Don’t Believe ‘Eerily Low’ Inflation in Canada: National Bank

This is how it’s ‘understated.’
We have long lamented the persistent understatement of soaring US housing costs in the Consumer Price Index, and thus the understatement of overall inflation as experienced by people with a roof over the head. But now two economists from the National Bank of Canada spell out their doubts about the housing inflation component in Canada’s overall CPI.
The Consumer Price Index in Canada rose 1.6% in April year-over-year seasonally adjusted, Statistics Canada reported last week, same as in March, but down from 2.0% in February. Over the past four years, CPI inflation ranged from 0.4% to 2.4%.
For inflation lovers, it was too tame. But Canadians – like Americans who’re in a similar boat – have long complained that life overall is getting a lot more expensive a lot faster than reflected in the CPI. And a big part of that expense is housing costs for owners and renters.

This post was published at Wolf Street by Wolf Richter ‘ May 23, 2017.

Legendary Investor Asher Edelman Says “I Have No Doubt” PPT Behind Market Rally

'@AsherEdelman: "I don't want to be in the market because I don't know when the plug is going to get pulled"
— CNBC's Fast Money (@CNBCFastMoney) May 23, 2017

Legendary vulture investor Asher Edelman, the 1980s model for Gordon Gekko, strayed into what must’ve been uncomfortable territory for CNBC during an appearance on “Smart Money” when he discussed his view that the government’s “plunge protection team” is the only thing propping up the current market rally, and said he suspects that it has again been recently een intervening in the market to keep stocks at record highs.
Edelman simply notes that he doesn’t want to be in the markets right now because ‘I don’t know when the plug is going to be pulled.”
Few can explain the market’s recent resilience, holding near record highs despite weak economic data and intensifying geopolitical tensions. The main benchmarks have risen for the fourth straight day following last week’s ‘Trump Dump” despite a terror attack in the U. K., the worst soft economic data since February 2016, and surprisingly low trading volume.

This post was published at Zero Hedge on May 23, 2017.

We Are Now Witnessing The Total Break Down Of The System – Episode 1287a

The following video was published by X22Report on May 23, 2017
UK’s consumers are tapped out and the retail industry was just hit and the entire market is now slowing. The EU will not let the UK exit they want 112 Billion Euros to leave. Greek bailout is not working out, Greece is now back in a recession, which they never really left. Soft data, hard data, all pointing to the same thing the system is breaking down. New home sales crashed, the real estate market is starting to fall apart. The average GDP numbers of the 30 match the average GDP number today, this means we are in a depression.

Stocks and Precious Metals Charts – Breaking You

You’ve been let down, it’s true
Your pain is so easy to see
You’re haunted by your history
And it feels like you’ve got no escape.
Your life left you high and dry
You used to be sure of yourself
But then your whole world went to hell
And tomorrow looks just like today.
Lift up your eyes
Love is on the way
And it won’t pass you by
You just gotta reach out your hand.
Audrey Assad, Breaking You
Stocks ‘extended the bull market’ as the spokesmodels on Bloomberg TV were saying in their adept analysis after the bell.
I have an itch to put a modest short back on to the equity market, but I resisted it for now. These things tend to have a time of their own.
And besides, it is not yet clear to me that all the suckers are back in, and the pros are looking to hand this third generation stock bubble off.
Volatility has come back down quite a bit once again.
Gold and silver were weak today. There will be an option expiration on the Comex this week Thursday the 25th. June is a more important month for gold than silver.
The GOP and the talking yam did not fail to disappoint with their initial budget proposal. They are going after the weak, the poor, and the sick in order to provide more of everything to their masters of wickedness in high places.

This post was published at Jesses Crossroads Cafe on 23 MAY 2017.


GOLD: $1255.95 down $5.65
Silver: $17.14 down 6 cent(s)
Closing access prices:
Gold $1252.00
silver: $17.08
Premium of Shanghai 2nd fix/NY:$1.67
LONDON FIRST GOLD FIX: 5:30 am est $1259.90
For comex gold:
For silver:
For silver: MAY
Total number of notices filed so far this month: 4575 for 22,875,000 oz

This post was published at Harvey Organ Blog on May 23, 2017.

Illinois Democrats In Senate Pass 33% Hike Of Personal And Corporate Income Taxes

Senate Democrats in Illinois, with a final vote of 32-26, have just passed a new budget proposal that includes a massive personal and corporate income tax hike and an expansion of the state’s sales tax, after saying they are no longer willing to wait for a broader deal with Republicans.
As the Chicago Tribune noted earlier this morning, the Democrats’ budget proposal includes a ~33% hike in both the the personal and corporate income tax rates and an expansion of the state’s share of sales tax revenue. In all, the package would cost Illinois taxpayers an incremental $5 billion.
Democrats spent the weekend tweaking the spending plan, and unveiled an updated proposal late Monday. It calls for spending $37.3 billion after raising about $5 billion through the tax hikes; a floor vote is expected Tuesday, said Sen. Heather Steans, a Chicago Democrat and key budget negotiator.

This post was published at Zero Hedge on May 23, 2017.

Podcast: Using a Supercomputer to Trade the Market

What happens when supercomputers trade the markets?
Last week, we spoke with Didier Sornette, director of the Financial Crisis Observatory at ETH Zurich, who uses one of Europe’s most powerful supercomputers to scan financial assets around the globe for unsustainable price movements – ”bubble signals” – which, when combined with fundamental analysis, is used to identify mispricings or “deviations from efficient markets,” as Didier explains in the following clip:

This post was published at FinancialSense on 05/23/2017.

“Somewhat Underwhelming” US Manufacturing Slumps To 8-Month Lows As Services Rebound Amid Soaring Costs

Weak Chinese PMIs and ‘steady’ European PMIs were trump by German IFO exuberance overnight ahead of US PMIs. Having tumbled to their lowest level since September, May preliminary US PMIs were mixed with Manufacturing slumping to 8-month lows and Services rebounding to 4-month highs.
The overall compoosite PMI rose modestly but the divergence betwen manufacturing and services is widening once again (and remember that has never ended well for services)
Measured overall, average cost burdens increased at a robust pace during May. This was driven by the steepest rise in service sector input prices since June 2015.

This post was published at Zero Hedge on May 23, 2017.

Seeds, Unicorns, and the Value of Venture Capital

Silicon Valley is a mystery to most people. So is technology in general, for that matter.
We like our gadgets, but we don’t really understand where they originate. We like tech stocks as long as they go up.
It doesn’t occur to us that when a tech stock goes public and millions of starry-eyed mainstream investors scramble to buy shares in the IPO, the ‘smart money,’ aka the early investors, are already cashing out and moving on.
This week, I’m at our Strategic Investment Conference, so instead of current news, I have a movie review for you. As you’ll see below, it’s a good peek into early-stage venture investing and has some lessons we can all apply.
First, a reminder: You can follow the conference action on our SIC Live Blog. We’ll be updating it frequently with session recaps, photos, and videos. Check out the agenda for speakers and times.
Now, on with the show.
Red Carpet
Back in March, I went to the South by Southwest Conference in Austin, part of which is a film festival. Many aspiring filmmakers premiere their creations at SXSW. I’ve never paid much attention, but this year, I noticed one that looked economically interesting.
Seed is a documentary by producer Andrew Wonder. The subject is AngelHack, a competition where teams of would-be tech entrepreneurs compete for venture capital funding. Here’s the official synopsis.
Seed follows three start-ups from around the world as they descend on San Francisco for AngelHack’s Silicon Valley Week. For three intense days they’ll hone their pitches, tell their story, and face humiliation at the hands of mentors just to get the chance to present their start-up to a panel of judges who could change their lives… or destroy their dreams.

This post was published at Mauldin Economics on MAY 23, 2017.

New Home Sales Plunge 11.4% In April

So much for the jump in the builder’s confidence index reported last week. The Government reported a literal plunge in new home sales in April. Not only did the seasonally manipulated adjusted annualized sales rate drop 11.4% from March, it was 6% below Wall Street’s consensus estimate.
Analysts and perma-bulls were scratching their head after the housing starts report showed an unexpected drop last week after a ‘bullish’ builder’s sentiment report the prior day.
The Housing Market index, which used to be called the Builder Sentiment index, registered a 70 reading, 2 points above the prior month’s reading and 2 points above the expected reading (68). The funny thing about this ‘sentiment’ index is that it is often followed the next day by a negative housing starts report. Always follow the money to get to the truth. The housing starts report released last Tuesday showed an unexpected 2.6% drop in April. This was below the expected increase of 6.7% and follows a 6.6% drop in March. Starts have dropped now in 3 of the last 4 months. So much for the high reading in builder sentiment.
This is the seasonal period of the year when starts should be at their highest. I would suggest that there’s a few factors affecting the declining rate at which builders are starting new single-family and multi-family homes.
First, the 2-month decline in housing starts and permits reflects new homebuilders’ true expectations about the housing market because starts and permits require spending money vs. answering questions on how they feel about the market. Housing starts are dropping because homebuilders are sensing an underlying weakness in the market for new homes. Let me explain.

This post was published at Investment Research Dynamics on May 23, 2017.

Liar Loans Dog Subprime Auto-Loan-Backed Securities

Santander, top subprime auto lender, verified income on only 8% of loans: Moody’s.
‘Liar loans’ were a factor in the housing bust during the Financial Crisis that brought down the banks. Bank regulators now require lenders to verify income and employment of mortgage applicants and take other steps to make sure buyers can afford the mortgage payment. But in auto loans, no such requirement exists. So here we go again…
Moody’s Investors Service analyzed $1 billion of Asset Backed Securities (ABS) backed by subprime auto loans that Santander Consumer USA Holdings, one of the largest subprime auto lenders, had issued. ‘Subprime’ means the borrower has a credit score of 620 or below. Turns out, Santander had verified the income of the borrowers on only 8% of the subprime loans.
Moody’s found other lapses, including loans with very low or no credit scores and no co-signer.
Back in February, Moody’s had rated these subprime-auto-loan-backed securities as high as Aaa. Among the institutional investors that bought them was Massachusetts Mutual Life Insurance, according to Bloomberg.
Moody’s contrasts Santander’s lack of even basic due diligence, such as verifying income and employment, with an auto-loan based securitization issued by GM’s finance subsidiary AmeriCredit. Moody’s compared the two because they are the top issuers of subprime auto-loan ABS. Turns out, AmeriCredit had verified income on 64% of the loans in the securitization. Bloomberg:

This post was published at Wolf Street on May 23, 2017.

Mnuchin Comments On Trump’s “Historic” Budget Proposal: “It Will Prevent Taxpayer Bailouts”

In a statement issued moments ago discussing Trump’s proposed, if completely impossible, budget proposal, Treasury Secretary Steven Mnuchin said that Trump’s “budget will achieve savings through reforms that prevent taxpayer bailouts and reverse burdensome regulations that have been harmful to small businesses and American workers.” Translation: taxpayer bailouts are imminent, especially now that the current economic cycle is the 3rd longest of all time and a recession grows likelier with every passing day.
Mnuchin also said that Trump’s proposed initiatives “coupled with comprehensive tax reform and other key priorities, will move America one step closer to sustained economic growth of 3 percent or higher.”
While we will clearly take the under, what we find most amazing about Trump’s budget proposal, is that it does not anticipated a recession until 2027. That would imply 18 years of economic growth since the 2009 recession, without a single contraction! Good luck with that.

This post was published at Zero Hedge on May 23, 2017.

UK Investigators Know Identity Of Manchester Bomber; Trump Calls Terrorists “Evil Losers”

We stand in absolute solidarity with the people of the United Kingdom.
— Donald J. Trump (@realDonaldTrump) May 23, 2017

Addressing the UK on Tuesday morning, British PM Theresa May said Tuesday that UK security services probing Monday’s attack at a Manchester pop concert believe they know the identity of the suspect, but will not release the name until further confirmation.
May, who briefed the media outside 10 Downing Street, said the terror attack that killed at least 22 and injured 59, including many children and young people, ‘stood out for its ‘appalling, sickening cowardice.”
“While we experienced the worst of humanity in Manchester last night, we also saw the best,” she said. May also said he had chosen the time and the place to attack and cause “maximum carnage and to kill and injure indiscriminately.” May said security services “believe the attack was carried out by one man” but need to find out whether “he was acting alone or part of a wider group.”
Separately, Queen Elizabeth II also released a statement on Tuesday, offered her condolences to the victims of Monday’s attack.

This post was published at Zero Hedge on May 23, 2017.

Jim Rickards: Don’t Watch the Circus in D.C., the Real News Is Gold

Over the last few weeks, the media has fixated on whether or not firing FBI director James Comey and allegations of Russian collusion will turn into Donald Trump’s Watergate. But in a recent column, economic analyst Jim Rickards said that really isn’t the most significant thing that’s happened.
While everyone is focused on the Washington circus this week, they’re missing what could be the real news – gold.’
On May 10, the media scarcely noticed when gold launched a decisive turnaround from its most recent dip. But that’s not the big news. We find it in a pattern that’s been establishing itself since the end of last year. As Rickards notes, since mid-December, we’ve seen the price of gold hit higher highs and higher lows.
Every retreat finds a footing higher than the one before and each new high reaches new, higher ground.’
Starting with the interim low of $1,128 on Dec. 15, we can see the pattern establishing itself. Since then, gold has hit the following highs before retreating,

This post was published at Schiffgold on MAY 23, 2017.

Summer Epocalypse Countdown: Trump Turmoil Takes Top Off Trump Rally

When financial Armageddon arrives, it can hit in a flash like a dangerous rogue wave – the kind that rises up when two big waves from different storms intersect and merge into a single wave big enough to capsize a ship. The global Wannacry warware attack and endless waves of Trump turbulence came together with just such damaging synergy last week, knocking the top off the Trump rally.
Black swans unite and strike stocks
On Wednesday of last week, the stock market fell 370 points because of all the turmoil Trump has been brewing – its worst day in eight months. Globally, equities lost almost a trillion dollars in a single day. Part of this was the political crisis in Brazil, and part was the Wannacry virus, but the biggest part nearly everyone agreed was the political crisis in the US that constantly embroils President Trump.
US equity funds saw $8.9 billion in outflows for the week up to Wednesdays’ close while European equity funds added one billion. US financial stocks took the brunt of the hit. Then the market recovered somewhat on Thursday and Friday, but more Trump turbulence took back a sizable piece of Friday’s attempted recovery.
Friday’s drop from its high point of the day hit immediately upon a double-whammy in the Washington Post and the New York Times, wherein thePost announced that a White House official is now a significant person of interest in the Russiagate scandal, and the NYT alleged via two anonymous (their new standard) government sources that Trump told the Russians at his meeting with the Russians and Kissinger that he had ‘just fired the head of the FBI; he was crazy, a real nut job,’ also telling them that doing so had taken off a lot of pressure that was on him because of Russia and that he was ‘not under investigation,’ as if not being under investigation resulted from the firing … in his opinion at the time.

This post was published at GoldSeek on 23 May 2017.

OPEC Is Studying The Following Three Options Ahead Of Thursday’s Meeting

Last week, ahead of the OPEC meeting, BofA commodity analyst Francisco Blanch said the oil cartel faced three specific choices ahead of its May 25 meeting in Vienna, when it is widely expected to extend the November 2016 production cut:
First, OPEC could cut production beyond the 1.2mn b/d agreed in December and encourage non-OPEC members to deepen the cuts. Second, OPEC could increase output aggressively and restart the oil price war. And third, OPEC could keep the cuts at the current levels for the next 6 to 9 months and hope for oil market demand conditions to improve. BofA also presented the following table adding the proposed likelihoods of any given choice of action, of which a simple deal extension had the highest probability of taking place.

This post was published at Zero Hedge on May 23, 2017.

The Character of the Market Is Changing

Not too many people remember the second week of August 2007, but for others, that week will be forever etched in their minds. And in many ways, it should be etched in yours as well.
During that infamous week, we witnessed an event that would later come to be known as the 2007 Quant Meltdown. While the events that unfolded took place in a relatively small pocket of the financial market, their effects would have consequences for all investors.
Algorithmic or quantitative investing has been on the rise for many years. One of the most prominent (and horrific) examples was Long-Term Capital Management – which, by the way, is one of the most ironic names possible, considering the fund engaged in high-risk, leveraged arbitrage trading strategies.
LTCM used a quantitative strategy to take advantage of arbitrage opportunities in fixed income markets. In 1998, when a financial crisis in Russia triggered a flight to safety, the firm sustained massive losses and was in danger of defaulting on its debts.
The amount of leverage LTCM used magnified its problems. Using $100 of borrowed money for every dollar of its own, LTCM held massive positions representing roughly 5% of the entire global fixed-income market. When a ‘once-in-a-lifetime’ event occurred that was not factored into their computer models, it brought the financial world to its knees.

This post was published at FinancialSense on 05/23/2017.

Gold and Silver Market Morning: May 23 2017 – Gold nudging overhead resistance ahead of a strong move!

Gold Today – New York closed at $1,260.30 yesterday after closing at$1,255.00 Friday. London opened at $1,260.05 today.
Overall the dollar was weaker against global currencies, early today. Before London’s opening:
– The $: was weaker at $1.1252 after yesterday’s $1.1240: 1.
– The Dollar index was slightly weaker at 96.90 after yesterday’s96.94.
– The Yen was slightly stronger at 111.24 after yesterday’s 111.34:$1.
– The Yuan was barely changed at 6.8901 after yesterday’s 6.8903:$1.
– The Pound Sterling was weaker at $1.2980 after yesterday’s $1.3018: 1.
Yuan Gold Fix
The Shanghai Gold Exchange was trading at 281.1 towards the close in Shanghai. Adjusting to the higher quality of gold traded there this price translates into $1,263.95. London opened at a $3.90 discount to Shanghai.
London and New York took gold higher yesterday, but today Shanghai lifted the gold price through resistance with London going higher on the back of Shanghai. All in all, the discounts of London and New York to Shanghai are very small, once again.

This post was published at GoldSeek on 23 May 2017.