Posted at 5:56 PM (CST) by & filed under In The News.

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Jim Sinclair’s Commentary

Mr. Williams shares the following with us:

- Expectations Should Turn Negative for Revised First-Quarter GDP, Based on Quarterly Trade Deterioration
- Real Construction Spending Contracted with Full First-Quarter Reporting
- Retail Sales Benchmark Revision Showed Deeper Contraction and Slower “Recovery” in Sales Activity than Previously Indicated

No. 716: March Trade Deficit, Construction Spending, Retail Sales Benchmark Revision ”
PDF: http://www.shadowstats.com

 

Chuck Norris Pledges To Protect Texas From Federal Invasion
Tyler Durden on 05/05/2015 15:45 -0400

Last week, former Texas lawmaker Todd Smith — a 16-year veteran of the Texas House of Representatives and self-proclaimed Last of the Fact-Based Republican Mohicans — took issue with Governor Greg Abbott’s decision to call in the Texas State Guard to monitor training exercises set to be conducted in the state between July and September by members of the Green Berets, Navy SEALS, and various other US army personnel. The drills — known as Jade Helm 15 — have become the subject of fierce debate among some Texans who contend that the US Special Operations Command may be using Jade Helm as an excuse to infiltrate the state in order to pave the way for an eventual takeover by the federal government.

While it’s not entirely clear what a “takeover” would constitute given that Texas is of course part of the United States already, locals recently got an opportunity to voice their concerns at an information session in Bastrop with Lt. Col. Mark Lastoria. Some attendees questioned whether the government intended to confiscate their firearms while others asked if the army would be bringing in ISIS fighters as part of the training program (as we learned on Sunday, there will apparently be no need to import ISIS fighters into Texas as they appear to have already made themselves at home in Garland).

Despite assurances that Washington currently has no plans to re-annex the state, the paranoia has only grown over the past two weeks fueled in part by a map that appears in the unclassified Jade Helm slide deck which designates Texas as a “hostile” territory. Of course the same map also identifies San Diego as harboring a militant insurgency, so the US Spec Ops Command probably assumed it would not be taken literally, but to some Texans the whole ordeal is anything but humorous and Todd Smith’s implicit suggestion that anyone who was suspicious of the federal government’s intentions in the state is a “hysterical idiot” didn’t help.

So, with the stage thus set, and with some concerned citizens convinced that a federal invasion of Texas is imminent, someone had to intervene to protect the territorial integrity of The Lone Star State and we imagine that when it comes to thwarting hostile incursions by thousands of well-trained soldiers, there’s no one better suited for the job than Chuck Norris and/or his famous alter ego, Walker Texas Ranger.

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Jim Sinclair’s Commentary

To our Canadian friends – welcome to the police state.

Canada poised to pass anti-terror legislation despite widespread outrage
Criticism of anti-terror bill C-51 has united a diverse array of prominent opponents as many fear the legislation creates the potential for a police state
John Barber in Toronto
Tuesday 5 May 2015 06.30 EDT Last modified on Tuesday 5 May 2015 09.03 EDT

Widespread protest and souring public opinion has failed to prevent Canada’s ruling Conservative Party from pushing forward with sweeping anti-terror legislation which a battery of legal scholars, civil liberties groups, opposition politicians and pundits of every persuasion say will replace the country’s healthy democracy with a creeping police state.

Prime Minister Stephen Harper is looking forward to an easy victory on Tuesday when the House of Commons votes in its final debate on the bill, known as C-51. But lingering public anger over the legislation suggests that his success in dividing his parliamentary opposition may well work against him when Canadians go to the polls for a national election this fall.

No legislation in memory has united such a diverse array of prominent opponents as the proposed legislation, which the Globe and Mail newspaper denounced as a a plan to create a “secret police force”.

The campaign to stop Bill C-51 grew to include virtually every civil-rights group, law professor, retired judge, author, editorialist and public intellectual in Canada.

“The scale of information sharing being proposed is unprecedented, the scope of the new powers conferred by the act is excessive, particularly as these powers affect ordinary Canadians, and the safeguards protecting against unreasonable loss of privacy are seriously deficient,” declared Daniel Therrien, Privacy Commisioner of Canada, in a typical statement. “All Canadians would be caught in this web.”

“Stephen Harper is attacking our rights & freedoms,” author Margaret Atwood tweeted, urging her local Member of Parliament to “do the right thing and #VoteAgainstC51”.

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Jim Sinclair’s Commentary

Maybe those people who star in the series “Life Below Zero,” are the smartest people on the planet.

Lawmakers in France Move to Vastly Expand Surveillance
By ALISSA J. RUBINMAY 5, 2015

PARIS — At a moment when American lawmakers are reconsidering the broad surveillance powers assumed by the government after Sept. 11, the lower house of the French Parliament took a long stride in the opposite direction Tuesday, overwhelmingly approving a bill that could give the authorities their most intrusive domestic spying abilities ever, with almost no judicial oversight.

The bill, in the works since last year, now goes to the Senate, where it seems likely to pass, having been given new impetus in reaction to the terrorist attacks in and around Paris in January. Those attacks, which included the offices of the satirical newspaper Charlie Hebdo and a kosher grocery, left 17 people dead.

As the authorities struggle to keep up with the hundreds of French citizens who travel to and from battlefields in Iraq and Syria to wage jihad, often lured over the Internet, the new steps would give the intelligence services the right to gather potentially unlimited electronic data.

The provisions, as currently outlined, would allow the intelligence services to tap cellphones, read emails and force Internet companies to comply with requests to allow the government to sift through virtually all of their subscribers’ communications. Among the types of surveillance that the intelligence services would be able to carry out is bulk collection and analysis of metadata similar to that done by the United States’ National Security Agency.

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Worst Ever US Trade Deficit Excluding Crude Hints At Upcoming QE4
Submitted by Tyler Durden on 05/05/2015 08:51 -0400

Remember that in a beggar thy neighbor world, where currency warfare has once again broken out between the US, Europe and Japan, for every winner there is a loser. In this case, the loser is the one country that has decided that a strong currency is a great thing for its economy (if only for the time being): that would be the US.

Why is this relevant? Because as the chart below shows, US trade excluding Petroleum, just crashed to $43.7 billion, the worst print in the history of the series, suggesting that portrayals of the US as a resurgent export powerhouse are completely erroneous, and that instead the US is as big a net importer of goods and services (and soon to be oil) as ever.

Biggest ever trade deficit (ex Petroleum)

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The crucial point here is that with Shale production now expected to decline (if only modestly: after all those junk bond investors are desperate to keep the MotherFracking dream alive), the US will soon have to import more oil which will require more debt issuance to fund the soaring trade deficit which will require more QE to monetize the deficit.

And thus the stage is set for QE4.

One thing is sure – if the trade deficit surge continues, and Q1 GDP tumbles below 0%, the Fed will be right back at the frontlines, CTRL-Ping the US economy right back into “beggar thy global neighbor” competitiveness. Because as we noted, with Q1 GDP now assured a negative print, and with Q2 GDP according to the Atlanta Fed at 0.8% and likely going lower if there are several “unexpected” spring showers, the US may enter a technical recession as soon as June 30.

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Jim Sinclair’s Commentary

Here is the rabbit hole we are going down taken there by our financial leaders.

China Hails Ties With Russia Aimed at Maintaining World Balance of Power
© AFP 2015/ POOL / SERGEI ILNITSKY

The high-ranking Chinese diplomat said that Russian-Chinese relations had reached a new level of development and the forthcoming visit of Xi Jinping to Moscow would facilitate further cooperation between Beijing and Moscow. The Chinese president will pay a three-day visit to Moscow on May 8-10, attending the Victory Day Parade on May 9 at the invitation of Russian President Vladimir Putin.

“Cooperation and coordination between China and Russia are needed to maintain the international balance of power and preserve the post-war world order. The participation of the leaders of the two countries in mutual events dedicated to the 70th anniversary of the Victory in World War II indicates that Russia and China, as the largest countries in the world and members of the United Nations, intend to maintain international order.”

According to the Chinese Vice Foreign Minister, Xi Jinping plans to hold talks with Vladimir Putin and Russian Prime Minister Dmitry Medvedev, as well as with WWII veterans, Russian experts working in China and journalists. He will also lay a wreath at the Tomb of the Unknown Soldier in Moscow.

It is expected that during Xi Jinping’s visit to Moscow, Russia and China will sign a number of agreements in the energy, aviation, space and finance sectors. In addition, Moscow and Beijing will discuss possibilities of further cooperation, including the Silk Road project.

Cheng Guoping added that a “good working relationship” and “personal friendship” between President Xi Jinping and President Vladimir Putin are “an important political basis for bilateral relations.”

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Posted at 2:58 PM (CST) by & filed under Jim's Mailbox.

Jim,

Supposedly friendly countries to the US are ignoring the US warning as exampled by India signing a deal with Iran. We are being taken less and less seriously by other countries of the world.

CIGA Larry

 

Jim,

Well, it appears that we are nearing the turn off point for the game of chicken being played in the European/Greek deal. I am sure one or the other will blink and turn off before the crash.

CIGA Larry

Posted at 11:46 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Here we go again creating more toxic paper which is in no one’s interest in the final analysis.

Wall Street’s Thinking About Creating Derivatives on Peer-to-Peer Loans
Investment funds can’t get enough
by Tracy Alloway and Matt Scully

It began with a seemingly wacky idea to reinvent banking as we know it. But no one is scoffing at peer-to-peer lending anymore — least of all, Wall Street.

Barely a decade old, “P2P” has gone mainstream and is now being co-opted by some of the big financial players it was supposed to bypass.

Investment funds can’t get enough of this business, which involves lending to people over the Internet and hoping they pay you back. Investors are snapping up the loans directly, while the banks are bundling them into securities, much as they did with subprime mortgages.

Now peer-to-peer lending and its Internet enablers like LendingClub Corp., the industry leader, are being pulled into the high-octane world of derivatives. While many hail Wall Street’s growing involvement, others warn investors could get carried away, as they did during the dot-com era and again during the mortgage mania. The new derivatives could help people hedge their risks, but they could also lure speculators into the market.

“It feels like the year 2000 again,” said Frank Rotman, a partner at QED Investors, an Alexandria, Virginia-based venture-capital firm that has invested in Prosper Marketplace Inc., Social Finance Inc. and 13 other P2P lending platforms. “Everyone is chasing ’it,’ but they don’t know what ’it’ is, and that is kind of scary.”

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China April Manufacturing Weakens Further in Final HSBC PMI

A Chinese manufacturing gauge trailed economists’ estimates in April as new orders declined, underscoring forecasts for policy makers to step up stimulus to shore up growth.

The final Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 48.9, missing the median estimate of 49.4 in a Bloomberg News survey and lower than the preliminary reading of 49.2. Numbers below 50 indicate contraction.

With economic expansion threatening to dip below the leadership’s 2015 target of about 7 percent — one state-affiliated group reportedly sees a 6.8 percent pace this quarter — officials have already loosened monetary policy. Anticipation of more measures to come has helped stoke a rally in stocks the past two months.

“China’s authorities are becoming more concerned about the economic downturn,” Wang Tao, chief China economist at UBS Group AG in Hong Kong, wrote in a note Monday. “In the next couple of months, we expect the government to speed up infrastructure investment with enhanced support from policy banks and cut the benchmark interest rate.”

The Shanghai Composite Index of stocks initially dropped after the PMI report, before recovering to be 0.9 percent higher as of 11:33 a.m.

The deterioration in the report contrasted with the official manufacturing PMI for April that suggested a stabilization.

More…

System-Wide Bail-In And Global Financial Meltdown
May 03, 2015

May 4 (King World News) – In recent trading days, the “bond kings”, Bill Gross and Jeff Gundlach, have been calling attention to the German Bunds. Gross called it “the shorting opportunity of a lifetime”, while Gundlach concurred pondering a possible 100-to-1 leveraged bet against the debt instruments. Almost on cue, the Bunds dropped precipitously in price….

It is not just German fixed income that is selling off. Below is a chart showing the going rates for the 10-year and 30-year U.S. Treasury bonds. The lower right portion of the chart tells us that something very important could be unfolding and confirming that interest rates are not just heading higher in Europe, but elsewhere around the globe. The bulk of the issued German Bunds are of the 10-year and 30-year duration.

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Texas shooting: Isil claims responsibility for first US attack
A series of tweets by Islamic State fighters claim that the two gunmen who attacked an event in Garland, Texas, were doing so in the name of Isil
By Harriet Alexander
2:18PM BST 04 May 2015

Islamic State fighters have claimed responsibility for the attempted shooting at a Texas anti-Islam event on Sunday night, in what is thought to be the first such attack on American soil.

The gunmen attempted to attack a meeting in Garland, near Dallas, where participants drew cartoons of the Prophet Mohammed.

Organisers knew that the event would be provocative, and it had caused a stir among extremists – who ten days before the attacks called for a Charlie Hebdo-style shooting.

One of the suspects was identified by ABC News as Elton Simpson, an Arizona man who was previously the subject of a terror investigation, citing a senior FBI official.

Police on Monday morning raided the Phoenix home of one of the suspected gunmen, FBI officials told CNN.

A week before Sunday’s shooting, the Transport Security Administration warned of an imminent attack.

The essence of the warning, according to a source speaking to The Intercept, is that "ISIS plans an attack on US soil."

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Jim Sinclair’s Commentary

The lessons of history are lost to the masters of today’s financial world.

Is there really a New Normal?

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May 4, 2015 
Sovereign Valley Farm, Chile

It was another time. Another era. Another superpower.

Great Britain’s was the largest economy in the world in 1873. And it showed.

The British pound dominated world trade and was the most widely used reserve currency on the planet.

And London was the undisputed epicenter of global finance.

There was more money in London, in fact, than in just about every other major financial center in the world combined.

Britain was clearly at the top of the world.

But in 1873, a financial reporter named Walter Bagehot published a book that shined a huge spotlight on some of this phony prosperity.

Bagehot was Editor-in-Chief of The Economist at the time. He was a brilliant finanical thinker, and the book,Lombard Street: A Description of the Money Market, was his masterpiece.

For example, the book describes how, even though the British banking system was the most widely used and powerful in the world, it was dangerously overleveraged:

"There was never so much borrowed money collected in the world as is now collected in London," writes Bagehot.

He further shines a huge spotlight on the risks of illiquidity, describing how Britain’s largest banks only held a very small percentage of their customer’s funds in cash:

"[T]here is no country at present, and there never was any country before, in which the ratio of the cash reserve to the bank deposits was so small as it is now in England."

He continues:

"[T]he amount of that cash is so exceedingly small that a bystander almost trembles when he compares its minuteness with the immensity of the credit which rests upon it."

Sound familiar?

In Bagehot’s day, banks invested or loaned out the vast majority their customers’ savings, only holding around 10% to 15% of deposits in reserve. Bagehot found this abysmally low.

Yet today some of the largest banks in the world hold as little as 3%. And debt levels have hit records never before seen in the history of the world.

Our system is even more leveraged and more indebted.

But the similarities don’t stop there.

Bagehot reminds readers of the spectacular collapse of banking house Overend, Gurney, and Co… sort of the Lehman Brothers of its day.

Overend had engaged in pitifully stupid behavior, run itself into insolvency, and was not bailed out by the government.

Overend failed in 1866, and it nearly dragged down the entire financial system with it.

It had been only seven years since that crisis when he wrote Lombard Street. But the major banks were right back to their same old reckless, irresponsible behavior. He writes:

"Even the great collapse of Overends, though it caused a panic, is beginning to be forgotten."

Bagehot also blasts the central banking system (dominated by the Bank of England) which had effective control over the economy:

"All banks depend on the Bank of England, and all merchants depend on some bank."

Of course, no one truly understood how that system worked. Everyone just had confidence that the central bankers were smart guys and absolutely would not fail:

"[F]ortunately or unfortunately, no one has any fear about the Bank of England. The English world at least believes that it will not, almost that it cannot, fail."

"[N]o one in London ever dreams of questioning the credit of the Bank, and the Bank never dreams that its own credit is in danger."

But as Bagehot points out, the data showed otherwise:

"Three times since 1844 [the Bank of England] has received assistance, and would have failed without it. In 1825, the entire concern almost suspended payment; in 1797, it actually did so."

Clearly these central bankers weren’t particularly good at their jobs. Bagehot sums it up like this:

"[W]e have placed the exclusive custody of our entire banking reserve in the hands of a single board of directors not particularly trained for the duty—who might be called ‘amateurs’. . ."

"But still there is a faith in the Bank, contrary to experience, and despising evidence."

This is miraculously dim-witted– to assume the men behind the curtain are going to get it right, and to willfully ignore the objective evidence which shows:

there is an unsustainble amount of debt in the system

the banking system is dangerously illiquid and overleveraged

banks are still engaged in the same risky behavior, 7 years after a major crisis

the central bank has far too much control over the economy

yet is run by amateurs

and is itself is at risk of failing

Of course, it wasn’t too long after this that Britain was overtaken as the world’s #1 economy, military power, and reserve currency.

Whew. Sounds crazy. Good thing we learned those important lessons, and that our modern system is so much better.

Until tomorrow,

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Simon Black 
Founder, SovereignMan.com

Extreme secrecy eroding support for Obama’s trade pact
Classified briefings and bill-readings in basement rooms are making members queasy.
By Edward-Isaac Dovere
5/4/15 5:40 AM EDT
Updated 5/4/15 11:54 AM EDT

The White House has been coordinating an administration-wide lobbying effort that’s included phone calls and briefings from Secretary of State John Kerry, Labor Secretary Tom Perez, Treasury Secretary Jack Lew, Agriculture Secretary Tom Vilsack, Commerce Secretary Penny Pritzker and others. Energy Secretary Ernest Moniz has been working members of the House Energy and Commerce Committee. Housing and Urban Development Secretary Julián Castro has been talking to members of his home state Texas delegation.

Officials from the White House and the United States trade representative’s office say they’ve gone farther than ever before to provide Congress the information it needs and that the transparency complaints are just the latest excuse for people who were never going to vote for a new trade deal anyway.

“We’ve worked closely with congressional leaders on both sides of the aisle to balance unprecedented access to classified documents with the appropriate level of discretion that’s needed to ensure Americans get the best deal possible in an ongoing, high-stakes international negotiation,” said USTR spokesman Matt McAlvanah.

Obama’s seeking a renewal of fast-track authority, which would empower him to negotiate trade deals that then go to Congress for up-or-down votes but not amendments. He says he needs that authority to complete the Trans-Pacific Partnership, a 12-country free trade agreement that he calls essential to stopping China from setting trade, labor and environmental standards in the Asia-Pacific region.

Administration aides say they can’t make the details public because the negotiations are still going on with multiple countries at once; if for example, Vietnam knew what the American bottom line was with Japan, that might drive them to change their own terms. Trade might not seem like a national security issue, they say, but it is (and foreign governments regularly try to hack their way in to American trade deliberations).

Moreover, many of the leaders of the opposition, administration aides argue, are people who aren’t used to dealing with classified information and don’t realize how standard this secrecy is. And by the way, they note, neither congressional conference committees nor labor contract talks allow even this level of access to negotiations while in process.

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Jim Sinclair’s Commentary

Competition is the heart of growth and this is the heart of the BRICS.

Russia signs up to $100 bn BRICS fund to rival IMF

Moscow (AFP) – Russian President Vladimir Putin ratified an accord Saturday to set up a $100-billion reserve fund for the so-called BRICS — the five leading emerging economies that include Russia, China, Brazil, India and South Africa.

Moscow is expected to contribute $18 billion to the reserve, well behind the $41 billion China has promised to pour into the fund that was set up after an agreement signed in July 2014 in Brazil.

The emerging economies also plan to form their own international bank based in Shanghai to challenge western dominance over international money markets.

"The accord on the creation of a common reserve fund for BRICS countries has been ratified," a document from the Kremlin quoted by RIA Novosti news agency said.

The fund is meant to shield the BRICS against "short-term liquidity pressures" and promote greater cooperation between the five member countries.

Russia — which has suffered huge currency fluctuations since the outbreak of the crisis in Ukraine — sees the fund as an alternative to international financial institutions like the IMF and World Bank that are dominated by the United States.

The BRICS countries between them account for 40 percent of the world’s population, and a fifth of the planet’s GDP.

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Backwardation is a function of supply
Author : Bill Holter
Published: May 4th, 2015

We live in a truly messed up and Orwellian world if you will.  In many parts of Europe, interest rates are negative.  Savers “pay” for the privilege of banks to hold their money, lenders pay sovereign treasuries to lend, new homeowners who borrow to buy property are paid to borrow.  This situation where borrowers get paid and lenders pay also exists between banks which is really strange because you would think bankers understand money and interest …just a little?

As a question to set the foundation, I ask you this; if you could sell something today for $100 and be contractually guaranteed to be ABLE to buy it back 30 days later at $99, would you do it?  I hope your answer is not only yes, but you return with “how many times can I do this, it’s free money?!”.  In the real world, this is called arbitrage.  Rarely does the condition ever exist on a single exchange, normally when it does exist it happens over two or more exchanges and even time zones.  The discrepancy can be miniscule as billions of dollars scan the globe 24 hours a day looking for this situation and lock the profit in until there is no more to be had.  Arbitrage is a big business and for the most part, RISK FREE.  The condition described above is called “backwardation”, the remedy is ALWAYS arbitrage.

Please notice I bold printed three words, “able, risk-free, and always”.  Starting with the first word “able”, if we changed that word to either possibly or cannot, the whole equation changes as the trade is no longer risk free and will not ever be done without risk assessment.  As I understand it, physical gold is in backwardation in London and silver in Asia.  Why has not big money stepped in and arbitraged the “guaranteed” profits out of these markets?

The answer of course is that the profit is not guaranteed.  The reason backwardation is persistent is because the fear of not being able to get your metal back 30 days into the future.  It is being deemed by the market that gold today (a bird in the hand thing) is more valuable than a “promise” to get it back in 30 days …because promises are made to be broken!  The fear obviously exists of a failure to deliver in the future, there can be NO other explanation why physical gold in hand is more expensive than gold 30 days in the future.  If you would like to tell me that the situation exists because interest rates are negative then please explain to me how interest rates can be negative and the logic behind it!

Andrew Maguire spoke of this again last Friday, he also spoke of the new “Allocated Bullion Exchange” (ABX)which was set to begin in late April and has been pushed back a few weeks.  I must confess to giving out incorrect information last month, I believed this was an offshoot of the SGE, Shanghai Gold Exchange, it is not.  Their homepage is up but not yet fully functional.  ABX intends to arbitrage the differences between the various global gold exchanges …on a PHYSICAL basis.  In other words, when one buys they ask for delivery and when one sells they will deliver the real product.  We will soon see how willing the shorts are to pummel metals prices with weeks or even months worth of global production “on paper”.  I believe it is entirely possible to see LBMA cleaned out and followed by COMEX of their inventories within a very short timespan.  An operation as such would not require huge amounts of capital, $10-$20 billion should be more than enough to do the trick!

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Posted at 11:21 AM (CST) by & filed under Jim's Mailbox.

Jim,

Martin Armstrong’s piece sheds some insight on Goldman Sachs’ recent push into Bitcoin through Circle Internet Financial.

If not cash, then what?

How about Gold!

CIGA Wolfgang R Newsmeister

Why The Powers That Be Are Pushing A Cashless Society
Submitted by George Washington on 05/04/2015

Martin Armstrong summarizes the headway being made to ban cash,  and argues that the goal of those pushing a cashless society is to prevent bank runs … and increase their control:

The central banks are … planning drastic restrictions on cash itself. They see moving to electronic money will first eliminate the underground economy, but secondly, they believe it will even prevent a banking crisis.

Paper currency is indeed the check against negative interest rates. We need only look to Switzerland to prove that theory. Any attempt to impose say a 5% negative interest rates (tax) would lead to an unimaginably massive flight into cash. This was already demonstrated recently by the example of Swiss pension funds, which withdrew their money from the bank in a big way and now store it in vaults in cash in order to escape the financial repression. People will act in their own self-interest and negative interest rates are likely to reduce the sales of government bonds and set off a bank run as long as paper money exists.

Nevertheless, there is a growing assumption that the negative interest rate world (tax on cash) is likely to increase dramatically in Europe in particular since it is socialism that is collapsing. Government in Brussels is unlikely to yield power and their line of thinking cannot lead to any solution. The negative interest rate concept is making its way into the United States at J.P. Morgan where they will charge a fee on excess cash on deposit starting May 1st, 2015. Asset holdings of cash with a tax or a fee in the amount of the negative interest rate seems to be underway even in Switzerland.

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Jim,

Richard Russell tells you where the government will be getting money from in order to survive, and of course to buy gold:

…and from Richard Russell, founder of Dow Theory Letters, in remarks posted on his website on April 27th:

”Subscribers may remember that I thought the stock market would have a melt-up before it settled into a destructive bear market.  It occurs to me that the chances of a melt-up are diminishing because the market is losing its upside momentum.  My thinking is that the market is preparing for one of the worst bear markets in history, one that will out do the 1929-32 affair.  My old friend, Robert Prechter, of Elliot Wave fame, believes the Dow will go below 400.  If this happens I think there will be doubts about whether the US can survive.    

”Many subscribers ask me whether I believe the US Government will call in its citizens’ gold.  I don’t think so.  If the Government needed money, it would go where the money is, which is in the pension funds or 401Ks.  Money from them will be taken and in their place they will find US Government Bonds or even IOUs.  Russell advice – buy and own physical silver and gold.”

CIGA Wolfgang R. Newsmeister

 

Jim,

Roubini is predicting a downward trajectory of the US Dollar.

CIGA Wolfgang R Newsmeister

Opinion: The dollar joins the currency wars
By Nouriel Roubini
Published: May 4, 2015 9:14 a.m. ET

U.S. growth isn’t strong enough to allow the Fed to ignore exchange-rate jitters, Roubini says

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Until recently, U.S. policy makers were not overly concerned about the dollar’s strength, because America’s growth prospects were stronger than in Europe and Japan. Indeed, at the beginning of the year, there was hope that U.S. domestic demand would be strong enough this year to support GDP growth of close to 3%, despite the stronger dollar. Lower oil prices and job creation, it was thought, would boost disposable income and consumption. Capital spending (outside the energy sector) and residential investment would strengthen as growth accelerated.

But things look different today, and U.S. officials’ exchange-rate jitters are becoming increasingly pronounced. The dollar appreciated much faster than anyone expected; and, as data for the first quarter of 2015 suggest, the impact on net exports, inflation, and growth has been larger and more rapid than that implied by policy makers’ statistical models. Moreover, strong domestic demand has failed to materialize; consumption growth was weak in the first quarter, and capital spending and residential investment were even weaker.

As a result, the U.S. has effectively joined the “currency war” to prevent further dollar appreciation. Fed officials have started to speak explicitly about the dollar as a factor that affects net exports, inflation, and growth.‎ And the U.S. authorities have become increasingly critical of Germany and the eurozone for adopting policies that weaken the euro while avoiding those — for example, temporary fiscal stimulus and faster wage growth — that boost domestic demand.

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Posted at 2:41 PM (CST) by & filed under In The News.

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Insanity Grips The Western World
Paul Craig Roberts

Just as Karl Marx claimed that History had chosen the proletariat, neoconservatives claim that History has chosen America. Just as the Nazis proclaimed “Deutschland uber alles,” neoconservatives proclaim “America uber alles.” In September 2013 President Obama actually stood before the United Nations and declared, “I believe America is exceptional.”

Germany’s political leaders and those in Great Britain, France, and throughout Europe, Canada, Australia, and Japan also believe that America is exceptional, which means better than they are. That’s why these countries are Washington’s vassals. They accept their inferiority to the Exceptional Country — the USA — and follow its leadership.

It is unlikely that the Chinese think that a handful of White People are exceptional in anything except their diminutive numbers. The populations of Asia, Africa, and South America dwarf those that comprise Washington’s Empire.

Neither do the Russians believe that the US is exceptional. Putin’s response to Obama’s claim of American superiority was: “God created us equal.” Putin added: “It is extremely dangerous to encourage people to see themselves as exceptional, whatever the motivation.”

If all countries are exceptional, the word loses its meaning. If America is exceptional, it means others are inferior for lacking this designation. Inferiors have less rights and can be bullied into submission or bombed into oblivion.

The Exceptional Country is above all the others and, therefore, doesn’t have to be concerned about how it treats them. Obviously, Americans and their vassals think America is exceptional as the millions of people murdered, maimed, and dislocated by Washington’s wars in eight countries in the 21st century has not resulted in condemnation of Washington. Merkel, Hollande, Cameron and the puppets in Canada, Australia, and Japan still suck up, holding tight to Washington.

Instead, Russia and Iran, countries that, unlike the US, are not militarily aggressive, are portrayed in the White People’s Media as threats and are condemned.

The White Media claims, and has claimed since February 2014, that there are Russian tanks and troops in Ukraine. Putin has pointed out that if this indeed was the case, Kiev and Western Ukraine would have fallen to the Russian invasion early last year. Kiev has been unable to defeat the small breakaway republics in eastern and southern Ukraine and would stand no chance against the Russian military.

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Did A Tap On The Shoulder "Prevent" The US Economy From Sliding Into Recession?
Tyler Durden on 05/02/2015 13:15 -0400

The US Ministry of Truth has been hard at work the last month and nowhere is that more evident than in the blatant "tap on the shoulder" that The National Association of Credit Managers must have got this week… to revise their catastrophic indicators back to ‘stable’…

Two weeks ago we highlighted what was a stunningly clear indication of the looming recessionary environment (that The Atlanta Fed is now also seemingly suggesting and is consistent with the worst collapse in macro data since 2008). The largest spike in ‘credit application rejections’ indicated a credit crunch and "serious financial stress manifesting in the data and this does not bode well for the growth of the economy going forward."

According to the CMI, the Rejections of Credit Applications index just crashed the most ever, surpassing even the credit crunch at the peak of the Lehman crisis.

This can be seen on the chart below.

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And without any new credit entering the economy, a recession is all but assured.

More details on what may be the most critical and completely underreported indicator for the US economy. The report continues, with such a dire narrative that one wonders how it passed through the US Ministry of Truth’s propaganda meter:

By far the most disturbing is the rejection of credit applications as this has fallen from an already weak 48.1 to 42.9. This is credit crunch territory—unseen since the very start of the recession. Suddenly companies are having a very hard time getting credit. The accounts placed for collection reading slipped below 50 with a fall from 50.8 to 49.8 and that suggests that many companies are beyond slow pay and are faltering badly. The disputes category improved very slightly from 48.8 to 49, but is still below 50. This indicates that more companies are in such distress they are not bothering to dispute; they are just trying to survive. The dollar amount beyond terms slipped even deeper into contraction with a reading of 45.5 after a previous reading of 48.4. The dollar amount of customer deductions slipped out of the 50s as it went from 51.8 to 48.7. The only semi-bright spot was that filings for bankruptcies stayed almost the same—going from 55.0 to 55.1. This is the one and only category in the unfavorable list that did not fall into contraction territory and that suggests that there are big, big problems as far as the financial security of these companies are concerned.

Which NACM summed up thus:

The rejections of credit applications is as miserable as it has been since the depths of the recession—going from 45.9 to 42.0.These are very bad readings and it will take a good long while to climb out of this mess.

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Auto Sales Drop, Miss For 5th Month In A Row; Worst Year-To-Date Performance Since 2009
Tyler Durden on 05/01/2015 15:15 -0400

Spin that Phil LeBeau…

This is the biggest miss for domestic auto sales since September (and weakest total print since last April)… This is the longest streak of missed expectations since 2008

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Printing 12.88mm SAAR vs 13.40mm in March – this is the biggest year-to-date drop since 2009.

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Russia Establishes Satellite Ground Station on US Doorstep – German Media
15:34 02.05.2015(updated 17:48 02.05.2015)

The Nicaraguan parliament ratified a treaty on space cooperation with Russia, which also authorizes the construction of ground-based stations for GLONASS, a global navigation satellite system designed to offer an alternative to the GPS.

Nicaragua is expected to use the system operated by the Russian Aerospace Defense Forces to monitor climate change and prevent natural disasters, in other words for peaceful purposes. "But the Obama administration may perceive a satellite system in the US ‘front yard’ only as a warning," said Deutsche Wirtschafts Nachrichten.

"Earlier, Russians surprised Americans with photos of [US] spy satellites, causing confusion among the US military. The US Lacrosse radar satellite’s motion was clearly documented at Russia’s Altay Optical Laser Center between 2005-2010," the media outlet said.

In 2012, Managua and Moscow signed an agreement on space cooperation, including construction of ground-based stations for GLONASS. The two countries are also negotiating an arms deal, under which Nicaragua plans to buy MiG-29 fighter jets and patrol boats from Russia.

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We Just Broke 2008′s Record For The Fastest Economic Unraveling!
Submitted by Tyler Durden on 05/01/2015 23:55 -0400

Submitted by Thad Beversdorf via FirstRebuttal.com,

In my last piece I provided a technical analysis that signaled we are entering the first stage of a bursting bubble that we’ll call the Fed Bubble.  Now while I do believe technicals provide good insight to the economic landscape I see them as a necessary rather sufficient qualifier.  In order to be truly confident that our technicals are providing an accurate story we need to understand the fundamentals behind the charts, as we often find the engine light comes on due to a loose wire rather than a problem with the engine.

The final Q1 GDP revision was just released and we saw that GDP has again missed expectations by such a large margin that 2015 is another write off for a 3% growth year.  Almost comically we heard the same excuses we got last year.  “Weather was wintery and next year is going to be the turnaround year”.  So in order to explain to these supposed economic and market ‘experts’ who seem wholly incapable of understanding economic and market forces with any sense of accuracy, let’s run through a few fundamentals.

I want to hone in on the category of consumer spending that is first to go away so that we may capture the first signals of a consumer spending pull back.  A good proxy for this is the Johnson Redbook Chain Store yoy sales.  This captures the consumer spending taking place at large department stores (Macy’s, Kohls, Walmart, Kmart, etc).  This is going to be where the real discretionary retail spending takes place, as in do I have enough space on my credit card for that sassy blue dress and groceries or just groceries?  And don’t think that is just a theatrical example.  I remember the days of asking myself those very same questions (ok maybe not the blue dress but you get the idea).  That is just real life here in the US (and Canada for that matter).

So this category does well to target the true discretionary spending.  Now if the chart trend appears strong or even flat then we can be confident consumers have not yet pulled back on even the most discretionary of items and so any variations in the overall spending patterns are likely not worrisome.  However, if we see a sharp pull back here it is indicative that a downturn in the overall spending trend is likely substantive rather than nuance.  Let’s have a look.

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Jim Sinclair’s Commentary

Jack those rates fast. The Economic Recovery is steaming hot, Janet.

Store Closings Index 2015 of Largest US Brick-and-Mortar Retail Chains
Gap, Coach, JCPenney, Kmart, All 2015 Store Closings Sorted by Company
By Barbara Farfan
Retail Industry Expert

Aeropostale, Gap, Coach, jcpenney, and Kmart are just some of the U.S. brick-and-mortar retail chains with a prominent position on the 2015 Store Closings Index. This 2015 Store Closings Index is filled with the names of the largest U.S. based retail chains and retail restaurant chains that are downsizing their presence in physical retailing within and beyond the borders of the United States of America.

In 2015, some retail chains like Bottom Dollar Food, Deb Shops, and Body Central are closing stores in connection with a bankruptcy filing, and will be going out of business forever in 2015. Others like Radio Shack and Wet Seal are rumored to be moving quickly down the downsizing road to bankruptcy as well. BOOKMARK THIS PAGE for frequent updates throughout the 2015 calendar year as new information about retail store closings becomes available.

This 2015 Store Closings list is arranged alphabetically according to the name of the brick-and-mortar retail chains doing the closings. The number in the left column is the total number of stores that have been designated for closing in the calendar year of 2015 and beyond. The latest additions are indicated with bold lettering. This list was last updated on April 12, 2015.

Store Closings Index 2015 of Largest US Brick-and-Mortar Retail Chains:

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Posted at 2:22 PM (CST) by & filed under Jim's Mailbox.

Jim,

OF COURSE NOT. Can’t let al those OTC derivates perform as required.

CIGA Brian S.

Ratings agencies say no default if Greece misses ECB, IMF payments

By Marc Jones

Most top credit rating agencies say they would not cut Greece’s rating to default if it misses a payment to the International Monetary Fund or European Central Bank, a stance that could keep vital ECB funding flowing into the financial system.

Greece owes nearly 1 billion euros to the IMF in May and almost 7 billion euros to the ECB over July and August and there are concerns that the government, stuck in funding talks with official lenders, will miss the payments.

This would be an unprecedented move that could put Athens’ future in the euro in doubt and has raised questions about whether it could set off a chain reaction, possibly accelerating repayments due to other official and private sector creditors and compounding Greece’s problems.

But for most rating firms, whose views determine whether the ECB can still accept sovereign Greek securities as collateral for lending to its banks, a missed IMF payment would not lead them label the country in default.

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Posted at 10:00 AM (CST) by & filed under In The News.

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US Treasury Bonds,The Godfather Of All Bubbles
Posted by Charles E Carlson  April 27, 2015

The 30-plus-year-old bull market in US bonds, notes and bills may well be the most destructive man-made “Bubble” in all of recorded history. It will sooner or later implode because it is unsound to the core. A puncturing of the bubble may start when any of several huge holders sells. Its implosion will trigger the sale of other overpriced corporate, municipal and foreign bonds, and the dollar itself may well be replaced as the world reserve currency. The US bond bubble is the Godfather because it is so large that no other investment market can absorb the mass exodus which will come from it. It is logical that those who have worked so deliberately to create this debt bubble will fight even harder to prevent its collapse. When it implodes, it will probably bring down lesser bubbles and excesses, including the function of the dollar as a world exchange currency.

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Greek Pensioners Crash Pension Fund Board Meeting, Form Lines At Bank
Submitted by Tyler Durden on 05/01/2015 08:25 -0400

On Thursday we noted that no matter how tempting it may be to tune out the almost hourly warnings from various sources claiming Greece is finally set to run out of cash, one can’t just assume the government will yet again find another couch cushion to reach into in order to scrape up a few more euros to pay government employees and creditors and thereby forestall the inevitable for another few weeks. Eventually, there simply will be no more money and the first signs that Greece has entered the final, terminal phase in the long and painful road to complete insolvency showed up last month in the form of a sweeping decree which required municipalities to transfer excess cash to the central bank.

That mandate was greeted with incredulity and with the country’s local governments less than willing to turn over their funds, Athens finally ran out of money (if only for 8 or so hours) on Tuesday when pensioners showed up at ATMs only to discover that their money simply was not there. Amusingly, the government blamed the delay on a “technical glitch”, and while we suppose it’s not exactly a lie to call running out of money a “technical glitch”, it was abundantly clear that the country’s socialist saviors were making a feeble attempt to avert a pensioner mutiny. Today, we get more details about the situation and sure enough, the retirees are restless.

Via The Australian:

Panicking pensioners queued at banks, raided their accounts and broke into a board meeting of the state pension fund as Greece struggled to pay its two million pension recipients.

Officials claimed that a “technical hitch” had delayed some payments as Greece braced itself to run out of money in days without a breakthrough from secret talks in Brussels…

The country’s state pension funds almost defaulted after a shortfall of “several hundred million euros” delayed payments to pensioners this week. Many people panicked when they discovered that their pension payments were not in their accounts.

“Normally I only withdraw half the money at the end of the month but today I’m taking it all,” said Sotiria Zlatini, 75, a former civil servant. “There are so many rumours going round.”

In a sign of public discontent, pensioners broke into a board meeting of the state pension fund demanding that it stop transferring cash reserves to the government under an emergency decree to keep the country solvent.

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Gold Manipulator Busted After Zero Hedge Report On HFT Gold Spoofing
Tyler Durden on 05/01/2015 08:07 -0400

In the aftermath of the Nav Sarao scapegoating farce, one week ago Zero Hedge decided to give the confused CFTC a helping hand and launched a daily series highlighting the constant spoofing and "manipulation" (in the CFTC and DOJ’s own words) that takes place in every asset class, but mostly in the E-mini futures ("Dear CFTC: This Is The Market Manipulating "Spoofing" Taking Place In The E-Mini Just Today"). Virtually every day since then we presented the "regulators" at the commodity trading commission a clear example of stock market manipulation, with the exception of Tuesday, when with the exclusive help of Nanex, we showed a clear case of gold spoofing.

This is what we said on April 28:

Here (courtesy of Nanex) are several examples in the June 2015 Comex Gold Futures this morning. All times are Eastern Daylight. In each of these cases, no trades (or a tiny few) executed against the large "spoof" order. You can see how prices were influenced by the sudden appearance (and disappearance) of these large, outsized orders.

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Posted at 11:31 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Here’s how the riots and the Fed are intertwined. Don’t worry, the banks are doing fine.

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Jim Sinclair’s Commentary

This would sure get your attention.

Bill Clinton’s plane makes unscheduled landing in Tanzania
Published April 29, 2015

KAMPALA, Uganda –  A spokesman for Bill Clinton says a chartered plane carrying the former U.S. president had to land unexpectedly after one of its engines developed a problem during a flight over Tanzania.

Matt McKenna told The Associated Press late Wednesday that "there was an issue with one of the plane’s four engines" which was quickly repaired.

He said the aircraft was on the ground for less than 45 minutes before it took off again. He gave no more details about the incident.

Clinton is in the East African nation of Tanzania as part of a wider tour of projects run by the family foundation.

He will also visit Kenya, Liberia and Morocco, according to the Clinton Foundation.

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Jim Sinclair’s Commentary

Certainly makes great sense as world equity prices move higher and investment money moves out on balance. Price rising and players leaving is not a wildly bullish development.

Telegraph’s Warner: Negative European Rates Signal Impending Doom
Thursday, 30 Apr 2015 06:40 AM
By Dan Weil

A whopping 30 percent of government debt in the eurozone — approximately 2 trillion euros worth — now carries a negative yield, and that amounts to a financial crisis in the making, says Jeremy Warner, assistant editor of The Daily Telegraph.

The 5-year German government bond yields negative 0.11 percent.

"What makes today’s negative interest rate environment so worrying is this: to the extent that demand is growing at all in the world economy, it seems again to be almost entirely dependent on rising levels of debt," Warner writes.

"The financial crisis was meant to have exploded the credit bubble once and for all, but there’s very little sign of it. Rising public indebtedness has taken over where households and companies left off."

Global central bank easing has led to frothy financial markets, Warner explains. "The bond market bubble is just the half of it. Since most other assets are priced relative to bonds, just about everything else has been going up as well."

And what’s the endgame?

"Eventually, there will be a massive correction, in which creditors will suffer sickening losses," Warner maintains. "Nobody can tell you when that moment will arrive," he argues.

"Both Keynsian and monetary economics seem to be in some kind of end game. What comes next is anyone’s guess."

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Jim Sinclair’s Commentary

The EU is waking up to who gets hurt the most with sanctions.

Italian Official Says Anti-Russian Sanctions May Be Lifted, Ukraine Protests
Alexander Vilf
20:25 29.04.2015

Ukraine’s Embassy in Rome has sent an official request to the Italian Foreign Ministry for comment on a recent statement by an official from the Italian Ministry of Economy and Finances about Italy possibly lifting anti-Russian sanctions in the near future, Ukrainian newspaper Evropeyskaya Pravda reported, citing a diplomatic source.

According to the newspaper, the diplomatic demarche, signed by Ukrainian Ambassador to Italy Heorhiy Chernyavskyi, was sent to the Italian Foreign Ministry on Tuesday. In the document, Chernyavskyi is said express doubts about the competence of Federico Eichberg, the Head of a Task Force on Foreign Investments at the Ministry of Economic Development. The Ambassador is also said to have proposed that the Foreign Ministry "respond to statements by Eichberg which directly contradict the government’s official position."

Speaking at an Italian business conference in Milan earlier this week, Eichberg stated that Italy will not support the continuation of economic sanctions directed against Russia. "Italy has made it clear since February that the Council of Ministers will not vote for the extension of sanctions," the official noted.

Russian analysts have commented that the Ukrainian Foreign Ministry’s protest seems to have come at rather an odd time, given that top Italian officials up to the ministerial level have been complaining about sanctions for several months now.

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Jim Sinclair’s Commentary

What a crock? Algos runs the market one more time.

A.M. Kitco Metals Roundup: Gold Prices Lower In Wake Of FOMC Statement, U.S. Jobless Claims
Thursday April 30, 2015 8:30 AM

Editor’s Note: The article was updated a second time to reflected lower gold prices.

(Kitco News) – Gold prices are sharply lower in early U.S. trading Thursday, in the wake of a bearishly construed FOMC statement. Losses were extended following an upbeat U.S. jobless claims report this morning. Fresh chart-based selling has also surfaced, including sell stop orders being triggered when technical support levels were breached in gold and silver markets. June Comex gold was last down $24.50 at $1,186.00 an ounce. May Comex silver was last down $0.75 at $15.92 an ounce.

Gold saw strong selling pressure develop after the weekly U.S. jobless claims report showed a decline to 262,000 in the latest reporting week—a 15-year low. The U.S. dollar index saw a rebound on the jobs data.

The market place has mostly digested the U.S. Federal Reserve’s Open Market Committee (FOMC) statement Wednesday afternoon. The statement said the U.S. economy slowed in the first quarter, but the slowdown is likely just transitory. There were mixed ideas on whether the statement fell into the camp of the monetary policy hawks or doves. The strong jobless claims report Thursday has some rethinking that the FOMC statement favors the hawks.

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