First, let’s start with the blindingly obvious; i.e., the “injury” noted above. Which is increasingly indisputable clarity of a world hopelessly mired in deep expanding recession. What we witnessed in 2009-14 – you know the “recovery” in which global debt, inflation and unemployment surged – was the “eye” of a Cat-5 economic hurricane caused by the world’s printing presses dating to the “Big Bang” of August 1971. And now, the powerful “back end” of the storm is here; which until the Ides of October arrived, was “2008, with one temporary exception.”
With the U.S. 10-year Treasury yield down to 2.18% this morning, even MSM cheerleaders like CNBC are on the verge of throwing in the towel on “recovery” propaganda in hopes of salvaging whatever ratings they still have. The “most damning proof yet of QE failure” – i.e., plunging rates despite said “recovery” is now completely understood worldwide. Thus, from this day forward, anyone that even intimates economic improvement will be laughed at. Even Obama’s most indoctrinated speechwriters will have difficulty crafting the Democrats’ strategy to maintain its slim Senate majority next month. Then again, this time around, no one seems to care who wins the Senate – as diehard Democrats and Republicans alike are starting to realize America has become a nation of “one-party Fascism,” in which it matters not who wins. A year ago, we wrote of how voters simply choose candidates promising the most entitlements. However, America’s outlook has since deteriorated so badly, I don’t think most could care less either way. Our guess is we have a record low voter turnout; and no matter who wins, a President with a kindergarten Congress too focused on future re-election to even debate critical issues.
Back to the financial world, yesterday’s pitiful PPT efforts to reverse the stock market’s plunge failed miserably – with the Dow plummeting 200 points in the day’s last hour and the NASDAQ continuing its horrific, well-deserved meltdown. Highlighting what we wrote in “TPTB are losing control of paper markets,” we witnessed miserably failed “Dead Ringer” and “Hail Mary” attempts, as well as repeated attempts to push precious metals down. They’re at it again this morning; but yet again, PMs are higher whilst global equities, bond yields, commodities and most currencies are lower. The news couldn’t be worse, with Chinese auto sales growth down to their slowest rate in 19 months; Eurozone September Industrial Production down 1.8%; Germany’s ZEW business sentiment survey down for the 10th straight month to negative 3.6; the IMF warning of “elevated financial and liquidity stability risks”; the commencement of EU hearings regarding the German Constitutional Court’s objections to QE; the U.S. small business sentiment index down 1%; and even the world’s greatest book-cooker, JP Morgan missing earnings! And for the icing on the cake, Italy’s rising Five-Star political party – controlling roughly one quarter of Italy’s Parliament – has introduced legislation for Italy to secede from the Euro currency. But have no fear; as the PPT, in one of the most brazen acts of desperation even I can recall, just came in and juiced Dow Futures nearly 100 points higher – for absolutely ZERO reason, other than to try and prevent today from morphing into “Black Tuesday.” Simultaneously, gold was “Cartel Heralded” at the COMEX opening, in TPTB’s all-out attempt to prevent a third-straight violation of “Cartel Rule #1” – i.e., “thou shalt not allow PMs to surge, whilst the Dow plunges.” However, the day is still young – and the powerfully negative forces strengthening with each passing hour.
No doubt, said MSM cheerleaders will be spinning the explosion of press regarding the possibility of further Fed easing as positive for stocks; as according to them, all news is good news. In other words, if the economy is deemed to be “recovering,” buy stocks; and if not, buy them more as the Fed will undoubtedly print more money and “save the day.” By now, such logic has been proven wrong six ways to Sunday; as not only is the real economy dying a slow painful death, but the Fed’s machinations have made it exponentially worse. And now that such “deformation” has yielded unprecedented bubble valuations, pushing on a string can no longer create artificial “wealth effects” for the “1%.” Sure, they’ll eventually get their hyperinflation – rendering all such problems moot as chaos spreads. But until then, we surely will see “deflation”; not in our cost of living, of course, but speculative asset prices.
Ah, “tapering” – we hardly knew ya. Incredible, how just a few weeks of falling stocks and the MSM’s focus has turned 180 degrees – from potential Fed rates hikes some “considerable time” in the future to the reality of “QE to Infinity”; and, gasp, the real possibility of a forthcoming QE4 announcement. We’ve long pounded the table that the Fed could care less about the economy – but instead, stock market gains for the “1%,” enabling “recovery” propaganda. And now that stocks are falling – notwithstanding the aforementioned PPT activity – the FOMC will be thinking long and hard of its upcoming October 29th “word cloud,” six days before the mid-term election. Again, we cannot emphasize enough that at its September 17th meeting, the FOMC said absolutely “Nothing!” hawkish; and that was before October’s economic and financial market meltdown. And thus, we could not be more definite that the “Countdown to the Yellen Reversal” has commenced – potentially, far sooner than even the most dovish doves might imagine.
Let’s forget for a second that a whopping two people on the entire continent have contracted Ebola, or that respected doctors have spoken emphatically of how low the risks of an Ebola pandemic are. I mean, let’s face it. In today’s gossip-focused, fear-mongering media world, no good “story” can be wasted – or opportunity to spend taxpayer dollars on spectacle. Thus, yesterday’s “quarantining” of a flight at Logan Airport, or highly-publicized Marine “Ebola training exercise.” To us, it sounds like a bunch of election-seeking politicians have seen the movie “Contagion” a few too many times – or perhaps, read Steven King’s “The Stand.”
Anyhow, reality or not, the “Ebola scare” is rapidly causing the same kind of “flight fear” as the post-9/11 environment – when nearly everyone with non-essential flight plans cancelled them. Diana and I – who coincidentally, started dating September 9th, 2011 – cancelled a sky-diving reservation later that month, given the morbid fear that crept into our consciousness. But as it turned out, the 2001 “terrorist scare” turned out to be nothing – “shoe bomber” propaganda notwithstanding; just as Ebola likely will today. And even if a handful of others contract it, the impact on air travel may well be significant at the worst possible time for a rapidly collapsing economy. Just look at the damage yesterday’s airline stock plunge caused, and tell us what you think the market is discounting. Ominously, the airlines index is screaming the same “DEPRESSION” signal as countless other key sectors from homebuilding, to building materials, technology, consumer discretionary and energy. Frankly, the only group that hasn’t yet collapsed is the Fed’s “pet” financial sector. But have faith, there will be justice – and that right soon!
And speaking of “justice,” we have NEVER been more confident in the prospects for precious metals to recapture their role as the “once and future kings’ of money. The “pent-up” demand in Western markets is unprecedented in global history – and once Whirlybird Janet confirms “QE to Infinity,” the astounding amount of Western PM under-investment will be a sight to behold!