15/4/17: Swift & Digital Money: Cybersecurity Questions

Swift, the interbank clearance system, has been the Constantinople of the financial world’s fortresses for some time now. Last year, writing in the International Banker (see link here), I referenced one cybersecurity incident that involved Swift-linked banks, and came close to Swift itself, although it did not breach Swift own systems. The response from Swift was prompt, pointing out that there has never been a cybersecurity breach at Swift.
Well, it appears that the fortress is no more. Latest reports suggest that NSA (a state actor in cybersecurity world) has successfully breached Swift firewalls. Details are here:

This post was published at True Economics on Sunday, April 16, 2017.

London Housing Market Suffers Worst Collapse Since Financial Crisis

At the end of 2016 we reported that the formerly invincible London home market had suffered its biggest crack in years, when home prices plunged the most in six years according to Rightmove. Asking prices in London dropped 4.3% in December with inner London down 6%. Meanwhile, the most exclusive neighborhoods, like Kensington and Chelsea, recorded even sharper declines at nearly 10% as home buyers migrated to cheaper areas of the city.
While it was unclear what was the catalyst: whether post-Brexit nerves, China’s crackdown on capital outflows, the ongoing depressed commodity market, or reduced migrations by wealthy Russian and Arab oligarchs, what is obvious is that the slump has continued, and according to the Royal Institution of Chartered Surveyors, its price balance for the city fell to the lowest since February 2009 last month, plunging to minus 49, which means that a greater percentage of agents reported drops in March.

Still, as Bloomberg reports, more respondents than not still expect prices in London to rise over the next year, the report showed. they may be disappointed.

This post was published at Zero Hedge on Apr 15, 2017.

UBS: “The Current Market Configuration Is The Opposite Of February 2016”

Last February, as Chinese stocks and the Yuan were crashing every day, sending the S&P tumbling and government bond yields crashing to record lows, in the process aborting the Fed’s first attempt to hike rates, volatility was soaring and confidence in the economy was in the dumps: in short, the bottom appeared like it was about to fall off. And then, as if by magic, theShanghai Accord happened, a few central bankers and finance ministers sat down behind closed doors and ironed out an agreement whose details are still unknown, and unleashed one of the biggest market surges in history, in the process once again fooling the Fed and central banks that (benign) inflation has again arrived, lead to not one but two rate hikes by the Fed this time. Indeed, unlike last February when pessimism rules, this time it is optimism about the economy and future that is seemingly boundless, even if the actual economy refuses to confirm this euphoric outlook.
And, if UBS is right, there is no reason to be optimistic. At all.
In a note titled “Separating reflation myth and reality”, the Swiss bank looks at the record gap in what has now become watercooler talk, namely that between hard and soft data surprises, and says that the gulf between the two series is now unprecedented:
The cause of the gap between soft and hard data is often put down to a lag. However, not only is the response from hard data more delayed than usual, the magnitude of the gulf between them is unprecedented. We believe understanding the reasons behind this gap is central to the identifying the nature of today’s reflation, and charting its future.

This post was published at Zero Hedge on Apr 15, 2017.

Global Credit Atlas: Who Yields What Around The World

While global interest rates have risen from all time lows, starting around mid-2016 when the China (not Trump) reflation trade hit and has since fizzled, in the process cutting the amount of negative-yielding debt by almost half, the reality is that rates still remain painfully low; so low that many banks have recently issued pieces asking if the world – awash in record debt – can handle a sizable increase in rates.
Perhaps the world won’t have a chance to find out: following the recent inflation prints, it appears that the reflation trade has officially ended, as expected here in February when we showed that the Chinese credit impulse fizzled; instead – and in line with Trump’s latest “weak dollar, low rates” policy – what may come next is not a spike in yields and a “controlled” steepening of the curve, but yet another washout to the downside, as all those predicting the end of the great bond bull market are proven wrong, again.

This post was published at Zero Hedge on Apr 15, 2017.

Junior Gold Miner ETF Suspends Creation Orders Due To Shortage Of Underlying Instruments

Over the last several weeks, two years after Howard Marks first brought attention to the topic with a letter in which he asked “What Would Happen If ETF Holders Sold All At Once?” some investors have once again quietly voiced concern about the inordinate and rising influence passive investing in general, and ETFs in particular, exert on stocks but especially on fixed income securities, including illiquid bonds and loans. To address some of these concerns, earlier last week, Goldman Sachs released a report titled “A closer look at years of passive (aggressive) investing in credit” in which it observed that the growth patterns shown in Exhibits 1 to 3, particularly the increase in the ownership share of ETFs…

…. have consistently raised concerns among fixed income investors and regulators. The fear is that the combined effect of the “liquidity mismatch” inherent to ETFs and a potential abrupt reversal of the inflows of the past several years could prove damaging to the secondary market. In February 2013, then Fed Governor Jeremy Stein echoed these concerns, pointing specifically to the growth of corporate bond ETFs: ‘If investors in these vehicles seek to withdraw at the first sign of trouble, then this demandable equity will have the same fire-sale-generating properties as short-term debt.’

This post was published at Zero Hedge on Apr 15, 2017.

Doug Noland: Risk Off Making Some Headway

This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
Global ‘Risk Off’ has been making some headway. This week saw ten-year Treasury yields drop 15 bps to 2.23%, the low since the week following the election. German bund yields declined another four bps to a 2017 low 19 bps. The Crowded Trade hedging against higher rates is blowing apart. The Crowded yen short has similarly been blown to pieces, with the Japanese currency surging an additional 2.3% this week (increasing 2017 gains to an impressive 7.7%). Japan’s Nikkei equities index dropped 1.8% this week, with y-t-d losses rising to 4.1%. Meanwhile, this week Gold surged 2.5%, Silver jumped 2.9% and Platinum gained 1.9%. In contrast to the safe haven precious metals, Copper dropped 2.8%, Aluminum fell 2.7% and nickel sank 4.2%.
European periphery spreads (to bunds) widened meaningfully. Italian spreads widened 14 to 213 bps, the widest since early-2014. Spanish spreads widened 13 to an eight-month high 152 bps. Portuguese spreads widened six bps and French spreads seven. Italy’s stocks fell 2.6%, with Italian banks down 5.9%. Spanish stocks lost 1.9%. European bank stocks dropped 2.6% this week.
A little air began to leak from the EM Bubble. Russian stocks were hammered 5.9% to an eight-month low, increasing 2017 losses to 14.2%. Brazilian stocks lost 2.5%. Chinese equities suffered moderate declines, while appearing increasingly vulnerable. For the most part, however, EM held its own. The weak dollar helped. EM equites (EEM) declined only 0.6% for the week, while EM bonds (EMB) gained 0.4%.

This post was published at Wall Street Examiner on April 15, 2017.

I Feel Sick, Because The U.S. Is On The Verge Of Making An Extremely Costly Mistake

All day long I have just felt sick. Right at this moment, we are closer to war with North Korea than we have been at any point since the Korean War ended in 1953. If Donald Trump decides to launch a military strike against North Korea’s nuclear facilities, the consequences could be absolutely catastrophic. The North Koreans have already promised to launch nukes at South Korea and at U. S. military bases in the region in return, and they also have vast stockpiles of chemical and biological weapons that they could use as well. To get an idea of the chaos that just a handful of North Korean agents armed with biological weapons could unleash inside the United States, just see this article. A military strike on North Korea could be the spark that sets off a global war in which millions of people die, and so we need to do all that we can to prevent this from happening. My hope is that if people make enough noise that Trump will back down and decide not to attack.
Earlier today, I was sent the following piece of intel. I was told that I could share it with all of my readers as long as I kept the name of the individual that sent it to me out of it. According to this source, it certainly looks as though an attack is being prepared…
An O-5 silver maple leaf Air Force puke says the bomb buses in Guam are maximum loaded, fully fueled and reserves are topped off. ‘ Reserves are only topped off just before the buses go airborne.
Kunsan has everything pointed north and ALL gates are closed…no traffic in or out.
7 air wings have been moved into the area and an augmented Carl Vinson CVN-70 (not alone) (per CMC x 2 and an O-5) has also moved into the area.

This post was published at The Economic Collapse Blog on April 14th, 2017.

Keiser Report: Horrible Advice for Generation X (E1058)

The following video was published by RT on Apr 15, 2017
In this episode of the Keiser Report Max and Stacy discuss some really horrible advice for Generation X about their impossible retirement as they try to repay their student loans designed to fail. In the second half Max interviews Chris Whalen, author of the new book, Ford Men: From Inspiration to Enterprise, about the myth that is the legend called Henry Ford.

These Are America’s Most Creative Cities

Much has been written about the role of the creative economy as a key indicator of economic health. As Visual Capitalist’s Nick Routley writes, the ‘rise of the creative class’ and ‘creative clusters’ are concepts that inform the larger conversation on cities as the economic drivers of regions. As a result, everyone from academics to governments are increasingly looking for ways to measure the scope and size of the creative economy.
According to the U. S. Bureau of Economic Analysis, the creative economy accounts for 4.2% of the GDP and is valued at $704 billion. It’s also a segment of the economy that’s still growing. For example, art director and graphic design jobs are growing across the country at rates of 9% and 13%, respectively.
While there is no consensus on where to draw the line on what jobs or sectors are ‘creative’, we do know that cities are the primary places where measurable creative activities take place.
Today’s infographic from Homes.com measures the number of creative jobs, creative schools, performing arts companies, and motion picture and video companies, to create the Creative City Index. While not comprehensive, it is an interesting snapshot of the creative economy of the country.

This post was published at Zero Hedge on Apr 14, 2017.

Putting a Damper on the Dollar

President Donald Trump put a damper on the dollar earlier this week when he claimed, in a Wall Street Journal interview, it was ‘getting too strong.’
‘I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting – that will hurt ultimately … It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.’
After his comments, the dollar index dropped 0.7%.
During an interview on CNBC’s Future’s Now, Peter Schiff said Trump’s comments on the dollar were correct but insisted the president doesn’t understand the reasons behind it or its actual impact on the economy.
‘Well, I believe he’s correct. The dollar is overvalued, but he’s wrong in his view about how the overvalued dollar impacts the US economy, at least in the short-run. And because the dollar is overvalued, we have an artificially high standard of living. I think that when the dollar does decline, it’s going to take the US standard of living down with it.’

This post was published at Schiffgold on APRIL 14, 2017.

Bank Lending Shrinking As Wage Growth Remains Stagnant

I appeared on Fox News Radio today on the Tom Sullivan Show. He asked me about the non-existant inflation report today, the poor retail sales numbers and the 0 perfect wage growth report.
We also got around to discussing positive bank profits. But I pointed out that bank lending is declining in the face of stagnant wage growth.
Bank Loans and Leases YoY are declining.

This post was published at Wall Street Examiner on April 14, 2017.

There’s a Gold Cartel Aimed At Keeping the Price Supressed! – Bill Murphy Interview

The following video was published by FutureMoneyTrends on Apr 15, 2017
We have Bill Murphy with us today to share his thoughts on why Gold’s sentiment is at a twenty year low and the constant manipulation of precious metals.
Bill explains if the Dollar could suffer from the geo political tensions going on and also the potential of Silver breaking out and becoming a Silver Bug’s dream!

China Just Flooded Its Economy With A Record Amount Of New Debt

China vowed that this time it was serious about finally deleveraging its economy. Once again, it lied.
First, a quick tangent: as a reminder, when it comes to the global economy, increasingly more analysts are realizing that just one number truly matters: that of the global credit impulse, which as we cautioned for the first time two months ago, had recently turned negative, mostly as a result of the recent deceleration in China’s credit creation.
Then earlier this week, in a follow up report from UBS, the Swiss bank found two material developments: the reflation trade of the past year was entirely the function of Chinese credit dynamics…
… and making matters worse, China’s credit impulse had now turned decidedly negative, suggesting a similar fate for the global credit impulse.

This post was published at Zero Hedge on Apr 14, 2017.

Ted Butler Quote of the Day 04-15-17

I’d prefer not to be wishy

washy when it comes to COT market structure analysis, but in COMEX gold futures, we are about midway between the historical extremes of the past year and that’s just another way of saying neutral. Price momentum could easily carry gold higher, but it’s just as likely that the commercials might look to soon ring the cash register and rig a downside flush out of some unknown proportions. Gold did just as it was expected to do price-wise in climbing higher on managed money buying this year, but having done so, that changed the market structure from extremely bullish to extremely neutral.

Like Las Vegas, it’s different in silver, as its market structure is as bearish as it has ever been. With no big increase in total open interest for the reporting week, I wouldn’t expect another very large increase in technical fund buying and commercial selling in Friday’s report, but considering the large increases over the past two weeks, that’s not saying much. The COT market structure points to lower silver prices ahead and, as is usually the case, this is also the only bearish factor, as can be seen in most current market commentary.

While I’m as prepared (mentally) for a deliberate silver price take-down on COT considerations as I suppose I can ever be, there are other factors present, not the least of which is the growing awareness and knowledge that silver prices are manipulated on the COMEX. This COMEX positioning fraud and manipulation will fail when it is sufficiently exposed, just like all scams and frauds, and that day is closer than ever. But there are other considerations driving me to maintain a full investment exposure, not the least of which is JP Morgan’s continued grab for physical silver and the chance for an unexpected double cross involving the other 7 big COMEX silver shorts

A small excerpt from Ted Butler’s subscription letter on 12 April 2017.

  More precious metals news & information available at
Ed Steer’s Gold & Silver Digest.