How Insane Home Prices in Silicon Valley & San Francisco Trip up Jobs Growth

Bay Area housing affordability nightmare hits home, so to speak.
What happens in a large urban market when a young couple with a household income that is far above median cannot afford to buy even a modest home? What happens to that local economy? That’s what everyone wants to know, because this is precisely the fate San Francisco, Silicon Valley, and surrounding Bay Area counties are contemplating.
The Housing Affordability Index (HAI), released by the California Association of Realtors (CAR), has some bad news for these people – and possibly for the trends in the local economy and the housing market.
The median price – 50% cost more, 50% cost less – in San Francisco of a single-family house hit $1.45 million in Q2, according to CAR. This does not include condos, whose prices are somewhat less deadly. It puts San Francisco in second place in the Bay Area, behind San Mateo County, which comprises the northern part of Silicon Valley. Santa Clara County, in fourth place, comprises the southern part of Silicon Valley. In third place is Marin County, just north of the Golden Gate Bridge:

This post was published at Wolf Street on Aug 14, 2017.

What David Tepper Bought And Sold In Q2: The Full Breakdown

Remember when several months ago the news that David Tepper disclosed that his Appaloosa bought a (tiny 100,000 share) take in Snapchat in Q1, sending the stock briefly higher, especially after he said that he would add more if the price fell below its IPO price of $17? Well, according to his just released 13F, he didn’t, and in fact has since dissolved his entire stake in the company that has since pivoted to dancing hotdogs.
That triviality aside, what was most notable about Tapper’s Q2 holdings is that in addition to boosting several key tech names, as well as opening a new $500+ million position in Alibaba, he took his total long equity holdings to just over $6.7 billion as of June 30, up from $6.1 billion at the end of March, the highest net long exposure since September 2014.

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


GOLD: $1284.70 DOWN $3.10
Silver: $17.14 up 6 cent(s)
Closing access prices:
Gold $1282.20
silver: $17.08
Premium of Shanghai 2nd fix/NY:$4.45
LONDON FIRST GOLD FIX: 5:30 am est $1281.10
For comex gold:
TOTAL NOTICES SO FAR: 4521 FOR 452,100 OZ (14.062 TONNES)
For silver:
100,000 OZ/
Total number of notices filed so far this month: 830 for 4,150,000 oz

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

Brien Lundin: If They Don’t Want You To Own It, You Probably Should

The following video was published by ChrisMartensondotcom on Aug 14, 2017
We’re living through the most extraordinary period of monetary printing in all of human history. It’s as widespread as it is delusional.
One of the most perplexing mysteries to us is that right as the Federal Reserve embarked on QE3 — which was a huge, enormous, $85 billion a month experiment — commodities began a multiyear decline within two weeks of that announcement. Concurrently, the world’s central banks plunged the world into steeply negative real interest rates, a condition that has almost always resulted in booming commodity prices — but not this time. Today, the ratio between commodity prices and equities is at one of, if not the most, extreme points in history

JPMorgan Lists Four “Red Flags” Why It Is Starting To Sell Stocks

While most banks have in recent weeks expressed concerns about the recent, near record high levels in the S&P – which is now 67 points above Goldman’s year end price target of 2,400 – few have been willing to go out on a limb and announce they are short the market, and that the bull market is now over (unlike Gartman who on Friday staked his reputation that the “Bull market has come to an end” only to unleash another rally in the S&P in the next two days).
Overnight, JPM’s Misla Matejka has done just that, and in his latest equity strategy note writes that JPM “continues to see the risk-reward for equities as unattractive” for 4 main reasons: i) complacency seen in VIX and in HY spreads could unwind further, ii) EPS momentum is deteriorating, iii) valuations are “outright expensive”, and iv) liquidity will be turning.
If the JPM strategist had left it at that, it would have been notable as it would be one of the very few, unhedged bearish recos on Wall Street. He did not, however, and said that after the early periof of turbulence, markets will continue rising, effectively nullifying his warning because what’s the point of selling just to have to buy again a few weeks or months down the line, or as Matejka put it the “medium-term fundamental view remains that equities are in an upcycle and that the potential consolidation should be used as another good entry point.”

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

A New Currency Emerges As The Old Currency Withers Away, Welcome To The Transition – Episode 1355a

The following video was published by X22Report on Aug 14, 2017
The restaurant industry is experiencing a slow down in traffic and sales even with rising food and drink prices. Trump signs memo looking into the trade agreements with China. From all the indicators that are now out in the public domain the US economy is in a recession even though the Fed has not acknowledged it. IRS reports quarterly taxes are down 40% as more individuals are not paying up. Does the Fed have 6200 tons of gold, we don’t because they will not allow anyone to audit it . Venezuela and many other countries are turning towards cryptocurrencies. The central banks are pushing to stop people from using cryptocurrencies, what we are witnessing is the transition into a new currency, a new system.

18 European Countries Have Negative 2Y Sovereign Yields As Negative-yielding Bonds Hit $8.6 Trillion

The market value of the world’s negative-yielding bonds has jumped almost 25 percent over the past month to $8.6 trillion amid slower-than-forecast inflation data and as investors piled into the safest securities as perceptions of geopolitical risk increased. That’s happened even after Federal Reserve officials started raising benchmark borrowing costs and said they would begin running off their $4.5 trillion balance sheet ‘relatively soon.’

This post was published at Wall Street Examiner on August 14, 2017.

Citi Chief Economist Fears “Financial Froth” But Thinks “Fed Tightening Is No Big Deal”

There are few entertaining economists, and fewer still work on Wall Street. Willem Buiter, the chief economist of Citigroup, is one of them. He is not only entertaining, but also outspoken – and his analysis of key economic trends and themes is second to none.
The Epoch Times spoke with Buiter about Federal Reserve (Fed) interest rate policy and the surprising strength of the euro, as well as the impossibility of a Chinese soft landing.
The Epoch Times: What is the Fed up to?
Willem Buiter: Well, there is very little tightening. The Fed has been raising its policy rates, unlike most of the central banks, who’ve been keeping them constant or are still cutting. But in real terms, policy rates are no higher now than they were before – maybe slightly less expansionary than they were, but there’s very little restraint.
You have the anticipation of balance sheet shrinking being announced probably in September. But that itself is not a major issue for markets in the most liquid assets in the universe.

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

Is This the Best Bear-Market Warning Indicator?

Today’s chart comes from Callum Thomas, Head of Research at, who says that this is probably one of the most important indicators to watch if you are trying to predict a bear market.
Simply put, it shows whether banks are tightening or loosening standards on large and medium firms and, as you can see, “a deterioration in lending standards has historically been a key warning sign for the S&P 500,” Callum notes in his recent Weekly Macro Themes report.

This post was published at FinancialSense on 08/11/2017.

Dudley Warns “Market’s Rate Hike Expectations Are Unreasonable” Sending Yields, Dec. Odds Higher

One day after the 5th consecutive miss in US CPI, NY Fed President William Dudley threw currency and eurodollar traders for another loop when he said on Monday that it was not “unreasonable” to think that the central bank would begin trimming its balance sheet in September and sees another rate hike this year – supposedly in December – should economic data hold up, ignoring the message sent from monthly inflation reports.
In an interview with the AP, Dudely warned that “the expectations of market participants are unreasonable,” when asked if the expectation of the Fed reducing its bond holdings in September was accurate. The news sent the dollar and yields higher, pushing the 10Y from 2.2050% briefly to 2.2230%, although the move was subsequently faded. The news also sent December rate hike odds modestly higher on the day, up to 33% from 25% earlier, after Dudley said that he expects another rate rise as long as economic data meets his expectations. “I would expect – I would be in favor of doing another rate hike later this year.”

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

It’s the End of the World as We Know It (and I Feel Fine)

The Butter Battle Book is a 1984 rhyming story by the late, great Dr. Seuss and a personal favorite of mine from back in ‘the day.’ Written as a thinly-veiled critique of the Cold War, the book proceeds in a rather predictable manner, but, in traditional ‘Seussian’ fashion, the overall message mostly takes a backseat to the colorful, inventive language and artwork it features. As Wikipedia describes the plot:
The Yooks and the Zooks live on opposite sides of a long curving wall. The Yooks wear blue clothes; the Zooks wear orange. The primary dispute between the two cultures is that the Yooks eat their bread with the butter-side up, while the Zooks eat their bread with the butter-side down. The conflict between the two sides leads to an escalating arms race, which results in the threat of mutual assured destruction… Eventually, each side possesses a small but extremely destructive red bomb called the “Bitsy Big-Boy Boomeroo”, and neither has any defense against it… No resolution is reached by the book’s end, with the generals of both sides on the wall poised to drop their bombs and waiting for the other to strike.
For unfortunate reasons, the book was brought to mind once again last week when the saber-rattling tensions with North Korea escalated to the point that fear of a cold war going hot was all most investors were talking about. We now have two ‘generals on both sides of the wall poised to drop their bombs,’ and the reaction by the market gave us our first spike in volatility in quite a while. For now, it remains just a war of words, but for obvious reasons, our inboxes were flooded with fears from clients and financial advisors about how to proceed. In fact, I received more than few slightly-panicked missives from our advisors that went something like this: ‘My clients are afraid the market is about to crash and want to sell all their stocks, what should I tell them?’

This post was published at FinancialSense on 08/14/2017.

US Stock Buybacks In Biggest Slide Since The Financial Crisis

In light of today’s euphoric market reaction, which has seen the VIX plunge by over 3 vols, or 20% lower, to just over 12 and sent both the Nasdaq and S&P higher by 1% on relief that there were no mushroom clouds of the weekend, the jury is out whether last week’s sharp risk off, short-vol mauling will persist or be just another BTFD opportunity. But while last week’s tension may already be forgotten, some disturbing trends persist. As SocGen’s Andrew Lapthorne writes, while the S&P trades near all time highs, the smaller cap Russell 2000 dropped a much sharper 2.7%, leaving this index up just 1.3% for the year and down 5% over the last couple of weeks on what we discussed last week was a growing concern for the US economy and companies who do not have exposure to international revenue.
Furthermore, High Yield Credit also fell sharply. Along with the Russell 2000, HYG has also unwound most of this year’s positive performance in a matter of weeks. As Lapthorne writes, “in our view, high yield credit and the Russell 2000 are all the same trade with different wrappers. Their continued success is highly dependent on asset volatility remaining as subdued and debt markets as generous as they have been, both of which we think is highly unlikely.”

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

Wars and Rumors of Wars: Fire and Fury Signifying Nothing? Stock market caught in the crossfire

August is a sultry month for stocks as markets thin out during the dog days of summer. Everyone leaves investing for a break from the heat. Statistically, August is the worst month for overall stock performance, while September delivers more of whatever August sends its way or brings its own dark surprises. After that, October loves a surprise and is the worst for having the most major crashes.
As markets now slide into their toughest time of the year, they also also face a major war of words that may quickly become more than words. The days of market calm appear now to have ended. $500 billion worth of supposed US market ‘value’ just cascaded into oblivion last week. (Over a trillion worldwide. Of course, it could reappear tomorrow.)
Markets crawling under the clouds of war
One place where August is living up to its reputation is in volatility. August is usually the most volatile month of the year.
The US stock market’s volatility index (VIX) became eerily placid for many weeks this summer, but this past week the VIX rose 70%. Of course 70% from a position so small and calm is not a lot, but it’s an awakening. And there appear to be many people and institutions now awakening.
PIMCO, as one big example, began loading up on puts to hedge against a market plunge while building up a strong cash position, suspecting the highly unusual calm is the kind that comes before a big storm. PIMCO’s chief investment officer said that Pimco ‘has been taking profits [a nice way to say selling off its stock holdings] in high-valued corporate credits and built cash balances for when better opportunities arise.’ That’s also a cautious way of saying,

This post was published at GoldSeek on 14 August 2017.

“Racism Is Evil” – Trump Says “Justice Will Be Delivered” In Charlottesville; Denounces KKK, White Supremacists

grudging. bare minimum. no indication he was feeling the words he was reading.
— John Harwood (@JohnJHarwood) August 14, 2017

During an impromptu statement from The White House, President Trump attempted to clear up the nation’s comprehensions of his views calling out the “KKK, Neo-Nazis, White Supremacists, and other hate groups as repugnant.”
Declared on Monday that ‘racism is evil’, Trump’s public comments were the first instance in which he called out the KKK and Nazis specifically for their role in this weekend’s violence at a white nationalist rally in Charlottesville, Va.
The statement that everyone was hoping for: “Racism is evil and those that cause violence in its name are criminals and thugs – including the KKK, Neo-nazis, white supremacists, and other hate groups that are repugnant to eveything we hold dear as Americans“…

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

The Return of the Debt Ceiling, 2017 Edition

In what is almost an annual tradition now, the US Congress will soon come up on the deadline where it must either approve a new increase in the statutory debt ceiling, the total amount of public debt outstanding that the US government is officially allowed to have on its books, or risk defaulting on payments owed to the US government’s creditors.
Read The Timetable for an Exploding US Debt Bomb
Business Insider’s Bob Bryan outlines the worst case scenario facing the nation if the Congress fails to increase the debt limit to cover the amount of spending it has previously approved.
Congress, in the midst of a month-long August recess, faces a massive policy threat when lawmakers return to Washington next month.
By the end of September, Congress must approve legislation to raise the nation’s debt ceiling – or risk a goal economy disaster. And it already sounds like the attempts at a compromise aren’t going well….
If breached, it could lead to disastrous consequences for the federal government, the US economy, and the global financial system. If the debt ceiling is not raised, the federal government would lose the ability to pay bills it already owes in the form of US Treasury bills and could lead the US to default on some of that debt.

This post was published at FinancialSense on 08/14/2017.

Big Red Flag For Crude Bulls: Chinese Oil Refining Tumbles Most In Three Years As Fuel Demand Slides

Slowly but surely, what we have claimed for the past year – that it is the demand side of the oil equation, not the supply, and especially the “Chinese wildcard” that is the critical factor in setting prices – is starting to emerge and be factored in by markets. And so, just days after we posted “Another Red Flag For Oil? China’s Crude Imports Slump To 7-Month Low” arguably catalyzed by the increasingly full Chinese Strategic Petroleum Reserve, overnight we got another major red flag – once again out of China – when Bloomberg reported that China’s oil refining dropped the most in three years for the month of July, while crude output retreated from the highest this year, “as the world’s largest consumer showed signs of losing momentum.”
According to Bloomberg calculations based on NBS data released on Monday, as shown in the chart below oil processing in July dropped 4.4 percent from the previous month to about 10.76 million barrels a day. While daily refining output typically falls from June to July on maintenance, last month’s fall was the biggest seasonal decline since 2014. Crude oil output fell 3% to 3.84 million barrels a day.

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

Hong Kong Gold Exchange Could Help Shift More Economic Power East

London and New York dominate gold trading, but some analysts think Hong Kong may soon become a more significant player. Its success could solidify China’s place in the world gold market, strengthen the yuan, and shift more economic power from west to east.
Last May, Hong Kong Exchanges and Clearing (HKEx) announced plans to launch gold futures contracts.
This won’t be the first attempt to establish a gold exchange in Hong Kong. A government backed exchange launched in 2011, but the the Hong Kong Mercantile Exchange (HKMEx) folded after just two years.
According to the South China Morning Post, the HKEx is in a much better positioned to succeed where its predecessor failed.
HKEx will fare better. With quarterly revenues of HK$3 billion, it boasts enviable financial strength. As owner of the London Metal Exchange, it can command considerable expertise in commodity futures. And with the Hong Kong government as its largest shareholder since 2007, it enjoys powerful official backing.’

This post was published at Schiffgold on Aug 14, 2017.