China’s “Bubble Prophet” Sees Unprecedented Surge In Home Prices

Beijing’s ability and eagerness, to create and roll from one bubble, whether it is in housing, equities, commodities, cars, bitcoin and so on, into the next has been extensively documented, however, of all recurring bubbles to impact the Chinese economy, housing is by far the most important. The reason for that is that housing provides Chinese society with a dramatic wealth effect, far greater than the stock market, and as Deutsche Bank calculated in March, in 2016 the rise of property prices boosted household wealth in 37 tier 1 and tier 2 cities by CNY 24 trillion, almost twice their total disposable income of RMB12.9 trillion (fig.11).

This post was published at Zero Hedge on Jun 11, 2017.

Why the World’s Billionaire Investors Buy Precious Metals

Why are these billionaires buying precious metals?
Their cited reasons can basically be summed up with six categories: wealth preservation, store of value, inflation hedge, portfolio diversification, future upside, and investment fundamentals.
What Billionaire Investors are Doing
1. Lord Jacob Rothschild
In late summer 2016, Rothschild announced changes to the RIT Partners portfolio because he was worried about very low interest rates, negative yields, and quantitative easing, saying they are part of the ‘greatest monetary experiment in monetary policy in the history of the world’.
His solution? Buy gold to help preserve wealth, and as a store of value for the future.

This post was published at GoldSeek on 11 June 2017.

The Inconvenient Truth… Of Consumer Debt

Oh, but for the days the hawks had a hero in Sydney. Against the backdrop of a de facto currency war, the Reserve Bank of Australia stood as a steady pillar of strength. The RBA held the line on interest rates, maintaining a floor of 2.5 percent, even as its global central bank peers drove rates to the zero bound and beyond into negative territory.
The abrupt end to the commodities supercycle drove the RBA to join the global currency war. The mining-dependent nation’s economy was so debilitated that policy makers felt they had no choice but to ease financial conditions. In February 2015, after an 18-month honeymoon, the RBA reduced its official rate to 2.25 percent, marking the start of a cycle that ended last August with the fourth cut to a record low of 1.5 percent.
The Bank of Canada has taken a similar journey in recent years. It embarked upon a mild tightening campaign in 2010 that raised the overnight loan rate from a record low of 0.25 percent to 1 percent in September 2010. The bank maintained that level until early 2015. Two weeks before the RBA’s first cut, the Bank of Canada lowered rates to 0.75 percent. The January move, which shocked the markets, was followed in July 2015 with an additional ease to 0.5 percent, where it remains today.
Bank of Canada Governor Stephen Poloz, who replaced Mark Carney after he departed to head the Bank of England, explained the moves as necessary to counter the downside risks to inflation emanating from the oil price shock to the country’s economy.

This post was published at Zero Hedge on Jun 11, 2017.

Macron Set For Landslide Victory In French Parliamentary Elections

With a record low turnout, less than 50% of eligible voters are expected to cast their votes in today’s first round of the French parliamentary election…
… projections show Macron’s Republique en Marche party winning by a landslide, set to hold a giant majority with anywhere between 400 and 445 seats in the 577-member National Assembly.

This post was published at Zero Hedge on Jun 11, 2017.

Legendary Investor Jim Rogers Warns That The Worst Stock Market Crash In Your Lifetime Is Coming ‘This Year Or Next’

If Jim Rogers is right, the worst stock market crash that any of us has ever seen is right around the corner. For the past 15 years, Rogers has been a frequent guest analyst on CNBC, Fox News and elsewhere, and he is immensely respected for the depth of knowledge and experience that he brings to the table. So the fact that he is warning that we are about to see the worst stock market crash in any of our lifetimes is making a lot of waves in the financial community. And of course Rogers is far from alone. Previously, I have written about several other prominent experts that are warning that a new financial crisis is imminent, and I have also discussed how a number of big investors are quietly positioning themselves to make an enormous amount of money when the markets crash. Could it be possible that all of these incredibly sharp minds could be wrong? Yes, but I wouldn’t bet on it.
I was actually quite stunned when I first learned what Jim Rogers had told Henry Blodget of Business Insider during a recent interview. Rogers has built up a tremendous amount of credibility, but now he is putting that credibility on the line by warning that a great stock market crash will happen by the end of next year. Here is the key portion of the interview …
Blodget: Well, yeah, TV ratings do seem to go up during crashes, but then they completely disappear when everyone is obliterated, so no one is hoping for that. So when is this going to happen?

This post was published at The Economic Collapse Blog on June 11th, 2017.

Is the Central Bank’s Rigged Stock Market Ready to Crash on Schedule?

We just saw a major rift open in the US stock market that we haven’t seen since the dot-com bust in 1999. While the Dow rose by almost half a percent to a new all-time high, the NASDAQ, because it is heavier tech stocks, plunged almost 2%. Tech stocks nosedived while others rose to create new highs. Is this a one-off, or has a purge begun for the tech stocks that have driven the nation’s third-longest bull market?
Yesterday’s dramatic ‘rotational’ divergence between tech stocks and the rest of the market, which as Sentiment Trader pointed out the only time in history when the Dow Jones closed at a new all time high while the Nasdaq dropped 2% was on April 14, 1999, stunned many and prompted Bloomberg to write that ‘a crack has finally formed in the foundation of the U. S. bull market. Now investors must decide if any structural damage has been done.’ (Zero Hedge)
This is important because, without the nearly constant lead of those tech stocks, the market would have been a bear a long time ago. Tech stocks created half of the market’s gains in 2017. Financials, which led the Trump Rally, also hit the rocks in recent weeks, at one point erasing almost all of their gains for 2017, though they recovered a little of late. If both continue to falter, the rally rapidly implodes and maybe the whole bull market with it.
The Tech sector suffered its worse high-altitude nose bleeds at the end of May – the biggest outflow in over a year. Said Miller Tabak’s Matt Maley in a note to clients:

This post was published at GoldSeek on 11 June 2017.

Palladium Pandemonium – Short Squeeze Sends Precious Metal Spreads Parabolic

I know just enough about the palladium market to get myself into some serious trouble – which means, I don’t know much. But this morning, the popular trader Kid Dynamite tweeted about a surprising development in the palladium futures market.
Usually, metals’ futures markets trade in contangos. The future price is higher than the spot price to account for the opportunity cost of holding (or financing) the long position in the underlying metal.

This post was published at Zero Hedge on Jun 11, 2017.

Psychologically damaged baby boomers blame Millennials for all of the perceived ills in the economy including destroying dozens of industries.

The headlines continue to rail against young Americans as if they are the primary cause for many industries going under. Forget about the fact that companies like Amazon have shifted the way all Americans shop. The headlines blaming young Americans are getting to the point of ridiculousness. Baby boomers hold 50 percent of all wealth in the US. The young group that is usually blamed for all of the economic ills only holds 4 percent of told wealth. So how can these stories continue? Well it appears that many older Americans are simply full of fear and live their lives based on emotional perceptions rather than facts. The reality is many baby boomers are psychologically damaged and see fear everywhere even though they have been the wealthiest cohort the world has ever seen.

This post was published at MyBudget360 on June 11, 2017.

Central Banker’s Real Legacy: Pension Funds Panic ‘Reach’ For Yield

Ben Bernanke’s creativity inspired a generation of economists and central bankers. QE, ZIRP and NIRP established a new class of economics that is mathematically sound but practically disastrous. Billions of dollars were transferred from savers to investors to boost the economy, but the wizards of quant forgot that something has to give. In this case, it was the formation of a pension crisis that threatens the golden years of millions of retirees across the world. None of the econometrics models provide a solution for the growing gap in pension funding, other than unsustainable debt accumulation.
Creativity cascaded to the less sophisticated pension fund managers. In a desperate reach for yields they increased exposure to project finance.
Perceived higher returns, long-term investment horizon and inflation protection made it the perfect match for pension funds. However, like their central banker peers, pension fund managers were completely mistaken. Actual risks were largely underestimated. The binary nature of cashflow risks makes conventional risk measures meaningless.
This is best illustrated by looking at the cumulative default rates of project finance (1991-2011) in North America, which exceeded the default rate of the non-investment grade Ba bonds in the first 6 years and is more than triple that of investment grade default rates.

This post was published at Zero Hedge on Jun 11, 2017.

It’s Confirmed: Without Government Subsidies, Tesla Sales Implode

According to the latest data from the European Automobile Manufacturers Association (ACEA), sales of Electrically Chargeable Vehicles (which include plug-in hybrids) in Q1 of 2017 were brisk across much of Europe: they rose by 80% Y/Y in eco-friendly Sweden, 78% in Germany, just over 40% in Belgium and grew by roughly 30% across the European Union… but not in Denmark: here sales cratered by over 60% for one simple reason: the government phased out taxpayer subsidies.
As Bloomberg writes, and as Elon Musk knows all too well, the results confirm that “clean-energy vehicles aren’t attractive enough to compete without some form of taxpayer-backed subsidy.”
The Denmark case study is emblematic of where the tech/cost curve for clean energy vehicles currently stands, and why for “green” pioneers the continued generosity of governments around the globe is of absolutely critical importance, and also why Trump’s recent withdrawal from the Paris Climate Treaty is nothing short of a business model death threat.
To be sure, Denmark’s infatuation with green cars is well-known: the country’s bicycle-loving people bought 5,298 of them in 2015, more than double the amount sold that year in Italy, which has a population more than 10 times the size of Denmark’s. However, those phenomenal sales figures had as much to do with price and convenience as with environmental concerns: electric car dealers were for a long time spared the jaw-dropping import tax of 180 percent that Denmark applies on vehicles fueled by a traditional combustion engine.

This post was published at Zero Hedge on Jun 11, 2017.

Another Day of Salami Slicing in Silver and Gold

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM The gold price was sold lower by about five bucks or so going into the London open. From there it inched higher into the noon silver fix — and from that point the sell-off into Friday’s low price tick commenced. That came about ten minutes before the equity markets opened in New York. From there the gold price chopped quietly higher until around 2:45 p.m. in after-hours trading. Then about an hour after that, some kind soul peeled about five bucks off the price into 5:00 p.m. EDT close.
The high and low ticks were reported as $1,284.60 and $1,266.70 in the August contract.
Gold was closed on Friday afternoon at $1,266.40 spot, down another $11.20 on the day, but still above its crucial 200 and 50-day moving averages, but a slice off the salami nonetheless. Net volume was monstrous once again at 207,000 contracts.

This post was published at GoldSeek on Sunday, 11 June 2017.

Trump Slams “Cowardly” Comey, Says Leaks “Far More Prevalent Than Anyone Ever Thought Possible”

After waking up on Sunday, Trump didn’t waste much time before taking to his favorite social network, where in a series of tweets, he first took credit for the latest Dow Jones record high, while praising the record “business and economic enthusiasm”, slamming “obstructionist” Democrats who “have no message, not on economics, not on taxes, not on jobs, not on failing #Obamacare”, and lashing out at “cowardly” Comey’s ‘leaks’ will be ‘far more prevalent than anyone ever thought possible.’
“I believe the James Comey leaks will be far more prevalent than anyone ever thought possible. Totally illegal? Very ‘cowardly!’, Trump said in a Tweet at 8:30am on Sunday.
I believe the James Comey leaks will be far more prevalent than anyone ever thought possible. Totally illegal? Very 'cowardly!'
— Donald J. Trump (@realDonaldTrump) June 11, 2017

This post was published at Zero Hedge on Jun 11, 2017.

How Would Markets React If Trump Is Actually Forced Out of Office?

Donald Trump’s policy agenda – and his very presidency – are in jeopardy…
Learn How to Exploit the Gold Frenzy! …at least if you believe the chatter on cable television.
Yes, for weeks now, the big media outlets have been stirring up talk of impeachment. One narrative after another – Russia, Comey, Kushner, etc. – yet no conclusive evidence of any ‘high crimes and misdemeanors.’
Still, Democrats in Congress smell blood in the water… and they have readied articles of impeachment for introduction as soon as an opportunity presents.
Buy Silver Quarters – In Stock, Ships Fast! But investors don’t seem particularly concerned about the implications of political turmoil intensifying in Washington.
The stock market keeps edging higher with minimal volatility.
The only hint of politically driven jitters all year came on May 17th. The Dow Jones Industrials slid by nearly 400 points as reports surfaced that former FBI Director James Comey was asked by President Trump to stop his investigation of former national security adviser Michael Flynn.

This post was published at GoldSilverWorlds on June 11, 2017.

Restaurant Sales, Traffic Tumble: “The Industry Hasn’t Reported A Positive Month Since February 2016”

There appeared to be a glimmer of hope for the restaurant industry last month, when despite ongoing negative restaurant sales and traffic performance in April, BlackBox Intelligence Executive Director, Victor Fernandez said that “there are some reasons to be cautiously optimistic about the second quarter, at least in terms of improvement over what we’ve seen in the recent past” adding that “the move of the Easter holiday meant that April’s results were likely softer than they would have been without this shift, meaning spending in restaurants was probably a little stronger than the numbers show.”
Alas, any trace of optimism was doused with the latest BlackBox snapshot report (based on weekly sales data from over 27,000 restaurant units, and 155 brands representing $67 billion dollars in annual revenue) which found that May was another disappointing month for chain restaurants by virtually all measures.
Same-store sales were down -1.1%, which represents a 0.1% decline from April. At the same time, same-store traffic “growth” also dropped by -3.0% in May, down 3.2% on a rolling 3 month basis. Although traffic results improved from prior month, the growth in check average was lower than it has been in recent months, causing the fall in sales growth vs. March and April.
More concerning is that the restaurant industry has not reported a month of positive sales since February of 2016, according to BlackBox.

This post was published at Zero Hedge on Jun 11, 2017.

Why The Markets Are Overdue For A Gigantic Bust

Let me begin with a caveat: confirmation bias is an ever-present risk for an analyst such as myself.
If you’re not familiar with the term, ‘confirmation bias’ suggests that once we’ve invested time and emotional energy into developing a worldview, we’ll then seek information to confirm that view.
After writing about the economy for so many years, I’m now so convinced that we can’t print our way to prosperity that I find myself seeing signs confirming this view everywhere, every single day. So that’s the danger to be aware of when listening to me. I’m going to keep repeating this mantra and Im going to keep finding data that supports this view.
Based on lots of historical inputs, I have concluded that Printing money out of thin air can engineer lots of things, including asset price bubbles and the redistribution of wealth from the masses to the elites. But it cannot print up real prosperity.
As much as I try, I simply cannot jump on the bandwagon that says that printing up money out of thin air has any long-term utility for an economy. It’s just too clear to me that doing so presents plenty of dangers, due to what we might call ‘economic gravity’: What goes up, must also come down.

This post was published at PeakProsperity on Friday, June 9, 2017.

Hedge Fund CIO: “$100BN Of Tech Stocks Got Sold And The S&P Was Unchanged. Not Sure How That Happens”

The start of another week is upon us, which means it is time for choice excerpts from the latest letter to clients by One River Asset Management CIO Eric Peters, who today writes about Brexit, the “new generals” in the market (more in a later post), rising populism in a world of tech “monopolies”, modern day robber barons, and much more.
We will have more from today’s letter shortly, but for now here is Peters on a topic on everyone’s minds, volatility, and what Friday’s Nasdaq “air pocket” means:
Beep Beep
‘Volatility didn’t really move,’ said Roadrunner, following the Nasdaq’s Friday afternoon air-pocket decline.
‘There were no real flows, no one was buying options,’ continued the market’s biggest volatility trader. ‘I’d expect this to continue for a bit at least.’ These kinds of things don’t usually end in a single day.

This post was published at Zero Hedge on Jun 11, 2017.

Why We’re Doomed – Idiocy On Display

This is worth watching folks…
The WSJ went out and showed people exactly how much of your personal information was available online.
There were a lot of oh my gosh’s, and a few oh that’s creepy but I didn’t hear one I’m going to kill them all.
That’s the problem, in a nutshell.
It actually concerns me was the strongest thing I heard.
It concerns you?

This post was published at Market-Ticker on 2017-06-11.