Posted at 1:40 PM (CST) by & filed under In The News.

clip_image002

 

Jim Sinclair’s Commentary

Seriously important especially where mismatches financially are discussed.

“It’s not entirely clear what will happen in the near term, but the financial markets are already pushed to extremes by central-bank induced speculation.  With speculators massively short the now steeply-depressed euro and yen, with equity margin debt still near record levels in a market valued at more than double its pre-bubble norms on historically reliable measures, and with several major European banks running at gross leverage ratios comparable to those of Bear Stearns and Lehman before the 2008 crisis, we’re seeing an abundance of what we call “leveraged mismatches” – a preponderance one-way bets, using borrowed money, that permeates the entire financial system.   With market internals and credit spreads behaving badly, while Treasury yields, oil and industrial commodity prices slide in a manner consistent with abrupt weakening in global economic activity, we can hardly bear to watch.”

More…

 

Putin Draws Line In The Sand As West’s Major Oil Companies Push For War
January 26, 2015

After back-to-back weeks of historic announcements that rocked the global markets, today a 41-year market veteran sent King World News an incredibly powerful piece that warns Russian President Vladimir Putin has drawn a line in the sand, as the West’s major oil companies are pushing for war.

By 41-Year Market Veteran Bill Haynes

January 26 (King World News) – Almost unreported in the United States is talk of shutting Russia out of the SWIFT banking payment system.  This would be the harshest sanction for Russia’s support of the separatist rebels in Ukraine.  SWIFT is the means by which banks move money around the world….

More…

 

Jim Sinclair’s Commentary

Relations with our ally in the Middle East go South. Is that logical under present circumstances?

Israel’s President Refuses To Meet With Obama
Submitted by Tyler Durden on 01/25/2015 22:29 -0500

While Obama is doing everything in his power to show that when it comes to commiserating with the Saudis, he is first in line, the US relationship with that “other” US ally in the region, Israel, is in a fast and furious state of “crash and burn.”

Recall, that it was yesterday when it was revealed that President Obama will forgo a visit to the Taj Mahal during his visit to India in order to pay respects in Saudi Arabia after the death of King Abdullah, the White House announced early Saturday morning. Vice President Biden was initially scheduled to lead the U.S. delegation, but he will instead now remain in Washington and Obama will add the stop onto his return from India, where Obama is concluding his trip to “foster economic ties with the nation.”

This, in turn, takes place a day after Obama announced he would not meet Israel’s prime minister when he visits Washington in March, the White House said on Thursday, after being blindsided by the Republicans’ invitation to Benjamin Netanyahu to address the U.S. Congress on Iran.

Bernadette Meehan, spokeswoman for the White House National Security Council, said Obama was withholding an invitation for Oval Office talks with Netanyahu because of Israel’s March 17 elections.

“As a matter of long-standing practice and principle, we do not see heads of state or candidates in close proximity to their elections, so as to avoid the appearance of influencing a democratic election in a foreign country,” Meehan said in statement.

“Accordingly, the president will not be meeting with Prime Minister Netanyahu because of the proximity to the Israeli election, which is just two weeks after his planned address to the U.S. Congress.”

More…

 

Jim Sinclair’s Commentary

How long do you really believe that China will stick to the peg? My take is not too long.

Chinese Currency Plunges To Peg Limit Against USDollar, Strongest Against Euro In 14 Years
Submitted by Tyler Durden on 01/25/2015 21:47 -0500

The drop in the Yuan over the past 2 days is the largest against the USDollar since Nov 2008 as USDCNY nears its highest (CNY weakest) since mid-2012. What is more critical is that for the first time since the new 2% CNY peg bands, USDCNY is trading at the extremes – 11.5 handles cheap to the fix. At the opposite end of the spectrum, the EURCNY just dropped below 7.00 for the first time since June 2001 with the biggest 2-day strengthening of the Chinese currency against the Euro in almost 4 years. It appears the consequences of ECB QE, SNB volatility, and now Greek concerns continue to ripple through the rest of the world.. and at a time when China faces its ubiquitous new year liquidity squeeze, that is not a good sign.

Biggest 2-day drop in the Yuan against the USDollar since 2008

clip_image003

With USDNCY puishing against its 2% peg band for the first time…

More…

 

“Unambiguously Good”? Dallas Fed Collapses To 20-Month Lows As Orders Plunge
Tyler Durden on 01/26/2015 10:39 -0500

Who could have seen this coming? Well apparently all but one economist (TD Securties Greene and Mulraine had a -5.0 est) as the -4.4 print is almost a 4 standard deviation miss from extrapolator’s and hockey-stickers’ dreams. Following December’s drop and miss, the Dallas Fed Manufacturing index is now at its lowest since May 2013. All components dropped, apart from inventories as 11% of firms reported layoffs and wage pressures eased.

clip_image004

Ugly…

Some of the details are extremely worrisome…

The shipments index plunged from 20.8 to 6, due to a much higher share of respondents noting a decline in shipments in January than in December.

Wage pressures eased, while input and selling prices declined in January. The raw materials price index came in at -1.7, its first negative reading in more than five years.

clip_image005

The finished goods price index fell 11 points to -6.7, after posting positive readings during the past 17 months.

More…

 

Jim Sinclair’s Commentary

Will Chair Yellen panic? Yes!

Fear And Dread Of Deflation—-The Keynesian Big Lie At Work
by David Stockman • January 26, 2015

The fear of deflation has become the cornerstone of Keynesian economic thought. A lack of inflation has been used to explain periods of economic weakness from the Great Depression of the 1930’s, to the Great Recession 2008-2009. And now, that philosophy has been adopted as gospel by those that control the Federal Reserve and virtually every central bank on the planet. In reality deflation is cathartic, and a necessary condition to heal the economy. If deflation were allowed to naturally run its course, as it did in the brief Depression of 1920-21, depressions would be sharp but fairly short in duration. And the economy would find itself on firm footing fairly quickly. However, Keynesians view deflation as the source of a destructive cycle in which; asset prices plunge, companies cut jobs, spending plummets, and a permanent recession sets in. Therefore, the prevailing current view maintains that deflation is something that needs immediate intervention of massive monetary stimulus–you can say they have become deflation phobic.  This is why I find it fascinating that Keynesians, who proliferate in central banks and in the financial media, are relentlessly cheerleading the recent spate of deflationary data. And, just to be clear, deflation has not been limited to the New England Patriots’ footballs–it is everywhere you look.

However, it is the height of hypocrisy that Keynesians use the specter of deflation to frighten us into believing we need to endlessly dilute the value of our currencies and take the rate on our savings to zero percent. But then, at the same time, take every data point that points to falling prices as another reason to be bullish on markets and the economy. Their mantras are: Lower commodity prices–a boost to the consumer, plunging interest rates–an increase in mortgage refinancing, I actually heard a commentator suggest crumbling copper prices were a boon to minting pennies–he obviously didn’t realize pennies have been minted mostly with zinc since 1983.

More…

 

Jim Sinclair’s Commentary

Do you really believe that Chair Yellen is a hawk? Her time is coming, and I wager she is a dove big time.

2015: The global economy’s ‘sink or swim’ moment
By Alanna Petroff   @AlannaPetroff January 24, 2015: 2:48 PM ET
DAVOS, Switzerland (CNNMoney)

Let’s be blunt: The central banks have done all they can, and now it’s ‘sink or swim’ time for the global economy.

This week the European Central Bank unveiled a massive stimulus program — worth $1.3 trillion — to lift the region out of its economic malaise.

It was the latest in a long line of stimulus measures from central banks around the world. But it will only work if everybody else follows through.

European politicians and policy makers must now make decisive moves to increase productivity, investment and growth, which can involve reforming labor market rules, promoting entrepreneurship and tweaking tax codes.

“We all have a job to do,” said ECB member Benoit Coeure during a panel discussion on Saturday at the World Economic Forum in Davos. “We have done our part. Others have to do their part.”

The stimulus certainly buys more time for European governments to press ahead with economic reforms.

More…

Posted at 1:23 PM (CST) by & filed under Jim's Mailbox.

Jim,

I am sure this will not reflect negatively in the unemployment figure.

Miraculously they, the number crunchers, will overcome the down slide in employment.

CIGA Larry M.

International Business Machines Corp. (IBM) To Layoff Over 100,000 Employees
Forbes reports that IBM will be laying off 26% of its employees next week
By: Martin Blanc
Published: Jan 25, 2015 at 9:26 am EST

It has been reported that International Business Machines Corp. (NYSE:IBM) will be laying off 26% of its global workforce next week. According to Robert X. Cringely, a contributor at Forbes, IBM is set to launch a transformation project – code named “Project Chrome” – to reorganize the company,

The transformation has come after the company reported weak performance in its earnings result this week. In the fourth-quarter earnings for fiscal year 2014 (4QFY14), IBM posted declining revenue for the eleventh consecutive quarter.

IBM intends to improve its financial performance in the upcoming quarters. The project is deemed to help the company create new business units for Global Technology Services, Research, Security, Commerce, and Analytics.

Mr. Cringley warns customers and employees that the company will be making significant changes in its structure, and that not all of these changes will strike as good news. A little more than a quarter of IBM’s global employees are expected to be notified about their dismissal soon and will be unemployed by February. IBM’s mainstream and storage business are likely to see deep cuts. The figure comes to over 100,000 redundancies, much greater than the 10,000 and 1,700 layoffs in 2013. IBM followed a similar layoff program in 1993 when the company sacked around 60,000 employees.

More…

 

Jim,

Surely there must be a way to identify them. Back in the early 70s when I was interning at Piper Jaffray and Hopwood, the guy that handled all the borrowing of shares for short selling sat in an office a few feet away from me. I learned that there were (maybe the operative word is “were”) laws that required the borrowing of shares to be sold short AND that BROKERAGE FIRMS have records of ALL Fails To Deliver and WHO FAILED!!!!

Can’t we go after the FAILS???  It is FRAUD! There IS a record of WHO failed! If not the individual… then the company that handled the transaction. Couldn’t a class go after the firm that failed to enforce the delivery fail?

Just a thought.

CIGA Buz

Buz,

There are laws, but in today world who cares. You have to protect yourself. Nobody is going to do it for you.

Make sure your shares are not by mistake in your margin account even though you do not have any margin on them. Do certification or direct registration to be sure or remain at risk of loss of the opportunity gold shares offer.

Respectfully yours,
Jim

Posted at 2:03 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

The financial business has become dangerous not only to financial but to mortal health.

“Cheerful” Dutch Financier Becomes 4th ABN Amro Banker Suicide
Tyler Durden on 01/24/2015 21:15 -0500

Following the deaths of 36 bankers last year, 2015 has got off to an inauspicious start with the reportedsuicide of Chris Van Eeghen – the 4th ABN Amro banker suicide in the last few years. As Quotenet reports, the death of Van Eghen  – the head of ABN’s corporate finance and capital markets -”startled” friends and colleagues as the 42-year-old “had a great reputation” at work, came from an “illustrious family,” and enjoyed national fame briefly as the boyfriend of a famous actress/model. As one colleague noted, “he was always cheerful, good mood, and apparently he had everything your heart desired. He never sat in the pit, never was down, so I was extremely surprised. I can not understand.”

As Niburu details, friends and colleagues were startled by the news that Chris van Eeghen had committed suicide.

He worked in Amsterdam for ABN / AMRO in the position of “head of syndicate and corporate finance markets.”

Again, there is again a familiar pattern, namely that there is no indication that Van Eeghen had plans to take his life.

Ostensibly a successful banker, coming from what was described as an illustrious family. Chris was also a familiar sight in Amsterdam’s nightlife scene and enjoyed national fame as possible new boyfriend of Tatjana Simic (a famous Croatian-Dutch model, singer, actress).

More…

 

Greece election: Radical Syriza party heading for big win
25 January 2015 Last updated at 14:56 ET

Anti-austerity left-wing party Syriza is heading for a substantial victory in Greece’s general election, official projections say.

The party is projected to win about 150 seats, just one short of an absolute majority, though officials say that number could change.

The ruling New Democracy party is projected to come a distant second.

Syriza’s Alexis Tsipras has pledged to renegotiate Greece’s debt arrangement with international creditors.

He has also vowed to reverse many of the austerity measures adopted by Greece since a series of bailouts began in 2010.

The result is being closely watched outside Greece, where it is believed a Syriza victory could encourage radical leftist parties across Europe.

Earlier, exit polls indicated that Syriza took between 36% and 38% of the total vote, with the ruling New Democracy party a distant second with 26%-28%.

Partial results from Greece’s election commission showed a clear Syriza lead.

‘Historic victory’

Syriza hailed the exit polls as “a return of social dignity and social justice”.

“What’s clear is we have a historic victory that sends a message that does not only concern the Greek people, but all European peoples,” spokesman Panos Skourletis told Greek television.

More…

 

Did We Just Get Confirmation That Economist John William’s Dire Prediction Is Now Unfolding
January 24, 2015

The last two weeks have been filled with historic announcements that have rocked global markets.  With that chaotic backdrop in place, just days ago economist John Williams issued a dire warning about the United States.  Remarkably, it appears that his ominous prediction may already be unfolding.

On Friday shares of UPS, which is one of the largest shipment and logistics companies in the world, plunged 10 percent.  What was even more worrying was the fact that Friday’s volume was 633 percent higher than the 200-day average volume.  During the panicked trading on Friday, a staggering 19.25 million shares of UPS traded hands (see massive red volume spike on the chart below).

More…

 

Jim Sinclair’s Commentary

Next MSM focus.

Conversation with Paul Craig Roberts: The Greek crisis
23.01.2015

Greece is in the grip of a very strong economic crisis trend for five long, eternal years. Like Argentina of the immediate post-dictatorship, so Greece has proved itself as a zealous student of the International Monetary Fund and ready to acknowledge its requests and economic recipes.

Those of the IMF and those of the European Central Bank. But the policies implemented by the government to rationalize the Greek state budget have produced results contrary to expectations. There was no economic recovery, no development, no balanced budget. The only growth was in the number of suicides, in that of the joblesses and miserable, in the number of bankrupt companies, in that of the Greeks emigrated abroad in search of a new future. Yet not one of “those who matter” really seems to consider the possibility of changing approach to the problem or at least soften their intransigence of thought.

The people? Indignant. What’s more, the heart fills with anger. Because we see what Greece is now but remember what she was, what she gave to Humanity.

What lessons can we draw from the Greek tragedy that unfolds before our eyes?

We asked Paul Craig Roberts to share with us some of his views on the subject, based on his past experience as economic adviser of the former US President Ronald Reagan.

Q) Dr. Roberts, could you briefly explain what is the supply-side economics that President Reagan sought to implement?

More…

 

Jim Sinclair’s Commentary

QE everywhere in the Global Economy even if it is called Monetary Stimulation.

Central bank prophet fears QE warfare Pushing World Financial System out of Control
by Ambrose Evans-Pritchard at The Telegraph • January 22, 2015

The economic prophet who foresaw the Lehman crisis with uncanny accuracy is even more worried about the world’s financial system going into 2015.

Beggar-thy-neighbour devaluations are spreading to every region. All the major central banks are stoking asset bubbles deliberately to put off the day of reckoning. This time emerging markets have been drawn into the quagmire as well, corrupted by the leakage from quantitative easing (QE) in the West.

“We are in a world that is dangerously unanchored,” said William White, the Swiss-based chairman of the OECD’s Review Committee. “We’re seeing true currency wars and everybody is doing it, and I have no idea where this is going to end.”

Mr White is a former chief economist to the Bank for International Settlements – the bank of central banks – and currently an advisor to German Chancellor Angela Merkel.

He said the global elastic has been stretched even further than it was in 2008 on the eve of the Great Recession. The excesses have reached almost every corner of the globe, and combined public/private debt is 20pc of GDP higher today. “We are holding a tiger by the tail,” he said.He warned that QE in Europe is doomed to failure at this late stage and may instead draw the region into deeper difficulties. “Sovereign bond yields haven’t been so low since the ‘Black Plague’: how much more bang can you get for your buck?” he told The Telegraph before the World Economic Forum in Davos.

“QE is not going to help at all. Europe has far greater reliance than the US on small and medium-sized companies (SMEs) and they get their money from banks, not from the bond market,” he said.

“Even after the stress tests the banks are still in ‘hunkering down mode’. They are not lending to small firms for a variety of reasons. The interest rate differential is still going up,” he said.

More…

 

Jim Sinclair’s Commentary

I would say it is a trend among those that are not enamored with the USA.

Iran Joins Growing List of Countries to Ditch Dollar in Foreign Trade
13:56 24.01.2015(updated 14:40 24.01.2015)

Deputy governor at Iranian Central Bank stated that Iran no longer uses the US dollar in foreign trade transactions, replacing it with other currencies.

MOSCOW, January 24 (Sputnik) – Iran no longer uses the US dollar in foreign trade transactions, replacing it with other currencies, the deputy governor at Iranian Central Bank told the Tasnim News Agency Saturday.

“In trade exchanges with the foreign countries, Iran uses other currencies, including Chinese yuan, euro, Turkish lira, Russian ruble and South Korean won,” Gholamali Kamyab told the news agency.

The official added that Iran was considering bilateral currency swap agreements, allowing partners to exchange one foreign currency for the equivalent in the other currency.

In early 2014, Justin Yifu Lin, the former World Bank Chief Economist, blamed the dominance of the US dollar for global economic crises and said it should be eliminated as the world’s reserve currency.

According to Lin, the solution would be to replace the national currency with a global currency.

Several countries have been avoiding the US dollar in foreign trade, including Russia, China, India and Turkey, often paying for products in gold or other agreed on currencies.

More…

 

Jim Sinclair’s Commentary

All three attendees are sick.

“Apocalyptic cold” gatecrashes Davos
John Gapper
Jan 25 11:34

Davos is full of security barriers and screening to keep out intruders who might threaten the world’s leaders of governments and companies, but one managed to sneak through without a badge – the common cold.

By the end of the week of events at the World Economic Forum, many of the attendees were complaining of a streaming nose, a cough, and a nasty headache. The “Davos apocalyptic cold” was how one sufferer described it darkly.

It turns out that frenetic networking at meetings and parties, complete with hand-shaking, back-slapping and kissing in the cheek carries perils as well as being good for the contact book. Once inside, the Davos cold spread, well, virally.

Perhaps it was rough justice for the one percent, gathered in tight proximity in an elite enclave. You can form an exclusive club all you like – but a virus can still gate crash.

More…

 

Jim Sinclair’s Commentary

Amazing broad-based economic recovery and job production.

More homeless camps are appearing beyond downtown L.A.’s skid row

Evicted four months ago from their Highland Park apartment, Louis Morales and his 18-year-old stepson, Arthur Valenzuela, live half-hidden by brush along the nearby Arroyo Seco riverbed.

Morales, 49, keeps a framed bible verse and a stuffed monkey in his tent. Water hauled by bike from a park heats up on the camp stove.

Next door, their friend Johnny Salazar fixes bikes and shattered computer screens on the cheap for people who live in the neighborhood. A brother and sister Morales has known for years live up the river, and three couples stay down by the bridge.

“Everybody here is from Highland Park,” Valenzuela said. “We don’t allow other people.”

Over the last two years, street encampments have jumped their historic boundaries in downtown Los Angeles, lining freeways and filling underpasses from Echo Park to South Los Angeles. The Los Angeles Homeless Services Authority, a city-county agency, received 767 calls about street encampments in 2014, up 60% from the 479 in 2013.

Some residents believe the city is exporting its downtown homeless problem to their neighborhoods. But social service agencies and volunteers say it isn’t that simple. They say that although downtown development and skid row cleanups are squeezing out some homeless people, many camps are filled with locals.

Soaring rents, closed shelters and funding cutbacks are pushing residents from neighborhoods such as Highland Park and Boyle Heights into the streets, where they cling to familiar turf.

More…

Posted at 1:05 PM (CST) by & filed under Jim's Mailbox.

Jim,

Goldman Sachs is calling Great Britain out in front of the world stage, “do not exit the Euro”  Wow, maybe the British are seriously considering following in the footsteps of the Swiss. I would think this kind of message would send a major tremor through the financial world.

CIGA Frank

Goldman Sachs president warns Britain’s exit from the EU could harm London’s status as ‘a great financial capital of the world’

The head of investment bank Goldman Sachs said Britain should stay in the European Union as an exit could harm London’s status as a financial centre.

Gary Cohn, president and chief operating officer of Goldman Sachs, said the investment bank wanted to continue operating in the capital and emphasised the value of London to the UK economy.

‘I think that having a great financial capital of the world staying in the UK – and having the UK be part of Europe is the best thing for all of us,’ Cohn told BBC business editor Kamal Ahmed at the World Economic Forum in Davos.

‘I think for the UK it’s imperative to keep the financial services industry in London,’ he said.

‘We all want to stay in London – it is our European headquarters.’

More…

Posted at 11:02 AM (CST) by & filed under Jim's Mailbox.

Dear Jim,

I’ve disconnected my home alarm system and de-registered from the Neighborhood Watch.

I’ve got two Pakistani flags raised in the front yard, one at each corner, and the black flag of ISIS in the center. The local police, sheriff, FBI, CIA, NSA, Homeland Security, Secret Service and other agencies are all watching my house 24/7.

I’ve never felt safer and I’m saving $49.95 a month.

CIGA Kathleen

Jim,

Worth taking heed…

2015 Omni-dimensional crisis: protecting oneself in stormy weather

The enormous dangers weighing on the banking and financial systems, especially in the West, but also on social and geopolitical peace, leads our team to warn the readers to be on their guard.

The issue is protecting one’s assets creatively, with diversification of solutions always the principal instruction [...] The purchase of gold especially, but also jewelry, precious metals, remains our first recommendation, up to 20% to 30% of one’s portfolio; for the remaining assets at the banks, think about the safest foreign banks as well, especially Chinese, which now have branches in Western countries; stay liquid: cash, cash, cash, in several currencies outside banks…

GEAB No 91 (Global Europe Anticipation Bulletin)

CIGA Wolfgang Rech

Posted at 11:40 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Mr. Williams shares with us.

- Rising from Recession? Strongest Growth in Over a Decade? Not a Chance.
- Continued Economic Woes Promise Difficult Times for the U.S. Dollar and the Fed
- Unstable December Housing Starts Continued Stagnating
- In Aggregate and by Component, Not One of the Monthly or Annual Rates of Change in the Starts Detail Was Statistically Significant

“No. 689: December Housing Starts, Special Comments on the Economy”
Web-page: http://www.shadowstats.com

 

Jim Sinclair’s Commentary

It does not matter where it happens, but that it happens in a Global Economy. QE or call it MS to Infinity.

SocGen Explains That Since The ECB’s QE Will Fail, It Will Need To Be Increased To €3 Trillion, Include Stocks
Tyler Durden on 01/22/2015 11:27 -0500

There are a bunch of things in the ECB post-mortem note just released by SocGen’s Michel Martinez, reproduced below, but here are the punchlines.

First, on the impact of ECB QE on the economy: “we argue ECB QE could be five times less efficient than in the US. In December, press reports suggested that the ECB had run studies suggesting that a €1000bn QE programme would only boost price levels by 0.2-0.8 after two years, five to nine times less efficient than the studies for the US or the UK. The impact on GDP is not provided, but it would be reasonable to assume the same impact as on inflation on a cumulated basis.”

In other words, it will be an outright failure as it “triest” to boost inflation expectations and the European economy in its current format. That, as a reminder, is its stated purpose.

So what does SocGen suggest? Simple: the same thing every Keynesian says when justifying why a piece of occult economic voodoo fails to work: it wasn’t big enough. To wit:

“The potential amount of QE needed is €2-3 trillion! Hence for inflation to reach close to a 2.0% threshold medium term, the potential amount of asset purchases needed is €2-3tn, not a mere €1tn.”

More…

 

Jim Sinclair’s Commentary

Everything is just fine. Yeah, sure!

Shadow banking now poses top risk to US stability, warns IMF
Non-financial lending has reached $15 trillion since the crisis and is outside the control of authorities warns the Fund’s deputy chief
By Ambrose Evans-Pritchard, in Davos
4:25PM GMT 21 Jan 2015

The US shadow banking nexus is coming back to haunt like some hydra-headed beast and now poses the biggest potential threat to the American financial system, the International Monetary Fund has warned.

Zhu Min, the IMF’s deputy chief, said regulators have successfully cleaned up much of the global banking system since the Lehman crisis, but the excesses have moved off books and are once again growing to disturbing proportions.

“The key risk has shifted to shadow banking,” he said, speaking at the World Economic Forum in Davos.

While the explosion of China’s shadow banking is well-known, Zhu Min said there has been a surge of lending by asset management funds and others non-bank players to US companies. This is outside normal control and is hard to track.

“Non-financial corporations have raised $1.3 trillion (£860bn) through shadow banking in the US alone,” he told the Telegraph.

The IMF estimates that contingent liabilities of these shadow forms of lending have reached $15 trillion in the US, using a “broad” measure of activities that captures new forms of risk. This is higher than in China. It is roughly 180pc of banking assets and is rising rapidly towards its pre-Lehman peak. It is particularly worrying since it was a “run” on the interlinked world of structured finance that caused the global crisis to metastasise in 2008.

Zhu Min said the oil price crash is “terrific news” for consumers but warned that its effects are double-edged and raise a whole new set of risks. It may set off a fiscal crisis in producer countries and a debt-repayment crunch for oil companies with $1 trillion of bonds. “There may be a spillover impact. It is a net positive but it should not be overestimated,” he said.

The concerns were echoed by David Rubenstein, head of the Carlyle Group, who said the slide in oil prices to $50 a barrel is likely to set off a chain of defaults by Russian companies that owe $650bn of external debt.

“They can’t service the debt. And who owns that debt? It is nearly all held by European banks. They are going to be hurt, and I suspect that currency turbulence in Europe is going to hurt them too,” he said.

More…

 

Jim Sinclair’s Commentary

QE or if you prefer MS (Monetary Stimulation) to Infinity.

Central bank prophet fears QE warfare pushing world financial system out of control
Former BIS chief economist warns that QE in Europe is doomed to failure and may draw the region into deeper difficulties
By Ambrose Evans-Pritchard, in Davos
6:48PM GMT 20 Jan 2015

The economic prophet who foresaw the Lehman crisis with uncanny accuracy is even more worried about the world’s financial system going into 2015.

Beggar-thy-neighbour devaluations are spreading to every region. All the major central banks are stoking asset bubbles deliberately to put off the day of reckoning. This time emerging markets have been drawn into the quagmire as well, corrupted by the leakage from quantitative easing (QE) in the West.

“We are in a world that is dangerously unanchored,” said William White, the Swiss-based chairman of the OECD’s Review Committee. “We’re seeing true currency wars and everybody is doing it, and I have no idea where this is going to end.”

Mr White is a former chief economist to the Bank for International Settlements – the bank of central banks – and currently an advisor to German Chancellor Angela Merkel.

He said the global elastic has been stretched even further than it was in 2008 on the eve of the Great Recession. The excesses have reached almost every corner of the globe, and combined public/private debt is 20pc of GDP higher today. “We are holding a tiger by the tail,” he said.

More…

 

clip_image001

 

Jobless Claims Over 300k For 3rd Week, Spike In Shale States
Tyler Durden on 01/22/2015 08:44 -0500

Not “unambiguously good” as Shale states see initial jobless claims spiking. Overall initial jobless claims missed expectations for the 4th week in a row, holding above 300k for the 3d week in a row (for the first time since July). At 307k, this week’s print is below last week’s but well above the 300k expectation. However, across TX, CO, ND, PA, and WV, initial claims (1 week lagged) rose to over 75k (from 30k in October)… “crisis has passed”?

clip_image002

Houston (and CO, ND, PA, WV) we have a problem…

clip_image003

and overall the picture of a crisis that has passed looks to be fading…

More…

 

Jim Sinclair’s Commentary

They are dropping like flies, making you wonder what is coming that forbids their presence.

Head of IT Companies Monitoring Pentagon, FBI, NSA and Army Presumed Dead After Suspicious Fire
January 21st, 2015

In the vein of all the suicided bankers, here’s another mysterious death connected to some pretty high places.

The 16,000 square-foot Annapolis mansion of millionaire IT executive Don Pyle, 55, went up in flames so fast on Monday, investigators believe a chemical agent must have been used. The house, dubbed “the castle” by neighbors, was fully engulfed by the time the fire department got there. It took 85 firefighters to finally put the blaze out. Pyle, his wife and four grandchildren are currently presumed dead.

Some 20 agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives have been called in to investigate and foul play is suspected. Lots of people are questioning not only since when does the ATF get involved in private house fires and missing persons cases, but so many ATF agents on one case. A bit much?

Maybe not considering who Pyle was. Not only was he the COO of ScienceLogic, a company which regularly conducts business with the military and intelligences communities and which monitored the online networks for both the Department of Defense and the FBI (among others), but he was also CEO at Netcordia, another IT company which has contracted with both the National Security Agency and U.S. Army to manage their online networks. He had just taken the position at ScienceLogic in October.

More…

 

clip_image004

Posted at 1:27 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Mr. Beef is in deep thought about gold.

clip_image002

 

Free Markets Have Been Completely Obliterated-Michael Pento
By Greg Hunter On January 21, 2015

Money manager Michael Pento says, “We live in a world now where free markets have been completely obliterated.  You can’t find a free market left on the planet, and that goes for commodities, equity markets, currencies and particularly goes for the bond markets.  The bond markets now do not represent any vestige of reality whatsoever.  That should be apparent to anyone with a pulse or an IQ better than a retarded ameba.”

On the recent Swiss National Bank move to remove the cap from the franc, Pento says, “It’s the steady erosion of the lack of faith we have as investors now in central banks and fiat currencies.  In the case of the Swiss National Bank, they could no longer peg to the euro.  Their currency dropped 12% against the dollar in one year.  They did not want to suffer what was going to occur with the ECB’s (European Central Bank) decision for massive QE.  It’s going to probably get announced on Thursday.  If it doesn’t get announced, I will predict even more chaos.”  If the ECB money printing is not big enough, Pinto says things will “blow up.”  Pinto also says, “If they do print enough money, things are going to blow up.  As I said, we have created a huge vacuum in markets.”

On central bank interventions that totally control global interest rates, Pento goes on to explain, “Now they own the entire yield curve.  They own the entire sovereign debt market.  If they ever stop and let the free markets come in, there’s going to be a vacuum, a sling shot in interest rates.  They are going to go so high so fast that there will be no revenue left to service debt.  That is the sad condition we have across the developed world.”

Pento, whose 2012 book titled “The Coming Bond Market Collapse,” predicts a collapse by 2016.  Pento contends, “I think they are going to have to stop manipulating the entire yield curve once inflation becomes entrenched in the economy.  Yes, we had inflation in home prices.  They inflated the stock market to the moon and it’s unsustainable, and they created a huge bubble in bonds.  But that didn’t translate automatically YET to rapid consumer inflation. . . . Once that happens, the central banks are going to have to stop printing, and that vacuum is going to be revealed.  You will see interest rates are going to shoot up like a slingshot.  If the U.S. had to pay just 7% interest on its national debt, and that’s the average going back to 1971, we would be insolvent.  We would have to pay $1 trillion in interest payments every year. . . . If we had to pay $1 trillion a year in interest payments, it would be game over.”

More…

 

clip_image003

 

Richard Russell – Gold Bull Spits In Fed’s Face By Breaking Out During Worldwide Depression!

In the aftermath of last week’s historic Swiss move, today the Godfather of newsletter writers, 90-year old Richard Russell, proclaimed that the gold bull has just spit in the Fed’s face by breaking out of its massive base, even as the worldwide depression continues to grind on.

Richard Russell:  “The world depression has settled down on mankind. In the meantime every nation is struggling to cheapen its currency. One way of doing this is that central banks are creating new trillions of assorted world currencies. It’s rapidly dawning on the wealthy one percent that the fiat currencies they hold are fast becoming worthless. The worst of the fiat currencies have suddenly come into question. The reaction of big money is to swap their garbage currencies for the only currency that has held its worth in all of history – gold.

Already you can feel the sweep of the new rush into gold. The base is now complete for the resumption of the bull market in gold. 

More…

 

clip_image005

 

Are Central Bankers Losing The Plot: “The SNB Move Signals A Spectacular Loss Of Nerve”
Submitted 01/21/2015

Via ADM Investor Services’ Marc Ostwald, from Zero Hedge

As we have reiterated frequently over recent years, the biggest vulnerability in the post crisis environment was that central banks start to make policy errors, by taking activist and precipitous decisions. Thus following on from last year’s error by Norges Bank (and noting that we would not call last week’s SNB decision a mistake, despite the shockwaves that it caused), the Bank of Canada joins that policy error club.

What does not compute, in an eerie mirror image of the Norwegian central bank’s rationale, is for the BoC to

Slash headline CPI forecasts, while keeping core CPI forecasts around 2.0% (around target), and

Tweak GDP forecast lower to 2.1% this year but upping the GDP forecast for 2016, and

Still taking policy action

It signals a spectacular loss of nerve when you have a country like Canada with the worst household debt levels in the developed world and an overheated housing market.

The  expected cut in 2015 GDP forecast looks optimistic, when one considers that the energy sector accounts for 25% of business investment in GDP terms, and one might suggest that the GDP forecast should be closer to 1.0%, on the basis that there is likely to be a much broader fall-out from the energy sector to “stall” (housing, transport, employment, etc).

As the evidence on this accumulates through the year, there appears to be considerable risk that the BoC’s forecasts look foolish – primarily in GDP terms, but quite possibly in CPI terms too, if the CAD starts a slide to USD 1.30 and the BoC’s deflation problem evaporates. At which point memories of the very undistinguished period of Gordon Thiessen’s stewardship of the BoC may come back to haunt it.

But in broader terms, this is symptomatic of the whole mirage of stability that developed world central banks have fostered in the post crisis era starting to unravel in a rather disorderly fashion… the ECB’s task tomorrow looks ever more unenviable!

More…

 

Jim Sinclair’s Commentary

This is the natural outcome of economic and financial pressures.

BBC Democracy Day: Europe ‘faces political earthquakes’
By Mike WooldridgeWorld Affairs correspondent

Political earthquakes could be in store for Europe in 2015, according to research by the Economist Intelligence Unit for the BBC’s Democracy Day.

It says the rising appeal of populist parties could see some winning elections and mainstream parties forced into previously unthinkable alliances.

Europe’s “crisis of democracy” is a gap between elites and voters, EIU says.

There is “a gaping hole at the heart of European politics where big ideas should be”, it adds.

Low turnouts at the polls and sharp falls in the membership of traditional parties are key factors in the phenomenon.

‘Highly destabilising’

The United Kingdom – going to the polls in May – is “on the cusp of a potentially prolonged period of political instability”, according to the Economist researchers.

More…

 

Jim Sinclair’s Commentary

Compared to what we did in 2009 to now, it is chump change.

ECB Seeks to Inject Up to 1.1 Trillion Euros Into Economy in Deflation Fight
By Alessandro Speciale

Mario Draghi called on the European Central Bank to make its biggest push yet to fend off deflation and revive the economy by unleashing a debt-buying spree of 1.1 trillion euros ($1.3 trillion).

The ECB president and his Executive Board proposed spending 50 billion euros a month through December 2016, two euro-area central-bank officials said. The plan still faces a tense debate in the Governing Council and may change before the final decision on Thursday, the people said, asking not to be identified as the talks are private. An ECB spokesman declined to comment.

By urging Fed-style quantitative easing, Draghi is remodeling the ECB as an aggressive central bank that will take risks even against the wishes of Germany, the region’s biggest economy. Bundesbank President Jens Weidmann and Executive Board member Sabine Lautenschlaeger have argued QE isn’t needed and reduces the incentive of governments to make structural reforms.

The proposal “looks larger than implied by the ECB’s previous comments about the size of its balance sheet,” said Riccardo Barbieri Hermitte, chief European economist at Mizuho International Plc in London. “A lot will depend on the risk-sharing features of the program.”

More…

Posted at 11:30 AM (CST) by & filed under In The News.

Sinclair32-5.jpg

 

Saxo Bank Warns “This Is The Endgame For Central Banks”
Tyler Durden on 01/20/2015 11:15 -0500

From Steen Jakobsen, CIO & Chief Economist, Saxo Bank, via TradingFloor.com,

Why oh why do we trust central banks?

Central bankers are politicians’ puppets

This is endgame for the central banks

The Swiss National Bank’s removal of the franc’s peg to the euro last week had far-reaching consequences because we were all taken by surprise. The fact that it would (and should) happen eventually was not lost on the market, but the SNB was as late as last week end talking tough and telling the market that the floor was an integral part of Swiss monetary policy – until it suddenly wasn’t any more.

I fully understand the rationale for the move (Jakobsen: SNB move is rationality itself) but like most of the market I’m extremely disappointed in the SNB’s communication and handling of the issue, but that’s the bigger lesson: Why is it most people trust or bother to listen to central banks?

Major central banks claim to be independent, but they are totally under the control of politicians. Many developed countries have tried to anchor an independent central bank to offset pressure from politicians and that’s all well and good in principle until the economy spins out of control – at zero-bound growth and rates central banks and politicians becomes one in a survival mode where rules are broken and bent to fit an agenda of buying more time.

Just looks to the Eurozone crisis over the past eight years – if not in the letter of law, then in spirit, every single criterion of the EU treaty has been violated by the need to “keep the show on the road”. No, the conclusion has to be that there are no independent central banks anywhere! There are some who pretend to be, but not a single one operates in true independence.

More…

 

Jim Sinclair’s Commentary

My dogs can buy a car.

Honda Warns Against ‘Stupid’ Auto Loans Driving U.S. Sales Gains
By Craig Trudell  Jan 20, 2015 6:00 AM E

A top U.S. executive at Honda Motor Co. (7267) said competitors are doing “stupid things” to boost auto sales, including making seven-year-long car loans that harm buyers.

Automakers are increasingly selling vehicles with 84-month loans that reduce monthly payments while making it tougher to repay faster than cars lose value, John Mendel, Honda’s U.S. sales chief, said in an interview. The Tokyo-based company will avoid longer-term loans even as Nissan Motor Co. (7201) tries to supplant it as the fifth-biggest automaker in the U.S., he said.

“You’re ringing the bell on a new-car sale, but that customer is saddled — they’re stretched so thin,” Mendel said at the North American International Auto Show last week. Extended-term loans are “stupid not just for us, but for the industry.”

The comments by Honda’s Mendel were a rare show of caution during the auto show in Detroit, as car-industry executives cheered the best year of U.S. sales since 2006. Deliveries are projected to rise to 16.7 million this year, which would be a sixth straight increase and extend the longest streak of gains since World War II.

Sales will keep growing as the Federal Reserve’s zero-interest-rate policy encourages investors to collect yield from auto loans, said Tom Webb, chief economist at Manheim Consulting. While not in a bubble, the industry is taking on more risk by extending longer loans with smaller down payments to buyers with blemished credit scores, he said.

More…

Russia, Iran sign agreement on military cooperation
January 20, 12:19 UTC+3

Russian Defense Minister Sergey Shoigu has invited his Iranian counterpart Hossein Dehgan to the Moscow conference on international security, due in April

Iran and Russia have signed a military cooperation pact, the official TASS Russian news agency reported on Tuesday.

The agreement to intensify military and technological cooperation was made during a Tehran meeting between Iranian Defense Minister Hossein Deghan and visiting Russian Defense Minister Sergey Shoigu, Russian media reported.

Shoigu, who arrived in Tehran on Sunday, was quoted by sputniknews.com as saying: “We are in favor of long-term and multi-level cooperation with Iran and welcome the Iranian leadership’s attempts to expanding its ties with Russia, including in military defense. We have common challenges and threats in the region that we can oppose only if we communicate.”

Shoigu will also reportedly meet General Hassan Firouzabadi, the Chief of Staff of the Iranian Armed Forces, while in Tehran.

More…

 

Jim Sinclair’s Commentary

Now how many times has QE been proposed as it is here? Europe promises huge QE and delivers little or none.

Hollande backtracks on statement that ECB QE will begin Thursday
French President Francois Hollande has told business leaders that the eurozone’s monetary authorities will announce a QE package this Thursday
By Peter Spence, Economics Correspondent
12:33PM GMT 19 Jan 2015

The French President has caused a headache for the eurozone’s policymakers.

He declared on Monday that the European Central Bank (ECB) will announce a quantitative easing programme this week, in a move that will support the French economy.

Francois Hollande made the comments to business leaders at the Élysée Palace, according to the Wall Street Journal.

The newspaper reports that Mr Hollande said: “On Thursday, the ECB will take the decision to buy sovereign debt, which will provide significant liquidity to the European economy and create a movement that is favourable to growth.”

Since his speech, the French leader has felt the need to backtrack. His office has declared that Mr Hollande was referring to the “hypothesis” of QE, not that it was certain.

The President respects the independence of the ECB, his office added. Some kind of announcement by the ECB is widely expected, with several investment banks suggesting that Mario Draghi, the central bank’s chief, will deploy a big QE “bazooka”.

Christian Schulz, a senior economist at Berenberg, said that Mr Hollande’s comments did “not touch on the questions market participants are already asking themselves”.

Investors have already “priced in” the announcement of a large stimulus package this Thursday, and have begun to debate the size, timing, and scope of whatever scheme is unveiled.

More…

Jim Sinclair’s Commentary

They will go to hell for this.

Schlumberger to buy stake in Russia’s largest oilfield service firm despite US sanctions
January 20, 12:38 UTC+3

LONDON, January 20. /TASS/. The US oilfield services firm Schlumberger will buy a 45.65% stake in Eurasia Drilling Company (EDC), the largest provider of onshore drilling services in Russia, for $1.7 billion, Schlumberger said in a statement on Tuesday.

Under the deal, the principal shareholders of EDC will take the company private. Upon delisting of the company from the London Stock Exchange, Schlumberger, through one or more subsidiaries, will acquire a minority equity ownership interest of 45.65% in EDC, in exchange for consideration of $22 per share, the statement said.

“The total cost of acquiring this minority interest, including the cost of a call option and various non-competition agreements, is approximately $1.7 billion. The call option will allow Schlumberger, at its election, to purchase the remaining shares in EDC during a two-year period commencing three years from the closing of the transaction,” the statement said.

The transaction is expected to close during the first quarter of 2015, and is subject to customary closing conditions.

The companies announced about the transaction amid US sectoral sanctions against Russia over its stance on the Ukraine crisis, prohibiting, in particular, the use of US deepwater drilling and unconventional deposit development technologies in the Russian oil industry.

More…

Russia’s external debt fell by 18% in 2014 — Central Bank
January 20, 11:26 UTC+3

Russia’s external debt has fallen from $728.86 billion to $599.5 billion over a year

MOSCOW. January 20. /TASS/ Russia’s external debt for 2014 has decreased by 18% to $599.5 billion, as of January 1, 2015, according to Bank of Russia’s ‘s preliminary assessment.

On January 1 2014, Russia’s external debt totaled $728.86 billion.

The report suggests that state administration’s debt is $41.5 billion. The new Russian national debt as of January 1, 2015 is $39.2 billion, down by 33.6% to the previous year . The Soviet-era debt has decreased by 11.5% to $1.77 billion.

The Central Bank’s debt has decreased by 37.5% to $10.4 billion, while the banking sector debt has gone down by 20% to $171.1 billion; other sectors total debt is estimated at $376.5 billion.

More…

Russia Has Begun Selling Its Gold, According To SocGen
Submitted by Tyler Durden on 12/18/2014 19:05 -0400
A few days ago, we first reported a rumor that was floating around Wall Street desks, and which, according to some, was the “reason” that gold was being kept lower even as sovereign risk was exploding around the globe. The rumor was that Russia was selling its gold holdings:

Rumor Russia selling gold

— zerohedge (@zerohedge) December 15, 2014

This led to Bloomberg speculating, and us rhetorically asking, if “Putin’s next step will be to sell gold”

“Russia is at a critical juncture and given the sanctions placed upon them and the rapid decline in oil prices, they may be forced to dip into their gold reserves, if it happens it will push gold lower.” That is what, according to some people Bloomberg has quoted, is in the cards.

While some suggest the accumulation was “tradition” it is still nonetheless an impressive aggregation of the barbarous relic:

clip_image001

So given the efforts to build this gold-backing for their nation’s currency, do we really expect Putin to now dump his physical: or perhaps more strategically suggest a true gold-backed currency and jawbone the currency that way?

So what is the truth? Well, we won’t for sure until the next official report by the Central Bank of Russia hits the IMF database,  but in the menatime, SocGen just reported that the selling may have started:

More…