Doug Noland: Belly of the Beast

This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
We’re at an important juncture for the global Bubble. There are growing divergences and anomalies. Market signals are increasingly conflicting and confounding: European equities in melt-up and U. S. markets at record highs, while China falters. Bond yields rising and commodities sinking. Talk of derivative issues and leveraged player struggles. Often discordant economic data providing fodder for bulls and bears alike.
Let’s begin at home. While recovering somewhat from March’s huge disappointment, at 16.81 million annualized (SAAR) units, April vehicles sales were significantly below estimates (17.1 million). This supports the view of tightened lending standards in auto finance. Also supporting the bear case, the ISM Manufacturing Index dropped to a weaker-than-expected 54.8, down from March’s 57.2 and February’s 57.7. March Personal Spending was reported flat versus estimates of up 0.2%. Non-farm Productivity was reported at a stinkball down 0.6% (est. down 0.1%).

This post was published at Wall Street Examiner by Doug Noland ‘ May 6, 2017.

Sell Euros – It’s That Time Of Year Again

Authored by Kevin Muir via The Macro Tourist blog,
Remember how a couple of weeks ago investors were scrambling to buy Euro currency protection in front of the French election? Today, worries concerning tomorrow’s second round between Le Pen and Macron are extinct (even with today’s leaks). Macron’s win has pretty well been priced in.
I don’t have a forecast regarding the outcome of the election. I am not making some bold Trump-like upset prediction. The polls have Macron winning, and that’s the most likely result.
But I wonder if we aren’t setting up for a buy-the-rumour-sell-the-news reaction.

This post was published at Zero Hedge on May 6, 2017.

Lackluster Trade

This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
US imports rose 9% year-over-year (NSA) in March 2017, after being flat in February and up 12% in January. For the quarter overall, imports rose 7.3%, a rate that is slightly more than the 2013-14 comparison. The difference, however, is simply the price of oil. Removing petroleum, imports rose instead 6.3% in March and just 4% for the first quarter overall. The value of inbound crude oil expanded by more than 70% for the second straight month.

This post was published at Wall Street Examiner by Jeffrey P. Snider ‘ May 5, 2017.

Canada Retaliates, Threatens Multiple Trade War Actions Against The US

The trade war between North America’s two biggest economies is just getting started.
Ten days after Trump unexpectedly imposed duties on Canadian softwood exports drawing loud protests from domestic lumber companies, the Canadian government has threatened to retaliate with multiple trade actions against the US, demanding a long-term deal without which several American industries could soon be targeted.
Canada’s Prime Minister Justin Trudeau said he would launch the first salvo in a letter to B. C. Premier Christy Clark, informing her that he’s seriously considering her request for a ban on thermal coal exports and that it’s being explored by federal trade officials. The second threat: a direct tit-for-tat escalation, with possible duties against Oregon-based industries. That also happens to be the home state of a Democratic senator, Ron Wyden, who has been a hardliner on the lumber dispute.

This post was published at Zero Hedge on May 5, 2017.

This Mysterious ’50 Cent’ Trader Is Betting Millions the Markets Will Collapse

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
A mysterious buyer known only as the ’50 Cent’ trader has been betting big on a U. S. market collapse – and losing millions along the way.
Over $89 million has been lost so far, to be exact.
You see, this shadowy trader has been buying up contracts that would mint him a large fortune should the VIX rise significantly – an outcome that would likely occur if the U. S. market sees a correction. We tried to come up with an exact number, but since the trades are so frequent, his exact profits will vary significantly.
The CBOE VIX ‘fear index’ is a measure of implied volatility in the benchmark S&P 500. ‘Higher volatility tends to mean prices change dramatically over a short period of time; lower volatility means market participants are pretty confident the price will remain about the same,’ said Money Morning Options Trading Specialist Tom Gentile to readers on April 27.

This post was published at Wall Street Examiner by Casey Wilson ‘ May 5, 2017.

US Student, Auto Loans Hit New All Time High Of $2.6 Trillion

One month after we, and every other financial media, reported that US credit card debt had risen back over $1 trillion for the first time since January 2017, the Fed demonstrated just how meaningless such reports are when in its latest consumer credit report it revised the total stock of revolving debt back under $1 trillion for the month of March, while boosting December’s amount to $1,000.1 billion, meaning that all those “$1 trillion in credit card” debt headlines were about 4 months late.

This post was published at Zero Hedge on May 5, 2017.

Spain’s Government Presses Property-Bubble Rewind Button

Taxpayer-funded subsidies to benefit banks, real estate agencies, construction companies, PE firms, and landlords.
After spending the last few years groggily getting back onto its feet following the collapse of one of the most spectacular – and destructive – real estate bubbles of this century, Spain’s economy is once again being primed for another property boom.
In the last quarter prices registered a year-on-year rise of 4.5%. Rents are also surging, though the country is still home to over half a million vacant properties. The cost of renting in Madrid and Barcelona, which between them account for 16% of those vacant properties, has reached historic highs, according to a new study by the online real estate market place Idealista. In Madrid, rents have risen on average by 27% since 2013; in Barcelona they’ve surged over 50%.
This trend is being driven by two main factors: the recent explosion in tourist rentals [read: Is Barcelona’s Crazy Tourist Boom Too Much of a Good Thing?], as well as a general shift in consumer behavior as more and more people choose (or have little choice but) to rent rather than buy property.

This post was published at Wolf Street by Don Quijones ‘ May 6, 2017.

Don’t Believe This Common Myth About the Oil and Gold Prices Relationship

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
Since both commodities are priced in U. S. dollars, there’s a common myth among investors that the oil and gold prices relationship is defined by lockstep price movements.
When the U. S. dollar rises in value, most dollar-denominated commodities like oil and gold become more expensive. That means a gaining dollar can pull oil and gold prices lower because those commodities are more expensive to foreign currency users.
This is why market logic often asserts that oil prices and gold prices move in tandem with one another. If one goes down, the other also goes down – and vice versa.
However, as this chart below will show you, oil and gold don’t always move in the same direction despite both being priced in dollars…

This post was published at Wall Street Examiner by Alex McGuire ‘ May 5, 2017.

This Silver Price News Shows This Is the Perfect Time to Buy

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
The biggest silver price news today (Friday, May 5) is the metal’s continued decline to its lowest level of 2017.
The price of silver today is down 0.3% and trading at $16.25. According to FactSet data, that’s the lowest level for an active silver futures contract since prices closed at $15.99 on Dec. 30, 2016. Today’s drop comes after two consecutive sessions of fresh 2017 lows.
Here’s why the white metal is in free fall this week – and why it represents one of the best buying opportunities of 2017…
Silver prices are on track for a big 5.9% loss this week thanks to the Fed’s statements after its May FOMC meeting.

This post was published at Wall Street Examiner by Alex McGuire ‘ May 5, 2017.

Oil Price Collapse Is ‘Permanent’; Analyst Says Fossil Fuel Has Had Its Day

(by Jillian Ambrose – Postmedia Network)
‘I usually put a 5 bet on the oil price – and I’m collecting,’ smiles Professor Dieter Helm.
It’s not difficult to imagine his tally of modest wagers adding up. The highly regarded Oxford University economics professor is a long-time industry observer. Today, he is in central London after taking meetings with major oil executives. He is also a familiar face in Whitehall and Brussels, where he advises, both formally and informally, on the trends reshaping the global energy markets.
Still, his stakes will be trillions of dollars lower than the energy leaders he advises.
If Helm is to be believed the oil market downturn is only getting started. The latest collapse is the harbinger of a global energy revolution which could spell the end-game for fossil fuels. These theories were laughable less than a decade ago when oil prices grazed highs of more than $140 a barrel. But the burn out of the oil industry is approaching quicker than was first thought, and the most senior leaders within the industry are beginning to take note.

This post was published at SRSrocco Report on MAY 6, 2017.

Do Saudi Arabia And Russia Really Want Higher Oil Prices?

Authored by Kurt Cobb via OilPrice.com,
The jawboning of oil prices by the Saudi Arabian/Russian tag team should be wearing off after more than a year of actions that don’t measure up to the words. Oil prices slumped recently, dropping from around $54 per barrel to just below $50 as of Friday’s close.
As if on cue, the Russian energy minister announced Friday that Russia has now met its target of reducing oil production by 300,000 barrels per day. It took four months to do something that should have taken just weeks. (The agreement came into force on January 1.) And, of course, we’ll have to see if the Russians have actually done what they say they’ve done.
Only a week earlier, the Saudi energy minister indicated that there is momentum growing in OPEC for extending production cuts beyond June for another six months. This announcement comes only six weeks after the same minister said that OPEC would NOT be considering extending the cuts. This is reminiscent of last year’s run-up to the production agreement in which Russia and Saudi Arabia kept alternating in making often contradictory announcements to sow confusion about the possibility of a production agreement and keep markets on edge without actually having to do anything.

This post was published at Zero Hedge on May 5, 2017.

“What Will Apple Acquire”: Here Are The Seven Most Likely Targets

Ahead of this week’s AAPL earnings, investors were looking forward to more clues what the company with the quarter-trillion cash war chest would do with the funds that are now greater than the GDP of Greece, and aside from the token increase in shareholder distributions, they got little else, which has once again prompted speculation who Apple will acquire once the company decides to shift away from corporate bond holdings (recall that as of this quarter Apple now has more corporate debt on its books than the biggest bond mutual fund) to acquisitions.
Apple’s problem, if one wants to call it that, is simple: while the company’s growth has slowed, selling fewer iPhone in the March 31 quarter than a year earlier as a result of sliding Chinese sales, the firm’s cash balance has continued to grow. Indeed, as of March 31, Apple had almost $260 billion of cash on the balance sheet. About 95% of this cash sits outside the US.
Some more details from Citi: Apple’s is generating ~$50-$55 billion of FCF per year, of which free cash flow generated in the Americas is about 15-20% (~$10bln) given higher capex needs in the US (data center, corporate headquarters build out). About $13 billion is being used for dividends. And, the balance is used to repurchase shares. That’s akin to $45-$50 billion per year, in total, for capital returns. This results in a 1.7% dividend yield and a 5% annual reduction in shares outstanding.

This post was published at Zero Hedge on May 5, 2017.

Stocks and Precious Metals Charts – The Unspeakable

“A culture that does not grasp the vital interplay between morality and power, which mistakes management techniques for wisdom, and fails to understand that the measure of a civilization is its compassion, not its speed or ability to consume, condemns itself to death.’
Chris Hedges
“In this way people are thrown aside as if they were trash.”
Francis I
“Those who are at present so eager to be reconciled with the world at any price must take care not to be reconciled with it under this particular aspect: as the nest of The Unspeakable. This is what too few are willing to see.”
Thomas Merton, The Unspeakable
The French elections will be this weekend, with market pricing in a win by the Europhile businessman Macron over the nationalist right with Le Pen.
The SP and Nasdaq closed at all time highs today.

This post was published at Jesses Crossroads Cafe on 05 MAY 2017.

France – Another “F.U.”?

Authored by Kevin Muir via The Macro Tourist blog,
When BREXIT happened, it was easy to understand why the market assumed the REMAIN side would win. Until that point, there had been no dramatic populist upsets, so the market’s optimism was understandable. Then came Trump. And I can say about that is, well, it was Trump, so the market again erred in assuming there would be no dramatic surprise.
After these two upsets, the market finally caught on to the game. When the French election rolled around, worried about a potential Le Pen win, market participants took a much less sanguine view. Ahead of the first election round, hedges were bought, worried op-eds were written about the dangers of a Le Pen victory and all in all, markets took the potential of another populist win quite seriously.
Yet, since it was announced that Le Pen and Macron had advanced to the second round, the market has become convinced Macron will be the next leader of France. Yeah, I get it, the math definitely seems to indicate that Le Pen will not be able to defeat Macron.
After having a look at the polling numbers, there seems to be some large market players who are setting themselves up ahead of the actual election. Yesterday there was a monster buyer of European risk assets. Actually, it started the day before, with European stocks closing on the highs both days. Even in the face of a moribund US tape, Eurostoxx pushed to new highs.

This post was published at Zero Hedge on May 5, 2017.

French Elections: Why Winning Could Be the Easiest Part for Macron

On May 7, France will vote to elect its president in a runoff between far-right candidate Marine Le Pen and the centrist Emmanuel Macron. Macron is predicted to win but will face political challenges to govern after the elections.
After a first round of voting on April 23, the leader of the far-right National Front party Marine Le Pen and Emmanuel Macron, the founder of the centrist movement En Marche!(On the Move), will be heading for a runoff on May 7th. Both candidates have cast themselves as outsiders to France’s mainstream parties and have almost no representatives in Parliament (Le Pen’s party has two while Macron’s movement has none). Whoever wins the elections will have difficulties forming a majority government and bringing the country together after an unprecedented election campaign which has dealt a blow to traditional French parties. Macron remains the favorite to win the second round and has the support of a substantial part of the business community, but he is already facing criticism from both ends of the political spectrum.
Macron’s Complicated Path to Victory
Having accurately predicted the results of the first round, polls are now suggesting that Macron should win the election against Le Pen on My 7th with around 60% of the vote, a lower margin than former president Chirac against Jean-Marie Le Pen in 2002 (80 to 20%). Several factors have nonetheless weakened Macron’s candidacy, especially in the days before the final vote.

This post was published at FinancialSense on 05/05/2017.

Former Fed Governor Warsh Asks “What Could Possibly Go Wrong”, Answers

Former Fed Governor Kevin Warsh, one of the most outspoken and critical members of the Fed’s extended family by far, lashed out at the prevailing groupthink that has permeated the Federal Reserve in a speech delivered moments ago at the Hoover Fed Conference titled “The Battle of Ideas”, in which among other things he explained that the Fed has no real strategy on policy normalization, asked “what could possibly go wrong” and, unlike all his former colleagues, provided an honest answer.
Here are some select excerpts from his speech:
According to popular lore, the Valley finds itself in the middle of long epoch of prosperity. And we are assured this is a sustainable, durable equilibrium. What could possibly go wrong?
That is the central question central bankers should be asking.
(Tail risks run in both directions. A subject for another day is ‘what could possibly go right’? The more material constraint on further economic expansion is on the productive side of the economy. If a pro-growth reform agenda were adopted across a range of macroeconomic policies, higher labor and capital supply into the real economy would cause economic growth to track substantially above Fed forecasts.)

This post was published at Zero Hedge on May 5, 2017.