Four Horsemen of the Apocalypse or the New Dawn

Jon

From John Mauldin:
‘For a central banker, deflation is one of the Four Horsemen of the Apocalypse: Death, Famine, Disease, and Deflation. It is helpful to understand that, before a person is allowed to join the staff or board of a central bank, he or she is taken into a back room and given DNA replacement therapy, inserting a gene that is viscerally opposed to deflation.’
Death: There will be many more deaths – think Middle East, Ukraine, Africa, and the next big war.
Famine: A shortage of food, whether inspired by drought, politics or war has been normal throughout history. Today there are food shortages in many countries and there are nearly 50,000,000 people in the U. S. on food stamps (SNAP) – the modern equivalent of ‘bread lines’ and ‘soup kitchens.’
Disease: Ebola, AIDS and drug resistant TB, staph infections and more.
Deflation: Deflation occurs in some assets while inflation occurs in others. Deflation is often good for the middle class, such as gasoline priced under $3.00 instead of gasoline priced at $5.00. But the political and financial elite want inflation and a larger supply of currency in circulation. There are more profits to skim and the debts are easier to repay under inflationary conditions. Deflation hurts indebted governments (all of them) and Wall Street. Central bankers must fight their enemy – deflation – and create more inflation.
Figuratively speaking, the Four Horsemen are trashing our world. In opposition to the Four Horsemen are the Four Rays of the New Dawn.
Gold: Gold has been money for 5,000 years. It represents a store of value and is effectively eternal. Few unbacked paper currencies have survived more than four decades before they are ‘printed’ into worthlessness. Gold will survive and is NOT dependent upon a government or a banker to print it or determine its value. The dawn of a new age is based on honest money – gold.
Silver: Repeat the gold story for silver but add that silver is used as money in commerce, as well as in hundreds of industrial and medical uses. The dawn of a new age has a silver lining.

This post was published at Deviant Investor on November 20, 2014.

Here Are The Highlights From The Senate’s Finding That Banks Manipulate Physical Commodities – Live Hearing Feed

Jon

After two years, and 396 pages of report, the Senate investigations committee finds (translating their gobbledygook into English) that the banks did indeed corner and rig the commodity market. As Bloomberg reports, the Senate panel said the firms have eroded the line separating banking from commercial activities to the detriment of consumers and the financial system. The holdings give banks access to non-public information that could move markets and increase the likelihood that industrial accidents will spur taxpayer bailouts, the report said… (i.e. manipulated the system). The hearing, involving bankers from Goldman, Morgan Stanley, and JPMorgan begins at 930ET…

This post was published at Zero Hedge on 11/20/2014.

Taking the Blue Pill Will Not Save You From Being On the Red List

Jon

How will one end up in a FEMA camp? What will be the profile of the people who will be ‘disappeared’? Have there been preparations to carry out such a reign of terror? The short answer to these questions is an unqualified YES! However, to fully understand what is coming, one must consider the context in which these draconian actions will be carried out.
There is a black box warning that needs to be delivered before going any further. After reading this article, if you think you can change ‘your evil ways’ and stop visiting the wrong websites and uttering criticisms of this administration, it is too late. You now live in an era where it taking blue pill will not save you from being put on the red list.
Impending Economic Collapse Most assuredly, the G20 announcement that your bank account is no longer to be considered money and all depositors will go to the end of the compensation line, issued by the Federal Deposit Insurance Corporation, which means that people like you and me will soon lose their entire life savings.
As previously reported on The Common Sense Show, ‘Treasury Secretary Jack Lew and the UK’s Chancellor of the Exchequer, George Osborne, on Monday (11/10), ran a joint exercise simulating how they would prop up a large bank (e.g. Bank of America) with operations in both countries that has landed itself in trouble. Also taking part in the ‘bank failure drill’ was Federal Reserve Chair Janet Yellen and Bank of England Governor Mark Carney, and the heads of a large number of other regulators, in a meeting hosted by the U. S. Federal Deposit Insurance Corporation’.
The purpose for the aforementioned drill was to rehearse the response which would be needed when the large banks fail in both Britain and the United States.

This post was published at The Common Sense Show on November 20,2014.

Consumer Prices – Fantasy and Reality

Jon

Airline Fares Are Declining – Aren’t They? A recent AP article published by ABC piqued our curiosity. It is entitled ‘Why Airfare Keeps Rising Despite Lower Oil Prices.’ Evidently, the authors felt an explanation was in order – maybe people have complained that air fares keep going up in spite of declining fuel prices? We can’t be sure what motivated them to write the article, but here are a few excerpts:
U. S. airlines are saving tens of millions of dollars every week because of lower prices for jet fuel, their largest expense. So why don’t they share some of the savings with passengers?
Simply put: Airlines have no compelling reason to offer any breaks. Planes are full. Investors want a payout. And new planes are on order.
In fact, fares are going higher. And those bag fees that airlines instituted in 2008 when fuel prices spiked aren’t going away either. In the 12 months ended in September, U. S. airlines saved $1.6 billion on jet fuel. That helped them post a 5.7 percent profit margin in the first three quarters of this year, robust for the industry but lagging behind the 10 percent average for the Standard & Poor’s 500.
In the past six years, airlines have done a great job of adjusting the number of flights to fall just short of demand. As a result, those who want to fly will pay a premium to do so. Airlines are selling a record 85.1 percent of their domestic seats. Thanks to several mega-mergers, four big airlines control the vast majority of flights, leaving very little room for another airline to undercut fares. With that in mind, here’s a closer look at what’s going on with airfare and the price of jet fuel:
– The average domestic airline ticket during the 12-month period ending in September rose 3.5 percent to $372.21, according to an Associated Press analysis of data from the Airlines Reporting Corp., which processes ticket transactions for airlines and travel agencies. That figure doesn’t include another $56 in taxes and fees that passengers pay.
– In the 12-month period ending in September, U. S. airlines burned through nearly 16.2 billion gallons of fuel. They paid an average of $2.97 a gallon – down from $3.07 the prior year, according to the Bureau of Transportation Statistics. That 10-cent drop saved the industry $1.6 billion. Fuel prices have since fallen further. United Airlines estimates it will pay $2.76 to $2.81 a gallon during the last three months of the year.
– Put another way: U. S. airlines burn through 311 million gallons of fuel in a week. Lower fuel prices are saving them $31 million a week.’

This post was published at Acting-Man on November 20, 2014.

You Asked For It, And Here It Is: The First GDP Downgrade Due To The Polar Vortex 2.0

Jon

And here come the excuses:
BMO Capital Markets economist Sal Guatieri notes that the BMO Economics team has lowered its U. S. fourth quarter gross domestic product (GDP) growth estimate to 2.5% from 2.8% due to weaker housing starts and a view that November’s activity could get chilled by polar vortex 2. While October was relatively warm, November has been anything but. However, he does not expect the sort of massive hit that GDP suffered in the first quarter of 2014 due to cold weather.

This post was published at Zero Hedge on 11/20/2014.

Dramatic Drone’s-Eye View Of The Record Upstate New York Snowfall

Jon

With half the nation covered in snow, according to ABC, nowhere appears to have had it worse (or more suddenly) than upstate New York. As images pour in from lake-effect snow, to The Buffalo Bills stadium, and from scenes caught in a snow storm to pandas playing, we thought the following stunning drone’s-eye-view over Erie County were incredible in their beauty and GDP-destroying cruelty…

A Drone’s eye view of the beauty (and GDP cruelty) of a snow-buried upstate New York


This post was published at Zero Hedge on 11/20/2014.

The Jaws of Life

Jon

There seems to be a lot of confusion out there as to whether the stock markets are bullish or bearish. Is the Dow Jones in a topping pattern as so many analysis are suggesting? I’ve seen some charts that are calling the big trading range , on the Dow Jones going all the way back to the 2000 bull market top, THE JAWS OF DEATH. Man it doesn’t get anymore dire than that. As usual I have a different take on the JAWS OF DEATH, which I would like to share with you tonight.
Before we look at the first chart for the Dow Jones I need you to clear your mind of everything related to the stock markets in any shape or form. That means no Elliot Wave counts, Time Cycles, Gann Lines , volume studies, no indicators of any kind. Clear your mind of every article you’ve ever read on the stock markets, bullish or bearish. And last of all, NO CHARTOLOGY. I want you to look at just the pure price action without any bias whatsoever. From that point we can then start to see what is really happening to the Dow Jones and related markets.
This first chart is a long term monthly look at the Dow going back to 1997 with no annotations or indicators of any kind, just pure price action. When you look at this chart for the Dow I want you to look at the very last bar on the top right hand side of the chart. As you can see the Dow is making new, ALL TIME HIGHS, for the month of November. Folks this is not what a top or bear market looks like. This is as bullish a chart you will find anywhere. Regardless of all the reasons why the Dow should be topping or is going into a bear market simply don’t add up . Again look at the last bar on the top right hand side of the chart.

Now that you can see what I’m seeing lets put some Chartology on this chart and see what it looks like. If you prefer you can put on your own trading discipline and see what you come up with. One of the basic principals of charting is what the the definition of an uptrend or down trend is. An uptrend consists of higher lows and higher highs while a downtrend makes lower lows and lower highs. This is a simple concept to understand. On this monthly chart below I’ve added all the chart patterns, as I’ve seen them form through the years.
Lets start at the 2009 crash low that ended on a massive capitulation spike in volume. Who could have ever guessed that five years later the Dow would be making record highs in 2014. I remember the 2009 low very well, the world as we knew it was coming to an end. That has stuck with investors all these years and makes them fearful every time the Dow has a decent rally. In reality, the real world, nothing could be further from the truth over the last five years. The old saying, the stock markets like to climb a wall of worry, pertains perfectly in this case.

This post was published at GoldSeek on 20 November 2014.

The Wrath of Draghi: Bailed-Out German Megabank Imposes ‘Negative Interest Rates’

Jon

Commerzbank, Germany’s second-largest bank, a toppling marvel of ingenuity during the Financial Crisis that was bailed out by ever dutiful if unenthusiastic taxpayers, will now reward these very folks with what Germans have come to look forward to: the Wrath of Draghi.
It started with Deutsche Skatbank, a division of VR-Bank Altenburger Land. The small bank was the trial balloon in imposing the Wrath of Draghi on savers and businesses. Effective November 1, those with over 500,000 on deposit earn a ‘negative interest rate’ of 0.25%. In less euphemistic terms, they get to pay 0.25% per year on those deposits for the privilege of giving their money to the bank.
‘Punishment interest’ is what Germans call this with Teutonic precision.
The ECB came up with it. In June, it started charging a ‘negative interest rate’ of 0.1% on reserves. In September, it doubled that rate to 0.2%.
‘There will be no direct impact on your savings,’ the ECB announced at the time. ‘Only banks that deposit money in certain accounts at the ECB have to pay.’ It even asked rhetorically: ‘But why punish savers and reward borrowers?’ And it added helpfully: ‘This behavior is not specific to the ECB; it applies to all central banks’ [here’s part one of the saga… The Wrath of Draghi: First German Bank Hits Savers with ‘Negative Interest Rates’].
On November 6, as rumors were swirling that even the largest banks would inflict punishment interest on their customers, Commerzbank CFO Stephan Engels came out swinging in an interview to assuage these fears. He said point blank, ‘We cannot imagine negative interest rates on deposits of our individual and business customers.’
On November 11, it was Martin Zielke, member of the Commerzbank’s Board of Managing Directors, who recited the same corporate script in his interview with Focus: ‘We cannot imagine at the moment that private customers pay a negative interest rate on their deposits with us.’

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

US Manufacturing PMI Misses By Most On Record, Lowest Since January

Jon

Recovery, we have a problem… November’s Flash US Manufacturing PMI printed a 10-month lows 54.7, missing expectation sof 56.3 by the most on record and tumbling for the third month in a row. The last 2 mnths have seen the biggest drop since June 2013 ands as Markit notes, suggests a further drop in GDP growth expectations of only 2.5% in Q4. Output is down for the 3rd straight month and Surprise!! Export market weakness is being blamed… as it seems the US cannot decouple from the rest of the world’s slump after all and is – as we have explained numerous times – merely on a lagged cycle.
10-month lows…

This post was published at Zero Hedge on 11/20/2014.

Ted Butler Quote of the Day 11-20-14

Jon 1 Comment

When I started [Wednesday's column], silver and gold were steady, only to sell off suddenly around 10:30 AM (EST). This sell-off was followed by a sharp rally, particularly in silver, only once again to sell-off as I complete this piece. Although I am adamant about reading too much into price movement to gauge what’s going on under the surface, there’s something about this volatility that is encouraging. I’m still of the mind that the COT structures in gold and silver are exceedingly bullish and it appears to me that this unusual price volatility may be due to JPMorgan and the other big commercial silver shorts shaking the tree to flush out as much outside selling as possible so that these big silver shorts can buy. I can (and have) look dumb in the very short term, but it feels to me like we can move up sharply at any moment.

The more I contemplate the four month price decline since mid-July in silver (and other commodities) increasingly it looks like the setup of all setups. There was an almost unmistakable deliberate intent to the decline and this has been proven out in the futures’ positioning changes. While unexpected by me, the recent double-crossing by the big silver shorts of the smaller raptors fits in perfectly with the mother of all setups thesis. And while the big traders on the COMEX can bomb the price at will in the short term, it’s hard for me to see what category of traders’ remains that can sell significant quantities of futures contracts. Instead, all I see are the many categories of potential big buyers.

A small excerpt from Ted Butler’s subscription letter on 11-19-14.

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

Had Enough of Roller Coaster Rides Yet?

Jon

My kids love to ride those wickedly wild roller coasters, the kind that leave your stomach suspended in mid-air at the top of the track while the cart is already down at the bottom of the valley. Every now and then, against my better judgment, I will let them twist my arm enough to strap myself into one of those things just so that I can inflict on myself the same punishment that they seem to delight in inflicting on themselves.
There was one coaster we went to where they had a camera set up with a strobe light that snapped your picture as your cart went past it on a particularly treacherous portion of the ride. I recall looking through those when we finished the ride and were lingering around at the customer staging area to see what the expression on my face was out of sheer curiosity. Yep – it looked like I was the victim of one of those infamous native American Indians, the Apaches, torture of their white eye prisoners.
After watching the doings in gold and silver this AM, I could wear my kids somehow strapped me back into one of those infernal roller coasters!

This post was published at Trader Dan Norcini on Wednesday, November 19, 2014.

Retail Rapture: UK Grocery Sales Drop 1st Time In 20 Years, Dollar General To Shut 4000 Stores

Jon

For the first time since it began collecting data in 1994, Kantar Worldpanel, the market researcher, reported a decline in UK grocery sales by value, as The FT reports the biggest UK grocers were “losing market share hand over fist,” as analysts warn “there are phoney price wars, and there are real price wars. This is a real price war.” This comes on the heels of Goldman report claiming 20% of British grocers are surplus to requirements. But it’s not just Britain… in the the cleanest dirty shirt world-economic-growth supporting decoupled economy of the USA, Reuters reports Dollar General may need to divest more than 4,000 stores to win approval from the U. S. Federal Trade Commission for its acquisition of Family Dollar.
As The FT reports, Britain’s supermarkets have suffered their first fall in sales in at least 20 years as lower food prices and a vicious price war cut the amount customers spend on groceries.
For the first time since it began collecting data in 1994, Kantar Worldpanel, the market researcher, reported a decline in UK grocery sales by value. ‘There are phoney price wars, and there are real price wars. This is a real price war,’ said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

This post was published at Zero Hedge on 11/20/2014.

The Prisoner’s Dilemma

Jon

Be Civilized … Want to know the secret of success in today’s civilized world?
Be civilized. More on that in one moment …
First, we note that the Dow hit a new record high on Tuesday of 17,688, after rising 40 points. And gold was just a buck shy of the $1,200-an-ounce mark. It appears to have bottomed out. Time will tell.
Remember that gold is not an investment. It is money – the best money. You keep some on hand; you never know when you may need it.
Now, back to the secret of success …

(Via soziologie.uni-muenchen.de)
The Prisoner’s Dilemma In 1962, Robert Axelrod was still a student. But he had access to the University of Michigan’s only computer – a primitive, clunky machine. Students were just starting to figure out what to do with computers. And Axelrod’s idea was to program it to play a game.
The game was meant to resolve what is known as the prisoner’s dilemma. You and a friend get busted for drugs. If you keep your mouths shut, you will both walk away. But if one of you rats out the other, the snitch will go free and the other will do time. If you both turn on each other, both of you will do time … but probably not as much, since you have both cooperated with the prosecution.

This post was published at Acting-Man on November 20, 2014.

Why Gold And US Dollar Do Not Always Move Inversely?

Jon

The strength (or weakness) in the U. S. dollar is one of the most important drivers of price of gold. However, this is not always true and there are times when they rise or fall simultaneously. The positive correlation between U. S. dollar and gold occurred, for instance, from May through December 1993, from May until November 2005, and at the turn of the 2008 and 2009.

Trends of the U. S. dollar and gold do not always align inversely, and even when they do, the percentage moves are not very well matched. Just think of the important rally in gold from 2008 to 2013, when the dollar was back where it was in late 2008. Also, peaks and troughs do not always align. Gold was rising when the dollar hit its peak in mid-2010.

This post was published at Gold-Eagle on November 19, 2014.

Fed Downplays Inflation Worries

Jon

Going over these FOMC statements is akin to the ancient art of divining the future by the examination of animal entrails. I can see the conversation:
Demetrius: “I see what appears to be a twisted piece of gut. That is a sign from the gods that the future is twisted and unclear. Perhaps we should wait before going to war”.
Apollos: ” I see the same thing but tells me that our enemies will lie twisted and ruined on the ground. We should to war immediately”.
Lydia: ” I see a big fat worm. That tells me that this animal is so screwed up on the inside that we should not believe a single thing this entrail reading crap tells us”.
The takeaway I get however has to do with inflation. We have been saying here for some time now, much to the chagrin of some of the gold perma bulls, that the market is not the least bit worried about inflation at the moment. That sentiment has been reflected in the flat to lower TIPS spread as well as the sinking commodity indices. Also, the concern of both the ECB and the Bank of Japan as been the LACK of INFLATION and what they like to euphemistically term, ‘disinflation’.

This post was published at Trader Dan Norcini on Wednesday, November 19, 2014.

Initial Jobless Claims Hit 2-Month Highs, Continuing Claims Tumble To 14-Year Lows

Jon

It is still far too early to call a turn in the long-term trend of initial jobless claims but this is the 5th week that new lows have not been made, 4th miss in a row, and (despite last week’s upward revision) claims sit at 2-month highs. Initial claims printed 291k (against 284k expectations) down very slightly from an upwardly revised 293k last week. However, continuing claims continue to tumble to fresh cycle lows at 2.33 million (below expectations and well down from last week’s jump).
4th miss of last 5 weeks for initial claims…

This post was published at Zero Hedge on 11/20/2014.

The Cultural and Political Consequences of Fiat Money

Jon

It may seem unusual that an economist would talk about culture. Usually, we talk about prices and production, quantities produced, employment, the structure of production, scarce resources, and entrepreneurship.
But there are certain things that economists can say about the culture, and more precisely, that economists can say about thetransformation of the culture. So what is culture? Well, to put it simply, it is the way we do things. This can include the way we eat – whether or not we dine with family members on a regular basis, for example – how we sleep, and how we use automobiles or other modes of transportation. And of course, the way we produce, consume, or accumulate capital are important aspects of the culture as well.
Limiting Budget Is the Key to Limiting Governments Now to understand the effects of fiat money on the culture, we must first look at the relationship between financial systems and the nature of government.
A number of economists have observed that fiat money is a prerequisite for tyrannical government, and the idea that monetary interventionism paves the way for tyrannical government is very old and goes back to Nicolas Oresme in the fourteenth century. It has not been emphasized in the twentieth century, but Ludwig von Mises is among the few who has stressed the importance of this relationship.

This post was published at Ludwig von Mises Institute on Jrg Guido Hlsmann.

Plunging Energy Prices Drag Down CPI, Offseting Jumping Food Costs

Jon

For the fourth month in a row, the shale-revolution crushing plunge in crude prices managed to push energy costs down, with the BLS reporting that “the gasoline index fell for the fourth month in a row, declining 3.0 percent, and the indexes for natural gas and fuel oil also decreased.” As a result, October CPI was unchanged from a month earlier, and up 1.7% from a year ago, below the Fed’s 2.0% target. However, stripping away plunging energy prices, things were a little different, with CPI ex food and energy up 0.2%, slightly above the 0.1% expected, and up from 0.1% before. But before everyone screams deflation, here is what also happened: the shelter index, airline fares, household furnishings and operations, medical care, recreation, personal care, tobacco, and new vehicles were among the indexes that increased. And for those few who have to eat, “The index for food at home has risen 3.3 percent over the last 12 months, the largest 12-month increase since April 2012.” and “The index for nonalcoholic beverages rose 0.6 percent, its largest increase since September 2012.”

This post was published at Zero Hedge on 11/20/2014.

The Latest Scandal: Goldman, Fed Employees Busted For Illegally Sharing Confidential Information

Jon

On the morning of Friday, September 26, in addition to the shocking news of Bill Gross’ departure from Pimco, the world was just as shocked, or not as the case was for many, that a former NY Fed staffer, Carmen Segarra, who had been previously fired for suggesting that Goldman Sachs has an undue influence on the NY Fed and gets a preferential treatment (certainly as a result of NY Fed’s president Bill Dudley being working previously at Goldman Sachs), had released nearly 50 hours of tapes confirming her allegations: that the NY Fed was nothing but a branch of the bank that controls every central bank. The full details were presented in “How Goldman Controls The New York Fed: 47.5 Hours Of “The Secret Goldman Sachs Tapes” Explain.”
Ironically it was on that very day that another recent Goldman hire from the NY Fed – a classic case of, as the NY Times puts it, the “revolving door, the symbolic portal that connects financial regulators to Wall Street” – a 29-year-old former New York Fed regulator named Rohit Bansal, got into hot water after something “shocking” was revealed: he had an inside source at the NY Fed who was providing him with illegal, confidential information on a regular basis.

This post was published at Zero Hedge on 11/20/2014.