One Trader Warns – Next Week’s FOMC Meeting May Not Be As “Benign” As The Market Believes

If ever there was a chance for The Fed to ‘sneak’ in a rate-hike while everyone is distracted, it’s next Wednesday as Trump Jr testifies to Congress. As former FX trader Richard Breslow remarks, The Fed “woulda, coulda, shoulda [hike] next week… but certainly won’t,” noting that if they are truly concerned about the “stretched valuations” taking an extended vacation through the summer is the worst thing The Fed can do…
Via Bloomberg,
It feels strange but, curiously, not entirely pointless, to suggest the Fed do something that there’s zero chance they will even contemplate. I’m talking about next week’s FOMC meeting and using it as an opportunity to be bold. This is mostly a meeting they hold in mid-summer to justify the fact that no one has any desire to be in Washington DC in August, and September is a long way off.
But taking an extended holiday is precisely what they oughtn’t do. The only thing it will accomplish is forcing, as well as encouraging, investors to carry on with the types of trades every right-minded observer thinks has a large element of recklessness. Which is just a somewhat less nice word for ‘financial conditions remain benign.’

This post was published at Zero Hedge on Jul 20, 2017.

Technology that Glitters in Gold: Solar Energy, Bioprinting and Tractor Beams

Researchers continue to come up with amazing new technologies utilizing gold.
We generally think of gold as an investment as well as money, but it is increasingly being used in high-tech applications. Gold’s conductivity and malleability make it suitable for a number of futuristic applications, from energy production to healthcare. Researchers are even using the metal in things that sound like they came out of a sci-fi book. In fact, the tech sector accounted for about 6% of gold demand in 2016.
A team of researchers in Japan has developed a material incorporating gold nanoparticlescapable of harvesting a broader spectrum of sunlight in solar panels. According to AsianScientist, the new formulation makes traditional semiconductor material 60 time more efficient at splitting water to harvest hydrogen atoms. This could revolutionize hydrogen energy production.
Hydrogen ranks among the cleanest low-carbon fuels. It gives off energy when it combines with oxygen. The byproduct is water. But currently, the process of harvesting hydrogen molecules by splitting H2O takes more energy than the produced hydrogen gives back. AsianScientist explains how gold may make the process more efficient.


This post was published at Schiffgold on JULY 20, 2017.

ECB Keeps Rates, QE Unchanged; Ready To Increase QE “In Size And Duration”

While nobody was expecting much from the ECB’s policy statement this morning, with all eyes on Draghi’s press conference in 45 minutes, judging by the disappointed market reaction to what were largely canned remarks by the ECB which sent the EURUSD in kneejerk reaction lower, positioning is indeed stretched and unless Draghi comes out with hawkish bazookas blazing, the EURUSD may slide bigly.
Back to the ECB’s decision, it announced that it kept both its rates and QE unchanged, with QE expected to run at 60BN per month until end of December or beyond if needed, ‘and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.’ The ECB said it was also ready to extend QE ‘in terms of size and/or duration’ if economic outlook worsens or financial conditions ‘become inconsistent with further progress towards a sustained adjustment in the path of inflation.’
On rates, the central bank expects these to stay at present levels ‘well past’ QE horizon
Main refinancing rate unchanged at 0.00% Deposit facility rate unchanged at -0.40% Marginal lending rate unchanged at 0.25% Full statement below:

This post was published at Zero Hedge on Jul 20, 2017.

“ECB Or Not To Be”: A Preview Of What Mario Draghi Will Say

Looking at today’s main event, the much anticipated ECB announcement in which Draghi may (or may not) announce a hawkish shift to the cental bank’s policies and/or reveal the bank’s tapering plans, Citi (whose titled we borrowed) gives the 30 second summary, and says that the market seems quite split on whether the ECB will remove the asset purchase program easing bias, but thinks that there’s room for mild disappointment. After all, it says, this meeting is just a warm up for the September meeting (and Jackson Hole). CitiFX Strategist Josh O’Byrne points out that the biggest market fear at the moment appears to be long positioning and “this risks morphing into FOMO for the next leg higher.” For the press conference, Citi expects Draghi to slightly tweak some of the language from Sintra to lean a little bit more towards the dovish side.
The bank’s expectations are summarized in the following handy cheat sheet:

This post was published at Zero Hedge on Jul 20, 2017.

Yield Curve Not Suggesting Imminent Market Peak, Recession

One of the most frequently cited predictors of a recession is when short-term interest rates rise above long-term interest rates. This is referred to as an “inversion of the yield curve” and typically happens when bond investors have a negative outlook on the economy. If you’re not familiar with the basics of the yield curve, please see What Is the Yield Curve Telling Us about the Future? for more background.
Here is what the Federal Reserve Bank of New York says on their website regarding the Yield Curve as a Leading Indicator:
The yield curve has predicted essentially every U. S. recession since 1950 with only one “false” signal, which preceded the credit crunch and slowdown in production in 1967. There is also evidence that the predictive relationships exist in other countries, notably Germany, Canada, and the United Kingdom.
Currently, the yield curve for the US is flattening – and not inverted – so there is no imminent signal that the US economy is facing a recession.
The big question is timing.

This post was published at FinancialSense on 07/19/2017.

World Stocks Hit Record High For 10th Consecutive Day In “No-Vol Nirvana”

The relentless risk levitation continued overnight, as global shares extended their stretch of consecutive record highs on Thursday for a 10th day after a cautious BOJ lifted Asian stocks to a decade high with a dovish announcement that offered no surprises, while pushing back Kuroda’s 2% inflation target to 2020, the 6th consecutive delay. With all eyes on the ECB in just over an hour, US equity futures are in the green, following solid gains around the globe. European stocks extended their biggest gain in a week while Asian equities maintained their rally. Microsoft, Blackstone, Philip Morris and Ebay are among companies reporting earnings. Initial jobless claims data due.
Traders – so mostly algos – are riding a global risk “high” in stocks as Asia’s and then Europe’s early 0.4 percent gains ensured MSCI’s 47-country All World index was up for a 10th straight session. This is the longest winning streak in global stocks since February 2015 and shows little sign of fatigue even as bond yields edged modestly higher again. The Stoxx Europe 600 Index rose 0.3 percent as of 9:53 a.m. in London. The U. K.’s FTSE 100 Index rose 0.5 percent to near the highest in a month. The MSCI Emerging Market Index fell 0.1 percent, the first retreat in almost two weeks. The VIX index closed below 10 for a record fifth consecutive day. Appropriately, Bloomberg dubbed the move a “no-vol” nirvana, in which stocks and bonds keep rallying as volatility evaporates.

This post was published at Zero Hedge on Jul 20, 2017.

The Dangerous Season Begins Now

Old Truism Readers are surely aware of the saying ‘sell in May and go away’. It is one of the best-known and oldest stock market truisms.
And the saying is justified. In my article ‘Sell in May and Go Away – in 9 out of 11 Countries it Makes Sense to Do So’ in the May 01 2017 issue of Seasonal Insights I examined the so-called Halloween effect in great detail. The result: in just two out of eleven international stock markets does it make sense to invest during the summer months.
But is ‘sell in May’ really the best recommendation? After all, it is merely a saying based on general experience. We will take a closer look at the seasonal pattern below.
The Precise Seasonal Pattern of the Russell 2000 Index The small and mid-cap index Russell 2000 exhibits particularly pronounced seasonal trends. That makes it very useful for the purpose of seasonal analysis.
Unlike a standard price chart, the seasonal chart of the Russell 2000 depicts the average pattern that emerges in the index in the course of a year. The horizontal axis shows the time of the year, the vertical axis the average percentage changes over the past 30 years. The seasonal trends of the index can be discerned precisely at a glance.

This post was published at Acting-Man on July 20, 2017.

Dollar Tumbles, Stocks Slammed As Mueller Expands Probe Into Trump Business Transactions

It was quiet, too quiet. Markets were comfortably drifting ever higher (10th day up in a row for Nasdaq) and then headlines hit on Bloomberg reporting that special counsel Robert Mueller wil be probing Trump’s business transactions and will extend his investigation to examining the dealings of Kushner and Manafort.
It is likely that such a wide-angle approach to the probe could trigger a response from the president who last night told the NYT in an interview that any digging into matters beyond Russia “would be out of bounds.” Bloomberg also notes that agents are interested in transactions involving the Bank of Cyprus, where Wilbur Ross served as vice chairman before he became the Commerce Sec., as well as the efforts of Jared Kushner to secure financing for some of his family’s real estate properties.
In short, Trump is about to respond, perhaps violently.
More from Bloomberg: The U. S. special counsel investigating possible ties between the Donald Trump campaign and Russia in last year’s election is examining a broad range of transactions involving Trump’s businesses as well as those of his associates, according to a person familiar with the probe.
FBI investigators and others are looking at Russian purchases of apartments in Trump buildings, Trump’s involvement in a controversial SoHo development with Russian associates, the 2013 Miss Universe pageant in Moscow and Trump’s sale of a Florida mansion to a Russian oligarch in 2008, the person said.

This post was published at Zero Hedge on Jul 20, 2017.

20/7/17: Euro Area’s Great non-Deleveraging

A neat data summary for the European ‘real economic debt’ dynamics since 2006:
***
In the nutshell, the Euro area recovery:
Government debt to GDP ratio is up from the average of 66% in 2006-2007 to 89% in 2016; Corporate debt to GDP ratio is up from the average of 72% in 2006-2007 to 78% in 2016; and Household debt to GDP ratio is down (or rather, statistically flat) from the average of 58.5% in 2006-2007 to 58% in 2016.

This post was published at True Economics on Thursday, July 20, 2017.

RBA Minutes Turn Hawkish On News That the AUD/USD Had Moved Higher

I have written several articles discussing my long term prospects for the Australian Dollar against the US Dollar over the past 6 months. In February I had written that there was likely a multi-year low in place on the AUD/USD, and then on May 2nd I followed up writing that there was now a longer term trade setup in place on the AUD/USD.
At the time of the May article the Australian Dollar was trading at 0.7550 against the US Dollar and I had noted that:
‘From a trading perspective, this current pattern is providing us with a fairly clean long setup around current levels with stops just under the 0.7159 zone. Targets for this longer term trade setup come in at the 0.8372-0.8593 zone.’
On May 9th the AUD/USD bottomed at 0.7328 and as of July 19th is trading 8% higher off of that May low.
The AUD/USD has now strongly broken through several price levels that have now given us the initial signals that the pair is indeed following through on this longer term trade setup that had been laid out back in May.
I have also recently written several articles discussing how the pundits seem to always find some exogenous news item to explain the price movements in the financial instrument in which they are reporting on. Often times the connection between this exogenous event and the financial instrument is suspect, and other times it’s just down right absurd.

This post was published at GoldSeek on Thursday, 20 July 2017.

NAVIGATING THROUGH THE STORMS

Several weeks ago I had to drive west on the Pennsylvania Turnpike to pick up my son after his sophomore year at Penn State. I’ve made this trip a dozen times over the last few years, since this is my second son attending Penn State, with a third starting in the Fall. It’s a tedious, boring, protracted, four hour trek through the rural countryside of the Keystone State. During these trips my mind wanders, making connections between the landscape and the pressing issues facing the world. I can’t help but get lost in my thoughts as the miles accumulate like dollars on the national debt clock.
More often than not I end up making the trip in the midst of bad weather. And this time was no different. The Pennsylvania Turnpike is a meandering, decades old, dangerous, mostly two lane highway for most of its 360 mile span. Large swaths of the decaying interstate are under construction, as the narrative about lack of infrastructure spending is proven false by visual proof along the highways and byways of America.
The real infrastructure crisis is below ground in urban shitholes where 100 year old water and sewer pipes fail on a regular basis, but bankrupt Democrat politicians divert their steadily declining tax revenues to bloated pensions of government lackeys. Infrastructure spending is only interesting to politicians if they can name it after themselves and have a ribbon cutting ceremony. Replacing water and sewer pipes before they explode isn’t sexy, so it won’t be done.

This post was published at The Burning Platform on July 19, 2017.

Overnight Paper Attack On Gold – Why This One Was Different

Once again there was an overnight ‘flash crash’ in Comex gold futures trading. This time it occurred at 3:56 a.m. EST at one of the quietest trading periods of the roughly 23 hour electronic trading day. India has gone sleep. The Shanghai Gold Exchange has been closed for about 90 minutes and the London markets are just beginning to function. I guess someone decided it was a good time to unload close $500 million worth of paper gold into the Comex’s Globex electronic trading system:

This post was published at Investment Research Dynamics on July 19, 2017.

Deutsche Bank Faces DOJ Subpoena Over Trump-Russia Probe

Deutsche’s relationship with Trump and questions about hundreds of millions in loans have dogged the German bank and the White House for months, abd now, ‘according to sources’ reported by The Guardian, Robert Mueller’s team and Trump’s bankers have established informal contacts and formal requests for information are forthcoming.
According to an analysis by Bloomberg, Trump now owes Deutsche, his biggest creditor, around $300m. He has four large mortgages, all issued by Deutsche’s private bank. The loans are guaranteed against the president’s properties: a new deluxe hotel in Washington DC’s old post office building, just around the corner from the White House; his Chicago tower hotel; and the Trump National Doral Miami resort.

This post was published at Zero Hedge on Jul 20, 2017.

Jeff Sessions’s Pot War Is Up in Smoke in Nevada

Thousands lined up to purchase recreational marijuana legally at 12:01 a.m. on July 1. At Euphoria Wellness, with a location in southwest Las Vegas, a crowd of 400 to 500 people were lined up at midnight. Other locations had just as many.
Among the first to purchase was state senator Tick Segerblom, who has a strain of weed named after him: ‘Segerblom Haze.’ The senator tweeted that he believed the state would rake in a million dollars in tax money this first weekend. Judging from the lines out the doors at dispensaries in just my neighborhood, I don’t doubt his projection.
Even with it being a scorching 107 degrees this afternoon, Las Vegans were waiting patiently in the sun to go up in smoke.
The Las Vegas Sun reports, ‘Destiny Diaz stood in line for nearly three hours at the Jardin Premium Cannabis dispensary in central Las Vegas to celebrate what some were calling the end of marijuana prohibition in Nevada.’
‘A local resident for 35 years, [Steve] Evans, 54, said he arrived just before 7:30 p.m. and that the nearly five-hour wait Friday night was the longest he had been away from his home in over eight years.
”I want an ounce of Gorilla Glue 4, and then I’m going home to sink into the sofa and be with my wife,’ Evans said, referring to one of the dispensary’s best-selling marijuana flower strains. ‘Pretty simple.”

This post was published at Ludwig von Mises Institute on July 19, 2017.

Bank of America Pulls Ripcord on Chinese Conglomerate HNA

Are the Conglomerates the Black Swan in China? Bank of America suddenly pulled back from doing business with HNA Group, a privately held Chinese conglomerate that has been on the forefront of highly leveraged, opaque Chinese conglomerates out on a mind-boggling debt-funded acquisition binge around the world.
‘We simply don’t know what we don’t know, and are not prepared to take the risk,’ Bank of America president for Asia Pacific, Matthew Koder, wrote in an internal email, dated June 28 that was leaked to The New York Times. ‘Given the importance of maintaining rigorous client selection standards, we have decided not to be involved with transactions with the HNA Group at this point in time.’
So Bank of America is getting scared and won’t do business with HNA. It’s walking away from a lucrative customer that has been generating piles of fees and interest income for the banks. The Times:
On one side of business, banks have helped HNA buy companies by arranging what is called collateralized financing. That has entailed allowing HNA to borrow money against the shares of the company that it is acquiring.
Big banks have also received large paydays for advising on HNA’s acquisitions. HNA and its affiliates overseas have paid an estimated $100 million in fees to banks advising on mergers and acquisitions since 2016….

This post was published at Wolf Street by Wolf Richter ‘ Jul 20, 2017.

The Feds Just Expanded Civil Asset Forfeiture ‘Laws’ Nationwide

When you’re a government agency, asking for a tax increase is always a hassle. As Ryan McMaken notes, for the most part, taxpayers don’t like taxes, and if asked if they want to pay more, they’re likely to often say “no.” Moreover, when public officials pass tax increases, they may face the wrath of taxpayers at the ballot box. For this reason, governments are always looking for ways to get revenue without having to use tax revenue.
One such ‘hidden’ method of seizing wealth from the taxpayers is through what is now called “civil asset forfeiture.”
This occurs when a law enforcement agency seizes the assets – including real estate, cars, cash, and other valuables – from private citizens based merely on the suspicion that the person has committed a crime with the assets in question. No due process is necessary. No conviction in a court of law need occur. While it is technically possible to sue a government agency to reclaim one’s possessions, this requires immense amounts of time and legal fees to pursue. Needless to say, civil asset forfeiture has become a lucrative source of income for law enforcement agencies. And, over the past 30 years, the practice has become widespread.
As Martin Armstrong detailed, between 1989 and 2010, U. S. attorneys seized an estimated $12.6 billion in asset forfeiture cases. The growth rate during that time averaged +19.4% annually. In 2010 alone, the value of assets seized grew by +52.8% from 2009 and was six times greater than the total for 1989. Then by 2014, that number had ballooned to roughly $4.5 billion for the year, making this 35% of the entire number of assets collected from 1989 to 2010 in a single year. Now, according to the FBI, the total amount of goods stolen by criminals in 2014 burglary offenses suffered an estimated $3.9 billion in property losses.

This post was published at Zero Hedge on Jul 19, 2017.

Millennials Can Punt On Bitcoin, Own Gold and Silver For Long Term

– Bitcoin volatility shows not currency or safe haven but speculation
– Volatility still very high in bitcoin and crypto currencies (see charts)
– Bitcoin fell 25% over weekend; Recent high of $3,000 fell to below $1,900
– Bitcoin least volatile of cryptos, around 75% annualised volatility
– Gold much more stable at just 10% annualised volatility
– Bitcoin volatility against USD about 5-7 times vol of traditional forex trading
– Cryptos remain subject to huge speculation with little fundamental analysis
– Despite major differences many crypto currencies correlated, mimic one another
– Extreme hype – bitcoin expert bets will eat own body part on national television
– Millennials can punt on bitcoin, should also own gold and silver for long term
– Cryptos mere ‘babies’ when compared to time tested gold and silver
Editor: Mark O’Byrne
Crypto volatility and hype shows immaturity remains
The joy about working in precious metals is that for part of the weekend you can switch off.
There is a precious time when markets are closed and you don’t have to worry about market movements and what might be happening. You check back in on Sunday afternoon/evening and can delight in the markets starting to wake up for the week ahead. This isn’t the case in cryptocurrencies.
This weekend crypto-currency market participants got a wake-up call as to what 24/7/365 market trading really means. They watched the price of bitcoin plummet around 10% on Sunday morning (EST) alone. This contributed to bitcoin’s overall fall of 25% since last Thursday and into the weekend. Other crypto currencies fell by more.

This post was published at Gold Core on July 20, 2017.

CLOSE TO NEW GOLD STANDARD? Australia Exports Record Amount Of Gold To China

Are the Chinese getting close to announcing a new gold-backed currency? Well, if the record amount of Australian gold exports into China is an indicator, it may be close at hand. While the Chinese have been importing a lot of gold from Australia, it reached a new record high in 2017.
According to the recently released data by the Australian Government June 2017 Resources and Energy Quarterly, Australia exported more gold to Hong Kong and China during the first quarter of 2017 than any other quarter in history.

This post was published at SRSrocco Report on JULY 19, 2017.

World Stock Markets Firmer; ECB Meeting Conclusion Awaited

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
(Kitco News) – Most world stock markets were firmer overnight, continuing to see upside support from generally upbeat corporate earnings reports. U. S. stock indexes hit record highs on Wednesday and are poised to move still higher when the New York day session begins.
Gold prices are lower in pre-U. S.-session trading today. Some mild profit taking from the shorter-term futures traders is featured after recent good gains in the yellow metal.
In overnight news, the Bank of Japan at its latest monetary policy meeting Thursday scaled back its inflation expectations to suggest its easy-money policies can remain in place longer.
The European Central Bank is meeting Thursday. The marketplace is awaiting the ECB’s stance on future monetary policy for the Euro zone. ECB President Mario Draghi’s press conference will be the highlight of the ECB meeting.

This post was published at Wall Street Examiner by Jim Wyckoff ‘ July 20, 2017.