Canaries ‘In Extremis’

Submitted by Robert Gore via,
Nobody ‘important’ will admit it until after the election, but the resumption of the depression is at hand.
Most people’s strongest memory of the last financial crisis was the September 2008 bankruptcy of Lehman Brothers. However, thirteen months prior to that, August 2007, two Bear Stearns’ mortgage hedge funds went bankrupt. That was the bell tolling for the housing market, the mortgage securities market, and – because of the leverage and the interconnections – the global financial system itself. The Dow Jones Industrial Average would not make its high for another couple of months, but for those who knew what they were looking for, the Bear Stearns’ bankruptcies signaled the impending reversal in financial markets and the economy.
Sometimes one has to see the big picture, and sometimes looking at a host of smaller pictures is more worthwhile. While housing and mortgage finance were the epicenters of the last crisis, there will probably be no single identifiable catalyst for the next one. Not because there are no central-bank sponsored debt-driven bubbles out there, but because there are so many of them, all over the world. Multiple coal mine canaries are in extremis and they’re sending the same message as the Bear Stearns’ bankruptcies did.
If the US real economy is not already in a recession, it’s on the verge.

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

Taxpayers, Pull out Your Wallet, Cost Estimates for Biggest Nuclear Energy Boondoggle Exploded Again

How the Nuclear Energy Lobby Eats up Global Taxpayer Billions
The well-funded lobbyists of the powerful nuclear energy industry are tirelessly working over governments around the world. Occasionally, there are minor setbacks, such as Fukushima or the current multi-billion-dollar scandal around the decommissioning costs of California’s San Onofre nuclear power plant, that threaten to expose just how horridly expensive nuclear power really is for taxpayers, ratepayers, and other stakeholders, from conception of the plant to final decommissioning and proper disposal of nuclear waste and contaminated materials – none of which has yet been accomplished and paid for.
But here’s the mega project that was first conceived in 1985, is still far from completion, and has now thrown back the date of first power generation to 2035, if it can ever be accomplished, and there are grave doubts it can.

This post was published at Wolf Street by Wolf Richter ‘ October 15, 2016.

What’s Next for the Price of Gold per Ounce

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
The price of gold per ounce continues to be volatile, and gold spent much of the past week searching for direction.
Gold prices have faced a formidable headwind this month in the U. S. dollar. In fact, the dollar has been one of the few rare assets that has been climbing, along with oil.
The S&P 500 is down 1.35% since Monday, and long-term bonds continue to sell off. Is the Fed finally getting what it wants? Is it going to get higher rates, or at least the expectation of inflation?
That’s how it looks right now. With a fresh set of Fed minutes released this week, the dollar rose in anticipation, while bonds sold off along with stocks.

This post was published at Wall Street Examiner by Peter Krauth ‘ October 14, 2016.

The “World’s Most Bearish Hedge Fund” Reveals Its Next Big Short

We have previously dubbed Shannon McConaghy’s Horseman Global the world’s most bearish hedge fund for one reason: as recently as a few months ago the fun had taken its net equity short position to an unprecedented -100%. At the end of September, it had modestly trimmed this short to a more modest -87.5%

What is perhaps just as impressive is that despite the fund’s massive bearish bias, if only in equities, it has managed to keep its YTD return virtually flat, with more profitable than unprofitable months so far in 2016. The offset? A whopping 66% gross long position in bonds.

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

The Fed’s Legacy: Asset Bubbles and Lost Confidence

This is a syndicated repost courtesy of The Daily Reckoning. To view original, click here. Reposted with permission.
For most experts, failure is a learning experience that leads to a search for new methods. That’s not true for central bankers. When their policies fail, they try more of the same in the vain hope that quantity will make up for the lack of quality in their ideas.
In the past seven years, major central banks have created over $15 trillion of new money, mostly through purchases of government bonds.
These money printing and bond purchase programs have been called QE1, QE2 and QE3 in the U. S., Euro-QE in Europe and QQE (quantitative and qualitative easing) in Japan.
All of these programs and exotic variations such as ‘Operation Twist’ have failed to achieve self-sustaining growth anywhere near former trends, and have failed to achieve the 2% inflation targets of those central banks.

This post was published at Wall Street Examiner by James Rickards ‘ October 14, 2016.

Where the Smart Money Goes When the Bubble Bursts

This is a syndicated repost courtesy of The Daily Reckoning. To view original, click here. Reposted with permission.
Where will all the money go when the bubble bursts, The Daily Reckoning’s Charles Hugh Smith wonders?
A simple question. Without an easy answer.
Typically – typically – bond prices and stock prices move like a seesaw. One goes up. The other goes down. And vice versa. If one of them gets walloped, investors sprint for the other.
But a typical market this is not. These days, stocks and bonds are piled on the elevated side of the seesaw. They’re both expensive. And when one legs higher, the other chases.

This post was published at Wall Street Examiner by Brian Maher ‘ October 14, 2016.

Statistician Warn Of “Systemic Mainstream Misinformation” In Poll Data

Submitted by Salil Mehta via Statistical Ideas blog,
Antagonism isn’t perpetual
If you recently glanced at the polls and the election markets, then you would be forgiven to believe that a landslide election is looming. It’s likely not, and the spreads have the potential to revert in surprising ways between now and Election Day. The drumbeat of negative news against Donald Trump may not cause further damage. We’ve discussed numerously, starting on October 11 and October 12, that Hillary Clinton’s runaway spread would revert (here, here, here, here).
Of course that’s a stand taken against a popular headwind, but also an opportunity to make money on an election bet that is mispriced. For example, when we wrote the reversion article, the betfair ask that Mr. Trump’s popular vote could remain in the 40’s% was only priced at 1:6 odds. Nate Silver’s 538 site also reflected this, as shown below. But we -and other academic statisticians- knew that this was faux election probability, and advised thousands to remain vigilant against planned mainstream misinformation.

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

Restuarant Industry In Gloom As Number Of Americans Eating Out Tumbles

While the latest government retail spending data shows that while it is slowing down, consumer spending on “eating out” or retail and food service sales, hasn’t posted a sharp deterioration, secondary tracking sources beg to differ. A far more accurate tracker of real-time US Restaurant sales, that of the National Restaurant Association’s Restaurant performance index, paints a far more disturbing picture.
As the Natl Restaurant Association reports for its latest data, August restaurant sales tumbled in August, sliding to the lowest level since the financial crisis. As the restaurant association reports, due in large part to declines in both same-store sales and customer traffic, the National Restaurant Association’s Restaurant Performance Index (RPI) fell below 100 in August. The RPI – a monthly composite index that tracks the health of and outlook for the U. S. restaurant industry – stood at 99.6 in August, down 1.0 percent from a level of 100.6 in July.

Restaurant operators reported net declines in both same-store sales and customer traffic in August, along with corresponding dips in the labor indicators. The RPI is constructed so that the health of the restaurant industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction for key industry indicators.

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

Doug Noland: The Perils of a Resurgent China Credit Boom

This is a syndicated repost courtesy of Credit Bubble Bulletin. To view original, click here. Reposted with permission.
There’s this uneasiness – an eeriness – in the markets; in the world (I’m not touching politics). Seemingly out of nowhere, the U. S. dollar index surged 1.7% this week. Notably, the Chinese currency fell 0.8% versus the dollar, the biggest weekly decline since January. Copper dropped 2.4%. Most EM currencies were under pressure. I suspect fears of heightened Chinese vulnerability have again become a major force behind unstable global markets.
We’re all numb to the big numbers. China’s debt has rapidly inflated to over 250% of GDP (Bloomberg at 247% to end ’15 from ’07’s 150%), in what has evolved into history’s greatest Credit Bubble. Total Social Financing, China’s aggregate of total Credit (excluding government bonds) is on pace to expand almost $3.0 TN this year. A headline from Bloomberg TV: ‘China’s Total Debt Grew 465% Over Past Decade’

This post was published at Wall Street Examiner by Doug Noland ‘ October 15, 2016.

5 Urgent Warnings From Big Banks That the ‘Economy Has Gone Suicidal’

The economy has gone suicidal.
It is working against the very people who need its energy to survive. It is collapsing on its own weight, and the weight of literally incalculable levels of toxic debt. And it is going to create the greatest disaster of our time, if the warnings from the world’s most powerful bankers are any indication.
While the general population is obsessed with the details of the world’s most entertaining and bizarre election in American history, the big banks are gearing up for a deadly serious economic collapse.
Just during the past few weeks, there have been major discussions about stock markets dropping, the insolvency of Europe’s biggest investment bank, the mounting debt crisis and a deeper, long-term decline for ‘everyday Americans.’
Here’s what you probably missed while the Hillary-Trump cage match has taken over the collective psyche:
1. HSBC Issues ‘Red Alert’ Over Imminent Sell-Off of Stocks
The U. S. stock market is artificially propped up by the Federal Reserve, but their ability to stimulate the economy has worn off. Immunity has set in, and they’ve got nothing left.

This post was published at shtfplan on October 14th, 2016.

The Week in Review: October 15, 2016

We are less than a month away from the election and it can’t be over soon enough. In the latest strange turn, several DC libertarians came out against prosecuting unlawful politicians and in support of a government-managed ‘common market,’ rather than genuine free trade that can be imposed unilaterally. In DC, regulators continue to expand their power, while special interests are trying to create a monopoly in prescription lenses. Meanwhile central bankers continue their assault on cash, while suppressing saving worldwide and continue to botch their own forecasts.

This post was published at Ludwig von Mises Institute on October 15, 2016.

“Radical Changes To The Business Model” – Deutsche Bank Forced To Shrink US Operations As Part Of DOJ Settlement

Back in 2008, when the business cycle was sharply turning, leading to a dramatic shortage of business for the major US investment banks which in the preceding years had gone on a hiring spree, one solution was to “shutter” one or more key competitors. This, according to some, was the underlying motive behind the elimination of the “outsider” banks, first Bear Stearns and then fixed income giant Lehman Brothers. Of course, their failure unleashed a series of unprecedented events (or as some have also dubbed them, “fringe taxpayer funded benefits”) for the banking sector, which involved a highly unpopular multi-trillion bailout, and as a result the elimination of competitors – even with the government’s blessing – is now generally frowned upon. However, merely crippling them, that’s another story.
Being crippled is what may soon happen to Deutsche Bank, whose next chapter in its melodramatic saga will involve the bank exiting some if not most of its US operations. According to a report in German newspaper Welt am Sonntag, “Deutsche Bank may be forced to shrink its U. S. activities as part of the settlement deal with the DOJ.”
Die Welt, sourcing unidentified people in the banking industry, said that radical changes to the business model are typical requirements in settlement arrangements with the U. S. government. Deutsche Bank ‘must clarify one or two things’ before an agreement can be struck, the person said, cited by Bloomberg. Germany’s largest bank will probably give up part of its U. S. investment banking business, the newspaper cited unidentified people in the banking industry as saying. As Reuters adds, while abandoning the United States, its most important market, altogether was very likely out of the question for the bank, it could consider scaling down its activities, so as to focus more on the needs of German corporate clients overseas.

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

Layoffs Hit Craft Brewer, as Big Beer, Big Money, Overcapacity Rattle American Craft Beer Market

The American Beer War Turns Sour American craft brewers have been the most spectacular economic success story since the Financial Crisis. Forget the slow-growth or sinking-into-quagmire stories typical in many other sectors. American craft brewers have become a global phenomenon, largely due to their excellent brewskis and astute marketing.
Yet total beer sales in the US have been declining for years, as major brands have been losing ground. In 2015, despite population growth, beer sales edged down another 0.2% to 196.7 million barrels, according to the Brewers Association, even as craft brewers have booked double-digit sales gains year after year, including 12.8% in 2015.
But here’s the problem with craft brewers: Everyone is now doing it. The Big Money is piling in. Private Equity firms and the largest multinational brewing conglomerates in the world are buying out craft brewers and funding new ones.

This post was published at Wolf Street by Wolf Richter ‘ October 14, 2016.

CNN Anchor Warns Of Post-Election Violence Due To “Hatred Dripping From Trump’s Mouth”

Capping a week of almost unprecedentedly biased coverage of the US presidential campaign, CNN outdid itself last night. Following Donald Trump’s scatching speech on Thursday – unleashing some of the most uncomfortable truthiness America has every heard from a non-tin-foil-hat-wearing basement-dwelling deplorable blogger – Brian Stelter suggested that the Republican nominee may be inciting violence which could last beyond the election.
“He’s dangerous…”

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

Russian Mafia Money Laundering, the Clinton Foundation and John Podesta

NEW YORK – The attack on me by Clinton campaign Chief John Podesta is an attempt to deflect attention from his criminal activities in the former Soviet Union. Podesta is at the heart of a Russian-government money laundering operation that financially benefits Podesta personally and the Clintons through the Clinton Foundation.
To be clear, although I have had some back-channel communications with Wikileaks I had no advance notice about the hacking of Mr. Podesta nor I have I ever received documents or data from Wikileaks.
The charge that I am working for Russian intelligence or any Russian interest is also false. Don’t confuse me with John Podesta’s brother, Tony Podesta, who runs the firm that got $180,000 from Uranium One, the Russian government’s uranium company to which Hillary Clinton transferred 20 percent of U. S. uranium.
Just how much money did Viktor Vekselberg, a controversial Russian billionaire investor with ties to the Vladimir Putin and the Russian government, launder through Metcombank, a Russian regional bank owned 99.978 percent by Vekselberg, with the money transferred via Deutsche Bank and Trust Company Americas in New York City, with the money ending up in a private bank account in the Bank of America that is operated by the Clinton Foundation?

This post was published at Lew Rockwell on October 15, 2016.

Balance Sheet Recessions and the QE Trap

The expectations of US GDP growth have slowed to 1.7 to 2.0% for the next 1 to 3 years. Market valuations are very high. There will likely be more volatility as Quantitative Easing (QE) unwinds. Inflation is a high medium-term risk due to high liquidity which will impact interest rates. INTRODUCTION
The investment model that I created looks at the current investment climate, but not the longer term. The format of this article is changed as I summarize the changes since The Escape from Balance Sheet Recession and The QE Trap was written by Richard Koo in 2014 in the Listening to the Experts Section. I believe that we will feel repercussions of the financial crisis for many years. Mr. Koo describes that this is likely to be true because of the unwinding of Quantitative Easing (QE). Financial Sense posted a CNBC video of Mr. Koo in April 2014 inKoo Warns on Fed “QE Trap” and Inflation.

This post was published at FinancialSense on 10/14/2016.