The Trouble with the Future

Submitted by William Bonner, Chairman – Bonner & Partners


PARIS – Yesterday, we got so much mail on our recent issue on Donald Trump we couldn’t read it all. Pro… con… off the wall – readers’ sentiments were all over the place.

But a clever reader mercifully brought the discussion to an end with this quote from fellow Baltimorean H.L. Mencken:


“As democracy is perfected, the office of the President represents, more and more closely, the inner soul of the people. On some great and glorious day, the plain folks of the land will reach their heart’s desire at last and the White House will be occupied by a downright fool and complete narcissistic moron.”


HLMenckenHL Mencken as a young man in front of his pre-war word processor. There’s a trenchant Mencken quote for nearly every occasion. If we could, we’d resurrect him.

Photo via Wikimedia Commons


All over the world, elections allow the people to express their innermost thoughts and feelings. This is a big day in Argentina, for example. Outgoing president Cristina Kirchner is supposed to hand over power to her successor, Mauricio Macri.

But when we looked yesterday, there was dispute as to exactly what time the baton would be passed. And Cristina has let it be known she would not attend the inaugural and would generally make life as difficult for Mr. Macri as possible.


meetingThis photo is simply too funny not to show it – it cries out for a caption contest actually. Background: Kirchner asked Macri to visit her in the presidential palace, so she could personally congratulate him on his victory. And she said to him to “come alone”, which immediately spawned the twitter hashtag #VeniSolo (#ComeAlone)

Photo via


CUoS_ZqW4AEcc-5Image from an #VeniSolo tweet …

Photo via


Deep State in Control

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December 16, 2015 – When The End Of The Bubble Begins

They are going to layer their post-meeting statement with a steaming pile of if, ands & buts. It will exude an abundance of caution and a dearth of clarity.

Having judged that a 25 bps pinprick is warranted, the FOMC will then plant itself firmly in front of the great flickering dashboard in the Eccles Building. There it will repose to a regimen of “watchful waiting”, scouring the entrails of the “incoming data” to divine its next move.

Perhaps the waiting won’t be so watchful as all that, however. What is actually coming down the pike is something that may put the reader, at least those who have already been invited to join AARP, more in mind of that once a year hour-long special broadcast by Saturday morning TV back in the days of yesteryear; it explained how the Lone Ranger got his mask.

Memory fails, but either 12 or 19 Texas Rangers rode high in the saddle into a box canyon, confident they knew what was around the bend. Soon there was a lot of gunfire and then there was just one, and that was only because Tonto’s pony needed to stop for a drink.

Yellen and her posse better pray for a monetary Tonto because they are riding headlong into an ambush in the canyons of Wall Street. To wit, they cannot possibly raise money market interest rates—-even by 75 bps—-without massively draining liquidity from the casino.

Don’t they know what happened to the $3.5 trillion of central bank credit they have digitally printed since September 2008? Do they really think that fully $2.8 trillion of it just recycled right back to the New York Fed as excess bank reserves?

That is, no harm, no foul and no inflation? The monetary equivalent of a tree falling in an empty forest?

To the contrary, how about recognizing the letter “f” for fungibility. What all that “excess” is about is collateral, not idle money.

The $2.8 trillion needed an accounting domicile—so “excess reserves” was as good as any.  But from a financial point of view it amounted to a Big Fat Bid for existing inventories of stocks and bonds.

Stated more directly, Wall Street margined the Fed’s gift of collateral, and did so over and over in an endless chain of rehypothecation. Continue reading

Retail Sales and Winter: Economic or Seasonal

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

Given that Black Friday weekend, including Thanksgiving itself, was uninspiring, the fact that the Commerce Department’s estimates for retail sales for all of November were again among the worst shows that Black Friday actually remains a pivotal part of the holiday setup. The trend has been to dismiss the traditional Christmas buying season kickoff as if earlier discounts might have the effect of boosting overall spending; spend less on Black Friday and the days around it so you can spend more in total?

Cannibalizing Black Friday weekend is just that, not a positive multiplier. Expecting otherwise just doesn’t make sense because people are going to spend what they are able, and the timing of the spending is incidental to their ability. Thus, the rather atrocious (yet again) spending estimates for November are commentary on that ability.

That is why there has been such a rush to “color” as much as possible any interpretations using the word “strong” or “solid” repeatedly, especially this year since retail and consumer spending didn’t just start to be recessionary in November. As an example, the National Retail Federation circulated its press release this morning, in light of the damning retail sales figures, which included internal contraction right at the start:

The first half of the holiday season is officially under wraps and it appears holiday shoppers in November were out in full force according to the National Retail Federation’s latest retail sales data, though on the surface, trends may appear softer than expected. However, according to NRF Chief Economist, the rise in November retail sales is actually very much in line with the events that are shaping the 2015 holiday shopping season. [emphasis added]

The title of the release is “First Half of the Holiday Season Shows Solid Growth.” Even the usual credentialed economist had to be careful in picking “solid” interpretations – after placing that description in the most benign-sounding context possible.

All in all, the growth in November really does point to a healthy consumer who at the end of the day will help retailers see solid growth, despite the economic and environmental challenges. Retailers are well-prepared for these challenges and are keen to continue to offer their shoppers a worth-while holiday shopping experience. [emphasis added]

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Marginal Gold Producer Takes Off

Submitted by Pater Tenebrarum  –  The Acting Man Blog

While Few are Watching …

Over the years we have made many notes of small things we observe in various market sectors, as they often come in useful when pondering trading decisions. In the bear market of the highly cyclical gold sector in recent years, one of the things that seems to be happening with unwavering regularity, is that as year-end approaches, many of the stocks that have been beaten down the most will suddenly begin to recover and often rally sharply for several weeks.


Photo credit: Anglo Platinum


Partly this is due to tax loss selling effects wearing off. Most institutional investors finish their tax loss selling shortly before the end of October, while individual investors will as a rule tend to engage in tax loss selling until December. Traders know that beaten down small cap stocks that are especially weak into year-end will tend to outperform early in the new year, as tax loss sales are often reversed as the new year begins. As an example, consider the action in the junior gold miners ETF GDXJ in late 2014 – early 2015:


1-GDXJGDXJ during the 2014 tax loss selling period and the rally thereafter into late January 2015. Almost 45% were gained in the space of five weeks – this is not to be sneezed at – click to enlarge. Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth


• Why A 0.25% Rate Hike Should Have Big Banks Nervous But Probably Won’t (Bern)
• “Coppock Guide” Signals A Bear Market Is At Hand (ZH)
• Junk-Bond Rout Deepens, Sends Shockwaves Through Stocks, Other Markets (WSJ)
• Junk-Bond Fund’s Demise Highlights SEC Mutual-Fund Worries (WSJ)
• China Steel Output Slumps to a One-Year Low as Prices Collapse (BBG)
• Missing Chinese Billionaire ‘Assisting Authorities in an Investigation’ (WSJ)
• US Senators Close in on Oil-Export Deal Amid Tax-Break Talks (BBG)
• EU Powerless to Stop Nationalist Ascendancy as Terror Fears Rise (BBG)
• French Vote for Regions as Main Parties Seek to Shut Out Le Pen (BBG)
• Julian Assange May Face Swedish Interrogation Within Days (Guardian)
• James Hansen, Father Of Climate Change Awareness: Paris Talks ‘A Fraud’ (Guar.)
• No Mention In Paris Of Refugees: Global Issues Live In Separate Boxes (Betts)
• The Athens Lawyer Who Became A Guardian To Refugee Camp Children (Guardian)