Jueves 22/10/15 Indice del precio de las casas, indicadores

[Fenix]

14:58 El oro se enfrenta a resistencia clave
Análisis técnico Citi
El oro marcó un mínimo el 20 de julio de 1073 dólares no visto desde principios de 2010 y desde entonces está rebotando. Después de subir más del 8%, el precio corrigió para probar el retroceso del 76,4% ($ 1,096) de ese rally (ver recuadro).

Desde entonces, el precio se ha movido otro 8% al alza y ahora se enfrenta a la resistencia de la media móvil de 55 semanas en 1.184, así como la línea de tendencia de pendiente negativa en 1.180.

Un cierre semanal por encima de esos niveles abriría las puertas a una subida a 1.390, cerca de la media móvil de 200 semanas.


14:32 El bono EEUU a 10 años está relativamente caro
El bono estadounidense a 10 está ahora más caro en relación con otros vencimientos que en cualquier otro momento en los últimos dos años, ante la falta de claridad sobre el momento de la primera subida de tipos de la Reserva Federal.

El rendimiento se ha mantenido en torno al 2 por ciento este mes desde un máximo del 2,3 por ciento alcanzado, antes de la decisión del 17 de septiembre de la Fed de mantener las tasas de interés, citando tibias presiones inflacionarias.

"Por el momento, el consenso del mercado es que la Fed probablemente no subirá las tasas este año, pero si las nóminas no agrícolas suben de 200.000, creo que van a subir en diciembre", dijo Kazuaki Oh'e, un vendedor de deuda en CIBC World Markets Japan.

"El bono a 10 años es el término más líquido, así que si usted es alcista, usted puede comprar el bono a 10 años fácilmente para obtener una ganancia de capital, pero si te giras a bajista, es fácil de vender."

[RCHF]

Exportaciones mineras cayeron 9,8% entre enero y agosto

De acuerdo a la SNMPE, las exportaciones de oro, cobre, molibdeno, zinc, estaño, plomo y plata tuvieron retrocesos en agosto



Asimismo, las exportaciones mineras en agosto ascendieron a US$ 1,659 millones, cifra 15.6% menor a la del mismo mes del 2014 (US$ 1,965 millones). El descenso de agosto, en comparación con lo reportado en el mismo mes del 2014, se explica por el menor valor obtenido de las exportaciones de oro, cobre, molibdeno, zinc, estaño, plomo y plata.




Estos siete metales explicaron el 97.7% del total exportado del sector minero en agosto último, sumando en conjunto US$ 325 millones menos en ventas que en agosto del 2014. En cambio, la exportación de hierro creció al registrar un aumento de US$ 16 millones con respecto a agosto del 2014.


Las exportaciones de oro cayeron en US$ 134 millones, al pasar de US$ 608 millones en agosto de 2014 a US$ 474 millones en el mismo mes del 2015, lo que implicó un descenso de 22.0%, debido a un menor volumen exportado (-9.6%) y menor cotización (13,7%)

Asimismo, el valor exportado del cobre de agosto de 2015 fue US$ 801 millones, monto menor en US$ 109 millones al del mismo mes del 2014 (US$ 910 millones), lo que implicó una caída de 11.9%. Ello se explica por una menor cotización (-27.1%), dado que el volumen exportado aumentó en 20.7%.

El valor exportado del molibdeno en agosto de 2015 fue de US$ 22 millones, monto menor en US$ 33 millones al del mismo mes del 2014 (US$ 55 millones), lo que implicó una reducción de 59.6%. Ello se explica una menor cotización (-57.8%) y volumen (-4.2%).

El zinc, por su parte, pasó de exportarse US$ 156 millones en agosto de 2014 a US$ 140 millones en el mismo mes del 2015, lo que implicó US$ 16 millones menos o un descenso de 10.7% en las ventas al exterior de este metal. Esto se explica principalmente por una caída en su cotización (-11.8%), pues su volumen se incrementó en 1.2%.

En el caso del estaño, las exportaciones descendieron en 37.3%, al pasar de US$ 43 millones en agosto del 2014 a US$ 27 millones en el mismo mes del 2015. Este resultado se explica tanto por el menor volumen (-14.2%) como de su cotización (-26.9%).

El plomo registró un descenso de 8.1% al pasar de exportarse US$ 162 millones en agosto de 2014 a US$ 149 millones en el mismo mes del 2015. Este resultado se explica por una reducción en su cotización (-25.5%), dado que su volumen se incrementó en 23.3%.

Finalmente, las exportaciones de plata refinada llegaron a US$ 7 millones en agosto del 2015, monto menor en US$ 5 millones a lo vendido en el mismo mes del 2014 (US$ 12 millones), lo que implicó una caída de 38.1%. Este resultado se explica por un menor volumen (-18.4%) y cotización (-24.2%).

El resultado negativo fue compensado por las exportaciones de hierro que registraron un incremento de 91.4% comparado con agosto del 2014, al pasar de exportarse US$ 18 millones a US$ 34 millones en el mismo mes del 2015. Este resultado se explica por su mayor volumen (+221.9%), debido a que su cotización descendió en 40.5% para ese periodo de análisis.

[Fenix]

Capital Is Still Flowing Out Of China, Here's How Beijing Is Hiding It
Submitted by Tyler D.
10/21/2015 - 21:20

Much like the NBS will obscure any weakness below 7% in China’s GDP data, the PBoC will do “whatever it takes” (central bank pun fully intended) to make sure the market doesn’t get wind of the fact that there’s still a tremendous amount of pressure in terms of capital outflows. As Bloomberg reports, "The People’s Bank of China and local lenders increased their holdings in onshore forwards to $67.9 billion in August, positions that would boost China’s currency against the dollar. The amount is five times more than the average in the first seven months."


Did Paul Volcker 'Save' A System That Was Simply Not Worth Saving?
Submitted by Tyler D.
10/21/2015 - 20:50

Paul Volcker announced his intention to squeeze inflation out of the system soon after he became Fed chairman. Too bad he didn’t save a better system. Not many men can resist the appeal of free money. Americans proved they were no better at it than others. Falling interest rates and the paper dollar gave them a way to impoverish themselves – by spending money they hadn’t earned. They took the opportunity offered to them. They borrowed and spent... and drove the entire world forward at a furious pace. But now that stage is over.


Goldman Is Getting Nervous: "There Are Significant Risks To Our Forecast For Gold Price Weakness"
Submitted by Tyler D.
10/21/2015 - 20:17

The "very serious people" are starting to get nervous, because while most other "commodities" have seen their prices plummet in the biggest crash since Lehman, gold just went green for the year. Enter Goldman Sachs: "While our base case remains for higher US real rates and lower gold prices, there are significant risks that our forecast for gold price weakness is pushed out, should the Fed surprise us and remain on hold in December."


Obama Unveils Roadmap To 'Bailout' Puerto Rico: "New" Bankruptcy Rules & Federal Fiscal Oversight
Submitted by Tyler D.
10/21/2015 - 22:30

America is not Greece, but judging from the Obama administration's just-unveiled plans to bailout Puerto Rico's disastrous debt situation, the American territory may have to sacrifice a little more sovereignty to get some relief. Obama is pressing for Congress to give Puerto Rico (PR) sweeping powers to reduce its $73 billion debt burden through a form of bankruptcy protection not now available to American territories and will also ask lawmakers to establish an independent body to monitor the island’s fiscal affairs (a la Troika).

[Fenix]

US Treasury Postpones Next Week's 2-Year Treasury Auction Due To Debt-Ceiling Roadblock
Submitted by Tyler D.
10/22/2015 - 09:29

Moments ago the US Treasury promptly removed any latent optimism that this latest debt ceiling crisis will somehow be magically fixed on its own after it announced that it would postpone the two-year note auction previously scheduled for Tuesday, as the impasse over the debt limit constrains the nation’s borrowing. “Due to debt ceiling constraints, there is a risk that Treasury would not be able to settle the two-year note”


Bitcoin Surges To 3-Month Highs After EU Tax Ruling
Submitted by Tyler D.
10/22/2015 - 09:11

Bitcoin has recovered all the losses from the volatility surrounding China's currency devaluation and Black Monday equity weakness as implicit capital controls drive the Chinese into alternative currencies (as we warned would happen). However, the last few days have seen the cryptocurrency surge to $280 - the highest in 12 weeks - as The EU's top court ruled bitcoin and other virtual currencies can be exchanged tax-free, putting them on a more equal footing with traditional cash.


Caterpillar Shares Tumble After Company Misses Across The Board, Revenues Plunge 19%, Guidance Cut
Submitted by Tyler D.
10/22/2015 - 08:01

We hoped yesterday's preview would soften the blow from today's CAT Q3 earnings which were clearly going to be ugly, and surely worse than consensus estimates. Moments ago we got said earnings and as expected, they were indeed far worse than expected, with CAT reporting adjusted EPS of $0.75 ($0.62 GAAP), below consensus estimate of $0.77, while revenue of $11.0 billion also missed expectations of $11.33.This takes place even as CAT repurchased $1.5 billion in stock in Q3, or about 75% of the total $2.0 billion in buybacks it conducted in all of 2015 (compared to $8 billion in the past three years).

[Fenix]

Deutsche Bank Warns Bonuses Will Be Slashed As Much As 30%
Submitted by Tyler D.
10/22/2015 - 10:45

A beleaguered Deutsche Bank is set to slash the investment bank bonus pool by some $566 million as John Cyran's effort to right a sinking ship continues. As Bloomberg reports, "no decision has been taken and the biggest reductions are likely to impact employees in the fixed-income business. Some managing directors may have their entire bonus scrapped, according to the person."


CEO Of Europe's Largest Zinc Producer Hints At Default: Bonds Hit Record Lows, Stock Plunges Most Ever
Submitted by Tyler D.
10/22/2015 - 12:19

Complacency seemed ready to set back in, with Glencore stock recently rising as high as its recent equity offering price of 125p. And then today we noticed that not only is Glencore's CDS back above 700 bps, the widest it has been in three weeks, but that another mining company has fallen into the market's crosshairs, this time Belgium-based (with Zurich HQ) Nyrstar NV, Europe's largest refined-zinc producer, whose stock crashed the most since its initial public offering in 2007, while it bonds tumbled to a yield of 19%, suggesting a default may be imminent.

[Fenix]

"Proxy" War No More: Qatar Threatens Military Intervention In Syria Alongside "Saudi, Turkish Brothers"
Submitted by Tyler D.
10/22/2015 - 14:37

"Anything that protects the Syrian people and Syria from partition, we will not spare any effort to carry it out with our Saudi and Turkish brothers, no matter what this is. If a military intervention will protect the Syrian people from the brutality of the regime, we will do it."


"All Kinds Of Mayhem Will Let Loose" As Strongest El Nino In Decades Looms
Submitted by Tyler D.
10/22/2015 - 15:20

September was officially the warmest ever recorded around the globe (the 7th time this year a month has set a record) as El nino is back in a big way. As Bloomberg reports, its effects are just beginning in much of the world -- for the most part, it hasn’t really reached North America -- and yet it’s already shaping up potentially as one of the three strongest El Nino patterns since record-keeping began in 1950. Expect "major disruptions, widespread droughts and floods," warned a senior scientist at the National Center for Atmospheric Research, adding that without preparation, "all kinds of mayhem will let loose." The last time there was an El Nino of similar magnitude to the current one, the record-setting event of 1997-1998, floods, fires, droughts and other calamities killed at least 30,000 people and caused $100 billion in damage.

[Fenix]

AbbVie Stock Plunges After FDA Warns Of "Serious Liver Injury Risk" From Company's Hep C Treatments
Submitted by Tyler D.
10/22/2015 - 15:17

It has been a horrible quarter for biotechs, and for AbbVie it just got worse.



Auto Loan Market "Reminds Me Of What Happened Right Before The Crisis", Top Regulator Warns
Submitted by Tyler D.
10/22/2015 15:00 -0400

All year we’ve warned that the auto loan market is beginning to look quite a bit like the housing market in the lead up to the financial crisis.

The dynamic is simple. It’s just the originate to sell model all over again and it’s having the predictable effect of causing underwriting standards to deteriorate. Banks can offload credit risk by packaging loans and selling ABS to investors thus freeing up their balance sheets to make still more loans.

The race to get in on the action causes banks to compete for an ever smaller pool of eligible borrowers. ZIRP adds fuel to the fire by i) enticing households to take on more debt, ii) creating demand for ABS as investors hunt for yield in a low rate environment.

The pool of creditworthy borrowers is of course limited and so, at a certain point, the only way to generate more securitizable debt is to lower your underwriting standards so that previously ineligible borrowers are suddenly eligible. That way, the loans keep getting extended and Wall Street’s securitization machine keeps getting fed.

There’s plenty of evidence to support this contention and we encourage you to go back and have a look at Santander Consumer (see here for instance) and Skopos Financial (see here) on the way to evaluating the degree to which loans are being made to borrowers who probably can’t service their debt just so those loans can be sliced, diced, and sold to yield-starved investors.

Here’s a look at America’s auto loan bubble. As you can see, total auto debt has now soared above the $1 trillion mark right along with student debt:

It’s with all of this in mind that we bring you the following from WSJ who reports that Comptroller of the Currency Thomas Curry is seriously concerned about the extent to which the auto loan market now resembles the pre-crisis housing market.

While policy makers have generally declared the U.S. banking system recovered from the financial crisis, Comptroller of the Currency Thomas Curry raised a rare red flag, saying in a speech that some activity in auto loans “reminds me of what happened in mortgage-backed securities in the run-up to the crisis.”



“We will be looking at those institutions that have a significant auto-lending operation,” he told reporters after the speech. Many mortgage-backed securities thought to be safe turned sour during the financial crisis, leading to heavy losses across Wall Street.



The comments are likely to raise concerns in particular at firms like Wells Fargo & Co. and other national banks active in auto lending that are regulated by the comptroller’s office. Mr. Curry’s vow of closer scrutiny wouldn’t affect their competitors at lenders owned by large auto manufacturers.



When the comptroller in the past has raised questions about loans being risky—as it has done since 2013 with leveraged loans to heavily indebted corporations—regulators have turned up the heat to the point that banks have dialed back products, even when they were profitable.



This isn’t the first time regulators have cast a spotlight on auto lenders.



In March, the Consumer Financial Protection Bureau raised concerns about consumers taking on too much auto debt, and some large financial firms have faced investigations regarding unfair auto-lending practices.



But Mr. Curry’s concerns focused on the risks auto loans may pose to banks’ safety and soundness. Lower-level OCC officials have previously raised similar concerns.



Auto lending has been increasing in recent years amid historically low interest rates, cheap gas and stronger consumer demand. Auto loans also performed relatively well during the financial crisis, which market watchers have interpreted as a sign that the loans are safe because even cash-strapped households must pay for transportation.



Auto lenders also have an easier time collecting collateral on a delinquent auto loan—by repossessing the car—than they do foreclosing on a house covered by a bad mortgage.



Those factors have emboldened banks and other financial firms to offer relatively attractive terms even to borrowers with low credit scores. In the second quarter of 2015, auto debt owed by U.S. households rose above $1 trillion for the first time, up more than 10% from a year earlier.



Mr. Curry said auto lending at banks supervised by the comptroller’s office, which includes most of the largest banks in the U.S., accounted for more than 10% of retail lending during the second quarter, up from 7% four years earlier. Banks are increasingly moving these loans into securities, rather than holding them in a portfolio, he said, similar to the way mortgages were packaged and sold to investors ahead of the financial crisis.



Through early September, Wall Street firms issued nearly $70 billion in securities backed by auto loans, up 9% from the same period a year ago, according to J.P. Morgan. About $21 billion of those were backed by subprime loans to relatively risky borrowers.



Subprime car-loan originations have taken off in recent years as lenders have loosened underwriting criteria in this sector, allowing for borrowers with low, and often no, credit scores to get access to financing. During the first half of 2015, lenders gave out $56.4 billion in subprime auto loans, up 13% from the same period a year ago and up 181% from the first half of 2009, when the market for these loans bottomed out, according to credit-reporting firm Equifax Inc.



Subprime car loans account for 20% of the car-loan dollars given out from January through June, the highest share for the period since 2008, according to Equifax.

Count us among those who doubt if very much will come of this very "serious" inquiry. After all, auto loans and student debt have served as the lone bright spot for the US "recovery", as every American with a pulse can now get themselves into a used car (even if it means taking out a loan with a term of 84 months) and every college student in the country can borrow from the taxpayer government not only to pay for tuition, but to fork over exorbitant monthly rents to the landlord, and to finance an iPhone 6S, an iPad Pro, and an Apple pencil, because let's face it, no one slums it in college anymore.

So lest the entire "recovery" illusion should suddenly be shattered by a regulator erroneously seeking to do his job, Mr. Curry may want to just back off and let the originate to sell model work its magic (just forget the fact that this will unquestionably end in tears)- the fate of the US economy might just depend on it.

[Fenix]

Banks Are Now Rejecting Deposits... Is a Cash Ban Next?
Submitted by Phoenix Capital Research on 10/22/2015 10:11 -0400

The Central Banks hate physical cash. So much so they there will likely try to ban it in the near future.


You see, almost all of the “wealth” in the financial system is digital in nature.


1) The total currency (actual cash in the form of bills and coins) in the US financial system is a little over $1.36 trillion.


2) When you include digital money sitting in short-term accounts and long-term accounts then you’re talking about roughly $10 trillion in “money” in the financial system.

3) In contrast, the money in the US stock market (equity shares in publicly traded companies) is over $20 trillion in size.


4) The US bond market (money that has been lent to corporations, municipal Governments, State Governments, and the Federal Government) is almost twice this at $38 trillion.


5) Total Credit Market Instruments (mortgages, collateralized debt obligations, junk bonds, commercial paper and other digitally-based “money” that is based on debt) is even larger $58.7 trillion.


6) Unregulated over the counter derivatives traded between the big banks and corporations is north of $220 trillion.


When looking over these data points, the first thing that jumps out at the viewer is that the vast bulk of “money” in the system is in the form of digital loans or credit (non-physical debt).


Put another way, actual physical money or cash (as in bills or coins you can hold in your hand) comprises less than 1% of the “money” in the financial system.


As far as the Central Banks are concerned, this is a good thing because if investors/depositors were ever to try and convert even a small portion of this “wealth” into actual physical bills, the system would implode (there simply is not enough actual cash).


Remember, the current financial system is based on debt. The benchmark for “risk free” money in this system is not actual cash but US Treasuries.


In this scenario, when the 2008 Crisis hit, one of the biggest problems for the Central Banks was to stop investors from fleeing digital wealth for the comfort of physical cash. Indeed, the actual “thing” that almost caused the financial system to collapse was when depositors attempted to pull $500 billion out of money market funds.


A money market fund takes investors’ cash and plunks it into short-term highly liquid debt and credit securities. These funds are meant to offer investors a return on their cash, while being extremely liquid (meaning investors can pull their money at any time).

This works great in theory… but when $500 billion in money was being pulled (roughly 24% of the entire market) in the span of four weeks, the truth of the financial system was quickly laid bare: that digital money is not in fact safe.


To use a metaphor, when the money market fund and commercial paper markets collapsed, the oil that kept the financial system working dried up. Almost immediately, the gears of the system began to grind to a halt.


When all of this happened, the global Central Banks realized that their worst nightmare could in fact become a reality: that if a significant percentage of investors/ depositors ever tried to convert their “wealth” into cash (particularly physical cash) the whole system would implode.


As a result of this, virtually every monetary action taken by the Fed since this time has been devoted to forcing investors away from cash and into risk assets. The most obvious move was to cut interest rates to 0.25%, rendering the return on cash to almost nothing.


However, in their own ways, the various QE programs and Operation Twist have all had similar aims: to force investors away from cash, particularly physical cash.


After all, if cash returns next to nothing, anyone who doesn’t want to lose their purchasing power is forced to seek higher yields in bonds or stocks.


The Fed’s economic models predicted that by doing this, the US economy would come roaring back. The only problem is that it hasn’t. In fact, by most metrics, the US economy has flat-lined for several years now, despite the Fed having held ZIRP for 5-6 years and engaged in three rounds of QE.


As a result of this… mainstream economists at CitiGroup, the German Council of Economic Experts, and bond managers at M&G have suggested doing away with cash entirely.


If you think this sounds like some kind of conspiracy theory, consider that France just banned any transaction over €1,000 Euros from using physical cash. Spain has already banned transactions over €2,500. Uruguay has banned transactions over $5,000. And on and on.


This will be coming to the US in the near future. Already, the big banks (the ones with the closest ties to the Federal Reserve) have begun turning away deposits OR charging them.


State Street Corp. , the Boston bank that manages assets for institutional investors, for the first time has begun charging some customers for large dollar deposits, people familiar with the matter said. J.P. Morgan Chase & Co., the nation’s largest bank by assets, has cut unwanted deposits by more than $150 billion this year, in part by charging fees…


And here’s another big “tell”…


“At some point you wonder whether there will be a shortage of financial institutions willing to take on these balances,” said Kelli Moll, head of Akin Gump Strauss Hauer & Feld LLP’s hedge-fund practice in New York, saying that where to hold cash has become an increasing topic of conversation as hedge funds are shown the door by longtime banking counterparties.

So where is the physical cash meant to go?


Jerome Schneider, head of Pacific Investment Management Co.’s short-term and funding desk, which advises corporate and institutional clients, said that as a result of the bank actions, he and his customers have discussed as cash alternatives boosting investments in U.S. Treasury bonds, ultrashort-duration bond funds and money-market funds.

When it comes to cash, Mr. Schneider said, “Clients have been put on warning.”

[Fenix]

Presenting America's New Debt Ceiling: $19,600,000,000,000
Submitted by Tyler D.
10/22/2015 15:54 -0400

Even as the bond market has been rather concerned about another possible debt ceiling showdown as we showed before, and which earlier today prompted the Treasury to announce the purposefully dramatic step of postponing the auction of 2 Year Notes next week, the reality is that one way or another, with an equity-driven wake up call for the GOP or without, the debt ceiling will be raised.

The only question is how much.

As a reminder, the reason why the total US debt held by the public hasn't budged from $18.1 trillion since March 16, 2015 is because that is when the last debt ceiling limit was hit. In the seven month since, the US Treasury has been cruising along on emergency cash measures, even as the total debt - if only for reporting purposes - has not budged (in reality it has grown by about half a trillion).

It will budge very soon, because no matter what the outcome of the upcoming week of debt ceiling negotiations, one thing is certain: the US has to be able to borrow more in order to survive.

And as The Hill reported, when one gets beyond the traditional posturing, the outcome will be the following:

The House is expected as early as Friday to vote on a conservative debt-limit proposal even though chances are slim that the plan can pass the Senate.



Speaker John Boehner (R-Ohio) told the GOP conference on Wednesday that he is expecting a vote on the Republican Study Committee (RSC) plan that would raise the debt limit to $19.6 trillion from $18.1 trillion and would run through March 2017.

Who will be the Republican to submit the unpopular measure? Most likely the outgoing speaker John Boehner, who will seal his tenure with this final act: "With only two weeks to go, the pressure is on the House to pass a measure that raises the nation’s $18 trillion debt ceiling amid a search for the next Speaker."

Yes, the republicans will pretend to demand concessions, such as a balanced budet and other "sound money" conditions...

The proposal would require a House vote on a balanced-budget amendment by Dec. 31, would implement a short-term freeze on federal regulations through July 1, 2017, and would compel the House to remain in session without a break if spending bills aren't done by Sept. 1.

... but they won't get them because the corporations pulling the strings of every D.C. politicians are the biggest beneficiaries from US debt-funded largesse, especially if one throws in the occasional contained or not so contained war.

This means another victory for the Demorats who have required a "clean" debt raise. This is precisely what they will get, and why it will have to take place under John Boehner as Paul Ryan would surely tarnish his reputation with the Freedom Caucus if his first act is one seen as submission to the left.

Which means that the only certain outcome from the melodramatic debt ceiling fight over the next several days, is the following: the US is about to have a brand spanking new debt ceiling, one that should last it until March of 2017: $19,600,000,000,000.

If the chart below looks increasingly exponential, that is not a coincidence.



Treasury Warns Of "Humanitarian Crisis" In Puerto Rico If Congress Does Not Agree To Bailout
Submitted by Tyler D.
10/22/2015 - 19:00

"Puerto Rico is not Greece"... but it increasingly looks like it will be in a few weeks, thanks to US taxpayers who are about to foot the bill for yet another creditor bailout.

[Fenix]

China's Red Capitalism Is The New Black Swan
Submitted by Tyler D.
10/22/2015 17:45 -0400

Submitted by David Stockman

The proverbial peddlers of Florida swampland can now move over. They can’t hold a candle to the red suzerains of Beijing.

The latter had drawn a line in the sand at 7.0% GDP growth. Conveniently enough, the “consensus” estimate of so-called street economists was pegged at 6.8% for Q3, thereby giving authorities one thin decimal point through which to thread a “beat” at 6.9%.

By golly they did it!

Even then, China’s Ministry of Truth had to fiddle down the GDP deflator to negative 0.5% (for the second time this year) in order to hit the bulls eye. And that’s exactly the point.

No real world $10 trillion economy plagued with all of the turmoil evident in China’s whipsawing trade data or its volatile real estate development sector or its faltering rust belt and commodity-based industries can possibly deliver absolutely stable GDP numbers to the exact decimal point quarter after quarter.

In fact, the odds that these reports represent anything other than goal-seeked propaganda are so overwhelmingly high that they perforce raise another more important question. Why does Wall Street and its servile financial press not issue a loud collective guffaw when they are released?

But no, the Wall Street Journal took it all very seriously, noting both the “beat” and China’s claim that the “miss” wasn’t a miss at all:

The better-than-expected result—a Wall Street Journal survey of 13 economists forecast a median 6.8% gain—is likely to renew debate over the accuracy of China’s growth statistics…….Speaking at an event to promote entrepreneurism in Beijing on Monday, Premier Li Keqiang said “even though it was 6.9%, it is still a growth rate of around 7%.”

Right. China’s #2 communist boss is out promoting the “enterprenurial spirit” while emitting central planning propaganda to the decimal point.

You might find the irony exceptionally rich, but there is a larger message. Namely, the true size of China’s economy is unknowable to the nearest trillion or even several trillions. But that does not prevent most of Wall Street from taking seriously each and every word of China’s self-evidently clueless statist rulers spouting growth rates to the decimal point.

In truth, Wall Street has become so intellectually addled from its addiction to central bank enabled gambling that it no longer has a clue about what really matters. That’s why the next crash will come as an even greater surprise than the Lehman meltdown, and will be far more brutal and uncontainable, as well.

Yet the evidence that a China-led crash is on its way is hiding in plain sight. And what is being blithely ignored is not merely the blatant inconsistencies in its economic numbers—–such as the fact that electricity consumption has grown at only a 1.3% rate over the past year——or that its commerce with the outside world has shrunk drastically, with imports down by 23% and exports off by 3-6% in recent months.

Instead, the evidence that China is a slow-motion trainwreck lies in the very consistency of its Beijing-cooked numbers. Apparently, no one has told its credit-happy rulers that printing precise amounts of new GDP quarter after quarter by issuing credit at double the rate of nominal income growth will eventually result in the mother of all deflationary collapses.

Stated differently, if the pattern of debt versus GDP shown below is pursued long enough, the world’s greatest open air construction site will fall silent. Everything which can be built will have been delivered; any cash flow which can be encumbered with more debt will have been levered-up; any pretense that financial institutions are solvent will have given way too soaring defaults; and the Wall Street delusion that the primitive central planners of red capitalism had a iron grip on China’s runaway expansion will have been revealed as a snare and delusion.

Accordingly, the only thing that really counted in yesterday’s release was that credit is still growing at nearly 12% or at 2X the 6.2% gain in nominal GDP. And as is also evident in the chart, this massive and aberrational debt versus income gap has been underway as far back as the eye can see.

Indeed, its goes all the way back to Mr. Deng’s moment of enlightenment 25 years ago. That’s when he discovered a printing press in the basement of the PBOC and concluded that communist party power might better be preserved by running these presses red hot than by Mao’s failed dictum that power descends from the white hot barrel of a gun.

In any event, why in the world would anyone in their right mind think this crucial chart can be extended toward the right axis much longer. Assume 10 more years of 12% credit growth, for example, and China will have $90 trillion of total debt or 50% more than the already staggering amount carried by the US economy.

At the same time and given that China’s nominal GDP growth is descending in Gartman fashion from the upper left to the lower right, assume the very best outcome for nominal income. That is, posit that somehow China manages to achieve ten more years of this quarters’ 6% nominal growth. So doing, you get a mere $17 trillion of GDP.

Everywhere and always, however, a 5X total leverage ratio on an economy is a recipe for crushing deflation. In fact, it has never happened before in modern times except for Japan after 1990; and Japan at least had some semblance of functioning markets separate from the state and the rule of commercial law, contracts and bankruptcy.

By contrast, when China fully plunges into its inexorable deflationary spiral the rulers of red capitalism will have no choice except to resort to Mao’s preferred instruments of rule—–paddy wagons and machine guns—-in order to quell an outraged citizenry. After all, Mr. Deng told China’s newly ascendant capitalists that it is glorious to be rich, but did not explain that printing press prosperity ultimately results in a crack-up boom.

Stated differently, the recent 18-month rise and then overnight collapse of $5 trillion of phony market cap in the Chinese stock market gave rise to utter panic and mindless expediency in Beijing, including a de facto bailout of billionaires. China’s red rulers apparently feared that the 90 million angry stock market speculators would be no match for its 70 million party cadres——especially since most of the latter were foremost among the former.

Yet what will happen when China’s hideously inflated real estate and land values succumb to the deflationary wringer? And hideous is not too strong a word: in many urban areas housing prices have reached 15-30X the median income.

Well, there are 65 million drastically over-priced, empty apartments in China because its rulers told speculators and the rising middle class that housing prices could never fall——that they were the next best thing to a piggy bank. Accordingly, the last phase of China’s madcap construction boom is likely to be a manic spurt of prison building to accommodate the millions of irate citizens who are destined to experience China’s turbo-charged version of 1929.

The other number number in the Q3 release that has been drastically misinterpreted is the reported 10.6% growth of fixed asset investment. Needless to say, this was described as “disappointing” when it is actually a screaming symptom of China’s terminally deformed economy. If it had any hope of avoiding a crash landing, fixed investment in its fantastically overbuilt public facilities and industrial capacity would be sharply negative, not still growing in double digits.

Owing to the cardinal error embodied in Wall Street’s self-serving rendition of Keynesian economics, however, China’s fatal dependence on erecting economic white elephants and what amount to public pyramids in the form of unused airports, train stations, highways and bridges, is given hardly a passing nod. That’s because it is assumed that some way or another China will make the transition to a services and consumption based economy just like the good old shop-till-they-drop US of A.

Let’s see. When China finally stops its borrowing binge, these putative shoppers will need to finance their purchases out of current incomes. Yet is not the overwhelming share of household income in China currently earned from the supply chain for fixed asset investment and construction and from the export of cheap goods to already saturated and debt-besotted DM markets?

Just consider the fantastical reality that China’s 2 billion ton cement industry produced more in three years than did the US industry during the entire 20th century. When they finally stop building roads, apartments and factories, therefore, it is not just the cement kilns which will shutdown, but a whole network of gravel haulers, chemical plants, cement truck fleets, construction equipment suppliers, work site service vendors and much more reaching deep into the interstices of China’s hothouse economy.

Likewise, when rebar and other construction steel demand collapses and the rest of the world throws up barriers to China’s surging steel exports, as it surely will and is already doing, the ricochet effects on China massively overbuilt 1.1 billion ton steel industry will be far-reaching. The incomes of coal barons and blast furnaces workers alike have already taken a pasting, and the downward spiral is just getting started.

And wait until China’s newly minted auto dealer lots become backed-up with unsold cars as far as the eye can see. Then its 25 million unit auto industry will tumble into a depression unlike anything since 1929 when Detroit’s production plunged from 6 million cars/year to less than 2 million.

All of those suddenly unemployed auto, steel, rubber, glass, upholstery etc. workers did, in fact, economically “drop”. But it wasn’t from an excess of shopping!

In short, the affliction of Keynesian economics brought many ills to the modern world, but repeal of Say’s Law was not among them. You can have a one-time credit party, but when it inevitably ends, consumption spending defaults to that which can be financed from current incomes. Consumption is the consequence of production and income, not its cause.

Yet crack-up booms eventually destroy the bloated and unsustainable incomes generated in the raw materials, capital goods and consumer durables sectors during the boom phase. Accordingly, even the red suzerains of Beijing can not get from here to there. The phantom incomes that resulted from paving nearly half of the Asian continent occupied by 20% of the world’s population must inevitably shrink, meaning that China’s consumption and service spending will falter, too.

Stated differently, China’s red capitalism is the new black swan. There is nothing rational, stable or sustainable about it. Moreover, the consequence of its pending collapse will be literally earth shattering.

That’s because in recent years it has accounted for a lot more than the one-third of global GDP growth conventionally cited. The latter is just a measure of border-to-border economic statistics.

But the second and third order effects are equally large. From the bowels of Australia’s iron ore mines to the top of Dubai’s pointless 100 story office towers, the entire warp and woof of the global economy has been distorted and bloated by the central bank money printing spree of the last two decades, led by the red credit machines of Beijing. Everywhere economies have succumbed to over-building, over-consumption, over-financialization and endless dangerous, unstable speculation.

So forget the cleanest dirty shirt meme or the preposterous Wall Street nostrum that the US economy has been “decoupled” from the rest of the world. That’s unadulterated hogwash, and its means that the stock market and risk assets are heading for a thundering crash.

After the fact, of course, Wall Street will discover that the world economy was unexpectedly taken down when the suzerains of Beijing were unable to perpetuate the Red Ponzi.

But just like last time during the mortgage and housing meltdown it was starring them in the face all along. Here is what happened to the home ATM piggy-bank that fueled the Greenspan Boom and that gave rise to the Wall Street illusion that consumption spending is the motor force of economic life.

From a peak mortgage equity withdrawal rate (MEW) at 9% of DPI or nearly $1 trillion per year prior to the crisis, MEW has been negative ever since. That is, it has subtracted from consumption, not added. Not one in one hundred Wall Street economists could have correctly projected this chart in 2007 when they were slobbering about the goldilocks economy.



Needless to say, when it comes to the wounded elephant in the room this time around—-the tottering edifice of the Red Ponzi——they are still slobbering.

[Fenix]

Finance Professor "Invests" In Jim Cramer's "Buy Right Now" Portfolio, Loses Money On 72% Of Stock Picks
Submitted by Tyler D.
10/22/2015 - 15:22

Curious how Jim Cramer's stock picks perform? One person decided to test them out in an audited environment. Here are the results...



What Your High School Chemistry Teacher Never Taught You About Gold
Submitted by Tyler D.
10/22/2015 16:55 -0400

Submitted by Simon Black via
One of the more unfortunate developments in human civilization over the last century is the devolution of money.

In fact, the word ‘money’ has now become synonymous with those funny pieces of paper that are conjured out of thin air by unelected central bankers.

Or even more ridiculous, ‘money’ has become the electronic representation of that paper.

Think about your bank account balance; it’s not like the bank has all that paper currency sitting in its vault.

The ‘money’ in your account doesn’t even really exist. There’s just enough of a thin layer of confidence in the system (at the moment) that this is a widely accepted practice.

It seems rather strange when you think about it. Though for thousands of years, early civilizations had some pretty wild ideas about money.

There are examples from history of our ancestors using everything from animals skins, to salt, to giant stones, as their form of ‘money’.

Though I suppose these weren’t any more ridiculous than our version of money– pieces of paper that don’t even really exist, controlled by unelected central bankers.

Of course, over the last 5,000 years, there was at least one form of money that did make sense. And it stuck. I’m talking, of course, about gold.

It’s no accident that gold has become the most consistent form of money in world history.

The metal is uniquely suited to serve as currency, not only amongst precious metals, but compared against nearly everything else on the planet.

You can see for yourself by taking a look at the periodic table of elements, the scientist’s catalog of everything the world has to offer.

Many of the entries on the periodic table are immediately disqualified. Many elements are radioactive. Others are gasses that would be impossible to transport.

Still others are colorless, and hence indistinguishable from air.

Taking these out eliminates most of the list, and you’re left with just a few dozen metals.

Most of these, however, like copper or iron, can be easily eliminated as well. They’re simply too common. And a form of money is useless if its in too much abundance… a lesson that modern central bankers have completely forgotten.

Others (like cesium) are highly reactive and explode on contact with water, or at least corrode easily.

Clearly a currency that kills its holder, or can’t even maintain its physical state without debasing itself, is rather useless.

Even silver, which nearly passes every single test falters at the last point, because it tarnishes slightly in reaction to sulfur in the air.

So out of all the elements we’re left with just one that’s just right: gold.

Gold is inert and non-reactive. It’s stable. It holds its form over the long-term. It’s malleable and easily divisible. And it’s rare. But not too rare.

Judging by its chemical properties, it’s no accident that gold became the most widely-used currency in history.

Of course, defenders of the paper money concept call gold a “barbarous relic”, suggesting that it has no place in modern civilization.

(Curiously, paper is also relic from long ago, dating back to the 2nd century AD in China. . .)

Yes it’s true that gold is a very old concept. But so is the wheel. Language. Arithmetic. And many other ideas passed down from the ages.

Just because something is ancient doesn’t mean it’s not RIGHT.

Empires rise and fall. Governments and central bankers come and go. Paper currencies lose their dominance.

But gold lasts.

And if you hold a long-term view, and believe that the path to prosperity is not paved in debt and money printing it makes sense to consider holding at least a small portion of your savings in the metal.

[admin]

http://www.wsj.com/public/page/espanol-inicio.html

[admin]

China recorta intereses en 0.25 a 4.35% en sus préstamos a un año.