Jim Sinclair’s Commentary
John Williams shares his latest.
- The Happy News Begins to Falter
- Third-Quarter GDP Growth Faces Downside Revision, Given Deteriorating September Trade and Construction Reporting
- Trade Deficit Widened Sharply
- Quarterly Construction Spending Growth Turned Negative from Positive
- Risk of Unexpectedly Weak October Payrolls
- Craziness in the Financial Markets Cannot Prevail, Assumed Underlying Reality Is Not There or Will Prove Fleeting
"No. 671: September Trade Deficit and Construction Spending "
How The BEA Goosed 3rd Quarter GDP——With A Phony 74% Leap In Defense Spending
by Contributor • November 3, 2014
By James Pethokoukis
And from this a thousand conspiracy-themed blog posts will be born. Here is Capital Economics on the surprisingly strong (3.5% vs. 3.0% forecast) third-quarter US GDP report:
– The reported leap in third-quarter defence spending, which added 0.7 percentage points to annualised GDP growth was, as far as we can tell, largely due to a failure of the BEA’s seasonal adjustment process. As a result, we expect defence spending to plunge this quarter, subtracting a similar amount from fourth-quarter GDP growth.
– All of the upside surprise in third-quarter GDP growth (the 3.5% outturn was well above the consensus forecast of 3.0%) can be explained by the 4.6% increase in government spending, which added 0.8 percentage points (ppts) to overall growth. Moreover, nearly all of that boost was due to a 21% leap in Federal defence consumption. That’s the largest increase since the second Iraq war in early 2003. Drilling down further, more than two-thirds of the rise was due to a 74% annualised leap in defence spending on support services for installation, weapons and personnel. This is unusual given that spending on such services typically makes up just 25% of total defence spending.
– Some of the rise in the third quarter could be due to the escalation in military action in the Middle East, but most of it appears to be due to a failure of the seasonal adjustment process. Looking at the averages over the past five years, defence support services spending has increased by 38% annualised in the third quarter only to fall by an average of 34% annualised in the fourth quarter. (See Chart 2.) The BEA all-but confirmed this problem when in an email it told us that it is “trying to determine if any methodology changes are necessary”.
German Precious Metal Dealers Report Huge Run on Silver Coins
Montag, 3. November 2014, 10:31 Uhr | Eingetragen von Goldreporter
Brisk sales not only on silver coins (subject to differential taxation in Germany), but increased demand also for higher taxed silver bullion.
Precious metal dealers in Germany have literally been run down after the latest slump in gold and silver. Wholesalers already expect deferred deliveries.
The latest plunge in gold and silver late last week has led to a sharp increase in demand by German precious metals investors, which also continued on Saturday. There was a particularly strong demand for silver coins. “On Thursday and Friday people had to draw numbers in order for us to control the run”, reports Andreas Heubach, CEO of Heubach Edelmetalle in Nuremberg. “On both days we sold each around 40,000 silver ounces – incredible”, he said. “Demand is back – and hysteria as well”, he evaluated.
“The run is tremendous, even today on a Saturday”, Christian Brenner, CEO of Philoro Edelmetalle GmbH in Leipzig and Berlin reports. Despite the high counter trade level in September, demand has increased by 100 percent, online-trade even soared by 300 percent.
“Run is not the right expression“, says René Lehmann of Münzland in Dresden. “We’ve seen up to 80 percent of our regular customers taking advantage of the slide to build up more positions. On those two days, on Thursday and Friday, we made approximately 50 percent of our monthly revenue”, he reports toGoldreporter. Maple Leaf (1 oz.), 1 kg Lunar and ½ oz. Great White Shark were particularly in demand, since Münzland had a special offer on them. In gold especially 1 oz. Maple Leaf and 1 oz. bars have been purchased. The ratio of buyers to sellers has generally been at 50 to 1.
US Mint Bullion Coin Sales Rally in October
by Mike Unser on November 4, 2014
American Eagle bullion coin sales scored multi-month highs in October
Demand for United States Mint bullion products again soared in October — even as gold and silver prices tumbled — with silver coin sales the strongest since January 2013 and gold coin sales the highest since January 2014.
A sales summary across U.S. Mint bullion products for last month and for the first ten months of this year follows.
American Eagle Silver Bullion Coins
American Silver Eagles surged by 5,790,000 coins last month, advancing 39.9% over September sales of 4,140,000 coins and hurdling the year ago level of 3,087,000 coins by 87.6%. October sales were the strongest since January 2013 when U.S. Mint authorized purchasers ordered 7,498,000. Overall, the month ranks fourth highest in the 99.9% pure silver coin’s 29-year history.
Year-to-date sales stand at 38,041,000 coins for the second quickest pace ever, and are down just 2.9% from the January to October 2013 period when sales reached 39,175,000 coins. Last year, American Silver Eagles hit an all-time record at 42,675,000 coins. This year’s Silver Eagle sales total is already higher than annual sales of all but 2 years since the coins debuted in 1986.
Factory Orders Slide 2nd Month In A Row (Did It Snow In September?)
Tyler Durden on 11/04/2014 10:11 -0500
Factory orders in September printed a drop of 0.6% MoM following August’s 10.0% revised tumble off the spurious spending in July. This is the first 2-month-in-a-row drop in factory orders since January – amid the economy-crushing polar vortex.
Did it snow in September?
Jim Sinclair’s Commentary
Some are waking up to reality.
Singer’s Elliott Says U.S. Growth Optimism Unwarranted as Data ‘Cooked’
By Kelly Bit Nov 4, 2014 10:43 AM ET
Paul Singer’s Elliott Management Corp. said optimism on U.S. growth is misguided as economic data understate inflation and overstate growth, and central bank policies of the past six years aren’t sustainable.
The market turmoil in the first half of October may be a “coming attractions” for the next real crash that could turn into a “deep financial crisis” if investors lose confidence in the effectiveness of monetary stimulus, Elliott wrote in a third-quarter letter to investors, a copy of which was obtained by Bloomberg News.
“Nobody can predict how long governments can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth,” New York-based Elliott wrote. “When confidence is lost, that loss can be severe, sudden and simultaneous across a number of markets and sectors.”
Better-than-forecast economic data and improving earnings reports have helped the Standard & Poor’s 500 Index rebound 8 percent from a six-month low on Oct. 15. U.S. stocks have more than tripled from their 2009 low when including dividends, and government bonds as measured by the Bank of America Merrill Lynch Treasury Index have rallied 26 percent in the past six years.
Jim Sinclair’s Commentary
GOP Senate Takeover Would Put Fed Under Microscope
By Dow Jones Business News, November 04, 2014, 07:52:00 AM EDT
By Victoria McGrane
WASHINGTON–A Republican takeover of the U.S. Senate on Election Day would promise increased political turbulence for the Federal Reserve.
Financial executives say a GOP-led Senate would ratchet up congressional scrutiny of the central bank’s interest- rate policies as well as its regulatory duties as overseer of the nation’s largest financial firms. Republicans haven’t controlled the Senate since before the 2008 financial crisis and recession, which put a spotlight on the Fed and its powers.
"If the Republicans take control of the Senate and thus have control of both the House and the Senate–two words for the Federal Reserve: Watch out," said Camden Fine, president of the Independent Community Bankers of America.
Leading the GOP wish list in dealing with the Fed would be legislation to open the central bank to more scrutiny of its interest-rate decisions, using congressional audits of monetary-policy matters that Fed officials strongly oppose. Many Republican lawmakers also want to require the Fed to use a mathematical rule to guide interest-rate decisions or shift its focus more directly to inflation rather than inflation together with unemployment. All of that would come on top of heightened bipartisan scrutiny of the Fed’s regulatory moves.
Many Republicans oppose the unconventional efforts the central bank has taken to bolster the U.S. economy over the past several years. The Fed last week announced the end of its long-running bond-buying stimulus program, known as quantitative easing. But that won’t quell GOP criticism, since many Republicans want Fed officials to move quickly now to raise interest rates from near zero and shrink the central bank’s balance sheet, which has climbed to near $4.5 trillion.
The GOP is widely expected to retain control of the House, where the Fed has already been the focus of legislation it sees as hostile. Under a Republican-led Senate, Alabama Sen. Richard Shelby would likely become the next chairman of the Senate Banking Committee, which oversees the Fed.