The Battle For $20.46 SILVER & Death of the Cartel — ANDY HOFFMAN

The following video was published by on Aug 1, 2016
Andy Hoffman joins me on Monday, August 1st to document the collapse of the current global economic order. Andy notes that there is an epic battle for $20.46 silver which marks silver’s 50 WEEK moving average. And it’s a battle that the cartel is about to lose as their RECORD silver short positions have not been enough to cap silver’s historic run this year. In fact silver is the second best asset of 2016 when priced in USD and the best asset for 2016 when priced in local currencies. “The cartel is going to be defeated and likely in the next six to twelve months,” Andy says.

This Has Never Happened Outside Of A Recession

Back in January, when the Fed released its Fourth Quarter “Senior Loan Officer Opinion Survey on Bank Lending Practices”, it revealed something ominous: in Q4, lending standards across the US banking sector tightened for the second consecutive quarter. This was a problem because as Deutsche Bank pointed out at the time, two consecutive quarters of tightening Commercial & Industrial loan standards “has never happened before without it signalling an eventual move into recession and a notable default cycle. Once we have 2 such quarters lending standards don’t net loosen again until the start of the next cycle.”
Then, three months ago, we got confirmation of three consecutive quarters of tightening lending standards when senior bank loan officers reported the tightest lending standards on net since the financial crisis. Needless to say, if a recession and a default cycle have always followed two quarters of tighter lending conditions, three quarters does not make it better.

This post was published at Zero Hedge on Aug 1, 2016.

Success In Curbing Chinese Capital Outflows Spells Disaster For High End NY/SF Real Estate

Bloomberg today called attention to waning Chinese demand for U. S. real estate, a topic that we’ve discussed thoroughly over the past month, pointing to a recent report from the National Association of Realtors which indicated a YoY decline in total sales to Chinese buyers for the first time since 2011 (see our previous post on this topic here: “The Party Is Over: Foreign Interest In US Real Estate Tumbles To 3 Year Lows”). As we previously discussed, Chinese businessmen concerned with a fragile economy and Yuan depreciation are funneling billions of dollars into high-end real estate of countries considered to be “safe-havens” like the U. S., Canada and Australia. In our view, these illegal capital flows are creating massive bubbles in high-end international real estate markets like New York, San Francisco, Vancouver and Sydney (something we discussed at length here: “Foreign Buyers Continue to Inflate Global Residential Real Estate Bubbles – This Will End Badly”). We’ve argued that when/if these illegal capital flows were curbed, these markets could be in for a rude awakening.
As pointed out in the NAR report, 71% of Chinese buyers in the U. S. real estate market pay completely with cash which just confirms the point that any success by China in curbing capital outflows will have a big impact on high-end properties in the U. S. A point which was confirmed by New York real estate broker David Wong:

This post was published at Zero Hedge on Aug 1, 2016.

D-day for Australia’s Real Estate Bubble?

Unknowable Degrees of Bubble Insanity
Back in February, we brought you an update on the truly insane real estate bubble in Australia (see: ‘Australia’s Housing Bubble – In the Grip of Insanity’ for details) in the wake of Jonathan Tepper of Variant Perception reporting on an eye-opening fact-finding tour in Sydney.
As every seasoned market observer knows though, the fact that a bubble has obviously attained crazy proportions does not mean it cannot become even crazier. We only need to think back to the Nikkei index in the late 1980s, the Nasdaq in the late 1990s, or the grand-daddy of modern-day bubble insanity, the Souk Al-Manakh bubble in Kuwait in the early 1980s.
The latter example is generally less well known than the others, but it is unsurpassed in terms of sheer mass dementia. What made this bubble so special – at its peak Kuwait’s stock market had a total capitalization of more than $100 billion, which made it the third-largest equity market in the world behind the US and Japan at the time, a fact that should have told market participants they were skating on very thin ice – was the use of post-dated checks to pay for stock purchases.
The bubble needed a trigger to pop, and that trigger was delivered when one day, a single one of these post-dated checks actually bounced. One of the biggest market crashes in history ensued – a truly dramatic wipe-out, that in the end destroyed the country’s entire OTC stock market.
As we have pointed out previously, while residential real estate is actually a consumer good, analytically it should be treated as akin to a capital good maintained over several consecutive stages of production, as it renders its services over a very long period of time (the same principle holds for other durable goods – see J. H. de Soto, Money, Bank Credit and Economic Cycles).
One implication of this is that interest rates are very important to the valuation of real estate. At present, the administered central bank interest rate in Australia is at a new low, and since it remains actually high compared to similar rates in other developed countries, it may well decline even further.

This post was published at Acting-Man on August 2, 2016.

In US Elections, Money Matters!

Simply put, in 40 years of US national elections – money talks, and bullshit (along with hope, change, trust, policy, and every other potential differentiator) walks…
As Statista details, so far, Hillary Clinton’s campaign has raised substantially more money than Donald Trump’s. But has cash ever really made a difference to U. S. election results down through the years? According to figures in Germany’s Handelsblatt newspaper (which have since been converted from euro to dollars), all of the election winners in recent years were also budget winners.

This post was published at Zero Hedge on Aug 1, 2016.


Gold:1351.30 up $2.40
Silver 20.46 up 15 cents
In the access market 5:15 pm
Gold: 1353.00
Silver: 20.43
Sorry for being late but my computer crashed again..took a while to restore the data.
For the August gold contract month, we had a HUGE 1801 notices served upon for 180,100 ounces. The total number of notices filed so far for delivery: 6829 for 682,900 oz or tonnes or 21.241 tonnes
In silver we had 1 notice served upon for 5,000 oz. The total number of notices filed so far this month: 1 for 5,000 oz.
Let us have a look at the data for today.
In silver, the total open interest ROSE BY A CONSIDERABLE 434 contracts UP to 223,343 AND AT ITS NEW ALL TIME RECORD AS THE PRICE OF SILVER ROSE BY 14 CENTS WITH FRIDAY’S TRADING. In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.114 BILLION TO BE EXACT or 160% of annual global silver production (ex Russia &ex China).
In silver we had 1 notice served upon for 5,000 oz
In gold, the total comex gold ROSE BY A CONSIDERABLE 5,186 contracts as that the price of gold ROSE by $16.70 on Friday. The total gold OI stands at 568,778 contracts.
With respect to our two criminal funds, the GLD and the SLV:
we had a big deposit of 35.94 tonnes in gold inventory . /
Total gold inventory rest tonight at: 964.03 tonnes
we had a huge change in the SLV, a deposit of 1.235 million oz, into the SILVER INVENTORY TO THE SLV
Inventory rests at 350.955 million oz.
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on August 1, 2016.

The Price Of Oil Is Crashing Again, And That Is Very, Very Bad News For The U.S. Economy

This wasn’t supposed to happen. The price of oil was supposed to start going back up, and this would have brought much needed relief to economically-depressed areas of North America that are heavily dependent on the energy industry. Instead, the price of oil is crashing again, and that is really bad news for a U. S. economy that is already mired in the worst ‘recovery’ since 1949. On Monday, U. S. oil was down almost four percent, and for a brief time it actually fell below 40 dollars a barrel. Overall, the price of oil has fallen a staggering 21 percent since June 8th. In less than two months, the ‘oil rally’ that so many were pinning their hopes on has been totally wiped out, and if the price of oil continues to stay this low it is going to have very seriously implications for our economy moving forward.
One of the big reasons why the price of oil has been declining is because the OPEC nations continue to pump oil at very high levels. The following comes from CNBC…
Production in July by the Organization of the Petroleum Exporting Countries likely rose to its highest in recent history, a Reuters survey found on Friday, as Iraq pumped more and Nigeria squeezed out additional crude exports despite militant attacks on oil installations.
Top OPEC exporter Saudi Arabia also kept output close to a record high, the survey found, as it met seasonally higher domestic demand and focused on maintaining market share instead of trimming supply to boost prices.
These countries don’t know if or when the price of oil will eventually rebound, but what they do know is that they desperately need cash in order to keep their sputtering economies going. Many of these nations are already experiencing significant economic downturns, and substantially reducing oil revenues at this time would definitely not help things.
Here in North America, oil production costs tend to be higher, and so when the price of oil crashes we tend to see companies shut down rigs. But when rigs get shut down, that means that good paying jobs are lost.
During the first four months of 2016, approximately 35,000 jobs were lost at Texas energy companies. Globally, more than 290,000 energy jobs have been lost since the price of oil started falling back in 2014.
And even though there was hope that energy companies would add jobs as the price of oil started rebounding during the second quarter, it turned out that the job losses just kept on coming…

This post was published at The Economic Collapse Blog on August 1st, 2016.

The Value of Connections in 2008

These days, some papers get more attention when they are in draft form than when they are published, in part because of the length of the review and publication cycle. Recall the Romer and Romer paper on the impact of tax changes, or the Philippon and Reshef paper on the financial sector, both of which made huge splashes years before they were finally published. My best-known paper also falls in that category. ‘The Value of Connections in Turbulent Times’ began knocking around the Internet in 2013, and is only now being published by the Journal of Financial Economics – nine years after we began working on it, and at a time when the world seems to have completely moved on from its subject. (Note: that link will allow you to download the published version of the paper for free, but only until September 4, 2016. Thanks Elsevier, I guess.)The paper, as you may have heard years back, shows that financial institutions with connections to Tim Geithner experienced abnormal positive market returns when his nomination to be treasury secretary was leaked and then announced in November 2008, and suffered abnormal negative returns when the news of his tax issues threatened to undermine his confirmation in January 2009. The interesting thing is that this is not ordinarily supposed to happen in the United States. Having connections to important government officials is not supposed to provide financial benefits to a company, and therefore nominations of those officials do not usually produce stock market bumps. The evidence is not completely one-sided, but in one representative example, researchers found that companies with connections to Dick Cheney did not experience abnormal returns in response to unexpected news about Cheney. This is in contrast to developing countries, where numerous studies have found that connections to important politicians are reflected in stock market valuations.

This post was published at Wall Street Examiner by James Kwak ‘ August 1, 2016.

Deutsche Bank, Credit Suisse Kicked Out Of Stoxx Europe 50 Index

What do you do when you are one of the biggest indices in Europe and are unable to rise simply because two of your biggest constituents, if not so much in market cap any more but certainly in terms of systemic importance, just can’t catch a bid? Why you delete them, of course even if the two names in question happen to be Europe’s two largest banks, Deutsche Bank and Credit Suisse.
Moments ago, STOXX Ltd, the operator of Deutsche Boerse Group’s index business, announced component changes in the STOXX Europe 50 Index due to the fast-exit rule. All changes become effective with the open of markets on Aug. 8, 2016.

This post was published at Zero Hedge on Aug 1, 2016.

Is The New US Currency Hiding In Plain Sight, Will The Old Currency Be Unredeemable? – Episode 1037a

The following video was published by X22Report on Aug 1, 2016
Greece looking to change their constitution and have additional referendums. US manufacturing has bounce but all indicators are pointing to a slowdown. Construction spending slows and crashes. US entitlements is the sixth biggest economy on earth. Social security unofficially went bankrupt in 2010. European banking system is in big trouble, the banks are insolvent. Saudi banks get a bailout. US is already moving to a new currency, the old currency might not be redeemable.

Junk Bond Issuance Collapses in the US and Europe

At a breath-taking pace. Default rate spikes. US stocks at record.
Standard and Poor’s default rate of US high-yield corporate bonds – the more appealing moniker for junk bonds – jumped to 4.5% in July, the worst since August 2010.
But no problem. The S&P Distressed High-Yield Corporate Bond Index – comprised of 470 bond issues so troubled that they’re trading at a yield that is at least 10 percentage points higher than the Treasury yield – has rallied 48% since February 12.
This includes the 2.5% swoon on Friday, when some of the hot air was let out.
Default rates blowing out to crisis proportions while institutional investors are piling into distressed junk bonds and drive up prices despite soaring defaults – these are the kinds of out-of-sync movements that our era of interest rate repression, QE, and the relentless search for yield is becoming famous for.
And so, in the same out-of-sync manner, despite rising junk bond prices and falling yields, US high-yield bond issuance in July dropped 32% from June, to $14.9 billion, according to LCD of S&P Global Market Intelligence. For the first seven months of the year, total issuance plunged to $196 billion, down 32% from a year ago.
In Europe it’s even worse. According to LCD, high-yield issuance this year through July plunged nearly 50% year-over-year, to just 27.5 billion.

This post was published at Wolf Street by Wolf Richter ‘ August 1, 2016.

Construction Spending Declines In June, Religious Construction Leads (Fed May Raise Rates Faster Than Thought)

US construction spending declined in the month of June by -0.6%. Residential spending was flat, with office and lodging spending up 0.6%. Manufacturing spending was down -4.5%.
The biggest gainer? Religious construction.
Here are residential and nonresidential spending on a YoY basis.

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ August 1, 2016.

Gold Daily and Silver Weekly Charts – Deliveries on Paper

Gold and silver held to an upward drift today, with a little more strength in Uncle Buck. One gets the sense that the ‘risk on’ boys were taking a little out of equities and putting the proceeds into safer harbors.
The big movers for the metals this week will most likely be the Bank of England rate decision and the US Non-Farm Payrolls Report.
And as always, any exogenous hiccups in the smooth seas being prepared by the central banks, who are spreading the oil of excess liquidity and negative rates on the choppy seas of poor economic growth.
Gold in particular is at an interesting juncture on the charts again. And as the stock commentary below points out, stocks have been on a tear for some time, and are looking a bit fully valued and even ‘toppy.’
There were more deliveries in gold last Friday, with the takers being the usual suspects. Interesting that despite all these deliveries that the gold inventories in the warehouses move very little.
Silver bullion is in for a quiet August on the Comex it appears.
The gains that have been achieved in the mining stocks year-to-date have been quite impressive.
I am wondering if and when those gains and higher metals prices will be reflected in real earnings. Right now there appear to be quite a few ‘if-come’ bets.

This post was published at Jesses Crossroads Cafe on 01 AUGUST 2016.

We’re All Hedge Funds Now, Part 4: Insurance Companies Go For ‘Growth’

The most recent batch of economic stats was even more disappointing than usual, resulting in a cliff dive for the Atlanta Fed’s GDPNow US growth report:

It’s the same around the world, with European, Japanese and Chinese numbers coming in below (already lowered) expectations. The implication? Interest rates in major countries will either remain extremely low or fall further from here. With $11 trillion of government bonds already trading with negative yields, that’s an historically unprecedented prospect.
But for financial companies like insurers, pension funds, and money market funds, today’s world is not just unprecedented, it’s existentially threatening. Consider, for instance, the plight of Australian insurance companies:

This post was published at DollarCollapse on AUGUST 1, 2016.

Ben Inker: This Is The “Shocking Hole” That Will Be Blown In Equities If Rates Spike By 1.5%

In early June, we presented a Goldman analysis which calculated what the market impact on fixed income securities would be as a result of even a modest 1% move higher in interest rates. The conclusion: a rather staggering $2.4 trillion in MTM losses for just US securities.
As Goldman explained at the time, “the aggregate interest rate duration across the bond market has also increased over the past several years, up over 20% vs. the 1995-2005 average level. Longer durations are largely driven by lengthening maturities on the bonds outstanding, as issuers have elected to term out their debt structures. Exhibit 4 shows that the average maturity of corporate bonds issued in 2015 and 2016 is over 16 years, vs. an average of 8.6 years during 1995-2005. The US Treasury has also chosen to lengthen its debt maturity structure, with more use of long duration bonds…. In 1994, the average yield on the bond index was 5.6%, vs. 2.2% currently. Lower bond coupons means that proportionately more of the bond cashflows now comes from principal, which tends to be distributed towards the end of the bond lifetime.”

This post was published at Zero Hedge on Aug 1, 2016.

Energy’s Trillion-Dollar Ticking Time Bomb

Upon occasion, my responsibilities these days have a way of dovetailing into what I used to do for a living. Today, it’s happening again.
My professional career in the U. S. intelligence community was in counterintelligence (CI). This involved watching the other guys and making it difficult for them to penetrate either the intelligence organization itself or the broader apparatus of American government and private sector decision-making.
These days, the more visible counter operation involves the one against terrorism. Here, the objective is to track down, prevent, or limit those who are bent on attacking targets, usually civilian and increasingly ‘soft’ (those having little protection), to undermine our society and our way of life.
I had little connection to counterterrorism throughout most of my professional life… until quite recently. Life has a strange way of coming about in circles.
To show you what I mean, let me first explain something else…

This post was published at Wall Street Examiner by Dr. Kent Moors – August 1, 2016.

Welcome To Rio: Olympic Village Catches Fire, Athletes Robbed, & Water “Teeming With Dangerous Viruses”

As the Olympic Games are set to get underway in Rio de Janeiro, the host country is experiencing a couple of “minor glitches.” Already reports have come in of gas leaks in athlete rooms (rooms which the Australians have labeled “uninhabitable”), athletes being robbed, a collapse of the main boat ramp intended for use in sailing competitions and a minor problem with water quality which an AP study found to be “contaminated with raw human sewage teeming with dangerous viruses and bacteria.”
On the water issue, The Associated Press commissioned a 16-month study on the waterways of Rio which revealed consistent and dangerously high levels of viruses from pollution and untreated human sewage. In fact, the AP’s tests revealed that Copacabana Beach, where the marathon and triathlon swimming are to be held and thousands of tourists are likely to take a dip, exceeded California’s limit for fecal coliforms (aka poop) by 5x over 13 months of testing. In addition, tests found that infectious adenovirus readings turned up at nearly 90 percent of the test sites over 16 months of testing. Dr. Valerie Harwood, Chair of the Department of Integrative Biology at the University of South Florida, reflected on the test results:

This post was published at Zero Hedge on Aug 1, 2016.

SP 500 and NDX Futures Daily Charts – Yawning Divergence Between Tech and Broader Market

If you look at my two favorite stock index charts below you can easily see that while the SP 500 is caught (or coiling if you prefer) within a trading range in the futures from about 2150 to 2170, while the big cap tech Nasdaq 100 has continued to go parabolic, with an interesting ‘island top’ potential formation being set today.
In other words, something has got to give here, and it is not clear whether the move will be up or down, but without central bank interference ‘down’ seems more probable.
And speaking of central banks, the Bank of England will be mulling over a rate cut in the latter part of this week.
The big tickle for US economic data will be the Non-Farm Payrolls report for July which comes out on Friday.

This post was published at Jesses Crossroads Cafe on 01 AUGUST 2016.

NY Fed Finds 15% Of Americans Have Negative Net Worth; Student Loans Contibute To Record US Wealth Inequality

Two weeks ago, the White House released a report that led to loud heckles among the more pragmatic economic community. As the WSJ described its conclusion: “he growing stack of $1.3 trillion in student debt is helping, not hurting, the U. S. economy” (there was much more in the full report which to many was nothing short of propaganda seeking to spin a $1.3 trillion debt bubble into a good thing).
Today, none other than the NY Fed took the White House to task with a surprisingly accurate (to an extent) analysis, based on a Survey of Consumer Finances, according to which not only do student loans contribute substantially to an emerging problem in US society, namely rising negative household net worth, but is also a key driver behind wealth inequality.
This is how the NY Fed explains the methodology:

This post was published at Zero Hedge on Aug 1, 2016.

The Helicopter Mortgage

Medical vs. Financial Engineering
I broke my elbow a month ago, pretty badly as I was told. The surgeon screwed the pieces back together, using a steel alloy bracket and six screws. Two hours later, I left the hospital with no cast, a bandage (just to cover a very ugly scar), a prescription for painkillers and therapy started a week later.
What would have happened if I had suffered the same accident in 1975? The surgery would probably be in-patient, requiring a couple of days in the hospital. The broken fragments would take weeks to heal, in a cast. Rehab would take many months while I may never regain the previous range of motion or strength again. Medical engineering has advanced so much in the last forty years.
Before I stray too far, why 1975? That was the year in which I entered the real estate market. In comparison, real estate involves just simple transactions, nowhere near the complexity of cutting up a body, drilling holes and screwing some plate into human bones.
In forty years, the real estate market should have advanced to the point where a transaction is no more cumbersome than ordering some merchandise on Amazon, prepackaged with financing, right? Wrong.
Not only has financing engineering not advanced like medical engineering, it has deteriorated into one of the most destructive forces in the modern world. Pertaining to real estate, it was failed financing engineering that brought us the Savings and Loans debacle.
It brought us Greenspan bubble part one, which paused on September 11, 2001, then went ballistic with Greenspan’s sub-prime bubble. It created derivatives and derivatives derived from derivatives.
The Helicopter Mortgage
Where has financial engineering led us to today?
Over a recent weekend, Mel Watt (FHFA), Jack Lew (Treasury) and Janet Yellen (Federal Reserve) held a summit meeting and came up with a plan that will forever eliminate the possibility of another housing crisis. The plan is the Helicopter Mortgage. Here is how it works:

This post was published at Acting-Man on August 1, 2016.