14/3/16: T-Rex v Paper Clip: Of Draghi and His Whatevers…

Remember recent ECB commitment to start buying more non-sovereign, non-financial corporates’ paper? It was the part of the blanket bombing with ‘measures’ deployed by Mario Draghi last week.
Here is my summary as a reminder: The European Central Bank cut its key lending rate to zero (from 0.05 percent) in March, slashing its deposit rate further into negative territory (to -0.4 percent from -0.3 percent). Desperate for stimulating slack corporate investment, the ECB also significantly expanded the size and scope of its asset-buying program, hiking monthly purchases targets from EUR60 billion to EUR80 billion. Worse, Mario Draghi also expanded the scope of the programme to include investment grade, euro-denominated debt issued by non-financial corporations. And he announced yet another TLTRO – a longer-term lending programme (4 years duration this time around, having previously failed to deliver any meaningful uplift in the corporate capex via three 3-year long programmes). The new TLTRO will be operating on the basis of the ECB deposit rate, effectively implying that Frankfurt will be giving away free money to the banks as long as they write new loans using this cash. Last, but not least, the finish line for the ECB’s flagship QE programme was pushed out into March 2017 from September 2016. And yet, the ECB’s leatest blietzkrieg into the uncharted lands of monetarist innovation ended with exactly the same outrun as was the case for the Bank of Japan few weeks before it.

This post was published at True Economics on March 14, 2016.

The Liquidity Endgame Begins: Whiting’s Revolver Cut By $1.2 Billion As Banks Start Slashing Credit Lines

Earlier today we reminded readers about the circular (and why note fraudulent conveyance) scheme hatched by JPMorgan to reduce its secured loan exposure to Weatherford, when just two weeks ago none other than JPM underwrote an WFT equity offering in which it sold equity in the company, and which proceeds were promptly used by the company to repay the JPMorgan revolver.
We then showed that it wasn’t just Weatherford: most of the “uses of funds” from the recent record surge in oil and gas equity offerings, have been used to repay the secured debt/revolver facilities, thereby eliminating funded and unfunded balance sheet exposure of major US banks.

This post was published at Zero Hedge on 03/14/2016.

343,916 Reasons Why The Fed Is Anything But Independent

Just a week ago we were surprised to find that current Federal Reserve Governor Lael Brainard gave $750 in three contributions to Clinton’s campaign between November and January, according to Federal Election Commission records.
And while Fed officials sometimes identify with either major political party, as Bloomberg correctly notes, “donations to a presidential candidate by a senior policy maker are unusual, particularly at a time when the central bank is trying to guard its independence from politics. The Fed’s authority has been criticized during the campaign, and both Democratic and Republican lawmakers have questioned decisions about regulation and monetary policy.” And here is the Republican soundbite for when the Trump campaign shifts to important things like the Fed:
At a time when Federal Reserve officials are making the case that monetary policy needs to be non-partisan and independent, a sitting governor has given money to Hillary Clinton.

This post was published at Zero Hedge on 03/14/2016.

Central Banks – The New Nukes?

You know something is strange when “the riskiest” country in the world is the nation whose central bank everyone is relying on to ‘save the world’ and “the safest” stock market in the world is from a nation whose neighbor is actively test-firing nuclear missiles? It appears activist central banks – following Draghi’s “kitchen sink” – have become the new normal’s ‘nukes’.
As Goldman notes, Brazil & Japan vol is highest and Korea lowest on %-ile basis

This post was published at Zero Hedge on 03/14/2016.

3 Signs a Stock Market Crash Could Be Coming in 2016

U. S. markets have logged four consecutive weeks of gains, but investors shouldn’t get too comfortable. In fact, we’ve spotted three signs a stock market crash could be coming in 2016…
But before we get to the stock market crash warning signs, here’s what has been pushing markets higher…
The key driver of stocks has been the sharp rebound in oil prices. Crude oil prices, which have climbed each of the last four weeks, added 7% last week to $38.50 per barrel. The International Energy Agency said it saw signs of a price bottom last week, which sent prices higher. Talks of a production freeze from some oil producers supported the rally.
Stocks and oil prices have moved nearly in lockstep this year, and that continued over the last month.
The second reason stocks have rallied is the various rounds of unconventional monetary measures from global central banks, including negative interest rates. The European Central Bank last week cut its key interest rate to -0.4% from -0.3%. It also expanded its quantitative easing by 20 billion euros to 80 billion euros per month.

This post was published at Wall Street Examiner by Diane Alter ‘ March 14, 2016.

Goldman: “The S&P 500 Is Overvalued”

Three weeks ago, when looking at the incoming Q4 results, we were stunned by an unprecedented divergence: that of GAAP and non-GAAP earnings. We showed this difference as follows:

… and noted that while on a non-GAAP basis, the S&P’s trailing P/E is a relatively rich 16.5x (over 17x as of today), it was the GAAP P/E that was troubling, because at just 91.5 in actual S&P EPS, this implies that the GAAP P/E of the overall market is now a near-record 22x.
We showed the delta between GAAP and non-GAAP as follows:

This post was published at Zero Hedge on 03/14/2016.


Gold: $1,244.40 down $14.30 (comex closing time)
Silver 15.52 down 9 cents
In the access market 5:15 pm
Gold $1235.30
silver: 15.36
At closing today, we have the following observations to bring to your attention:
In silver, the OI has remained at record levels for many years despite the low price of silver. The total OI in oz has been above total annual global production! Silver is in backwardation at the comex until July although it is a paper backwardation. Silver is in real backwardation in London for several months
And now gold:
The total OI for gold has now surpassed 500,000 contracts or 50,000 million oz or 1,552 tonnes of gold The world produces around 2,200 tonnes of gold (ex China ex Russia which keeps all of their gold). The last time gold had an OI at 500,000 was in Sept/October 2012 with the gold price at $1700.00.
The high OI for both gold and silver accompanied by a low price, defy logic and thus no doubt we have massive criminal activity by our bankers in their constant raiding of gold and silver trying to extricate themselves from their massive short OI. Gold is not in backwardation at the comex and not in London England.
At the gold comex today, we had a poor delivery day, registering 0 notices for NIL ounces and for silver we had 40 notices for 200,000 oz for the active March delivery month.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 211.98 tonnes for a loss of 91 tonnes over that period.
In silver, the open interest fell by 137 contracts to 169,127 with silver advancing by 6 cents. In ounces, the OI is still represented by .846 billion oz or 122% of annual global silver production (ex Russia ex China).
In silver we had 40 notices served upon for 200,000 oz.
In gold, the total comex gold OI rose by an enormous 2,245 contracts to 506.363 contracts despite the fact that the price of gold was DOWN $13.30 with Friday’s trading.(at comex closing). No wonder the crooks continued to raid gold today.
We had a huge change in gold inventory at the GLD, a withdrawal of 8.63 tonnes of gold from the GLD/ thus the inventory rests tonight at 790.14 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex. In silver,/we had a huge change in inventory/this time a huge deposit of 1.903 million oz and thus the Inventory rests at 325.868 million oz
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on March 14, 2016.

Wedbush Warns “A Trump Victory Will Send Stocks Down 50%”

“The Fed has consistently missed every recession and every depression” says Wedbush’s Ian Winer, as he explains to BNN why watching the bond market and not this week’s FOMC “dot plot” is more insightful, “expecting the economy to be mired in modest growth with at most 2 rate hikes this year.”
But then Winer goes full bear-tard as he opines on tomorrow’s super-super-super-Tuesday noting that “people are very concerned about any outcome other than Hillary Clinton,” ominously warning that “if Trump wins Florida and Ohio then the market will get very nervous.”

This post was published at Zero Hedge on 03/14/2016.

JPM Looks At Draghi’s “Package,” Calls It “Solid,” But Underwhelming

Earlier this month, JPMorgan’s Jan Loeys revealed that the bank is underweight equities ‘for the first time this cycle.’
Why? Well, allow Jan to explain it to you:
The fundamentals of growth, earnings and recession risk have not improved, and if anything have worsened. We remain wary of the near-empty ammo box of policy makers. Our 12-month-out US recession odds have risen to 1/3. But even with no recession this year or next, we see US earnings rising only slowly by low single digits and see little to boost multiples. The eventual recession should bring US stocks down some 30%, creating a strong downward risk skew to returns over the next few years.
That came just a day after Mislav Matejka suggested one reason to avoid buying this market: namely that even as equities were down 3% on the year going into March, multiples were actually higher than they were on January 1.
On Monday, we get the latest from Matejka. His advice: fade the ECB. To wit:

This post was published at Zero Hedge on 03/14/2016.

SP 500 and NDX Futures Daily Charts – Little Conviction in ZombieLand

Stocks drifted higher during much of this very low volume, sleepy day.
They gave up the best of their gains into the close.
This is a market that is ‘marking time’ for a catalyst, perhaps the FOMC meeting on Wednesday the 16th. There is little expectation that the Fed will do anything at this meeting, but traders want to hear what, if anything, new that they have to say.

This post was published at Jesses Crossroads Cafe on 14 MARCH 2016.

Precious Metals Supply and Demand Report

ECB Inspires Large Short Term Moves
On the week, the prices of the metals didn’t move all that much. However, the move around 6am (Arizona time) on Thursday is notable. The price of silver spiked up from around $15.12 to $15.64 – 3.4% – by around 8am. Twelve hours later, the price touched $15.73 before sliding off.
We are always interested in the fundamentals, as we watch price moves. The question is always: is this speculators, betting with leverage on the silver price using futures? Or is it industrial or stacker demand for real metal?

This post was published at Acting-Man on March 14, 2016.

The Narrative ‘Fix’ Is In – “Bold” Is The New “Buy”

With regard what’s happening in Europe, we’ve seen this movie before.
On August 2, 2012 Mario Draghi gave the most disastrous ECB press conference of all time. The market anticipation was enormous leading up to the event, as this was the moment where the ECB would unveil the Outright Monetary Transactions (OMT) program — a new, ultimate weapon to be deployed to rescue the euro. In truth, the OMT then (and now) was just a bunch of words. Powerful and nice-sounding words, to be sure, but just words. All hat and no cattle, as they might say in Texas. The Germans then (and now) were clearly not on board with the OMT, and European markets broke hard. Spain’s stock market dropped more than 5% that day, and Italy’s was close to that. Spain’s 10-year bonds hit a 7.2% yield, and Italy’s hit 6.3%. You can imagine what happened in Portugal and Greece.
But the most amazing thing happened the next day on August 3. What the Financial Times had originally called “Draghi’s Blunder” was now written up as “Draghi’s Bold Move”. Every talking head and person of media influence (what game theory calls Missionaries) with access to the ECB or a European central bank started reading from the same playbook (“Mario is a genius”, “markets got it wrong”, etc.). I thought my head would explode if I heard the word “bold” one more time. Combine this with the European Plunge Protection Team buying up every risk asset in sight at the opening bell, and the rest, as they say, was history. European (and global) markets rocked on in risk-on mode for months … years, really, if you focus on Eurozone sovereign rates. It’s the purest example of Narrative creation and the Common Knowledge Game in action that I know, and was in many ways the spark for my starting Epsilon Theory.

This post was published at Zero Hedge on 03/14/2016.

The 19-Year-Old Who Outperformed 99% Of Hedge Funds In 2012 Shares Her “Trading Secrets”

Remember Rachel Fox? For those who do not, here is a reminder courtesy of this blast from the February 2013 past interview of the then-16 year old Desperate Housewives “TV star” who became a “star trader” using her acting money, and after returning 30% in 2012 and outperforming 99% of hedge funds, waspromptly interviewed by CNBC, unleashing the whole “17 year old hedge fund manager” meme:

This post was published at Zero Hedge on 03/14/2016.

Gold Daily and Silver Weekly Charts – FOMC Announcement on Wednesday the 16th

Today was a lightly traded day, with plenty of antics as the markets wait for something to act on, and if not, then anything the Fed might have to say on Wednesday.
The US dollar was a little higher, and the precious metals moved a little lower in a fairly deliberate two step.
It was generally a ‘snoozer’ of a day.

This post was published at Jesses Crossroads Cafe on 14 MARCH 2016.

Central Banks Are Looking To Extend Debt Into More Countries To Hold Off The Collapse – Episode 918a

The following video was published by X22Report on Mar 14, 2016
Greece’s banks give the illusion they are ok, but in reality they are ready to collapse. IMF Lagarde wants to spread debt to more countries to keep the system propped up. Tax refunds tumble much lower than the previous year which will hurt retail further. Physical gold demand strong in other countries but no in the US. Obamacare enrollment has dropped and the HHS is very quiet about it.

The Rats Keep Pressing The Bar: Two Amazing Stories, One Inevitable Result

Anyone who doubts that the global financial system has run out of (good new) ideas has only to track the recent words and deeds of central bankers and mainstream economists: Slightly-negative interest rates didn’t lead people to borrow more? We’ll go more negative! Buying up all the government bonds didn’t prevent deflation? We’ll start buying corporate bonds and equities!
Still, it’s shocking to see where this endless repetition of the same actions takes us. A recent Bloomberg article, for instance, notes that even though corporate profits are falling and individual investors are dumping equity mutual funds, company share buybacks are surging:
There’s Only One Buyer Keeping S&P 500’s Bull Market Alive
Demand for U. S. shares among companies and individuals is diverging at a rate that may be without precedent, another sign of how crucial buybacks are in propping up the bull market as it enters its eighth year.
Standard & Poor’s 500 Index constituents are poised to repurchase as much as $165 billion of stock this quarter, approaching a record reached in 2007. The buying contrasts with rampant selling by clients of mutual and exchange-traded funds, who after pulling $40 billion since January are on pace for one of the biggest quarterly withdrawals ever.

This post was published at DollarCollapse on March 14, 2016.