“Emergency Alert” Declared At Nuclear Facility In Washington; Evacuation Ordered, No-Fly Zone In Place

This robot is being used at Hanford right now to sample contamination in the air and on the ground. pic.twitter.com/AFOrhIbB9S
— Susannah Frame (@SFrameK5) May 9, 2017

Update 2: An aerial survey midmorning Tuesday showed an opening about 20 feet by 20 feet into the tunnel, which had been covered with about eight feet of soil. As Tri-CityHerald.com reports , the breach could expose the highly radioactive material disposed of in the tunnel to the atmosphere.
No airborne radiation had been detected as of about 10:30 a.m. Radiological surveys were continuing.
Instructions for people to shelter in place were expanded from central Hanford to all of Hanford, including LIGO and the reactor areas along the Columbia River, after the aerial survey. No one is being allowed to enter the site beyond the security barricades.
Earlier in the morning workers near Purex had noticed a 4-foot-by-4-foot depression that was 2 to 4 feet deep over the tunnel.
Workers in Purex were evacuated when the depression was noticed.
About 3,000 workers in central Hanford initially were told to take shelter indoors, including about 1,000 workers at the vitrification plant construction site. Ventilation systems at the vit plant have been turned off as part of the emergency procedure and equipment that could generate heat have powered down.
The DOE announced that secretary Perry is aware of the incident and that there is no initial indication of any worker exposure or an airborne radiological release.

This post was published at Zero Hedge on May 9, 2017.

Asian Metals Market Update: May-09-2017

There is no news at the moment to spruce up gold and silver. World gold council’s demand statistics of the last quarter has not been that great. Central bank demand in the last quarter has been less. I do not think that low central bank demand prevented a gold price rise. Mild fundamental weakness along with no new reasons to invest in gold is causing the temporary weakness. To the gold investors, unless gold breaks and trades over $1500, a big and very quick rise (as I had been expecting) will not be there.
Short term returns in gold can be negative but long term returns will always be positive. Gold investment returns cannot be compared to that of a bull run in equities markets.

This post was published at GoldSeek on 9 May 2017.

Passenger Brawl Breaks Out At Ft. Lauderdale Airport After Flight Cancellations

A passenger fight broke out at Fort Lauderdale-Hollywood International Airport on Monday night after angry Spirit Airlines travelers faced massive delays and flight cancellations due to labor issues with the carrier’s pilot’s union, which have resulted in over 300 flight cancelations over the past 7 days. Video posted online showed upset passengers confronting airline employees as Broward Sheriff’s deputies were on hand attempting to keep order in the terminal after at least nine flights were canceled.
According to CNN, Spirit’s front ticket desk ‘turned into chaos,’ when angry passengers exited a plane after their flight had been cancelled and swarmed the already crowded ticketing counter. Broward County deputies struggled to calm down passengers, with videos showing some passengers being put in handcuffs. CNN said some travelers were detained, but it’s unclear whether any passengers face charges.

This post was published at Zero Hedge on May 9, 2017.

Fed Reports Unexpected Collapse In Credit Card, Auto Loan Demand

Two weeks after we reported that the consumer credit card default rate as tracked by S&P/Experian Bankcard had surged to the highest level since June 2013…

… we were looking forward to the latest Fed Senior Loan officer survey for more details about changing loan dynamics within US society.
What the report revealed was troubling: while on the surface, the Loan Officer Survey characterized loans to businesses as “basically unchanged” from the previous survey, it did remark that standards for commercial real estate (CRE) loans had tightened.
According to the report, “banks reported tightening most credit policies on Commercial Real Estate loans over the past year…. On balance, banks reported weaker demand for CRE loans in the first quarter.”

This post was published at Zero Hedge on May 9, 2017.

Copper, China, and the Global Economy

Copper and oil are important barometers of where the global economy is headed. For copper, the weather vane for its direction isn’t so much about supply as it is about demand. Here, we look to chinese industrial activity and the commitment of traders report as important signals on the demand side as it relates to the broader global economy.
When Large Specs or Managed Money funds reach extreme net long holdings of copper, hedging for higher prices, we look for signs of a top. From November 2016 to this past February, it was clear copper funds had reached extreme levels of optimism on price. Sucking so much of the buying potential out of investment funds with these record net long copper holdings made copper vulnerable. Once the major strikes subsided and the economy cooled, copper fell over 10% from its February peak. This market has been in need of speculative long liquidation before copper prices could find a bottom. Over the past 3 months, about 60,000 Managed Money fund contracts have been reduced. While our ideal buy zone requires another 40,000 to 80,000 contract liquidation, copper can work into a bottoming formation in the $2.30’s – 2.40’s without reaching such extremes.

This post was published at FinancialSense on 05/08/2017.

Just One Week Later, Atlanta Fed’s Q2 GDP Forecast Crumbles From 4.3% to 3.6%

It’s deja vu all over again.
Four months after the Atlanta Fed started off its Q1 GDP nowcast at 2.5%, then raised it just shy of 3.5% before eventually crashing, and closing the books at 0.2%, slightly below where the BEA reported Q1 GDP, on May 1 the regional Fed released its initial GDP forecast for Q2, and, as we noted last week, it came as no surprise to anyone that the initial estimate was just a tad optimistic at 4.3%, to which we commented that if past is prologue, “expect this number to end roughly 50% lower in three months when the first advance Q1 GDP report is released.”
One week later, we are a third of the way there, because moments ago, the Atlanta Fed did just as expected, and chopped off a whopping 17% from its initial estimate, revising its Q2 GDP estimate from 4.3% as of May 1 (and 4.2% as of May 4) to 3.6%, due to a decline in forecast real consumer spending growth and real private fixed investment.

This post was published at Zero Hedge on May 9, 2017.

Silver Elevator Keeps Going Down – Precious Metals Supply and Demand

Frexit Threat Macronized
The dollar moved strongly, and is now over 25mg gold and 1.9g silver. This was a holiday-shortened week, due to the Early May bank holiday in the UK.
The big news as we write this, Macron beat Le Pen in the French election. We suppose this means markets can continue to do what they wanted to do before the threat of Frexit, shutting off trade between France and the rest of Europe, and who knows what else Le Pen was plotting to do to the French people.
This will be a short Report this week, as Keith has been working hard on a paper to address the question of which metal will have the higher interest rate. Look for that tomorrow.
Fundamental Developments
Below as the only true look at the supply and demand fundamental of the metals, but first, the price and ratio charts.
Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. It had another major move up this week, after a major move up last week and one the week before.
It now sits at the same level it was a year ago. If it breaks above 76, then the next resistance looks to be 80.

This post was published at Acting-Man on May 9, 2017.

Job Openings Hit 8 Month High Despite First Two-Month Drop In Hiring Since The Recession

Tracking the disappointing, and downward revised March jobs report, when as a reminder the US added only 79,000 jobs, today’s JOLTS report showed a decidedly more benign labor market in the month of March, with good news on the job openings front, offset by another month of hiring weakness.
So what did “Janet Yellen’s favorite labor market indicator” show? First, the surprising spike high in overall February job openings was revised lower from 5.743MM to 5.682MM, which in turn resulted in March job openings hitting what was the pre-revised February number, or exactly 5.743MM, modestly above the expected 5.670MM, and the highest since last July. The job categories with the biggest number of open jobs were Professional and Business Services (1.102MM) and Health care and Social assistance (1.062MM).
According to RSM calculations, the latest JOLTS data indicate further labor market tightening, with the number of individuals per job opening falling to 1.32.
And while America’s millions of job openings remain unfilled, a continuation of the recent troubling trend was seen in the March hiring numbers, which showed that hiring in March barely changed, although last month’s sharp drop was revised higher. As a result, in March some 5.260 million people were hired, up 11K from the previous month, and the highest since December’s 5.303 million.

This post was published at Zero Hedge on May 9, 2017.

How Fed-Enabled Zombie Companies Crush Productivity Growth

When lagging firms don’t go bust, they hog scarce resources and drag down productivity.
The global economy is picking up steam, but that’s deceptive. The foundations of expansion are soft, marked by weak productivity growth and inequality. The two are related.
The productivity problem confronting the world’s advanced economies predates the financial crisis more than a decade ago. When we look beyond the headline statistics, patterns emerge. Advanced economies have become less dynamic and are at risk of becoming sclerotic unless the ambition for reform is revived.

This post was published at Zero Hedge on May 9, 2017.

This Is Not Normal

Dennis DeBusschere, an analyst over at Evercore ISI, put together this next chart comparing historical S&P valuations (vertical axis) against volatility (horizontal axis).
As you can see, the current setup in the market is very unusual, approaching previous extremes in terms of a richly valued but low expected volatility market.
So what’s causing the market to trade at historically high valuation levels with so little concern for risk? There are a couple of plausible explanations.
Let’s start with earnings. With 83% of companies in the S&P 500 having reported, the Q1 blended earnings growth rate is 13.5% (according to FactSet). This is substantially higher than the 9.0% growth initially expected. Some of this is due to a rebound in energy sector earnings, but stripping those out, the blended earnings growth for the quarter still comes in at 9.3%.
Read Barry Bannister’s Comprehensive Macro Outlook Suggests Bear Market in 2019
That’s good news for a few months ago but means very little as of today. Investors don’t care where earnings were – they care where they’re headed. And right now analysts are actually expecting earnings to hold up for the rest of 2017.
Consider the following figures, all courtesy of FactSet:

This post was published at FinancialSense on May 9, 2017.

Hertz Gets Crushed after ‘Even Worse than Expected’ Loss

#Carmageddon and Uber did it. For Carl Icahn, it just doesn’t let up.
Shares of Hertz Global Holdings plunged 18% in late trading on Monday to $12.25 after it reported another fiasco quarter, missing even the terribly low analysts’ expectations.
On Sunday I postulated: ‘Expectations for Q1 are so low that it will be hard to report ‘worse than expected’ numbers.’ But buffeted by all sides, Hertz managed unexpectedly to pull it off.
Global revenues in the first quarter fell 3.4% year-over-year to $1.9 billion. In the US, revenues fell 3.8% to $1.35 billion.
Its ‘total revenue per unit per month,’ a key industry metric, fell 5% globally to $889. In the US, it fell 8% to $928.
Despite the deteriorating revenue metrics, the average number of vehicles in the fleet rose 4% to 478,000 in the US and 2% internationally to 150,400. More vehicles translate into higher costs.
On the revenue side, Hertz is getting hammered by rideshare companies. Corporations and non-expense-account tourists are shifting their ground transportation spending to rideshare companies, particularly Uber, from taxis and rental cars. Here are the numbers that I pointed out yesterday.

This post was published at Wolf Street on May 8, 2017.

CENTRAL BANK MARKET RIGGING: Horrified About The Biggest Global Bank Run In History

The Fed and Central banks are manipulating the gold and silver price because they are horrified that the biggest global BANK RUN in history will take down the entire system. Unfortunately, a lot of investors are still being misled about the fundamentals of precious metals market manipulation. While the Fed and Central bank are indeed intervening in the gold and silver market, they are also propping up the majority of asset values across the board. This is especially true for most stocks, bonds and real estate.
Yes, it is also true that billions of Dollars worth of paper gold and silver are dumped into the market in nanoseconds during very light trading days. Thus, the impact is to cap the gold and silver price, making sure that 99% of investors stay fast asleep. These are the very same investors who the Central banks are working extremely hard to keep their funds placed firmly in stocks, bonds and real estate.
I continue to receive emails from individuals who believe the Central banks can push the price of gold or silver anywhere they please. This is total RUBBISH. However, there is some method to their madness. It is a crying shame that there are still analysts out there misleading their followers with that sort of superficial nonsense.
All the Fed and Central Banks can do is to keep the gold and silver price from exploding higher. They cannot push the value of gold or silver (too far) below its cost of production. Here is a chart from my previous article showing the gold price versus the top two gold miners (Barrick and Newmont) cost of production:
The gold market price was always HIGHER than Barrick and Newmont’s cost of production. So, as we can plainly see, the Fed and Central Banks NEVER pushed the annual gold price below Barrick and Newmont’s cost of production from 2000 to 2016.
Which means, the notion that the Fed and Central banks can push the price of gold down to $500 or even zero, is total nonsense. They CAN’T do it, and they know it. Furthermore, I have older Homestake Mining Annual Reports from the 1970’s. Homestake Mining was the United States largest gold producer for more than 50 years. I plan on writing an article showing how Homestake’s cost of production increased substantially, along with the oil price, during the inflationary decade of the 1970’s.

This post was published at SRSrocco Report on MAY 8, 2017.

IMF Report: U.S. Corporate Debt Could Be Trump’s Waterloo

As U. S. equity markets continue to price to perfection a grab bag of promised corporate giveaways from their Best Forever Friend, President Donald Trump, a group of researchers at the International Monetary Fund (IMF) had the temerity to ask last month – what could possibly go wrong.
In their April 2017 ‘Global Financial Stability Report,’ IMF researchers methodically pare back the rosy lenses of the U. S. equity market and focus on the warning signs in the U. S. corporate debt market. Two particular findings have the power to potentially jolt the equity markets out of their euphoric stupor. The researchers note:
‘The [U. S.] corporate sector has tended to favor debt financing, with $7.8 trillion in debt and other liabilities added since 2010…’ [Italics added.] ‘The number of [U. S.] firms with very low interest coverage ratios – a common signal of distress – is already high: currently, firms accounting for 10 percent of corporate assets appear unable to meet interest expenses out of current earnings. This figure doubles to 20 percent of corporate assets when considering firms that have slightly higher earnings cover for interest payments, and rises to 22 percent under the assumed interest rate rise. The stark rise in the number of challenged firms has been mostly concentrated in the energy sector, partly as a result of oil price volatility over the past few years. But the proportion of challenged firms has broadened across such other industries as real estate and utilities. Together, these three industries currently account for about half of firms struggling to meet debt service obligations and higher borrowing costs.’
The report acknowledges that equity markets ‘have taken a relatively benign view’ of the downside risks and warns that there could be a ‘swift repricing of risks in the event of policy disappointment.’

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

Volatility Near a Record Low

There is such appealing clarity in the bearish pattern shown that we should have no qualms whatsoever about sticking with our game plan to catch a profitable ride on the little sonofabitch. That means never chasing a rally, buying only on weakness, and doing so only when VXX is at or very near a Hidden Pivot swing point. At the moment, that would imply a print within a few pennies of the 14.64 downside target shown. If the trade sets up that way, we’ll use call options to leverage the anticipated bounce. So far, it has been a waiting game as we’ve pushed back the expiration date due to VXX’s screw-all-of-you price action. Now, let me suggest bidding 0.50 for eight May 19th 15 calls, good through Wednesday._______ UPDATE (May 1, 11:11 a.m.): VXX is getting crushed today, trading at new record lows. The actual intraday low so far is 14.64 – my target precisely. Subscribers have reported buying the calls for 0.50 or slightly less, so I’ll use 0.50 as a cost basis. Now offer half of them to close for 1.00, good-till-canceled. These are keepers with no stop-loss. Be prepared to write off the entire $400, since this is a highly speculative bet that goes against a long and powerful downtrend. _______ UPDATE (8:38 p.m.):VXX subsequently fell to new depths, raising the prospect of a further plunge to as low as 13.31over the near term. Regardless, we’ll sit on the calls for now. Click here for an hourly chart that shows the 13.31 target clearly. A drop of that magnitude is difficult to imagine although hardly inconceivable. All it would take would be for the stock market to go comatose, in a sideways-to-slightly-up trend, over the next 3-5 days. (Note: An alternative target at 14.09 could brake the fall. It can be calculated by sliding ‘A’ down to 21.73 (1/19/17). _______ UPDATE (May 8, 7:40 p.m.): Wow. There really seems to be no bottom for this brick. VXX fell below the minor support at 14.09 flagged above, presumably bound for 13.31. The VIX on which it is based looked even worse, falling to within 0.29 points of the all-time low achieved in December 2006 (click here for chart). If you don’t subscribe but would like to join great traders from around the world in the chat room, click here for a free two-week trial subscription. You’ll also receive actionable trading ‘touts’ and invitations to frequent ‘impromptu’ sessions where Rick ‘takes requests’.

This post was published at GoldSeek on 9 May 2017.

Three Fast Facts About Slow Markets

From Nicholas Colas of Convergex
Today we continue our recent exploration of the ongoing low volatility in US equity markets, but with a novel twist. Instead of looking at the CBOE VIX Index, we look at the historical trends in actual S&P 500 price volatility. Not only is the dataset longer here (starting in the 1950s rather than 1990), but it is also ‘Stickier’ than the twitchy VIX.
Three takeaways.
First: actual price volatility is running at 48% of its long run average at the moment and has been stuck around these levels for 77 days. The last recent periods of similar low-vol were in mid-2014 (75 days in duration) and late 2006/early 2007 (79 days). The 1990s had 2 long runs of low volatility: 1995/1996 (254 days) and 1992 (179 days) but the 1980s had only one (80 days in 1985). Second: actual price volatility does correlate negatively to current returns (-44% from 1959 to today). Third: more volatility now/soon does not have any forecasting power on returns over the next year.

This post was published at Zero Hedge on May 9, 2017.

Home Capital Sells $1.5 Billion In Mortgages At Unknown Price To Shore Up Liquidity

As recently as a few weeks ago, the business model of Canada’s largest alt-mortgage lender, Home Capital Group, was originating and sourcing mortgages. Then a liquidity crisis struck, sending the company’s business into a tailspin and unleashing an unprecedented bank run on the company’s retail deposits. And, as of today, the company is now in the mortgage selling business. In a press release, the company announced it has entered into an arrangement with an undisclosed third party to sell up to a total of $1.5 billion in funded mortgages and loan renewals, in a desperate attempt to shore up liquidity, and confirmation that other attempts to raise capital have failed.
While Home Capital added that the deal includes up to C$1 billion of uninsured mortgages and C$500 million of insured mortgages, or about 10 percent of the company’s total mortgage book, it did not provide the most important information: at what price it sold the mortgages.
As HCG adds, the Third Party has “indicated an interest in further expansion of this arrangement at a later date” suggesting that the terms of the transasction were quite advantageous.
‘This purchase arrangement is designed to give us the ability to continue to serve as many customers as possible in the mortgage broker channel, and we are optimistic that there can be opportunities for future growth,’ said Bonita Then, interim Chief Executive Officer of Home Capital. ‘Meanwhile, we continue to work very hard to develop additional sources of funding, while carefully managing our liquidity.’

This post was published at Zero Hedge on May 9, 2017.

The insidious effects of monetary inflation

Most people with a basic grounding in economics know that increasing the supply of money leads to a fall in the purchasing power of money. However, this is usually as far as their understanding goes and explains why monetary inflation is generally not unpopular unless the cost of living happens to be rising rapidly. Monetary inflation would be far more unpopular if its other effects were widely understood.
Here are some of these other effects:
1. A greater wealth gap between rich and poor. For example, monetary inflation is probably a large part of the reason that the percentage of US household wealth owned by the richest 0.1% of Americans has risen from 7% to 23% since the mid-1970s and is now, for the first time since the late-1930s, greater than the percentage US household wealth owned by the bottom 90%. Inflation works this way because asset prices usually respond more quickly than the price of labour to increases in the money supply, and because the richer you are the better-positioned you will generally be to protect yourself from, or profit from, rising prices.
2. Large multi-year swings in the economy (a boom/bust cycle), with the net result over the entire cycle being sub-par economic progress due to the wealth that ends up being consumed during the boom phase.
3. Reduced competitiveness of industry within economies with relatively high monetary inflation rates, due to the combination of rising material costs and distorted price signals. The distortion of price signals caused by monetary inflation is very important because these signals tell the market what/how-much to produce and what to invest in, meaning that there will be a lot of misdirected investment and inefficient use of resources if the signals are misleading.
4. Higher unemployment (an eventual knock-on effect of the misdirection of investment mentioned above).

This post was published at GoldSeek on 9 May 2017.