Posted at 2:19 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Your nose grows. Your nose grows.

Homebuilder Confidence Jumps To 10 Year Highs As Lumber Prices, New Home Sales Slump
Submitted by Tyler Durden on 08/17/2015 10:06 -0400

NAHB Sentiment jumped to 61 – the highest since 2005 – despite weakening new home sales and collapsing lumber prices. Housing Starts also remain tepid (especially compared to 2005 levels) but hope springs eternal for an industry almost 100% reliant on hope. Prospective buyer traffic rose 2 points as Northeast saw a drop as West and South saw modest increases.

10 Year highs!!!

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And then again there is this…

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And this…

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Empire State index tumbles to recession-era levels
By Steve Goldstein
Published: Aug 17, 2015 8:58 a.m. ET

A reading of New York-area manufacturing conditions fell swiftly and brutally in August, one that could make the likelihood of an interest-rate hike next month — or even this year — more remote.

The Empire State general business conditions index nose-dived to a reading of negative 14.9, from positive 3.9 in July, marking the worst level since April 2009, the New York Fed said. The index, on a scale where any positive number indicates improving conditions, was far worse than the positive 4.5 forecast in a MarketWatch-compiled economist poll.

It wasn’t just weakness at the headline. The new-orders component sank to negative 15.7 from negative 3.5, and the shipments index sank to negative 13.8 from positive 7.9.

Readings for unfilled orders, delivery time, inventories and average employee workweek also were negative, and the index for prices received just barely stayed positive at 0.9 from 5.3 in July.

Oddly, perhaps, the index for future business activity climbed seven points to 33.6.

Manufacturers have complained for some time about the strength of the U.S. dollar, and turbulence in China probably isn’t helping matters.

That said, the Empire State index is the first of a wave of regional manufacturing reports, and generally economists pay closer heed to the Philadelphia Fed report, which comes out Thursday.

“Along with this report’s history of volatility, the dichotomy between the fairly solid expectations portion of the survey and the horrendous current conditions portion leads us to be wary of taking the current conditions data at face value, and we would be very surprised to see other manufacturing indicators post similarly weak results in the weeks ahead,” said Josh Shapiro, chief U.S. economist at MFR Inc.

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Posted at 2:16 PM (CST) by & filed under Jim's Mailbox.

Jim,

For anyone who has ever doubted the existence of “Data Manipulation” by the government, to make our lives appear better than they are, here is the proof:

At least New Orders, Inventories, and Employment are ( or should be) honest, statistically accumulated facts representing the current state of the economy.

But, “Hope”?

Who the hell inserted that variable?

I can only assume  that if the hard evidence is too HARD to bear, then just increase the hope portion of the numbers, then all will be better. After all, how do you measure hope? What value does it have?

If I’m on a ship without lifeboats and it begins sinking, there are certain facts that are relevant:

-no lifeboats
-temperature of the water defining the length of time before hypothermia sets in
-availability of life preservers

These are factual data to delineate the situation and define my existence.

Because I “HOPE” I will survive, has no relevance whatsoever to the situation.

Therefore, how can you use “HOPE” to determine the odds of my survival?

What a joke. I often “HOPE” a million dollars falls in my lap. Does that really make my life better or at least provide an indication of my future prospects?

CIGA Wolfgang R

Empire Fed Collapses To Six Year Lows As New Orders Signal Recession Imminent
Submitted by Tyler Durden on 08/17/2015 – 08:36

Zerohedge.com

Having ‘stabilized’ in recent months, The Empire Fed Manufacturing Survey just collapsed to -14.92 (from 3.86) missing expectations of 4.50 by the biggest margin since 2010.

Across the board it was a bloodbath with New Orders crashing, inventories plunging and employment lower (with both workweek and number of employees falling).

The headline data would have been worse were it not for the concurrent spike in ‘hope’ – highest since April.

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

Historically, the United States has been a hard money country. Only [since 1913] has the United States operated on a fiat money system. During this period, paper money has depreciated over 87%. During the preceding 140 year period, the hard currency of the United States had actually maintained its value. Wholesale prices in 1913… were the same as in 1787.
– Kenneth Gerbino former chairman of the American Economic Council

 

The #1 Reason Why Donald Trump Is What America Needs (And Deserves)
Submitted by Tyler Durden on 08/15/2015 22:02 -0400

Submitted by Simon Black via SovereignMan.com,

Just a few weeks ago, US talk show host Stephen Colbert was asked if he thought that Donald Trump had a chance of becoming President of the United States.

Colbert responded sincerely. “Honestly, he could. And that’s not an opinion of Trump. That’s my opinion of our nation.”

He’s right. The Land of the Free may very well be ready for something completely different. And Trump certainly seems able to deliver.

He is, after all, unique in his field. Donald Trump has never served in politics, and his blunt style is almost the exact opposite of every other major candidate.

But there’s one thing that really sets him apart, that, in my opinion, makes him the most qualified person for the job:

Donald Trump is an expert at declaring bankruptcy.

When the going gets tough, Trump stiffs his creditors. He’s done it four times!

Candidly, this is precisely what the Land of the Free needs right now: someone who can stop beating around the bush and just get on with it already.

As history shows, a default is inevitable.

The calculus is quite simple: when governments take on too much debt, they start having to divert a huge amount of their tax revenue just to pay interest.

This means that, at a minimum, the government has to sacrifice many of the promises they made to their citizens. They cut other programs in order to have enough money to pay interest.

But that’s not too popular. So instead they typically just borrow more money… until they’re borrowing money just to pay interest on money they’ve already borrowed.

This makes the problem exponentially worse.

Debt skyrockets. And soon the government is spending more on interest payments than national defense. (The US is almost at this point).

Eventually a bankrupt government has no choice: either default on their bondholders, or default on the obligations they made to their citizens. Or both.

This could take the form of a ‘selective default’. For example, the US government could default on the $2.4 trillion that it owes the Federal Reserve.

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Posted at 12:45 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

I do not think Luca has to travel so far. In fact me might get there by walking?

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

Dear CIGAs,

Thank you everyone for your responses to yesterday’s article, there were well over 500 to which Jim and I have responded to. I spoke this morning with a nuclear physicist to get her opinion which follows;

“Bill, the blast is hard to see because a text box is right over the explosion on my screen. In my opinion, from what I can see, the blast does not look nuclear. It resembles more an explosion of a large fuel/oil storage tank, as would be found at a port. Also, there is no info in English on how far the filmers were from the blast, which would help in scale.”

Of the many comments received, the most common was “fuel ordinance”. I try always to be accurate and get to the truth which is why we went to the source of a scientist. I now believe the explosion was in fact some sort of fuel or chemical, most common thought amongst comments was LNG (liquid natural gas). Whether the explosion was or was not an accident may never be known. Accidents do happen, the “timing” of this accident does add the flavor of curiosity.

Standing watch,
Bill

Posted at 1:06 PM (CST) by & filed under In The News.

Nothing did more to spur the boom in stocks than the decision made by the New York Federal Reserve bank, in the spring of 1927, to cut the rediscount rate. Benjamin Strong, Governor of the bank, was chief advocate of this unwise measure, which was taken largely at the behest of Montagu Norman of the Bank of England… At the time of the Banks action I warned of its consequences…  I felt that sooner or later the market had to break.
– Bernard Baruch

 

This Alarming Indicator Is Back At A Level Last Seen 10 Days Before The Bear Stearns Collapse
Submitted by Tyler Durden on 08/14/2015 10:31 -0400

One of the most disturbing and recurring themes highlighted on this site over the past year has been the ever greater disconnect between the worlds of equity and fixed income, whether in terms of implied volatility, or actual underlying risk.

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It turns out there is an even more acute, and far more concerning divergence, which was conveniently pointed out overnight by Bank of America’s Yuriy Shchuchinov, one which again looks at the spread between credit and equity. Specifically, BofA notes that in just the past two weeks, credit spreads from our HG corporate bond index have widened another 9bps to 164bps while equity volatility is down another percentage point (although technically BofA uses the 3rd VIX futures as its measure of equity volatility rather than VIX itself to get a smoother series that is less affected by the daily noises and seasonalities).

This is how the resulting dramatic divergence looks like:

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Why is this notable?

In BofA’s own words: “this spread currently translates into 10.26 bps of credit spread per point of equity vol, the level reached on March 6, 2008 – ten days before Bear Stearns was forced to sell itself to JP Morgan for $2/sh. Recall that – unlike the credit market – the equity market well into 2008 was very complacent about the subprime crisis that led to a full blown financial crisis.”

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Jim Sinclair’s Commentary

Good time to tighten, Janet. 

UMich Consumer Sentiment Slips As Business Expectations Collapse To 11-Month Lows
Submitted by Tyler Durden on 08/14/2015 10:08 -0400

It appears the US Consumer is losing faith. August preliminary UMich Consumer Sentiment slipped from July’s 93.1 and missed expectations. This is the 2nd weakest print since November. Longer-term inflation expectations fell back to 2.7% and expectations for household income growth slipped to just 1.6%, but the collapse in business expectations to 11-month lows is the most crucial aspect.

The headline was weak…

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But hope is fading fast…

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Jim Sinclair’s Commentary

The following is a time tested method of understanding Fed statements.

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Jim Sinclair’s Commentary

Let’s see who buys (steals) them.

Barrick Gold debt on the brink of junk after downgrade
Thursday, August 13, 2015 At 08:07PM
Lawrie Williams | 13 August 2015 11:16

LONDON – We have noted here before the debt level mire that most of the world’s major gold miners have found themselves in after years of chasing growth when the gold price was strong and moving upwards.

However since late 2012 the gold price has been declining, but the major debt commitments – mostly relating to significant new mining projects and expansions which came to a peak thereafter – somewhat typical of the cyclical nature of mining industry economics. But in the views of many, this has led to the companies being overstretched financially (albeit not beyond their powers to dig themselves out of the financial pit thus created). The major credit rating agencies have been treating them accordingly, based on their current debt positions. This makes the companies less attractive in the eyes of the institutions and hedge funds and can lead to a downrated entity – particularly if it falls to non-investment grade (junk) status, then likely having to pay higher interest rates in servicing its debt.

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Posted at 5:10 PM (CST) by & filed under Bill Holter.

Dear CIGAs,

The question of our title is very important, “Did the FINAL WAR just start?”.  If you polled Americans on this question, 99.9% would answer “no” if you took out the Middle East.  Last week I wrote “The Rumblings of War” regarding the IMF rebuffing China’s entry into the SDR.  This was followed up by “The shot heard ’round the world” on Tuesday commenting on China’s surprise devaluation.  The purpose of this writing is to show you YES, we are in fact at war!  Rather than “tell” you we are at war, I feel it is better to point out a few dots, connect some of them and then ask a few questions which might help you understand the war that is in fact being waged.  If you can answer some of the questions then connecting dots and forming your own conclusions will be easier.

As our backdrop, we are “told” the world is in recovery from the very bad experience of 2008.  Since then, various central banks have monetized debt on a massive scale, led by the Federal Reserve of the U.S..  Undoubtedly, the greatest “export” from the U.S. has been dollars themselves and financial products known as derivatives.  For the most part, the world spun merrily until last fall when Saudi Arabia decided to increase production and lower prices.  This was presumably done at the request of the U.S. and meant as a tool to injure Russia’s energy sector, economy and financial system.  Can the petrodollar which became accustomed to $100 oil be supported with sub $50 oil?  There are two sides to this coin, yes the consumer of oil saves but doesn’t lower oil price mean less liquidity in the system?  Doesn’t it mean lower velocity and less demand for dollars?

Moving along, did anyone really wonder “why” or what (or better yet, WHO) was behind China being put off for acceptance as a component of the SDR?  Then just two trading days later, China devalued their currency in a surprise move…followed by two more devaluations!  Remember, the U.S. has been prodding China to strengthen their currency and has gone so far as to call them a “currency manipulator”!  Now we see China doing the exact opposite of U.S. requests (demands?).  World markets have been shaken, and at a time when liquidity is quite tight.

A stronger dollar since last fall has acted as a constant and nagging “margin call” to the world which has contributed to the lack of liquidity.  Have the Chinese finally said “fine, you want to issue a margin call to the world, we will help you issue it.  Let’s see what happens to your financial system when the margin call fails to be met?”.  Do you see what I am getting at here?  The Chinese are now forcing the dollar higher by devaluing their own currency.  They understand the dollar is nothing more than a debt instrument, are they attacking and intending to destroy the dollar with its own strength?

Follow this through, a stronger dollar will decrease our exports and slow our already slow or negative economy. A too strong dollar can actually undermine itself and even kick off a derivatives chain explosion. Our banks and brokers are very thinly capitalized, can they withstand losses in derivatives caused by a currency crisis?  Can they withstand the losses from failed counterparties unable to pay?  Do you see?  A currency crisis “caused” by China could be a calamity.  China has already accused Citadel (Ben Bernanke’s new employer) of creating the crash in their equity markets, is a currency crisis retaliation for their equity crash and public shaming by the IMF?  If you understand how the Chinese think and also understand the works of Sun Tzu, Jim and I ask if China’s strategy is …  “In order to destroy the dollar permanently make it stronger temporarily.”? 

Another area to look at is gold and silver.  Supplies have recently gotten very tight, not just for retail in the U.S. but all over the world.  Has production slowed or have buyers stepped up their hoarding?  Or, have Western central banks reduced their “dis hoarding”?  Whatever it is, something in the supply/demand dynamics has definitely changed …and it has not taken much money to do it!  Are these separate events or are they tied together somehow?

This is where it gets weird or some might say “coincidental”.  Did anyone see the explosion at the Chinese port city of Tianjin yesterday?  https://www.youtube.com/watch?v=_92WaPxeqCs  “Yesterday” being one day after China devalued their currency?  I am no rocket scientist and cannot say for sure, but does this not look like a nuclear explosion?  Can someone out there explain to me in simple terms how a chemical explosion could look like this?  As for the word “coincidence”, the CIA says there is no such thing as a coincidence!

Speaking of coincidences and I have permission to pass this along to you.  Jim Sinclair wrote just a few days ago for the first time in many a moon, he said “gold has very limited downside from here and could move to $2,000 as an initial stop”.  Do you believe it was a coincidence that he speaks now?  No, he was called and was “told” by the same people who guided him in 1980 at the market top.  Do you believe it was a coincidence following Jim’s writing, the IMF shunned China followed by the shot heard ’round the world of a yuan devaluation …three times?!!!  …not to mention an explosion that could be seen from space!  My mind is made up, no it is not any coincidence at all. 

or months I have been suggesting Mr. Putin would drop a “truth bomb” revealing all sorts of false flag events and fraud perpetrated by the U.S..  I still believe this is to come and now even more likely.  Why more likely?  Because the financial sparring between East and West may have taken a very serious turn yesterday and I seriously believe a tactical nuke was set off.  If this is the case, China will provide proof and they will retaliate.  I believe the smoldering stages of what was a financial/technological/trade war have now become hot and the first shot was fired.  I truly do ask for comments regarding what happened in Tianjin.  Please do not send me opinions, I would like to hear exactly why or why not the explosion was nuclear.  I will believe a tactical nuke until someone proves to me it was not.  May God help us all with what comes!

Standing Watch,

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

Posted at 5:01 PM (CST) by & filed under In The News.

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Jim Sinclair’s Commentary

Larceny 101.

“Project Omega” – Why HFTs Never Lose Money: The Criminal Fraud Explained
Tyler Durden on 08/13/2015 11:51 -0400

Two weeks ago, without knowing the details of the most recent market-rigging and frontrunning scandal involving “alternative” market veteran ITG’s dark pool POSIT, which issued a vague 8-K it would settle with the SEC for “irregularities”, we explained what we thought had happened:

ITG had an in house prop trading group, or “pilot”, which operated for nearly two years, whose only signal was client order flow, which it would frontrun, and make millions in profits. In other words, once again precisely what we have claimed since 2009. But oh yes, not everyone is guilty of such manipulation. Only Liquidnet… and Pipeline… and ITG… and countless other ATS and HFT firms for whom clients are better known as either “easy money” or muppets.

And yes, we get the “trading experiment” narrative: calling it “criminal market manipulation and order frontrunning scheme” just does not sound like something the Modern Markets Initiative would spend millions of dollars to get Congressmen to agree on.

It turns out we were spot on, the only thing we missed was the name of this market manipulation exercise. Now, thanks to the SEC, we know: “Project Omega” (or as it was also correctly dubbed here the “criminal frontrunning scheme”) is how ITG dubbed its secretive prop-trading desk whose only purpose was to frontrun clients.

Here are the details for all you suckers who still read the HFT apologists and believe the bullshit that all these algos do is provide liquidity, when in reality all the really do is frontrun your orders, assuring them of 6 years of trading without a single day’s loss (or in the case of Virtu, one trading day loss). From the SEC:

Between approximately April 2010 and July 2011, ITG violated the federal securities laws and regulations in multiple ways as a result of its operation of an undisclosed proprietary trading desk known within ITG as “Project Omega” (“Project Omega” or “Omega”). During the period of April to December 2010, Project Omega accessed live feeds of ITG customer and POSIT subscriber order and execution information and traded algorithmically based on that information in POSIT and in other market centers. In connection with one of its trading strategies, Project Omega identified and traded with sell-side subscribers in POSIT and ensured that those subscribers’ orders were configured in POSIT to trade  “aggressively,” or in a manner that benefitted Omega by enabling it to earn the full “bid-ask spread” when taking the other side of their orders.

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Jim Sinclair’s Commentary

Simple solution. Under our system sign a bill and bail ourselves out, of course increasing the debt accordingly. Push the enter button on the computer and off we go.

150 Days: Treasury Says Debt Has Been Frozen at $18,112,975,000,000
By Terence P. Jeffrey | August 12, 2015 | 11:50 AM EDT

(CNSNews.com) – The portion of the federal debt that is subject to a legal limit set by Congress closed Monday, August 10, at $18,112,975,000,000, according to the latest Daily Treasury Statement, which was published at 4:00 p.m. on Tuesday.

That, according to the Treasury’s statements, makes 150 straight days the debt subject to the limit has been frozen at $18,112,975,000,000.

$18,112,975,000,000 is about $25 million below the current legal debt limit of $18,113,000,080,959.35.

On July 30, Treasury Secretary Jacob Lew sent a letter to the leaders of Congress informing them that he was extending a “debt issuance suspension period” through October 30.

In practice, that means that unless Congress enacts new legislation to increase the limit on the federal debt before then, the Treasury will continue for at least the next eleven weeks to issue Daily Treasury Statements that show the federal debt subject to the limit beginning and ending each day frozen just below that limit.

The Daily Treasury Statement for March 13 was the first to show the debt subject to the limit closing the day at $18,112,975,000,000. Every Daily Treasury Statement since then has reported the same thing: the debt closing the day at $18,112,975,000,000.

Every Daily Treasury Statement since Monday, March 16, has also reported the debt beginning and ending each day at $18,112,975,000,000.

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Jim Sinclair’s Commentary

Remember step #2 of this great drama is the destruction of the middle class, forever. Serfdom is an important part of the playbook. Want to kill something? Red tape it.

Our Government, Destroyer of Jobs
If our government can’t destroy all the private-sector jobs directly, it will do so indirectly by borrowing so much money the system collapses.
Wednesday, August 12, 2015

Conventional economists and pundits are puzzled why jobs growth has been so anemic in this “recovery.” Here’s one factor they overlook: our government. In theory, our government is supposed to encourage private sector job growth. In reality, all the hundreds of pages of regulations are killing job growth, one small business and one job at a time.

Correspondent/entrepreneur Ray Z. was kind enough to share his experience of trying to open a bagel shop and create six jobs:

“For many years, many of my friends and family who have come to my home and experienced my cooking, have told me that I should “open a restaurant”. Of course, I took this with a grain of salt, :0 since many people say this exact phrase, to many other people. There are a lot of people who are able to create very delicious meals.

About five years ago, there was a restaurant for sale, not too far from my home and business. I thought about buying the restaurant, but at that time, the economy was not doing well and I wanted to take a wait and see attitude before I committed to anything. Eventually, the restaurant closed down and a different type of business opened up in the space that had been a restaurant. That business went under in the middle of 2014 and I decided it might be time to open a retail food establishment in the space that used to be a restaurant. How hard could it be?

I signed a lease with the property owner for his 1000 square foot space. I contracted with a general contractor and designed the restaurant floor space on a CAD program I have on my office machine.

Having boot-strapped two seven figure companies from the ground up over the past 25 years, I knew all of the permits needed in order to open a regular business. First, I had to have my attorney file for incorporation in my state. Then, I secured my FEIN (Federal Employer Identification Number) from the IRS, opened a bank account, got my sales and use tax permit (to collect sales taxes) from the State and contacted the person at the state level who is responsible for food establishments at the state level. The department that handles such things is the Nevada Health Department.

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