Can’t Find Any Inflation? Here’s A Place To Start

Jon

Lately, there has been much anguished consternation, especially among the tenured US economics professors (primarily those who make 6-digits or more per year) and of course, the Federal Reserve where as we revealed last week, at least 113 government workers make $250,000 (excluding bonuses) and thus all are confined within the cozy cocoon of America’s “1%ers”, about the so-called complete disappearance and collapse in inflation. So to help these ivory tower-confined individuals in their holy grail to rediscover the inflation that is more than felt by the rest of America, here are two simple charts.

This post was published at Zero Hedge on 10/27/2014.

What’s the future for fixed income investment managers after Bill Gross?

Jon

If legendary ‘bond king’ Bill Gross could not get the bond markets right what future is there for any investment manager in the sector? Just where can you hide when a 30-year bull market looks in danger?
Carlyle Group Head of Financial Services Olivier Sarkozy discusses managing fixed income in the post-Gross era. He speaks on ‘Bloomberg Surveillance’… CLICK HERE TO WATCH VIDEO

This post was published at Arabian Money on 27 October 2014.

AAPL Among 338 Nasdaq Stocks That Are “Broken” This Morning

Jon

The US stock market is open… so at least one exchange must be broken. Sure enough, as Nanex notes, NYSE Arca and BATS had “issues” this morning as 338 symbols stopped reporting trades between 1018ET and 1028ET. The stocks included AAPL, FB, FOXA and FSLR (HFT darlings). In addition S&P 500 e-mini futures liquidty was the 4th lowest ever during this morning’s trading.
Here is the excellent Eric Hunsader tracking the breakdowns… (from oldest to newest)
Looks like NYSE-Arca had an outage in symbols D-F between 10:18 and 10:28
— Eric Scott Hunsader (@nanexllc) October 27, 2014

This post was published at Zero Hedge on 10/27/2014.

The Jeremiad

Jon

Back in 1990 my wife and I took a three month trip to Mexico to help decide if we were really called to be missionaries, or merely had a burden to help people. The difference is critical. But while there, I recognized that Spanish speaking people had problems pronouncing my name Jerome. They don’t use the ‘J’ sound in Spanish and the letter ‘E’ is pronounced as a long ‘A’ is in English, and there are no silent letters. So my friend there, a native, suggested I use a Spanish version of Jerome. He suggested Jeremiah or Geronimo (Spanish for Jerome, Goyaa in Apache). Jeremiah was the prophet that dared to warn Jerusalem about a coming disaster. Well, I chose Jeremiah because it was biblical, and for several months was known as Jeremiah – or ‘Jeremias’ in Espaol. We were not called to be missionaries, and ultimately satisfied our burden with annual trips delivering medical care to impoverished indigenous people in the Sierra Nevada mountains – ironically the same range where Geronimo found refuge.
But the other day I found myself saddled with the Jeremiah complex. But this time it is not simply making my name easier to say. I have been posting short warnings on Facebook (a site which most of my family reads vigorously) about the economic situation. I started the day the ‘satan signal’ appeared. I just thought that was very interesting and people might be curious and open to hear about FED manipulation and the PPT. Each time I begin preaching, I have certain relatives to tell me to stop being a gloom ‘n doomer. (I shouldn’t have had that beer before I sat down to write my last Facebook post). My mother says it makes her sad when I get negative. Other friends do not comment at all, but hit that ‘like’ button each time I mention the weather, tell some outdoors hiking or camping story, or talk about something from my academic research. They like the professor, but not the economic forecaster.

This post was published at TF Metals Report on October 27, 2014.

The dollar decline continues: China begins direct convertibility to Asia’s #1 financial center

Jon

This morning some of the biggest financial news of the year made huge waves all over Asia.
Yet in the Western press, this hugely important information has barely even been mentioned. (CNBC.com, for example, has yet to report on this story as of 11:45am Eastern…)
So what’s the news?
The Chinese government announced that the renminbi will become directly convertible with the Singapore dollar… effective tomorrow morning.
It’s clear this deal has been in the works for a while, and it’s another major step towards the continued internationalization of the renminbi and unseating of the dollar as the world’s dominant reserve currency.
For decades the renminbi has been a tightly controlled currency. It’s only been in the last few years that the Chinese government started loosening those controls, primarily in response to the obvious need for a dollar competitor.
The entire world is screaming for an alternative to the dollar and the US government.

This post was published at Sovereign Man on October 27, 2014.

Markets And Metals Are Ready But They Will Diverge

Jon

Markets have been very strong and have a solid low now in place but they do need a little rest since they have come so far so fast and are now overbought.
I’ve already identified the leading sectors for member and the stocks within which do best are also well known to us already.
It is almost time to get heavy into stocks once again for the run into the end of the year.
As for the metals, they are broken and can’t even base after a strong move lower.
The metals are just about ready to head south once again though so let’s take a look at how they failed this past week.
Gold ended the week down a solid 5.71% after giving the perma-bulls a glimmer of hope.
Gold was moving pretty well mid-week and looked like it may take over from silver as the leader between the two.
The problem was, silver was not confirming the strength and was actually still quite weak.

This post was published at GoldSeek on 27 October 2014.

Pending Home Sales Disappoint As 15% of Realtors Report Clients Unable To Obtain Financing

Jon

Less than a week after the NAR reported September existing home sales which surged at a 5.17 million annualized pace, the highest since September 2013, rebounding from the August drubbing which was also the worst miss in 2014, today the NAR flip-flopped and disappointed sellside expectations of a 1.0% rebound following the August -1.0% decline, rising a modest 0.3%, and less than half the 2.2% expected increase from a year ago, rising only 1.0% Y/Y. This was the third miss in the series in the last 4 prints.
Some commentary on the disappointing print, from Lawrence Yun, NAR chief economist: moderating price growth and sustained inventory levels are keeping conditions favorable for buyers. “Housing supply for existing homes was up in September 6 percent from a year ago, which is preventing prices from rising at the accelerated clip seen earlier this year,’ he said. ‘Additionally, the current spectacularly low mortgage rates should help more buyers reach the market.’
That’s funny: we have been hearing that for the past 6 years. We also heard that rising rates are also bullish for housing as it means buyers have to rush to catch the last low rates before the spike. That didn’t quite pan out either.

This post was published at Zero Hedge on 10/27/2014.

Volcanic Eruption of Gold and Silver Demand: Shanghai’s Blast

Jon

The BRICS Just Don’t Stop
Very recently, this Watchman wrote a seriesabout world demand ramping up in precious metals. This is doubly true of Eastern demand. Yet, unsurprisingly over the past few weeks, as the bullion banks have used a rising U. S. dollar as cover to knee-cap Comex spot prices repeatedly, Asia has stepped up their gold-buying game even more. In fact, the numbers coming in are stretching the ‘just in time’ precious metals delivery system to the brink, once more.
As great as the demand figures were going into early October, they’re even better now, and deserve another look.
As I wrote before, the West’s exchanges, specifically the Comex and LBMA, are the crooked mechanisms which control prices for silver and gold for the rest of the planet. Yet, the pricing power of those two crooked exchanges is not long for this world. Those wolverines are being de-fanged by the BRICS as we speak. It is not an easy process, nor is it a terribly quick one, as stackers well know, but once again, I urge those in our community to show the kind of self-assured patience that the Chinese and Indians nationals are showing.
Shanghai: A Black Hole for the World’s Gold
Not only have the Chinese kept up this brisk pace of gold-accumulation since late September, they’ve upped the ante several notches!
Check out these withdrawals:
Week 39: Demand was 45 tonnes.
Week 41: Demand was over 68 metric tonnes! This is the 3rd-largest, weekly demand total on record for Shanghai
Week 42: 51.5 tonnes of gold was withdrawn.
Incredible.
Look at this graph beneath, via Koos Jansen’s abode:
See that yellow line that represents the entirety of world gold mining supply? Now see the blood-red bar on the furthest right, slicing through the top of it like a lovely stream of magma from the exploding volcano, which we casually refer to as ‘Chinese gold demand’?
Make no mistake about it, the Chinese appetite for gold is most definitely volcanic!

This post was published at The Wealth Watchman on OCTOBER 27, 2014.

ECB Bought Just EUR1.7 Billion Covered-Bonds Last Week

Jon

According to an ECB-leaked spreadsheet (now confirmed), the impotent omnipotent central bank bought a mere EUR1.7 billion of covered bonds last week (which was largely expected) according to Bloomberg. This somewhat inglorious start to the ECB’s efforts to engorge its balance by another trillion or so is supported by precedent as it has been the sovereign purchase programs that made the big difference in the past. Under pressure to “front-load the purchases” as one analyst notes, the results from last week suggest, as we have warned, there simply is not enough quality unencumbered assets lying around in Europe to make a dent in the ECB’s efforts to greatly rotate taxpayer-backed free money on to bank balance sheets.
*ECB SAYS EU1.7 BLN OF COVERED-BOND PURCHASES SETTLED LAST WEEK

This post was published at Zero Hedge on 10/27/2014.

Brazilian Stocks Plunge 6% To 7-Month Lows After Roussef Win

Jon

Just as we warned last night was indicated by the Japanese market’s Brazil ETFs, so the IBOVESPA has opened down over 6% this morning on very heavy volume following the ‘disappointing for the bulls’ electionvictory of Dilma Rousseff. Despite her associations with Petrobras (which may have suggested it bounced), the favorite Jim Chanos short is being crushed, down 14% at the open. The Real is tumbling too, breaking above 2.54 to its weakest against the USD since Dec 2008.
Brazilian stocks…

This post was published at Zero Hedge on 10/27/2014.

The Day The POMO Died

Jon

For those who follow the Fed’s daily intervention in the stock market, today is a historic, if bittersweet day: this is the day when the Permanent Open Market Operations (or POMO) as a result of the QE3 program launched in December 2012, finally die (at least until it is reincarnated yet again). Today, at 11:00 am, the NY Fed’s market desk will conclude its 933rd POMO since August 25 of 2005, when it will inject just about a $1 billion in the stock market in the form of a $0.85-$1.05 billion buyback of long-end bonds. And with that, Simon Potter’s open market operations desk located on the 9th floor of Liberty 33, will be put on temporary hiatus.
A chart showing the daily history and 30-day average of the Fed’s direct intervention in capital markets and mispricing of risk is shown below.

This post was published at Zero Hedge on 10/27/2014.

Who rules? Information Technology

Jon

Natural systems show us only lower bounds to the possible, in cell repair as in everything else. – K. Eric Drexler, Engines of Creation, p. 105
Our ability to create models – virtual realities – in our brains, combined with our modest-looking thumbs, has been sufficient to usher in another form of evolution: technology. That development enabled the persistence of the accelerating pace that started with biological evolution. It will continue until the entire universe is at our fingertips. – Ray Kurzweil, The Singularity Is Near: When Humans Transcend Biology (Kindle Locations 9409-9412; all subsequent references in this format refer to this source)
The combination of nanotechnology and advanced AI will make possible intelligent, effective robots; with such robots, a state could prosper while discarding anyone, or even (in principle) everyone. – K. Eric Drexler, Engines of Creation, p. 176
Along with the massive money printing and debt-laden economy our overlords insist we need, there is another economy, so to speak, that defies their intentions. In the world of technology the Keynesian horror known as price deflation is the overpowering fact. Far from bringing economic calamity, the accelerating growth of a widening range of technologies isproving resistant to the Keynesian virus of central bank inflation. And as these technologies merge with our minds and bodies in increasingly diverse and intimate ways, decentralize and revolutionize nearly every aspect of our economy and culture, the world as we know it today will disappear during our lifetimes. There are at least three reasons why today’s world will soon be ancient history: 1. The life force of capitalism (creativity, entrepreneurship, competition, free markets) is still alive, especially in information technology. Ray Kurzweil (March 31, 2011 interview): The smartphones we carry around in our pockets are a billion times more powerful – per dollar – than the computer I used at MIT in the late 1960s. They’re also 100,000 times smaller. In 25 years our cell phones will be the size of a blood cell and more powerful. (6:10)
2. Once a technology becomes an information technology it is subject to theLaw of Accelerating Returns, meaning it advances exponentially. Human biology and medicine historically progressed at a linear rate until they were transformed by information technology. When the government version of the Human Genome Projectbegan in 1990, for example, critics said it would take thousands of years to finish, given the speed at which the genome could then be scanned. Yet the 15 year project finished slightly ahead of schedule.

This post was published at GoldSeek on 27 October 2014.

Service PMI Slides To 6 Month Low, Implies Slide In Q3 GDP To 2.5%; Ebola, Ukraine Blamed

Jon

It appears the cleanest dirty shirt may need some laundering. For the 4th month in a row, US Services PMI has dropped (hitting 6-month lows) and missing expectations by the most this year. The excuse for this weakness – oh that’s easy -“there are clearly many concerns, ranging from worries about the impact of Ebola, the Ukraine crisis, the ongoing plight of the Eurozone , signs of further weakness in emerging markets and the Fed starting to tighten policy.”

This post was published at Zero Hedge on 10/27/2014.

Andy Hoffman-Fed’s Biggest Fear-Loss of Confidence in Dollar

Jon

The following video was published by Greg Hunter on Oct 26, 2014
Why is the Fed so terrified with even a relatively small market drop from all-time highs? Andy Hoffman of Miles Franklin thinks, ‘Their fear is a loss of confidence in the dollar. It’s that simple. . . . Since 2008, all they have left in their arsenal is money printing, market manipulation and propaganda. The propaganda doesn’t work anymore. Nobody believes in recovery, and everyone knows it’s not true.’ Hoffman also points out, ‘Just think about the perception if the Dow fell a thousand points in a day or, let alone, three or four thousand points in a day. They would call it the crash of 1929. Look at Europe. Twenty-five European banks failed the stress test. . . . The banking system, as a whole, is on the precipice right now, and the slightest drop will cause the whole 2008 calamity to start all over again. . . . Once that confidence leaves, everyone races out of currencies, and the stock market and the whole economy mirage collapses.’

ECB Stress Again Fails To Inspire Confidence As Euro Stocks Slide After Early Rally; Monte Paschi Crashes

Jon

It started off so well: the day after the ECB said that despite a gargantuan 879 billion in bad loans, of which 136 billion were previously undisclosed, only 25 European banks had failed its stress test and had to raised capital, 17 of which had already remedied their capital deficiency confirming that absolutely nothing would change (conveniently the ECB reported that private sector loan issuance declined once again by 1.2% Y/Y), Europe started off with a bang as stocks across the Atlantic jumped, which in turn pushed US equity futures to fresh multi-week highs putting the early October market drubbing well into the rear view mirror. Then things turned sour.
Whether as a result of the re-election of incumbent Brazilian president Dilma Russeff, which is expected to lead to a greater than 10% plunge in the Bovespa when it opens later, or the latest disappointment out of Germany, when the October IFO confidence declined again from 104.5 to 103.2, or because “failing” Italian bank Monte Paschi was not only repeatedly halted after crashing 20% but which saw yet another “transitory” short-selling ban by the Italian regulator, and the mood in Europe suddenly turned quite sour, which in turn dragged both the EURUSD and the USDJPY lower, and with it US equity futures which at last check were red.
So here is where we are now in the markets: European shares fluctuate, currently down having just touched session lows with the travel & leisure and food & beverage sectors outperforming and banks, autos underperforming. Banks index falls having risen earlier on results of ECB stress tests yesterday. Brazilian stocks fall after Rousseff wins election. The Dutch and Swiss markets are the best-performing larger bourses, Italian the worst. The euro is stronger against the dollar. Irish 10yr bond yields fall; Spanish yields decline. Commodities decline, with nickel, corn underperforming and natural gas outperforming. U. S. Dallas Fed index, pending home sales, Markit U. S. composite PMI, Markit U. S. services PMI due later.
And while today attention turns towards the US pending home sales release and a host of tier 1 US earnings including Merck at 1100GMT and Twitter after-market, the biggest event by far takes place at 11:00 am when the Fed monetizes some $0.85 – $1.05 billion in 2036-2044 bonds, after which POMO, and QE3, are officially over!

This post was published at Zero Hedge on 10/27/2014.

A Scary Story for Emerging Markets

Jon

The consequences of the coming bull market in the US dollar, which I’ve been predicting for a number of years, go far beyond suppression of commodity prices (which in general is a good thing for consumers – but could at some point threaten the US shale-oil boom). The all-too-predictable effects of a rising dollar on emerging markets that have been propped up by hot inflows and the dollar carry trade will spread far beyond the emerging markets themselves. This is another key aspect of the not-so-coincidental consequences that we will be exploring in our series on what I feel is a sea change in the global economic environment.

This post was published at Mauldin Economics on OCTOBER 25, 2014.

A Storm of Global Events Is Threatening to Push Gold and Silver to Record Highs

Jon

Earlier this week, Mac Slavo reported on an interview conducted with the CEO of Future Majestic Silver Corp, Kieth Neumeyer. In it, Mr. Neumeyer proposed a brilliant way to put an end to the blatant manipulation of the gold and silver market. If all of the mining companies in the world agreed to halt production for a single 30 day period, it would ‘send ripples throughout the entire system’.
It would show the phony paper market who’s really in charge. With the price of 800 million ounces of physical silver being controlled by 1 billion ounces of paper stocks, a challenge like this could make stock prices tumble while the price of real silver goes through the roof. He suggested that they agree upon a month sometime in 2015. I’d be willing to bet that the anticipation of that event, would make silver prices go ballistic long before that month arrives.
Of course, even if Mr. Neumeyer doesn’t have his way, there’s a long list of events on the horizon that could push gold and silver back into the spotlight. There’s so many factors that are converging at once, that if only a few them come to fruition, we can expect gold and silver to be making some serious gains by the end of this year.
Another challenge to metals market may be coming down the pike by the end of this month. In Switzerland, a referendum is being planned for November 30th, that could bring about the first gold backed currency in decades. Currently, polls show that support for the bill has a very narrow lead, so we’ll see what happens in the next few weeks. If it passes, Switzerland will hold 20 percent of it’s reserves in gold, demand the return of all its gold being held overseas, and will cease selling gold to the rest of the world.

This post was published at The Daily Sheeple on October 26th, 2014.

28/10/2014: Page 75… ECB Washes Out Its Big Bazooka QE with New NPLs…

Jon

In the previous (lengthy) post I covered my view of the ECB stress tests results. But, per chance, you have missed two core points on these, here they are, in a neater summary:
Point 1: Stress tests are weak compared to expectations and independent analysts’ estimates of capital shortfall (by a factor of up to or in excess of10:1).
Point 2: Stress tests have raised non-performing loans levels in the euro area banking system by EUR136 billion to EUR879.1 billion or close to 9% of the euro area GDP. The increases were recorded in all categories of loans, which in simple terms means the banks have been under-providing for loans losses across all categories of their core assets.

This post was published at True Economics on October 27, 2014.