Posts Categorized: Jim’s Mailbox

Posted by & filed under Jim's Mailbox.

Jim/Bill.

I thought you might like this.

Dave

Charts Suggest The Dow Index Is Being Painted To Get “New Highs” In The Market
July 12, 2019

By Pam Martens and Russ Martens

What we need today is a real life character like Vinny Gambini in the movie My Cousin Vinny to take over the questioning for the U.S. Senate Banking Committee – like Ferdinand Pecora did in the early 1930s to root out the systemic frauds in the stock market of that era. Gambini would haul the heads of equities trading for each of the major Wall Street banks and their Dark Pools to a hearing, put them under oath, and grill them about the highly suspicious trading activity that is going on in today’s markets.

Let’s start with what happened yesterday. In the face of punk earnings forecasts for the rest of this year and a growing global economic slowdown, the Dow Jones Industrial Average hit a historic milestone, closing above 27,000 for the first time. But the rising tide didn’t lift all boats: eight of the Dow’s 30 stock components closed in the red. Those stocks were Chevron, Verizon, McDonald’s, Apple, Travelers, Johnson and Johnson, Pfizer, and Merck.

There was something else that raises suspicious red flags to veteran chart watchers. A big spurt in some of the Dow stock components magically occurred in the final 15 minutes of trading, like some mystical, invisible hand had decided to levitate these share prices before the closing bell.

More…

 

Jim/Bill,

This from our friend at Shadow Stats.

Dave

The Permanent Recession
July 15, 2019

Via The Great Recession blog,

Oops. Worse than pathetic. Using consistent accounting through time, we discover we have actually been in receding GDP (recession) since 2000 with the exception of one little bump in 2004. We don’t want to admit that, so we we’ll just ignore that by saying we improved our accounting methods over time.

And that is why I say “It’s been a great recession” because we never actually left the Great Recession. Rather than the longest expansion in US history, we’ve been enduring the longest recessionin US history ever since the dot-com bust. The above chart shows the GDP growth rate, and the REAL GDP “growth” rate, which has actually been contraction, not growth, for the past two decades if measured by historic standards. So long as GDP is growing, (above 0 on the chart above), we’re in expansion. Whenever GDP is shrinking (below 0 on the chart above), we’re in recession.

So, when you see financial commentators writing or talking about “the longest expansion on record,” this month, translate that in light of this article. It is only the longest expansion on record if you change the way you calculate GDP from the way previous records were calculated. It’s sort of like saying, “This person ran the longest marathon in history,” but not mention that we’ve reduced the length of the kilometer or mile by which we measure marathons.

More…

 

Jim,

As you said years ago, countries are moving away from the dollar.

Dave

India & Russia Will Use Their National Currencies For Defense Deals To Bypass US Sanctions – Report
July 15, 2019

Russia and one of the biggest importers of its weapons, India, have decided to use their national currencies to transfer payments for massive defense deals in order to skirt possible US sanctions, according to Bloomberg.

Moscow and New Delhi have been boosting their arms trade in recent months, with Russia selling submarines, ships, tanks and jets to its Indian partners and set to supply S-400 air defense systems to the country. India’s procurement of S-400s, with a contract worth more than $5 billion, has triggered anger from one of the its largest trade partners, the US, which has warned India of possible consequences of the move.

The new payment method through the ruble and the rupee, agreed by the central banks of Russia and India, may avoid Washington’s sanctions threat. It would enable India to make the first payment for two warships built by Russia, Bloomberg said, citing sources. It is not clear what vessels were implicated in this, but last year the two parties inked a deal for four Russian guided-missile frigates for the Indian Navy, two of which are being built in Russia’s Kaliningrad region.

More…

Posted by & filed under Jim's Mailbox.

Jim/Bill,

If we had only a few hundred billion in debt, I would say a little bit of inflation would certainly help whittle that down.

Higher product prices mean higher tax revenues.

Higher wage costs mean higher tax revenues.

These higher revenues for the government would help alleviate the funding pain.

But, we are approaching $23 trillion in debt, with escalating spending and budget deficits to boot!

Add to the mix:

-Global move away from the Dollar as a                 reserve currency (lower Dollar = higher inflation)

-Global move away from funding U.S. Treasury debt.                      (eventually, soaring bond yields will make funding                     our debt impossible)

-Escalating trade wars (soaring domestic consumer                     prices with huge inflationary impact)

-Oil supplies placed at risk from escalating Mideast                     turmoil and threats of tanker blockades (soaring oil                     prices, which some analysts predict could surpass                     $300 bbl, will permeate every facet of our lives                     with massive inflationary impact)

Now we’ve got a scenario whereby the word “implosion” fits the bill.

Only HYPERINFLATION can resolve this problem.

Brace yourself for eventuality.

CIGA Wolfgang Rech

Here Come The China Tariffs: Core Inflation Hotter Than Expected, Headache For Powell
July 9, 2019

Having slowed and disappointed for the last two months, all eyes are on US consumer price index growth (which was expected to slow once again in June) this morning as the next Fed rate-cut narrative confirmation.

The problem for rate-cut-hopers is that the picture is mixed at best. Headline CPI slowed to +1.6% YoY (exactly as expected) – below The Fed’s mandated 2.0% ‘stability’ level; but core CPI rose 2.1% YoY (hotter than the expected 2.0%) and above The Fed’s 2 handle…

 

 

 

 

 

 

 

 

 

More…

 

WOW James, great common sense from a Fed nominee!

Bill

Bill,

I don’t know how well a gold standard would work for a welfare state, but maybe we would have fewer “shabby little secrets” as Greenspan spoke of long ago.  Judy Shelton’s write up today gives me goosebumps. It all crescendos into a grand thesis. “Across borders and through time.” I think I understand.

http://www.gata.org/node/19226

CIGA James

 

Jim/Bill,

POTUS: “When you see the Google executives, together, and one of their executives decides to… there he is, stand up please! How good… what a great job… He’s not controversial, he’s truthful. He’s truthful. That was a great job. That was one of many.”

JB

Posted by & filed under Jim's Mailbox.

Jim/Bill,

Deep State antics are easy to spot.

JB

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jim/Bill,

You have told listeners, this was China’s plan.

Dave

China (Officially) Buys Gold For 7th Straight Month As Treasury Holdings Tumble
July 8, 2019

China continued its renewed (public) gold-buying spree in May adding another 10 tons of the precious metal to its reserve – the seventh month of buying in a row.

“It’s a diversification away from the U.S. dollar, particularly given the trade tensions and the potential technology cold war that’s evolving,” said Bart Melek, global head of commodity strategy at TD Securities.

“We have to remember that gold is nobody’s liability.”

While this figure is hotly contested as being an underestimate of Chinese State’s actual gold holdings, its the only figure available, and whatever the real number, its notable that the Chinese government has revived the trend of announcing physical gold purchases each and every month.

“Given the U.S.-China tensions, it is little surprise that China is attempting to diversify away its holdings of the dollar and Treasuries,” Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore, said in an email, adding that it’s likely to continue adding in the coming months as its reserve holdings still lag countries such as the U.S. and Germany.

“Aside from its attempt to diversify its holdings of dollars, owning more gold reserves is also an important strategy in China’s rise as a superpower,” Lee said.

More…

 

Exactly Wolfgang!
Bill

Jim/Bill,

Much like the parable of frog, the public is being kept from understanding the impending dangers of the Fed interest rate policy decisions on equities, and more importantly, of China’s plan to move from US Treasuries into gold.  Any swift action would create panic in the markets, and China would not be able to sell its US Debt positions.  And gold would soar beyond their reach.  Thus, the slow and steady transition.

A frog sitting on a saucepan handle. The boiling frog is a fable describing a frog being slowly boiled alive. The premise is that if a frog is put suddenly into boiling water, it will jump out, but if the frog is put in tepid water which is then brought to a boil slowly, it will not perceive the danger and will be cooked to death.

en.wikipedia.org/wiki/Boiling_frog

 

 

 

 

 

 

 

 

There has been much speculation lately on the Federal Reserve and its ongoing tightening policy. If you were to only read mainstream economic news you would think the Fed had already reversed course and “capitulated”, but this is not the case. The Fed continues to hold interest rates at their neutral rate of inflation while also moving forward with asset dumps from their balance sheet. Nothing has changed since December/January when the Fed first made minor changes to its public statements hinting at “accommodation”.

https://www.zerohedge.com/news/2019-07-09/gold-will-rise-even-if-fed-doesnt-cut-interest-rates

China continued its renewed (public) gold-buying spree in May adding another 10 tons of the precious metal to its reserve – the seventh month of buying in a row.

“It’s a diversification away from the U.S. dollar, particularly given the trade tensions and the potential technology cold war that’s evolving,” said Bart Melek, global head of commodity strategy at TD Securities.

“We have to remember that gold is nobody’s liability.”

https://www.zerohedge.com/news/2019-07-08/china-officially-buys-gold-7th-straight-month-treasury-holdings-tumble

Be aware

Be cynical

Be safe

CIGA Wolfgang Rech

Posted by & filed under Jim's Mailbox.

Wolfgang,

“Where’s the beef” is part and parcel of our entire fabric these days…

Bill

Jim,

We spoke two weeks ago about the race to devalue all currency’s against gold. The race to the bottom is now on.

Dave

Trump Says US Should Join “Great Currency Manipulation Game” By Devaluing Dollar
July 4, 2019

President Trump has never been a fan of the strong dollar. And after beating around the bush for months by demanding a 50 bp rate cut and more QE from the Fed, it seems the president is now explicitly calling on the US to artificially weaken the greenback by any means necessary.

In a tweet, Trump blasted China and Europe for playing a ‘big currency manipulation game’ and recommended that the US “MATCH” or risk being “the dummies who sit back and politely watch as other countries continue to play their games.”
<blockquote class=”twitter-tweet” data-lang=”en”><p lang=”en” dir=”ltr”>China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games – as they have for many years!</p>&mdash; Donald J. Trump (@realDonaldTrump) <a href=”https://twitter.com/realDonaldTrump/status/1146423819906748416?ref_src=twsrc%5Etfw”>July 3, 2019</a></blockquote>

<script async src=”https://platform.twitter.com/widgets.js” charset=”utf-8″></script>

More…

 

Jim/Bill,

Where’s the Beef?

 

 

 

 

 

Appearance is all that matters.   Everything else, the meat, we’ll……who really cares.

First we get the headline reporting huge job increases (Yet unemployment rises!  Go figure)

Then looking deeper into the stats, the next headline reports the increase was due people having to get 2,3,or 4 jobs to keep up with living expenses.  Not really pure job creation based on a roaring economy.

“To summarize: June saw a surge in full-time jobs, as total US employment hit a record high of 157 million workers, however virtually all of this increase was due to workers being forced to get a second (or third, or fourth) job, double- (and triple-)counting those who can no longer make ends meet on one job alone.”

Remember MOPE?   Management of Perspective Economics.

Especially relevant today with the Algo trading dominating the markets.

CIGA Wolfgang Rech

It Wasn’t All Great News: Multiple Jobholders Soar To Record High
July 5, 2019

While the headline payrolls number was stellar, coming in higher than even the most optimistic Wall Street forecast, one aspect of today’s jobs report that will likely become a major talking point for Democrats and other critics of the Trump economy, is that the number of multiple-jobholders soared from 7.855 million to 8.156 million, a monthly surge of 301,000 – the biggest since July 2018, and an indication that the jobs number was far weaker than the headline represents if one excludes all those workers who represented two jobs to the BLS’ various surveys.

 

 

 

 

 

 

 

 

 

 

 

 

More…

U.S. Adds 224,000 Jobs As Hiring Rebounds In June, Calming Worries About The Economy
July 5, 2019

By Jeffry Bartash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The numbers: The U.S. added a robust 224,000 new jobs in June, rebounding from a recent lull and calming worries about the health of an economy now entering a record 11th year of expansion.

The increase in new jobs easily beat the 170,000 forecast of economists polled by MarketWatch.

Improved hiring last month dispels for now the threat of a dramatic slowdown in growth for an economy that just this month set the record for longest expansion ever. Ongoing U.S. trade disputes and a faltering global economy have dampened exports, wounded American manufacturers and undermined the confidence of businesses and consumers.

The U.S. and China — the world’s two largest economies — agreed last week to delay pending tariffs and return to negotiations given the high stakes involved.

More…

Posted by & filed under Jim's Mailbox.

Jim/Bill,

Supporting my post yesterday.

CIGA Wolfgang Rech

ROSS NORMAN : Gold Price Action Suggest Epic Events Close By
July 3, 2019

Love it or hate it … you just cannot ignore gold … it is after all a “bellwether”.

Originally a bellwether was a bell tied around the neck of a castrated ram (a wether) who would lead the other sheep and give the shepherd a ready reckoner on the movements of the flock. In financial markets it just refers to a leading indicator.

Gold is currently suggesting that dark things may be afoot on the economic front.

After six years of relatively tame ‘sheepish’ price performance, gold has suddenly become a turbocharged ram on a motorbike, without a helmet.

 

 

 

 

 

 

 

 

 

 

 

 

 

More…

 

Exactly Wolfgang.

Bill

Jim/Bill,

If there were ever any doubts, this should cast them away.

“it seems the president is now explicitly calling on the US to artificially weaken the greenback by any means necessary.”

Trump is signaling the next move for the Dollar, and hence…Gold.

CIGA Wolfgang Rech

Trump Says US Should Join “Great Currency Manipulation Game” By Devaluing Dollar
July 3, 2019

President Trump has never been a fan of the strong dollar. And after beating around the bush for months by demanding a 50 bp rate cut and more QE from the Fed, it seems the president is now explicitly calling on the US to artificially weaken the greenback by any means necessary.

In a tweet, Trump blasted China and Europe for playing a ‘big currency manipulation game’ and recommended that the US “MATCH” or risk being “the dummies who sit back and politely watch as other countries continue to play their games.”

More…

Posted by & filed under Jim's Mailbox.

As we have continually said, the debt (in the US AND globally) cannot ever be paid back in current values of currency.  This results in “devalue or die…!

Bill

Jim/Bill,

It’s the only exit in the room…Monetization.

Inflate away all debts, both public and private.

From the government’s profligate spending, to Municipal extravagance, to Student debt, to credit card issues, and more.

But the amount of inflation necessary must approach hyper inflationary status to work.

Serious stuff!

Mainly because the end result is the downfall of all economic systems and societal collapse.

CIGA Wolfgang Rech

The Clash Of Generations Is Here: Why People’s QE Is Inevitable
July 1, 2019

Via Global Macro Monitor,

Don’t know if you caught the Democratic debate the other night, which featured Bernie and Joe, who could be the grandfathers of some of the younger candidates that were on stage, but it also confirmed the arrival of what we have been writing about for years, the Clash of Generations.

More…

 

Courtesy of CIGA Werner.

Bill

 

This will end in a grand failure to deliver Wolfgang…

Bill

Jim/Bill,

Gold is always an indicator of potential turmoil somewhere.

“Gold was the enemy to me”  Paul Volker

“Then and now, the gold price is viewed as the inverse price of the confidence in the system.”

 

 

 

 

 

 

 

 

 

 

 

Being that is “capped” to prevent anyone from becoming enlightened, today’s jump in price especially significant.

The rise of $28 on no real news, despite any potential intervention, is truly significant.

Something may well be brewing and we’ll soon find out.

CIGA Wolfgang Rech

Paul Volcker: Gold Was the Enemy
March 26, 2015

NEW YORK—Paul Volcker is a living financial legend. As a chairman of the Federal Reserve in the early ′80s, he was singlehandedly responsible for quashing stagflation by raising interest rates to an unheard of 20 percent by June 1981.

What ensued was an unprecedented economic expansion and bull market in stocks, which was only seriously stopped by the Internet bust in 1999, caused by the lax monetary policy of Volcker’s successor Alan Greenspan.

As part of a meeting of the Committee for Monetary Research and Education, Volcker (88) gave us rare insights into his story, the working of the Fed, and current financial issues at the University Club in New York, on March 25.

Volcker served under both Democratic and Republican presidents but got along well with both.

“When I became chairman, we had pretty bad inflation. President Carter was under some pressure. He recognized inflation was a big problem and something had to be done about it,” he said.

More…

Posted by & filed under Jim's Mailbox.

Slowly but surely the ship sinks. Gold bear phase over.

Jim

Jim/Bill,

The Dollars will come home one day.

JB

Russia, China Sign Agreement on Payments in National Currencies in Blow to Dollar – Reports
June 28, 2019

MOSCOW (Sputnik) – Russian Finance Minister Anton Siluanov and Chinese People’s Bank Governor Yi Gang signed on 5 June an intergovernmental agreement to switch to national currencies in mutual payments, the Izvestiya newspaper reported on Friday, citing a letter from the Russian Finance Ministry.

According to the newspaper, the information about the accord is contained in the letter of Deputy Finance Minister Sergey Storchak to the chairman of the Russian lower house’s Committee on Financial Market, Anatoly Aksakov. The letter was a reply to Aksakov’s inquiry about the ministry’s efforts to intensify work on settlements with economic partners in national currencies and thereby “strengthen the country’s economic security.”

The letter also notes that new mechanisms for payments in national currencies between Russia and Chinese businesses were already under development.

Aksakov, in turn, told the newspaper that one of the options could be creating “gateways” between the Russian and Chinese analogues of the SWIFT payment system. An increase in payments in national currencies however will also require creating a market of ruble and yuan financial instruments, the senior lawmaker stressed. This, according to Aksakov, will let the two nations hedge risks of exchange rate fluctuations in bilateral trade. As a result, the share of ruble payments with China may rise from the current 10 percent to 50 percent in the coming years, the lawmaker estimated.

More…

 

Jim/Bill,

When a rotting carcass lies around, the stench gets worse as time goes by.

It’s no different with a zombie bank.

 

 

 

 

 

 

 

 

 

 

 

Take a whiff. Does it smell like Lehman?

CIGA Wolfgang Rech

Deutsche Bank To Fire Up To 20,000: One In Six Full-Time Positions
June 28, 2019

While Deutsche Bank finally delivered some good news for a change to its long-suffering investors, when it miraculously failed to fail the latest Fed stress test, on Friday the chronically sick bank reverted to its “cutting into muscle” baseline when the largest German lender with the €45 trillion notional derivatives was said to be preparing “to cut as much as half its global workforce in equities trading as part of a broad restructuring to boost profitability”, according to Bloomberg with the WSJ adding that the total number could be between 15,000 and 20,000 job cuts, or more than one in six full-time positions globally.

The cuts being contemplated by senior executives reflect an acceleration of Deutsche Bank’s downsizing and another major pullback from its global ambitions. If followed through, the reduction would represent 16% to 22% of Deutsche Bank’s workforce of 91,463 employees, as disclosed by the bank as of the end of March

Some employees in the bank’s equities department, anticipating cuts, have cleared personal belongings from their desks, and salespeople have curtailed client calls and meetings, WSJ reports citing people inside the bank.

Additionally, the investment bank, which had about 38,000 full-time employees at the end of March, is expected to take a big hit in any downsizing. The bank’s global equities operation, which has steadily lost clout to U.S. banks with stronger balance sheets, lost about €750 million in 2018, the Journal reported in March.

According to the proposed plan the bank will eliminate hundreds of positions in equities trading and research, as well as derivatives trading, and is expected to start informing staff of cuts – including in the U.S. and Asia – as soon as next month. Rates trading is also affected.

More…