Is the market all-knowing?

‘The tape tells all’ is a Wall Street bromide we’re all familiar with. It neatly summarizes the belief that the major averages discount everything pertaining to the business outlook. It’s also a basic tenet of Dow Theory.
Writing a century ago, Richard Wyckoff was one of the very first market pundits to put this belief in writing. ‘The tape tells the news minutes, hours and days before the news tickers or newspapers and before it can become current gossip,’ he wrote. ‘Everything from a foreign war to the passing of a dividend; from a Supreme Court decision to the ravages of the boll-weevil is reflected primarily upon the tape.’
This sentiment was also eloquently summarized by author Robert Rhea over 80 years ago. Writing in his classic book, The Dow Theory, Rhea observed:
‘The fluctuations of the daily closing prices of the Dow-Jones rail and industrial averages afford a composite index of all the hopes, disappointments, and knowledge of everyone who knows anything of financial matters, and for that reason the effects of coming events (excluding acts of God) are always properly anticipated in their movement. The averages quickly appraise such calamities as fire and earthquakes.’
The late Joe Granville took this a step further by suggesting that the stock market represents the sum total of a nation’s intelligence across many different fields. He maintained that the market knows virtually everything worth knowing about the short-to-intermediate-term outlook.

This post was published at GoldSeek on Friday, 14 July 2017.

Why Has The Thinking Class Of America Abandoned Thinking?

Authored by James Howard Kunstler via,
The abiding enigma of this tormented era remains: why has the thinking class of America abandoned thinking?
The answer is: it’s the reaction to their own failure.
Failure to do what? To produce the utopia that Gnostic liberalism promised – a perfect world based on altering human nature. The result is an essentially religious hysteria, like the witch frenzies of Medieval Europe that were sometimes provoked by ergot poisoning – a fungus with toxic psychotropic properties that grew on the harvested rye, inducing frightful hallucinations in the villagers, who then lashed out at their perceived supernatural antagonists. Trump in our time is the ergot on the bread of our politics. And Russia is the witch.

This post was published at Zero Hedge on Jul 14, 2017.

The Mighty U.S. Shale Oil Industry To Lose Another $20 Billion In 2017

Well, it looks like the U. S. shale oil industry is going to chalk up another lousy year of financial losses in 2017. This shouldn’t be a surprise as the U. S. shale oil industry hasn’t made any real money since 2008. However, I still read articles suggesting that the United States will still become energy independent by ramping up its Mighty Shale Oil Machine.
Unfortunately, the country’s shale oil industry will never allow the United States to become energy independent, but it will sure go BROKE trying to do so.
According to the article by Nick Cunnigham, Is Wall Street Funding A Shale Failure, he made the following remarks:
Investors hungry for yield are throwing money into companies who then drill more, and the surge in production is hurting the industry as a whole. Despite efficiency improvements, the shale industry is expected to be cash flow negative by a combined $20 billion this year as oil prices sink.
….. Investors are slowly waking up to the idea that they may not be able to make juicy profits by betting on a sharp rebound in oil prices. There is some early evidence that Big Finance is pulling back, with new equity issuance down recently.

This post was published at SRSrocco Report on July 14, 2017.

Global Capital Markets Have Added Over $11 Trillion Since Trump’s Election

Since President Trump’s election, global equity markets have added more absolute value than at any time in history (around $12 trillion) – surpassing the front-running exuberance that started when Bernanke hinted at QE2 in 2010.
The value of global equity markets reached a record high $76.28 trillion yesterday, up a shocking 18.6% since President Trump was elected. This is the same surge in global stocks that was seen as the market front-ran QE2 and QE3

Of course, some might say this is driven by animal spirits. Still others will proclaim this is all Trump as Obama’s suppressive boot on the throat of business is lifted.
However, there is another explanation… a $1.4 trillion addition to global central bank balance sheets seems to have a curiously strong correlation to the gains…

This post was published at Zero Hedge on Jul 14, 2017.

Gold Prices Fall To The Thrill Of Investors

The price of gold fell to a new low during the first week of July according to several reports that claim the decrease in value is due to a strong job market and the expectations of higher interest rates in the United States.
Learn How to Exploit the Gold Frenzy! August gold fell by $13.60, which is the equivalent of a 1.1 percent decrease in value. Such rate is the lowest since March when prices dropped by 2.6 percent. Silver also experienced its share of decline with initial values falling by as much as 10 percent on Friday (July 7). There was eventually a reversal in the numbers that increased September silver’s value from its original price fall. The commodity still lost 55.8 cents of its worth to bring a 3.5 percent reduction in prices for silver.
The U. S Federal Reserve and European Central Bank
The U. S. Federal Reserve has expressed desires to normalize its policies and pursue gradual interest rate increases. The European Central Bank, on the other hand, is making steps towards closing in on its efforts to stimulate the United Kingdom’s economy after several years of purchasing bonds aggressively. Such shift in agendas on behalf of the U. S. Federal Reserve and European Central Bank has caused global bond yields to rise exponentially. Such increase has taken its toll on gold prices in a negative manner.

This post was published at GoldSilverWorlds on July 14, 2017.

BofA Lashes Out At The Fed: “Take That Punch Bowl Away” Or Face A Crash

In a dramatic appeal for rationality at the Fed, Bank of America’s global FX strategy team today released a note titled “take that punch bowl away”, which laments that while central banks backtracked from their hawkish recent rhetoric this week, it warns that “they will be sorry if they allow bubbles” and predicts that vol will increase this fall adding that the bank remains “cautious and selective in EM FX, despite the Fed-triggered rally this week.”

The note comes 24 hours after BofA’s chief strategist Michael Hartnett warned that “the most dangerous moment for markets” will likely come when “rising rates combine in three or four months’ time with an inflection point in corporate profits. In anticipation of this, we would use the next couple of months to buy volatility, and within fixed income slowly reduce exposure to IG, HY, and EM bonds.”

This post was published at Zero Hedge on Jul 14, 2017.

Why the Price of Gold’s Rebound This Week Could Continue Through 2017

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
After falling 6.8% from the June 6 peak of $1,298, the price of goldseemed to have finally hit a bottom on Friday, July 7.
That was when gold prices fell 1.1% to $1,210 – the lowest since March 15. However, the metal has rebounded 1.5% since then to today’s gold price of $1,230.
This week’s gains mostly came from renewed weakness in the U. S. dollar. After all, the U. S. Dollar Index (DXY) has declined from 96 basis points on July 7 to 95.27 today.
And the dollar’s weakness is no real surprise, thanks to the U. S. Federal Reserve.

This post was published at Wall Street Examiner by Peter Krauth ‘ July 14, 2017.

JPMorgan Warns S&P Faces Large “Negative Gamma”, Could Exaggerate Any Drop Next Week

Earlier in the week we noted the ‘odd’ surge in downside protection demand even as tech stocks were soaring, and now JPMorgan is noting the S&P has shifted to a large ‘negative gamma’ underhang which “could boost volatility if we were to sell off.”
As Bloomberg notes, options markets suggest a lack of confidence in the rally. Traders are piling into downside hedges on every uptick in prices…

This post was published at Zero Hedge on Jul 14, 2017.

Research Team Slams Global Warming Data In New Report: ‘Not A Valid Representation Of Reality… Totally Inconsistent With Credible Temperature Data’

As world leaders, namely in the European Union, attack President Trump for pulling out of the Paris Climate Agreement which would have saddled Americans with billions upon billions of dollars in debt and economic losses, a new bombshell report that analyzed Global Average Surface Temperature (GAST) data produced by NASA, the NOAA and HADLEY proves the President was right on target with his refusal to be a part of the new initiative.
According to the report, which has been peer reviewed by administrators, scientists and researchers from the U. S. Environmental Protection Agency (EPA), The Massachusetts Institute of Technology (M. I. T.), and several of America’s leading universities, the data is completely bunk:
In this research report, the most important surface data adjustment issues are identified and past changes in the previously reported historical data are quantified. It was found that each new version of GAST has nearly always exhibited a steeper warming linear trend over its entire history. And, it was nearly always accomplished by systematically removing the previously existing cyclical temperature pattern. This was true for all three entities providing GAST data measurement, NOAA, NASA and Hadley CRU.

This post was published at shtfplan on July 14th, 2017.

Will Trump Use Obama’s “Secret Debt Ceiling Plan” To Avoid A U.S. Treasury Default?

After voting to repeal and replace Obamacare 60 times under the Obama administration, Senate Republicans, now that it counts, are locked in a heated civil war over how or if they should even modify the controversial legislation. As proven time and again, despite sharing a common party, conservative and moderate republicans have very little else in common.
So, while many may think that a repeat of the 16-day government shutdown in 2013 is unlikely while a single a party controls all three branches of government in Washington D. C., we suspect it may not be quite as simple as that. Without a budget in place that truly balances, conservative republicans will most likely be unwilling to approve debt ceiling increases no matter who is sitting in the White House.
While republicans have attempted to get ahead of the game by passing a debt ceiling increase well in advance of a breach, efforts so far have failed. And while it may seem far away, the U. S. government will reach its statutory limit on borrowing some time in October. So how will Mnuchin handle the Treasury Department if Republicans fail to act and Democrats refuse to play ball? Turns out Obama had a plan for that. Per Bloomberg:
When the nation almost breached its debt ceiling six years ago, the Federal Reserve and Treasury drew up contingency plans that were kept secret until January, when transcripts of an Aug. 1, 2011 conference call at the central bank were released after a customary five-year lag.

This post was published at Zero Hedge on Jul 14, 2017.

July 14/Poor CPI numbers coupled with poor retail sales sends gold and silver northbound with the dollar sinking/Turkey turns its back on the West: purchases defense missiles from Russia/Turkey w…

GOLD: $1230.30 UP $12.00
Silver: $15.96 UP 21 cent(s)
Closing access prices:
Gold $1228.50
silver: $15.96

This post was published at Harvey Organ Blog on July 14, 2017.

UMich Consumer Confidence Tumbles To Lowest Since Before Election As ‘Hope’ Disappears

Following the biggest 2-week plunge in Bloomberg’s index of economic comfort in 6 years, UMich reports a big disappointment in the preliminary print for June. At 93.1 (below the 95.0 expectation), this is the weakest print since Oct 2016 – before the election.

UMich point sout that overall, the recent data follow the same pattern repeatedly recorded around past cyclical peaks: expectations start to post significant declines while assessments of current economic conditions continue to reach new peaks. To be sure, the data do not suggest an impending recession. Rather, the data indicate that hopes for a prolonged period of 3% GDP growth sparked by Trump’s victory have largely vanished, aside from a temporary snap back expected in the 2nd quarter. The declines recorded are now consistent with just above 2% GDP growth in 2017.

This post was published at Zero Hedge on Jul 14, 2017.

Global Currency Reserve at Risk

Within the US borders, the population remains largely ignorant of the true significance of the global currency reserve concept. It is of paramount importance, yet almost never discussed in the financial press. The public within the United States simply assumes the country operates with the USDollar as its currency, with near blindness to its global role in trade and banking. The end of an era is coming, as the change will be powerful in its effect. The shock wave could hit this year in some form, in a manner to highlight its importance.
The term is tossed around in common manner, often without an explanation of what it means. A strict meaning is followed by a practical meaning. The USDollar serves as global currency reserve, insofar as the USTreasury Bond is the standard for bank reserve core asset usage. Numerous countries have a core foundation to their national banking system. They maintain core assets and ratios. It is not gold bullion, but rather the USGovt debt. It is the USTBond denominated in USDollars. Of course, such practice is upside down and lunatic. Debt operating as core assets in the global banking system is utterly reckless, insane, and bound to force a systemic breakdown. Such is the heresy and risk from the banker cabal.
The practical side of global currency reserve system is that trade payments are standardized as being executed in USDollar terms. A crude oil shipment, a grain shipment, a container vessel shipment, they are paid in USD terms, often with short-term USTreasury Bills. Also, international contracts like for consulting services or for installation of IT systems typically are written for payment in USD terms. As a result, the nations set to pay for a shipment or contract maintain huge USTreasury stores in their banking systems, ready to complete the trade payments.

This post was published at GoldSeek on Friday, 14 July 2017.

The First Horse Out Of A Burning Barn Gets Scorched The Least

From a Short Seller’s Journal Subscriber: I just read the piece on Denver homes and the idea of taking a lower price. $100,000 less jumped out. We are selling our overpriced turkey in the clouds in a posh area of Nevada where stupid money goes to die.
Our contract price is $115,000 less than an appraisal done 4 months ago. All the realtors think that prices in the hills will continue upwards. I know better and locales like this are primed for a very ugly drop. That’s our reason for taking $115,000 less than appraisal value
The first horse out of a burning barn gets scortched the least . Thank you for that tip Worth the price of the newsletter times 10 or 20…

This post was published at Investment Research Dynamics on July 14, 2017.

Goldman Revises Its Fed Rate Hike Odds After Latest Disappointing Data

After Yellen’s unexpectedly dovish Congressional testimony on Wednesday, Goldman’s chief economist, Jan Hatzius, who previously was especially bullish on the US economy and expected as many as 4 rate hikes in 2017, took an axe to its tightening forecast, and noting Janet’s latest commentary, said “in our view, this reduces the probability of a July announcement and raises the likelihood of a September announcement. As a result, we now think that there is a 10% (vs. 20% previously) probability that the next rate hike will come in September, a 5% probability that it will come in November, and a 55% (vs. 50% previously) probability that it will come in December. Cumulatively, this implies a 70% probability (vs. 75% previously) of at least three hikes this year.”
Fast forward two days, when after today’s latest batch of poor economic data, in which both core CPI and retail sales missed, Goldman has again cut its rate hike forecast, and is on the verge of saying that another rate hike in 2017 is basically a coin toss. This is what Goldman said moments ago:
Core CPI inflation was lower than expected for the fourth consecutive month, though the year-over-year rate remained stable and prices in the large and persistent shelter and healthcare services categories both accelerated. Retail sales were weak – with an outright decline in the key control gauge that was four tenths below expectations – reflecting relatively broad-based softness. We adjusted down our Fed odds accordingly. We now believe there is a 5% probability that the next rate hike will come in September, a 5% probability that it will come in November, and a 50% probability that it will come in December (a 60% cumulative probability of at least three hikes this year).

This post was published at Zero Hedge on Jul 14, 2017.

The “Missing Slide”: JPM Credit Card Charge-Offs Jump To Four Year High

While JPM was quick to provide all the favorable data in its earnings presentation (and not so favorable when it comes to the sharp drop in its markets sales and trading division) one thing was conspicuously missing: the slide on “Mortgage Banking And Card Services” which has traditionally been part of the bank’s earnings presentation and was certainly featured prominently last quarter.
Of course, it is possible that JPM simply forgot to include it, or perhaps it did not want to bring attention to a troubling trend: the concerning increase in net credit card charge-offs, which last quarter rose to just shy of $1 billion, and which prompted JPM to report an unexpected increase in credit costs (driven also by JPM’s write-down in its student loan portfolio).

This post was published at Zero Hedge on Jul 14, 2017.