Posted at 10:16 AM (CST) by & filed under Jim's Mailbox.

Dear James,
The Dollar Store Supply Chain Barometer
The average person doesn’t think or care about the supply chain. The supply chain is the process of getting your stuff from where it is made to the place where you can buy it. We don’t have to think about the when, where and how scenarios. We merely go the store, locate what we want on the shelf, pay for our items, and leave with our purchases.
There isn’t a great deal of thought involved in how we acquire what we want and need. Back in the day, items were supplied to most destinations by railroad and there wasn’t enormous international distances between the source of supply and the end consumer. Today, we obtain goods from all over the world. Perishables and high value items are transported by airplanes, and almost everything else travels over sea as revealed by the Baltic Dry Index, which tracks the oceanic transport. What happens if the supply chain becomes disrupted? How will the average person know, and what can you do to prepare? Looking at Dollar Stores is a fast and easy barometer for determining changes in the supply chain.
In the past weeks, airlines to and from China have all but shut down. The Baltic Dry Index is at the lowest level since the 2008 financial crisis. What does this mean for you? It means that there is a real possibility that supplies from China are going to be diminished. The western world has become particularly dependent on Chinese goods, and the threat of the Corona Virus is creating impact on supply chains. This is not directly related to the Corona Virus. It is related to the fear of the spread of the virus. Regardless if the threat of Corona Virus is real or not, the fear is real and the supply chains are feeling the effects. At the very least, available goods coming from the East will be more costly since what is shipped will experience an increased transportation cost, making all goods increase in price. Fewer transports result in higher shipping costs.
If we look at dollar stores, where the cheapest items can be obtained, we may see a picture of the larger economy and the effects on the supply chain. In 2018, it was estimated that 42% of dollar store merchandise is directly from China. Shortages in the supply chain would quickly been seen in the inventory on dollar store shelves. If the inventory of dollar store merchandise begins to disappear from the shelves, the average consumer would know that there are problems with the supply chain. If there are items missing from shelves in the dollar store, it would be a fairly quick reflection of what is occurring in the supply chain. Although a trend would be seen in retail in general, the dollar stores may be the first to reveal such a trend, and could be seen as the “canary in the coal mine” of Chinese merchandise availability. It would be interesting to watch the dollar stores over the next 6-8 weeks. Just some food for thought!
My Dear Sister K

Posted at 3:35 PM (CST) by & filed under In The News.

Bill Holter’s Commentary

As we have been stressing for several weeks, economic contraction due to slack demand and supply chain issues. Central banks do not have a tool to create an antidote, nor can they “print” people back to work. Be assured, there will be credit market ramifications, and we all know it is all about credit!

China Mobile Phone Sales Crash Most On Record
February 24, 2020

China’s mobile phone industry cratered in January as shipments plunged by more than a third, according to a new report from China Academy of Information and Communications Technology (CAICT).

China shuttered dozens of cities, closed major manufacturing hubs, shutdown retail stores, and placed more than 700 million people in lockdown for virus containment purposes, creating one of the most massive demand shock the country has ever seen, resulting in the bust of the mobile phone industry in January.

CAICT reported domestic mobile phone shipments were around 20.8 million units, down 38.9% year-over-year.

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Posted at 12:15 PM (CST) by & filed under In The News.

Bill Holter’s Commentary

In the best interest of our country or not? And why would it need to be secret?

Source: Democrat Senator Held Secret Meeting In Munich With Iranian Foreign Minister Zarif
February 17, 2020

Sen. Chris Murphy of Connecticut and other Democratic senators had a secret meeting with Iranian Foreign Minister Mohammad Javad Zarif during the Munich Security Conference last week, according to a source briefed by the French delegation to the conference. Murphy’s office did not respond to repeated requests for comment by press time.

Such a meeting would mean Murphy had done the type of secret coordination with foreign leaders to potentially undermine the U.S. government that he accused Trump officials of doing as they prepared for Trump’s administration. In February 2017, Murphy demanded investigations of National Security Advisor Mike Flynn because he had a phone call with his counterpart-to-be in Russia.

“Any effort to undermine our nation’s foreign policy – even during a transition period – may be illegal and must be taken seriously,” Murphy said in 2017 after anonymous leaks of Flynn’s phone call with Russian ambassador Sergey Kisylak were published. He also strongly criticized the open letter some Republican senators sent Iranian leaders during the Obama administration’s campaign for a nuclear agreement.

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Posted at 12:13 PM (CST) by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com (Early Sunday Release)

Chris Martenson is futurist, economic researcher and holds a PhD in toxicology from Duke University. So, Martenson has a unique perspective about the coronavirus and what its effects will be to the global economy. Don’t believe the mainstream media. Things are not getting better, and Martenson contends, “It’s getting worse. It is a tale of two stories inside China and outside China. Inside China, we have been suspicious of their reporting, and they have been underreporting the cases at least by a factor of 10 and maybe more. This is both for infections and deaths. . . . The Chinese government would not lock down 90% of their economy just to save a couple of lives. They don’t roll that way. So, there is something there that is very worrisome to them. . . . Outside of China, we trust the numbers a lot more. . . . So, when we are looking outside of China, we are seeing the cases of the coronavirus are now increasing exponentially. It’s got a very short doubling time and a very high rate of infectivity. It’s not the flu. It’s not SARS. The mainstream media is trying to tell people there is nothing to worry about, and we don’t take that view at all. . . . Covid19, as they call it now, is a real beast.”

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Posted at 2:47 PM (CST) by & filed under Bill Holter.

Originally posted for subscribers on February 12, 2020.

Bill is interviewed re: gold and silver physical purchase/sale.

Posted at 3:37 PM (CST) by & filed under In The News.

Bill Holter’s Commentary

And this was BEFORE the coronavirus…

Largest Shipping Decline Since 2009 and That’s Before Coronavirus
February 18, 2020

The January Cass Freight Shipping Index is more bad news for the global economy.

The Cass Freight Shipping Index is down 9.4% year-over-year, the largest decline since 2009. And this is for January, before the Coronavirus disruption.

The turn of the calendar didn’t leave the bad news in 2019, as the Cass Freight Index showed continued weakness in the U.S. freight market. Both the shipments and expenditures components of the Cass Freight Index worsened sequentially and showed decelerating y/y growth. According to the broader stock market levels, there is still optimism out there, but the freight trends have yet to turn. And the Covid-19 coronavirus case count continues to grow, creating uncertainty around containment and eventual impact on global supply chains. Some Chinese factories resumed operation this past week, but they are still not close to 100% production levels. Others have pushed re-opening back to March 1.

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Posted at 10:20 AM (CST) by & filed under General Editorial.

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www.georgesellas.com

What is it that we’re seeing here in plain sight yet obstructed by separating storylines with misdirection’s popping up everywhere? Is it possible that “Quantitative Easing” has been hidden behind the term “Repo Market” yet, ultimately benefitting the same players with this newly printed cash being used to bury the bodies, like those of Deutsche Bank and HSBC? Both of these entities are reducing employment and exiting markets after taking hard hits in their ROI’s and yet, the markets keep rising.

Deutsche Bank is quoted as saying they are shedding “… $100 billion in assets, and taking a massive $7.3 billion hit … part of a major overhaul” with the other central banker’s problem child, HSBC admitting “…Around 30% of our capital is currently allocated to businesses that are delivering returns below their cost of equity, largely in global banking and markets in Europe and the U.S.,”

     These two banks are not getting healthier at all, in fact, they seem to be dying a slow death and their declines should be hurting other major institution’s as well. The point maybe that western central bankers and friends, control (almost all) derivatives and in size. These deciders of print have the right to bail out whoever they want and when they want. They literally have a wide selection of problems to choose from when more cash is needed and yet, no one can find any report of these newly created debt instruments ever being paid off. These same Repurchasing Agreements just keep getting bigger and bigger and bigger (Just like QE … until?).  

     We in essence, have a self-assigned organization called the “International Swaps and Derivatives Association” made up of central bankers, with others, associated by trades, and agreements, created to protect and support these over-leveraged sovereign debt assets “by any means possible”. The ISDA committees are the same ones that decide when it can bail itself out, and who else survives by throwing this hot money wherever its needed. They are the “tool” that must declare a default or there is no default – no matter what occurs!

     The idea of hiding this new QE title by calling it a Repo is doing what it was intended to do, hide the events in plain sight. The expectations of QE to Infinity will proceed, as a Repurchasing Agreements of Infinite Print! That is, until something not calculated by the algos surfaces, and with consequences …

Got Silver and Gold?

Stay Strong!

J. Johnson

Posted at 12:04 PM (CST) by & filed under Jim's Mailbox.

Jim/Bill,

Telegraphing what’s to come.

The “Golden Swan”?

“Of course, dumping US Treasuries would impede China’s economic growth if dollar assets were sold and converted back into renminbi (which would appreciate). But China could diversify its reserves by converting them into another liquid asset that is less vulnerable to US primary or secondary sanctions, namely gold.

Indeed, both China and Russia have been stockpiling gold reserves (overtly and covertly), which explains the 30% spike in gold prices since early 2019.”

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One day, out of the blue, the Golden Swan will catch us all by surprise.

CIGA Wolfgang Rech

Dr.Doom On Gold & ‘The White Swans Of 2020’
February 19, 2020

Authored by Nouriel Roubini via Project Syndicate,

In my 2010 book, Crisis Economics, I defined financial crises not as the “black swan” events that Nassim Nicholas Taleb described in his eponymous bestseller, but as “white swans.”

According to Taleb, black swans are events that emerge unpredictably, like a tornado, from a fat-tailed statistical distribution.

But I argued that financial crises, at least, are more like hurricanes: they are the predictable result of built-up economic and financial vulnerabilities and policy mistakes.

There are times when we should expect the system to reach a tipping point – the “Minsky Moment” – when a boom and a bubble turn into a crash and a bust. Such events are not about the “unknown unknowns,” but rather the “known unknowns.”

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Guys,

This narration came from one of my good friends in radio. It’s about farmers and it needs to be shared!

Denny

So God Made A Farmer: The Mike Bloomberg Edition
February 19, 2020

http://www.youtube.com/watch?v=WZvGsMN_FUw&feature=emb_title

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Jim/Bill,

There has been much talk about the soaring debt levels.

A look at the chart below makes one think of Zimbabwe or Weimer Germany.

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Yet a friend of mine stated that when push comes to shove, President Trump will simply fall back on his M.O. which is “Default on the debt”.  Then we’ll start anew.

I said, “think about that for a moment.  If we default who will feel the pain?  Pension funds own bonds, banks own bonds, funds own bonds, foreign corporations own bonds, Central Banks own bonds, etc.

If we default, it will waves of bankruptcies throughout the world and spiral us into a major global depression.  (The only survivors will those who own gold and silver).

Furthermore, all faith in the U.S. Dollar will be lost and hence, hyperinflation will come to be.

Hyperinflation on top of depression!  an event that will no doubt leave everyone speechless.

On another note, look at the period between 1980 and 1990 on the chart.  Those were the Reagan years of renewed prosperity.

His magic bullet was “print your way to prosperity”.  And eventually someone will have to pay.

Jimmy Carter lost the election to Reagan on 2 counts:  The Iran hostage crisis and an $800 billion debt!

yet when Reagan left office, it looks like we hit $3 trillion in debt.  And nobody cared.

CIGA Wolfgang Rech

Wolfgang,

As we have been saying, “one man’s debt is another man’s asset”…

Bill

Jim/Bill,

Yellen says that the FED should buy stocks.

Speaking via video conference with bankers in Kansas City, Yellen said

that the Fed would take a page out of the SNB and BOJ playbook, and might be able to help the U.S. economy in a future downturn if it could buy stocks and corporate bonds.”

Yes, it is illegal.  But we can simply change the law overnight.

I don’t know about you, but imagine the cost of bailing out a 20,000 point drop in the Dow!

The money needing to be printed to do this is mind boggling.  (But don’t worry, not only can we default on our bonds, we can also default on our Dollar)

Yellen also believes another financial crisis will not come in our lifetimes.

File under “Famous Last Words”.

“Will I say there will never, ever be another financial crisis? No, probably that would be going too far. But I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will.”

Hey girl, take a step closer to the abyss and take a look down!

Come on now, don’t be afraid.

It will only hurt if the ledge gives way.  Which………I don’t believe it will.

CIGA Wolfgang Rech

Yellen Says Fed Should Buy Stocks In The Next Crisis
February 18, 2020

Back in June 2017, there were several odd moment of bizarre honesty coupled with schizophrenic confusion under Janet Yellen’s Fed.

First there was San Fran Fed president John Williams, who would eventually on to become the Fed’s #2 when he took over as head of the NY Fed in 2019, who said that “there seems to be a priced-to-perfection attitude out there” and that the stock market rally “still seems to be running very much on fumes.” Williams added that “we are seeing some reach for yield, and some, maybe, excess risk-taking in the financial system with very low rates. As we move interest rates back to more-normal, I think that that will, people will pull back on that.”

Then it was then-Fed vice chairman Stan Fischer’s turn, who echoed Williams in saying that “the increase in prices of risky assets in most asset markets over the past six months points to a notable uptick in risk appetites…. Measures of earnings strength, such as the return on assets, continue to approach pre-crisis levels at most banks, although with interest rates being so low, the return on assets might be expected to have declined relative to their pre-crisis levels–and that fact is also a cause for concern.” Fischer then also said that the corporate sector is “notably leveraged”, that it would be foolish to think that all risks have been eliminated, and called for “close monitoring” of rising risk appetites.

Finally, none other than then-Fed Chair Janet Yellen said that some asset prices had become “somewhat rich” although like Fischer, she hedged that prices are fine… if only assumes record low rates in perpetuity: “Asset valuations are somewhat rich if you use some traditional metrics like price earnings ratios, but I wouldn’t try to comment on appropriate valuations, and those ratios ought to depend on long-term interest rates.”

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Jim/Bill,

A warning sign?

CIGA Wolfgang Rech

Yes Wolfgang,

This is the “Yogi Berra chart”…looks like De va ju all over again!

Bill

Dear Chart of the Day Fan:
Here’s my chart for today. I’ll talk about it shortly after 3:30 p.m. Eastern (12:30 p.m. Pacific) on the Bloomberg Businessweek radio show. Also, I’ll present
my Stock of the Day just after 4:05 p.m. (1:05 p.m.) on the radio and later on social media. You can hear me on Bloomberg Radio or see me at Bloomberg Global News on YouTube. Earlier charts are on my Tumblr page.

Thanks for your interest. It’s appreciated.

Untitled

Shares of U.S. regional banks are suffering just as they did two decades ago, when an Internet-driven bull market ended. A comparison between the KBW Regional Banking Index of 50 lenders and the S&P 500 Index shows as much. The industry gauge’s ratio to the S&P 500 fell Tuesday to its lowest reading since September 2000, according to data compiled by Bloomberg. Tuesday’s close was 39% lower than a peak in December 2016. “Regional banks not crashing on a relative basis” would be a reason to turn bullish about U.S. stocks, J.C. Parets, editor of the All Star Charts blog, wrote in a post Sunday.

Sincerely,
David Wilson

Jim/Bill,

Who would be hurt by a default on our debt?

Or, if your in the mindset of “America would NEVER do that”, then look at it another way: Who would be hurt by a normalization of interest rates?

Either way….scary shit! (excuse the language).

We are no longer approaching ground zero; we are AT ground zero.

The largest buyers, and those with the positive trade surpluses to invest, have left the game and are now sellers (Russia, China, Japan, Germany, Mexico). All that basically remains is the Fed, government funds such as pension and Social Security, US Banks, and other US entities (pension funds, institutions, insurance companies, corporations, and individuals).

Pulling a default is like holding a gun to your own foot and pulling the trigger. (I would have preferred to another body part but it would be too graphic).

All that is left is…drumroll please……….MONETIZATION.

Hell, even helicopter drops would be too slow.

You’d need a quicker and more massive means…..

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CIGA Wolfgang Rech

Wolfgang is on a total roll today! I want whatever vitamins he is on…

Bill

Who Bought The $1.3 Trillion In Debt The US Government Added In 2019?
February 19, 2019

Authored by Wolf Richter via WolfStreet.com,

Treasury securities are hot. The Fed backed up the truck. US banks & others bought too. But China dumped…

The US Gross National Debt spiked by $1.3 trillion over the past 12 months, to $23.3 trillion. These days, trillions fly by so fast it’s hard to see them. But these are the good times. And we don’t even want to know what this will look like during the next economic downturn:

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