It’s Wednesday morning, and the commodity carnage is accelerating – to the point that the CRB commodity index’s “dead cat bounce” from the 40-year low of 185 it briefly touched in late August is on the verge of being taken out. Undoubtedly aided by the newly formed, but clearly overmatched, “oil, copper, and zinc PPT’s” – the latter of which was blatantly deployed on October 9th to “save” Glencore – the CRB peaked that very day, at 204, before plunging back to 189 this morning, en route to points much, much lower. As discussed in Tuesday’s “direst prediction of all – revisited – far direr than ever,” the historic commodity oversupply I warned of 14 months ago is accelerating, as global economic activity has nearly ground to a halt. As are the horrifying political, economic, and social ramifications – particularly regarding the decidedly not “transitory” plunge in crude oil; i.e., the world’s top revenue producer.
Last week’s dramatic increase in Saudi Arabia’s “discount” to global oil prices – following a downgrade in its credit rating, as rating agencies hone in on Saudi’s massive, exploding budget deficits – should tell you all you need to know about how destructive the upcoming “oil price wars” will be; in many ways, just as destructive as the “final currency war” has been, and will continue to be, as Central banks aggressively destroy what’s left of their nations’ “money.” Which, by the way, is on the verge of a massive “surge” – to quote America’s former Iraqi military strategy – given the ECB’s promise of a “big cut” in its already negative interest rates next month.
And oh yeah, the PBOC having just completed its seventh straight day of Yuan devaluations (not un-coincidentally, amidst this weekend’s horrifying Chinese trade data), as it expands what I deemed this summer, the “cataclysmic financial big bang to end all big bangs”; in taking said “final currency war” nuclear. And seeing China’s Containerized Freight Index hit an all-time low yesterday, I couldn’t be surer that these horrifying trends are ready to go parabolic. Throw in last night’s massive API crude inventory build – which not only was much higher than anticipated, but represented the seventh straight weekly increase, and you can see why late August’s WTI crude low of $37.80/bbl is in eminent danger of being revisited – particularly now that as the aforementioned “oil PPT’s” $44/bbl “line in the sand,” which has served as technical support for the past two months, has been decidedly breached.
And now that essentially all the profitable “hedges” put on by collapsing shale oil companies last year have expired – as said “transitory” oil price increase is now more than a year old – “Economic Mother Nature” is on the verge of taking her revenge on the manipulators that sought to usurp her immutable laws with money printing, market manipulation, and propaganda; as just in the U.S. alone, hundreds of shale producers – financed by $500 billion of junk bonds and “leveraged loans,” which are plunging as we speak – are likely to go bankrupt, taking countless investors and “private equity” funds with them.
Yesterday alone, the OECD, or Organization for Economic Co-operation and Development, warned of a “deeply concerning” slowdown in global trade and economic growth; whilst credit rating agency Moody’s ominously warned that “global economic growth will not support significant reductions in government debt or increases in interest rates by major central banks. Consequently, authorities lack the ample fiscal and monetary policy buffers usually created at the top of the business cycle, leaving growth and global financial stability particularly vulnerable to shocks for an extended period of time.” Translation: “The global economy is crashing – and since Central banks have already taken interest rates to zero (and in some cases, lower); and already levered their balance sheets exponentially with QE; they have no remaining ammunition to prevent the ‘unstoppable tsunami of reality’ from washing over them.”
And by the way, for those that believe the Fed will actually “raise rates” next month – despite having never promised such, whilst admitting it remains, as always, “data dependent” – consider that yesterday’s U.S. 10-year Treasury bond auction was a rousing success, as everyone from individual investors to global Central banks came charging in to capitalize on the “jawboning gift” the Fed delivered last month – as it inches ever closer to its QE4 destiny. And now that an incredible four of five of the FOMC’s 2016 regional policy-making voters will be former Goldman Sachs employees – following yesterday’s appointment of Neel Kashkari as head of the Minneapolis Fed – the odds of such “accelerated monetary easing” have gone equally parabolic.
Rounding out yesterday’s economic carnage, Gallup’s U.S. economic confidence remained mired at multi-year lows, well below zero; whilst bellwether retailer Macy’s dramatically missed its revenue estimates and slashed forward guidance; as fast food workers in 270 cities struck against unfairly low wages – recent, government-mandated “minimum wage increases” notwithstanding. And this, whilst the world’s number one fast food employer, McDonalds, saw its debt rating slashed to barely above junk – after having announced that instead of paying its employees, it plans to compromise its balance sheet with massive increases in its share buyback and dividend program, by issuing $10 billion of debt! I mean seriously, you simply can’t make this stuff up!
And by the way, given that essentially all the so-called “jobs” created in October’s bogus NFP report – that is, those not created by the fabricated “birth-death model” – were the very part-time, minimum wage paying “gigs” at serial employee abusers like McDonalds, it shouldn’t surprise you that, for that first time in the 43 years since the national “General Social Survey” was published, older adults are more “miserable” than younger ones. Oh, don’t worry. Those “young-uns” taking out trillions of soon-to-be-defaulted, government sponsored student loans because no jobs are available; who can’t even get jobs at McDonald’s because savings-less senior citizens are taking them; causing them to live at home at record rates; forego home purchases; and stall family formation, will shortly be forced to take the full brunt of coping with the economic morass – and demographic nightmare – the U.S., and global, economy will be for years to come.
And then there’s the social and political nightmares said economic collapse is catalyzing – per what I wrote in last year’s “crashing oil prices portend unspeakable horrors.” To that end, the Greek crisis – which given yesterday’s delay of a €2 billion “bailout” due to Greece’s inability to complete the “reforms” the Troika demanded, is far from over – has been the unwitting “poster child.” To that end, is anyone even aware that on Monday, the Catalan government – fresh from September’s “Catalan-astrophe,” when a pro-secession government was elected – took the first Parliamentary step towards seceding from Spain by the end of 2016? Which, I might add, would take nearly a quarter of Spain’s GDP and tax revenues with it. Which, putting such a blow into perspective, is nearly double California’s 14% contribution to U.S. GDP, and triple New York’s 8%.
Moreover, is anyone aware that just yesterday, the nation with the second highest non-financial debt/GDP ratio on the planet, Portugal – which just happens to be a “PIIG” as well – had its government overthrown by a coalition of Communist and radical left socialists, just eleven days after its President (Portugal has a President and a Prime Minister) warned they were too dangerous for office? To that end, consider the chaos that will ensue, as Prime Minister Pedro Coelho has been forced to resign a mere six weeks after winning a national election, as a coalition of “anti-austerity” socialists, led by incoming Prime Minister Antonia Costa, have dramatically usurped his power. And while they initially claim to not have an interest in a “Portu-gexit” – quite obviously, to ensure said anti-Coelho coalition would get enough votes – if you believe that, I have a bridge in Brooklyn to sell you.
Ah, and then there’s the “markets,” where maniacal, unprecedented, relentless manipulation of “last to go” markets like paper gold and silver and the “Dow Jones Propaganda Average” – such as yesterday’s prototypical equity “dead ringer” algorithm and comically redundant COMEX-opening and “cap of last resort” attacks; as well as this morning’s 547th “2:15 AM” EST Precious Metals paper raid of the past 624 trading days, “Cartel Herald” algorithm et al – mask “Economic Mother Nature’s” dramatic advancement in nearly all other arenas.
To that end, “high-yield” credit markets are notching new multi-year lows; commodities are in all-out freefall, and the “surging dollar” – i.e., collapsing currency markets – portend not only surging worldwide import inflation and heightened currency wars – but social, political, and even military instability. Heck, the U.S. just announced it is sending “boots on the ground” to Syria – to nary a peep from the U.S. media. Or, for that matter, the dozen or so Republican Presidential hopefuls in last night’s nationally-televised debate! Emerging market capital flight is accelerating; “private equity” valuations are plunging – portending massive write-offs and lay-offs in the coming months and years; and Freddie Mac announced its first quarterly loss since being nationalized, suggesting the next wave of printing press financed “bailouts” are on the way.
Heck, even the PPT’s painfully obvious presence has become front and center news – as believe it or not, amidst the past two months’ blatantly orchestrated equity rally, taking the NASDAQ up an incredible 20% amidst a veritable blizzard of “horrible headlines,” its “advance/decline line – i.e., advancing stocks minus declining stocks – is negative. In other words, the PPT’s focus on equity futures in the market capitalization weighted NASDAQ (and S&P 500) have made its manipulative impact that much more transparent – as whilst most stocks are declining, a handful of mega-large caps have been taken skyward by the PPT’s relentless equity monetization. Which, in turn, is why “hedge bombs” – I mean, hedge funds – continue to miserably underperform the market – for the seventh straight year. And incredibly, people still give the “geniuses” that run them 1%-2% annual “management fees,” and 20% of all the funds’ profits!
As for Precious Metals, such incessant price suppression is “only making it worse” for the soon-to-be-deposed “New York Gold Pool”; whose unfathomably intense, unrelenting scheme has caused global physical demand to surge to record levels; whilst above-ground inventories rapidly vanish, as the outlook for the decimated mining industry – for both Precious and base metals – has never been worse. And again, I cannot emphasize enough that roughly half the world’s silver production is the byproduct of copper, lead, and zinc mines; which, as their prices inexorably decline amidst one of the worst oversupply situations in memory, will be shutting down en masse. In other words, making the estimated 25%-50% silver production decline discussed in last year’s “Miles Franklin All-Star Silver Panel Webinar” appear eminently possible.
To that end, Steve St. Angelo’s latest article, “biggest silver supply losers of 2015,” highlights how not only are the world’s five largest silver-producing countries’ production down 6% year-over-year for the first eight months of 2015, but nations not in the top five are down substantially as well – such as Canada, whose year-to-date silver production is down a whopping 32%! And now that U.S. Mint silver sales are picking up anew, as paper prices have been decimated back down to the mid-$14s level that sparked this summer’s dramatic physical shortages, the “Achilles Heel” that is the tiny physical silver market may well be poised for another Cartel-busting demand surge. Which is why, as global “horrible headlines” go increasingly parabolic, the time is NOW to protect yourself, with the only assets to have proven immune to Central bank money printing throughout history.
And, to that end, if you do decide to act, we humbly ask you to give Miles Franklin a call at 800-822-8080 – and give us a chance to earn your business. And, as always, you can contact me via email, at [email protected].