Posted at 12:45 PM (CST) by & filed under

By Greg Hunter’s Sunday Release)

Dear CIGAs,

Gold and derivatives expert Rob Kirby thinks crashing oil prices are going to lead to a 2008 style financial meltdown.  This is not a maybe–a market explosion is going to happen in 2015.  Kirby contends, “Oh yes, without a doubt, it will.  It must because the income crude oil sales generate are used to pay the interest on the debt. . . . If you have a mortgage payment of $5,000 at the end of the month and you only have $2,500, you have defaulted.  That is the position they are in right now.  We just need to wait for some coupon dates to come and go because these guys won’t have the money.  They don’t have the income.”

Kirby also thinks what is happening with oil prices being cut in half in a matter of months is no accident.  Kirby explains, “I look at what is transpiring in the crude oil market as yet another engineered or financial trickery on the part of the financial elites. . . . What this breakdown in the crude oil price is going to spawn another financial crisis.  It will be tied to the junk debt that has been issued to finance the shale oil plays in North America.  It is reported to be in the area of half a trillion dollars worth of junk debt that is held largely on the books of large financial institutions in the western world.  When these bonds start to fail, they will jeopardize the future of these financial institutions.  I do believe that will be the signal for the Fed to come riding to the rescue with QE4.  I also think QE4 is likely going to be accompanied by bank bail-ins because we all know all western world countries have adopted bail-in legislation in their most recent budgets.  The financial elites are engineering the excuse for their next round of money printing . . .  and they will be confiscating money out of savings accounts and pension accounts.  That’s what I think is coming in the very near future.”

On the economy getting better and the upward revision to GDP of 5%, Kirby says, “The official data is inconsistent with what you can imperially observe going on in the economy.  The economy isn’t doing well, and in addition to the economy not doing well, the U.S. government, for all intent and purposes, is insolvent.  Why bonds would be rallying against a backdrop of an issuer that is insolvent is beyond anybody’s fundamental understanding, but fundamentals don’t count anymore in our markets. . . . We don’t have markets anymore; we just have interventions. . . . This financial engineering is all a hallmark of communism or central planning.  Central planning has a track record of failing.”


Posted at 1:03 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Not all good news.

Dollar’s Surge Pummels Companies in Emerging Markets
From Brazil to Thailand, Firms That Sold Bonds in Dollars Now Face Steep, Even Staggering Costs
Ian Talley and Anjani Trivedi
Updated Dec. 30, 2014 7:20 p.m. ET

The soaring U.S. dollar is squeezing companies in emerging markets from Brazil to Thailand that now face higher costs on roughly $1 trillion in bonds sold to investors before the greenback’s surge.

For 2014, the dollar is on track to gain more than 7% compared with a group of emerging-market currencies tracked by the Federal Reserve Bank of St. Louis As the rise ripples through economies around the world, it is causing particular pain at firms in emerging markets that issued bonds in dollars instead of local currency.

The dollar’s rise means it costs more to make regular bond payments and pay off outstanding bonds as they mature. That is starting to hurt earnings at many companies, will likely force some to dip into emergency reserves and could trigger defaults on some corporate bonds, analysts warn.

To some economists, the mounting pressure evokes memories of currency crises in Asia and Latin America during the 1980s and 1990s, when the strong U.S. dollar helped trigger slides in economic growth and prices for real estate, commodities and other assets.

“The investor community is becoming very much one-way or crowded toward retrenching to the U.S.,” says Nikolaos Panigirtzoglou, global markets strategist at J.P. Morgan Chase & Co.

Many of the same countries are vulnerable again now, but few analysts and investors foresee a full-blown crisis.

More than two-thirds of the outstanding corporate bonds in emerging markets are considered high-quality by major rating firms, meaning they carry a low default risk.


Jim Sinclair’s Commentary

Inflation and recession plus difficulties is the distribution of key consumer items.

UPDATE 1-Venezuela confirms recession, inflation hits 63.6 percent in Nov
Tue Dec 30, 2014 4:47pm EST
(Adds central bank statement, comment by opposition leader, data)
By Andrew Cawthorne and Diego Ore

Dec 30 (Reuters) – Venezuela entered a recession in 2014, with the economy shrinking in the first three quarters, the Central Bank said on Tuesday, blaming political opponents for the dismal figures.

In a statement, the bank said GDP contracted 4.8 percent in the first quarter, versus the same period of last year, then it fell a further 4.9 percent in the second quarter and shrank 2.3 percent in the third quarter.

The statement added that 12-month inflation, which is the highest in the Americas, reached 63.6 percent in November.

The central bank statement, confirming an economic contraction widely forecast by analysts, came just before President Nicolas Maduro was about to start a news conference in which he was expected to announce economic changes.

Venezuela’s socialist government blames political opponents, who protested in the streets for four months earlier this year, for damaging the South American OPEC nation’s economy. The protests resulted in violence that killed 43 people.

"These actions against public order blocked the correct distribution of basic goods to the population, as well as the normal development of production of goods and services," the bank statement said.

"This resulted in an inflationary spike and a fall in economic activity."

Opponents say Venezuela’s economic crisis is a consequence of 15 years of socialist policies, begun by Maduro’s predecessor Hugo Chavez, who ruled from 1999 to 2013 before his death from cancer.


US Construction Spending Slips 0.3 Pc.t in November
WASHINGTON — Jan 2, 2015, 10:01 AM ET
By JOSH BOAK AP Economics Writer

A sharp slowdown in government-built schools and infrastructure caused U.S. construction spending to fall slightly in November.

The Commerce Department says construction spending slipped 0.3 percent in November, after having climbed 1.2 percent in October.

Much of the decline came from a 1.7 percent retreat in government expenditures. Publicly-built school spending fell 2.5 percent, while the transportation, health care and public safety sectors also fell.

Private construction spending rose a modest 0.3 percent in November. Home-building climbed 1 percent in November, offsetting the declines in the office, commercial and health care-related construction.

Total construction spending has jumped 2.4 percent from a year ago to $974.9 billion.


Jim Sinclair’s Commentary

More on the stunning recovery.

Manufacturing in U.S. Expanded Less Than Forecast in December
By Shobhana Chandra 2015-01-02T15:00:00Z

Manufacturing in the U.S. cooled in December, settling into a more sustainable pace of growth as the year drew to a close.

The Institute for Supply Management’s factory index dropped to a six-month low of 55.5 from 58.7 in November, a report from the Tempe, Arizona-based group showed today. The reading in October matched a three-year high. Figures greater than 50 indicate growth and the median forecast in a Bloomberg survey of economists called for a December reading of 57.5.

A slowdown in orders growth indicates companies are beginning to scale back capital spending plans as overseas markets slow and lower oil prices hit American oil producers. At the same time, U.S. factory floors will probably stay busy early this year as employment gains and cheap gasoline boost consumer spending.

“We’d get more acceleration in manufacturing if there was any pickup in global markets,” Gennadiy Goldberg, U.S. strategist at TD Securities USA LLC in New York, said before the report. “The manufacturing outlook is still pretty solid. As the labor market strengthens and consumer sentiment improves, we’ll see stronger demand.”

The purchasing managers’ index averaged 55.8 in 2014, the best for any year since 2010. Economists’ estimates in the Bloomberg survey for the December index ranged from 54 to 59.3.

The ISM group’s new orders gauge declined to 57.3 in December from 66, and a measure of production dropped to 58.8 from 64.4. An index of export demand fell to 52 from 55, the biggest one-month decline in 2014.

The ISM group’s factory employment measure increased to 56.8 in December from 55.5 the prior month.

The index for orders waiting to be filled decreased to 52.5 from 55.


Jim Sinclair’s Commentary

Lots of talk, modest action.

Draghi Warns Of Rising Deflation Threat In Eurozone, Hints At QE
Friday January 02, 2015 3:02 AM

VIENNA ( Alliance News ) – European Central Bank President Mario Draghi said that the risk of deflation in the euro area has risen over the months and the central bank is preparing to react to such a threat, if necessary.

His comments, suggesting that the ECB is moving closer to unleashing full-blown quantitative easing, including sovereign bond purchases, dragged the euro to its lowest level in more than four years.


Jim Sinclair’s Commentary

Business and the Dow moving in tandem. How unusual.

U.S. Stocks Decline on Factory Data; Treasuries Advance
By Jeremy Herron and Joseph Ciolli  Jan 2, 2015 10:45 AM ET

U.S. stocks fell after a third annual advance, as investors assessed data showing manufacturing cooled. Bonds gained and the dollar strengthened amid speculation the Federal Reserve will raise rates as other central banks extend stimulus.

The Standard & Poor’s 500 Index fell 0.3 percent at 10:44 a.m. in New York. Energy shares in the gauge slid 0.8 percent with the price of crude. The Stoxx Europe 600 Index sank 0.4 percent while the as the euro weakened to a 4 1/2-year low. The dollar rose versus all of its 16 major peers. The yield on five-year German notes fell below zero for the first time while the rate on 10-year Treasury notes dropped seven basis points to 2.10 percent.

Manufacturing in the U.S. cooled in December, settling into a more sustainable pace of growth as the year drew to a close. European Central Bank President Mario Draghi said he can’t exclude the risk of deflation in the euro area, hinting that the likelihood of large-scale quantitative easing is increasing, according to an interview with German newspaper Handelsblatt. The Fed releases next week the minutes from its last policy meeting at which it pledged patience in raising interest rates even as growth showed signs of accelerating.

“Investors are looking for validation that the economy is, in fact, as strong as advertised,” Peter Sorrentino, a Cincinnati-based fund manager at Huntington Asset Advisors Inc., which oversees $1.8 billion, said in a phone interview. “There’s a nagging fear that the market is a bit overpriced for the actual speed of the economy. The market may struggle to find its footing here in the first couple of days until we get some more data points out.”


Posted at 2:32 PM (CST) by & filed under In The News.

Existing Home Sales Revised Lower (Again), Midwest Slumps For 6th Month In A Row
Tyler Durden on 12/31/2014 10:10 -0500

While existing home sales rose 0.8% (beating the 0.5% expectation) MoM in November, once again previous data was revised lower. On an unadjusted basis however, YoY home sales rose at only 1.7% – missing expectations of 2.6% growth. The Midwest region saw existing home sales drop again – for the 6th month in a row, down over 5% in that period.


As NAR’s Larry Yun explains…

“The consistent economic growth and steady hiring we’ve seen in the second half of this year is giving buyers enough assurance to consider purchasing a home before year’s end,” NAR chief economist Lawrence Yun said in a statement.

“With rents now rising at a seven-year high, historically low rates and moderating price growth are likely to entice more buyers.”

Which is all very odd given yesterday’s conference board consumer confidence saw "plans to purcahse a home" dropped once again…



Saudi Arabia Will Support Oil Price after US Fracking Suffers — Mishka Vom Dorp

The Brent crude oil price has fallen from $115 in June to under $58 per barrel as of December 30, 2014.1

A lower oil price is where production costs make all the difference. For a long time, analysts have suggested that US production is substantially more expensive and therefore sensitive to oil prices. This is where the rubber meets the road, as the coming months may reveal the extent of fragility, waste, or mismanagement within the oil industry — in the US and globally.

What is the reason for this prolonged and unforeseen event? Who wins and who loses as it shakes out?

Mishka vom Dorp joined our team in 2010. He is a broker at Sprott Global Resource Investments Ltd.

Mishka wrote the following note to his clients giving his take on the situation, and why he believes the Organization of Petroleum Exporting Countries (OPEC) is a major player in the oil take down:

I believe the oil price would bounce back if not for OPEC’s decision to keep up oil production at the same rate. Since I believe that Saudi Arabia will eventually consent to reducing its production, I believe now could be a good time to consider investing in specific oil companies — ones with low debt and the ability to continue producing over a 3-year timeframe at these prices.

The Organization of Petroleum Exporting Countries (OPEC)

Oil is plunging due to oversupply from the US and OPEC countries, a strong dollar, and weak demand.

So why did Saudi Arabia, the de facto leader of OPEC, ignore calls last month by poorer members — including Venezuela and Iran — to cut oil production to help stop sliding prices?

Wouldn’t it be in their interest to attempt to send the price of oil back to June’s levels?

After all, at a higher price, they could produce fewer barrels and extend the reserve life of their reservoirs but still make just as much money.

We can’t know what goes on behind closed doors, but one thing is for certain: the decisions made by OPEC have a real impact on the global economy.


Posted at 1:45 PM (CST) by & filed under In The News.

Greenspan Throws a Wet Blanket on Hopes for Growth Breakout
Tuesday, 30 Dec 2014 12:11 PM

Just when you thought the U.S. economy was roaring back to health, Former Federal Reserve Chairman Alan Greenspan is here to tell you otherwise.

“The United States is doing better than anybody else, but we’re still not doing all that well,” Greenspan, 88, said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “We still have a very sluggish economy.”

Greenspan said the economy won’t fully recover until American companies invest more in productive assets and the housing market bounces back.

“Almost all of the weakness in the last four, five, six years has been in long-lived investments” in capital goods and real estate, Greenspan said. “Until these pick up, we’re not going to get the kind of vibrant growth that everyone is hoping for.”

Greenspan, who retired from the Fed’s helm in January 2006, said he expects growth to dip below a 3 percent annual rate in the fourth quarter of this year. His forecast is in line with the estimate of 2.5 percent in a Bloomberg survey of economists.


The ICE Just Banned Market Manipulative "Momentum Ignition" Trading
Tyler Durden on 12/30/2014 10:34 -0500

Back on September 8, we reported some bad news and some good news:

The good news: starting September 15, 2014 the CME said it would no longer tolerate what is affectionately calls "Disruptive market practices." This is what we unaffectionately called HFT-market rigging practices including frontrunning, quote stuffing, churning, subpennying and so on.

The bad news: the CME effectively admitted that it was not only tolerating and turning a blind eye toward such disruptive market practices until this point, in many cases it was compensating the "liquidity providing" perpetrators.

Today we can share the same pair of good and bad news: overnight the ICE Exchange (proud recent owner of the NYSE) decided to join the CME and reported, that "Effective January 14, 2015, subject to conclusion of the applicable regulatory review period, the Exchange will implement amendments to Rule 4.02 which consolidate the rules prohibiting disruptive trading into new subparagraph (l) and add language to provide additional clarification as to the types of practices that are prohibited."

As the bulletin below shows, the ICE is now merely the latest futures exchange where the most glaring forms of HFT market abuse will no longer be tolerated. From the just released notice:

Rule 4.02 – Trade Practice Violations

In connection with the placement of any order or execution of any Transaction, it shall be a violation of the Rules for any Person to:

(l) Engage in any other manipulative or disruptive trading practices prohibited by the Act or by the Commission pursuant to Commission regulation, including, but not limited to:

(1) Entering an order or market message, or cause an order or market message to be entered, with:

(A) The intent to cancel the order before execution, or modify the order to avoid execution;

(B) The intent to overload, delay, or disrupt the systems of the Exchange or other market participants;

(C) The intent to disrupt the orderly conduct of trading, the fair execution of transactions or mislead other market participants, or

(D) Reckless disregard for the adverse impact of the order or market message.

(2) Knowingly entering any bid or offer for the purpose of making a market price which does not reflect the true state of the market, or knowingly entering, or causing to be entered, bids or offers other than in good faith for the purpose of executing bona fide Transactions.



Consumer Confidence Misses 2nd Month In A Row Despite Record Stocks, Low Gas Prices
Tyler Durden on 12/30/2014 10:08 -0500

Having missed expectations by the most since June 2010 in November, The Conference Board’s measure of Consumer Confidence missed once again. The previous dip was revised higher (because ‘revisions’ is exactly what makes sense in a confidence survey) from 88.7 to 91.0 but the current level printed 92.6 against expectations of 93.9. This is the 3rd miss of the last 4 months (as stocks hit record highs and gas prices collapse?). Employment "not so plentiful" rose to its worst level in a year, employment expectations going forward dropped as did income growth expectations.



Posted at 2:06 PM (CST) by & filed under In The News.

Magic Growth Numbers
Paul Craig Roberts
December 26, 2014

Everyone wants good news, so the government makes it up. The latest fiction is that US real GDP grew 4.6% in the second quarter and 5% in the third.

Where did this growth come from?

Not from rising real consumer incomes.

Not from rising consumer credit.

Not from rising real retail sales.

Not from the housing sector.

Not from a trade surplus.

The growth came from a Bureau of Economic Analysis survey of consumer spending on services. The BEA found that spending on Obamacare drove the US real GDP growth to 5% in the third quarter.

In America, unlike in other countries, a huge chunk of medical spending goes to insurance company profits, not to health care. Another big chunk goes to paperwork, which has a variety of purposes such as collecting personal information on patients and combating fraud (probably the paperwork costs more than fraud). Another chunk goes for tests and procedures in order to justify further procedures. For example, if a doctor thinks a patient’s diagnosis requires a MRI, he must often first order an x-ray to establish that a cheaper procedure does not suffice. If a cancerous skin growth needs to come off, first a biopsy must be done to establish that it is a cancer so that a needless removal is not performed. And, of course, medical practicians must order unnecessary tests in order to protect themselves from the liability of relying on their medical judgment.

To regard any of these expenses as economic growth is farfetched.

There are sampling and other problems with the survey of personal consumption, and apparently Obamacare spending was all dumped into the third quarter. Why the third quarter?



Exposed – Dangerous 2015 Ahead As Global Governments Plan To Steal Money

Today a 40-year market veteran sent King World News an incredibly important piece that exposes global governments and their treacherous plan to steal people’s money.  This piece exclusively for KWN also cautions readers around the world to expect a wild and dangerous ride in the coming year.

By Robert Fitzwilson of The Portola Group

December 29 (King World News) – In mid-December, the U.S. Treasury finalized the rules for what looks like a fairly innocuous addition to the retirement plan menu, the so-called “myRA”. We say “finalized” with a wink as we all know that what has been promulgated is simply the proverbial camel nose under the tent. It looks benign and even positive, but the program clearly has the agenda of redirecting the retirement savings away from the current IRAs and other plans enjoyed as the primary savings vehicle for most Americans. 

The target has to be the near $20 trillion of retirement assets in the United States. The final incarnation of this retirement model will most likely be adopted globally by other governments, so those living outside of the U.S. should pay heed as well….


Posted at 1:09 PM (CST) by & filed under Jim's Mailbox.


It looks like China is expanding their sphere of influence even more.

CIGA Larry.

China Extends Forwards, Swaps Trading to Three More Currencies
By Bloomberg News Dec 26, 2014 12:57 AM MT

China will allow trading in forwards and swaps between the yuan and three more currencies in a bid to reduce foreign-exchange risks amid increased volatility in emerging markets.

The China Foreign Exchange Trade System will begin such contracts with Malaysia’s ringgit, Russia’s ruble, and the New Zealand dollar from Dec. 29, it said in a statement on its website today. That will extend the yuan’s swaps trading to 11 currencies on the interbank foreign-exchange market.

A plunge in Russia’s ruble this month to a record low sparked a selloff in developing nations’ assets, leading to a surge in currency volatility. The new contracts come amid efforts by China to increase the international use of the yuan, as the world’s second-largest economy promotes it as an alternative to the U.S. dollar for global trade and finance. Malaysia and Russia are China’s eighth and ninth biggest trading partners, according to data compiled by Bloomberg.

“This will provide companies with better hedging tools, and at the same time, make currency trading more efficient,” said Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong. “China won’t stop yuan globalization or capital-account opening because of the volatility in emerging market currencies.”

The CFETS is an agency under the People’s Bank of China.


Posted at 2:42 PM (CST) by & filed under In The News.

CBR launches SWIFT alternative for domestic payments
Published time: December 26, 2014 13:06

The Central Bank of Russia (CBR) has launched a new SWIFT-style payment service aimed at moving away from Western financial dominance. The system is already operating, and will be fully functional within six months.

"The new service was launched in order to ensure smooth and safe transmission of financial messaging within the country, and is another step towards improving the system of services provided by the Bank of Russia,” said the bank statement Friday.

The regulator said the new service will allow credit institutions to transmit messages in a SWIFT format through CBR to all Russia’s regions without restrictions.

The calls to disconnect Russian banks from the global interbank SWIFT system came amid the deterioration of relations between Russia and the West and the introduction of sanctions.

However, SWIFT itself does not intend to switch Russia off from the system, saying a number of countries put pressure on it, and insists it is not joining the anti-Russian sanctions.

Alla Bakina, head of the CBR’s national payment system department said in November the cost of transmitting financial messaging will be comparable to those of similar services in the market.

The deputy head of the department Ramilya Kanafina said the bank plans to complete Russia’s switch to its SWIFT alternative by May 2015.

SWIFT is a global banking transaction system used by most international banks. The information the system carries, including payment instructions, is securely exchanged between financial institutions. It began operating in 15 countries in 1973 and is now used in 210 countries.


Posted at 4:26 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Mr. Williams shares the following with us.

- Booming GDP – Strongest Growth in More than a Decade Is Nonsense 
- Magnitude of GDP Revisions Suggests Unstable Data and Unusual Internal-Reporting Issues at Bureau of Economic Analysis 
- Basic Durable Goods Orders Slowed Sharply in Third-Quarter 2014, On Track for Fourth-Quarter Contraction 
- Home Sales Also Showed Patterns of Stagnation and Renewed Downturn

"No. 684: GDP Revision, November Durable Goods, New- and Existing-Home Sales" 


C.D.C. Ebola Error in Lab May Have Exposed Technician to Virus

A laboratory mistake at the Centers for Disease Control and Prevention may have exposed a technician to the deadly Ebola virus, federal officials said on Wednesday. The technician will be monitored for signs of infection for 21 days, the incubation period of the disease. A small number of other employees, fewer than a dozen, who entered a lab where the mistake occurred will also be assessed for exposure.

The error occurred on Monday when a high-security lab at the C.D.C. in Atlanta, working with Ebola virus from the epidemic in West Africa, sent samples that should have been inactivated to another C.D.C. laboratory, which was down the hall. But the lab sent out the wrong samples, ones that had not been inactivated and that may have contained the live virus. The second lab was not equipped to handle the live virus. The technician who worked with the samples wore gloves and a gown, but no mask, and may have been exposed.

The error was discovered on Tuesday.

The accident is especially troubling because dangerous samples of anthrax and flu were mishandled at the C.D.C. in June, eroding confidence in an agency that has long been one of the most respected scientific research centers in the world. The C.D.C. promised last summer to improve its safety procedures.


Jim Sinclair’s Commentary

The downtrend in the price of oil is not all good for the USA as Financial TV claims continually.

Oil Drillers Are Under Pressure to Scrap Rigs to Cope With Downturn
By David Wethe Dec 24, 2014 12:59 PM ET

Offshore oil-drilling contractors, who last year were able to charge record rates for their vessels, are now under pressure to scrap old rigs at an unprecedented pace.

The recent five-year low in oil prices is threatening an industry already grappling with a flood of new vessels and weakening demand. More than 200 new rigs are scheduled to be delivered in the next six years. That’s a 25 percent jump from the number currently under contract.

To cope, many rig owners will try to keep revenue up by culling older vessels to balance supply and demand.

“The older assets, particularly those built before the 2000 time period, are really less desired by the industry,” James West, an analyst at Evercore ISI in New York, said in a phone interview. Those vessels “are only causing the customer base to use those rigs against higher quality rigs to get pricing lower.”

Oil Prices

About 140 older rigs would need to be scrapped to make way for the new vessels scheduled for delivery by 2020, according to Andrew Cosgrove, an analyst at Bloomberg Intelligence. That pace would double the number scrapped in the previous six years and even eclipse the 123 vessels retired since 2000, according to data compiled by Bloomberg.

Booming offshore exploration earlier in the decade encouraged a flurry of rig orders. That’s now leading to a potential market crash in a global industry pegged to generate revenue of $61.5 billion this year. Low oil prices are compounding the problem, alarming investors.


Excited Puppy Starts To Dance After Spotting Its Owner
The Huffington Post | By Jade Walker

2015 Will Be A Year Of Surprise, Panic, Desperation & Radical Change

Today one of the greats in the business warned King World News that 2015 will be a year of panic, desperation, and radical change for the world.  He also said 2015 will be a year of surprises that will have an incredible impact not only people but also major markets and economies around the globe.

Egon von Greyerz:  “As we approach 2015 the world is on the cusp of a deflationary collapse.  Central banks around the world are fighting trying desperately keep their economies afloat.  Zero percent interest rates are no longer helping, so negative interest rates have been introduced in an attempt to create inflation….