Tag Archives: Janet Yellen

Gold & Silver: Buy The Paper Price Attacks

These premiums [the ex-duty import prices being paid for legal kilo bar imports in India] are actually quite remarkable as the need to import kilo bars only arises if Indian demand is not satisfied by Dore imports (which had a duty advantage of $15.52/oz this afternoon) and smuggled gold. Reports of apprehensions at Indian airports are continuing to appear, indicating that smuggling has in fact revived. – excerpt from John Brimelow’s Gold Jottings Report (contact John at brimelowgoldjottings@gmail.com to learn more about his service)

The price of gold & silver have had a big move since mid-December, despite the flood of “fake news” connected to the temporary disruption of gold imports into India precipitated by Modi’s now-failed attempt to limit the ability of Indians to buy physical gold and despite the plethora of fake news about the quantity of gold flowing into China both before and after after the week-long Chinese New Year observance.

Brimelow goes on to assert in one of his Monday updates that, “Viewed from a US-centric and technical perspective, gold’s friends have something to worry about. However the Asian buying is about as strong as it ever usually gets and for that reason the Bears’ prospects are probably limited.”  Note, the “technical perspective” indirectly references that use of paper gold by the western bullion banks in their attempt to control the global price of gold.

As an example of the price-control mechanism implemented in the western paper market, you’ll note that after a surprise bounce in gold on Friday, likely stimulated by paper short-covering on the Comex, was met with an attack after the Monday a.m. LBMA gold price “fix” and again right after the Comex floor paper gold trading commences:

These are typical times during the day, when the physical gold buying markets in the east are closed for the day and the western paper market manipulators take control of global gold trading via LMBA forwards and Comex futures and OTC derivatives.

Just as notable about Friday’s move higher in gold during NY trading hours is that fact that the price was moving in correlation with a move higher in both the dollar index and the U.S. stock market.  Often, there is an inverse correlation between gold and the USDX/Dow/SPX.

There’s is an “invisible hand” in the market pushing the prices of gold and silver higher in defiance of the attempted price control schemes being exerted in London and New York. This silent operator is without the pressure being exerted in the physical market.

This week I’m sure will prove to be a bit of a price roller-coaster, as the semi-annual “Humphrey-Hawkins” (as it used to be called) Fed Chairman testimony on monetary policy and the economy is a time used by the western CB’s and bullion banks to control the price of gold using paper. After all, they can’t have the price of gold moving higher when the Fed’s El Hefe is extolling the virtues of the fiat currency and fractional banking system in front of Congress and the world, which begins today.

The point here is that it’s my view that the next longer term trend move in gold is higher, which means that price attacks should be used as buying opportunities, both for the metal and the mining shares.  In fact, the mining shares were quite stubborn about going lower when gold was being hit hard in New York after being hit hard in London.  Typically this is a signal to the market that prices in the precious metals sector are going higher.

 

IRD On Kennedy Financial: Janet Yellen Is A Complete Embarrassment

Predictably, the FOMC once again fell flat on its face with regard to its continuous threats over the last month to hike rates. Despite the politically motivated rhetoric about the strengthening economy and tight labor market flowing from Yellen’s pie-hole, the fact that the Fed is afraid to raise rates just one-quarter of one percent tells us all we need to know about the true condition of the economy.

If I didn’t despise the fact that Yellen has been an incompetent political hack originally inserted into the Federal Reserve system as a political tool since her first tenure as an economist at the Fed in 1978, I would almost feel sorry for her. But the fact that she can stand in front of the public and read off of a sheet of paper scripted with lies about the state of the economy forces me to despise her as much as I despise the entirety of Washington, DC

This analysis of Yellen underscores my view that Yellen is either tragically corrupt or catastrophically stupid:  How Yellen Rationalizes Financial Bubbles

Phil and John Kennedy invited onto their podcast show to discuss the FOMC, Yellen, Gold, Deutsche Bank and some other timely topics:

mining-stock-journal-bannerNewSSJ Graphic

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…

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.

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).

 

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”

What The Heck Did Janet Yellen Just Say?

The Federal Reserve members seem intent and content to make fools of themselves with continuous threats to raise interest rates. Some of them seem to discharge the “rate hike next meeting” utterance regularly as if they have Turret’s Syndrome. And yet, when the rubber meets the road, there’s no change in monetary policy.

And then there’s Janet Yellen.  She becomes more pathetic with every public appearance. Today one of the CNBC goons asked her if the Fed has a credibility problem.  If you can make sense of her answer please explain it to me.  I really hope she was starting to trip on LSD someone might have slipped into her coffee because her response is nothing more than unintelligible utterances (as quoted from Zerohedge.com):

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. And there’s a lot of uncertainty around each participant’s projection. And they will evolve. Those assessments of appropriate policy are completely contingent on each participant’s forecasts of the economy and how economic events will unfold. And they are, of course, uncertain. And you should fully expect that forecasts for the appropriate path of policy on the part of all participants will evolve over time as shocks, positive or negative, hit the economy that alter those forecasts. So, you have seen a shift this time in most participants’ assessments of the appropriate path for policy. And as I tried to indicate, I think that largely reflects a somewhat slower projected path for global growth — for growth in the global economy outside the United States, and for some tightening in credit conditions in the form of an increase in spreads. And those changes in financial conditions and in the path of the global economy have induced changes in the assessment of individual participants in what path is appropriate to achieve our objectives. So that’s what you see – that’s what see now.

Say what?  That’s not what I see.  What I see is pathetic pscycho-babble from a human with dementia settling in…

For an interesting take on the FOMC policy announcement today, Eric Dubin at The News Doctors posted a  discussion between Peter Schiff (Euro Pacific Capital) and Andy Brenner (Guggenheim Partners) that’s worth watching if you don’t care to watch the NCAA hoops tournament play-in games:  Peter Schiff/Andy Brenner On Today’s FOMC Meeting.

Extreme And Blatant Gold Futures Manipulation: Bad Jobs Report Ahead?

These guys are seriously overplaying their hand so something must be up.  – John Embry email to me in reference to the blatant intervention in the stock and gold futures markets

The Cliff’s Notes explanation to John’s comment:  The Fed knows the economy is technically in a recession and will be forced to take Fed Funds negative sometime in early 2016.  Yellen floated that trial balloon earlier today.   That’s an event that should launch gold.

First, in reference to the extreme degree of anti-gold propaganda currently being vomited by the western media – see this article from Mark Hulbert LINK and this article from the new Jon Nadler LINK – here is what is going on in the physical gold market:

Reuters has reported that the China Gold Association has announced that Jan/Sept gold production was up 1.48% to 356.9 tonnes and consumption was up 7.83% to 813.89 tonnes. This is the biggest gap between production and consumption growth that JBGJ can remember. The huge Chinese output growth has been going on for well over 10 years and with the early mines getting old sustaining the trend must be getting increasingly difficult. A leveling off or even more a decline in Chinese gold output could increase import demand dramatically.  – John Brimelow from his Gold Jottings report

Typically when there’s bad news coming, the Fed/banks engage in an extreme degree of market intervention to keep the stock market aloft and a heavy lid on the price gold.  After all, they can’t have a rising price of gold alert the world to the degree to which the U.S. system is one big fraud.

The stock market has become historically overvalued.  David Stockman discusses this in his latest article – This Time Is The Same – And Worse.  In his analysis, he reports that the trailing 12-month P/E ratio on the S&P 500 is 22.49x, or higher than it was at the peak of the stock market in 2007.

However, there’s one big flaw in Stockman’s analysis.  He’s using current GAAP accounting numbers.  In order to compare current S&P earnings with earnings and P/E ratios, we have to adjust the earnings by employing “apples to apples” GAAP standards.   Generically, the latest significant GAAP changes in 2010 enabled the big banks to include a significant amount of non-cash “adjustments” as part of their reported net income.  In some quarters, more than 90% of the GAAP net income reported by major banks and financial firms is based on non-cash, discretionary “adjustments.”

In truth, and admittedly this is somewhat imprecise but not wholly inaccurate because the same dynamic applies to the tech sector S&P 500 companies as well (note: IBM is currently being investigated by the SEC for revenue recognition issues – this fact supports my assertion), it is highly probable that the $93.80 per share EPS cited by David Stockman is substantially less than $93.80 using 2007 or 2000 or 1987 GAAP standards.   I would hazard a highly educated guess that if we did the exercise of adjusting today’s S&P 500 earnning using the GAAP rules in place in 2000 that the $93.80 EPS would be cut in half.

In fact, I know of someone who did that exercise back in 1998, using 1987 GAAP standards, and this person determined that the reported earnings in 1998 were less than half of what was reported that year if 1987 GAAP standards were employed.

In other words, the true P/E ratio on this current stock market is, in all probability, the highest in history.

I want to show the gold market intervention that occurred blatantly today and then I’ll suggest a good possibility for the current extreme degree of market intervention (click on each to enlarge):

5minGoldoneYrGold

The ratio of paper gold to deliverable physical gold reported to be in Comex vaults almost hit 300 earlier this week.  After yesterday’s long-side liquidation/bullion bank short-covering operation the ratio “mellowed” out a mere 278x.

As you can see, gold moved higher after a series of gold-friendly comments from the ECB’s Mario Draghi. It was promptly slapped back down about 10 minutes before he Comex floor trading in gold commenced. This occurs about 90% of the time. No news or events occurred that would have prompted the sell-off in gold. After starting to recover from the obligatory Comex floor trading smack, Janet Yellen issued tourettes syndom outbursts loaded with incoherent nonsense about how great the economy was doing, the labor market was tight and the FOMC was going hike rates in December.

Yellen’s comments, other than being the drool of a babbling idiot, had no basis in provable fact. Nearly every private-sector compiled economic data series is reflecting a precipitous decline in economic activity that is back down the activity levels of 2008/2009.  As for a “tight” labor market?  Yes, I suppose if you just ignore the 93 million who have left the labor force – i.e. 28% of the total U.S. population – then I suppose it’s a bit easier to manipulate the data to reflect a low rate of unemployment.  Make no mistake, the unemployment rate number being reported is an unmitigated fraud, which makes Janet Yellen an unmitigated fraud.

This brings me back to my explanation for the extreme and blatant stock/gold market manipulation this week.  A friend and colleague of mine from NYC does great work on how the BLS uses its fraudulent “birth/death” model to manipulate the non-farm payroll report every month.  The employment report for October comes out Friday this week.  Historically the BLS inserts a big bump up in the birth/death jobs additions in October.  My colleague believes that the number reported will be manipulated higher than the 177k estimate in order to support Janet “Tourettes Syndrome” Yellen’s rate-hike in December fairytale:

BD model adds 145,000 jobs. NFP for October comes in at 190,000. Mark Zandi gets quoted in every wire service saying it’s a clear indicator of the underlying strength and improvement in the economy All jump even harder on the consensus December Fed rate hike band wagon Stock market rips lower and Gold gets hammered to under $1100 Stock market rips at 3:30pm into the Friday close as they force massive short covering into green and Gold goes unchanged on the day. A bullish comment from Jim Bullard is optional…

This view is well-crafted and will likely be right.  However, with each passing non-Government economic report which shows jobs being cut, especially in the manufacturing, energy and financial sectors, the big job additions reported by the BLS take the Government numbers deeper into the credibility hole.   The extreme manipulation and intervention in the U.S. stock/gold market reflects the extreme degree of desperation which the Fed/Treasury/banks are exerting in order to prevent the markets from revealing the truth about the degree to which the U.S. political/financial/economic system has been completely engulfed in fraud and corruption.

Expect a big “beat” on Friday from the NFP report, followed by beat-down of gold.  That smack in gold should be bought with both hands.

One more point, Yellen referenced the possibility of taking rates negative. Talk about an obvious trial balloon.  This tells us that she and her band of FOMC stooges understand the truth about the economy.   This is an event that should send gold on a moonshot.  They are working to make sure that the lift-off platform is as low as possible.

The FOMC Meeting Is A Complete Joke

The result has become as predictable as the sun rising in the east and setting in the west:

  • Federal Reserve leaves interest rates unchanged
  • Fed signals rate hike still possible at ‘next meeting’
  • Fed says economy expanding at a moderate pace
  • Fed says inflation continues to run below Committee’s long run objective

A monkey sitting a type-writer could write that script.  The Fed isn’t going to raise rates at the next meeting and the economy is getting worse, not better.  Everyone knows that.  It’s appalling that the members of the FOMC – supposedly highly educated economists and experienced financial market professionals – choose to blatantly insult our intelligence with these statements.

If the FOMC members actually believe that the economy is “expanding at a moderate pace,” I’d love to see the data upon which they are basing this conclusion.  Because the real-world data streaming from just about every source of information other than the Federal Government shows that the economy is already mired in a recession.  Perhaps the FOMC members ARE the monkeys sitting at the type-writer writing those headlines…

John Williams of Shadowstats.com does by far the most thorough dissection and analysis of the primary economic data of anyone of whom I’m aware.  Here is his assessment of the the U.S. economy and the Fed’s unwillingness to raise rates even one-quarter of one-percent:

Indeed, symptomatic of a financial system in serious distress, the FOMC remains unable or unwilling to move decisively on raising interest rates, to move the financial system towards monetary normalcy. Continued inaction or waffling by the Fed has begun to shift the focus and concerns of domestic and global investors away from what appears increasingly to be perpetual moribund economic activity into the areas of systemic instabilities, prospective or otherwise, that are so troubling to the U.S. central bank…

The U.S. economy remains in contraction (see Commentary No. 747, Commentary No. 751 and Commentary No. 755), with a variety of key indicators, such as industrial production, real retail sales and revenues of the S&P 500 companies continuing to show recession. Although formal recognition could take months, consensus recognition of a “new” recession should gain relatively rapidly, in tandem with a variety of monthly, quarterly and annual data reflecting the downturn in business activity.  LINK

I keep coming back to these graphics, but for me they encapsulate everything about the Federal Reserve, the zoo known as the Federal Open Market Committee and the insidious, catastrophic corruption that has completely engulfed the U.S. economic, financial and political system:

PCR5

 

Yellen Folds Her Cards – Admits It Was A Bluff

“In the summer of 2011 is when things went insane.”  – Remember this quote

In the process, Yellen is making herself out to be a complete fool or a liar:

“I do not want to overplay the implications of these recent developments, which have not fundamentally altered our outlook,” she said. “The economy has been performing well, and we expect it to continue to do so.”  Bloomberg News

The economy has been “performing well?”  Seriously?   Let’s have a look.  Here’s year over year percentage change in retail sales:

Graph1 As you can see, there’s been a steady decline in the year over year growth in real retail sales since August 2010. Is this 70% of the economy the part to which Yellen is referencing as “performing well?”

But here’s the kicker:

graph2 THIS graph shows the actual dollar change in retail sales LESS auto sales since August 2010. We know that auto sales have been pumped up by the largest expansion in automobile subprime (junk) debt issuance in history. If you strip away that artificially pumped up area of the economy – pumped up by Yellen and Bernanke – look at the stunning decline in retail sales.

Retail sales represents 70% of the economy.  How can the economy possibly be doing well when the only segment of retail sales showing signs of life is the automobile segment, which has been pumped up by what will be the eventual catastrophic availability of junk loans.   Contacts of mine in the local auto business are in outright shock at the number of 2013-2014 cars hitting the repo market.  I have seen with my own eyes leased land lots along busy commercial boulevards which are overflowing with repo’d vehicles.

Perhaps Yellen was referencing the “low” unemployment rate.  The magical 5.1% rate of unemployment that is conjured up with Government fabrication.  Ya that number may be the unemployment rate if you use the Census Bureau guesstimate of employment based on flimsy population samples and if you ignore the fact that nearly 100 million people in the working age population are not part of or have left the labor force – or if you just make up the numbers (birth-death model):

graph3 We’ve all seen this graph several times but it’s worth seeing again in the context of Janet Yellen making the statement that “the economy is performing well.”

In the famous phrase from Macbeth, the employment situation in the United States is “a tale told by an idiot, full of sound and fury, signifying nothing.”

Now here’s another kicker.  Many of you have already seen the outstanding Fed video written and produced by my good friend and colleague, John Titus:   Best Evidence –  Fed Audit Shocker:  They Come From Planet Klepto.    I get previews of his work along the way and he shares a lot of information with me about everything he discovers reading the Fed transcripts, which are released 5 years ex post facto.

The particular transcript John was pouring over for the above video was from the Fed meeting right before QE was introduced.  The information is there for anyone to look at but John actually does the work.

Recall from yesterday that Janet Yellen referenced the unemployment rate as evidence that QE had worked.  I received a text from John last night that said:  “Janet Yellen is such a fucking liar.”   To which I replied: “based on what, this time?”  To which he cited:  “Did you see that shit about the Fed not boosting inequality?  She says QE put people back to work.  Based on what?  Because in the June 2009 Fed transcript she said the unemployment rate b.s.”  As you can see, John is extremely pissed off at Yellen’s blatant dishonesty.

So there you have it.  Yellen is on record stating to her Fed cohorts that the unemployment rates is nonsense.  This was when she was Bernanke’s co-pilot of the FOMC.  From this we can conclude that Yellen is a serial liar.  But we can also conclude that she is an idiot because she has a left a definitive trail of evidence proving that she’s a liar.

This brings me to the “in the summer of 2011 is when things went insane” comment. The very same John Titus attended a conference yesterday put on by Eric Hunsader, of HFT’s Nanex fame.  Titus asked Hunsader when he first noticed that there was no longer Rule of Law in the markets.   Hunsader replied that “I guess it’s always been there but it got worse” [he pondered searching for a reflective answer and compared it the frog in boiling water adage].

But then John said one of Hunsader’s underlings spoke out – the first and only time during the show – and said “the summer of 2011 is when things went insane.”

I would like to tie this back to the two graphs above which show that retail sales began a definitive decline in growth rate in early 2011 AND an outright decline ex-autos in “the summer of 2011.”

By that time the U.S. system had been bombarded with QE for two years and interest rates had been at zero for a bit longer than two years.  Additionally, the Fed and the Government began an undeniably aggressive attempt to reflate all asset markets and pump up housing and auto sales.

graph4 A lot of bad occurrences developed in the summer of 2011. As you can see from this graph to the left, the stock market went on the longest uninterrupted rise in its history without any real correction. 2011 is when it became obvious to most observers willing to admit it that the Fed was controlling the asset markets with QE.  AND, I might add, figured out how to take advantage of HFT trading and the shadow banking system to help serve its objectives.

If we learned one thing yesterday, it’s that the Fed can not and will not raise interest rates. It’s backed into a corner from which it will be impossible to emerge without a full-scale systemic reset or crash. The problem is that, when this cesspool of lies, fraud and corruption starts to really implode, we will all wish we were watching the show from another planet.

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It’s also why have stated in the past, and have increasing confidence in my conviction, that this is leading to world war three and, ultimately, “The Road.” Interestingly, I’ve received emails from some well-known personas in finance that have expressed a similar belief…