Tag Archives: FOMC meeting

Who Is Buying China’s Dumped Treasuries?

According to the latest Treasury International Capital report (for October), China unloaded nearly $42 billion in Treasuries in October. In the last 12 months, China has unloaded nearly $150 billion in Treasuries, equivalent to more than one month’s worth of new Treasury issuance by the U.S. Government.

The Zerohedge/mainstream financial media narrative is that China is selling Treasuries to defend the yuan. They hold reserves other than dollars. Why not sell those? They are trying to unload their Treasuries w/out completely trashing the market. Imagine what would happen to the bond market if China announced a bid wanted in comp for $1.1 trillion in Treasuries. They are working with Russia to remove the dollar’s reserve status and the U.S. doesn’t like it which is why there is an escalating level of military aggression toward Russia and China by the U.S.

Too be sure, China’s Treasury selling has contributed heavily to surprising spike up in long term Treasury yields.  But who is buying what China is selling?  Japan has been unloading Treasuries every month since July.  On a net basis, foreigners unloaded $116 billion Treasuries in October.  A colleague in the pension industry told me today that pensions are not buying Treasuries because the yield is too low.

Phil and John (Not F) Kennedy invited me on to their engaging and entertaining podcast show to discuss the chaos that has enveloped the global financial markets including the Fed rate hike, the manipulated take-down of gold and silver and the deleterious effects from the spike up in interest rates.

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Adios To The Housing Market

That popping sound you just heard is the Fed popping the housing bubble.  The housing bubble that it inflated with ZIRP and zero-bound credit requirements to qualify for a mortgage.    But first, let’s get this out of the way:  Goldman’s Jan Hatzius – apparently the firm’s chief clown economist commented that the Fed’s “faster pace” of rate hikes reflects an economy close to full employment.  That statement is hand’s down IRD’s winner of “Retarded Comment of the Year by Wall Street.”

I guess if an economic system in which 38% of the working age population is not working can be defined as “full employment” then monkeys are about to crawl of out Janet Yellen’s ass.  I guess we’ve witnessed more stunning events this year…

Before we start assuming the Fed will raise rates three times in 2017, let’s consider that Bernanke’s “taper” speech was delivered in May 2013.  3 1/2 years later, the Fed Funds rate has been nudged up a whopping 50 basis points – one half of one percent.

I hope the Fed does start raising rates toward “normalized” rates, whatever “normalized” is supposed to mean.  Certainly there’s nothing “normalized” about an economic system in which real rates are negative – that is to say, an economic system in which it’s cheaper to borrow money and spend it than it is to save.

Having said all that, put a big pitch-fork into the housing market.  Notwithstanding the highly manipulated “seasonally adjusted annualized rate” data puked on a platter  and served up warm by the National Association of Realtor and the Census Bureau – existing and new home sales data, respectively – the housing market in most areas of the country is deteriorating at an increasing rate.    I review this data extensively and in-dept in my Short Seller’s Journal.

Even just marginally higher mortgage rates will choke off the ability of most buyers to qualify for anything less than an conventional mortgage with 20% down and a 720 or better credit score.   With a rapidly shrinking full-time workforce – the Labor Department reported that last month the economy lost 100,000 full-time jobs – the percentage of the population that has a 720 credit rating and can afford 20% is dwindling rapidly.

The Dow Jones Home Construction index is down 2.5% today.  What will happen to the stocks in that index when the Fed cranks back up it’s “we’re raising again” song and dance?

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Despite the rampant move in the Dow/SPX since the election = while the Dow and SPX were hitting all-time highs almost daily – the momentum was not enough to propel the homebuilder stocks even remotely close to a 52-week high.  Hell, the 50 dma (yellow line) has remained well below the 200 dma (red line) and has not even turned up.  THAT is the market sending a message.

Here’s a weekly version of the same graph that goes back to 2005, when the DJUSHB hit an all-time high:

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When looked at it in that context, one has wonder where this great housing boom has been hiding? The stock market certainly didn’t price in a booming housing market. That’s because the truth is that the housing market since 2008 has been driven by massive Fed and Government intervention. The intervention enabled a segment of the population to buy a home that could not have otherwise afforded to buy a home. It was really not much different than the previous bubble fueled by liar loans and 125% loan-to-value mortgages. As I detailed yesterday, the system is now re-entering a cycle of delinquencies, defaults and foreclosures.

If you are thinking about buying a home – primary, vacation or investment – wait.  You will be happy you waited.  Prices have been pushed up to near-record levels by 3% down payment mortgages and credit assessment that gears the amount of mortgage available to a buyer based on maximizing the monthly payment based on monthly gross income.  That system is over now.  Prices and volume are going to spiral south.

If you need to sell your home, you better list it as soon as possible.  You will find that you will be competing with a surge in new sellers that descend like locusts.  “Price reduced” signs will blossom everywhere.  Just like 2008…

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Fed Reverse Repos Reveal Big Cracks In The Financial System

Since the Fed’s QE program largely tapered at the end of 2014 (note:  the Fed still used interest on its mortgage holdings to buy more mortgages), the size and volatility of the Federal Reserves reverse repo operations with banks – especially foreign banks – has been continuously increasing:

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The most likely explanation for this is growing liquidity problems in the western banking system connected to increasing instability in OTC derivatives. While all fingers point to Deutche Bank, DB is just one player in large game in which every player is inextricably connected.  But the eventual derivatives financial nuclear melt-down will probably be triggered by DB, and the fact that the ECB enabled Deutsche Bank to cheat on the BIS-mandated bank stress tests reinforces this view:  ECB Allow DB To Cheat.

The scale and severity of this problem is going to explode now that the U.S./western housing and auto loan bubbles are beginning to pop.

In today’s Shadow of Truth episode, we discuss some possible meanings embedded in the two graphs above plus a couple other topics not covered by the mainstream financial media propaganda:

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Operation Mockingbird And The Mainstream Media

Notice how EVERYTHING – even the most trivial of events – on Fox News/Business, Bloomberg, CNBC, CNN and MSNBC is “BREAKING NEWS?” The presentation of the news and the exploitation of sensationalism has itself become an insidious form of propaganda.

Operation Mockingbird was implemented by the CIA in the early 1950’s as operation to influence the media.  The idea is that, regardless of the truth, the first headline read by the public in the media was the version of the news that would stick with the public.  As an example, whenever a bomb explodes somewhere in the U.S., the first headlines that hit the newswires blame it on ISIS.

The genesis of this propaganda tool was Edward Bernays (nephew of Sigmund Freud), who is credited with being “the guy” behind Joseph Goebbels and the father of the “Virginia Slims Girl,” among another nefarious accolades.

In this latest episode of the Shadow of Truth, we discuss the reasons why that, for almost anything connected with politics and economics, the opposite of anything reported by the mainstream media likely the truth.

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Gold And Silver Getting Ready To Launch Again

Doc – Silver Doctors – and Eric Dubin – The New Doctors – invited me back on their SD Weekly Metals & Markets show this past week. We discussed the upcoming “most important ever” FOMC meeting this Tues/Wed (note the sarcasm as CNBC labels every FOMC meeting “the most important ever”), the “shock and awe” manipulation of gold and silver ahead of this meeting and the reasons why the precious metals are getting ready for another move higher. We also chatted about who might replace Hillary if/when she goes down for the count and we gave our predictions on whether or not the Fed will hike rates on Wednesday:

Thoughts On Rate Hikes, Money Printing and Jim Rickards

In times of universal deceit, telling the truth is revolutionary act.  – George Orwell

A subscriber to my Mining Stock Journal sent me this correspondence a few days ago while the precious metals were being pushed lower by the bullion banks:

I read an article before the July 4th holiday from James Richards. He said that China would use the G20 meeting to push for the SDR. I kept this in the back of my head while the PMs were being smacked around in August. Zerohedge came out with this story today that more fiscal stimulus was coming:  LINK

There’s no question that Fed co-chairman Stanley Fisher floated his “rate hike coming” propaganda all week last week, starting with his useless speech at Jackson Hole, as a device to help the Comex banks smack gold with their fraudulent paper gold.

It’s now clear that gold was taken down ahead of the G20 meeting because the insiders knew that a call for more QE would emerge.  And that’s about the only thing that emerged other than the amusing abuse of Obama by China and Russia.

This was my response to the above subscriber inquiry – I thought it was worth sharing:

Rickards is controlled opposition. He appears to be friendly to anti-elitists like our crowd but he’s a front for the Deep State that is pushing hard for the SDR to replace the dollar because the dollar will still be largest component and it will enable the Deep State to maintain a high degree of control of the global economic system.

I believe China/Russia are using the SDR as an intermediate step toward getting rid of the dollar completely. That the SDR will play some type of role for awhile is already priced in to the market. That Chinese SDR bond issued is an example. Rickards is regurgitating information that is already obvious and absorbed into the markets. More interesting is to figure out what’s next.

You saw how China treated Obama at the G20 vs. Putin. The writing is on the wall on the for the dollar and the U.S.

If the big Central Banks resort to more QE to keep everything from collapsing, gold will soar. If they don’t resort to QE, everything will collapse and gold will soar in flight to safety.

The only strategy “they” have left is to create as much disinformation and confusion as possible. Rickards is part of that disinformation apparatus. Note the heavy onslaught of anti-gold propaganda the past few weeks, primarily Fed heads chirping like pre-programmed monkeys about rate hikes. Won’t happen.

Is The Financial System On The Brink Of Collapse Again?

Craig “Turd Ferguson” Hemke invited me on his podcast series for a discussion about somewhat hidden developments occurring behind the carefully crafted western propaganda facade.

For those who have at least been able to “blow the Orwellian smoke” away from the war on gold, you’ve noticed that the Fed/bullion banks are having a lot of trouble pushing gold lower.  In fact, the current line of battle is at $1300 and I believe that barrier will soon be breached decisively to the upside.

We also discussed the ongoing “controlled demolition” of Deutsche Bank, which currently poses perhaps the biggest threat to the western financial system.  You listen to our conversation in mp3 format with this LINK or by clicking on the graphic below:

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“Thanks for the heads up on LULU and SHW. Bought the SHW July 15 270 strike puts and did well on exit this morning before market reversal” – “Sal,”  Short Seller’s Journal subscriber

“The comparative pittance you charge for the MSJ has already paid off quite well for me and my younger brother.” – “Bill,”  Mining Stock Journal subscriber

FOMC No Rate Hike: Gold, Silver, Miners Pop – Stocks Drop

We’re very bullish on gold, which is the anti–paper money, of course, and is underowned by investors around the world.   – Paul Singer, Elliot Management Corp

Predictably, the Fed did not raise the Fed Funds rate by a piddly one-quarter of one percent today.  It’s not because the economy is crashing – which it is – but because the foundation of the massive, money-printing inflated asset bubble in the U.S. and globally rests on the teetering foundation of zero-percent interest rates.

Negative rates rates presents another dilemma:  a western financial system that is completely dysfunctional from over eight years of bombarding the western economies with ZIRP and money printing.  At least most of the eastern hemisphere countries have Central Bank lending rates well above zero.  China’s is 4.35%;  Russia’s is 10.5%.

This blog unequivocally said three weeks ago, when the usual Fed clowns began their routinized interest-rate hike threat that the FOMC would whiff again.  What the heck happened to today’s meeting be in “live,”  John (SF Fed’s John Williams)?  Now that the Fed balked once again at nudging rates 25 basis points closer to China’s overnight Central Bank lending rate, does that mean that today’s meeting was not “live?”

Interestingly, stocks were pushed higher overnight and gold was pushed lower.   When I saw it at 5:30 a.m. EST, gold was down $7 from where it opened the overnight CME Globex electroning session (6:00 p.m . EST).

After the “not live” meeting was over and the results hit the tape, both gold and the stock market popped.  But the stock market apparently saw through the transparency of Yellen’s smoke-blowing and interpreted another “dead” meeting to mean the economy is indeed dead.  While gold ramped up toward $1300, the S&P 500 plunged 11 points in the last 28 minutes of trading.

I have been suggesting to my Short Seller’s Journal subscribers that the S&P 500 is starting to tip over – finally.  I think there’s a better that 50/50 chance that the S&P 500 repeats the same kind of cliff dive it took in August 2015 and the beginning of 2016.

On the other hand, it seems that a lot of western money – wealthy individuals and smart hedge fund managers – are beginning to plow a lot of money into physical gold.  Why? Because the price-movement of paper gold relative to the size of the Comex open interest is running in higher in defiance.   This is something that has not occurred in the last 15 years and it’s caught a lot of market analysts wrong-footed.

The character of the market has changed.  I don’t know how much leverage the Fed/bullion banks have to push gold a lot lower at these levels.  We’ll find out as gold challenges $1300 again and we get closer to BREXIT.  The Fed/ECB/BOE are making it clear that they will do their best to manage the price of gold into this potential event.

For anyone interested in opportunities to profit from getting in on the early stage of this next leg of gold’s bull market, check out my Mining Stock Journal.  I present long term view ideas on high potential junior micro-cap mining stock ideas.

I present the views. My service is research-based, not trading-based. Everyone has to
buy/hold/sell according to their own risk/return preferences and tolerances.  I buy LONG term core positions in my ideas and trade in and out of maybe 20% of the position but not very often.  You don’t get rich trading the market. You get rich finding very undervalued ideas and holding them until they are overvalued. We are 90% away from juniors being overvalued.   You can subscribe using this link:  Mining Stock Journal.  You will start with the current issue plus get all of the back-issues (it’s bi-monthly).

 

Deutsche Bank Is Collapsing – But It’s Not The “Black Swan”

The global financial system is close to going supernova.

Both Credit Suisse and Deutsche Bank stocks are hitting all-time lows.  Both are collapsing despite billions in Central Bank – Fed, ECB, Bundesbank, Swiss National Bank – monetary support.

Deutsche Bank had been advertising a 5% interest rate to customers in Belgium on  90-day deposits of at least 50k euros .  Bank deposits are essentially “loans” to a bank from the depositor (creditor).  This implies that the rate that DB had to pay to attract deposits is equivalent to a triple-C rated credit (although the 10-yr junk bond rates for double-B  rated bonds are around 5.5%, keep in mind that DB is paying 5% for 3-month money).   This is the unmistakable sign of a company that is collapsing.

DB stock was down over 3% yesterday on a day when most big TBTF banks for down 1% or less. It’s down another 2.8% 3% as I write this today, trading below $15/share for the first time ever.   This bank is obviously collapsing and any money manager who holds onto this stock for clients is in serious breach of fiduciary duty.  This is the 2016 version of Enron.

But it won’t be a “Black Swan” event.  The Central Bank authorities knew DB was going to collapse when Anshu Jain was fired in June 2015, literally about  2 weeks after DB’s board had given Jain even more control over bank operations.  However, the Central Banks mentioned above collectively had a year to put a “ring” around the collateral damage – i.e. the derivative counter-party default risks – that occurs from DB collapsing.

The Credit Suisse problems have been far less visible but the behavior of the stock is signalling to us that CS’ problems are on par with DB’s.  I don’t know if both banks will ultimately end up being monetized by a combination of taxpayer bailiouts (including U.S. Taxpayers) and bail-ins.  I would suggest that bail-in capital available would not even remotely address the derivatives-related liabilities embedded in the Credit Suisse’s and DB’s balance  sheets.

My point here is that – unless there’s even bigger problems hidden from the Central Banks, which have had a year now to address the DB/CS situation – a DB collapse will likely cause a sell-off in the stock market, but would not be the “Black Swan” for which everyone is searching.

I don’t know what the Black Swan is or what it will look like.  Otherwise it wouldn’t be a Black Swan, right?  What I will suggest is that the day in which the “box” with Schrodinger’s cat appears and we look into to it to see a dead cat is quickly approaching.  I would also suggest that this is why those who have been calling for a short-term wipe-out in the price of gold have been proved wrong for over two months, despite the blatant daily attempts by the Fed/ECB/bullion banks to push the price of gold lower.

This is a development that no one is talking about – but I believe that is represents a hidden slow-motion financial collapse that will soon accelerate:

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The “Markets” Are A Total Farce: Stocks Pushed Up – Gold Pushed Down By The Fed

I described the other day what a circus the inter-FOMC meeting periods have become.   One by one Fed clowns appear to describe an economy at full employment and threaten us with another one-quarter of one percent Fed Funds rate hike. Since this process has started last Monday, the S&P 500 has been flat but gold has been taken down methodically  about $80, or 6.7%.   The mining stocks as represented by the HUI have been dropped 12% from their high last week.

Yesterday the circus took on a new dimension.  SF Fed John Williams was once again out promoting rate hikes this year and even more rate hikes next year – LINK.  St Louis Fed clown Bullard was out yesterday pontificating that low rates  for too long could be risky – LINK.  You don’t  say, James?  Is he referencing the nominal .25% Fed funds rate since  lat e 2008?  OR is he referencing the negative real interest rates since well before 2008?  To which measure of interest rates are you are you referencing, James?

They both made some insane assertions about “full employment” in the economy.  Does that mean that anyone who wants to be a bartender or barista can find gainful employment?  But what about the 38% of the population that is no longer counted as part of the labor force?   A large majority have given up looking for work because it’s easier and pays better to soak off the taxpayer via Social Security Disability, Welfare and Student Loans.

Everyone knows that the true unemployment rate is over 20%.   This is based on applying the way the Government calculated unemployment in 1980.  We still have the issue of data collection and “massaging.”  The economy is far from healthy and the flow of economic reports from private sector sources, including regional Feds, continue to reflect an economy that is deteriorating down the level of economic activity in 2009.

The Fed needs to promote the idea of rate hikes in order to show consistency in policy with its narrative of “full employment, tight labor market conditions and an improving economy.”  Just as important, it reinforces the Fed’s ability to manipulate the price of gold.

The source of frustration for many of us is that higher rates correlate with lower stock prices and higher gold prices.    Days like today in the markets are difficult to watch because it’s driven entirely by false propaganda and direct intervention in the market by the NY Fed/Exchange Stabilization Fund.

While days like today may be painful to watch, the truth is that since the Fed began bashing gold with rate-hike drivel starting last Monday, the S&P 500 has not moved higher despite days like today which make it feel like the stock market is poised to hit an all-time high.

When the Fed pushes down the price of gold with paper during NY Comex floor-trading hours, take advantage of it by buying some physical gold or silver.

I have moved U.S.Government electronic monopoly money from my checking account into my  Bitgold account every day this week.  I don’t have the funds required to buy a 1oz. bullion coin everyday, but  BitGold  allows me to accumulate .9995% gold grams. This is bona fide allocated gold.

I want to make it clear that I’m not an affiliate or associated with Bitgold and do not get any ad revenues from Bitgold for the display link at the top (although I’m sure I could if I requested it).  I just really believe in the service and I think anyone can benefit from moving their digital bank credits out of the global Central Banking system and in to Bitgold.  I receive a 2% “bonus” if someone uses the links on this site to sign-up for Bitgold and everyone who opens a new account that is funded receives a 5% bonus.

I had an in-depth conversation with the CEO several weeks ago and when I find the time I am going to share my analysis of the with the subscribers of my Mining Stock and Short Seller Journals.