Submitted by Tyler Durden on 09/07/2015 - 08:22
The data point everyone has been waiting on is out and, just as we tipped weeks ago, China liquidated nearly $100 billion in USD assets during the month of August in support of the yuan.
Submitted by Tyler Durden on 09/07/2015 - 13:16 There is strong evidence that economies perform better with a tight labor market and, as the International Monetary Fund has shown, lower inequality (and the former typically leads to the latter). Of course, the financiers and corporate executives who pay $1,000 to attend the Jackson Hole meeting see things differently: Low wages mean high profits, and low interest rates mean high stock prices. Statements from Fed officials that the economy has virtually returned to normal are met with derision. Perhaps that is true in the neighborhoods where the officials live. But, with the bulk of the increase in incomes since the US “recovery” began going to the top 1% of earners, it is not true for most communities. Simply put, in the US, workers are being asked to sacrifice their livelihoods and wellbeing to protect well-heeled financiers from the consequences of their own recklessness.
Submitted by Tyler Durden on 09/07/2015 - 11:53 As events unfold that have to be seen to be be believed in Belgian capital Brussels, European farmers - protesting plunging food prices, blamed on Russia's food embargo, which was retaliation to Europe and US sanctions - are demanding EU intervention to bail them out. What was originally a parade of tractors quickly turned violent as farm equipment rammed police barricades and police released tear gas and water jets in response to the farmers unleashing their "hay cannon." Boomerang anyone? "EU farmers are paying the price for international politics...There have been hundreds of suicides as a result of disastrous agricultural policies."
698K Native-Born Americans Lost Their Job In August: Why This Suddenly Is The Most Important Jobs ChartSubmitted by Tyler Durden on 09/07/2015 - 15:14 Over the past year, some have asked - is there any labor-related chart that matters any more? The answer: a resounding yes, only it is none of the conventional charts that algos and sometimes humans look at. The one chart that matters more than ever,has little to nothing to do with the Fed's monetary policy, but everything to do with the November 2016 presidential elections in which the topic of immigration, both legal and illegal, is shaping up to be the most rancorous, contentious and divisive.
The stock market is extremely overvalued – it could easily crash through the bottom hit after the Lehman crisis [S&P 500 closed at 676.53 on March 9, 2009] – Alasdair Macleod on Shadow of Truth
It’s getting harder for perma-bulls to make the argument that the U.S. economy is in a state of recovery. It’s getting even harder for them to justify the current stock market valuations. Not only are all of the reliable economic metrics pointing toward the early stages of what could be a deep economic recession, if the trailing twelve month GAAP earnings of the S&P 500 index companies were adjusted by using the GAAP accounting standards that were in place in 1980 – or even 1990 – the current stock market would be the most overvalued in history.
Submitted by Tyler Durden on 09/07/2015 - 16:15 Five years of austerity, higher taxes, deep cuts in public spending, record suicide rates, and homelessness beyond anyone's worst forecasts... is it any wonder that, as Gallup reports, a majority of adults in the country - 55% - said in a poll that they think converting from the Greek drachma to the euro in 2001 has harmed Greece.
Submitted by Tyler Durden on 09/07/2015 - 15:45 The fallout from the demise of the petrodollar is becoming impossible to sweep under the rug even as Gulf states are keen to downplay the severity of the budget crunch. For the Saudis, who need crude at $100 to plug a budget deficit that’s projected at a whopping 20% of GDP, the situation is becoming particularly acute. For Qatar, the situation isn't quite as dire but that doesn't mean the country's officials aren't acutely aware that the world is now scrutinizing the budgets of petrostates in the wake of collapsing crude and indeed on Monday, Qatari Finance Minister Ali Sherif al-Emadi was at pains to reassure the market.
Ron Paul On Promoting Democracy With Bombs, Drones & Guns: The Neocon Complicity In Europe's Refugee CrisisSubmitted by Tyler Durden on 09/07/2015 - 14:45 While the media focuses on the human tragedy of so many people uprooted and traveling in dangerous circumstances, there is very little attention given to the events that led them to leave their countries. Certainly we all feel for the displaced people, especially the children, but let’s not forget that this is a man-made crisis and it is a government-made crisis.
Submitted by Tyler Durden on 09/07/2015 - 14:09 On one hand, every economist, virtual portfolio manager, Yahoo Finance Twitter expert, and TV talking head is certain that a September rate hike is inevitable. On the other hand, the bank that runs the NY Fed (and whose chief economist Jan Hatzius has dinner with NY Fed head Bill Dudley at the Pound and Pence every other month), Goldman Sachs is re-doubling down on its call that the Fed will not hike in September. Here are Goldman's seven reasons why not.
Submitted by Tyler Durden on 09/07/2015 - 13:44 The violence in two of the world's conflict hot spots escalated materially over the weekend after a Houthi rocket attack in Marib killed 45 UAE soldiers, prompting the delpoyment of an additional 1,000 Qatari troops and triggering stepped up Saudi airstrikes. Meanwhile, in Turkey, roadside bombings blamed on the PKK mean Ankara will look to plunge the country deeper into civil war ahead of elections in November.
Submitted by Tyler Durden on 09/07/2015 - 13:02 Filed under 'what the f##k?', French President Francois Hollande is preparing for air strikes in Syria in a somewhat mind-numbing approach to to stem a flood of refugees from the Middle East into Europe. Using the always-ready excuse of "grappling with the threat of terrorism," Bloomberg reports Hollande's response to Europe’s biggest refugee crisis since World War II by increasing the bombing of the very place from which the refugees are fleeing...
Submitted by Tyler Durden on 09/07/2015 - 12:10 Why are the global elite buying extremely remote compounds that come with their own private airstrips in the middle of nowhere on the other side of the planet? And why did they start dumping stocks like crazy earlier this year? Do they know something that the rest of us don’t?
On Friday 31st July 2015, I released an article discussing the sale of Swiss gold refiner Valcambi to Indian jewellery company Rajesh Exports. In my report, in a section about Valcambi’s annual gold refining capacity, I made passing reference to 2013 gold refining production statistics that had been published by the London Bullion Market Association (LBMA) on 1st May 2015. These same gold refinery production statistics had also been quoted by the LBMA as recently as July 2015 in the news section of Issue 78 of its ‘Alchemist’ magazine, (published on 21st July 2015, just a week before my article).
The stockmarket is toxic! It’s very important that you don’t get seduced by the old siren song of Wall St about “buying the dip” and other nonsense like “being selective”. While these strategies have worked up to now, they won’t any longer, because we are now in a bearmarket, and furthermore it looks like we are on the verge of another plunge.
The past few weeks have been momentous. The stockmarket has finally broken down from the huge bearish Rising Wedge that we had delineated many months ago, as shown on the 8-year chart for the S&P500 index below. The validity and importance of this Wedge is amply demonstrated by the fact that after the index broke down from it, it plunged.
Blogger John Koning recently posted on the negative skewness (or as he says: bulls walk up the stairs, bears jump out the window) of the stock market. He notes that “there are plenty of famous meltdowns in stocks, including 1914, 1929, 1987, and 2008, but almost no famous melt ups”. To demonstrate this, he produces a chart of 22,013 trading days since 1928 grouped by the daily return and showing the percentage of days that were negative.
The chart below replicates Koning’s figures but I have also included gold and silver London Fixes since 1968 for comparison, which is the longest data set I have.
While we were led to believe that the Fed would begin tightening upon recovery, new fears of a double dip have sparked the Keynesian clan into moving in the opposite direction. Soon enough, we believe, a new quantitative easing program will be unveiled.
Bernanke is Afraid to Raise Rates
Perhaps the most perma-bear of them all is Ben Bernanke, who after nine months straight of economic gains has yet to let loose on historically low rates. Mind you, the recovery is fragile, however in no time in history has virtually free money ever solved any problems. The most recent real estate bubble was a product of low rates, as was the bubble prior to the Great Depression, and so will be the next bubble.
Ronan Manly has published a fascinating analysis of the LBMA gold refining statistic today.
The gold refined by LBMA ‘good delivery’ refiners in Switzerland is sometimes involved in converting existing gold bars into kilobars suitable for export to the Asian Markets.
Ronan Manly offers quite a bit of detail with regard to a very large revision in the LBMA 2013 refining data and suggests that such a large restatement of gold statistics, almost 1/3, without explanation, seems odd.