The Monetary Base, Buybacks and the Stock Market

A Useful Leading Indicator?
We often see charts comparing the S&P 500 to the growth in the Federal Reserve’s balance sheet, or more specifically, to assets held by the Fed. There is undeniably a close correlation between the two, but it has struck us as not very useful as a ‘timing device’, or an early warning device if you will.
Recently we have come across a video of a presentation by Bob Murphy, in which he uses a slightly different comparison that might prove more useful in this respect. Instead of merely looking at Fed assets, he uses the total monetary base. Here is a chart comparing the monetary base to the S&P 500 Index since 2009:

This post was published at Acting-Man on March 16, 2016.

Gold Daily and Silver Weekly Charts – March Madness

“The main thing is that the debt is in dollars. So we can’t run out of cash–we print the stuff. Suppose that foreigners decide we’re not reliable. How does that drive up interest rates? The Fed controls short-term interest rates, and long-term interest rates reflect expected short rates. How’s that supposed to happen?”
Paul Krugman, Interview on CNNMoney
Well, at least now we know why gold was knocked down lower in the paper trading earlier this week.
It was to prepare us for The Big Retraction from the Fed, who begged a mulligan on their most recent rosy forecasts from three months ago about The Recovery. And as suspected, it’s those foreigners who are at fault. And that’s why we can’t have nice things.
There was intraday commentary about that here.
And so after ‘fessing up and saying that things are not quite as good as they had thought, the dollar tanked and gold took off higher with some serious vigor.
There was little delivery activity yesterday in gold at The Bucket Shop.
But some customers coughed up over a million ounces of silver, most of which were taken on the cheap by the house account at JPM. What prescient trading.

This post was published at Jesses Crossroads Cafe on 16 MARCH 2016.

And this is When the Jobs ‘Recovery’ Goes Kaboom

A party pooper showed up.
The future for employment looks bright. The gig economy is firing on all cylinders. The FOMC, in its statement concerning its interest rate decision today, was practically gleeful about employment and where it’s headed:
A range of recent indicators, including strong job gains, points to additional strengthening of the labor market.
The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen.
Elsewhere, employment has been cited as one of the strong points of the economy. Companies have been hiring and creating jobs by the millions since the Great Recession, bringing total ‘non-farm employment,’ as defined by the Bureau of Labor Statistics, from a low of 129.7 million in February 2010 to 143.6 million in February 2016. That’s nearly 14 million more employed folks!
A lot of them might be part-timers, and there are some with more than one part-time job, and some have been counted twice, and many people are mired in the vast category of the ‘working poor.’ But some sectors in some parts of the country have been booming and adding jobs that pay well, for example the ‘tech’ sector, which includes all kinds of app-companies that are actually just trying to sell something to consumers, such as a craft-brew delivery service or Uber.

This post was published at Wolf Street by Wolf Richter ‘ March 16, 2016.

Here Are The “Dots” – Fed Downgrades Economic Outlook, Sees Just Two Rate Hikes In 2016

Back in December, the overoptimistic Fed predicted 4 rate hikes in 2016. Just a few weeks later, the Fed Funds futures said “no way”, when markets crashed, predicting the Fed was dead wrong, expecting zero rate hikes in 2016 (and 2017). Since then the market has picked up modestly and now expects at least one more rate hike in 2016.
So what does the Fed say now?
As a result of another cut to the economic forecast, one which now sees 2016 GDP at 2.2% vs 2.4% previously, and a drop in inflation from 1.2-1.7% to 1.0-1.6%…

This post was published at Zero Hedge on 03/16/2016.

Everything Is Awesome Right Before The Entire Economy Collapses – Episode 920a

The following video was published by X22Report on Mar 16, 2016
Sweden is the latest country to report a housing bubble, this is something we saw prior to 2008. Signs of a recession are all around us, all you need to do is look and you will see it. CPI surges to the most since 2008. Mortgage apps are down. Industrial production is down. Baltic Dry Index levels out and starts to decline again. FED does not increase rates, but everything is awesome, job market, retail economy great, the global economy is the problem. Peter Schiff warns of major layoffs coming soon

The Fed Decision Explained In 1 Simple Chart

Tumbling US unemployment and surging US inflation is not what really matters to ‘Global’ Janet. She knows what happened the last time “market” expectations were so disclocatedly bullish relative to “economic” expectations… and doesn’t want to be driving the current bus off the great-er depression cliff…

This post was published at Zero Hedge on 03/16/2016.

“Data Dependent” Fed Chickens Out Again: Blames “Global” Risks For Unchanged Rates, Cuts Rate Hike Forecast

With gold up 15% since The Fed hiked in December (and stocks lower) and the market pricing a hike today at just 4% (June 53%), it is not surprising that Janet panicced and folded again in the face of “unequivocally good” data based on what the “Dow Data Dependent” Fed has said it monitors. Of course there were plenty of excuses:
FED MEDIAN FORECAST IMPLIES TWO 2016 RATE HIKES VS FOUR IN DEC FED SAYS GLOBAL ECONOMIC DEVELOPMENTS CONTINUE TO POSE RISKS FED LEAVES RATES UNCHANGED AT 0.25%-0.5% AS EXPECTED FED: GEORGE DISSENTED IN FAVOR OF A RATE RISE TO 0.5%-0.75% Not too dovish (upgrade uncertainty), not too hawkish (lowered rate hikes), a goldilocks statement, with just a little less inflation and just a little less GDP growth, and just two more quarter of near-ZIRP rates is what it takes for the world to get it all together.

This post was published at Zero Hedge on 03/16/2016.

P2P Property Lending Explodes In China; Officials Panic

PBoC governor Zhou Xiaochuan thought about it, and decided it’s probably not a good idea for borrowers to get P2P loans for down payments on homes.
In fact, he said last weekend, it’s illegal: ‘Funds used for down payments cannot be borrowed.”
Vice-governor Pan Gongsheng, one of Zhou’s deputies, echoed his sentiments. ‘Property agencies and developers are not qualified to conduct financial business. They are illegally doing financial business,’ he explained. ‘This business they are engaged in, and jointly with peer-to-peer lenders and down payment credit firms, has not only raised the leverage of residents’ house purchases, worn down the effectiveness of macro policy controls and added to financial risks, but has also increased risk in the property market.”
Now you might think that what’s implied there is too bad to be true – even in the increasingly ludicrous world of P2P and marketplace lending. But in fact, P2P lenders in China have indeed been funding down payments on homes, embedding an enormous amount of excess leverage into the market while simultaneously driving up prices in Tier-1 cities.

This post was published at Zero Hedge on 03/16/2016.


The slow motion collapse of Venezuela continues unabated. Ever since the price of oil fell and pulled the rug out from under their socialist government, Venezuela has been going to hell in a handbasket. The country has experienced price controls, inflation, food shortages, dissident roundups, and mob violence. The situation has deteriorated to such an extent, that the capital city of Caracas is now the most violent urban area in the world.
And on top of all that, the population is facing widespread electricity shortages, despite the fact that Venezuela is a nation brimming with easily accessible oil.

This post was published at The Daily Sheeple on MARCH 16, 2016.

SP 500 and NDX Futures Daily Charts – There Goes The Recovery Again, Receding Into the Future

‘Victorians, Victorians, who never learned to weep.
Who sowed the bitter harvest that your children go to reap.”
F. Scott Fitzgerald, This Side of Paradise
Ah, the vagaries of empire, and the New American Century. O brave new world, that has such wieners in it.
The Fed had to ask for ‘a mulligan’ on its forecasts from just a few months ago, and reflected that in their FOMC statement today.
They reduced the forecasts for growth and inflation for this year, and suggested they would not be raising rates quite so confidently.
And for all this they seemed to blame ‘global developments.’ As if.
Anyone with open eyes and an intermediate education in macroeconomics knows that the Fed is raising rates not for any benefits to the real economy, but to provide themselves some policy room to cut rates without going negative when their latest financial asset bubbles begin to collapse.

This post was published at Jesses Crossroads Cafe on 16 MARCH 2016.


Gold: $1,229.30 down $1.10 (comex closing time)
Silver 15.21 down 5 cents
In the access market 5:15 pm
Gold $1262.60
silver: 15.62
In the words of Bill Murphy of GATA today on remarking on gold’s huge advance in the access market: ‘Houston, we have a problem’
The Fed’s credibility has now been shot as Yellen backs away from increasing rates due to global disturbances.
At the gold comex today, we had a poor delivery day, registering 0 notices for nil ounces and for silver we had 230 notices for 1,150,000 oz for the active March delivery month.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 211.33 tonnes for a loss of 92 tonnes over that period.
In silver, the open interest fell by 2055 contracts down to 166,180 with silver down by 9 cents yesterday. In ounces, the OI is still represented by .831 billion oz or 119% of annual global silver production (ex Russia ex China).
In silver we had 230 notices served upon for 1,150,000 oz.
In gold, the total comex gold OI fell by 6,624 contracts to 493,086 contracts as the price of gold was DOWN $14.00 with yesterday’s trading.(at comex closing). The fall in OI in gold should relieve a little pressure on our bankers.
We had another big change in gold inventory at the GLD, a deposit of 2.09 tonnes/ thus the inventory rests tonight at 792.23 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 no changes in inventory/ 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 16, 2016.

Trading The FOMC

With the market already pricing in dramatically fewer rate-hikes that the “cheerleading” Fed, Deutsche Bank expects the USD to respond favorably to the FOMC’s signals on Wednesday, contrary to the pattern seen after the last four FOMC meetings with press conferences.
The waning influence of the Fed’s projections is showing up in derivatives markets. After the December revision to the projected path of interest rates, traders responded much less than they did earlier in the year in the market for derivatives known as overnight-indexed swaps.

This post was published at Zero Hedge on 03/16/2016.

SILVER INVESTMENT: Switching From A Commodity To High Quality Store Of Value

The biggest trade of a lifetime will occur when the value of silver switches from a mere commodity to a high-quality store of value. Actually, it’s not really a trade of a lifetime, but rather a fundamental repricing of real assets verses supposed assets. According to the Investment Company Institute, the supposed value of the total U. S. Retirement Market was $23.5 trillion in the third quarter of 2015:

This post was published at SRSrocco Report on March 16, 2016.

Fed Mouthpiece Parses Timid Janet’s Latest Pronouncement

Janet Yellen has spoken and the word was “hold.”
And not only that, the FOMC median forecast now only implies two rate hikes for 2016 versus four as the Fed’s own outlook converges on market expectations. The read through on the US economy was relatively benign but worries about global markets persist, and the very fact that that has become what certainly appears to be a deciding factor in these decisions speaks to the notion that the invisible “third mandate” is becoming more and more apparent with each passing meeting.
In any event, here’s Jon Hilsenrath parsing the latest statement from the “data-dependent” Fed as only WSJ’s Fed whisperer can.

This post was published at Zero Hedge on 03/16/2016.

First There Was “Brown’s Bottom,” Now Gold Gains On “Morneau’s Miscue”

‘Sooner or later, everybody sits down to a banquet of consequences’
– Robert Louis Stevenson
Gordon Brown, back when he was the UK Chancellor of the Exchequer, distinguished himself by selling off approximately one-half of Great Britain’s gold reserves at what turned out to be a near-bottom at the end of the secular bear market in gold which lasted from 1980 to 2000-ish. He will probably be remembered for this more than anything else he ever did, even as Prime Minister. He’ll be somewhat of a laughing stock because of it (gold now, even after a vicious near 5-year cyclical bear, worth a paltry 300% to 400% more than what England garnered from it’s sales). That chapter among those who pay attention to this sort of thing is affably called ‘The Brown Bottom’.
Two events recently converged in the news to create an analogous moment here in Canada:
1) the news that the new Finance Minister Bill Morneau has completed selling all remaining Government of Canada gold reserves. Canada, the 5th largest gold producer in the world, as a nation holds exactly zero ounces of gold as currency reserves.
2) Gold has resumed it’s secular bull market. This is something I have not been alone in anticipating, but it looks like Mr. Morneau has managed to pick off the exact end of the cyclical bear, selling just as the price of gold, driven by negative rates, impending bans on cash and generalized financial repression, is commencing lift off.

This post was published at Zero Hedge on 03/16/2016.