donderdag 17 augustus 2017

Stocks Slammed Amid 'Cohn Of Uncertainty' As Hindenburg Omen Cluster Nears Record

"Pause that refreshes?", "Fleshwound?" or "beginning of the end?"


Between Bannon's China trade war threats and fears over Cohn leaving, risk was off today, not helped by dismal Industrial Production data and the utter horror in Barcelona. Trannies were worst, but this was an ugly say all around, losses accelerate into the close ahead of tomorrow's OPEX. NOT OFF THE LOWS...


Small Caps are now back to unchanged year-to-date...


S&P closed at critical support around 2430...


From "Fire & Fury", Nasdaq is leading the drop...


In order, from worst to first, retailers, energy, financials, and tech have tumbled since "fire and fury" with Utes holding gains...



Cohn Uncertainty crushed Goldman...


S&P VIX surged back to 15 and Russell/Nasdaq back over 18. Thursday Spike, Monday Plunge, Thursday Spike, this is the quickest reversal in VIX since Sept 2016...


Over the last few weeks, a cluster of Hindenburg Omens have been erupting across the major equity indices...


In fact, the size of the cluster is flashing a major warning...


The S&P dropped back below its 50DMA (this is the biggest drop below the 50DMA since before the election) to its lowest in 5 weeks...


Tech stocks gave up the week's gains...


AAPL was down today but FANG stocks were worse...


HY Credit tumbled to stop exactly at its 200DMA ($87.36 HYG) plunging thru its 50DMA...


And stocks catching down to credit...


Treasury yields slid further today (again the AMZN rate lock pressure lifted and safe haven demand) with 30Y yields now lower on the week (10Y ended with a 2.18% handle)...


With 30Y yields back at one-week lows...


The dollar pumped higher overnight (seemingly bid after Bannon's comments) but tumbled after ECB Minutes, Industrial Production, and Cohn rumors...


The biggest driver of USD swings today was EURUSD which shifted on ECB Minutes...


The drop in the dollar during the day session managed to lift WTI Crude modestly back above $47...


Gold jumped again today, pushed higher overnight by Bannon's China trade war threats...

The S&P 500 Is Now Overvalued On 18 Of 20 Valuation Metrics

After last week's brief war with North Korean-inspired volatility explosion (and just as rapid subsequent retracement), some have asked if the resulting market decline, which is down a further 1% on today's latest terrorist attack in Spain, has made stocks more attractive. Here is the quick answer according to Bank of America: based on the 20 most widely used valuation metrics, the S&P remains substantially overvalued on 18 of 20 valuation metrics, the only exceptions being free cash flow, helped by depressed capex), and relative to bond, the Fed's favorite indicator which got a shout out in yesterday's FOMC minute, where yields remain depressed thanks to $18 trillion in global central bank purchases...


# Some brief thoughts on valuation from BofA's Savita Subramanian: The S&P 500 forward P/E expanded in July to 17.7x from 17.4x (its highest level in 13½ years) as the market rallied more than estimates climbed. The valuation backdrop forthe S&P 500 remains the same: US stocks trade above historical average levels across nearly all metrics we track, but equities continue to look attractive relative to bonds, where the equity risk premium (ERP) is more than 50% above its long-term average. Multiples expanded across most sectors last month, with the exception of Industrials and Staples, both of which now trade in-line with historical average levels. Energy, which was among the best-performing sectors in July, saw the most multiple expansion last month. The sector continues to trade at a record discount to history on relative Price/Book, but grew increasingly expensive on relative forward P/E as analysts revised down EPS estimates amid the continued weakness in oil prices.
# With the S&P just still just shy of all time highs, here is BofA's summary of the distribution of global "minor" and "major" geopolitical risks...

VIX Tops 15, Stocks Hit "Fire And Fury" Lows As Cohn Doubts Continue

Amended statements from The White House have left investors doubting whether Gary Cohn will "remain" at The White House and that has sent stocks plunging to "Fire & Fury" lows and VIX back above 15...


For now, Nasdaq is leading the charge lower...


Nasdaq VIX is surging...

White House Confirms "Cohn Intends To Remain In Position"

Update 2: The White House has issued a statement confirming that "Gary Cohn intends to remain in position as NEC Director." The only problem is, the market is ignoring it. Presumably, the market now believes it is just a matter of time...


Update 1: Goldman Sach stock and the market are rebounding after Axios reports "source with direct knowledge says rumor is '100% False'"...

Van Plows Into Barcelona Crowd Killing 13; Armed Terrorists Take Hostages After Shootout

Update 2; According to El Mundo the number of dead increased to 13. Additionally, as the Telegraph adds, Police stationed at the cordon a block away from Plaza Catalunya, on Passeig de Gracia, say they have no information what is happening inside. Confused tourists, shoppers and business owners gathered at its edges, awaiting some word or direction as to what to do. The Catalan police say they are treating the crash as a suspected terrorist attack but cannot yet confirm the motive. According to media reports, the attack vehicle was a rented van. That would suggest, if this is confirmed as a terrorist attack, that terrorists are imitating the perpetrators of the London Bridge attack, where a rented van was also used. Sky News reports that police are now looking for a second van that may have been involved in the attack.
Update 1: According to Reuters, two armed men have entered a restaurant after the van crash and have taken hostages, while El Periodico tweets that there is an active shootout taking place the area in what the Barclona police now say is considered a "terrorist attack"...


Reuters also adds that at least two have been killed in the van crash while El Mundo adds that more than 20 people have been injured. Pictures from the scene of the crash show emergency services and civilians attending to at least two people on the ground. One twitter video post shows bodies strewn across the pavement for at least 100 metres of the famous street...


El Pais newspaper said the driver of the vehicle had fled on foot after mowing down dozens of people. While full details of the incident were not immediately clear, since July 2016 vehicles have been used to ram into crowds in a series of militant attacks across Europe, killing well over 100 people in Nice, Berlin, London and Stockholm. In recent weeks, threatening graffiti against tourists has appeared in Barcelona, which draws at least 11 million visitors a year...

Goldman, S&P, USDJPY Drop On Unconfirmed Rumors That Gary Cohn Resigned

Amid calls from many Americans for his resignation, former Goldman President and Trump's director of national economic council Gary Cohn has remained silent. However, Goldman Sachs (and the whole market) is sliding this morning as a slew of headlines cross trading desks offering unconfirmed rumors that Cohn is set to resign...


# Raven @QTRResearch FYI: This was the original Gary Cohn rumor tweet from a somewhat reputable source but not MSM; appears to have been deleted 
Goldman began to sink yesterday as things escalated...


VIX is up and the whole market slid on this rumor...



This follows Yale School of Management's Jeffrey Sonnenfeld's warning that the market would crash if Cohn resigned; "I don't want to be an alarmist, but there is a lot of faith that he is going to help carry through the tax reform that people are looking for," Sonnenfeld said on "Squawk Box." "I think if he steps away, it would crash the markets"....

US Manufacturing Drops In July As Auto Production Slumps

Industrial Production, leaked early, rose just 0.2% MoM in July, missing expectations and slowing from last month's 0.4% gain. Manufacturing production actually shrank (-0.1%)...


The biggest driver of the decline was a 3.6% slump in motor vehicle production....

Things To Ponder

- Trump policy doubts, weak inflation to weigh on Wall Street (Reuters)
- Trump Remarks on Violent Rally Rattle Aides, Risk Agenda (WSJ)
- Trump blasts Republican senators over Charlottesville criticism (Reuters)
- Trump's crisis spurs talk of White House departures (Reuters)

Philly Fed Slides To Weakest Since Election As Employment Sinks

Following Empire Fed's exuberant six-sigma beat and surge to three year highs, Philly Fed failed to live up to its neighbor's promise, dropping from 19.5 to 18.9 in August (a small beat of 18.0 expectations)...


This is the weakest print since Nov 2016, despite a surge in new orders and average workweek as inventories tumbled and employment slipped...


Hope remains alive and well though. The diffusion index for future general activity increased from a reading of 36.9 in July to 42.3 this month, its highest reading in four months. Over the next six months, nearly 49 percent of the firms expect increases in activity, and only 7 percent expect decreases....

Wal-Mart Slides, Free Cash Flow Fails To Cover Dividends And Buybacks

Despite reporting strong earnings which beat on both the top and bottom line in today's most anticipated earnings report, Walmart stock is down 3%, sliding to the lowest level since late July after it provided full year EPS guidance whose midpoint was below Wall Street expectations. Here are WMT's otherwise respectable historical results.
- Q2 adj. EPS $1.08, beating est. $1.07, on the top end of the $1.00- $1.08 range
- Q2 revenue $123.4BN, beating est. $123.05b
- Total U.S. comps. ex-fuel up 1.7%, in line with consensus est. of 1.7%
- Wal-Mart U.S. comps. up 1.8%, est. up 1.8%; forecast up 1.5%-2.0% in Feb.
- Wal-Mart U.S. traffic up 1.3% y/y, avg ticket up 0.5%
- Wal-Mart U.S. E- commerce sales up 70 bps y/y, GMV up 67%...

S&P Futures, Euro, Stocks Fall After Fed's Low Inflation Warning

S&P futures, European stocks and bond yields all fell in early trade alongside oil and the euro after the latest Fed minutes expressed concern over weak U.S. inflation, while Asian equities rose overnight ahead of WalMart earnings and the latest ECB minutes. Gold rose as high as $1,290 before fading most gains as the USDJPY rebounded. Fund futures are now pricing in about a 40% chance the Fed will raise rates by December, compared to 50% before the Fed's minutes. Last week's market turmoil and resultant near record jump in volatility in the wake of heightened tensions between the U.S. and North Korea has continued to ease, bringing down gauges of equity and bond volatility and repairing most of the damage done to stock markets, in fact as Bank of America showed, the retracement in the VIX on Monday was among the fastest on record. But political angst isn’t over; investors continue to watch the political trainwreck in Washington where President Trump disbanded two high-profile business advisory councils amid the fallout from his response to the weekend violence in Virginia. "Trump dissolving his major business groups makes the investment community even more pessimistic because this sets the stage for even more failure for him," Naeem Aslam, chief market analyst at Think Markets in London, wrote in a note...


Lost in the political noise was the July FOMC minutes, where the most notable takeaway was the reference to “most participants expected inflation to pick up over the next couple of years and to stabilize around the 2% objective over the medium term”. Many participants “saw some likelihood that inflation might remain below 2% for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside.” The debate on inflation echoed recent comments made public by various Fed presidents, while some members noted the “committee could afford to be patient in deciding when to increase the rates further and argued against additional adjustments until incoming information confirmed that the recent low inflation were not likely to persist”. Those comments were balanced by the observation that “Some other participants were more worried about risks arising from a labour market that had already reached full employment and was projected to tighten further from the easing in financial conditions”.
Elsewhere, on the balance sheet unwind topic, “several” members favoured an announcement in the July meeting, but most preferred to defer that decision to the next meeting in September. With concerns about weak inflation in the air, the Stoxx 600 Index was down 0.1%, with declines in banking shares offsetting advances in healthcare stocks. Germany's DAX, France's CAC 40 and the UK's FTSE 100 all fell 0.1%. Yesterday's Reuters' trial balloon, according to which Mario Draghi would not say anything of note next week during the Jackson Hole conference, weakened the euro, which traded as low at 1.1700 this morning and gave support to fixed income assets with European government bond yields dropping, and the 10Y Bund yield down nearly 2 bps to 0.42%, down from Wednesday's high of 0.47%. Most other euro zone yields fell 1-2 basis points. In currencies, the euro slid before the release of the minutes from the last ECB meeting. Most Asian currencies rose overnight, with the Korean won up 0.3% after tensions over North Korea continued to ease.
Overnight, the yen gained for a second day as the dollar decline on declining US rate hike expectations. The Australian dollar rose a second day against the U.S. dollar to reach the highest in nearly 2 weeks after July employment data beat estimates while prior month data was revised higher and iron ore prices erase week-to-date losses. In Europe, the pound rose against the euro after strong U.K. retail sales data. In commodities, London copper, aluminum and zinc hit multi-year highs on expectation China's reform of its metals industry will curb supply against a backdrop of robust demand. Gold and tin were among the best performing metals, and zinc traded near a 10-year high. Oil prices edged higher after new data showed U.S. crude stocks have fallen by 13 percent from a peak in March. Brent crude futures were at $50.36 per barrel, up 0.2 percent from their last close. Today's data include jobless claims, Philadelphia Fed Business Outlook and industrial production. Wal-Mart, Gap, Ross Stores and Madison Square Garden are among companies reporting earnings.
# Market Snapshot;
- S&P 500 futures down 0.1% to 2,465 
- STOXX Europe 600 down 0.1% to 378.62
- Nikkei down 0.1% to 19,702.63
- Topix down 0.07% to 1,614.82
- Hang Seng Index down 0.2% to 27,344.22
- Shanghai Composite up 0.7% to 3,268.43
- German 10Y yield fell 1.0 bps to 0.435%
- Euro down 0.3% to $1.1738
- Brent futures down 0.2% to $50.17/bbl
- Gold spot up 0.3% to $1,287.08
- U.S. Dollar Index up 0.2% to 93.70
# Top Overnight News;
- Alibaba, Wal-Mart Report Earnings; ECB Minutes Watched for Taper Clues
- The U.S.’s top general declined to comment on South Korean leader Moon Jae-in’s assertion that he needed to sign off on a war against North
- Korea, saying President Donald Trump had the final say on a unilateral military strike Trump’s pro-business image tarnished as CEOs abandon president
- China believes the Korean Peninsula issue can only be solved via dialogue and negotiations, Fan Changlong, Vice Chairman of Central Military Commission said
- Saudi Arabia shipped the least oil in almost three years in June, just as domestic stockpiles are dwindling.
- U.K. retail sales rose 0.3% m/m in July, exceeding the median estimate of +0.2%, driven by the biggest jump in purchases of food in almost two years
- President Donald Trump waded into a longstanding scrap between online retailers and their brick- and-mortar rivals with a Twitter posting Wednesday about Amazon.com Inc. and taxes
- Fed officials are looking under the hood of their most basic inflation models and starting to ask if something is wrong
- Investors are about to get their first look at Bill Ackman’s plans for improving the performance of Automatic Data Processing Inc., which the activist investor contends is losing ground to smaller rivals
- Credit Suisse, JPMorgan and Citigroup have struck the first deals on a new structured debt platform amid a boom in repackaged note transactions
- Most industrial metals eased back after a rally that took zinc to the highest level in almost 10 years on signs of supply curbs and faster economic growth around the world
- U.K. consumers are flagging, stripping the economy of its most consistent and important support over the past two years.
- Air Berlin Plc’s insolvency could open the way for Deutsche Lufthansa AG to add new hubs for inter-continental flights while allowing short-haul discount specialist EasyJet Plc to boost its presence in the German capital - South Korea’s Moon says will be no war again on the peninsula
- Japan July trade 418.8b yen vs 327.1b est; exports 13.4% vs 13.2% est
- Australia July jobs 27.9k vs 20.0k est; unempl rate 5.6% vs 5.6% est
- New Zealand Aug ANZ consumer confidence 126.2 vs 125.4; +0.6% m/m
- Elliott Is Said to Buy Debt in Move to Block Berkshire Oncor Bid
- For Bull Market in U.S. Stocks, You’re Only as Young as You Feel
- Credit Suisse’s London Sublease to WeWork Said to Be Blocked
- Trump’s Pro-Business Image Tarnished as CEOs Abandon President
- Republican Leaders Duck for Cover After Trump’s Race Remarks
*) Asia equity markets traded indecisive following a relatively tepid close in the US where basic materials outperformed as zinc rose above USD 3000/ton to a decade high, while energy and financials declined on oil weakness and after US yields were pressured post¬FOMC minutes. ASX 200 (-0.10%) was choppy with miners underpinned by strength across the metals complex and as a slew of earnings releases also drove individual stocks, while Nikkei 225 (-0.14%)was subdued by a firmer currency. Shanghai Comp (+0.68%) and Hang Seng (-0.24%) were both initially higher, although the latter then pared gains on profit taking and amid an increase in money market rates. 10yr JGBs traded flat amid an indecisive risk tone in Japan, while the 5yr auction also failed to spur price action as the results were mixed. PBoC injected CNY 60bln in 7-day reverse repos and CNY 40bln in 14-day reverse repos. (Newswires)
* PBoC set CNY mid-point at 6.6709 (Prey. 6.6779).
*Japanese Trade Balance (Jul) JPY 418.8bln vs. Exp. JPY 327.1b1n (Prey. JPY 439.9b1n); Exports (Jul) Y/Y 13.4% vs. Exp. 13.2% (Prey. 9.7%); Imports (Jul) Y/Y 16.3% vs. Exp. 17.0% (Prey. 15.5%)
# Top Asian News;
- Economic Growth in the Philippines Exceeds 6% for Eighth Quarter
- Casino Giants Look for Clarity as Japan Begins Public Debate
- Series of Gaffes Taint Unicom’s $11.7 Billion Sale Announcement
- Gemadept Seeks $125M From Stake Sales in 2 Units: CEO Minh
- Tokyo Stocks Slip as Yen Strengthens After Dovish Fed Minutes
- Taiwan Blackout Seen Pressuring Tsai to Reconsider Energy Policy
- BOJ Seen Trimming Bond Purchases Further If Yields Extend Slide
- China Kickstarts Privatization Push With Unicom Share Sale
- Tencent’s Appetite for AI Sends Sector Stocks Surging in China
*) European equities trade modestly lower (Eurostoxx 50 -0.2%) with financials underperforming in the wake of yesterday's FOMC minutes which received a somewhat dovish response given concerns at the Fed regarding inflation. To the upside, material names outperform in response to the gains seen overnight in the metals complex with Dalian iron ore prices up over 6% during Asia-Pac trade. In fixed income markets, prices were originally supported by the softness seen in European equities and the fallout of yesterday's FOMC minutes with the 10yr Bund approaching 164.00 to the upside. Looking ahead, investors will likely turn towards today's ECB minutes release for any views on concerns surrounding scarcity of core paper and any potential biases the central bank could have in purchasing paper from across the continent.
# Top European News;
- U.K. Said to Plan Visa-Free Travel for Europeans After Brexit
- U.K. July Retail Sales Rise, Led by Surge in Demand for Food
- Nets CEO Opens Door to European Expansion Amid Deals Speculation
- Axa, NN Are Said to Near Deal for Billionaire March’s Encampus
- Seadrill Shields Seadrill Partners From Impact of Chapter 11
- Novo’s Diabetes Drug Bests Lilly’s in Aiding on Weight Loss
- Vestas Maintains Outlook, Begins $706 Million Share Buy Back
- Lufthansa Swoop for Air Berlin Would Add Lower-Cost U.S. Routes
# In currencies, sterling was once again a key focus for FX markets amid further tier 1 data from the region, this time with retail sales on the data slate. Upon the release, GBP/USD saw a spike higher after 3/4 headline metrics exceeded expectations before prices were dragged lower to pre-announced levels with all 4 components revised lower. USD has regained some ground against its major counterparts following the losses seen last night in the wake of the FOMC minutes. USD has particularly out-muscled EUR with participants looking for further insight via the ECB minutes into the current train of thought at the central bank given yesterday's source reports. AUD has regained some ground amid firmer metals prices, subsequently shrugging off the domestic jobs data overnight. 
# In commodities, the metals complex traded higher overnight with gold prices extending on gains seen following the FOMC minutes. Elsewhere, Copper traded higher alongside broad strength across basic materials with Dalian iron ore prices up nearly 6%, while WTI traded quiet overnight and failed to make any significant recovery from yesterday's post-DoE declines. Saudi Arabia June output rose 190K bpd M/M to 10.07mln bpd, while Saudi Arabia June crude exports fell 40K bpd M/M to 6.889mn bpd, according to JODI data. Libya's NOC said that the Sharara oil field is "working normally and the situation is currently stable" following recent security breaches.
# Looking at the day ahead, we’ve got a fair bit of data due today including July IP (0.3% mom expected), capacity utilisation, conference board US leading index (0.3% expected), the Philadelphia Fed business outlook survey (19 expected), initial jobless claims and continuing claims stats. Away from the data, the ECB will publish the account of its July policy meeting and the Fed’ Kaplan will also speak. Further, Wal-Mart will report its results today....

Despite 'Growth Promise', Global Negative-Yielding Debt Surges To Highest Since October

The market value of bonds yielding less than zero percent has jumped by a quarter over the past month to $8.68 trillion, the highest since October, which is odd given the mainstream narrative that everything is awesome and global growth is heading for escape velocity? "probably nothing"...


As Bloomberg notes, slower-than-forecast inflation data and haven demand on geopolitical risk have revived bond bulls around the world...


With global borrowing costs already so low, central banks should be prepared to cut interest rates deep into negative territory in the next economic downturn, warn economists including Harvard professor Kenneth Rogoff....

Spanish Bond Yields Plunge To Record Lows As 'Economy Improves' (Just Don't Tell The Nation's Youth)

Spain’s two-year bond yields have collapsed to a record low -35bps this week and Portugal's followed suit, plunging near record low levels as Draghi's "whatever it takes" has benefitted all those front-running bondholders but left youth unemployment hovering still near record-high levels...


As a strong euro weighs on the region’s inflation outlook, it makes it harder for the European Central Bank to end quantitative easing and negative interest rates, said Peter Chatwell, head of European rates strategy at Mizuho International Plc in London, and sure enough today's reports that Draghi's Jackson Hole appearance will be a nothing burger has sparked more anticipation that QE isn't ending anytime soon, despite better-late-than-never complaints from the Germans...


"Whatever it takes" to keep asset prices high!

SP500 Index Update

Thursday Market Observations

# Once again, the SPX opened the day strong and closed weak. The market gave us a tepid response to dovish FOMC minutes, and we consider that bearish, although we continue to expect more rally into the 8/21 New moon/solar eclipse. A test of the highs is possible going into 8/21. Our bias is that the market will hold up into our 8/20-8/21 projected turn window, which includes the 8/21 solar eclipse, before seasonal weakness into October begins. The NYSE McClellan Oscillator registered below -200 reading on 8/8 and this argues that a correction has started which should be of a higher degree than what unfolded from 3/1 into 4/16.
# Gold gave us a "topping solar-lunar signature" on Friday and we declined in an EW a-b-c correction into early Tuesday. After the dovish Fed minutes on Wednesday, gold and especially gold stocks rallied hard. Gold stocks are quietly starting to outperform gold and this is key to a break out from this range bound market soon. The Comex gold and silver COTs are arguing that the PMs made a major low on 7/10. The GDX/GLD ratio spiked higher after the dovish FOMC minutes and this is suggesting a break above $1300 soon. A daily close above $1307 will lead to a quick test of $1375.
# Silver gave us a pullback into Monday. We are close to the start of a 3rd of a 3rd wave higher off the February 2016 low. Silver stocks bullishly firmed against silver yesterday.
# Crude oil gave us 5-waves down into early Wednesday. We should see a bounce on Thursday.
# Bonds held up well yesterday.
# The USD held up into the FOMC minutes and then fell hard after the dovish comments. Our bias is that we have started a major bear market in the USD and the uptrend in commodities since May should have legs....

Phoenix Capital; Did The Fed Just Warn The Debt Bubble Is Beginning To Burst?

While everyone is focusing on political issues, the NY Fed published a stunning report on the state of the US consumer. According to the NY Fed, the average US household has hit a new record for debt, surpassing the old record set at the peak of the 2007 bubble...


Put simply, the average US household today is more in debt that it was in late 2007: the former peak of a massive debt bubble. Of course, revealing that we’re in a massive debt bubble is only half the story. The more critical issue for those looking to invest based on this is when the debt bubble bursts. Bad news, it’s starting already. The NY Fed noted that early and serious delinquencies for credit cards are rising. This is not a new development either, it’s been happening for NINE straight months: a trend not seen since the depth of the great crisis in 2009. So US households are more in debt than they were in late 2007 and the credit cycle is turning with delinquencies rising just as they did in the Great Crisis of 2008. Meanwhile, stocks are at all-time highs. So what happens when the markets wake up to the fact that yet another massive debt bubble is beginning to burst?

Stocks Surge To 2nd Longest Dip-less Streak In History

The S&P 500 has not seen a drawdown of more than 3% since the election last November. This is the second longest run in history...


The Dow has hit 31 all-time highs in 2017 and has done so with no more than a 3% pullback...


Additionally, Bilello notes this is the fourth longest streak in US history without a 5% drop...


It’s been more than a year since the S&P 500 has suffered a 5% pullback...


"The best of times" indeed...

Brandon Smith; Korean War Part II, Why It's Probably Going To Happen

Though a lot of people in my line of work (alternative economic and geopolitical analysis) tend to be accused of "doom mongering," I have to say personally I am not a big believer in "doom." At least, not in the way that the accusation insinuates. I don't believe in apocalypse, Armageddon or the end of the world, nor do I even believe, according to the evidence, that a global nuclear conflict is upon us. In fact, it annoys me that so many people seem desperate to imagine those conclusions whenever a crisis event takes shape. I think the concept of "apocalypse" is rather lazy, unless we are talking about a fantastical movie scenario, like a meteor the size of Kentucky or Michelle Obama's Adam's apple hurtling towards the Earth. Human civilization is more likely to change in the face of crisis rather than end completely. I do believe in massive sea-changes in societies and political dynamics. I believe in the fall of nations and empires. I believe in this because I have seen it perpetually through history. What I see constant evidence of is that many of these sea changes are engineered by establishment elitists in government and finance. What I see is evidence of organized psychopathy and an agenda for total centralization of power. When I stumble upon the potential for economic disaster or war, I always ask myself "what is the narrative being sold to the public, what truth is it distracting us from and who REALLY benefits from the calamity." The saying "all wars are banker wars" is not an unfair generalization, it is a safe bet.
# First, let's clear up some misconceptions about public attitudes towards the North Korean situation. According to "polls" (I'll remind readers my ample distrust of polls), a majority of Americans now actually support U.S. troop deployment to North Korea, but only on the condition that North Korea attacks first. I want you to remember that exception, North Korea must attack first. It will be important for later in this analysis. Despite a wide assumption that the mainstream media is beating the war drums on this issue, I find it is in most cases doing the opposite. The mainstream media has instead been going out of its way to downplay any chance that the current inflamed rhetoric on both sides of the Pacific is anything other than bluster that will end with a whimper rather than bomb blasts. This is one of the reasons why I think war is imminent; the media is a notorious contrarian indicator. Whatever they predict is usually the opposite of what comes true (just look at Brexit and the election of Donald Trump, for starters). Another generalization that is a sure bet is that the mainstream media usually lies, or at the very least, they are mostly wrong. That said, if we are to believe the latest polls, unfortunately, one thing is clear: The American people, on both sides of the political spectrum, are becoming more galvanized around supporting a potential conflict with North Korea. For the establishment, war is a winning sell, at least for now. Of course, I am aware that we have heard all this before.
Back in 2013 tensions were relatively high with North Korea just like they are today. North Korea threatened a preemptive nuclear strike on the U.S. back then, too, and in the end it was all hot air. However, besides wider public support than ever before in terms of troop deployment to North Korea, something else is very different from 2013. Primarily, China's stance on the issue of regime change. In the past, China has been consistent in supporting UN sanctions against North Korea's nuclear program while remaining immovable on war and regime change in the region. In 2013, it was clear that China was hostile to the notion of a U.S. invasion. In 2017, though, something has changed. China's deep ties to the global banking establishment, their open statements on their affection for the IMF, and their recent induction as the flagship nation for the IMF's Special Drawing Rights system make it clear that they are working for the globalist agenda, not against it. This is not necessarily a new thing behind the curtain; China has done the bidding of globalist institutions for decades. Today though, the relationship is displayed far more publicly. In 2015, it was China, not the U.S., that sounded the alarm over North Korea's nuclear program, indicating that Pyongyang might have technology well beyond American estimates. It was this warning that triggered the slow buildup to today's fear over a fully capable intercontinental ballistic missile package in the hands of North Korea. It seems obvious to me that China plays the role of North Korea's friend as long as it serves the interests of the globalist agenda, and then China turns on North Korea when the narrative calls for a shift in the script.
It is China that opens and closes the door to war with North Korea; a China that is very cooperative with the IMF and the push towards total globalization. In 2013, China presented the narrative of stalwart opposition to U.S. invasion. In 2017, China has left the door wide open. Both alternative and mainstream media outlets latched onto recent statements made by Beijing proclaiming that China "would not allow regime change in North Korea." What many of them forgot to mention or buried in their own articles, though, was that this was NOT China's entire statement. China also asserted that they would REMAIN NEUTRAL if North Korea attacked first. I cannot find any previous instance in the past when China has made such a statement; a statement that amounts to a note of permission. Both the American public and the Chinese government have given support for regime change in North Korea given the stipulation that there is an attack on the U.S. or U.S. interests and allies. So, I ask you, what is most likely to happen here? Much of the world and most importantly the U.S. is on the verge of a new phase of severe economic decline according to all fundamental data trends. The U.S. is set to enter into yet another debate on the debt ceiling issue with many on the conservative side demanding that Trump and Republicans not roll over this time. And, as I discussed in my article 'Geopolitical Tensions Are Designed To Distract The Public From Economic Decline', a North Korean conflict stands as the best possible distraction.
# How does the establishment rationalize a contested debt ceiling increase while also diverting blame away from themselves on the continued decline in U.S. and global fiscal data? War! Not necessarily a "world war" as so many are quick to imagine, but a regional war; a quagmire war that will put the final nail in the U.S. debt coffin and act as the perfect scapegoat for the inevitable implosion of the current stock market bubble. The international banks have much to gain and little to lose in a war scenario with North Korea. I predict that there will be an attack blamed on North Korea. Either North Korea will be prodded into a violent reaction, or, a false flag event will be engineered and tied to Pyongyang. Remember, for the first time ever, China has essentially backed off of its opposition to invasion of North Korea as long as North Korea "attacks preemptively." Why didn't they make this exception back in 2013? Because now the international banks want a distraction and China is giving them the opening they require. Will this war culminate in global nuclear conflagration? No. The establishment has spent decades and untold trillions building it's biometric control grids and staging the new global monetary framework under the SDR system. They are not going to vaporize all of this in an instant through a nuclear exchange. What they will do, though, is launch regional wars and also economic wars. Those people expecting apocalypse in the Hollywood sense are going to find something different, but in my opinion much worse, a steady but slower decline into economic ruin and global centralization. Eventually, China and the U.S. will enter hostilities, but these hostilities will lean more towards the financial than the kinetic. The establishment cabal works in stages, not in absolute events. Another Korean war would be a disaster for America, just not in the way many people think.
# Will there be a nuclear event? Yes. If war takes place in North Korea then it is likely they will use a nuclear device somewhere in retaliation. We may even see a nuclear event as a false flag catalyst for starting the war in the first place. This will not be a global threat, but a mushroom cloud over any American city or outpost is enough to scare the hell out of most people. It is all that will be needed. Does this mean "doom" for the American people? It depends on how we react. Will we continue to hold the banking establishment responsible for all of their sabotage previous to a high profile war in the pacific? Or, will we get caught up in the tides of war fever? Will we question the source of future attacks on the U.S., or will we immediately point fingers at whoever the media or government tells us is the enemy? Our response really is the greatest determining factor in whether or not the American ideal of liberty stands or falls. This time, I do not see bluster, but a dark fog very common in the moments preceding conflict. This time, I believe we are indeed facing war, but war is always a means to an end. War is an establishment tool for social engineering on a massive scale....

Adam Garrie; China-India Conflict Is Far More Dangerous Than US-North Korea One

While the international media remains concerned to the point of being fixated on the US-DPRK (North Korea) stand-off, in terms of sheer firepower, the much more pressing stand-off between China and India holds the potential to be far more destructive.
# Indian Nuclear Weapons; While the best intelligence about North Korea’s weapons delivery capabilities indicates that North Korea is in possession of intermediate range ballistic missile systems which are incapable of hitting the US mainland, India’s intermediate range systems are not only more advanced but due to India’s proximity with China, these missiles could easily strike targets within China. Of course, China has a vastly more equipped army and nuclear capacity, but any war between China and India that would involve the use of intercontinental ballistic missiles would be a world-changing event. While many have focused on the possibility of a short land-based border war, similar to that which the two countries fought in 1962, due to the rapid advance of both the Chinese and Indian militaries in the decades since 1962, there is every possibility that such a war could escalate quickly.
# The Modi Factor; Much is said in the western mainstream media about North Korea’s leader Kim Jong-Un being unpredictable and flippant. This information is largely based on self-fulfilling propaganda rather than actual knowledge of Kim Jong-Un’s thought process and leadership. While little is actually known about Kim Jong-Un’s long term strategic thinking, India’s Prime Minister Narendra Modi’s modus operandi is all too clear. Modi’s political programme has resulted in economic stagnation, worsening relations with its two most important neighbours, China and Pakistan and increasing incidents of violence, discrimination and intimidation against India’s large Muslim minority. With these major failures looming large (however much they are dismissed or rationalised by the ruling BJP), Modi has resorted to an entrenched militant nationalism which has resulted in galvanising the most extreme elements of Modi’s Hindutva base domestically while provoking China by placing Indian troops in territory China claims as its sovereign soil. Against this background it could be fair to surmise that India’s leadership is less stable than that of North Korea, even when accounting for the differences in India’s size, wealth and global reach vis-à-vis North Korea. If US leaders have been well known to provoke wars to get a poor domestic political performance or a scandal out of the headlines, one should not surmise that Modi will behave any differently. The fact that a conflict with China whether a military conflict, the ensuring trade conflict for which India is virtually entirely responsible or a combination of both, is manifestly to India’s detriment, seems to be lost on a leadership which is obsessed with short term propaganda victories rather than genuine economic and diplomatic progress.
# Actual versus Perceived Chinese Interests; China’s concerns about Indian violations of its sovereignty and moreover with the anti-cooperative attitude that Modi’s government has taken, is a very serious matter for China. China has repeatedly warned that its patience is being tested and that China will not ultimately hesitate to militarily defend itself, even while stating that war is not China’s preferred option. By contrast, China’s interest in both North and South Korea is one of stability and more importantly, one of peace. China, like Russia, does not want to see the Korean war reignite on its borders. This is why China has taken an even hand on the North Korean issue, one that has surprised those who overestimate China’s relationship with the DPRK, one which throughout most of the second half of the 20th century, was less important than Pyongyang’s relationship with the Soviet Union. North Korea is on occasion a source of a Chinese headache, but it is the United States which has a lingering geo-strategic ambition to unite Korea under the auspices of a pro-American government. China by contrast would be happy with the status-quo minus weapons tests and military drills on both sides of the 38th parallel. In respect of India however, China has a deeply specific set of interests which are summarised as follows:
- No threats made to China’s territorial integrity
- A resentment towards dealing with an Indian government that from the Chinese perspective is needlessly hostile
- A long term goal of cooperation with India in respect of One Belt,One Road
- A more intrinsic desire not to see India fall too deeply into the US rather than what Chinese media calls the ‘Asian’ sphere of influence.
Modi would appear to understand China’s perspective which is perversely why his government is doing precisely the opposite of what China wants. India currently has soldiers on Chinese territory in the disputed Doklam/Donglang region. India is attempting to shut China out of Indian markets in such a manner that seeks to paint India as a competitor to China rather than a country whose economic potential is complimentary to that of China. In an all-out trade war with China, India will lose, the only question remains how badly. Thus far Modi’s attitude does not bode well for an honourable second place. Finally, India’s recent purchase of American weapons that are vastly overpriced via-a-vis their Russia or Chinese equitant is an example of Modi being penny wise and pound foolish. Modi’s relationship with the United States is one where Modi is squandering Indian treasure in order to make an expensive point. Donald Trump himself joked at a press conference with Modi that the American side will try and get the final price higher before India commits to a final sale of weapons.
# Conclusion: India would stand to benefit greatly from doing what Pakistan has been going for years, namely understanding that the old alignments of the Cold War, including the idea of being non-aligned means something very different in 2017 than it did in 1970. The China-Pakistan Economic Corridor, Pakistan’s historically good relations with Russia and its refusal to follow US ally Saudi Arabia into an unnecessary conflict with Qatar and by extrapolation with Iran, demonstrates a far-sighted geo-strategic maturity that will ultimately benefit Pakistan greatly. India has every ability to do with China what Pakistan has done with Russia while not losing its old Cold War friend. Until India realises this, it is fair to say that the flash-points of conflict between Beijing and New Deli are far more worrying and could be far more damaging in the long term than the war of words between Washington and Pyongyang, frightening though it may at times sound....

woensdag 16 augustus 2017

Gold Gains As Stocks Sink After Trump Turmoil, Fed Fearmongering

Shitty day for Housing Recovery enthusiasts, the Trump administration, and Fed followers...


Stock actually ended the day higher thanks to the overnight bid and panic squeeze at the open but the theme of the day was simple. Trump is in trouble (agenda on the rocks) and The Fed is explicitly warning about bubbles...


VIX ended the day lower but once again it was a game of two halves (NOTE Russell 2000 'VIX' was higher on the day)...


AAPL pushed to new record highs as the great rotation from FANG stocks continues...


The Dollar was dumped and bond yields tumbled after Trump and accelerated after The Fed...


With the AMZN issue out of the way, selling pressure lifts on bonds and today's turmoil put a bid under prices...


The Dollar Index erased most of its gains from the last two days...


Flows swung toward risk-off after U.S. Vice President Pence dialed up the rhetoric, saying North Korea must permanently abandon its nuclear ambitions. This followed news from the White House earlier in the day that Trump and Pence would meet with the National Security team regarding Southeast Asia on Friday at Camp David.
# Gold jumped on warmongery and Trump turmoil then shifted higher on a dovish Fed statement. Crude was ugly after a large crude draw offset by a surprise build in gasoline stocks...


Zinc spiked today and Copper was up as the base metal commodity index surged to its highest level since Nov 2014...


However, what happens next?


The analog continues to hold...