Trump Already Keeping Jobs in the U.S., The TPP Is Falling Apart, Should He Dump the Fed?

Bond Carnage hits Mortgage Rates. But This Time, it’s Real

Wolf Richter wolfstreet.com, www.amazon.com/author/wolfrichter

The “risk free” bonds have bloodied investors.

The carnage in bonds has consequences. The average interest rate of the a conforming 30-year fixed mortgage as of Friday was quoted at 4.125% for top credit scores. That’s up about 0.5 percentage point from just before the election, according to Mortgage News Daily. It put the month “on a short list of 4 worst months in more than a decade.”

One of the other three months on that short list occurred at the end of 2010 and two “back to back amid the 2013 Taper Tantrum,” when the Fed let it slip that it might taper QE Infinity out of existence.

Investors were not amused. From the day after the election through November 16, they yanked $8.2 billionout of bond funds, the largest weekly outflow since Taper-Tantrum June.

The 10-year Treasury yield today jumped to 2.36% in late trading the highest since December 2015, up 66 basis point since the election, and up one full percentage point since July!

The 10-year yield is at a critical juncture. In terms of reality, the first thing that might happen is a rate increase by the Fed in December, after a year of flip-flopping. A slew of post-election pronouncements by Fed heads – including Yellen’s “relatively soon” – have pushed the odds of a rate hike to 98%.

Then in January, the new administration will move into the White House. It will take them a while to get their feet on the ground. Legislation isn’t an instant thing. Lobbyists will swarm all over it and ask for more time to shoehorn their special goodies into it. In other words, that massive deficit-funded stimulus package, if it happens at all, won’t turn into circulating money for a while.

So eventually the bond market is going to figure this out and sit back and lick its wounds. A week ago, I pontificated that “it wouldn’t surprise me if yields fall some back next week – on the theory that nothing goes to heck in a straight line.”

And with impeccable timing, that’s what we got: mid-week, one teeny-weeny little squiggle in the 10-year yield, which I circled in the chart below. The only “pullback” in the yield spike since the election. (via StockCharts.com):

Note how the 10-year yield has jumped 100 basis points (1 percentage point) since July. I still think that pullback in yields is going to happen any day now. As I said, nothing goes to heck in a straight line.

In terms of dollars and cents, this move has been wiped out a lot of wealth. Bond prices fall when yields rise. This chart (via StockCharts.com) shows the CBOT Price Index for the 10-year note. It’s down 5.6% since July:

The 30-year Treasury bond went through a similar drubbing. The yield spiked to 3.01%. The mid-week pullback was a little more pronounced. Since the election, the yield has spiked by 44 basis points and since early July by 91 basis points (via StockCharts.com):

Folks who have this “risk free” bond in their portfolios: note that in terms of dollars and cents, the CBOT Price Index for the 30-year bond has plunged 13.8% since early July!

However, the election razzmatazz hasn’t had much impact on junk bonds. They’d had a phenomenal run from mid-February through mid-October, when NIRP refugees from Europe and Japan plowed into them, along with those who believed that crushed energy junk bonds were a huge buying opportunity and that the banks after all wouldn’t cut these drillers’ lifelines to push them into bankruptcy, and so these junk bonds surged until mid-October. Since then, they have declined some. But they slept through the election and haven’t budged much since.

It seems worried folks fleeing junk bonds, or those cashing out at the top, were replaced by bloodied sellers of Treasuries.

Overall in bond-land, the Bloomberg Barclays Global Aggregate bond Index fell 4% from Friday November 4, just before the election, through Thursday. It was, as Bloomberg put it, “the biggest two-week rout in the data, which go back to 1990.”

And the hated dollar – which by all accounts should have died long ago – has jumped since the election, as the world now expects rate hikes from the Fed while other central banks are still jabbering about QE. In fact, it has been the place to go since mid-2014, which is when Fed heads began sprinkling their oracles with references to rate hikes (weekly chart of the dollar index DXY back to January 2014):

The markets now have a new interpretation: Every time a talking head affiliated with the future Trump administration says anything about policies — deficit-funded stimulus spending for infrastructure and defense, trade restrictions, new tariffs, walls and fences, keeping manufacturing in the US, tax cuts, and what not — the markets hear “inflation.”

So in the futures markets, inflation expectations have jumped. This chart via OtterWood Capital doesn’t capture the last couple of days of the bond carnage, but it does show how inflation expectations in the futures markets (black line) have spiked along with the 10-year yield (red line), whereas during the Taper Tantrum in 2013, inflation expectations continued to head lower:

Inflation expectations and Treasury yields normally move in sync. And they do now. The futures markets are saying that the spike in yields and mortgage rates during the Taper Tantrum was just a tantrum by a bunch of spooked traders, but that this time, it’s real, inflation is coming and rates are going up; that’s what they’re saying.

Trump's Asian Pivot: 'US to Jump on One Belt, One Road Bandwagon'

Newly elected US President Donald Trump is likely to abolish Barack Obama's pivot to Asia policy and stop encouraging Asian Pacific nations to aggravate tensions in the South China Sea, Tom McGregor, Commentator and Editor at China Network Television (CNTV) suggested in an interview with Sputnik.

Donald Trump is likely to bring about a change in the US foreign policy, Tom McGregor, Commentator and Editor at CNTV and News Republic APP Asia-Pacific geopolitical columnist, believes. According to the journalist, after Trump's election the US may break the ice with China and ASEAN nations. Killing the Trans-Pacific Partnership (TPP) project will become Trump's first step in this direction, he noted. 'Trump Will Stop Obama's Pivot to Asia' "Trump will stop Obama's Pivot to Asia, and he's already ended TPP. He will no longer encourage Asian governments behind-the-scenes to spark territorial disputes in the South China Sea," McGregor assumed. © FLICKR/ GAGE SKIDMORE 50 Shades of Hawkish: Bolton Vs Giuliani as Trump's Top Picks for State Secretary Indeed, Politico.com reports that Trump will quit the controversial trade pact within the first 100 days, citing an internal transition team document shared with the media outlet. Speaking to Sputnik, Dr. Seijiro Takeshita of the University of Shizuoka and Philip Levy, Senior Fellow on the Global Economy, underscored that TPP was the cornerstone of Barack Obama's "pivot to Asia" policy. McGregor assumed that tensions between Beijing and Washington may "devolve into trade and global currency disputes." "Japan and China are considered to be flagrant 'currency manipulators' and Trump will confront Beijing and Tokyo over this matter," the journalist noted. For its part, "Beijing will criticize Trump for disregarding the Climate Change agreement, because so many Chinese companies invested big bucks into Green Energy companies and countless renewables energy will go into bankruptcy, causing problems to China's economy," according to McGregor. However, there are also signs of potential improvements in US-China relations. © AP PHOTO/ NG HAN GUAN, POOL 'Adjusting the Strategy': Trump Signals US Wants Broader Economic Cooperation With China In his interview with the South China Morning Post senior adviser to Trump on national security and intelligence James Woolsey underscored that the Obama administration's disregard for the Chinese-led Asian Infrastructure Investment Bank (AIIB) was a "strategic mistake." Woolsey also added that he expected a "much warmer" response from Trump to Beijing's "One Belt, One Road" initiative. "Trump has an ambitious plan to rebuild America's infrastructure," McGregor pointed out. "China's Belt & Road can play a pivotal role to help Trump make American infrastructure great again. The first step will be for Trump to sign the US up as a member of the China-led Asian Infrastructure Investment Bank (AIIB)," he predicted. 'New Dawn' Will Rise for ASEAN Nations As for ASEAN nations, McGregor assumed that "a new dawn will arise" for them "with Trump in the White House." Will Trump stop their "drift" toward China? "ASEAN members were drifting to China, because Obama and the prospects of Hillary Clinton becoming US President moved them in that direction. They did not support the bullying tactics of Obama and Clinton, so who could blame them for befriending Beijing," the journalist explained. © REUTERS/ NG HAN GUAN/POOL Philippine President Rodrigo Duterte and Chinese President Xi Jinping (R) shake hands after a signing ceremony held in Beijing, China, October 20, 2016 "They will return back to Washington for support, but they will maintain friendship with China, so they can receive maximum benefits from both sides. That's a pragmatic and win-win approach," he elaborated. Trump's First Domestic, Foreign Political Steps The CNTV commentator also gave his prognosis of Trump's very first steps after the inauguration. "Here's what we can expect. Trump will make decisions, based on his own viewpoints. He will listen and consider advice, but he will be the final decision maker. He won't act in a consensus manner, similar to what President Barack Obama had done during White House meetings," McGregor told Sputnik. "His agenda at the start will be to toughen up immigration laws, aid countries that are fighting radical Islamists, launch investigations under the Department of Justice to root out corruption, cancel the US as signatory of the Paris Agreement Climate Change Treaty, end sanctions against Russia, force NATO to move troops away from Russian border, sign the US up for China's Belt and Road via the AIIB, and the big shocker: Visit Mexico for his first trip abroad as US President," the journalist suggested. © PHOTO: PIXABAY America's Rebalance: Trump's Election Opened Door to New Global Order During his second month in office, Trump is likely to focus more on domestic policies, McGregor envisions. "It will be Trump vs. The Washington Beltway Establishment for his first year in office, but as Trump rises in popularity polls after six months, the GOP will find ways to mend fences," he predicted. On the other hand, according to the CNTV commentator, Trump's foreign policy is likely to "shift away" from neo-conservative values, such as the US' global hegemony. Remarkably, as Tom Engelhardt noted in his April article for TomDispatch.com, Trump "is the first American leader… of recent times not to feel the need or obligation to insist that the US, the 'sole' superpower of Planet Earth, is an 'exceptional' nation, an 'indispensable' country, or even in an unqualified sense a 'great' one." More Populist Politicians Will Win Elections in Europe Given the EU leadership's anxiety about Trump's win, what are the prospects of US-European relations? "It's great news that Eurocrats and a few European leaders feel a deep sense of anxiety about Trump and they will soon discover that Trump was not joking about asking the EU and UK to spend more money on NATO," McGregor noted. Trump's biggest headaches will come from pro-globalist Western European governments, McGregor deems. "They will demand he support the status quo, but Trump will respond by mocking them on his Twitter account," the journalist remarked ironically. According to the journalist, Europe may face the "circulation of elites." "We can expect to see more populist politicians, from the Left and Right, to win more elections," he concluded. The views expressed in this article are solely those of the author and do not necessarily reflect the official position of Sputnik.

Read more: https://sputniknews.com/politics/201611151047472984-trump-china-asean-new-silk-road-aiib/

Major Winter Storm to Hit Ottawa Ontario on Sunday November 20, 2016

Major Winter Storm is on its way for Ottawa Ontario on Sunday November 20, 2016 and it will bring 20 to 30+ cm of Snow and the Winds will be Very Strong Coming from the North that will Cause Blowing and Drifting Snow Including Cornwall Ontario, Brockville Ontario, Kingston and Belleville Ontario and it will be Stormy Conditions and It will Bring Whiteout Conditions and Reduced Visibility and Driving will be Treacherous and Dangerous Driving Conditions and Roads will be Very Slippery and The Low Pressure System will be Intense and The Major Winter Storm will also be Hitting Hawkesbury Ontario and 1st Half of Sunday November 20, 2016 will Start off as Rain and 2nd Half of Sunday the Rain will Change over to Snow in Ottawa and Cornwall Ontario. People in Ottawa Ontario and The Surrounding Areas Be Prepared Have your Winter Boots, Winter Jackets, Hats, Gloves, Scarfs and Ski Pants Ready. Order your Pizzas and Chinese Food and Buy Cases of Pepsi and Coke. Do your Grocery Shopping Don’t Wait until the Last Minute Do it Right Now. Buy your Hefts at Home Hardware Stores. Have your iPads, iPods, Cell Phones, Laptops and Tablets Charged and Have your 3G and 4G Internet Ready. When you are Driving your Car Take your Time Driving your Car and Slow Down so you Don’t Get in the Car Accident. When you are Walking Be Very Careful while you are Walking so you Don’t Slip and Fall. Make Sure to Have your Furnaces Ready and Turn on the Furnaces to Keep the House Warm. Drink Lots of Green Tea, White Tea, Red Tea and Drink Lots of Green Tea to Keep you Warm. Have your Extra Blankets Ready to Keep you Warm. When you are Walking Don’t Walk too Far. Make Sure to Have your Shovels, Hefts, Snow Scoops, Snow Blowers, Snow Plows and Salt Trucks Ready. If you Have anybody Living in Ottawa Ontario and The Surrounding Areas. Be Prepared for the Major Winter Storm on Sunday November 20, 2016. Take Care and Stay Safe and Don’t Get Caught in the Major Winter Storm Stay Warm and Be safe.

The U.S. Silver Market Experienced Two Significant Developments In August

by SRSrocco 

According to the USGS most recent report, the U.S. silver market experienced two significant developments in August.  From the data published in the USGS August Silver Mineral Industry Survey, U.S. silver production declined significantly while silver imports surged to near record highs.

First, U.S. silver production in August is down a stunning 14% compared to the same month last year and down 10% versus the previous month:

This is certainly a big decline compared to the trend earlier in the year where the average U.S. silver mine supply was approximately 95 metric tons a month.  What makes this quite surprising is that the price of silver hit a high of $20.7 in August, nearly $5 higher than during January-March.  So, why is U.S. silver production declining so much as the price continued higher??

I called up the USGS Silver Specialist and left a message on their answering service as to the details why silver production in the U.S. declined so much in August.  If I receive a reply, I will update the post.

Secondly, the U.S. silver imports hit a near record high of 581 metric tons (mt) in August versus 502 mt in July and 464 mt in June:

This large jump in U.S. silver imports is interesting as demand for the iShares Silver ETF was basically flat in August.  Even though the SLV ETF silver inventories surged during the first half of the year, it was relatively flat in July and August.

What I found also quite interesting is that the U.S. imported 55 mt of silver from Poland in August which was half of their total monthly mine supply.  Poland produces about 105 mt of silver a month.  Normally, Poland exports no more than 10-20 mt of silver a month to the United States.

For whatever reason, U.S. silver imports surged as the price hit a record high of $20.7 in August.  As I mentioned, this silver did not make its way into the iShares Silver SLV ETF as their inventories remained flat.  So, where did it go?

Well, according to the information from the COMEX, total inventories on the exchange increased from 153 million oz (Moz) at the beginning of August to 163 Moz by the end of the month.  Thus, the COMEX silver inventories increased 10 Moz or 311 metric tons in August.  Thus, some of the nearly 80 metric tons imported by the United States in August made its way into the COMEX silver inventories.

Of course, that is if the COMEX holds all the silver it states in its inventories or if each silver bar doesn’t have several owners.

Regardless, to see such a large decline in U.S. silver production in August was quite surprising.  Furthermore, the Silver Institute just put out their 2016 Interim Silver Report which they state that world silver production is forecasted to decline in 2016.

Unfortunately, once U.S. and global oil production starts to head south in a big way, world silver production will most certainly follow suit.  More about this in future articles.

Lastly, I will begin posting articles by The Hills Group on the oil and energy market this weekend.  Bedford Hill of The Hills Group, has a wealth of knowledge on the oil industry, their ETP Oil Model as well as other aspects of the energy industry.  I will be posting The Hills Group short response to the USGS announcement of a new 20 billion barrel oil resource in the Wolfcamp Shale formation in Texas.

YOU DON’T OWN YOURSELF, THE FEDERAL RESERVE DOES

[11/19/16]  For a while I have been receiving e-mails from a good friend who has asked me to investigate something weird about the Birth Certificates. He wanted me to take a look at them because they have certain numbers and other things printed on them that need an explanation.

When I looked at my own Birth Certificate, I noticed it was a copy of the original. So I went through old boxes and baby books that my Mom had saved before she died and found what I was looking for — my original Birth Certificate. It was brittle and yellowed with decades of age but — wow — it was NOT the original!

What I have learned since is kind of like discovering that you are part of the Matrix. It seems none of us have our original Birth Certificates — they are all copies. And the copies have a serial number on them, issued on special Bank Bond paper and authorized by “The American Bank Note Company.” Huh?

The truth is stranger than fiction. But here it is:

It seems that back in 1913 the United States was short of cash. By the end of World War I, wartime costs had depleted the treasury and there were several really bad financial panics. The country needed to print more money than it had as equity to restore confidence in the money supply and get the economy back on its feet.

When you or I need more money, we use something as collateral and go to a bank for a loan. When a country needs more money it has to go somewhere also. But in 1913 there wasn’t anywhere to go. So the US created the Federal Reserve Act. This established a private central bank (The Federal Reserve Bank) that would regulate the amount of money the US government was allowed to borrow and put in circulation. It also would expect to be repaid, like any bank, with interest.

After only 20 years things went from bad to worse. During Franklin D. Roosevelt’s presidency, in 1933, the US was unable to pay its debt. The county was bankrupt. The private banks that made up the Federal Reserve demanded their money and Roosevelt responded. He had to use the only thing left of any value to pay the banks and continue doing business with them — the citizens of our country. Us!

Exactly how all this was orchestrated is too lengthy to be addressed here, but this much can be told. The original birth or naturalization record for every U.S. Citizen is on file in the official records in Washington, D.C. (you get to keep a copy!) and the property and assets of every living U.S. Citizen is pledged as collateral for the National Debt!

Within two weeks and three days each Certificate of Live Birth is to be filed in Washington D.C. Evidence reveals that there is even a Federal Children Department established by the Shepherd/Townsend Act of 1922 under the Department of Commerce that appears to be involved in this process in some way. Every citizen is given a number (the red number on the Birth Certificate) and each live birth is valued at from 650,000 to 750,000 Federal Reserve dollars in collateral from the Fed.

This kind of makes you feel a little different when you look at Federal Reserve Chairman, Nancy Yellen, doesn’t it?

OK. Let’s take a pause to look at the Birth Certificates [below]. You will see the red numbers and you will see the fact that it is, in reality, a “Bank Note.” Congratulations — you and I are commodities!

Trump’s Labor Day Message As Unemployment Nears 25%: “The American Worker Is Getting Crushed”

Watch Donald Trump’s Labor Day message to Americans:

The American worker built the foundation for the country we love and have today. But the American worker is getting crushed.
Bad trade deals like NAFTA and TPP… such high and inexcusable taxes and fees on small businesses that employ so many good people.
This Labor Day let’s honor our American workers – the men and women who proudly keep America working. They are the absolute best anywhere in the world. There’s nobody like them.
I’m ready to make America work again and to make America great again. That’s what we’re going to do on November 8th.

 The REAL unemployment rate in America, when you count all those people the government no longer counts, is approaching 25%.

That means that nearly one in four Americans have no job.

These are Great Depression numbers.

Via ShadowStats:

 According to the Free Beacon:

There were 94,708,000 Americans not participating in the labor force in May, an increase of 664,000 individuals from the previous month, according to data from the Bureau of Labor Statistics released Friday.

That’s about 2,000,000 more Americans who are out of the labor force than there were in October 2015.

This is Obama’s America and Hillary Clinton will undoubtedly continue the trend.