Thursday, January 14, 2016

Renewed volatility in Asia pushes investors into the safety of the yen

Uncertainty plagues the currency markets: analyst

The yen was slightly higher against the dollar and other currencies in Asia Thursday, as investors bought the perceived safety of the Japanese currency following renewed volatility in Asian stocks.
Tracking an overnight selloff after further oil price weakness, the greenback USDJPY, +0.10%  fell to as low as ¥117.29 during Asia trade before bouncing back to ¥117.77 with Y¥117.68 late Wednesday in New York.
Brent crude LCOG6, +1.68%  , the global benchmark, dropped below $30 barrel intraday for the first time since 2004 amid a global supply glut and fears of a deepening slowdown in China.
Indonesia’s risk-sensitive rupiah was weaker against the U.S. dollar after explosions and gunfire hit the capital Jakarta. The dollar rose to as high as 13,990 Indonesia rupiah USDIDR, +0.58%  from IDR13,932 before the explosions.
A risk-averse mood persisted in Tokyo after the Dow Jones Industrial Average DJIA, -2.21%  fell 2.2% to its lowest level since late September.
The Nikkei Stock Average NIK, -2.68%  was down 2.7% at 17,240.95, after briefly falling below the 17,000 level for the first time since Sept. 29 2015. Meanwhile, the benchmark Shanghai Composite Index SHCOMP, +1.97%  was up 1%.
But the dollar showed enough resilience to stay around ¥117.50 with dip buying kicking in to support the greenback. After confirming the dollar’s downside around ¥116.70 earlier this week, there seems to be dollar buying orders from a broader range of investors including Japanese importers especially during Tokyo hours.
“I can feel uncertainty,” given U.S. stocks’ steep decline despite the relatively healthy state of the U.S. economy, said Takuya Kanda, senior researcher at Gaitame.Com Research Institute.
“It looks the market has overreacted” to the oil price decline, but that also suggests the market remains uncertain about future course of the global economy, he said, adding that markets were not fully considering the positive aspects of a low oil price environment.
The Japanese currency was also stronger against the euro EURJPY, +0.23% which briefly hit ¥127.75 before regaining to ¥128.05 midday compared with ¥128.05 late Wednesday. The U.K. pound GBPJPY, +0.11%  touched as low as ¥168.84, its cheapest level since October 2014, before recovering to ¥169.74 midday.
The Australian dollar AUDJPY, +0.09%  fell to as low as ¥81.22 midday from ¥81.98.
In other currency-pair trading, the euro EURUSD, +0.1103%  gained against the dollar with the common currency changing hands at $1.0873 from $1.0833.
The WSJ Dollar Index BUXX, +0.00% a measure of the dollar against a basket of major currencies, was up 0.07% at 91.18.

Elon Musk is going to love the latest news to come from China

China may have already overtaken U.S. in electric-vehicle sales

Faraday Futures
An electric-car boon in China is good news for Faraday Future’s concept cars, and others.

China may have already overtaken the U.S. in sales of electric cars, although whether that rapid pace is sustainable is another story.
That’s from analysts at Barclays, who said in a note clients Wednesday that annual sales of electric vehicles in China may grow by about 44% a year until 2020, and are expected to have reached 220,000 units in 2015. That would contrast with less than 120,000 electric cars sold in the U.S. also last year.
That speedy growth scenario would knock China’s annual oil demand by around 1%, the analysts said.
It would also be a boon to U.S. electric car makers such as Tesla Motors Inc. TSLA, +0.28%  and traditional U.S. car makers, which have announced plans to launch more electric cars or offer electric options of existing models.
Just last week, General Motors Co. GM, +0.36%  introduced at the Las Vegas’ Consumer Electronics Show its new Chevrolet Bolt EV, arriving at dealerships in late 2016 with a price tag of $30,000.
Ford Motor Co. F, -0.82%  has announced plans for new electric cars, including an electric version of its Focus sedan. Also at the Las Vegas show, Faraday Future Inc., a company with close ties with a Chinese web television company, introduced a new electric “concept” car. The company has said it will build a new factory outside Las Vegas.
China is focusing on pure electric vehicles rather than hybrids, and prioritizing buses and public-utility vehicles as a means to combat pollution and traffic congestion, the Barclays analysts said. The country has also enacted policies encouraging infrastructure development, such as a push to add more charging stations.
China waives sales tax and the annual license tax for EVs, and local benefits are common, particularly in major cities concerned about congestion and smog. For example: In Beijing, electric-car buyers do not have participate in the monthly license lottery.
Barclays estimated that with subsidies and tax benefits, the cost of buying an EV in China is similar to that of a internal-combustion engine car.
EV sales in China have grown rapidly since 2014, and the Barclays analysts said they expect “a continued acceleration in sales to lift China above the U.S. as the world’s largest EV market in 2015.” There’s increasing optimism that EVs “are finally taking off in China,” they said.
The Chinese government has set a target to lift EV sales to 1.5 million vehicles, or 5% market share, by 2020, from 75,000 in 2014.
That acceleration is still at early stages and is based on strong government support, so questions remain as to whether China can keep that pace. Constraints in battery supplies and a slower-than-expected infrastructure buildup are some of the pitfalls.
Even in a world were expectations meet reality, the potential effect of China’s EV penetration on the country’s oil demand might be modest in the next five years, the Barclays analysts said.

If you live in these 3 states, your nest egg could be compromised

Over 30 million workers don’t have access to a retirement plan from their employers

Depending on where you live, you may have less access to a retirement plan from your employer — and that can hurt your nest egg.
Roughly 40% of workers — that’s more than 30 million full-time, private-sector workers ages 18 to 64 — don’t have access to a retirement plan from their employer such as a 401(k), according to a report released Wednesday from The Pew Charitable Trusts.
In some states, the situation is worse than others: In Florida, which has the worst access rate, just 46% of workers could take advantage of a company-sponsored retirement plan (Texas and New Mexico are the only other states with rates of less than 50%). Meanwhile, in Wisconsin, which had the best access rate, 70% have access to a company-sponsored retirement plan.
This matters because access to a retirement plan from your employer predicts participation in the plan, which, in turn, predicts total retirement savings. Fully 85% of workers with access to a plan participate in it, and, not coincidentally, the states with the lowest (Florida) and highest (Wisconsin) access rates to employer-sponsored retirement plans, also had the lowest (38%) and highest (61%) participation rates.
Furthermore, as the Employee Benefit Research Institute notes, “workers are more likely to save in a retirement plan at work than they are to save on their own through an IRA.” That may explain why employer-sponsored plans represent such a large portion of workers’ retirement savings.
Nearly half of workers say that their savings in their employer-sponsored retirement savings plan will be a “major” source of income for them in retirement, the highest of all the criteria (just 31% of workers, for example, say Social Security will be a major source of retirement income for them), EBRI data shows. Meanwhile, only about one in four workers think their IRA will be a major source of retirement income for them.
Although just because you work at a company that doesn’t offer a retirement plan, doesn’t mean you can’t save or that you’ll be undersaved; plenty of Americans without a company plan make regular contributions to an IRA or other savings vehicle.
Furthermore, Americans as a whole, both those with and without company plans, are undersaved for retirement -- a problem that’s gotten worse in recent decades, as Obama alluded to when addressing the joint session of Congress in his State of the Union address Tuesday: “It’s not much of a stretch to say that some of the only people in America who are going to work the same job, in the same place, with a health and retirement package, for 30 years, are sitting in this chamber…for everyone else, especially folks in their 40s and 50s, saving for retirement or bouncing back from job loss has gotten a lot tougher.”
Indeed, 28% of American workers have less than $1,000 in savings and investments; and another roughly 30% have between $1,000 and $24,999.
Most workers don’t have enough money to retire
Total savings and investments, 2015
Less than $1,000 28%
$1,000 - $9,999 17%
$10,000 - $24,999 12%
$25,000 - $49,999 9%
$50,000 - $99,999 10%
$100,000 - $249,999 10%
$250,000 or more 14%
Source: Employee Benefit Research Institute
Read: Most Americans are one paycheck away from the street.

Forget the emotional bears and bulls — these numbers say buy China now

The market bears just keep winning in the new year.
The S&P 500 has slumped into correction territory, and Chinese stocks today briefly traded in bear-market territory. ZeroHedge is gleefully reporting that a “legendary” J.P. Morgan quant sees the beleaguered S&P SPX, -2.50%  getting more grizzly. That’s using the common definitions for correction and bear territory — drops of 10% and 20%, respectively, from closing highs.
Any silver lining in these dark clouds? Well, at least analysts are getting a bit more creative in their finger-pointing after each market dive. Sure, they’re still blaming China’s economic slowdown and crude oil’s crash, but U.S. consumer-discretionary stocks are now key culprits. Yes, we’re looking at you, Netflix NFLX, -0.28%  and BorgWarner BWA, -9.52%  .
Here’s another possible reason for hope: Some investors are embracing Chinese stocks, and not just the buyers from Beijing suspected of orchestrating today’s upside reversal by the Shanghai Composite.
“We don’t believe in the gloom and doom scenarios,” says Dave Garff of Accuvest Global Advisors, referring to the China angst. “You have to look at the recent poor momentum as a negative, but on balance, the positives outweigh the negatives.” More from Garff in the call of the day.
Today’s chart is upbeat, suggesting that oil could find a bottom at last. But the stat of the day tosses red meat to the bears, as it gives the latest damage estimate for global stocks in this not-so-happy new year.
Key market gauges
S&P ESH6, +0.21%  and Dow YMH6, +0.27%  futures are pointing to a slightly higher open, but they were up more earlier, and let’s not forget that yesterday’s morning gains didn’t stick. Chart watchers see head-and-shoulders patterns and potential for “the most important session the U.S. markets DJIA, -2.21%  have had in four years.” Europe SXXP, -2.18%  is falling, and non-Chinese Asian markets closed with losses. The Shanghai Composite SHCOMP, +1.97%  undercut its August closing low before turning positive. Oil CLG6, +1.18%  and gold GCG6, -0.10%  are higher, as a key dollar index DXY, -0.03%  drops.
The call
This table is alphabetical. The top-ranked nations are Japan, Korea, Germany, China, Hong Kong and Taiwan.
Accuvest’s Garff says his shop’s investing strategy is to search each month for “countries that provide the best opportunities in global markets going forward.”
In their latest look-see, China has moved up to fourth-best nation, and investors therefore should overweight that country, according to Accuvest’s model. That model looks at four factors: fundamentals (earnings and economic growth), momentum (relative strength), risk and valuation (relative and absolute).
“We want to be as dispassionate as possible, and not be swayed by market commentary and sentiment,” Garff told MarketWatch in an email. “As always, our views could change next month, but for the moment, we continue to like China.”
He acknowledges the many good reasons for steering clear of China, including suspect data from the government and listed companies, as well as Beijing’s various missteps as it manages its economy and financial markets. But Accuvest’s president and chief investment officer argues the U.S. has “similar issues” with data, while a growing middle class and other demographics are on Beijing’s side as the economy slows and changes.
The stat
$3.2 trillion — That’s the value wiped out by this year’s global stock swoon, according to data as of Wednesday’s close from Howard Silverblatt at S&P Dow Jones Indices. He tracks the loss via the S&P Global Broad Market Index. Last week, the damage amounted to $2.5 trillion, according to other data trackers.
The buzz
GoPro GPRO, -25.46%  is poised to plunge in today’s session after announcing job cuts and disappointing quarterly sales late Wednesday. Fewer of us than anticipated are wearing video cameras to show off our exciting lives, but there is no shortfall when it comes to dark humor or bearish comments:
Read more: Can drones and virtual reality rescue GoPro?
On the earnings front, J.P. Morgan JPM, +2.08%   reported a profit beat before the open, while Intel INTC, -2.36%  delivers after the close.
Cocoa CHOC, +0.35%  rose 10% last year while almost all commodities fell, though it’s down in 2016.
Signs that the emissions-tests shenanigans may go even further, after a report Renault RNO, -12.08%  was raided by French authorities.
Indonesia says ISIS was behind a deadly attack in Jakarta, and Iran may have mistreated U.S. sailors.
The chart
Getty Images
What’s that screeching sound? Maybe oil bulls? But wait, it’s strangely harmonious. Oh, it’s a “bullish bat harmonic” etched by crude futures. Greg Harmon over at Dragonfly Capital has flagged this chart pattern, as he says oil might “hold here and reverse.”
You probably know the head and shoulders, or the cup with handle, but maybe not this formation named after everyone’s favorite flying mammal. The bat harmonic has to do with geometric patterns and price turning points, as Investopedia puts it.
“Oil looks oversold from the momentum indicators, but as traders say, ‘oversold can get oversolder,’” Harmon writes. Note his chart below showing oil’s bat harmonic is dated Tuesday, and crude gained Wednesday and is rising this morning. Go here for all of Harmon’s harmonic musings.
The economy
Watch for weekly jobless claims at 8:30 a.m. Eastern Time, along with a report on import and export prices.
On the Fed front, St. Louis Federal Reserve President James Bullard is slated to give a speech at 8:15 a.m. Eastern.
Across the Atlantic, European Central Bank President Mario Draghi is expected to speak at 9 a.m. Eastern. Investors also will be digesting ECB minutes and the Bank of England’s rate announcement.
The quote
“I asked him if I made four times what the average person made, why couldn’t I retire four times earlier? He assured me it didn’t work that way, but I wasn’t sold on his reasons. ... The idea of freedom and having my time be my own, sleeping in, reading and traveling, [now] THAT was the life I craved.” — a lawyer who retired at age 33 in a Q&A with blogger Mr. Money Mustache, who is known for spending less and retiring at 30.
Random reads
GoPro could try sponsoring this Minnesota man who’s creating his own frigid fun.
We have a winner in that big Powerball lottery that captivated those who pay no heed to statistics.
Snoop Dogg barks at Bill Gates after Microsoft’s gamer network goes down.
A “Friends” reunion is happening, and Oscar nominations are due to hit this morning.
Sorry, Sean Penn. El Chapo was actually interested in a Mexican actress, and he apparently hadn’t heard of you.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.

Awaken slaves! - How The Private Central Bank Ponzi Scheme Trapped And Destroyed America

By Michael Rivero
Once upon a time, in 1913, a corrupt Congress and a corrupt President transferred the money creation authority vested in the government by the Constitution to a private central bank. It was going to be called the Third Bank of the United States. Such a fundamental change to the nation's economy should have required a Constitutional Amendment. But earlier that same year, there had been a huge fight to ratify another Amendment, the 16th Amendment authorizing the income tax, and there is good reason to suspect that the 16th Amendment actually failed ratification even though the payers of that income tax were told otherwise.
"I think if you were to go back and and try to find and review the ratification of the 16th amendment, which was the internal revenue, the income tax, I think if you went back and examined that carefully, you would find that a sufficient number of states never ratified that amendment." - U.S. District Court Judge James C. Fox, Sullivan Vs. United States, 2003.
Getting yet another Amendment ratified against such opposition, or worse, having to cheat one through, would be extremely difficult.
Then there was a problem with the proposed name, "Third Bank of the United States", as it reminded people of the predations of the First and Second Bank of the United States.
"Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out!" -- Andrew Jackson, shortly before ending the charter of the Second Bank of the United States. From the original minutes of the Philadelphia committee of citizens sent to meet with President Jackson (February 1834), according to Andrew Jackson and the Bank of the United States (1928) by Stan V. Henkels
Shortly after President Jackson (the only American President to actually pay off the National Debt) ended the Second Bank of the United States, there was an attempted assassination.
But I digress.
Faced with the possibility that a new Amendment to transfer money creation from the US Government to a privately owned bank might fail and fail badly, and with the name "Third Bank of the United States" already leading to opposition to the plan, the plotters did an end run around the Constitution, passing the Federal Reserve act over Christmas vacation when the members of Congress opposed to the bill would be away. The name of the new bank was then changed to "The Federal Reserve." But, it is a private bank, no more "Federal" than Federal Express. From that moment on all currency would enter circulation as a loan at interest.
"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit.We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men." -- Woodrow Wilson 1919
Ironically enough, this was the very system of banking the American Revolution was fought to free us from.
"The refusal of King George 3rd to allow the colonies to operate an honest money system, which freed the ordinary man from the clutches of the money manipulators, was probably the prime cause of the revolution." -- Benjamin Franklin, Founding Father
Starting in 1913, public schools stopped teaching about King George's Currency Act, which ordered the American colonies to conduct business only using bank notes borrowed at interest from the Bank of England, and since then American students are taught that the revolution was about Tea Parties and Stamp Acts, lest the more clever students wonder how we ended up back in the same banking system that led to the first revolution.
The Founding Fathers understood how dangerous such banking systems are, and I will try to teach you here what the public schools are forbidden to let you know. The Federal Reserve system is a deliberate trap, to enslave a population to unpayable debt in order to control and exploit them, and here is how it works.

Before any commerce can happen, currency must go into circulation. Someone has to borrow it from that private central bank. The borrower can be government, a business, another bank, or ordinary citizens using credit cards, car loans, or mortgages. For the purposes of clarity, we will use a single dollar to represent that initial borrowing from the central bank. For the purpose of this illustration, "borrower" refers collectively to the entire American nation.

That dollar now enters circulation, passing from the original borrower to others, as payment for labor, in exchange for raw materials, as taxes, and so forth. Round and round it goes, passing from hand to hand, yet it is still a note borrowed from the Central Bank and it is still accruing interest. That Central Bank note, or (in the United States) Federal Reserve Note, is not a unit of value, it is a unit of debt.

At some point, that dollar is repaid to the Central Bank. The Central Bank then demands the interest. In our case, a nickle. But there is a problem. That nickle doesn't exist and it never did. It is imaginary.

So now the borrower has to borrow another dollar, out of which he takes a nickle to pay for the interest on the first dollar.

The rest of that second borrowed dollar now goes into circulation, but this time, only 95 cents is in circulation to pass from borrower to vendor to employee to grocery store to government, then back to the Central Bank.

The borrower goes back to the Central Bank to repay that second dollar, but only has 95 cents, plus he owes that imaginary five cents interest as well, or ten cents.

Once more the borrower has to borrow a new dollar from the Central Bank, only this time he has to take a dime out of that new dollar to hand bank to the banker. The borrower walks out of the bank with only 90 cents to put into circulation, while still owing a whole dollar plus five cents interest.

The cycle keeps repeating over and over with each new loan having to return more and more back to the Central bank as accumulated interest.

With each cycle the Central Banks gets richer while there is less and less currency available for commerce. People have to tighten their belts. Works are let go. Sales slow down. "Austerity" is imposed.

Eventually, a point is reached where as much accumulated interest is owed as the money being borrowed. So the borrower now has to borrow twice as much from the Central Bank merely to have the same actual currency in circulation as when they started. The Central Bank system only operates as long as the borrower is willing to go deeper and deeper into debt, and debt slavery. This is what makes the Central Bank scheme a pyramid system. It works only so long as ever-larger new generations of borrowers can be found to allow new currency to enter circulation, out of which the interest on the older loans is paid. And of course, by design, the debt can never ever be paid off. Once that first paper note is loaned into circulation, total debt will always exceed total currency. The system is designed that way, to keep you in debt, to keep you a slave to the bankers.
This is the reason that every nation on Earth with such a Central Bank is now drowning in debt. The Federal Reserve, the World Bank, the International Monetary Fund, the European Central Bank, are all built on this same system. This is why nations that refuse such banking systems are made war on.
"Either the application for renewal of the charter is granted, or the United States will find itself involved in a most disastrous war." -- Nathan Mayor Rothschild, angered at the refusal of Congress to renew the charter for the First Bank of the United States in 1811. Congress stood firm and Britain, goaded to "recolonize" America by the Bank of England, headed at the time by Lionel de Rothschild, launched the war of 1812."If this mischievous financial policy, which has its origin in North America, shall become endurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous without precedent in the history of the world. The brains, and wealth of all countries will go to North America. That country must be destroyed or it will destroy every monarchy on the globe." -- The London Times responding to Lincoln's decision to issue government Greenbacks to finance the Civil War, rather that agree to private banker's loans at 30% interest. Following Lincoln's assassination, the Greenbacks were taken out of circulation.
On June 4, 1963, President John F. Kennedy signed Executive Order 11110, which authorized the US Treasury to issue "United States Notes, backed by silver, so that the American people would not have to borrow federal Reserve Notes at interest. Five months later Kennedy was assassinated in Dallas Texas, the US Notes were taken out of circulation, and John J. McCloy, President of the Chase Manhattan Bank, and President of the World Bank, was named to the Warren Commission, presumably to make certain the financial dimensions behind the assassination were never made public.
And what did it cost the Central Banks to wield such power over nations? Paper and ink, or today a few keystrokes on a keyboard. In fact the practices of the Central Bank would be felonies under the United States Coinage Act of 1792, which declared debasement of the gold and silver-backed currency of the United States a death penalty offence.
The Central Bank knows that those pieces of paper with ink are worthless. But while the Central Bank can just create those paper notes out of thin air (legalized counterfeiting), you may not. In order to pay that ever-growing debt you have to do what you are told to do by those who have some of those pieces of paper to hand out tell you to do. Work long hours. Invade a foreign nation that refuses to have a Private Central Bank. Torture innocent people to death to find weapons of mass destruction that do not exist to justify a war. Compromise your morals and integrity. Perform sexual favors. Whatever the purveyors of those pieces of paper want, you must do. That paper note is your slave chain.

Even worse, as the imaginary debt piles higher and there is less and less currency in circulation, people start to become desperate to obtain those pieces of paper with colored ink on them to pay off that debt they have been tricked into believing they owe to the private central bankers. Over time, more and more moral accomodations become accepted by society in exchange for the acquisition of those pieces of paper with ink on them. Manufacturers start cutting corners, producing shoddy products that break and wear out. Food companies start using more cheap fillers. Pharmaceutical companies produce medicines of dubious efficacy and definite harm. Society turns brutal and predates on itself. Manufacturers come to want bad products that break easilyso people will buy more. The medical establishment comes to desire a sickly population because they cannot make money off of a healthy people. Food companies add addictive chemicals to food to make people buy and eat more. Wall Street comes to see fraud as a legitimate business tactic. Eventually immorality and unethical business behavior becomes the accepted social norm. Under the mounting illusion of debt society drifts into outright criminality perpetrated by everyone against everyone. From there it is a short step to seeing war and conquest of other nations' weath as the only remaining solution to the debt problem. In short, the predations of private central banking lure society into trading what is best in human nature in exchange for those paper and ink tickets until civilization itself is at risk.
Private Central Banking is not about banking, or even about money. It is about Control. Private Central Banking is about rule by enforced servitude to artificially created debt. No different from other hoaxes played by the rich on the poor, such as Rule by Divine Right, or Rule by Chattel Ownership of your Body (slavery). As a human civilization we have outgrown these hoaxes and realize they are illegitimate forms of governance. So too shall it be with Rule by Debt. Those previous systems only worked as long as the subjugated population believed that those systems were real; the way the world was supposed to be. When the people broke free of the slavery of belief, those forms of enslavement collapsed. For the few to feel rich, everyone else must be poor. As the availability of currency declines, it does not matter how hard people are willing to work; there must inevitably be homeless, joblessness, hunger, and wars of conquest to "balance the books."
Modern banking is not a science. It is a religion, simply a set of arbitrary rules and assumptions that favor the masters of that belief system, which we are brainwashed in school to think is something tangible and real.
It is time to stop, while we still can.
We have outgrown Rule by Divine Right and recognize slavery as inherently wrong.
Now is the time for the next step in our societies evolution in which the money must serve the people, rather than the people serve the money.
Central Banks are a failed experiment. Look at the devastation of Europe, or your own home town and you will see it.
The common enemy of all humankind are Private Central Banks issuing the public currency as a loan at interest.

Warning: The Broader Stock Market Has Already Turned Bearish!

Large-cap stocks opened this morning in the green, seeming to offer a little reprieve from an ultra-violent start to 2016. Small- and mid-caps weren’t so lucky. They’re continuing to rip through fresh new lows.
This has been the toughest bull market and bubble to call, as many leading indicators that we have used in the past simply don’t work since central banks hijacked the markets after 2008. But with these major divergences continuing to build, and after many years of the Fed’s zero-percent interest rates, it seems we’refinally coming close to the end.
You just can’t have a recovery that’s driven entirely by government stimulus. It only works when consumers start spending again and businesses expand to meet the demand.
Otherwise, you prevent the economy from rebalancing naturally, and only encourage greater speculation and bubbles… and that’s exactly what these bogus policies have done.
I’ve been warning more and more strongly from late 2014 forward that this bubble finally looked like it was peaking after going much longer than anyone could have imagined. But into May of 2015 it continued to edge up to slight new highs. Since then we have continued to make lower highs on each rally – what I call a “rounded top pattern.”
But there’s a classic indicator that tells when a major bull market or bubble is finally peaking. I was suspicious that this indicator would not work this time in such an artificial market and economy. But it’s working like a charm.
That indicator occurs when small-cap stocks greatly underperform large-cap stocks. This is a sign that the dumb money is piling in and the smarter money is exiting. It’s like the generals advancing without the troops.
Analysts use the advance/decline line to measure this phenomenon. But since it can get confusing, here’s a simpler take on it: the value line geometric index (the blue line in the chart below).
This is an equal-weighted and broad index of stocks. Instead of Amazon and Google counting for god-knows-how-much of the S&P 500 and skewing our sense of the broader market, this index weights them all equally.
That way you get a sense for how the broader market is doing. So look at how it’s doing compared to the S&P 500:
Value Line Index Shows Broader Stock Market Already in Bear Market
It shows that the “typical” stock is already in a bear market – down 21% as of yesterday.
The Dow and S&P 500 and the Nasdaq are all weighted by market value and that makes the largest stocks dominant in such indices. At the end of a bull market, the least sophisticated investors pile in and they buy the big-name stocks that they know – Apple, Coca-Cola, Facebook, Nike, Google, Amazon.
Those stocks get super overvalued. Do you realize that Amazon is up 120% in the last year and that its price/earnings ratio is currently at 870 times a 12-month trailing earnings of $0.70? That’s insane!
This is a time to sell on rallies, not buy on dips.
Stocks appear to be coming back after a rough start to the year, but I ultimately project they’ll be down to 5,500 to 6,000 by early- to mid-2017, and possibly sooner. My strongest warnings were at a Dow of 17,300. We’re about 1,000 points below that now, so if we get a sustainable bounce in the weeks ahead, sell any holdings you don’t have allocated to a specific, active investing strategy.
It’s better to get out of a bubble a little early than a little late, as bubbles burst at least twice as fast as they build…
It’s still not too late to get out of this one.


Gordon Long: Americans Are Facing Increasing Levels Of Taxation By Underfunded Federal, State, And Local Governments

Jan 13 – Gordon Long, co-founder of Financial Repression Authority, discusses a powerful combination of headwinds in our current market and economic environment, including his belief that Americans are facing increasing levels of taxation by underfunded federal, state, and local governments; a “peak…

The Dow Is Now Down 1600 Points From New Year's Exuberant Highs


From 17,660 highs to 16,058 lows in 10 days!

Huge Miner Bankruptcies Possible Soon; Great News For Gold And Silver, Bad News For Streaming Companies?

by John Rubino
The commodities bust may be about to claim some brand-name victims:

Freeport-McMoRan Inc: The Hits Just Keep Coming

Freeport-McMoRan (NYSE:FCX) is off to a brutal start in 2016 with its stock price down nearly 40% in just over a week. The company is being battered by a barrage of negative news items, with the latest being another analyst downgrade. The rough start, which follows a very tough 2015, has a lot of investors wondering if the company will make it through the year in one piece.
The weakness in the copper price has been the biggest weight on Freeport-McMoRan’s stock this year. Its price recently hit a six-year low due to growing concerns of a worsening slowdown in China, which is the world’s biggest copper market. With copper falling below $2 per pound it calls into question Freeport-McMoRan’s ability to generate sufficient cash flow to both manage its debt and fund its capex plan. It’s a plan that is based on a $2 copper price in 2016 and $45 per barrel for oil. Presently, copper is a few pennies below that level, while oil has plunged into the low $30s.
Those price weaknesses not only will weigh on the company’s cash flow, but are weighing on the value of oil and copper assets. That’s making it even less attractive for Freeport-McMoRan to pursue asset sales to pay down its large debt load. In fact, asset values have fallen so steeply that one Jefferies analyst is concerned that “window of opportunity for Freeport-McMoRan to repair its balance sheet may have closed.” That’s after the company has yet to find a funding solution for its oil and gas business after searching for alternatives for more than a year.

Glencore Debt Swaps Jump to Six-Year High as Copper Price Slides

(Bloomberg) – The cost of insuring Glencore Plc’s debt against default rose to a more than six-year high as the price of raw materials such as copper continued to tumble.
The trader and miner’s credit default swaps increased to as much as 946 basis points, the highest since April 2009 on a closing basis, according to data from S&P Capital IQ’s CMA.
Slumping commodity prices have battered Glencore, prompting it to scrap a dividend payment, sell new shares and outline asset sales as it seeks to curb debt to maintain its investment-grade rating. Copper dropped to a six-year low amid a rout in metals as muted Chinese inflation increased concern that demand from the world’s largest buyer of raw materials will slow.
“CDS levels are driven by commodity prices and in the case of Glencore, especially copper,” said Max Mihm, a Frankfurt-based portfolio manager at Union Investment, which holds Glencore bonds among assets totaling about $271 billion. “If prices fall further and stay low Glencore will need to do more to protect its IG ratings.”
A lot of big, diversified miners produce silver and gold as byproducts, so if, say, a copper mine closes because of that metal’s recent price collapse, that also takes precious metals out of the production stream and other things being equal raises their price. So far so good for gold bugs.
But fans of gold and silver streaming companies, including this writer, are watching the carnage in copper and oil with mixed emotions. Many of the miners now teetering on the edge of insolvency have cut deals in which they promise to sell their byproduct gold and silver to streaming companies in return for big up-front payments. That money may now be at risk.
Franco Nevada, the biggest streaming company, recently paid Canadian miner Teck Resources $610 million for a future share of the silver produced by the latter’s Peruvian mine. The number two streaming company, Silver Wheaton, has paid Glencore and Valeover $1 billion for portions of the gold and silver produced by some of their mines.
What happens if some of these miners subsequently go bankrupt? That’s not clear, but it can’t be good for the streaming companies whose cash will be tied up (at best) and might simply disappear.
Meanwhile, the never-ending precious metals bear market is producing a steady drumbeat of smaller gold and silver mining failures, some of which are streaming company partners. Most recently, Rubicon Gold fell to effectively zero after announcing that oops, its reserves were only one-tenth of what it had previously promised. Streaming company Royal Gold is on the hook for $75 million to this one.
Looking on the bright side, the streaming companies are highly diversified, with dozens of deals spread around the world. So the failure of any one — even a big one — probably isn’t an existential threat. It is, however, a near-term problem for buyers of these stocks. But also possibly a long-term opportunity if the streaming companies get swept down in the general carnage.

Ralph Nader Destroys the Federal Reserve in Open Letter – Calls it “Out of Control, Private Government”

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When it comes to the Fed, Congress is mired in hypocrisy. The anti-regulation, de-regulation crowd on Capitol Hill shuts its mouth when it comes to the most powerful regulators of all – you and the Federal Reserve. Meanwhile, Congress goes along with the out-of-control, private government of the Fed—unaccountable to the national legislature. Moreover, your massive monetary injections scarcely led to any jobs on the ground, other than stock and bond processors.
– Ralph Nader in his letter to Janet Yellen
Ralph Nader gets it. In fact, he get it so much that he published a book last year titled: Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State.
Nevertheless, in case you need more proof of just how profoundly he understand how this neo-feudal gulag economy functions, read the following letter he wrote to Federal Reserve Chairwoman, Janet Yellen, on behalf of savers.
Here it is, in its full glory:

Dear Chairwoman Janet Yellen:
We are a group of humble savers in traditional bank savings and money market accounts who are frustrated because, like millions of other Americans over the past six years, we are getting near zero interest . We want to know why the Federal Reserve, funded and heavily run by the banks, is keeping interest rates so low that we receive virtually no income for our hard-earned savings while the Fed lets the big banks borrow money for virtually no interest. It doesn’t seem fair to put the burden of your Federal Reserve’s monetary policies on the backs of those Americans who are the least positioned to demand fair play.
We follow the reporting on your tediously over-dramatic indecision as to when interest rates will be raised – and no one thinks that when you do, it will be any more than one quarter of one percent. We hear the Federal Reserve’s Board of Governors and the various regional board presidents regularly present their views of the proper inflation and unemployment rate, and on stock market expectations that influence their calculations for keeping interest rates near-zero. But we never hear any mention of us – the savers of trillions of dollars who have been forced to make do with having the banks and mutual funds essentially provide a lock-box for our money while they use it to make a profit for their firms and, in the case of the giant banks and large mutual funds, pay their executives exorbitant salaries..
We are tired of this melodrama that exploits so many people who used to rely on interest income to pay some of their essential bills. Think about the elderly among us who need to supplement their social security checks every month. 
On October 27, the Wall Street Journal headlined the latest rumors of twists and turns inside the secretive Federal Reserve: “Fed Strives For Clear Signal on Rate Move: As 2016 approaches, the central bank hopes to better manage market expectations.”
What about the expectations of millions of American savers? It is unfortunately true that we are not organized; if we were, we would give you and the Congress the proper signals!
Please, don’t lecture us about the Fed not being “political.” When you are the captives of the financial industry, led by the too-big-to-fail banks, you are generically “political.” So political in fact that you have brazenly interpreted your legal authority as to become the de facto regulator of our economy, the de facto printer of money on a huge scale (“quantitative easing” is the euphemism for artificially boosting the stock market) and the leader of the Washington bailout machine crony capitalism when big business, especially a shaky Wall Street firm, indulges in manipulative, avaricious, speculative binges with our money. 
When it comes to the Fed, Congress is mired in hypocrisy. The anti-regulation, de-regulation crowd on Capitol Hill shuts its mouth when it comes to the most powerful regulators of all – you and the Federal Reserve. Meanwhile, Congress goes along with the out-of-control, private government of the Fed—unaccountable to the national legislature. Moreover, your massive monetary injections scarcely led to any jobs on the ground, other than stock and bond processors.
So what do you advise us to do? Shop around? Forget it. The difference between banks, credit unions and mutual funds may be one-twentieth or one-tenth of one percent! That is, unless you want to tie up money, that you need regularly, in a longer term CD or Treasury. Even then interest rates are far less than they were ten years ago.
Maybe you’re saying that we should try the stock market to get higher returns. Some of us have been impelled to do that, but too many have lost their peace of mind and much money in the market.
The Fed’s near-zero interest rate policy isn’t helping younger people with student loans (now over 1.3 trillion dollars), whose interest rate ranges from six to nine percent. It doesn’t help millions of pay-day loan borrowers or victims of installment loan rackets – mostly the poor – whose interest rates, rolled over, can reach over 400 percent!
Chairwoman Yellen, I think you should sit down with your Nobel Prize winning husband, economist George Akerlof, who is known to be consumer-sensitive. Together, figure out what to do for tens of millions of Americans who, with more interest income, could stimulate the economy by spending toward the necessities of life.
For heaven’s sake, you’re a “liberal” from Berkeley! That is supposed to mean something other than to be indentured by the culture and jargon of the Federal Reserve. If you need further nudging on monetary and regulatory policies of the Fed, other than interest rate decisions, why not invite Berkeley Professor Robert Reich, one of your long-time friends and admirers, to lunch on your next trip home?
Start imagining what we, the savers, have to endure because of plutocratic, crony capitalism for which the Federal Reserve has long been a leading Tribune. 
Can we expect your response?
Sincerely yours,
Savers of America
At 81 years old, this man shows no signs of slowing down.
While we’re at it, check this out if you missed it the first time around:
Video of the Day – Ralph Nader Blasts Harvard Law School for Serving “Corporate Crooks on Wall Street.”
In Liberty,
Michael Krieger

Chart Of The Day: Canadian Heavy Crude Falls To $19.81—–Down From $100 In 2011

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The Dow Falls Another 364 Points And We Are Now Down 2200 Points From The Peak Of The Market

By Michael Snyder
Falling - Public DomainIt was another day of utter carnage on Wall Street.  The Dow was down another 364 points, the S&P 500 broke below 1900, and the Nasdaq had a much larger percentage loss than either of them.  The Russell 2000 has now fallen 22 percent from the peak, and it has officially entered bear market territory.  After 13 days, this remains the worst start to a year for stocks ever, and trillions of dollars of stock market wealth has already been wiped out globally.  Meanwhile, junk bonds continue their collapse.  JNK got hammered all the way down to 33.06 as bond investors race for the exits.  In case you were wondering, this is exactly what a financial crisis look like.
Many of the “experts” had been proclaiming that “things are different this time” and that stocks could defy gravity forever.
Now we seeing that was not true at all.
So how far could stocks ultimately fall?
I have been telling my readers that stocks still need to fall about another 30 percent just to get to a level that is considered to be “normal” be historical standards, but the truth is that they could eventually fall much farther than that.
Just this week, Societe Generale economist Albert Edwards made headlines all over the world with his prediction that we could see the S&P 500 drop by a total of 75 percent…
If I am right and we have just seen a cyclical bull market within a secular bear market, then the next recession will spell real trouble for investors ill-prepared for equity valuations to fall to new lows. To bottom on a Shiller PE of 7x would see the S&P falling to around 550.
I will repeat that: If I am right, the S&P would fall to 550, a 75% decline from the recent 2100 peak. That obviously will be a catastrophe for the economy via the wealth effect and all the Fed?s QE hard work will turn dust.
That is why I believe the Fed will fight the next bear market with every weapon available including deeply negative Fed Funds rates in addition to more QE. Indeed, negative policy rates will become ubiquitous.
Most believe a 75% equity bear market to be impossible. But those same people said something similar prior to the 2008 Global Financial Crisis. They, including the Fed, failed to predict the vulnerability of the US economy that would fall into deep recession, well before Lehman?s went bust in September 2008.
Other than stocks, there are three key areas that I want my readers to keep an eye on during the weeks ahead…
1. The Price Of Oil – The price of oil doesn’t have to go one penny lower to continue causing catastrophic damage in the financial world.  If we hover around 30 dollars a barrel, we will see more bankruptcies, more defaults, more layoffs and more carnage for energy stocks.  But of course it is quite conceivable that the price of oil could easily slide a lot farther.  Just check out some of the predictions that some of the biggest banks in the entire world are now making
Just this week Morgan Stanley warned that the super-strong U.S. dollar could drive crude oil to $20 a barrel. Not to be outdone, Royal Bank of Scotland said $16 is on the horizon, comparing the current market mood to the days before the implosion of Lehman Brothers in 2008.
Standard Chartered doesn’t think those dire predictions are dark enough. The British bank said in a new research report that oil prices could collapse to as low as $10 a barrel — a level unseen since November 2001.
2. Junk Bonds – This is something that I have written about repeatedly.  Right now, we are witnessing an epic collapse of the junk bond market, just like we did just prior to the great stock market crash of 2008.  As I mentioned above, Wednesday was a particularly brutal day for junk bonds, and Jeffrey Gundlachseems convinced that the worst is still yet to come…
He seemed to leave his most dire predictions for junk bonds, a part of the market he’s been bearish on for years. Gundlach believes hedge funds investing in risky debts face major liquidity risks if they are forced to exit positions amid investor redemptions. “We could be looking at a real ugly situation in the first quarter of 2016,” Gundlach said on a Tuesday call with investors, when referring to redemptions.
Because many hedge funds operate with leverage, he raised an alarming prospect that those who don’t redeem could be left with losses far more severe than their marks indicate. As the Federal Reserve raises rates, redemptions combined with tightening credit conditions could create major pricing dislocations.
3. Emerging Markets – We have not seen money being pulled out of emerging markets at this kind of rate in decades.  We are seeing a repeat of the conditions that caused the Latin American debt crisis of the 1980s and the Asian financial crisis of the 1990s.  Only this time what we are witnessing is truly global in scope, and central bankers are beginning to panic.  The following comes from Wolf Richter
Last year was a terrible year, probably worse than 2009,” the head of Mexico’s central bank told a conference of central bankers in Paris on Tuesday. It was the first year since 1988 that emerging markets saw net capital outflows, according to the Institute of International Finance, a Washington-based association of global banks and finance houses.
In December more than $3.1 billion fled emerging market funds. If anything, the New Year has been worse.
“I don’t have any data yet for the first week of 2016 but it’s probably going to be very, very, very bad,” Carstens said. If conditions do not improve, he warned, central banks in emerging markets may have little choice but to adopt a more “radical” approach to monetary policy, including intervening in domestic bonds and securities markets.
In addition to everything that I just shared with you, we got several other very troubling pieces of news on Wednesday…
-Canadian stocks continued their dramatic plunge and have now officially entered a bear market.
-PC sales just hit an eight year low.
-GoPro just announced that it is getting rid of 7 percent of its total workforce.
The bad news is coming fast and furious now.  The snowball that started rolling downhill about halfway last year has set off an avalanche, and panic has gripped the financial marketplace.
But my readers knew all of this was coming in advance.  What we are witnessing right now is simply the logical extension of trends that have been building for months.  The global financial crisis that started during the second half of 2015 is now bludgeoning Wall Street mercilessly, and investors are in panic mode.
So what comes next?
We have never seen a year start like this, so it is hard to say.  And if there is some sort of a major “trigger event” in our near future, we could see some single day crashes that make history.
Either way, the hounds have now been released, and it is going to be exceedingly difficult to get them back into the barn.

Alert: Clintons War Against Gold Backed Dinar

With $19 trillion in debt, the only thing that keeps the US going is the petrodollar. This means that the bankers will pay any price to ensure the status quo. Even if it means starting wars that could end up killing millions.

Baltic Dry Index over the last 10 years.

Baltic Dry Index over the last 10 years.


China dumps US Treasuries for first time on record.

dumps US Treasuries for first time on record.