Posted at 9:47 AM (CST) by & filed under Bill Holter.

Dear CIGAs,

My commentary this week will be spotty as I am travelling.  As my available time to write is limited, below is a comment from reader “J.H.” in regards to the theory of a “truth bomb” being released by Mr. Putin.  My comments will follow:

“Bill, just a thought.

On several occasions you have indicated that at some point Russia (Putin) would be dropping a Truth Bomb aimed at the US.

In light of the recent Russian actions in Syria I would submit that he has just done such.

Let’s look back to last week when Putin addressed the United Nations. He spent some time talking about the Syrian conflict, the Mideast instability and the fallout now enveloping Europe. He put much of the blame on the Western powers and particularly singled out America and implied it’s lack of leadership, motives,  nor decisive actions as a root cause. At one point in the speech Putin asked “Do you realize now what you’ve done?” In doing this he asked America directly and Barack Obama specifically, for all the world to hear?  

Now fast forward to today and what has occurred since the conclusion of Putin’s UN speech. Within days Russia moved in advanced weaponry and  planes. Russia also secured directly or indirectly backing by Iran, China and to the dismay of the US, Iraq in their limited fashion began to take the initiative to strike back at the ISIS faction.

We have seen the initiation of bombing sorties en mass. We have learned that one of the key targets on day one was a ISIS command bunker located in country . A command center that apparently the US was not aware of or just ignored! We are hearing reports that ISIS is incurring significant collateral damage – all in a matter of days. Now if Putin’s actions results in a significant reduction of ISIS advancement, and or their retreat (again) just in a short period of time; how will this reflect on US initiative and motives?

Compare this to the limited sorties backed by the US. Bombing of insignificant targets, let alone a command bunker. The delivery of inferior equipment to the Kurds. Supply drops meant for  those fighting against ISIS missing their target and falling into ISIS hands. Spending millions (probably more like billions)  arming “moderate terrorist! The clown brigade goes on.

If one does not think that the world is watching and taking notes they are mistaken! So my suggestion is that Putin did drop a Truth Bomb at the UN in a diplomatic fashion and is backing up his accusations with actions ( to our liking or not).”  J.H.

The above in my opinion is close to spot on but only the beginning of some very stark “truths” about to come public.  What is occurring in the Middle East (and hardly being reported on by our bought and biased media) is quite simple, the U.S. is being KICKED OUT!  Russia has taken the bull by the horns and within less than a week knocked the crap out of ISIS …which is what we should have done …but have not because “truth” be known, our intelligence agency has funded part of ISIS. THIS is exactly what Mr. Putin was alluding to when he said “we know everything.”

Yes I understand he was answering a question regarding the Ukraine “coup” when he made this statement of knowing everything …but I do believe he meant EVERYTHING!  Russia, now being joined by China is exposing the lack of control and thus POWER in the Middle East by the U.S..  The “flows” of capital which have supported the petrodollar all these years will soon be “crimped”.  I believe next we should watch to see if anything significantly changes in the Ukraine.  Does Russia become more forceful or does U.S. support of western Ukraine lessen?

Ultimately I believe the “big one” will be dropped at a most inopportune time.  In my opinion, Western markets will be shortly moving toward seizure mode, it is my expectation they will receive a little added nudge.  Can you imagine if while western markets are convulsing in currency, credit and equity markets, Mr. Putin makes “crazy” accusations of outright frauds and false flag events committed by the U.S.?  Worse, what if he actually backs these allegations with proof?  Or incontrovertible proof? 

To ask the obvious, what if Mr. Putin, joined and backed by the Chinese were to come out with “proof” of U.S. dirty doings at the same time he pushes further militarily in the Middle East, Ukraine, or politically in the Koreas, Europe or elsewhere?  Will the American people remain asleep or will they finally wake up and say “NO MORE!”?  This is a very important question because I do believe the American people still, deep down have a sense of right and wrong even if our leaders do not.  Will the populace suddenly lose the stomach to support global bullying tactics because the release of a “truth bomb”? 

Of course the other side of the coin is the U.S. will not have the ability to war (other than pushing buttons) if the dollar were to suddenly fail on a global basis because confidence collapses.  It is this confidence collapse in my opinion which is hoped for by Russia (and the Chinese) as a way to avert outright war and aggression.  It is however pretty clear at this point, Russia is moving and the U.S. is not.  Mr. Putin has been sending a very clear message over the last week, they will be pushed no more and they have taken the gloves off.  “Truth” I believe is a weapon included in his arsenal!

Standing watch,

Bill Holter
Holter-Sinclair collaboration
Apologies as comments cannot be replied to due to travel.

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

Turmoil in Middle East Could Turn Into Global Meltdown
18:46 04.10.2015(updated 18:47 04.10.2015)

If the West continues to ignore the real problems of the Middle East region or try to solve them militarily, instead of using diplomacy and financial resources, the instability in the region could further deepen, Noriel Roubini, a professor at NYU’s Stern School of Business, wrote in his article for Project Syndicate.

According to the author, among actual geopolitical risks, the greatest is the long arc of instability stretching from the Maghreb to the Afghanistan-Pakistan border.

Currently, the instability along this arc is growing, the author pointed out. Libya has become a failed state, Egypt has returned to authoritarian rule, and Tunisia is destabilized by terrorist attacks. The violence now is spreading into Sub-Saharan Africa.

According to Roubini, the US and its allies in their pursuit of regime change in Iraq, Libya, Syria and Egypt helped to fuel the turmoil in the region. And now the turmoil is also undermining previously secure states, like Jordan, Lebanon and even Turkey.

What is more, the situation is aggravated by a proxy struggle for regional dominance between Sunni Saudi Arabia and Shia Iran in Iraq, Yemen, Bahrein and Lebanon.

“And yet, remarkably, even as most of the region began to burn, oil prices collapsed. In the past, geopolitical instability in the region triggered three global recessions,” the analyst wrote. “There appears to be no ‘fear premium’ on oil prices; on the contrary, oil prices have declined sharply since 2014. Why?”

The most important reason, as the author explained, is that, unlike in the 1970-80s, the current turmoil in the Middle East has not caused a supply shock. Indeed, there is a global glut of oil, and the West has cut its energy reliance on the Middle East.

“With the US on the way to achieving energy independence, there is a risk that America and its Western allies will consider the Middle East less strategically important. That belief is wishful thinking: a burning Middle East can destabilize the world in many ways,” the article read.





Jim Sinclair’s Commentary

CIA ISIS on the ropes?

Russia Claims ISIS Now On The Ropes As Fighters Desert After 60 Airstrikes In 72 Hours
Submitted by Tyler Durden on 10/03/2015 – 13:15

One question that’s been asked repeatedly over the past thirteen months is why Washington has been unable to achieve the Pentagon’s stated goal of “degrading and defeating” ISIS despite the fact that the “battle” pits the most advanced air force on the planet against what amounts to a ragtag band of militants running around the desert in basketball shoes.

Those of a skeptical persuasion have been inclined to suggest that perhaps the US isn’t fully committed to the fight. Explanations for that suggestion range from the mainstream (the White House is loathe to get the US into another Mid-East war) to the “conspiratorial” (the CIA created ISIS and thus doesn’t want to destroy the group due to its value as a strategic asset).

The implication in all of this is that a modern army that was truly determined to destroy the group could likely do so in a matter of months if not weeks and so once Russia began flying sorties from Latakia, the world was anxious to see just how long the various rebel groups operating in Syria could hold up under bombardment by the Russian air force.

The answer, apparently, is “less than a week.”

On Saturday, the Russian Ministry of Defense said it has conducted 60 bombing runs in 72 hours, hitting more than 50 ISIS targets.

According to the ministry (Facebook page is here), Islamic State fighters are in a state of “panic” and more than 600 have deserted.

Here’s what happens when the Russians locate a terrorist “command center”:



Jim Sinclair’s Commentary

We all need some relief from the talking heads, newspapers and even the alternative press.

Click here to watch the video…


Paul Craig Roberts On Russian Bombings In Syria – Putin Sent A Decisive Message To The West

With people around the world worried about the escalating war in Syria, today former U.S. Treasury official, Dr. Paul Craig Roberts, told King World News that with four straight days of Russian bombings in Syria, Putin has sent a decisive message to the West.

Eric King: “Dr. Roberts, about this situation in Syria, obviously the Russians have bombed key targets and the rest of the world is watching and saying, ‘Putin just took over and put a stop to the madness.’”

Dr. Paul Craig Roberts: “It certainly looks that way. You know Putin told the world at the U.N. meeting, ‘We can no longer tolerate the state of affairs in the world.’ So he told the United States, Europe, and the other puppet states such as Canada, Australia, and Japan that Russia will no longer tolerate this. And two days later they (the Russians) have taken over the situation in Syria.

Essentially the United States is responsible. This (warring force) is the group that came out of the forces we created in Libya to overthrow Gaddafi. And when Russia blocked the intended U.S. invasion of Syria, Obama sent these people to Syria and pretended they were a free Syrian army of oppressed Syrians who were fighting to liberate their country from a dictator who used chemical weapons against his own people.

But the United States lost control of them, even though Washington’s clandestine operations still seem to supply them. So basically the Russians have said they can’t tolerate complete and total chaos in the Middle East and it’s going to stop before it engulfs Syria…



Jim Sinclair’s Commentary

This is a very important video in which the advertisement is as interesting as the news reports.

Click here to watch the video…

Posted at 8:00 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Mr. Williams shares the following with us.

- Expectations Shift Towards Recession
- September Payrolls Gained Just 83,000, Net of August Revisions;
Annual Payroll Growth Dropped Below 2.0%, to a 15-Month Low
- September Labor Force Plunged by 350,000, with the
September Unemployment Rate on the Cusp of Rounding Lower by 0.1%
- Yet, Headline Monthly Labor Data Remained Almost Worthless
- September 2015 Unemployment: 5.1% (U.3), 10.0% (U.6), 22.9% (ShadowStats)
- Construction Spending Gain Mostly Reflected Downside Revisions
- Latest Money Supply M3 and Monetary Base Took Unusually Large Hits 

“No. 756: September Labor Conditions, Money Supply M3, August Construction Spending ”


“They’re Hopping Mad In The US And Saudi Arabia”: Russian Strikes In Syria Spark Epic Western Media Propaganda Blitz
Submitted by Tyler Durden on 10/02/2015 16:01 -0400

We are now two days into Russia’s air campaign against anti-regime forces in Syria and both Moscow and the West are rushing to spin the narrative. 

The frantic attempt from both sides to shape public opinion has been truly amazing to behold and the sheer amount of coverage speaks to what we said on Thursday about just how important the conflict really is for the Mid-East balance of power.

For the US, portraying Russian airstrikes as supportive of a murderous regime and as an imminent threat to civilians is key, as it allows Washington to explain away the fact that the US and its allies haven’t coordinated their efforts with Moscow. Take the following from CNN for instance, who reports that Russia has made a “strategic blunder” and that by opening an air campaign, Russia risks raising the spectre of the Soviet-Afghan war in the minds of potential jihadists who will supposedly rush into Syria to join the fight:

There is no ambiguity now about Russia’s current tactics in Syria — they are seeking to take over the airspace in the region and be the agenda-setting force on the ground, several senior administration officials told CNN.

“Yesterday’s demarche to the U.S. by Russian officials in Baghdad was clear in its intent,” one senior administration official said. “Make sure you don’t have anyone around ISIS targets and get out of the air.”

And while U.S. officials have no plans to cede Russia any ground, they also said it appears that Russian President Vladimir Putin made a dramatic chess move that the Russians have not thought through — one official even called it a “strategic blunder.”

Had the Russians been clear that they are providing support in Syria to prevent Syrian President Bashar al-Assad regime’s collapse — a scenario that would benefit ISIS — they might have gotten some credit on the world stage.

But their very first strikes in the region hit CIA-backed anti-Assad rebel forces, Arizona Republican John McCain, chairman of the Senate Armed Services Committee, said Thursday on CNN’s “New Day.”

And U.S. officials note that every bomb against a non-ISIS Sunni target puts them more in bed with Iran and Hezbollah, which are Shiite. U.S. allies in the Persian Gulf warn that this could set off a huge sectarian conflict and that the deeper the Russians get into this, the harder officials believe it will be to get a diplomatic process with the Saudis and others restarted.

“It is going to be hugely tempting for the Saudis to start financing their guys again,” another senior administration official said. “Syria will be a magnet for every jihadi, who will rush to fight the Russians, just like they did in Afghanistan. The problem is while this will cause problems for the Russians, it will also mean trouble for the Gulf, when the jihadists come home.”



David Stockman On CNBC: ‘We’re On The Fiscal Titanic”
by CNBC • October 1, 2015

Click here to watch the video…

A government shutdown would force Congress to address fiscal issues before they reach unmanageable levels, a former Reagan administration official contended Wednesday.

“We’re on the fiscal Titanic and we’re going to hit something hard and immovable one of these days,” said David Stockman, director of the Office of Management and Budget from 1981 to 1985, in a CNBC “Closing Bell” interview.

The House of Representatives and Senate on Wednesday passed a last-minute stopgap spending bill that will keep the federal government open through Dec. 11 pending President Barack Obama’s signature. But another budget battle will likely ensue then, as Congress remains divided over federal funding for women’s health organization Planned Parenthood.

Read MoreHouse passes legislation to avoid shutdown

Many in Congress have opposed a shutdown, as a government closure can put some federal employees temporarily out of work or delay their pay. Stockman contends it could have a positive effect by making lawmakers address spending and debt issues.

He called for entitlement and defense spending reform. He also argued that easy monetary policy from central banks has made lawmakers less likely to address the deficit.

Still, Stockman did not clearly outline why a shutdown would force lawmakers to make significant budget changes.


Posted at 7:38 AM (CST) by & filed under In The News.

China Bought Gold With Proceeds From Record Sale Of US Treasurys

Tyler Durden on 09/30/2015 09:59 -0400

Two months ago, when China stunned the world in announcing it had officially “bought” 604 tons of gold for the first time since 2009 (this was untrue: China merely admitted to the world what we had reported for years, namely that it had been patiently accumulating gold via untraceable accounts and only now decided to reveal a fraction of its total holdings), we said that, contrary to the wrong “one-and-done” pundit assessment, China would continue “adding” to its gold holdings. To wit:

… now that the seal has been finally broken after so many years, and since today’s update indicates that Chinese gold numbers are clearly goal-seeked with a specific policy purpose – to boost confidence - we await for the PBOC to start leaking incremental gold holding data every month (and especially in months when the market crashes) which will bring us ever closer to what China’s true gold holdings are.

One month ago, we were proven correct when China indeed announced it had “added” another 19.3 tons of gold in July – even as it was dumping record amounts of Treasurys at the time as we previously reported.

Then, overnight, we got a second confirmation when the PBOC announced that China’s official gold holdings had risen again in August, increasing by 520,000 troy ounces, or 16.2 tons (which is more than 3 times the entire registered gold inventory in the Comex vault system), and bringing the new total to 54.5 million ounces, or 1,694 tons of gold. In dollar terms, Chinese gold holdings rose from $59.2 billion at the end of July to $61.8 billion. 

However, even as China is “buying” gold, it is still doing so at half the pace of neighbor Russia, which as reported several days ago added 1,000,000 ounces or about 31 tons in the same month, bringing its total to 42.4 million ounces, or 78% of China’s holdings.  Between China and Russia, some 47 tons of gold were purchased in the open market in past month.

Naturally, as has been the curious case for the past several months, the confirmation that China keeps buying gold merely served to push gold lower, and as of this moment gold was down to $1,117/ounce: the lowest level in two weeks.

A Commerzbank analyst had this to say about China’s ongoing gold buying spree: “Given the size of Chinese currency reserves and the extent of its domestic gold production, even higher gold purchases might have been assumed. That said, the decrease in currency reserves may have put the brakes on buying interest of late, in August, currency reserves declined to a two-year low of $3,557.4 billion.”

This is almost correct. The real message here is that in a month in which China (together with its Euroclear-held Belgium holdings) sold a record $83 billion in Treasurys…



Jobs Report Is Lackluster, Raising Concern on Economy’s Course
OCT. 2, 2015

Employers added 142,000 jobs in September, the Labor Department said on Friday, suggesting that the American economy is losing momentum after a similarly lackluster report for the previous month.

The official unemployment rate held steady at 5.1 percent, and hourly wages for private sector workers were flat after jumping by a relatively robust 0.4 percent in August.

The report for August was revised sharply downward, showing the economy created only 136,000 jobs, well below the 173,000 originally estimated.

Friday’s report came just two weeks after the Federal Reserve decided that the recovery was still too frail to risk lifting interest rates from their near-zero level. While the Fed chairwoman, Janet L. Yellen, later suggested that the Fed was still likely to go ahead with a rate increase before year’s end, the latest evidence of a weakening economy may push any such increase into next year.

Diane Swonk, chief economist at Mesirow Financial, noted in an analysis before the report’s release that “it would be more reassuring if we could see a point where the economy is truly firing on all cylinders for a change.”

Other reports suggest that while the overall American economy remains sturdy, it has lost steam on several fronts in recent months. The manufacturing sector has been hit by the strong dollar and weak global demand; the oil industry has cut back sharply on investment in response to low prices; and farming has taken a hit because of slumping commodity prices.



Jim Sinclair’s Commentary

It was always that way from day one.

HFTs Have Devolved To Two-Bit Criminals Straight Out Of “Office Space”
Tyler Durden on 10/01/2015 19:01 -0400

Back in October 2011, Zero Hedge was first to point out something previously unknown: a small, then-unheard of firm, managed to upstage none other than Goldman Sachs when it comes to total weekly program trading volume on the NYSE.

Since then Latour, an affiliate of Tower Trading, has emerged as one of the pre-eminent HFT powerhouses in NYC. As we subsequently learned, Tower Research – which is run by Mark Gorton of LimeWire fame – is a member of the upstart Modern Markets Initiative, a lobby firm whose stated purpose is focused on “demonstrating the benefits of algorithmic or quantitative trading, often referred to as high-frequency trading, in today’s modern markets.”

It has failed to do that.

Instead, it has demonstrated, twice in the span of one year, that HFTs are nothing but two-bit, small-time criminals, intent on breaking all the rules, frontrunning clients, and otherwise abusing market ethics and norms.

In short: HFTs rig markets constantly, and what’s worse: they are now getting so behind the curve, the SEC is catching them in the act on an almost daily basis.

Which brings us back to Latour and September 2014, when one year ago the SEC – in its first enforcement action against a high-frequency trading firm – charged Latour Trading for using faulty calculations in complex trading strategies that let it buy and sell stocks without holding enough capital. The firm at times accounted for 9% of all U.S. stock trading, according to the SEC’s order.

As the WSJ reminds us, Latour, which didn’t admit or deny wrongdoing, agreed to pay $16 million to settle the case, the largest penalty for a violation of the so-called net capital rule, the SEC said.

The net capital rule provides various methodologies that broker-dealers need to follow to make sure they are adequately taking account of the risk they are exposed to from their market activities. Latour routinely violated those requirements from 2010 through 2011, the SEC said.

Latour said it had “fully remediated the problems described in the Commission order, and we are pleased to put them behind us.”



Big layoffs may signal end of expansion: Challenger
Tom DiChristopher

The number of announced layoffs by U.S.-based companies surged in September from the previous month, and Hewlett-Packard’s outsized cuts raise a red flag, John Challenger, CEO of Challenger, Gray & Christmas, told CNBC’s “Squawk Box” on Thursday.

“It’s interesting that we are beginning to see some big layoff announcements this year,” he said. “One of the things you start to see as you get near the end of a period of expansion, but before it really turns, is you start to see major layoffs occurring, big mega-layoffs like we’re seeing now.”

U.S.-headquartered companies put 58,877 jobs on the chopping block last month, up 43 percent from just more than 41,000 in August and the third highest monthly total this year, Challenger’s global outplacement firm reported.

Challenger said the computer sector led all other industries in layoffs in September. Hewlett-Packard accounted for nearly all of the 32,500 reductions.

Last month, Hewlett-Packard announced it would cut 25,000 to 30,000 positions as part of its restructuring, which will split the company into one firm focused on enterprise services and one dedicated to its legacy hardware business.

Challenger said the HP cuts were not necessarily an indicator that overall layoffs would continue to increase substantially month to month. Instead, he said, they may be a sign that companies having a more difficult time will begin shedding workers.

The first day of October saw further cuts from big companies.

Reuters reported that Wal-Mart is planning to lay off hundreds of people at its headquarters in Arkansas as part of the retail giant’s efforts to pare costs. Fewer than 500 employees are expected to lose their jobs, and an announcement could be made as early as Friday, according to one of sources told Reuters.



World set for emerging market mass default, warns IMF
Higher US interest rates will expose weaknesses in emerging market corporations which have gorged themselves on cheap debt, IMF warns
By Szu Ping Chan
6:50PM BST 29 Sep 2015

The International Monetary Fund (IMF) has issued a double warning over higher US interest rates, which it said could trigger a wave of emerging market corporate defaults and panic in financial markets as liquidity evaporates. 

The IMF said corporate debts in emerging markets ballooned to $18 trillion (£12 trillion) last year, from $4 trillion in 2004 as companies gorged themselves on cheap debt. 

It said the quadrupling in debt had been accompanied by weaker balance sheets, making companies more vulnerable to US rate rises.

“As advanced economies normalise monetary policy, emerging markets should prepare for an increase in corporate failures,” the IMF said in a pre-released chapter of its latest Financial Stability Report.

It warned that this could create a credit crunch as risks “spill over to the financial sector and generate a vicious cycle as banks curtail lending”. 

In a double warning, the IMF said market liquidity, or the ease with which investors can quickly buy or sell securities without shifting their price, was “prone to sudden evaporation”, particularly in bond markets, when the Federal Reserve started to raise interest rates. 

It said a steady growth environment and “extraordinarily accommodative monetary policies” around the world had helped to maintain a “high level” of liquidity. However, it warned that this was not the same as “resilient” liquidity that could support markets in time of stress.


Posted at 12:13 PM (CST) by & filed under In The News.

Mid-East Coup: As Russia Pounds Militant Targets, Iran Readies Ground Invasions While Saudis Panic
Submitted by Tyler Durden on 10/01/2015 12:05 -0400

Back in June, the commander of Iran’s Quds Force, Qasem Soleimaini, visited a town north of Latakia on the frontlines of Syria’s protracted civil war. Following that visit, he promised that Tehran and Damascus were set to unveil a new strategy that would “surprise the world.” 

Just a little over a month later, Soleimani – in violation of a UN travel ban – visited Russia and held meetings with The Kremlin. The Pentagon now says those meetings were “very important” in accelerating the timetable for Russia’s involvement in Syria. The General allegedly made another visit to Moscow in September. 

The timeline here is no coincidence. Iran has long provided covert and overt support to the Assad regime via financial transfers, logistical support from the Quds, and via the involvement of Hezbollah in the Assad government’s fight to regain control of the country. 

As we’ve documented extensively over the past several weeks, what appears to have happened here is that Iran, unable to simply invade Syria in support of Assad (because doing so would obviously be a disaster in terms of preserving the optics around the P5+1 nuclear deal), turned to Moscow which has in the past used Russia’s Security Council veto to block the referral of the war in Syria to the Hague and which is a known ally of both Tehran and Damascus. 

While it’s unclear exactly what the pitch was to Putin, Russia clearly saw an opportunity to advance The Kremlin’s geopolitical agenda at a key time in history. Moscow is keen to put on a brave face amid the most contentious standoff with the West since the Cold War (as a result of the conflict in Ukraine and the annexation of Crimea) and amid the related effort to preserve Gazprom’s market share in Europe. 

In short, Putin looks to have viewed this as the ultimate geopolitical win-win. That is, Russia gets to i) expand its influence in the Middle East in defiance of Washington and its allies, a move that also helps to protect Russian energy interests and preserves the Mediterranean port at Tartus, and ii) support its allies in Tehran and Damascus thus preserving the counterbalance to the US-Saudi-Qatar alliance. 

Meanwhile, Iran gets to enjoy the support of the Russian military juggernaut on the way to protecting the delicate regional nexus that is the source of Tehran’s Mid-East influence. It is absolutely critical for Iran to keep Assad in power, as the loss of Syria to the West would effectively cut the supply line between Iran and Hezbollah. 

The same dynamic is playing out in Iraq. That is, Iran is fighting ISIS via various Shiite militias just as it’s fighting the Saudi-led coalition in Yemen via the Shia Houthis. It is thus extremely significant that Baghdad has agreed to share intelligence with Syria and Russia, as that effectively means the Iran-backed Shiite militias battling for control of Iraq will enjoy the support of the Russian military. 



This Is The Endgame, According To Deutsche Bank
Submitted by Tyler Durden on 10/01/2015 12:53 -0400

DB’s Jim Reid lays out the “endgame” scenario, one which this website first said is inevitable back in 2009. With Citi and Macquarie already on board, expect what was once merely the figment of a “deranged tinfoil conspiracy-theory blog’s” imagination, to become global monetary policy. And yes, the real endgame is the one we have said from day one: total fiat (and conventional economics) collapse.

* * *

From Deutsche Bank’s chief credit strateigst

Our thesis over the last few years has basically been that the global financial system/economic fundamentals are so bad that its good for financial assets given it forces central banks into extraordinary stimulus and for them to continue to buy assets in never before seen volumes. The system failed in 2008/09 and rather than allow a proper creative destruction cleansing, policy makers have been aggressively propping it up ever since. This has surely led to a large level of inefficiency in the system which helps explain weak post crisis growth and thus forces them to do even more thus supporting asset prices if not the global economy.

However since the summer this theory has been severely tested by China’s equity bubble bursting, China’s small ‘shock’ devaluation and the start of a rundown in reserves for the first time in over a decade. We’ve also seen associated commodities and EM woes, endless unsettling speculation about the Fed’s next move and more recently the idiosyncratic corporate scandal around VW and funding concerns around Glencore. The hits keep on coming. Is it now so bad it’s actually bad again?

The most recent leg of the sell-off begun after the Fed held rates steady two weeks ago as the narrative focused on either this reflecting worrying economic concerns or a Fed that is a slave to financial markets and losing credibility. So do we think we’re now entering a period where central banks are increasingly impotent? The answer is that they have been for a while on growth so not much has changed. However they can still buy more assets and continue to keep policy loose. Although we don’t think QE and zero interest rates does much apart from prop up an inefficient financial system it’s all we’ve got until we have a huge policy sea change which probably only happens in the next recession (more later).

So for now we think central banks are trapped into continuing on the same high liquidity path. The BoJ and the ECB are likely to do more QE in my opinion and the Fed is going to have a real struggle raising rates this year which has been our long-term view. Indeed we have sympathy with DB’s Dominic Konstam that they may also struggle in 2016. At the moment central banks are fortunate that they have the conditions to do more as virtually all are failing on their mandate to keep inflation close to or at 2%. The real problem would be if inflation was consistently looking like breaching 2%. Then central banks would generally be going beyond their mandate by printing money and keeping rates close to zero. So in short the ‘plate spinning’ era continues for a number of quarters yet and certainly while inflation is so low.

We think the end game is that when the next global recession hits, then QE/zero rate world will be re-appraised. Perhaps the G20 will get together and decide to try a different approach. In our 2013 long-term study we speculated how we thought the end game was ‘helicopter money’ – ie money printing to finance economic objectives (tax cuts, infrastructure etc). While it has obvious flaws and huge risks (eg political manipulation and inflation), one can argue it will always have more economic impact than QE in its current form. However that’s perhaps a couple of years away still.

For now, a lot depends on whether the turmoil accelerates the next recession quicker than we think. If 2016 is a recessionary year for the US and the global economy with China growing notably south of 6% then risk assets will fall significantly further. However if the global economy stumbles on in positive territory then risk assets will likely recover, especially if the ECB and BoJ do more and the Fed continues to hold or as a minimum reduces the dots a fair degree on any small hike. That’s our base case for the moment and fortunately our main asset class – namely credit – is starting to get to levels where we have only been wider during recessions or during the existential Euro crisis of 2011/12. So the risk reward looks decent. VW and Glencore have sucked Euro IG into the problems that US credit has been dealing with all year but I’m not sure they’re symptomatic of a wider DM corporate governance issue in the VW case or a precursor for similar funding concerns elsewhere in the case of Glencore.


Posted at 3:42 PM (CST) by & filed under In The News.

Dear CIGAs,

Both Bill and I have two days of meetings concerning the ground business in Africa. We will both make our best effort to post, but please understand there is a lot of travel involved with these meetings, and time is limited.



World set for emerging market mass default, warns IMF
Higher US interest rates will expose weaknesses in emerging market corporations which have gorged themselves on cheap debt, IMF warns
By Szu Ping Chan
6:50PM BST 29 Sep 2015

The International Monetary Fund (IMF) has issued a double warning over higher US interest rates, which it said could trigger a wave of emerging market corporate defaults and panic in financial markets as liquidity evaporates.

The IMF said corporate debts in emerging markets ballooned to $18 trillion (£12 trillion) last year, from $4 trillion in 2004 as companies gorged themselves on cheap debt.

It said the quadrupling in debt had been accompanied by weaker balance sheets, making companies more vulnerable to US rate rises.

“As advanced economies normalise monetary policy, emerging markets should prepare for an increase in corporate failures,” the IMF said in a pre-released chapter of its latest Financial Stability Report.


Posted at 6:00 PM (CST) by & filed under Bill Holter.

Dear CIGAs,

Two huge pieces of news hit Monday like a one-two punch!  First; UBS Is About To Blow The Cover On A Massive Gold-Rigging Scandal followed by; Saudi Arabia withdraws overseas funds Gold and Oil both affect the dollar, and this is happening while global liquidity is drying up. The soon to be catch phrase for October will be “lack of liquidity”!

First, the Swiss investigation into the gold market has got to be a scary one for shorts both legal or naked. The investigation will not be a whitewash similar to the CFTC silver investigation where “nothing actionable” was found. Please understand the key word there was “actionable”. I ask you this, if something was found to have occurred but was in the “interest of national security” …would it be “actionable”? It is also key to understand the suppression of gold prices also act to support the value of both dollars and Treasury bonds. In other words, the dollar can be seen to be more valuable than it really is and also allow interest rates to be lower than they otherwise would be.

As for the oil news, for Saudi Arabia to pull capital back home is a natural reaction as they now are running huge deficits and obviously an effect from the lower oil prices. It also has another effect, probably a large portion of the $73 billion withdrawn were in dollar denominated assets. It also means the Saudis are not a source of demand for dollars. Please also keep in mind from a geopolitical standpoint they have signed multiple trade deals with both Russia and particularly China, it is a good bet these will not be transacted in dollars.

Lastly thrown into the mix is the disaster called Glencore. They are a huge commodity firm with huge leverage and derivatives outstanding. Current CDS rates suggest (and it is not JUST Glencore …. they have a better than coin flip chance of bankruptcy. Should this occur, you must understand it as a “credit” event rather than a commodity event. Yes of course unwinding their commodity positions will be a nightmare, the implications to the overall credit structure of the system are however MUCH GREATER!

This is happening at a time when liquidity has and is drying up all over the world. Whether you look at dollars, euros, yen or yuan, liquidity is just not there. Please view this link showing liquidity in the U.S. S+P 500 over the last eight years, it is basically GONE! What this means is if you are a large holder of positions, there is no exit and you are trapped! This is what I believe we will find out very shortly.

The lack of liquidity will create vacuums beneath asset prices, stocks, bonds, commodities and will culminate in a currency/credit crunch. This is very easy to see and anticipate if you are willing to see it. The “light switch” moment is near. Should we see a day where the Dow loses 700-1,000 points followed by another disaster day …it will be game over. Should the PPT lose credibility, neither the Fed “put” nor PPT “put” will be in place and it will be every man for himself. We are very close to the moment in time where the only solution to halt the selling will be to “pull the plug”!

Standing watch.

Bill Holter
Holter-Sinclair collaboration
Comments welcome [email protected]

Posted at 5:57 PM (CST) by & filed under Jim's Mailbox.


I was watching The Donald’s speech yesterday in NYC. He stated that the unemployment statistics out of the government were fantasy stats at best.  Probably the most unbelievable numbers there are.

When people are unemployed, but seeking work, they are considered “employed”! Incredible. When no longer seeking work, they are removed from the workforce. More incredulity. Part Time work is considered employment.

His economists lead him to believe the unemployment rate to be about 20-24% (roughly).

Some economists state it’s between 30-35%, with the highest estimate to be around 42%.

Trump does his Donald thing in an interview with Time:

You’re talking about 10% of California’s workforce, maybe 13% …

Don’t forget in the meantime we have a real unemployment rate that’s probably 21%.

It’s not 6. It’s not 5.2 and 5.5. Our real unemployment rate–in fact, I saw a chart the other day, our real unemployment–because you have ninety million people that aren’t working. Ninety-three million to be exact.

If you start adding it up, our real unemployment rate is 42%.

He stated in his tax platform that all single workers earning under $25k and all married couples earning under $50k pay zero taxes.

My question to you, Jim: What if he miscalculates and GDP doesn’t grow by 6%, and there’s not enough money to fund the government and pay the interest on government debt? You can’t simply retroactively collect taxes. Would there be a massive monetization of new debt? I know he abhors the idea of $19 trillion in government debt and growing. But he would only cause that to spike exponentially if he is wrong. (I’ll stick with gold, in spite of my admiration for his tenacity in getting things done).

His heart and ideas are in the right place, (saving Social Security, lower taxes, no inheritance tax, repatriate jobs) but unfortunately… it’s a bit too late.

Furthermore, he should address the corruption in the oversight agencies on Wall Street. In fact, ALL oversight agencies.

Investigate the Comex and it’s lack of adherence in monitoring highly leveraged speculative positions in gold and silver, margin debt, the “infamous” Center for Disease Control in Atlanta, the FDA, etc

Now, I have a proposals to support future housing growth, savings growth, liquefy banks, and attack abused social programs he hasn’t even heard of. All done while sterilizing the money supply growth in the interim. I hope I can someday provide some suggestions to him. A leader’s door should always be open to his constituency.

I wish him the best of luck in his endeavor to right the wrongs in our country.

I only ask one thing of him… when dealing with Congress and the formidable resistance he can expect to receive, make a speech to the US public enlightening us (and shaming the legislatures if warranted) as to their true motives in office.

CIGA Wolfgang Rech

CIGA Wolfgang,

In today’s world if you do not get your 6% it would be his turn to add controlled street drugs and prostitution to the GDP to get it to whatever level they wanted.



Good Morning Jim,

The Conference Board data is not quite as trust worthy as U.S. Bureau of Labor Statistics data. Who would have thought.

CIGA Bernie

Consumer Confidence Spikes Near 8-Year High Amid Global Turmoil But “Hope” Fades
Submitted by Tyler Durden on 09/29/2015 10:09 -0400

For the second month in a row, US Consumer Confidence (according to The Conference Board) soared in September. Printing 103.00 (smashing expectations of 96.8) in September, this is just shy of January’s high going back to August 2007. The biggest driver of this seemingly odd exuberance (amid global escalation in financial and physical wars) is the Present Situation (up from 115.8 to 121.1) while “hope” dropped from 91.6 to 91.0.


As The Conference Board explains…


The Conference Board

The organization is now considered an unbiased “trusted source for statistics and trends, second only to perhaps the U.S. Bureau of Labor Statistics”.