Fed's Advisory Council Admits We're Screwed - Schiff Report

Jun 1, 2013 The only thing more amazing than the admission is how long it took them to figure it out! The Schiff Report (6/1/13) Listen to the Peter Schiff Show Weekdays 10am to noon ET on http://www.SchiffRadio.com

Pentagon Denies Relationship with anti-Christian extremist Mikey Weinstein; Instantly Complies with His Demands

 

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 One month ago the Pentagon assured the public it was not being advised by anti-Christian extremist Mikey Weinstein. Yet two days ago Weinstein called the Pentagon demanding that a Christian painting be removed from a dining hall in an Idaho Air Force base, and the Pentagon complied with his demand--in less than one hour.

On Apr. 28, Breitbart News reported that Pentagon brass met Weinstein and his Military Religious Freedom Foundation. That was shortly after Weinstein published an article in which he called observant Christians “fundamentalist monsters” who seek to impose “a rapacious reign of theocratic terror” in the military through their “putrid theology.”
While he opposes all religion in the military, Weinstein reserves his most caustic language for observant Christians. And the one thing he objects to above all things is proselytizing in the military, which Christians call evangelism.

Asian shares cautious on U.S. data, Fed concerns

By Chikako Mogi

TOKYO (Reuters) - Asian shares were capped on Monday as investors took profits from recent highs in the face of uncertainty over how much longer the current U.S. stimulus would continue, and data underscoring the fragility of China's economy.
Investors will scrutinize more data this week from the United States for clues to growth and demand prospects in the world's largest economy.
Speculation over whether and when the U.S. Federal Reserve would start scaling back its current massive bond-buying program emerged following a string of positive American data and was the catalyst for corrections across markets which had drawn strong support from the Fed's largesse.
Reports showing Chinese growth was failing to pick up momentum gave no reason for a turnaround from soft sentiment.
China's factory activity shrank for the first time in seven months in May as both domestic and external demand softened, while activity in the services sector also slipped, pointing to slowing momentum in the world's second-largest economy.
"We still cannot see any signs of recovery but the chances of any sharp slowdown are also small," said You Hongye, an economist at China Essence Securities in Beijing.
These reports followed an weekend release that showed China's official PMI rising to a more-than-forecast 50.8 in May from 50.6 in April.
ANZ said in a commentary that this single indicator did not change its view on China's softening economic condition.
"Structural reforms are needed in order to help sustain the growth prospect ... inconsistent data will continue to complicate China's economic policy making and potentially impair the judgment of policymakers," the Australian bank said.
MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> was pressured, after earlier giving up as much as 0.2 percent to its lowest in nearly seven weeks. A fall this session would mark a fourth straight day of declines. The index ended May down 4.7 percent for its worst monthly performance in a year.
Australian shares (.AXJO) stabilized, up 0.1 percent after falling on Chinese data. Hong Kong shares (.HSI) were up 0.4 percent but slightly trimmed gains while Shanghai shares (.SSEC) also lost some of its early gains to inch up 0.1 percent.
Even Japan's Nikkei stock average (.N225), which has outperformed the Asian bourses, eased, falling as much as 2.8 percent to a six-week low earlier in the session. (.T)
Reflecting heightening investor nervousness, the CBOE Volatility index (.VIX), which measures expected volatility in the Standard & Poor's 500 index (.SPX) over the next 30 days, hit a six-week high on Friday.
The Standard & Poor's 500 Index (.SPX) posted consecutive weekly losses for the first time since November as investors took some money off the table after the index rallied 14.3 percent, the best first five months of the year since 1997, and ended May up for the seventh straight month of gains - its longest streak of monthly gains since 2009.
"The Federal Reserve's willingness to alter the pace of purchases sooner than markets had previously expected has meant that markets remain attuned to the incoming data flow in the U.S.," Barclays Capital said in a research note.
The May ISM manufacturing index is due later in the session and the more important monthly nonfarm payrolls data is due on Friday. The Fed has said it would keep up the stimulus campaign until the employment situation improved.
Data on Friday showed U.S. Chicago Purchasing Managers Index rose far more than expected in May, fanning worries about the Fed slowing its bond purchases later this year and sending U.S. Treasury prices lower on Friday, capping the worst month for the market in nearly 2-1/2 years.
Some cautioned about prematurely factoring in the possibility of the Fed's tapering.
"The idea of early tapering of QE is still some time away - inflation is still low and the Fed has to get it a little higher. We are overweight equities and advising anyone who is short equities to square positions," said Gary Dugan, Chief Investment Officer, Asia & Middle East, at Coutts.
The dollar rose 0.3 percent to 100.66 against the yen, off a three-week low of 100.22 on Friday. The dollar index (.DXY), measured against a basket of six key currencies, was down 0.14 percent after touching a three-week low on Thursday.
U.S. crude futures fell 0.2 percent to $91.76 a barrel and Brent fell 0.3 percent to 100.06. (O/R)

Amid global equity market corrections spurred by concerns over the Fed's stimulus outlook, equity funds tracked by EPFR Global recorded collective outflows of $2.79 billion during the week ending May 29 as retail redemptions hit a year-to-date high while bond funds attracted $1.37 million, their second lowest total of 2013.

China industrial output/PMI: http://link.reuters.com/qaf92t
Asia PMIs: http://link.reuters.com/maz35s

China’s Demand For Physical Quadruples Gold Premium

The premium that gold buyers in China pay to take immediate delivery of bullion has jumped four-fold in the last six weeks following the gold price 'crash'.

As Bloomberg notes, even before the mid-April drop, China's gold imports jumped to a record in the first quarter as domestic demand (776 tons) outweighed domestic supply (403 tons).

Images of consumers overwhelming jewelry shops were everywhere but the following chart clarifies just what the suspected gold manipulation did for demand as China's gold premium, while admittedly noisy, jumped from a long-run average of around $7 to over $32!

As one analyst notes, the gold "premium is a function of demand and supply, and right now you could interpret the high premium in Shanghai as a sweetener to entice the overseas gold supply to flow into China."


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18 Signs That Massive Economic Problems Are Erupting All Over The Planet

by Michael

This is no time to be complacent.  Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine.  In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing.  Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer.  Just look at what is happening in Europe.  The eurozone is now in the midst of the longest recession that it has ever experienced.  Just look at what is happening over in Asia.  Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control.  One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have “kicked the can down the road” by recklessly printing money and by borrowing money at an unprecedented rate.  Unfortunately, the “sugar high” produced by those foolish measures is starting to wear off.  We are going to experience a massive amount of economic pain along with the rest of the world – it is just a matter of time.
But for the moment, there are a lot of skeptics out there.
For the moment, there are a lot of people that are declaring that the problems of the past have been fixed and that we are heading for incredibly bright economic times ahead.
Unfortunately, those people appear to be purposely ignoring the economic horror that is breaking out all over the globe.
The following are 18 signs that massive economic problems are erupting all over the planet…
#1 The eurozone is now in the midst of its longest recession ever.  Economic activity in the eurozone has declined for six quarters in a row.
#2 Italy’s economy has now been contracting for seven quarters in a row.
#3 Industrial production in Italy has fallen for 15 months in a row.  It has now fallen to its lowest level in about 25 years.
#4 The number of people that are considered to be “seriously deprived” in Italy has doubled over the past two years.
#5 Consumer confidence in France has just hit a new all-time low.
#6 The number of unemployed workers seeking a job in France has hit a brand new all-time record high.  Many unemployed workers in France are utterly frustrated at this point…

“I’ve sent CVs everywhere, I come to the unemployment agency every day, for 3 or 4 hours to look for work as a truck driver and there’s never anything,” said 42-year old Djamel Sami, who has been unemployed for a year, leaving a job agency in Paris.

#7 Unemployment in the eurozone as a whole has just hit a brand new all-time record high of 12.2 percent.
#8 Youth unemployment continues to soar to unprecedented heights in Europe.  The following is from an article that was recently posted on the website of the Guardian that detailed how bad things are getting in some of the worst countries…

In Greece, 62.5% of young people are out of work, in Spain it’s 56.4%, then Portugal with 42.5%, and then Italy with 40.5%.

#9 Youth unemployment is being partially blamed for the worst rioting that Sweden has seen in many years.  The following is how the Daily Mail described the riots…

Sweden is reeling after a third night of rioting in largely run-down immigrant areas of the capital Stockholm.
In the last 48 hours violence has spread to at least ten suburbs with mobs of youths torching hundreds of cars and clashing with police.
It is Sweden’s worst disorder in years and has shocked the country and provoked a debate on how Sweden is coping with youth unemployment and an influx of immigrants.

#10 An astounding 10 percent of all banking deposits were pulled out of banks in Cyprus during the month of April alone.
#11 Economic growth in India is the slowest that it has been in an entire decade.
#12 Suddenly Australia is experiencing some tremendous economic challenges.  The following quotes are from a recent Zero Hedge article…

-“We’re seeing a much sharper contraction in the Australian economy than we’d anticipated four or five months ago”. Coffey MD, John Douglas. The engineering group has seen its shares, which traded above $4 in 2007, hit 10c last week.
-“By 10am, the Fitness First gym in the city is packed full of brokers who’ve had a gutful of sitting at their desk doing nothing – salary cuts are starting and next it will be jobs” Perth broker
-“Oh mate, the funding market is dead. You are now seeing a few deeply discounted rights issues for those that are reaching desperate levels ….. liquidity has completely disappeared” Perth broker

#13 The financial system in Japan is beginning to spin wildly out of control.  The Japanese stock market has now declined about 15 percent from the peak, and many believe that the yen will continue to get weaker and that interest rates in Japan will start to rise significantly.
#14 Global cash flow is declining at a rate not seen since the last recession.  This indicates that we could be headed for a global credit crunch.
#15 Real wages continue to decline in the United States.  Even though we are being told that the U.S. is experiencing an “economy recovery”, real weekly earnings have declined from $297.79 in 2010 to $295.49 in 2011 to $294.83 in 2012.  (The preceding calculation is based on 1982-1984 dollars)
#16 Wall Street is buzzing about the fact that “the Hindenburg Omen” appeared at the end of last week.  So exactly what is “the Hindenburg Omen”?  The following are the criteria that are used to determine whether it has appeared or not…

1. The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
2. The smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.
3. That the NYSE 10 Week moving average is rising.
4. That the McClellan Oscillator ( a market breadth indicator used to evaluate the rate of money entering or leaving the market and interpretively indicate overbought or oversold conditions of the market)is negative on that same day.
5. That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs).

When the Hindenburg Omen makes an appearance, it supposedly means that the U.S. stock market is likely to experience a serious decline within the next 40 days.
#17 As I wrote about the other day, the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been in more than two years.  That means that lots of “smart money” has been getting out of the market and lots of “dumb money” has been pouring in.
#18 Margin debt on the New York Stock Exchange has set a new all-time high.  The following is from a recent Market Oracle article…

Margin debt—that’s the amount of money borrowed to purchase stocks—on the New York Stock Exchange (NYSE) reached its all-time high in April. Margin debt on the NYSE registered at $384.3 billion as the key stock indices hit new record-highs. (Source: New York Stock Exchange web site, last accessed May 29, 2013.) The highest margin debt ever reached prior to this was in July of 2007, when it stood just above $381.0 billion. At that time, just like today, the key stock indices were near their peaks and “buy now before it’s too late” was the prominent theme of the day

Whenever margin debt spikes like this, a stock market crash almost always follows.  If you doubt this, just check out the chart in this article.
Wall Street has had a good couple of years, but it has been a “false prosperity” that has been pumped up by reckless money printing by the Federal Reserve.  Just like all of the other stock market bubbles that we have seen in recent years, this one is going to burst too.  And as Marc Faber recently pointed out, this bubble has been particularly beneficial to the wealthy…

The Fed has been flooding the system with money. The problem is the money doesn’t flow into the system evenly. It doesn’t increase economic activity and asset prices in concert. Instead, it creates dangerous excesses in countries and asset classes. Money-printing fueled the colossal stock-market bubble of 1999-2000, when the Nasdaq more than doubled, becoming disconnected from economic reality. It fueled the housing bubble, which burst in 2008, and the commodities bubble. Now money is flowing into the high-end asset market – things like stocks, bonds, art, wine, jewelry, and luxury real estate.
Money-printing boosts the economy of the people closest to the money flow. But it doesn’t help the worker in Detroit, or the vast majority of the middle class. It leads to a widening wealth gap. The majority loses, and the minority wins.

The fact that the U.S. stock market has set new all-time record high after new all-time record high in recent months means very little.  At this point, the stock market has become completely divorced from economic reality.  When this current bubble bursts, the adjustment is going to be very painful.  Wall Street will likely whine and complain and ask for more bailouts, but they may find that authorities are not nearly as sympathetic this time.
Much of the rest of the world is already experiencing the next major wave of the economic collapse.  Reckless money printing by the Fed and reckless borrowing and spending by the federal government may have delayed the inevitable in the United States for a little while, but those measures have also made our long-term problems even worse.
There was one piece of advice that Ben Bernanke included in hiscommencement speech to students at Princeton recently that I thought was particularly ironic…

“Don’t be afraid to let the drama play out.”

Will he take his own advice when the next great financial crisis strikes the United States?
That seems very unlikely.
Unfortunately, things are not going to be so easy to fix this next time.
What happened back in 2008 was just a preview.
What is coming next is going to absolutely shock the world.

Whistleblower Reveals World Bank Corruption

Joe Wright
Activist Post

Whistleblowers continue to endure an increasing level of targeting and prosecution by an administration that touts its commitment to transparency. Despite this, many brave insiders continue to come forward to reveal the extent of corruption at the highest levels.

The latest information comes from Karen Hudes, seen in the video below with Sean Stone. Her bio highlights her 21-year experience at the World Bank as Senior Legal Counsel:

She worked in the US Export Import Bank of the US from 1980-1985 and in the Legal Department of the World Bank from 1986-2007. She established the Non Governmental Organization Committee of the International Law Section of the American Bar Association and the Committee on Multilateralism and the Accountability of International Organizations of the American Branch of the International Law Association.

The World Bank is already notorious for its wide range of human rights violations, land-grab schemes, environmental destruction and economic attacks on sovereign nations and local communities. Hudes offers some additional details about what she asserts is one single group controlling world financial markets and media. She also offers names of people who were involved in blackmail surrounding a 2007 prostitution scandal. Hudes has now been charged by Attorney General Eric Holder with trespassing after being arrested May 13th at an office of the World Bank.

It is worth noting that much of what Hudes discusses from her perspective shows the level of compartmentalization that takes place in large governmental organizations. For example, she states that she believes the World Bank is "finally fulfilling its mandate" by stopping the next world war. However, the deliberate destablization campaigns with subsequent destruction and reconstruction projects, as documented by other insiders such as John Perkins, call this idealistic view into serious question. Hudes maintains that it is exactly this type of corruption that is being rooted out, and why people like her are being targeted.

Regardless of one's view of the World Bank as an institution, Hudes' information highlights that there are people who get into this type of work with good intentions, believing the propaganda they have been given. At the very least, her assertion that there is a network of insiders that will continue blowing the whistle about World Bank corruption bears watching. Lastly, it is worth noting her comments on the possibility of martial law in America and the steps being taken to avoid it. Time will tell.

Other sources:
http://kahudes.net/
https://twitter.com/KarenHudes
http://www.huffingtonpost.com/kevin-l...
http://www.johnperkins.org/tag/world-bank/

Read the report about the network of global corporate control here:

http://arxiv.org/PS_cache/arxiv/pdf/1107/1107.5728v2.pdf

For a full treatment of the depth of World Bank corruption, please read John Perkins' book, Confessions of an Economic Hitman.

Hat Tip: The Daily Sheeple

Investment Expert Landesman: Fed Tactics Have 'Insanely' Inflated Stocks

This you can bet on: The Federal Reserve will eventually stop its $85 billion-a-month bond-buying program, an economic lifeline aimed at getting the country back on its feet after the financial crisis.

While no one knows when the central bank will start winding down the quantitative easing that has pushed down interest rates, Fed Chairman Ben Bernanke hinted last week that the taps may start running dry sooner rather than later — perhaps as early as this summer.

The very thought sent a shiver through world stock and bond markets, though investors took some comfort after a closer look at Bernanke's remarks and reassurances from European and Japanese central banks.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

Markets got back on track this week on the prevailing view that Bernanke may not act all that soon after all. Still, the underlying message was clear: All good things must come to an end.

That said, there are ways to protect your portfolio and perhaps profit from the big shift. Experts recommend three strategies — a move into cash, alternative bond funds and buying shares that have lagged the recent run-up in stock prices — among other ideas.

Here are some tactics investors might consider as the era of quantitative easing ends:

CASH IS KING

The tapering off of the Fed's stimulus program — which has pushed interest rates to historic lows — will cause bond yields to spike and prices to slump. The 10-year Treasury bond is yielding 2.17 percent, already up from 1.94 percent before Bernanke testified before a congressional committee last Thursday.

In a note last week, Goldman Sachs said bond yields are "distorted" and pegged the "fair value" — or the yield it would offer under normal market conditions — of the 10-year Treasury at 2.5 percent.

"We're assuming that the yields are artificially low, and any kind of rate increase will really damage those funds," said Chris Costanzo, investment officer at Tanglewood Wealth Management in Houston, Texas, a firm with $750 million in assets under management.

With that in mind, Costanzo has reduced his clients' positions in U.S. stocks, increased the cash holdings of his conservative clients to as much as 24 percent of their portfolios and has moved out of bond index funds with large stakes in Treasurys. He said those moves will help protect portfolios in case the ending of the Fed's stimulus program isn't smooth.

DON'T ASSUME STOCKS ARE SAFE

The Standard & Poor's 500-stock index could tumble once the Fed announces it is winding down its purchase program and bond yields start rising, said Uri Landesman, who oversees $1.2 billion at the New York investment manager Platinum Partners.

"When people pull out of the bond market, they are going to pull out of everything," he said, adding that he believes the stock market has been "insanely" inflated by the Fed's policies.

He expects the S&P 500 to trade at about 1,400 by October, a decline of almost 16 percent from Tuesday's level of 1,660.

BOND ALTERNATIVES HOLD PROMISE

There are alternatives to stocks. Costanzo is adding to positions in "go anywhere" bond funds such as the $41.2 billion DoubleLine Total Return fund, whose 5 percent stake in Treasurys is just a third of the average of 16 percent among funds in its category, according to Morningstar.

Instead, that fund, whose three-year annualized return of 10.2 percent puts it in the top 2 percent of intermediate bond funds, holds large positions in "private label" mortgage bonds that are not backed by Fannie Mae or Freddie Mac.

These bonds have rallied as the housing market rebounded, and supplies have fallen to $909 million from a peak of $2.2 trillion in 2007. With few new bonds coming onto the market, the lack of supply will likely help keep prices steady even if the housing market cools, analysts say.

THE USUAL DEFENSES MAY NOT WORK

Typically, a stock market pullback helps boost prices of so-called defensive sectors — such as utilities, telecom companies and consumer staples — that are not as dependent as many other companies on a growing economy for profits. But this year those sectors have led the market. Investors already have turned to them as alternatives to the bond market.

Defensive sectors are "extraordinarily expensive," said Burt White, chief investment officer at LPL Financial.

Slow-growing utilities, for instance, are trading at an average trailing price-to-earnings ratio of 16.5, while the S&P 500 as a whole is trading at a p-e of about 14. Over the last 10 years, utilities have traded at an average p-e of 14.1, according to a Fidelity Investments analysis.

By comparison, technology stocks, a growth sector in which investors typically pay more for future earnings, trade at an average of 15.1. Typically, that sector trades at a p-e of 20.

BETTING ON THE ECONOMY

If the Fed does retreat, it will be because the economy is picking up steam. That is leading White and others to consumer discretionary stocks, even though those are already up about 20 percent this year.

"The consumer names will continue to do well, given that any pullback won't be economic in nature but much more around the tapering of the stimulus," he said.

Investors who want to bet on the sector could opt for an exchange-traded fund like the $843 million Vanguard Consumer Discretionary Fund. Costing 14 cents per $100 invested and yielding 1.3 percent, the ETF has its highest weighting in Home Depot, McDonald's and Amazon.

Alan Gayle, who manages $325 million invested in four target-risk portfolios at Ridgeworth Investments, has been increasing his stake in technology stocks and other cyclical sectors for the same reason. Tech stocks are up about 9.9 percent for the year, lagging the broader market, and are poised to push higher should a growing economy nudge corporations into increasing their capital spending, he said.

BANKS WILL PROFIT FROM RISING RATES

Large financial firms may benefit from the end of the Fed's program over the long term, said Ann Miletti, a co-manager of the $1.8 billion Wells Fargo Advantage Opportunity fund, which focuses on mid-cap stocks.

Miletti has added to positions in financial firms such as Ameriprise Financial and Lazard Ltd in anticipation of rising rates. Such a move would make money markets and other interest-bearing accounts more profitable without increasing costs, she said. Lazard is lagging the benchmark S&P by about six percentage points for the year and trades at a forward p-e ratio of 14.1.

Still, investors who make the "rising rates" play may have to wait for a while before the payoff, she concedes. Nobody knows when the Fed will act — just that it eventually will.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did


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