Germany blocks TTIP, now it is up to Italy

Submitted by Beppe Grillo  – The Beppe Grillo Blog

The TTIP is a trade agreement between the US and EU of which we know little or nothing. Not only because of the Italian media (at 73 th place in the world ) that avoids raising the debate on the issue, but also because the documents relating to the agreement are kept secret . The negotiation of the terms of the Treaty took place between a group of bureaucrats. EU member states have not entered the negotiating process and are now being questioned for the ratification.

Without going through the approval of the people, just the signature of heads of government not elected by anyone (in the case of Italy and Portugal ), that national interests do not care.
In Germany a few weeks ago two hundred thousand people took to the informed Square say no to TTIP with a massive demonstration that invaded the city of Berlin with hundreds of initiatives between flashmob, principals, seminars and public events.

Pictures of the event in Berlin NoTTIP

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It did not go unnoticed because right after Norbert Lammert , President of the Bundestag (Federal Parliament of Germany), said: ” I exclude categorically that the Bundestag will ratify a trade agreement between the European Union and the United States never having participated in the negotiations and not having even been able to consider alternative options ”. Together with Economy MinisterSigmar Gabriel , Lammert believes that ” so far limited access to information on the US side is unacceptable, both for the government and for Parliament ”.

Continue reading

FOMC: One Month in a Submarine with a Defect Radio

Submitted by Pater Tenebrarum  –  The Acting Man Blog

Bureaucratic Fantasies

As trained Kremlinologists we were truly baffled by yesterday’s FOMC statement. Yes, we know, they are eager to hike rates at least once, just so they can prove they can still do it, but the comments on the US economy in yesterday’s statement sounded as if the entire committee had just spent the past month in a submarine with a defect radio.

yellow submarineImage credit: Heinz Edelmann

Here is a chart posted by John Hussman in his recent weekly missive, that illustrates US economic activity on the production side, a topic we have recently discussed extensively as well (see: “US Economy – Close to a Bust?” and “More Ominous Data Points” for details).

wmc151026aAn amalgamation of incoming data from the Fed’s own district surveys via John Hussman

As we have pointed out, in terms of total spending and output, the manufacturing sector is the US economy’s largest sector by far (even if it is just 13% of “GDP”). It seems therefore pretty clear that when its most important components are in the kind of free-fall normally seen only in recessions, that something is seriously amiss.

It does not matter what has caused this. It is not somehow made “better” by the fact that the only just beginning bust in the oil patch is one of the main triggers. After all, this is how all economic busts begin: the sector with the largest extent of malinvestment keels over first. Moreover, the fracking boom was the by far greatest contributor to capex and employment during the entire post crisis recovery, so its demise is bound to make waves.

You can compare the once gain relatively terse FOMC statement with the previous one with the help of the WSJ’s trusty FOMC statement tracker. What makes it so funny is that all words of warning or caution are gone – the US economy’s soggy performance is described as “solid”, the troubles in submerging markets, which exercised Mr. Draghi less than a week earlier, no longer even rate a mention. In short, it’s really bizarre. Continue reading

Fiat money quantity update

Submitted by Alasdair Macleod – FinanceAndEconomics.org

Chart 1 29102015

After a few months of slower growth, FMQ has picked up again.

FMQ is the sum of True Money Supply (as defined by the Austrian School of Economics), plus the banking system’s reserves and other banking-related liabilities on the Fed’s balance sheet. Account is taken of temporary adjustments that otherwise distort the picture, such as the Fed’s repurchase agreements and reverse repurchase agreements. See here for a fuller description of FMQ.

The intention is to quantify fiat money both issued into public circulation and also held in reserve within the federal banking system. Fiat currency was originally issued in return for gold deposited with the commercial banks in return for bank notes and deposits. This gold was then passed to the Fed in return for cash and reserves, subsequently handing it on to the US Treasury in return for a certificate, which appears on the Fed’s balance sheet to this day. FMQ quantifies the full reversal of this process.

The chart above shows that the growth in FMQ since 1960 followed an exponential path until the banking crisis in 2008. Subsequently, it has accelerated to the end-September 2015 level of $14.39 trillion, considerably above its long-term historic path, and reflects the monetary hyperinflation initiated by the Fed in its attempts to rescue the financial system from the last banking crisis, and then to revive the US economy. Continue reading

Durable Goods Get Even Uglier, More Meaningful

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

Anyone looking to buck the “dollar’s” direction in September has been sorely disappointed by almost every single data point so far. The latest is durable goods which was even more ugly across-the-board than August – and that includes the rather stark downward revisions for last month. Year-over-year, new orders (ex transportation) fell almost 6% after declining a revised 3.74% in August; shipments have begun to track orders, as expected, falling 3.59% in September for the third consecutive month of contraction and four of the past five. Capital goods, a proxy for business capex, were even worse: new orders dropped just shy of 8% while shipments declined by more than 3%, forming what looks to be a steep downward slope.

In terms of accumulating weakness, the 6-month averages in those series are either worse than the 2012 trough or matching it. It was that feebleness that surely convinced the Fed to engage in a third QE (and then another when the downside remained stubborn) at that time, a rather poignant comparison to the interest rate debate at the FOMC taking place today. Economists and policymakers have been at great pains to downplay the significance in manufacturing retrenchment as either unimportant or “transitory”, but the trajectory of the economy provided by this persistent downslope will not allow it.

Treasury prices are higher after the US durable goods orders report showed doubt about the economy’s performance during the third quarter. While September’s decline in orders wasn’t as steep as expected, prior months were revised much lower. This is leading investors to bring down their estimates of U.S. third-quarter economic growth, says Credit Agricole’s David Keeble, adding that Treasurys got a lift as a result.

When the dreariness of the end of “transitory” forces even economists to deploy anything other than glowing metaphors and descriptions of the economy you know it is quite serious:

Durable goods orders have been down in four of the past six months, a sign of the problems facing manufacturers as they struggle with economic weakness in key export markets like China. A stronger dollar has also been a drag, making American products less competitive overseas.
Economists said the new report provided further evidence of the headwinds. They were especially concerned by downward revisions in previous months showing weaker overall orders and a larger decline in the business investment category.

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Gold Up 3% In October and Enters “Seasonal Sweet Spot”

Submitted by Mark O’Byrne  –  GoldCore

– Gold down 1.3% this week on Fed “noise”
– Gold up 3% in October on robust demand
– Stronger gains in euros, Swiss francs, Japanese yen
– October poor month for gold seasonally
– November, December, January and February the “seasonal sweet spot”
– Confirmation of surging demand for bullion in Germany, India and China in Q3

Gold is headed for a 1.3% fall this week after the Fed’s latest suggestion that they may increase interest rates in December or in the New Year. However, for the month of October gold is 3.1% higher from $1,115/oz to $1,150/oz and has seen even larger gains in other currencies.

GoldCore: Gold Spot Prices Seasonal

Gold’s Seasonal Performance – U.S. Global Investors (1969-2010)

This strong performance in October comes despite October being traditionally a weak month for gold. This bodes well as we enter the “seasonal sweet spot” for gold. Continue reading

The Latest (and Dumbest) Central Bank Fraud

Submitted by William Bonner, Chairman – Bonner & Partners

A Financial Reckoning

WATERFORD, Ireland – You go for a nice picnic on the slopes of Vesuvius… You spread out your tablecloth. You open your picnic hamper. You prepare for a relaxing afternoon in the warm October sun.

And then someone comes running down the mountain, warning that the volcano is going to blow up. You pack up your sausages and put a cork in the wine bottle… and rush to the car and drive away. Better to be safe than sorry. And then? Nothing happens.

Mt.OntakeWhen these ominous columns of smoke become visible, it may be time to make tracks. Or not. This image shows Mt. Ontake in Japan, which tends to erupt occasionally …

Photo credit: Kyodo / Reuters Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

• It Is Already Too Late To Scrap China’s One-Child Policy (AEP) 
• Li Floats New China Five-Year Growth Minimum of Around 6.5% (Bloomberg) 
• China Steel Industry Outlook ‘Worst Ever Amid Unprecedented Losses’ (Zero Hedge) 
• 28 Chinese Investors In Fanya Metal Exchange Go Missing After Protest (Quartz) 
• Shell Has Biggest Loss in More Than a Decade on Price Slump (Bloomberg) 
• London House Prices Most Overvalued In The World, Says UBS (Guardian) 
• Why Investors Are Shorting Canada’s Housing Market (CNBC) 
• Great Expectations: The Driving Force Behind Latest Property Crisis (McWilliams) 
• Bank of Japan Keeps QE On Hold As It Hopes For Recovery (Reuters) 
• Britain’s Youth At Risk Of Being ‘Lost Generation’ (Guardian) 
• US Special Ops Have Been Fighting ISIS On The Ground For Months (Bloomberg) 
• In Defeat For Beijing, Hague Court To Hear South China Sea Dispute (Reuters)
• European Parliament Votes To Urge Protection for Edward Snowden (NY Times) 
• Two Boats Carrying Refugees Sink Off Greece, Leaving 21 Dead (AP) 
• Greek Coast Guard Seeks Dozens Of Migrants Off Lesvos After Wreck (Kath.) 
• Germany To Spend Up To €16 Billion On Refugees Next Year (Reuters) 
• Refugees Risk Freezing To Death In Germany, Too (Local.de) 
• EU Nations Have Relocated Only 86 Refugees From 160,000 Pledged (Bloomberg) 
• Lesbos Volunteer Says Huge Amount Of Trauma As Refugee Boats Capsize (Guardian) 
• Lesbos Braces For Winter As Refugees Keep Coming (Gill) 

US On Road To Third World

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

On January 6, 2004, Senator Charles Schumer and I challenged the erroneous idea that jobs offshoring was free trade in a New York Times op-ed. Our article so astounded economists that within a few days Schumer and I were summoned to a Brookings Institution conference in Washington, DC, to explain our heresy. In the nationally televised conference, I declared that the consequence of jobs offshoring would be that the US would be a Third World country in 20 years.

That was 11 years ago, and the US is on course to descend to Third World status before the remaining nine years of my prediction have expired.

The evidence is everywhere. In September the US Bureau of the Census released its report on US household income by quintile. Every quintile, as well as the top 5%, has experienced a decline in real household income since their peaks. The bottom quintile (lower 20 percent) has had a 17.1% decline in real income from the 1999 peak (from $14,092 to $11,676). The 4th quintile has had a 10.8% fall in real income since 2000 (from $34,863 to $31,087). The middle quintile has had a 6.9% decline in real income since 2000 (from $58,058 to $54,041). The 2nd quintile has had a 2.8% fall in real income since 2007 (from $90,331 to $87,834). The top quintile has had a decline in real income since 2006 of 1.7% (from $197,466 to $194,053). The top 5% has experienced a 4.8% reduction in real income since 2006 (from $349,215 to $332,347). Only the top One Percent or less (mainly the 0.1%) has experienced growth in income and wealth.

The Census Bureau uses official measures of inflation to arrive at real income. These measures are understated. If more accurate measures of inflation are used (such as those available from shadowstats.com), the declines in real household income are larger and have been declining for a longer period. Some measures show real median annual household income below levels of the late 1960s and early 1970s.

Note that these declines have occurred during an alleged six-year economic recovery from 2009 to the current time, and during a period when the labor force was shrinking due to a sustained decline in the labor force participation rate. On April 3, 2015 the US Bureau of Labor Statistics announced that 93,175,000 Americans of working age are not in the work force, a historical record. Normally, an economic recovery is marked by a rise in the labor force participation rate. John Williams reports that when discouraged workers are included among the measure of the unemployed, the US unemployment rate is currently 23%, not the 5.2% reported figure. Continue reading

The Debate: GOP Candidates Elevated, CNBC Eviscerated

Well now. We actually got our money’s worth last night.

Almost with out exception the GOP candidates conveyed a compelling message that the state is not our savior, while the CNBC moderators spent the night fumbling with fantasy football and inanities about which vitamin supplements Ben Carson has used or endorsed.

But this was about more than tone. The interaction between the candidates and the CNBC moderators revealed the yawning gap between the bubble world at the intersection of Washington and Wall Street and the hard scrabble reality of economic stagnation and political alienation on main street America.

Yes, the CNBC moderators engaged in a deplorable display of gotcha journalism punctuated by a snarky self-righteousness that was downright offensive. John Harwood is surely secretly on the payroll of the Democratic National Committee and it was more than obvious why Becky Quick excels at serving tea to blathering old crony capitalist fools like Warren Buffett.

So they deserved the Cruz missile that came flying at them mid-way through the debate.

At that point the Senator from Texas had had enough, especially from Carl Quintanilla. The latter has spend years on CNBC commentating about the “market”, but wouldn’t know honest capitalism is if slapped him upside the head, and has apparently never meet a Washington intervention that he didn’t cheer on as something to help the stock averages go higher:

Let me say something at the outset. The questions that have been asked so far in this debate illustrate why the American people don’t trust the media. This is not a cage match. And if you look at he questions—Donald Trump, are you a comic book villain? Ben Carson, can you do math?… Marco Rubio, why don’t you resign? Jeb Bush, why have your numbers fallen? How about talking about substantive issues?”

Nor did the Texas Senator let up:

“Carl, I’m not finished yet. The contrast with the Democratic debate, where every thought and question form the media was ‘Which of you is more handsome and wise”

As one pundit put it afterwards, “given the grievous injuries inflicted on Team CNBC”  by Cruz and the rest of the candidates, the only thing left to do was to “shoot the wounded”. Continue reading

And Back to Oil Again

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

Even though oil production inside the United States has declined over the summer, it’s as if oil supply is all that continues to matter. With oil prices down significantly today, as well as since mid-October, the incessant appeal of oil supply blooms yet further even though there is so much more than that to take into account. If prices fall as they have, you find nothing but “overhang” and “glut”, but when they rise it is far more of the perky and hopeful variety. This isn’t to say that oil supply is unimportant or unrelated, only that oil is clearly far more than that being especially driven financially.

“It continues to show excess (supply) in the market in this quarter and going forward … it’s only really in the last quarter of next year when we could potentially see some rebalancing of the market,” Natixis commodity strategist Abhishek Deshpande said.
“What markets don’t tend to realise is the overhang of crude, which has been developing since September last year, will go into the end of next year,” he said.
U.S. production cuts — from a peak of around 9.6 million barrels a day to around 9.1 million — and optimism over demand have failed to translate into higher prices, said Ric Spooner, chief market analyst at Sydney’s CMC Markets.

If lower actual supply and “optimism over demand” aren’t pushing the great expected rebound, then that leaves oil commentary in the same place as economic commentary looking for transactions and activity that just aren’t there; nor likely to be. In other words, “optimism over demand” is very different than actual demand, a dichotomy as old as this “recovery” but with quite renewed emphasis about 2015. As noted last week, oil stocks (inventory) are rising again, along with distillates, even though stocks remain close to record levels (almost a third greater than a year ago). That strikes directlyagainst consistency:

Oil prices fell a third straight session on Tuesday, with Brent crude touching a six-week low on the persistent global supply glut ahead of U.S. data expected to show another increase in crude inventories.
Crude futures felt pressure from analyst expectations that U.S. crude inventories rose last week, a fifth consecutive build after gaining 22 million barrels in a four-week span.

Again, that would indicate far more than simply oil supply, especially as supply has been cut. That leaves the “dollar” firmly implanted on the oil price curve, and almost alone in that position, particularly the front months where most volatility resides. As distinguished by the spot price alone, the imprint of the October “dollar” could not be clearer:

ABOOK Oct 2015 Dollar Late WTI CurveABOOK Oct 2015 Dollar Late WTI Spot Continue reading

Global Property Bubble Set To Burst – UBS and Deutsche Warn

Submitted by Mark O’Byrne  –  GoldCore

The London property market is being increasingly recognized as a bubble and now even leading international banks are warning that the bubble may be set to burst.

GoldCore: Global Property Bubble

Today, UBS has warned that London’s property market is “frothing” and last week Deutsche Bank were the property party pooper “calling time” on the London property “party.”

According to a new UBS report, England’s capital is home to the most significantly overvalued housing market of any major city in the world – and that means there’s a risk the bubble is close to bursting.

“When inexpensive financing is combined with bullish expectations, real estate prices eventually uncouple from the real economy,” said UBS head of global real estate Claudio Saputelli.

“We have seen this in the current cycle, particularly in the world’s leading financial centers, where housing prices are now, in many cases, fundamentally unjustified. The risk of a real estate bubble in these cities has risen sharply. While it is not always possible to prove conclusively the existence of a bubble, it remains essential to identify the signs of one early on.”

Deutsche bank’s research as seen in the latest edition of its Konzept magazine last week warned that:

“The dinner-party perception that prices for prime London property have always gone up is potentially a reason to worry. That everyone strongly believes they will continue to go up further is a cause for anxiety. Still, timing any turn is hard and it has long been a losing battle to call an end to the froth in this market. But perhaps we are close to the turning point.”

Deutsche describes previous examples of house-price slumps, notably in Hong Kong and Japan:

There are multiple catalysts to suggest that 2015 is the turning point [for London]. The most significant are: impending higher interest rates, tighter macro-prudential policies and a deepening politicisation of the housing issue. Again, all that needs to happen is for investors to think price outcomes are asymmetric, with low upside and large downside.

There is growing political risk embedded in prime London housing. It is not that prices cannot rise further. It is that the more they rise the greater the chance of a political backlash against further gains.

What’s more…

Valuations are high relative to history, falling interest rates cannot provide further support, and given current affordability home ownership cannot rise materially. London’s property is unlikely to enjoy the next 30 years as it did the last.

We clearly warned in December 2014, that the London property bubble looks set to burst. According to a host of different measures it appears overvalued and indeed severely overvalued.

Indeed, we were one of the few brokerages and advisers to warn regarding the global property bubble prior to the global financial crisis. Our analysis of property markets led to growing concerns in 2004 and 2005 about the very high levels of mortgage and total debt being seen in the UK, U.S. and internationally.

Our research clearly warned regarding property bubbles in the UK, Ireland and the U.S. and we warned readers and especially clients about the risks this would pose to the global financial system and economy and the risks of a global financial crisis.

Now is a good time to reduce allocations to overvalued property markets in many leading international cities such as New York, Hong Kong, Singapore, London and elsewhere and to diversify into physical gold.

A bursting of property bubbles in London and New York would be expected to have an impact on national economies and indeed on national property markets. Sentiment would be badly impacted.

Caution should be the order of the day.

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

• Fed Keeps Interest Rates Unchanged But Hints At December Rise (Guardian) 
• Fed Keeps December Rate Hike in Play (Hilsenrath) 
• The Death Of Monetary Policy In 1 Dismal Chart (Zero Hedge) 
• Inflation Fixated Central Banks Have Lost Their Way (Stephen Roach) 
• The Unnatural Rate Of Interest -Ultra Wonkish- (Steve Keen) 
• Britain Is Heading For Another 2008 Crash: Here’s Why (David Graeber) 
• Paris Climate Deal To Ignite A $90 Trillion Energy Revolution (AEP) 
• China Running Out Of Strategic Oil Reserve Space (Reuters) 
• Nigel Farage Rages At EU’s Modern Day “Brezhnev Doctrine” (Zero Hedge) 
• British Bookmaker Doubles Probability of Exit From EU (Bloomberg) 
• Putin Tests English Debt Law as Ukraine Feud Heads to London Court (Bloomberg) 
• European Parliament Opposes National Bans on GMO-Food Imports (Bloomberg) 
• Germany To Oblige Banks To Offer Accounts To Refugees (Reuters) 
• Inside Europe’s Migrant-Smuggling Rings (WSJ) 
• Three Migrants Drown Off Lesvos, Coastguard Rescues 242 As Boat Sinks (Reuters) 
• At Least Five Refugees, Including Four Children, Drown In Aegean (AP) 
• Dozens Of Refugees Missing After Boat Sinks Off Lesvos (AP)