‘Climb the mountains and get their good tidings. Nature’s peace will flow into you as sunshine flows into trees. The winds will blow their own freshness into you, and the storms their energy, while cares will drop away from you like the leaves of Autumn.’ – John Muir
We just got back from a family vacation in Colorado visiting my oldest son, who graduated college last year and immediately moved to Colorado to start his life. The trip was fun, enlightening, exhausting, and a lesson in how the easy money policies of the Fed result in mal-investment and the impoverishment of the middle class.
I don’t want to be a downer, as our week in Colorado was a fantastic journey where we witnessed some of the most stunning panoramas and beautiful awe inspiring vistas of our lives. My son is in the perfect place, as he loves mountain biking, hiking, snow boarding, camping, and hockey. After a week in Colorado, you realize why it is the least obese state in the union. It’s a perfect setting for those who enjoy the outdoors, as Colorado has 300 days of sunshine per year, along with the most snow per year.

This post was published at The Burning Platform on August 6, 2016.

Chart of the Day – Gold: Sideways for Awhile?

In my last chart of the day I noted that gold and the metals sector in general were too stretched above the 200 DMA and would likely have to churn for awhile before the next leg up could begin. After seeing the sell off following Friday’s employment number I think I probably called that one correctly. The metals may have to churn sideways for most of August before the next rally begins.

This post was published at GoldSeek on Sunday, 7 August 2016.

14% Of Americans Have Negative Wealth

According to the New York Federal Reserve, 14% of the U. S. population lives in households that have ‘negative’ wealth. In other words, these are households that have more debts piled up than assets, which puts their net worth in minus territory.
But what does a negative wealth household look like?
In the following chart, VisualCapitalist’s Jeff Desjardins compares the data on negative wealth households with the data on their positive counterparts. There are some obvious and stark contrasts…

This post was published at Zero Hedge on Aug 6, 2016.

Establishment Tries To Suppress “Dissident Actuaries” Explosive Report On Public Pensions

Submitted by Walter Russell Mead via The American Interest,
America’s slow-motion public pension train-wreck (by some estimates, the shortfall currently exceeds $3 trillion) has been kept in motion for years by deeply dishonest accounting practices employed by state and local governments, which presume unrealistically that pension funds can consistently earn white-hot annual returns approaching eight percent. So it’s disappointing, but not particularly surprising, that the actuarial establishment moved to suppress a report pointing this out.
Pensions and Investments reports:
The American Academy of Actuaries and the Society of Actuaries Monday abruptly disbanded its longtime joint Pension Finance Task Force, objecting to a task force paper challenging the standard actuarial practice of valuing public pension plan liabilities. ‘This paper (is) being censored by the AAA’ and SOA, said Edward Bartholomew, who was a member of the former task force, in an interview. ‘They didn’t want it to get out.’
Others who were members of the task force also said in interviews the two actuarial groups are trying to suppress publication of the paper.

This post was published at Zero Hedge on Aug 6, 2016.

JPMorgan et al Smash the Precious Metals Using the Job Numbers as Cover

The gold price didn’t do much in Far East or early London trading on their Friday, as the world waited for the job numbers report at 8:30 a.m. EDT yesterday morning. And when they were announced, JPMorgan et al were ready. Most of the damage was done by 10:45 a.m. EDT, but shortly before the COMEX close, quiet selling pressure appeared once again – and gold was closed almost on its low of the day.
The high and low ticks were reported by the CME Group as $1,371.00 and $1,340.40 in the December contract.
Gold was closed in New York yesterday at $1,335.40 spot, down $25.00 on the day. Net volume was just over 195,000 contracts – and that includes October and December.

This post was published at GoldSeek on Sunday, 7 August 2016.

Visualizing 31 Incredible Facts About Gold

No metal can claim a legacy comparable to gold.
As VisualCapitalist’s Jeff Desjardins notes, gold has been used to show affectionate love, but it has also represented power, status, and riches for the greatest kings of antiquity. Gold’s history is truly legendary, ripe with colorful tales and anecdotes from people ranging from William Shakespeare to Christopher Columbus.
But gold doesn’t just ‘talk the talk’.
Gold also walks the walk, because its grandeur is backed up by impressive chemical properties and uses. As we documented in our extensive Gold Series, it’s been used as a monetary metal for thousands of years by ancient civilizations such as the Lydians, Greeks, Chinese, and Romans. It’s the most malleable and ductile metal, and it doesn’t tarnish or corrode. Over time, these properties have helped people to associate gold with concepts such as immortality or royalty.
Even today, people are still finding new uses for gold that are impressive in their own right. For example, scientists recently discovered a gold alloy that is four times tougher than titanium.
Without further ado, here are 31 incredible facts about gold…

This post was published at Zero Hedge on Aug 6, 2016.

Record P/Es & A “Too Big To Fail” Market Explained

Submitted by Thad Beversdorf via FirstRebuttal.com,
In a recent Yahoo Finance article (h/t Nick Webb), Richard Bernstein attempts the latest rationalization of rising P/E multiples.
‘There is an old investment rule-of-thumb called the Rule of 20 that uses combinations of headline inflation and the S&P 500 P/E to determine fair value,’ Bernstein said. ‘Our valuation models are, of course, more elaborate than the simple Rule of 20, but based on a more rigorous analysis of inflation and P/E ratios, the current equity market appears, at worse, to be fairly valued. Investors forget that inflation was increasing leading up to the 2008 bear market. In fact, the CPI, which is a lagging indicator, peaked at 5.6% in July 2008. Today’s headline inflation is 1.0%.’ Bernstein’s suggestion is that the market ‘appears, at worst, to be fairly valued’ when one does a ‘more rigorous analysis of inflation and P/E ratios’. So I’ve gone ahead and done a more rigorous analysis of inflation and P/E ratios.

This post was published at Zero Hedge on Aug 6, 2016.

Selling your health for 20 cents per pound

There I was again, in the organic section of the market, watching as people bypassed the organic bananas, which were $.89/lb, in favor of the non-organic for $.69/lb. They are located right next to each other. I stood there for a little while and watched as this went on. Granted, organic costs more. And sometimes, a lot more. If you are counting your pennies, non-organic can be quite attractive. But why, if the price is nearly the same, would anyone choose pesticide-laden produce over non-pesticide-laden produce?
Let’s do the math: 5 pounds of organic bananas = $4.45. 5 pounds of non-organic bananas = $3.45. That’s a ONE DOLLAR difference. Less than the price of a cup of Starbucks coffee. Quite frankly, I’m at a loss at why people would willingly poison themselves to save a dollar. One dollar. Are we really that brainwashed? Unfortunately, for most of the American population, the answer is yes.
We believe what the TV commercials tell us without question, because they are not supposed to deceive. We believe what the government agencies tell us without question because we have been brought up to believe that authority figures do not lie, and always know best. Yet the history of the FDA, EPA, USDA, and various other alphabet soup agencies tells us that we were and are being systematically poisoned by substancesrubber-stamped as ‘safe.’ Substances that any intelligent person who does a bit of research knows is harmful.

This post was published at FarmWars on August 6, 2016.

Is CMBS The Next “Shoe To Drop”? GGP Sales Suggest Commercial Real Estate Crashing

Apparently people are growing less and less “eager” to shop in America’s dilapidated malls of the 80’s. Stunning Soviet-era architecture just doesn’t draw the crowds it used to. The mall, once a hot spot for American youth, has aged (and not so gracefully we might add) due to the consequences of a decade of extreme under-investment as REIT investors sacrificed long-term success for current yields. Add to that the fact that Amazon is eager to sell almost everything you could possibly want at a loss and ship it to your door within 27 minutes, it’s not surprising that mall traffic is suffering.
The problem, of course, is that none of this curbed investor appetite for CMBS securities or commercial real estate REITs as investors have spent the past 7 years reaching for yield in a low-interest rate environment. What better place to park capital than a “safe,” commercial real estate REIT with high income visibility from long-term lease agreements? Sounds like a great idea as long as you can ignore the pesky little fact that REIT dividends have predominantly been funded with cash saved from under-investment in repairs and remodels making those distributions effectively a return “of” capital rather than a return “on” capital…details…as long as you can sell to someone else before then music ends then you’ll be just fine.
Unfortunately for those investors, recent signs seem to indicate that the music is, in fact, ending. This is a topic we’ve discussed in the past (see recent post entitled “Time To Take The Fed’s Warning Seriously: CMBS Has “Greatest Ever Monthly Delinquency Increase“) as signs are starting to emerge that delinquency rates for CMBS structures are on the rise while valuations of underlying properties are on the decline.

This post was published at Zero Hedge on Aug 6, 2016.

Another Phony Jobs Report – Paul Craig Roberts

As John Williams has made clear, the monthly payroll jobs number consists mainly of an add-on factor of 200,000 jobs. These jobs are a product of the assumption in the Birth-Death Model that new business ventures create more unreported new jobs than the unreported job losses from business failures. If we sustract out this made-up number, July saw a gain of 55,000 jobs, not enough to keep up with population growth. Even the 55,000 figure is overstated according to John Williams’ report: ‘The gimmicked, headline payroll gain of 255,000 more realistically should have come in below zero, net of built-in upside biases.’
In other words, the 255,000 jobs are the product of a virtual reality created by a faulty model and manipulations of seasonal adjustments. Williams says the real rate of unemployment is not the claimed 4.9% figure but 23%.
Even if we assume that 255,000 jobs were created in July, the news remains bad, because the jobs claimed are mainly lowly paid part time jobs without benefits and provide insufficient income to support an independent existence. This is why so many employed young people
continue to live at home with their parents.

This post was published at Paul Craig Roberts on August 5, 2016.

MF Global 5 Years Later: PWC Set To Take The Fall As Corzine Still Untouched

Jon Corzine, former Governor of New Jersey and CEO of Goldman Sachs, took over the helm of MF Global in March 2010. When revenue at the bank failed to live up to expectations, Corzine developed a scheme to place a massive $6BN bet on the sovereign debt of the aptly named PIIGS (Portugal, Italy, Ireland, Greece, Spain) through a financial structure known as a “Repo to Maturity”. To summarize the strategy for all you aspiring CEO’s, when you find it difficult to generate organic revenue growth sometimes the better option is to just bet your entire firm on a single, massively-levered trade on the sovereign debt of countries on the verge of insolvency.
Well, not so much. Deterioration of the Eurozone economies in mid-2011 resulted in massive margin calls on Corzine’s trade and a liquidity

This post was published at Zero Hedge on Aug 6, 2016.

The Week in Review: August 6, 2016

This week the Bank of England continued the global trend of lowering interest rates when they announced a new historically low rate of .25%, along with an additional round of quantitative easing. England is not the only country desperate for economic growth, after the Fed last week admitted the US economy was too weak for themto follow through with a rate hike. The central banks, in their never ending crusade against deflation, are fighting the very phenomenon that can actually increase society’s well-being. Unfortunately, as embodied in the rise of EU head Jean-Claude Juncker, the worst often rise to the top, as the political class continues its class warfare against those that enjoy its power.

This post was published at Ludwig von Mises Institute on August 6, 2016.

Why Oil Under $40 Will Bring It All Down Again: That’s Where SWFs Resume Liquidating

After several months of aggressive selling of stocks in late 2015 and early 2016, the culprit for the indiscriminate liquidation and concurrent market swoon was revealed when it emerged that the seller was not only China (which was forced to sell USD-denominated reserves to offset a surge in capital outflows following the Yuan devaluation), but also Sovereign Wealth Funds belonging to oil-exporting countries, who were dumping billions in risk assets to offset the collapse of the price of oil, which in turn exacerbated current account and budget deficits.

This post was published at Zero Hedge on Aug 6, 2016.

Preparing For A World Without Cash

The Wall Street Journal has published an Op-Ed – authored by two NYU professors: Max Raskin and David Yermack – on the subject of the digitalization of currency. The strawman offers several pros and cons to a ‘world without cash’ but before we start, one commenter summed up our own skepticism…
“Given the fact that the trust in The Fed is at the level of Clinton; why is there any discussion regarding providing them any additional powers? Look at the deplorable track record of these clueless bureaucrats!” Raskin and Yermack begin: The Federal Reserve has done almost nothing to study how a digital currency might work…
Central bankers throughout the world, from Canada to Ireland, have recently indicated that they might issue digital currency in the future. Yet the U. S. has been absent from the debate. As the world’s central monetary power, America should play a leading role in studying the benefits and pitfalls of a digital-currency future. While plenty of risks would come with such a conversion, the potential perks are so great that it merits serious consideration.

This post was published at Zero Hedge on Aug 6, 2016.

Why this Job Market is Still Terrible: The Politically Incorrect Numbers Everyone is Hushing up

For individuals, it has barely improved since the Great Recession. If you have a salary well into the six figures, stock options, nearly free healthcare, and other benefits such as access to free gourmet lunches and dinners at the company’s food court, you might have missed something that a lot of folks feel every day: It’s still a very tough battle out there in this job market. And here is why.
Today we got what was called a ‘stellar jobs report’: Non-farm payrolls rose 255,000 in July. In the other component of the report, the household survey showed that 420,000 new jobs were created. There are now a record 123.9 million full-time jobs. Government hiring was strong. Numerous sectors added to payrolls. And the unemployment rate remained stuck at 4.9%, with 7.8 million people deemed officially unemployed.
So everyone was happy. Well, certainly the stock market was. The S&P 500 closed at a new high. The Treasury market started worrying about a Fed rate hike, and the 10-year yield rose to 1.59%

This post was published at Wolf Street on August 5, 2016.

Doug Noland’s Credit Bubble Bulletin: Updating Government Finance Quasi-Capitalism

I found my thoughts this week returning to Hyman Minsky, financial evolution and Capitalism. Updating my 2013 Government Finance Quasi-Capitalism thesis seemed overdue.
‘Minsky saw the evolution Capitalist finance as having developed in four stages: Commercial Capitalism, Finance Capitalism, Managerial Capitalism and Money Manager Capitalism. ‘These stages are related to what is financed and who does the proximate financing – the structure of relations among businesses, households, the government and finance’…’
Money Manager Capitalism: ‘The emergence of return and capital-gains-oriented block of managed money resulted in financial markets once again being a major influence in determining the performance of the economy… Unlike the earlier epoch of finance capitalism, the emphasis was not upon the capital development of the economy but rather upon the quick turn of the speculator, upon trading profits… A peculiar regime emerged in which the main business in the financial markets became far removed from the financing of the capital development of the country. Furthermore, the main purpose of those who controlled corporations was no longer making profits from production and trade but rather to assure that the liabilities of the corporations were fully priced in the financial market…’
Late in life (1993) Minsky wrote: ‘Today’s financial structure is more akin to Keynes’ characterization of the financial arrangements of advanced capitalism as a casino.’ More and more concerned by the proclivity of ‘Money Manager Capitalism’ to foment instability and crises prior to his death in 1996, Minsky would have been absolutely appalled by the late-nineties ‘Asian Tiger’ collapse, the Russia implosion, LTCM and the ‘tech’ Bubble fiasco. Minsky was no inflationist. His focus would have been to rectify the institutional and policy deficiencies that were responsible for progressively destructive mayhem.

This post was published at Wall Street Examiner on August 6, 2016.

Six Weeks In A Row – Rising Rig Count Pushes Oil Down

The US oil and gas rig count, as reported by Baker Hughes on Friday, was up one over last week, bringing the total number of oil and gas rigs to 464. The US oil rig count was up 7 from last week, while the gas rig count fell one, with miscellaneous rigs also losing a rig. Eagle Ford and the Permian saw the strongest rig count increases. Eagle ford was up 4 oil rigs, while The Permian added an additional 5 oil rigs.
The Barnett and Niobrara both lost one oil rig over the last week.
Although a total increase of one rig is fairly insignificant, and oil rig increase of seven – and an increase to the oil rig count for six straight weeks – may add further worries to an already shaky oil market.

This post was published at Alt-Market on 06 August 2016.

Meet IDI: The Company That Has “Weaponized” Profiles On Every American Adult

“Every move you make. Every click you take. Every game you play. Every place you stay. They’ll be watching you.”
If the government’s all-seeing eye was not worrying enough for the privacy-deprived American citizenry, ‘profiling’ has now gone mainstream as IDI, a year-old company in the so-called data-fusion business, is the first to centralize and weaponize all that information for its customers. As Bloomberg explains,
For more than a decade, professional snoops have been able to search troves of public and nonpublic records – known addresses, DMV records, photographs of a person’s car – and condense them into comprehensive reports costing as little as $10.
Now they can combine that information with the kinds of things marketers know about you, such as which politicians you donate to, what you spend on groceries, and whether it’s weird that you ate in last night, to create a portrait of your life and predict your behavior.

This post was published at Zero Hedge on Aug 6, 2016.