Bank of England Keeps Rate, QE Unchanged As Expected, Hints May Cut More

As was expected by the consensus of economists, and facilitated by the recent surge of positive economic data out of the UK, moments ago the BOE did not surprise, when it kept its interest rate at 0.25% after a unanimous 9-0 vote, which also included keeping the BOE’s government bond and corporate bond purchases unchanged at GBP 435 and 10bn, respectively.
However, while the nine-member Monetary Policy Committee admitted that recent near-term data has been far stronger than anticipated since the Brexit vote, and certainly by comparison to the BOE’s apocalyptic vision, it couldn’t draw inferences for its longer-term forecasts. Officials said their view of the ‘contours of the economic outlook’ hadn’t changed.

This post was published at Zero Hedge on Sep 15, 2016.

That 5.2% Jump in Household Income? Nope, People Aren’t Suddenly Getting Big-Fat Paychecks

The median income for men is below 1974 levels. We’ll be hearing and reading about this for a long time, in all kinds of iterations: ‘Americans last year reaped the largest economic gains in nearly a generation,’ the New York Times gushed. ‘Household incomes surged 5.2% in 2015, first gain since 2007,’ the Wall Street Journal raved. Everyone was happy. Poverty rates dropped 1.2 percentage points. Finally, some good data in that beleaguered sector! The middle class and those below had been getting hammered for too long.
The impetus of these happy moments in the US economy is the Census Bureau’s Income and Poverty survey for 2015. It reported that median household income – 50% of households earn more, 50% earn less – rose 5.2% to $56,516, adjusted for inflation via the Consumer Price Index.
Median household income had been declining in fits and starts since the peak in 1999. But even after this phenomenal rise in 2015, it was still 1.6% lower than in 2007 and 2.4% lower than in 1999.

This post was published at Wolf Street on September 14, 2016.

Precious Metals Entering, Stocks and Bonds Exiting Bull Market

A)Stocks have been in an uptrend for more than five years and the Dow Jones Industrial Average has more than tripled since 2008 lows.
B)I am concerned that these gains are overinflated and pumped higher through these policies of the Central Bankers and stocks are way overvalued and extremely overbought.
C)Because we have not seen a meaningful correction in the Dow in more than seven years, the chance of a significant bear market remains higher than ever.
D)I believe the Dow-Gold ratio is about to turn in favor of precious metals in a big way.
E)The Fed raising rates could be good for precious metals as investors may finally rotate out of overvalued stocks in search for equities backed by precious metals.
Stocks have been in an uptrend for more than five years and the Dow Jones Industrial Average (NYSEARCA:DIA) has more than tripled since 2008 lows. Smart investors are getting nervous as they realize that no market goes straight up forever. The question now is not if but when will the next bear market in equities occurs. It does not take a PhD rocket scientist to observe the record gains in the US stock market for a lengthy period of time without any major corrections. It begs the question is any of this through the use of record low interest rates and quantitative easing since the start of the credit crisis to achieve this?
I am concerned that these gains are overinflated and pumped higher through these policies of the Central Bankers and stocks are way overvalued and extremely overbought, not reflecting the real economy which to me is the worst it has been in a long time. Unemployment still remains high, small business growth is almost non-existent and government spending remains out of control. Interest rates are going negative and the appetite for precious metals is rising.
Because we have not seen a meaningful correction in the Dow in more than seven years, the chance of a significant bear market remains higher than ever. I believe the US stock markets are at dangerous overbought levels and we should now be hedged with precious metals and mining stocks which are generally considered counter cyclical to equities.
I believe the Dow-Gold ratio is about to turn in favor of precious metals in a big way. I am focused on mining companies that are backed with assets rather than pipe dreams like so many tech stocks (NASDAQ:QQQ). While the lemmings were chasing stocks in 2015 I continued to build positions in deeply discounted mining companies with near term production, top notch management teams and in mining friendly jurisdictions. Now in 2016 although stocks remain high, the miners (NYSEARCA:GDX) have outperformed. This may be just the beginning because I expect even greater capital rotation into precious metals and junior miners when stocks begin crashing.

This post was published at GoldSeek on 14 September 2016.

On This Day Eight Years Ago Lehman Filed For Chapter 11: There Have Been 672 Rate Cuts Since

Eight years ago the world, and the western financial system changed forever, when the impossible became all too real when Wall Street woke up to news that what until a few days ago was one of the world’s largest investment banks had filed for bankruptcy, which would proceed to unleash the most unprecedented period of central bank micromanagement, and market manipulation in history.
Courtesy of Reuters Vikram Subhedar, this is what the front page of Reuters looked like on that day.

This post was published at Zero Hedge on Sep 15, 2016.

Initial Jobless Claims Confirm Hillbama’s “Everything Is Awesome” Meme; But…

Initial jobless claims continue to live in a distorted world of its own… Against expectations of 265k, claims beat with a 260k print – flat to last week and stuck near 42 year lows suggesting we’ve almost never been better.
Forward-looking expectations of employment in Services and Manufacturing sectors looks bad… and did not end well last time…

This post was published at Zero Hedge on Sep 15, 2016.

Financial Intervention – The Monkey and The Fish

‘Kindly let me help you or you’ll drown, said the monkey to the fish as he placed him safely up the tree.’ – Unknown
The financial system (mistaken for the economy) is so bloated with risk that any number of events could trigger an explosion that would reach much further than anyone could imagine – causing irreparable damage.
Because of the size and the massive dependence on the institutions (who have evolved like a cancer from big finance), the resulting carnage will reach out much further than the primary institutions.
The reason these monsters are too big to fail is because without them everything stops -food distribution, the flow of credit, and the systems that support that.
Most mid to large size communities are days away from complete breakdown in the case of serious financial market interruption or panic.
Deflation is the natural tendency or force that the monetary powers have been fighting for over 100 years. Everywhere you look, there is evidence that the underlying economy ‘wants to’, ‘needs to’, ‘must’ desperately correct. The high priests of finance will do EVERYTHING in their power to prevent nature from running it’s course.

This post was published at Silver-Coin-Investor on Sep 13, 16.

Draghi: E.U. must redistribute wealth and strengthen borders to save the union

The European Union will grind to a halt in a mire of ever-worsening unpopularity if it fails to tackle inequality, tighten external borders and co-ordinate defence policies, according to European Central Bank President Mario Draghi.
Anti-globalisation forces are closing borders and reversing progress made in recent years, he said, with policies which ‘have at times been reminiscent of the interwar period: isolationism, protectionism, nationalism’.
The message is a stark warning from the ECB’s chief, who has taken a new tack to push politicians to act. He has spent several years telling governments that they should use the breathing room granted by low interest rates to reform their economies to boost employment, productivity and growth.
But little of that has happened, forcing Mr. Draghi to resort to stronger language to describe economic problems as a threat to the political project’s viability.

This post was published at The Telegraph

Bond Markets Hit Another ‘Ukrainian Chicken Moment’

Two European companies — French drug maker Sanofi and German household products maker Henkel — last week became the first firms to persuade investors to pay them to borrow euros. By selling bonds yielding minus 0.05 of a percentage point, they may well have signaled the bond market’s peak, delivering this decade’s equivalent of the “Ukrainian Chicken Farm Moment.”
That phrase refers to the 2006 sale of $250 million of bonds by Myronivsky Hliboproduct which, according to its description on the Bloomberg terminal, is “a vertically integrated producer of poultry products in Ukraine.” Few investors had ever heard of the Ukrainian chicken breeder, but with an interest rate north of 10 percent, buyers were clamoring for the MHP bonds. Bill Blain, currently at Mint Partners in London, was one of the bankers who brought the deal to market. He recalls the bidding frenzy:
“It was massively oversubscribed. A few weeks later, bird flu broke out in Hong Kong. The chicken farm was uninsured. The market immediately discounted the notes and the price crashed 30 percent or more. That moment of supreme belief when anything is possible in the new issues market will always be remembered as “The Ukrainian Chicken Farm Moment.“”
An investor who buys some of Sanofi’s 1 billion ($1.12 billion) of bonds and holds them until they’re repaid in three years is guaranteed to lose money.

This post was published at bloomberg

High Frequency Traders Elbow Their Way Into the Currency Markets

High-speed electronic market making, already widespread in stocks, is getting a grudging welcome from currency markets. They don’t have much choice.
Algorithmic traders have more than tripled foreign-exchange volumes over the last three years, seizing opportunities as Wall Street banks withdraw from currency dealing, according to Aite Group, a consultant in Boston. The new group of market makers is trading almost $200 billion a day. While that may seem small in the context of the sprawling global currency market, consider this for perspective: Stock trading on all U.S. exchanges totals about $270 billion a day.
From Citadel Securities LLC, which boosted foreign-exchange volumes 83 percent in the first half, to Global Trading Systems LLC, which has tripled activity since the U.K.’s Brexit decision, to Jump Trading LLC, which says it plans to expand its direct market making, non-banks are racing to provide more currency liquidity.
‘Market participants can keep the status quo and remain in the past or they can choose to evolve, roll with the punches and get with the times,’ said Sara Wardell-Smith, global head of foreign-exchange trading and sales at Wells Fargo & Co. in San Francisco. ‘As long as the pricing, service and capabilities are there, why wouldn’t we consider these alternative liquidity outlets?’

This post was published at bloomberg

Some of the Biggest Hedge Funds Are Bleeding Cash

Some of the biggest and best-known hedge funds can’t hang on to client capital.
Richard Perry, who started his hedge fund 28 years ago, has seen assets in his Perry Capital shrink to $4 billion, from $10 billion last September. That 60 percent drop comes as the firm’s main fund fell 18 percent from the end of 2013 through July.
Perry isn’t the only manager struggling. John Paulson’s assets, on the decline since 2011, are down an additional 15 percent this year. And Dan Och, who like Perry cut his teeth at Goldman Sachs Group Inc., is now managing $39.2 billion at his Och-Ziff Capital Management Group, compared with $44.6 billion at the start of the 2016.
Hedge funds have suffered their biggest withdrawals since the financial crisis, with investors pulling $23.3 billion in the first half of the 2016, according to data from Hedge Fund Research Inc. While the redemptions equal less than 1 percent of the $2.9 trillion industry, the biggest funds are bearing the brunt of the damage as pension plans and other large institutions that flocked to the name-brand firms during the heyday in the last decade are now retreating after years of lackluster returns.

This post was published at bloomberg

U.S. Budget Deficit Totals $107.1 Billion in August

The federal government recorded a deficit of $107.1 billion in August, slightly lower than the July deficit. But the imbalance through 11 months of this budget year is up sharply from a year ago, reflecting higher spending and lower-than-expected tax revenues.
The Treasury Department said Tuesday that the deficit, with just one month to go in the budget year, totals $620.8 billion, up 17.1 percent from the same period a year ago. The August deficit was slightly lower than the $112.8 billion imbalance in July.
The Congressional Budget Office last month revised its estimate for the 2016 deficit up sharply to show an imbalance of $590 billion. That was up from a March projection of $534 billion. The budget year ends on Sept. 30 and September is expected to show a surplus.

This post was published at ABC News

Election Fraud Probabilities

It is an election year and the media has obsessed over Trump’s inflammatory statements and HRC’s health. A recent Google search for ‘Hillary’s health’ showed 140 million hits. Parkinson’s has been widely mentioned.
Both issues could affect the outcome of the Presidential election IF the election is honest and has not already been decided. But are election fraud, vote ‘miscounts,’ illegal voters, and buying the election probable? We all know the jokes about the Chicago cemetery vote, but what about election fraud in voting machines, punch cards, or manual systems?

This post was published at Deviant Investor on September 15, 2016.

Mexico Builds A “Wall” (And Guess Who Paid For It)

Mexico is building a ‘wall’… on its southern border (to keep illegal immigrants out). Perhaps even more ironic, The FT notes that the Cadministration is coy about its role in Mexico’s crackdown but is sending $75m in equipment and training to help stop Central Americans from crossing illegally into Mexico… in other words, US Taxpayers funded a Mexican wall to keep immigrants out.
The UN estimates 400,000 Central Americans cross illegally into Mexico each year and as many as half of those are fleeing violence. But as The FT reports, Mexico already acts as a formidable barrier for many…
Zero net immigration of Mexicans into the US and an 82 per cent fall in people caught trying to cross the US-Mexico border in the past 10 years means that most would-be immigrants detained there are Central Americans. Even without Mr Trump’s fortress frontier, Mexico finds itself under increasing pressure to stem the migrant tide near its source – its own southern border.
‘Mexico has become a wall for migrants,’ said Sister Magdalena Silva, co-ordinator of Cafemin, a privately run shelter in Mexico City that takes in refugee families, including Rosa’s. ‘The current policy is to arrest migrants to stop them from getting to the US border.’

This post was published at Zero Hedge on Sep 15, 2016.