"Run!"
If you cannot read the writing on the wall then allow me to read it
for you.
The European Union has abrogated the Rule of Law for the good
of the State. This is the second such abrogation with the first being
the exemption of certain European institutions and the IMF from the
Private Sector Involvement of Greece. Greece may be a one-off exemption
as they claim but we now have a second instance where jurisprudence
has been overturned for the good of the nations of Europe. This is not
Socialism or Capitalism but rather some sort of Fascist governance
which I publically decry as the echo of the jackboots sounds across the
Continent once again. The precedents have now been set and the future
is clearly marked by a return to the totalitarianism of a politically
controlled State. My advice is therefore succinct:
RUN!
Derivatives Have Exploded Again
Dear CIGAs,
QE to infinity is going to be guaranteed by the taxpayer, you.
Derivatives have exploded again. Morgan’s losses must be humdingers.
You can be sure there are many more out there hiding is plain sight. That is what a step like this means.
Jim
Taxpayers now stand behind derivatives clearinghouses. May 23, 2012, 7:11 p.m. ET
President Obama’s standard gripe is that the economy has performed so poorly during his term because of the financial crisis he inherited from George W. Bush. But this week it is Mr. Obama who has bequeathed to his successors a landmark in financial regulation. It is bound to haunt them, though not as much as it will haunt taxpayers.
J.P. Morgan’s recent trading loss and the resulting Washington blather about tighter regulation have grabbed headlines. Little noticed is that on Tuesday Team Obama took its first formal steps toward putting taxpayers behind Wall Street derivatives trading—not behind banks that might …
More…
http://online.wsj.com/article/SB10001424052702304840904577422393164106270.html
China And Japan Dropping Dollar Cross Rate System, Will Transact Directly
While various three letter economic schools of thought continue sprouting left and right, in an attempt to validate endless spending predicated on one simple thing: transitory reserve currency status, and we emphasize transitory, reality moves on, oblivious of what economic theoreticians believe it should be doing. As Yomiuri Shimbun reported last night, China and Japan are set to launch direct currency trading, bypassing the dollar, and the associated benefits and risks, entirely. "But how can that be?" dollar purists will scream. After all, when one bypasses the dollar, one commits blasphemy to a reserve currency. Somehow we think China gets that. From the AP: "Japan and China are expected to start direct trading of their currencies as early as June as part of efforts to boost bilateral trade and investment, according to reports. With the planned step, exchange rates between the yen and the yuan will be determined by their transactions, departing from the current "cross rate" system that involves the dollar in setting yen-yuan rates, Kyodo News said on Saturday."
Trader Dan on King World News Markets and Metals Wrap
Join Eric King and I as we discuss the gold and silver market action this
past week, along with an analysis of the Commitment of Traders report, the
outlook for the US Dollar and the mining shares in general, on the KWN
Markets and Metals Wrap.
*http://tinyurl.com/7rrfakc*
**
Resolve of Small Cap Stock Bulls To Be Tested
It could be a anxious early summer for unhedged small cap stock bulls.
Chart: Russell 2000 (IWM) And Russell 2000 Diffusion Index (DI)
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Spanish Banking needs more funding/Spain's Catalonia province also badly in need of money/
Good
morning Ladies and Gentlemen:
Gold closed at its highest point on Friday $1568.80 for a gain of
$11.50. Silver also did pretty good
rising by 20 cents to $28.37. Friday was truly remarkable for our
precious metals because they rose despite a 75 point drop in the Dow and
a fall in the euro/usa dollar cross.
(The final dow figures: 12454 for a drop of 74.92 points.
The Euro/dollar cross
The Invisible Hand Is Regaining Control of Gold
The invisible hand continues to lean on every short term gold rally. I know
this the last thing that the dejected community wants to read, but it is
what it is. The gold lease spread composite will turn from negative to
positive when it's done leaning. Table: Gold Lease Spread Composite (GLSC)
and Gold Price, USD Smart money knows we're close. Gold's diffusion index
remains above 60%...
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content, and more! ]]
Someone Is Accumulating Crude Oil As It Declines
The invisible hand, already buying weakness, will continue to do so until
WTI falls into the $86-76 range within 5-10 weeks. Diffusion index readings
above 60 represents concentrated buying (by the invisible hand) as the
market declines into the morass of fear this summer. When ever retail and
spec trader is short crude, it will bottom abruptly with little media
warning. That's why...
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content, and more! ]]
A Mess the 45th President Will Inherit
Infinite liquidity and taxpayer funds backstop everything deemed too
critical to fail. Headline: A Mess the 45th President Will Inherit
President Obama's standard gripe is that the economy has performed so
poorly during his term because of the financial crisis he inherited from
George W. Bush. But this week it is Mr. Obama who has bequeathed to his
successors a landmark in financial...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]
Stupendous Mogambo Advice (SMA)
I was recently in a spirited conversation with a small crowd of people
about how my Stupid Mogambo Advice (SMA) to buy gold, silver and oil has
not been working very well recently, and various theories were advanced as
to why that should be the case.
One particular participant in the conversation volunteered to me that
perhaps the reason is that I am stupid. He looked right at me and said
"You're a stupid, lying moron!", whereupon everyone agreed by cheering and
clapping.
Yet another opined that they have not become fabulously wealthy overnight
because I am a "Halfwitted loudmout... more »
SP 500 and NDX Futures Daily Charts - Tiptoeing Into the Long Holiday Weekend
Postcards From Sweden
We
present the following postcard we just got from Sweden. We can only
hope this is a very isolated incident of people enjoying to wait in line
for a few pieces of paper, completely devoid of any contextual
reference. That, or they are all suddenly applying for a mortgage, or in
the best case, merely enjoying the wonderful weather, just incidentally
next to a branch of one of Sweden's largest banks.Guest Post: The Taxpayer Funded PR Campaign For Obamacare Begins
Only in public schools and universities is the fairy tale still taught that governments are representative of the people.
The blue collared man on the street realizes the chips are stacked
against him. For those who don’t have political connections, the
pseudo fascist system that is still referred to as “capitalism” in the
U.S. is akin to a casino game of chance. That is, the odds are always
in the house’s favor. The house is the federal leviathan and its
equivalent at the state and local level as well as the big, cartelized
industries which feed off government protection. With Obamacare, the middle class will end up being liable for yet another entitlement program that, like any other government initiative, will cost more than was initially estimated.
Worse yet, they will be bombarded with advertisements they paid for
which attempt to convince them that Uncle Sam has once again delivered
prosperity with a badge and a gun. The disheartening part is some
Americans will be foolish enough to actually believe it.
May 26, 2012, at 6:09 am
by Jim Sinclair in the category Jim's Mailbox |
Print This Post | 
Email This Post
by Jim Sinclair in the category Jim's Mailbox |
Print This Post | Email This Post
Eric,
Demand for Business Equipment in U.S. Declines in April
CIGA Eric
An important trendline of the 2009 recovery has failed. While the break suggests caution towards future economic growth, the transition from expansion to contraction could take months to unfold.
Chart: Real Business Core Capital Spending: Real or CPI-Adjusted New Orders of Durable Goods ex. defense and aircraft (RBCCS) and YOY Change
Headline: Demand for Business Equipment in U.S. Declines in April
Companies placed fewer orders for computers, machinery and other capital equipment in April for a second month, indicating manufacturing in the U.S. is cooling. Bookings for non-military goods excluding aircraft fell 1.9 percent after dropping 2.2 percent in March, the first back-to- back decline in a year, the Commerce Department said today in Washington. Other reports showed claims for jobless benefits were little changed last week and consumer confidence hovered near a four-month low. “We can’t seem to really gather any steam,” said Julia Coronado, chief economist for North America at BNP Paribas in New York. “From consumer spending to hiring to manufacturing activity, everything is kind of moderate and OK but not particularly spectacular or satisfying.” Slowdowns in Europe and parts of Asia combined with a cooling in business spending in the U.S. after the reduction of a government tax credit this year may restrain manufacturing. At the same time, Americans are buying cars at the fastest pace in four years, creating a rebound in auto making that is rippling through the economy.
Source: bloomberg.com
More…
QE to infinity is guaranteed as seen in the third skier illustration.
Jim
Demand for Business Equipment in U.S. Declines in April
CIGA Eric
An important trendline of the 2009 recovery has failed. While the break suggests caution towards future economic growth, the transition from expansion to contraction could take months to unfold.
Chart: Real Business Core Capital Spending: Real or CPI-Adjusted New Orders of Durable Goods ex. defense and aircraft (RBCCS) and YOY Change
Headline: Demand for Business Equipment in U.S. Declines in April
Companies placed fewer orders for computers, machinery and other capital equipment in April for a second month, indicating manufacturing in the U.S. is cooling. Bookings for non-military goods excluding aircraft fell 1.9 percent after dropping 2.2 percent in March, the first back-to- back decline in a year, the Commerce Department said today in Washington. Other reports showed claims for jobless benefits were little changed last week and consumer confidence hovered near a four-month low. “We can’t seem to really gather any steam,” said Julia Coronado, chief economist for North America at BNP Paribas in New York. “From consumer spending to hiring to manufacturing activity, everything is kind of moderate and OK but not particularly spectacular or satisfying.” Slowdowns in Europe and parts of Asia combined with a cooling in business spending in the U.S. after the reduction of a government tax credit this year may restrain manufacturing. At the same time, Americans are buying cars at the fastest pace in four years, creating a rebound in auto making that is rippling through the economy.
Source: bloomberg.com
More…
My Dear Friends,
One thing I am sure of is that the majority opinion on the destiny of
the euro is wrong. The bear position is so crowded it may as well be
one sided.
Sure, that type of trading will continue to put pressure on but it
all will go splat after the fact. Yes that type of position reflects its
mirror image on the dollar and could make the present bullish near term
price objective real, but for a moment only.
Gold seems to recognize that we are witnessing the death throes of all fiat currencies inherent in this transition of the euro.
The unexpected is in fact happening. Sovereign insolvency resulting
in debt repudiation was thought to be a part of history in Zimbabwe
only. It is not.
It is a clear and present danger to the largest debtor nation on the
planet, the US dollar. The problems with the dollar will make Greece
look like child’s play.
Once the euro circus, which seems traditional, comes to its dead end a
change will occur. At or slightly ahead of that time the short of the
euro is going to get crushed. The firm dollar is no longer a factor in
the gold price as the death of fiat currency overcomes the temporary
mirror image of the euro the dollar is.
I feel from the time of the event we will see a much higher euro and weaker dollar that may well prevail for years.
Stay the course. We are totally correct.
Enjoy your weekend.
Regards,
Jim
Jim
Jim Sinclair’s Commentary
The retiree is the endangered species in the Western financial world.
All your benefits are going to start to disappear. A society that
mistreats its elderly has no valid reason to continue to exist.
Feds eye retirement-fund tax to cut $16 trillion-plus deficit By GREGORY BRESIGER
Last Updated: 8:25 AM, April 22, 2012
Uncle Sam, in a desperate attempt to fix its $16 trillion-plus deficit, is leering over Americans’ retirement nest egg as its new bailout fund.
Capitol Hill politicians are assessing tax changes that could let the Internal Revenue Service lay claim to a portion of the $18 trillion sitting in 401(k) accounts and other tax breaks used by middle-class workers, including cutting the mortgage tax deduction.
A commission looking for ways to close the deficit, and, noting the extent of 401(k) tax breaks, recommends an examination of the system as one way to prevent government bankruptcy.
Besides 401(k)s, other possibilities include the mortgage-interest deduction on second homes, as well as benefits from employer-provided health insurance, which are untaxed now.
Under current 401(k) rules, total employee/employer contributions can’t exceed $50,000. In the proposed rule change, employer/employee contributions would be limited to 20 percent of the employee’s compensation, with a maximum of $20,000, the so-called 20/20 proposal.
Another proposal being discussed in Congress says all tax deductions on 401(k)s and IRAs to be replaced with an 18 percent credit. The credit, according to a proposal that has been endorsed by economist William Gale, would be placed directly in a person’s retirement account.
“Unlike the current system,” Gale told Congress, “workers’ and firms’ contributions to employer-based 401(k) accounts would no longer be excluded from income and would be subject to taxation, contributions to IRAs would no longer be tax-deductible and any contributions to a 401(k) plan would be treated as taxable income.”
More…
Jim Sinclair’s Commentary
You expected any other outcome?
SEC Staff Ends Probe Of Lehman Without Finding Fraud By Joshua Gallu – May 24, 2012 11:30 PM ET
U.S. Securities and Exchange Commission investigators have concluded their probe of possible financial fraud at Lehman Brothers Holdings Inc. without recommending enforcement action against the firm or its former executives, according to an excerpt of an internal agency memo.
Lawmakers and investors have pressed the agency for more than three years to determine whether Lehman misrepresented its financial health before filing the biggest bankruptcy in U.S. history in September 2008.
Under a heading reading “Activity in Last Four Weeks,” the undated document reads, “The staff has concluded its investigation and determined that charges will likely not be recommended.”
SEC officials didn’t dispute the authenticity of the memo or its contents.
Pressure on the agency to punish any wrongdoing related to Lehman’s collapse escalated after Anton Valukas, the court- appointed bankruptcy examiner, found the firm misled investors with “accounting gimmicks” that disguised its leverage.
Senior SEC officials have been reluctant to formally close the matter even though investigators found a lack of evidence of wrongdoing, according to people with direct knowledge of the matter. The officials have weighed issuing a public report on their findings that would stop short of an enforcement action while highlighting the firm’s questionable conduct.
More…
Jim Sinclair’s Commentary
Arab Spring hailed by all as a great development for democracy is a disaster for Western Interests.
‘What happened to the revolution?’ Egypt left facing choice between Islamists and Mubarak’s last prime minister
Egypt is facing a presidential run-off vote between the Islamists of the Muslim Brotherhood and a former regime apparatchik, leaving the young liberal activists who overthrew President Hosni Mubarak asking: "What happened to the revolution?" By Richard Spencer, Cairo
5:59PM BST 25 May 2012
With provisional results in from most polling stations on Friday, Mohammed Morsi, the uninspiring and overweight engineering professor dubbed by many "the Islamists’ spare tyre" after being picked as a last-minute stand-in, had a clear lead.
He had been trailing in the opinion polls, but an even bigger surprise was the surge into a marginal second place for Ahmed Shafiq, who had his own derisive nickname – "felloul", or "remnant", a reference to his role as Mr Mubarak’s last prime minister.
The result is the most polarising possible for Egypt’s post-revolutionary, fractured society, giving voters a clear choice between political Islam and fewer personal freedoms and a return to the perceived stability but frequent brutality of the ancien regime.
The activists who led the Tahrir Square revolution took their celebrated wit to their favoured social networks in outrage. "If it’s really Shafiq/Morsi then I’m launching a vote-for-Satan campaign," wrote Ashraf Khalil, author of a book on the revolution, on Twitter. "Why settle for a lesser evil?" "I’m cool. My business will thrive," said Hossam Bahgat, head of the Egyptian Initiative for Personal Rights and one of the country’s best-known human rights activists. He had supported Abdulmoneim Aboul Fotouh, a "liberal Islamist" once favoured to win who faded in the final week and seemed likely to end up in fourth place.
Amr Moussa, the former Arab League secretary-general long considered the front-runner, did even worse, trailing in fifth.
More…
Jim Sinclair’s Commentary
There are so many factors to major negotiations which can be extremely fateful.
Israel revives military option after Obama rejects its nuclear demands of Iran DEBKAfile Exclusive Report May 24, 2012, 9:23 AM (GMT+02:00)
A fateful decision is reached on Iran
Israel has withdrawn its pledge to US President Barack Obama not to strike Iran’s nuclear sites before the November presidential election after he rejected its minimal demands for nuclear negotiations with Iran. This is reported exclusively by debkafile’s Washington sources.
In public, Israeli ministers still talk as though they believe in results from the Six-Power talks with Iran, which Thursday May 24 limped into their second day in Baghdad with the parties still miles apart. But the presidential veto has essentially cast Israel outside the loop of influence on the outcome of diplomacy.
When Israeli Defense Minister Ehud Barak met US Defense Secretary Leon Panetta at the Pentagon on May 17 he was told that Obama had rejected Israel’s toned-down demands for Iran to at least to halt high-grade uranium enrichment, export its stocks of material enriched higher than 3.5 percent grade and shut down production at the Fordo nuclear plant near Qom. For six months, the Obama administration tried to sweeten the bitter pill of this rejection by bumping up security aid. The latest appropriation covered another $70 million for manufacturing more Iron Dome short-range missile interceptors.
After talking to Panetta, Barak turned to Secretary of State Hillary Clinton and National Security Adviser Tom Donilon in the hope of winning their support for softening Obama’s ruling. Clinton replied she was not involved in the negotiations with Iran and Donilon, that a personal decision by the president was not open to change.
A week of consultations followed the defense minister’s return home, during which it was decided to tear up Israel’s pledge to refrain from attacking Iran during the US presidential campaign. Wednesday, May 23, the day the Baghdad talks began, Barak signaled Washington to this effect.
More…
Jim Sinclair’s Commentary
The COMEX will deliver paper, not gold, and continue in its operation.
Wall Street Journal says Comex has been classified as ‘too big to fail’ Submitted by cpowell on Fri, 2012-05-25 06:09. Section: Daily Dispatches
A Mess the 45th President Will Inherit
Taxpayers Now Stand Behind Derivatives Clearinghouses
From the Wall Street Journal
Thursday, May 24, 2012
http://online.wsj.com/article/SB1000142405270230484090457742239316410627…
President Obama’s standard gripe is that the economy has performed so poorly during his term because of the financial crisis he inherited from George W. Bush. But this week it is Mr. Obama who has bequeathed to his successors a landmark in financial regulation. It is bound to haunt them, though not as much as it will haunt taxpayers.
J.P. Morgan’s recent trading loss and the resulting Washington blather about tighter regulation have grabbed headlines.
Little noticed is that on Tuesday Team Obama took its first formal steps toward putting taxpayers behind Wall Street derivatives trading — not behind banks that might make mistakes in derivatives markets, but behind the trading itself. Yes, the same crew that rails against the dangers of derivatives is quietly positioning these financial instruments directly above the taxpayer safety net.
As we noted in May 2010, the authority for this regulatory achievement was inserted into Congress’s pending financial reform bill by then-Senator Chris Dodd. Two months later, the legislation was re-named Dodd-Frank and signed into law by Mr. Obama. One part of the law forces much of the derivatives market into clearinghouses that stand behind every trade. Mr. Dodd’s pet provision creates a mechanism for bailing out these clearinghouses when they run into trouble.
More…
Jim Sinclair’s Commentary
QE to infinity here and there.
Merkel Considers Debt-Sharing Plan as Monti Says She’s Isolated 2012-05-25 08:36:34.0 GMT
By Brian Parkin and Jeffrey Donovan
May 25 (Bloomberg) — Chancellor Angela Merkel left open a potential compromise on debt sharing in the euro area as Italian Prime Minister Mario Monti said he can help bring Germany round to acting in Europe’s "common good."
Merkel’s veto on allowing Germany to underwrite joint debt issuance in the 17-nation euro region is under fire from her international partners as well as the domestic opposition. While she refused to back joint euro-area bonds at a Brussels summit on May 23, Germany’s opposition parties wrung a concession from the chancellor on her return to Berlin yesterday to reconsider a separate proposal on common liability for sovereign debt.
The blueprint, first mooted in November by Merkel’s council of economic advisers, involves a so-called European redemption fund that would help governments scale back outstanding debt to below 60 percent of economic output in return for constitutional commitments on economic reform. The government and opposition agreed to discuss the matter further on June 13.
"All German political parties remain opposed to ‘classical’ euro bonds and to common debt issuance for all purposes," Julian Callow, chief European economist at Barclays Capital in London, said in a note. "However, if a more narrow definition of euro bonds is considered, such as the Council of Economic Advisors’ proposal for a debt redemption fund, then we believe that support has been increasing" so long as "some conditionality or sharing of fiscal policy were achieved."
More…
Dear Extended Family,
Time for blasphemy. I do not propose these as right, just as possible.
Could the world consensus on a significantly lower euro be totally wrong?
1. Assume the Greek situation is resolved however it happens to be.
Assume the euro does a great full body shake, throwing off some of its
weakest members.
At that point what happens?
Be careful about being bearish. That side is getting to be an
unwieldy crowd. You might be dead wrong. It could start a move of the
euro from $1.40 to $1.60 versus the dollar.
2. How about the election of Hollande in France? This is a "game
changer" because it is the beginning of a euro political and economic
union of the Left? The major problem with the euro is it is not a
political union and each member has their own economic agenda and cannot
stand all the other members. Remember the Left is dizzy, but on the
Right is our banksters who are downright mean.
What would the value of the euro be with number one done, and two number expected? I think $1.40 to $1.60.
You short of euro guys are a violent bunch. I heard enough of your
emails cursing at me because you refuse to consider the above as even a
possibility. Are you not making a political trade rather than an
economic trade?
The Super Bears on the euro I know are European by background; many are expats.
Respectfully,
Jim
Jim
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