Posted at 9:35 AM (CST) by & filed under In The News.

Reverse Repos Go Parabolic: ‘Liquidity Shock’ Derivatives Melt-Down Has Begun!
Posted on April 17, 2015 by The Doc

The strange volatility we’ve been experiencing in the markets is occurring because there’s is a massive derivatives melt-down going on behind the scenes. 

The Fed is engaging in an enormous reverse repo operation in order to prevent the global financial system from collapsing.

The ONLY REASON the Fed would need to inject massive amounts of Treasuries into the global banking system is because there’s an extreme shortage.
A massive derivatives accident requiring MASSIVE amounts of collateral to be posted has developed:

Submitted by PM Fund Manager Dave Kranzler, Investment Research Dynamics:

A reverse repurchase agreement, also called a “reverse repo” or “RRP,” is an open market operation in which the Desk sells a security to an eligible RRP counterparty with an agreement to repurchase that same security at a specified price at a specific time in the future. LINK…IMF tells regulators to brace for global ‘liquidity shock’ -LINK.

The financial news spin-doctors are attributing today’s abrupt sell-off to a report of a Bloomberg terminal outage and to a report that China has expanded its list of stocks available for shorting.   This explanation for the plunge in stocks globally is so absurd it almost leaves me speechless.


Jim Sinclair’s Commentary

The chess game continues while the West thinks it is checkers.

The Greek "White Knight" Emerges: Putin To Give Athens €5 Billion For Advance Gas Pipeline Fees
Tyler Durden on 04/18/2015 09:54 -0400

With Greece teetering on the edge of insolvency and forced to raid pension and most other public funds, ahead of another month of heavy IMF repayments which has prompted even the ECB to speculate Greece should introduce a parallel "IOU" currency, a white knight has appeared out of nowhere for Greece, one who may offer $5 billion in urgently needed cash. The white knight is none other than Vladimir Putin. “Just because Greece is debt-ridden, this does not mean it is bound hand
and foot, and has no independent foreign policy,” Putin said previously.

According to Spiegel, citing a senior figure in the ruling Syriza party, Greece is poised to sign a gas deal with Russia as early as Tuesday which could bring up to €5 billion into the depleted Greek coffers.

The move could now "turn the tide" for the debt-stricken country according to a senior Greek official.

As Reuters adds, during a visit to Moscow earlier this month, Greek Prime Minister Alexis Tsipras expressed interest in participating in a pipeline that would bring Russian gas to Europe via Turkey and Greece.

Under the proposed deal, Greece would receive advance funds from Russia based on expected future profits linked to the pipeline. The Greek energy minister said last week that Athens would repay Moscow after 2019, when the pipeline is expected to start operating.

Greek government officials were not immediately available to comment on the Spiegel report.

Of course, this being Greece, the probability of actual repayment is negligible: after all the likelihood of a Greek default is astronomical, and €5 billion will do little to change the mechanics of Greek debt sustainability. And Putin very well knows this.

However, the Russian leader is not acting out of the kindness of his heart, but merely engaging in another calculated move, one which kills two birds with one stone:


Jim Sinclair’s Commentary

What a hell of a mess.

The ECB Is Considering A Parallel Greek Currency
Tyler Durden on 04/17/2015 15:16 -0400

As we first reported yesterday, one of the proposed measures to be implemented in Greece just before, or during its default and/or exit from the Eurozone, in addition to pervasive capital controls of course, is the implementation of a parallel "currency", or as explained yesterday, a government paying its citizens with IOUs.

This is what we said less than 24 hours ago:

Greece might resort to IOUs and/or capital controls to avoid a disorderly default and keep the banks afloat for now. But such measures would offer a temporary solution at best and could be the first steps towards a euro-zone exit.

Assuming that a deal is not reached next week, there are a couple of routes that the Greek Government might take to avert disaster in the short term. First, it could issue IOUs to pay public sector workers and pensioners and free up money to repay its debts. But this could cause economic chaos if fears that the IOUs would never be paid sparked riots or public sector employees simply refused to work.

Even if Greek people accepted IOUs, they could only function for a very short period. Before long, those receiving incomes in IOUs could only afford to pay their taxes through the same medium. And given that the Government’s international creditors would not accept IOUs as repayment, this would still lead to a debt default. Effectively, the IOUs would become a parallel currency whose value was deemed lower than that of a normal euro. This would be akin to a euro-zone exit.

Today, to our dismay, we find that the ECB has not only considered a "parallel currency" alternative but for Greece this may be a reality before long. According to Reuters, the ECB "has analyzed a scenario in which Greece runs out of money and starts paying civil servants with IOUs, creating a virtual second currency within the euro bloc, people with knowledge of the exercise told Reuters."

"The fact is we are not seeing any progress… So we have to look at these scenarios," said one person with knowledge of the matter.


Jim Sinclair’s Commentary

Our trustworthy new best friends.

Iranian ship convoy moves toward Yemen, alarming US officials
By Kristina Wong – 04/17/15 06:39 PM EDT

U.S. military officials are concerned that Iran’s support for Houthi rebels in Yemen could spark a confrontation with Saudi Arabia and plunge the region into sectarian war.

Iran is sending an armada of seven to nine ships — some with weapons — toward Yemen in a potential attempt to resupply the Shia Houthi rebels, according to two U.S. defense officials.

Officials fear the move could lead to a showdown with the U.S. or other members of a Saudi-led coalition, which is enforcing a naval blockade of Yemen and is conducting its fourth week of airstrikes against the Houthis.

Iran sent a destroyer and another vessel to waters near Yemen last week but said it was part of a routine counter-piracy mission.

What’s unusual about the new deployment, which set out this week, is that the Iranians are not trying to conceal it, officials said. Instead, they appear to be trying to "communicate it" to the U.S. and its allies in the Gulf.

It is not clear what will happen as the convoy comes closer to Yemen. Saudi Arabia has deployed ships around Yemen to enforce the blockade, as has Egypt. An official said the ship convoy could try to land at a port in Aden, which the Houthis have taken over.


Jim Sinclair’s Commentary

Different reactions to demonstrators.



Posted at 2:05 PM (CST) by & filed under In The News.



Jim Sinclair’s Commentary

John Williams shares the following with us.

- Housing Starts Plunged at Annualized Pace of 31.0% (-31.0%) in First-Quarter 2015
- Real Retail Sales Contracted at 2.0% (-2.0%) Annualized Pace in First-Quarter, Worst Showing Since Depths of Economic Collapse
- Annual Real Sales Growth at Recession Level
- Real Earnings Fell by 0.4% (-0.4%) in March
- March Year-to-Year Inflation: -0.1% (CPI-U), -0.6% (CPI-W), 7.5% (ShadowStats)
- First-Quarter 2015 Real GDP Headed for a Contraction

"No. 713: March CPI, Real Retail Sales and Earnings, Housing Starts, GDP Prospects "



Jim Sinclair’s Commentary

Power is moving East!

China Readies $46 Billion for Pakistan Trade Route
Beijing plans to pour $46 billion into infrastructure projects, open new trade routes
By Saeed Shah in Islamabad and Jeremy Page in Beijing
Updated April 16, 2015 10:58 p.m. ET

Chinese President Xi Jinping is set to unveil a $46 billion infrastructure spending plan in Pakistan that is a centerpiece of Beijing’s ambitions to open new trade and transport routes across Asia and challenge the U.S. as the dominant regional power.

The plan, known as the China Pakistan Economic Corridor, draws on a newly expansive Chinese foreign policy and pressing economic and security concerns at home for Mr. Xi, who is expected to arrive in Pakistan on Monday. Many details had yet to be announced publicly.

“This is going to be a game-changer for Pakistan,” said Ahsan Iqbal, Pakistan’s planning minister, who said his country could link China with markets in Central Asia and South Asia.

“If we become the bridge between these three engines of growth, we will be able to carve out a large economic bloc of about 3 billion living in this part of the world…nearly half the planet.”

Beijing’s primary concern is that instability in neighboring Pakistan and Afghanistan is spilling into China’s predominantly Muslim northwest, and could grow worse with the withdrawal of U.S. troops from the region.

China sees a historic opportunity to redraw the geopolitical map by succeeding where the U.S. has largely failed, building critical infrastructure that could kick-start economic growth and open new trade routes between China and Central and South Asia. A cornerstone of the project will be to develop the Pakistani port of Gwadar, a warm-water port run by the Chinese on the doorstep of the Middle East.


Jim Sinclair’s Commentary

China chokes on algo shorting.

This Is China’s Short Selling Announcement Which Sent Chinese Futures Plunging
Tyler Durden on 04/17/2015 07:14 -0400

As noted earlier, while tens of thousands of Bloomberg terminal users were twiddling their thumbs during an outage that lasted several hours, China futs crashed.



There was some confusion about the cause of the rapid move, but it appears the catalyst was an announcement by the China Securities Regulatory Commission in which it allowed fund managers to lend shares for short-selling, and will also expand the number of stocks investors can short sell, in a bid to raise the supply of securities in the market.

Reuters has more:

Investors now face difficulties borrowing stocks for sale, even with some companies trading at lofty valuations.

China’s shares posted seven weeks of gains, reaching seven-year highs on Friday, as retail investors rushed to open stock accounts and borrow a record amount of money to buy shares, pushing trading turnover to record highs.


Jim Sinclair’s Commentary

The USDX dollar quote will follow the Petro Dollar as Nixon took us off the gold standard and put us on the Petro dollar standard.

The Collapse Of The Petrodollar: Oil Exporters Are Dumping US Assets At A Record Pace
Submitted by Tyler Durden on 04/15/2015 22:42 -0400

Back in November we chronicled the (quiet) death of the Petrodollar, the system that has buttressed USD hegemony for decades by ensuring that oil producers recycled their dollar proceeds into still more USD assets creating a very convenient (if your printing press mints dollars) self-fulfilling prophecy that has effectively underwritten the dollar’s reserve status in the post WWII era. Here’s what we said last year:

Two years ago, in hushed tones at first, then ever louder, the financial world began discussing that which shall never be discussed in polite company – the end of the system that according to many has framed and facilitated the US Dollar’s reserve currency status: the Petrodollar, or the world in which oil export countries would recycle the dollars they received in exchange for their oil exports, by purchasing more USD-denominated assets, boosting the financial strength of the reserve currency, leading to even higher asset prices and even more USD-denominated purchases, and so forth, in a virtuous (especially if one held US-denominated assets and printed US currency) loop…

Few would have believed that the Petrodollar did indeed quietly die, although ironically, without much input from either Russia or China, and paradoxically, mostly as a result of the actions of none other than the Fed itself, with its strong dollar policy, and to a lesser extent Saudi Arabia too, which by glutting the world with crude, first intended to crush Putin, and subsequently, to take out the US crude cost-curve, may have Plaxico’ed both itself, and its closest Petrodollar trading partner, the US of A.

As Reuters reports, for the first time in almost two decades, energy-exporting countries are set to pull their "petrodollars" out of world markets this year.


Not long afterwards (and by that we mean “not long” in the sense that three months isn’t really that long when it comes to everyone catching on to what “fringe” bloggers say is likely important), Bank of America took notice in the form of interviews with a half dozen or so in- house economists whose views can be generally summed up as follows: “…the end of the Petrodollar recycling chain is said to impact everything from Russian geopolitics, to global capital market liquidity, to safe-haven demand for Treasurys, to social tensions in developing nations, to the Fed’s exit strategy.”


Jim Sinclair’s Commentary

A satire by the Onion, but who knows?

FBI Uncovers Al-Qaeda Plot To Just Sit Back And Enjoy Collapse Of United States
Apr 15, 2014


A recent al-Qaeda video shows a militant training to carry out his mission of lying back and watching America’s status as a superpower erode

WASHINGTON—Putting the nation on alert against what it has described as a “highly credible terrorist threat,” the FBI announced today that it has uncovered a plot by members of al-Qaeda to sit back and enjoy themselves while the United States collapses of its own accord.

Multiple intelligence agencies confirmed that the militant Islamist organization and its numerous affiliates intend to carry out a massive, coordinated plan to stand aside and watch America’s increasingly rapid decline, with terrorist operatives across the globe reportedly mobilizing to take it easy, relax, and savor the spectacle as it unfolds.

“We have intercepted electronic communication indicating that al-Qaeda members are actively plotting to stay out of the way while America as we know it gradually crumbles under the weight of its own self-inflicted debt and disrepair,” FBI Deputy Director Mark F. Giuliano told the assembled press corps. “If this plan succeeds, it will leave behind a nation with a completely dysfunctional economy, collapsing infrastructure, and a catastrophic health crisis afflicting millions across the nation. We want to emphasize that this danger is very real.”

“And unfortunately, based on information we have from intelligence assets on the ground, this plot is already well under way,” he added.

A recently declassified CIA report confirmed that all known al-Qaeda-affiliated organizations—from Pakistan to Yemen, and from Somalia to Algeria—have been instructed to kick back and enjoy the show as the United States’ federal government, energy grid, and industrial sector are rendered impotent by internal dissent, decay, and mismanagement. According to statements made by top-level informants and corroborated by leading Western terrorism experts, if seen through to its conclusion, al-Qaeda’s current plot could wreak far more damage than the events of 9/11.

In the past year, money transfers to al-Qaeda cells around the world have reportedly been accompanied by instructions to use the funds to outfit safe houses with the proper equipment to receive American cable news broadcasts and view top U.S. news websites, allowing terrorists to fully relish each detail of the impending demise of the last global superpower.


Jim Sinclair’s Commentary

MSM and Financial TV says this is very good!

Stockman: US Business Inventory Glut Is a Black Omen for the Economy
Thursday, 16 Apr 2015 07:00 AM
By John Morgan

Business inventories in the U.S. are stacking up much faster than sales are, an omen of a violent liquidation to come that could mean a tumbling national economy, according to David Stockman, White House budget director during the Reagan era.

Stockman suggested investors should not be fooled by March retail sales that showed positive momentum, because that’s only part of the overall business sales picture in America.

He explained it was not until four years after the recession officially ended that retail sales even got back to their pre-crisis peak. "Needless to say, when you spend 48 months digging out of a deep hole, it might look like progress if you ignore where you started," he writes in his Contra Corner blog.

More ominously, Stockman concludes there is "chilling evidence" that the supply side of the economy is not prospering.

In fact, he noted, total business sales (manufacturing, wholesale and retail) are continuing to falter even as inventories are expanding. Specifically, he cited February business sales of $1.313 trillion that were essentially flat with January, meaning that first quarter to date is down 2 percent from the fourth-quarter average and off 3 percent from the mid-year 2014 level.

Stockman predicted the spendthrift U.S. consumers who helped push the economy to lofty levels before 2008 are not going to make an encore appearance. "They have lost their ATM; they did not get a ‘gas tax cut’; and the growth rate of real wages has ground decidedly slower," he said.

Stockman said a centerpiece of the 2008 financial crisis came when excessive inventories that built up during the housing boom were "violently liquidated."

In what he suggested could play out as an echo of that downturn, Stockman maintained the monthly rate of business sales in February was actually $16 billion less than the same month a year ago, while total inventories rose by nearly $60 billion.


Jim Sinclair’s Commentary

Not may, but will. It is all about oil.

China May Gain Control of South China Sea, U.S. Navy Says

China’s island building program in the South China Sea may result in it gaining control of some of the world’s most important waterways, the U.S.’s most senior military commander for Asia said.

“If this activity continues at pace, is that it — those would give them de facto control” of the maritime territory they claim, Admiral Samuel Locklear, head of the U.S. Pacific Command, told the U.S. Senate. Locklear said China could install long-range detection radars, base warships and warplanes on the islands, potentially giving it the ability to enforce an air defense identification zone.

Satellite photos this month showed images of Chinese dredgers at work at Mischief Reef in the Spratly Islands, a feature also claimed by Vietnam, the Philippines and Taiwan. President Barack Obama said April 10 that the U.S. is concerned that China is using its “muscle and power” to dominate smaller countries in the region.

Locklear said the pace of China’s building program was “astonishing” and added that the islands would improve China’s ability to locate a maritime security force in the waters that would be larger than the combined coast guards of the Southeast Asian countries.

China claims about four-fifths of the South China Sea, home to some of the world’s busiest shipping lanes, under a so-called nine-dash line drawn on a 1940s map. Vietnam, the Philippines, Taiwan, Malaysia and Brunei also claim territory in the waters.


Jim Sinclair’s Commentary

Our allies are hit men? No, not possible.

Three Prominent Poroshenko Critics Killed in Kiev in Three Days
Sputnik/ Sergey Kozlov
19:55 16.04.2015(updated 22:54 16.04.2015)

As the political situation in Ukraine destabilizes, the suspicious killings of prominent opposition supporters continue to transpire.

A prominent Ukrainian journalist, known for his critical views of Poroshenko’s government was shot dead in Kiev on Thursday, in the latest series of suspicious deaths of opposition supporters.

Oles Buzina, 45, a supporter of ex-president Viktor Yanukovych, was shot in the street. Buzina’s body was found on the ground nearing his apartment building close to the city center. The head of Kiev’s police department Alexander Tereschuk said that a TT gun was allegedly used in the crime.

According to the neighbors, the journalist was probably shot while jogging. He was found wearing a sports outfit. The 45- year-old was shot by two men in masks who disappeared from the crime scene in a Ford Focus car with either Latvian or Belarusian number plate.

Buzina was a columnist and editor of the daily newspaper Segodnya financed by Rinat Akhmetov, Ukraine’s richest man and a leading sponsor of Yanukovych’s Party of Regions. He was an opposition journalist, writer and TV host, well-known for his criticism of Poroshenko’s government.


Jim Sinclair’s Commentary

Got to love those sanctions results on others.

India Scraps Major Arms Purchase with France, Inks Major Deal with Russia
India’s Congress Party has canceled most of its order of 126 French Rafales and opted for a large order of Russian Sukhois
(Breiz Atao) Wed, Apr 15

This article originally appeared at Daily of the Breton State. It was translated by Tom Winter atFort Russ

India has essentially annulled it gigantic arms contract with France for the purchase and combined construction of 126 Rafale fighter planes; the Indian Prime Minister agreed to buy only

36 of them during his visit to Paris last week, a responsible government source stated. Instead, India will buy 127 fifth generation Russian fighter jets.

It is part of the direct fall-out from the socialist French governments anti-Russian policy, aligned with Washington. Obedient to the US, the Le Drian/Hollande tandem chose not to turn over the Mistral ships to Russia. This about-face on the part of India constitutes a major triumph for Vladimir Putin. Moscow’s revenge against France with will cost Paris 20 billion euros.

India essentially annuls its order

The Defense Minister Manohar Perrikar indicated that if India were inclined toward the purchase of any additional Rafales, this, too, would be through government to government accords. In January 2012, India chose the Rafales in one of its most important arms purchases in decades, for a cost evaluated at 20 billion dollars, but the accord was set aside following M. Modi’s coming into office.

“One car can’t go on two highways at the same time. The other route had numerous problems” said Mr Parrikar, alluding to the former Rafale agreement with France, which had been signed by the former government led by the Indian National Congress Party.

But the minister did welcome the purchase of 36 Rafales as a “breath of fresh air” for the Indian Air force. He did not specify the number of additional Rafales to be acquired after the first ones have been directly delivered from France in two years. But buying up to 126 fighter jets would be a financially "steep hill to climb” he concluded.


Jim Sinclair’s Commentary

Do you think the oil price drop might have started with a sanction sense to it?

Ahead of the Bell: Schlumberger trims another 11,000 jobs
Schlumberger trims another 11,000 jobs as oilfield services company deals with sector pressure
By The Associated Press

Schlumberger is cutting another 11,000 jobs, bringing the total to 20,000 this year, as slumping oil prices squeeze the world’s largest oilfield services companies.

Schlumberger’s profit tumbled 39 percent in the first quarter with oil companies cutting back on production in North America. The economies of oil-exporting countries like Russia, Mexico and Venezuela are under severe strain. Schlumberger has slashed spending to adapt, yet the fall-off has been so abrupt, particularly in North America, that the company said additional measures were required.

Shares of Schlumberger Ltd. climbed before markets opened Friday.

Oil prices plunged 60 percent from last June to January, although they have recovered some of those losses in recent months. Even so, the drop has forced almost every energy producer to cut expenses and scale back production. Producers are also pressuring oil service companies, which manage their oil fields, on costs.

Rivals Halliburton and Baker & Hughes have cut thousands of jobs this year.

Schlumberger Ltd., which has principal offices in Paris, Houston, London and The Hague, announced 9,000 job cuts in January. The latest round of cuts equate to a total workforce reduction of about 15 percent. The company currently employs around 115,000 people globally.

Schlumberger this year spent about $1.7 billion on a minority stake in Russia’s Eurasia Drilling Co. Ltd.

Company shares climbed 2.5 percent, or $2.25, to $94.14 in premarket trading. The stock had climbed about 5 percent so far this year, as of Thursday’s close, more than doubling the gain registered by the Standard & Poor’s 500 index over the same time frame.


Posted at 1:19 PM (CST) by & filed under Jim's Mailbox.


A very supportive article on gold and silver by Stewart Thompson. I’ve followed him for some time and he’s not an impetuous sort of guy, but rather thoughtful and reflective; taking charts into account… but not being led by the nose by them.

Buy gold equities now, he says, and physical will continue its upward pace in a steady manner for years to come.

One should not look at gold as an insurance policy anymore, but as an asset that will generate large returns in the foreseeable future.

CIGA Wolfgang

Gold: Are Greed & Fear Becoming Irrelevant?
Tuesday April 14, 2015 15:29

Almost every day, bank economists are making more positive statements about the outlook for gold prices, and rightly so.  "Money printing had almost always resulted in inflation but in today’s excess global production capacity environment and with the oil price having collapsed, that inflation has been deferred…." -Jon Bergtheil, Citigroup, April 13, 2015.

Jon suggests that the 2016 – 2020 period should support higher gold prices, because the inflation that has been deferred will arise.

Barron’s also posted a very positive report on Newmont on the weekend, stating that Newmont shares will rise substantially, even if gold declines.

I agree, and in 2014 I predicted that 2015 -2016 would see many gold stocks outperform gold, regardless of where gold trades.




Now here’s a novel idea! Who woulda thought?

CIGA Wolfgang Rech

Fed Shies Away From June Rate Hike
Weak economic data causing some officials to rethink timing of first increase in more than 6 years
By Jon Hilsenrath
Updated April 16, 2015 7:50 p.m. ET

A patch of soft economic data has created uncertainty inside the Federal Reserve about when to start raising short-term interest rates, dimming the chances of a move as early as June.



There’s more money than there’s stuff in the world.

Central Banks have purchased most, if not all, of the sovereign debt available. Now, as in Europe, they’re going after corporate debt.

Once that’s gone, they’ll be going after equities.

Then what? Going to Garage Sales?

But this road, as in all roads, does have an end. And when that end is reached… there’s always the Amazon drones, designated to provide money drops throughout the principalities.

We all know when the money exceeds the stuff, the price of stuff MUST rise. That, my friend, is called inflation.

Helicopter Ben… We had you pegged right!

CIGA Wolfgang Rech

When The ECB Starts Buying Corporate Bonds And Stocks Here’s Where It Should Look
Submitted by Tyler Durden on 04/17/2015 – 14:50

When the ECB is finally forced, by distortions of its own making, to dive into the corporate bond market, and when, after that, Mario Draghi goes full-Kuroda and throws the ECB’s balance sheet behind European equities, the central bank may want to check in the following places for relative value because according to Bloomberg, these are the countries where the “bargains” are to be found in equities and fixed income…


Posted at 2:34 PM (CST) by & filed under In The News.

Greece pushed a step closer to Grexit after IMF snub

Greece has been pushed a step closer to default and potential exit from the euro after one of its main lenders, the International Monetary Fund, all but ruled out allowing the cash-strapped country to delay repaying the €1bn (£722,000) due next month.

The head of the IMF, Christine Lagarde, said delaying the payments would be an unprecedented action that would only make the situation worse.

Speaking at the organisation’s spring meeting, she said: “Payment delays have not been granted by the board of the IMF in the last 30 years.”

Her intervention is likely to heighten fears that senior policymakers in the US and Europe are preparing for Greece to leave the eurozone.

She said that delays had “been granted to a couple of developing countries … and that was not followed by very productive results”.

The IMF is a rules-based institution, Lagarde said. While all options were available, she added: “It’s clearly not a course of action that could be recommended in the current situation.”

Her comments followed a report that the Greek finance minister, Yanis Varoufakis, had sounded out the IMF over whether Athens could ask for a delay on the payments it is struggling to afford. The scramble to get the funds together could leave Athens unable to meet pensions and welfare payments at the end of May.

The report in the Financial Times said that Varoufakis was rebuffed after he made an “informal approach” to discuss the issue.

Greece vigorously denied asking for leniency from the Washington DC-based lender of last resort. A spokesman for Varoufakis described the story as “lies”.



Jim Sinclair’s Commentary

All is well says Financial TV.

US Industrial Production Plunges By Most Since Aug 2012, Utility Output Drops Most In 9 Years
Tyler Durden on 04/15/2015 09:24 -0400

Mortgage Apps tumble, Empire Fed slumps, and now Industrial Production plunges… Against expectations of a 0.3% drop MoM, US Factory Output was twice as bad at -0.6% – the worst since August 2012 (and lamost worst since June 2009). This is the 4th miss in a row. What is even more stunning is that despite the coldest of cold winters that crashed the US economy, Utilities saw their output crash 5.9% – the most in 9 years (explained as follows – largely reversing a similarly-sized increase in February, which was related to unseasonably cold temperatures). Motor Vehicles saved the data from being a catastrophe with a 3.2% rise (following a 3.6% drop In Feb).

Not a pretty picture…


With Utilities output dropping by the most since 2006…



Jim Sinclair’s Commentary

A war without the US? Impossible.

US paratroops convoy to western Ukraine for training mission
Stars and Stripes
Published: April 13, 2015

U.S. paratroopers have arrived in Ukraine for Operation Fearless Guardian, a six-month effort to train Ukraine’s newly established national guard force.

The first troops from the 173rd Airborne Brigade arrived Friday in western Ukraine, delivering military cargo after completing a 1,100-mile convoy from their home station in Vicenza, Italy, the Army said.

“The equipment on the convoy consists primarily of logistics vehicles to support and enable the training effort in Ukraine,” said Capt. P.J. Hartman, a battalion transportation planner with the 173rd, in an Army news release. “This equipment will provide maintenance support as well as troop and general cargo transport to and from training areas.”

The convoy of 50 paratroops and 25 vehicles traveled through Austria, Germany and Poland before arriving in Yavoriv, Ukraine. Formal training with Ukraine’s national guard will begin later this month. About 300 U.S. soldiers will deploy for the effort, which centers on training three battalions of Ukrainian troops in a range of infantry tactics.

The initiative isn’t the first time U.S. troops have worked in Ukraine. Since Russia’s annexation of Ukraine’s Crimea peninsula last year and ongoing hostilities with Russian-backed separatists in the country’s east, U.S. soldiers — under the Operation Atlantic Resolve mission —have deployed several times to training grounds in western Ukraine.

The latest mission was initially slated to begin in March. It was delayed by U.S. officials, who wanted to allow time for a new cease-fire agreement between Ukraine and the separatists to take hold.

Last summer, turmoil in Ukraine forced the Army to postpone its Rapid Trident exercise. The mission, which included troops from the 173rd, was eventually carried out in September.

In recent months, U.S. special operations forces also have conducted medical training with Ukrainian forces.


Jim Sinclair’s Commentary

Dirty bomb central.

Thieves steal deadly radioactive material in Mexico, 5 states on alert
Published time: April 16, 2015 14:23

Authorities have issued emergency warnings to five Mexican states after it was reported that thieves had stolen potentially deadly radioactive material, the latest such heist to strike the Latin American country.

The interior ministry issued an alert in the states of Tabasco, Campeche, Chiapas, Oaxaca and Veracruz that a container holding iridium-192 – a man-made radioactive element that can cause burns, acute radiation sickness and even death – was stolen on Monday from a truck in Cardenas, a town in southern Tabasco.

"This source is very dangerous to people if it is removed from its container," the statement said.

The theft of the radioactive material was reported by the company Garantia Radiografica e Ingenieria on Monday. 
The ministry added the material “could cause permanent injuries to the person who handles it or who has been in contact with it for a brief time (minutes or hours)."

"Being close to this quantity of unprotected radioactive material for hours or days could be fatal," the statement warned. 
Luis Felipe Puente, head of Mexico’s civil protection agency, emphasized that anybody who finds the source should establish a 30-meter perimeter around it and contact the authorities immediately.

Mexico has been shaken by a string of incidences involving radioactive materials.


Jim Sinclair’s Commentary

Totally appropriate for Ben!

Ben Bernanke To Join World’s Most Levered Hedge Fund: HFT Powerhouse Citadel
Submitted by Tyler Durden on 04/16/2015 06:37 -0400

Several years ago, Zero Hedge first, and to our knowledge only, reported that when it comes to unofficially executing trades in the equity market the NY Fed – through a slightly more than arms-length arrangement – does so using Chicago HFT powerhouse Citadel. In other words, while Citadel was instrumental in preserving the smooth, diagonal ramp in stocks since 2009 and igniting upward momentum just as everyone else stared to sell when the Markets Group of the NY Fed called, it was also paid handsomely: after all, nobody checks the Fed’s broker commission statement. In fact according to some, indirect Fed compensation to what is the world’s most leveraged hedge fund has been in the billions over the past decade.

Well, now it’s payback time, and as the NYT reported overnight, the Brookings Institution’s favorite blogger, former Fed Chairman Ben Bernanke, has joined none other than Citadel as an advisor.

According to the NYT, "while Mr. Bernanke will remain a full-time fellow at the Brookings Institution, the new role represents his first somewhat regular job in the private sector since stepping down as Fed chairman in January 2014.  His role at Citadel was negotiated by Robert Barnett, the Washington superlawyer who also negotiated a deal for his book, “The Courage to Act,” which Mr. Bernanke recently submitted to his editor and will be published in October."

From the NYT:

Mr. Bernanke will become a senior adviser to the Citadel Investment Group, the $25 billion hedge fund founded by the billionaire Kenneth C. Griffin. He will offer his analysis of global economic and financial issues to Citadel’s investment committees. He will also meet with Citadel’s investors around the globe.

It is the latest and most prominent move by a Washington insider through the revolving door into the financial industry. Investors are increasingly looking for guidance on how to navigate an uncertain economic environment in the aftermath of the financial crisis and are willing to pay top dollar to former officials like Mr. Bernanke.

Mr. Bernanke joins a long parade of colleagues and peers to Wall Street and investment firms. After stepping down, Mr. Bernanke’s predecessor, Alan Greenspan, was recruited as a consultant for Deutsche Bank, the bond investment firm Pacific Investment Management Company and the hedge fund Paulson & Company.


Citadel Head Bond Trader (And TBAC Member) "Leaves" After Losing $1 Billion
Tyler Durden on 04/16/2015 12:44 -0400

It is almost too coincidental to be a coincidence: on the day Ben Bernanke, who until a year ago was the biggest fixed income portfolio manager in the world courtesy of the Fed’s $4.5 trillion in assets, joins Citadel as an advisor, the massively levered "market-neutral" hedge fund which as we showed earlier has $176 billion in regulatory assets, "loses" its global head of fixed income, senior managing director Derek Kaufman. Well not exactly loses. The reason for his "voluntary" departure: according to Bloomberg Kaufman is leaving Citadel not because he is about to be replaced by the former Fed chairman but because last year he lost $1 billion "in a variety of trades."

Some more details on Derek from his Linkedin Profile:

Derek Kaufman is [ZH: was] Head of Global Fixed Income and a member of Citadel’s Portfolio Committee.

Prior to joining Citadel in 2008, Mr. Kaufman was a Managing Director at JPMorgan Chase,where he most recently served as Global Head of Fixed Income in the Proprietary Positioning Business. He started at J.P. Morgan in 1996.

Mr. Kaufman is a member of the Treasury Borrowing Advisory Committee and the Federal Reserve Bank of New York’s Investor Advisory Committee on Financial Markets. He is a member of the Economic Club of New York, on the Board of Trustees for Third Way, an innovative think-tank in Washington, D.C., and on the Leadership Council of Robin Hood.


Jim Sinclair’s Commentary

Sanctions might go both ways.

EU Unable to Substitute Russian Gas If Moscow Abandons Ukraine Transit

BRUSSELS (Sputnik) —The European Union will not be able to find another source to substitute Russian gas transiting through Ukraine, if Russia rejects the Ukrainian transit route, Janez Kopac, the Director of the Energy Community Secretariat, said.

The Energy Community is an international organization, which mission is to extend the EU internal energy market’s legal framework to South East Europe and beyond. Secretariat is the only Energy Community’s permanent institution.

Kopac told RIA Novosti:

"No, there is not enough capacity at the moment. I think, this will not change in the coming years, even by the end of 2019."

On Monday, Russian Energy Minister Alexander Novak said Russia will most likely refrain from transiting gas through Ukraine to Europe once the current contract expires in 2019.

Russia has repeatedly expressed concerns over Ukraine’s lack of trustworthiness as a transit country. Currently, up to 40 percent of Russian gas is delivered to Europe through the Ukrainian territory.

Kopac also said Ukraine will remain a transit country for Russian gas supplies to the European Union.


Jim Sinclair’s Commentary

Into consumer debt hell with credit either approaching or maxed out.

Where Have All the Consumers Gone?

Retail sales rose less than expected in March after declining for three consecutive months. Since the U.S. began collecting data in 1967, only twice has it seen three-month stretches of waning retail sales in non-recessionary times.

This is puzzling. Why would consumers spend less as the economy picks up steam? And why haven’t consumers gone shopping with the one percent extra income that collapsing oil prices have handed them?

Last year, most forecasters assumed consumers would promptly spend their energy savings, resulting in a blowout Christmas season. Because it makes up 70 percent of gross domestic product, consumer spending was the only sector that could push the economy from its tepid 2.3 percent real growth rate to the 3.5 percent to 4 percent rate some economists had been predicting since the recovery started. Forecasters also pinned their hopes on consumer confidence readings, which hit a 10-year peak as shown by the University of Michigan survey.

Those prognosticators must not be aware of the low correlation between consumer confidence and spending. Our work shows that changes in consumer sentiment often lag, rather than precede, shifts in outlays.

Investors, too, have been optimistic. The consumer discretionary component of the Standard & Poor’s 500 Index, which includes retailers, auto producers and media companies, is up 19 percent in the last six months, compared with 10 percent for the broader S&P 500. Many of these companies are domestic-only and aren’t suffering from the strong dollar and weak foreign sales the way multinationals are. The ratio of stock prices to earnings for consumer discretionary stocks over the last year is 19.7, up from a five-year average of 16.5.


Jim Sinclair’s Commentary

How many times do you need to be told by how many people until you believe?

FDIC Plots a Bank Heist Involving YOUR Accounts

There’s a new front opening up in the war on your wealth. If you haven’t heard yet of the “bail-in,” you will. Even if you have, you need to know the latest…

The bail-in is another weapon in the government’s arsenal of capital controls meant to reward Wall Street cronies and separate you from your money.

We’ve long been familiar with capital controls, such as daily limits on bank withdrawals. Add that to seven years of microscopic interest rates cannibalizing savers’ nest eggs combined with planned inflation stealing your money while you sleep. But unlike the drip-drip we’re used to, the bail-in will come upon you quickly, harshly, and with finality.

As the world faced a complete financial meltdown in 2008, Congress ponied up fresh taxpayer money – $800 billion for openers and trillions since – to bail-out favored banks and industries. Out-of-favor institutions were allowed to fail. Jobs, fortunes, and futures disappeared while unborn generations were saddled overnight with unpayable debt.

Congress and bankers noted the sharply disagreeable taxpayer reaction. So they recycled an old idea from the Great Depression’s playbook – next time, just steal bank depositors’ life savings.

That tried and true tactic took a new name: the bail-in. The easy part – the laws they needed had been in place for decades. But for added cover, they passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, a 1930′s-styled, bank heist blueprint with a feel-good name.

Those laws altogether say your money in your bank account in your name is not your money. Those laws say the bank owns your deposited money, not you.


$5,000 SILVER?
Author: Bill Holter 
Published: April 16th, 2015

A catchy title this “$5,000 Silver?” don’t you think?  Am I crazy?  Is this even possible?  In who’s lifetime? Ours or our great, great grandchildren long after we are dead and buried?  The best way to look at this I believe is to briefly look at silver’s big brother gold and then postulate whether it’s possible or not.

To begin, let’s look at what happened in 1980 and why gold traded up to $875 in the first place.  As Jim Sinclair has said many times, gold “moved in a manner to cover the value of foreign held debt of the U.S.”.  He has also said “$50,000 gold is possible and it may turn out that this figure is far too low”.  Before you laugh and start firing spitballs at me or Mr. Sinclair, I remind you of his call of “gold at $1,650 per ounce by Jan. 2011″.  He said this when gold was $350 per ounce or so and the year was around 2004 if memory serves me correctly.  He was called a nut job and far worse …he was correct in retrospect and off in his timing by about eight months …SEVEN YEARS AHEAD OF TIME!

To refresh your memory, let’s do some basic mathematics.  The U.S. purportedly has 262 million ounces of gold.  (As a side note, if you understand how much gold China has imported just over the last six years and compare that to global production, then you understand the U.S. has in all likelihood “dishoarded” much of this gold).  We can compare this 262 million ounces to our national debt rounded off at $18 trillion.  Doing the math, if we had to back our debt with the gold we supposedly have, the number currently comes up to $68,700 per ounce!

Before you call me nuts, I have one question for you.  Were foreigners to decide that “dollars” for any (many!) reason was no longer acceptable, what would we “pay” with?  Remember, since the dollar is the reserve currency, the U.S. holds almost NOTHING in foreign reserves.  Why should we have to hold foreign reserves, we issue THE reserve currency?!  And yes, I understand the debt is “contracted” in dollars so all we have to do is print more to make the payment.  All I am saying is this, if the U.S. was forced somehow to actually settle the debt …in gold, our gold would need to be valued at $68,700 per ounce “now”.  I say “now” because our debt burden will only grow larger, our gold holdings (IF they truly still exist) will not grow or “breed” making our stash larger with new little goldlings.  My point is this, $68,700 is a credible number only assuming we do have the gold we claim to have.

Now let’s look at silver.  Silver is taken out of the ground at roughly a 10-1 ratio to gold production.  This number includes “by-product” silver.  The current price ratio is 70-1 or thereabouts, nonsensical when you factor in the price to produce silver is higher than the market price.  This situation argues for severe supply cutbacks in the future unless the price goes higher to allow for a mining profit.  Silver is also a very miniscule market when looked at from a dollar standpoint.  There are roughly 800 million ounces produced globally which in dollar terms is less than $15 billion.  In today’s world, $15 billion is nothing!  Individual companies are bought and sold for more every day.

Another aspect to silver is the “low hanging fruit” has already been found and mined.  Many companies have high graded production just to stay in business.  New silver deposit exploration has found very little over the last 5-10 years, current new exploration today is almost non existent because the funds from operations have turned into losses.  The capital to look for new silver deposits simply does not exist.


It’s Not The Weather: Industrial Production Is Rolling Over, Yet The Fed Is Clueless About Its Own Index
by David Stockman • April 15, 2015

Another day of “incoming data” and still more evidence that this isn’t your father’s business cycle. This time it comes from the Eccles Building itself, but don’t expect the Keynesian money printers domiciled there to recognize that the industrial production report they issued today constitutes yet another rebuke to their entire macro model.

The March index slipped badly (0.6%) and thereby predictably elicited a “do not be troubled” assurance from the talking heads. It was just aberrant weather again. Well, that’s actually right. March was so much warmer than February that the utility component of the index plunged by 5.9%.

Indeed, as another branch of the Fed revealed a few days ago, March was actually warmer than normal for the month. Presumably this means the punk economic data for March can’t be explained by winterish weather-since it is the very opposite condition which explains last month’s steep drop in utility production.

So the better part of wisdom would be to keep the weather and its unpredictable impact on monthly power plant demand out of it. And, as it happens, the trends in the other two components of the index-mining and manufacturing-do offer some very pertinent clues about the dismal state of the US economy.

In a word, both of these indices are rolling over on a short-term basis and reflect trend lines which implicate the destructive doings of bubble finance, not the Fed’s pretension that it is rejuvenating the main street economy.

In the case of mining, the March index was down 4% from its December level, yet the decline in actual shale patch output has not yet even started. The recent rollover in the index is mainly attributable to the plunge in coal production, which is now down 20% from it peak three years ago.

In sum, the 30% gain in mining production since the pre-crisis peak is all in the rearview mirror. Mining accounts for about one-seventh of the industrial production index, and, as George W. Bush once said in another context, this sucker is going down.


Jim Sinclair’s Commentary

Always good news to see market expansion and a move await from pure dollar trading.

SGE to start fixing gold price denominated in yuan

The Shanghai Gold Exchange will try to start offering the renminbi-denominated gold-fixing price this year, as an alternative to the dollar-denominated gold-fixing in London, a top bourse official said on Wednesday.

SGE head Xu Luode said that the bourse has been researching the pros and cons of the yuan-denominated gold-fixing price, and will strive to launch it by the end of this year as market conditions have laid "foundations" for the new price-fixing.

"The yuan-denominated price for gold will not compete with the current dollar-denominated price. Instead, it will be complementary, offer one more choice, and the yuan-denominated and US dollar-denominated systems can be cross-referenced," said Xu, adding that the yuan-denominated benchmark price will only make gold prices more reasonable. It will also reflect the existing supply and demand situation, as China accounts for about 40 percent of the global physical gold demand.

China is also the world’s biggest producer and second-largest consumer of gold. Currently global gold prices are decided by the century-old London fix, which has been under scrutiny because of alleged price-manipulation and will soon be replaced by a new mechanism involving more participants.

Analysts said the move, if successful, will help popularize global use of the renminbi, which has already become world’s fifth most-used settlement currency and reserve currency for some banks.

"If the yuan-gold-fixing in Shanghai is launched, it can use the model of the international board of the SGE within Shanghai’s Free Trade Zone, which allows foreign investors and banks to settle and trade in offshore yuan, while domestic ones to use onshore yuan as the currency is yet to be fully convertible," said Yang Fei, a gold investment analyst with See-wonder Financial Information Technology Co Ltd.


Posted at 1:55 PM (CST) by & filed under Jim's Mailbox.


Just a thought.

If cash were banned to allow the Fed to have negative interest rates below minus 100 bp, wouldn’t that create a massive flight out of bonds and into gold?

Also note that reference that such a scenario would prevent people from “opting out of the system!” Exactly what you’ve been saying for years with “GOTS”.

CIGA Wolfgang Rech

Citigroup’s Gold "Expert" Demands A Cash Ban
Submitted by Tyler Durden on 04/16/2015 13:09 -0400

Late last year, Grexit "expert" Willem Buiter decided that he was a greater expert on the topic of monetary metals than on geopolitics by stating that "Gold Is A 6,000 Year Old Bubble." Now, he has decided that after gold, it is best to just do away with any physical currency altogether and the time to ban cash has arrived.

In a new piece, Citi’s Willem Buiter looks at this problem, which is known as the effective lower bound (ELB) on nominal interest rates. Fundamentally, the ELB problem comes down to cash. According to Buiter, the ELB only exists at all due to the existence of cash, which is a bearer instrument that pays zero nominal rates. Why have your money on deposit at a negative rate that reduces your wealth when you can have it in cash and suffer no reduction? Cash therefore gives people an easy and effective way of avoiding negative nominal rates. Buiter’s note suggests three ways to address this problem:

1.Abolish currency.

2.Tax currency.

3.Remove the fixed exchange rate between currency and central bank reserves/deposits.

Yes, Buiter’s solution to cash’s ability to allow people to avoid negative deposit rates is to abolish cash altogether. (Note that he’s far from being the first to float this idea. Ken Rogoff has given his endorsement to the idea as well, as have others.)

Before looking at the practicalities of abolishing currency, we should first look at whether it could ever be necessary. Due to the costs of holding large amounts of cash, Buiter puts the actual nominal rate at which the move to cash makes sense as closer to -100bp. So, in order for a cash abolition to become necessary, central banks would need to be in a position where they wished to set nominal rates much lower than that.

If cash were to be banned, people could no longer opt out from this system. Bank runs would no longer be possible at all. While a bank run these days only gives one government scrip that is itself an irredeemable liability of a central bank, it is at least slightly more “real” than the accounting entry known as deposit money. Most importantly, cash can insure one against a bank going under, or the breakdown of the entire banking system, which is always a potential danger. Banks would obviously love a cash ban – quite possibly they are the only ones who would love it even more than governments.


Posted at 10:52 AM (CST) by & filed under In The News.



Jim Sinclair’s Commentary

Mr. Williams shares the following with us.

- Quarterly Retail Sales and Industrial Production Last Dropped Together in First-Quarter 2009, When Real GDP Contracted 5.5% (-5.5%) 
- Nominal Retail Sales Fell an Annualized 5.0% (-5.0%) in First-Quarter 2015; March Annual Growth Was Weakest Since Economic Collapse 
- Real Retail Sales Also Locked-In to First-Quarter Contraction 
- Pummeled by Declining Manufacturing and Oil and Gas Production,Industrial Production Fell an Annualized 1.0% (-1.0%) in First-Quarter 2015 
- First-Quarter 2015 GDP Still on Track for Renewed Downturn 
- March PPI Inflation Was Almost Unremarkable

"No. 712: March Nominal Retail Sales, Industrial Production, PPI " 


Jim Sinclair’s Commentary

Germany is the hope and safe haven for the EU?

How German government debt just got dangerous
A "poisonous cocktail" of events could see investors burnt by holding ultra-safe German government debt
By Mehreen Khan
12:45PM BST 13 Apr 2015

Investors have been warned of dangers of holding German government debt, as unprecedented central bank easing sends the country’s 10-year borrowing costs towards zero.

Germany bunds with a maturity of up to eight years have already veered into negative territory, and are likely to be joined by the country’s 10-year debt, which is currently trading at 0.15pc, down from 0.54pc at the start of the year.

A €1.1 trillion quantitative easing blitz from the European Central Bank last month has driven up the price of safe assets such as eurozone government debt. Yields, which move in the opposite direction to fixed income prices, have plummeted.

Anxiety over Greece’s future in the eurozone and the spectre of a deflationary spiral gripping the currency zone have also driven investors to seek shelter in high-quality sovereign debt. Germany’s triple-A rated sovereign paper is considered the safest asset class in the eurozone.

But analysts are warning the market for the government debt is now becoming dangerously mispriced.

German bonds are vulnerable to a "potentially poisonous cocktail of resurgent inflation and wage increases," according to David Roberts of Kames Capital.

“If you look at bunds in anything other than the shortest possible timescale, the risk becomes very clear,” said Mr Roberts.

Strategists at Bank of America Merril Lynch also warn that a "swift rise in German bund yields" would burn many investors.


Jim Sinclair’s Commentary

Some economic recovery?

Fed’s Dudley Warns about Wave of Municipal Bankruptcies
by The Daily Coin · April 15, 2015
by Wolf Richter, Wolf Street

It has been a persistent ugly list of municipal bankruptcies: Detroit, MI; Vallejo, San Bernardino, Stockton, and Mammoth Lakes, CA; Jefferson County, AL. Harrisburg, PA; Central Falls, RI; Boise County, ID.

There are many more aspirants for that list, including cities bigger than Detroit. Detroit was the test case for shedding debt. If bankruptcy worked in Detroit, it might work in Chicago. Illinois Gov. Bruce Rauner wants to make Chapter 9 bankruptcies legal for cities in his state, which is facing its own mega-problems.

“Bankruptcy law exists for a reason; it’s allowed in business so that businesses can get back on their feet and prosper again by restructuring their debts,” Rauner said. “It’s very important for governments to be able to do that, too.”

His plan for sparing Illinois that fate is to cut state assistance to municipalities, which doesn’t sit well with officials at these municipalities. Chicago Mayor Rahm Emanuel’s office countered that balancing the state budget on the backs of the local governments is itself a “bankrupt” idea.

Puerto Rico doesn’t even have access to a legal framework like bankruptcy to reduce its debts, but it won’t be able to service them. It owes $73 billion to bondholders, about $20,000 per-capita – more than any of the 50 states. If you own a muni bond fund, you’re probably a creditor. Bond-fund managers use its higher-yielding debt to goose their performance. But now some sort of default and debt relieve is in the works. The US Treasury Department is involved too.

“People before debt,” the people in Puerto Rico demand. It’s going to be expensive for bondholders.

That’s the ugly drumbeat in the background of New York Fed President William Dudley’s speech today at the New York Fed’s workshop, “Chapter 9 and Alternatives for Distressed Municipalities and States.”


Jim Sinclair’s Commentary

The petro dollar is being picked at daily and outside of the weak Euro that is all that is holding the dollar above .7900 USDX in this world of algo driven illusionary markets.

Look Who’s Not Buying The Dips: Oil-Rich Nations Dumping Petrodollar Assets at Record $200 Billion Pace
by Bloomberg Business • April 14, 2015
By Javier Blas at Bloomberg

Now that oil prices have dropped by half to $50 a barrel, Saudi Arabia and other commodity-rich nations are fast drawing down those “petrodollar” reserves. Some nations, such as Angola, are burning through their savings at a record pace, removing a source of liquidity from global markets.

If oil and other commodity prices remain depressed, the trend will cut demand for everything from European government debt to U.S. real estate as producing nations seek to fill holes in their domestic budgets.

“This is the first time in 20 years that OPEC nations will be sucking liquidity out of the market rather than adding to it through investments,” said David Spegel, head of emerging markets sovereign credit research at BNP Paribas SA in London.

Saudi Arabia, the world’s largest oil producer, is the prime example of the swiftness and magnitude of the selloff: its foreign exchange reserves fell by $20.2 billion in February, the biggest monthly drop in at least 15 years, according to data from the Saudi Arabian Monetary Agency. That’s almost double the drop after the financial crisis in early 2009, when oil prices plunged and Riyadh consumed $11.6 billion of its reserves in a single month.

The International Monetary Fund commodity index, a broad basket of natural resources from iron ore and oil to bananas and copper, fell in January to its lowest since mid-2009. Although the index has recovered a little since then, it still is down more than 40 percent from a record high set in early 2011.

Oil futures in New York traded at $52.78 a barrel today, 49 percent lower than a year ago.

Reserves Drop

A concomitant drop in foreign reserves, revealed in data from national central banks and the IMF, is affecting nations from oil producer Oman to copper-rich Chile and cotton-growing Burkina Faso. Reserves are dropping faster than during the last commodity price plunge in 2008 and 2009.

In Angola, reserves dropped last year by $5.5 billion, the biggest annual decline since records started 20 years ago. For Nigeria, foreign reserves fell in February by $2.9 billion, the biggest monthly drop since comparable data started in 2010.


Posted at 10:51 AM (CST) by & filed under Jim's Mailbox.


First Jamie Dimon said it, now Prudential says it. If I’m not mistaken, it seems like there would be no bid when the interest rate environment changes.

Everyone is complacent, expecting the Fed to maintain low rates for the foreseeable future, thereby supporting bond prices. Should this scenario change, bondholders seeking bids for their holdings may be in for a rude awakening. There will be none, at least at reasonable prices. Furthermore, the equity markets would take a nasty hit.

People’s first question should be: Where do I go with my money (should I be lucky enough to get out)? If we were to be in an inflationary environment, I’d say gold, real estate, and any hard asset.

If we were to be in a deflationary environment, then gold would still be the only viable choice:

CIGA Wolfgang Rech

"Roy Jastram concludes that, during periods of major deflation, the operational value of gold increases. He also concludes that gold maintains its purchasing power over long time periods (half-century intervals), not because gold is being valued up to the price of commodities, but because the price of commodities is being valued up to the price of gold.

By de-stabilising the banking system and the monetary system, deflation creates a period of chaos and uncertainty, which is quite positive for the price of gold, the only money that is real and has no counterparty risk, like paper currencies based on national debt. During a period of deflation, there are many banks that go under, so people tend to keep their money outside the banking system and, preferably, in gold and/or silver.

In conclusion, it is not necessary to have a high rate of inflation or hyperinflation, as we often read in the media, for the gold price to take off. Even deflation can generate a major increase in the gold price. The only negatives for gold would be disinflation and moderate inflation."


"Biggest Worry" Is "Dramatic Decline" In Bond Market Liquidity, Prudential Says
Submitted by Tyler Durden on 04/14/2015 – 19:00

“The biggest worry of the buy side around the world is that there has been a dramatic decline in liquidity from the sell side for many fixed income products,” Prudential’s David Hunt tells Bloomberg, echoing Jamie Dimon and confirming what we’ve been shouting about for years.




Believe what you want, but Koichi Hamada’s initial statement was the “real thing.”

The recant, came from above, so as not to rile the markets and narrow the exit door.

This is VERY important for gold, the dollar, and Japanese inflation (lest they look forward to paying twice the world price for energy, agricultural products, and commodities).

Anyone can see what just happened. Clear as daylight.

CIGA Wolfgang Rech

JPY Jumps After Abe Special Adviser Shows He Has No Shame Whatsoever
Submitted by Tyler Durden on 04/14/2015 08:15 -0400

It appears being Special Adviser to Japanese Prime Minister Shinzo Abe comes with great prerssure to toe the line – as opposed to advise. Koichi Hamada yesterday said USDJPY 105 was "appropriate" and USDJPY 120 was "too weak"… that sent USDJPY tumbling. These comments were reiterated in the earlyAsia session and adding that he "doesn’t think JPY will weaken much further." We wake up this morning and reuters reports that he has entirely flip-flopped his views saying now that "120 is appropriate," and that he " would not oppose further easing." It’s clear someone got a tap on the shoulder…


Posted at 2:35 PM (CST) by & filed under Jim's Mailbox.


Remember comedian Henny Youngman?

"Take my wife… please!"

Well, here’s the government to ALCOA… "Take my money… please!"

Maybe, with the negative interest rate environment taking place worldwide, ALCOA will get paid to take this loan! This is how far the corruption and crony capitalism has come in America.

You may laugh at this, but already banks are paying people to take out mortgages in Europe. It’s not a leap to suggest the government will be paying corporations to take government money. It certainly solves the problem of eroding sales in a recessionary environment. In fact, corporations won’t have to make or sell anything anymore, for years to come. And if you think that citizens being laid off because of this matters, think again. The government doesn’t actually need your tax dollars. They have the Fed. They can print to their heart’s content.

Citizens, this is where your tax dollars go until nothing is left. Then it will be too late to express your revolt.

Gold is looking better as each day passes.

CIGA Wolfgang Rech

Latest $269 Million DOE Loan Causes Major Controversy
Submitted by Tyler Durden on 04/14/2015 – 12:26

No doubt smarting from criticism about its lack of success in picking winners in alternative energy vehicles, the Department of Energy has given initial approval for a $269 million loan to a proven winner – Alcoa’s high-strength aluminum to make vehicles lighter and more fuel efficient. But the new loan came under immediate fire for being superfluous since Alcoa was proceeding with the plant with or without DOE assistance.