Gold: $1289.40 UP $3.50
Silver: $18.49 UP 0 cents
Closing access prices:
Gold $1285.00
silver: $18.42!!!
Premium of Shanghai 2nd fix/NY:$7.55
LONDON FIRST GOLD FIX: 5:30 am est holiday
For comex gold:
For silver:
For silver: APRIL
Total number of notices filed so far this month: 744 for 3,720,000 oz

This post was published at Harvey Organ Blog on April 17, 2017.

We’re All Yen Traders Now

Today’s post will have no answers. I am not sure anyone truly understands the strange day to day squiggles of the increasingly intertwined global financial system, but I wanted to highlight a relationship that cannot simply be monkeys typing Shakespeare.
Let’s start with the market developments over the past couple of days. Last week ended on a trading holiday, with markets closed for Good Friday. Weirdly, the U. S. Federal Government does not take the day off. With Wall Street deserted, there were a bunch of economic releases that shit the bed. Yup, they were not good.
I took the liberty of lifting a couple of charts from ZeroHedge that sum up the extent of the economic miss:

This post was published at Zero Hedge on Apr 17, 2017.

Mnuchin Agrees With Trump: “Strong Dollar Over Short-Period Of Time Is Hurting US Economy”

In an interview with the FT, Treasury Secretary Steven Mnuchin discussed Trump’s “tremendous” tax reform, and confirmed what many already knew: that the push to revise the US tax code has been dramatically slowed by the failure to repeal and replace Obamacare, and conceded that the administration’s timetable for ambitious tax reforms will be delayed. Mnuchin also said the target to get tax reforms through Congress and on President Donald Trump’s desk before August was ‘highly aggressive to not realistic at this point’.
However while his tax-related comments were predictable, it is what he said about the strength of the dollar that was most notable. Recall that during his confirmation hearing, Mnuchin stated that a strong-dollar is preferable “in the long-run.” The question then became how he would reconcile his strong dollar stance with Trump’s recent flip-flop, in which the president urged for not only lower interest rates but a weaker dollar. This is what he told the FT about what relative value of the USD he prefers:

This post was published at Zero Hedge on Apr 17, 2017.

A Permanently High Plateau

Margin debt hits fresh new highs, but according to status quo puppets, nothing to worry about because its different this time. (i.e. just like 1929 – in the words of Irving Fisher, ‘a permanently high plateau’ [of prosperity].) And in a sense such talk is correct, because the markets have never been more rigged, however even with this, the bureaucracy’s price managers will fail at some point (stocks usually peak a few months after a margin debt peak), as all faulty and unfair systems self-destruct from within eventually. In the case of the stock market, as with all other previous episodes since 1987, it’s speculator exhaustion that develops, where while the present sequence is pushing the extremes, it too will end.
That said, the extreme could always get ‘more extreme’. According to Martin Armstrong (his computer?) the Dow could go to 42,000. In looking at the monthly CBOE Volatility Index (VIX) below, I’m afraid I can’t agree with Marty this time, at least not with his cavalier call for a doubling of the Dow from here. Yes, if speculator betting practices don’t change as we head into summer, maybe the Dow could grind up to 22,000 based on the numerics previously discussed on these pages; however, the possibility of a doubling from here appears unlikely. Indeed, as you would know in reading these pages these past month, a move to 22,000 (2450 on the S&P 500 [SPX]), is best-case scenario as far as we can project. Anything past these metrics cannot be long for this earth.
How could such a move happen? What is his computer suggesting? It’s suggesting the European Union (EU) will break up this year, and money will flow from the Eurozone to the US in a ‘safe haven bid’ because the ‘big money’ can’t buy gold (or bonds apparently). They can’t buy gold because the market is too small, so the geniuses who manage money will be forced to buy stocks. That’s a nice story, and knowing people, he will likely be right to an extent. However in circling back up to the margin debt situation, some people might consider paying off their debt in a time of increasing uncertainty – and this is the key (and key fault of Marty’s argument) – especially if stocks are falling.

This post was published at GoldSeek on 17 April 2017.

Netflix Misses On Subs, Guides Lower; Burns $422 Million But Is Optimistic Thanks To Adam Sandler

Last quarter investors forgot the negative cash-flow, forgot the soaring cost of content, forgot the rampant competition, and forgot fact that Netflix slashed its domestic subscriber growth expectations, and just bought-the-f##king-record-high because international subscriber growth soared. This quarter, however, they may be less gullible because that surge in international subscribers not only did not happen, but missed by a whopping 370K subs, missing both the street forecast of 3.9 million and the company’s own guidance of 3.7 million. Adding to the pain, domestic subscribers of 1.42 million also missed consensus of 1.59 million and the company’s forecast of 1.5 million.
Then, unlike last quarter, NFLX’s outlook was far less euphoric, and the company now sees Q2 EPS of 15c, 8c below consensus. Revenue was also fractionally below expectations with the company expecting sasles of 2.755BN in Q2, below the 2.76BN est.
Results summary:

This post was published at Zero Hedge on Apr 17, 2017.

The Coming French Revolution

In a few weeks, France will elect its next president. Given the French executive’s considerable powers, including the authority to dissolve the National Assembly, the presidential election, held every five years, is France’s most important. But the stakes are higher than ever this time.
The two frontrunners are the far-right National Front’s Marine Le Pen and Emmanuel Macron, who served as economy minister under Socialist President Franois Hollande, but is running as an independent. If, as expected, Le Pen and Macron face off in the election’s second round on May 7, it will be a political watershed for France: the first time in 60 years that the main parties of the left and the right are not represented in the second round.
France has not endured such political turmoil since 1958, when, in the midst of the Algerian War, General Charles de Gaulle came to power and crafted the Constitution of the Fifth Republic. That shift, like any great political rupture, was driven by a combination of deep underlying dynamics and the particular circumstances of the moment.

This post was published at Zero Hedge on Apr 17, 2017.

Trump Just Turned The Tables On The Fed – Episode 1256a

The following video was published by X22Report on Apr 17, 2017
London housing market is imploding and this is starting to happen in many other countries. Boeing will be laying off hundreds. Homebuilder confidence dips in April, the housing market is imploding. Empire Fed declines as the real hard data shows what’s really happening with the economy. Trump is playing with the Fed and just turned the tables on the Fed to show that they are the ones bringing down the economy. Be prepared the push is on to bring the economy down, the fight is who will be blamed. India’s ATM machines are running out of cash.

Stocks and Precious Metals Charts – Identities

‘If you wanted to understand a politician you mustn’t pay too much attention to his speeches, but find out who were his paymasters. A politician couldn’t rise in public life, in France any more than in America, unless he had the backing of big money, and it was in times of crisis like this that he paid his debts.
The great corporation which employed you lied to you, and lied to the whole country – from top to bottom it was nothing but one gigantic lie.’
Upton Sinclair
“To keep me from becoming conceited because of these surpassingly great revelations, there was given me a thorn in my flesh, a messenger of Satan, to torment me. Three times I pleaded with the Lord to take it away from me. But he said to me, ‘My grace is sufficient for you, for my power is made perfect in weakness.’ Therefore I will boast all the more gladly about my weaknesses, so that Christ’s power may rest on me. That is why, for the Lord’s sake, I delight in weaknesses, in insults, in hardships, in persecutions, in difficulties. For when I am weak, then I am strong.
2 Corinthians 12:7-10
Great power and wealth rarely serve to bring out the best in a person. Rather to the contrary, it most often exposes and amplifies any of their weaknesses in character.
If a fellow was a duplicitous, greedy, self-serving, and double-dealing type before they came into power, it is highly unlikely that more wealth and more power will suddenly make them virtuous. The notion that a greedy person will somehow obtain enough and suddenly become empathetic is a fallacy. Greed knows no bounds and is never satisfied by its very nature. We can imagine ourselves having enough, perhaps, but that is because we are not greedy.
Indeed, I think the mistaking of great wealth and power for virtue in the first place is one of the greatest errors of our culture.

This post was published at Jesses Crossroads Cafe on 17 APRIL 2017.

Sean Spicer Briefs Press On Latest North Korea Developments

In a relatively short daily press briefing, Sean Spicer took a barrage of questions on everything from North Korea to Trump’s taxes and White House visitor logs but largely just repeated official administration policies on the issues.

North Korea – Repeating Trump’s previous position, Spicer noted that the White House will not define any sort of ‘red lines’ with regards to North Korean provacations but confirmed that all options remain on the table. As of now, Spicer indicated that the White House continues to pursue active negotiations with President Xi of China to exert maximum, non-military pressure on North Korea which includes China’s recent decision to halt coal imports.

This post was published at Zero Hedge on Apr 17, 2017.

Beware Of Delusional Market Timers

This past week has seen a lot of whipsaw. But, from an Elliottician’s perspective, it was to be expected, as the market has been tracing out a b-wave within a corrective 4th wave structure. This is the most variable segment within Elliott’s 5 wave structure, and typically acts just as we have seen over the last few weeks.
As the stock market hits heights which have surprised most market participants, we have seen many market participants maintain a bearish bias through most of the rise because the “fundamentals suggest the market should not be this high.”
They review data published by research firms supporting their thesis based upon earnings, money flow, margin debt, GDP, and a myriad other “reasons” as to why the market should not be this high. They have developed a certain amount of comfort in “knowing” that they are not wrong, but, rather, it’s the stock market which is wrong, despite the market continuing its march higher. Moreover, they take further comfort in their belief that other investment advisors share their bearish perspectives.

This post was published at GoldSeek on 17 April 2017.

What the Heck’s Going On with Classic Cars?

The asset class of Beautiful Machines heads south.
Prices of collector cars fell again, according to the April report by Hagerty, which specializes in insuring vintage automobiles. After a tremendous price surge that peaked in 2015, they’ve been ratcheting their way down ever so slowly. But it adds up after a while.
The ‘Hagerty Market Rating Index’ – which tracks the ‘heat’ of the market – fell 0.33 points to 66.65 in April. The index, which is adjusted for inflation, is now down 7.4% from its all-time high of 71.99 in May 2015. Here are more clues from Hagerty’s report:
The number of owners expressing the belief that the values of their vehicles are rising continues to fall. The number is at its lowest since November 2013 for owners of mainstream vehicles and at its lowest since May 2012 for owners of high-end vehicles.
Expert sentiment dropped for the first time since November. Market observers have cited that many cars with prior auction results have been changing hands for less money than in the past.

This post was published at Wolf Street on Apr 17, 2017.

Boeing To Lay Off “Hundreds” Of Engineers

President Trump will not be amused. In a letter to employees, Boeing VP John Hamilton announces that the company will lay off “hundreds” of engineers as soon as this week, affecting Washington and “other enterprise locations.”
As Bloomberg headlines show:

This post was published at Zero Hedge on Apr 17, 2017.

Goldman: The S&P 500 Is Not Overvalued – Yet

Goldman Sachs is the latest bank to publish research trying to justify the current high level of the market as well as its year-end S&P 500 price target.
Goldman laid out its case for further equity gains in a presentation published at the beginning this month titled Where To Invest Now. Across 80 pages, the investment bank’s chief equity strategist David Kostin dissects the US equity market and find several areas that look attractive based on macro and micro trends. However, some of the most interesting analysis contained within the presentation as the top-down assessment of the S&P 500’s current valuation and outlook.
Goldman: The S&P 500 Is Not Overvalued – Yet
Goldman’s data shows that the S&P 500 aggregate and median (earnings estimate) P/Es are both expensive today, compared to history. As the chart below shows, the 35 year average forward P/E based on median estimates is 14, compared to today’s figure of 18.2.

This post was published at FinancialSense on 04/17/2017.

Why We’re Ungovernable, Part 17: Europe Gets Its Doomsday Scenario

The rise of French far-right presidential candidate Marine Le Pen has made a lot of people nervous since, among many other things, she’s in favor of leaving the eurozone, which would pretty much end the common currency. But since polling has shown her making the two-person run-off round but then losing to a mainstream candidate, the euro-elites haven’t seen any reason to panic.
Here, for instance, is a chart based on February polling that shows Le Pen getting the most votes in the first round, but then – when mainstream voters coalesce around her opponent – losing by around 60% – 40%. The establishment gets a bit of a scare but remains firmly in power, no harm no foul.
Then came the past month’s debates in which a previously-overlooked communist candidate named Jean-Luc Mlenchon shook up the major candidates by pointing out how corrupt they all are. Voters liked what they heard and a significant number of them shifted his way.

This post was published at DollarCollapse on APRIL 17, 2017.

Dear Hedge Funds: This Is Who Is Responsible For Your Deplorable Returns

Over the past several years we have repeatedly stated that despite protests to the contrary, the single biggest factor explaining the underperformance of the active community in general, and hedge funds in particular, has been the ubiquitous influence of the Fed and other central banks over the capital markets.
Specifically, back in October 2015, we wrote that “as central planning has dominated every piece of fundamental news, and as capital flows trump actual underlying data (usually in an inverse way, with negative economic news leading to surging markets), the conventional asset management game has been turned on its head. We have said this every single year for the past 7, and we are confident that as long as the Fed and central banks double as Chief Risk Officers for the market, “hedge” funds will be on an accelerated path to extinction, quite simply because in a world where a central banker’s money printer is the best and only “hedge” (for now), there is no reason to fear capital loss – after all the bigger the drop, the greater the expected central bank response according to classical Pavlovian conditioning.”
Several years later, Goldman Sachs confirms that we were correct.
In a note released overnight by Goldman’s Robert Boroujerdi titled “An Rx for Active Management” and which seeks to explain the now chronic underperformance of the “smart money”, the Goldman analyst says he has identified two key considerations impacting the performance of actively managed equity funds including 1) the nature of market regimes and 2) behavioral tendencies of portfolio managers.

This post was published at Zero Hedge on Apr 17, 2017.

Just How Overvalued Is The Market? Here Are 20 Metrics To Help You Decide

Despite the recent modest profit-taking in the S&P 500, the market – just shy of its all time high 2,400 level – remains in nosebleed valuation territory.
As Bank of America calculates, in March the S&P 500 forward P/E was little-changed amid a flat month for stocks, and at 17.5x continues to trade at its highest levels since 2002 (on a trailing basis P/E is at 19.6 and 29.0 based on the Shiller PE). This is almost one turn higher since we last performed a similar valuation exercise back in December.
Hardly a bargain, stocks remain stretched vs. history on the majority of metrics Bank of America tracks (Table 2) and as Savita Subramanian points out, the only way stocks still look cheap is relative to bonds. While BofA is quick to warn that today’s elevated valuations suggest longer-term caution on stocks, it reminds clients that “valuations typically matter little in the final stage of a bull market during which sentiment and positioning are the key drivers of returns.” This is also known as the so-called “just buy everything” cop out.
Stripping away BofA’s subjective commentary, to allow readers to decide for themselves whether stocks are massively overvalued and overbought, or perhaps cheap, here is a breakdown of the S&P 500 across a wide variety of valuation measures – 20 in total – to gauge whether US stocks look cheap vs. history. What the analysis shows is that of 20 metrics, the S&P is overvalued based on 18 by as much as 85% (on a historical market cap to GDP basis) and up to 105% if looking at the S&P in WTI terms, and is cheap only according Price to Free Cash Flow (25.1x vs 28.4x) which however is a function of ultra low interest rates, and also based on a ratio of the S&P-to-Russell 2000 fwd PE multiples. A third metric which last December suggested stocks were “cheap“, namely trailing normalized PE (19.6x vs 19.0x average) flipped to “rich” in the past 5 months.

This post was published at Zero Hedge on Apr 17, 2017.

Bond Spreads, Yield Curves, and French Elections

When corporate spreads are narrowing relative to the risk-free rate, it suggests there is a view among market participants that the economic outlook is improving and, accordingly, that there is less risk of default. The converse also holds true, which is why the spread between corporates and Treasuries is watched closely as a sign of confidence – or lack thereof – in the economic outlook.
What about spreads, though, between government securities?
The US market is currently battling concerns about a flattening yield curve, which isn’t exactly what one would expect to see if there was strong faith in the economic outlook.
Generally speaking, the curve should be steepening with the 2-year – 10-year spread widening on a promising outlook as stronger growth should lead to a pickup in inflation, which would drive up rates at the inflation-sensitive back end of the curve. Lately, however, that hasn’t been happening.
Spread ‘Em
The Federal Reserve raised the target range for the fed funds rate in December and March to account for the improvement in economic activity, but strikingly, the yield on the benchmark 10-yr note has come down sharply in recent weeks, dropping at a faster pace than the yield on the 2-yr note has been dropping; hence, there has been a flattening of the yield curve with a narrowing in the 2-10 spread.

This post was published at FinancialSense on 04/17/2017.

Steve Keen: “Can We Avoid Another Financial Crisis?” (Spoiler Alert: No!)

Economic theory is like a layer cake: Explanations within one layer make sense, but once you move to another layer, they no longer apply. Economist Steve Keen’s new book ‘Can We Avoid Another Financial Crisis?’ is an illustrative example.
The good news is that Keen accurately describes the current economic system; the bad news is that the answer to the question in the title is ‘no.’ (And, despite what I believe is his accurate overall assessment, he misses, or skips over, a few key, hidden elements of economic theory.)
Keen defines his question within the layer of a corrupt banking system, the system we have now. He explains how it is that banks create money in the form of debt, and how this leads to financial instability. In the book he quotes the Bank of England’s own economists:
‘In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.’
Keen builds on the work of Hyman Minsky and Joseph Schumpeter to explain why it is that private debt created out of nothing by private banks leads to economic instability.

This post was published at Zero Hedge on Apr 17, 2017.