Meet The People Behind The Death Of Canada’s Oil Patch

Analyzing provincial statistics in Canada is an exercise in spotting the odd one out.
Alberta, the heart of Canada’s dying oil patch, is a cautionary tale about boom and bust cycles and just how dramatic the difference can be between the good times and the bad.
To be sure, we’ve spilled quite a bit of digital ink documenting the plight of the provincial economy and we’ve also outlined some of the more shocking statistics that touch on the human toll exerted by plunging crude prices. Food bank usage in the province, for instance, rose 23% Y/Y from Q1 2014 through Q1 2015 and suicide rates had risen by a third through the summer of last year.
As far as the economy, the latest data out earlier this month show Alberta was the only province in which real GDP contracted in 2015. “Alberta is facing another recession this year as cuts in energy investment and job losses hit the economy hard,’ Conference Board of Canada said, adding that ‘until imbalances in global oil markets improve, prospects for a recovery are bleak.”

This post was published at Zero Hedge on 03/17/2016.

Super-Luxury Homes Hit by Reversing ‘Wealth Effect’

‘We won’t see this again until 2021.’
This had to happen. Now we’re getting reports that in the Hamptons, on Long Island’s east end, where Wall Street’s richest hobnob over the summer, home prices at the very top, after a phenomenal boom, are getting crushed.
What’s getting blamed? The crummy performance of the markets last year.
The average price in 2015 of the ten most expensive homes sold in the area has crashed 20% from a year earlier – to a measly $35.5 million.
After soaring a mind-bending 180% in five years, from $15.9 million in 2009, the average price of the top ten homes had reached $44.6 million in 2014, according to a report by Town & Country Real Estate in East Hampton, cited by Reuters.
The year 2009 was when the Fed’s ‘wealth effect’ strategy was kicking in. It was precisely what Bernanke wanted to accomplish. He spelled it out in aneditorial. The Fed’s ‘strong and creative measures’ would inflate asset prices, which would lead those benefiting the most from it, including those on Wall Street that extract fees and get paid big bonuses, to feel wealthier and spend a little more, which would crank up the economy. And this is what happened in the Hamptons.

This post was published at Wolf Street by Wolf Richter ‘ March 17, 2016.

Another Former Fed Employee Pleads Guilty To Stealing Secret Fed Data

Another day, another criminal Fed employee admits to being just that.
Recall that just yesterday we wrote about former NY Fed employee Jason Gross who somehow managed to avoid a prison sentence, but was slapped on the wrist with a $2,000 fine after he admitted to stealing confidential NY Fed data and handing it over to his former supervisor in his new role working for Goldman Sachs.
As it turns out he wasn’t the only “cockroach” – moments ago the DOJ Office in Illinois announced that another former senior analyst at the Chicago Fed, Jeffrey Cho, 35, has pled guilty to stealing “sensitive financial data” which he took with him days before resigning from the Fed and moving to a different employer. The conviction carries a maximum sentence of one year in federal prison. A sentencing hearing has been scheduled for June 21, 2016, at which point we can only expect Cho will get the Jason Gross treatment and get away with merely a fine.
In the charge, the DOJ states that in his role as a Senior Supervision Analyst, Cho had access to sensitive, proprietary and valuable information belonging to the bank. The information included financial data and materials relating to the bank’s responsibility to monitor the health of certain financial institutions in the United States.

This post was published at Zero Hedge on 03/17/2016.

US Economy Is Tumbling Into An Economic Collapse That Will Shock The World – Episode 921a

The following video was published by X22Report on Mar 17, 2016
Gold slammed down and now pushing back up. Initial jobless claims at 42 year lows even though more retail stores are closing and corporations are laying off. Real income is going to decline this year. Baltic Dry index declines again, the dead count bounce is over. All the signs are pointing to a recession/depression as corporate and bank profits decline. Caterpillar revenue declines again. Moody’s downgrades Saudi Arabia


Gold: $1,264.50 up $35.20 (comex closing time)
Silver 16.02 up 81 cents
In the access market 5:15 pm
Gold $1256.70
silver: 15.90
At the gold comex today, we had a poor delivery day, registering 0 notices for nil ounces and for silver we had 4 notices for 20,000 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 rose by 2325 contracts up to 168,505 with silver down by 5 cents yesterday (pre announcement by Yellen). In ounces, the OI is still represented by .843 billion oz or 120% 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 rose by 8,465 contracts to 501,551 contracts as the price of gold was DOWN $1.10 with yesterday’s trading.(at comex closing). The rise in OI in gold should add considerable pressure on our bankers and thus expect future raids.
We had another big change in gold inventory at the GLD, a whopping deposit of 11.89 tonnes/ thus the inventory rests tonight at 807.09 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 17, 2016.

N.Y. Fed To Blame In Hacking Theft of $81 Million in Bengladesh Central Bank Heist

No longer are banks robbed by armed bandits brandishing Smith & Wesson Schofields and cloth masks…
The new ‘Wild West’ can be found right here, on your computer, mobile device, or wherever hackers can wield the Internet.
And just last month, Bangladesh’s central bank – and the Federal Reserve Bank of New York – became two prominent victims of highway robbery.
You see, the N. Y. Fed – hacked by cyber-criminals on Feb. 5 – had $101 million in Bangladesh Bank funds stolen from it by alleged Chinese hackers.
The stolen money was transferred to accounts in Sri Lanka and the Philippines. About $20 million sent to Sri Lanka has reportedly been recovered, but $81 million remains missing. Some of that money is thought to have been funneled through casinos, reported The Wall Street Journal on Tuesday.

This post was published at Wall Street Examiner on March 17, 2016.

Catalonia Said To Blackmail Spain On Overdue Bank Loans

Spanish politics is a mess.
Everyone knew, going into last fall and winter, that the waters were about to get decidedly choppy. At the national level, Podemos was ascendant as Pablo Iglesias rode a wave of anti-austerity sentiment straight to the front of disaffected voters’ collective consciousness.
A nation beset by sky high unemployment had grown tired of the PP and PSOE duopoly that had dominated Spanish politics since at least the late 80s. Between Podemos and Ciudadanos, a shakeup was virtually assured.
Meanwhile, Catalonia held what amounted to a referendum on independence in late September and then in early November, the regional parliament approved a resolution to take steps towards establishing an independent republic.
Mariano Rajoy didn’t like that idea so much. ‘Catalonia isn’t separating from anywhere,’ he said at the time.

This post was published at Zero Hedge on 03/17/2016.

Will The Fed Follow The BoJ Down The NIRP Rabbit Hole?

On Monday, in ‘JPM Looks At Draghi’s ‘Package,’ Finds It ‘Solid’ But Underwhelming,’ we noted that according to Mislav Matejka, investors would do well to fade the ECB’s latest attempt to jumpstart inflation, growth, and of course asset prices with Draghi’s version of a Keynesian kitchen sink.
‘Overall, we believe the latest package is far from a game changer,’ Matejka opined.
What was especially interesting about that particular note was the following graph and set of tables which show just how ‘effective’ NIRP has been for the five central banks that have tried it so far.

This post was published at Zero Hedge on 03/17/2016.

U.S. Home Prices Seen Rising 1.7% Over the Next Year (Real Avg Weekly Earnings Only Growing At 1.6% YoY)

Fannie Mae’s recent survey discloses what Nobel Laureate Robert Shiller has said in the past: households are always overly optimistic about home price growth. Until now.
(Bloomberg) – Americans expect home prices to rise 1.7 percent over the next year, according to a monthly Fannie Mae National Housing Survey.
The survey, conducted by Penn Schoen Berland, in coordination with Fannie Mae, polls 1,000 adults during the first three weeks on the month. It has a margin of error of /-3.1 percent.

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ March 17, 2016.

High-Risk Regime’s 6-Month Anniversary

High-Risk Regime’s 6-Month Anniversary

We are more than 1/2 a year since the August stock market crash, sometimes known as China’s Black Monday. And in our “flipping volatility regimes” article last month, we argued that the risk regime was statistically higher and endured that way, after the August tumult then snapback. During this past 6 months, the volatility index has averaged ~20%. Nearly four percentage points greater than its average during the 6 months before that! Today the market’s volatility has dropped to a close below 15%, something seen only 10 times in the past 125 trading days (6 months).

This post was published at Zero Hedge on 03/17/2016.

Gold Daily and Silver Weekly Charts – Stock Option Expiry – US Douleur du Monde

Tomorrow is a stock option expiration for March, which as I recall is not inconsequential.
A surprising number of people contacted me via email to ask if something had happened, as gold rallied but was noticeably lagged by PHYS and some of the mining stocks.
And then later on gold was hit, giving up its gains for the day and the miners et al. knocked down a bit further.
Silver held up fairly well, but was more surprising was that the dollar had quite a poor day of it as you can see below.
Other than normal profit-taking and short selling, I would consider the possibility that the biggest options players, who tend to be the Banks and the others who play virtually every market and market cross, saw a nice opportunity to clean the clocks of the call buyers in the miners and related trades who were enthused by the big run higher sparked by the Fed.
However that is a surmise for now and there are somewhat less complicated explanations. But after all we have seen, I am much more willing to entertain the crookedness of the markets than I might have been some years ago. The options markets have become almost as bad a rat’s nest as the forex markets for the retail traders.

This post was published at Jesses Crossroads Cafe on 17 MARCH 2016.

What Happens To The Market Next: JPMorgan’s Head Quant Explains

JPM’s head quant, Marko Kolanovic, who turned somehwat gloomy in the past few months, has seen some hits and misses in his recent forecasts. On one hand he did accurately predict the surge in gold one month ago, as well as the rebound in oil and Emerging Markets; however on the other he suggested that being long VIX and cash would be a good place to wait out the upcoming market volatility.
Most recently, when looking at the market’s fundamentals which as we pointed out in late February are massively stretched, he also noted that “EPS recoveries that follow 2 consecutive EPS contractions (~20% of times) were typically triggered by some form of stimulus (fiscal, monetary or exogenous). We expect market volatility to stay elevated and investors to remain focused on macro developments such as the Fed’s rates path, developments in China, and releases of US Macro data. Elevated volatility and EPS downside revisions will provide a headwind for the S&P 500 to move significantly higher (via multiple expansion).”
Perhaps Kolanovic failed to anticipate the “animal spirits” response to first a stimulative PBOC, then a dovish BOJ, followed by an even more dovish ECB and topping it off, yesterday’s dovish FOMC, which was clearly sufficient to boost both the Dow Jones and the S&P500 into the green for the year. He is correct, however, that in the absence of a major stimulus, EPS will likely remain subdued: after all the only “stimulus” from the ECB was a greenlighting for European companies to buyback their stock with ECB-backstopped debt issuance, while the Fed merely slowed down the pace of its rate hikes, confirming that the global economy is quite weaker than it had originally expected.
This is how Kolanovic explains this new period of central bank convergence:

This post was published at Zero Hedge on 03/17/2016.

Bad News For The Bears: Gartman Will Be Long VIX Until The S&P Hits 2,118

Yesterday morning, after reading the latest Gartman letter, we reported that in what may have been the worst possible news for vol longs, Gartman said he had become a “buyer of the VIX.” As a reminder this is what he said:
NEW RECOMMENDATION: we are taking a ‘punt’ on the short side of the equity market, but this time we shall do so by buying volatility; that is, we shall buy the VXX volatility index ETF listed on the NYSE and we shall do so upon receipt of this commentary and the market’s opening. We’ll have a stop in tomorrow’s TGL, but for now we do not wish to risk more than 5% on this trade… a rather large stop to be certain for our purposes in the past but we’ll tighten that up measurably over the course of the next day or two. This is unusual action on our part ahead of an FOMC meeting given the historical tendency of equities to rise after these meetings; but call it trader’s intuition or call it what you will we think a ‘one unit’ punt is warranted and reasonable.
To which we responded:

This post was published at Zero Hedge on 03/17/2016.

S&P Turns Green For 2016 As “Average” Stock Reaches Key Technical Resistance

On the heels of Trannies and The Dow, The S&P 500 just crossed into green for the first time in 2016. This technical melt-up occurs as the “average” stock reaches a key intersection of recent trendlines…
S&P 2016 Green for St. Paddy’s Day… 2043.94 taken out
Note the VIX tails as the market lurched higher… VIX slammed to a 13 handle…

This post was published at Zero Hedge on 03/17/2016.

TDV Interview Series: Doug Casey – We are Leaving the Eye of the Hurricane!

The following video was published by TheDollarVigilante on Mar 17, 2016
Jeff interviews veteran speculator and personal mentor, Doug Casey. Topics include: markets at the edge of a precipice, the most dangerous time in history for capital, an unwitting tendency to self destruction, corruption and power, the USA reached its peak in the 1950’s, the world is awash in debt, the biggest bubble is the bond bubble, death of the dollar, negative interest rates, bank bail-ins, the was against cash, carrying gold across borders, capital controls, invest in tangible commodities, gold mining stocks are at near all time lows similar to 2001.

China’s Most Innovative Capital Outflow Yet: Bizarro M&A

In early February we observed a a new, troubling trend among Chinese corporations: soaring corporate debt as a result of a surge in cross-border M&A.
As we said then “Chinese corporate leverage, represented by the traditional debt/EBITDA ratio is, in some cases, absolutely ludicrous, especially among companies which in recent weeks have tried to mask their balance sheet devastation through global M&A activity, such as ChemChina’s recent record for a Chinese company $44 billion purchase of Syngenta, or Zoomlion’s $3.3 bid for US rival Terex last month.”
As the FT noted at the time, “so high are the debt levels at ChemChina and several other companies behind some of the country’s biggest overseas investments that financing for the deals would have been difficult or prohibitively expensive were it not for the backing of the Chinese state, analysts said.”
Looking specifically at ChemChina, FT wrote that ChemChina, which bid $43.8bn for Syngenta, a Swiss company, is in poor financial shape. “It made a net loss of Rmb889m in the third quarter of last year and carried a total debt of Rmb156.5bn ($24bn). The debt load was equivalent to 9.5 times its earnings before interest, tax, depreciation and amortisation at the end of 2014, well above the international standard for excessive leverage of 8 times Ebitda.
But what is most disturbing is that ChemChina’s 9.5x debt/EBITDA is downright conservative among Chinese corporations.
Take Zoomlion, a lossmaking Chinese machinery company that is partially state-owned: its total debt stands at 83 times its EBITDA. “Zoomlion’s bid is a desperate attempt to remain relevant,’ said Mr Pillay.

This post was published at Zero Hedge on 03/17/2016.

The ECB and John Law

Last week, the ECB extended its monetary madness, pushing deposit rates further into negative figures.
It is extending quantitative easing from sovereign debt into non-financial investment grade bonds, while increasing the pace of acquisition to 80bn per month. The ECB also promised to pay the banks to take credit from it in “targeted longer-term refinancing operations”.
Any Frenchman with a knowledge of his country’s history should hear alarm bells ringing. The ECB is running the Eurozone’s money and assets in a similar fashion to that of John Law’s Banque Generale Prive (renamed Banque Royale in 1719), which ran those of France in 1716-20. The scheme at its heart was simple: use the money-issuing monopoly granted to the bank by the state to drive up the value of the Mississippi Company’s shares using paper money created for the purpose. The Duc d’Orleans, regent of France for the young Louis XV, agreed to the scheme because it would provide the Bourbons with much-needed funds.
This is pretty much what the ECB is doing today, except on a far larger Eurozone-wide basis. The need for government funds is of primary importance today, as it was then.
In Law’s day, France did not have a central bank, such as the Bank of England, managing the issue of government debt, let alone a functioning government bond market. The profligate spending of Louis XIV had left the state three billion livres in debt, which was the equivalent of 1,840 tonnes of gold. This was about 85% of the world’s estimated gold stock at that time, at the livre’s conversion rate into Louis d’Or. John Law would almost double that by June 1720, with unbacked livre notes issued by his bank.
Today, the assets being overvalued for the governments’ benefit are government bonds themselves, but the principal is the same. There is no need to use a separate, Mississippi-style vehicle, because there is a fully functioning government bond market.

This post was published at GoldMoney on MARCH 17, 2016.