Tag Archives: stock bubble

Demise Of The American Farmer Reflects The Demise Of The Middle Class

Too much debt, poor capital allocation decisions (McMansions, expensive leased cars, spending to “keep up with the Jones’) and declining disposable income.  It’s hitting the general middle class in America similarly to the way in which it is hitting the American family farmer.

The Wall Street Journal posted an article titled, “The Next American Farm Bust Is Upon Us” earlier this past week.  The bubble in farm land, just like the general real estate bubble, was precipitated by the Fed’s money printing and general easy money policies.  The cover story was that the policy was directed at stimulating economic activity.  But the actual result varies, with banks, corporations and ultra-wealth elitists benefiting to the detriment of the rest of the country.

A friend and colleague of mine who happens to be a wheat farmer shared with me his real life experience with trying to compete against the Monsanto-driven corporate farms in this country.  He’s working to move the production of his farm from wheat to industrial hemp but will need legislative help in his State to accomplish this:

Where some farmers get in trouble is spending too much for new equipment, and/or not fertilizing enough (or at all)… and/or not being good farmers in general.

For farmers carrying a high debt load, it’s challenging right now. Prices for wheat and corn will rebound eventually, but I’m not sure these grains are the best crops for farmers to grow going forward.

Russia is the world’s largest exporter of wheat, with Canada and the US tied for #2. Russia is also increasing their corn production (non-GMO) to be competitive with American farmers. Although demand for wheat and corn will never go away, these reasons are why I’m bearish on grain farming… and bullish on industrial hemp.

That’s why I’m cautiously optimistic about the industrial hemp bill becoming law in my State this year (fingers crossed).

Make no mistake, the plight of the farmer parallels that of the general middle class.  While some portion of the middle class is doing the proverbial celebratory end zone dance right now over the few thousands in paper profits they are making in the greatest stock bubble in U.S. history.   Most if not all of them will hang around too long and watch paper profits turn into paper losses when this historic equity bubble pops.

Meanwhile the Establishment elitists are coming out of the woodwork and warning the proletariat to take their profits out of the market and run, like these comments from James Tisch, CEO of Loews Corp, Tisch family scion, member of the Council on Foreign Relations and former director of the NY Fed.  In reference to the average retail investor.

In addition to Tisch, several other Establishment elitists have issued warnings, including Bill Gross, Larry Fink, Ray Dalio, George Soros and Sam Zell.   As my good friend and colleague, John Titus of Best Evidence Videos has said presciently:

One of the rules by which the elite aristocrats abide is they consider it rude to not issue a warning before they do something bad to us. They’re like criminals with manners. In other words, it’s gauche to flush the toilet while the serfs are taking a shower without giving a “heads up.”

 

Upside Surprise For Gold And Silver In 2017

To date, the price of gold and silver have followed a very similar trading path that was taken by the metals in early 2016, with gold and silver bottoming in mid-December and staging a strong rally through mid-January.  Technically, as our Shadow of Truth guest Craig “Turd Ferguson” Hemke point s out, all of the stars were aligned for a take-down of the gold price using paper derivative gold.

These “stars” include:  January contract trading expiration, February options contact expiration, an “overbought” technical condition and the upcoming FOMC meeting and employment report next week.  ALL of these variables are factors which are used to help the bullion bank gold cartel take down the price of gold and silver using the paper gold derivatives traded largely without enforcement of the regulations in place in New York and London.

But now the market is set up for an upside surprise.  Contrary to recent “alternative facts” media reporting, India has continued consuming a lot of gold on a daily basis. This includes legal kilo imports, dore bar importation (subject to a lower import duty than kilo bars) and smuggling, the latter of which is estimated to be as high as 300 tonnes per year now.  The “authorities” in the media who track gold into India fail to account for dore bar flow and smuggling.

In addition, a favorite false narrative of the World Gold Council, Bloomberg and Reuters is that gold imports into China slowed down at the end of the year because of import restrictions put on gold by the Government.  Nothing could be further from the truth.  The “fake news” reports are based on imports into Hong Kong, which are publicly reported by Hong Kong authorities.  But a few years ago China began to allow gold imports through Beijing and Shanghai, which is not reported, specifically to obscure the true amount  of gold flowing into China.

But it’s easier to build a false narrative around easily observable data rather than look for the greater truths intentionally hidden from public purview.  As it turns out, nearly 100 tonnes of gold were delivered onto the Shanghai Gold Exchange on the last trading day before China closes shop for the Chinese New Year celebration.  Of course, if any of that gold flowed through Beijing or Shanghai, it would go unaccounted for by the entities listed above that only account for gold going from Hong Kong into China.

We at the Shadow of Truth are forecasting a better year for the metals in 2017 than in 2016. We invited Turd Ferguson on the show for lively two-part discussion of the factors that will drive the metals higher:

Part 1:

Part 2:

The Air Is Releasing From The Hope Bubble

The post-election run-up in stocks was fueled purely by “hope and change” energy.  Now that Trump has assumed the mantle, reality will hit like an icy shower.  The non-“alternative facts” about the economy continue to show contraction in real economic activity.   The retail sales report for December was an utter disaster, especially if you strip out gasoline and autos.

The price of gasoline rose in December, which raised the nominal level of gasoline sales but inflation-adjusted is another matter.  With autos, as it turns out based on measurable dealer inventories, a large portion of the auto “sales” were deliveries to dealers financed by “floor financing programs” and not actual sales to end-users.

I found a curious chart and commentary in today’s “Daily Shot.”  I love this report because the author wears rose-colored glasses and puts a positive spin on any and all U.S. data.  Today he had this graph:

This was presented as a positive. But let’s review the facts. It took $4 trillion in money printing – over $2 trillion of which went directly into the mortgage market – a few trillion in Government subsidies to the housing market including the bail-out of Fannie Mae and Freddie Mac, the artificial imposition of record low interest rates and the re-stimulation of the subprime mortgage market in the form of Government-backed FHA and VHA mortgages in order to move the single-family home turnover rate back up to the “long run average.” Think about that for a moment:  it took several trillion dollars of direct housing market stimulus to move the needle on the home turnover rate up just a couple percentage points to its “long run average.”

But what happens now?  Now that interest rates are rising, the printed money has worked its way through the system and mortgage default, delinquency and foreclosure rates are beginning rise again, what will happen to the line on that graph?  Of course, it will head south – quickly and likely below the low it hit in 2010 –  unless the Fed re-ups its money printing and the Government throws even more subsidies behind housing.  But all that is going to do is put people into homes who otherwise can’t afford them.

The Philly Fed business outlook index hit a 2-year high, however, the prices paid sub-index drove a large part of this at it soared to its highest level since Feb 2012. In addition, the “expectations” for prices received dropped. This would imply that gross and profit margins are expected to drop. In addition, the average workweek sub-index dropped.

Now, there’s two big caveats with this reports, and of course the mainstream media and even ZH did not bother to peruse the entire report from the Philly Fed website but SSJ did bother. First, the survey used to construct the index measures primarily future expectations. There’s clearly a high degree of “hope” associated with the Trump stock market rally. I expect a big reversal of this sentiment over the next three months. Second, the Philly Fed incorporated “new seasonal adjustment factors” into the report. This was disclosed in the actual report for January. As with all seasonal adjustment calculations, the Philly Fed does not disclose its methodology for calculating the adjustments but they are likely designed to overestimate seasonal factors and therefore overestimate the index level calculations. – From the latest Short Seller’s Journal

In the latest Short Seller’s Journal, I take apart the latest economic hopium-infused economic reports and provide several short-sell ideas to take advantage of facts, which will eventually emerge and take stocks lower.  The “air” leaking out of the Trump bubble and it will translate into many profit-making trades in the stock market from shorting stocks or buying puts.  The SSJ is a weekly report dedicated to helping subscribers make money on the historically overvalued stock market.  You can subscribe using this link:  Short Seller’s Journal.  It’s monthly with no minimum time commitment.

Dave Kranzler provides excellent and indepth research in making his case to go long or short with options to play if you choose.  I look forward to getting his mining journal and short sellers journal in my inbox which include new ideas as well as updates on
previous ideas as market conditions change. I agree with his overall outlook on the market as my gut tells me something is wrong and since I’m not a market analyst I rely on Dave’s
experience to help me decipher what is really happening though his journals as well as his articles and interviews which are easily found on youtube. Thanks Dave for all you do and the personal attention and dedication to your subscribers.  – subscriber “Keith”

 

Fake Economic News + Overvalued Stocks = Recipe For Market Disaster

Think you know what will happen this year?  What would you have said to me on January 1st last year if I told you:  ” the S&P 500 would hit several new all-time years this year and Donald Trump will be elected President?”

Craig “Turd Ferguson” Hemke invited me on to his “A2A” webinar with his subscribers last week.  We had a spirited and (I think) entertaining discussion about abundance of fake economic news that permeates the financial media, the true state of the U.S. economy and the growing risks to the stock market.  And of course we chatted about precious metals an mining stocks.

And of course his subscribers had some interesting and thought-provoking questions. You can listen to our conversation here:  A2A with Dave Kranzler and you can access Turd’s webite here:  TFMetals Report.

Goldman to Trump: Situation Assessment, Government Bail-ins, Precious Metals Threat: Systemic Collapse

A guest post from Stewart Dougherty. Stewart included some thoughts in his email to me that I thought should be shared as a preface to his essay:

——————–

Hi Dave:
Some pretty heady stuff, particularly the part about the Fed’s balance sheet being a lie. (I am 100% convinced of this, but cannot prove it, at least not yet.) And remember, Bernanke was caught issuing $10 trillion in swaps to foreign banks, all of which was supposed to remain a complete secret. It is not as if they haven’t been caught doing what I am saying they are still doing, to an even larger degree.

I’ve stated that the “conversation” is imagined, intuited and fictional, so the small living parts of the shredded Constitution might actually protect my freedom of speech; wouldn’t that be amazing.

I believe “government bail-ins” is fresh terminology … people hear about bank bail-ins all the time … but they don’t hear about government bail-ins, which are going to affect far more people and are inevitable. (As I’ll explain in Part 2, government bail-ins are not going to be about taxes … tax increases are too slow, and oftentimes don’t even work.) Since it’s new, the term government bail-ins might gain a lot of attention.

——————–

Despite Goldman’s avid support for Hillary Clinton, fewer than three weeks after the election, Gary Cohn, the number two executive at Goldman Sachs met privately at Trump Tower with the President-elect. Ten days later, he was named to one of the most powerful financial positions in the world, Director of the National Economic Council of the United States of America.

As they say, knowledge is power, and power is knowledge; both open doors, ears and minds when they decide to. What could Cohn have said to Trump that resulted in his near-immediate hire? Using the Inferential Analytics methodology, we have synthesized a message a visitor of Cohn’s stature might have conveyed to Trump on November 29, 2016. And while it is inferred, intuited and fictional, the following transcript is deeply grounded in the nation’s current and prospective fiscal, financial, monetary and economic situation.

The Visitor: “I appreciate your invitation and it is a pleasure to meet with you today. Permit me to convey Lloyd’s congratulations. He would like to assure you that you have Goldman’s full support going forward.

“Our time is short, so I will give you a very high level situation assessment. Thousands of person hours and millions of dollars’ worth of research and analysis stand behind each of the themes I will touch on, and we can provide additional details if you wish. As one of the U.S. government’s closest financial allies for decades, particularly when it comes to the placement of the nation’s sovereign debt, we have a deep understanding of the financial dynamics at work. When I use the term “we,” it is because Goldman and the United States government have been close business partners for many years.

“As you correctly stated to the American people during your campaign, the situation is not good. It is containable at this time, but only if we continue to run substantial deficits and create large sums of new dollars, in other words, debt. With all due respect, we believe the U.S. government is going to need our help as never before in the coming months and years.

“I will briefly touch on nine topics. There are others we could discuss, but these tell the most important part of the tale. They are: 1) Deficits; 2) Debt; 3) Reporting; 4) War; 5) Perception; 6) Stocks; 7) Money Creation; 8) Currency; and, 9) Precious Metals.

“As you may know, I started my financial career as a Comex trader, and Lloyd began his as a gold dealer at J. Aron, which was acquired by Goldman. We both have extensive experience in the Precious Metals markets, and believe they are going to be of incalculable significance in the near future. I will review this topic later.

“All I ask is that you not shoot the messenger. Much of what I tell you is troubling.

“First, the deficits are structurally non-containable. The OMB itself confirms this, projecting escalating deficits for the next 50 years, with not one year of surplus during that entire time. The aggregate deficit during the next decade alone will be at least $10 trillion. If there is a slowdown or recession, it will be greater or even much greater. The deficits can only be reined by a massive political reset and wholesale reneging on the entire social contract, including Medicare, Social Security, public pensions and welfare. Such a reset would result in an economic collapse. Therefore, it is not feasible, although it could be forced upon us by endogenous or exogenous events that would take the situation out of our hands.

“The debt has gone vertical, rising from $10 to $20 trillion in eight years. Obama created more debt than all other presidents in the previous 230 years, combined. This amount does not include the federal government’s net, unfunded liabilities, which are an additional $150+ trillion, and growing by trillions per year on a GAAP accounting basis. Please understand that his shadow, unfunded debt is net of projected tax receipts; in other words, it is completely out of control.

“Debt is now increasing at an accelerating rate, with $1.4 trillion added last year alone. This debt can never be paid in future dollars having value anywhere even close to today’s, but for now at least, we are still able to peddle it. We do know that for us to successfully distribute the debt in the future, interest rates will have to go higher, which will compound the fundamental deficit and debt problems. Otherwise, we will have to print money on a scale never before seen, which will further damage the value of the dollar. There is a limit to how badly currencies can be damaged; they can and do go into freefall. Several are, as we speak.

“The so-called economic recovery has been false. The Obama administration, with the full support of the Fed created $10 trillion in counterfeit dollars and threw them at the economy, funding everything including non-stop wars, Food Stamps, a vast expansion of government, subsidized Obamacare, solar panel cronies, fund-raising and golf trips, you name it. It’s all included in the nation’s deliberately and, frankly, fraudulently inflated GDP. We understand; it had to be done, and we helped make it happen by being expert debt pushers.

“Some like to think that we can grow our way out of the deficits and debt, but our analysis disagrees. Assume 4% GDP growth. Given an $18 trillion economy (ours is not, as explained above, but let’s say it is), 4% growth means a GDP increase of $720 billion in Year 1. Let’s say the federal government is able to collect in taxes 25% of the gross GDP increase, a wildly optimistic assumption. That would produce $180 billion in incremental revenue. But the structural deficits, as reflected by the increases in debt, exceed $1 trillion per year. Even 4% GDP growth will hardly make a dent in the fiscal hemorrhaging. And to prime the pump for such growth, the government will have to spend a few hundred billion dollars per year on infrastructure spending and the like. This will fully negate the incremental taxes. So we have to dig a deeper fiscal hole for the privilege of digging an ever deeper fiscal hole.

“This leads to topic #3, Reporting. At this point, out of necessity, virtually every government economic statistic ranges from being “massaged” to outright false. GDP is particularly misleading. If we deducted government deficit spending and the multiplier effects it creates, the United States economy would immediately collapse. If that were to happen, we cannot credibly forecast a scenario that would restore it to growth. Economically, it would constitute an existential event.

“Obviously, we cannot openly admit the reality of the situation, or even let it become known. Therefore, the government must doctor the reports. Given the interrelationships among economic reports, we now have to lie about everything. If we just lied about certain metrics, say, GDP and employment, then the other metrics, if not similarly fabricated, would contradict the fabricated reports. We would be unable to explain the inconsistencies and contradictions. We have to lie about unemployment, GDP growth, retail sales, wages, money supply, the cost of Obamacare subsidies, current deficits, current debt, the true fiscal trajectory of Medicare, Medicaid and Social Security, government pension underfunding, projected deficits and debt, and all the rest. When it comes to false reporting, we’re in a box; there’s no alternative to it.

“This is one reason why the Alternative Media are so dangerous to us, and why we need to eliminate them. There are many talented analysts in that domain. They know the truth, and that we’re not telling it. The fact is that fake news comes from us, not them, as they are revealing to a growing army of citizens.

“In addition to false reporting, there is War. War is just like the Fed; it is never audited. This deliberate lack of oversight is how $6 trillion can go missing at the Army, alone. The Army’s missing funds are a small portion of the total amount that has disappeared into the military spending vortex. War spending is critical to topline GDP, and we can play a lot of non-detectible games with it. The saying, “War is the health of the state,” was coined for us. If we stopped fighting wars, GDP would crater. Wars are a necessary constant going forward, even if we have to invent them.

“This brings us to Perception, one of the most important factors of all. In reality, the economy and dollar have become a confidence game. We know that if confidence in an inherently dysfunctional system is lost, only a reset plus time can restore it. But as we discussed earlier, a reset is socially, politically and economically impossible. If the 200,000,000 U.S. citizens currently dependent upon the government to some degree were deprived of even a fraction of their payments, economic and social entropy would result. In fact, the people want more, not less. Free college; free or massively subsidized health care; a $15 minimum wage; the list goes on. Politicians have told them they can have these things, so there is a vast disconnect between popular expectations and fiscal reality.

“Stock market indices are one of the few tools we can use to create positive perceptions. We have successfully created a false perception of economic health by taking stocks to new highs. We have also deliberately engineered a “wealth effect,” which has artificially spurred spending and GDP, and boosted the so-called “animal spirits.” Doing these things has disguised reality and bought us a lot of time.

“But the real reasons we have manipulated stock markets higher go further. First, without a levitated stock market, the pension funds would collapse. Which would ripple through the economy in a massively destructive way.

“Second, federal, state and local governments need the capital gains-related tax revenue produced by the artificially propped-up stock markets. Dow 20,000 will produce a 2017 tax windfall, which is required to offset the damaged economy’s tax shortfalls. The stock markets are a crucial money machine when it comes to tax generation.

“Now to money creation, which takes us deep into the Dark Side. To fund the massive deficits and levitate the stock market, we have had to create trillions of new dollars. But if the actual amount were revealed, confidence in and the value of the dollar would collapse. So we have to lie about this, too. The Fed’s balance sheet is actually trillions more dollars than what is reported.

“We inject newly digitized currency into the system by crediting trusted, proven collaborators such as the BOE, BOJ and Bank of Israel with dollar amounts that can range into the trillions, depending upon circumstances. These collaborators use a portion of these credits to buy our stocks and bonds, in accordance with strict timing, allocation and dollar amount instructions. They funnel the remainder of the funds to trusted, third-party actors, including hedge funds, merchant banks and dark pool operators, providing them, too, with specific deployment instructions. Therefore, the buying comes from many different markets and locations, which makes it look normal and legitimate.

“What exists is a small club of trusted players who deploy enormous sums of money, all of it counterfeit and undocumented, to support the positive perception, healthy GDP and strong stock market agendas. This money costs our partners nothing; we create it for them, out of nothing. The fact is that management of the dollar is far more clandestine than any of the operations conducted by the CIA or NSA, and the Fed is the most secretive and sophisticated intelligence agency on earth. Geo-financial hegemony is its mission, and dollars are its spies, operating, misdirecting and deceiving from the shadows every minute of every day, all over the world.

“While a large and increasing number of citizens now demonstrate broad skepticism about government institutions, they still have blind faith in the statistics reported by the Fed. Which is upside down, because the Fed’s figures are the most dishonest of them all. It proves the power of propaganda, particularly when billions of dollars are spent on it. If the Fed were subject to audit, which of course it deliberately and necessarily is not, none of this would be possible. And if the true size, composition and deployment of the Fed’s balance sheet were known, the entire global financial system would implode.

“That is the situation, in a nutshell. As you can see, it is fragile and untenable. We can continue to manage it in the current context, but if the context were to change, even in small ways, it could all come down. We have to prevent that at any cost because if it does come down, even our most sophisticated computer simulations cannot posit a scenario by which it could be propped back up.

There is a subtle knock on the office door. Trump realizes he is out of time. He says to his guest, “I understand what you have said, and need you to come back and finish.” They arrange for the visitor to return in three days, December 2nd. Trump asks, “So we can move as fast as possible then, please give me a brief outline of what we will discuss.”

The visitor responds: “Most people do not think about these issues at all, but the sophisticated ones do. We have deliberately misdirected that cohort’s attention. We have distracted them with talk of bank bail-ins and other financial gossip to keep their thinking off of what is actually a much more profound and necessary outcome: government bail-ins. We have before us a complex, four dimensional puzzle, in which the puzzle pieces represent events wrapped in time. Both the controlling elite and the people are putting the puzzle pieces in place as fast as they can, because they know their futures depend on it. The side that first completes and comprehends the puzzle will win; the other side will lose. Two of the most important puzzle pieces are currency and precious metals, both swaddled in time. Which is running out for one side or the other.”

[To be continued in Part 2]

Stewart Dougherty is the creator of Inferential Analytics (IA), a forecasting method that applies to events proprietary, time-tested principles of human instinct, desire and action. In his view, forecasting methods not fundamentally based upon principles of human action are unlikely to be reliable over time. He is a graduate of Tufts University (BA) and Harvard Business School (MBA), is a 35+ year veteran of the business trenches and has developed IA over a period of 15+ years.

It’s A Retail Sales Train Wreck

The Census Bureau reported that its advance estimates of retail sales for November show a .1% gain from October and a 3.8% gain over November 2015. Wall St. was forecasting a .4% gain. Oops. But there’s a bigger problem with that headline report of a .1% increase in retail sales for November:   it’s based on guesstimates by the Census Bureau for the largest retails sales categories.

If you go through the data tables that accompany the headline retails sales report – LINK – you’ll see asterisks in the “not adjusted” data for November in most of the business categories. In a footnote the CB discloses that, “Advance estimates are not available for this kind of business.”  Most people who see the headline news reports, or hear the news “soundbytes” on tv, do not realize that the retail  sales number is an “estimate.”

On an inflation-adjusted basis, the .1% “gain” reported for November is a decline.  Most are not aware of that fact as well.  Also, the .8% gain reported for October was revised down to a .6% gain.  It is highly probable that November’s number will be revised to negative when December’s retail sales report hits in January.  But the revision for November is typically not reported at all.

According to a research piece published by Cowen & Co. on December 14th, mall traffic fell 6.4% in November from October and December month-to-date traffic was down 9.9%. Granted, there’s no question that some portion of that mall traffic has shifted to buying online for its holiday purchases. However, even with the growth in online retail sales, e-commerce accounts for less than 10% of total retail sales (the Census Bureau estimated e-commerce represented 7.7% of total sales in Q3 2016.

I have no doubt that the Government’s Census Bureau is going to put forth its best effort to manipulate the sales data it collects in order to present a positive light on December and holiday sales this year. However, the actual reports coming from the retailers themselves reflects a retail environment in which the stores are fiercely competing for a “shrinking pie” of consumer disposable income.

Restoration Hardware stock did an 18% cliff-dive two weeks ago when it reported its Q3 earnings.   Over the last six trading days, the XRT retail ETF is down 4.2%.  It was down every day last week despite the SPX and Dow hitting new all-time highs.

In the latest Short Seller’s Journal released Sunday evening, I dive into the retail sales numbers in-depth and present a lot more information which should satisfy proof of concept that this year’s holiday retails sales will be a complete disaster.  Note:  I have no doubt the Census Bureau and industry promotion organizations will manipulate the data for the holiday season in order to report positive sales results.  But the reality check will come from the companies themselves, which have a harder time faking the numbers.

I present several retail-related short ideas in the latest SSJ, including options trading suggestions.  On of the ideas is already down 1.3% today.  You can access these ideas plus in-depth data and analysis using this link:  Short Seller’s Journal.   SSJ is a monthly subscription.  New issues are published weekly and there’s no minimum time commitment.

Historic Market Blow-Up Is Brewing

I was chatting with a good friend who works at a pension fund. He said that pensions are historically overweighted in stocks right now. But it looks like the latest push higher in the stock market is coming from hedge funds, who apparently missed a large portion of the “Trump rally.”   We determined that the best reason to invest in stocks for both pension and hedge funds is “to avoid looking like an idiot.”

That’s it – that’s the “fundamental” justification for investing in stocks right now is because everyone else is and if your portfolio on Dec 31 is underweighted in stocks you’ll look like an idiot.

That stocks are more overvalued now than at any time in history except maybe 1999 is unequivocally undebatable.  However, if the GAAP accounting standards in force in 1999 were applied to current earnings, both the Dow and S&P 500 would be at record valuation levels.   I discuss this in more detail in the latest Short Seller’s Journal.

So, chasing stocks higher to avoid looking like a moron makes a lot of sense, right? Currently I can’t find evidence that the Fed is printing money to fuel this stock market so I have to believe that it has relaxed credit standards to enable banks, hedge funds and mutual funds (yes, many mutual funds now have the ability to tap credit lines) to borrow money with which to chase stocks.

Debt/credit behaves just like printed money until the debt has be repaid.  So creating credit is de facto printing.  But, what happens when debt defaults begin to pick up?  This is beginning to happen now in mortgage, auto and credit card debt.  Again, I provide proof of concept in the Short Seller’s Journal.

This is perhaps the most dangerous market – both stocks and bonds – in history.  It’s the largest money bubble in history that has been blown by the Fed, in conjunction with the ECB, BoE, BoJ and PBoC.   Silver Doctors/News Doctors invited me on to its Metals & Markets weekly podcast to discuss why 2017 could witness an historic market collapse:

Untitled

The Consumer Is Broke: “Restaurant Sales Worst Since July”

At -1.3 percent, disappointing restaurant sales growth in November was the ninth consecutive month of negative same-store sales; and the worst sales growth since July…Same-store sales for third and fourth quarters, at the end of November, are both -1.1 percent.Black Box Intelligence

That’s the restaurant industry.  Here’s a retail sales report from Dollar General, which would represent about 40-50% income and spending demographic:

Interestingly, we talk to our consumers each and every quarter through panel data as well as we bring them in and talk to them in general and I can tell you as late as mid third quarter, they were telling us that their sentiment – feeling – is even more dire than it was in previous quarters in early 2016  – Dollar General CEO in response to an analyst question on the quarterly earnings conference call.

Granted, DG’s core customer is low-income. However, as more Americans slide into the “low income” segment, it will affect overall retail sales, especially with regard to disposable income. My point here is that, despite the sense of “hope” signaled by the “Trump rally,” in general the average American is not feeling optimistic about the economy and I believe this will translate into a poor holiday season for both retailers and the overall economy. – Short Seller’s Journal, Dec 4 issue

Retail sales this holiday season are going to be abysmal.  Everyone with whom I’ve chatted who’s been out holiday shopping – I mean everyone – has commented on how eerily quiet the stores are this year.

The Census Bureau and the National Retail Federation will issue phony sales reports that will be contradicted by the actual sales reports from and guidance from retailers.  This report written by NY Post editor, John Crudele, outlines the methodology by which the Census Bureau manipulates the monthly retail sales reports:

Halfway down the page is a listing for Health and Personal Care Stores. It had a 7.6 percent increase in October. But underneath that calculation, there are no data, only an asterisk. That’s explained in the footnote to mean “advance estimates are not available for this kind of business.”

So how did Census determine that there was a 7.6 percent increase in Health and Personal Care Stores when the only category listed doesn’t provide data? “Furniture and home furnishing stores” also had a 3.4 percent sales increase. But, again, Census came up with a calculation despite no data.  – John Crudele on October retail sales report

If you pull up the actual retail sales report issued by the Census Bureau, you’ll see that several categories are “asterisked,” meaning the CB imputed its own estimate for October retails sales for that category.  In other words, about half the reported headline number is made up.

Restoration Hardware’s earnings report yesterday is an example.  The stock is down 18% after missing Wall Street’s earnings estimates – badly – and issuing dismal guidance on holiday sales and its outlook for 2017.

The point here is that the average household real disposable income is declining. As such, the average consumer is choking on debt, Obamacare premium increases, and the spiraling cost of everyday living – especially those households with children.

Despite a stock market that is going parabolic and in the final stages of a blow-off top, several of my stock picks in the weekly Short Seller’s Journal have provided profitable trades since August (some have not, to be fair).   One retailer in particular dropped 20% after I presented it in August and is now back up to the price at which I recommended shorting it.  I will be discussing this stock as a great short idea in this week’s issue.  You can access the SSJ using this link:  Short Seller’s Journal.

Payment terms are monthly and you can cancel at any time.  The SSJ issues are weekly and delve in-depth into economic data and analysis that you will not necessarily find on in the mainstream or alternative media.

Party Like It’s 1999: The Stock Market Is A Propaganda Tool

The degree and level of propaganda now flowing from the Establishment and the Establishment-controlled mainstream media is on par with that of the old Soviet Politburo or German Third Reich.   In fact, I’d confidently propose that this point is incontestable.

With modern technology and regulations which have made Fed operations and accountability tragically opaque, I have zero doubt that the Fed and the Government have managed to turn the stock market into another propaganda tool.  Studies have shown that, over the short term, the direction of the stock market and consumer sentiment measures are highly correlated.

Thus, pushing the stock market a lot higher is a mechanism that can be used to influence the public’s sentiment and willingness to spend.  This is critical after an election in which the political party controlling Capitol Hill changes and – more important – during the holiday shopping season.

Without question the U.S. economy is beginning to quickly crumble.  If you “peel away” the manipulative techniques applied to the economic reporting it reveals that every segment of the economy is now contracting.  Even the factory orders report for October released  yesterday – which showed a 2.7% gain over September – is still down 2.3% YTD vs the same YTD period in 2015.  Strip away the transportation component and it’s down 2.7%.

With interest rates on the long end up over 100 basis points in a very short period of time, the Fed’s balance sheet has taken a big hit. It currently owns over $4 trillion in Treasuries and mortgage securities. Assuming an average duration of 10 years on its holdings, the market value of the Fed’s balance sheet has dropped 8.4%, or approximately $320 billion. As of this past Thursday, the Fed’s balance sheet showed $46 billion in book equity. If the Fed were forced to mark-to-market its fixed income holdings, the Fed’s net worth would be significantly negative – close to $300 billion negative. Think about that: the only thing backing the value of the U.S. dollar right now is the U.S. military and a Central Bank with a massive negative net worth.  – excerpt from IRD’s latest Short Seller’s Journal

Market intervention in this manner is an attempt to convince the public that the economic system is healthy and will be even healthier in the future.  As such it’s another subtle propaganda tool – a perception management device.   If the Fed were step away from the market, the stock market would rapidly re-price to reflect the true underlying economic reality.  In short, stocks would crash and concomitantly gold and silver would soar.

The Fed injected billions into the system in late 1999 ahead of Greenspan’s Y2k scare. It led to the biggest stock market blow-off top of all-time.The current market is quite similar, only the economic and financial fundamentals underlying both the public and private sectors of the system are far worse than they were in 1999.

The ONLY thing that can explain the move in the stock market since around 2:00 a.m. EST after the election is massive Fed stimulus in some form – either direct cash injections done in a format that won’t show up on the Fed’s balance sheet or a massive spike up in the availability of short term credit lines made available to banks and extended to hedge funds. There is no other explanation.

Today for example, the stock market is spiking higher AND bond prices are higher/yields lower. This makes absolutely no sense and can only be explained by official intervention of some sort.

Gold and silver will “sniff” this out and at some point I expect to see gold begin to move a lot higher and the dollar sell-off precipitously. I also expect that the Chinese are going to send their response to Trump’s inimical overtures on Twitter by accelerating their sale of U.S. Treasuries.

lf the same GAAP accounting standards used in 1999 to measure corporate earnings – the standards having been relaxed more almost every year since 2000 to enable companies to report higher GAAP earnings – were applied to today’s earnings numbers, we would see that the current stock market is by far the most overvalued in history.

This will not end well.

Orwell’s “Thought Police” In Real-Time

“Fake news” accusations, preposterously manipulated Government economic reports (like today’s employment report), stock market intervention, interest rate and precious metals manipulation – these are all varying forms of propaganda tools that are implemented in an attempt to shape and control the public’s perception of events.  They are tools used to distort reality for the purpose of influencing the individual’s thought formulation.   It’s right out of Orwell’s playbook.

Elijah Johnson on behalf of Silver Doctors invited to me discuss the Government/elitists efforts to restrict free speech and to harness the public’s perception of reality.  While you may or may not be pleased with the President-elect, his surprise win over Clinton offers a ray of hope that the population at large is rejecting the movement toward Governmental totalitarianism:

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