1.) Long-term readers of Palisade Research know this chart well. We are now 297 trading days into a bull market on the TSX Venture Exchange, as depicted by our 1990 to Present – Bull & Bear Markets Chart. During that time, the TSX Venture has had some sell-offs, but history says this is inevitable. In fact, we are currently mired in a several month long pull-back. So what comes next? We took a look at the USD and the US equities market to formulate an idea.

2.) The Bloomberg Commodity Index (BCI) is a diversified price index distributed by Bloomberg Indexes. Since January 2016, gold has outperformed its peers, with a significant divergence taking hold. However, the recent pull-back has allowed the BCI to catch-up. That is until recently, when gold started to charge ahead, yet again.

3.) Gold bugs are paying close attention to the US equity markets, which have been embroiled in a multi-year bull market. If money continues to pour into the S&P, little capital is left to fuel a gold bull market. The following chart looks at company leverage, calculated as debt/EBITDA. This is a common metric to assess a company’s ability to pay off its debt. This ratio has been increasing in tandem with the market caps of the S&P 500 companies. When looking at these two numbers as a ratio, it appears debt loads are reaching capacity, and can no longer fuel growth. It seems there is still some runway, but the downtick suggests a swift fall.

4.) Another key indicator and Warren Buffett’s favourite – The S&P 500 market cap to GDP ratio. This ratio is often used to gauge market sentiment and determine if the overall market is under or overvalued. When the metric is greater than 100%, it is often a sign the market is overvalued. In 2000, the ratio was 153%, and the markets fell sharply due to the dot-com bust. We are currently over 100%, a good deal higher than the average of 0.86.

5.) But maybe one of the most compelling cases to be made for exhaustion in the bull market can be seen when looking at margin. When buying on margin, investors borrow funds from their brokers to buy shares. The debit margin is the total money owed by an investor; the higher this number, the more leveraged he is. Buying on margin has been a good bet to date, however, margins are hitting all-time records, and investors are very vulnerable to any sort of market shock. Selling will be exaggerated as margins unwind, which in turn can extend the length of any sort of market downturn.

6.) No one knows what will mark the top for US equity markets. We feel they are due for a major correction, but that correction could be months or years away. What we can say for certain is that the USD is weakening despite the Fed increasing rates. The weakness can be attributed to Yellen’s dovish tone. Another major factor? Trump’s repeal of Obamacare was a major pledge, and its failure only emphasized the rifts within the GOP, which has the potential to derail other major promises, including tax reform and spending. In times of uncertainty, gold is the go to safe haven for every investor!

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

“What worries you?” asks a Bloomberg TV anchor of billionaire investor Jim Rogers. Rogers was not shy in his response: “The Federal Reserve… has no clue what they are doing. They are going to ruin us all.”

Having driven rates to record lows and with debt sky-rocketing, Rogers warns “this is all going to end very, very, very badly.” Rogers slams the ‘counterfactual’ arguments that things would have been a lot worse if The Fed had not done all this, “propping up zombie banks and dead companies is not the way the world is supposed to work.”

“It’s been nine years and we have nothing to show for it [economically] except staggering amounts of debt.”

We have missed Mr. Rogers painful truthiness…

via http://ift.tt/2nBb2yS Tyler Durden

After getting an office (and access to classified information and a government-issued phone) in the White House West Wing, President Trump's eldest daughter Ivanka is becoming an official government employee, joining her husband in serving as an unpaid adviser to her father in the White House.

As The New York Times reports, this move from being an informal advisor to becoming an official federal employee follows criticism from ethics experts, who said it would allow her to avoid some rules and disclosures.

Ms. Trump said in a statement on Wednesday…

“I have heard the concerns some have with my advising the president in my personal capacity while voluntarily complying with all ethics rules, and I will instead serve as an unpaid employee in the White House office, subject to all of the same rules as other federal employees."

 

“Throughout this process I have been working closely and in good faith with the White House counsel and my personal counsel to address the unprecedented nature of my role."

Ms. Trump’s title will be special assistant to the president.

Her husband, Jared Kushner, has the title of senior adviser.

A spokeswoman for the president said to The New York Times in an email…

“We are pleased that Ivanka Trump has chosen to take this step in her unprecedented role as first daughter and in support of the president.” 

 

“Ivanka’s service as an unpaid employee furthers our commitment to ethics, transparency, and compliance and affords her increased opportunities to lead initiatives driving real policy benefits for the American public that would not have been available to her previously.”

Ms. Trump’s lawyer, Jamie S. Gorelick, said that her decision stemmed from “her commitment to compliance with federal ethics standards and her openness to opposing points of view.”

Does this break the media narrative around Ivanka? Who knows – we are sure Maxine Waters will have something to say about it.

Too late, MSNBC's Chris Matthews already has… (via Gateway Pundit) Comparing Trump's children to Saddam Hussein's sons…

“You know, we kid,” he said, “I kid about everything, but Uday and Qusay working for Saddam Hussein — you couldn’t go to a restaurant and have eye contact with those guys without getting killed.”

 

“These people are really powerful,” he explained. “Imagine getting into a fight in the office with Jared or Ivanka. They have enormous power, and they’re always gonna be there.”

 

“This is what I worry about for other people in the White House,” Politico’s Annie Karni responded.

 

“Ivanka Trump has been described as her father’s eyes and ears on the ground. That’s a little scary if you’re just a regular White House staffer.”

As a reminder, The Telegraph described Hussein's sons thus…"Uday, the psychopathic playboy, and Qusay, the cold, calculating and ruthless heir apparent, summed up the two sides of Saddam’s Iraq. They were living proof of how their father’s brand of tyranny combined wanton brutality with the cunning acumen that won more than three decades of dominance."

via http://ift.tt/2mQDA8N Tyler Durden

Conservative wachdog Judicial Watch today released another 1,184 pages of State Department records, including previously unreleased Hillary Clinton email exchanges which according to the legal organization revealed “additional instances of Abedin and Hillary Clinton sending classified information through unsecured email accounts and contributors being given special access to the former secretary of state.”

The records contain 29 previously undisclosed Clinton emails – of a total of which is now at least 288 emails that were not part of the 55,000 pages of emails that Clinton turned over to the State Department. This further appears to contradict statements by Clinton that, “as far as she knew,” all of her government emails were turned over to the State Department. Two of these emails are now available on the State Department’s website.

In one notable email exchange from February 23, 2010, ambassador and long-time friend to Hillary Clinton sought to map out her – and Bill Clinton’s – funerals in 2010 because “planning is best done when they are still with us.”

Capricia Marshall, who was chief of protocol for the State Department when Hillary Clinton served as secretary of state, wrote to Huma Abedin, Doug Band and Cheryl Mills on Feb. 23, 2010, saying “everytime someone significant passes, I am flooded with requests” about the Clintons’ arrangements.

“Planning is necessary and best done when they are still with us,” she wrote to top Clinton aide Abedin.

“As well, Hum – I would make the same suggestion to you – for her it will be a little different … And once affirmed it will be very hard for someone to deny the type of ceremony she wanted — as well I understand that the President can request certain arrangements for her that she/her rep cannot (ie if you want the motorcade to go through DC — stop somewhere),” Marshall wrote.

She told the aides she needed to contact the military to prepare for the funerals — “as Protocol has a lot to do with planning, notification etc.”

* * *

Another email exchange between Abedin and Doug Band revealed tension between Clinton’s top personal aide and the former secretary of state’s chief of staff, Cheryl Mills. The rift was revealed when Chelsea Clinton asked Band if he could arrange a White House tour for a female Haitian-American sailor from the USS Comfort. 

“I don’t want to get cross wise with cdm [Cheryl Mills] on anything Haiti related,” Abedin replied. Three minutes later she wrote again. “HAVE YOU MET CHERYL MILLS,” Abedin asked in all caps about Hillary Clinton’s former chief of staff when she was secretary of state. “You have no idea.”

Band replied, “Good point.”

“She will kill the tour if she find out i set it up …,” Abedin wrote back. “Wow,” Band replied.

* * *

Among the other emails, is a February 2010 exchange in which Jake Sullivan, then-Deputy Chief of Staff to Clinton, sent to Clinton’s and Abedin’s unsecure email accounts information that the State Department has classified as the material includes information “to be kept secret in the interest of national defense or foreign policy; foreign relations or foreign activities of the US, including confidential sources.” The redacted information concerns “former GTMO [Guantanamo] detainee Binyam Mohamed” and Mohamed’s request for “various classified intelligence documents” that contained U.S. intelligence information related to his detention before he was taken to Guantanamo.

In other emails, Clinton’s “final” schedules with specific details concerning her whereabouts were transmitted by Lona Valmoro to the unsecure emails accounts of Clinton Foundation officials Doug Band, Terry Krivnic Margaret Steenberg and others, and forwarded to Abedin’s unsecure email account.

In April 2010, Sid Blumenthal sent two email memos to Clinton containing information now classified.  Clinton forwarded this material to Abedin’s unsecure email account. The classified information, which Clinton asks Abedin to print off for her, concerns the change of government in the Kyrgyz Republic.

In a statement by Tom Fitton, the Judicial Watch President said that “these emails are yet more evidence of Hillary Clinton’s casual and repeated violations of laws relating to the handling of classified information. The Justice Department should finally begin an independent investigation into the Clinton email matter.” But why, when every day there is a new daily dose of dripping red meat – or rather make that Russian salad – involving Trump’s ties to Putin to keep the media and authorities more than busy with constant speculation that Trump is a Kremlin spy.

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

Interested in precious metals investing or storage? Contact us HERE 

 

 

 

 

The Market Has Its Head Buried Deep In The Sand

Posted with permission and written by Dave Kranzler (CLICK HERE FOR ORIGINAL)

 

 

 

Several “black swans” are looming which could inflict a financial nuclear accident on the U.S. markets and financial system. I say “black swans” in quotes because a limited audience is aware of these issues – potentially catastrophic problems that are curiously ignored by the mainstream financial media and financial markets.

 

The most immediate problem is the Treasury debt ceiling. The Treasury is now projected to run out of cash by mid-summer. Of course, in the spurious manner in which the markets evaluate the next trade, July may as well be a decade away. My best guess is that the “market” assumes that, after drawn out staging of DC’s version of Kabuki Theatre, Congress will raise the debt ceiling, probably up to $22 trillion. Then the Fed will extend its highly secretive “swap” operations to foreign “ally” Central Banks (hint: Belgium and Switzerland) in order to fund the onslaught of Treasury issuance that will ensue. Problem solved…or is it?

 

(Note: Plan B would be another one of Trump’s bewildering Executive Orders removing the debt ceiling. Plan B is another form of “fiat” currency issuance)

 

The second “black swan” seen by some but invisible to most is the ongoing collapse the shopping mall business model, erroneously blamed on the combative growth of online retailing. But when I look at the actual numbers, that argument smells foul. 

Is Online Retailing Actually The Cause Of Brick/Mortar Retail Apocalypse?

More than 3,500 stores are scheduled to be shuttered in the next few months. JC Penny, Macy’s, Sears, Kmart, Crocs, BCBC, Bebe, Abercrombie & Fitch and Guess are some of the
marquee retailing names that will be closing down mall and strip mall stores. The Limited is going out of business and closing down all 250 of its stores.

 

The demise of the mall “brick and mortar” retail store is popularly attributed to the growth in online retail sales. To be sure, online retailing is eating into the traditional retail sales distribution mechanism – but not as much as the spin-meisters would have you believe. At the beginning of 2015, e-commerice sales were about 7% of total retail sales. By the end of 2016, that metric rose to 8.3%. However, looking at the overall numbers reveals that nominal retail sales have increased for both brick/mortar stores and online. In Q4 2015, total nominal retail sales were $1.186 trillion. Brick/mortar was $1.096 trillion and online was 89.7 billion, which was 7.6% of total retail sales. In Q4 2016, total sales were $1.235 trillion with brick/mortar $1.133 trillion and online $102.6 billion, which was 8.3% of total retail sales.

 

As you can see, there was nominal growth for both brick/mortar and online retailers. My point here is that the spin-meisters present the narrative that online retailers are eating alive the brick/mortar retailers. That’s simply not true. Part of the problem that the total retail sales “pie” is shrinking, especially when analyzing the inflation-adjusted numbers. I created a graph on from the St. Louis Fed’s “FRED” database that surprised even me (click to enlarge):

 

 

The graph above shows the year over year percentage change in nominal (not inflation-adjusted) retail sales on a monthly basis from 1993 (as far back as the retail sales data goes) thru February 2017, ex-restaurant sales, vs. outstanding consumer credit. As you can see, since 1994 the growth in nominal retail sales on a year over year basis has been in a downtrend, while the level of consumer credit outstanding as been in a steady uptrend. Since 2014, the rate of growth in debt has exceeded the rate of growth in retail sales. If we were to adjust the retail sales using just the Government-reported CPI measure of “inflation” retail sales would be outright declining.

 

The problem with the mall business model is debt. The mall-anchor retailers who are vacating mall space like cockroaches vacate a kitchen when the light is flipped on have been leveraged to the hilt by the financial engineers who control them who in turn have been enabled by the most permissive Federal Reserve in U.S. history. To be sure, online retailing is cutting into the margins of Macy’s, JC Pennies, Sears, Dillards, etc. But these companies would have no problem “fighting back” if they were not over-leveraged to the eyeballs.

 

Layer on top of that the leverage employed by the mall REITs and the recipe for a financial crisis larger than the 2008 “big short” mortgage/housing crisis has been created. To compound this problem, mall owners are now starting to mail in the keys to financially troubled malls: More mall landlords are choosing to walk away from struggling properties, leaving creditors in the lurch and posing a threat to the values of nearby real estate…[as] some of the largest U.S. landlords are calculating it is more advantageous to hand over ownership to lenders than to attempt to restructure debts on properties with darkening outlooks (LINK).

 

But it gets worse. I referenced the consumer’s ability to borrow in order to spend money. Economic activity in the United States has relied heavily on an increasing amount of debt issuance for several decades. At some point consumer borrowers reach a point at which they can no longer support taking on more debt, whether in the form of mortgages, auto loans/leases or credit cards. The problem for the U.S. financial system is that there will be widespread defaults on the consumer debt that’s already been issued. The average U.S. household has “hit a wall” on the amount of debt it can absorb. This is why restaurant and retail sales are dropping and why auto sales have rolled over. All three will get worse this year.

 

This Will Crush The Pensions

Finally, the third “invisible” black swam is the looming pension crisis. A colleague of mine who works at a pension fund did a study last year in which he concluded that, because of the extreme degree of public pension underfunding, a 10% decline in the stock market for a sustained period – i.e. more than 3 or 4 months – would cause every single public pension fund to blow up. As he has access to better data than most, he also surmised that the degree of underfunding is 2-3x greater than is publicly acknowledged by the mainstream media (see this article for instance: Bloomberg claims $1.9 trillion underfunding).

 

Circling back to the mall/REIT ticking time-bomb, while the Fed can keep the stock market propped up as means of preventing an immediate nuclear melt-down in U.S. pensions (all of which are substantially “maxed-out” in their mandated equities allocation), the collapse of commercial mortgage-back securities (CMBS) will have the affect of launching a nuclear sub-missile directly into the side of the U.S. financial system.

 

The commercial mortgage market is about $3 trillion, of which about $1 trillion has been packaged into asset-backed securities and stuffed into yield-starved pension funds. Without a doubt, the same degree of fraud of has been used to concoct the various tranches in these CMBS trusts that was employed during the mid-2000’s mortgage/housing bubble, with full cooperation of the ratings agencies then and now. Just like in 2008, with the derivatives that have been layered into the mix, the embedded leverage in the commercial mortgage/CMBS/REIT model is the financial equivalent of the Fukushima nuclear power plant collapse.

 

It’s a matter of time before a lit match hits one of the three lethal powder-kegs described above. This is why the bank stocks were hit particularly hard last week when the Dow was in the middle of its 8-day losing streak. Of course, all it took to spike the Dow/SPX higher was a couple of immaterial “consumer confidence” reports in order to reflate the stock market with some “hope.” Don’t forget, the last time consumer confidence high-ticked was in 1999, right before the tech bubble imploded.

 

Unfortunately, the next financial catastrophe that is going hit the system, which the Fed is helpless to prevent, will make everyone yearn for just the tech bubble or “big short” bubble collapses. Meanwhile, the stock market and its collective universe of “investors” will continue sticking its head deeper into the sand, oblivious to the sling blade that is swinging closer to its neck.

 

Portions of the above analysis were excerpted from the current Short Seller’s Journal.

 

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

 

The Market Has Its Head Buried Deep In The Sand

Posted with permission and written by Dave Kranzler (CLICK HERE FOR ORIGINAL)

via http://ift.tt/2nwHS2h Sprott Money

LULU shareholders may be stunned, but at least someone at United Airlines is smiling.

Moments ago Lululemon reported Q4 earnings of $0.99, missing consensus estimates of $1.01 by 2 cents, hardly a disaster.

However, it was LULU’s guidance that shocked Wall Street.

According to the press release, for Q1 the company now expects net revenue to decline, and be in the range of $510 million to $515 million based on a total comparable sales decrease in the low-single digits on a constant dollar basis. Wall Street had expected the company to generate $552.8 million in revenue in the quarter. 

Worse, the company guided to Q1 EPS of $0.25 to $0.27, far below the consensus estimate of $0.39, and below even the lowest Wall Street forecast of $0.34. LULU noted that the guidance assumes a 31.2% tax rate (perhaps it should simply lower its effective tax rate by reincorporating in Ireland).

For the full fiscal 2017, LULU said it expects net revenue to be in the range of $2.550 billion to $2.600 billion based on a total comparable sales increase in the low-single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of $2.26 to $2.36 for the full year, modestly higher than the $2.16 estimate however Wall Street does not appear to have some doubts about this longer-term forecast.

While LULU did not explain what caused the sharp slowdown in demand for the company’s products – one doubts the recent United Airlines scandal had a dramatic adverse effect –  LULU warned that 1Q comp sales would be down low-single digits, confirming that there is something very strange when it comes to consumer demand in the current quarter, and which certainly does not jive with reports of soaring consumer confidence.

Needless to say, the market is not happy with LULU’s sudden pivot away from being a growth stock, sending it over 17% lower in after hours trading.

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Seriously, this is too easy…

 

Dow and Trannies were lower on the day as the Nasdaq just kept chugging higher (Nasdaq Composite up 14 of the last 17 days)

 

On the week The Dow is the laggard (but still green)

 

For the 6th day in a row, stocks opened weak and ramped non-stop all day…BTFD Much?

 

NOTE VIX was not paying along today…

 

Banks closed lower (except JPM)…

 

Post healthcare vote – Dollar's down; but Bonds, Stocks, and Gold are up…

 

Bonds erased most of yesterday's losses – and are now back lower post-healthcare vote (except for 2Y)

 

With 30Y back below 3.00%…

 

The Dollar index traded in an extremely narrow range for most of the day but ironically, after good housing data and very hawkish FedSpeak, the dollar began to sink! Back below post-healthcare-vote close…

 

On the week, EUR and Cable are weakest offset by a stronger AUD…

 

WTI and RBOB jumped on inventory data (despite a new cycle high in production) but copper and PMs flatlined…

 

Finally – this is not how it ius supposed to work… not at all…

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Authored by Mike Shedlock via MishTalk.com,

Polls show close to 40% of French voters are still undecided. That’s a record total this late in the game.

In the “what if” category, two candidates proposed counting blank votes (a vote for none of the party candidates).

It’s quite possible, if not probable, that “nobody” would win in such a match-up.

Via email, Eurointelligence provides some interesting commentary.

The outcome of the French presidential elections is still quite unpredictable. And this is not due to the candidates’ relative performance. The main factor is the undecided voters.

 

A new poll shows that 40% of the French do not know who to vote for. With just one month to go, this is an absolute record: in 2012 there were 26% at this stage. Undecided, angry, and disgusted, these voters do not even know whether they should bother and go to vote. And of those, 86% would prefer if their lack of preference could be expressed as an explicit blank vote.

 

With such high numbers the question, then, is whether their blank vote should be a valid one that counts, writes l’Opinion in its lead story. This vote would then be an expression of their preferences, political disengagement, and rejection of all candidates. At the moment these blank votes are counted but do not play a role later when the candidates’ support percentages are calculated. If they were accounted for, certain candidates would drop out in the first round as they would fail to qualify under the threshold, and the winners’ percentage would look much less impressive. It would also have meant that neither Jacques Chirac nor François Hollande would have had a majority of over 50% in the second round. The advantage of such a blank vote is that it might get people to bother to vote, and reduce the number of those who abstain or protest. It also might reduce protest votes which often turn to extremist parties to find expression.

 

This blank vote idea has been taken up by Jean-Luc Mélenchon and Benoît Hamon, who both advocate a recognition of the blank vote in the counting. But there are considerable hurdles for this. It would require a rewrite of Article 7 in the constitution. This is not about to happen anytime soon. It would also imply that the winner of the second wound could win with only a relative majority. Imagine what the duel between Jacques Chirac and Jean-Marie Le Pen in 2002 would have looked like. Maybe the second round would have been different altogether? Who knows. But with a rising number of politically disengaged people, the blank vote discussion is here to stay. And there are also clear differences among the current candidates on this.

 

The latest poll shows that, if the blank vote were effective, it would be employed most strongly by the electorate of Jean-Luc Mélenchon or Marine Le Pen, with 44% and 35% respectively. This is followed by Benoit Hamon (33%) and Emmanuel Macron (30%). It would be least used among the voters of Francçis Fillon (22%). The most enthusiastic about a blank vote are the supporters for Mélenchon, Hamon and Macron.

 

For the last five months of primaries and polling French voters defied predictable outcomes. And now they ponder the question whether to vote in the first round, and for whom. Don’t think you know already who the next president will be.

 

One further caveat is that if you allow the blank vote to count, you will eventually have to allow it to win. And, in this case, you could end up with a second round run-off between Le Pen and a blank, leaving the electorate with a choice between fascism and anarchy. Have they thought this through?

French Election Polls

In the US, would “Neither” have beaten Donald Trump and Hillary Clinton?

Even if “Nobody” won just a handful of states, it would have denied a majority to one of the others.

A vote for none of the above is a theoretical question, but 40% undecided (38% by Wikipedia) is not.

We have already seen two major election surprises, and there could easily be another one.

via http://ift.tt/2o8Hcm9 Tyler Durden