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Janet Yellen has confirmed that the ($USD) is going to collapse.

I don’t mean a systemic, going to zero, collapse (though one day the $USD, like all fiat currencies will fail). I mean that the $USD is going to drop hard in the coming 18+ months.

How hard?

I believe we’ll see the $USD in the 80s sometime in 2018. That’s a full 11%-13% lower from where the $USD is today. Put simply, the entire move in the greenback that was driven by the Fed ending QE will be unwound.

How do we know this?

Janet Yellen’s testimony to Congress earlier this month was a clear signal.

First, a little context…

For months now, numerous Fed officials have been publicly stating that the Fed was embarking on a significant tightening schedule.

This has been one of the most coordinated and clear Fed PR campaigns in recent history with numerous Fed officials calling for 3-4 rate hikes in 2017 as well as Fed balance sheet shrinking.

Then on Tuesday and Wednesday July 11th and 12^th respectively, Fed Chair Janet Yellen testified in front of Congress that the Fed is just about done with tightening. Moreover, she stated that the Fed WOULDN’T use its balance sheet normalization as a monetary policy (indicating that it won’t use it to drain liquidity from the system).

The $USD, which was already trending downward in spite of the Fed’s previous hawkishness, promptly collapsed. And Gold erupted higher.

It's time to get moving into inflation plays.

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

 

 

via http://ift.tt/2tDN76t Phoenix Capital Research

In a project dubbed ‘Bowline’, Bloomberg reports that Deutsche Bank may shift about 300 billion euros ($350 billion) from the balance sheet of its U.K. entity to Frankfurt as client trading and assets migrate to the continent following Britain’s decision to leave the European Union. While not the first bank to threaten to move post-Brexit, the scale of asset movement is the largest yet.

Deutsche Bank’s balance sheet listed 1.59 trillion euros in total assets at the end of last yea and much of its trading in Europe is traditionally booked in London. But, as Bloomberg reports, the Brexit-contingency project calls for Frankfurt trading to go live in September 2018 and for the balance sheet migration to be completed by March 2019, said the person, who asked for anonymity in discussing internal matters.

Chief Executive Officer John Cryan told employees in a recent videotaped message that he’s girding for a hard Brexit, with the “vast majority” of trades currently booked in London probably moving to Frankfurt, but the bank hasn’t officially detailed its plan.

 

People familiar with the matter told Bloomberg that the lender intends to move chunks of trading and investment-banking assets from London to Frankfurt, with the jobs of several hundred traders and as many as 20,000 client accounts likely to be shifted.

 

“There’s an awful lot of detail to be ironed out and agreed,” Cryan said in the video. “But inevitably roles will need to be either moved, or at least added, in Frankfurt.”

Deutsche Bank’s plan notes that trade and balance sheet migration will begin in September 2018, with six months required for the move of the balance sheet, the person said. The bank plans to start informing clients from September 2017 that their contracts will be switched to Frankfurt. It wants to have built front-to-back technology and processes by June 2018, according to the person.

This report comes just days after Cryanb warned his staff that the bank “will assume a reasonable worst outcome” from the UK’s talks with the European Union, according to a Bloomberg News report.

“The worst is always likely to be worse than people can imagine,” Cryan said.

Britain is expected to lose financial passporting rights, which allow banks with a base in the UK to sell products and services to customers and financial markets across the EU.

Frankfurt is emerging as a popular destination for many international firms choosing a post-Brexit base. Three Japanese lenders, Daiwa, Sumitomo Mitsui Financial Group, and Nomura, have all confirmed in recent weeks that they will set up new post-Brexit bases in Frankfurt.

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

Authored by Mike Shedlock via MishTalk.com,

Illinois, Alabama, Connecticut, Michigan, Mississippi, New Mexico, Ohio, and Wyoming are the only states that still have not regained employment lost during the Great Recession or prior recessions.

The Wall Street Journal comments These Eight States Still Haven’t Regained All Their Lost Jobs.

Nonfarm payrolls in June still lag high-water marks set in 2008 or earlier in eight states struggling against headwinds like population loss and the manufacturing sector’s long-term decline: Alabama, Connecticut, Illinois, Michigan, Mississippi, New Mexico, Ohio and Wyoming.

 

At the same time, unemployment rates were at all-time lows in six states, a mix of regions that are experiencing strong growth and other places with slower job gains and possible worker outflows: Arkansas, California, Colorado, North Dakota, Tennessee, and Washington. Records for state unemployment rates go back to 1976.

 

Some areas face structural challenges, such as factory employment’s long decline. Across a swath of the industrial Midwest – Illinois, Michigan and Ohio – employment peaked back in 2000 and still hasn’t recovered to that level after two national recessions and two recoveries.

 

For other states, the local jobs recovery has simply been much slower than the national average.

Notably, in past recoveries, some states saw their unemployment rates return to normal levels not because jobs returned but because job seekers moved away or otherwise departed the local workforce.

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

On the heels of homebuilder optimism tumbling to 8-month lows in July, existing home sales slumped in June (down 1.8%, more than the 0.9% decline expected) to the second lowest SAAR this year. Existing home sales are now unchanged since September, but we note that average prices are up 6.5% YoY.

Total existing-home sales , decreased 1.8 percent to a seasonally adjusted annual rate of 5.52 million in June from 5.62 million in May. Despite last month's decline, June's sales pace is 0.7 percent above a year ago, but is the second lowest of 2017 (February, 5.47 million).

Since rates surged, exisitng home sales have gone nowhere (but prices have risen)…

"Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that's straining their budget," he said.

 

"The demand for buying a home is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines."

For context, this is the weakest summer selling season since 2011… a time when seasonally sales have tended to increase…

First-time buyers were 32 percent of sales in June, which is down from 33 percent both in May and a year ago.

NAR's 2016 Profile of Home Buyers and Sellers – released in late 20164 – revealed that the annual share of first-time buyers was 35 percent.

"It's shaping up to be another year of below average sales to first-time buyers despite a healthy economy that continues to create jobs," said Yun.

 

"Worsening supply and affordability conditions in many markets have unfortunately put a temporary hold on many aspiring buyers' dreams of owning a home this year."

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Following Europe's PMI slump to six-month lows this morning, US Composite PMI rose to a six-month high, with Manufacturng surprising to the upside (4-mo high). The stronger PMI reading was supported by accelerated growth in output, new orders, employment and stocks of inputs during July, but the principal weak spot in the economy remained exports, with foreign goods orders dropping.

As 'hard' US economic data has drastically disappointed over the last three months, Services (higher) and Manufacturing (lower) based on Markit's PMI survey have diverged markedly until today's July print which saw manufacturing catch up…

 

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

“The July PMI surveys show an economy gaining growth momentum at the start of the third quarter, enjoying the strongest monthly improvement in business activity since January.

 

“Most encouraging was an upturn in new order inflows to the second-highest seen over the past two years, which helped push the rate of job creation to the highest so far this year, indicative of non-farm payrolls growing at a rate of around 200,000.

 

“The principal weak spot in the economy remained exports, with foreign goods orders dropping – albeit only marginally – for the first time since last September, often blamed on the strength of the dollar.”

 

“The overall rate of expansion remains modest rather than impressive. The surveys are historically consistent with annualized GDP growth of approximately 2%, but the signs are that growth could accelerate further in coming months.

 

We leave you with UBS' comment which seemed to sum things up rather well:

via http://ift.tt/2vSL3nY Tyler Durden

On Monday morning, Trump took another swipe at Attorney General Jeff Sessions, with whom he expressed displeasure recently for recusing himself from the Russian probe, when in a tweet he said “why aren’t the Committees and investigators, and of course our beleaguered A.G., looking into Crooked Hillarys crimes & Russia relations?”

So why aren’t the Committees and investigators, and of course our beleaguered A.G., looking into Crooked Hillarys crimes & Russia relations?

— Donald J. Trump (@realDonaldTrump) July 24, 2017

And, as Axios reports moments ago, Trump is reportedly “so unhappy with Attorney General Jeff Sessions that he has raised the possibility of bringing back Rudolph Giuliani to head the Justice Department, according to West Wing confidants.” Axios notes that in internal conversations, Trump has recently proposed the idea of nominating Giuliani, “a stalwart of his campaign.”

Of course, this could be just another rumor, or merely a trial balloon:

Trump often muses about possible personnel moves that he never makes, sometimes just to gauge the listener’s reaction. So the Giuliani balloon may go nowhere.

Or perhaps tired of getting nowehere with his original staff, Trump means it this time: Axios notes that “Giuliani would have a tough time getting 50 Republicans senators to vote to confirm him. He was such an early and ardent Trump backer that he wouldn’t be seen as an independent guardian of the department in these tumultuous times.” Furthermore, the nomination could be seen as Trump “throwing gasoline on a fire. And Giuliani’s stop-and-frisk police policy as New York mayor, and clients since then, also would be controversial with many senators.”

Additionally, Axios noted over the weekend Newt Gingrich, another notable backer of the Trump, may take a more visible, frequent role as a defender as Trump girds for battle with special counsel Bob Mueller.

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

Authored by Michael Snyder via The Economic Collapse blog,

One mystery trader has made an extremely large bet that the stock market is going to crash by October, and if he is right he could potentially make up to 262 million dollars on the deal.  Fortunes were made and lost during the great financial crisis of 2008, and the same thing will happen again the next time we see a major stock market crash.  But will that stock market crash take place before 2017 is over?  Without a doubt, we are in the midst of one of the largest stock market bubbles in U.S. history, and many prominent investors are loudly warning of an imminent stock market collapse.  It doesn’t take a genius to see that this stock market bubble is going to end very badly just like all of the other stock market bubbles throughout history have, but if you could know the precise timing that it will end you could set yourself up financially for the rest of your life.

I want to be very clear about the fact that I do not know what will or will not happen by the end of October.  But one mystery investor is extremely convinced that market volatility is going to increase over the next few months, and if he is correct he will make an astounding amount of money.  According to BI, the following is how the trade was set up…

• To fund it, the investor sold 262,000 VIX puts expiring in October, with a strike price of 12.
• The trader then used those proceeds to buy a VIX 1×2 call spread, which involves buying 262,000 October contracts with a strike price of 15 and selling 524,000 October contracts with a strike price of 25.
• For reference, bullish call spreads are used when a moderate rise in the underlying asset is expected. Traders buy call options at a specific strike price while selling the same number of calls of the same asset and expiration date at a higher strike.
• In a perfect scenario, where the VIX hits but doesn’t exceed 25 before October expiration, the trader would see a whopping $262 million payout.

I will be watching to see what happens.  If this mystery investor is correct, it will essentially be like winning the lottery.

But just because he has made this wager does not mean that he has some special knowledge about what is going to happen.

For example, just look at what Ruffer LLP has been doing.  They are a $20 billion investment fund based in London, and they have been betting tens of millions of dollars on a stock market crash which has failed to materialize so far.  But even though they have lost so much money already, they continue to make extremely large bearish bets…

As of earlier this week, Ruffer had spent $119 million this year betting on a stock market shock, $89 million of which had expired worthless, according to data compiled by Macro Risk Advisors. The investor has gradually amassed holdings of about 1 million VIX calls through three occasions so far in 2017, and each time a significant portion expired at a loss.

 

Blame a subdued VIX for the futility. The fear gauge was locked in a range of 10 to 14 for the first three months of 2017, and while it has since climbed to as high as 15.96, it has been stuck well below 14 since a single-day plunge of 26% nine days ago. Earlier this week, the index closed at its lowest level since February 2007.

 

But that doesn’t mean Ruffer is giving up. Already loaded up on May contracts, the firm has continued to buy cheap VIX calls expiring later in the year — wagers costing about 50 cents.

I can understand why Ruffer has been making these bets.  In a rational world, stocks would have already crashed long ago.

The only way that stock prices have been able to continue to rise is because of unprecedented intervention by global central banks.  They have been pumping trillions of dollars into the financial markets, and this has essentially completely destroyed normal market forces.  The following comes from David Stockman…

The Fed and its crew of traveling central banks around the world have gutted honest price discovery entirely. They have turned global financial markets into outright gambling dens of unchecked speculation.

 

Central bank policies of massive quantitative easing (QE) and zero interest rates (ZIRP) have been sugar-coated in rhetoric about “stimulus”, “accommodation” and guiding economies toward optimal levels of inflation and full-employment.

 

The truth of the matter is far different. The combined $15 trillion of central bank balance sheet expansion since 2007 amounts to monetary fraud of epic proportions.

In the “bizarro world” that we are living in today, many companies are trading at prices that are more than 100 times earnings, and some companies are actually trading at prices that are more than 200 times earnings.

Stock prices have become completely and totally disconnected from economic reality.  As I discussed the other day, U.S. GDP has only risen at an average yearly rate of just 1.33 percent over the past 10 years, but meanwhile stock prices have been soaring into the stratosphere.

Nobody in their right mind can claim that makes any sense at all.  Just like in 2000, and just like in 2008, this absolutely ridiculous stock market bubble will have a horribly tragic ending as well.

Once again, I don’t know what the exact timing will be.  Stocks could start crashing tomorrow, but then the Swiss National Bank could swoop in and buy 4 million shares of Apple just like they did during the months of January, February and March earlier this year.

The biggest players in this ongoing charade are the global central banks.  If they decide to keep pumping trillions of dollars into global financial markets, they may be able to keep the bubble going for a little while longer.

But if at any point they decide to withdraw their artificial assistance, those that have placed huge bets against the market are going to make absolutely enormous piles of cash.

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

In the past few weeks and months we have seen some reports wherein it became clear Germany is actually selling some of its gold on a monthly basis. That’s an interesting phenomenon as it’s weird to see a country secretly repatriating its gold which it starts to sell shortly afterwards.

There’s no doubt it must have been easier to start selling when it was still located in the foreign vaults, and just transfer the cash proceeds back to Berlin or the Bundesbank. But okay, the sales are pretty marginal as Germany ‘dumped’ just 120,000 ounces of gold  in the past three months. A move from 108.6 million ounces to 108.48 million ounces isn’t the end of the world, and definitely doesn’t indicate the start of a trend.

But what did catch our attention (besides obviously the ‘Russian Alliance’ –consisting of Russia, Belarus and Kazakhstan – buying more gold), was the behaviour of Turkey. Not only are the Turks buying more gold at a substantially more aggressive pace than the Russians adding 950,000 ounces of the yellow metal in just three months, the purchases are also much more meaningful when you look at the bigger picture.

In just three months, Turkey has increased its gold reserves by in excess of 7% and that’s a really substantial step for a relatively small country. What makes it even more interesting is the fact Turkey was a huge net seller in 2016 as it sold in excess of 3 million ounces of gold between June and December before increasing its position again (at a rather aggressive pace).

There’s no real explanation for this, and we would be surprised if the Turkish Central Bank was trying to ‘time the market’. As this wouldn’t explain the substantial sales when the gold price lost its momentum in the second half of last year…

As you can see on the previous image, the average weight of the precious metal in the total basket of foreign reserves has also been increasing from January until May (we are still waiting for Turkey to release its June update) has continued to increase in the first few months of the year.

The Turkish timing might be pretty good, as gold has now once again bounced off its lows in the lower-1200 region, and has now moved above its 200 day and 50 day moving average, and this usually is a sign of strength.

Source: stockcharts.com

It now does look like the gold price is ready to attack the $1290-1300 levels again which might be a surprise considering the summer months are traditionally pretty weak for the precious metal. Are we gearing up for a few busy weeks and months? Time will tell!

>>> Read our Guide to Gold right now!

via http://ift.tt/2upjAvT Secular Investor

Caterpillar’s great depression ended four months ago, when in March following a record 51 consecutive months of annual declines, its global retail sales posted the first, if modest, monthly increase growing by 1% on the back of a surge in Chinese and other Asia/Pac sales. Since then the trend has accelerated, and in June the company reported that Asia Pac sales rose by 40% Y/Y, which however appears to the next cyclical slowdown following increases of 46%, 47% and 49% in the March-May period. Just as notably, retail sales in the US rose by 2% again, the best performance since May 2015.

The result is that CAT’s global sales have posted the longest positive streak in 51 months, and appear to have put the 4+ year depression in the read view mirror – even if Asian retail sales appear to be slowing once again – and are levitating higher, although as we said last month, just like during the 2011/2012 downturn, it all depends on how “hard” China’s economic slowdown will be over the coming year.

Finally broken down by component, it was a mixed picture with weakness re-emerging amid transportation equipment:

• Power Gen: -7%, after down -10% in April
• Industrial: +10%, after up +4%
• Transportation:-7%, after up +8%
• Oil & Gas: +6%, after down -13%

And while construction industries (thanks China housing) were broadly higher, up 10% in June, a modest decline from May’s 11%, resources – i.e., E&P and others, continue to languish, and were again down 1% in June, following a -3% drop in May, which however was an improvement from the 19% drop in both March and April as commodity producers appear to be finally spending more on capex.

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