Posted at 9:50 AM (CST) by & filed under Jim's Mailbox.

Jim,

Yoda’s secret to relaxation during the Greek Tragedy Crisis!

Yoda says: “What, me worry?”

CIGA Dr. Dave.

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Jim,

This is really big. If this doesn’t add fuel to the fire of liquidations, I don’t know what will. Not because of the threat of an equity market meltdown, but because people now no longer know what they purchased!

When you put your money in "safe haven" funds like short term debt, you never in a million years expect to be exposed to equities and more importantly, derivatives!

"This move will, in effect, transfer a portion of the risk of BlackRock’s riskier mutual funds – derivative-laced high yield and equity funds – to its more “conservative” funds, like high grade, short duration fixed income funds.’

‘Anyone who invested in less-risky funds did so with an understanding of the definition and risk parameters of the funds at the time of investment.  But now BlackRock is changing the rules and risk parameters of those funds by exposing them to the counterparty risk of the riskier funds in the BlackRock fund complex which will be able to borrow money from the less risky funds.

This means that the Treasury fund in which your IRA or 401k is invested will now be “invested” in any fund that borrows money from the fund with your money.  The risk profile of your “conservative” fund assumes the risk profile of the riskier fund.

Because of this, there is absolutely no reason for anyone to leave any of their money in any of BlackRock’s funds."

More…

There’s not even fine print to mislead you, much less outright disclosure.

Perhaps this 4th of July will provide a different kind of fireworks.

CIGA Wolfgang Rech

An Inadvertent Warning From BlackRock – Get Your Money Out Of Mutual Funds ASAP
Submitted by Tyler Durden on 06/29/2015 11:00 -0400

Via Investment Research Dynamics,

BlackRock Inc. is seeking government clearance to set up an internal program in which mutual funds that get hit with client redemptions could temporarily borrow money from sister funds that are flush with cash.  – Bloomberg News

We may have been early on warning about leaving your savings in the financial system. It’s okay to be too early getting your money out of the system but it’s fatal to be just one second too late.  The gates are already in place in money market funds just waiting for the signal to be lowered

BlackRock’s filing with the SEC to enable “have cash” funds to lend to “heavy redemption” funds should send shivers down the spine of anyone with funds invested in any BlackRock fund.  In fact, it should horrify anyone invested in any mutual fund.

Larry Fink, BlackRock’s chief executive officer, said in December that U.S. bond funds face increased volatility, adding that he expected a “dysfunctional market” lasting days or even weeks within the next two years.   – Bloomberg

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Jim,

Negative systemic crisis usually blindsides most people. This time is no different.

Who could’ve guessed? Dollar hammered on global flight to safety?

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My oh my. This ought to change the thinking of many.

CIGA Wolfgang Rech

 

Jim,

You know that things are bad behind the scenes when China comes to the rescue of the West.

The only thing I can think of that China fears most is a $1.4 quadrillion derivative meltdown taking down the entire global financial system.

If you think otherwise, I would love to hear it.

CIGA Wolfgang R.

Dear Wolfgang,

Nobody, China included, wants to see a full meltdown here.

Jim

China says wants Greece in euro zone, pledges EU infrastructure investment
Mon, Jun 29, 2015, 11:32AM EDT

BRUSSELS (Reuters) – China’s Premier Li Keqiang said on Monday he wants to see Greece remain in the euro zone and promised that Beijing would make investments in the European Union’s new infrastructure fund.

"It is in China’s interest. We would like to see Greece staying in the euro zone and we urge the international creditors to reach an agreement with the Greek side," Li told business leaders at a conference in Brussels before an EU-China summit.

He also pledged Chinese investment in the EU’s new 315 billion euro infrastructure plan launched by European Commission President Jean-Claude Juncker, as well as saying Beijing would buy European Investment Bank bonds.

More…

Posted at 2:27 PM (CST) by & filed under In The News.

Bill Holter’s Commentary

The BIS finally tells the truth (a little late), the Greeks run their banks (too late) and the IMF is considering moving their headquarters to Beijing …just in time? Hasn’t anyone been paying attention?

The world is defenceless against the next financial crisis, warns BIS
Monetary policymakers have run out of room to fight the next crisis with interest rates unable to go lower, the BIS warns
By Peter Spence, Economics Correspondent
11:30AM BST 28 Jun 2015

The world will be unable to fight the next global financial crash as central banks have used up their ammunition trying to tackle the last crises, the Bank of International Settlements has warned.

The so-called central bank of central banks launched a scatching critique of global monetary policy in its annual report. The BIS claimed that central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies.

These low interest rates have in turn fuelled economic booms, encouraging excessive risk taking. Booms have then turned to busts, which policymakers have responded to with even lower rates.

Claudio Borio, head of the organisation’s monetary and economic department, said: “Persistent exceptionally low rates reflect the central banks’ and market participants’ response to the unusually weak post-crisis recovery as they fumble in the dark in search of new certainties.”

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“Rather than just reflecting the current weakness, they may in part have contributed to it by fuelling costly financial booms and busts and delaying adjustment. The result is too much debt, too little growth and too low interest rates.

"In short, low rates beget lower rates."

More…

Greece Will Close Banks to Stem Flood of Withdrawals
By LANDON THOMAS Jr. and NIKI KITSANTONISJUNE 28, 2015

ATHENS — Greece will keep its banks closed on Monday and place restrictions on the withdrawal and transfer of money, Prime Minister Alexis Tsipras said in a televised address on Sunday night, as Athens tries to avert a financial collapse.

The government’s decision to close banks temporarily and impose other so-called capital controls — and to keep the stock market closed on Monday — came hours after the European Central Bank said it would not expand an emergency loan program that has been propping up Greek banks in recent weeks while the government was trying to reach a new debt deal with international creditors.

The debt negotiations broke down over the weekend after Mr. Tsipras said he would let the Greek people decide whether to accept the creditors’ latest offer. That referendum vote is to be held next Sunday, after the current bailout program will have expired.

Mr. Tsipras in his televised address criticized the European Central Bank for declining to increase its emergency loans to Greek banks.

“It is clearer than ever that this decision has no other goal apart from blackmailing the Greek people and obstructing the smooth democratic procedure of the referendum,” he said.

Mr. Tsipras’s remarks did not include details of the bank closings and other controls on the movement of money, which the government was expected to explain later in the evening. Greece, though, appears to be taking steps similar to ones by Cyprus in 2013 to avoid a bank collapse.

More…

 

EURUSD Opens Down 150 Pips, Breaks To 1.09 Handle
Tyler Durden on 06/28/2015 15:26 -0400

Contained-ish…

EURUSD trades 1.0997 before some stops bounce…

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EURCHF tumbling (CHF bid)…

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We wait to see where equities open… which could be a problem as USDJPY has collapsed (carry unwinds en masse)

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Which implies a 40-50 point drop in the S&P…

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Greek debt crisis: Banks to stay shut, capital controls imposed

Greek banks are to remain closed and capital controls will be imposed, Prime Minister Alexis Tsipras says.

Speaking after the European Central Bank (ECB) said it was not increasing emergency funding to Greek banks, Mr Tsipras said Greek deposits were safe.

Greece is due to make a €1.6bn (£1.1bn) payment to the International Monetary Fund (IMF) on Tuesday – the same day that its current bailout expires.

Greece risks default and moving closer to a possible exit from the eurozone.

Greeks have been queuing to withdraw money from cash machines over the weekend.

Mr Tsipras did not give details of how long banks would stay shut, or exactly what controls on capital would be imposed.

Greece and its creditors had been locked in talks over fresh bailout money on Friday when the Greek government called a surprise referendum for 5 July over the terms it was being offered.

More…

Posted at 7:22 PM (CST) by & filed under Bill Holter.

Dear CIGAs,

This coming week could be very telling. China just ended a disastrous week and finished just whiskers away from entering bear market (-20%) territory  http://www.zerohedge.com/news/2015-06-27/chinas-370-billion-margin-call. Credit markets all over the world are weakening and yields are rising. Greece will not make their June 30 payment(s) and probably go through a referendum to decide whether or not to flip their creditors the bird in a meaningless vote. In fact, Greece will probably "go boom" this week. Their banks and stock markets may not open Monday morning http://www.zerohedge.com/news/2015-06-27/greek-stock-market-may-not-open-monday-greek-officials-warn. Two days later, some sort of plan will need to be concocted to classify their bankruptcy as not a "DEFAULT", otherwise a $3 trillion fuse to a $1.4 quadrillion bomb will be lit! These and more will be very important "mid-term exams", any failure will bleed over into derivatives and become "final and terminal exams" with zero chance of a passing grade!

We have all heard about the Greenspan, Bernanke and now the Yellen "put".

It has been believed (and for good reason), the Fed would step in and save the stock market should it begin to buckle. Magically, and time after time as the stock market would hit critical levels, panic buying would appear.  This has been written about many times by many authors. Would the Fed really buy stocks or even indices? I would ask, "why wouldn’t they, it is actually even legal" after the plunge protection team was created in 1988. This is not conspiracy theory, it is FACT! All one needs to do is look at the Bank of Japan, they openly buy stocks and even seem proud of it!  As for equities, please ask yourself these questions. How "sound" is a stock market that makes continual new highs on lesser and lesser volume? http://www.zerohedge.com/news/2015-06-27/bad-breadth-milestone-warning-stocks If you are a large holder, are you bigger than the available exit? What if everyone at once took Ms. Yellen up on her "put offer"?

Another area where Fed buying looks to be very important is in our credit markets. Unless they step up with some serious buying, and soon, our 10 year Treasury yield will take out 2.5% to the upside. U.S. Treasuries and their "value" are what act as collateral or foundation for everything the world "believes in". Before going further, I do want to mention another aspect of the ultra low rates we live with. When rates are 10%, a 100 basis point move is only 10%, when rates are 2%, a 100 basis move is 50%!  In other words, movements in interest rates when rates are low have a hugely magnified impact. When rates rise, collateral "shrinks" very rapidly from a low interest rate base which means margin calls are more rapid and bigger in amounts. Higher rates will make insolvencies that much more likely and will then occur "systemically".

This topic was suggested to me by Jim, as he put it, I believe this chapter will be described as "The Phantom of the Fed Put revealed." Please understand what is meant here. There is a "confidence" all over the world in not just the Fed but in ALL central banks. This is a misplaced confidence because the markets themselves are far larger than any single central bank or even ALL of them collectively. Yes, The Fed can push, pull, support and suppress …for a time. They cannot stop a broad tide from going out or prevent a tsunami from coming in over a long time frame. The current timeframe is six years, A LONG time for us Westerners, might as well be six days for those from the East. Does a Fed (central bank) put really exist? Or is it only the "belief" a put exists?

My point is this, the only thing holding markets together is confidence …and the only thing keeping confidence from being shattered is the belief central banks are and will provide a "free put" to all markets. Take the three examples I started with up top. If the Chinese market continues to implode, what will that say about the abilities of the PBOC? Or when Greece defaults and triggers others, what will that say about the ECB or IMF? Were Treasury yields to rise through 2.5% amongst the other turmoil, what will that say about the "safe haven" status of Treasuries and thus the dollar?  It will be a reflection of Fed impotence. The skeptics who say "they will do this forever" …can say what they say at their own peril!

Let me finish this with the BIG BAZOOKA. I am sure you remember Hank Paulson talking about $700 billion TARP as a bazooka? The reality is this amount will not even be a spitball this next time around. There are over $1.4 quadrillion worth of notional value derivatives outstanding. The apologists say "notional" value has no meaning, it is only the "margin" that counts. They are correct during "normal times". Normal times being defined as being "trusted enough" and being able to breathe. Seriously, if you can breathe today you can borrow money. What comes next is a change of thought and a massive phase of global distrust. When trust and confidence break, "margin call" will become a familiar term to nearly all.

This you MUST understand, when trust evaporates, credit will cease entirely. Without credit, the world will stop spinning. Everything finance and many things real will be gone. The financial house cannot stand with a worthless foundation and distribution of real products will cease as the supply chain breaks. Over $1.4 quadrillion in derivatives is a larger number than "everything is worth" …not to mention far larger than the money supplies to settle the trades or put up the margin. You see, "putting up the margin" will equate to 100% of all these contracts because in default …notional and real value are one and the same! Settlement is not an option! It is this $1.4 quadrillion margin call that hangs over the entire system each and every day. Margin calls are almost never issued into calm. They are almost always issued into panics and by definition ALWAYS at the wrong time! The only way to shed all margin is to get G.O.T.S.!

I have said all along and stand by my statement "when this thing gets lit, it will only take 48 hours to engulf everything". If this is truly the "beginning of the ending sequence", many markets will go no bid while a couple will go no offer! Meaning you will have what you and that’s all you will have… I leave you with this horrible thought for the weekend. How better might $100 be spent? A nice dinner with your spouse or on 200 lbs. of parboiled rice?

Regards, Bill Holter
Holter-Sinclair collaboration
Comments welcome! [email protected]

Posted at 3:17 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Finally caught after the break out by eating through the fence.

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Greek PM Alexis Tsipras calls referendum on bailout terms
Prime minister returns from Brussels and tells Greece that terms offered by creditors ‘clearly violate the European rules’
Helena Smith in Athens
Friday 26 June 2015 18.25 EDT Last modified on Saturday 27 June 2015 03.46 EDT

In a dramatic move that will put Europe on tenterhooks, the Greek prime minister Alexis Tsipras told his fellow citizens last night he would call a referendum on the bailout accord that international creditors have proposed to keep the debt-stricken country afloat.

Following an emergency meeting of his cabinet, Tsipras said his leftist-led government had decided a package of austerity measures proposed by the country’s creditors – made in a last-ditch effort to avert default – would be put to popular vote. The referendum will take place on Sunday 5 July.

A leaked document suggests David Cameron believes a Greek exit may be the best option, though he acknowledged it would carry ‘major risks’

Read more

“After five months of hard negotiations our partners, unfortunately, ended up making a proposal that was an ultimatum towards Greek democracy and the Greek people,” he said in a national address, “an ultimatum at odds with the founding principles and values of Europe, the values of our common European construction.”

The leader, who only hours earlier had rejected the proposed reforms after several days of high-stakes talks in Brussels, said Greeks now faced a “historic responsibility” to respond to the ultimatum.

He said the reforms were “blackmail for the acceptance on our part of severe and humiliating austerity without end and without the prospect of ever prospering socially and economically”.

Describing the vote as a “historic decision”, Tsipras said he had informed the leaders of France, Germany and Mario Draghi, the head of the European Central Bank about the decision. “I asked them to extend our current bailout by a few days so this democratic process could take place,” he said.

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Jim Sinclair’s Commentary

Sounds like GOTS to a large degree from a most interesting source.

Hold “Physical Cash,” “Including Gold & Silver” To Protect Against “Systemic Risk” …Fidelity
By Mark O’Byrne –
June 22, 2015

Hold physical cash “including gold and silver” says manager in one of largest mutual fund and financial services groups in the world

· “Systemic risk” threat to deposits says respected Fidelity fund manager

· Record global debt unlikely to be sustained by higher interest rates

· Banks may not be prepared for “shock” of defaults

· Guarantees to depositors unlikely to be honoured

· Savers and investors should hold “physical currencies” “including precious metals”

A fund manager for one of the largest mutual fund and investment groups in the world, Fidelity, has warned investors and savers to have an allocation to “physical cash,” “including precious metals” to protect against “systemic risk.”

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Ian Spreadbury, who oversees the investment of over £4 billion of clients money in bond markets for Fidelity told Telegraph Money

“Systemic risk is in the system and as an investor you have to be aware of that.”

He believes that the record debt that has been ballooning since the crisis of ’08 due to interest rates being forced down to near zero by central banks. This debt, particularly where mortgages are concerned, would likely become unsustainable if, and when, rates rise to realistic levels.

“We have rock-bottom rates and QE is still going on – this is all experimental policy and means we are in uncharted territory.”

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Jim Sinclair’s Commentary

All the way back in September of 2009 Dr. Roberts had warned us of the fact that Europe was not acting on its own, but as a client state of the US. The impending years proved absolutely that this was true. The banksters in the US pursued this hegemony as a US client state.

Europe’s Complicity in Evil — Paul Craig Roberts
June 25, 2015

Sovereignty or Imperialism?

On September 5, 2009 I addressed an international conference in Austria on the subject of Europe’s subordination to the US and, thus, the absence of any constructive criticism of US foreign and domestic policies. Karel van Wolferen, whose website is http://www.karelvanwolferen.com, kindly reminded me of my address to the conference when he he sent it to me with his supportive response. Both are available below. You can see from my address and from Karel’s response that the reckless direction of US foreign and domestic policy has been known for many years. Yet the recklessness continues

Europe’s Complicity in Evil
By Paul Craig Roberts

[An address by Hon. Paul Craig Roberts, Ph.D., Chevalier, Legion d’Honneur, to Mut zur Ethik Conference, “Sovereignty or Imperialism,” Feldkirch, Austria, September 5, 2009]

There is a widespread supposition that Obama, being black and a member of an oppressed race, will imbue US foreign policy with a higher morality than the world experienced from Bush and Clinton. This is a delusion.

Obama represents the same ideology of American “exceptionalism” as other re- cent presidents. This ideology designates the United States as The Virtuous Nation and supplies the basis for the belief that America has the right, indeed the responsibility, to impose its hegemony upon the world by bribery or by force. The claim of American exceptionalism produces a form of patriotism that blinds the US population to the immorality of America’s wars of aggression.

Nothing is any different under Obama. Obama has escalated war in Afghanistan; started a new war in Pakistan; tolerated or supported a military coup that overthrew the elected president of Honduras; is constructing 7 new US military bases in Colombia, South America; is going forward with various military projects designed to secure US global military hegemony, such as the Prompt Global Strike initiative that intends to provide the US with the capability to strike anywhere on earth within 60 minutes; is working to destabilize the government in Iran, with military attack still on the table as an option; supports America’s new military African Command; intends to encircle Russia with US bases in former constituent parts of the Soviet Union; has suborned NATO troops as mercenaries in US wars of aggression.

How should Europe react?

Europe should disassociate from the United States and go into active opposition to US foreign policy. Europeans should demand that their governments withdraw from NATO as it serves no European interest. The two aggressive militarist powers, the US and Israel, should be sanctioned by the UN and embargoed.

Instead, Europe is complicit in US and Israeli war crimes.

Because of the Cold War, Europe is accustomed to following US leadership. The financial convenience of the shelter provided by US military power negated independent European foreign policies. In effect, Western European countries became US puppet states.

How does Europe escape from a subservient relationship of many decades? Not easily. The US is accustomed to calling the shots and reacts harshly when it meets opposition. For example, French opposition to Bush’s invasion of Iraq brought about instant demonization of France by the US media and members of Congress.

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Posted at 10:45 AM (CST) by & filed under Bill Holter.

Dear CIGAs,

"Don’t push a bad position"! This is good advice in many varied quests. It is good advice in games like chess or poker. Good advice in sports, business, politics, geopolitics and certainly in militarily ventures. Today we will look at two separate issues where "bad positions" are being pushed to the wall!

First, we have an insane situation brewing in COMEX silver. The open interest finally exceeded 200,000 contracts (1 billion ounces). I believe the only other time this much open interest existed was back in 1980 or ’81. This makes no sense whatsoever, the price is again plumbing 4 year lows yet open interest has moved to record highs? The fact open interest has expanded while price has declined is proof positive the "initiation" of this expanded open interest has been by "shorts" but absorbed by "someone" on the other side of the trade. Total global production of silver is only 800 million ounces or thereabouts so COMEX shorts have contracted to deliver 25% more silver than will even be produced globally over the next 12 months. Silver available for COMEX delivery only totals 57 million ounces so they sit on a naked short time bomb of more than 950 million ounces!

If we look at the July silver contract, there are 55,000 contracts still open with only 4 days remaining before first notice day. This is 275 million ounces still open with only 57 million ounces available to deliver. This is truly fraudulent sales of metal because the metal does not exist to deliver. Yes I know, the apologists will say "this always happens and the shorts will decline into first notice day and evaporate throughout the delivery month". I agree, this "has" always happened in the past but something is changing now. In the past, total open interest always dropped going into FND, now it is not. Not only are all July contracts closed out being rolled into September, the total is rising rather than declining sharply.

I first wrote last August about the situation where huge open interest in the September contract dwarfed the available silver for delivery. My speculation then as it is now, I believe somehow the bulk of the open interest in the nearby month is of Chinese origin. I called it a "Kill Switch" then and still believe this to be the case. The shorts have had their way with silver but I believe "pushing a bad position". They are "making" price by contractually selling silver which does not exist. This travesty was recently called out by Keith Neumeyer, CEO of First Majestic Silver corp., http://www.mineweb.com/news/silver/silver-manipulation-first-majestic-question-cftc/. Bravo! and you are exactly correct.  Then of course we must wonder of JP Morgan reportedly accumulating millions of silver ounces, what of this?

To finish this section, there is NO market anywhere on the planet where the amounts of futures dwarf the physical product so overwhelmingly than in silver. Why is silver so important? Why has it been bludgeoned so badly and even priced below the cost of production? You must understand how small the silver market is. Total global production is less than $15 billion per year …"but", silver cannot be left alone because high silver prices do not jibe with low gold prices. …And gold MUST be kept down and out of the limelight because high gold prices do not fit with low interest rates …which are an absolute must in an effort of reflation. You see, in no way can interest rates be allowed to rise with the amount of global debt outstanding. Higher interest rates will crush the debt outstanding, the silver market is at the VERY BEGINNING of the "food chain" that keeps the lid on interest rates. I believe the Chinese hold this market in their back pocket paid for with "pocket change", they will use is it at their own discretion!

Another "bad position" is the stance the U.S. is taking with Russia (and the rest of the world for that matter). We have placed economic and financial sanctions on Russia in an effort to bankrupt them. It has been speculated the Saudis opened the oil spigots to lower energy and break Russia as was done in the 1980′s. So far there has been more stress in the U.S. fracking sector than damage done to Russia. This may have originally been the case, however, Russa and Saudi Arabia just signed six separate deals just last week. A case can be made, the sanctions meant to hurt Russia have hurt the German, French and other Euro economies just as much. The IMF has said they will fund Ukraine even after a default …but not Greece, they need some of that "austerity stuff" that no one wants. Greece has turned back and forth playing nice with Russia in an on again off again type romance.

The scary part is the military buildup of U.S. hardware in Eastern Europe. Mr. Putin has a "limit" to what he will tolerate just as anyone else. The danger to the U.S. is not just World War III, it may be the lengths Mr. Putin will go to avoid a war. I have speculated Russia (Mr. Putin) will drop a "truth bomb" in order to cripple the U.S. financially by breaking confidence in any and all things American. I believe Russia (via Snowden) has enough evidence of various false flags, fraudulent deals and U.S. scam tradings to "shame" the U.S. into retreat. When I say "shame", I am talking about the dollar being undermined by a break of confidence.

We have pushed and shoved our way around for years while "losing friends and not influencing people".  In trying to isolate Russia, we have succeeded in isolating ourselves as the rest of the world prepares avoiding the dollar.  Just look around, the U.S. has steadily lost allies in meeting after meeting.  We have been in a bad position for at least 15 years, our manufacturing base is gone. Yet we have pushed our position harder and harder? You see, we have had to "push" because what was once "earned" and deserved is no longer true, we now must demand our place at the table to sit at it …and mostly unwelcome.

Let me finish with this thought, just as the high school football star is always invited to the parties, the invitations become less and less if he becomes conceited or if his skills diminish.  In this analogy, the U.S. has not only become conceited but crossed the line well into arrogance. As for "skills"? These were shipped overseas just as Ross Perot said they would. Unfortunately, the U.S. has pushed itself from a bad position into one worse than anyone could imagine 20 years ago!

Regards, Bill Holter
Holter-Sinclair collaboration
Comments welcome! [email protected]

Posted at 10:30 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Chinese influence in the public gold market will significantly expand. The mega machine algos of silver and gold could meet their match.

Shanghai Gold Exchange in talks to list products on CME
Fri Jun 26, 2015 5:40am EDT

The Shanghai Gold Exchange (SGE) is in talks to list its bullion products on CME Group’s trading platform and launch yuan-denominated bullion contracts in Dubai, an exchange official said.

China, the top producer and a leading consumer of gold, is seeking to boost its global presence in the bullion market and increase the use of its currency, while also opening up its own markets to foreign players.

State-run SGE, the world’s biggest physical bullion exchange, will initially list its products and prices on CME, whose members and clients will be allowed to trade the Chinese exchange’s products, SGE Vice-President Shen Gang told an industry conference on Thursday.

In the next phase, SGE members will be able to trade CME products via SGE, Shen said, according to presentation slides,

adding the bourse was also in talks to list yuan-denominated gold contracts on the Dubai Gold and Commodities Exchange.

"SGE will continue to actively explore any cross-market cooperation opportunities," Shen said.

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Jim Sinclair’s Commentary

No worries. The equity markets here have the Yellen Fed put in place.

China Politburo Opines On Market Crash: "Black Friday Massacre"
Tyler Durden on 06/26/2015 11:50 -0400

Big trouble in big over-leveraged China…

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China’s Politburo official mouthpiece Xinhua summed up the bloodbath in China in one tweet overnight…

Which is odd, since just a month ago, another mouthpiece noted an "authoritative insider" pushing investors to save less and buy more stocks "as economic downside riosks were well managed." China Daily, a month ago, quoted an "Authoritative Insider" pushing the average joe Chinese citizen to save less and speculate more…

He stressed that investment has a vital effect on economic growth: “Seen from the stage China is at right now, whether it can transfer savings to effective investment will be the key to stable economic growth.”

The insider also mentioned that on the one hand the Chinese people are having trouble getting sustainable property income with the high rate of household savings, and on the other hand the real economy and key construction projects lack funding. As a result, more financing channels should be explored to exploit the potential of private capital and transfer more savings into investment.

According to the insider, current economic risks are largely under control, but we should maintain a high level of vigilance over risks related to high leverage and asset bubbles.

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Jim Sinclair’s Commentary

Now that is one huge hunger to save.

With $21 Trillion, China’s Savers Are Set to Change the World
by Enda Curran Jeff Kearns
June 25, 2015 — 6:00 PM EDT

Few events will be as significant for the world in the next 15 years as China opening its capital borders, a shift that economists and regulators across the world are now starting to grapple with.

With China’s leadership aiming to scale back the role of investment in the domestic economy, the nation’s surfeit of savings — deposits currently stand at $21 trillion — will increasingly need to be deployed overseas. That’s also becoming easier, as Premier Li Keqiang relaxes capital-flow regulations.

The consequences ultimately could rival the transformation wrought by the Communist nation’s fusion with the global trading system, capped by its 2001 World Trade Organization entry. That stage saw goods made cheaper across the world, boosting the purchasing power of low-income families at the cost of hollowed-out industries.

Some changes are easy to envision: watch out for Mao Zedong’s visage on banknotes as the yuan makes its way into more corners of the globe. China’s giant banks will increasingly dot New York, London and Tokyo skylines, joining U.S., European and Japanese names. Property prices from California to Sydney to Southeast Asia already have seen the influence of Chinese buying.

Other shifts are tougher to gauge. International investors including pension funds, which have had limited entry to China to date, will pour in, clouding how big a net money exporter China will be. Deutsche Bank AG is among those foreseeing mass net outflows, which could go to fund large-scale infrastructure, or stoke asset prices by depressing long-term borrowing costs.

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Jim Sinclair’s Commentary

Now you really do not want top secret clearance!

Hackers Stole Secrets of U.S. Government Workers’ Sex Lives
06.24.1510:24 PM ET

Infidelity. Sexual fetishes. Drug abuse. Crushing debt. They’re the most intimate secrets of U.S. government workers. And now they’re in the hands of foreign hackers.

It was already being described as the worst hack of the U.S. government in history. And it just got much worse.

A senior U.S. official has confirmed that foreign hackers compromised the intimate personal details of an untold number of government workers. Likely included in the hackers’ haul: information about workers’ sexual partners, drug and alcohol abuse, debts, gambling compulsions, marital troubles, and any criminal activity.

Those details, which are now presumed to be in the hands of Chinese spies, are found in the so-called “adjudication information” that U.S. investigators compile on government employees and contractors who are applying for security clearances. The exposure suggests that the massive computer breach at the Office of Personnel Management is more significant and potentially damaging to national security than officials have previously said.

Three former U.S. intelligence officials told The Daily Beast that the adjudication information would effectively provide dossiers on current and former government employees, as well as contractors. It gives foreign intelligence agencies a roadmap for finding people with access to the government’s most highly classified secrets.

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Posted at 9:35 AM (CST) by & filed under Jim's Mailbox.

Jim,

Why didn’t their future reading detect the theft or should those that stole have seen their capture, and standard wrist slapping?

CIGA JB Slear

FDA gets caught and admits that it’s guilty

For Immediate Release: The U.S. Food and Drug Administration FDA gets caught and admits that it’s guilty in one of the biggest thefts of intellectual property in history.

Listen to clips of an interview regarding this: click here

On June 21, 2015, the Acting Commissioner of the Food and Drug Administration (FDA), Dr. Stephen Ostroff, admitted to one of the largest thefts of intellectual property of all time.The technology involves patents and trade secrets for what is called “predictive analytics.”Predictive analytics involves the harvesting of “big data” that is then analyzed by supercomputers to predict the future.If you are wondering just how big the market is for this revolutionary technology, take a look at the numbers. The predictive analytics market is expected to grow to $5.24 billion by 2018 at an annual CAGR of 25.2% making it one of the biggest and fastest growing market segments in the economy.On May 7, 2015, Acting Commissioner Ostroff was personally served with an affidavit giving the agency 45 days, 15 days more than legally required, to refute allegations that it stole a small company’s predictive analytics patents and trade secrets which are valued at billions of dollars in today’s market.According to Dr. John Hnatio, one of the owners of the small company, FoodQuestTQ LLC, “Dr. Ostroff’s failure to refute the facts now legally stands as an admission of guilt that the FDA intentionally stole our technology. This represents a watershed moment for technology entrepreneurs across the nation who, every day, face the theft of their intellectual property by the U.S. Government. In far too many cases, these small companies do not have the resources to defend themselves from the government Goliath,” he said.

The actions by the small company represent a landmark victory in preventing the government from simply stealing the technology of small businesses. “What FoodQuestTQ has done, is a strategic legal departure from relying exclusively on abstract codes or text, and an overburdened court system,” says Mr. Bruce Becker, another FoodQuestTQ entrepreneur. Becker goes on to say, “Instead of relying solely on government statutes, we have turned to the use of common law which allows judges to rely on their predecessors’ decisions of actual controversies. It’s a whole new ballgame.”

Private sector companies including the 300 member companies of the Grocery Manufacturers Association and Battelle Memorial Institute have received similar affidavits from FoodQuestTQ LLC but have not yet responded. Hnatio says, “Any company out there that stole our technology can be sure of one thing. We will aggressively pursue you. The entire future of small business is at stake here.”

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Jim,

Resistance on the upside has been said to be 2.48% yield on the 10 year note.

Dangerous setup here if bonds continue breaking down (where’s the door?).

You would think, with the increasing possibility of no Greek deal this weekend, that money would be finding a "safe" haven in US Bonds. Doesn’t appear the case as much selling is taking place today. Perhaps, when the chips are down, they aren’t considered as safe as the media purports.

If a Grexit or default occur Monday morning, and bonds are not the safe haven they appear to be, I wonder where the money will flow?

Not stocks either, as many of the largest fund managers are exiting the equity markets and some big players are urging caution (Rogers, Icahn, etc).

Plus you see many of the leaders forming rolling tops. Quite scary.

CIGA Wolfgang R.

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Jim Sinclair’s Commentary

Fracking in your back yard may not be good news for you and your town.

Jim,

I forget the phrase that is used in many industries and government…but it means "when significant loss of life occurs, only then will remedial action be taken."

"Earthquakes with a magnitude of 3.0 or greater have jumped from 20 in 2009, to 585 in 2014. But 2015 could be even worse – if current trends continue, the state could log more than 800 for the year."

Well, despite the overwhelming evidence now presenting itself, I’ll guess we’ll just have to wait until Tulsa get swallowed up into bowels of the earth.

CIGA Wolfgang Rech

Very Recent Huge Increase In Quakes A "Game-Changer" For Oklahoma Oil & Gas
06/26/2015
Submitted by Nick Cunningham via OilPrice.com,

The recent spike in earthquakes in Oklahomacould present a “game changer” for regulators.

That is how regulators themselves described thespate of earthquakes that struck the state between June 17 and June 24, according to Reuters. Oklahoma has become the most seismically active state in the country in recent years, with a lot of scientific data pointing to the practice of disposal wells as the culprit. Earthquakes with a magnitude of 3.0 or greater have jumped from 20 in 2009, to 585 in 2014. But 2015 could be even worse – if current trends continue, the state could log more than 800 for the year.

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Jim,

As always, no one is prosecuted and jailed.

Our criminals are treated less harshly than our kids.

At least our children will be grounded for a day or two when they misbehave.

CIGA Wolfgang Rech

 

"As AP reports, according to the IG’s deputy Timothy Camus, two "lower-graded" employees at the IRS center in Martinsburg, West Virginia, erased 422 computer backup tapes that contained as many as 24,000 emails to and from former IRS official Lois Lerner.

It gets better: the tapes were erased in March 2014, months after congressional investigators requested all of Lerner’s emails, and months after Zero Hedge, among many others, said to simply track down the server backups.

And the punchline: according to George, who before "investigating" IRS cimes, was a page for the 1980 Democratic National Convention and a founder of the Howard University College Democrats, the workers might be incompetent, a lead investigator said Thursday, but there is no evidence they were part of a criminal conspiracy to destroy evidence."

IRS Deleted Backups Of 24,000 Lois Lerner Emails Months After Subpoena
Submitted by Tyler Durden on 06/25/2015 18:55 -0400  ZERO HEDGE

Back in 2013 when the IRS’ scandalous targeting of "teaparty" organizations was first disclosed and when then IRS-official Lois Lerner pleaded the Fifth while the IRS’ defense was that all her emails in the period under question were destroyed due to a local hard disk "failure" (which was then shredded to destroy all evidence) everyone who was not an utter idiot asked a simple question: where are the backup servers? After all, every email not only leaves a permanent trail, it can always be tracked down to a host server.

Today during a testimony by the Treasury’s Inspector General for tax administration, J. Russell George, before Jason Chaffetz, chairman of the House Oversight and Government Reform Committee, the IRS finally closed that gaping loophole. In the most idiotic way possible.

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Posted at 12:50 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Here is an interesting question. Does the exit of economically failed countries from a currency union make the union’s currency worth more or less?

Forget Grexit, "Madame Frexit" Says France Is Next: French Presidential Frontrunner Wants Out Of "Failed" Euro
Tyler Durden on 06/25/2015 10:16 -0400

There has been some confusion why Germany and the Eurozone are so strict in negotiating with France and unwilling to concede even to the smallest of what they deem as outlandish Greek demands. The reason is not so much whether Spain or even Italy, both countries with soaring unemployment, a lost generation and a sweeping movement against "austerity", follow with comparable demands should Europe concede to Tsipras, but France, where the frontrunner for the next president, the National Front’s Marine Le Pen, has just warned that not only is a Grexit inevitable, but that France would follow shortly.

Here it is worth reminding that one of the biggest European concerns with Greece is not so much its resolute attitude toward Greek demands which Europe can easily squash and force a regime change by cutting off ELA to Greek banks forcing a prompt and violent coup d’etat, but dealing with political parties who promise anything and everything just to be elected, in the process pushing aside Europe’s preferred technocrats who will do the bidding of Brussels without the smallest objection.

Le Pen is not a technocrat. In fact, as leader of the popular right-wing National Front party she is about as diametrically opposite as one can get to being a puppet of unelected bureaucrats. And that is concerning to Europe because having seen how easy it is for a populist party to get elected in Greece, promising an end to austerity and, if necessary, an exit from the Euro which in addition has become the "black sheep" political parties bogeyman.

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Jim Sinclair’s Commentary

The most endangered species is on two legs. It is the pensioner.

State budget balancing is putting pensions at risk
Some 150 state and local pension funds reported assets under $3 trillion to cover the estimated $4.1 trillion needed to pay benefits.
John W. Schoen | @johnwschoen

When it comes to the recent improvement in state finances, one retiree’s pain is another one’s gain.

More than five years after the Great Recession tore a giant hole in their budgets, most states have made big progress in stabilizing their finances.

That’s good news for millions of state taxpayers and the millions of investors who hold state-issued municipal bonds—many of whom are retirees that depend on them for a steady stream of safe income.

But the improved fiscal health owes much to a wave of cuts that have whittled away at pension benefits for current and future retirees.

"Nearly every state since 2009 enacted substantive reform to their retirement programs—including increased eligibility requirements, increased employee contributions reducing benefits, including suspending or limiting cost-of-living increases," said Alex Brown, research manager at the National Association of State Retirement Administrators.

More than 45 states have wielded the budget knife on pension benefits, deploying a variety of these changes and resulting in overall benefit cuts averaging 7.5 percent, according to an analysis by the NASRA. That also means new employees can expect to work longer and will need to save more on their own to match the benefits paid to existing employees and current retirees.

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Jim Sinclair’s Commentary

Here comes your next black hole.

Auto Loans In "Untested" Territory Blackstone Warns As Subprime ABS Sales Accelerate
Tyler Durden on 06/24/2015 20:30 -0400

Earlier this month, we gave readers a snapshot of the US auto market on the way to explaining why it was that car sales hit a 10-year high in May. To recap:

  • Average loan term for new cars is now 67 months — a record.
  • Average loan term for used cars is now 62 months — a record.
  • Loans with terms from 74 to 84 months made up 30%  of all new vehicle financing — a record.
  • Loans with terms from 74 to 84 months made up 16% of all used vehicle financing — a record.
  • The average amount financed for a new vehicle was $28,711 — a record.
  • The average payment for new vehicles was $488 — a record.
  • The percentage of all new vehicles financed accounted for by leases was 31.46% — a record.

We went on to note that despite the worrying statistics shown above, optimists (like Experian) will likely point to the fact that the average FICO score for borrowers financing new cars fell only slighty from 714 to 713 Y/Y while the same Y/Y scores for those financing used vehicles actually rose from 641 in Q1 2014 to 643 in Q1 2015. While that’s all well and good, there’s every indication that those figures are likely to deteriorate significantly going forward. Why? Because Wall Street’s securitization machine is involved. in the consumer ABS space (which encompasses paper backed by student loans, credit cards, equipment, auto loans, and other, more esoteric types of consumer credit), auto loan-backed issuance accounts for half of the market and a quarter of auto ABS is backed by loans to subprime borrowers. Put simply, those subprime borrowers are getting subprimey-er.

In other words, the same dynamic that prevailed in the US housing market prior to the collapse is at play in the auto loan market. Lenders are competing for borrowers as lucrative securitization fees beckon, and this competition is directly responsible for loose underwriting standards. Bloomberg has more on the interplay between auto ABS issuance and “stretched” auto loan terms:

Demand for automobile debt in the U.S. is enabling lenders to make longer loans to people with spotty credit, stoking concern that car shoppers are being lulled into debt loads they won’t be able to sustain.

Of the subprime vehicle loans bundled into securities, 73 percent now exceed five years, up from 64 percent during the first three months of 2014, according to data from Citigroup Inc.

Loans as long as seven years are increasingly being put into more bonds as auto-finance companies and Wall Street banks sell the securities at the fastest pace since 2007.

The longer loans make it easier for consumers to afford rising new and used car prices by spreading out and lowering payments. While the securities are attracting plenty of buyers with high loss buffers and AAA ratings, some investors are beginning to question the wisdom of lending at terms that have never before extended beyond five years.

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