Category: zerohedge

Authored by Mac Slavo via SHTFplan.com,

Presidential historian and author Doug Wead claims that the deep state, which has successfully overthrown the governments of foreign countries, is going to continue to actively seek a coup d’etat of the duly elected president of the United States.

If there was ever a time in history to be concerned about another rise in communism, now is that time. Wead says that the deep state is determined to overthrow Donald Trump. The presidential historian refused to mince words, saying:

We have very skilled, talented professionals. They’ve overthrown governments in Vietnam and the Philippines, in Iraq and Iran, in Egypt, in the Ukraine. Duly elected democratic governments.

 

They created what they called 'popular uprisings'…

 

Here we go, let's try this is America…

 

There's no going back."

Of course, we should expect nothing less from shadow governments. The very same people who work in the State Department, some of them in intelligence, and some of them in the media, have successfully caused uprisings in several other countries. They’ve worked together to overthrow foreign governments, and Wead believes Trump is a thorn in their side preventing a global takeover.

The deep state has become somewhat of a mainstream topic of discussion since Trump’s election.  Before, it was more of a “conspiracy theory.”  But the goals of the deep state are simple: the complete enslavement of mankind by political elites. 

They [republicans in congress] see themselves as “partners” with the Left in the same game: to establish an elitist politico-oligarchic ruling class, broken down into divisions throughout the globe for ethno-cultural manipulation, yet with the same end-state.

 

That goal is the enslavement and complete control of all of mankind with the elitists ensconced as the ruling moneyed class.  They see themselves as the educated, sensible minority with tender sensibilities and true humanistic views…who must…must…take a stand in the globalist crusade against the barbaric Neanderthals of the proletariat and populist serfs.

 

–SHTFPlan

The average IQ of an American has dropped 14 points over the past century and with the media actively peddling propaganda, there’s no need for anyone to desire their own mental and physical freedom.  In fact, we now hear the weakest members of society clamor for communism, as if they wouldn’t be the first the state “extinguishes” in the event that they succeed.  Communism preys on those who are producers and has little interest in those who actually desire it.

It has been apparent to those not blinded by partisan politics that something is going on in the government right now, yet most simply call it a “witch hunt,” simply for lack of wanting to admit the deep state exists.  It certainly looks like a battle between democracy and the deep state. And we aren’t sure we’d put money on democracy at this point in history.

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Back in 2007, the ratings agencies were so woefully behind the eight ball in understanding and reporting the credit risks in the U.S. financial system that it was nearly impossible to tell from day to day whether they were really just that incompetent or if they were complicit in the biggest financial fraud in history.  Regardless of which you believe is more likely, they seem intent upon not making the same mistake again…at least not in Australia. 

As The Sydney Morning Herald points out today, Moody’s has cut the long-term credit rating of Australia’s four biggest banks after pointing to surging home prices, rising household debt and sluggish wage growth as potential threats to the financial industry down under.  Australia & New Zealand Banking Group Ltd., Commonwealth Bank of Australia, National Australia Bank Ltd. and Westpac Banking Corp. were all downgraded to Aa3 from Aa2, Moody’s said in a statement released earlier today. Per The Sydney Morning Herald:

“In Moody’s view, elevated risks within the household sector heighten the sensitivity of Australian banks’ credit profiles to an adverse shock, notwithstanding improvements in their capital and liquidity in recent years,” the statement said.

 

“In Moody’s assessment, risks associated with the housing market have risen sharply in recent years. Latent risks in the housing market have been rising in recent years, because significant house price appreciation in the core housing markets of Sydney and Melbourne has led to very high and rising household indebtedness,” the statement said.

 

“The rise in household indebtedness comes against the backdrop of low wage growth and structural changes in the labour market, which have led to rising levels of underemployment.

 

“Whilst mortgage affordability for most borrowers remains good at current interest rates, the reduction in the savings rate, the rise in household leverage and the rising prevalence of interest-only and investment loans are all indicators of rising risks.”

Of course, as we’ve pointed out multiple times before, the Chinese money laundering operation…sorry, we meant Sydney “housing market”…puts the previous U.S. housing bubble to shame.

 

Of course, all of the banks that are now being downgraded are the same ones that assured us just a couple of months ago that Australian home prices were not in a “speculative bubble.” Testifying before a parliamentary committee, the chief executives of National Australia Bank, Westpac Banking and Commonwealth Bank of Australia all said that while they were worried about elements of the housing market, prices weren’t over-inflated.  Per Bloomberg:

“I would draw the distinction between a speculative bubble in prices and prices beyond what fundamentals would justify,” Westpac’s Brian Hartzer told the committee in Canberra Wednesday. A bubble isn’t occurring in Sydney or Melbourne, where house prices have risen the most, he said.

 

“There are increasing risks, but I still believe the answer is no,” National Australia Bank’s Andrew Thorburn said when asked if houses in Sydney and Melbourne are overpriced.

 

Commonwealth Bank, the nation’s largest mortgage lender, is “lending at levels we are comfortable with” across Australia, Chief Executive Officer Ian Narev told the committee when he testified Tuesday.

Meanwhile, the ever-important “crane-index” helps to put some perspective around just how ‘bubbly’ the Australia market has become.

 

Of course, maybe Australia’s bankers are right and bubbly home prices are just the result of strong fundamentals.  Although, the last time a prominent banker made a similar prediction in the U.S. he turned out to be just a bit off the mark.  Ben Bernanke (July 2005):

“Well, unquestionably, housing prices are up quite a bit; I think it’s important to note that fundamentals are also very strong. We’ve got a growing economy, jobs, incomes. We’ve got very low mortgage rates. We’ve got demographics supporting housing growth. We’ve got restricted supply in some places. So it’s certainly understandable that prices would go up some. I don’t know whether prices are exactly where they should be, but I think it’s fair to say that much of what’s happened is supported by the strength of the economy.”

Oops.

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Authored by Michael Snyder via The American Dream blog,

Is it possible that the Yellowstone supervolcano is gearing up for a major eruption? If you follow my work on a regular basis, then you already know that I spend a lot of time documenting how the crust of our planet is becoming increasingly unstable. Most of this shaking is taking place far away from the continental United States, and so most Americans are not too concerned about it. But we should be concerned about it, because a major seismic event could change all of our lives in a single instant. For instance, a full-blown eruption of the Yellowstone supervolcano would have the potential of being an E.L.E. (extinction level event). That is why it is so alarming that there have been 296 earthquakes in the vicinity of the Yellowstone supervolcano within the last 7 days. Scientists are trying to convince us that everything is going to be okay, but there are others that are not so sure.

The biggest earthquake in this swarm occurred last Thursday evening. It was initially measured to be a magnitude 4.5 earthquake, but it was later downgraded to a 4.4. It was the biggest quake in the region since a magnitude 4.8 earthquake struck close to Norris Geyser Basin in March 2014. This magnitude 4.4 earthquake was so powerful that people felt it as far away as Bozeman…

The main quake was centered about 5.8 miles underground.

 

The quake and aftershocks occurred just over 8 miles northeast from West Yellowstone, according to the U.S. Geological Service.

 

A witness reported that she felt the building she was in move.

 

Dozens of people reported that they felt it in and around West Yellowstone, Gardiner, Ennis, and Bozeman.

But by itself that one quake would only be of minor concern. What is troubling many of the experts is that this earthquake has been accompanied by 295 smaller ones.

There is normally a rise in seismic activity before a volcano erupts, and according to theoretical physicist Michio Kaku, a long overdue eruption at Yellowstone could “rip the guts out of the USA”…

Scientists currently believe that there’s a 10% chance that a “supervolcanic Category 7 eruption” could take place this century, as pointed out by theoretical physicist Michio Kaku who appeared on a segment for Fox News.

 

The grey haired physicist told Shepard Smith that the “danger” we are now facing with the caldera is that it’s long overdue for an eruption which Kaku said could “rip the guts out of the USA.”

 

Kaku said that a “pocket of lava” located under the park has turned out to be twice as big as scientists originally thought.

I would like to try to describe for you what a full-blown eruption of the Yellowstone supervolcano would mean for this country.

Hundreds of cubic miles of ash, rock and lava would be blasted into the atmosphere, and this would likely plunge much of the northern hemisphere into several days of complete darkness. Virtually everything within 100 miles of Yellowstone would be immediately killed, but a much more cruel fate would befall those that live in major cities outside of the immediate blast zone such as Salt Lake City and Denver.

Hot volcanic ash, rock and dust would rain down on those cities literally for weeks. In the end, it would be extremely difficult for anyone living in those communities to survive. In fact, it has been estimated that 90 percent of all people living within 600 miles of Yellowstone would be killed.

Experts project that such an eruption would dump a layer of volcanic ash that is at least 10 feet deep up to 1,000 miles away, and approximately two-thirds of the United States would suddenly become uninhabitable. The volcanic ash would severely contaminate most of our water supplies, and growing food in the middle of the country would become next to impossible.

In other words, it would be the end of our country as we know it today.

The rest of the planet, and this would especially be true for the northern hemisphere, would experience what is known as a “nuclear winter”. An extreme period of “global cooling” would take place, and temperatures around the world would fall by up to 20 degrees. Crops would fail all over the planet, and severe famine would sweep the globe.

In the end, billions could die.

So yes, this is a threat that we should take very seriously.

But today, most Americans think of Yellowstone as little more than a fun tourist attraction. But the truth is that many tourists have discovered just how dangerous Yellowstone can be. Some have been scalded by boiling water from geysers that can get as hot as 250 degrees Fahrenheit, and one man from North Carolina recently had to be flown to a burn center after he mistakenly fell into a hot spring…

A North Carolina man was flown to the University of Utah Burn Center after falling into a hot spring at Yellowstone National Park late Tuesday night.

 

Gervais Dylan Gatete, 21, was with seven other people in the Lower Geyser Basin north of Old Faithful when he fell, according to a park news release.

 

The group attempted to transport Gatete, an employee with Xanterra Parks and Resorts, by car for medical treatment. Just before midnight, they flagged down a park ranger near Seven Mile Bridge on the West Entrance Road.

Since Yellowstone is still very active, scientists assure us that it will erupt again one day.

And when that happens, all of our lives will be completely turned upside down in a single moment.

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Content originally published at iBankCoin.com

CNN’s Jim Acosta is beside himself after (soon to be former) White House Press Secretary Sean Spicer called for the media to turn off cameras and audio recording devices for a ‘silent’ press briefing. Acosta, apparently unaware that there was a time when the Press Corps used to take notes by hand, staged a silent protest by tweeting a picture of his retarded socks.

The Spicer off-camera/no audio gaggle has begun. I can’t show you a pic of Sean. So here is a look at some new socks I bought over the wknd http://pic.twitter.com/wO9erspwYa

— Jim Acosta (@Acosta) June 19, 2017

“If he can’t come out and answer the questions and they’re just not gonna do this on-camera or audio—why are we even having these briefings or these gaggles in the first place?”

STONEWALLED!

Acosta tweeted that he was ‘stonewalled’ by Spicer’s silent briefing.

Make no mistake about what we are all witnessing. This is a WH that is stonewalling the news media. Hiding behind no camera/no audio gaggles

— Jim Acosta (@Acosta) June 19, 2017

The CNN host then whined on air about being passed over for questions. Looks like the White House’s war on Fake News is getting under Jim’s skin…

It’s like we’re just covering bad reality television, is what it feels like now.

How will the press corps ever recover? Will the ever-evasive White House confiscate pencils and paper next? Can Jim Acosta walk and chew gum at the same time?

Watch the anchor-socked anchor’s dramatic tantrum below:

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With the New York City real-estate market sagging under the weight of too much inventory following a credit-driven surge in multifamily housing in recent years, the return of Manhattan’s marginal buyer could finally be at hand.

A ranking of the city’s best-selling condo buildings from Property Shark hints at how the ultra-high end of the market, where units can sell for $20 million or more, appears increasingly vulnerable. While some of the top-selling buildings have racked up impressive sales totals, some have vacancy rates as high as 40%.

Recognizable names like 15 Central Park West and “billionaires row” member One57 top the Property Shark rankings. Lower down, Brooklyn makes its entry into the top 50 with One Brooklyn Bridge Park, as the increasingly trendy borough attracts financial and tech types who might’ve once preferred the East Village or Chelsea. However, despite the rapid ascent of Brooklyn property values, 49 of the city’s top-50 selling buildings remain in Manhattan.

Central Park is the hotspot with the largest share of best-selling buildings, with six of the top 10 clustered around the landmark. 230-unit Central Park West, the city’s all-time best-seller, has achieved total sales volume of nearly $1.9 billion. Condos in the building regularly sell for more than $8 million.

Units in One57 regularly sell for more than $20 million, though 12% of its inventory currently remains unsold.

The third best-selling building, 432 Park Avenue, averages $20.2 million per condo, though 37% of its inventory remains on the market. In another indication of how inaccessible the city’s property market has become for buyers who are merely wealthy, the building with the lowest median apartment price in the PropertyShark ranking is the 551-Unit Orion Condominium, located near Times Square, where units sell for $900,000. It came in at No. 22.

Here’s a breakdown of the top 10:

No. 10 – 150 Charles St.

“With a total sales volume of $786,532,443, 105 Charles Street ranks as the #10 best-selling building of all times in New York City. Originally built in 1901, the condo conversion has sold 97% of its stock at an average of $8,937,869 per unit. The 91-unit West Village best-seller is a landmark structure.”

No. 9 – The Sheffield 57

“Built in 2005 as one of the largest apartment developments in New York City, the 609-unit Sheffield57 is currently one of the city’s best-selling condos buildings. Sales volume in The Sheffield57 has reached $803,155,159, with 12% of units yet to be sold. Luxe amenities of course abound in what is one of the most expensive condo conversions in the city. They include an indoor/outdoor swimming pool, 3 sun decks overlooking Midtown Manhattan, a spa and a sleek fitness center with yoga/Pilates studio among others.”

No. 8 – 56 Leonard Street

“One of Tribeca’s most luxurious residential developments, 56 Leonard Street made NYC’s best-selling top 10 thanks to an $890,414,761 sales volume – a total projected to expand with the sale of the remaining 14% of units. It showcases a Herzog & de Meuron-designed two-floor amenity complex with a 75-foot infinity lap pool as one of its most striking features. Residents can also access the building’s conference room, indoor/outdoor theater and sleek fitness center, among many other exclusive amenities.”

No. 7 – Manhattan House Condo

“Built in 1950 as a landmark apartment development on the Upper East Side, the extensively renovated 575-unit development is currently New York’s 7th residential structure with sales topping $1 billion, With 31% of its units still on the market, and the average sale price clocking in at $2,618,276, the luxurious development will grow well over its current sales volume of $1,034,219,13. Manhattan House Condo residents enjoy access to the rooftop Manhattan Club with its indoor/outdoor entertaining areas, a luxe fitness center and yoga studio and sizeable private garden.”

No. 6 – The Time Warner Center

“Once boasting the highest market value in New York City, Time Warner Center’s residential component is still among the city’s most successful. Having reached $1,076,2228,720 in sales, units in the 97%-sold development go for an average of $5,519,122. Exclusive amenities at the 2004-built asset include concierge services, a ballroom, landscaped roof deck, fitness center and health club, complete with pool and access to the Mandarin Oriental Hotel’s spa and the luxurious shopping available in the building’s commercial component.”

No. 5 – The Plaza

“Originally built in 1907 as a hotel, the French chateau-styled building has become an icon of the city, featured in countless movies and F. Scott Fitzgerald’s landmark novel The Great Gatsby. Concierge and hotel services are made available to residents, along with a host of high-priced amenities. Units here sold for $7,956,261 on average for a total sales volume of $1,296,870,614 to date.”

No. 4 – The Greenwich Line

“Having amassed $1,513,709,635 in sales to date, the 5-building development is currently 91% sold with units going for an average of $8,138,223. Green spaces, walking trails and a sizeable private garden characterize the 204-unit development. Each structure in Greenwich Lane features a full fitness floor, complete with golf, yoga and wellness rooms. Additional features include a 75-foot indoor pool, 22-seat screening room with wet bar and Thomas O’Brien-designed interiors.”

No. 3 – 432 Park Avenue

“Currently the tallest residential building in New York and the western hemisphere, and the 3rd best-selling one, 432 Park Avenue has already exceeded $1.77 billion in sales. Its final sales volume is projected to cross over the $2 billion threshold to make it New York City’s #1 best-selling building ever. Three floors of luxurious amenities have enticed deep-pocketed buyers to invest in the 96-story tower. An executive boardroom, 18-seat screening room, library complete with billiards room and a 75-foor two-lane indoor swimming pool are just a few of the building’s exclusive amenities, along with a resident-only restaurant led by a Michelin-starred chef.”

No. 2 – One57

“At $21,134,400, One57 has the most expensive average sale price among the city’s top-selling buildings. Projected to surpass $2 billion in sales, the 83-unit development is the city’s all-time bestselling building and its 2nd tallest residential structure. Known as “The Billionaire Building”, One57 showcases a private function room, performance and screening venue, art atelier and a library complete with pool table and 24-foot aquarium. Residents can also access hotel amenities at the Park Hyatt below, including the triple-height indoor swimming pool and health club complete with yoga studio, and spa and steam rooms.”

No. 1 – 15 Central Park West

“One of the most hyped buildings of the early ‘00s, Central Park West is a two-part development – The Tower soars 35 stories high on Broadway, while the 19-story The House boasts coveted Central Park views. With 229 units sold for a total of $1,881,982,784, The House is New York City’s best-selling building ever. Residents can access an impressive amenity package that includes a 14,000-square-foot fitness center, a 75-foot sky-lit lap pool, spa-level treatment rooms, a 20-seat private theater and an outdoor terrace. Past and present celebrity residents include Robert De Niro, Denzel Washington, Sting and Goldman Sachs CEO Lloyd Blankfein.”

See 11-50 here.

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Authored by Adam Taggart via PeakProsperity.com,

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The good news – thanks to the largest liquidity injection in almost six months, yields on China's sovereign bonds have fallen – the biggest drop since Dec. 29, to 3.50 percent, while the one-year dropped four basis points to 3.57 percent. .

“The People’s Bank of China’s liquidity injections are showing its intention to protect the market at this sensitive period of time,” said Sun Binbin, a Shanghai-based analyst at Tianfeng Securities Co.

Notably this is the largest liquidity injection for this time of year in Chinese history (noteworthy since spikes in liquidity occur at regular intervals around quarter-end and lunar new year).

The bad news – as yields have fallen, the curve has collapsed to its most inverted ever… flashing warning signals for growth as loud as they have ever been.

Of course, if Fed's Dudley is to be believed today, a flattening yield curve is not a negative signal for the economy… apart from the seven out of seven times it has occurred since the late 60s, perfectly predicting recession of course.

Furthermore, as RBC's Charlie McElligott notes China's tightening financial conditions (higher short-term rates in the chart below) have crushed not just the yield curve, but global commodities…

Lenders have become increasingly reliant on wholesale funding and central bank loans this year, analysts at China Minsheng Banking Corp.’s research institute wrote,“major banks don’t have much extra funds, as is shown by the excess reserve data,”

 

As The Wall Street Journal previously reported, an inverted yield curve defies common understanding that bonds requiring a longer commitment should compensate investors with a higher return. It usually reflects investor pessimism about a country’s long-term growth and inflation prospects.

“But the curve inversion we are seeing right now is one with Chinese characteristics and it’s different from the previous one in the U.S.,” said Deng Haiqing, chief economist at JZ Securities.

 

The current anomaly in the Chinese bond market is partly the result of mild inflation and expectations of a slowing economy, Mr. Deng said. “At the same time, short-term interest rates will likely stay elevated because the authorities will keep borrowing costs high so as to facilitate the deleveraging campaign,” he said.

Notably, it appears officials are concerned at the potential for fallout from this crisis situation.

In an article published Saturday, the central bank’s flagship newspaper, Financial News, said that the severe credit crunch four years ago won’t repeat itself this month because the central bank will keep liquidity conditions “not too loose but also not too tight.”

 

Chinese financial markets tend to be particularly jittery come June due to a seasonal surge of cash demand arising from corporate-tax payments and banks’ need to meet regulatory requirements on capital.

 

On Sunday, the official Xinhua News Agency ran a similar commentary that sought to stabilize markets expectations. “Don’t panic,” it urged investors.

Sounds like exactly the time to 'panic'.

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Authored by Mike Krieger via Liberty Blitzkrieg blog,

The wayfarer,
Perceiving the pathway to truth,
Was struck with astonishment.
It was thickly grown with weeds.
“Ha,” he said,
“I see that none has passed here
In a long time.”
Later he saw that each weed
Was a singular knife.
“Well,” he mumbled at last,
“Doubtless there are other roads.”

 

– Stephen Crane, The Wayfarer

When times get tough people can unite and fight back against a common enemy, or they can be manipulated into fighting each other. Unfortunately, the latter has become increasingly popular amongst all sides in what has become an increasingly deranged, adolescent and counterproductive political environment.

Meanwhile, the people who are truly powerful, the oligarchs of industry and their bought and paid for political minions are the ones who really benefit. The primary purpose of this website from the very beginning has been to highlight how power actually functions in imperial America with the hope that people across the political spectrum could unite and push back against the unaccountable rent-seeking practices of a common enemy. It seems I was extraordinarily naive.

When a writer and thinker such as myself is forced to admit failure, it’s a very tough pill to swallow. Writing this blog is in many ways a thankless task. I’m essentially doing volunteer work day in and day out because I passionately believe in the ideas I put forth, and to see them have little to no effect on the public debate can be very depressing. Rather than seeing human beings unite to throw off the predatory shackles that bind them as I had hoped, I see people who should be coming together punching and yelling at each other in the streets — and that’s on a good day. On bad days, people are getting shot or run over, from Virginia to London. Watching all this madness unfold while the truly powerful sit back and grin, more secure in their positions as ever before thanks to rabble fighting each other, sometimes makes me want to just stop doing this writing thing. After all, what’s the point?

But I know better. I know that karma, or action, is not about the fruits of your work, but the action itself is everything. I discussed this concept at length in the post,Do Ends Justify the Means? Here’s an excerpt.

Unfortunately, many people don’t have any principles to begin with and simply live their lives in the pursuit of their own superficial, materialistic or egotistical goals. These are the types of people who most often employ “ends justify the means” thinking, which is exactly why those of us who do have principles must reject this way of thinking and pursue a more conscious manner of achieving our ends. If that means our ends aren’t achieved in our lifetime that’s something that must be accepted. The means we use will reverberate in the universe forever and will benefit the world whether we’re able to point to definitive results or not.

As much as I understand the above to be true, it doesn’t make staring at the world devolving around me any easier. However, it does provide me with the moral fortitude to stick to my principles even if nobody is listening or cares.

If any of what I’ve written so far speaks to you, let me share a few thoughts I wrote down the other night while lamenting the mounting degeneracy that seems to be multiplying in society at large.

What I see out there is ugly. Really ugly and it’s coming from all sides. There seems to be this perverse ascendent philosophy (if you can call it that) to act as depraved as your perceived enemy. I think that’s the worst possible response and can only lead to one thing. More depravity.

 

I don’t consider myself particularly enlightened, but I’ve come to a few realizations and perhaps the most important one of all is to always try to be better. Look for your better nature and try to follow it. While I certainly don’t always live up to what I want to be in my language or commentary, I understand that when you stay true to your better self you are much happier and content. It’s better for you, it’s better for your relationships and it’s better for the world.

 

Many people seem to be losing sight of the big picture while focusing on petty arguments and fame obsession.

 

Picking holes in other people is easy, working on yourself is much harder. But it’s so much more important.

I wrote this post for myself as much as I did for my readers. I hope it connected with some of you, and helps you stick to your better nature as things get uglier around us. The healthy response to others getting worse, is not to imitate them, but to try to be better.

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Submitted by Gordon Johnson of Axiom Capital Research

Last night, China published May, 2017 new home pricing data for its 70 city index, which showed a continued slowing in growth (a key driver for commodity consumption inside China). More specifically, in May, new home prices across the China 70 city index advanced just 0.74% m/m, while annual growth, or the most important metric here, fell further to just +9.46% y/y (vs. +9.63% annual growth in April, and +10.51% annual growth December, 2016).

Exhibit 1: China New Home Price Growth YoY and MoM

Source: Source: National Bureau of Statistics (NBS), Axiom Capital Research.

Looking at the data in more granular detail, we note that the top 3 tiers of cities all displayed slowing annual growth, while the tier 4th-tier-and-over “crowd” remained resilient (overall, annual growth for China’s 70 city index fell -17bps in May).

Exhibit 2: Average Price Change of New Homes, by Tiered-Cities, %Y/Y

Source: National Bureau of Statistics (NBS), Axiom Capital Research.

Looking at the data from a different viewing glass, the total number of flat or falling markets rose to 14 in May from 12 in April, and just 8 in March.

Exhibit 3: New Home Prices 70-Cities M/M: Number of Cities Up vs. Down

Source: Source: National Bureau of Statistics (NBS), Axiom Capital Research.

Lastly, and probably the most important takeaway here, as shown below, historically, once year over year new home price growth in China begins to slow, this is typically a precursor to herculean iron ore port inventory destocking.

So what’s the likelihood that home prices in China continue to trend lower? Well, in our view, the fact that China’s yield curve is now inverted (the 1-year SHIBOR rate is now below the 1-month, 3-month, and 6-month SHIBOR rates), as well as the fact that banks, for the first time ever: (a) now charge more to lend amongst themselves than to corporations (evidenced by the fact that the 1-year SHIBOR rate of 4.43% is above the China 1-year Loan Prime rate of 4.30%), and (b) now charge more to lend among themselves than it costs them to take money from the PBoC (evidenced by the fact that the 1-year SHIBOR rate of 4.43% is above the China 1-year Benchmark Lending rate of 4.35%), implies credit tightening continues to plague a number of Chinese markets. Stated differently, evidenced by the deteriorating home price growth trend in China in May, credit tightening in China is beginning to show transfer effects (i.e., the rise in lending rates in China is now transferring from financial markets to the real economy).

Exhibit 4: China New Home Price Growth vs. Iron Ore Port Inventories

Source: National Bureau of Statistics (NBS), Shanghai SteelHome, Axiom Capital Research.

CONCLUSION: Should home price growth in China continue to slow, we foresee a prodigious Chinese iron ore port inventory destocking cycle taking hold. And, as any investment professional knows, when a commodity good is defined by record inventory levels (Chinese iron ore port stocks are just off all-time record highs), and a sharp destocking cycle takes form, this usually spells TROUBLE for the underlying commodity good (when you destock, you de facto bring organic demand to a virtual stop).

With the above as a backdrop, and also considering: (1) China’s 1-year SHIBOR rate is up nearly 140bps since China began its “stealth tightening” in 4Q16 (i.e., nearly double the 75bps in tightening the US Fed has done over the past several months), (2) China’s 1-year SHIBOR rate hasn’t declined since 4/14/17, and (3) year-to-date 2017, China’s 1-year SHIBOR rate has only fallen a total of 3 days, we see further weakening in China’s home sales price growth as likely. As a result, we also expect much weaker iron ore prices as an extensive destocking cycle takes hold, pushing organic demand for new ore produced materially lower. Resultantly, we continue to expect iron ore prices to exit 2017 in the low $40s, moving to the low $30s in 2018 (this is not Consensus at present, even amongst the iron ore “bears”).

Exhibit 5: China 12-Month SHIBOR Rate

Source: China Foreign Exchange Trade System, Axiom Capital Research.

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Earlier today, NY Fed president Bill Dudley sparked a hawkish storm in the markets, when in a bizarre statement he doubled down on the Yellen’s “hawkish hike” rhetoric, and  made it seem that easing is now perceived by the Fed as a bad thing:

• FED’S DUDLEY: HALTING TIGHTENING CYCLE NOW WOULD IMPERIL ECONOMY

Then moments ago, today’s second Fed speaker of the day, Chicago Fed’s dovish, FOMC voter Charles Evans delivered a Dr. Jekyll and Mr. Hyde statement, where first, in his prepared remarks and during the subsequent Q&A in New York he sounded rather hawkish, while speaking to reporters after the event he flipped at emerged as his usual old dovish self.

First, here are the highlights from the dovish Evans:

• “I think where we are with the funds rate right now is kind of in line with my outlook.”
• “US fundamentals are good, no reason this won’t continue”
• Evans sees a “high threshold to change the Fed’s balance sheet unwind plan”
• Evans said there are only “small differences” in whether the FOMC hiked rates 2, 3, or 4 times in 2017.
• Evans says he didn’t dissent last week because “we’re at a point where the real economy is really doing quite well”
• Evans agreed with Yellen and others that the reductions in the balance sheet should gradual and like “watching paint dry”.
• “I can’t just sort of say, it’s without risk to continue with very accommodative low interest rates”
• “Beginning to adjust the balance sheet is one of the easier, more natural things to do, soon, sometime this year”

He also said something which really doesn’t make any sense, to wit: “I want to assure you that if we know things are going wrong we will act.” The statement is clearly meaningless because on countless occasions the Fed has said it has no way of seeing asset bubbles in advance, and since an asset bubble is the biggest risk facing global markets, one wonders just how the Fed could know that “things are going wrong.”

And then as he was leaving, the dovish Evans we all know so well, made a surprise appearance:

• “We could wait until December” and assess the data and still be able to get the three hikes in which are implied by the median dot in the latest quarterly Fed forecast
• “I think it’s going to be important to see several months of markedly better inflation data.”
• “I think that it’s about the policy path from here that is the risky part. Now, it could be that we’ve already gone too far. I don’t think that’s the case”
• “I think if we were to race to a higher funds rate too quickly without seeing improvements in inflation, that could be quite a concern. And it’s that part that I think where we need to stop and kind of go, you know — I just think the message out of the conservative central banking story was, we need to get inflation to 2 percent”: Evans

His non-committal conclusion was that “we’re at a point where we’d be well- served to meaningfully monitor the data.”

During his speech, the dollar initially strengthened, then weakened, but since the end of his speech it has resumed its autopilot move higher as Dudley’s comments clearly take presedence, bizarre as they may have been.

via http://ift.tt/2sjK6WE Tyler Durden