“There Will Be Blood”: S&P Warns Failure To Raise Debt Ceiling Would Be “More Catastrophic Than Lehman”

With just one month left until the Treasury “X-date”, or the moment when it would run out of cash without a debt-ceiling resolution…

… the time has come for dire, apocalyptic threats to spook Congress into action and specifically reaching a compromise on a debt ceiling resolution, and S&P – which infamously downgraded the US in 2011 during the last debt ceiling fiasco – is happy to be the source of bad news.

This post was published at Zero Hedge on Aug 30, 2017.

Trump Reverts To Populist Roots In “Tax Plan” Speech; Sets Up Congress For Another Epic Fail

Update: Following Trump’s Springfield, MO speech, Treasury Secratary Steve Mnuchin issued the following statement which, much like the Presidnet’s speech, calls for more jobs, higher wages, higher GDP growth, sugar, spice and everything nice….yet provides absolutely no details on how to accomplish any of it.
‘Today President Trump reaffirmed his commitment to deliver meaningful tax reform to the American people that is focused on growing the economy, stimulating job creation, increasing wages, revitalizing small businesses, and expanding economic opportunity for all Americans. ‘As the president explained, his vision of tax reform creates good paying jobs, grows wages for workers, focuses on tax relief for hard working, middle income families, and makes American businesses more competitive.
‘Historically, members of both parties have understood that the tax code is too complicated, creating a rigged system that only benefits wealthy special interests. We must make it fairer by leveling the playing field for American workers and job creators, in order to grow the economy and reinvest trillions of dollars back into our country.
‘Americans understand that middle income taxpayers and their families need tax relief and a simple tax code so they keep more of their paycheck and spend less time filling out their taxes.
‘At the Treasury Department, we are committed to continuing to advance the President’s vision on tax reform while working with Congress to pass a plan that will lead to economic growth and job creation to benefit all Americans.’

This post was published at Zero Hedge on Aug 30, 2017.

Wall Street, Not Waiting on Mnuchin, Readies Debt-Limit War Room (Sifma revisiting, revising 2011, 2013 contingency plans)

(Bloomberg) The key industry groups that seek to prevent seismic disruptions in the world’s biggest debt market aren’t waiting around to see if Treasury Secretary Steven Mnuchin can get Congress to lift the debt limit before America exhausts its borrowing capacity.
The Securities Industry and Financial Markets Association, the $14.1 trillion Treasury market’s self-regulatory body, is revisiting and revising work done ahead of previous debt-ceiling showdowns in a bid to lessen the potential market disruption should politicians fail to raise the debt ceiling in time. The group’s primary focus is how operational issues such as trading, clearing, and settlement would be affected should debt payments get delayed. Sifma’s preparations coincide with similar efforts being undertaken by the Federal Reserve-sponsored Treasury Market Practices Group.
Call this ‘A View to a Shill.’ Or the war room for the US invasion of Grenada.
5 year Credit Default Swaps on the US are rising, but not by much.

This post was published at Wall Street Examiner on August 30, 2017.

Wall Street Journal Lashes Out At “Our Political Central Bankers”

While the concept of ‘independence’ among the unelected central bank cognoscenti is as cute as the tooth fairy or santa claus, it is nevertheless defended by those on high as sacrosanct to our very democracy. That is until The Wall Street Journal’s editorial board finally had enough of Fed officials joining the ‘resistance’ against financial reform…
Via WSJ,
Janet Yellen didn’t run for President, but you wouldn’t know it from her policy dmarche Friday at the Federal Reserve’s annual Jackson Hole retreat. The Fed Chair unleashed a defense of post-crisis financial regulation that shows how political the world’s central bankers have become.
‘Already, for some, memories of this experience may be fading – memories of just how costly the financial crisis was and of why certain steps were taken in response,’ Ms. Yellen said.

This post was published at Zero Hedge on Aug 30, 2017.


In what is a sure signal to oligarchs across the globe, Lord Jacob Rothschild, founder and chairman of RIT Capital Partners, has substantially minimized his exposure to what he views as a risky and unstable U. S. capital market. In the half-yearly financial report for RIT Capital Partners, Rothschild explained the company’s aggressive moves to significantly reduce exposure to U. S. assets.
‘We do not believe this is an appropriate time to add to risk. Share prices have in many cases risen to unprecedented levels at a time when economic growth is by no means assured,’ Rothschild said in his semi-annual report.
Additionally, Rothschild stated that he believes quantitative easing (QE) programs employed by central banks, such as the Federal Reserve Bank in the U. S. will ‘come to an end.’
Rothschild was quoted in the report as saying, ‘The period of monetary accommodation may well be coming to an end.’

This post was published at The Daily Sheeple on AUGUST 30, 2017.

Trump Finally Breaks His Silence On North Korea: “Talking Is Not The Answer!”

The U. S. has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!
— Donald J. Trump (@realDonaldTrump) August 30, 2017

Following the latest missile launch from North Korea, which sparked panic as it flew over Japan before splashing down in the Pacific, Trump remained noticeably silent on the topic…until now. In a new tweet this morning, Trump has finally broken his silence saying “talking is not the answer!” to solve the North Korea crisis.
“The U. S. has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!”
As Bloomberg pointed out yesterday, the delayed Trump tweet on the topic was likely the result of a new process put in place by Chief of Staff Kelly to assure that responses to such crises go through formal White House channels rather than ‘off-the-cuff” tweets.

This post was published at Zero Hedge on Aug 30, 2017.


GOLD: $1308.50 DOWN $5.00
Silver: $17.44 DOWN 1 CENT(S)
Closing access prices:
Gold $1309.00
silver: $17.43
Premium of Shanghai 2nd fix/NY:$4.36
LONDON FIRST GOLD FIX: 5:30 am est $1310.60
For comex gold:
TOTAL NOTICES SO FAR: 5245 FOR 524,500 OZ (16.314 TONNES)
For silver:
5,000 OZ/
Total number of notices filed so far this month: 1249 for 6,245,000 oz

This post was published at Harvey Organ Blog on August 30, 2017.

China: Q2 Early Look Brief

Leland Miller is a leading expert on China’s financial system and a good friend. He and his colleagues publish the China Beige Book, which is actually a whole series of distinct products. They regularly interview (if memory serves correctly) about 2000 large Chinese companies in every sector to get a good idea of what is actually happening in the Chinese economy. There is nothing else like their work, and anybody who is investing large sums or who just does business in China gladly pays the six-figure price to get access to their data and research.
Even this quarterly brief that I attach is embargoed, and I am generally not allowed to send it on. Leland made an exception this time (after consulting with his partners), and I thank them for that. You can learn more about China Beige Book here: chinabeigebook.com/
Below I’m going to paste the email intro that Leland sent me, which has some qualifiers and insights about the quarterly brief you’re going to read. I should note that in our recent conversations Leland was more upbeat about China than he has been in several years. That is not to say he’ll be that way next year, but the facts on the ground right now are all pretty good. Now, here’s Leland:
As promised, here is our Early Look Brief from last quarter. Per the usual, it was released ten days before the end of the quarter, which makes it the earliest look in the world at the current quarter’s data.

This post was published at Mauldin Economics on AUGUST 30, 2017.

Gartman: “Yesterday The ‘Machines’ Came In And The Game Changed”

With Gartman’s August 11 prediction that “the bull market has come to an end” (which carried the added bonus that Gartman’s “reputation” was also on the line, once the “commodity guru” was proven wrong) long forgotten, and in fact both on CNBC and in his latest note to clients, Gartman once again declaring that it is a bull market after all, lately it has become difficult to read Gartman’s latest missives and trade recommendations (if only to do the opposite), as recent events appear to have deeply scarred the confidence of the CNBC Fast Money guest, who barely dares to make any forecasts. That said, he does continue to have an uncanny approach to “Gartsplaining” market events, and in this regard his latest note was certainly no exception.
Here is the money excerpt from his latest letter
STOCKS, IN THE STRANGEST OF WAYS, ARE NEARLY UNCHANGED as measured by our proprietary International Index wherein six of the ten markets comprising our Index have risen… none by more than 1%… and as four have fallen, with Germany’s 1.5% loss leading the way to the downside. In the end, our International Index has gained a marginal 4 ‘points’ but also in the end the fact that the markets collectively were able ‘accept’ the supposed threat from North Korea; were able to shrug off that threat and in the case the markets in North America were able to finish the day higher was certainly most impressive.

This post was published at Zero Hedge on Aug 30, 2017.

Vice Index – Consumer Spending & Confidence Rolling Over

One of the important aspects of the US economy is that recent business cycles have been longer. But also shallower.
I believe that the internet is playing a big role in this ‘lower-for-longer’ phenomenon.
Increased communication that is the essence of the internet has also meant:
a) Pricing power reduction: Consider what is happening with retail store chain closings. They are casualties of the net: with a click of a button, mobile shoppers can find the lowest prices. And shippers can deliver the goods virtually overnight (if not sooner).
b) Supplier expansion: More suppliers means more competition
c) Consumer base expansion: Connecting suppliers and buyers have expanded the overall marketplace. With more buyers, producers can achieve profits through greater volume. It’s become a virtuous cycle – if you consider deflation virtuous
Simply put, it’s damn near impossible to create scarcity. And scarcity is at the heart of inflation and economic expansion.
But here’s the gotcha: this slow economy depends on low inflation.

This post was published at FinancialSense on 08/30/2017.

One Trader’s “Ultimate Guide To Navigating The Equity Markets”

This remains a market in which traders are, for lack of a better word, “confused” (another good word is “paralyzed” as we observed one month ago).
For the latest confirmation of this, look no further than Bloomberg’s macro commentator (and former hedge fund manager) Richard Breslow, who in his latest macro note admits that “truth be told, there are very few of us who know what’s going on with the equities markets.” The other problem is that despite all the “fundamental analysis, valuations, metrics and the like” by financial professionals, the market appears to move in jagged discontinuities, with little logic or rationale, immune to the best financial “hot takes.”
Inevitably, Breslow writes, “the market doesn’t carry through as promised and it’s inevitably made clear that it has nothing to do with that day’s investing thesis but some nefarious and exogenous influence.”

This post was published at Zero Hedge on Aug 30, 2017.

Fearing Contagion, Russia Bails Out Bondholders in its Biggest Bank Collapse Yet

‘The panicky mood has been dampened down,’ as other banks are rumored to be teetering.
True to the playbook of bank bailouts, the Central Bank of Russia (CBR) decided to bail out Bank Otkritie Financial Corporation, the largest privately owned bank in the country, and the seventh largest bank behind six state-owned banks.
The Central Bank put in an undisclosed amount of money in return for at least a 75% stake. This is likely to be Russia’s biggest bank bailout ever, well ahead of the current record holder, the $6.7 billion bailout of the Bank of Moscow in 2011.
Otkritie and its businesses would operate as usual, the Central Bank said. The banks obligations to creditors and bondholders, which include other Russian banks, would be honored to avoid contagion.
The controlling shareholder of Otkritie bank is Otkritie Holding, with a 65% stake. The bank had grown by wild acquisitions, grabbing other banks, insurers, non-pension funds, and the diamond business of Russia’s second largest oil producer Lukoil. Otkritie Holding is owned by executives of Lukoil, state-owned VTB bank, Otkritie, and other companies. So clearly, this bank is too big to fail.

This post was published at Wolf Street on Aug 30, 2017.

US Second Quarter GDP Revised Sharply Higher To 3.0%, Best In Two Years

In a surprise for traders – and the Fed – moments ago the BEA reported that after its first revision of Q2 GDP (a quarter which ended two months ago), the initial estimate of 2.6% was revised to 3.0%, beating expectations of a 2.7% print, and the highest annualized growth rate since Q1 2015. The annualized Q2 GDP was more than double the first quarter number which as a reminder printed at 1.2%
While most components were revised higher in the latest release (with the notable exception of government which downshifted from 0.12% to -0.05%) the bigges contributor to the upward revision was Personal Spending, which surged 3.3% in Q2, after rising 1.9% in Q1, and contributing 2.28% of the bottom GDP line.

This post was published at Zero Hedge on Aug 30, 2017.

Japan’s Economy Near Record Postwar Economic Expansion

As the developed world struggles with sluggish economic growth, inflation, and almost nonexistent wage growth, the one country that has defied all expectations is Japan, as Postwar economic expansion numbers are near a record despite all the troubles facing the country.
After several decades of stagnation, this year Japan’s economy finally looks as if it’s starting to reach escape velocity.
Japan’s Economy Near Record Postwar Economic Expansion
According to the government’s definition of growth Japan’s economy has been in an expansionary cycle since December 2012, and analysts now believe that the country’s economy will go on to match the second longest postwar economic expansion this year. In the late 1960s, Japan’s economy expanded for 57 months straight, the second longest postwar economic expansion on record.

This post was published at FinancialSense on ValueWalk/ 08/30/2017.

Eight Days to Destruction

Harvey made landfall as a Category 4 Hurricane on August 25. The wind and flooding caused massive destruction. The news mentioned one hundred billion dollars as a preliminary estimateof the damage.
Eight days before on August 17 Harvey became a named storm. There was no apparent cause for alarm on August 17.
Two days later it was upgraded to a tropical depression. Harvey reached hurricane strength on August 24. Much can happen in eight days.
August 17: Harvey is named August 21: Total eclipse of the sun. The path crossed the contiguous 48 states. August 21: President Trump announces a revised and renewed war effort in Afghanistan. August 25: Category 4 Harvey makes landfall, destroys buildings and dumps trillions of gallons of water on Texas. Houston, the 4th largest city in the U. S. flooded in many areas.

This post was published at GoldSeek on 30 August 2017.

Trump Tax Talk Preview: Light On Details, Heavy On Populism

Will be leaving for Missouri soon for a speech on tax cuts and tax reform – so badly needed!
— Donald J. Trump (@realDonaldTrump) August 30, 2017

Later this afternoon, at 2:30pm to be exact, President Trump will take the stage at the birthplace of ‘Mainstreet USA’, Springfield, Missouri, to kickoff his push for tax reform. But, if you’re expecting details on exactly what your future effective tax rate might be and/or how your mortgage interest deduction might be impacted, then you’re likely in for a ‘yuge’ disappointment.
As Politico points out this morning, Trump’s tax speech has been drafted by White House aide Stephen Miller, the leader of the nationalist arm of the White House staff, as oposed to Chief Economic Advisor Gary Cohn which means it will be heavy of the populist flare and light on the details.
President Donald Trump will launch a major push for a sweeping tax overhaul with a speech Wednesday in Missouri aimed at convincing his base – and the rest of the nation – that he has a fresh vision for ‘unrigging’ the American economy and isn’t just repackaging the trickle-down economics of past Republican presidents.
Wednesday’s speech in Springfield is being built around the sale of tax reform as a populist policy, according to five senior administration officials. The tax speech is being drafted by senior White House aide Stephen Miller, a leader of the nationalist wing of the administration.

This post was published at Zero Hedge on Aug 30, 2017.