22 April 2014

Bernanke Talks Up the Bankers' Balance Sheet Boogie Woogie - The Truman Sparks Award

Sometimes when I just don't have the words someone more articulate than me on the subject says it all.

Confounded Interest
Bernanke: QE Was For “The Man On The Street”
(Wall Street, That Is!) and Their Electrical Parade
By Anthony B. Sanders

Zero Hedge has an amusing story today based on former Federal Reserve Chairman Ben Bernanke’s speech to the Economic Club of Canada (for a cool $250,000).

* Bernanke Says US Economy Is Heading Towards Complete Recovery

Huh?  The lime colored box shows the rewards of Quantitative Easing to the Man on the Street. In Kingman Kansas, perhaps. Stagnant real household income, employment to population ratio and YoY growth in hourly wage income. And flat-lined mortgage purchase applications.


But for Wall Street, it has been roses, cigars and snifters of cognac.


Of course, retirement funds for workers and investors in the stock market do benefit from The Fed’s quantitative easing. Yet, the jobs market remains stalled while creating low-paying and part-time jobs.

Perhaps Bernanke wants Disney World to rename the Main Street Electrical Parade as the Wall Street Electrical Parade!


Fed policy under Greenspan and Bernanke in two and one half minutes.

Presenting the 'Truman Sparks Award' for Orthogonal Banking Regulation and Obtuse Monetary Policy. - Jesse

Gold Daily and Silver Weekly Charts - Hotel California

Its funny the way that 476,000 ounces of gold have been 'delivered' so far this month, but the warehouse inventories never seem to go down.

Like the Hotel California, you can check out, but you can never leave.

When I was seconded to the ITU in Genève for many weeks at a time, I used to stay in a smaller hotel on the Rue Gevray that was called the Hotel California. It was very convenient because they had efficiency rooms on the top floor with a small kitchen and a balcony with a nice view of the lake.  And it was not a bad walk up the hill to the old League of Nations building, and an equally pleasant walk over to the restaurant areas.

Alas, they have long been out of business. I heard that for some time they were apartments, and then were taken over by student squatters.    I am just sorry that I never acquired one of their signature bath mats, lol.

It was a typical little European hotel, very friendly.  They held the room if one of the regulars took off on the weekend for a trip into the French countryside, or east into the Schweizer Alpen.  I received a Christmas card every year from them for quite some time. 

I understand why no gold seems to be leaving the Comex warehouses, but it is still kind of funny. The 'claims' are really just warrants, and they are passing them around for shits and giggles for the moment. The Comex is not so much a 'real market' of buyers and sellers who actually produce and use the things that they trade, but more of a game of traders, punters, and banksters. 

The drawdowns we saw over the past year were somewhat unusual, especially along with those of so many of the funds and ETFs. I understand the *possible* alternative explanations, especially those peddled by Shill & Troll. But I think something is up behind the scenes.

So let's see what happens. If I am right, at some point the convergence with reality could be impressive.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Wash Cycle

"People feel like the system is rigged against them, and here is the painful part, they’re right. The system is rigged. Look around. Oil companies guzzle down the billions in profits.

Billionaires pay a lower tax rate than their secretaries, and Wall Street CEOs, the same ones the direct our economy and destroyed millions of jobs still strut around Congress, no shame, demanding favors, and acting like we should thank them. Does anyone here have a problem with that?"

Elizabeth Warren

If you have been short this market recently that most likely has been some pain. 'Never short a dull market.' And especially a dull (low volume) market in which the Fed and their Banks are running rampant with free, hot money.

I think we *might* be nearing the end of the wash cycle, and I could be on the lookout for something on the downside, but not quite yet. There is still some room to go higher and shorting is an advantageous, short term strategy at most times.

Disgraceful really, but they do not care.

Have a pleasant evening.

NAV Premiums of Certain Precious Metal Trusts and Funds - Crash In a Matter of Months?

In case you were wondering there is a Comex precious metal options expiration on Thursday the 24th.

Since the expiration is for the inactive month of May, I am wondering if they are not going to do an early hit with a head fake on this one as the day comes.

 Hard to forecast.  Typically a noted player will show their hand at some point and the pit crawlers will follow their lead.  They used to walk into the pit, but now I wonder if they just don't print it on the electronic trade, if you know what to look for.

The 'hit' on the metals was pretty much standard operating procedure this morning.

We are clearly in the 'wash' cycle for equities.  Except for the miners which are getting pummeled.  That is a hard trade lately.

Normally I take this sort of thing with a grain of salt, but I have quite a bit of respect for Richard Russell.  He has an interview in which he says that he says 'the dollar will crash in a matter of months.'
"The US will lose its reserve currency advantage within a few years or probably less time. Our defense against a weak economy is always to print more money. In a matter of months, I see the dollar crashing.”
Now the stock market I could understand, and agree with much of what Richard Russell has to say about it and the economy. Although as a traditionalist I would be looking more towards Sept-Oct timeframe, and would have to see a classic 'crash pattern' which has worked well for me in the past.  I have not seen that yet, and if we get close to it, I will start discussing it.   But it is the familiar 'failed rally' two step that I can find in almost every major US stock market crash.

But as for a dollar crash, I am struggling with that one.  It is possible but not likely.  And the obvious questions are why and against what?   Since the dollar is not pegged against anything, it would take a serious event to trigger a 'crash.'

And it takes quite a bit for a major developed currency to fail.  The Fed may not have a literal printing press, but they do have a Balance Sheet and can absorb any amount of debt they wish.   It may not be pretty, and it could weaken the dollar against some commodities and imports, but a crash?  That seems like a real long shot now.  But I am keeping an open mind on it.

As you know I am aware of the major hyperinflationary episodes of the past, and have been following the arguments of those who do and do not think it is possible with a sovereign currency like the US dollar.   And I think you know that my own opinion is that this is highly unlikely, excepting for some major exogenous events, and a colossal policy error or two.  Stagflation seems much more likely to me based on the lack of reforms.

But I thought you might like to be aware of what Richard Russell has to say, and what I think about it at this time.  Legendary legends make all sorts of predictions, and write their hits in marble and their misses in sand.  And I know I cannot forecast the future very often, except at the extremes.  And I am not there yet on any crashes excepting some unforeseen exogenous event which no one can really forecast.

21 April 2014

Gold Daily and Silver Weekly Charts - Lies, Damn Lies, and an Option Expiration

“A true opium of the people is a belief in nothingness after death - the huge solace of thinking that for our betrayals, greed, cowardice, and murders that we are not going to be judged.”

Czesław Miłosz

The action for the precious metals did not bode well, when late last night as gold drifted higher and crept over 1300 it was smacked down by some heavy dumping of contracts in quiet trade in the Globex market.

And we saw that classic back and forth sea saw today around the level targeted by that late night selling at 1290. Its a little thing after all, but it is discouraging to those who watch these daily antics too closely.

As a reminder, there is an option expiration on the Comex this week, on Thurday the 24th. Since May is an 'off month' I would not expect it to be all that significant.

More notable is the interesting delivery month we are seeing, with plenty of warrants for the April contracts changing hands, but little to no gold showing any visible movement in the warehouses.

As you may have read, China has opened Beijing as a third point of imports of gold, in addition to Shanghai and Hong Kong.  One might suspect that the numbers so closely watched by some in Hong Kong will continue to become increasingly less relevant to that actual world trade in gold.  Much like the Comex.

Big things are happening behind the scenes.  But you will see only traces of their footprints in the news of the day. 

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Wash, Rinse, Repeat

"Come, let us sing to the Lord; let us make a joyful noise to the rock of our salvation. Let us come before His presence with thanksgiving; let us make a joyful noise to Him with songs of praise. For the Lord is a great God, and a great King above all.

In His hands are the deep places of the earth, the heights and strength of the hills. The sea is His, for He made it, and His hands formed the dry land. Come, let us worship respectfully, let us kneel before the Lord our Maker. For He is our God and we are the people of His pasture and the sheep of His hand. Now, if you will but hear His voice."

Psalm 95

Neflix 'beat' after the bell.

There was little economic news this morning.

It appears that Pfizer is wooing AstroZeneca, and Barrick has been schmoozing with Newmont. Neither of these lusty pairings has been bearing fruit we hear.

The public interest is not even an afterthought in most things, but particularly in matters financial like the stock market which is, as they say, rigged.

Have a pleasant evening.


Ukraine: The Global Corporate Annexation

"War against a foreign country only happens when the moneyed classes think they are going to profit from it."

George Orwell

"War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives.

A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small 'inside' group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes."

Major General Smedley Butler, USMC

There is certainly a long established difference between a just war, a defensive war, and a war of adventure or aggression. No one understand this better than those who suffer loss in fighting them.

Like quite a few people I found myself asking, 'Why the Ukraine? Why the sudden push there, risking conflict with Russia on their own doorstep?' Why are we suddenly risking all to support what was clearly an extra-legal coup d'état?'

It is telling perhaps that one of the first things that happened after the coup d'état is that all of the Ukraine's gold was on a flight to New York, for the safekeeping by those same people who have managed to misplace a good portion of the German people's gold. It is the most transportable and fungible store of wealth, where the transfer of less portable assets by computerized digits may lag.

Follow the money...

Ukraine: The Corporate Annexation
'For Cargill, Chevron, Monsanto, It’s a Gold Mine of Profits'
by JP Sottile

As the US and EU apply sanctions on Russia over its annexation’ of Crimea, JP Sottile reveals the corporate annexation of Ukraine. For Cargill, Chevron, Monsanto, there’s a gold mine of profits to be made from agri-business and energy exploitation.

The potential here for agriculture / agribusiness is amazing … production here could double … Ukraine’s agriculture could be a real gold mine.

On 12th January 2014, a reported 50,000 “pro-Western” Ukrainians descended upon Kiev’s Independence Square to protest against the government of President Viktor Yanukovych.

Stoked in part by an attack on opposition leader Yuriy Lutsenko, the protest marked the beginning of the end of Yanukovych’s four year-long government.

That same day, the Financial Times reported a major deal for US agribusiness titan Cargill.

Business confidence never faltered

Despite the turmoil within Ukrainian politics after Yanukovych rejected a major trade deal with the European Union just seven weeks earlier, Cargill was confident enough about the future to fork over $200 million to buy a stake in Ukraine’s UkrLandFarming...

Read the entire report here.