“Get Ya Popcorn Ready” RBC Says: “Markets Are Paralyzed With Uncertainty” As “Spook Story” Arrives

In a post that in retrospect was timed perfectly, yesterday we first warned that the BOJ may be about to unleash a bond “VaR shock”, one that would promptly lead to a global asset contagion, as a result of Kuroda’s surprising eagerness to steepen the yield curve, a move which would lead to an accelerated selling of the long end first in Japan, then across the entire world where some $13 trillion in bonds trade at negative yields. We also explained how “with cross asset correlation soaring, not to mention with risk-party and CTA funds approaching record leverage, the risk is that investors frontrunning a perceived change in the BOJ’s policy in two weeks time could lead to a dramatic selloff in JGBs, which then spreads across to global fixed income markets, all of which trade like connected vessels.”
The warning did not stop there: as we explained previously, in early June, Goldman warned that a sharp 1% spike in rates across the curve in the US alone, would result in MTM losses of $2.4 trillion. That excludes the crossover impact into stocks, as a selloff in bonds
leads to a correlated liquidation across equities, as a result of record leverage for Risk-Parity and other quant funds…
… for whom coordinated selling in both asset classes could lead to dramatic deleveraging, and a positive feedback loop of even more selling.

This post was published at Zero Hedge on Sep 9, 2016.

Could This Bull Market End Up Rivaling the Tech Bubble? This Strategist Thinks So – Here’s Why

Brian Reynolds, Chief Market Strategist at New Albion Partners, argues that the current credit-led bull market in the US will likely last for several more years, even outpacing the 1990s bull market culminating in the tech bubble, as severely underfunded pension funds are forced into corporate debt and equity to meet their return requirements. Even though Brian thinks this will ultimately drive the US stock market much higher, he does not think it will end well and refers to this process as a “daisy chain of financial engineering.”
Here’s a portion of his recent podcast interview with Financial Sense where he also provides his outlook on where the next bubble is likely to concentrate, how it will end, and what investors should pay attention to for monitoring how this will unfold in coming years.
Brian, you discuss three very important themes when it comes to understanding the credit boom and bust cycle, particularly as we see it playing out currently here in the US. Let’s talk about the first theme that you highlight driving US markets today and which you say could even possibly rival what we saw in the 1990s leading up to the tech bubble.
“Well, I think it’s not only going to rival the 1990s, I think it’s going to exceed it because our nation’s public pension funds have grown to the point where they dwarf the Federal Reserve. Since Detroit went bankrupt in 2012 those pensions have realized that they are underfunded and their current and future retirees are on the hook for any shortfall so across this country in the last four to five years, every major state has either thought about raising taxes or has raised taxes to bring more money into our pension system; and that money is being allocated to our credit market so instead of worrying about if it’s going to end, it’s actually more likely to intensify in the next two to three years.”

This post was published at FinancialSense on 09/08/2016.

Ted Butler Quote of the Day 09-09-16

While this was the largest weekly reduction in the gold commercial headline number in 14 weeks (since May 24), it is important to recognize that any reading around 300,000 contracts net short is historically extreme and typically bearish. That’s where we’ve been for more than two months. Therefore, it’s closer to the truth to say we’ve been in a broad trading range in price and in a market structure historically extreme over that time in both gold and silver.

And while the concentrated short position of the 4 largest gold traders is down this week, even more astounding is that the big 5 thru 8 position is also down big again. From July 12, the net short position of the big 5 thru 8 is down from over 100,000 contracts to under 65,000 contracts this week. Against that record drop, the big 4 in gold have increased their net short position by 14,000 contracts, a necessary consequence of preventing a gold price explosion. Not only does this reconfirm the failure of a big 5 thru 8 gold trader, it represents a remarkable level of concentration on the short side of COMEX gold, despite this week’s reduction in big 4 shorting.

Here we have the total commercial gold net short position at a historically extreme 300,000 contracts, with more than 202,000 of those contracts held short by only 4 traders. The math should jump out at you – two-thirds of the historically extreme COMEX commercial net short position in gold is held by only four traders. The COMEX is the world’s largest gold exchange and as such would be thought to be comprised of many thousands of participants. How is it possible that only 4 traders can hold two-thirds of the entire commercial net short position? Is there no level of market concentration that is too much for the regulators, short of one trader holding 100% of one side of a market?

A small excerpt from Ted Butler’s subscription letter on 03 September 2016.

  More precious metals news & information available at
Ed Steer’s Gold & Silver Digest.

Global Stocks Slide As Bond Curves Steepen On Central Bank Concerns; Oil Falls

Yesterday we asked if the stealthy Japanese intention to steepen the JGB yield curve will crash global markets. While a crash, if any, has yet to emerge, overnight we have observed another bond selloffs, particularly at the long end of the curve, which has spilled over into stocks around the world on what Bloomberg dubbed were “signs central banks are starting to question the benefits of further monetary easing.” Oil pared a weekly gain, leading commodities lower.
As predicted yesterday, today longer-maturity bonds bore the brunt of the losses after the European Central Bank on Thursday downplayed the need for more stimulus, sending 30-year German bund yields to the highest since June, while Reuters added that “The Bank of Japan is studying several options to steepen the bond yield curve, say sources familiar with its thinking, as authorities desperately seek out policy tools to revive an economy that has failed to emerge from stagnation despite years of massive stimulus.”
As shown in the chart below, both Japan and German long-term yields are almost back to positive…

This post was published at Zero Hedge on Sep 9, 2016.

A Look at Energy – Oil and Gold

Oil and energy stocks have a bit further to rally but I do not expect either to get very far before the next daily cycle low comes due. This video will show you the likely trajectory of future price performance in the energy markets over the next several weeks.

This post was published at GoldSeek on Friday, 9 September 2016.

“This Is A Big, Big Moment” – Gundlach Warns Yellen May Surprise Markets

In his latest webcast to DoubleLine investors and the general public, the “new bond king” Jeffrey Gundlach, who had taken a one month sabbatical from public appearances after warning (hyperbolically as he explained yesterday) to “Sell Everything, Nothing Here Looks Good“, said that the Fed is determined to show it is independent from market forces, and may hike rates even as investors bet they will not.
As a result, Gundlach said it’s time for fixed-income investors to prepare for rising rates and higher inflation by reducing the duration of their positions, moving money into cash and protecting against volatility. In his presentation titled appropriately “Turning Points” (presented below) Gundlach said that ‘this is a big, big moment,’ predicting that ‘interest rates have bottomed. They may not rise in the near term as I’ve talked about for years. But I think it’s the beginning of something and you’re supposed to be defensive.’
“They want to show that they are not guided by the markets,” Gundlach told Reuters in a telephone interview following the DoubleLine webcast. “The Fed wants to show, at some point, that they can’t be replaced by WIRP (World Interest Rate Probability). The only way they can do that is to tighten when WIRP is below 50.”
However, by trying to prove its independence from the WIRP, the Fed might be “blowing itself up,” Gundlach warned. The Fed will not hike in September if the WIRP is below 40 and the S&P 500 is below 2150, he said on the webcast, which we assume means that the market is in control after all.

This post was published at Zero Hedge on Sep 9, 2016.

Gold, Silver, Blockchain and Fintech – Solutions To Negative Rates, Bail-ins, Cash Confiscations and Cashless Society

I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.
As some of you may know, in a previous life I wrote a lot about gold and silver. I took the perspective of someone who was new and curious to the precious metals. I wanted to know more than just how the Fed announcements affected the prices, why demand and supply weren’t enough to predict movements and why history didn’t seem to have taught us any lessons.
After 3 years I stepped away as, to be honest, I was bored. Not of gold and silver but of the narrative, it didn’t seem to be changing and keeping up-to-date with what was happening in other areas of investment and changes in the financial arena.
I spent the next two years broadening my knowledge base, working with startups in the trendy world of fintech and speaking to people about that buzzword ‘blockchain’.

This post was published at Gold Core on September 9, 2016.

Explaining the moves in the gold price

If you read some gold-focused web sites you could come away with the belief that movements in the gold price are almost completely random, depending more on the whims/abilities of evil manipulators and the news of the day than on genuine fundamental drivers. The following two charts can be viewed as cures for this wrongheaded belief.
The first chart compares the performance of the US$ gold price with the performance of the bond/dollar ratio (the T-Bond price divided by the Dollar Index). The charts are almost identical, which means that the gold price has been moving in line with a quantity that takes into account changes in interest rates, inflation expectations and currency exchange rates. The second chart shows that the US$ gold price has had a strong positive correlation with the Yen/US$ exchange rate. As we’ve explained in the past, gold tends to have a stronger relationship with the Yen than with any other currency because the Yen carry trade makes the Yen behave like a safe haven.

This post was published at GoldSeek on 9 September 2016.

Major Problems Announced At One Of The Largest Too Big To Fail Banks In The United States

Do you remember when our politicians promised to do something about the ‘too big to fail’ banks? Well, they didn’t, and now the chickens are coming home to roost. On Thursday, it was announced that one of those ‘too big to fail’ banks, Wells Fargo, has been slapped with 185 million dollars in penalties. It turns out that for years their employees had been opening millions of bank and credit card accounts for customers without even telling them. The goal was to meet sales goals, and customers were hit by surprise fees that they never intended to pay. Some employees actually created false email addresses and false PIN numbers to sign customers up for accounts. It was fraud on a scale that is hard to imagine, and now Wells Fargo finds itself embroiled in a major crisis.
There are six banks in America that basically dwarf all of the other banks – JPMorgan Chase, Citibank, Bank of America, Wells Fargo, Morgan Stanley and Goldman Sachs. If a single one of those banks were to fail, it would be a catastrophe of unprecedented proportions for our financial system. So we need these banks to be healthy and running well. That is why what we just learned about Wells Fargo is so concerning…
Employees of Wells Fargo (WFC) boosted sales figures by covertly opening the accounts and funding them by transferring money from customers’ authorized accounts without permission, the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency and Los Angeles city officials said.
An analysis by the San Francisco-headquartered bank found that its employees opened more than two million deposit and credit card accounts that may not have been authorized by consumers, the officials said. Many of the transfers ran up fees or other charges for the customers, even as they helped employees make incentive goals.

This post was published at The Economic Collapse Blog on September 8th, 2016.

This Sentiment Reading Is Not Like The Others

Options data from the International Securities Exchange does not corroborate the frothy readings seen in most other sentiment measures.
We’ve mentioned several times in several different outlets that perhaps our biggest concern regarding the equity market presently is overheated sentiment. From professional active money managers to volatility traders to traders in bearish ETF’s and mutual funds, sentiment readings are registering either severe complacency or downright bullishness. This nearly unanimous optimism is what has us concerned.
And then there’s the equity options trading on the International Securities Exchange (ISEE).
Just when you start to think this stock ‘game’ is easy, you wake up and realize that the market’s ducks are never all in a row. There is always something, or a few things, that don’t fit with the rest of the data – or one’s analytical narrative. Such is the case with the ISEE. That is because, using a 21-day moving average, the ISEE Call/Put ratio is at its lowest level since its inception in 2006 – as in, ever. In other words, in 10 years there has never been a 21-day stretch that saw fewer calls purchased relative to puts.

This post was published at Zero Hedge on Sep 9, 2016.

Global Financial Market Volatility Crashes, China Warns “‘National Team’ Deeply Involved”

Price swings in financial markets have become increasingly muted as investors mull the outlook for monetary policy in the world’s biggest economies, but with a little turbulence starting to creep into markets, this record-breaking collapse in risk perceptions (and record levels of leveraged speculation) is a recipe for disaster.
As Bloomberg details, The Bank of America Merrill Lynch GFSI Market Risk Index, a measure of future price swings implied by options trading on global equities, interest rates, currencies and commodities, fell this week to itslowest level since Dec 2015…
Different asset classes are influencing one another by the most since at least 2008, according to a Credit Suisse Group AG gauge known as the cross-market contagion indicator that tracks price relationships in equities, credit, currencies and commodities.
‘With the Federal Reserve and Bank of Japan meetings ahead of us, investors can’t make any out-sized moves before the major events are over,’ said Takashi Hiroki, chief strategist at Monex Securities in Tokyo. ‘We have a lack of reasons to move, and have been seeing a directionless market for some time.’ The torpor in stock markets is going global. A gauge of volatility in global equities has dropped to levels last seen two years ago..

This post was published at Zero Hedge on Sep 9, 2016.

Zimbabwe: The Industrial Revolution in Reverse — Nick Giambruno

Cecil Rhodes once fantasized about the ‘ultimate recovery of the United States of America’ by the British Empire.
Rhodes – an influential British businessman and South African politician – was a staunch supporter of British imperialism. The famous Rhodes scholarship is named after him.
He helped colonize southern Africa on behalf of the U.K. in the late 1800s.
The country of Rhodesia (now Zimbabwe) was named after him.
During his childhood, Rhodes was plagued with various illnesses. Hoping a different climate might improve his health, his family sent him to South Africa with his brother at the age of 17 to work on a cotton farm.
Almost immediately, the brothers caught ‘diamond fever,’ which had been sweeping the region. They found the diamond business much more lucrative than cotton.

This post was published at International Man

German Industrial Output Unexpectedly Falls Most Since 2014

German industrial production fell by the most in almost two years in July as manufacturing suffered from subdued global trade.
Production, adjusted for seasonal swings, fell 1.5 percent from the previous month, when it rose a revised 1.1 percent, data from the Economy Ministry in Berlin showed on Wednesday. That’s the lowest since August 2014. The reading, which is typically volatile, compares with a median estimate for a 0.1 percent gain in a Bloomberg survey. Output was down 1.2 percent from a year earlier.
The figures join a slew of data released since the U.K.’s vote to leave the European Union that suggest the outlook for the German economy has weakened. A gauge for private-sector activity fell to the lowest level in 15 months in August and several of the country’s biggest corporations have expressed their concerns over a slowdown in orders. Meanwhile, the Bundesbank reiterated in its last monthly report that growth should pick up in the current quarter.
‘The German industry seems to suffer from weaker activity in China, struggling euro-zone peers and a general shift away from manufacturing toward services,’ said Carsten Brzeski, chief economist at ING-Diba AG in Frankfurt. ‘With this in mind, chances remain low that the former backbone of the German economy will quickly return to its old strength.’

This post was published at bloomberg

Panama Papers: Denmark buys leaked data to use in tax evasion inquiries

Denmark has become the first country in the world to apparently buy data from the Panama Papers leak, and now plans to investigate whether 500-600 Danes who feature in the offshore archive may have evaded tax.
Denmark’s tax minister, Karsten Lauritzen, said he will pay up to DKK9m (1m) for the information, which comes from the Panamanian law firm Mossack Fonseca. He said an anonymous source approached the Danish government over the summer.
The source sent over an initial sample of documents and the government reviewed them. After concluding they were genuine, it secretly negotiated support for the controversial deal from political parties in parliament, the minister said.
‘Everything suggests that it is useful information. We owe it to all Danish taxpayers who faithfully pay their taxes,’ Lauritzen said, admitting that he had originally been ‘very wary’. He added: ‘The material contains relevant and valid information about several hundred Danish taxpayers.’

This post was published at The Guardian

Japan’s demand for “seamless Brexit” is a timely warning against hubris — Ambrose Evans Pritchard

Britain is likely to scrape by without any economic contraction this quarter and seems almost certain to avoid a recession this year. Few could have hoped that the immediate Brexit squall would blow over so quickly.
The record one-month jump in services activity in August clinches a spate of remarkably resilient figures, more or less neutralizing the cascade of crashing indexes in July.
Markit’s combined gauge of services and manufacturing is back up to 53.6. This is higher than it was before the referendum vote, and higher than it is currently in the eurozone, where Schadenfreude has proved short-lived. It is no longer implausible to suggest that the U.K. economy might outperform the eurozone this quarter, and nor should this be a great surprise.
The 12pc drop in sterling against the euro – compared to its trading range earlier this year – is a macro-economic stimulus for Britain. It is a form of macro-economic tightening for the eurozone, creating an extra headwind as it struggles to break out of a deflation trap.

This post was published at The Telegraph

The Coming Dollar Rally – Chaos in Europe

Margaret Thatcher was spot on when she warned that Britain would not join the Euro for the covert maneuvers behind the scenes was to create the federalization of Europe – their real dream to be the United States of Europe. Thatcher was betrayed by her own cabinet because some members also were dreaming to federalize Europe.
Most people have no idea that the idea of creating the euro actually took place back in 1985 and was proposed as well as supported by the the United States. The idea was put forth at the Plaza Accord when the birth of the G5 was established. The idea was that the dollar was too high and that its strength was because it had emerged as the only major world currency. The idea was born that if Europe created a single currency, there would be a rival to the dollar. This was really hatched in France. Germany saw this as a means to an end to expand its own exports throughout Europe by eliminating the currency risk for its manufacture base. Make no mistake, the United States wanted a strong euro to reduce the US trade deficit. The participating countries were USA, Germany, France, Britain, and Japan.

This post was published at Armstrong Economics on Sep 9, 2016.

Mapping The World’s Central Banks

“Don’t just do something, stand there (and say something),” appears to be the mantra for the world’s central banks at the moment as $200bn of QE is puked across global asset markets every month and everyone promising to do more of what they started (Fed hikes and BoJ, ECB asset purchasing).
As Deutsche Bank explains, a dovish stance persists with most central banks in “wait-and-see” mode…
Which is no surprise, as global growth is expected to fall to its slowest pace post-crisis in 2016, following broad-based downgrades throughout this year..

This post was published at Zero Hedge on Sep 9, 2016.

Dealing Desk: Precious Metals Reclaim Strength

This week, clients have been net buying gold and silver, taking advantage of the lower prices due to the FOMC announcement last Friday. Week on week, we have continued to see a high volume of orders including higher value orders. Goldmoney Wealth’s clients have favoured the London, Swiss, and Singapore vaults this week with less preference being shown for the Hong Kong and Canadian vaults.
Kelly-Ann Kearsey, Dealing Manager at Goldmoney Wealth said that this week has seen precious metals reclaim some of their previous losses due to disappointing US economic data such as the US non-manufacturing new orders, which fell to its lowest since 2013, together with a weaker US Dollar. On Tuesday, gold and silver prices surged with both gold and silver reaching a three-week high as the dollar index slipped down 1.1% to a two-week low.

This post was published at GoldMoney on SEPTEMBER 08, 2016.

Dell-EMC to Lay Off 2,000 – 3,000 US Workers after Requesting 5,000 H-1B Visas & Green Cards to Import Foreign Workers

Trying to find efficiencies and synergies to save $1.7 billion. The ink was barely dry on Dell’s acquisition of EMC, the largest technology deal ever, valued at $67 billion when it was announced in October last year – and already the layoff rumors are oozing from the woodwork.
‘People familiar with the company’s plans’ told Bloomberg that Dell will cut 2,000 to 3,000 jobs.
Dell spokesman Dave Farmer refused to comment specifically on the report on Thursday but said instead, as sort of a confirmation: ‘As is common with deals of this size, there will be some overlaps we will need to manage and where some employee reduction will occur.’
On Wednesday, the day the deal closed, CEO Michael Dell gave some clues in an interview: ‘There are some overlapping functions and that sort of thing – that’s not the primary feature of this, but there is some of that.’
These ‘overlaps’ or ‘overlapping functions’ are terms in corporate speak for real people, and these real people are mostly working in the US, according to the report: supply chain, marketing, and general and administrative positions.

This post was published at Wolf Street on September 9, 2016.