Goldman Looks For Policy Error At The Fed, Finds Something Unexpected

When it comes to Goldman’s reaction (function) to the Fed’s own reaction function, so to speak, it has been a love-hate, but mostly confused, relationship over the past three months.
First, back in March, Goldman’s Jan Hatzius was stunned to note that the market reaction following the Fed’s first rate hike was not the reaction the Fed wanted, when “the Fed’s 0.25% rate hike had the same effect as a 0.25% race cut” and prompted it to ask if Yellen has lost control of the market.
Two months later, in May Goldman once again wondered of the Fed has lost control of a market, where financial conditions have become progressively “easier” the higher the Fed Funds rate rose. It then added that “we find that the sensitivity of financial conditions to monetary policy shocks has been quite high recently, at least when we identify these shocks using bond market moves around FOMC meetings. This suggests that the easing of financial conditions is due to other factors.”

This post was published at Zero Hedge on Jun 28, 2017.

Gold Scammers Using ‘Affinity Fraud’ Technique

Gold scammers are targeting Chinese-Americans, but similar techniques can be used to target and rip off other groups of people.
The scam has most recently been reported in Maryland. According to CBS Baltimore, the Montgomery County Police Department reports at least one victim lost $20,000 to gold scammers targeting people of Chinese descent.
Police term the technique being used as ‘affinity fraud.’ The scam ‘relies on building trust with victims based on shared affiliations and characteristics such as age, race, religion, occupation, etc.’
The specific scam in Maryland starts with a phone call. The phone number appears as a Chinese number on caller ID. The scammer establishes a rapport and then arranges an in-person meeting. Once face-to-face, the scammers show the victim fake gold, claiming they found it while doing construction work. They claim they are undocumented, and want to sell the gold and use the money to either return to China, or to help family in that country. The scammers hook their victims through their convincing story, their shared cultural understanding, and by saying they will take less than money than the gold is worth.

This post was published at Schiffgold on JUNE 28, 2017.

Planning To Sell Volatility? Goldman Explains Why It Will Buy From You

Other than buying Ethereum, one strategy has stood out in investing circles – selling US equity market volatility, and as Goldman notes, the profitability of vol-selling strategies has accelerated in the last year. With vol at record lows, and after a long-run of success, Goldman unveils its guide to selling volatility, why it’s a good idea, and how to do it.
Via Goldman Sachs,
We are increasingly asked whether flows into options and VIX selling strategies are pressuring options prices and dampening stock price moves. Indeed, when an investor sells an option, the Market Maker on the other side of the trade ‘delta-hedges’ the portion of the trade where there is not a natural buyer. This ‘delta-hedging’ dampens the volatility of the underlying asset from the time of the trade until expiry, all else equal. In this report, we explore the public data that is available to assess whether options and VIX ETP flows have the potential to contribute to the decline in implied and realized volatility. While a significant portion of the options market trades in OTC markets (where public data is sparse), we believe trends in OTC markets are consistent with our findings in the listed markets. In fact, based on our discussions with those that run systematic options strategies, much of OTC volume is recycled into the listed market and likely to influence publically available data.
Why are investors asking if options selling strategies are crowded?

This post was published at Zero Hedge on Jun 28, 2017.

The Shift is On: Why Institutional Investors Are Buying Gold Again

There’s an advantage to being well-connected in an industry: you can sometimes be among the first to spot a change in trend.
And that appears to be exactly what’s happening in the gold industry.
Retail demand for physical gold products has been strong over the past few years, and lukewarm from the institutional crowd. But now traders and dealers are witnessing a shift. Retail demand has gone soft – but interest from institutions and high net worth investors is spiking.
US Mint sales of gold coins – a reliable barometer of retail demand – were strong in January but otherwise are roughly half of normal levels this year. Meanwhile, holdings in GLD (SPDF Gold Shares, the largest gold ETF) just hit their highest level of the year. And hedge funds and other large speculators increased their bullish bets on gold by 37% the last two weeks of May, the most since 2007.
Why the sudden about-face?
For retail gold buyers, price tends to be the determining factor. If gold spikes, they’re likely to hold off on new purchases and wait for a better deal. If the price drops, they tend to load up. This has been a fairly reliable trend.
But why the sudden shift into gold from the institutional crowd?
‘It was hard to tell the gold story in 2012, because the stock market wasn’t at all-time highs,’ says Peter DiMaria, a trader at Gold Bullion International in Manhattan.
What Peter and his group at GBI have witnessed over the past several months is quite curious. They’re suddenly getting interest in gold from brokers, institutions, and high net worth investors. He says it takes half as many phone calls to schedule appointments, for example, as it did before. In some cases investors are cold-calling them. Purchases have picked up considerably.
The reason?

This post was published at GoldSeek on 28 June 2017.


GOLD: $1248.40 UP $1.60
Silver: $16.78 UP 6 cent(s)
Closing access prices:
Gold $1249.50
silver: $16.81
Premium of Shanghai 2nd fix/NY:$10.49
LONDON FIRST GOLD FIX: 5:30 am est $1251.60
For comex gold:
TOTAL NOTICES SO FAR: 2868 FOR 286,800 OZ (8.9206 TONNES)
For silver:
Total number of notices filed so far this month: 993 for 4,915,000 oz

This post was published at Harvey Organ Blog on June 28, 2017.

Loonie Spikes To 5-Month Highs After Poloz, Patterson Double-Whammy

Following Bank of Canada’s Poloz restates his bias for higher rates earlier in Sintra, now BoC deputy Patterson confirmed “the oil shock is largely behind us” and hinted that low rates were no longer needed. This is the biggest spike in the Loonie since March 2016, pushing it back to its strongest against the dollar since early Feb 2017.
In a speech on how policy makers gather intelligence to augment its analysis, Bank of Canada Deputy Governor Lynn Patterson outlined how the central bank’s ‘contacts’ in the oil sector helped shape its decision to cut interest rates twice in 2015.
‘That knowledge fed into our judgment and, ultimately, our decision to lower our policy rate in January and July 2015,’ Patterson said in Calgary, according to prepared remarks.
‘Two years later, it is our view that these cuts have helped facilitate the economy’s adjustment to the oil price shock and that the economic drag from lower prices is largely behind us.’

This post was published at Zero Hedge on Jun 28, 2017.

Watch Live: Congressional Hearing On How The Fed Is Screwing Main Street And Retirees

This morning the House Financial Services Committee is holding a hearing that will evaluate how Federal Reserve policies are adversely affecting households, small businesses, savers, and retirees, and consider policy opportunities that the Federal Reserve could implement to improve economic opportunities for all.
The panel will include the following witnesses:
Dr. Norbert Michel, Senior Research Fellow, The Heritage Foundation

This post was published at Zero Hedge on Jun 28, 2017.

28/6/17: Seattle’s Minimum Wage Lessons for California

Two states and Washington DC are raising their minimum wages comes July 1, with Washington DC’s minimum wage rising to $12.50 per hour, the highest state-wide minimum wage level in the U. S. This development comes after 19 states raised their minim wages since January 1, 2017. In addition, New York and Oregon are now using geographically-determined minimum wage, with urban residents and workers receiving higher minimum wages than rural workers.
Still, one of the most ambitious minimum wage laws currently on the books is that of California. For now, California’s minimum wage (for employers with 26 or more workers) is set us $10.50 per hour (a rise of $0.5 per hour on 2016), which puts California in the fourth place in the U. S. in terms of State-mandated minimum wages. It will increase automatically to $11.00 comes January 1, 2018. Thereafter, the minimum wage is set to rise by $1.00 per annum into 2022, reaching $15.00. From 2023 on, minimum wage will be indexed to inflation. Smaller employers (with 25 or fewer employees) will have an extra year to reach $15.00 nominal minimum wage marker, from current (2017) minimum wage level of $10.00 per hour. All in, in theory, current minimum wage employee working full time will earn $21,840 per annum, and this will rise (again in theory) by $1,040 per annum in 2018. So, again, in theory, nominal earnings for a full-time minimum wage employee will reach $31,200 in 2022.

This post was published at True Economics on June 28, 2017.

Macro Liquidity Time Bomb Ticks Toward Zero

US macro liquidity has grown slowly over the past year. Meanwhile, stock price inflation has surged, setting up a large divergence versus liquidity. It suggests that the market has become overextended due to excessive bullish sentiment. This is the mirror image of the oversold reading in February 2016.
The difference today is that the Federal Reserve has announced that it will soon begin withdrawing liquidity from the system. The Composite leading indicators (CLI) will flatten later this year and probably turn lower next year. Today’s market overextension represents an extreme level of risk.
My proprietary macro liquidity indicator combines 5 different measures of US systemic liquidity. The most important of these is a measure of the cash flowing from the Fed to the Primary Dealers. Other components include a measure of the change in bank deposits not resulting from flows from money market funds, and several measures of commercial bank trading and investment activities. Finally, I include a measure of direct foreign central bank purchases of US securities.

This post was published at Wall Street Examiner on June 27, 2017.

The Fed Just Announced The Final Confirmation That The Economy Is About To Crash – Episode 1318a

The following video was published by X22Report on Jun 28, 2017
Retailers are now starting to fight among each other as the retail industry breaks down. The Fed just made it harder for students going to college, the rates are going up. Pending home sales decline as mortgage application decline even further. Trump is now cutting the budget and putting a hiring freeze in government. The Fed just confirmed that there is a major disaster coming, Yellen has stated that the banks are strong and we will most likely not see a financial crisis in our lifetime.

WTI/RBOB Jump On Gasoline Draw As US Crude Production Tumbles Most Since August

Last night’s unexpected API builds kneejerked prices lower but a weaker dollar helped levitate WTI/RBOB into the DOE print. While tropical depression Cindy may have affected the data, DOE reports a small build in crude (expectations for a draw) but all eyes were on gasoline which drew 894k, well below API’s build levels and expectation of no change. Production in the Lower 48 fell 55k b/d – the biggest drop since Aug 2016 (likely impacted by Cindy).
Crude +851k (-2.25mm exp) Cushing -678k Gasoline +1.351mm (unch exp) Distillates +678k (+350k exp) DOE
Crude +118k (-2.25mm exp) Cushing -297k (-600k exp) Gasoline -894k (unch exp) Distillates -223k (+934k exp)

This post was published at Zero Hedge on Jun 28, 2017.

Earnings Driven Stock Market

The ‘earnings season’ is the period each quarter when the vast majority of corporate earnings are reported. The bulk of the stellar gains in the stock market this year have occurred around earnings season. Alcoa typically kicks it off around the 3rd week at the start of each calendar quarter and 6 to 8-week market rallies have ensued. Should this pattern repeat, then we should begin to see upward price action around the 3rd week of July and price acceleration in August. While we have already edged into the price and time window for our expected medium-term top in 2017, we will be interested to see if sentiment measures finally become overbought should this rally continue to the upper end of our time and price window.
The earnings improvement in early 2017 was virtually guaranteed with the exceptional year over year comparisons of the energy sector and technology.

This post was published at FinancialSense on 06/28/2017.

Trump Budget Cuts Hit As State Department Imposes New Hiring Freeze

In an effort to support President Trump’s plans to cut the State Department budget by about one-third in fiscal year 2018, Secretary of State Rex Tillerson has imposed a new freeze on hiring.
As a reminder, President Trump instigated an across-the-board hiring freeze in his first days as President, then lifted it in April in favor a more “surgical freeze.”
Mick Mulvaney, the director of the Office of Management and Budget, described the new stay on hiring as a more “surgical” freeze than the first.

This post was published at Zero Hedge on Jun 28, 2017.

NYSE President Explains Why Markets Should Be Rigged More

Targeting Short Sellers: what they do is ‘icky and un-American.’
Short sellers like Andrew Left, founder of Citron Research, serve a real purpose in the markets and in society. His analysis helped reveal what’s going on at Valeant Pharmaceuticals and brought media focus on how the company conspired not only to manipulate up its reported sales and earnings but also drug prices for consumers. But short sellers are nuts.
Short sellers are fighting a system that is totally rigged in every way against them. They’ve chosen to make money when share prices fall. They’ve chosen to make money in the most painful way possible. Self-flagellation comes to mind. Because the entire system is rigged to make share prices rise, no matter what. And when they rise, short sellers get their heads handed to them.
NYSE Group President Tom Farley, who should be neutral about share prices and should be primarily concerned about the functioning of the market, hammered home just how rigged that fight is.
‘It feels kind of icky and un-American, betting against a company,’ he told lawmakers in Washington yesterday. Even those engaging in rampant hype, lies, and worse, I presume. According to Bloomberg:

This post was published at Wolf Street on Jun 28, 2017.

Alarm! Deutsche Bank Said to Face Possible $60 Million Derivative Loss (As Hindenburg Omen Flashes Red)

Deutsche Bank is struggling with stock prices that a pale shade of levels from 2007.
Now that DB has a derivatives fiasco on their hands as well.
(Bloomberg) – Deutsche Bank AG, the German lender seeking to overhaul how it manages risks, made a bet on U. S. inflation that puts the firm on course to lose as much as $60 million, people familiar with the matter said.
The trade used derivative products tied to U. S. inflation, said the people, who requested anonymity because the details aren’t public. The Frankfurt-based lender has been examining whether Deutsche Bank traders breached risk limits on the deal, some of the people said. The case has been escalated to the bank’s supervisory board, one person said.
Such a loss would be a setback for Chief Executive Officer John Cryan, who has been trying to improve the lender’s risk and operational controls that have drawn scorn from regulators around the world.

This post was published at Wall Street Examiner on June 27, 2017.

Cable, Gilt Yields Spike After BoE’s Carney Hints At Stimulus Withdrawal

It’s deja vu all over again in Sintra.
Yesterday, Draghi sent EUR and Bund yields surging on his ‘hawkish’ comments, which he was forced to talk back just over an hour ago, and today the confusion is back and it is the UK’s turn as Bank of England governor Carney just hinted that the removal of stimulus is likely to become necessary, reversing on his own dovish stance unveiled just last week.
The section in question is the following (his full speech is here)):
Some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional. The extent to which the trade-off moves in that direction will depend on the extent to which weaker consumption growth is offset by other components of demand including business investment, whether wages and unit labour costs begin to firm, and more generally, how the economy reacts to both tighter financial conditions and the reality of Brexit negotiations. These are some of the issues that the MPC will debate in the coming months

This post was published at Zero Hedge on Jun 28, 2017.

Gold and Silver Market Morning: June 28 2017 – Gold continues to recover from the massive [mistaken?] sale!

Gold Today – New York closed at $1,249.10 yesterday after closing at $1,244.30 Monday. London opened at $1,253.00 today.
Overall the dollar was weaker against global currencies, early today. Before London’s opening:
– The $: was much weaker at $1.1358 after yesterday’s $1.1256: 1.
– The Dollar index was weaker at 96.36 after yesterday’s 96.97.
– The Yen was weaker at 112.36 after yesterday’s 111.77:$1.
– The Yuan was stronger at 6.8036 after yesterday’s 6.8145: $1.
– The Pound Sterling was stronger at $1.2810 after yesterday’s $1.2748: 1.
Yuan Gold Fix
The three global gold markets are moving back into line today with London and New York rising to almost Shanghai’s level. New York rose to within $7.32 of Shanghai’s prices down from $16 lower than Shanghai, and London opened $7.42 lifting the discount to Shanghai, from $13.42. This is again, confirming Shanghai dominating pricing power.
The Yuan continues to strengthen as you can see above. The Shanghai gold price is moving independently of the Yuan’s exchange rate.
Silver Today – Silver closed at $16.68 yesterday after $16.57 at New York’s close Monday. Today, silver is telling us it wants to rise. Is it leading the way for gold?

This post was published at GoldSeek on 28 June 2017.