In last year’s fourth quarter, the annual Wall Street-funded propaganda blitz was in its highest ever gear; coupled, of course, with the most vicious, blatant market manipulation in recorded history. Consequently, the “cover” provided by strong equity gains caused the entire MSM community – and sadly, much of the alternative media – to figuratively “close up shop” during the holiday season. Thank god for Zero Hedge and a handful of others – like the Miles Franklin Blog, of course – kept on plugging away; as the reality of rising global debt, unemployment, inflation and unrest was as virulent as ever. It was only a matter of time before these issues again made headline news; and in this case, all it took was the turning of the calendar to release their fury. We anticipated so much in our “2014 predictions,” which sadly, have in several instances already come to fruition.
Just four weeks into the New Year, global financial markets are in chaos; particularly in nations with collapsing currencies, yielding the potential for near-term hyperinflations. Thailand, the Ukraine, Venezuela and Argentina are receiving the most media attention; but rest assured, the steep currency declines we anticipated are wreaking havoc the world round – and shortly, will be infecting as many “first world” nations as “third world” ones. And when they do, life as we have known it for generations will permanently change.
Part and parcel to the surge in market volatility – as economic reality sets in – is the re-awakening of global media coverage. Consequently, our daily “housekeeping” before “thought pieces” has become more time-consuming. Not only are we attempting to give “big picture” commentary to digest; but with the world’s financial markets changing so rapidly, it is important to relay real-time information as well. Currently, the “horrible headlines meter” is pegged off the scale; and thus, I’ll try to be as concise as possible in describing the day’s key events.
Let’s start with yesterday’s ridiculous late day PM “crybaby attack”; catalyzed by absolutely NOTHING except Cartel fear of major breakouts ahead of today’s COMEX options expirations, tonight’s State of the Union address, and tomorrow’s FOMC statement. As you can see, the Cartel is utterly terrified of silver breaking above its seven-month “line in the sand” at $20/oz.; while equally obviously, it fears a large amount of $1,250/oz. gold calls closing today’s February contract significantly “in the money.” Remember, there are still 125,000 ounces of gold standing for delivery of the December contract; and with 11 million ounces of open interest on the expiring February contract, the odds that the measly 375,000 registered inventory ounces will be enough to prevent a month-end default are extremely low.
Next, how about an update on the global economy – starting with “updates” on two recent pieces? The first, regarding how amazed I was to see AFC championship tickets priced at the same level as those from Opening Day, was validated by this week’s flood of commentary about plunging Super Bowl ticket prices. Below is a chart of the trend in ticket prices over the past four years – which in our view, perfectly mirrors the global economy; as this year’s secondary market ticket pricing is the lowest since the 2002 Super Bowl – you know, right after 9/11, when people were scared to fly. As for the second update, to yesterday’s piece about the Girl Scouts of America pushing scout leaders with massive cookie sale demands; lo and behold, it turns out 25% of its “HQ” personnel in New York City were just laid off, as the relentless recession that started five years ago worsens with each passing day.
Yesterday, we saw an incredible 11% sequential decline in new U.S. home sales – followed up by today’s Case-Shiller real estate index, which depicted its first monthly decline in more than a year. In other words, the dramatic impact of (modestly) higher rates on a heavily leveraged, accounting-gimmick-masked housing bubble is returning to the fore. To wit, this is the TOP STORY on Yahoo! Finance this morning – about surging underwater mortgages – which we assure you, will become a MAJOR issue in the coming months. And oh yeah, durable goods orders were reported this morning to have plunged 4.3% in December, compared to “expectations” of a 1.6% increase. You know, the type of things that destroyed the freely-traded markets of yesteryear. By the way, take a look at the chart below, and tell me if you spot the relentlessly hyped U.S. “recovery.”
For that matter, look at the two below charts of the European recovery – updated yesterday for current conditions. The first depicts all-time high French unemployment – incredibly, 67% above the pre-2008 crisis levels; and the second, the astonishing decline in 4Q 2013 European corporate earnings estimates in just the past six weeks, from expectations of a 9% year-over-year increase in early December, to a big old goose egg today! And for the record, if we do see any “improvement” in Greek GDP this year, it’s because they just copied the U.S. and Chinese government propagandists in restating their definition of GDP to make it look stronger.
Last but not least, we have last night’s earnings report from Apple; i.e., the “face of global retail demand.” I may not be a technology analyst, but I know a thing or two about retail stocks from my decade as a buy and sell-side analyst. Below is what I wrote after Apple’s devastating 2Q13 earnings miss in September; validated 100% by yesterday’s even worse 4Q miss, when just 51 million iPhones were sold compared to “expectations” closer to 55 million. Not to mention, forward revenue guidance was dramatically reduced; partly due to the market saturation noted below and partly the weak global economy. And BTW, note how what I wrote then about falling iPhone prices describes exactly the gist of yesterday’s “Need vs. Want, Part II.” For the record, Apple stock is down $42/share today; but don’t worry, the PPT will not allow the Dow to fall ahead of the (pitiful) State of the Union address.
FYI, the Apple “glamour trade” is long OVER; as it is now just a simple retail stock, whose P/E multiple will eventually trade down to mid-single digits. Heck, when I bought my Samsung Galaxy S3 just one year ago, I was forced to pay nearly $300; but now, you can get one with “no money down” and payments over multiple years. Sorry, folks, the GLOBAL smart phone market is saturated; and thus, yet another “savior” business is DEAD, DEAD, DEAD.
–Miles Franklin, September12, 2013
Or, for that matter, gold and silver to trade materially above the key round numbers of $1,250/oz. and $19.50/oz., respectively (the former representing gold’s two-month “line in the sand” ahead of this afternoon’s COMEX options expiration; which, “coincidentally,” represent major strike prices. Given the past two days’ horrific economic data, how can any other explanation than official intervention is utilized to explain today’s waterfall declines at the 10:00 AM “key attack time” – to exactly these key strike price levels? Oh well, let’s just see what happens tomorrow, when the Fed must decide whether or not to “taper” amidst a collapsing global economic and market environment!
Which brings me to today’s discussion of said State of the Union speech; in which, pitifully, Obama’s “handlers” have decided to focused on America’s widening wealth inequality. Quite apropos, just a day after Jamie Dimon was awarded a 74% pay raise after JP Morgan’s historic year of convictions related to defrauding the public; not to mention, this incredible hotel bill from this week’s Davos Economic Summit, where billionaires also discussed their “worries” about wealth inequality. FYI, when reading this bill, consider that the Swiss Franc/U.S. dollar exchange rate is near parity.
For those not watching the polls, Obama’s approval rating hit an all-time low this week (see below). In other words, all’s not well on many fronts, despite what he will undoubtedly purport. And for those that don’t think TPTB fear rising gold prices, take a look at the last time his approval dropped this low; yes, in August 2011, when “dollar-priced gold” hit an all-time high – amidst the S&P downgrade and spiraling U.S. debt problems. Since then, America has added more than $3 trillion of debt, S&P has been sued by the government, and real employment has soared to Depression-era levels. But amazingly, the stock market is much higher and gold much lower; care of the unprecedented money printing, market manipulation and propaganda campaign put into place back then; which sadly, appears to have reached the end of its rope.
Even more pathetically, Obama believes he will “win votes” via last night’s Executive Order mandating an increased minimum wage – to $10.10/hour – for future Federal contracts. In other words, the nation’s least productive workers will get a raise, funded by the rest of us – via future inflation, as the money to pay for this raise will be printed. Of course, $10.10 per hour won’t feed a typical family either; and frankly, is flat out insulting to the concept of inequality reduction – insomuch as the world’s richest 85 people are now cumulatively wealthier than the 3.5 billion poorest.
For a variety of reasons – many of them structural and irreversible – real wages have been declining for four decades. Sadly, the average food stamp recipient is now of good health and working age; and for those lucky enough to work for such slave wages, not only did the average work week just hit an all-time high, but the ratio of profits to employees did as well – meaning more is being accomplished with less; whilst the ratio of wages to profits just hit an all-time low!
Of course, the giant pink elephant in the room is the fact that the most significant “inequality engine” is the Central bank printing presses that create inflation for all, but profits for just “the 1%” owning it; particularly when Wall Street lobbyists have been generating exponentially increasing benefits for their clients, paid for by the unsuspecting “99%.” Worse yet, even when Wall Street loses this free money, it gets bailed out with TARP, ZIRP, QE and other government interventions – again, financed by the eternally inflation-generating printing presses of Central bankers.
And thus, if you can stomach watching the State of the Union address tonight (I can’t), consider that essentially every objective metric depicts a decline of the “world’s greatest nation” to all-time lows – particularly since its current President took office. Not that Obama is any more than a cog in a broken piece of machinery, of course; as frankly, said decline started in August 1971, when the abandonment of the gold standard enabled America’s balance sheet to morph from the best in global history to the worst in just four decades. Today, the Ponzi scheme that is the global fiat currency regime is in its final, hyper-destructive phases; and thus, I can only imagine the horrific topics that will be described when America’s next President delivers the State of the Union speech. By then, of course, if you haven’t protected yourself against the ramifications of these issues, you will likely have been financially destroyed.