Stock Markets Need to Check into the Betty Ford Center

Jon

The interventions of the central bankers ‘smells of a co-ordinated attack to help boost declining sentiment’, said Adrian Miller, director of fixed-income strategy at GMP Securities. ‘Markets need to check into the Betty Ford Center and go into rehab, to wean themselves off this addiction to central bank support. If that means more volatility and lower prices in some asset classes, so be it.’
The hints that US and UK monetary policy tightening would indeed be delayed fuelled a strong rally in global equities on Friday, ending a turbulent week in financial markets on a more positive note.
The UK FTSE 100 index rose 1.9 per cent on Friday – its biggest one-day increase since July 2013. The FTSE All world index had jumped 1.4 per cent by late afternoon in London, while eurozone stocks were up 3 per cent – their biggest one day jump in more than two years. In New York, the US S&P 500 closed up 1.3 per cent.

This post was published at Tea Party Economist on October 18, 2014.

Gold And Silver – Financial World: House Of Cards Built On Sand

Jon

Saturday 18 October 2014
Take heart PM community, your turn is coming. What is happening in the stock market is a harbinger of what is sure to come for gold and silver, at some point in the future. When? Ah, that elusive question the answer to which so many want to know, the same answer to which so many so-called prognosticators have serially gotten wrong over the past few years. The best answer is patience.
It is highly unlikely that a single bank, at least in the Western fiat central banking system, is solvent. All, repeat, all banks are insolvent, propped up by the Rothschild system that few can successfully challenge. All banks exist by accounting deceit and every kind of threat, indirect or otherwise, that it is not wise to challenge the international banking cartel [on the verge of collapse]. Russia and China are rising to the occasion rather timely.
What is the result of ‘printing’ trillions upon trillions of fiat currency? While it has not yet played itself out, due to market distortions by ‘The Powers That Be,’ history shows that all fiat paper currency systems fail. Is it any different this time around. No! The only thing ‘different’ would be the mechanics of how the Western system will fail. A combination of computers and the internet have given the elites a decided upper hand that has enabled the ‘disenabling’ system they run an extended life, if you will, in their ability to perpetuate fiat deceit.
As an aside, most people are totally unaware of the extent to which the elites have been able to dominate every facet of human life on this planet. Control is not a strong enough word to describe the extent and depth of the evil they wrought in their utterly corrupt ambitions to rule as a one-government New World Order.
We believe we have a degree of insight on some of the ways in which events have been played out on the world’s stage, the coup d’etat against the United States by the Rothschild moneychangers, the final nail in the proverbial coffin being the takeover of the United States currency with the passage of the Federal Reserve Act in 1913, and the simultaneous abdication of Congress in its Constitutional duty to Article 1, Section 8: ‘To coin money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

This post was published at Edge Trader Plus on October 18, 2014.

John Tamny Needs to Stop Lecturing People on Mises’ Monetary Views

Jon

John Tamny has an unfortunate habit of criticizing Austrian economists by citing the legacy of Ludwig von Mises, when it is
clear that Tamny doesn’t know what he’s talking about. Let me be clear: I am all for people criticizing Austrians; perhaps we’re suffering from a blind spot on some key issue, and only an outsider can set us straight. But it will confuse the general public about what Mises’ views actually were, when guys like Tamny continually write articles ‘explaining’ Mises that are utterly wrong. One these pages, I’ve previously dealt with Tamny’s confused writings on banking – where he also argued that Mises would disavow current Austrian School economists – and in the present post, I’ll address his recent finger-wagging of David Gordon.
It all started when Gordon criticized the new book by Steve Forbes and Elizabeth Ames, arguing that they erroneously conceived of money as a ‘measuring rod’ of value. This is an absolutely standard component of Austrian economics, and it comes straight from the mouth of Mises – as I’ll document soon.
Yet astonishingly, John Tamny then rushed to the defense of Forbes and Ames by arguing that Gordon was defying the teachings of Mises. (!) Moreover, Tamny actually got sarcastic in his response, and argued that the Forbes/Ames/Tamny position was self-evident, a tautology flowing out of the definition of money as a means to facilitate exchange. Let me here just quote a bit of Tamny’s piece to reassure the reader that I’m not misrepresenting him:
Last week Mises Institute senior fellow David Gordon reviewed Money, the book released last summer by Steve Forbes and Elizabeth Ames… What struck this writer [Tamny–RPM] as odd is that in lightly attacking Forbes and Ames, Gordon only succeeded insofar as he perhaps unintentionally revealed a strong disagreement about money with the intellectual father of the Institute which employs him, Ludwig von Mises.
Gordon has a problem with the Forbes and Ames assertion that money is merely a measure meant to facilitate exchange. Notable here is that the authors are simply stating what’s obvious, something that surely predates even Adam Smith (‘the sole use of money is to circulate consumable goods’), that money isn’t wealth. It’s what we use to exchange actual wealth.

This post was published at Mises Canada on October 17th, 2014.

Homebuilders Setting Up For Another Short Entry

Jon

The homebuilder stocks staged a dead-cat bounce higher this week. I have been saying that the builders were very oversold and would likely engage in a sharp short-squeeze rally. Today’s huge short-squeeze move – see this link – in the entire stock market added fuel to the homebuilder’s spike up.
I mentioned last week that the builders were due for a technically ‘oversold’ short term bounce. I also asserted that the builders typically rally into the NAHB homebuilder sentiment index and the housing starts report. Finally, I said a bounce up the 50 dma was likely and a continuation move to the 200 dma was possible.
The housing starts report today was driven by starts in apartment rental buildings. Just like during the original housing bubble, developers are going to over-build apartment buildings. This will drive rents lower, which will drive home prices lower. I’m already seeing some downward pressure on apartment rents in Denver and there’s several large projects in various stages of completion. I’m also seeing many more homes offered for rent in good neighborhoods than I’ve seen in the last 4 years.
Today the DJUSHB closed at the 50 day moving average.

This post was published at Investment Research Dynamics on October 18, 2014.

How Americans go poor by spending money on housing and related expenses: Americans spend 33 percent of their income on housing-related items.

Jon

People tend to think that buying a home means only paying principal and interest. Most conveniently forget the other myriad of expenses associated with being a homeowner. As Americans find less disposable income in their bank account each month, less Americans are becoming homeowners. The middle class is moving away from the American dream because of the slow process of inflation. Beyond the principal and interest, people spend money on taxes, utilities, furniture, repairs, insurance and other costs that come with being a homeowner. Even non-homeowners spend an inordinate amount of money on housing. Overall Americans spend 33 percent of their income on housing-related items. This is probably why Wall Street has an insatiable appetite to buy up properties to convert them into rentals. Americans are now seeing a large share of their income going into the housing pipeline.
How much do Americans spend on housing-related items?
In total, Americans spend $16,687 a year on housing. This amounts to 33 percent of total income on housing-related expenses. We can break down the numbers as follows:
-Households spent most on shelter (59 percent)
– 60 percent of expenditures on shelter were on owned dwellings. These expenses consist of:
-Mortgage and interest charges ($3,067)
-Property taxes ($1,836)
-Maintenance, repairs, insurance, and other expenses ($1,153)
These are the most upfront costs but there are many others:

This post was published at MyBudget360 on OCT 17, 2014.

The Pauperization of Workers in the UK and America

Jon

Since the financial crisis, the government of the UK and the Bank of England have jumped through hoops and twirled around in extraordinary gyrations to bail out one of the largest financial centers in the world, the uniquely powerful and at once unaccountable speck of land, the City of London, an incorporated area within London known as the Square Mile; or rather bail out its financial institutions, way of doing business, and bonuses; and along the way, bail out banks further afield.
Done in the now classic way. Key ingredient: the Bank of England printed enormous amounts of money, repressed interest rates, and stirred up inflation, which hit 5% in 2011. But somebody had to pay for it: savers and workers. It demolished real wages and purchasing power of the people who make up the rest of the country.
This chart by FactSet shows how average hourly earnings growth (blue line, in percent, seasonally adjusted, year-over-year) has been relentlessly below CPI (yellow line, in percent, year-over-year). It’s the process of pauperization by inflation:

This post was published at Wolf Street on October 18, 2014.

Politicians Are the Most Distrusted Among All Occupations

Jon

I am here in Germany kicking the tires and taking the temperature of the core of the European economy. Interestingly enough, a survey has revealed that politicians around the world have the worst reputation among all other occupations. The people have by far the least confidence in world leaders. In Germany only 15% say that they ‘trust’ the professional group of politicians. One has to wonder just when will the German people start to rise up? That too seems to be in the cards after 2015.75.

This post was published at Armstrong Economics on October 18, 2014.

Stock Market Seven Year Cycle & A Correction Ahead?

Jon

From a duration perspective, is the current uptrend in today’s stock market getting risky? Based on history, should one assume that a correction may be nearing? Our main consideration of the following charts of the S&P 500 is the duration of the turning points.

In the next set of charts we took a historical ‘Top’ and the October 2007 ‘Top’ and indexed them to 100 so that we could compare the price action.

This post was published at GoldSeek on 17 October 2014.

A Day for Composure

Jon

With the kind of week we have just been through, it is certainly a relief to see a bit of “calm” coming back into the markets to close out this wild week. Drawing too many conclusions from the price action is probably not too wise given the fact that there were huge money flows flipping into and out of various sectors as traders were trying to avoid not only getting steamrolled, but in many cases, apparently from what I have seen in the price action of some areas, desperately trying to minimize what no doubt were some enormous losses.
At least the Complacency Index, as I prefer to call the VIX, nudged down somewhat from what was a 22 month high!

The Gold Volatility Index also moved lower today. It hit its highest level this year but compared to the VIX, still looks rather tame by comparison.
The Dollar, in spite of all the wild swings, violent price action and outright chaos that seemed to mark the currency markets this week essentially ended the week going no where! It remains in a consolidation mode working between 87 on the topside and 85 on the bottom. The market has certainly relieved its overbought status on the technical indicators so this range trade is actually a pretty good thing as far as I am concerned.

This post was published at Trader Dan Norcini on October 17, 2014.

Reading the Road Map to a Police State

Jon

“There is no crueler tyranny than that which is perpetuated under the shield of law and in the name of justice.” -Charles de Montesquieu
If there was any silver lining to the horrifying events that took place in Ferguson, Missouri which riled the month of August, it has finally brought the issue of police militarization to the forefront. As outrageous as the police shooting death of unarmed 18-year-old Michael Brown was, the brutal law enforcement response in the form of running roughshod over the First Amendmentand resorting to quasi-martial law to mostly peaceful protests by local residents and activists was worse. To many observers, what took place in a Midwest suburb was indistinguishable from scenes out of occupied Iraq.
How did this happen? For an answer, the writings of investigative journalist Radley Balko are an invaluable resource. Perhaps more than any other person, Balko has reported substantially onpolice militarization and injustice across the country for years.
The full details can be found in his book Rise of the Warrior Cop: The Militarization of America’s Police Forces . This important book, which was recently released in its paperback edition, could not have arrived at a better time. Despite going into an intellectually rigorous analysis of law, politics, and history, Balko has a gift for storytelling, which highlights many heartbreaking stories and makesRise of the Warrior Cop an accessible and gripping read.
In the introduction, Balko begins with the provocative question:
How did we evolve from a country whose founding statesmen were adamant about the dangers of armed, standing government forces – a country that enshrined the Fourth Amendment in the Bill of Rights and revered and protected the age-old notion that the home is a place of privacy and sanctuary – to a country where it has become acceptable for armed government agents dressed in battle garb to storm private homes in the middle of the night – not to apprehend violent fugitives or thwart terrorist attacks, but to enforce laws against nonviolent, consensual activities?

This post was published at Ludwig von Mises Institute on October 18, 2014.

What Happens With The Gold Price If Deflation Wins?

Jon

Since writing last month that inflation was on the rise, things have taken an abrupt turn. Look at the deflationary actions that have recently taken place:
The US dollar has shot up The US bond market has rallied Precious metals prices have collapsed Base metal prices have fallen Stock markets have declined Oil and other commodities have fallen. Further, just last week the International Monetary Fund cut its global economic growth forecast for the third time this year. Why? It doubts how quickly ‘rich countries will be able to pull free from high debt and unemployment in the wake of the 2007-2009 global financial crisis.’
It’s hard to argue that high debt levels are deflationary. And with the current expansion based largely on debt, we can’t expect sustainably higher economic activity to be generated.
So what happens if deflation wins? Even if we eventually get inflation, what happens to our gold investments if we first go through a deflationary bust?
There aren’t a lot of modern-day examples of deflation. The Consumer Price Index (CPI), as faulty as it may be, has registered only three declines since 2000, and all were short-lived. The CPI fell:
August to October, 2006 July to December, 2008 March and April, 2009. That’s it. You can find other fleeting periods further back, but nothing long enough to draw any strong conclusions.
The only example we have of true deflation is the Great Depression.
The Great Depression Speaks You’ll recall that the United States was on a gold standard at the time. But there’s still a lesson to be learned about gold and deflation…

This post was published at GoldSilverWorlds on October 17, 2014.

Fuzzy Numbers – Crash Course Chapter 18

Jon

Chapter 18 of the Crash Course is now publicly available and ready for watching below.
What if it turned out that our individual, corporate and government decision-making was based on misleading, if not provably false, data?
As we detail in this latest chapter of the Crash Course series, that’s exactly the case today with the key indicators (inflation, GDP, employment, deficits, etc) our central planners are using to guide the future of the global economy.
The cumulative effect of all this statistical sleight of hand serves only to make things seem rosier than they actually are. If this is not lying to ourselves, then ‘deluding ourselves’ is the next best term.
Keep this self-deception in mind when you next read about how ‘our robust economy is still expanding’.
We are now in the midst of a worldwide debt orgy, dangerous asset bubbles, the beginning waves of boomer retirements – and solid, credible information is what we need as a beacon to find our way out.
CLICK HERE TO WATCH VIDEO

This post was published at PeakProsperity on Friday, October 17, 2014.

Chris Powell: Gold to Be Revaluated Upwards Substantially Overnight

Jon

The following video was published by SilverDoctors on Oct 17, 2014
GATA’s Chris Powell joins us this week for a power packed show discussing:
Powell’s view on the endgame- Central banks will revaluate gold upwards substantially overnight, after which the gold suppression will start again from a much higher level Massive Chinese gold accumulation: China doesn’t want a free market, they want control of the gold market! If Gold & Silver Markets Are Not Rigged, They Are the Only Markets Not Rigged- Free markets are restraints on Central bank power! Physical vs. certificate bullion- Chris asserts that if you’re taking certificates at a bullion bank, you might as well flush your money down the toilet! Physical PM investors are fighting every central bank in the world- they won’t relinquish their power easily until the last ounce of metal is drained from the markets. Is the collapse of the fiat system imminent, or will the struggle against Central banks go on for decades?

Gold Daily and Silver Weekly Charts – Life During Wartime

Jon

There is a steady drain of silver from the warehouses. Not large enough to matter, but a million ounces here, a million ounces there.
Let’s see if the precious metals can make that triple bottom stick, and break the downtrend.
Longer term it is all about the physical supply. That is what matters in a nutshell. Everything else is commentary.

This post was published at Jesses Crossroads Cafe on 17 OCTOBER 2014.

Extreme PM Shorting Peaks

Jon

The world’s financial markets are changing dramatically with the Federal Reserve on the verge of ending its third quantitative-easing campaign. The Fed’s massive deluge of inflation drastically distorted markets, which are finally starting to normalize. The precious metals were crushed by the Fed’s artificial levitation of the stock markets, leading to extreme futures shorting. But that looks to have peaked, a very bullish omen.
What a difference a few weeks makes! Back in mid-September, the US stock markets were drenched in euphoria and hitting nominal record highs. Nearly everyone was totally convinced equities would keep on climbing forever. You couldn’t turn on CNBC or open a financial newspaper without seeing endless predictions for a big end-of-year rally. And gold and silver were despised, believed to be doomed to spiral lower.
Yet those markets were a Fed-conjured illusion, an artificial fiction. Financial markets are forever cyclical, they never move in one direction indefinitely. The longer any particular run has lasted, the greater the odds of an imminent reversal and full mean reversion. Stock markets had levitated for far too long, while the precious metals had fallen for far too long. The prudent contrarian trade was to sell stocks and buy gold.
I warned and warned and warned about the extreme danger in these Fed-manipulated stock markets. On September 5th as the SPX made a new nominal record, I wrote that the looming end of QE3 meant a serious selloff neared. Again on September 26th when the S&P 500 was still not far from 2000, I outlined the overwhelming case for a major stock-market selloff looming. Market extremes always reverse, period.
The Fed foolishly engineered stock-market sentiment based on the false belief that these markets only rise, never fall significantly. This made a mockery of the millennia-old wisdom of prudent diversification of portfolios. Some thirty centuries ago, the ancient Israeli King Solomon wisely advised diversifying investments, ‘Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.’
Thanks to the Fed, all anyone wanted to own was stocks. Putting all one’s financial eggs in one basket is plain flat-out stupid, the height of folly! This irrational belief led to an entire asset class, precious metals, being abandoned and left for dead. American futures speculators piled on to this gold-to-zero trade, effectively borrowing vast amounts of gold and silver they didn’t own to sell it short. This crushed PM prices.
But as this serious stock-market selloff is proving, the Fed-spawned levitation has to and will unwind. And as markets normalize and mean revert, so will the anomalous antipathy towards traditional portfolio diversification with alternative investments. As gold and silver slowly regain favor as a smart destination for a fraction of every portfolio, the American futures speculators will be forced to cover their massive shorts.
With precious-metals investment demand crazy-low, the futures traders have been utterly dominating the PM prices. And as these charts show, the lion’s share of that powerful influence has emerged from the short-side trade. Both gold and silver prices over the past couple years have a strong inverse correlation with American futures speculators’ total short contracts. This fact has extraordinarily-bullish implications.
Extreme futures short selling is inherently self-limiting, because all shorts must soon be covered. The underlying commodity borrowed from someone else to be sold has to be repurchased and paid back. And in the futures markets, the price impact from a trader adding a new long contract or buying one to offset and cover a short contract is identical. Major short covering means massive gold- and silver-futures buying.
That will catapult gold and silver prices higher, gradually enticing investors to return. And with the Fed-distorted stock-market levitation finally rolling over, the extreme PM-futures shorting looks to have peaked. Every Friday afternoon, the CFTC publishes futures speculators’ positions as of the preceding Tuesday in its famous Commitments of Traders reports. And the latest from Tuesday the 7th reveals change is afoot.

This post was published at ZEAL LLC on October 17, 2014.

S&P Drops 4th Week In A Row – Worst Streak In Over 3 Years

Jon

Despite a Bullard-bullshit-driven rampalicious surge in the last 36 hours, this is the first weekly close below the 200DMA for the S&P 500 in 2 years and longest losing streak since August 2011. Today was the best day of the year for the Dow Industrials and 4th up-day in a row for the Transports (which ended the week up 3%) as the major indices saw significant divergence on the week. The USDollar closed lower for the 2nd week in a row with EUR strength the main driver. Treasury yields ended the week remarkably stable (30Y -3bps, 5Y -11bps) up 30-40bps above intraday lows on Wednesday. Despite USD weakness, only gold managed gains in the commodity complex. Oil bounced off $80 but ended the week down 3.2% (around $82). VIX was slammed lower at the open today, closing -3 at 22 ( 1 on the week).

This post was published at Zero Hedge on 10/17/2014.

Leading Indicators for Gold’s Turnaround

Jon

Gold is currently getting a reprieve as it trades close to $1240 which is above important weekly support at $1200. It’s safe for the time being but we believe that Gold will ultimately break back below $1200 and below $1100 before the end of the already long in the tooth bear market. Because Gold is somewhat of an anti-asset, it’s important to chart its course against other asset classes. Gold performs best when its strong against all other classes. Moreover, prior to recent important bottoms Gold bottomed first against other classes before bottoming in nominal terms. It appears that could happen again.
The first chart looks back at the 2008 bottom. We plot Gold against foreign currencies, commodities, global equities and the S&P 500. Gold’s lowest tick was late October 2008 while its daily low was in November 2008. Against other asset classes, Gold bottomed before then. Gold bottomed against foreign currencies and the S&P 500 in September while bottoming against global equities in May and commodities in June.

This post was published at GoldSeek on 17 October 2014.

The World Has Less Than 5 Days Worth Of Copper Inventories

Jon

According to the financial media, the global economy is supposedly rolling over causing a glut of inventories producing a deflation in the prices of many commodities. If this is the case… someone should tell that to King of base metals… Copper.
Something doesn’t seem to be making sense in the copper market as the price continues to decline, so are the level of global copper inventories. You would think the opposite would be the case, but we must remember in the new Financial Paradigm – Paper assets such as Derivatives, Stocks and Bonds are KING, while Gold-Silver and commodities are GARBAGE. Which is why (according to their mentality), financial assets are what we should EAT, while gold-silver and commodities are what we flush down the toilet once we are done digesting and consuming them (put another way – CRAP).
If we look at the chart below, we can see a very interesting trend taking place in global copper inventories. Not only are we are near record lows, we are down to less than five days worth of copper inventories:

This post was published at SRSrocco Report on October 17, 2014.