Friday, January 15, 2016

Here's A Chart You Won't See On CNBC

What goes up, comes down considerably faster...

Art Cashin Comments On Today's Crash: "The Fed Will Try Anything"

"The Fed will try anything," warns Art Cashin, calmly explaining that markets "are in 'deep concern' mode," currently and if the S&P hits 1857, "there might be another whole new round of selling." The Fed's solution, Cashin stoically explains to a dumbstruck CNBC anchor, that "it doesn't matter that it hasn't worked in the past," The Fed will unleash moar QE to save the world.

It's Official: Trump Is Now The Bookies' Favorite

Norway Pushes Panic Button: "We're In A Crisis Now, We Can't Deny That"

Slumping crude prices are weighing heavily on Norway's economy as the government looks to its $830 billion sovereign wealth fund to plug budget holes and pay for fiscal stimulus. Officials hope a weaker krone can serve as a shock absorber but with Mario Draghi stuck in easing mode, that may prove to be an increasingly dubious proposition.

This Is What Janet Yellen Thinks Is The "Worst-Case Scenario" For The U.S.

"Japan’s deflation didn’t begin until the mid-1990s, a half-decade after the collapse of Japanese real estate and equity prices. Furthermore, during the early years of deflation, Japanese long-run inflation expectations remained well anchored, averaging about 1½ percent as measured by consensus forecasts. So, unfortunately, a Japan-style deflation remains a relevant worst-case scenario for us going forward."

Oil Extends Losses As Oil Rig Count Drops By Just 1

While gas rigs fell 13 last week, oil rigs dropped just 1 to 515. Crude's initial reaction was to extend losses...

Nasdaq Collapse Leaves No Major US Equity Indices Positive Post-QE3

Who said this market was all driven by The Fed?

filed under "white trash"...

More Smoking Guns - Will Hillary's Next Stop Be The White House Or The Big House?

There are now more than 100 FBI agents investigating Hillary Clinton. Her denial that she is at the core of their work is political claptrap with no connection to reality. It is inconceivable that the FBI would send such vast resources in the present dangerous era on a wild-goose chase. It is the consensus of many of us who monitor government behavior that the FBI will recommend indictment. If the FBI recommends indictment and the attorney general declines to do so, expect Saturday Night Massacre-like leaks of draft indictments, whistleblower revelations and litigation, and FBI resignations.

Dow Crashes 650 Points From Bullard Bounce Top

Some folks are selling... a lot.

S&P Crashes Below August 24 "Black Monday" Lows

"Inconceivable" ... but there is more to come.

Why Senator Cruz' Undisclosed Goldman Loan Is A Real Problem

The dishonesty here is that Cruz has pretended to stand against the bankers. But Cruz is bought and paid for and would be in the pocket of the New York Banks no different than Hillary, Bush, or the rest of them who take money from this crowd. You do not forget to report a loan from Goldman Sachs when your wife is a managing director. Come on. How stupid do we have to be to entertain this excuse?

S&P Enters The Latest European Scandal: Downgrades Poland From A- To BBB+

As so often happens, whenever there is a political spat in Europe, the rating agencies are quickly involved (thing S&P and Moody's downgrades and upgrades of Greece depending on how well the vassal nation is "behaving"), and moments ago S&P downgraded Poland from A- to BBB+ outlook negative, precisely due to Poland's new media law which has been the topic of so much consternation over the past week. In other words, S&P is now nothing more than a lackey for Brussels, threatening to send Polish yields higher if Poland does not fall in line.

If It Walks Like A Bear, Growls Like A Bear...

BofAML says that clients are no longer in "denial" about recession/bear market risks; but clients not yet willing to "accept" we are already well into a normal, cyclical recession/bear market.
How about now?

European Stocks Enter Bear Market

 When "whatever it takes" meets "get me out now!"...

US Freight Volumes Fall For First Time In 3 Years As Baltic Dry Crashes Under 400

For the first time in three years and before that the recession, the total volume of freight moved by road, rail, pipeline, inland waterways and air has fallen Y/Y. Meanwhile, on the high seas, the Baltic Dry has collapsed under 400.

No, Goldman Is Not Calling For An "Oil Bull Market": Here Is What It Really Said And Why It's Bad News For Banks

There has been some confusion overnight whether Goldman, in a note released overnight, is calling for a new "bull market" in oil and commodities in general. Goldman did not call for a bull market. This is what it did say, and it is not good news for US banks.

Recession Imminent As Business Inventories-To-Sales At Cycle Highs

Just as Wholesale inventories-to-sales ratios flash recessionary signals so Business inventrories-to-sales point to US heading towards an inventory-dump recession. At 1.38x, the ratio is the highest since the last crisis as both sales and inventories fell Mom but year-over-year, sales tumble (-1.4% YoY) and inventories rise (1.6% YoY).

With Stocks in Freefall, Nasdaq Breaks... (Stocks Soar)

Exchange says Nasdaq/Finra TRF -- a service dark pools and other off-exchange venues use to report stock trades -- is experiencing technical issue.

Saudi Arabia: A Weak Kingdom On Its Knees?

The great Kingdom of Saudi Arabia - the long-time dictator of crude oil prices for the world - is struggling on all fronts. The Saudis are in a state of panic all around - from its OPEC status and dwindling reserves to its proxy wars that absolutely cannot turn into full-fledged wars and its growing friendlessness. At the end of the day, Saudi Arabia has overextended itself, and overestimated its prowess and it does not have the clout that it once had to be able to do this effectively.

Here It Comes: New York Fed President Says "If Economy Weakens Further, Would Consider Negative Rates"

Remember when the Fed's dots - less than a month ago - suggested there would be 4 rate hikes in 2016? Ah, the memories. Well, you can not only forget that (now that the market is estimating the next rate hike will come in October if ever), but it appears that the Fed will follow Kocherlakota's advice after all and not only cut rates (the possibility of a January rate cut now is 10%), but will pass go, and collect negative rates:
After today's atrocious, recessionary data, one can be certain that the Fed is furiously considering negative rates.

Gold & Silver Spike To Crucial Technical Levels

It has been a roller-coaster week for precious metals as the 50-day moving average remains key support for Gold and resistance for silver. This morning's chaos appears to have reignited the bid for safety once again...

WalMart To Fire 16,000 As It Closes 269 Stores Globally

Behold: the effect of an across the board minimum wage hike...

Posted at 2:19 AM (CST) by & filed under Bill Holter.

Dear CIGAs,
I recently had a long and very interesting conversation with John Embry of Sprott Resources. It is always good to speak with him as I consider him one of the five sharpest economic/precious metals minds I know of and certainly value his opinion. John’s name came up a couple of days ago when someone asked “where is all this silver coming from” to meet the outsized physical demand? I said “this is the number one question John Embry and Eric Sprott have been asking for about a year now”.
Our conversation was quite broad but let’s zero in on the “silver supply” aspect because I believe it is more important than anything else in our world today. That is a very big statement but stay with me as you will see toward the end why I believe this. John asked where IS all the silver coming from? Let me first say what follows was my best educated “guess” and I know of no one who has the firm and hard answer; I told him during the 80′s and early 90′s the amount of “scrap” could be a very logical explanation. Then during the 90′s and early 2000′s the silver deficit could be explained by the huge amount of silver recovered from the “Manhattan Project” estimated to be nearly 1 billion ounces. I also believe the Chinese lent somewhere around 300 million ounces of silver to the U.S. back in 2003 for a 10 year term which expired in that “magical year” 2013. If this was true, it would explain the massive paper takedown in May of 2013 because the lease was “up”. I believe silver had to be taken down as the price was getting away and threatening $50. A collapsing price would allow the U.S. to say “don’t worry, you will get your silver back as we have the price under control”.
Here is where I believe the silver to meet delivery has come from, CHINA! But why? First and foremost, China was a “silver nation” and had used silver as money for longer and in greater quantity than any other nation. In other words, the silver has come from the only place it could have because China had it. OK, but even if China was the only large stockpile, why would they “throw good money after bad” if they were already defaulted on? I believe they wanted the crowned jewel of the West, Gold! They had silver but the West had the gold accumulated during the 1900′s and especially after WWII. Yes the U.S. dishoarded in the 50′s and 60′s but we did still have 8,000 plus tons left and are (were?) custodian for other Western gold holdings. It is my contention a deal was made where silver has been supplied by China to prevent the Achilles heel (silver) from defaulting and blowing up everything. In other words, keeping the game going for longer would allow China to accumulate gold and drain what is left, had the game blown up in 2013, China would not have had the ability to accumulate what they have since then. Call this “dropping pennies to pick up dollars”.
Getting back to what I said at the beginning where I said “silver is more important than anything else in the world”, please follow this through. Silver is a very small market, some would say unimportant except for its various technological, medical, etc. uses. However, in no way could silver’s price get away to the upside without dragging gold with it. Were the price of gold to get away to the upside, demand would explode (particularly in China where they are known as speculators and “chasers”). Were this to happen, the existing supply would be chewed up and the uncomfortable request “please deliver my gold” would become prevalent. At this point the game would be over as the scam of fractional reserve gold (and silver …and everything else) would be public knowledge.
You see, “trust” is at the heart of it all. Our entire financial system is based on trust. Trust in government, trust in fiat currency, trust in cross trading partners, trust in your bank or your broker… it is ALL TRUST! What would happen to this trust if it turned out that a Ponzi scheme turned up somewhere? Not just any Ponzi scheme like Madoff but one where the exchange itself was running a fractional reserve fraud and could not deliver? Trust …IN EVERYTHING would fail!
As usual I am sure I will be trolled for the above and called an idiot but I must ask you this- If global gold supply has not met demand for 20 years or more, where can the metal have come from to meet the deficit? The same goes for silver and even more so because the supply/demand deficit has been even more severe and longer in duration? The answer is most obvious, the metal had to come from the only place available, above ground supplies. For gold, that can only mean “official” stockpiles (vaults). For silver, I believe the only large above ground stockpile left was legacy silver in China.
Please do not point at the price and say “see, there are no shortages” as we have seen shortages, rationing and backwardation in both silver and gold over the last two years. If you gave me 100 billion counterfeit shares of IBM I could sell whenever I wanted, I am pretty sure I could make IBM look like a falling down drunk whenever I wanted and the price would certainly be depressed! Herein lies the fault, gold nor silver can be “printed” and when all is said and done investors holding receipts for same will be in for a very big and very bad surprise!
To finish, if I am correct about the silver for delivery coming from the most likely of all places, China, then I believe this will be looked back on by historians as “the Chinese silver fox in the West’s golden hen house! Am I correct? I don’t know but we will soon see as the global paper financial edifice is quaking on its own. John Embry told me, “of all the many theories I have heard so far, yours makes the most sense and is the most logical”. I mentioned this topic to Jim yesterday and he told me when we first talked about it six months back he was skeptical but the more he has thought about it …the silver can ONLY be coming from where it exists…Chinese legacy silver!
I think China has done some very intelligent maneuvering particularly since the 2008 crisis. They figured out our fractional reserve scheme was toast but they played along anyway. They even levered up as much or more than we did since then. However, with this increase in credit they have built infrastructure in the form of roads, bridges, cities, plant and equipment …all for and with future uses. The West on the other hand has thrown a “standard of living party” and neglected infrastructure to the point of dilapidation. Yes China’s financial system will implode with all the rest, they may even lead it! But, they will be left with new infrastructure and “money” (our gold) to get started again. President Xi has even said this to his people and to the world. He said the short term would be difficult but the long term beneficial. I think he is telling the truth!

Standing watch,

Bill Holter
Holter-Sinclair collaboration
Comments welcome!


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