Tag Archives: FOMC

The Economy Is Tanking

The FOMC can raise interest rates any time it desires, without prior approval from anyone outside the Fed. Accordingly, the ncreased hype primarily has to be aimed at manipulating the various markets, such as propping the U.S. dollar. Separately, it remains highly unusual, and it is not politic, for the FederalReserve to change monetary policy immediately before a presidential election. – John Williams, Shadowstats.com

The March non-farm employment report originally reported that 215,000 jobs were created (ignore the number of workers who left the labor force).  But five months later the BLS released “benchmark” revisions which took that original number down by 150,000.  However, the BLS reports a 74,000 upward revision to Government payrolls, which means that non-Government payrolls were down 240,000 in March.  So much for the strong jobs recovery…

A report out on August 19th that received no attention in the financial media showed that Class 8 (heavy duty) truck orders fell 20% from June and 58% year over year. This is after hitting a four-year low in June. The big drop was blamed on a high rate of cancellations. This is consistent with regional Fed manufacturing reports out two weeks ago that showed big drops in new orders. Again, the economy is starting contract – in some areas rather quickly.   Heavy trucking is one of the “heart monitors” of economic activity.

Another datapoint that you might not have seen because it was not reported in the mainstream financial media: the delinquency rate for CMBS – commercial mortgage-backed securities – rose for the 5th month in a row in July. The rise attributed to “another slew of balloon defaults.” Balloon defaults occur when the mortgagee is unable to make payments on mortgages that are designed with low up-front payments that reset to higher payments at a certain point in the life of the mortgage. This reflects an increasing inability of tenants in office, retail and multi-family real estate to make their monthly payments.

Again, I believe that evidence supporting the view that housing and autos are starting to tank is overwhelming. Last week Zerohedge featured an article with data that showed that prices in NYC’s lower price tiers are starting to fall, following the same path as the high-end market there LINK. I want to reiterate that I’m seeing the exact same occurrence in Denver in the mid/upper-mid price segment. Furthermore, I’m seeing “for sale” and “for rent” signs pile up all over Denver proper and I’m seeing “for sale” signs in suburban areas where, up until July, homes were sold as soon as a broker got the listing. NYC, Denver and some other hot areas in the last bubble began to fall ahead of the rest of the country.  I don’t care what the National Association of Realtors claims about the level of existing home inventory, their numbers are highly flawed and the inventory of homes on the market is ballooning – quickly.

I like to describe housing as “chunky,” low liquidity assets. It takes a lot of “energy” to get directional momentum started. Once it starts, it eventually turns into a “runaway freight train.” We saw the upside of this dynamic culminate over the last 6-9 months. But now that freight train is slowly cresting and will soon be headed “downhill.” I don’t think this dynamic can be reversed without extraordinary interventionary measures, even larger than 2008, from the Fed and the Government.

As for autos, I detailed the case that auto sales are heading south in previous blog posts. However, Ford disclosed in its 10-Q filing that charges for credit losses on its loan portfolio increased 34% in the first half of 2016 vs. 2015. GM’s credit loss allowances increased 14% vs. 2015. As credit losses pile up in auto-lender portfolios and in auto loan-backed securities, lenders will begin to constrict their auto sales lending activities. It will be an ugly downward spiral that will send negative shock-waves throughout the entire economy.

I find it highly improbable that the stock market will not continue lower unless the Fed steps in to prevent it.  The Fed is playing “good cop/bad cap” with its rate hike theatrics.  As John Williams points out, it does not require a formal FOMC meeting for the Fed to raise or lower interest rates.  In fact, there’s precedence for inter-FOMC pow wow interest rate changes.   This entire Kabuki theater is designed to support the dollar ahead of yet another meeting in which Fed stands still on rates.   Honestly, even a quarter point hike could act like dynamite on the financial weapons of mass destruction hidden on and off bank balance sheets.  The fraud at Wells Fargo is just the tip of the ice-berg.

The short-sell ideas I present in IRD’s Short Seller’s Journal have worked out of the gate four weeks in a row.  The last time SSJ had a streak like this was during the early 2016 sell-off.  Although my ideas are meant to be long-term fundamental shorts based on flawed business models and deteriorating business conditions, a couple of those ideas are down over 10% in less than a month.  I’m also sharing my strategies with the homebuilders, all of which will be trading under $10 within the next 18-24 months (except maybe NVR.

You can access the Short Seller’s Journal here:   SSJ Subscription.  This is a weekly report in which I present my view of the markets, supported with economic data and analysis you might not find readily in the alternative media and never in the mainstream media.  It’s a monthly recurring subscription you can cancel anytime.   Subscribers can access IRD’s Mining Stock Journal for half-price.

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Why Do Central Banks Need To Exist?

The short answer is, they  don’t.   Central Banks function as “legititmized” price control mechanisms.  They control the price of money in order to help the elitists confiscate your wealth.  That’s it.   But price controls never last very long and neither do Central Banks.   The U.S. is on its third CB in less than 300 years of existence and there’s been in a movement in place to get rid of the Fed for at least the last 8 years.

The Daily Coin featured a useful analysis – LINK – of the latest attempt by the western Central Banks to build a “currency sandbox” for everyone to play in because they know the U.S. dollar’s role as the reserve currency is coming to an end.  The Utility Settlement  Coin” is an act of desperation to head off the move by eastern hemisphere emerging economic powers, led by China and Russia, to create a level playing field.

Almost every year the precious metals sector experiences a price correction late in the summer.   And almost every year the anti-gold propaganda floods the internet and media. This year is no exception.  But the current pullback in the sector has about run its course.   This was a healthy pullback after the huge run up in the sector.   The next leg higher should be even more exciting.

Finally, the U.S. economy is starting to collapse.  Blow away the propaganda smoke being blown by the likes of Janet Yellen, Stanley Fisher and Hillary Clinton and a clear view of the real economic data will show a nasty downturn emerging in housing, autos, general manufacturing and discretionary consumption.   In the latest episode of the Shadow of Truth, we discuss these issues and infuse some humor to make it easier to digest – enjoy the podcast and enjoy your  long holiday weekend – it could get ugly in Q4:

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Puerto Rico’s Collapse Foreshadows A Total U.S. Collapse

Congress, for some reason, has agreed to use U.S. Taxpayer money to bailout Puerto Rico. That’s mighty generous of Congress to use Citizens’ money for that, especially when most Congressmen have their money tax-sheltered in the Rothschild Trust Company in Reno.  But it begs the question:  Why is Puerto Rico even part of the United States?

An article in the Wall Street Journal reports that Puerto Rico’s pension fund is underfunded by $43 billion, which is on top of $70 billion in various forms of Government debt.  Puerto Rico is an “unincorporated territory of the U.S., which means that it probably harbors a lot of U.S. money hiding from the IRS.  That explains why Congress is using other people’s money to bailout their own money plus the money of those who fund Congressional seats.

Puerto Rico, for all intents and purposes, has financially collapsed.   Your tax dollars are keeping it solvent and paying out pension beneficiaries.  But the State of Illinois would love to have the size of PR’s problems.  The State pension fund in Illinois is underfunded by over $111 billion.  That’s based on a lot of assets like commercial real estate, junk bonds and private equity investments that are marked to fantasy.  Mark ’em to market and I bet the pension fund is underfunded by closer to $200 billion.

That’s just Illinois.  If we were to do a rigorous mark to market assessment of the State pension funds in California, Texas, New Jersey, New York and Florida, I’d bet my last roll of silver eagles that combined the pensions in those States – not including Illinois – are underfunded by  over $1 trillion.

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The graph above shows a 60-minute intra-day chart of the S&P 500 going back to late June. I’ve been featuring this chart in my Short Seller’s Journal every week.   The S&P 500 has basically flat-lined since July 7.  If you overlaid a bollinger-band width indicator, it would show a horizontal line since July 7.  The Fed has temporarily achieved the remarkable feat of removing volatility from the stock market.

The Fed has keyed the stock market to minimizing VaR.  “VaR” stands for “Value at Risk.”  It’s essentially a fancy-sounding term that measures how much an investment portfolio – or bank asset portfolio – might lose given certain volatility assumptions over time.  That’s it in a nutshell though I’m sure quant-geeks will get picky with that summary.

But the bottom line is that if market volatility shoots up for some reason, VaR will shoot up and that will incinerate every single big bank and pension fund  in this country.  Puerto Rico’s predicament will look like a feel-good Broadway musical by comparison.

A friend of mine did a comprehensive of study of public pension funds and concluded that a 10% or more drop in the S&P 500 over a sustained period of time would induce the collapse of all public pension funds.  I think he assumed the best case in terms of how pensions currently mark their assets.  If you notice, the 10%-plus  sell-offs last August and January were followed by sharp “V” bounces – both time.  That was undoubtedly the work of the Fed and my friend’s quantitative work explains why.

I would be surprised if there’s ever been a 7-week period of time when the volatility in the stock market has been as low as it has been since July 7.  Especially considering the high volume of economic, political and geopolitical events that are occurring simultaneously, each of which individually has caused sharp market sell-offs historically.

Another friend/colleague of mine told  me today that one of clients stated that he thought the Fed could hold up the market forever.  My response to that is, if that were the case the whole world would be speaking German right now.

The U.S. collapse will happen either now or later.  For the latter outcome, at some point the Fed will need to print 10’s of trillions of dollars to prevent that horizontal line on the graph above from turning into a downward-pointing near-vertical line.  Of course, please review the history of Germany circa 1923 to see how the money printing alternative worked out…

The Fed’s Latest Comedian: Stanley Fisher

Stanley Fisher embarrassed himself and the Fed today by regurgitating the standard Fed threat to raise rates in 2016. The Fed officials are starting to sound like that teacher on the Peanuts cartoon:

We are close to our targets,” Fischer said in a speech at the Aspen Institute in Aspen, Colorado on Sunday. “Looking ahead, I expect GDP growth to pick up in coming quarters, as investment recovers from a surprisingly weak patch and the drag from past dollar appreciation diminishes,” he added, without giving explicit views on his rate outlook.  LINK

Someone needs to put a muzzle on these guys. The economy is meeting the Fed’s goal of what, creating the lowest labor force participation rate in history? I have to believe the Fed is looking at the real economic data reports and not the seasonally manipulated annualized rate garbage fed to us by the likes of the Government, auto industry and housing industry. Retail sales, including and especially restaurant sales, are declining and possibly on the verge of collapsing. Same with housing. I have been reviewing the real data in-depth in my weekly Short Seller’s Journal.

It’s especially funny that Fisher is bragging about a strong in economy from his perch at the Aspen Institute in Aspen, Colorado. Why? Because Aspen real estate is collapsing: Brokers At A Loss To Explain Sudden, Precipitous Drop In Aspen Real Estate: (LINK)

High-end sales that fuel Aspen’s $2 billion-a-year real estate market are evaporating, pushing Pitkin County’s sales volume down more than 42 percent to $546.45 million for the first half of the year from $939.91 million in the same period of 2015

I was just in Aspen two weeks ago.  I wandered into the Ralph Lauren store and it was a morgue.  The salesperson was hounding me like a starving wild animal.  It was uncomfortable.

I’d love to see the Fed hike rates next month at their next FOMC circus.  In fact, hike them 50  basis points instead of the gratuitous one-quarter of one percent they teased us with at the end of 2015.   A rate hike might finally put the hammer on Clinton’s Presidential aspirations.  We already can see that her supporters could give a shit about her psychopathic criminal behavior.

Fisher apparently thinks the Fed has “neared its goals” for the economy.   If he thinks falling housing, retail and auto sales – combined with shrinking jobs market – are worth goals, hell raise rates 1%.

The the truth is that the only goal the Fed has accomplished is an almost daily delivery of good belly-laugh.

The Stock Market Is A Weapon Of Massive Wealth Destruction

The discussion about p/e ratios and other valuation ratios derived from Company-issued GAAP accounting financials is idiotic.  The GAAP accounting allowances have been liberalized beyond a Bernie Sanders wet dream over the last 20 years.   The p/e ratio at the peak of the tech bubble is completely different from the p/e ratio at the top of the 2007 stock bubble which is completely different then the p/e ratio now.

If 1999’s or 2007 GAAP standards were applied to today’s earnings, the P/E ratio on the S&P 500 would be at least as high as 65 p/e ratio registered in 2007.   By several other metrics, most notably market cap/sales ratio, the current stock market is by far the most overvalued in history.

And that does analysis does not incorporate any adjustments for the fraud component of contemporary corporate accounting.

The S&P 500 and Dow are hitting all-time highs this week.   This was triggered by the Ben Bernanke influenced Bank of Japan decision to engage in “helicopter money” activity in an attempt to stimulate economic activity.  Notwithstanding the fact that Bernanke is likely the most destructive Central Banker in history, Japan’s decision will end in destruction of its currency.  Maybe that’s what the NWO’ers are working toward achieving anyway.

Interestingly, the U.S. stock market reacted counter-intuitively to Japan’s move.  The yen and other Asian currencies plunged vs. the dollar, making U.S. manufactured exports to Japan/Asia more expensive and making Asian imports into the U.S. cheaper.   This in turn will further depress U.S. corporate revenues and earnings, which have dropped 5 quarters in a row – likely a 6th quarter when we get to see Q2 earnings reports.   To label this response by the U.S. stock markets “idiotic” is an insult to the word “idiotic.”

Beneath the glow of a stock market on fire, the U.S. economy is collapsing, especially the consumer.  I’ve detailed the decline in a key consumer spending metric, dining out, to demonstrate that middle class disposable income is shrinking quickly.  The Canadian brokerage firm, Canaccord, released a report this morning which stated that, “said the firm’s checks indicate a material decline in sales and traffic trends in casual dining restaurants was seen in June LINK.

June auto sales came in below expectations.  This is despite a new record in auto debt issuance.  The auto debt bubble is starting to look a lot like the housing mortgage bubble of 2005-2008.

The price of oil is starting to drop quickly again.  Refiners are cutting crude oil orders quickly as demand for refined products slips as another oversupply condition has accumulated:  LINK.   The Fed and the TBTF banks have been working hard to keep the price of oil propped up.  They know all too well that a big bank balance sheet disaster looms if too many junk-bond financed companies go tits up all at once.  That will happen anyway and for that we can soon expect Helicopter Money in this country.

Speaking of Helicopter Money, Cleveland Fed President, Loretta Mester, gave a speech in Australia in which she alluded the possibility of using “Helicopter Money” to stimulate economic activity.  Mester is a voting member of the FOMC. This tells us that the FOMC itself has been discussing the possibility of dropping bags of money on the population.

This reflects a Fed that is in a complete state of desperation about the collapsing economy.  $4 trillion in direct money printing plus several multiples of that amount of money injected into the system in the form of credit failed to stimulate real economic activity.  Why are they talking about even more?   Sure, housing and auto purchases using DEBT were stimulated, but that ship has sailed unless the Fed wants to give out money for down payments.

The Fed is even more desperate to keep the stock market elevated. If the stock market collapses, or just drops over 10% for an extended period of time – as in a few months – every single pension fund and insurance company in this U.S. will collapse.  It’s a simple as that.

In other words, the stock market is one big weapon of Mass Wealth Destruction.  You can protect yourself by unloading your non mining stock dollar-based “investments” and moving your money into physical gold and silver.

I am expecting a MONSTER move in the precious metals between now and the end of the year.  I will lay out an overview of my views later this week…I save details behind my analysis for subscribers to my Mining Stocks and Short Seller Journals…

 

The Economy Is Tanking – Inflation/Obamacare Attacking The Middle Class

The economic reports continue to show an overall rate of deterioration in economic activity down to levels – in general – comparable with the 2008-2010 period.  Freight transportation activity is part of the “nerve center” of the economic system.   The latest data from Cass shows a rapid decline in both freight shipments and expenditures that began in mid-2014:

UntitledAlthough shipments ticked up from April to May 1.3% – attributable to seasonality –  year over year shipments for May dropped nearly 6%:Untitled

As you can see, expenditures plunged 10.1% year over year.  North American freight shipments reflect all economic activity at all levels of the economic system across a broad spectrum of industries.

Retail sales reports going back to December 2014 are signalling economic stress at the household level:   “During normal economic times, annual real growth in Retail Sales at or below 2.0% signals an imminent recession. That signal basically has been in play from December 2014, based on industrial production, retail sales and other indicators), suggesting a deepening, broad economic downturn” (John Williams, Shadowstats.com)

This financial stress at the household level is beginning to show up in credit delinquencies and defaults.  Last Tuesday Synchrony Financial reported an unexpected spike in its credit card charge-off rates:  Rising Credit Card Defaults.   As I’ve detailed in prior posts, auto loan delinquencies and defaults are beginning to accelerate.  I’ve covered a couple of credit and credit-related companies in my Short Seller’s Journal , one of which is down 18% since I featured it on March 20th. This is a remarkable fact given that the S&P 500 is up 1.5% in the same time-frame.   When the stock market rolls over, this stock will drop at least 50%.

Although the latest retail sales report last week showed a small gain month over month, the unexpected gain was fueled almost entirely by the rise in gasoline prices.   The Government CPI report does not show much inflation, because the Government goes out of its way to not measure inflation.

The Government’s methodologies used to hide real inflation have been dissected ad nauseum by this blog and many others over the years.  Instead, I wanted to share a write-up a friend and colleague of mine sent me which elegantly describes the truth about inflation and Obamacare and the affect both are having on the average American household:

There’s a huge disconnect between the Government CPI report and true inflation. May wholesale gas prices were flat while the Commerce Dept reported that May gasoline sales for retail sales purposes went up 2.1%. Implies 2% usage higher which might tie in with how, with lower gas prices earlier this year there was the shift to the lower mileage bigger vehicles, or could be more driving.

However, April gas prices according to CPI were up 8.1% but wholesale prices were up more like 14% in April. So the CPI price increase is 57% of the futures price increase. Apply the “lower inflation” to revenues driven by inflation and that’s how GDP gets overstated.

There a lot of moving pieces in the data charade. CPI is reported later this week (June 16th) and it will be interesting to see whats reported for gas. I looked at this a few years ago and found stark inconsistencies between the price level used by the Government in its CPI index vs wholesale gas prices, which are futures based.

The other issue is in food. This is where the CPI index substitution comes into play that John Williams (Shadowstats.com) talks about. My own index includes “outside skirt steak” which is approaching $20 a pound, where I used to pay $5-7 a pound a few years back. So we actually bought/substituted rib eyes at 10 bucks a pound. From an inflation perspective, if that got into the counting, I reduced my inflation by 50% (we later bought hamburger meat at Sams for 2.79 a pound so in the month we cut out our personal CPI on meat by 85%-although we moved to lower quality products). Another issue was cereal–which I used to buy regularly at Walmart early this year at $2.50 a box and it’s now $3.30 a box (32% price inflation).

So, what’s the point?

The point is that there is getting to be some serious inflation in food and somehow its not showing up in the Govt data. In addition, with all the variability with sales and type of stores and how the GDP, Jobs or CPI surveys are created–less than scientific, the government can drive whatever reporting outcome it wants and it’s virtually impossible for anybody to follow.

Regardless of how gasoline pricing is showing up for various Govt reports, between the higher cost of gas and food, and lower earnings in general, people are getting more and more stretched especially as healthcare, education and housing costs go much higher.

This latest retail sales report did confirm home improvement is now declining (big ticket items and durable goods), which had been one of the few bright spots in retail. I am also guessing that there is a shift in overall spending to necessities. The huge increases in Healthcare premiums is pretty significant for a family along with co-pays and deductibles. Practically speaking the middle class is getting attacked. There are not enough ultra-high income earners who can carry the economy.

The S&P 500 made another failed run at an all-time high earlier this month.  If the Fed was not aggressively preventing any down-side momentum from gripping the stock market, there would like be a stock market crash.

The U.S. financial and economic system is inching toward an abyss that is much deeper and darker than the abyss into which it plunged in 2008.

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SoT Market Update: The Fed Fails And Gold Glitters

In this installment of the Shadow Truth’s Market Update episode, we discuss the FOMC’s unwillingness and inability to raise interests even 25 basis points, the 2008 financial collapse redux, and that fact that gold is “sniffing out” a catastrophic market event on the horizon.

The Audit The Fed Movement In Congress Is A Joke

CNBC announced yesterday that “The ‘audit the Fed’ movement is taking a big step in Congress this week.”  Only here’s the problem:

The bill seeks not a financial exam of the U.S. central bank but rather a peek behind the curtain of how monetary decision-making happens.   LINK

The first time I read that, it me left somewhat stunned.  “A peek behind the curtain” of how monetary decisions happen?  Seriously?  I think we get to see this in action every day between FOMC meetings, when the various Federal Reserve retards step up to the podium to drool all over themselves as they as mumble incoherently about raising interest rates at the next meeting.  In fact, just today some chode from the Atlanta Fed named Lockhart stated that:

June certainly could be a meeting at which action could be taken. I think it is a little early at second-quarter data to draw a conclusion, so I am at this stage inconclusive about how I am going to be thinking about June, but I wouldn’t take it off the table.

Here’s SF Fed Head John Williams – this is just priceless:   “I think the incoming data have actually been quite good and reassuring in terms of policy decisions, so, in my view, June is a live meeting.”

Really John, June is going to a “live” meeting?  Does that mean that the rest of them have been fake?   From where are you getting your data- the toy chest at your dentist’s office?

I hope that guy didn’t actually  have to pay for his education because it was a colossal waste of money if he did.  Do we really need Congress wasting time passing legislation to mandate a “peek” at that?

I just don’t understand how these Fed officials can threaten to raise rates predicated on the economic “data” that’s being released.   It’s childish. Everyone knows the Fed can’t raise rates without collapsing the house of cards it has created.  The sharp sell-off in the Untitledstock market today was attributed to the turret’s syndrome outbursts by these two idiots. But nothing could be further from the truth.  The market sold off today in a reversal of the manipulated spike higher yesterday.  The momentum-chasing computer algos began dumping the historically overvalued shares they gobbled up yesterday.

One of the big banks issued a study a couple weeks ago which showed that the only entities buying stocks right now are pension funds.  “Smart” money is dumping shares at an unprecedented rate and really smart money is getting extremely net short and/or loading up on gold (it was revealed yesterday in an SEC filing that Soros Funds made gold its largest holding).

I said 12 years ago that the last asset remaining  after housing for the elitists to loot would be the retirement assets.   It’s starting:  severely underfunded pension funds loading up on the overvalued stocks being dumped by insiders and “smart” money.  “Underfunded” is a socially polite way to say “the pension fund has a big debt obligation to future beneficiaries.”  An underfunded pension fund buying stocks on margin is no different than someone buying stocks in a IRA on margin, only the latter is not allowed by law.

An audit of the Fed will NEVER happen.  This country will collapse before any kind of reform or change is ever possible.  I knew the possibility of an audit of any substance died the very first time Ron Paul tried to pull a proposal through the House Financial Services Committee.  Chairman Barney Frank sat on it before deciding to use it as toilet paper.

What do we need an audit for anyway?  Everyone knows the Fed does not have the gold that it claims to be “safekeeping” on behalf of the U.S. Treasury.   The Fed knows everyone knows.   But as long as no one forces the Fed to open up its “deep storage” vaults, everyone can keep pretending that the gold is there.

A reader asked this question today:  “if naked shorts are allowed to be dumped on the Gold and Silver exchanges without any regard for reality, how can the companies that are shorting be stopped from shorting? It seems to me they control the deck and the rules on the Comex and CFTC have been tailored to allow them to manipulate the market and if that is the case what can stop them?”

My answer is that the physical market will eventually cause a massive default by the naked shorts.  But my view for the last 15 years has been that the U.S. will start a world war before it is forced by the physical market  to reveal the truth.  I stand by that call.   A non-audit of the Fed is likely deferring the inevitable…

Yellen vs. Mr. Magoo

I’m not sure which is more off the rails:  the stock market bubble that is being inflated or the Chairman of the of the organization that is doing the inflating:

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Hmmm…”Well, let me start — let me start with the question of the Fed’s credibility. And you used the word “promises” in connection with that. And as I tried to emphasize in my opening statement, the paths that the participants project for the federal funds rate and how it will evolve are not a pre-set plan or commitment or promise of the committee. Indeed, they are not even — the median should not be interpreted as a committee-endorsed forecast”

The System Will Implode When Central Bank Intervention Fails

The economic reports released this morning added to the near-continuous flow of information reflecting a U.S. economy that is likely contracting, for the most part.  Perhaps the only “fundamental” variable not contracting is the hot air coming from the Fed.

In today’s release of its “services” PMI, Markit explains:  “The US economy is going through its worst growth spell for three and a half years…and the worst may be to come as the greatest concern is the near-stalling of new business growth.”

The core durable goods new orders index released today dropped for the 13th month in a row – Zerohedge points out that it is the longest “non-recessionary” stretch of consecutive monthly drops in 70 years.

In fact, a good argument can be made that if a bona fide rate of inflation was applied to the Government’s GDP calculations, the U.S. economy has not produced real, inflation-adjusted economic growth since 2006.  Review the work of John Williams’ Shadowstats.com for evidence of this fact.

The Swiss National Bank admitted that it has spent $470 billion on currency manipulation since 2010.  Given the Fed’s refusal to disclose any information about its currency swap programs – including denying all FOIA requests on this matter – there can be no doubt that the Fed has been actively funding the SNB’s endeavors. The same goes for the SNB’s huge U.S. stock portfolio, which includes insanely overvalued gems like AAPL and AMZN.

We are witnessing the western Central Banks’ last gasp at preventing total systemic collapse.  The Fed et al were able to defer this event in 2008 with many trillions of direct money printing – deceptively marketed as “Quantitative Easing” – and many more trillions of direct Government income and spending subsidization.  After all, a Government willing to underwrite and guarantee 3% down payment, subprime credit mortgages is creating nothing more than a form of “helicopter money” dressed in drag.

A reader who is a self-professed real estate expert took issue with my blog post the other day in which I stated that the housing market is tipping over now.   He said: “Until proven otherwise, the U.S. housing market is still alive and well right now – and Denver is still doing very well too!”

Quite an assertion given that his opinion is based almost solely on the corrupted data produced by the National Association of Realtors (I refer you to one of several blog posts in the  past in which I demonstrate in detail why the NAR data is highly flawed, if not intentionally fraudulent to some degree).   To which I responded:

We’ll have to agree to disagree. Despite the propaganda, prices have been falling in Denver since last summer. Inventory is going through the roof. The “bubble” neighborhoods everywhere in metro-Denver are starting to look like they did in 2008, littered with for sale and for rent signs. I’m not sure where your “Denver” data is coming from but I conduct actual “boots on the ground” due diligence. I am getting emails from readers in Florida, DC/Virginia, NY and other regions describing the same thing I’m seeing in Denver.

The NAR data is highly manipulated. Yr over yr SAAR is useless as is the NAR data collection methodology. The “seasonal adjustment” regression program is the same program the Government uses in its data manipulation scheme.

At the lower end of the spectrum, we are seeing the last fumes of a regenerated subprime mortgage bubble sponsored by FNM/FRE/FHA/VHA/USDA. Yes, the USDA, which sponsors 0% down pmt mortgages in “rural” areas where “rural” turns out be the outermost suburban band of most MSA’s. Were you even aware of that?  There’s also been a “last gasp” surge in investor/flipper volume. They will be stuck holding the bag on homes they can’t sell or rent, just like in 2008.

My point in all of this is that the only “trick” left in the Fed’s bag right now is direct intervention in the stock market.   It’s a last gasp effort in an attempt to generate a “confidence” and “wealth effect” dynamic.  Hey, if the stock market isn’t going down things can’t be that bad, right?

The problem is that, for the most part, the world can no longer absorb any more credit expansion. We’re seeing this in the U.S. with the rapidly rising delinquency rates for auto and student loans, soon to be followed by another round of mortgage delinquency/defaults.

The Fed knows this and that’s why it continues to defer raising rates despite the constant barrage of threats to do just that at “the next meeting.”  Even the boy who cried “wolf” is blushing on behalf of the Fed.  I believe that the Fed’s inability to inflict a meaningful price take-down of gold and silver – especially silver – may be an indication that the Fed’s manipulative powers are beginning to atrophy.

It’s likely that this latest bear market bounce in stocks – the one for which Jim Cramer has ceremoniously proclaimed “a new bull market” – is going to start tipping over.  It won’t happen all at once but it will likely lead to yet another “waterfall” drop in the S&P 500.  Incredibly, the last two times around witnessed an incredible amount of screaming from the “peanut gallery” for the Fed to do something in response to just a 10-15% drop in stocks.  Bear markets typically don’t end until stocks have dropped 60-90%.

At some point the Fed will be completely helpless to prevent the market from going lower. That’s the point at which the system will collapse.  In my upcoming issue of the Short Seller’s Journal, I outline why I believe both oil and stocks are getting ready to head down the roller coaster tracks once again.  I have an idea that will capitalize on another move lower in oil plus accelerating defaults in the energy sector.  Subscribers also received an update email last night that presented a stock that I think is getting ready to experience an “elevator shaft” drop.  This company’s accounting is more misleading than Amazon’s, if that’s possible.

The Fed has been working overtime to hold up a stock market that is the most overvalued in U.S. history based on using traditional GAAP earnings.  My Short Seller’s Journal will help you find stocks that will ultimately fall at least twice as much as the overall market, either because of misleading accounting that gets exposed or rapidly deteriorating fundamentals, or both.  (click below to subscribe)

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