Posts Categorized: Jim’s Mailbox

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[The employment figures] were borrowed from earlier reporting, where the BLS does not have to report the revisions, at present.  Likely aimed at distracting the markets from the unexpected 0.2% jump in the unemployment rate.  Here is what I wrote earlier on my homepage.  Please call if you have any questions:

LATEST ECONOMIC RELEASES: (Jan 4) December 2018 Employment and Unemployment, and Payrolls (Bureau of Labor Statistics – BLS)

Surging December payrolls were a reporting fraud, a canard, no more than massive prior-period revisions “recalculation of seasonal factors” that shifted growth from past months into the October 2018 to December 2018 timeframe, without showing the headline downside revisions to the earlier months from which the growth was borrowed.

Unadjusted October and November payroll numbers revised negligibly higher, while the seasonally adjusted data revised sharply higher and surged further in December.  The not credible headline December jobs gain of 312,000, was a nonsensical 370,000 net of prior-period revisions.

The effective reporting fraud and standard gimmick here is that previously reported data, back more than two months (before October) from which much of current headline growth was borrowed, are not reported as revised with the current headline data.  That revised reporting is seen only with the annual benchmark revision, which will not be published until next month (this reporting gimmick is reviewed regularly by ShadowStats, as last detailed in Commentary No. 979, Supplemental Detail).

December U.3 Unemployment jumped to 3.86% (headline 3.9%), from a revised 3.70%, previously 3.67% (headline 3.7% in both cases), versus a revised headline 3.8% (3.76%), previously 3.7% (3.74%) in October, in the context of annual revisions to the seasonally adjusted Household Survey (unemployment/employment) data.  The broader U.6 rate held at 7.59% in December, versus a revised 7.58% (previously 7.57%) in November and an upwardly revised 7.5% (7.45%), previously 7.4% (7.40%) in October.

The ShadowStats Alternate Unemployment rate, which counts the long-term displaced and discouraged workers not accounted for by the government (discouraged workers disappear from the rolls after one year), held at 21.4% in December versus an upwardly revised 21.4% (previously 21.3%) in November.  Detail has been graphed on the Alternate Data Tab.  Five years of revised hard data are available there to subscribers.

Best regards,


– FOMC-Driven Consumer Slowdown Signals Onset of a New Recession, as Nominal Monetary Base Drops to a Five-Year Low
– Effects of Ongoing Federal Reserve Tightening Increasingly Have Pummeled Real Retail Sales, Production and Construction Activity
– Intensifying Consumer-Liquidity Squeeze Reflected in Downside Revisions to Previously Estimated Auto Sales, Housing and Third-Quarter GDP
– Third-Quarter 2018 Final Sales (GDP Net of an Increasing Inventory Buildup) Slowed to a Revised 1.03% (Initially 1.43%) from a Second-Quarter 5.33%
– Annual Growth in November Freight Activity Plunged to a Two-Year Low
– November 2018 Residential Construction and Sales Continued in Deepening Downtrends, Well Shy of Ever Recovering Pre-Recession Highs
– November Manufacturing in Record 131st Straight Month of Non-Expansion, Still Shy by 4.7% (-4.7%) of Recovering Its Pre-Recession Peak; Unlike Anything Ever Seen in the 100-Year History of the Production Series
– 2008 Banking-System Insolvency Arose Under the Watchful Eye of the Banking-System-Owned Federal Reserve
– Subsequent FOMC Actions in the Last Decade Centered on Propping the Banks, Not on Restoring a Healthy Economy
– Stock Market Turmoil Has Begun to Respond to the Intensifying Effects of Financial-System Distortions and Instabilities

“No. 981: Retail Sales, Production, New Orders, Residential Construction, GDP and Stocks

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CIGA Kevin regarding liquidity tightness.


  1. Factors Affecting Reserve Balances of Depository Institutions

Still on track Fed sold off about $7B of Treasuries and $7B Mortgages in latest week ending January 2- basically on track at $60B per month.

  1. Factors Affecting Reserve Balances of Depository Institutions (continued)

Reverse Repo’s of $14B sterilized the QT by putting cash back into banking system albeit on a short term basis. IMO the reverse repos in the latest week may have saved the equity market through January 2, but that didn’t last long. Not hard to see that both a shortage of cash and shortage of good collateral are both causing liquidity issues and are feeding on each other.

1A. Memorandum Items

And Securities held in custody for foreign official and international accounts declined by $7B in the week. Can’t imagine why that would occur seeing how the US dollar is such a safe haven and undervalued and so loved by our allies and trading partners- sarcasm intended.





Currency wars, trade wars, hot wars! This is not good, especially in light of China’s recent saber rattling regarding sinking an aircraft carrier.


In Landmark Speech, Xi Threatens Violence Against Taiwan, Demands ‘Peaceful Reunification’
January 2, 2018

With trade talks between the US an China finally ramping up, reviving hopes that a deal might end a slump in global equity markets that has carried into the New Year, one would think ‘Taiwan’ would be the last word any investor wanted to hear. But we’ve been hearing it with an alarming frequency lately. From a belligerent Chinese admiral and from President Xi Jinping.

And in a Wednesday speech to commemorate the fortieth anniversary of a landmark shift in China’s Taiwan policy, President Xi offered a vision of the future relationship between China and Taiwan that blatantly contradicts what Taiwan wants for itself – which is, more autonomy, if not outright independence, as the ruling pro-independence party has repeatedly insisted.

Instead, Xi insisted during his speech that China reserves the right to use force to bring Taiwan to heel – but that peaceful “reunification” would be Beijing’s goal. Xi has made resolving the “Taiwan issue” a priority.



Happy Birthday JB!!!


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You said the dollar’s days were numbered and this past year proves you correct.


Top 5 Countries Opting To Ditch US Dollar & The Reasons Behind Their Move
January 2, 2019

The past year was full of events that inevitably split the global geopolitical space into two camps: those who still support using US currency as a universal financial tool, and those who are turning their back on the greenback.

Global tensions caused by economic sanctions and trade conflicts triggered by Washington have forced targeted countries to take a fresh look at alternative payment systems currently dominated by the US dollar.

RT has taken a deeper look into the recent phenomena of de-dollarization, summing up which countries have taken steps towards eliminating their reliance on the greenback, and the reasons behind their decision.


The ongoing trade conflict between the United States and China, as well as sanctions against Beijing’s biggest trading partners have forced China to take steps towards relieving the dollar dependence of the world’s second-largest economy.



Wonder how much debt is supported by the bad forecast?



Don’t have the answer to this Tom but I am sure we will find out via bankruptcies!



Fracking’s Secret Problem—Oil Wells Aren’t Producing as Much as Forecast
January 2, 2019

Thousands of shale wells drilled in the last five years are pumping less oil and gas than their owners forecast to investors, raising questions about the strength and profitability of the fracking boom that turned the U.S. into an oil superpower.

The Wall Street Journal compared the well-productivity estimates that top shale-oil companies gave investors to projections from third parties about how much oil and gas the wells are now on track to pump over their lives, based on public data of how they have performed to date…



Our pal Kevin with some very startling numbers…for those still sleeping!


US Household Sector: Net Worth

According to Credit Suisse Global Wealth Data book 2018 for Q2, Global Net Worth totaled $317T up $14T from Q2 2017. It is interesting that in Q2 2018, US Household Net Worth accounted for $98.1T or 30.9% of Global Net Worth while US GDP of $20.4T makes up only about 24% of world GDP. When “the fat lady sings” more fat will be trimmed from the bloated US Net Worth than the Rest Of The World. Further inspection reveals that US Real Non-Financial “Hard” Assets made up only 31.9% of Total Net Worth meaning over 2/3rd of US Household Assets, some 68.1%, are in “virtual & paper” Financial Assets. The US has too much financial “skin” in the game compared to the Chinese Household Sector too where only 37.1% of its Chinese Household Net Worth is in Financial Assets but nearly 2/3rd are in  Real Non-Financial “Hard” Assets. It is not hard to forecast what a financial and monetary collapse will do to the US Household Sector relative to its Chinese counterparts. Think Liposuction on a grand scale. – see page 106 for 2018 data – see page 40 for 2018 data


China Household Sector: Net WorthAccording to Credit Suisse Global Wealth Data book 2018 for Q2, Chinese Household sector grew from $49.6T to $51.9T. It is interesting that in Q2 2018, Chinese Household Net Worth accounted for 16.4% of Global Net Worth while Chinese GDP of $13.1T also made up exactly 16.4% of world GDP. Further inspection reveals that Chinese Real Non-Financial “Hard” Assets made up 62.9% of Total Net Worth meaning the bulk of Chinese Household Assets are in not “virtual & paper” assets like the US. – see page 103 for 2018 data – see page 41 for 2018 data

Stay tuned as gold price discovery and reset rewards the gold saving Chinese Households at the expense of US and other Western Households that have for more than 40 years over-consumed and under-saved with little to no gold set aside for rainy days. With Chinese Households accumulating some 17,000 MT or 530 million ounces of physical gold since restrictions were lifted in 2008, $10,000/oz gold will quickly added some $5T to their household net wealth. India will see over $6.25T in added wealth to their post-2008 8,000MT of gold accumulation & 12,000MT pre-2008. The West will greatly experience a large transfer of wealth as financial assets decline and gold rises as it is reintroduced into the world’s monetary system.


US Household Sector: Financial Assets/Total Assets – Non-financial assets in Q3 2018 officially made up 71.8% of all assets at record levels exceeding Q3 2017 71.4% and previous peaks at Q4 2007 64.7% & Q4 1999 71.4%. Notice the decline in US Household Financial Assets relative to Total Assets at the bear market lows of 2002 and 2009 where financial assets suffered much worse than “hard tangible assets”.

Q3 2018 –  71.8%

Q3 2017- 71.4%

Q1 2009- 62.4% (Financial Assets fell 19% from ’07 peak; Tangible Assets Fell 10.7% from ’07 peak)

Q4 2007- 64.7%

Q4 2002- 61.7%  (Financial Assets fell 17% from ’99 peak; Tangible Assets rose 23% from ’99 peak)

Q4 1999- 71.4%


US Household Sector: Corporate Equities, Mutual Funds, ETF shares/ Financial Assets – Corporate Equities held directly and indirectly in Q3 2018 officially made up 35.0% of all financial assets nearly exceeding Q4 2007 37.1% but below Q4 1999 50.1%. Equities are ripe for a big decline in prices relative to all financial assets. Stay tuned as gold price discovery and reset rewards the gold saving Chinese Households at the expense of US and other Western Households that have for more than 40 years over-consumed and under-saved with little to no gold set aside for rainy days.

Q3 2018 – 35.0%

Q3 2017- 33.9%

Q1 2009- 27.9%

Q4 2007- 41.5%

Q4 2002- 35.3%

Q4  1999- 50.1%


US Household Sector: Corporate Equities, Mutual Funds, ETF shares/ Total Assets –  Corporate Equities held directly and indirectly in Q3 2018 officially made up 25.15% of all assets nearly matching Q4 2007 26.9% but below Q4 1999 35.2%. Notice the decline in Equities, Mutual Funds & ETF shares at the bear market lows of 2002 and 2009 indicating stocks suffered much worse than Total Assets.  Equities are ripe for a big decline in prices relative to all assets. Stay tuned as gold price discovery and reset rewards the gold saving Chinese Households at the expense of US and other Western Households that have for more than 40 years over-consumed and under-saved with little to no gold set aside for rainy days.

Q3 2018 – 25.15%

Q3 2017- 24.19%

Q1 2009- 17.4%

Q4 2007- 26.9%

Q4 2002- 21.5%

Q4 1999- 35.2%


US Household Sector: Net Worth/Disposable Personal Income (DPI) – Net Worth in Q3 2018 officially made up 700% of DPI blowing away Q4 2007 615% and Q4 1999 632%. Looking at peak U.S. Equities in Q3 2018 that were valued at about $31T or 200% of DPI, this was also a record. By the end of Q4 2018 equities fell by about $5T from the peak yet are still ripe for a big fall. Real estate will tank too because forced liquidations will ensue as DPI is insufficient for servicing mortgage debt as interest rates continue to rise regardless of equities and employment declining simultaneously.

Q4 2018 – 681%

 Q3 2018 – 700%

Q3 2017- 673%

Q1 2009- 467%

Q4 2007- 615%

Q4 2002- 499%

Q4 1999- 632%


Current data:


Historical data:


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Notes From Saturday’s Discussion For Subscribers:




The PTT painting the tape for the last couple of days in December has not helped. Black Rock was down 29%, Greenlight 34% the end of MOPE has arrived.


Einhorn’s Greenlight Extends Decline to 34% in Worst Year
December 31, 2018

David Einhorn closed out 2018 with his biggest annual loss ever for the 22-year-old Greenlight Capital.

The firm’s main hedge fund fell 9 percent in December, extending this year’s decline to 34 percent, according to an investor update viewed by Bloomberg.

Greenlight posted some of the industry’s best returns in its early years, but has stumbled since losing more than 20 percent in 2015.




This was discussed on a Saturday call.


Did the U.S. Military Just Admit Victory in Afghanistan Is Impossible?
December 28, 2018

In the week before President Donald Trump’s reported decision to abruptly withdraw 7,000 U.S. service members from Afghanistan, the top U.S. commander there all but admitted that the 17-year-old war there will not end with a military victory for the Pentagon.

“This fight will go until a political settlement,” Army Gen. Scott Miller, the commander of U.S. Forces-Afghanistan and the Resolute Support mission there, told CNN when asked whether the Afghan campaign against the Taliban had reached a stalemate. “These are two sides that are fighting against one another, and neither one of them will achieve a military victory at this stage.”

In the same interview, U.S. ambassador to Afghanistan John Bass concurred with Miller’s assessment, cautioning that U.S. and Afghan officials will face a complicated diplomatic situation given the Talian’s aggressive rejection of the current administration in Kabul.




You and Bill had a mid-week special talk, in early February, when you warned listeners the market top was in. Let’s hope they listened.


“They Said It Could Never Happen Again?” – Global Stocks Suffer Worst Year In A Decade
December 31, 2018

The world’s central banks’ safety harness finally gave way and one by one the world’s markets started to plunge.

Global stock markets lost almost $12 trillion in 2018 – the largest market cap loss since 2008 (and second largest in history)…




A $6 million bribe would needlessly embarrass is an understatement. We need a return to the rule of law.

El Chapo Trial Has Yet to Reveal Mexico’s Dark Secrets of Narco-Corruption
November 29, 2018

For a moment, the trial of Joaquín Guzmán Loera, the Mexican drug lord known as El Chapo, seemed like it might turn into a kind of truth-and-reconciliation commission that would reveal, not only the details about the defendant’s life of crime, but also secrets about narco-corruption in Mexico.

But after a flurry of prosecution filings and rulings by the judge in the first three weeks, it now appears unlikely the trial will become a sweeping exposé on bribery. The jury has heard plenty so far about payoffs to the Mexican police and politicians, but there is much they have not heard — and probably never will.

Setting limits on evidence at criminal trials is common in order to focus on specific charges against specific individuals. But the limits placed on the evidence in this case seem to counter a deep desire in Mexico for a public airing of the sins of its law-enforcement and political establishments in a longstanding drug war.


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Deep Bow of Respect!

















As we said on Saturday, the whole system is based on bullshit.


“Everything Is Fake”: Ex-Reddit CEO Confirms Internet Traffic Metrics Are Bullshit
December 28, 2018

“It’s all true: Everything is fake,” tweeted Former Reddit CEO Ellen Pao regarding a Wednesday New York Magazine article which reveals that internet traffic metrics from some of the largest tech companies are overstated or fabricated. In other words; they’re bullshit.

Pao was responding to a tweet by the Washington Post’s Aram Zucker-Schariff, quoting the following segment of the article:

Take something as seemingly simple as how we measure web traffic. Metrics should be the most real thing on the internet: They are countable, trackable, and verifiable, and their existence undergirds the advertising business that drives our biggest social and search platforms. Yet not even Facebook, the world’s greatest data–gathering organization, seems able to produce genuine figures. In October, small advertisers filed suit against the social-media giant, accusing it of covering up, for a year, its significant overstatements of the time users spent watching videos on the platform (by 60 to 80 percent, Facebook says; by 150 to 900 percent, the plaintiffs say). According to an exhaustive list at MarketingLand, over the past two years Facebook has admitted to misreporting the reach of posts on Facebook Pages (in two different ways), the rate at which viewers complete ad videos, the average time spent reading its “Instant Articles,” the amount of referral traffic from Facebook to external websites, the number of views that videos received via Facebook’s mobile site, and the number of video views in Instant Articles.




The reader who wrote in and asked you if you thought the bear market was over, should read this article for insight.


The Depression of 2019-2021?
December 28, 2018

he profound question which transcends all this day-to-day market drama over the holidays is the nature of the economic slowdown now occurring globally. This slowdown can be seen both inside and outside the US. In reviewing the laboratory of history — especially those experiments featuring severe asset inflation, unaccompanied by high official estimates of consumer price inflation — three possible “echoes” deserve attention in coming weeks and months. (History echoes rather than repeats!)

Will We Learn from History — And What Will Soon Be History?

The behavioral finance theorists tell us that which echo sounds and which outcome occurs is more obvious in hindsight than to anyone in real time. As Daniel Kahneman writes (in Thinking Fast and Slow):

The core of hindsight bias is that we believe we understand the past, which implies the future should also be knowable; but in fact we understand the past less than we believe we do – compelling narratives foster an illusion of inevitability; but no such story can include the myriad of events that would have caused a different outcome .


J. Johnson regarding Kitco’s major faux pax last night. I received so many e-mails (and many from people who have never e-mailed me before) regarding gold’s “$190 drop”, I could not respond to all of them!

Main Stream News Services And Kitco Quotes Get Punked
December 31, 2018

 Good Last Day of the Year Everybody!    

      Gold is giving us a smile this early morning after almost everybody that uses Kitco got a heart attack last night with their inabilities to immediately correct the pricing error which makes one wonder why their quotes were off for so long, with Gold now at $1,285.40, up $2.40 with a low at $1,279.70 (not $1,190 as was quoted) with the high so far at $1,286.50. Silver is up as well with the trade at $15.53, up another 9.4 cents with the high to beat $15.575 with a low at $15.39. The support for the US Dollar continues with its trade at 95.815 after dipping down to 95.685 before London came in, with the high at 96.07. All this was done some time way before 5 am pst. Under the Venezuelan Bolivar Gold is continuing to gain value with the price now at 12,837.93 Bolivar gaining another 46.94 over the past 48 hours with Silver gaining another 15.48 trading at 155.106 Bolivar (a $15 gain under the US Dollar is $75,000 per contract).     

      The January deliveries are moving forward with the count now at 1,021 demands for physical losing 8 from Fridays count with a volume of 1 so far on the board this morning. Silvers overall demands show an Open Interest count at 173,458 obligations proving only 66 Overnighters leaving the trade on a 12.5 cent gain, nice!

        We may have found the reason for the lack of news over the past week or so with most of the main stream media being shuttered with a virus over the weekend, supposedly by foreigners and I can hardly wait for Russia to be blamed again as the comedy continues. More news about the news seems to be exasperating the issues even more so as Der Spiegel news service is forced to suspend their “editor in chief” and “chief editor” for doing what the American Media has been getting away with for way too long now (except for Acosta). Can this viral shutdown be a heads up for those that create the news and not report the real? Probably not, but I can still wish it!   



Dismal Dave from down under with some historical quotes.  I would add, “stay off the roads tonight as it is the one night of the year for amateurs only, professionals always stay home!


‘Sometimes, when I reflect on all the beer I drink, I feel ashamed. Then I look into the glass and think about the workers in the brewery and all of their hopes and dreams. If I did not drink this beer, they might be out of work and their dreams would be shattered. I think, it is better to drink this beer and let their dreams come true, than be selfish and worry about my liver.’ Babe Ruth. (1895-1948).

‘When I read about the evils of drinking, I gave up reading.’ Paul Horning. (1935-    )

‘24 hours in a day and 24 beers in a case.  Coincidence?  I think not!’ H. L. Mencken. (1880-1956).

‘When we drink, we get drunk. When we get drunk, we fall asleep. When we fall asleep, we commit no sin When we commit no sin, we go to heaven. So, let’s all get drunk and go to heaven.’ George Bernard Shaw. (1856-1950).

‘Beer is proof that God loves us and wants us to be happy.’ Benjamin Franklin. (1706-1790).

‘Without question, the greatest invention in the history of mankind is beer. Oh, I grant you that the wheel was also a fine invention, but the wheel does not go nearly as well with pizza.’ Dave Barry. (1947-    ).

‘Beer: Helping ugly people have sex since 3000 B.C.’ W. C. Fields. (1880-1946).

‘Remember ‘I’ before ‘E,’ except in Budweiser.’ Professor Irwin Corey. (1914-    ).

‘To some it is a six-pack. To me, it is a Support Group. Salvation in a can.’ Leo Durocher. (1905-1991).

‘Well, ya see, Normy, it’s like this .. A herd of buffalo can only move as fast as the slowest buffalo, and when the herd is hunted, it is the slowest and weakest ones at the back that are killed first. 

‘This natural selection is good for the herd as a whole, because the general speed and health of the whole group keeps improving by the regular killing of the weakest members. 

‘In much the same way, the human brain can only operate as fast as the slowest brain cells. 

‘Excessive intake of alcohol, as we know, kills brain cells, but, naturally, it attacks the slowest and weakest brain cells first. 

‘In this way, regular consumption of beer eliminates the weaker brain cells, making the brain a faster and more efficient machine. 

‘That’s why you always feel smarter after a few beers!

Cheers, a TV Sitcom; Cliff Clavin to his buddy, Norm Peterson.

‘He was a wise man who invented beer.’ (428BC-    ).

‘I have taken more from alcohol, than alcohol has ever taken from me.’ Winston Churchill. (1874-1965).

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CIGA Paul is absolutely correct, enjoy these last “normal” days because there won’t be many more. This is the end of an 80 year credit supercycle and the empires it spawned. “Truth” will be ugly indeed…

Trump saying buy the dip with the plunge protection team backing his play was really smart…
I thought when I first heard the comment it was from desperation.
The trip to Iraq with the first lady is a class touch.
Every day we don’t explode is a great day. We need to enjoy them as there won’t be many more.
You do great work. Thank you again.

Tom with another good find! Expect extremely sharp bear market rallies until the final capitulation…and be on the lookout for hints of currency change.

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We have warned in our Saturday chats about this…


It’s Not Just a Trade War; It’s Not Just China – Its Russia, Too
December 24, 2018

It’s not just a trade war: behind that, hides a tech-war – and behind that, lie the plans for a full-spectrum arms race – from space to cyber. As one US current commander put it: “fields of data and information … that’s what modern war runs on. “What are the missions we do in space today? Provide information; provide pathways for information; in conflict, we deny adversaries access to that information”. So, the new arms-race is as much about retaining and advancing US tech-leadership in chip evolution, quantum computing, big data and Artificial Intelligence (AI) for weaponry – as it is just about tech lead in the economic sphere: i.e. dominating civilian industry standards for the next generation of those smart electronic gadgets – that we all will buy.

So, what is going on? Well, the US military complex is ‘for real’ on this. They are gearing-up for the coming military-standoff with China. The constant harking on themes that China is stealing America’s technology, its knowhow and its data – and now the barrage of allegations about China ‘hacking’ and (shades of the Russiagate) interfering in US elections, essentially (but not wholly) is about shaping a casus belli versus China. The rude fact is that the US military were shocked to find how far they were falling behind Russia and China in high-tech weaponry.

A bipartisan, expert US Defense Department report submitted to Congress in November, warned: