Jim Sinclair’s Commentary
Mr. Williams shares his latest with us.
- October Housing Starts Indicated Fourth-Quarter Contraction
- PPI Headline Inflation of 0.2% Reflected Peculiarities of New Reporting Approach
- October PPI Will Dampen Real Growth in New Orders for Durable Goods and Construction Spending
"No. 675: October Housing Starts, PPI"
U.S. MINT REPORTS ON SILVER EAGLES: Huge Demand & Weekly Rationing
by SRSrocco on November 19, 2014
After the huge take-down in the price of silver on October 31st, demand for Silver Eagles skyrocketed. Then on Nov. 5th after silver was knocked down another 5%, the U.S. Mint suspended sales of Silver Eagles.
It was reported that the U.S. Mint sold 2 million Silver Eagles on Nov. 5th before they suspended sales. However, we didn’t see a huge increase in sales on their website for that day. So, I decided to contact Michael White, Public Affairs person for the U.S Mint and ask him about this issue as well as some other questions.
Mr. White provided me that actual sales figures from Oct 31st to Nov. 18th. These sales figures can be seen in the chart below:
On Halloween, Oct. 31st when Zombies knocked the price of silver down 4%, the U.S Mint sold 1,425,000 Silver Eagles that day. After the weekend, Silver Eagle sales on Monday, Nov 3rd were a hefty 625,000. As the price of silver trended lower on Tuesday, the U.S. Mint sold another 430,000 on Nov. 4th.
And then on Nov 5th, with the paper price of silver down 5%, demand for Silver Eagles increased to a level that totally wiped out all remaining Silver Eagle inventories at the U.S. Mint. We must remember, there are Authorized Dealers who purchase Silver Eagles directly from the U.S. Mint to sell as retail or to wholesale dealers.
Deformations On The Dealer Lots: How The Fed’s ZIRP Is Fueling The Next Subprime Bust
by David Stockman November 19, 2014
On any given day, Janet Yellen is busy squinting at 19 essentially meaningless labor market graphs on her “dashboard”, apparently looking for evidence that ZIRP is working. Well, after 71 months of zero money market rates—-an unprecedented financial absurdity—-there are plenty of footprints dotting the financial landscape.
But they have nothing to do with sustainable jobs. Instead, ZIRP has fueled myriad financial bubbles and speculations owing to the desperate scramble for “yield” that it has elicited among traders and money managers. Indeed, the financial system is literally booby-trapped with accidents waiting to happen owing to the vast mispricings and bloated valuations that have been generated by the Fed’s free money.
Nowhere is this more evident than in the subprime auto loan sector. That’s where Wall Street speculators have organized fly-by-night lenders who make predatory 20% interest rate loans at 115% of the vehicle’s value to consumers who are essentially one paycheck away from default.
This $120 billion subprime auto paper machine is now driving millions of transactions which are recorded as auto “sales”, but, in fact, are more in the nature of short-term “loaners” destined for the repo man. So here’s the thing: In an honest free market none of these born again pawnshops would even exist; nor would there be a market for out-of-this-world junk paper backed by 115% LTV/75-month/20% rate loans to consumers who cannot afford them.
Indeed, instead of the BLS concocted “quit rate” and other such aggregated data noise about the nation’s massive, fragmented, dynamic and complicated complex of thousands of local and sectoral labor markets—- about which the Fed can and should do nothing—-Yellen might be gazing at the $1.6 billion in bids attracted earlier this year by Prestige Financial Services of Utah. That occurred in the junk bond market, which the Fed does heavily impact, and could not have possibly happened in the absence of ZIRP.
Jim Sinclair’s Commentary
The Flash Boys (mechanized high speed traders) are going to be the real Black Swans that breaks the system.
Flash Boys Raise Volatility in Wild New Treasury Market
By Susanne Walker and Lisa Abramowicz Nov 17, 2014 5:45 PM MT
In a flash, the bond market went wild.
What began on Oct. 15 as another day in the U.S. Treasury market suddenly turned into the biggest yield fluctuations in a quarter century, leaving investors worrying there will be turbulence ahead.
The episode exposed a collision of forces — the rise of high-frequency trading and the decline of Wall Street dealers — that are reshaping the world’s biggest and most important bond market. Money managers say the $12.4 trillion Treasury market is becoming less liquid, meaning securities can no longer be traded as quickly and easily as they used to be, thanks in part to the Federal Reserve’s bond-buying program.
“The way the market is set up right now, we’ll see instances like we did on that day,” said Michael Lorizio, senior trader at Boston-based Manulife Asset Management US LLC, which oversees $281 billion. “There’s going to be a learning curve as to how to handle that.”
The development reflects unintended consequences of new financial regulation, as well as steps the Fed has taken to breathe life into the U.S. economy. The implications, however, extend far beyond Wall Street, because the Treasury market determines borrowing costs for governments, companies and consumers around the world.
When the day began on Oct. 15, an unprecedented number of investors were betting that interest rates would rise and U.S. government debt would lose value. The news that morning seemed ominous. Ebola was spreading. So was war in the Middle East. At 8:30 a.m. in Washington, the Commerce Department announced a decline in retail sales.
The shift came all at once. The sentiment that the Fed would raise rates reversed. Traders who’d bet against, or shorted, Treasury bonds had to buy as many as they could as quickly as they could to limit their losses. By 9:38 a.m., 10-year Treasury yields plunged 0.34 percentage point, the most in five years.