Bill Blain: “I Have A Feeling The Much Anticipated October Crash Is Just Not Going To Happen”

Blain’s Morning Porridge, July 13
‘Never mind manoeuvers, always go at them.’
Methinks we worry too much.
Canada hiked interest rates for first time since 2010 yesterday. The Loonies (Canadians, and not a term meaning they are moon-struck idiots, but a reference to their dollar coin) tend to track the US quite closely – the BoC follows the Fed. The next phase will be the sequential follow on by the rest of the globe’s central banks as they each step in line. The last few weeks confirm global central bank policy in now on a hawkish tack – it’s about ending extraordinary monetary experimentation, normalisation and higher rates. So bond prices have fallen and yields are higher. Get over it.
There are still many flies in the ointment – most notably wage inflation just ain’t apparent – but its happening. The only questions are when and how fast.
Bear in mind: Janet Yellen’s testimony yesterday confirms the Fed’s pace of interest rates rises will be: ‘Lower for Longer’!

This post was published at Zero Hedge on Jul 13, 2017.

Gold and Silver Market Morning: July 13 2017 – Gold and silver are rebounding!

Gold Today – New York closed yesterday at $1,220.30. London opened at $1,222.15 today.
Overall the dollar was weaker against global currencies, early today. Before London’s opening:
– The $: was stronger at $1.1402 after yesterday’s $1.1448: 1.
– The Dollar index was almost unchanged at 95.75 afteryesterday’s 95.76.
– The Yen was stronger at 113.03 after yesterday’s 113.36:$1.
– The Yuan was stronger at 6.7821 after yesterday’s 6.7881: $1.
– The Pound Sterling was stronger at $1.2927 after yesterday’s $1.2855: 1.
Yuan Gold Fix
New York followed Shanghai higher yesterday leaving a $2.40 differential. Today, London turned higher, also following Shanghai but raising the differential to $9.27 from yesterday’s $7. All global gold markets are seeing a rebound from the breakdown of the Technical picture from $1,250.
Silver Today – Silver closed at $15.92 yesterday after $15.84 at New York’s close Monday.

This post was published at GoldSeek on 13 July 2017.

‘Transitory’ – Core Producer Price Inflation Falls Back Below Fed Mandate

With The Fed convinced any downturn in inflation is ‘transitory’ – due to wireless carrier discounting, or oil ups and downs – today’s Core PPI fell back below the ‘mandated’ 2.0% level after one brief shining month above it. Producer prices ex food and fuel rose just 1.9% YoY, slowing from last month’s 2.1% rise.
This is the 3rd time in5 years that Core PPI has managed just one month above The Fed’s mandate and faded…
Under the covers shows some interesting standouts…

This post was published at Zero Hedge on Jul 13, 2017.

Gartman Covers Oil Short

Two days ago, when oil was plumbing its latest cycle lows, Goldman came out with a “contrarian” note in which it admitted that its bullish commodity outlook had been wrong, and cautioned that absent “shock and awe” from OPEC, oil could drop below $40, to which our logical counter was that this likely capped the latest crude selloff, but there was one outstanding item: the world-renowned momentum chaser, Dennis Gartman: “As to whether this means that the “suddenly” skeptical Goldman, which as we sarcastically pointed out was selling oil throughout its entire “bullish phase”, is now finally buying WTI, consider that Gartman remains bearish and do the math.”
Fast forward 48 hours when after the latest rebound in oil, Gartman is no longer bearish…

This post was published at Zero Hedge on Jul 13, 2017.

Q2 2017 Bank Earnings Outlook

In this issue of The Institutional Risk Analyst, we take a prospective look at Q2 2107 earnings for the large cap banks in the financial services sector. By way of disclosure, we don’t own any banks. Our direct exposure to financials is in fintech and in just two names – Square (NYSE:SQ) and PayPal (NASDAQ:PYPL). More on these names in a future issue of The IRA.
The larger US banks experienced a mini bull rush following the most recent stress tests conducted by the Fed and other prudential regulators. The good news is that the banks have too much capital. The bad news is that, well, the largest banks have too little business to support revenue and earnings, leading to the obvious conclusion that share buybacks must go up.
First, looking at the best valued of the large banks, let’s consider US Bancorp (NYSE:USB). With an ‘A+’ bank stress index rating from Total Bank Solutions, USB is among the lowest risk large banks in the US. Trading at over 2x book value, the shares of the $440 billion total asset USB are up 2x the S&P 500 over the past year. Needless to say, with a beta of 0.93, this is one large bank stock most hedge funds don’t dare sell short.
The Street estimates that USB’s revenue will be up 5% for the full year and earnings up 7% in 2017. Because USB does not depend upon Wall Street investment banking and derivatives activities to make its earnings number, this bank has among the most dependable financial performance of the top five commercial banks by assets.

This post was published at Wall Street Examiner on July 13, 2017.

15% Of Greenlight Capital Investors Submit Redemption Requests

While, inexplicably, Bill Ackman’s Pershing Square remains immune (according to Ackman at least) to redemptions despite posting a terrible return in the past two years, another hedge fund from the “glory days” is having less success in keeping LPs: the WSJ reports that Einhorn was “forced to pay back more than $400 million in clients withdrawals at midyear, as more than 15% of eligible investors chose to redeem their money” which again is surprising because unlike some other hedge funds, mostly on the macro side, which continue to post double digits losses, Greenlight was down only 2% in the first half of the year. Although, as we have been repeating since 2011, in a time when every hedge fund’s benchmark is the S&P actively managed by every central banker in the world, any and all active managers who underperform the broader market are targets. Greenlight has also underperformed his broader peer group with the average stock-picking hedge fund up 6% in H1 according to HFR.
As the WSJ notes, Einhorn, who manages $7 billion, “has been humbled. His repeated predictions of a swoon for some highflying technology companies are so far unrealized, while a recent push to split General Motors Co. stock was rejected by his fellow shareholders. Greenlight is just two years removed from its worst year ever, double-digit losses in 2015 that led Mr. Einhorn to confess at the next annual investor dinner that he had ‘failed miserably.’

This post was published at Zero Hedge on Jul 13, 2017.

Asian Metals Market Update: July-13-2017

Factors which can affect markets
Gold and silver rose after the Federal Reserve chairman signaled a slower pace of interest rate hikes than expected. Yellen said that the Federal Reserve remains on track to both interest rate hikes and to begin shrinking its balance sheet before the end of next year. July and August US jobs numbers will be the key as cyclical factors due to the US summer season will come into play. At the end of the day the investment demand for gold (for the rest of the year) will be dependent on the pace of US interest rate hikes outlook. Geopolitics have failed to affect bullion. Indian demand of gold and silver will be very high this quarter only to fizzle out in the final quarter of the year.
US retail sale numbers tomorrow will be key.

This post was published at GoldSeek

Global Stocks Hit New All Time High After Dovish Yellen, Strong Chinese Trade Data

The hawkish tone and global bond tantrum unleashed by central bankers at the Sintra ECB forum two weeks ago is now a distant memory, and after Janet Yellen surprised markets with an unexpectedly dovish (in the market’s interpretation) testimony yesterday, overnight global shares hit their fourth all-time high in less than a month as concerns about the tightening Fed were laid to rest, sending September and December rate hike odds sliding.
One of the Fed chief’s comments that markets latched on to was her view that bank would not need to raise U. S. rates “all that much further” to reach current low estimates of the “neutral” funds rate. Yellen’s dovish relent lifted Wall Street to a new all time high, while lowering bond yields virtually everywhere and sending the MSCI All-Country World Index to a fresh record while European shares headed for their biggest two-day gain in almost three months.
Yellen’s testimony had the added impact of diverting attention from Trump Jr.’s emails about his meeting with a Russian lawyer, which sent stocks sliding on Tuesday, though concern remains that the latest saga in Washington will likely delay, perhaps permanently, Trump’s fiscal reform efforts. The dovish Fed also sent the Bloomberg Dollar Spot Index to the lowest since September while gold climbed.

This post was published at Zero Hedge on Jul 13, 2017.

GOP Lawmaker: Use Food Stamp Funds to Pay for Trump’s Border Wall

U. S. Rep. Steve King (R-IA) rustled feathers this morning (July 12) when he proposed a radical way to fund President Donald Trump’s promised border wall.
When asked by CNN’s Alisyn Camerota if he was comfortable using $1.6 billion – not from Mexico, but from the American people – to pay for the wall, King responded:
‘Absolutely yes, and more. I’d throw another five billion on the pile, and I would find half of a billion dollars of that right out of Planned Parenthood’s budget!’
The rest, however, would be drawn from a program over 45.4 million people depend on…


This post was published at Wall Street Examiner on July 12, 2017.

Dollar Continues Fall While Metals Offer Ratio Plays | Golden Rule Radio

The following video was published by McAlvany Financial on Jul 13, 2017
This week we talk about how the Dollar continues to fall, and we’ll discuss the recent bear raid on Silver. We look at gold, Platinum, Palladium price movements this last week and emphasize the importance of Ratio Trade opportunities. Janet Yellen of the FED believes we won’t see another Financial Crisis in our lifetime….. Is that even possible and what levels of manipulation are the FED willing to take. Thanks for listening to Golden Rule Radio our weekly precious metals update. Be sure to subscribe for more.

Fed Up: Yellen’s Mouth Is Moving But She’s Not Telling Us Anything

Federal Reserve chair Janet Yellen spoke to Congress yesterday. She talked. But she didn’t say a whole lot.
Most analysts seemed to view Yellen’s speech as ‘more dovish.’ She expressed concerned that inflation my not be rising fast enough to meet the mythical 2% target, and that could slow the pace of rate hikes.
It’s premature to reach the judgment that we’re not on the path to 2% inflation over the next couple of years. We’re watching this very closely and stand ready to adjust our policy if it appears the inflation undershoot will be persistent.’
The Fed chair also hinted that we may be close to the end of the interest rate tightening cycle. In a written statement released before her congressional testimony, Yellen said the Fed would not need to raise rates ‘all that much further’ to reach current low estimates of the neutral fed funds rate. (More on this in a moment.)
Just a day before, Fed Governor Lael Brainard foreshadowed Yellen’s comments, backing off talk of numerous future rate hikes. She said the Fed ‘may not have much more to do’ in terms of raising the interest rate.

This post was published at Schiffgold on JULY 13, 2017.

SocGen’s “Pretty Simple” Explanation Of Janet Yellen’s Testimony

Did Janet Yellen really reverse so fast? Just two weeks after the Fed chair (and most other FOMC members) warned that ‘asset valuations are somewhat rich if you use some traditional metrics like price earnings ratios”, Yellen sent the Dow and MSCI World index back to all time highs, after what the market broadly interpreted as an unexpectedly dovish speech in which the one line that stood out was that ‘because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get a neutral policy stance’ suggesting the Fed’s entire dot plot is an error and that the “terminal” Fed Funds rate will never make it to 3%, or even 2% for that matter.
Of course, algos and carbon-based traders were delighted by the phrasing and unleashed the latest buying spree, however did the market get ahead of itself? SocGen had a “pretty simple” explanation of what really happened yesterday, saying “don’t overcomplicate it…As long as US interest rates consolidate and fears about a move to well north of 2.5% remains in check, the positive tone in emerging markets that prevailed prior to mid-June should resume’. All I can add is that this as true of credit, equity and the broader FX market as it is of emerging markets.”

This post was published at Zero Hedge on Jul 13, 2017.

Draghi Said To Address Jackson Hole Followed By ECB QE Tapering Announcement

Just in case traders haven’t gotten whiplash from all the hawkish-to-dovish-to-hawkish shifts in central bank posturing over the past month, here is the WSJ which reports that for the first time in three years, ECB’s Mario Draghi is scheduled to address the Fed’s Jackson Hole conference in August, “in a speech that is expected to give a further sign of the ECB’s growing confidence in the eurozone economy and its reduced dependence on monetary stimulus.”
While the Fed debates whether to hike rates in December (market odds are now roughly 50%) and announce the winddown of its balance sheet in September, the biggest question facing the global market is the future of the ECB’s 60 billion QE program, currently due to run through December, and when it will start tapering. Technically, according to Deutsche, even more important is the BOJ’s QE but that particular monetization program is likely to continue well into 2018 as the Nikkei reports. As such the marginal flow of liquidity in global markets is in the hands of Mario Draghi.

This post was published at Zero Hedge on Jul 13, 2017.

World Stock Markets Rise After Dovish Yellen; U.S. PPI On Deck

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
(Kitco News) – Global equity markets were mostly higher overnight, following the lead of the U. S. stock market that saw the Dow Jones Industrial Average post a record high close Wednesday.
Dovish comments on U. S. monetary policy from Federal Reserve Chair Janet Yellen on Wednesday helped to lift the U. S. stock indexes. The U. S. indexes are pointed toward firmer openings when the New York day session begins.
Gold prices are modestly up in pre-U. S. day trading on more short covering and bargain hunting after hitting a four-month low earlier this week.
The key U. S. economic report today is the producer price index for June, which is expected to come in unchanged from May.

This post was published at Wall Street Examiner on July 13, 2017.

German Police Arrest Suspects In Theft Of Massive 100 Kilogram Gold Coin

German special commandos have arrested several people in connection with the theft of a large gold coin that was stolen from the Bade museum in Berlin back in March in a brazen theft that shocked the public.
While Reuters didn’t say whether police recovered the coin – there was some speculation that the thieves would’ve melted it down for the gold – photographs did show police leading away a suspect, whose face was covered to hide his identity. The arrests were made in the Neukoelln area of Berlin

This post was published at Zero Hedge on Jul 13, 2017.

GOLD & SILVER MARKET: Four Interesting Developments

There are four interesting developments taking place in the gold and silver market that precious metals investors should be aware of. While Americans continue to place all the BETS in the CASINO called Wall Street, via stocks, bonds and real estate, the EAST has been acquiring record amounts of gold and silver. Furthermore, something interesting seems to have changed recently in the Silver Eagle sales market.
FIRST DEVELOPMENT: Let’s start off with showing the stunning amount of silver India imported in May. According to Smaulgld.com, India imported nearly 2,000% more silver in May 2017 vs May 2016:
Matter-a-fact, India imported nearly the same amount of silver in May, than they received from January-April. Also, we can see that May’s 1,473 metric tons of silver imports is 2-4 times more than any of the prior months. Something has inspired the Indians to import that much silver this past May.

This post was published at SRSrocco Report on JULY 12, 2017.

Someone Just Made An “Unprecedented” Bet On An Imminent Surge In Bond Volatility

Step aside “50 cent”, there is a new mystery vol trader on the block, one who is certain that a vol quake is about to strike US Treasurys.
According to Bloomberg, which first spotted the trade, someone just bet that bond volatility is about to soar. The unknown trader bought $10 million in out-of-the-money puts and calls on 10Y Treasury futs (a strangle). The outsized trade was spotted as it involved huge block sizes of about 63,500 on either side: “a strangle of that magnitude is rare, and possibly unprecedented” according to several rates traders who spoke to Bloomberg.
***
But just as notable as the size is the timing: the strangle expires July 21, giving the trade a shelf life of under 10 days before it expires worthless. Which means that the trader is confident enough about not only the size of the upcoming price swing to bet $10 million on it, but also when it will strike. According to Bloomberg calculations, the theta on the trade is so high that just to recoup the premium, the yield on the 10Y would have to rise or fall about 10 bps from 2.38%, and preferably very soon.
Once the 10Y moves beyond 10bps, gains are unlimited, and the trader “stands to gain about $50 million on a quarter-point move in either direction from the starting level, which would involve approaching this year’s highs and lows for 10-year yields.”

This post was published at Zero Hedge on Jul 12, 2017.

Can The Dow Trade to 30K or is it Just Another Pipe Dream

One group of experts state that the markets are ready to crash, another states the markets are ready to soar to new highs. Which group is one supposed to believe? For starters, the naysayers have the odds stacked against them as every so-called stock market crash has turned out to be a long-term buying opportunity. We view stock market crashes as once in a ‘lifetime buying opportunity’ and frankly so should every self-respecting long term Contrarian investor. The smart money always swoops in and buys top quality stocks when there is blood on the streets, and the dumb money sells right at the bottom.
Therefore, our advice is that you should never listen to jackasses that continuously states that the market is going to crash, but instead the opposite comes to pass. Had you listened to almost all these experts, you would have been bankrupted several timesover. What is even more disturbing is that stations like CNN continue to provide air time to these individuals despite their abysmal track record, clearly proving that you don’t have to know anything to be labelled a Financial Expert.

This post was published at GoldSeek on Thursday, 13 July 2017.