Economy

Gold Tumbles To 2014 Lows As China Unveils Anti-Rigging Benchmark

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– Gold Tumbles To 2014 Lows As China Unveils Anti-Rigging Benchmark (ZeroHedge, Sep 18, 2014):

With a Fed hinting at exit strategies, gold has tumbled to 2014 lows (and almost in the red year-to-date) as traders apparently forget Japan, China, and European central banks continue to (or are set to) print more money into the global reflation trade. It appears that as the West continues to sell ‘paper’ gold, the East remains enamnored as the PBOC announced this morning:

  • *CHINA TO FORM SHANGHAI GOLD BENCHMARK, PBOC GOVERNOR SAYS
  • *PBOC CHIEF ZHOU: GOLD MARKET IMPORTANT PART OF FINANCIAL MARKET
  • *SHANGHAI GOLD MARKET HAS TO AVOID SYSTEMIC RISK: PBOC’S ZHOU

Furthermore, traders have noted physical buying interest continues in the Asian region as premiums rise in China and India.

As Bloomberg reports, PBOC’s Zhou says Chinese gold market is crucial:

Read moreGold Tumbles To 2014 Lows As China Unveils Anti-Rigging Benchmark

An Appalling Practice Used In Only Two Nations, Of Which The US Is One

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– An Appalling Practice Used In Only Two Nations, Of Which The US Is One (Doug Casey’s International Man):

It’s sort of an obscure story, but it’s also incredibly instructive.

That’s the story of how Eritrea—a tiny, mostly unheard-of country in East Africa—taxes its citizens who live abroad.

Eritrea is one of only two countries in the entire world that taxes its nonresident citizens on their global income. Specifically, Eritrea levies a flat 2% tax on the income of its citizens who reside abroad.

Nearly every other country in the world bases its tax system on residency rather than citizenship.

Read moreAn Appalling Practice Used In Only Two Nations, Of Which The US Is One

Goldman’s Former Head Of Housing Research Predicts Housing Crash, Recession Within Three Years

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– Goldman’s Former Head Of Housing Research Predicts Housing Crash, Recession Within Three Years (ZeroHedge, Sep 17, 2014):

When a former Goldman executive and the prior head of its housing research team comes out with a shocking analysis so contrary to what the same individual would do in his “former life” when he would be extolling the “inevitable” rise of home prices from here to eternity and beyond, and also throw in an open letter to none other than president Obama, predicting at least a 15% crash in home prices in the next three years, a move which would without debt catalyze the next US recession, it is time to pay attention. Meet Joshua Pollard, who in February 2009 took over coverage of US Housing at Goldman Sachs.  His point, in short: “House prices are 12% overvalued today. They have already started to decline. Today’s misvaluation matches the excess of 2006-07, just before the Great Recession… 5 of the last 7 US recessions were led by a weakening housing market… I am lamentably confident that home prices will fall by 15% within three years.” Or, as some may call it, crash.

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House Votes To Fund Arms To Moderate (For Now) Syrian Rebels (And Ex-Im Bank)

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Related info:

– ‘Moderate’ Syrian Rebels Sign Non-Aggression Pact With ISIS; Iraq Defies US

–  House Votes To Fund Arms To Moderate (For Now) Syrian Rebels (And Ex-Im Bank) – Live Feed (ZeroHedge, Sep 17, 2014):

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*HOUSE HAS VOTES FOR U.S. AID TO SYRIAN REBELS; VOTE CONTINUING

Those sneaky politicians… The House has just begun voting on whether to amend the US Spending Bill to enable funding for Obama’s grand strategy of training “moderate Syrian rebels.

  • *SYRIAN REBEL AID IS PROPOSED AS AMENDMENT TO U.S. SPENDING BILL
  • *HOUSE BEGINS VOTE ON U.S. AID TO SYRIAN REBELS SOUGHT BY OBAMA

However, what few have also noticed is that the bill also includes an extension for funding the Export-Import bank.

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The Price Of Milk Just Hit An All-Time High

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– Got (Record-High-Priced) Milk? (ZeroHedge, Sep 17, 2014):

Hot on the heels of yesterday’s low PPI and this morning’s falling CPI, we thought it worth noting (given The Fed’s pre-occupation that inflation is running too low) that the price of milk – that staple of the American diet – just hit an all-time high. Nope, no inflation here…

Read moreThe Price Of Milk Just Hit An All-Time High

The Fed’s Laughable GDP ‘Forecast’ Just Got Even Funnier

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–  The Fed’s Laughable GDP “Forecast” Just Got Even Funnier (ZeroHedge, Sep 17, 2014):

What in January 2012 was a 2014 GDP forecast range of 3.7%-4.0% collapsed to 2.1%-2.3% in June (because clearly the Fed couldn’t possibly forecast snow in the winter), and three months later is now 2.0%-2.2%. In short, a 43% forecasting error.

Read moreThe Fed’s Laughable GDP ‘Forecast’ Just Got Even Funnier

Abenomics Crushes Sony: Electronics Giant Forced To Cancel Dividend For First Time Ever

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– Abenomics Crushes Sony: Electronics Giant Forced To Cancel Dividend For First Time Ever (ZeroHedge, Sep 17, 2014):

It was over a year ago, when contrary to the propganda spewed on a daily basis by the Japanese government hell bent on destroying the domestic economy, now suffering its Keynesian death rattle, just to push stocks to highs which nobody except for a few thousand people will be able to monetize on, that the CEO of Sony explicitly warned that “the preconception is that a weaker Yen is good overall. Unfortunately for us, versus the USD, it goes the other way… we are actually at a disadvantage.” He wasn’t kidding and just under a year later, back in May, Sony shocked everyone when the electonics giant not only posted a massive net loss of $1.3 billion, far worse than previously expected, but also slashed its profit outlook by 70%.

Fast forward to today, when minutes ago the Yen hit another multi-year low against the dollar, which sure enough, is great for the nominal value of Japanese stocks, if horrible for the actual Japanese companies, the Japanese middle class, and pretty much everyone except for a few superrich people. Such as Sony. Because the (now former) electronic giant, which once upon a time was the target of an activist campaign by none other than Dan Loeb who mysteriouly saw value in the company, once again stunned everyone when it reported overnight that it expects its annual loss to swell to $2 billion, but, far worse, canceled the payment of its dividend for the first time ever after writing down the value of its troubled smartphone business.

 Needless to say, Sony’s stock which doubled in 2013 for the completely wrong reasons, is now crashing.

Read moreAbenomics Crushes Sony: Electronics Giant Forced To Cancel Dividend For First Time Ever

Which Global Hegemon Is on Shifting Sands?

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– Which Global Hegemon Is on Shifting Sands? (Of Two Minds, Sep 17, 2014):

Given that all the leading candidates for Global Hegemon are hastening down paths of self-destruction, perhaps there will be no global hegemon dominating the 21st century.

Which nation with aspirations of global dominance (i.e. hegemony) has these attributes?

1. The nation’s recent prosperity is based on a vast expansion of credit.

2. The nation has 100+ million obese/diabetic citizens.

Read moreWhich Global Hegemon Is on Shifting Sands?

‘We Are Recreating The Markets Of 2007’

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FYI.

– Seth Klarman: “We Are Recreating The Markets Of 2007” (ZeroHedge, Sep 17, 2014):

Exceprted from Seth Klarman’s Baupost letter to investors,

We don’t know now (nor do we ever know) what the overall market will do. As we’ve discussed in recent letters, there are reasons for investors to be frightened but also numerous individual opportunities worth seizing. Today’s limited opportunity set means that we are still holding sizable cash balances, about 35% of the portfolio at June 30. This dry powder will become more valuable if the markets become more turbulent.

Equity markets continue to hit successive record highs, volatility remains strikingly low in equity and most other markets, and inflation is ticking higher. Investors have clearly grown weary of worrying about risky scenarios that never seem to materialize or, when they do, don’t seem to matter to anyone else. U.S. GDP, for example, was recently restated to minus 2.9% for the first quarter of 2014. Normally, this magnitude drop signals recession. Equities, nevertheless, marched relentlessly higher.

Read more‘We Are Recreating The Markets Of 2007’

A World Headed For Nowhere

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From the article:

“It’s the final excesses and steps of a broke society. It’s madness to the power of infinity. The only thing that’s certain is that in the end, your money will all be gone. That’s how Mario Draghi ‘saves’ the EU for a few more weeks, and that’s how the big boys of finance squeeze more from what little you have left (which is already much less than you think).

A world headed for nowhere.”

– Debt Rattle Sep 16 2014: Subprime Is Back With A Vengeance (The Automatic Earth, Sep 16, 2014):

CarOnSlope1920
Christopher Helin Franklin car on slope, San Francisco. 1920

A few days ago, I wrote an essay about how ECB head Mario Draghi seeks to redefine the definitions of certain words and terms, like the one that define financial instruments, because he needs to find hundreds of billions in new spending money in Europe without adding to the behemoth existing debt (Germany won’t let him do that). And yes, that is indeed as impossible and meaningless as you think it is. But these are desperate times.

Thing is, I called that essay Draghi To Save Europe With Semantics , and maybe I shouldn’t have, because it’s obviously not the most sexy and catchy title on the planet, but my problem there was, it captures what I was talking about. And it’s all much broader and bigger than that, but then that’s what the article tries to explain.

Moreover, the financial press also catches up. To the fact that semantics and re-defining are the flavor du jour, once again, just like they were in 2005-6-7. When ratings agencies used the confusion about what things actually mean to stamp AAA ratings on everything including your kids’ snot nose tissues and toilet paper. And that is an important development, if you care about preserving some of your remaining wealth. Which I think you’d like to do, so please bear with me.

Read moreA World Headed For Nowhere

What The ‘Porsche Indicator’ Tells Us About The Greek ‘Recovery’

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– What The “Porsche Indicator” Tells Us About The Greek “Recovery” (ZeroHedge, Sep 17, 2014):

As the “Big Mac Index” is to global purchase price parity levels of inflation, so when it comes to the state of the “recovery” if not for everyone, then certainly for the 0.1%, there is no better metric than the “Porsche Indicator.” Recall: “Porsche Reports Record Sales in 2013; 21 Percent Increase Over 2012” which certainly didn’t come on the back of yet another year of declines in real incomes for the middle class (spoiler alert: it came on the back of some $10 trillion in liquidty injections by the world’s central banks).

Read moreWhat The ‘Porsche Indicator’ Tells Us About The Greek ‘Recovery’

Germany Issues 2-Year Note At All-Time Record Low Yield Of -7bps

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– Germany Issues 2Y Note At Record Low Yield Of -7bps (ZeroHedge, Sep 17, 2014):

Germany sold EUR 3.34 billion 2-year notes to a desparate-for-collateral, safe-haven-seeking, ECB QE-front-running, deflation-pricing market (with exceptional demand – an elevated 2.26x bid-to-cover) for a stunning -0.07% yield… an all-time record low yield issuance for Germany. We have nothing to add…

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Janet Yellen Trolls America’s Poor: Tells Them It Is Important To Get Rich

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– Janet Yellen Trolls America’s Poor: Tells Them It Is Important To Get Rich (ZeroHedge, Sep 16, 2014):

The Fed Chairman has some words of encouragement for the tens of millions of Americans who live at or below the poverty level, including that threatened with extinction class, affectionately known as “the middle.” Her message? Build assets, or said otherwise…  get rich.

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How Banks Continue FX Rigging Right Under The SEC’s Noses

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–  How Banks Continue FX Rigging Right Under The SEC’s Noses (ZeroHedge, Sep 16, 2014):

The good news is that the rigging of the FX markets – now conspiracy fact, not conspiracy theory – has, according to Bloomberg, forced the world’s biggest banks to overhaul how they trade currencies to regain the trust of customers and preempt regulators’ efforts to force changes on an industry tarnished by allegations of manipulation with the “modernization of processes that probably should have been brought in 15 or 20 years ago.” However, the FX market is far from ‘clean’ as Bloomberg notes, while banks can limit access to details about client orders on their computer systems, they can’t keep employees from talking to one another. Some traders also are still communicating with clients and counterparts at other firms via Snapchat, circumventing their company’s controls right under the nose of the SEC. As one trader commented, “these [reform] changes look like fig leaves.”

As Bloomberg reports, positive changes are happening (on the surface)…

Read moreHow Banks Continue FX Rigging Right Under The SEC’s Noses

NSA Warns ‘Bad Guys Are Everywhere’ As Spooks Run Afoul Of German Laws Again

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++ Iraq: al Baghdadi appare in immagini in moschea Mossul ++
A welcome distraction: the Islamist dude with the $6.500 James Bond watch.

(The Mossad and our CIA are obviously paying well. More info down below.)

– NSA Warns “Bad Guys Are Everywhere” As Spooks Run Afoul Of German Laws Again (ZeroHedge, Sep 16, 2014):

Successfully Distracted …

We can probably “thank” ISIS for having distracted everyone from the ongoing spy scandal. A new barbaric and powerful terrorist group the danger of which is blown out of all proportion by politicians and the media is no doubt a Godsend for the national security apparatus and the military-industrial complex. In fact, this reminds us that ISIS looks suspiciously like an artificial creation anyway, one that has at some point undoubtedly received assistance from one or more states.

In a previous missive (see “Equal Opportunity Spy-Fest” for details), we discussed an article in German news magazine Der Spiegel (which has by the way done some excellent sleuthing beyond merely reporting on the content of the Snowden files). The article at Der Spiegel inter alia mentioned occasions when representatives of the “national security” apparatus or government spokesmen speaking on its behalf were caught in blatant lies and noted in its conclusion:

Read moreNSA Warns ‘Bad Guys Are Everywhere’ As Spooks Run Afoul Of German Laws Again

China Launches CNY500 Billion In ‘Stealth QE’

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Related info:

– Goldman’s Take On China’s “Stealth QE”:

“Domestic media (Sina) reported that the PBOC conducted RMB 500bn of Standing Lending Facility operations with the big 5 commercial banks (ICBC, BOC, BoCOM, CCB, ABC). The reports note that the duration is 3 months and the RMB 500 bn is evenly split among the banks. This amount is roughly the same as a 50 bps cut to RRR for the whole banking system on a static basis. There is no official confirmation from the PBOC yet. Still, such an easing would be consistent with our expectation that (1) monetary policy will loosened amid the drastic slowdown in activity growth and falling inflation, and (2) full scale RRR and interest rate cuts are unlikely because they would be viewed as aggressive stimulus.”

– What Happened After China’s Last “Stealth QE”?:

In a worrying sense of deja-vu all over again, today’s rip higher reflects perfectly the US equity market’s knee-jerk reaction to the last ‘Stealth QE’ from China on July 28th. That did not end well as hot money flowed out to the instantaneously “easiest” central bank in the world…

–  Markets React Violently To China’s Stealth QE:

From copper to high-yield credit and from stocks to bonds and gold, markets are reacting violently to the headlines from China that they are unleashing another 500bn Yuan “stealth QE”… everything is rallying.. except the USD (biggest drop since May).

– China Launches CNY500 Billion In “Stealth QE” (ZeroHedge, Sep 16, 2014):

It has been a while since the PBOC engaged in some “targeted” QE. So clearly following the biggest drop in the Shanghai Composite in 6 months after some abysmal Chinese economic and flow data in the past several days, it’s time for some more. From Bloomberg:

  • CHINA’S PBOC STARTS 500B YUAN SLF TODAY, SINA.COM SAYS
  • PBOC PROVIDES 500B YUAN LIQUIDITY TO CHINA’S TOP 5 BANKS: SINA
  • PBOC PROVIDES 100B YUAN TO EACH BANK TODAY, TOMORROW WITH DURATION OF 3 MONTHS: SINA

Just as expected, the Chinese “derivative” currency, the AUD, goes vertical on the news, and the S&P 500 goes vertical alongside:

Read moreChina Launches CNY500 Billion In ‘Stealth QE’

Desperate Californians steal water from fire hydrants as rich community pays half a million dollars for overwatering lawns

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– Desperate Californians steal water from fire hydrants as rich community pays half a million dollars for overwatering lawns (Natural News, Sep 15, 2014):

The ongoing water crisis in California has sparked an apparent crime wave in some parts of the state, with desperate residents illegally taking water from fire hydrants in the middle of the night to keep their lawns green and their animals happy. Reports indicate that, in some areas, as much as 10 percent of the water supply has gone missing, presumably due to theft, a premonition of much worse things to come if rains remain at bay.

The city of Lemoore, for instance, a community of some 25,000 people south of Fresno, has seen numerous water thefts in recent weeks — a growing black market for water amidst one of the worst droughts in California history. According to The Hanford Sentinel, thieves are believed to be attaching hoses to fire hydrants throughout the city and pumping water into large plastic tanks affixed to the back of trucks.

Read moreDesperate Californians steal water from fire hydrants as rich community pays half a million dollars for overwatering lawns

Bank Of America Has A Message For Its European Depositors: “We May Charge You”

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–  Bank Of America Has A Message For Its European Depositors: “We May Charge You” (ZeroHedge, Sep 15, 2014):

Because Mario Draghi wasn’t joking about that whole NIRP thing. And yes, negative deposit rates mean just that.

BofA Europe deposits_0

As the letter says, don’t worry: Bank of America has an extensive team of “liquidity and investment management solutions” experts who will gladly advise you to rotate your money out of deposits and into financial stocks, preferably that of BAC itself.

Why Scotland Has All The Leverage, In One Chart

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– Why Scotland Has All The Leverage, In One Chart (ZeroHedge, Sep 15, 2014):

As Scotland prepares to vote for or against Independence from the Union on Thursday, it appears everyone has an opinion on what may, what should and what will happen. At the basis of every such opinion is some basis in fact, misguided as it may be in most cases, about who has all the leverage, with the dominant one being that Scotland would make a horrendous mistake if it says goodbye to the UK and puts a border around what is currently a third of UK’s landmass.

Some, such as Deutsche Bank, the bank that has the single greatest derivative exposure in the world and is therefore most leveraged to maintaining the status quo, saw its “Chief Economist & Member, Group Executive Committee, Deutsche Bank AG” David Folkerts-Landau personally put pen to paper on Friday and in rambling, demagogic terms, explain why it would be a “Wrong Turn” for Scotland to seek self-determination.

Read moreWhy Scotland Has All The Leverage, In One Chart

Minimum-Wage Blowback; The De-Humanization Of Fast-Food Has Begun

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– Minimum-Wage Blowback; The De-Humanization Of Fast-Food Has Begun (ZeroHedge, Sep 15, 2014):

In January we noted ‘Smart Restaurant’ – the burger-flipping robot – and just last month we reported on China’s robotification of the fast-food business; but, as The Washington Post reports, the greatest enemy to the minimum-wage-demanding fast-food worker has arrived: you can now order your own quarter-pound bacon cheeseburger from a welcoming, non-judging machine. With McDonalds sales the worst in almost a decade, it appears their need to maintain profits has stoked a move towards dehumanization. One wonder how long before this action is also declared ‘unpatriotic’.

As WaPo reports,

Read moreMinimum-Wage Blowback; The De-Humanization Of Fast-Food Has Begun

UK Hints At Next Reserve Currency, To Issue Chinese Yuan-Denominated Bond

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– UK Hints At Next Reserve Currency, To Issue Chinese Yuan-Denominated Bond (ZeroHedge, Sep 15, 2014):

Yuanification continues around the world. As The USA attempts to corral its allies in a ‘broad coalition’, an increasing number of people – including domestic economic policy advisors – are shifting away from the USD as primary reserve currency. However, the move by British Chancellor of the Exchequer George Osborne, announced Friday, is likely the most notable yet in the world’s de-dollarization. As Xinhua reports, the British government intend to be the first nation (ex-China) to issue Renminbi denominated bond and to use the proceeds to finance the government’s reserves of foreign currency. Osborne described this dialogue outcome as “a historic moment” and a statement of British confidence in the potential of the RMB to become “the main global reserves currency”.

As Xinhua reports,

Read moreUK Hints At Next Reserve Currency, To Issue Chinese Yuan-Denominated Bond

US Industrial Production Follows China; Misses With Biggest Drop Since Jan

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– US Industrial Production Follows China; Misses With Biggest Drop Since Jan (ZeroHedge, Sep 15, 2014):

But but but… the survey all said record highs… Yet another piece of hard data hits the tape and disappoints. While Fed surveys point to an exuberant economy, Industrial Production fell 0.1% in August (missing +0.28% expectations) for its worst print since January’s “weather”-related plunge. This comes on the heels of Chinese Industrial Production at its worst in 6 years… perhaps explaining why global GDP expectations continue to test cycle lows. US Capacity Utilization also dropped to 78.8% (lowest since Feb) and the weakness was all Manufacturing driven as production slumped 0.4% MoM – its worst since Jan. So who you gonna believe? Soft surveys? or Hard data?


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‘Today The Average Family Of Four In America Is Associated With Roughly $735,000 Of Debt’

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What could possibly go wrong?
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For the best viewing experience, watch the above video in hi-definition (HD) and in expanded screen mode

Debt

“… today the average family of four in America is associated with roughly $735,000 of debt.”

– Debt – Crash Course Chapter 13 (Peak Prosperity, Sep 12, 2014):

There’s just too damn much of it

The fundamental failing of today’s global economy can be summarized simply: Too Much Debt

We have taken too much of it on, too fast, in too many markets around the world, to have any hope of making good on it. Not only does the math not work out, but also on a moral level, we are placing a tremendous obligation on future generations that will unfairly limit the prosperity they can enjoy tomorrow in order to finance our consumption today.

In the US alone, total credit market debt stands at over $57 trillion and is doing its damnedest to continue expanding exponentially. Since simple math shows us that this debt level cannot be supported, the key questions to ask at this stage are:

Will the unsupportable debt disappear via default, or inflation?

And very important:

Read more‘Today The Average Family Of Four In America Is Associated With Roughly $735,000 Of Debt’

Speculation Swirls Over Fed Language On Rate Hike

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Related info:

– The Fed Has A Big Surprise Waiting For You (ZeroHedge, Sep 13, 2014):

The US economy is dead. The Fed has known this for a long time, but pumped it up to where it is now to draw in all the greater fools, the so-called big investors who have made money like honey from QE and ZIRP. They are the greater fools. The American real economy ceased being a consideration long ago. We’re in for big surprises, and they won’t be pretty, they’ll be pretty nasty. There are far too many people who think of themselves as smart who don’t see the difference between a theater play and a reality show. The Fed will raise rates because that will make the biggest banks the most money. There’s nothing else that matters. The Fed can’t revive the US economy, that’s just a foolish notion. But it can suck a lot of wealth out of it.

Federal-Reserve-Bernanke1

– Speculation swirls over Fed language on rate hike (Guardian/AP, Sep 15, 2014):

When the Federal Reserve issues a policy statement after it meets this week, the financial world will be on high alert for two words:

“Considerable time.”

The presence or absence of that phrase will trigger a rush to assess the likely timing of the Fed’s first increase in interest rates since it cut them to record lows in 2008.

The Fed’s recent statements have said it expects to keep its key short-term rate near zero for a “considerable time” after it stops buying Treasurys and mortgage bonds. Those bond purchases have been intended to keep long-term rates down to support the economy.

Read moreSpeculation Swirls Over Fed Language On Rate Hike

The Terrifying Future of The United States

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Flashback.


Published on Jun 5, 2013

If this doesn’t wake you up, I don’t know what will.

Links to get you started on your research:

Read moreThe Terrifying Future of The United States