In The News Today

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Bill Holter’s Commentary

This is a very interesting article, the first two paragraphs are exactly correct.

Hedge Fund CIO: You Should Be Buying Vol – MMT Is Coming Next And It Will Be Preceded By An Explosion In Volatility
September 29, 2019

Submitted by Eric Peters, CIO of One River Asset Management

We’re approaching a redistribution,” said the macro CIO, swinging through NY. We were discussing trades, themes, the big picture. “What lies behind us were all good things for asset owners, and what lies ahead is in many respects the opposite.” We were eating at some Greek place. “Investors rode a trend based on stock buybacks, high profit margins (which are the inverse of low wages), low taxes, and loose regulation of technology,” he said, holding up four fingers. “Now think about what lies ahead.” And he lowered each finger into a closed fist.

We hit peak inequality and it sparked a political response across the globe, I said. And it occurred at a time when monetary policy has largely hit its limit – those two things are obviously related. So now markets bump along with investors scrambling for sources of scarce yield, accepting more risk for less return, until something goes wrong – then the profound changes that are happening beneath the surface become clear. That’s when we see an enormous fiscal response, whether we call it MMT or not won’t matter. That’s what’s coming next.
“I spend a lot of time in Tokyo,” said the same CIO, dropping heavy names from his recent visit. “I’ve been pressing them for years to get seriously aggressive. When the government can borrow for 20-years at -0.20% in a nation filled with so many smart scientists, how can you not issue bonds and invest massively in primary science? Surely you’ll earn a positive return on that kind of investment – that’s not building bridges to nowhere,” he said. “But my contacts there can’t seem to wrap their heads around anything that challenges their orthodoxy.”

Established economic and political interests created myths about how economies work, I said in response. Entrenched interests fear change and will do everything possible to maintain the status quo. They created what we now call economic orthodoxy. But according to it, all this QE would have sparked massive inflation. Japan’s 250% Debt/GDP would have provoked economic collapse. But these things haven’t happened, because the myths are not truths. And as the faith in orthodoxy melts, established interests will fall, real change will come.

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J. Johnson’s Latest – The Beatings Continue, But So Do The Call Options Purchases in Silver!
September 30, 2019

Great and Wonderful Monday Morning Folks,   

      Today is the last day of our fiscal year (US federal government) and as usual the morality beatings continue with Gold trading at $1,489.80, down $16.60 after being pushed down to $1,486.20 with the high at $1,507.20. Silver is still being used as the Red Headed Step Child with its trade at $17.23, down 42.2 cents after being knocked to $17.16 with the high at $17.66. The US Dollars trade, on the last day of the year, is at 98.925, up 16.4 points and close to the high at 98.965 with the low at 98.71. All of this nonsense happened before 5 am pst, the Comex open, and the London close.   

      Everything we are seeing in the currency’s arena is all about the support of the internationally accepted US Dollar mechanism (for now) with the emerging markets taking hits as well. In Venezuela, Gold is now trading at 14,879.38 Bolivar down 1,168.50 over the weekend with Silver losing 4.845 with its super sale price now at 172.085 Bolivar. In Argentina, Gold is trading at 85,399.44 Pesos showing a reduction of 436.70 with Silver at 987.662 Pesos showing a reduction of 25.088. In Turkey, Gold’s price is at 8,411.22 Lira showing it too lost 84.98 with Silver at 97.2719 losing 2.9681 in T-Lira value.    

      October Silver Deliveries are now in full swing with the count at 1,173 fully paid for 5,000-ounce contracts and with a Volume of 25 up on the board so far today with a trading range of $17.505 and $17.165 with the last trade being the low and a single lot order. This is only 5,865,000 Ounces of a product that is needed in just about all electronics and showing only a slight 33 count reduction from Fridays tally. We know the criminal element is still allowed to trade precious metals, what we don’t know is what deal they made with the last administration and if that deal will be removed by Trump or if we’re to wait for the last bar to leave but one thing for sure is, the Resolutes are still Resoluting!    

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Jim Sinclair’s Commentary

My experience with China is that you don’t kick a sleeping dragon.

Hong Kong Protesters Taunt Beijing in Bid to Spoil Communist China’s Birthday
September 30, 2019

HONG KONG—Protesters here have dialed up attacks against the Chinese Communist Party ahead of mass demonstrations planned for the 70th anniversary of the People’s Republic of China on Tuesday, renewing momentum for the protest movement by shaping it as a fight against authoritarianism.

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China Quietly Doubles Troop Levels In Hong Kong, Envoys Say
September 30, 2019

Last month, Beijing moved thousands of troops across the border into this restive city. They came in on trucks and armored cars, by bus and by ship.

The state news agency Xinhua described the operation as a routine “rotation” of the low-key force China has kept in Hong Kong since the city’s handover from Britain in 1997. No mention was made of the anti-government protests that have been shaking the metropolis since June.

It was a plausible report: China has maintained a steady level of force in the territory for years, regularly swapping troops in and out. And days earlier, according to an audio recording obtained by Reuters, embattled Hong Kong leader Carrie Lam had told local businesspeople that China had “absolutely no plan” to order the army to put down the demonstrations.

A month on, Asian and Western envoys in Hong Kong say they are certain the late-August deployment was not a rotation at all, but a reinforcement. Seven envoys who spoke to Reuters said they didn’t detect any significant number of existing forces in Hong Kong returning to the mainland in the days before or after the announcement.

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Jim Sinclair’s Commentary

In the last two weeks, this headline is almost a daily event. It has greater implications than most reports are willing to give. If you take a look back, every time we have a systematic financial problem, the first market to start showing it is the repo market. It could be that a cashless society is not the great idea that everybody says it is.

Fed Adds $63.5 Billion To Financial System In Repo Transaction
September 30, 2019

The Federal Reserve Bank of New York added $63.5 billion to the financial system Monday, using the market for repurchase agreements, or repo, to relieve funding pressure in money markets.

Banks asked for $63.5 billion in overnight reserves, all of which the Fed accepted, offering collateral in the form of U.S. Treasury and mortgage securities.

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Jim Sinclair’s Commentary

The administration is backing off of their blanket statement, and that even should be considered last week’s news.

Exclusive: Nasdaq Cracks Down On Ipos Of Small Chinese Companies
September 29, 2019

(Reuters) – Nasdaq Inc (NDAQ.O) is cracking down on initial public offerings (IPOs) of small Chinese companies by tightening restrictions and slowing down their approval, according to regulatory filings, corporate executives and investment bankers.

Nasdaq’s attempt to limit these stock market flotations comes as a growing number of them end up raising most of the capital in their IPO from Chinese sources, rather than from U.S. investors.

The shares of most small Chinese companies trade thinly following their U.S. listing, because most of them stay in the hands of a few insiders. Their low liquidity makes them unattractive to many large institutional investors, to whom Nasdaq is seeking to cater.

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Jim Sinclair’s Commentary

The following is the party line of the operative thought that this is the first time since the Great Recession, and is not occurring because it is simple technical reasons.  You must find the real reason why this is happening.

The New York Fed Chief Is Facing His Biggest Test. Here’s His Response.
September 29, 2019

John C. Williams, president of the Federal Reserve Bank of New York, has spent the past two weeks grappling with the regional bank’s most tumultuous period in years.

Since Sept. 16, a shortage of dollars in an obscure but crucial corner of short-term Wall Street funding, called the repo market, has forced the New York Fed to engage in an ongoing series of market interventions — a first since the Great Recession. The effort is an attempt to keep the central bank’s benchmark rate from accidentally creeping higher.

The situation is the biggest test so far for Mr. Williams — who took the helm of the New York Fed in June 2018 — and one that many market analysts say deserves a less-than-stellar grade.

While officials have succeeded in getting interest rates under control, some investors have criticized the Fed for moving too hesitantly when problems first arose, waiting until rates on repurchase, or repo, agreements had skyrocketed and briefly spilled over, pushing the Fed’s benchmark rate above its intended range.

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Jim Sinclair’s Commentary

The market is driven heavily by computer decisions devoid of fear and greed. As long as momentum continues up, prices continue up.

U.S. Stocks Rise to Cap Volatile Quarter
September 30, 2019

The S&P 500 jumped Monday, on track to enter the fourth quarter with its biggest year-to-date gain in more than two decades.

The broad stock-market index has rallied 19% this year—its best performance in the first three quarters of a year since 1997. The advance comes alongside a rally in both bonds and commodities.

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Jim Sinclair’s Commentary

The scramble for yields is a primary reason for the appreciation of the dollar. It is one of the few currencies, and the only major currency to exist, with a number before the decimal point.

Investors Scramble for Yield as Growth Outlook Darkens
September 30, 2019

This article is part of the Journal’s quarterly markets review, “Investing in a Low-Yield World.”

The world is again running low on yield.

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Jim Sinclair’s Commentary

The entire world is experiencing economic reversal as US figures announce a questionable miracle of a boom of all time.

Beijing Takes Stakes in Private Firms to Keep Them Afloat
September 30, 2019

SHANGHAI—China is snapping up stakes in private companies at a record rate, as the trade war, economic slowdown and credit squeeze heap pressure on entrepreneurs.

The investments mark a reversal after decades in which state-owned enterprises have shrunk in importance, as reflected in measures such as their share of the workforce or asset ownership. Since China’s public-sector companies are typically less efficient or innovative than their private rivals, the shopping spree could lead to a fresh drag on growth.

Private enterprises are in a weaker position because they have comparatively poorer access to cheap bank loans and other types of financing, and have also been squeezed by Beijing’s moves to reduce pollution and overproduction.

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Jim Sinclair’s Commentary

What is not a technology share?

Apple And Merck Drive Wall Street Higher As Trade Worries Abate
September 30, 2019

(Reuters) – U.S. stocks rose on Monday, helped by surges in Apple and Merck & Co as investors set aside worries about the U.S.-China trade war.

Shares of Apple (AAPL.O) rose 2.4% after Chief Executive Officer Tim Cook told a German daily that sales of the company’s newest iPhones were off to a strong start, while JP Morgan raised its forecast for shipment volumes. Apple is struggling to reverse shrinking iPhone sales amid tepid global demand for smartphones.

The S&P 500 technology index .SPLRCT and the health care index .SPXHC both added about 1.3%, leading other sectors.

Sentiment on Wall Street also got a boost after White House trade adviser Peter Navarro dismissed reports that the Trump administration was considering delisting Chinese companies from U.S. stock exchanges as “fake news.”

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