Month: May 2017

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Congress ended the week by passing a continuing resolution keeping the government funded for one more week. This stopgap funding bill was designed to give Congress and the White House more time to negotiate a long-term spending bill. Passage of a long-term spending bill had been delayed over objections to Republican efforts to preserve Obamcare's key features but give states a limited ability to opt out of some Obamacare mandates…[ZH: that longer-term bill has been agreed with the Democrats]

This type of brinkmanship has become standard operating procedure on Capitol Hill. The drama inevitably ends with a spending bill being crafted behind closed doors by small groups of members and staffers and then rushed to the floor and voted on before most members have a chance to read it. These “omnibus” spending bills are a dereliction of one of Congress’s two most important duties — allocating spending. Of course, Congress long ago abandoned another primary duty — preventing presidents from launching military attacks without first obtaining a congressional declaration of war.

The uncomfortable question raised by Congress’s abrogation of these two key functions is whether a republican form of government is compatible with a welfare-warfare state. The answer seems to be “no.”

Congress’s dysfunctional spending process is an inevitable result of the government’s growth. It is simply unrealistic to expect Congress to fund the modern leviathan via a lengthy and open process that allows individual members to have some say in how government spends their constituents’ money. The dysfunctional spending process benefits the many politicians eager to avoid accountability for government spending. The rushed process allows these politicians to say they had to vote for the spending bills. Often, these big spending bills include a promise to cut spending in the future. Like tomorrow, the promised spending cuts are always a day away.

If government continues to expand, the economy will continue to stagnate, social tensions and violence will increase, and more power will be concentrated in the hands of the president, bureaucrats, and a select few members of Congress. The only way to avoid this is for Congress to shut down most of the federal government, starting with bringing the troops home and drastically cutting the military-industrial complex’s budget. Congress must also close all unconstitutional federal agencies and programs, and wind down federal entitlement programs. A good place to start is the Department of Education. The Federal Reserve must be audited and then ended.

The root of the current crisis is neither political nor economic but philosophical. Too many have bought into the lie that government can protect us from life’s misfortunes and stamp out evil around the world without endangering our liberty, our safety, and our prosperity. Convincing a critical mass of people to reject big government is key to our success.

The breakdown of the congressional appropriations process, combined with hyper-interventionism via the Federal Reserve and foreign policy, suggest we are in the last stages of the welfare-warfare state. Whether this system’s inevitable collapse completes our descent into authoritarianism or leads to a restoration of limited, constitutional government and free markets depends on how effective those of us who know the truth are in spreading the ideas of liberty.

via http://ift.tt/2p0V8Mh Tyler Durden

Coffee has been pretty ice cold since November of 2016, as its lost nearly a third of its value. Could this large 6-month decline turn into an opportunity? Below looks at Coffee ETF (JO) over the past few years.

CLICK ON CHART TO ENLARGE

The decline over the past 6-months in JO, has it testing triple support last week at (1). While at this potential support zone, JO attempted to create a bullish wick (reversal pattern) last week at (1). Bullish sentiment towards coffee has declined along with the price over the past 6-months, to the 29% level.

The trend in Coffee (JO) remains down, as it has created a series of lower highs for years. One weeks reversal action does not prove that a trend reversal is in play. The first step towards proving that a trend reversal could be in play, would be an overhead breakout at (2).

 

Send me an email to review a
complimentary copy of my  Weekly
Sector/Commodity Research that provides weekly
pattern analysis and actionable ideas

Website: KIMBLECHARTINGSOLUTIONS.COM

Blog:  http://ift.tt/2nMNRyT

 

Questions: Email services@kimblechartingsolutions.com or call us toll free 877-721-7217 international 714-941-9381

via http://ift.tt/2pnmE9B kimblecharting

Confirming the weakness in the preliminary print (and on the heels of China's major disappointment), Markit's US manufacturing PMI tumbled in April to its lowest since September 2016. ISM's Manufacturing Survey confirmed PMI's for once and collapsed from 64.5 to 57.5. Worse still, stagflationary pressures remain as new orders and output slump, input prices are rising at their fastest rate since Sept 2014.

Slower growth of total new work contributed to the weakest upturn in purchasing activity across the manufacturing sector since September 2016. Manufacturers also sought to reduce their inventory holdings, with stocks of purchases falling slightly for the first time in seven months. In contrast, post-production inventories increased at a modest pace in April. The latest survey signalled that the rate of expansion nonetheless eased to its weakest for seven months. New order growth also moderated to its slowest since September 2016, which survey respondents mainly linked to more cautious spending among domestic clients.

Having tracked stocks for months post-Trump, it appears the respondents in the ISM survey finally gave up hope.

 

Employment slumped in the ISM survey…

 

But it was new orders that took the biggest hit…

 

Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“Manufacturers reported that growth of production and order books have slowed markedly since peaking in January, with April seeing the weakest improvements for seven months.

 

 

“The signs of slowing growth are most evident in the domestic consumer sector, but investment goods manufacturers continue to fare well, enjoying stronger capital equipment spending from the energy sector in particular. Exports have also perked up, with April seeing the steepest increase in foreign orders for eight months.

 

“Price pressures have meanwhile risen to a two-and-a-half year high, which is likely to feed through to final prices paid for goods consumers in coming months.

 

“A more upbeat picture came from hiring, which picked up in April, as did optimism about business conditions in the year ahead, suggesting firms are expecting order books continuing to improve in coming months.”

The 'soft' data is collapsing back to reality (near 3-month lows)…

via http://ift.tt/2qpc1RX Tyler Durden

Clashes have erupted in central Paris between riot police and demonstrators during a May 1 Union demonstration protesting against both candidates who qualified for the second round of the French presidential elections, according to AFP.

“Masked and hooded individuals have thrown projectiles and Molotov cocktails onto police forces”: Paris police authorities

Police forces have retaliated with tear gas grenades, the Paris police said adding that two riot policemen have been hurt. Protesters have been throwing smoke grenades at police, who tried to push the crowds backwards down the road.

According to RT reporters on location, fires could be seen burning alongside the road. A policeman was reportedly injured in the clashes.

Tear gas has been deployed by law enforcement to keep the increasingly angry crowd at bay.

As RT further adds, Parisians gathered in Place de la Republique in the French capital on Monday to protest the results of the first round of the French presidential elections. It was not immediately clear which candidate, if any, the protesters preferred.

Live feed

 

via http://ift.tt/2qkKvrw Tyler Durden

Before scrolling down, take a guess at the three best and worst performing commodities of 2016 and 2017!

Ok now go…

 

2016 was a good year for commodities. The Bloomberg Commodity Index, which is a diversified benchmark for commodity investments, gained 10%.

Uranium ended the year down 41%! The nuclear sector spent much of 2016 continuing its six year decline that began with the Fukushima Daiichi disaster. But even there, a bright spot emerged beginning in November 2016, when uranium prices embarked on an epic rally, gaining 50% in just 3 months.

2016 had some spectacular performers. Lithium gained 71% on the tails of Tesla’s mega success, and its future need for lithium ion batteries. There is no arguing that lithium is a key material in the energy revolution.

Vanadium, primarily used as a steel additive, benefited from Chinese subsidies enacted to boost a slumping economy. Other factors? The commodity witnessed a resurgence due to its limited supply, and its additional applications in vanadium redox batteries and grid energy storage.

Iron ore takes the crown. Chinese demand for iron was unusually strong, partially driven by tax incentives and subsidies. China accounts for 65% of the world’s iron ore demand; this accompanied with a decrease in global production due to low prices resulted in iron ore gaining 90% for the year!

So what is 2017 looking like?

What goes up must come down, or so is the case with iron ore. 2016’s best performing commodity is shaping up to be 2017’s worst. Over supply in China has led to a glut that may take time to chew through.

Nickel prices surged in the beginning of the year with the rest several other industrial commodities, but has since fallen. The commodity is now down 7% for the year. Once again, China is part to blame. The country is the world’s largest consumer of the nickel, which is used as an alloying material in stainless steel. When steel subsidies decline, so too does the demand for nickel.

Tin is currently at a 6% loss. The general slowdown in global growth (yes, mainly China), has affected all base metals, including tin. The world’s largest tin producer, Indonesia, is in the midst of environmental reform and has been cracking down on illegal smuggling. Thus, exports have declined, giving a little bit of support to prices. A reversal to the upside could be coming.

The worst performing commodity of 2016, is one of the best of 2017. Uranium is up 12% for the year, peaking at 31% in February. Uranium supply is finally coming into question, especially with Kazakhstan announcing that it has cut production by 10%. We are adamant that uranium is on the doorsteps of a full-fledged bull market, and is the ultimate contrarian bet. Here are five reasons why uranium is so appealing, and our top three uranium stocks for 2017.

Palladium is another beneficiary of the clean energy revolution, with prices increasing 22% due to an increase in fabrication demand; the main driver being gasoline-powered auto markets of the United States and China. Furthermore, it appears the Chinese government will be implementing stricter emission standards, which in turn will increase the usage of palladium in auto catalysts. Palisade Global just took an insider position in New Age Metals (CVE:NAM), which holds North America’s largest undeveloped platinum and palladium deposit – http://ift.tt/2qkRLUr

Cobalt, yes cobalt, is now the premier battery metal, riding the clean energy revolution and already gaining 70% for the year! Unlike lithium and manganese, cobalt has immediate supply qualms in that the lion’s share of its production is from the highly unstable DRC. Furthermore, 98% of the world’s cobalt production comes as a by-product of copper and nickel. We maintain cobalt will be one of the performing commodities over the next five years.

We want to mention an exciting new opportunity in the cobalt space, Cobalt 27 (CVE:KBLT), a company that will provide investors pure-play exposure to cobalt. The company is looking to hold actual physical cobalt and several early stage cobalt royalties. Cobalt 27 is also currently in negotiations with cobalt producers and developers for potential cobalt stream acquisitions. Palisade Resources, our private resource company just sold royalties on three past producing cobalt mines to Cobalt 27.

Cobalt 27 is in the process of raising $200 million. This is a staggering amount, let alone for a cobalt company! The company is chaired and led by Anthony Milewski, a mining industry veteran and the foremost expert in the cobalt space. Mr. Milewski has managed several mining investments at various stages of development and turnaround situations, and across a range of commodities. He also serves as a member of the investment team at Pala Investments Ltd.

To learn more about why cobalt is poised to break out and become one of the best performing commodities, we encourage you to read our  cobalt primer, which also has two of the best cobalt exploration companies in the market. In fact, they are already exploring as we speak and have high impact catalysts on the horizon.

So how about gold?

Gold almost made the list of top performers in 2017, showing a 10% gain for the year. It appears the US economy remains strong, but investors bought up the yellow metal because of higher than average geopolitical uncertainty. This includes increased tensions in Syria, Trump’s aggressive stance towards North Korea, and more recently, the French elections. Nonetheless, the Fed has been strong in its hawkish stance, and will stand by its inflationary fiscal stimulus. Will 2017 be the year when the dam finally breaks? We remain firm in our resolve, continuing to accumulate the best of best gold stocks.

Remember, huge moves can be made emerging from a bear market as oversold conditions make way for major supply crunches. Cobalt is a prime example of what can happen to a commodity bouncing off a bottom. Don’t be surprised to see some wild gains in prices in the months and years ahead!

via http://ift.tt/2pxW4sD Palisade Research

In the beginning it was a slow pace, then it became a casual jog. Then, starting early last week, the jog morphed into a full-blown run, and – as of the past 3 days – the withdrawal of deposits at Home Capital Group’s high interest savings accounts has mutated into a full blown mad dash not to be the last person to have their money at what is now an effectively insolvent alternative lender.

According to HCG’s latest press release this morning, the “less than prime” Canadian mortgage lender held HISA deposits of only $391 million as of Monday, May 1; this is down C$130 million from Friday, or a reduction in the total amount by 25%. It is also down 72% from the C$1.4 billion reported one week ago.

For those who need to think all the way back to the third Greek bailout of 2015 to recall what a bank run looks like, here is what the deposit situation at HCG has looked like over the past month.

There is some good news: a terminal bank run at the mortgage lender has already been largely factored in, and is largely covered courtesy of the recently announced $2 billion emergency loan from the Ontario Pension Plan – putting up to 321,000 retirees on the hook – which carries a pre-bankruptcy interest rate of as much as 20%.  To this end, HCG announced
today that its subsidiary, Home Trust, expects to receive the initial draw today of $1 billion from its
$2 billion credit line.

However, there is another problem: the company has another C$12.8 billion in  Guaranteed Investment Certificate deposits, or GICS. As these 30- and 60-day deposits come due in the coming weeks, depleting HCG’s already tapped out liquidity, and forcing even more emergency loans. Without a deposit base, Home Capital can’t fund new mortgages.

As we reported over the weekend, while Home Capital hired investment bankers for a possible sale, there is little to no interest in the loan book as the company itself.

Meanwhile, as financial regulators say they are watching closely, overnight Jim Hall, the CIO of Mawer Investment Management, formerly one of the biggest investors at HCG, said he is “recalculating the odds of a contagion widening across the Canadian financial system.”

“The probability has gone from infinitesimal to possible – unlikely, but possible. If depositors or bondholders start to lose faith in their banks, well then that becomes systemic.”

So is contagion on the horizon? Here Bloomberg has some good observations, noting that unlike in the U.S. housing crash when loan defaults soared, there is little evidence of faulty loans, at least not yet: after all the housing market remains propped up by tens of billions in offshore money flooding into Canada’s two main metroareas, Vancouver and Toronto. Furthermore, Home Capital’s delinquency rate, for example, was just 0.20% as of February, suggesting at least for the time being there are no rising delinquency concerns.

All that may change, however, if Chinese money launderers shift to other targets, such as the US west coast as one can now make the case based on several outlier transactions in the Pacific Northwest and, as of past week, Los Angeles.  It would also explain why the Ontario Pensioners demanded they have $2 in mortgage collateral for every $1 lent, hinting that the creditor may anticipate losses as much as 50% on the loan in the future.

Still, investors are starting to get cold feet, and shares of rivals First National Financial and Equitable Group have both tumbled, dragged lower by the Home Capital woes as investors fear contagion.

via http://ift.tt/2qvBadc Tyler Durden

David Stockman has a stern message for investors: They're living in a fantasy land about Trump.

"I don't know what the stock market is thinking but if they have faith in a giant fiscal stimulus and tax cut then it's a delusional faith that's going to be badly disappointed and I think fairly soon," rages the former director of the Office of Management and Budget under President Reagan, during a recent interview with CNBC.

Stockman said that "Wall Street is totally misreading Washington," and President Trump's promises of tax reform will be "dead before arrival."

The president is "essentially a 70-year old kid in a candy store who wants one of everything: More for defense, veterans, border walls, law enforcement, infrastructure and 'phenomenal' tax cuts, too—without the inconvenience of paying for any of it," said Stockman.

Of the proposed tax bill announced this week, he said, "It's a wonderful fantasy…but there's no way to pay for the $7.5 trillion cost of the main features."

"I like [the tax plan] but you have to pay for it either with a new tax like the border adjustment tax, which is dead, or spending cuts which Trump has ruled off the table," Stockman explained. "What you have down there is a total fiscal calamity that is going to basically dominate Washington."

Stockman expects a "constant fiscal crisis and stalemate" in D.C., which will ultimately delay the "good stuff," like a tax cut, from ever happening.

Of Trump's first 100 days in office, Stockman again referred to the White House as a "pop up store giving out candy before the 100th day to say they've accomplished something." Adding, "this isn't a serious plan, it can't be done. And I think it's only indicative of the huge trouble that's brewing down there in the beltway."

Eventually, however, Stockman expects the drama in D.C. to trickle into equities, sparking a significant pullback.

via http://ift.tt/2p0wewB Tyler Durden

Authored by Kaitlin Last via BetterDwelling.com,

Canadian real estate values continue to soar, and a record number of buyers are piling into risky loans. According to the Bank of Canada (BoC), and the Ministry of Finance (MoF), high ratio mortgage borrowers are extending themselves to the limit. While we covered how concerning this trend has become in Toronto, it’s not just isolated to that city. It’s a trend that’s growing across all Canadian urban centers.

High Risk Mortgages

People taking out high-ratio mortgages combined with incomes too low for the property value, is spreading across Canada. A high-ratio mortgage is defined as a mortgage where the buyer leaves less than a 20% downpayment. The BoC and MoF have both expressed concern when high-ratio mortgages are paired with high income-to-loan ratios. The amount of high risk buyers is increasing as markets reach dizzying heights, especially in urban areas.

Vulnerability isn’t just the buyer’s ability to keep devoting a high percentage of their income to carrying payments. Since the number of these buyers are accelerating as prices get higher, they’re at a greater risk during a correction (not even a crash). Something as small as a 5% drop in value and many of these mortgages would be underwater. Underwater is industry slang for the buyer has 0, or less than 0, equity in their home. If this happens it would mean already broke homeowners would have to pay to get rid of their home. Combine that with a higher interest rate at renewal, and you can imagine the mayhem that can unfold.

Toronto and Vancouver Have The Highest Totals

High-ratio mortgages with low income levels is a growing trend in Canada, but Toronto and Vancouver take it to the next level. Across Canada, 18% of high risk mortgages have extremely low incomes for the homes they’re in, an increase of 38% over two years. Despite Vancouver’s insanely high prices, Toronto still tops the risky business of subprime borrowers. Toronto takes the top spot with a 53% increase during the same period, bringing their total to 49%. Coming in second is Vancouver which had a 25% increase over the past two years, bringing their total to 39%. These two cities are moving much faster than the average for the country, and they’re getting to dangerously high levels.

Source: Ministry of Finance (Canada), Bank of Canada’s Calculations.

Trend Is Growing Across Canada

Although Toronto and Vancouver take the cake, this trend is also growing across Canada, albeit with a lower impact. Over the past 2 years, Calgary saw a 23% increase of high ratio mortgages with at risk-income ratios, totalling 32%. Montreal saw a 30% increase over the past two years, bringing their total to 13%. Ottawa-Gatineau saw a massive 62.5% increase, bringing their total to 13%. Meanwhile, quiet little Halifax saw a 40% increase, a total of 7%. So while the issue is growing across Canada, it hasn’t reached the crisis heights of Toronto and Vancouver yet.

While Toronto and Vancouver are leading the market for risky mortgage debt, they aren’t alone. Canada has dodged the real estate commodity cycle for almost 30 years. That has produced a whole generation of people that have no idea that real estate is a cyclical market. This irrational exuberance, and the thoughts that this market will never end is placing all homeowners in a precarious situation.

via http://ift.tt/2qoTViT Tyler Durden