A Day Of Reckoning

A day of reckoning approaches – even the oligarchs know this – and it’s coming closer faster every day. No, I’m not playing with words here, or your sensibilities. However, because our situation has been in hyper-bloat for so long now, essentially measured by stock market lows in 2009, this statement is simple fact. A day of reckoning approaches – and it’s coming closer faster every day. It’s that simple, whether you want to face up to this inevitability or not. And it will arrive for all the reasons we discuss on these pages every week, some of which, the important ones, we will discuss here again today.
As regular readers would know, long ago we sounded in on the inevitability of a profound decentralization process, countering still omnipresent ‘Globalization’ plans on the part of the world’s elites, now accelerating in sympathy with increasingly destabilizing economies as central planning continues to destroy the global economy, impoverish increasing numbers, and exacerbate wealth / income inequalities. So make no mistake – process continues to accelerate in this regard – where the economy / markets are disintegrating even though a thin veneer of normalcy is still being maintained in ‘price stability’, a situation that should look quite different next year.
Next year is another year ending in ‘7’ that should go down in history as a pivot point back towards the volatility that more accurately reflects the vulgarities associated with the human experience – and our flagrant disregard for the ‘seven deadly sins’. The markets / economy are being supported by the status quo’s desire to maintain stability prior to the US Presidential election this fall, because they are especially worried about being displaced by a popular vote that brings in radical change, if that is truly what Donald Trump represents. Because globalists will put the heat on Trump if he wins – and embedded bureaucrats will back them up logistically.

This post was published at GoldSeek on Monday, 12 September 2016.

Calling an Economic Audible

Dear Friends,
Now is the time I would normally be sending you Thoughts from the Frontline, but this week I’m calling an audible. Rather than leave you wondering, I’m sending this short note to explain the new game plan.
I’ve spent the last few days working on what I think will be one of my most important newsletters ever. The more I researched and wrote, the more concerned I got at the direction our monetary and political authorities want to take us. The words I wrote led me to conclusions I could not believe.
Trying to prove myself wrong, I’ve spent hours on the phone and in person with some of my best sources. They think I’m right – which doesn’t make me feel any better.
The long and short of it is, our central bankers have set themselves up as the high priests of an economic religion. They hold certain doctrines on faith, and nothing will shake that faith. That’s the same impulse that drove ancient religious leaders to ‘policy decisions’ like human sacrifice. The gods demand it, so it must be done. Too bad for all the victims.

This post was published at Mauldin Economics on SEPTEMBER 11, 2016.

Key Events In The Coming “Fed Blackout” Week

The spotlight turns to US data and Fed speakers ahead of the Fed blackout period this week. The BoE and SNB meet to decide policy but consensus expect no change from either. Elsewhere we get inflation data from the US, UK, Sweden & EZ (F), Q2 GDP from NZ & SW and labor market data from the UK & AU.
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Starting with the economic data, it’s a super quiet start to the week today outside of the Fed speak detailed below with no real significant data due to be released.
Tomorrow kicks off in China where the August data dump is due including retail sales, fixed asset investment and industrial production. During the European session tomorrow we’ll get the final August CPI revisions in Germany along with the September ZEW survey. There’s important data due to be released in the UK tomorrow too with the August CPI/RPI/PPI readings due. In the US tomorrow we’ll get the August NFIB small business optimism reading, along with last month’s monthly budget statement.
We start in Japan on Wednesday where the final revision to industrial production in July will be made. We then move onto France where the final August CPI revisions are made before the UK comes under the spotlight again with the latest employment report. Euro area industrial production in July will also be released. It’s quiet once again in the US on Wednesday with the only data due being the import price index for August.

This post was published at Zero Hedge on Sep 12, 2016.

“More To Come” – Trader Warns VIX Seasonality Suggests “It’s Not Over Yet”

Among the factors roiling the market last Friday, was the surprising addition of Fed governor Lael Brainard to the list of speaker in Chicago today, making hers the last scheduled appearance before U. S. central bankers go into their traditional pre-meeting quiet period ahead of a Sept. 20-21 FOMC meeting. The theory that quickly spread across the market is that Brainard, one of the Fed’s most dovish members not to mention a four-time donor of Hillary Clinton, would send a signal that tightening is coming, a flip-flop that would be sure to move markets, leading to a corresponding frontrunning of said flipflop. Others, however, saw the timing of her speech as consistent with her record because she spoke close to both the March and June meetings, urging a patient stance both times.

This post was published at Zero Hedge on Sep 12, 2016.

Global Stocks and Bonds Fall Sharply – Gold Consolidates After Two Weeks Of Gains

Global stocks and bonds fell the most since the Brexit panic today as recently dormant volatility came back with a vengeance. There are deepening concerns that global central banks’ ultra loose monetary policies have been ineffectual and may indeed be creating asset bubbles in stock, bond and indeed property markets internationally.
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European stocks fell sharply with the Stoxx Europe 600 shed 1.8% by late morning and leading European indices down by roughly 2%, on course for their biggest losses since June.
In Asia, Hong Kong’s Hang Seng Index fell 3.4% in its worst day since February. Stock markets in Shanghai, Japan and Australia all closed with losses of around 2%.
U. S. stock futures pointed to a 0.8% opening loss for the S&P 500 after on Friday, it saw its biggest daily drop since the U. K. referendum.

This post was published at Gold Core on September 12, 2016.

Bond Yields Surge Around The World, Stocks Tumble As “VaR Shock” Goes Global, Correlations Approach 1

It appears that Hillary’s pneumonia has spread to global capital markets.
Last Thursday, with the S&P trading just shy of all time highs, we warned readers to “Brace For VaR Shock“, and explained how the BOJ’s surprising intent to steepen its Japanese yield curve could unleash a global bond market selloff, as a result of record high correlations between bond and stock assets. The very next day, accelerated by further hawkish comments by the Fed’s Rosengren who saw a “reasonable case” for a rate hike, the S&P saw its biggest plunge since Brexit as fears about central bank “inaction”, coupled with the realization of the BOJ-driven VaR shock spread through the market, and topped off with news that the Fed’s Lael Brainard was set to deliver an unscheduled last minute speech in Chicago today around noon, which according to some could hint at a September rate hike by the legacy dove.
While it remains to be seen what Brainard will say, the market today is in a sell first, ask questions later mode, as the Friday bond liquidations that started in Japan and spread to the US, has now slammed Europe. Here are some recent indicative levels courtesy of Tradeweb:
SPAIN’S 10-YEAR BOND YIELD RISES TO 1.13 PERCENT, HIGHEST LEVEL SINCE LATE JULY AND UP 4.5 BPS ON DAY – TRADEWEBWEB PORTUGAL’S 10-YEAR GOVERNMENT BOND YIELD RISES TO TWO-MONTH HIGH OF 3.23 PERCENT , UP 6 BASIS POINTS ON DAY – TRADEWEBEWEB ITALIAN 10-YEAR BOND YIELD RISES TO HIGHEST LEVEL IN OVER TWO MONTHS AT 1.33 PERCENT , UP 5 BPS ON DAY- TRADEWEBWEB

This post was published at Zero Hedge on Sep 12, 2016.

“Global Market Rout” – Bond Selloff Snowballs Into Stock Liquidations On “Stimulus Pullback” Fears

While there is not much to add to our previous market wrap from earlier this morning, now that traders in the US are arriving at their desks, the selloff appears to be accelerating and as Bloomberg notes, “a selloff in fixed income is starting to snowball into a global market rout”driven by what Reuters dubbed “growing concerns that global central banks’ commitment to the post-crisis orthodoxy of super-low interest rates and asset purchase programs may be waning.”
It appears Kuroda broke markets once again, the reason being the central bank insistence to steepen yield curves to avoid suffocating banks and pension funds, while keeping the broader easing theme on hold even as it means trillions in longer-dated bonds now find themselves in limbo as frontrunning central bank purchases is no longer possible. So what do traders do? Why they sell of course.
As Bloomberg also adds, “shares in Europe and Asia dropped the most since the aftermath of the U. K. Brexit vote in June, and U. S. stock-index futures fell as concern spread that central banks are preparing to wean markets off unprecedented stimulus. Treasuries extended their slide into a fourth day as the U. S. prepared to sell three- and 10-year notes, and the yield on benchmark German bunds reached the highest since Britain’s decision to exit the European Union was confirmed. Oil sank toward $45 a barrel as nickel tumbled the most in four weeks. The yen advanced and the won slid. Samsung Electronics Co. tumbled after airlines and regulators warned against the use of its Note 7 smartphones.”
Come to think of it, it really is starting to look like a bloodbath, especially considering the dominant color in the following market summary table.

This post was published at Zero Hedge on Sep 12, 2016.

Silver Returns Earthward

The prices of both metals were down this holiday-shortened (Labor Day in the US) week, especially on Friday. The decline corresponded to a spike in interest rates. Of course everyone watched the action of the stock market on Friday. Whatever the proximate cause, the root is credit. When borrowing to buy assets does not work, then selling assets to repay debt is required. It could be companies who bought their own shares, it could be European banks. It could be leveraged investors speculators in their Etrade accounts.
This leads us to another reason why a high basis is a bearish signal for the USD price of a metal. The basis is the carrying cost. One month ago, if you bought a December silver contract, you paid a big premium. As we recall, it was around 14 cents per ounce. As you hold that contract, this premium decays. If you wait until First Notice Day, it could be completely gone or even negative. That is, you may get a few pennies under the spot price to sell the contract. If you roll the contract – i.e. sell December and buy March – you will incur that cost of carry again.

This post was published at SilverSeek on Monday, September 12th.

“Friday ‘Shock’ Larger Than Brexit For Quants”: BofA Expects $52 Billion In Near-Term Selling Pressure

It all started with a note by JPM’s Marko Kolanovic last Wednesday, in which he warned that the period of market calm is ending, and volatility was about to surge, which in a reflexive fashion would lead to accelerated selling by quant, systematic and risk-parity funds as a result of near-record leverage. According to Kolanovic while a driver of the recent market stability the “relatively stable macro data and a seasonal decline in trading activity” he explained that “a significant driver of the volatility collapse was derivatives hedging effects, also known as pinning”, as well as the near all-time high leverage for Volatility Targeting and Risk Parity strategies. However, “this is all about to change as a number of important catalysts materialize this month (ECB, BOJ, Fed meetings), seasonals push market volatility higher, and leverage in systematic strategies and option positioning provide fuel for volatility.”

This post was published at Zero Hedge on Sep 12, 2016.

Gartman: “We Came Into Friday “Pleasantly” Long Of Equities. We Quickly Changed Our Position”

If Friday’s selloff can be indirectly – and humorously – blamed on Gartman being “pleasantly” long of equities going into the rout, then perhaps a rebound looms, because as DG writes in his latest note, he quickly went “net short” of equities moments after realizing the momentum is not with him. Here is the key section from his latest note:
SHARE PRICES, GLOBALLY, ARE DOWN VIOLENTLY AND ‘RISK HAPPENS FAST’ as already noted several times above as our old friend, Doug Kass, likes to tell us, for all ten of the markets comprising our International Index have fallen since Friday, with 5 of the 10 having fallen by more than 2% and with one… the market in Brazil… having fallen by nearly 4%. Trend lines that had been sloping upward in instance after instance and which had held for months have been broken through to the downside, proving themselves to be readily vulnerable. ‘Reversals,’ one after another, have evolved, and not merely daily reversals, but in many instances weekly and now even monthly reversals to the downside have either already evolved or are on the verge of doing so.
Risk does indeed happen fast, with the blame today going to be cast upon the Federal Reserve Bank for the thought that it may actually vote to tighten monetary policy at its meeting next week. We have never been of the mindset that the Fed was prepared to tighten policy and to raise the o/n Fed Funds rate next week, but many were and more had become so following Mr. Rosengren’s comments on Friday that he was beginning to err toward tighter policies… this from one of the more ‘dovish’ of the voting, regional Federal Reserve Presidents. That was all that was needed to change the market’s collective psychology at a moment’s notice, and although we are quite certain that the global market’s bearish rush shall quell any further consideration on the part of various FOMC voting participants about tighter policies, it shall not likely make any difference; the die’s been cast and risk has indeed happened fast.

This post was published at Zero Hedge on Sep 12, 2016.

Who Tells the Truth Anymore…Anyone in Office?

Boston FED President Rosengren last week warned of the economy overheating? Really! That is an absolute lie. The world’s seventh largest container company just went belly up. CAT has had four straight years of monthly sales declines. Agrium and Potash are merging because the chemicals and agriculture business are moribund. Oil is $45 here in the states and demand is abysmal. The largest stand-alone grocer in the country, Kroger, just warned for the second half of 2016, as it is locked in a price war. Should I go on? Those are real stories not made up government numbers. They paint a picture of an economy that is more than likely in RECESSION!
The excuse for the sell-off in yields and everything else was an alleged shift away from bond buying commitments by the BOJ and other CBs. That too is an absolute lie. Since when do CBs admit defeat? How about never.
What they are doing is a result of over 14T dollars in sovereign debt yielding negative returns. They want asset managers to sell the long end for two reasons.
1) They want a steeper yield curve. This will allegedly convince everyone inflation is coming.
2) The CBs are running out of debt to buy. They need sellers! Here is your proof.

This post was published at GoldSeek on Monday, 12 September 2016.

Hunt for Cash – Vancouver Airport Seized $18.7 million from Travelers

Over the past 3 years, Vancouver has seized at its airport $18.7 million in undeclared cash of which 70% has been from Chinese. The hunt for money is really outrageous that it is all about taxes and our property rights have been lost. All governments are acting like common criminals robbing people of their property claiming they have no right to travel with their own money. There is no crime just failing to tell them you have money on you.

This post was published at Armstrong Economics on Sep 12, 2016.

Central Banks May Choose Helicopter Money Over Negative Rates

The US Federal Reserve (Fed) is considering raising rates. Is the ‘normalization’ of interest rates about to happen which savers and investors have been yearning for? Most likely not. Policymakers are merely realizing that the policy of zero rates – or even negative rates as in the euro area or Switzerland – doesn’t work as intended.
The wider public is very much against it. Banks, for instance, run into trouble because their profits come under severe pressure in an environment of zero, let alone negative, interest rates. Bank clients start protesting as their bank deposits no longer earn a positive return. They even start redeeming their deposits in cash, thereby causing bank refinancing gaps.
Negative Rates Under Another Name However, central banks are quite unlikely to abandon the idea of pushing real – that is inflation-adjusted – interest rates into the negative. What they might have in mind is allowing for ‘somewhat higher’ nominal interest rates, accompanied by ‘somewhat higher’ inflation, making sure that real interest rates remain in, or fall into, negative territory.
In this vein, the Federal Reserve of San Francisco suggested in a paper published on 15 August 2016 that monetary policy should rethink and possibly allow for an inflation of more than 2 percent.1 The debate about higher inflation – say, 4 rather than 2 percent – is actually an old one; in academic circles it comes and goes in waves.

This post was published at Ludwig von Mises Institute on September 12, 2016.