China Capitulates: Injects $25 Billion Into Liquidity-Starved Banks To “Appease Investors”

Is China’s push to deleverage its financial system over?
That is the question following last night’s dramatic reversal in recent PBOC liquidity moves, when after weeks of mostly draining liquidity, the central bank injected a whopping 170 billion yuan (net of maturities), or $24.7 billion, the biggest one-day cash injection into the country’s financial markets (and contracting shadow banking system as first reported here last week, when we showed the first drop in China Entrusted Loans in a decade) in four months. The surprising move was “a fresh sign that Beijing is trying to mitigate the damage to investor confidence inflicted by its recent campaign to tamp down speculation fueled by excessive borrowing” according to the WSJ.
Today’s injection was the the largest since just before the Lunar New Year holiday in January, when Chinese banks traditionally stock up on liquidity.
On one hand it is possible that the PBOC is simple concerned about the sharp decline, and in fact contraction, in China’s shadow banking system, where as we showed last week Entrusted Loans posted their first decline since 2007 even as China’s M2 continued to decline.

This post was published at Zero Hedge on May 16, 2017.

If You’re Going to Mars, Chew Silver Gum

The United Arab Emirates hopes to build the first city on Mars by 2117. If Franziska Apprich, PhD has her way, travelers to the red planet will chew silver-imbedded gum during the trip.
Apprich serves as an assistant professor at Canadian University Dubai. In a partnership with a colleague at New York University, she created a product she has dubbed ‘UAE Space Gum.’
Wrapped in star-shaped silver packaging, the gum is formulated to boost immunity and fight infection. It contains natural gum, silver particles, date paste, honey, and vitamin C.

This post was published at Schiffgold on MAY 16, 2017.

Losing Faith? Dollar Index Dive Erases Post-Election Gains

The Dollar Index is now down 5 days in a row. While economic data has been disappointing (potentially leaving a less hawkish Fed – though we doubt it), it appears Trump turmoil is more to blame as dollar-holders lose faith in dollar assets…
The question is – is 3rd time testing this low the charm for a breakdown? Or do we bounce back higher again?

This post was published at Zero Hedge on May 16, 2017.

Are You Expecting the Great Convergence?

We all know that investing is a game of expectations. The market ‘prices in’ certain information, and then we adjust our outlook and positions as those expectations change. A key operating rule of this ‘game’ is that when the best that can be seen ahead is fully discounted, the market tops out.
A perfect example of this in action (on a micro scale) is the classic ‘beat and raise.’ When a company reports earnings, the best thing possible – at least for those who are long the stock – is for the company to beat earnings expectations for the prior quarter, then raise their guidance for subsequent quarters.
This resets the expectations of investors, and the stock almost always trades higher.
When it comes to managing our investments, we set expectations across a wide variety of different elements. Right now, I see particularly unrealistic expectations being set in two main areas: future returns, and economic growth.
Without question, these two depend on one another. It’s very difficult for investors to see substantial returns sans economic growth. But I’d like to briefly attack these as two separate issues.

This post was published at FinancialSense on 05/16/2017.

Asian Metals Market Update: May-16-2017

Traders can focus on Trump. US President Donald Trump’s top foreign policy advisers raced to contain political damage from a report saying he revealed sensitive classified information to Russia’s top diplomat during an Oval Office meeting last week. Trump problems will be good news for gold bulls. Buyers and investors of gold are not there on the hope of more price falls. If gold shows some short term strength then laggards will start investing in gold.
There can be an inverse correlation between gold prices in US dollars and gold prices in bitcoins. I expect this trend to continue for the rest of the year. Zooming bitcoin prices is also one of the reasons why gold in US dollars is not rising. Gold prices will zoom if and when bitcoin starts falling.
Last week, there was a massive attack in global computer system. Governments are trying to move into to zero cash all emoney based system. Governments are even trying to induce you to buy gold in electronic form. All your investment will become useless if and when there is a similar attack or a more fatal attack on global computer systems. Investment in physical gold is the need of the hour. Physical gold investment is the only liquid hedge against a potential crash in the global emoney system. Gold is not to be looked at as a short term quick money investment.

This post was published at GoldSeek on 16 May 2017.

Housing ‘Recovery’ Stumbles As Starts, Permits Plunge In April

After a big plunge in March (it’s the weather, stupid), Housing Starts were expected to rebound in April… but did not! Starts dropped 2.6% in April, after March’s 6.6% drop. Building Permits also tumbled 2.5% MoM – also multiple standard-deviations below expectations.
Single family permits dropped to 789K, the lowest since November (and multi-family is also at its lowest since Nov)

This post was published at Zero Hedge on May 16, 2017.

India Working Toward Establishing a Spot-Gold Exchange

In an effort to bring order to India’s gold market, the government has partnered with the World Gold Council to create a physical spot-gold exchange. According to Bloomberg, it could be up and running as soon as next year.
The move toward an India spot-gold exchange is part of a broader bullion industry self-regulation effort gaining steam in one of the world’s leading gold markets. Last month, three committees formed – one to study a gold trade code, one to formulate good delivery rules, and a third to explore a spot exchange. The committees were born out of a meeting that included business chambers, the World Gold Council, banks, the Indian Bullion and Jewellers Association (Ibja), and the India Gold Policy Centre at IIM-Ahmedabad.
According to Bloomberg, establishing the spot exchange faces some challenges, including the fact that state governments in India oversee gold-related matters, not the central government. Lack of vault space and reliable receipts for metal also pose hurdles.

This post was published at Schiffgold on MAY 16, 2017.

Sally Yates’ Revenge: Mike Flynn Conduct May Have Breached “Criminal Statute”

Ask Sally Yates, under oath, if she knows how classified information got into the newspapers soon after she explained it to W. H. Counsel.
— Donald J. Trump (@realDonaldTrump) May 8, 2017

After giving hours of testimony before the Senate Judiciary Committee on May 8th (which we covered here), Sally Yates sat down for another round of interviews with CNN’s Anderson Cooper to answer all the same questions about Michael Flynn’s dismissal all over again. The full interview is set to air tonight at 8pm EST on CNN but a teaser clip has been released for our early digestion.
Perhaps the most provocative part of the teaser comes at the 0:24 mark when Cooper asks whether Flynn’s underlying conduct was “illegal.” To which Yates responded:
“There is certainly a criminal statute that was implicated by his conduct.”
We assume that this quote is more than sufficient grounds for Maxine Waters to, once again, call for Trump’s immediate impeachment.
On whether Flynn should have been fired:

This post was published at Zero Hedge on May 16, 2017.

California Admits State’s Contribution To Retirement Giant CalPERS To Double (As Recovery Takes Longer Than Expected)

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
California’s recovery from The Great Recession has taken longer that Governor Jerry Brown imagined. Yet the slowness of the recovery hasn’t stopped Governor Brown from spending like the proverbial drunk sailor on big dollar items such as high-speed rail (for which Senator Diane Feinstein’s husband was award a near-billion dollar contract). But as an economist friend of mine in California said ‘What do you expect when the Democrats have a super majority in California’s governing bodies?’ And now Governor Brown is asking President Trump for financial assistance in building the high speed train (and pay off Senator Feinstein’s husband).
When you spend like a wild man on government projects and combating poverty, something has to give. And one of the somethings is the California state pension program for teachers and public employees. Even big spender Jerry Brown has ‘suddenly’ realized that CalPERS was only 65% funded as of June 30, 2016 (CalPERS reported that the state plans’ unfunded liability totals $59.5 billion and is 65 percent funded, meaning that CalPERS only has 65 percent of the funding required to make pension payments to state retirees).

This post was published at Wall Street Examiner on May 16, 2017.

Hotbed of Bootleg Software, China Gets Hit Most by WannaCry

Just one more reason for China to develop its own mousetrap. According to China’s official state TV broadcaster, cited by the New York Times, about 40,000 institutions were hit by the WannaCry ransomware attack on Windows-based computers since Friday – more institutions than in any other country.
This included research universities like Tsinghua University. Students around the country complained about being locked out of final thesis papers. Hainan Airlines and other major companies were infected. The electronic payment systems at PetroChina’s gas stations around the country went down for much of the weekend. Bank of China ATMs went down too.
China Telecom was among the companies that instructed employees over the weekend to patch the vulnerability of their computers, first using a patch it provided, and when that failed, a patch provided by Chinese security company Qihoo 360, which, as the Times put it, citing an employee of China Telecom, ‘supports pirated and out-of-date versions of Windows.’
So why did China’s companies and institutions get infected with this ransomware in such large numbers? One reason is the sheer size and complexity of the Chinese economy and the large numbers of computers. The other reason: Pirated versions of Microsoft Windows running on those computers.

This post was published at Wolf Street on May 15, 2017.

Odds Of Trump Still Being President In 2019 Hit Record Lows

From a recent high of 75%, the last few days – before FBI Director Comey was fired and Trump allegedly spilled the beans to the Russians – the odds of Donald Trump still being President at the end of 2018 have tumbled to record lows…
On relatively high volume, PredictIt’s site shows heavy selling (with some trades crossing below 60%).

This post was published at Zero Hedge on May 16, 2017.

A Market Crash 2017 Could Happen If the Trump Agenda Fails

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
The ‘Trump Rally’ has sent the Dow soaring 14% since Election Day, but the market could fall just as quickly, and a market crash in 2017 is a serious possibility. President Trump’s proposals to boost infrastructure spending, lower taxes, and cut regulations to boost economic growth have all made investors extremely bullish in 2017.
‘Everyone is looking to Trump…as the stock market’s chief motivator,’ CNBC reported as recently as March.
Stocks have soared to record-breaking highs, like the Nasdaq hitting its all-time high close of 6,128.51 just last week (May 10). But as we’ll show you in just a bit, stocks are now overvalued and ripe for a stock market crash. All it will take is a single destabilizing event to trigger a market crash.
That event could be the derailing of President Trump’s economic agenda. Here’s why overvalued stocks are dangerous and how a 2017 stock market crash could happen…

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

PAPER vs. PHYSICAL: The Amazing Amount Of Leverage In The Silver Market

While many precious metals investors realize the massive amount of paper trading leverage taking place in the gold market, they should see what is going on in the silver market. In a previous article, I provided data showing that an amazing $9.8 trillion of notional gold paper trading took place on the world’s exchanges in 2016 versus $42 billion in actual physical gold investment. This was a paper to physical ratio of 233 to 1.
However, the amount of paper trading leverage in the silver market is much higher than that.
But, before I get into the specifics of the paper silver market trading leverage, let’s take a look at the pathetic amount of physical silver investment versus Central Bank asset purchases. According to the data in the recently released 2017 World Silver Survey, total physical silver investment for 2016 came in at a whopping $4.4 billion.

This post was published at SRSrocco Report on MAY 15, 2017.

As SNAP Bounces On 13Fs, This Is How Long It Took Recent Tech Companies To Lose Their IPO Price

Investors are piling into Snap Inc. today (up over 7%) after hedge fund 13Fs over the weekend showed Appaloosa, Third Point, Soros, and Blackrock (among others) were all holders of the ‘camera’ company at the end of Q1…
Having dropped to as low as $17.07 (just 7c above the IPO price), the fact that these asset managers were holding the stock above $22 six weeks ago is apparently a reason to buy?

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

Dying Shopping Malls and Wealth Managers

People talk about the changing environment. In the financial world around us, things are also changing dramatically. What use to be is no more. There are no real ticker-tape parades any more and future pits are closing opting for online trading. What is changing and why can we not see it? The internet has changed the way people shop around the world with the retail sector currently dominated by Amazon, accounting for almost 65% of online sales. Amazon pasted Walmart (in market cap) back in 2015 and within the past two years has grown in value to be worth twice as much. Large department stores and the more traditional malls are closing but this is happening as retail spending continues to grow. Admittedly, online merchants have made it far easier, tap a button and our goods arrive at the doorstep the next day, but obviously at the expense of shop staff. The more comfortable we get with online retail the more intelligent we are shopping around and doing it ourselves. Is having the ease of service and renewed confidence a major influence upon why we are turning to index trackers and ETF’s rather than pay a money manager 2% to do it for us?

This post was published at Armstrong Economics on May 16, 2017.

The Economic School You’ve Never Heard Of

Submitted by Valentin Schmid via The Epoch Times,
Mainstream economics is under heavy pressure. Consistently wrong policies and forecasts have damaged the field dubbed ‘the dismal science.’ But what do critics propose should supersede the prevailing neo-Keynesian and neoclassical schools? Almost all alternative economists are calling for more government involvement to ‘fix’ the free market and make it work better.
But there is one school of economics, once prevalent in academia until it was pushed into obscurity, that places the power to fix the world’s problems in the hands of the people.
‘Economists err if they forget that economic life existed before them and that it operates, for the most part, independently of them,’ American economist Peter J. Boettke wrote in his book ‘Living Economics.’
Economics was once tasked with describing how man manages the world’s scarce resources, a process far older than economics as a science. But it has morphed into a field that blames the individual and reality for not measuring up to its theories, and then uses the coercive power of the state in an attempt to shape individuals and reality according to its ends.
The Austrian school of economics, the once dominant school of economic thought at the turn of the 19th century, focuses on the individual – and his or her actions and motivations – to explain economic life. It derives its name from the many scholars from Austria who developed 19th-century classic liberalism into a coherent explanation of economic life.

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

An Unexpected Change in Gold’s Seasonal Trading Pattern

Here at the outset, I want to share with you an interesting observation we made last week of gold’s seasonal trading pattern. As you can see in the chart below, based on data provided by Moore Research Center, the five-year pattern, represented by the orange line, is diverging from the longer-term trends. Note that the index on the left measures the greatest tendency for the asset to make a seasonal high (100) or low (0) at a given time.
***
The data show that lows are now reached late in the year, not in January (according to the 15-year period, represented by the dark blue line) or August (according to the 30-year pattern, represented by the light blue line). Historically, September has seen the highest returns on gold as Indians make huge purchases in preparation for Diwali and the fourth-quarter wedding season, but lately we’ve seen changes. When we calculate the average monthly returns of the past five years, from January 2012 to December 2016, we find that January is the strongest month, returning 5.3 percent, followed by August with 2.3 percent. September actually returns negative 1.3 percent.
There could be a number of reasons why this is, but it’s important to recognize that the five-year period captures the bear market that dragged gold from its high of $1,900 an ounce in August 2011 to a recent low of $1,050 in December 2015. The years 2013, 2014 and 2015 all saw negative returns, so it’s little wonder why the orange line trends down from February-March to December.

This post was published at GoldSeek on Tuesday, 16 May 2017.