Steven Hawking and 32 of his fellow scientists have written an angry letter about the origins of the universe in response to a recent Scientific American article about the same topic. Hawking, an English theoretical physicist, cosmologist, and author and Director of Research at the Centre for Theoretical Cosmology within the University of Cambridge, wrote the letter in ‘categorical disagreement.’
The Scientific American article challenged the cosmic inflation theory and suggested scientists look for new ideas on the origins of the universe. But Hawking took issue with the new ideas presented. Titled Pop Goes the Universe, physicists Anna Ijjas, Paul J. Steinhardt, and Abraham Loeb examine the latest measurements from the European Space Agency relating to cosmic microwave background (CMB). CMB is the oldest light in the universe which is said to have been emitted during the ‘Big Bang’ (the universe’s beginning) around 13 billion years ago. In 2013, a map of the CMB appeared to show how the universe inflated extremely fast, before settling down to become the universe we see today. This, many experts said, backed up models relating to inflation theories, where the universe expanded exponentially fast a fraction of a second after the Big Bang.
Time Magazine stated that Hawking and his colleagues firmly believe in the Big Bang Theory, so their angry reaction letter was perfectly predictable – even though it is just a theory, like the proposed ‘Big Bounce.’

This post was published at The Daily Sheeple on MAY 14, 2017.

A Tale of Two Markets

The next big trending move will occur in the energy markets. All the technical and cyclical signs are in place to suggest a major bottom is forming. In the precious metals market we have the exact opposite setup. This video will clarify how these two markets are likely to behave in the next several months.

This post was published at GoldSeek on 14 May 2017.

Is Bacon Feeding the War Machine?

The Wall Street Journal offered a cute news scoop that ice cream is more important than bacon when tracking what has come to be known as inflation. Sarah Chaney was stalking the U. S. Department of Labor Blog and stumbled on the post ‘Ice Cream vs. Bacon.’
No doubt, those on the paleo diet would be stunned to know ‘the average dollar amount per year that all U. S. households spent on ice cream was $54.04, while the average amount on bacon was $39.07,’ claims the department’s post.
Why Does the Price of Bacon Matter?
Why this matters to number-crunchers at the labor department is ‘the more people spend on an item, the more inflationary changes to its cost will affect the total inflation rate,’ explains Department of Labor blogger Steve Henderson. And in this case, ‘bacon has increased in price almost 32 percent over the past 10 years while ice cream went up 21 percent over the same time period.’
There are inflation indexes for most everything and are all rolled together into the Consumer Price Index (CPI) to form a market basket.
Of course, Mr. Henderson and his fellow workers believe they are doing ‘God’s’ work at the Labor Department. He emphasizes:
‘Policymakers, researchers, journalists, government bodies and others use the CPI to make important decisions that directly affect American citizens.’
Yes, but as I related in ‘Garbage In Garbage Out at the Federal Reserve,’ the collection of this precious data is, well, somewhat suspect.

This post was published at Mises Canada on MAY 12, 2017.

Is Risk Parity Driving The Market?

I am have more and more discussions about Risk Parity.
While Bridgewater is the best known and largest advocate of Risk Parity – it can be implemented in a simple form by virtually anyone.
Sophisticated Risk Parity strategies involve balancing multiple asset classes (global bonds, global equities, commodities, FX, etc.) in the ‘correct’ proportions to achieve a desired level of portfolio risk while still have positive expected returns.
At its most basic level – it is buying stocks AND buying bonds under the assumption (hope) that when one goes down, the other goes up, dampening volatility while generating positive returns over time.
There is an appeal to buying bonds as a ‘hedge’ against equity risk rather than buying options or buying VIX based ETFs and ETNs. In an ‘ideal’ world, buying treasuries as a hedge generates income while offering some ‘risk-off’ protection; whereas, buying options tends to just drain money time and again.
One big question is ‘why are treasuries doing so well and stocks not reacting?’

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

The Federal Reserve Must Go

If you want to permanently fix America’s economy, there really is no other choice. Even before Ron Paul’s rallying cry of ‘End The Fed’ shook America during the peak of the Tea Party movement, I was a huge advocate of shutting down the Federal Reserve. Because no matter how hard we try to patch it up otherwise, the truth is that our debt-based financial system has been fundamentally flawed from the very beginning, and the Federal Reserve is the very heart of that system. The following is a free preview of an upcoming book that I am working on about how to turn this country is a more positive direction…
As the publisher of The Economic Collapse Blog, there have been times when I have been criticized for focusing too much on our economic problems and not enough on the solutions. But I believe that in order to be willing to accept the solutions that are necessary, people need to have a full understanding of the true severity of our problems. It isn’t by accident that we ended up 20 trillion dollars in debt. In 1913, a bill was rushed through Congress right before Christmas that was based on a plan that had been secretly developed by very powerful Wall Street bankers. G. Edward Griffin did an amazing job of documenting the development of this plan in his groundbreaking book ‘The Creature from Jekyll Island: A Second Look at the Federal Reserve’. At that time, most Americans had no idea what a central bank does or what one would mean for the U. S. economy. Sadly, even though more than a century has passed since that time, most Americans still do not understand the Federal Reserve.
The Federal Reserve was designed to create debt, and of course the Wall Street bankers were very excited about such a system because it would make them even wealthier. Since the Fed was created in 1913, the U. S. national debt has gotten more than 5000 times larger and the value of the U. S. dollar has declined by about 98 percent. So the Federal Reserve is doing what it was originally designed to do. In fact, it has probably worked better than the original designers ever dreamed possible.

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

How to Drink from a Firehose

Rosengren & Carney
Draghi Heckled
Treasury Hat Trick
Stop Drinking Now
A Brief Commercial
Orlando, Washington DC, St. Thomas, and SIC 2017
Basic economics tells us all resources are scarce, but our demand for them is not. Hence we need methods to allocate the limited supply of each resource. A significant part of economics is the study of those methods.
One exception to the rule, though, has developed in the last few years: The amount of information available to us is practically unlimited. Open your internet browser, and most of that information is just a few clicks way. But if media industry profits (or lack of them) are any indication, demand for that information is anything but infinite.
One problem with information is that much of it is biased. I know, for instance, that when I read a certain economist commenting on recent data, he is going to put a spin on it that reflects the particular economic soapbox he prefers to stand upon. And while I will occasionally take time to read such people, just to kind of keep up on ‘influencers,’ they often don’t really add much to the conversation.
Then there are those who are always delivering fascinating surprises. They do enormously deep dives into arcane data and tease out insights of real importance – connections to other ideas or solutions to challenging problems – they come up with new and different way of looking at the world. I don’t know what you call them, but ‘seekers of truth’ is how I label them. They are just as curious as I am about how the Grand Puzzle all fits together, and they are describing the pieces as viewed from the another side of the table. I value these thinkers. (Sitting here thinking about it, I realize that I need to put a list together of some of my best resources. Some of them are expensive to access; but, surprisingly, more and more of them are either cheap or free. I will get around to that project and make it available to you one day.)

This post was published at Mauldin Economics on MAY 14, 2017.

Scandal At China’s Grand Silk Road Summit As India Skips, Warns Of “Unsustainable Debt”

It was supposed to be China’s day of celebrating massive infrastructure spending for the sake of spending (read ghost towns, only now outside China’s borders) as Xi Jinping pledged $124 billion on Sunday for his new Silk Road plan to forge “a path of peace, inclusiveness and free trade” while calling for the abandonment of old models based on rivalry and diplomatic power games. However, it did not go quite as smoothly as expected.
A celebration years in the making, Xi hosted dozens of world leaders – including a piano-playing Vladimir Putin – on Sunday for the country’s biggest diplomatic showcase of the year, touting his vision of a new “Silk Road” that opens trade routes across the globe. Xi used the summit to “bolster China’s global leadership ambitions” as U. S. President Donald Trump promotes “America First” and questions existing global free trade deals.
In total, leaders from 29 countries attended the forum, including some of China’s close allies and partners such as Russian President Vladimir Putin, Cambodian Prime Minister Hun Sen, Kazakh President Nursultan Nazarbayev, Turkey’s quasi-dictator Tayyip Erdogan, as well as the heads of the United Nations, and the CapEx leeches from the IMF and World Bank.

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

China Bulls Are Going to Get a Wake-Up Call, Says Leading China Analyst

China’s first quarter economic data came in above expectations and many are raising their growth outlook for the world’s second largest economy.
Looking under the surface, however, Leland Miller at China Beige Book told FS Insider that China’s positive growth last quarter was due to some of the loosest monetary conditions on record and that complacent investors may be getting a wake-up call in coming weeks and months.
Q1 Good … on the Surface
Though metrics such as Chinese GDP and PMIs gave the impression things are going well, there’s more to the story, Miller noted. It’s not nearly as positive as people have been portraying.
‘If you look at the state of the economy, Q1 did so well because the old economy did so well,’ he said. ‘Manufacturing, commodities, and property to some extent, led in the first quarter, where retail did quite poorly and services underperformed.’
It appears that China is hitting its goals, but there’s going to be a big toll to pay later.

This post was published at FinancialSense on 05/12/2017.


Time and time again we are seeing fraud taking place in the precious metals’ market. Thousands of tonnes of paper silver and paper gold are being dumped over just a few hours or days. For anyone who doesn’t understand what is happening, let me categorically state that this has nothing to do with the real physical market in gold and silver. No, this is blatant manipulation by governments and bullion banks as well as speculators. And since governments are involved, it is sanctioned by them with no consequences for the traders who are rigging the market.
BULLION BANKS FEAR THE DAY THEY MUST TURN PAPER GOLD INTO PHYSICAL What is happening has nothing to do with real markets or real supply and demand. What we are seeing is governments trying to obfuscate their total mismanagement of the economy and the currency. So far, the bullion banks have been fortunate that gold and silver paper holders haven’t called their bluff and asked for physical delivery. Because we know and the banks know that the day they will need to come up with the real gold and silver bars, it is game over. Because they haven’t got physical gold or silver to cover even a fraction of their paper shorts. Between futures exchanges, bullion banks, including precious metals derivates contracts, there are hundreds of ounces of paper gold and silver outstanding for every ounce of physical backing.
The problem is that it is not only the bankers that are the culprits in this game. No, governments are just as culpable. Western banks officially hold 30,000 tonnes of gold. Virtually no Western central bank has ever had a physical audit of their gold. The US had their last audit during Eisenhower’s reign in 1953?
Western central banks have in the last few decades been liquidating a major part of their gold holdings. For example, he UK sold half of their gold holdings at the end of the 1990s and Switzerland sold over half. Norway sold ALL their holdings in the early 2000s.

This post was published at GoldSwitzerland on May 12, 2017.

An Impending Economic And Financial Disaster

You’ve probably heard/read a lot lately about the VIX index. The VIX index is a measure of the implied volatility of S&P 500 index options. The VIX is popularly known as a market ‘fear’ index. The concept underlying the VIX is that it measures the theoretical expected annualized change in the S&P 500 over the next year. It’s measured in percentage terms. A VIX reading of 10 would imply an expectation that the S&P 500 could move up or down 10% or less over the next year with a 68% degree of probability. The calculation for the VIX is complicated but it basically ‘extracts’ the implied volatility from all out of the money current-month and next month put and call options on the SPX.
The graph above plots the S&P 500 (candles) vs. the VIX (blue line) on a monthly basis going back to 2001. As you can see, the last time the VIX trended sideways around the 11 level was from 2005 to early 2007. On Monday (May 8) the VIX traded below 10. The last time it closed below 10 was February 2007. The VIX often functions as a contrarian indicator. As for the predictive value of a low VIX reading, there is a high correlation between an extremely low VIX level and large market declines. However, the VIX does not give us any information about the timing of a big sell-off other than indicate that one will likely (not definitely) occur.

This post was published at Investment Research Dynamics on May 14, 2017.

Wall Street’s Big Fugly Secret Revealed

When the ship starts to sink, the rats begin to think only moments ahead. The big picture falls by the wayside. Surviving until tomorrow is all that matters. Next year is lifetimes away.
There are a few places in the world you can see this happening in real-time.
One such place is Wall Street.
Case in point:
The flash boys are hitting a dead-end. Bloomberg has just reported on a strange real estate buy in Chicago. A tiny group of stock traders purchased 31 acres of undeveloped land for $14 million, twice the going rate… just to plop down an antenna.
Looking at the paperwork, the antenna is owned by World Class Wireless, an affiliate of Jump Traders.
And here’s why…
Just across the street is the building for the CME Group – the world’s largest futures exchange.
‘The high tech microwave antenna,’ ex-Wall Streeter Dr. Fly writes in his iBankCoin blog, ‘is able to intercept data coming out of the CME before it makes its way to the east coast – creating an arb situation that last microseconds. It is the definition of cheating, rich, powerful people using their position to jimmy rig trades in their favor, all but guaranteed. It’s like having a time machine that can go a microsecond into the future and see prices and then trade off of the knowledge using very sophisticated high speed quants.’

This post was published at Laissez Faire on May 12, 2017.

“Caution Ahead” Citi Urges As Four Key Chinese Indicators Are “Starting To Wave Red Flags”

Another day, another warnings about China’s fading credit impulse (see here in February, and Pimco most recently), and market complacency about what the recent monetary tightening and drop in commodity prices in Chinese markets means for global markets, this time from Citigroup.
In the latest note from Citi’s cross-asset strategist, Jeremy Hale, titled simply enough “China: Caution Ahead”, he highlights the long-standing trend lower in the EMRA, or Emerging Markets Risk Aversion Index (CIGMEMRA Index on Bloomberg) which is Citi’s measure of aggregate risk aversion in developing countries, which in turn has led many investors to ask the bank whether “investors are getting complacent on EM.”

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

Marc Cohodes, The Scourge Of Home Capital, Reveals His Latest Short

Having single-handedly hounded Home Capital Group – the company which we predicted in 2015 would be “ground zero” for any potential Canadian financial crisis, and has emerged as the Canada’s equivalent to the infamous New Century which in 2007 presaged the upcoming global financial crisis – into near oblivion, noted chicken-farmer and short-seller, Marc Cohodes, over the weekend revealed the full details behind his latest short thesis: Canadian oil and gas service provider, Badger Daylighting.
Badger, for those unfamiliar, is a company which uses a technique called hydrovac excavation, in which pressurized water and a powerful vacuum are used to expose buried pipes and cables.
The company, with the unfortunate Toronto Ticker “BAD“, already had a bad day on Friday when it revealed earnings and revenues that badly missed consensus expectations. Insult was added to injury after Cohodes, who most recently gained prominence for his short bet on Home Capital Group, previewed pages of a negative presentation on Badger to his Twitter feed Friday, saying that the shares are overvalued and that there are low barriers to entry.
As a result, BAD shares plunged as much as 28% to C$22 in Toronto, the biggest intraday decline since November 2006, after previously dropping 4.8% YTD. To be sure, on Friday Badger CEO Paul Vanderberg, without in depth knowledge of Cohodes’ thesis, responded to Cohodes saying “my focus on that is really not to focus on it” during the earnings call and adding that “I don’t agree with the thesis.” Obviously, especially since neither he nor anyone else had seen or read it.
Chief Financial Officer Jerry Schiefelbein also responded, saying Badger is working to train new workers and managers on how to operate more efficiently, which should help reduce costs. He said the company’s first-quarter sales were ‘pretty good’ following a couple of tough years. As for Cohodes’ criticism about low barriers to entry, Schiefelbein was quoted by Bloomberg saying tat Badger’s size gives it an advantage over mom-and-pop shops that would seek to compete with the company. Badger can tackle bigger projects for municipalities, has safety systems that larger customers require and it can move assets to markets where there is more demand, he said. ‘It’s not just digging holes in the ground.’

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

Europol Fears Computers Simply Won’t Start Monday: Over 200,000 Infected In “Unprecedented” Global Cyberattack

There was a silver lining in what has been dubbed the “world’s biggest ransomware attack” – it struck on Friday mid-afternoon (in Europe), just as businesses were winding down for the weekend, and as a result the full impact of the forced system shutdowns would not be fully felt over the weekend when businesses and infrastructure are generally operating at a subdued pace. However, with the weekend coming to a close, the full extent of the inflicted damage may become apparent in just a few hours.
That was the warning by Europol Executive Director Rob Wainwright who on ITV’s ‘Peston on Sunday’ broadcast, said that additional disruptions are likely as people return to work Monday and turn on their desktop systems, and as a result the “unrivaled” global cyberattack is poised to continue claiming victims.

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

“It Fell Off A Cliff”: Morgan Stanley’s Macro Indicator Just Crashed The Most Since Dec. 2008

Step aside Citi US Economic Surprise Index, which after a “surprising” streak of negative economic data, recently crashed to the lowest level since October 2016…

… and make way for Morgan Stanley’s ARIA, a monthly US macro indicator based on data collected through primary research on key US sectors (consumer, autos, housing, employment, and business investment).
The reason why this particular index will likely feature prominently in financial commentary in the coming days and weeks, is that as Morgan Stanley’s chief economist Ellen Zentner writes, “ARIA appears to have fallen off a cliff in April, with a 0.72% decline, the largest since December 2008.”

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

“Over 200,000 Infected”: Europol Fears Global Systems May Not Start Monday After “Unrivalled” Cyberattack

There was a silver lining in what has been dubbed the “world’s biggest ransomware attack” – it struck on Friday mid-afternoon (in Europe), just as businesses were winding down for the weekend, and as a result the full impact of the forced system shutdowns would not be fully felt over the weekend when businesses and infrastructure are generally operating at a subdued pace. However, with the weekend coming to a close, the full extent of the inflicted damage may become apparent in just a few hours.
That was the warning by Europol Executive Director Rob Wainwright who on ITV’s ‘Peston on Sunday’ broadcast, said that additional disruptions are likely as people return to work Monday and turn on their desktop systems, and as a result the “unrivaled” global cyberattack is poised to continue claiming victims.

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