Stocks and Precious Metals – Options and Inaugurations

The stock option expiration was fairly quiet although there was a range in the trading, with tech finishing unchanged and the SP 500 gaining back what it lost yesterday.
Gold and silver both moved back up towards overhead resistance.
Donald Trump was inaugurated as the 45th president. His speech was quite interesting in its bluntness. Judging from the smirk on a few of the all too familiar political faces, I expect the Donald will have quite the fight on his hands with the long established swamp rats from both parties, if he indeed intends to do as he says.
Now we start the 100 days, during which I will try to retain an open mind and judge things by what happens, what is actually done, rather than what has been said and promised.
Larry Summers was speaking on Bloomberg TV from Davos of course, giving his economic and geopolitical advice to a president who presumably couldn’t care less. It is nice to see him on the sidelines, and not on the playing field. He is almost the perfect Davos man.
Have a pleasant weekend.

This post was published at Jesses Crossroads Cafe on 20 JANUARY 2017.

The Following Words Had Never Appeared In An Inaugural Address, Until Today

That Trump’s inaugural address was provocative is putting it mildly. Nowhere was this more obvious than in the initial reaction of the Financial Times. Consider the following excerpt:
For most presidents, a first inaugural address has been the occasion to set out a personal vision of the American idea. You do not necessarily lose points for failing to set out policy in granular detail. You are playing mood-music, making it as stirring as possible and positioning yourself in the grand flow of American history: reminding your audience of an essential continuity. Mr Trump’s theme was the opposite. From his first words, he stressed discontinuity: that his presidency would be a break. ‘Today’s ceremony, however, has a very special meaning because today we are not merely transferring power from one administration to another or from one party to another, but we are transferring power from Washington DC, and giving it back to you, the people.’
That audience-shaping attempt, at least, had the right idea. Mr Trump made a lot of play with the second and first-persons plural: ‘This is your day’; ‘We will bring back our jobs.’ But he positioned his ‘great movement’ in a way that suggested not that the Washington government was the expression of democracy but its enemy. It was an unusually rancorous, backward look, given what he said about unity and solidarity. It was a dismissal of, rather than a humble doffing of the cap to, history.

This post was published at Zero Hedge on Jan 20, 2017.

Did The Free Market Kill Coal?

Would you like to know my secret to turning my environmentalist friends into stalwart defenders of the marketplace? The answer is simple: coal.
You would be amazed by the reversal in rhetoric witnessed right before your eyes, typically accompanied by a big dose of schadenfreude aimed at Appalachian people.
The ‘free market killed coal’ adage apparently qualifies as ironic humor in leftist circles. Never mind the tens of thousands of families, hundreds of communities, a plethora of near-bankrupt school districts, and so many others left behind in the wreckage of coal’s decline. Environmentalists may even laugh as states who have endured generation after generation of poverty face choppy fiscal seas, forcing indelicate, hammer-doing-a-scalpel’s-job reductions in infrastructure, education, and health spending. None of these things seem to matter when it isn’t their political constituency on the destructive end of creative destruction.
My instinctual reaction to this ‘meme-ification’ of my home state of West Virginia’s suffering was anger. I wanted to show everyone how truly uncompassionate the left is about these sorts of things. But now that I’ve spent plenty of time getting under the hood of energy policy, I realize I should have questioned the merits of the claim first.

This post was published at Ludwig von Mises Institute on Jan 21, 2016.

What Will Prick the ‘Leveraged Share Buyback’ Craze?

Fitch Gets Nervous.
There may be a day when we look back at the current craze of ‘leveraged share buybacks’ – as Fitch Ratings calls these creatures of financial engineering – the way we now look back at the craze of leveraged buyouts (LBO) just before it all came apart during the Financial Crisis.
If a company with a torrent of free cash flow uses some of this cash to invest and expand, and then uses some of the remaining cash to pay dividends and repurchase its own shares, few people would quibble with it.
The problem for bondholders, and stockholders ultimately, arises when a company doesn’t generate enough cash to pay for its investments, dividends, and share buybacks, and ends up borrowing to fund share buybacks, thus increasing its debt burden while hollowing out its equity capital.
Instead of investing this borrowed money to expand and create more business whose cash flow would help service that debt in the future, companies blow this money on reducing the number of shares outstanding, or at least watering down the impact of executive stock compensation plans. Nothing good ever comes of these ‘leveraged share buybacks,’ other than making per-share metrics look better.

This post was published at Wolf Street by Wolf Richter ‘ Jan 20, 2017.


Gold at (1:30 am est) $1204.30 UP $3.40
silver at $17.00: UP 3 CENTS
Access market prices:
Gold: $1209.30
Silver: $17.10
The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.

This post was published at Harvey Organ Blog on January 20, 2017.

Ohio State Offers Students An Inauguration Day “Safe Space”

As America’s precious millennial snowflakes continue to wrestle with the fact that Donald J. Trump is now the President of the United States, irrespective of how many tears have flooded college campuses around the country, Ohio State University has announced they will be providing a “safe space” for students to gather to contemplate and internalize Trump’s inauguration. Hosted by “The Women’s Place“, the “safe space” activities will include “poetry reading workshops, a community mural art project, and campus teach-ins”…because when you can’t handle a loss there’s no better cure than a group coloring project.
On January 20, 2017, the Student Life Multicultural Center (SL MCC) is hosting ‘I, too, am America’ Inauguration Day 2017. Inspired by Langston Hughes’ poem ‘I, Too’ this one-day event will include poetry reading workshops, a community mural art project, and campus teach-ins. The purpose of this event is to foster a safe space for the Ohio State campus community to connect with one another, support aspirations, and empower growth and change.

This post was published at Zero Hedge on Jan 20, 2017.

Jim Rickards: European Central Bank to Tighten Later This Year

This is a syndicated repost courtesy of The Daily Reckoning. To view original, click here. Reposted with permission.
Jim Rickards joined CNBC’s The Rundown to offer his analysis for 2017 and what expectations on the European Central Bank’s (ECB) moves may be under rising Eurozone inflation and other regional factors.
Rickards began the conversation by weighing in that, ‘Mario Draghi is my favorite central banker, I think he is the only one who really understands central banking.’ Draghi is the current head of the European Central Bank and a former Goldman Sachs banker who began his term as leader of the ECB in November 2011. Rickards went on to remark, ‘Central banks are actually not that powerful but they have been given a pretense. Mario Draghi says little, and does less. That is a very effective way of operating.’
Jim Rickards is the New York Times bestselling author of The Road to Ruin. Rickards has worked previously on Wall Street for several decades and has advised the U. S intelligence community on topics surround currency wars and capital markets.

This post was published at Wall Street Examiner by Craig Wilson ‘ January 20, 2017.

Trump’s Economic Plan: Create 25 Million Jobs, Grow GDP At 4%, Lower Taxes For All Americans

President Trump’s economic plan will create 25 million new jobs in next decade, ‘return to 4 percent annual economic growth,’ “lower rates for Americans in every tax bracket, simplify the tax code, and reduce the U. S. corporate tax rate’ according to a statement just posted on the White House wesbite.
He has also proposed ‘a moratorium on new federal regulations and is ordering the heads of federal agencies and departments to identify job-killing regulations.’
The statement also announced the US withdrawal from the Trans-Pacific Partnership and that he is committed to renegotiating NAFTA. “If our partners refuse a renegotiation that gives American workers a fair deal, then the President will give notice of the United States’ intent to withdraw from NAFTA.”
From the White House website
Bringing Back Jobs And Growth Since the recession of 2008, American workers and businesses have suffered through the slowest economic recovery since World War II. The U. S. lost nearly 300,000 manufacturing jobs during this period, while the share of Americans in the work force plummeted to lows not seen since the 1970s, the national debt doubled, and middle class got smaller. To get the economy back on track, President Trump has outlined a bold plan to create 25 million new American jobs in the next decade and return to 4 percent annual economic growth.

This post was published at Zero Hedge on Jan 20, 2017.

Time’s Up

It is no longer a matter of words.
The transfer of power, which our nation has undertaken 44 times in succession using votes, words and oaths, has been completed.
You are probably feeling either elated, dismayed, horrifyingly*****ed off or ready to commit suicide.
All of that is folly.
During the previous 8 years, which many believed was going to augur in a new age for America of equality and progress for all, you got none of the above. The national debt, which I remind you only has value because you are willing to go to work in the morning and pay taxes, doubled during those eight years. In “real” terms (if you believe government statistics — that is, you don’t buy food, fuel, medical care or anything similar) you have a lower income. There are nearly a third more people on food stamps. Seven million more American live in poverty today than did in 2009.
You may be “thankful” for Obamacare if you couldn’t get “insurance” before, but in point of fact you ought to be*****ed. You ought to be*****ed off because you shouldn’t need health insurance for anything other than a catastrophic event you could not reasonably foresee, such as cancer, and the cost of everything medical, including cancer treatment, should be anywhere from a fifth to a tenth of what it is today.
You may be “thankful” for more college loans but in fact you shouldn’t need them at all. You used to be able to flip pizzas to pay for college, and the reason you can’t today is those loans. Calculus, literature, physics, chemistry, history, political sciences — these things have not suddenly gotten more-complicated or expensive by a factor of ten.

This post was published at Market-Ticker on 2017-01-20.

Will President Trump Prick The ‘Big, Fat, Ugly Bubble’?

This is a syndicated repost courtesy of The Felder Report. To view original, click here. Reposted with permission.
With economic optimism soaring since the election, rising risks to the economy and financial markets have fallen off Mr. Market’s radar. However, there are a number of reasons to believe Donald Trump and his advisers are well aware of these risks and have already made plans to address them sooner rather than later.
To this point, Mark Spitznagel recently wrote, ‘The ‘big, fat, ugly bubble’ in the stock market that President-elect Donald J. Trump so astutely identified during his campaign now becomes one of the greatest potential liabilities of his presidency.’ From a political standpoint, the sooner Trump and his administration deal with these risks the easier it will be to blame on the prior administration. Allowing them to fester for any period of time increases the likelihood they will take the blame for the bubble’s bursting.

This post was published at Wall Street Examiner by Jesse Felder ‘ January 20, 2017.

Morgan Stanley: “We Haven’t Seen A Shift This Severe In Over A Decade”

While the plunge in cross-asset correlations, which as recently as last fall was at all time highs, has been duly documented in recent weeks, nowhere is it more obvious than in the following chart from Morgan Stanley which shows the firm’s global correlation index.
Morgan Stanley’s Andrew Sheets summarizes the stunning move as follows: “Regional correlations, cross-asset correlations and individual stock and FX correlations have fallen simultaneously. That’s unusual; we haven’t seen a shift this severe in over a decade” and ultimately calls it for what it is: a “crash” in correlations unlike any seen before.
He then concedes that while ‘crash’ is not a term used lightly adding that “our editors here at Morgan Stanley won’t let us use it without a good reason” he “struggles to think of another word to describe just how much, and how sharply, cross-asset correlations have fallen. In just four months, we have gone from a market of unusually close linkages across markets, to one with usually divergent returns.”

This post was published at Zero Hedge on Jan 20, 2017.

Nigel Farage Joins Fox News

Following his comments yesterday that he “was proud to have played [his] part in Trump’s election,” Nigel Farage has announced that he will be joining Fox News channel as a contributor.
Taking a moment to enjoy the occasion yesterday, Farage admitted to an audience at the Hay-Adams hotel in Washington D. C.:
‘When I look back in years to come, perhaps the greatest joy of 2016 was that realisation, as state after state in the Midwest went red… Just to see the faces of those CNN presenters will stay with me forever.’

This post was published at Zero Hedge on Jan 20, 2017.

Trump Sworn In

Trump was sworn in to the dismay of CNN and others. Trump bashed Washington and said he was handing the country back to the people. He did not cheer the Republicans nor the Democrats. He spoke to the people who elected him and said they would not be ignored again. We will see. He will make America first and said that the United States has defended everyone else’s borders but not our own.
Armstrong Economics

This post was published at Armstrong Economics on Jan 20, 2017.

Trump Speech Preview: “Three Big Ideas”

With the markets laser-focused on every word Trump will utter in just over two hours during his inaugural address, and many wondering if he will stick to the script or as he is known to do, veer off it, Axios has obtained a big-picture preview of what Trump will discuss, noting “we’ll see the tension between Trump’s impulsive, improvisational style and the intellectual architecture his top aides are trying to build around it.”
Citing a top Trump source, Axios’ Mike Allen writes that the speech will focus on “three big ideas”
“The speech is an attempt to address the deep structural problems facing American society. … We’re talking here about decades-long problems.” The speech is “not ideological”: “It’s a rejection of ideological thinking. Ideological thinking is always looking at the world through a strictly dogmatic prism. It’s having a set of beliefs that are uncompromising.” The speech will convey “that a nation and its people and its affairs are like a family and you need to take care of them.” It is unclear if Trump will provide some details on his concrete plans about how to stimulate America’s economy, something which was lacking from his press conference last week, disappointing the market.
Axios notes that the speech is expected to be on the short side, “More JFK length (1,366 words) than Clinton (2,155 at his second inaugural).”

This post was published at Zero Hedge on Jan 20, 2017.

The Wrecking Ball Has Arrived

The wrecking ball, Donald J. Trump, was inaugurated today as the 45th President.
His inaugural speech was uncompromising! The masses in front of him were wildly in favor of what he had to say. The media was appalled and those who sat behind him – the establishment – were likely shell-shocked. They reacted with limited, nervous applause.
To my knowledge, there has never been an inauguration speech like this one. Contrary to Pogo, Trump defined the enemy and it was not us. This wrecking ball clearly differentiated between the average man and the parasites who inhabit Washington.
The speech was populist all the way. It was anti-establishment all the way. Clear demarcation lines were drawn. I sense that war was declared on Washington, DC today. There will be no compromise. Either Trump will be destroyed or he will dismantle much of the Washington establishment.
No one knows how this will play out. Media will interpret the Trump speech as demagogic populism. Many will consider it dangerous and compare it to the worst forms of despotism.
Democrats will condemn the speech and the man. Republicans will be quiet, somewhat in shock. They are probably meeting in back rooms right now to determine how serious this man is. Likely, they will underestimate him. After all, these are people who use words for advantage. Trump is not. He uses words to define accomplishment. He is also a competitive man that wants to win.

This post was published at Economic Noise on January 20, 2017.