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JPMorgan: “Nothing Appears To Be Breaking” But “Something Happened” / by Tyler Durden on 08/30/2015 20:14

If you thought you were merely on the fence about being confused on the topic of the global economy, and how the Fed may be on the verge of a rate hike when on both previous occasions when financial conditions were here the Fed was launching QE1 and QE2, here is JPM’s chief economist Bruce Kasman to make sure of that.

Something happened

The August turbulence in global markets has produced significant shifts, including a 6.6% fall in equity prices. The currencies of emerging market countries have depreciated substantially against the G-4, while emerging market borrowing rates for sovereigns and corporates have moved higher. Global oil prices have been whipsawed as have G-4 bond yields.

The speed and magnitude of these movements is reminiscent of past episodes in which financial crises emerged or the global economy slipped into recession. However, nothing appears to be breaking. Global activity indicators have, on balance, disappointed but remain consistent with a modest pickup in the pace of growth. Additionally, despite the turbulence in financial markets, there is no sign of unusual stress in short-term funding markets or of a credit crisis in any large EM economy.


14th amendment Trump was right Illegal children aren’t citizens!

InvestmentWatch / Submitted by IWB, on August 30th, 2015

Is Donald Trump an uninformed buffoon when it comes to immigration like his critics claim? Or is he right to question the conventional wisdom when it comes to the 14th Amendment?

Since the topic of birthright citizenship has been all over the news, now is a great time to pause my Constitution Revolution series and clarify what the 14th Amendment means.

Before we get into that, let me lay down one disclaimer that you have to remember in order to understand this post: all I intend to do here is demonstrate the meaning of the 14th Amendment. That’s it.

Keep in mind that whatever your opinion is on illegal immigration, it has absolutely no impact on the meaning of the 14th Amendment. Whether you love the idea of birthright citizenship for the children of illegal immigrants or you hate it – it doesn’t matter.

Truth is truth and the 14th Amendment means what it means. That’s what I intend to cover in this post.

With that out of the way, let’s take a look at the relevant part of the 14th Amendment:

“All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.”


Jim Willie Alert! The Global Financial War Is Now Full-Blown HOT!

Pete Santilli ShowPublished on Aug 28, 2015

Jim Willie Is Pete’s special guest tonight and says any Nation that has a devaluation in the future can look forward to a military attack … The type of attack may surprise you.

Hat tip: silvoracious

Oil price risks collapse to below $ 20 a barrel

InvestmentWatch / Submitted by IWB, on August 30th, 2015

by Secular Investor

The bear market in commodities is already four years old, but there are risks that oil will make another final huge leg lower – contrary to anything consensus might imagine.

Although we don’t share Fed vice-chairman Fisher’s view on inflation (totally neglecting China exporting deflation and secular global debt deflation forces), he has a valid point in stating that the current oil shock is mainly supply-driven. Post-crisis, central bank Quantitative Easing has resulted in huge investment in overcapacity and thus de facto price deflation: a nice example of central banks aiming for one goal, inflation, and accomplishing the polar opposite.


Do You Feel Lucky? / by Tyler Durden on 08/30/2015 19:50 -040

Chinese (Mis)Fortune Cookie…


The Malthusian GENOCIDAL ASSAULT On Humanity — Christina Sarich

SGTreport.comPublished on Aug 30, 2015

All of your hopes and dreams come down to 0.25% / 

Spoleto, Italy
August 28, 2015

Charles Dickens opened his 1859 masterpiece A Tale of Two Cities with one of the most famous introductions in literary history:

“It was the best of times, it was the worst of times… “

This line is notoriously incomprehensible to high school students around the world.

But as paradoxical as it sounds, it truly hits the nail on the head in describing social inequality.

Dickens wrote his book about the struggles in England and France just prior to and during the French Revolution.

For the aristocracy it was the best of times.

These people were born into a life of unparalleled prestige and luxury simply by accident of birth, without ever having to work a day in their lives.


Policy Confusion Reigns As China Caps Muni Debt, Uncaps Bank Debt, And Bad Loans Soar / by Tyler Durden on 08/30/2015 19:14

Last week, China moved to increase the quota for issuance under the country’s local government debt swap program to CNY3.2 trillion. The program, designed to help the country’s local governments crawl out from under a debt burden that amounts to more than 30% of GDP, allows provincial governments to issue bonds with yields that approximate the yield on central government debt and swap the new bonds for outstanding LGFV loans which generally carry higher interest rates. Generally speaking, the debt swap will save local governments somewhere in the neighborhood of 300 to 400 bps.

Of course, as we’ve detailed exhaustively, these types of deleveraging initiatives come at a cost for China. That is, with the economy slowing, there’s a certain degree to which China needs to re-leverage by attempting to boost credit growth and juice aggregate demand. That reality, plus the fact that the banks which made the initial loans to local governments weren’t keen to swap those high yielding assets for the new, lower yielding bonds, prompted the PBoC to implement what amounts to Chinese LTROs which allow the banks to pledge the new local government bonds for central bank cash which can then be re-lent to the real economy. So, in a nutshell, local governments issue new bonds, the bank swaps existing loans for those bonds, then the PBoC allows the bonds to be pledged as collateral for new cash. Ideally, this would be a win-win; that is, local government save billions in debt servicing costs and banks have fresh cash to make new loans.

The only problem is this: what happens when local governments need to borrow more money to finance things like infrastructure projects? That question prompted the PBoC to relax rules on LGVF financing, a move which hilariously negated the entire refi effort by encouraging local governments to turn to the very same high interest loans that got them into trouble and necessitated the debt swap program in the first place.


What You Must Know About Fed Minutes And Emanations From Jackson’s Hole / by  • 

This post is an excerpt from the Pro Trader and Monthly Investor MacroLiquidity report. Subscriber links are below the text.

The Fed’s FOMC meeting minutes are a key instrument of official propaganda on how the Fed wants you to view policy. I won’t waste your time with what the Fed staff and FOMC members reportedly said about the economy and markets as represented in the July meeting minutes. Events have a way of superseding whatever they wanted you to think 6 weeks before the release.

I guess they need the 6 weeks to continue the debate over what they want you to think they were thinking so that they can tinker with the language. If the Fed wanted to, it could release a transcript the next day. But that would be messy. It wouldn’t be proper propaganda at all. They need to massage the words so that the come out “just so.” The minutes are designed to soothe you into thinking there’s no need to panic. All is well. The omnipotent Fed has everything under control. As the world goes crazy around you, you merely need to stay focused on the soothing words. “All is well. We know exactly what we are doing.”

It’s all so silly.


Did the Fed Trigger Another Stock Market Crash on Monday August 31? / by John Galt / August 30, 2015 19:00 ET

As of this past Friday, August 28th, the Federal Reserve, the Plunger Protection Team (PPT for short), and the financial infomercial media had been screaming “Mission Accomplished” as they helped to goose the Monday and Tuesday disaster into a gain for the week.

Unfortunately for the financial media and more of the cheerleaders, futures are down again as this article is being published.


Black(er) Monday Looms: Dow Futures Down 220 After J-Hole Speeches & China Fold / by Tyler Durden on 08/30/2015 – 18:45

It appears a combination of Stan Fischer’s ‘September is still on the table’ hawkishness (among others at Jackson Hole) and the “promise” once again that China will not intervene in the stock market anymore has taken all the exuberance out of last week’s epic short squeeze in US stocks. Dow futures have given all of Friday’s manipulation back and are trading back near Thursday’s JPM panic lows – down 220 from Friday’s close.


Confirmation Bias in Markets

confirmation / Monty Pelerin / August 30, 2015

As markets churn in volatile fashion, investors see what they want in each move. In a sense, trading or investing, as much of life, is like a Rorschach test. You see what you want to see or what fits your experience. This tendency is known as confirmation bias. It is useful under ordinary conditions but dangerous when major changes and important turning points occur.

If markets went up last week most people believe they will go up this week. When this pattern has been reinforced over five years, the upside confirmation bias can be strong. When “buy the dips” always rewards, you always buy the next dip. Similarly, most of the generation that went through the Great Depression never again had favorable views of the stock market.


Jackson Hole Post-Mortem: “Door Still Fully Open To September Lift Off” / by Tyler Durden on 08/30/2015 – 18:25

Curious why the S&P futures have opened down some 0.6%, wiping out the entire late-Friday ramp? The reason is that as SocGen summarizes it best, following the Jackson Hole weekend, we now know that despite Bill Dudley’ platitudes “the door is still fully open to Fed liftoff in September.”

Here is how SocGen describes a Fed whose posture still hints at a September rate hike:

 Jackson Hole vs Market Consensus

Analysing the speeches and papers from Jackson Hole, we note several “gaps” to the market consensus. Top of the list, Vice-chair Fischer struck a slightly less dovish tone suggesting that all options remain open with respect to a September liftoff. New research presented, moreover, showed that US inflation is less influenced by FX rates than some in markets fear. BoE Governor, for his part, played down the China slowdown noting this did not yet warrant a change to BoE strategy. Vice President Constancio also sounded confident in the ECB’s ability to close the output gap and raise inflation. More worrying, RBI Governor Rajan warned that central banks should not be overburdened and noted mispricing of certain assets. Also notable was the apparent lack of discussion on what tools central banks have left to fight new downside risks; and this at a time when one of the more effective QE channels of emerging economies’ leverage expansion has lost its punch. A topic perhaps for the 4-5 September G20 in Ankara.


Breaking U.S. Army looking for missile that fell from a apache in New York! / Submitted by IWB, on August 30th, 2015

FORT DRUM, New York — Officials from Fort Drum are looking for a M36 Captive Flight Training missile they lost during a flight to Stewart International Airport in New Windsor, Orange County.


Blame the Federal Reserve, Not China, for Stock Market Crash / By Ron Paul via Ron Paul Institute / Sunday, 30 August 2015

Following Monday’s historic stock market downturn, many politicians and so-called economic experts rushed to the microphones to explain why the market crashed and to propose “solutions” to our economic woes. Not surprisingly, most of those commenting not only failed to give the right answers, they failed to ask the right questions.

Many blamed the crash on China’s recent currency devaluation. It is true that the crash was caused by a flawed monetary policy. However, the fault lies not with China’s central bank but with the US Federal Reserve. The Federal Reserve’s inflationary policies distort the economy, creating bubbles, which in turn create a booming stock market and the illusion of widespread prosperity. Inevitably, the bubble bursts, the market crashes, and the economy sinks into a recession.

An increasing number of politicians have acknowledged the flaws in our monetary system. Unfortunately, some members of Congress think the solution is to force the Fed to follow a “rules-based” monetary policy. Forcing the Fed to “follow a rule” does not change the fact that giving a secretive central bank the power to set interest rates is a recipe for economic chaos. Interest rates are the price of money, and, like all prices, they should be set by the market, not by a central bank and certainly not by Congress.

Instead of trying to “fix” the Federal Reserve, Congress should start restoring a free-market monetary system. The first step is to pass the Audit the Fed legislation so the people can finally learn the full truth about the Fed. Congress should also pass legislation ensuring individuals can use alternative currencies free of government harassment.


A Very Unexpected Statement From A Central Banker: “We Are Merely Reacting To A Situation We Did Not Create” / by Tyler Durden on 08/30/2015 17:44

The ECB’s Vitor Constancio, while largely a silent puppet operating quietly in the shadow of his boss, former Goldmanite Mario Draghi, is best known for his tragicomic statement from October 2014 that the ECB will not stress test Europe’s banks for deflationary scenario because it simply won’t happen…

My question would be on how credible these tests are. Looking at the adverse scenario, you haven’t even included deflation. You have not included an interruption in gas imports to Europe. You have not included full-on sanctions on Russia. So please elaborate and convince us.

Constâncio: The scenario for the stress test was published earlier in the year, so some of the things you mentioned would not have been considered. But indeed, what was considered is a severe shock being the growth of other countries. If you look to the scenario, you see that for the US, there is also a big deceleration of growth which is part of the scenario and also for other countries that are the markets of the euro area. So that is embedded in those assumptions of indeed a big drop in external demand directed to the euro area. That’s the first point. The scenario of deflation is not there because indeed we don’t consider that deflation is going to happen.


This Interview Could Literally Save the Lives of You and Your Family

tyranny / by  / Aug 30, 2015

Dave recently interviewed Bob Griswold about all the dangers we will soon face and most importantly, what we can do to survive. The interview was so riveting and was so widely distributed, that it twice crashed Griswold’s large website.


BACK TO SCHOOL FOR THE FREE SHIT ARMY / By Jim Quinn / 30th August 2015

Of course they need free school supplies before starting their free breakfasts and free lunches next week. Of course, there is no need for them to learn English in our government run schools. I bet every woman and child in that free shit line has a smart phone.

Meanwhile, working Americans are busy buying their kids’ school supplies this week and getting ready to pay for their lunches starting next week. We’re working harder so the free shitters don’t have to. Welcome to Obama’s American paradise of free shit.


Did The Fed Intentionally Spark A Commodity Sell-off? / by Tyler Durden on 08/30/2015 17:00

Submitted by Leonard Brecken via,

The intention here is the bring facts to light so the public can decide.

I’m not quite sure what to believe on how and why oil prices remain more than 50 percent below free cash flow break even for most independent E&P companies. I know for sure it’s not just one reason and is more likely a confluence of events.

Part of the reason oil prices broke new six-year lows is tied to hedge funds shorting equities and pressuring equity pricing through shorting oil. Another reason is the desire of private equity firms to buy assets on cheap and some banks seeking M&A fees. Obviously OPEC policy has a part to play. There is also no doubt that EIA statistics mistakenly leave the impression that production has remained resilient throughout the summer. But the spark that set the ball in motion was the dollar strength as every major money center bank in the U.S. recommended going long EU equities and long the dollar because of further monetary easing in Europe.

The inverse correlation between the U.S. dollar and oil prices in June was virtually 100 percent, but that has changed more recently, as I have noted previously. At that time, investors here in the U.S. plowed into biotechnology and technology and went short oil as if they knew what assets central banks were going to buy and not buy based on all the free money from Europe and Japan.


Donald Trump Versus Bernie Sanders?? The Political Bubble Is Bursting / by John Rubino on August 30, 2015

Now it’s not just Europe where formerly-fringe candidates are suddenly vying for power. The US presidential primaries, which were supposed to be coronations for the latest Bush/Clinton snoozfest, have turned interesting and in some cases surreal, as Donald Trump, who a few short months ago was viewed as a kind of circus clown by most Republicans, and Bernie Sanders, an honest, straight-shooting avowed socialist, are drawing the biggest crowds and creating the most excitement.

But far from being a surprise, this is exactly the kind of thing an over-indebted and therefore ungovernable society should expect. From Chapter 14 of The Money Bubble: What To Do Before It Pops (January 2014):

Just based on the numbers, the global financial system should have collapsed long ago. That it hasn’t has less to do with economics than with politics. The people in charge have arranged things so that they can keep borrowing, spending and printing into the indefinite future – as long as they can agree on “compromises” that give each faction most of what it wants. That’s how US military spending can soar (thus keeping the right happy) while entitlement programs can simultaneously spread to every corner of American life (keeping the left happy). As long as the resulting deficits can be financed and the bond, currency and precious metals markets tamed with repeated government interventions and newly-printed currency, then the game can continue.


Fed Opacity is Suffocating the Markets / by  • 

Market observers continue to give short shrift to the fact that the Federal Reserve is the perpetrator of the “Red Wedding” in the markets. The Federal Reserve doesn’t trust the markets. It thinks it knows better than the markets how to set the price of capital and create the conditions for economic growth.

Every once in a while, we get an errant number like the revised second quarter GDP number of +3.7% to tease us into thinking that they know what they are doing. But once we look below the headline number, we find the same weakness that has plagued the economy since the financial crisis. Years of ZIRP and QE have suffocated the economy in too much debt that will continue to smother growth for years to come.

The Fed continues to speak out of both sides of its mouth, when its best course of action would be to say nothing. On Wednesday, New York Fed President Bill Dudley sought to calm markets by saying that the case for a September rate increase was “less compelling.” On Friday, Fed Vice Chair Stanley Fischer said that a September hike was still a possibility.


Polish Government Confirms Discovery Of Nazi “Gold Train”, Warns It May Be Booby-Trapped / by Tyler Durden on 08/30/2015 16:14

Last weekend we reported that in the past month two men, a Pole and German, claimed to have discovered the legendary Nazi “gold train” – a 150 meter long German train alleged to be full of gold, gems and weapons, which disappeared just before the end of World War II – in the proximity of the Polish town of Walbrzych, close to where the Nazi are said to have loaded up the train with valuables for its final voyage in the town of Wroclaw, just as the Soviet forces approached in 1945.


GoldSeek Radio – Aug 28, 2015 [JEFF CHRISTIAN & DAVID NICOSKI] weekly RadioPublished on Aug 30, 2015

The Donald Trump phenomenon: hidden meanings / by Jon Rappoport / Aug. 30, 2015

“You could take the five major news networks and filter Jesus Christ, Buddha, Hitler, Stalin, Attila, Gandhi, and Lawrence Welk through them, and eventually you wouldn’t be able to tell the difference among them. They’d all come across in the same way. That, in fact, is the purpose of television.” (The Underground, Jon Rappoport)

I have nothing against hope, but the brand of naïve hope that surfaces during every presidential election season is truly ridiculous.

Candidate after candidate lies through his teeth, and the people buy in.

Now some are saying The Donald is running to form a third party and thus hand the election to Hillary. Whereas the preferred alternative would be what? Prince Jeb? There’s a difference between Hillary and Jeb? Who’s kidding who?

Or they say The Donald is running to provide a safety valve, so the American people can blow off steam, but ultimately wind up with nothing to show for it.

If that were true, so what? Public despondency will set in? What grotesque political swamp-soup are we wading in now?

I approach this from a different angle.


Since 2014 Foreign Central Banks Have Withdrawn 246 Tons Of Gold From The NY Fed / by Tyler Durden on 08/30/2015 14:14

First it was Germany who redeemed 120 tons of physical gold in 2014; then it was the Netherlands who “secretly” redomiciled 122 tons of gold; then this past May, we learned that Austria would be the third “core” European nation to repatriate most of its offshore gold, held primarily in the Bank of England, redepositing it in Vienna and Switzerland.

In short, beginning in 2014 and continuing through today, the gold “bleeding “from the vault located 90 feet below street level at 33 Liberty Street (and which may or may not be connected by a tunnel to the JPM gold vault located just across the street at 1 Chase Manhattan Plaza) has continued. As the chart below shows, while central banks assure the population that there is nothing to worry about when it comes to paper money, and in fact it is the evil ISIS terrorists who plot and scheme to crush the benevolent Fed with their terroristy “gold dinars” and if not that then their made in Hollywood propaganda movies, they have been quietly pulling gold from the biggest centralized depository of global gold in the world: the New York Federal Reserve.

According to the latest just released monthly update of foreign official assets held in custody at the NY Fed, in July the total holdings of foreign earmarked, i.e., physical, gold declined to just over $8 billion when evaluated at the legacy “price” of $42.22 per ounce. In ton terms, this means that after declining below 6000 tons in January, for the first time since FDR’s infamous gold confiscation spree, the total physical gold held at the NY Fed dropped another 9.6 tons in July, down to 5,950 tons.

This is the lowest amount of gold held by the NY Fed in custody in decades, is the 18th consecutive month of flat or declining gold, and when added to previous outflows, amounts to 192 tons of gold withdrawn in the past 12 months, and a whopping 246 tons pulled since the start of 2014.