Bill Cohan: The Truth About the Fed

Jon

“The truth is, although both incidents do reveal something about the way the powerful and famous get away with more stuff than the rest of us, there’s no real comparison. The Segarra Tapes actually reveal little or nothing that was not already known, assuming you have a shred of understanding how the Federal Reserve banks actually work. Nor is William Dudley, the president of the Federal Reserve Bank of New York, about to get pilloried in public like NFL Commissioner Roger Goodell.

This post was published at Jesses Crossroads Cafe on 28 SEPTEMBER 2014.

The Plunge Protection Team Is Opening An HFT-Focused Chicago Office

Jon

For several days we had heard a persistent rumor, that one of the most famous members of the New York Fed’s Markets Group, also known as the Plunge Protection Team, Kevin Henry was moving to the HFT capital of the world, Chicago. We refused to believe it because, let’s face it, when the trading desk on the9th floor of Liberty 33 needs to get its hands dirty in stocks, it simply delegates said task using just a little more than arms length negotiation, with the world’s most levered HFT hedge fund: Ken Griffin’s Citadel. Why change the status quo.
And then, it turned out to be true because as the Chicago Fed announced just a few short days ago:
The Markets Group at the Federal Reserve Bank of New York manages the size and composition of the Federal Reserve System’s balance sheet consistent with the directives and the authorization of the Federal Open Market Committee (FOMC), supports debt issuance and debt management on behalf of the U. S. Treasury, provides foreign exchange services to the U. S. Treasury and provides account services to foreign central banks, international agencies and U. S. government agencies. Markets Group is establishing a presence at the Federal Reserve Bank of Chicago and has openings for both experienced professionals and recent graduates.
So instead of interacting with the HFT momentum ignition algos using the microwave line of sight towers from NY all the way to Chicago, the NY Fed has decided it needs to be present on location in the windy city to buy up every ES contract and reverse the selling momentum when the day of reckoning finally hits.

This post was published at Zero Hedge on 09/28/2014.

Does Surging Demand For Gold & Silver Coins Signal a Bottom?

Jon

Reports of individuals snapping up near-record numbers of gold and silver coins are coming in from around the world:
U. S. Mint American Eagle gold coin sales set to rise sharply in Sept
(Reuters) – The U. S. Mint has sold nearly 50,000 ounces of American Eagle gold coins so far in September, almost double its total in August, as a sharp pullback in gold prices and geopolitical tensions boosted interest for physical products from retail investors.
With only six business days left until the end of September, sales of American Eagle bullion gold coins made for investors were 46,000 ounces, up 84 percent from August sales of 25,000 ounces, the latest U. S. Mint data showed on Monday.
Record highs in U. S. equities also prompted some retail investors to buy precious metal products to diversify their portfolios, said David Beahm, vice president at New Orleans coin dealer Blanchard & Co.

This post was published at DollarCollapse on September 28, 2014.

The Southwest housing mania is overheating: California, Arizona, and Nevada leading the way once again with unaffordable housing markets.

Jon

There is a great book called Willpower that examines the ability of people to actually exercise self-control and how these character traits impact life. Those that can delay gratification typically end up doing better in life throughout marriages, work, and their financial decisions. Why this matters for housing especially here in California is most people look at their left and right and are trying to keep up with their neighbors. It is fascinating to see many people trying to cash in on their current equity so they can leverage up to a bigger home because they can. Forget about paying down the mortgage for retirement. Time to press reset and leverage into a bigger home. Since home ownership in California is largely in the domain of older home owners many are simply diving into this property ladder game once again. Retirement figures show that many older Americans are horribly underprepared for retirement. Yet the advice is always to buy as much house as you can get your hands on. Think about the $700,000 starter crap shack here in SoCal. For a 20 percent down payment, a household will need to save up $140,000. Most are into instant gratification and that is why car leases reign supreme in the land of all hat and no cattle. This is the land of Purnia Dog Chow eating baby boomers living in million dollar homes and welcoming back their heavily indebted offspring. The Southwest once again is paving the way to this new recent housing mania. If we look at California, Nevada, and Arizona we find that home values have quickly outpaced underlying economic activity.

This post was published at Doctor Housing Bubble on 28 Sep, 2014.

The “Only Chart That Matters”, Projected Until 2016

Jon

Three weeks ago, in “A Quick Reminder Of The Only Thing That Matters, In One Chart” we did just that, showing the ever greater amount of global liquidity injected by the central banks, thanks to which they have so far successfully masked the accelerating economic collapse of the world, as shown by cratering “benign” inflation expectations to levels not seen since Lehman: hardly a confirmation of economic stability and growth:

This post was published at Zero Hedge on 09/28/2014.

Rising GDP “Boosts Consumer Demand” To Buy Gold

Jon

GOLD BUYING is boosted more by rising GDP and stronger consumer incomes than by financial crisis, according to a new study from a world-renowned economics professor.
Defying the developed West’s common belief that gold is only for bad times, the report confirms what market-development organization the World Gold Council calls “gold’s positive duality: its ability to benefit from both the contraction and expansion phases of the business cycle.”
The econometric study comes from Avinash Persaud – emeritus professor at Gresham College, visiting fellow at CERF-Cambridge University, and governor of the London School of Economics – who was commissioned by the World Gold Council to study consumer versus investment gold buying both globally and in 11 key countries.
Over the last five years, world demand to buy gold jewelry has accounted for 48% of annual purchases, and a further 10% has gone to electronic products such as PCs and smartphones. With central banks buying 7% on average, and despite the global financial crisis, gold investing has accounted for less than consumer demand – some 35% per year since 2009.
“The new analysis,” says the Council, presenting Professor Persaud’s findings, “shows that a 1% increase in GDP lifted jewellery consumption by an average of 5%, all else equal.” Because “gold jewellery is what economists refer to as a ‘superior’ good,” says Persaud, “where demand increases proportionally more than income.”

This post was published at Gold-Eagle on September 28, 2014.

Wendy McElroy: Aftermath of the GGC Firestorm

Jon

Introduction: Wendy McElroy is a prolific book author, columnist, speaker and contributor to prestigious journals and magazines, often with an “alternative” slant. She made her reputation as a young writer commenting from a libertarian standpoint on feminism, and taking a pro-pornography position that was anathema to the feminist “old guard” that saw pornography as a tool of chauvinist oppression. McElroy has continued to speak out, nonetheless, on issues of the most importance to her: libertarianism, anarchism and, of course, feminism. She has served as a weekly columnist for FoxNews.com and is the editor of the feminist website ifeminists.com. McElroy is also a research fellow at the Independent Institute, and contributing editor to The Dollar Vigilante, Ideas on Liberty (formerly The Freeman), The New Libertarian, Free Inquiry and Liberty magazines. Her writing has appeared in such diverse periodicals as National Review, Marie Claire and Penthouse. For over a decade, McElroy was a series editor for Knowledge Products. She has written and edited many documentary scripts for audio cassette, some of which were narrated by Walter Cronkite, George C. Scott and Harry Reasoner. Ms. McElroy contributes a weekly column to The Daily Bell. Her most recent book is The Art of Being Free: Politics versus the Everyman and Woman.
Daily Bell: Thanks for speaking with us again. How are you?
Wendy McElroy: Doing well, thank you. Life has been a wild ride of late but I am looking forward to a long, hard winter because it will give me the excuse I need to spend every day in front of my computer, writing. Other than time spent with my husband, I’m never happier than when I’m workin’ the words. And I am jazzed about a new book I’m doing about non-political strategies through which to pursue freedom, especially on a personal level in daily life.
Daily Bell: Your editorial, “The Fate of Galt’s Gulch Chile,” which we published at The Daily Bell in August, received an enormous amount of attention. Can you provide a brief history of your involvement in GGC and summary of the points made in your editorial for those not aware of the background?

This post was published at The Daily Bell on September 28, 2014.

Poor Man’s Gold!

Jon

Silver is the Rodney Dangerfield of the precious metals. It gets no respect. Maybe this chart says why. The price noted in the chart above is as of the end of August. Today it is lower around $17.80. On an inflation-adjusted basis, silver is trading around where it was in either the late 1800’s or ‘heavens above’ back around 1780.
Some improvement. Outside of a good run in the mid-1800’s and the famous Hunt Brothers spike into 1980 silver has actually been in a long-term downtrend on an inflation-adjusted basis.
Silver has thrust above the long-term downtrend channel so that is positive. It remains down roughly 65% from the high of 2011. As to the inflation adjusted 1980 high, well silver would have to reach to roughly $128 to equal that run.

This post was published at Silver Bear Cafe on September 27, 2014.

Miracle Man (Who Invented Off-Balance-Sheet Financial Engineering that’s still Sinking Companies Today)

Jon

Ivar Kreuger was an industrial and financial genius who sought complete control over the operations of his global match conglomerate. At the height of his power, Kreuger ran a monopoly that controlled 75% of all global match sales. Kreuger succeeded, in part, by introducing innovations in finance that are still being used today, but which have also been used by companies such as Enron and others to deceive investors. His insatiable desire for complete control and the promises Kreuger made that couldn’t be kept led to the collapse of his company in 1932 and billions of dollars in losses to investors.
Miracle Man
Ivar Kreuger got his start in the construction business, introducing new engineering techniques in Sweden that enabled him to win contracts to build the Stockholm Olympic Stadium (1912) and Stockholm City Hall (1913). He succeeded not only because he used the latest construction technology, but because Kreuger was able to complete these buildings on time and on budget. Unlike other construction companies, Kreuger promised to pay a penalty if buildings were not completed by the contract date. He also asked that he receive a bonus if the projects were completed early, which they often were. Kreuger was a wheeler and dealer from the beginning. He knew how to incentivize his clients to both win contracts and to profit from them.

This post was published at Wolf Street on September 28, 2014.

Know When To Fix A Broken Stock

Jon

A recurring theme has been presented here over the past several years: the performance of certain simple option strategies quite often gives an accurate picture of the mood of the stock market. The mood of traders – the emotion – does not determine the future of stock prices, but it surely determines how traders are likely to react to future news.
As with any indicator, be it a Simple Moving Average (SMA), a Relative Strength Index (RSI), an Elliott Wave or a Fibonacci Retracement, the use of options as an indicator is not useful at predicting the future. But, one does not need to know the future in order to be a successful trader. To be successful requires a trader to be cognizant of the emotions present in the market, thus allowing the trader to observe changes in the stock market in their proper context, and react accordingly.
A trader needs to know when other traders are optimistic, because a dip in stock prices makes optimistic traders likely to buy stocks. On the other hand, pessimism makes traders look for the nearest exit. A dip in stock prices in an optimistic market is not the same as a dip in a pessimistic one. The context is important.
Last week saw the first major shift away from optimism in several months. It is still an optimistic market, but not nearly as optimistic as it was just a few short weeks ago. The shift in optimism has been clearly outlined in three recent articles, available here:

This post was published at ZenTrader on September 28, 2014.

India’s Changing Gold Culture

Jon

India has been the world’s No.1 gold buyer for thousands of years. But traditions are changing…
TODAY marks the last day of Shradh, writesAdrian Ash at BullionVault, the period of “closed observance” on Hindu calendars when it’s deemed “inauspicious” to start new ventures or make new investments.
The end of Shradh has a political angle. Also known as Pitru Paksha, the early autumn shutdown has been used to delay nominations for upcoming elections, reports The Times of India.
Fighting such “superstitions” can be dangerous. Rationalist campaigner Narendra Dabholkar was murdered in summer 2013 when pushing anti-superstition laws. This summer’s delay to India’s electoral process has angered many who want to reduce what they see as the stifling (and corrupting) effect of India’s deep culture of religious observance.
Gold looms large in that culture of course (and also in India’s huge bribery and corruption culture). The peak demand season in the world’s heaviest consumer market starts now, running on until Diwali at the end of October. But long term, many analysts think the wider availability of luxury goods in India will dent India’s gold demand, overcoming superstition where rationalism cannot. Many financial services providers think the same of their products…from bank savings to stock-market funds.

This post was published at Gold-Eagle on September 28, 2014.

The Collapse of the American Economy Has Begun

Jon

Susan Duclos recently interviewed ‘V’ the Guerrilla Economist and the following information was revealed in this landmark interview:
‘The process of undermining the US dollar is well on schedule as well; more than 105 countries have decided that the dollar no longer works for them, joining Russia, China and other BRICS nations in leaving the dollar as the entire world comes to the realization that America’s leaders are insane. Their recklessness and evil ways have left tremendous shame upon our nation. Though there has been much manipulation and propping up, but that is only setting us up for the inevitable massive crash.
‘V’ begins by updating us on recent information that he has received from his 4-Star General source and warns that events are still on schedule, a schedule that he previously warned would leave the US dollar ‘undermined’ by 2015 and the US ceasing to exist as a nation by 2017′.
The interview, can be accessed through the following link. I highly recommend listening to this interview.

This post was published at The Common Sense Show on September 27, 2014.

In Detail, Why The New Homes Sales Report Was Completely Flawed

Jon

Gyrating wildly month-to-month, as seen also with the extreme and unstable monthly reporting of the housing-starts series in Commentary No. 660, headline August new-home sales rose by an incredible 18.0% for the month. Even more incredible – as to why the Census Bureau even bothers to publish the current detail – a headline monthly gain of that magnitude was not statistically-significant at the 95% confidence level. – John Williams, Shadowstats.com
I know I’m beating the drums often on the housing market. But I had it pegged fairly accurately at the top in 2005/2006 and was too busy with the precious metals market to take advantage of it. The housing market is crumbling again, and what’s been promoted as a ‘recovery’ is nothing more than a multi-trillion dollar stimulus-fueled dead-cat bounce that is rolling over and headed below where it was after the first leg down.
The August new home sales report gave the housing market perma-bulls a spark of hope. The only problem is that the Census Bureau report is as misleading as all of the other statistically manipulated, propaganda-laced economic reports vomited at us by the Government.

This post was published at Investment Research Dynamics on September 27, 2014.

PM End of Week Market Commentary – 9/26/2014

Jon

On Friday gold dropped -2.50 to 1220.00 on heavy volume. Silver rallied, moving up 0.16 to 17.65 on moderate volume. PM tried to rally in Asia and London, but then sold off as the dollar broke out to new highs a few hours before the US market opened. However in the last 30 minutes of trading in NY, both gold and silver staged a decent end of day rally, bringing gold almost back to even, and moving silver clearly into positive territory. Traders did not want to be short PM going into the weekend, which I interpret as positive.
What’s more, PM’s relatively good performance on a day where there was a big [ 0.48%] dollar rally was a hopeful sign as well.
On Friday mining shares fell, with GDX off -1.66% on moderate volume, and GDXJ dropped -2.77% on moderately heavy volume. On the charts, GDX closed down right at support, while GDXJ remained comfortably inside its recent trading range. Longer term, GDXJ looks stronger than its cousin GDX.
For the week, gold was up 3.10 [ 0.25%], silver down -0.14 [-0.79%], GDX off -3.00% and GDXJ down -4.27%. Miners in general are underperforming metals right now, giving a strong “risk off” signal.
The USD
Once again, a strong week for the dollar, which broke above 85 closing up 0.89 [ 1.05%] to 85.79. After this breakout, my weekly charts no longer show enough relevant price history – the buck hasn’t been above 85 since July 2010.

This post was published at PeakProsperity on Sat, Sep 27, 2014 –.

“Hope Is Not Good Policy” – Saxo Bank Warns The Entire World Is Headed For A Minsky Moment

Jon

Surely not this old chestnut – again?
‘Interest on debt grows without rain’ – Yiddish proverb
This proverb explains most of what goes on in policy circles these days. We are now watching Extend-and-Pretend, Episode VI: Promises for improvement amid ever growing debt levels.
In brief, we’re still working with the same dog-eared script we were introduced to all of five years ago, when markets had stabilised in the wake of the financial crisis: maintain sufficiently low interest rates to service the debt burden.
In other words, pretend to have a credible plan, but never address the structural problems and simply buy more time. But while we were able to get away with this theme for an awfully long time, the dynamic is now changing as the risk of low inflation (and even deflation) is a brick wall for the extend-and-pretend meme. Yes, interest does grow without rain, and the cost of maintaining and servicing debt grows especially fast in a deflationary regime.
Mads Koefoed, Saxo Bank’s macro economist, projects US growth at around 2.0% for all of 2014. That will be the sixth year with US growth near 2.0%, so despite lower unemployment and a record high S&P500, the economy has a hard time escaping that 2.0% level.

The US may be getting back to work, but why are growth rates so stubbornly stuck at the 2.0% mark? Photo: Thinkstock

This post was published at Zero Hedge on 09/27/2014.

Sick Man of Europe is Europe; Blame the Socialists, Progressives, Greens, and the Euro Itself

Jon

Joel Kotkin writing for New Geography hits the nail smack on the head with his assessment Sick Man of Europe is Europe.
Throughout the continent, public support for a united Europe fell sharply last year. Opposition to greater integration has emerged, with anti-EU parties gaining support in countries as diverse as the United Kingdom, Greece, Germany and France.
The new reality is epitomized by France’s ascendant far-right political figure, Marine Le Pen, who is now leading in many polls to win the next presidential election.
These attitudes suggest that the EU could be devolving from a nascent super-state to something that increasingly resembles the Holy Roman Empire, a fragmented landscape of small, unimportant states wrapped in a unitary, but ephemeral crepe. This challenges the view of some Americans, particularly but not only on the left, who see Europe as a role model for the U. S.

This post was published at Global Economic Analysis on Saturday, September 27, 2014.