Have mercy! I’m starting this article late Friday afternoon, to be finished tomorrow morning (I’m leaving shortly, to take Sylvie to a special outdoor showing of The Force Awakens). And I kid you not, since my must listen Audioblog from yesterday morning, “Brexit II – Coming November,” I have gathered a mind-numbing eight pages of “PM-bullish, everything else bearish” headlines – ranging from the political, to the economic, to the monetary. Each, in and of itself, is “article-worthy”; and the scariest part is, eight-page “horrible headline” logs will shortly become commonplace – as the collapse of history’s largest, most destructive fiat Ponzi scheme unfolds. Frankly, I don’t know where to start – although trust me, today’s “end game” couldn’t be more obvious, as it’s not often I get to eviscerate one of the history’s most evil corporations. Which, I might add, I’m proud to say I was offered a job at during my Wall Street heyday in 1999… and refused.
Politically speaking, it couldn’t be more obvious that the walls are rapidly closing in on Hillary Clinton – which is exactly why I taped yesterday’s unplanned Audioblog. My sense is that now that the election “homestretch” is starting, everything from her scruples, to her scandals, to her health will be under siege. And trust me, it will NOT be good for financial markets – which is probably why David Stockman ranks the realization that she, and the status quo, will likely lose November’s election, as his most likely catalyst of an historic market crash, in September or October.
And it’s not just here where political turmoil is exploding; as the Italian constitutional reform referendum, which I will shortly be devoting a separate article to, is rapidly approaching, in either October or November. I strongly believe, like Brexit, that the Italian people will use it as a “vote of no confidence” in Matteo Renzi’s leadership – throwing the Italian political scene, too, into chaos, when he resigns as promised. Let alone, what will happen in Spain when Catalonia moves forward with seceding – as its Parliament officially voted to do last month; or as the world looks ahead to 2017, when both Angela Merkel in Germany, and Francois Hollande in France, will likely be resoundingly defeated by anti-EU, and anti-Euro, leadership.
Meanwhile, in Brazil, where the Olympics were only pulled off because the Olympic village was guarded by tens of thousands of soldiers, Dilma Rousseff was officially impeached yesterday. In Turkey, Erdogan’s post-coup – or fake coup – power grab will unquestionably be a major source of geopolitical instability; while in Venezuela and Nigeria, bloody revolutions are all but certain. Not to mention Greece, which per this horrifying article, is on the brink of collapse – with close to $700 billion of debt, half of it “off balance sheet,” waiting to imminently default. Heck, there may not even be a “Troika” to administer a third – or is it fourth – “bail out” next year!
In the “Land of the Setting Sun,” word has it that Haruhiko Kuroda, Chairman of the imploding Bank of Japan, is himself is on the block (although personally, I’d prefer Hara-Kari); which is probably why he’ll likely “go for broke” with unlimited helicopter money and deeply negative interest rates by year-end. After which, both he and the “patron saint” of Abenomics will likely be unceremoniously kicked out of office – in Shinzo Abe’s case, for the second time. As for China, this weekend’s G-20 meeting, which Jim Rickards deems the beginning of the end of dollar hegemony, given that it directly proceeds Yuan inclusion in the IMF’s strategic currency baskey, there’s no telling what the future economic leadership of the world will do. At some point, China will surely announce its true gold reserves, but this weekend is probably a long shot.
Economically, things literally couldn’t be worse. I’ll get to today’s disaster of an NFP jobs report momentarily – which, as usual, was much worse than even the superficially weak headlines numbers. In my view, the +151,000 jobs reported was strategically selected by the BLS/Fed/Obama Administration to be just weak enough to prevent the Fed from carrying through its LIE about potentially raising rates, but just strong enough for them to “save face.” At least, that’s what they think will be the perception – as opposed to the reality of people realizing the BLS/Fed/Obama Administration were in fact lying about the “recovering” economy – and “imminent rate hikes”; and that in fact, the data was horrifyingly weak.
But before I go there, I must re-emphasize just how bad the “other” U.S. economic data was this week, such as collapsing August auto sales; an imploding, sub-50 ISM Manufacturing Index; much weaker than expected construction spending; factory orders down 10% year-over-year, excluding U.S. government “defense” orders; plummeting productivity; surging bond defaults; massive tax increase announcements; the EU’s €13 billion tax grab against Apple, which will undoubtedly reduce already plunging corporate earnings; and across-the-board weak – in most cases, recessionary – regional activity indices. To that end, just how many more charts demonstrating how economic activity has “never been this week outside of a recession” – like this one – before the “investment community” gets it?
Throw in Thursday’s bankruptcy of the world’s eighth largest shipping company – which already, is reaking havoc on global logistics. Plus, relentless data depicting exploding healthcare costs (no Hillary, pharmaceutical price controls will NOT make things better), and soon-to-fail insurance companies and pension funds (thanks, NIRP!); as well as collapsing real estate bubbles from the four corners of the planet, and you can see just how bad things are getting – particularly now that commodities, by far the most important global business, are plunging anew. To that end, how hilarious were today’s latest “oil PPT” generated, nonsensical headlines of how Putin now favors the “production freeze” that will NEVER happen, simply to “stabilize” – even if for a few days – oil’s relentless plunge toward its equilibrium value, well below $35/bbl?
Putting the icing on the spoilt economic “cake,” mere hours before the “most important jobs report ever,” the world’s largest industrial equipment manufacturer, Caterpillar, announced 2,000 layoffs – whilst the world’s largest retailer, Walmart, announced 7,000. Which is why, with each passing month of fabricated BLS “jobs” numbers – in a world where economic activity is not only the worst of our lifetimes, but worsening, with each passing day, the Fed’s – and Obama Administrations’ – claims of “recovery” have become increasingly laughable. And by “worst of our lifetimes,” I mean that not only is global trade quantifiably that bad, but the few areas that haven’t yet had a 2008-like plunge into the abyss will likely do so imminently, due to the gargantuan level of debt and overcapacity – compared to both the Great Depression and “Great Recession” – caused by the “Great Deformation” of 21st Century Central bank lunacy.
And by “Central bank lunacy,” I mean this week alone, we’ve seen the Bank of Japan all but guarantee the world’s largest, most destructive “helicopter money” drop at its upcoming September 21st meeting (“coincidentally,” the day of the Fed’s next meeting). On September 15th, we’ll see if the Bank of England is ready to follow up last month’s promise of another rate cut by year end, this time, to the “zero bound” (although I doubt they’ll increase QE again, as investors won’t currently sell gilts at positive yields, knowing full well negative yields are imminent.
Meanwhile, this week’s ECB meeting, on September 8th, may have a few surprises of its own – particularly in light of the “trial balloon” that emerged yesterday, of how the ECB is considering joining the Bank of Japan in outright QE lunacy, by monetizing stocks. And then there’s my personal wildcard, the Bank of Canada, who may well surprise everyone this Wednesday by “unexpectedly” cutting rates – particularly if the “oil PPT” can’t capitalize on its latest short-squeeze targeted “production freeze” propaganda. To that end, December 2015’s “NIRP vs. Gold, Pt. V” focused on my then prediction that negative interest rates would shortly escape Europe, due to various Bank of Canada governors loudly endorsing it. As it turns out, Japan beat them to the punch, in “unexpectedly” launching NIRP two months later. However, after eight more months of Canadian economic misery – compounded by this summer’s Vancouver real estate crash – my “spider senses” tell me Canadian NIRP is rapidly approaching, a prelude to what will inevitably happen here.
Which brings me to the grand-daddy of Central bank idiocy, cluelessness, and destruction, the Federal Reserve. Just one week ago, Janet Yellen’s uber-dovish comments were not perceived as “hawkishly” as expected, so Vice Chairman Stanley Fischer was trotted out to pretend it was – and equally importantly, smash gold and silver prices back down, amidst ultra-thin “summer doldrums” trading conditions. As it turns out, the following day’s Jackson Hole speakers were so blindingly dovish, you’d probably have required sunglasses to see them – including those from the Fed itself; like Dennis Lockhardt of the Atlanta Fed, who essentially said the Fed could never unwind its balance sheet; Charles Evans of the Chicago Fed, who said that due to weak economic growth, zero bound rates are here to stay; and John Williams of the San Francisco Fed, who not only endorsed negative interest rates, but said the FOMC should raise its arbitrary 2% “inflation target.” Heck, even the world’s largest, most mainstream investors understand the game by now, as highlighted by this timeless gem from Bill Gross, one of the world’s largest fixed income investors.
“(The world’s leading) central bankers, all have mastered the art of market manipulation…(which Ms. Yellen, and other central bankers) would plead guilty to over a cocktail at Jackson Hole or any other get together of PhD economists who have lost their way.”
Anyhow, Yellen’s suggestion last Friday that the economy is “nearing the Fed’s employment and inflation goals” – thus, yielding a “strengthening of the rate hike case in recent months,” were only able to push September “rate hike odds” up to 35% – but only after Stanley Fischer’s damage control comments, after the “market” had initially laughed her blatant lies off. Irrespective, both Yellen and Fischer, as always, claimed to be “data dependent” (whatever that means), which was taken to believe that this week’s NFP jobs report would be a de facto “referendum” on the Fed’s September 21st policy decision. This, despite the increasingly common knowledge that the government can, and will, print whatever number it wants – no matter how bad underlying economic activity is, or how bad the report’s non-headline details are.
To that end, the 151,000 headline number was bad enough – particularly, from the perspective of a central bank trying to purport “full employment,” in a nation whose population growth is nearly twice that amount. Moreover, said details were far worse, featuring essentially zero wage growth, a declining work week, and not a single goods-producing or construction job. Throw in 106,000 fictional “birth-death” jobs, a slew of nonsensical “seasonal adjustments,” and a job mix dominated by government and minimum wage paying sectors, and it couldn’t be clearer how miserable this “job” report is. Which is probably why September “rate hike odds” plunged to nearly 20%, ending the Fed’s latest “imminent rate hike” propaganda at one fell swoop, just as I predicted. To that end, my very strong belief is that by the end of 2016, not only will “market participants” – stop worrying about the next rate hike, but their focus will reverse 180 degrees, toward speculation of the next rate cut. In the words of Zero Hedge’s Tyler Durden,
”if Yellen hikes into an environment in which wages are falling, it will be nothing less than the Fed’s attempt to push the economy into recession.”
Just as last Friday, when the Fed’s miscalculation – of thinking it could disguise its uber-dovishness with one ambiguously “hawkish” comment – Precious Metal prices surged, even after the Cartel, incredibly, smashed gold $10/oz the second this mind blowing weak report was published. In response, just like Stanley Fischer’s “plan B” CNBC interview last week, the Cartel trotted out Goldman Sachs’ Chief Economist, Jan Hatzius, to raise his September rate hike odds from 40% to 55%; a carefully chosen percentage to keep Precious Metal traders wary – who cumulatively, seem to have forgotten PM prices bottomed the very day the Fed hike rates last December.
Yes, Jan Hatzius, the direct successor of Bill Dudley as Goldman’s Chief Economist – who is now President of the New York Federal Reserve; i.e., the world’s second most powerful central banker. In other words, Hatzius’ coincidentally timed – and in true fed speak manner, ambiguous, while at the same time threatening – comments, were unquestionably released to prevent traders from believing “the bottom” is in on this month’s summer doldrums PM attacks. Not to mention, to attempt to buy a few more weeks of can-kicking stability, as the powers that be desperately try to hold things together for Hillary Clinton, who must win to not only save their jobs, but control over financial markets and political power. Per my “Brexit II – Coming, November 8th” Audioblog, I believe they will miserably lose on both counts – but that won’t stop them from trying, like trapped rats on a sinking ship.
Moreover, for those that actually believe Goldman’s analysts are any smarter than the rest of the world’s financial community, here’s a sampling of “hapless Hatzius’” track record of predicting rate hikes – at a firm that was stopped out of its February “short gold” recommendation within weeks…
November 23, 2015 – “Goldman forecasts four rate hikes next year”
February 3, 2016 – “Goldman says Federal Reserve will only hike three times this year”
May 5, 2016 – “Goldman gives up on June rate hike”
June 13, 2016 – “Decent chance for July rate hike, says Goldman’s Jan Hatzius”
July 8, 2016 – “Goldman now sees two-thirds chance of a rate hike in 2016”
In other words, Hatzius is as clueless as he is compromised, in his de facto roles as the Fed’s – and by proxy, the Cartel’s – Chief Wall Street Propagandist. Which is probably why, despite every imaginable Cartel “weapon” being unleashed, not only did gold close $13/oz higher – and $23/oz above yesterday morning’s post COMEX opening attack levels, at $1,325/oz, but silver surged all the way to $19.50/oz, versus $18.55/oz just 24 hours prior.
Now that said “doldrums” are over – with an expected surge in “PM bullish, everything-else-bullish” headlines, unlike any in modern times – the odds that the Cartel, and “henchman” like Stanley Fischer and Jan Hatzius, are about to be exposed, have never been higher. As are the odds that the “Big One,” in which control over public perception and financial markets are lost, commences. At which point, either you will have already protected yourself from what’s coming, or have forever wasted that “golden” opportunity.