A “Stealth” Bear Market Has Already Begun

Submitted by William Bonner, Chairman – Bonner & Partners

An Expensive Market

PARIS – Yesterday, we reported that the U.S. manufacturing sector shrank for the fifth month in a row in December. We could have added that it is now back to levels last seen in July 2009 – in the immediate aftermath of the global financial crisis.

 

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Image via elitewm.com

 

We could have mentioned, too, that the Baltic Dry Index – which tracks the cost of shipping raw materials by sea – just hit a record low. We’ve been citing many other fundamental indicators all pointing the same way – toward a weakening global economy.

 

1-BDIThe BDI (Baltic Dry Index, an index of international dry bulk shipping rates) has suffered a collapse of 96% since its 2008 peak – with that it is the only serious competitor still in contention for the “greatest crash in history” title, which is currently held by the stock market of Cyprus – click to enlarge.

 

Why, then, are stocks – which are supposed to look ahead – still telling us that the coast is clear? Continue reading

China Has Been Entirely Predictable

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

The Chinese currency is once more on top of the news heap, with everyone trying to figure out what is going on. At first, “devaluation” was almost welcomed back in August when it was viewed as some kind of belated PBOC indirect “stimulus.” Very quickly, however, that view was softened as the currency direction appeared very much related to financial turmoil; and not just in China. That point confounded convention and would continue to haunt the mainstream commentary especially as the PBOC further seemed to be trying to get CNY to move upward rather than downward. In fact, the very hint that a grand central bank would be fighting with such desperation was antithetical to everything that economics believes.

I fully recognize the conceit in proclaiming that the rest of the world has got it all wrong (it’s far easier to proclaim that of just economists). In that respect, whatever comes out of China in 2016, the silver lining (potentially) will be to demonstrate that effect. A much more potent tragic benefit would be if that awakening is further extended to the entire global financial system, which was my most fervent hope after the events in 2008 (misreading the world’s desire to just get back to the “way it was” with the least amount of disruption).

The commentary surrounding Chinese instability is mistaken first by thinking it purely Chinese. That comes about because the frame of reference is all wrong.

Stocks fell around the world and commodities slid after China’s central bank set the yuan’s reference rate at an unexpectedly weak level, a reminder of the shock depreciation in August that sparked a wave of financial-market turmoil.

 

Emerging-market stocks dropped to a six-year low and developing-nation currencies declined versus the dollar, while shares in Europe resumed losses after closing higher on Tuesday.

It was only unexpected if you thought what happened in August was discrete and temporary. Unfortunately, starting with economists, that is all that has been declared in China these past few months. Continue reading

US Economy – on the Verge of Recession?

Submitted by Pater Tenebrarum  –  The Acting Man Blog

US Manufacturing Sector Weakens Further – Alea Iacta Est?

On the first trading day of the year, China’s stock market crumbled, seemingly waylaid by yet another weak manufacturing PMI report and a further slide in the yuan. On the same day, a few Fed members came out affirming that several more rate hikes would be seen in the US this year (such as SF Fed president Williams and Cleveland Fed president Loretta Mester).

 

dice

Image vie pixabay.com

 

Meanwhile here is the latest update of the Atlanta Fed’s GDP Now indicator:

 

A-gdpnow-forecast-evolutionThe GDP Now model declines to just 0.7%, once again way below the consensus range

 

When we last mentioned this indicator in passing, it still stood at 1.7% – and that was on December 18! Not long after that, we posted a year-end overview of US manufacturing data with updated charts from our friend Michael Pollaro. This was on December 23, but in the meantime a wealth of additional data has been released, primarily in the form of district surveys and finally the manufacturing ISM release on January 4.

Michael has provided us with a fresh set of charts, showing the evolution of the most important data points of the district surveys as an average and comparing them to the respective National ISM data. In previous updates on manufacturing data, we have mentioned that we see little reason why the trends that have been in motion since early 2015 should reverse. And indeed, they haven’t – on the contrary, they seem to be accelerating.

The most upsetting releases of late have been the Chicago ISM (which contains services as well) and the national ISM released on January 4. Both came in way below already subdued expectations, with the Chicago number falling totally out of bed, posting a headline reading of just 42.9 – well in contraction territory. In the comparison charts below, the ISM manufacturing number is still as of November, but we show the updated ISM chart further below as well Continue reading

Perth Mint Silver Coins Sales Surge 56%, Gold Sales Drop 16% In 2015

Submitted by Mark O’Byrne  –  GoldCore

The Perth Mint’s annual silver coins sales surged 56%, while gold sales fell 16% in 2015, as silver stackers continued to accumulate silver coins and bars and the new silver nugget or kangaroo coin (1 oz and 5 oz) saw very high levels of demand.
Silver_Kangaroo

The Perth Mint’s gold sales rose in December from the prior month, but annual sales slid by nearly a fifth in 2015. Gold sales in December rose to 40,096 ounces from 31,664 ounces in November, the mint said on its website on Wednesday as reported by Reuters.

While gold sales  rose in December from the prior month, but annual gold sales slid by nearly a fifth in 2015. Sales slid 16 percent for the year, after dropping by a third in 2014.

 

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Note: Sales figures in ounces. Gold sales include coins and minted bars. Silver figures include only coins as the mint does not issue silver minted bars

The Perth Mint’s silver sales in December eased to 1.08 million ounces from 1.15 million ounces in the previous month.

For the year, they surged about 56 percent to 11.8 million ounces. The mint sold a record 3.5 million ounces of silver in September alone on strong demand after the launch of the new silver coins and as prices fell to multi-year lows.

Bullion buyers continue to accumulate and see silver at $14 per ounce as great value vis a vis gold ($1,100 per ounce), stocks and many other investments.

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

China Stock Markets Shuttered -Again- After Falling 7% (FT)
China Jolts Markets With Sharply Lower Yuan Fix (CNBC)
Offshore Yuan Rises From Five-Year Low as PBOC Puzzles Markets (BBG)
Global Oil Prices Hit 12-Year Low (Reuters)
Shanghai Fund Manager Dumps All Holdings in ‘Insane’ Market (BBG)
It’s All Bad News for Markets Buckling Under China, Fed, Economy (BBG)
George Soros Sees Crisis in Global Markets That Echoes 2008 (BBG)
Fears Mount Over Rise Of Sovereign-Backed Corporate Debt (FT)
A $500 Car Repair Bill Would Send Most Americans Scrambling (WSJ)
If A Basic Income Works For The Royal Family, It Can Work For Us All (Guardian)
Macy’s To Cut Jobs, Shut Stores Amid Weak Holiday Sales (Reuters)
Note To Joe Stiglitz: Banks Originate, Not Intermediate (Steve Keen)
BIS Says Central Banks’ Stimulus Strategy Is Based On A False Premise (AEP)
One Map That Explains the Dangerous Saudi-Iranian Conflict (Intercept)
Massive US Tax Grab Coming in 2016 at All Levels of Government (FRA)
Deal Paves Way For Thousands Of Cuban Immigrants Heading To US (CNN)
EU Fails to Defuse Passport-Free Clash in Northern Europe (BBG)
Drop In Refugees Due to Weather, Not Turkey’s Crackdown, Germany Says (Reuters)