history is unknowable beyond that point. This concept draws from a variety of sources, but for me the foundational idea comes from the physics of black holes, in which gravity concentrates the material of a collapsing star into a point of infinite gravitation, i.e. a singularity, that is surrounded by an event horizon that marks the line beyond which observers will inevitably be pulled to their destruction in the black hole. Observers cannot go back once they cross the event horizon, but they cannot see the inside of the black hole without going beyond the event horizon.
Longtime correspondent B. C. recently proposed that the global stock markets have reached a Financial Singularity in which trading machines now control the markets. Here are excerpts of B. C.’s emails on the topic: In some respects, “The Singularity” has occurred in the financial markets, only humans are incapable of perceiving it except by inference. I will reiterate from the past my assertion based on direct and highly suggestive personal evidence that the major US, UK, and EZ equity markets are being “managed” offshore by the TBTE (too big to exist) banks’ dark pools’ pass-through entities in the Caribbean banking centers, levering up US Treasury and MBS (mortgage-backed securities) holdings to jam equity index with the assistance of NYSE-Euronext exchange-sponsored HFT (high fequency trading) at the price margin.

This post was published at Charles Hugh Smith on WEDNESDAY, SEPTEMBER 03, 2014.

145 Years Of Japanese “Growth” And Inflation

Well into the second year of Abenomics, doubts have risen about the effectiveness of Japanese Prime Minister Shinzo Abe’s approach of boosting economic growth and overcoming deflation via ‘three arrows’ of monetary, fiscal, and structural policy. Yet another set of disappointing data recently released for July has reinforced these doubts. As several key turning points approach before year-end, whether Abenomics will succeed or stumble is at the forefront of most traders’ minds (whether they understand that or not). In the interest of some context for just how far Japan has fallen, we present 145 years of growth and XX-flation for the Japanese economy…

This post was published at Zero Hedge on 09/03/2014.

Unions are Not Capitalism

Labor unions are a dying breed. According tothe Pew Research Center, union membership in America ‘is at its lowest level since the Great Depression.’ In 1983, there were approximately 17.7 million union workers. Today, that numberstands at 14.5 million, with every estimate showing a continued downward trajectory. Clearly, the Norma Raes of the world are going extinct.
But as Samuel Johnson quipped, one should never dismiss the triumph of hope over experience. In celebration of Labor Day, the leftie rag New Republic recently published an interview with labor strategist Rich Yeselson defending the role of unions in the U. S. As a labor organizer, Yeselson’s bias is on full display. Instead of giving an objective view of stagnating union membership, he obfuscates to boost his own profession.
When asked if unions are dead, Yeselson rightly says ‘no’ while pointing out that millions of Americans are still active members. Unions not only retain fairly hefty membership, but also own valuable real estate in big cities and pension funds worth billions of dollars. Despite declining membership, there is still plenty of capital left over from organized labor’s heyday.
Fancy buildings and promised retirement benefits aren’t enough to reverse the downward trend however. Public opinion about unions is also on the decline. Between Volkswagen plant workers voting against joining the United Auto Workers and the confectionary company Hostess declaring bankruptcy to rid itself of unionized employees, there is a growing perception of greed directed at labor organizers. There is also the uncomforting fact that state and local governments – the industry most heavily unionized in the country – areunderwater on their pension obligations.

This post was published at Mises Canada on September 2nd, 2014.

Eurobonds – the Coming Federalization of Europe

Europe will move to Eurobonds for now Brussels gets it – if the euro fails, they lose their jobs in Brussels. Individual government bond issues have prevented the Euro from becoming a major currency and it now trails even the Chinese Yuan in trade. Nonetheless, some are trying to argue such as the German bank co-chief Anshu Jain that he naively claims that maintaining separate debts for each country is strangely an important disciplining effect for debt reduction. The problem with his view – government do not pay back debt and that includes Germany as is the case with the USA. Where is the discipline?
The Eurobonds are coming when the ECM turns down from 2015.75 and this will be seen as the great solution…

This post was published at Armstrong Economics on September 3, 2014.

“A Printer And A Prayer” – The Three Problems With The Fed “Liquidity Coverage Ratio” Plan

A little over a week ago we wrote that in order to mitigate problems arising from record debt and soaring NPLs, the G-20 had a modest proposal for global banks: more debt. Specifically “in November said leaders will agree “that the world’s top banks must issue special bonds to increase the amount of capital which can be tapped in a crisis instead of calling on taxpayers to come to the rescue, industry and G20 officials said.” In other words, suddenly the $2.8 trillion in Fed injected excess reserves, split roughly equally between US and European banks, are no longer sufficient, and while regulators are on one hand delaying the implementation of Basel III and its tougher capital rules, on the other they are tactically admitting that whatever “generous” capital buffer banks have on their books right now will not be sufficient when the next crisis strikes.”
The proposal for the first time introduced GLACs, or bonds known as “gone concern loss absorption capacity”, seen by regulators as essential to stopping the world’s 29 biggest lenders from being “too big to fail.”
Some of our thoughts at the time: “according to the G-20, instead of having to collapse liabilities to offset that scourge of the New abnormal, namely Non-Performing Loans, banks are hoping to lever up, pun intended, the current scramble for yield and instead beef if up their cash asset, even if it means increasing the liability side of the balance sheet by issuing more debt. Because really all the GLAC do is limit how the banks may use the proceeds from such bond issuance. Then again, these being banks, one can be certain that the moment the GLAC cash is wired in, the funds will be used to ramp risk instead of sitting in a drawer somewhere, awaiting rainy days. Because nobody in a bank is paid for avoiding a crisis, and everyone is paid to generate a return even if it means making the systemic bubble even bigger.”

This post was published at Zero Hedge on 09/03/2014.

Gold Daily and Silver Weekly Charts – Non Farm Payrolls – Freedom Is Best

“The stupidity of the average man will permit the oligarch, whether economic or political, to hide his real purposes from the scrutiny of his fellows and to withdraw his activities from effective control…
The American business oligarchy is not as hereditary as European landed aristocracies, but is for that reason neither more virtuous nor less tenacious in clinging to its power and privilege.”
Reinhold Niebuhr, Moral Man and Immoral Society
Dico Tibi Verum, Libertas Optima Rerum Nunquam Servili Sub Nexu Vivito, Fili.
‘I tell you the truth, my son, that the best of all things is freedom. Never live under the bondage of slavery’.
William Wallace Memorial
Markets continue to slough off the geopolitical drumbeat to war that Obama and his Merry Neo-cons are playing. Even a cheery beige book was unable to turn that market frown completely upside down. Profit taking is underway in stocks. I suspect that this means that we are soon to see another wash and rinse ahead of the Alibaba IPO which is a bit more than twenty days away.

This post was published at Jesses Crossroads Cafe on 03 SEPTEMBER 2014.