In The News Today

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Jim Sinclair’s Commentary

Friday night R&R before we get back into the fray Monday.

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Jim Sinclair’s Commentary

The absolute constant since the beginning of QE to infinity was the flow of false statements concerning QE’s limitations, and curtailment of QE. Every statement out of the Fed dealt with the end of QE as it constantly increased and continued.

I am of the mind that the developments in the Japanese bond market have scared the Fed.

My feeling is that some others in our community in the need of news who specialize in the spectacular are making too much of the constant flow of QE end statements from the practitioners of expanding QE.

QE only ends in a practical sense when the Fed walks away from offerings in the treasury market and the bond market implodes.

The Fed may also be planning for First Contact.

Fed Maps Exit From Stimulus
Timing of Wind-Down Is Uncertain, but Focus Is on Managing Unpredictable Market Expectations
By JON HILSENRATH

Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy—an effort to preserve flexibility and manage highly unpredictable market expectations.

Officials say they plan to reduce the amount of bonds they buy in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves. The timing on when to start is still being debated.

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The Fed’s strategy for how and when to wind down the program is of intense interest in financial markets. While the strategy being debated leaves the Fed plenty of flexibility, it might not be the clear and steady path markets expect based on past experience.

Officials are focusing on clarifying the strategy so markets don’t overreact about their next moves. For example, officials want to avoid creating expectations that their retreat will be a steady, uniform process like their approach from 2003 to 2006, when they raised short-term interest rates in a series of quarter-percentage-point increments over 17 straight policy meetings.

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Dear CIGAs,

If you have significant money in deposits in the Western world system you are about to make a philanthropic contribution to the Bankster’s malpractices. It is taxation of the innocent without representation or profit.

 

Rumor control:

Van Eck Management did not close down a large PM hedge fund. That was a misinterpretation by listeners of someone’s public statement.

 

Jim Sinclair’s Commentary

More of the Techno Bankster’s world of wonders.

As Stock Market Reaches Record Highs, Americans Owning Stock Drops to Record Low
Friday, May 10, 2013

Now seems like a great time to invest in the stock market, which has continued its bullish ways this year. But then why has stock ownership reached a 15-year low?

Gallup’s annual Economy and Finance survey, conducted April 4-14, found that only 52% of Americans currently are playing the market. That’s the lowest rate since at least 1998, when Gallup began tracking stock ownership. Even that figure is deceptive because about half of Americans who do own stock do so only through pension funds, mutual funds and other accounts they don’t control.

Meanwhile, the Dow Jones Industrial Average reached 15,000 recently, for the first time ever.

Lydia Saad at Gallup says the good times on the stock exchange are just not enticing enough for many Americans, what with unemployment still above 7%—a statistic that doesn’t include those who have given up looking for work after being without a job for so long.

“While soaring stock values may be an incentive to jump back into the market, continued high unemployment appears to be acting as a barrier,” Saad wrote. “Without a job, some Americans may simply be unable to afford stock investments, while others may fear the market is still too risky as long as joblessness remains a national problem.”

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Jim Sinclair’s Commentary

Free Gold, the theory stated simply and directly, is correct. Like any school of thought it has developed opinions concerning many other aspects of gold that may be true, but also might be incorrect. This is common of any school of thought as it gains followers.

Normally, the followers destroy the Guru. That being said, we must all consider the following presentation. Everything about Free Gold that I agree with is here, nowhere else.

The emancipation of Gold is at hand. The paper takedown today of the gold price and physical demand in London are the tools of the emancipation of Gold from paper and therefore the unseen hand that is developing Free Gold.

Please watch the following short video.

 

Jim Sinclair’s Commentary

Before the story of the effects of the meltdown in OTC derivatives and its impact is over, you will see many strange ways governments will seek money to buy their bonds.

Argentina’s Deadbeat Special: Buy a 4% Bond or Go to Jail
By Pablo Gonzalez & Katia Porzecanski – May 10, 2013 10:28 AM ET

President Cristina Fernandez de Kirchner wants tax evaders hiding about $160 billion in dollars to help finance Argentina’s oil-producing ambitions. Her offer: Buy a 4 percent bond or face the prospect of jail time.

The tax authority announced the plan May 7, highlighting its information-sharing agreements with 40 nations and warning Argentines who don’t use the three-month amnesty window that they risk fines or arrest. Evaders have two options for their cash and the only one paying interest will be a dollar bond due in 2016 to finance YPF SA (YPF), the state oil company. The 4 percent rate is a third the average 13.85 yield on Argentine debt and less than the 4.6 percent in emerging markets.

A year after seizing YPF, Fernandez is funneling more money into the nation’s energy industry as the government struggles to boost production from the world’s third-biggest shale oil reserves. With Argentina already committed to pumping $2 billion of central bank reserves into a fund for energy investments and the highest borrowing costs in emerging markets keeping it from issuing debt abroad, the government is eyeing the billions of undeclared dollars that Argentines hold to help shore up reserves that have dwindled to a six-year low.

“The authorities need to take steps to open up external resources in the energy sector and to finance the Treasury and local governments,” said Sebastian Vargas, a New York-based analyst at Barclays Plc. “The amnesty is not negative for markets but it’s disappointing because they do little to solve balance-of-payment difficulties.”

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Jim Sinclair’s Commentary

Japan has taken over form Bernanke in leading the "QE to infinity" parade. Japan might well not be able to maintain such a position, resulting in a situation that has to scare the daylight out of our beloved US Fed and treasury central planners.

LAND OF THE DYING SUN: JAPAN’S LOOMING DEBT CRISIS
May 9, 2013 · by prospectjournalucsd · in ECONOMICS,OPINION, POLITICS. ·

Work-a-day meth addicts can keep it together for a time—and they may even get a lot of stuff done. Hey, look at Christopher Walken. He managed to earn a small fortune staying alive for countless rounds of Russian Roulette in The Deer Hunter. Granted he wasn’t a speed addict, but the fact is, no matter what, unsustainable situations always crash—hard.

That might as well be the case with Japan. The confluence of factors impending over its eventual demise retain such a serious tone, it is hard not to fear for the nation’s long-term governmental stability. From energy to fiscal to monetary policy, Japan finds itself between a rock and a hard place on every front.

In the wake of the Fukishima Nuclear Disaster, Japan has halted the production of all nuclear power—reducing domestic energy production by 30 percent of pre-Fukishima levels.Japan now has to import fossil fuels to make up the difference. With national debt at 230 percent of GDP and a budget deficit of 56 percent of GDP, Japan currently has to grapple with negative economic expansion while producing domestic energy at heavy loss. Indeed, Japan has entered a deep recession given its economy is contracting at an annualized rate of 2.3 percent.

Furthering disconcerting sentiment, Japan currently allocates 25 percent of its budget to simply service the interest on its debt.To keep itself afloat, the industrial titan is seeking to devalue the yen to maintain its manufacturing-based, export-driven economy. Yet, by debasing its currency Japan is destroying its citizens’ wealth. The people of Japan, more than any other developed nation, buy their own government bonds—Japanese debt. Consequently, citizens are primed to see negative returns on their investment and realize a dystopian retirement if the Bank of Japan tries to print its way out of this predicament.

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Jim Sinclair’s Commentary

Surprise, surprise, look who made the headlines again.

However, nothing much will happen. A fine will be paid, and all parties except the public walk away happy.

California Attorney General Sues J.P. Morgan Over Alleged ‘Fraudulent and Unlawful Debt-Collection Practices’
Published May 09, 2013
Dow Jones Newswires

California Attorney General Kamala Harris sued J.P.Morgan Chase & Co. (JPM) in state court on Thursday, claiming the bank has "run a massive debt collection mill that abuses the California judicial process."

The attorney general alleges in the complaint that J.P.Morgan Chase, the nation’s largest bank by assets, robo-signed legal documents deployed in credit card debt-collections. Such signing is a practice previously used by banks in dealing with the massive number of home foreclosures, which led to regulatory sanctions.

"At the heart of the defendants’ unlawful conduct is the rampant use of ‘robo-signing’ — a practice of signing declarations, affidavits, and other documents in mass quantities, typically hundreds at a time, without any knowledge of the facts alleged in the document and without regard to the truth or accuracy of those facts," according to the complaint,

Attorney General Harris said she demands J.P.Morgan Chase cease the alleged practices, which include flooding California courts with collection lawsuits and claiming inaccurate amounts–and compensate allegedly harmed borrowers.

"From January 2008 through April 2011, Chase filed thousands of debt collection lawsuits every month in the State of California," the Attorney General’s office said a news release. "On one day alone, Chase filed 469 such lawsuits in California."

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