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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:
Fake News, Propaganda And False Flags
The Fake News conspiracy is starting to lose steam. It’s time to bury it completely. But this won’t happen because the “Fake News” narrative is another propaganda tool that is being used to distract the public’s attention from a collapsing economy and political system.
Paul Craig Roberts sent around an article that cites a former top NSA official who states explicitly that the NSA would have evidence of Russian influence on the election. Apparently it has none:
If the idiots in the intelligence community expect us to believe them after all the crap they have told us (like WMD’s in Iraq and “no we don’t collect data on millions or hundreds of millions of Americans”) then they need to give clear proof of what they say. So far, they have failed to prove anything.
Which suggests they don’t have proof and just want to war monger the US public into a second cold war with the Russians.
After all, there’s lots and lots of money in that for the military-industrial-intelligence-governmental complex of incestuous relationships
This article is a must-read: No Evidence Russia Hacked The Election.
The Russian/Fake News narrative is designed to foment Cold War 2.0 with Russia. Russia and China are working – understandably – to remove the dollar as the world’s sole reserve currency. The only means by which the U.S. can try to stop this is military. It’s beginning to escalate into a dangerous game. Trump seems to be perpetuating it by rhetorically fanning the flames with China in the South China Sea.
When an Empire is collapsing, history tells us that the Government foments “patriotism” through the heavy application of propaganda that is used to support rampant imperialism. This is where the U.S. is right now.
Of course, Trump’s motive for enabling the Fake News narrative to perpetuate is to distract attention from his cabinet appointments, which have a decided Big Oil and Big Bank flavor to them. So much for draining the Swamp.
This chart from William Banzai is priceless:
Guest Post: Here’s Why The Banksters Are In Trouble
If the Fed were to reverse the portion of its QE in which it injected trillions onto big bank balance sheets as well as fomented a mortgage/housing bubble, the Too Big To Fails – including Goldman Sachs – would collapse. Make no mistake, it would ultimately prove to be a good thing.
However, there’s also a growing groundswell of grassroot Americans who have “woken up.” Perhaps the only good attribute of the last election is that it hastened the rate of enlightenment. Too be sure, the number of Americans who understand the difference between Truth and Propaganda has vastly increased.
A reader of this blog and subscriber to the Mining Stock and Short Seller Journals submitted this narrative of a recent “enlightenment” experience that occurred while on a routine visit to the local barber shop. It’s worth perusing:
I’m almost speechless as a result of the experience I just had. I have just returned from getting a haircut at the local barbershop downtown. I was there along with the barber, a semi-retired gentleman who now drives a school bus part-time, and a local hay farmer. Our conversation was an absolute stunner, and provides very compelling (albeit admittedly anecdotal) evidence that the bankster elite are in BIG trouble.
Why?
Well, first of all, the barber (in his late 30s) was explaining for all of us how the big banks are in MAJOR trouble on account of (and I am quoting verbatim) “the trillions of dollars of complex derivatives they are holding that are going to implode as a result of the rapid rise in US treasury bond yields.”
The bus driver then explained to everyone how he is no longer keeping any more money in his checking account than he needs to cover outstanding checks; that otherwise he holds all of his money in cash at home. Why? Because he is afraid that, at some point in the very near future, “we’ll all wake up on a Monday morning to discover that a bank holiday has been declared, and none of us will be able to access our funds.”
Finally, the hay farmer told us all how, as a result of having an excellent harvest this year, he had opted to pay off, two years early, the loan on his new tractor. He explained how he had received a call from the bank holding the loan, and the loan officer had attempted to convince him to NOT pay off the loan yet, and even offered to refund twelve months of interest payments if he would simply carry the loan to full term. The farmer adamantly refused. His response to the bank officer? “I understand perfectly well why you want to keep this loan on your books for two more years: you are using my loan as collateral to borrow short and lend long to the tune of at least ten times my original loan balance, and if I pay off my loan early, my debt and your collateral will be extinguished at the same time, and you’ll have to come up with more collateral to back up loans you never should have made in the first place.”
I was stunned!
“… borrow short and lend long … if I pay off my loan early, my debt and your collateral will be extinguished … loans you never should have made in the first place.” WOW!
I sat there absolutely amazed at the relatively high level of understanding manifest by these “salt of the earth” types — and I realized the extent to which the global elite have grossly underestimated the common folk of this world. I am, at this moment, as hopeful for the future of America as I have been in many years.
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.
CONFIRMED: Big Banks Rigging The Silver Market
According to the plaintiffs, records surrendered by Deutsche Bank show traders and submitters coordinating trades in advance of a daily phone call, manipulating the spot market for silver, conspiring to fix the spread on silver offered to customers and using illegal strategies to rig prices.
“Plaintiffs are now able to plead with direct, ‘smoking gun’ evidence,’ including secret electronic chats involving silver traders and submitters across a number of financial institutions, a multi-year, well-coordinated and wide-ranging conspiracy to rig the prices,” the plaintiffs said in their filing. The new scheme “far surpasses the conspiracy alleged earlier.” – Bloomberg.com, December 7, 2016
Anyone who denies that gold and silver are manipulated either has not spent time examining the evidence or is financially incentivized to refute all allegations. In other words, they are either ignorant or willfully corrupt. This includes the entire universe of politically corrupt western Central Bankers and professionally criminal Wall Street bankers. But first and foremost it includes all three branches of Government.
Traders discussing on recorded lines ways in which to rig the silver market? Imagine that. Lost in the smoke of the latest revelations about the big bank silver market manipulation is the fact that Andrew Maguire presented evidence of this at JP Morgan over six years ago. Perhaps the most shocking aspect about the latest revelations is that JP Morgan was not cited in the Deutsche Bank court filings.
Although summarily dismissed by the Commodity Futures Trading Commission and mainstream financial conspiracy, JP Morgan has been the “ring leader” in the silver market manipulation scheme for years.
The latest revelations will never be accepted as truth until CNN or CNBC reports on them to “verify” for the zombie masses that the big banks are indeed corrupt beyond the imagination of “conspiracy theorists.” It will be interesting to see if this will lead to RICO prosecution, which it should:
RICO law refers to the prosecution and defense of individuals who engage in organized crime. In 1970, Congress passed the Racketeer Influenced and Corrupt Organizations (RICO) Act in an effort to combat Mafia groups. Since that time, the law has been expanded and used to go after a variety of organizations, from corrupt police departments to motorcycle gangs. RICO law should not be thought of as a way to punish the commission of an isolated criminal act. Rather, the law establishes severe consequences for those who engage in a pattern of wrongdoing as a member of a criminal enterprise
The threat of RICO was used to pry open the truth at Drexel Burnham in order to bring down what was, at the time, one of the biggest – if not the biggest – financial market corruption schemes in U.S. history.
The latest revelations are hard evidence that GATA has been right since 1998, when it was founded by Bill “Midas” Murphy and Chris Powell in order to document and expose the gold and silver market manipulation for the world to see. GATA’s evidence has been written off for over a decade as “conspiracy theory.” Now it is confirmed conspiracy truth. In fact, Murphy was banned as a guest on CNBC after he discussed gold market manipulation.
“Fake news?” Hardly. Proof is now in court documents. In today’s episode of the Shadow of Truth, we discuss the latest court documented evidence which confirms that silver market manipulation is standard operating procedure at the big banks who are supported by the taxpayers:
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.
NATO, The Obama Government And Fake News
Here’s the identity of the entities behind PropOrNot:
Launched by a resounding article in the Washington Post, on 24 Novembre 2016 [11], a mysterious group entitled Propaganda or Not? established a list of de 200 Internet sites – including Voltairenet.org – who were allegedly tasked by the Kremlin with relaying Russian propaganda and intoxicating US public opinion to the point where they elected Donald Trump.
While Propaganda or Not? does not publish the names of its directors, it does indicate that it unites four organisations – Polygraph, The Interpreter, the Center for European Policy Analysis and the Digital Forensic Research Lab.
– Polygraph is one of the sites of Voice of America, the US public radio and television organisation controlled by the Broadcasting Board of Governors.
– The Interpreter is a magazine of the Institute of Modern Russia, now broadcast by Voice of America.
– The Center for European Policy Analysis is a pseudopod of the National Endowment for Democracy (NED) directed by Zbigniew Brzeziński and Madeleine Albright.
– And finally, the Digital Forensic Research Lab is a programme of the Atlantic Council.
In a document distributed by Propaganda or Not?, this pseudo-NGO, born of associations financed by the Obama administration, clearly names its enemy – Russia. It accuses Russia of having been the origin of the 9/11 Truth Movement and the Internet sites supporting Syria and Crimea.
On 2 December 2016, the United States Congress voted a law forbidding all military co-operation between Washington and Moscow. In the space of a few years, NATO has re-activated MacCarthyism.
You can read this entire article here: NATO, The Obama Government And “Fake News”
I did a podcast with Elijah Johnson of Finance and Liberty/Silver Doctors in which we discussed the use of fake news and manipulated Government economic reports as totalitarian propaganda tools: Orwell’s Thought Police In Real-Time.
Gold Manipulation, Propaganda And Totalitarianism
“I read Atlas Shrugged, Brave New World (+ Brave New World Revisited) and 1984 every ten years or so. Each time they are closer to reality.” That comment was emailed in from a listener who offered the suggestion that the websites identified by Jeff Bezos’ “Washington Post” are Russian propaganda conduits should combine resources and sue the WashPo. Apparently the proprietor of Nakedcapitalism.com, Yves Smith, has threatened the WashPo with a defamation lawsuit and has demanded a public retraction of the accusations put forth by Deep State insider, Jeff Bezos (see this for details on Bezo’s connection to the Deep State: McCarthy’s Red Scare Redux).
The problem is that lawsuits of that nature do no good anymore. We’re in the latter stages of “Atlas Shrugged.” If you’re not part of the insider Government’s elitist circle, there is no Rule of Law. If Yves takes up a collection to help fund her fight, we will gladly contribute but we don’t think fighting the trend is going to do anything other than pander to our ego. It’s false gratification that is embedded in the illusion that citizens can effect change. Ask the people who are being honest with themselves if their vote for “change” worked in 2008…
In other words, there’s a movement toward totalitarianism set in motion now that can’t be stopped until it blows itself up. History is pretty clear on this dynamic. Look at the Bill being passed by the House that contains a section which opens the door for internet censorship. If that Bill becomes a law, it will remove any legal standing to file suits like the one threatened by Yves. If she’s serious about filing a suit, she needs to file it before the Senate passes that legislation and before it’s signed by either Obama or Trump.
The movement toward Governmental totalitarian control gained traction when nobody put up any resistance to the increasing use of presidential Executive Orders. Congress should have been livid but rolled over under a shower of special interest money. The use of the Executive Order usurps Congressional and Judicial power and transfers it to the Executive Branch of Government and, specifically, to the Oval Office. It’s Rule of Man.
Just like the totalitarian creep, the use of propaganda by the Government is intended to assert control over the public’s perception. The phony economic reports and the manipulation of the markets – especially the intervention in the stock gold markets – are various forms of propaganda. The economic fundamentals continue to deteriorate. By just about every privately source economic data series the U.S. economy is contracting – i.e. in a recession.
If the Dow and the S&P 500 keep going higher and the price of gold is prevented from moving higher – and even though the economic fundamentals would suggest that stocks should be tanking and gold should be soaring – it sends the “message” that “maybe everything is better than it seems to me.” Pure. Unadulterated. Propaganda.
In today’s episode of the Shadow of Truth, we discuss the use of propaganda and market manipulation as tools used by the Government to help it advance the movement toward to a totalitarian system as prophesied by visionaries like Orwell, Huxley and Rand:
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:
Paul Craig Roberts: Trump’s Appointments
Note: I exchanged emails earlier this week with Dr. Roberts. We had a good chuckle over Jeff Bezos’ accusations per PropOrNot.com that our websites were conduits for Russian propaganda. We also chatted about Trump and his appointments so far, to which I expressed disappointment but to which Craig responded “I am going to give him six months.”
Dr. Roberts has written a must-read commentary on Trump’s appointments. Do not make the mistake of letting the mainstream media – or even the alternative media – influence your views. Do not express contempt prior to your own investigation. Too be sure, Dr. Roberts is coming from a background of experience that none of us can claim to possess:
Another limit on a president’s ability to form a government is Senate confirmation of presidential appointees. Whereas Congress is in Republican hands, Congress remains in the hands of special interests who will protect their agendas from hostile potential appointees. Therefore, although Trump does not face partisan opposition from Congress, he faces the power of special interests that fund congressional political campaigns.
When the White House announced my appointment as Assistant Secretary of the Treasury, Republican Senator Bob Dole put a hold on my appointment. Why? Dole had presidential ambitions, and he saw the rising star of Republican Representative Jack Kemp as a potential obstacle. As I had written the Kemp-Roth bill that had become Reagan’s economic policy, Dole regarded me in the Treasury as a one-up for Kemp. So, you see, all sorts of motives can plague a president’s ability to form a government…
…Commentators are jumping to conclusions based on appointees past associations. Mnuchin was an early Trump supporter and chairman of Trump’s finance campaign. He has Wall Street and investment experience. He should be an easy confirmation. For a president-elect under attack this is important.
Please spend time reading the entire piece here: Dr. Paul Craig Roberts – Trump’s Appointments