Fed Up Friday: Aug. 27 – Sept. 2

It’s been a week since Janet Yellen’s talk at Jackson Hole. Learn more about the aftermath and what’s to come in this week’s edition of Fed Up Friday.
New Job Numbers Bad News for Possible September Rate Hike
Employment numbers for August came in this morning, and, at just 151,000 newly added workers, they’re lower than many were hoping. The official unemployment rate remained at 4.9 percent. Average hourly earnings grew only 0.1 percent, bringing the 12-month increase in wages to 2.4 percent. The wage increase is said to be ahead of inflation, but that’s only if you consider the fuzzy consumer price index numbers the Fed uses to make their data dependent decisions. Gold prices jumped around $10 per oz at the news.
Recent Hawkish Fed Comments Aren’t Convincing Skeptical Investors
Evasive language and ambiguous proclamations from the Fed are starting to irritate many traders. Janet Yellen’s speech last week was more of the same as the chairwoman, yet again, speculated on the possibility of a September rate hike. The market’s initial reaction suggested investors saw a hawkish future, but the feelings didn’t last.

This post was published at Schiffgold on SEPTEMBER 2, 2016.

Investment Banks in Danger as Robots Winning Current War: BAML

Technology is moving to disrupt as many business models as it can and investment banks are not immune, an August 26 91 page Bank of America Merrill Lynch report points out. Banks in the European Union are struggling with different challenges than some of their US or Japanese counterparts. Inside banks, there are emerging approaches that differ from one bank to the next which can primarily be described based on how technology spending is categorized. It is this approach to managing the future and embracing or rejecting technology that could determine winners and losers in a segment beset by relatively low stock price-to-book value multiples.
Banks have been the only stock category trading below book value
In a stock market environment where banks are trading below book value – the only industry group to be doing so, as we have noted in ValueWalk – bank managers are searching for a solution. That solution could be found inside a powerful societal trend: eliminate humans and replace them with technology as the robots come for the jobs.
The major investment banks will not be the first in financial services to go down this path. It was the human trading floor that was first automated – most notably pushed aside by high-frequency trading. What resulted was a market structure where information traveled around the world in microseconds, the subject of a pitched battle at the Securities and Exchange Commission over the IEX Exchange. The next real battle that matters to banks is trading in SWAPs, which firms such as Citadel and Bloomberg are both looking to automate. Speed is one part of the technology-driven formula to reduce costs at major investment banks, but the exchange clearing systems typically also include the risk management benefit of the organization facilitating the trade not facing directional market risk.

This post was published at FinancialSense on 09/02/2016.

Since 2014 The US Has Added 520,000 Waiters And Bartenders And Lost 13,000 Manufacturing Workers

As another month passes, the great schism inside the American labor force get wider. We are referring to the unprecedented divergence between the total number of high-paying manufacturing jobs, and minimum-wage food service and drinking places jobs, aka waiters and bartenders. In August, according to the BLS, while the number of people employed by “food services and drinking places” rose by another 34,000, the US workforce lost another 14,000 manufacturing workers.

This post was published at Zero Hedge on Sep 2, 2016.

Asian Metals Market Update: Sep 2, 2016

Gold and silver will see another big crash if the US nonfarm payrolls numbers comes in over 230,000. On the contrary chances of a rise to $1434 will be high if the number comes in below 160,000 and without upward revisions to previous months. September’s FOMC is the last meeting where manipulations can be done to support Hillary Clinton. The only support which the Federal Reserve can do is to prevent the US stock markets from falling. I believe the Federal Reserve may not raise interest rates this month and will give a hawkish view on future interest rate hikes.
Physical demand for gold and silver in Asia should remain on the higher side today. Lots of sell positions are there. If gold and silver rise today then these sell positions will get converted into buys and there will be another bull rally. Gold and silver future investment demand will be dependent on price outlook.

This post was published at GoldSeek on 2 September 2016.

Fewest Stocks Traded In 32 Years – The Market Is Disappearing In One Giant Leveraged Buyout

The number of common stocks traded on major U. S. exchanges are the fewest in three decades.
As CNBC reports, “Currently, there are just 3,267 stocks in the University of Chicago’s CRSP data, and this is the lowest since 1984,” wrote longtime Jefferies equity strategist Steven DeSanctis.
What’s behind this phenomenon? DeSanctis explains:
“Between the lack of IPO activity, the pickup of M&A, and buybacks, the U. S. equity world is becoming smaller and smaller, and this could be one of many reasons why active managers are lagging behind their indexes. Companies may not want to come public due to the additional cost of Sarbanes-Oxley or the fact that the private market has become a bigger source of financing than it has been in the past.”
So whether it’s the total number of stocks or the amount of shares for each company outstanding, the stock market is shrinking.

This post was published at Zero Hedge on Sep 2, 2016.

Deutsche Bank Tries To Explain Why It Did Not Deliver Physical Gold, Fails

The unprecedented escalation involving Deutsche Bank’s failure to deliver physical gold on demand continues.
As we first reported two days ago, a client of Xetra-Gold, a German Exchange-Traded Commodity fund, tried to get access to the gold he had been promised under the Xetra-Gold prospectus, leading to much confusion about just where the failure to deliver had taken place, at Xetra or at the fund’s designated sponsor, and the client’s principal bank: Deutsche Bank.
Then, overnight, we presented the just as odd response provided by Deutsche Boerse where the ETC is traded, which sounded as if it was trying to pass the buck onto Deutsche Bank. This is what it said:
Deutsche Brse Commodities GmbH stresses that owners of Xetra Gold units can exercise their right to delivery of securitised gold at any time. The gold is delivered by the bank branch on which the investor has its securities account – on the condition that the branch offers this service, as the gold can only be delivered through the investor’s custodian bank.

This post was published at Zero Hedge on Sep 2, 2016.

“Tremendous Ripple Effects” – Retailers Demand Bailout After Hanjin Collapse Paralyzes Trade

When we first reported about the imminent paralysis of an unknown number of global supply chains and a potential shock in worldwide trade as a result of the historic bankruptcy of Hanjing Shipping, one of the world’s largest container shipping companies which handles 8% of Trans-Pacific trade volume for the US market, we concluded that “the global implications from the bankruptcy are unknown: if, as expected, the company’s ships remain “frozen” and inaccessible for weeks if not months, the impact on global supply chains will be devastating, potentially resulting in a cascading waterfall effect, whose impact on global economies could be severe as a result of the worldwide logistics chaos. The good news is that both economists and corporations around the globe, both those impacted and others, will now have yet another excuse on which to blame the “unexpected” slowdown in both profits and economic growth in the third quarter.”
However, not even this extreme forecast captured what would happen just 48 hours later, when as the WSJ reported overnight, retailers have gone far beyond simply blaming the Hanjing bankruptcy for their upcoming woes: they are petitioning for a government bailout, or as the WSJ put it, they are “bracing for a blow as they stock up for the crucial holiday sales season, asked the government to step in and help resolve a growing crisis.”
Or, as America’s banks would call it, “get bailed out.” And, in taking a page right out of the 2008 bank bailout, the doom and gloom scenarios emerge:
‘While the situation is still developing, the prospect of harm is significant and apparent,’ Sandra Kennedy, president of the Retail Industry Leaders Association, wrote in a letter to the Department of Commerce and the Federal Maritime Commission. Hanjin’s recent bankruptcy filing ‘presents an enormous challenge to U. S. shippers,’ she said, and ‘could have a substantial impact on consumers and the economy at large.’

This post was published at Zero Hedge on Sep 2, 2016.

Gold and Silver Market Morning: Sep-2-2016 — Gold and silver consolidating above $1,300!

Gold Today -Gold closed in New York at $1,313.30 on Thursday after Wednesday’s close at $1,308.30. London opened at $1,310.
– The $: was weaker at $1.1182 down from $1.1134 yesterday.
– The dollar index was weaker at 95.79 from 96.11 yesterday.
– The Yen was almost unchanged at 103.57 from yesterday’s 103.55 against the dollar.
– The Yuan was slightly weaker at 6.6823 from 6.6801 yesterday.
– The Pound Sterling was stronger at $1.3267 from yesterday’s $1.3140.
Yuan Gold Fix
After New York pulled up from its lows around $1,305 to $1,313 Shanghai stabilized too, following New York, as did London.
The Yuan weakened against the dollar while the dollar weakened against other currencies. It was a day when the U. S. began to wind down ahead of the long weekend.
LBMA price setting: The LBMA gold price setting on Friday was at$1,311.50. On Thursday it was at set at $1,305.70.
The gold price in the euro was set on Friday at 1,172.34 up slightly onThursday’s 1,171.45.

This post was published at GoldSeek on 2 September 2016.

Reuters Floats Disturbing Trial Balloon: “The ECB May Be Forced To Buy Stocks”

Over the past two years, we have repeatedly cautioned that the biggest challenge facing the ECB as it expands its bond monetization is the ability to find sellers of private securities, i.e., a shortage of monetizable bonds, both government and now corporate. LastMarch, even JPM warned that it doubts the Eurosystem can “meet its quantitative target without distorting market liquidity and price discovery.” That however has not stopped Mario Draghi from steadfastly continuing the ECB’s QE, even as the bond shortage has gotten more acute by the week. In fact, according to Jefferies analysts, the shortage is now so profound that the ECB is effectively buying back bonds from itself.
According to a note by Marchel Alexandrovich and David Owen, first flagged by the WSJ, courtesy of the circular nature of the Eurosystem, the central bank has masked what is essentially a backdoor monetization of its own securities.
How does Draghi achieve this? As the WSJ notes, the ECB’s QE program is implemented through several national central banks, like Germany’s Bundesbank and Spain’s Banco de Espana. National central banks buy bonds according to rules set by the ECB. The problem is that these constraints narrow the stock of debt the banks can buy from. These rules prevent the purchase of too much debt from any one country and stop central banks from buying debt with steeply negative yields. Portuguese and Irish debt, for instance, is now becoming scarce. But the national central banks also sell sovereign bonds. They sometimes reduce their holdings as a part of their reserve management activities, which aim to ensure that banks, state institutions and other organizations ‘manage their euro-denominated reserve assets comprehensively, efficiently, and in a safe, confidential and reliable environment,’ according to the ECB’s website.

This post was published at Zero Hedge on Sep 2, 2016.

Socialism Has Destroyed the Social Structure

Once upon a time, couples would have three to five children for that was their retirement. Family was everything. Then came Marx who effectively replaced the family with politicians. The family structure has declined steadily since the introduction of socialism. Children no longer save to take care of their parents for that is government’s job.
While some still tout that we are becoming over-populated, the number of children has been dropping remarkably. In China they implemented the one-child rule. That resulted in couples only wanting boys to carry on the family name. But daughters are typically those who take care of their parents zealously. China passed rules that the only child had to visit their parents. Now, the government is stepping in again and reducing the credit of adult children who do not visit their parents.

This post was published at Armstrong Economics on Sep 2, 2016.

What Janet Yellen Must Know but Can’t Say

Policy wonks billed Fed Chair Janet Yellen’s recent remarks from Jackson Hole, Wyoming, as ‘one of the single most important speeches’ she’ll give all year.
Traders yawned because they already know the answer to the one question that no politician dares to ask.
Now you will, too.
An Insult to Every Investor
I delivered a keynote speech several years ago in Bermuda to a gathering of reinsurance executives, corporate officers, and prominent financiers responsible for hundreds of billions of dollars around the world.
And, as part of that, I spoke about both the 2008-2009 financial crisis and the opportunities it would create – things we’re still tracking profitably today.
Trending: How the Fed Buried Our Future at Jackson Hole
Shortly after I’d finished, I received one of the bluntest questions in a long time from deep within the room well beyond the stage lights:
‘Does any nation really need a Fed?’
You may be wondering the same thing now following Janet Yellen’s most recent remarks in Jackson Hole.
The answer is still ‘no.’
The Fed is an abomination, and the American Federal Reserve in particular is an insult to every investor who believes in capitalism, economic progress, and political freedom.

This post was published at Wall Street Examiner on September 1, 2016.

IMF Gold Sales – Where ‘Transparency’ means ‘Secrecy’

IMF Gold Sales – Where ‘Transparency’ means ‘Secrecy’
Welcome to the twilight zone of IMF gold sales, where transparency really means secrecy, where on-market is off-market, and where IMF gold sales documents remain indefinitely ‘classified’ and out of public view due to the ‘sensitivity of the subject matter’.
Off and On Market
Between October 2009 and December 2010, the International Monetary Fund (IMF) claims to have sold a total of 403.3 tonnes of gold at market prices using a combination of ‘off-market’ sales and ‘on-market’ sales. ‘Off-market’ gold sales are gold sales to either central banks or other official sector gold holders that are executed directly between the parties, facilitated by an intermediary. For now, we will park the definition of ‘on-market’ gold sales, since as you will see below, IMF ‘on-market’ gold sales in reality are nothing like the wording used to describe them. In total, this 403.3 tonnes of gold was purportedly sold so as to boost IMF financing arrangements as well as to facilitate IMF concessional lending to the world’s poorest countries. As per its Articles of Agreement, IMF gold sales have to be executed at market prices.
Critically, the IMF claimed on numerous occasions before, during and after this 15-month sales period that its gold sales process would be ‘Transparent’. In fact, the concept of transparency was wheeled out by the IMF so often in reference to these gold sales, that it became something of a mantra. As we will see below, there was and is nothing transparent about the IMF’s gold sales process, but most importantly, the IMF blocked and continues to block access to crucial IMF board documents and papers that would provide some level of transparency about these gold sales.

This post was published at Bullion Star on 2 Sep 2016.

Why You Should Enroll In The Chartered Central Bank Watcher (CCBW) Program

Has the financial world stopped making sense to you? Frustrated by markets that go up day after day (or at least in the last 30-minutes of trading) under seemingly overvalued fundamentals? Confused by conflicting opinions from central bank governors? Tired of being misled by the Fed’s continuing threat of rising interest rates? Does buying up negative-interest-rate bonds seem like an idiotic task? Well not when you have central banks involved, so stop your whining about ‘fairness’ and ‘fundamentals’ and get on board the liquidity train by enrolling in my Chartered Central Bank Watcher (CCBW) program.
By obtaining your CCBW designation you can finally get relief from the arduous task of thinking and put aside those fears regarding moral hazard. CCBW’s will have the edge, as they follow the CB’s around the globe as they buy up $200 billion in financial assets monthly without breaking a sweat. Who needs hundreds of silly technical charts when you can just focus on one graph showing the mounting supply of central bank assets.

This post was published at Zero Hedge on Sep 2, 2016.

The Fed’s interest rate conundrum

Two weeks ago I pointed out that the Fed is seemingly unaware of early signs of price inflation.
You can read the article here. The Fed is clearly ignoring the coincidental rise in USD LIBOR and the growth in bank lending, and is still prevaricating over interest rates, despite its full employment and price inflation conditions more or less being met.
My earlier article was an economic analysis. The purpose of this article is to point out other factors that impede a return to interest rate and monetary normality, and it concludes that a rise in US interest rates would probably be accompanied by more quantitative easing, perhaps on a discretionary basis.
Secular stagnation and bond markets
Increasingly, economists are describing lack of economic growth as secular stagnation, a term of which we will hear more, implying that the free market is at fault for failing to respond to monetary stimulation. They ignore the fact that the private sector’s entrepreneurial qualities are being crushed by a lethal combination of overregulation and unsound money. They ignore the fact that capital reallocation from malinvestments to productive investment has all but ceased as a result of too-big-to-fail policies. To even consider these explanations would put the macroeconomic clock back to the abandonment of Say’s law, and no central planner is going to do that.
Instead, having latched onto secular stagnation as a condition to be addressed, there is a powerful argument being pushed by the doves that tightening monetary policy will be counterproductive, and the concept of interest normality needs to be readjusted downwards. Alternatively, the hawks are worried that zero and negative interest rates are not normal, and with employment and inflation targets broadly satisfied, rates should be raised sooner rather than later.
Which side wins the argument remains to be seen, but the most obvious problem facing the FOMC, if it raises interest rates, is the danger of triggering a bond bear market, not just in the US, but globally. We are told by the people who add these things up that there are now about $13 trillion of bonds on negative yields. Globally, bond markets are without doubt more overvalued than they have ever been, and while the Fed’s policies have contributed to the bond bubble, the main culprits are the Bank of Japan, the ECB, and they are now joined by the Bank of England. Three out of four top central banks are aggressively attempting to inflate their monetary conditions through unprecedented interest rate suppressions and quantitative easing.

This post was published at GoldMoney on SEPTEMBER 01, 2016.

The End of the Silver Correction

After nearly three months of moving sideways since July 4th, silver is near the end of its correction and ready to move on. The chart below shows that a classic flat wave has panned out and is now either ended or very close to it.

The ABC of a flat wave is a common Elliott Wave pattern characterized by an initial zigzag wave down (our ‘A’ wave) followed by a similar but upward B wave rally. The move inevitably closes with an impulse C wave which tends to finish lower than where the A wave finished (here at $19.20).

This post was published at SilverSeek on September 2, 2016 –.

America You Need To Lose Weight: At Least 1 Out Of Every 5 People Are Obese In All 50 States

The United States officially has an obesity crisis. According to a brand new report that was just released by the Trust for America’s Health, at least one out of every five people meet the clinical definition for obesity in all 50 states. But of course in some states things are far worse than that. More than 35 percent of all adults are obese in four states, and the obesity rate is between 30 and 35 percent in 21 other states. And it is important to keep in mind that just needing to lose weight does not mean that you are obese. According to the CDC, you have got to have a body mass index of at least 30.0 to meet the clinical definition for obesity.
Each year, the American people spend 60 billion dollars on weight loss programs and products. That breaks down to about 188 dollars for every man, woman and child in the country. We are a nation that is absolutely obsessed with losing weight, and yet obesity levels are hovering near all-time record highs.
But some parts of the U. S. are definitely doing better than others. The following is an excerpt that comes directly from the new report…
In 2015, Louisiana has the highest adult obesity rate at 36.2 percent and Colorado has the lowest at 20.2 percent. While rates remained steady for most states, they are still high across the board. The 13th annual report found that rates of obesity now exceed 35 percent in four states, are at or above 30 percent in 25 states and are above 20 percent in all states. In 1991, no state had a rate above 20 percent.

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

The Most Troubling News For The Fed In Today’s Jobs Report

While the Fed will surely be displeased that after two ~275K prints in a row, the US labor market stalled again by nearly 50%, with August payrolls rising only by 151K, what Yellen will be most focused on is not the number of jobs, but rather the wage growth, or more specifically the lack thereof. As we noted earlier, on an average hourly basis, in August wages rose only by 0.1%, below the 0.2% Wall Street hoped for, and the lowest monthly increase since February.
As usual, however, hourly wages gave only half the story, because the US economy is a product of aggregate hours and wages, and it was here that a major problem emerged. As the chart below shows, when looking at the largest private sector grouping of US payrolls, the total production and non-supervisory workers which amount to roughly 83% of the entire workforce, the aggregate hours worked rose just 1.1% over the past 12 month, the lowest increase since July 2010.
And the flipside to this was that average weekly earnings for all employees not only declined from $884.08 to $882.54 over the past month (with weekly earnings for production and non-supervisory workers likewise declining from $727.92 to $727.10), but that on an annual basis, the 1.5% increase was the worst print in 32 months.

This post was published at Zero Hedge on Sep 2, 2016.

Goldman Says Weak Payrolls “Just Enough For September Hike”, Raises Odds From 40% To 55%

The market may have given up on a September rate hike, as odds plunged from 36% to 22% after today’s payrolls report, with even December looking suddenly shaky…
… but according to Goldman, the jobs report was nonetheless strong enough to justify a September rate hike.
As Jan Hatzius wrote moments ago, employment growth was weaker than expected in August, but more importantly above the Fed’s estimates of the breakeven rate. As a result, Goldman now sees a 55% probability of a hike at the September FOMC meeting, likely with dovish changes to the statement and dot plot. However even with the September rate hike, the Fed would be one and done for 2016, as Goldman now sees December odds tumbling from 40% to 25%, leaving the cumulative odds for just one rate hike in 2016 at 80%.

This post was published at Zero Hedge on Sep 2, 2016.

WTF Chart Of The Day: US Factory Orders Tumble For Longest Streak In History

21 Months… US Factory Orders have decline year-over-year every month since October 2014 (the end of QE3). This is the longest period of decline in US history (since 1956) and has always indicated the US economy is in recession…
While headlines will crow of 1.9% MoM gain (which missed expectations of a 2.0% rise), the trend is simply ugly – Year-over-year Factory Orders fell 3.5%
As Bloomberg also notes, there’s one key takeaway from the Commerce Department’s report Friday on U. S. factory orders. The value of unfilled orders dropped in July to the lowest level in two years, indicating producers are having an easier time meeting demand.

This post was published at Zero Hedge on Sep 2, 2016.

Why September May Be Key for the Long-Term Outlook on Stocks

We just spoke with technician Erin Heim of Stockscharts.com on our podcast to get her outlook on US stocks, gold, oil, and the US dollar. Erin outlined why she is currently neutral to bearish on most of the broad US stock market indices but then went on to say something that many may find unthinkable: ‘It’s not out of the question that we are beginning a new bull market.’
This is a bit hard to believe when we consider the Everything Bubble chart or even the fact that earnings and stock prices have clearly started to diverge for over a year now.
However, when we examine the technical picture of the market via the long-term MACD (Moving Average Convergence/Divergence) oscillator – one of the most popular indicators used in technical analysis – it is very close to forming a long-term bullish crossover (or ‘buy signal’ as technicians will sometimes say) on the S&P 500 similar to what we saw in 2003 and 2009.

This post was published at FinancialSense on 09/01/2016.