Don’t look at us. Gold did it!

Some of you clearly recall the year 1969 where Ted Kennedy drove off a bridge with a woman in his car. (No, this article really is not about politics, but describes how the media shapes the public’s thoughts and views). Accounts of the Chappaquiddick event paint a sordid picture. It was clear to anyone that Kennedy was partying with single women while his wife was absent, drinking, flirting and left the party with a woman for reasons that evidence suggests were not altogether innocent. It was likely he was drunk. It was likely that he was speeding away from the sheriffs’ deputy who saw the car parked by a cemetery a few minutes earlier and came over to ask if they needed help. His actions – driving off a bridge – caused her death. But somehow, he managed to hold onto his office. He sidestepped punishment, stayed in office, and got away with a heinous crime.
Who did what and with what effect? Agent -action – results. Agents make a choice, they act, and then we see a result. And we determine responsibility in the construction of a story by assigning one of the players as the “agent.” Kenneth Burke wrote over 400 pages to explain this, though he really nailed it by the first page. Very simple grammar right? We learned it in ‘grammar-school.’ Surely nobody could fool us simply by manipulating grammar… right?
A speech critic and colleague of mine, David Ling, explained how Kennedy pulled it off: Within Kennedy’s speech to the people of Massachusetts, Kennedy was able to ascribe the tragic result to the ‘scene’ of the crime, AND to the mysterious ‘Kennedy curse’ that had afflicted his family. Kennedy was at the wrong place at the wrong time – and this evil ‘curse’ that had taken the lives of his two brothers … well he mentions it and leave it to the imagination. Though he repeatedly takes responsibility in the speech, his underlying argument was that a dark night, a wrong turn, a poorly designed bridge, and a curse conspired to commit the crime against him (and Mary Jo, of course).
The sheeple of Massachusetts bought it.
So, when analyzing the reasons that an action has occurred, as we do every day when we try to understand our stock charts, we must look very closely at grammar and the narrative structure of the stories told that explain it. And I see a simple, purposeful, clever strategy as I look at headlines each day about stocks bonds, currencies, etc., and especially describing movements in the price of gold. The writers of headlines and articles conceal the real agent, and point to another as they ascribe a reason for the action.
Consider these headlines from March 31, 2017:

This post was published at TF Metals Report on April 2, 2017.

Fed Reportedly “Tired of Waiting for Inflation,” Plans to Give Every Household $1 Million in Cash

The basic idea is that giving each household, regardless of wealth or income, $1 million each will spur consumption so mightily that inflation will skyrocket.
The Federal Reserve has been trying to boost the official inflation rate for eight long years, and apparently patience with current policies is finally wearing thin. Rumor has it that the Fed is readying a new “nuclear option”: distributing $1 million to each household in the U. S.
The Fed can create any sum of dollars it chooses with a few digital keystrokes. An unidentified source at the Fed reported, “The handheld calculators at the Fed only have 12 digits, so there’s a bit of confusion about how much money we’ll have to create to give $1 million to all 100 million U. S. households. The consensus answer is $100 trillion, but they’re putting the numbers into the current econometric models to verify this.”
The basic idea is that giving each household, regardless of wealth or income, $1 million each will spur consumption so mightily that inflation will skyrocket. “What the Fed has wanted for eight long years is to generate an expectation of inflation,” our source explained, “so that consumers will spend whatever cash or credit they have now, knowing that it will buy less in the future.”

This post was published at Charles Hugh Smith on APRIL 02, 2017.

Julian Assange In Jeopardy As Exit Poll Shows Lasso Winning Ecuador Presidency

It may be the worst possible news for Julian Assange. Or the best, depending on which exit poll of the Ecuador presidential election is right.
With the results of the Ecuador presidential run-off race set to be announced in hours, two exit polls projected two different winners in a tight election in OPEC’s smallest member nation on Sunday evening, sparking celebrations in the rival camps of a leftist government-backed candidate and a former banker. As Reuters reports, the final results could take days to tabulate, the electoral council has warned, in a race that could extend a decade of leftist rule or usher in more business-friendly policies in the oil-rich Andean country.
According to one exit poll, conservative challenger Guillermo Lasso had 53.02% of votes versus 46.98% for government-backed Lenin Moreno, an exit poll by leading pollster Cedatos showed on Sunday afternoon. With Cedatos considered one of the most trustworthy polls, the Lasso camp broke into cheers, with supporters waving flags and honking horns in wealthier northern Quito.

This post was published at Zero Hedge on Apr 2, 2017.

Stock-To-Bond Ratio Back At 2007 Peak

As 1Q17 finishes with a gain in the books, the stock to bond performance ratio has also broken to a new cycle high, elevating to levels not seen since mid-2007.
Our measure of the stock to bond ratio measures the total return of the S&P 500 relative to that of the JPM 10 year treasury total return index. When the blue line rises, stocks are outperforming bonds, and vice versa.

This post was published at Zero Hedge on Apr 2, 2017.

Base Jumping off the Stock Market’s Peak

According to Bank of America, there is no time to leap into the stock market like the moment before its cataclysmic fall. BofA’s Michael Hartnett has no doubt that the stock market stands on the edge of catastrophic collapse, but the euphoric rise before it takes the plunge could be the greatest financial rush you’ll ever know:
As Hartnett explains, the catalyst for bull in equity and credit markets since 2009 was the ‘revolutionary monetary policy of central banks’ who, since Lehman, ‘have cut rates 679 times and bought $14.2tn of financial assets.’ And, once again, he warns that this central bank ‘liquidity supernova’ is coming to an end, as is ‘the period of excess returns in equities and corporate bonds, as is the period of suppressed volatility.’ (Zero Hedge)
The tail-end risk of this trade What happens to the Fed’s economic recovery when the Fed ends its money boom just as irrational exuberance in the stock market is retreating? Unless Trump pulls a magic rabbit out of his hat that looks far better than his ‘great’ health-care plan, the Trump Rally will quickly turn this year into the Trump Dump.
Consider what the Trump Dump could turn into: The Fed plans 3-4 rate increases into the unwind of the irrational Trump Rally. It also hinted this week at money-supply reduction. This unwind of Fed and folly will fall into an economy where earnings are far from justifying inflated stock prices, where jobs pay about the same as they did thirty years ago (adjusted for inflation) and where benefits are far below what they were thirty years ago, while the peak of retiring baby boomers dives into a pool retirement funds that have evaporated out from under them because of the Fed’s decade of near-zero interest. (That just names a few of the hazards that lie ahead on this trajectory.)
What could possibly go wrong?

This post was published at GoldSeek on 2 April 2017.

What Is America Going To Look Like When Stocks, Home Prices And Even Used Cars All Crash By At Least 50 Percent?

Have you ever thought about what comes after the bubble? In 2008 we got a short preview of what life will be like, but most Americans seem to have come to the conclusion that the last financial crisis was just a minor bump in the road toward endless economic prosperity. But of course the truth is that the ridiculously high debt-fueled standard of living that we are enjoying now is not sustainable, and after this bubble bursts it will be an extremely painful adjustment for our society.
Since the last financial crisis, the U. S. national debt has nearly doubled, corporate debt has doubled, stock valuations have reached exceedingly ridiculous extremes, the student loan debt bubble has surpassed a trillion dollars, we are facing the largest unfunded pension crisis in U. S. history, and in many parts of the country (particularly the west coast) we are facing a housing bubble that is even worse than the one that burst in 2007 and 2008.
And even with all of these bubbles, U. S. GDP growth has been absolutely anemic. Even if you believe the grossly manipulated numbers that the federal government puts out, the U. S. economy grew at a ‘miserably low’ rate of just 1.6 percent in 2016…

This post was published at The Economic Collapse Blog on April 2nd, 2017.

Hedge Fund CIO: “What If The ‘Trump Earnings Surge’ Was Just An Illusion?”

We bring readers this follow-up note to our earlier quote from the latest Weekend Notes by Eric Peters, CIO of One River Asset Management, as it provides a glimpse into the process of cognitive disappointment many other market participants may soon encounter, once the following key question is asked, and answered: ‘What happens if Trump can’t cut corporate taxes? What happens if we’ve recalibrated earnings to a future that was just an illusion?’
‘How’s he going to cut taxes and make it revenue neutral?’ asked the CIO. ‘How’s he going to do massive infrastructure when we’re so deep in debt?’ he continued.
‘And why is the yield curve flattening? Why is loan demand declining? Why is consumer confidence at historic highs while retailer stocks are getting demolished?’ He paused to catch his breath.
And still panting asked, ‘What happens if he can’t cut corporate taxes? What happens if we’ve recalibrated earnings to a future that was just an illusion?’

This post was published at Zero Hedge on Apr 2, 2017.

Matt Drudge Warns: ‘There Is A Crisis On Many Fronts… I Suspect There Is Sabotage’

Top news reporter Matt Drudge crashed the Michael Savage show this weekend to discuss the state of affairs in Washington D. C.
Drudge recently Tweeted his discontent with the Republican Party, going so far as to say that ‘Republicans lied about tax cuts’ and that he wants his ‘vote back.’
On the Michael Savage show, Drudge doubled down on his frustrations:
I do think there is a crisis… on many front… Is some of it of his own making?

This post was published at shtfplan on April 2nd, 2017.

Why The Market’s “One-Sided Stability” Is Becoming Increasingly Dangerous: Deutsche Explains

A topic that has been beaten to death both on these pages and virtually in every other financial website, has been the remarkable complacency in markets manifested, among other things, by near record low realized and implied equity vol, coupled with a recent plunge (if subsequent rebound) in cross-asset correaltions. Furthermore, as a result of habituation to both central bank and HFT dominance, and the relegation of human-driven, “actively managed” strategies, the “buy the dip” period has collapsed to a record short period of time, as every drop in risk is now simply an opportunity to “BTD.”
While all of this is well-documented in the land of equities, less has been said about the extension of recent vol effects across other asset classes, such as rates and fixed income, and in general to the broader, cross-asset market topology.
For one relevant discussion of how volatility is impacting the rates market, where until recently we had witnessed record shorts around the 10Y tenor, we present the latest note from DB’s Dominic Konstam, whose latest report is summarized as follows: “market dynamics during the last month indicate a change in investor perceptions of the relative pace of Fed tightening and the delivery of fiscal stimulus. We believe that despite considerable local stability, the market is vulnerable to a risk off trade. We see an asymmetric risk between rally and sell off. In our view, a bull flattening rally below 2.25% could cause substantial short covering activity, adding a tail wind to a rally below these levels.“

This post was published at Zero Hedge on Apr 2, 2017.

Investors Notch an Ominous Record

The market stumbles these days and a rainbow forms in the skies over Wall Street.
Just another chance to buy the dips.
The Dow’s up about 200 this week after last Friday’s health care adventure.
And why not?
For eight years dip buyers have been rewarded royally for their efforts.
Will this time be different?
It was John Templeton – Sir John Templeton – who said bull markets are born on pessimism, grow on skepticism, mature on optimism… and die on euphoria.
Eight years in… has this bull market finally passed the optimism phase… and entered euphoria?
We consider one possible sign today…
Think of the crash of 1929 and what springs to mind?
Shoeblacks… paper slingers… taxi hacks, all giving the hottest stock tips?
Yes, maybe that. But also something else…
Margin buying.
Investors borrowing money to buy stocks. Buy now… pay later. (And pay they would.)

This post was published at Wall Street Examiner on March 31, 2017.

Does Donald Trump Regret Anything? Highlights From His FT Interview

With Donald Trump’s 100th day in office fast approaching and set to coincide with the April 28th deadline when the Continuing Resolution is set to expire, potentially resulting in a government shutdown, the FT sat down with the president for an interview that covers some of the more pertinent aspects of Trump’s presidency to date.
As the FT notes, halfway through the interview in the Oval Office, Trump is asked if he regrets any of his abrasive tweets about allies, political opponents and the state of the world. Trump pauses, momentarily, and responds: ‘I don’t regret anything, because there is nothing you can do about it. You know if you issue hundreds of tweets, and every once in a while you have a clinker, that’s not so bad.’ To which the FT responds, “there are tentative signs that there is more method behind the madness than critics suspect.”
In addition to the previously noted warning that the US is prepared to engage North Korea unilaterally should China fail to intervene (even though it already has to an extent), here are some of the highlights:
On whether Trump will bring up tariffs and “equalization” during his meeting with Xi:

This post was published at Zero Hedge on Apr 2, 2017.

46% Of Millennials In San Fran Ready To Move Out; Blame Housing, Traffic & Trump

A growing number of snowflake millennials are saying they can no longer stand to live in the preeminent American ‘safe space’ of San Francisco because the “rent is too damn high”, the traffic is too damn congested and, well, President Trump. According to a new poll conducted by the Bay Area Council, 40% of all people living in San Francisco say they’re ready to ditch the city for greener pastures while the number is even higher among millennials at 46%.
A growing number of Bay Area residents, led by millennials (18-39), are looking to greener (or less expensive) pastures as the region’s housing and traffic crises combined with an astronomical cost of living take their toll, according to results of the 2017 Bay Area Council Poll released today. The poll found that 40 percent of respondents are considering leaving the Bay Area in the next few years, with millennials leading the way at 46 percent, along with those who spend the biggest share of their income on housing.
‘Losing our youth is a very bad economic and social strategy,’ said Jim Wunderman, President and CEO of the Bay Area Council. ‘But until we get serious about building the housing we need we’re going to continue seeing our region drained of the young and diverse talent that has helped make the Bay Area an economic powerhouse. We know what the solutions are – streamline local approval and reduce fees and regulatory costs – we just need the political will here and in Sacramento to make them happen. It can be done, it must be done and we’re working now to get it done.’

This post was published at Zero Hedge on Apr 2, 2017.

The Social Security Trust Fund Is Just a Stack of IOUs in a West Virginia Filing Cabinet

The Social Security Trust Fund every retiree is relying on is not what most Americans believe it is.
The brutal truth is this $2.85 trillion fund, which is supposed to keep the Social Security program solvent until the year 2033, has no money in it whatsoever.
The entirety of the Social Security Trust Fund is held in ‘special obligation bonds,’ a type of government bond issued for a single purpose (in this case, the funding of Social Security benefits).
In other words, this ‘fund’ is actually debt.
And unlike marketable Treasury bonds, these special obligation bonds can’t be sold. They only have value if the U. S. government buys them back.
They also differ from marketable Treasuries in that they exist in paper form. All of them are stored in two loose-leaf binders in a filing cabinet at the ‘Bureau of Public Debt’ in Parkersburg, W. Va.
But what many people fail to realize is that what the paper bonds represent isn’t money that can be sent to Social Security beneficiaries, but debt owed by the U. S. government.
President George W. Bush made that clear on a little-remembered visit to Parkersburg in April of 2005:
‘A lot of people in America think there’s a trust, in this sense – that we take your money through payroll taxes and then we hold it for you, and then when you retire, we give it back to you. But that’s not the way it works.

This post was published at Wall Street Examiner on March 31, 2017.

First Post-Brexit Tremors: Theresa May “Would Go To War” To Protect Gibraltar

The ink has yet to dry on Theresa May’s Article 50 signature from last week which officially started the UK’s 2-year long divorce from the EU, and already Europe has been traumatized by comments from former Conservative leader Michael Howard, who suggested that Theresa May is be prepared to go to war to protect Gibraltar as Margaret Thatcher once did for the Falklands, comments which according to the Guardian were “immediately criticized as inflammatory.”
Howard told Sky News on Sunday that: “There is no question whatever that our Government will stand by Gibraltar… 35 years ago this week another woman Prime Minister sent a task force half way across the World to defend the freedom of another small group of British people against another Spanish-speaking country…. I am absolutely certain our current Prime Minister will show the same resolve in standing by the people of Gibraltar.”

This post was published at Zero Hedge on Apr 2, 2017.