“Ready To Blow” – National Geographic’s Guide To The Yellowstone Supervolcano

Amid a growing ‘swarm’ of over earthquakes (now over 1000), and Montana’s largest quake ever, scientists are growing increasingly concerned that the so-called ‘super-volcano’ at the heart of Yellowstone National Park could be building towards a Category 7 eruption. So what is a ‘super-volcano’ and what does its explosion mean for life on earth? NatGeo explains…

As National Geographic details…
Think of Yellowstone as a gigantic pressure cooker, fueled by a massive supervolcano. Water from rain and snowmelt, much of it centuries-old, percolates through cracks in the Earth’s crust until heated by molten rock reservoirs deep below. The water then filters upward, eventually finding release in the thousands of geysers, hot springs, and other hydrothermal wonders.

This post was published at Zero Hedge on Jul 8, 2017.

“When The Facts Change”- Oil’s Biggest Cheerleader Capitulates: Andy Hall’s Full Bearish Letter

After years of being oil’s biggest cheerleader, “oil god” Andy Hall, who starting with the OPEC Thanksgiving massacre in 2014 has had several abysmal years, in the process losing the bulk of his AUM, finally threw in the towel last week when in a July 3 letter to investors, he admitted that “the facts have changed” and that “fundamentals have deteriorated significantly” adding that “demand growth seems to be somewhat less than anticipated while supply keeps surprising to the upside… the expected acceleration in inventory drawdowns has not materialized… disappointed expectations for accelerating stock draws following the arrival of peak seasonal demand. Meanwhile, U. S. shale operators have continued to add rigs at a surprisingly fast rate thus raising the odds for significant oversupply in 2018, even if OPEC maintains its production cuts beyond Q1. Over the past month, the market has in effect priced in two negatives, one long-term, the other short-term.”
More importantly, Hall confirms what we have said for the past two years and what most so-called experts have missed: namely that “shale is now the marginal barrel” and adds that “if the marginal cost of oil for the next 3 or 4 years really is headed to the mid-$40 range then OPEC’s attempts to push prices to $60 seem futile” adding that “It is unlikely that OPEC will find the cohesion necessary to keep prices at an artificially elevated level if all it does is accommodate rampant growth in shale oil production.”
That line of thinking raises the possibility of yet another reversal in OPEC policy – abandoning supply management and letting market forces balance supply and demand. This would obviously result in significantly lower prices, at least in the short term. On the other hand, with many OPEC countries needing much higher prices for fiscal sustainability (for Saudi Arabia the level is over $80), there is an inherent instability which adds to the geopolitical risks to supply. But for now, it seems likely that OPEC, led by Saudi Arabia, will stay the course with its current policy of production restraint. Oil at $45-50 is preferable to it being at $40 or below, even if the loftier target of $60 has proven elusive.

This post was published at Zero Hedge on Jul 8, 2017.

Who Knew? German Central Bank Has Been Selling Gold For More Than A Decade

Authored by Louis Cammarosano via Smaulgld.com,
Deutsche Bundesbank gold reserves shrink 45 tons over the past ten years.
German Central Bank holdings fall From 3,420.6 tons at the end of Q2 2007 to 3375.6 tons, a drop of 1,446,783 ounces. German gold reserves have decreased 1.3% over ten years.
Bring the Gold Home & Sell Some Deutsche Bundesbank, the central bank of Germany, has gained a high profile for its insistence on repatriating a good portion of its gold from vaults at the New York Fed, the Bank of England of London and the Bank of France in Paris. We have been covering the German gold repatriation story since they made their request in 2013 here, here, here and here.
The German repatriation requests aimed to rebalance the Deutsche Bundesbank’s gold holdings from nearly 70% held abroad to 50% held within Germany’s borders. The German Central Bank announced earlier this year that it has nearly completed its plan to repatriate its gold.

This post was published at Zero Hedge on Jul 8, 2017.

BofA Stunned By Drop In Gasoline Demand: “Where Is Driving Season?”

Exactly six months ago, when oil bulls still held on to some fleeting hope that OPEC may somehow stabilize the crash in oil prices despite the shift in marginal oil production from low-cost OPEC producers to US shale (a hope which is now gone as the just disclosed letter from Andy Hall demonstrates), Goldman noticed something troubling: an unprecedented collapse in gasoline demand. As the firm’s energy analyst Damien Courvalin said on February 8, when discussing the 6% fall in US gasoline demand, such a plunge “would require a US recession” and add that “implied demand data points to US gasoline demand in January declining 460 kb/d or 5.2% year-on-year. In the absence of a base effect, such a decline has only occurred in four periods since 1960 during which time PCE contracted.”
Now, 6 months later, the situation is very much different: with the US now inside peak summer driving season, the cyclical drivers behind gasoline supply and demand are vastly different, and yet something has remained the same: gasoline demand in the US simply refuses to rebound, surprising analysts by how weak it is. So weak, in fact, that Bank of America has released a note which, like Goldman half a year ago, reveals confusion about why – if the economy is indeed strong – demand hasn’t kept up and has prompted BofA’s energy analyst Francisco Blanch to ask “where is the driving season?” and, more specifically, “is this year’s driving season over before it began?”

This post was published at Zero Hedge on Jul 8, 2017.

Week in Review: July 8, 2017

This week America celebrated its Independence day, a holiday dedicated to honoring, as Ryan McMaken noted, “a document that promotes secession, rebellion, and what the British at the time regarded as treason.” In spite of our own government’s attempts to hijack it for simply another celebration of sterile patriotic pride, the success of America’s inherently radical revolution is a moment of history that must not only be remembered, but emulated in the future. After all, as Jefferson said, at times “it becomes necessary for one people to dissolve the political bands which have connected them with another,” remains as relevant today as they were in the 18th century.

This post was published at Ludwig von Mises Institute on July 8, 2017.

Catalonia and Spain to Push Each Other into Financial Abyss?

Markets are still complacent.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
Even if you take into account the ECB’s binge buying of public debt in the Eurozone, the degree of complacency of market players over Catalonia’s worsening ties with the Spanish government – and any potential financial fallout – is surprising. Spain’s northeastern province can no longer issue its own debt, which is in deep junk territory, and depends on the central government’s national liquidity fund (FLA) for about 60% of its funding. Moody’s warned if Catalonia defaults, given the debts it owes Spain, markets would see it as a Spanish default.
Fitch Ratings warned in April that Catalonia has grave liquidity problems that will require ‘proactive management’ and ‘close collaboration with the central state’ – something that’s clearly not on the cards any time soon….
About 85% of residents of Catalonia want a referendum on independence, according to the latest poll by El Periodico, a Barcelona-based newspaper that doesn’t back independence. Many of the respondents to the survey do not want independence either; what they want is a say on the matter.

This post was published at Wolf Street by Don Quijones ‘ Jul 7, 2017.

The War On Cash: Australia Considering Chipping Senior’s Money To Stop Them From Saving

Ten years ago I wrote on my personal travel blog, ‘Australia sucks’. In it I detailed, ‘Australia seems to have more rules than any other country on the planet I have visited. There are signs outlining rules everywhere. I was even on a street that had a street-sign denoting that particular street as being an alcohol-free street. No alcohol is allowed to be consumed or even carried on that street?? I presume that even includes inside the houses on that street by the way it was written!’
I haven’t been back to Australia for years for this exact reason. It is one of the most oppressive countries in the world.
So, it actually comes as no surprise to hear that the Australian government is considering putting tiny identification chips in its $100 bills to track them and to stop people from avoiding extortion and ‘pensioners hoarding the money’.
This is according to a government agency that is actually, really called the ‘Black Economy Taskforce’.
The ‘black economy’ or ‘black market’ is a euphemism for the free market. They have to make it sound as bad as possible to get people to believe that by them stomping out the free market, they are helping out Australians. It’s the same reason they always like to make the word anarchy sound as bad possible. People need to fear freedom or they won’t want to be enslaved anymore.

This post was published at Dollar Vigilante on July 8, 2017.

Eastern Europe Chooses To Keep Western Civilization

Authored by Giulio Meotti via The Gatestone Institute,
“The greatest difference is that in Europe, politics and religion have been separated from one another, but in the case of Islam it is religion that determines politics” – Zoltan Balog, Hungary’s Minister for Human Resources. It is no coincidence that President Donald Trump chose Poland, a country that fought both Nazism and Communism, to call on the West to show a little willingness in its existential fight against the new totalitarianism: radical Islam. “Possessing weapons is one thing, and possessing the will to use them is another thing altogether”. – Professor William Kilpatrick, Boston College. In a historic speech to an enthusiastic Polish crowd before the meeting of the G20 Summit leaders, US President Donald Trump described the West’s battle against “radical Islamic terrorism” as the way to protect “our civilization and our way of life”. Trump asked if the West had the will to survive:
“Do we have the confidence in our values to defend them at any cost? Do we have enough respect for our citizens to protect our borders? Do we have the desire and the courage to preserve our civilization in the face of those who would subvert and destroy it?” Trump’s question might find an answer in Eastern Europe, where he chose to deliver his powerful speech.

This post was published at Zero Hedge on Jul 8, 2017.

Visualizing “Conundrum 2.0”: This Is What The Fed Is Missing

While it may come as a surprise to the current crop of 17-year-old hedge fund managers, the current period of persistently low long-term interest rates and plunging, near reocrd volatility in the face of a hawkish Fed and rising short-term rates, is hardly new: exactly the same happened from 2004 through 2006, despite the Fed’s continued rate hikes and jawboning. Alan Greenspan, the Fed’s Chair at the time, called this phenomenon a “conundrum” and blamed it on many things, including the global savings glut.
And, as the latest FOMC minutes demonstrated, the current period of especially loose financial conditions despite a projected 3 rate hikes in 2017 coupled with a balance sheet rolloff is likewise confusing the Fed. Deutsche Bank has called this “Conundrum 2.0.”
So, in an attempt to explain what the Fed is missing as it stubbornly hopes to push LT rates higher and risk prices lower, Deutsche’s financial strategists believes the causes of long-term rate decline to be as shown in the chart below: they think that rate declines are largely being caused by four factors:
disappointment over policy of the Trump administration (pink), geopolitical/political risk outside the US (orange), increased demand for and decreased supply of bonds (yellow) and concerns about slowing US and Chinese economies (grey). At the same time, Deutsche believes the causes of rising share prices in a time of declining long-term rates, are shown in the bottom right quadrant on the chart below. The first of these is an ‘excess liquidity spiral’. In the absence of risk-off factors, declining long-term rates (with the added impact of a weakening USD) give rise to excess liquidity. Pension funds/individuals/insurers strengthen their risk-taking stance to compensate for reduced income from government bonds and the like. Strengthening of the risk-taking stance brings about decreases in long-term rates through aggressive acquisition of term risk.

This post was published at Zero Hedge on Jul 8, 2017.

One Hundred Years Of Federal Reserve Interest Rate Policy Explained

Authored by Chris Hamilton via Econimica blog,
In this article I outline what drove the federal funds rate since WWII and what will drive it, likely through 2050. In short, the broad inverted “V” shape of the Federal Funds Rate since WWII essentially follows a single macro trend and gyrates on this path to a secondary micro cycle.
The macro cycle is premised on the annual growth in the US adult population and the annual change in demand they represent. The micro cycle is the business cycle, with the short term gyrations essentially following the change in full time employees. That’s it. Not hard to be a central banker, eh? However, for some strange reason, nearly all economists and “people in the know” focus primarily or entirely on the micro cycle?!?
The chart below shows the macro driver, the annual change in the adult population (20-60yr/olds) growth cycle (blue line) driving the federal funds rate (black line) since WWII. Interestingly, annual GDP growth (yellow columns) peaked from ’04 through ’06 and has not, nor is it likely to regain that peak based on adult population growth (which is now negative). The only means by which annual GDP would continue to grow or surpass previous highs would be significantly more debt. Debt at levels that would need to be considerably higher than seen since ’09 against a now declining consumer base.

This post was published at Zero Hedge on Jul 8, 2017.

CFTC Approves Options Trading In Bitcoin

US regulators aren’t yet comfortable with bitcoin ETFs (although a quad-levered S&P ETF is just fine for mom and pop), but apparently options and swaps are another story.
This week, the CFTC took a bold step forward in terms of granting institutional investors access to the bitcoin market, approving the creation of the first SEF or Swap Execution Facility. Previously, traders who wished to place bets in bitcoin derivatives markets were forced to operate in markets that were strictly OTC. But now the agency has issued a registration order to LedgerX, granting it status with the CFTC as a Swap Execution Facility, in the process approving bitcoin options trading.
SEFs are platforms for swap trading that were created under Dodd-Frank to bring tighter regulatory scrutiny to derivatives markets. By authorizing the first SEF for bitcoin options, the CFTC is effectively clearing the way for institutional traders like hedge funds and CTAs to participate in those markets.
‘LedgerX is an institutional trading and clearing platform which has been patiently waiting for full regulatory approval from the CFTC to trade and clear options on bitcoin.

This post was published at Zero Hedge on Jul 8, 2017.

They’re Not All Murderers, But A Few Are…

This is the poster nutcase for why all illegal immigrants must be deported now:
The illegal immigrant accused of stabbing to death her four children and husband put on a bizarre show in court on Friday, smiling and posing for news cameras and even giving a double “thumbs up” gesture.
It does not matter what percentage of illegal immigrants are insane murderers, just as arguments about executing murderers being “mean” don’t matter either. What matters, in short, is this:
An illegal immigrant that is deported cannot commit a murder on our soil because they’re not here, just like a murderer you execute cannot commit a second murder because they’re not here.

This post was published at Market-Ticker on 2017-07-08.

Does a Falling Money Supply Cause Recessions?

In his writings, Milton Friedman blamed central bank policies for causing the Great Depression. According to Friedman, the Federal Reserve failed to pump enough reserves into the banking system to prevent a collapse in the money stock (see Free to Choose). In response to this failure, Friedman argued the money stock M1, which stood at $28.264 billion in October 1929; fell to $19.039 billion by April 1933 – a decline of almost 33%.
As a result of the fall in the money stock economic activity followed suit. By July 1932 year-on-year industrial production fell by over 31%. Also, year-on-year the consumer price index (CPI) had plunged. By October 1932, the CPI fell by 10.7%.

This post was published at Ludwig von Mises Institute on June 8, 2017.

Paper Gold And Silver – A Tragic Reflection Of The U.S. Financial System

Dave, just a moment for some feed back on your Short Seller’s Journal. I just placed an order for 1oz gold eagles thx to my profits off Tesla and BBBY, thx as always. – subscriber email received today – Short Seller’s Journal information
Wow. The hedge funds are almost net short silver contracts again, having had their algos steered into that predicament by the bullion bank market manipulation. The fraudulent paper short position in both gold and silver – but especially silver – is many multiples larger than the available supply of physical metal that is supposed to legally back commodity derivatives. This is evident from the Comex disclosures.

This post was published at Investment Research Dynamics on July 8, 2017.

A Tale Of Two Gold Markets

Authored by James Rickards via The Daily Reckoning,
In the early morning hours of Monday, June 26, gold fell about 1%, from $1,254 per ounce to $1,242 per ounce, in a matter of seconds.
And that the equivalent of 1.8 million ounces of gold were sold at once. The 1.8 million ounce amount is equivalent to about 59 metric tons of gold. That’s about 2% of the entire gold mining production of the world for a full year. No one sells that amount of physical gold.
Besides, mining output is almost 100% pre-sold these days, meaning that if you wanted to buy that much gold directly from a mine, you couldn’t do it, because it’s already committed to fulfill existing contracts. Forget about getting gold elsewhere too.

This post was published at Zero Hedge on Jul 8, 2017.

Why the Next Recession will be a Doozie for Consumers

Tougher for workers, rougher for the economy.
The employment data released today beat expectations nicely. In June the economy added 222,000 civilian jobs. April and May numbers were revised up. In total, over the past three months, nonfarm payrolls rose by 581,000 jobs.
This data will do nothing to deter the Fed from proceeding with its tightening plans. The Fed should never have cut its policy rate to zero, or kept it down that long, and it should have never engaged in QE. However, acting as lender-of-last-resort when credit froze during the Financial Crisis – when even GE and IBM had trouble borrowing to meet payroll – was essential to keep the system from collapsing. These short-term loans were not part of QE and were paid back. But the hangover of QE is still on the Fed’s balance sheet.
So I support whatever ‘normalization’ efforts the Fed might undertake. They should have happened years ago.
Among the reasons the Fed wants to ‘normalize’ policy now is to put aside some dry powder for the next recession or crisis. And it will come. Recessions are an essential part of the business cycle. If allowed to proceed, they’ll blow the cobwebs from the system, remove excess debts, and clean out the misallocation of capital – at the expense of creditors and investors. It’s a fresh start for the economy.

This post was published at Wolf Street by Wolf Richter ‘ Jul 7, 2017.


Nothing ever goes in a straight line. For every rally there will inevitably be a retracement, a minor selloff often of no more than profit taking. These are generally pauses where a durable trend either overcomes doubts, or succumbs to them. In the stock market, they call it the wall of worry. In bonds, it’s become a bit more complicated.
At this particular moment, US treasuries are again being sold. It’s really not to this point all that much, but you wouldn’t know it from the commentary trying to describe it. The headlines all scream in unison BOND ROUT! It is in many ways the opposite of stocks, where even larger corrections (like the liquidations in 215 and 2016) get shrugged off as nothing of great concern.
This disparity is, however, quite easily explained. Stocks on the way up are a reflection of the way the world is supposed to be. It just isn’t possible, in mainstream convention, for prolonged economic agony. Share prices as they are now, as they have been since especially QE3 in 2012, are signaling the end of the malaise and the belated return of conventional sense. Bond yields going only lower are a loud (and more robust) contradiction to good orthodox understanding of the way the whole world might actually work.

This post was published at Wall Street Examiner by Jeffrey P. Snider – July 7, 2017.

Canadians Brace For A “Perfect Storm” Brewing In Housing Market

We’ve spent a fair amount of time discussing Canada’s housing market over the past several months as Chinese money laundering operations have sprouted up bubbles all over the place. Here’s a modest sampling of our recent work:
All Hell Breaks Loose In Toronto’s House Price Bubble Canada’s Housing Bubble Explodes As Its Biggest Alternative Mortgage Lender Crashes Most In History Canada Housing Regulator Warns Of “Strong Evidence Of Housing-Market Problems” The Toronto Housing Market Is About To Collapse By This Measure But, as the Globe and Mail notes today, there could very well be a “perfect storm” brewing in several Canadian housing markets as the result of extreme pricing bubbles, over-indebted consumers, a major tightening of mortgage rules and the prospect of rising rates.
On the regulatory front, Canada’s Office of the Superintendent of Financial Institutions (OSFI), is considering new rules that would require lenders to effectively “stress-test” borrowers to confirm they would be in compliance with credit metrics even if rates were to rise 200 bps. From a practical standpoint, such a move would immediately remove roughly 20% of the average Canadian’s home buying power.

This post was published at Zero Hedge on Jul 7, 2017.

Stock Prices Climb as 222,000 New Jobs Were Created in June

In Dow Jones news today, stock prices climbed as 222,000 new U. S. jobs were created in the month of June and the average hourly wage grew.
Here are the numbers from Friday before the closing bell for the Dow, S&P 500, and Nasdaq:
ndex Closing Point Change Percentage Change Dow Jones 21,411.26 +91.22 +0.43% S&P 500 2,425.23 +15.48 +0.64% Nasdaq 6,152.16 +62.70 +1.03%

This post was published at Wall Street Examiner by Garrett Baldwin ‘ July 7, 2017.