The Rise Of The Teenage Intern: How China Keeps ‘iGadget’ Costs Down

China is increasingly relying on ‘student interns’ to make gadgets like iPhones in Western China, according to The Wall Street Journal, where lower wages make it harder to attract ‘real’ migrant workers. As the following brief clip explains, the government has created ‘vocational’ schools in very rural areas of China for high-school students but the quality of education (and ‘jobs’) is not what they had hoped…

This post was published at Zero Hedge on 09/23/2014.

August Existing Home Sales Tank Despite Lowest Mortgage Rates In Year

Just for the record, I would not be surprised is tomorrow’s new home sales report is stronger than expected. The numbers are coming from the Government’s Census Bureau and the new home sales series has been irregularly volatile and unreliable. But based on every homebuilder earnings report released so far, new home sales are dropping quickly. Mortgage purchase applications confirm this, as 93% of all new homes use a mortgage for the purchase. Any bounce in homebuilders on tomorrow’s report should be shorted with both hands.
Sales are going lower from here. We are in a long term secular bear market and the market – aided by several trillion in Fed and Govt stimulus, achieved a small dead cat bounce in the context of the bigger trend going on. Employment as a percent of the working age population is at historical lows and those who are employed are back to the 1994 average earnings levels. There is no organic economic support for the housing market.

This post was published at Investment Research Dynamics on September 23, 2014.

Nanny Bloomberg Takes Aim at Gun Control, Misses By a Long Shot

Earlier this year, former New York Nanny Mayor Michael Bloomberg started a gun control group called Everytown for Gun Safety.
The group is making significant political investments in the midterms. They’ve announced endorsements in more than 100 federal and state elections, and have produced two television commercials that will run in Illinois and Oregon.
From USA Today:
Everytown for Gun Safety’s endorsements and the new ads in Illinois and Oregon are part of an effort by Bloomberg to make curbing gun violence a pivotal issue in midterm elections that will determine which political party controls the Senate and the agenda on Capitol Hill. Republicans need to net six seats to win the majority in November.
The campaign includes what supporters call a ‘Gun Sense Voter’ road show with stops in Oregon, California, Illinois, Minnesota, Maine, Maryland and Connecticut over the next three weeks. The tour, led by Shannon Watts, founder of Moms Demand Action for Gun Sense in America, also will visit Seattle where Everytown is pushing a state initiative that would expand background checks for firearms purchased online and at gun shows.

This post was published at The Daily Sheeple on September 23rd, 2014.

Gold Daily and Silver Weekly Charts – The Prisoner’s Dilemma, Bureaucrats Agonistes

‘The dove descending breaks the air With flame of incandescent terror Of which the tongues declare The one discharge from sin and error. The only hope, or else despair Lies in the choice of pyre or pyre- To be redeemed from fire by fire.
Who then devised the torment? Love. Love is the unfamiliar Name Behind the hands that wove The intolerable shirt of flame Which human power cannot remove. We only live, only suspire Consumed by either fire, or fire.’
T. S. Eliot, Four Quartets
“And he led him up to the highest place, and showed him all the kingdoms of the world and their splendours.”
Matt 4:8
If you are not familiar with the classic game theory example of The Prisoner’s Dilemma you may read about it here. I see quite a few instances in the world today that seem like the types of standoffs as described in that example of two people who can broadly benefit if they come to an agreement, or both suffer if one or the other seeks a short term advantage. The Ukraine, Syria, Israel, the Congress, the great inequality in the US economy. The examples are almost everywhere. It seems as though working for some broader benefit, and engaging in productive compromise, is utterly out of temper in this utterly selfish, hard-hearted world of ours. For me the most interesting aspect of The Prisoner’s Dilemma is watching the Western Central Banks trying to come to terms with their unsustainable positions in the monetary metals markets, vis a vis the BRICS.

This post was published at Jesses Crossroads Cafe on 23 SEPTEMBER 2014.

Gold Seeker Closing Report: Gold Gains While Stocks Fall

The Metals:
Gold climbed $18.36 to $1233.66 at about 7AM EST before it fell back off in New York, but it still ended with a gain of 0.63%. Silver surged to as high as $17.975 at one point, but it then fell back off and ended with a loss of 0.06%.
Euro gold rose to about 961, platinum gained $5 to $1328, and copper remained at about $3.04.
Gold and silver equities rose almost 2% at the open before they fell back towards unchanged by midmorning, but they then climbed to new highs in afternoon trade and ended with nearly 2% gains.

This post was published at GoldSeek on 23 September 2014.

On The Market’s Central-Bank-Induced Bipolar Disease

“We’re suffering from central-bank-induced bipolar disease, bouncing from joy to despair number by number,” notes Bloomberg’s Richard Breslow.
“We certainly have aspirations of better growth, higher inflation and a road map,” but he adds, this is simply “another way of saying we’re completely data-dependent.”
As Eric Green at TD wrote, that explains why yields are more correlated to data surprises than at any point this year.

This post was published at Zero Hedge on 09/23/2014.

sept 23/Gold and silver rise/Silver open interest at the comex falls/Silver inventory at SLV rises yet gold inventory at GLD falls/USA along with some Arab countries and Israel bomb Syria/Russia …

Gold closed up 4.20 at $1221.20 (comex to comex closing time ). Silver was up 1 cent at $17.71
In the access market tonight at 5:15 pm
gold: $1215.00
silver: $17.75
GLD : we lost 1.20 tonnes of gold at the GLD (inventory now at 773.45 tonnes)
SLV : again we had a huge addition 2.397 million oz of silver inventory/note the difference between gold and silver. Physical gold that arrives from the Bank of England is sent down to Shanghai who lately has been receiving greater than 40 tonnes per week with the lower gold prices. In silver, there is no reason to raid the SLV because there is no physical silver to provide India or China.
We will discuss these and other stories
So without further ado………………
Let’s head immediately to see the data has in store for us today.
First: GOFO rates/
All months basically moved towards the positive needle as they must have found a few bars to lease. On the 22nd of September the LBMA stated that they will not publish GOFO rates. However today we still received today’s GOFO rates
London good delivery bars are still quite scarce.
Sept 23 2014
1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate
.1075000% .110000% .11250000% .1200% .225000%
Sept 22 .2014:
1 Month Rate 2 Month Rate 3 Month Rate 6 month Rate 1 yr rate
10600% .106000% .11000% .11800% .22400%
Let us now head over to the comex and assess trading over there today,

This post was published at Harvey Organ on September 23, 2014.

Gold Price Outlook For 2014 And 2015

In a recent presentation, Dundee’s Martin Murenbeeld explained the bullish and bearish forces at work in the gold market with some 50 charts. The slideshow is available below.
Looking back to 2013, it appeared that investors went heavily into equities which resulted in a massive negative correlation between stocks and gold. On the other hand, Chinese net imports from Hong Kong set record volumes.
More importantly, however, Murenbeeld looks into the gold price expectations for 2014 and 2015.
Bearish factors for 2014 and 2015 Basically, in sum, Murenbeeld sees the following bearish factors for gold’s price in the coming 18 months:
The Fed must inevitably tighten policy The Fed is currently ‘tapering’ QE will end late 2014 And the Fed will raise rates in 2015 US dollar will remain firm in 2014-15!? The world economy is sluggish Gold typically weakens during recessions Inflation pressures remain subdued There is often a need for ‘liquidity’ Equity markets will continue to draw investment interest away from gold Investors still have gold to sell – and ‘technicals’ bearish This is only the summary of this view. Readers are recommended to study the accompanying charts which are available in the presentation below.
Bullish factors for 2014 and 2015 As for the bullish forces at play, this is what Murenbeeld expects in the coming 18 months:

This post was published at GoldSilverWorlds on September 23, 2014.

Stocks Close “Not Off The Lows”, Small Caps Unchanged Since Oct 2013

The Russell 2000 is -7.5% from July highs, -3% in 2014, unchanged since last October and year-over-year small-cap performance is the worst since July 2012. Despite four valiant momo-pump efforts to rally stocks to VWAP (to cover institutional sellers), they just kept falling back to bond-market-reality as US equities decoupled lower from JPY after Europe closed. The USD closed unch (after major swings intraday around Europe’s close) with GBP strength and AUD/CAD weakness leading it lower on the week. Treasury yields dropped 2-3bps across the curve (down 3-5bps on the week) and all below FOMC levels (30Y -11bps). Gold is now up 0.6% on the week with oil and silver rising modestly. Copper found no bid despite a very slightly better-than-expected China PMI. Financials slipped once again (catching down closer to credit). VIX closed just shy of 15 – 7 week highs.
Ugly close (and SPY broke below its 50DMA after hours) with hevay institutional sells at VWAP…

This post was published at Zero Hedge on 09/23/2014.

China’s Vast Amateur Spy Network: Kiss Patents Goodbye

The patent system is hopeless. China can violate it daily, and does. China can violate it systematically, and does.
The FBI cannot stop this. Nothing can stop this.
But if the Chinese can get away with this, it means that NSA and the entire domestic spying network is hopeless, too.
The American public is oblivious to the following. The U. S. government covers it up, because it points to the overwhelming incompetence and vulnerability of the U. S. government’s own spy network, used mainly to spy on Americans.
Intelligence agencies around the world typically regard China’s approach to spying as sloppy and unprofessional. While many other countries focus on stealth and finesse for espionage, China’s focus is on mass numbers.

This post was published at Tea Party Economist on September 23, 2014.

Weak Incomes Trump Cheap Debt: Y/Y Existing Homes Sales Down For 10th Straight Month

Since mortgage applications to purchase a home peaked back in June, it would make sense that home sales would follow a similar approach and pattern with enough lag. Not only are purchase applications down, they are back at the same low level that vexed the home market earlier this year – and this time without the ‘obvious’ excuse of weather-forlorn real estate prospects. Given that erosion, there really should not have been much surprise that existing home sales in August were below July’s pace.

With housing data relatively volatile month-to-month, there is certainly the real possibility August was just an aberration all its own, with the prior rebound that began with spring re-asserting in autumn. However, with the timing factor exhibited by the application process, the decline in applications once more to the degree it has surrendered suggests that this may be more than a one-month interruption. It would not be at all surprising if this latest retrenchment picks up in the months ahead (as we have seen in home construction).
As it is, the current pace of home sales remains well-behind last year and seemingly unable to catch up despite the spring being ‘less worse’ than the winter…

This post was published at David Stockmans Contra Corner on September 23, 2014.

SP 500 and NDX Futures Daily Charts – Air Continues To Come Out of Post-Alibaba Markets

The air continued to come out of the point men on the recent stock market bubble as the SP 500 led the markets lower today. As you may recall, in the 1990′s Robert Rubin established that one could pump up the market most efficiently by buying the SP futures, and in a sense forcing all the index followers and funds to buy stocks to keep up with that trend. It has been used any number of times, and I suspect is still in the back pocket of the Exchange Stabilization Fund, aka ‘The Plunge Protection Team,’ as a tool for ‘saving the markets.’ As Rubin’s dictum went, it was cheaper to pump up stocks in a falling market, rather than coming in after the fact and repairing the post bubble damage with a genuinely productive effort, or even a bail out. The market makers have certainly learned that lesson and they have pumped up the US equities, at least selectively. One can see this in the first chart tonight, which shows the ratio of the SP 500 to the Russell 2000. This has been a fairly selective rally, and as you know I suggested we would see the market makers, who all have a keen interest in the success of Alibaba IPO, smoothing the way for it. Alas, I think that the leveraged buy of the VIX I had put on for this post-Baba world worked, but I took it off a bit too quickly as VIX climbed a bit more today. Well, I am not comfortable with these triple play derivatives which are generally designed to lose money, and ten percent is ten percent. So what next? Now the air starts coming out, and Alibaba starts moving back down towards its original IPO price point of $68. The actual price doesn’t matter all that much. It is not clear after looking over the structure just what the hell the holder of the stock actually owns if anything, except for a piece of a shell corporation in the Cayman Islands. It is like a modern derivative, a betting vehicle, more a state of mind that a productive piece of anything when push comes to shove. It has all the substance of a punchboard or hoop and bottle in a carny game.

This post was published at Jesses Crossroads Cafe on 23 SEPTEMBER 2014.

When The New Normal Fails: The “Problem With Traditional Economics” In A Bizarro, Centrally-Planned World

They call it the New Normal(sic) for a reason: that reason is that as a result of 6 years of central-planning interventions in the global economy, an experiment that has grown far more monstrous than anything the USSR ever tried to do, everything is now broken: all conventional economic linkages, relationships and correlations you learned about in university are no longer applicable or practical in a world that has taken both Keynesian and monetary theory beyond their wildest extremes.
The result is a ghoulish, macabre collage of mishmash theories applied haphazardly in hopes that something will finally stick, and if not, at least kick of the day of reckoning a little longer.
All of that will fail, and, just as the Austrian economists predicted from day one, the entire house of cards will come crashing down in a heap of record credit. Yes, it could have been different, had the people in charge taken the correct, but difficult decision when Lehman failed, and purged the system of its credit excesses. But they didn’t, as that would have wiped out trillions in equity value where the bulk of the “wealth” and net worth of the legacy status quo is located.
So they kicked the can.
For all those sick and tired of watching the grotesque pantomime in which only the rich get richer, while everyone else is ever more impoverished, we have good news – the experiment is coming to an end. Only it is not us postulating that the entire “modern” economic system is on its last breath – here are seven slides from Citi explaining the very much intractable “problems with traditional economics“, and why the economic Titanic, floating on an ocean of central bank liquidity, is approaching the proverbial iceberg.
So, without further ado, here is everything that is broken with the traditional economic system as applied in today’s bizarro world…

This post was published at Zero Hedge on 09/23/2014.

Gold Sentiment – How Bad Is It?

After the original drop in gold price from the top of $1,920 per ounce in 2011 to $1,180 per ounce in 2013, gold has started a sideways consolidation triangle pattern. Is this a correction, or is it just a pause within a move that will retrace the whole move since 2009? What does sentiment tell us?
The gold market is a very opaque one and very hard to analyse. The amount of gold exchanging hands outside the markets is enormous. China seems to continue buying in a very discrete way and shows regularly, through speaches but also actions, that it considers gold at the core of its currency war, mainly with the United States. It’s interesting to notice that, recently, on every attack on the gold price to push it down, once the original move stops, almost every time momentum fails to take gold lower. This pattern doesn’t look to me as a correction into a bear market but more as a bottoming formation.
Chart #1 : Spot Gold

This post was published at Gold Broker on Sep 23, 2014.

Strong 2 Year Auction Prices At Highest Yield Since April 2011, Highest Bid To Cover Since February

On one hand today’s 2 Year bond auction priced, as expected, at the widest level since April 2011, or 0.589%, on rising concerns that the Fed may, all economic signs to the contrary, raise rates in the coming year.
On the other hand, this was arguably the strongest 2 Year auction at this yield, in all of 2014. First, the auction stopped through a substantial 0.6bps through the 0.595% When Issued. Then, the Bid to Cover was a solid 3.564, the second highest of 2014, only lower than February’s 3.605. Finally, the internals also were very solid, with Directs taking down 16.11% and Indirects holding 40.91%, the most since March 2014, leaving only 42.98% to the Dealers, which was also the lowest since March.

This post was published at Zero Hedge on 09/23/2014.

The Fed’s Credit Channel Is Broken And Its Bathtub Economics Has Failed

Among the many evils of monetary central planning is the conceit that 12 members of the FOMC can tweak the performance of a $17 trillion economy on virtually a month to month basis – using the crude tools of interest rate pegging and word cloud emissions (i.e. ‘verbal guidance’). Read the FOMC meeting minutes or the actual transcripts (with a five-year release lag) and they sound like an economic weather report. Unlike the TV weatherman, however, our monetary politburo actually endeavors to change the economic climate for the period immediately ahead.
Accordingly, the Fed is pre-occupied with utterly transient and frequently revised-away monthly release data on retail sales, housing starts, auto production, business investment, employment and inflation. But its always about the latest ticks in the data – never about the larger patterns and the deeper longer-term trends.
And of course that’s the essence of the Keynesian affliction. The denizens of the Eccles Building – -overwhelmingly academics and policy apparatchiks – -rarely venture into the real economic world. They do believe, therefore, that the US economy is just a giant bathtub that must the filled to the brim with ‘aggregate demand’ and all will be well.

This post was published at David Stockmans Contra Corner on September 23, 2014.

Stocks Rally Following Janet Yellen’s Conference and Scotland’s Historic Referendum

Interest rates can’t stay zero forever, but for now it’s more of the same.
The Federal Reserve’s bond-buying program, enacted to spur growth, will indeed be winding down next month, as expected. But record-low interest rates will stay as they are for a ‘considerable time,’ Fed Reserve Chairwoman Janet Yellen insisted during her Wednesday press conference last week.
It was ‘game on’ for the stock market following Yellen’s speech. The Dow Jones Industrial Average closed at a new record high of 17,156, while the S&P 500 Index rose two points to close at 2,001, the Nasdaq nine points to end at 4,562.
This news gives stocks reason to rally for a ‘considerable time,’ or at least until the Fed gives us a more concrete timeframe for a rate hike.

This post was published at GoldSeek on 22 September 2014.

Ho-Ho-Holding Mexican Bimbo Can’t Get Paid

Sad but true. Current owner of the Twinkies and Ho-Ho brands, Mexico’s Grupo Bimbo, had planned to take advantage of an exuberant public stock market by bringing a secondary stock offering to reduce its leverage. Everything was good-to-go on Friday, but with the market now down a stunning 1.5% from pre-BABA IPO levels, they have pulled the offering:
*MEXICO’S BIMBO SAID TO POSTPONE FOLLOW-ON SHARE OFFER: REUTERS No comment as yet on the reason, though we assume “market conditions” will be cited as the fickleness of capital markets’ animal spirits is once again exposed for all to see. Perhaps Grupo Bimbo should rename themselves Grupo Bimbaba?

This post was published at Zero Hedge on 09/23/2014.