The Great Rig of the Last Five Years is Ending

Since 2012, when Europe was about to collapse, we’ve been told that “everything was fixed.” Everyone from finance ministers to the President of the US stated that we were in recovery and the worst was behind us.

Now, we find out that:

1)   Europe is completely busted. The political class over there lied to the people, and even circumvented Democracy to keep the fraud in place. It’s telling that nationalism is on the rise there again. If your vote no longer counts… and the folks in power don’t give a flying turnip about your well being, things tend to get ugly fast.

European Financials have completely broken their trendline from the 2012 bottom:

France’s economy is imploding… gee who would have thought that socialism wouldn't work when there's no money to tax away anymore?

Ditto for Spain… which is now beginning the process of breaking into multiple countries.

 

And even Greece, which has been “saved” FOUR TIMES is collapsing again. Time to save it again!

2)   In the US, we now know for a fact that all of the “data” showing us in recovery was in fact fictitious. This was a recovery “on paper” only.

 

Real unemployment is over 12%, nearly half of all US households are on some form of Government assistance, and GDP growth should be included in great works of fiction along with Moby Dick and The Scarlet Letter. Nothing is what it seems anymore. The great rig is ending…

 

This is all only the beginning. When the smoke clears, stocks could be 30% lower than where they are now, if not more.

The great rig of the last five years is ending. Are you prepared?

If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.

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Best Regards

Phoenix Capital Research

 

 




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Homebuilder Sentiment Slides, Biggest Miss Since Feb As Buyer Traffic Plunges

Surprise! Having been fooled twice before in the last housing bubble by the NAHB’s persistent optimism in the face of dismal realities, it appears October was the beginning of a breaking point in realtor confidence. The headline sentiment index dropped to 54, missing extrapolated expectations of 59, led by a collapse in prospective buyers traffic (from 47 to 41). The headline 54 level is below the lowest estimate of 56 from 52 economists surveyed. Both present and future sales sub-indices also dropped but have no fear, as the NAHB notes, “while there was a dip this month, builders are still positive about the housing market,” as cheaper borrowing costs may help draw more prospectiev buyers into the market (umm yeah that hasn’t worked).

NAHB sentiment missed by most since Feb…

 

As NAHB tries to fool us thrice…

 

Charts: Bloomberg




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Philly Fed Drops To 4-Month Lows, Employment Tumbles

Despite a small beat of expectations at 20.7 vs expectation sof 19.8 but down from 22.5 , Philly Fed fell for the 2nd month from 3-year highs to 4-month lows.

Under the surface things were even less agreeable with employment and average workweek tumbling notably. As the table below shows, the number of employees was whacked in half to just 12.1, while the employee workweek actually dipped into negative territory at -1.3

Forward-looking expectations dropped driven by a fall in capital spending expectations, which slid as now has become the norm, from 23.7 to 18.9.

The punchline from the Philly Fed’s summary:

The October Manufacturing Business Outlook Survey suggests continued expansion of the region’s manufacturing sector. Firms reported continued increases in new orders but slower growth in activity, shipments, and employment this month. The survey’s future activity indexes remained at high readings, suggesting continued optimism about manufacturing growth. Firms were less optimistic about employment increases over the next six months, but one-third of the firms still expect to hire additional workers.

Oh well, there is always the 7th half of 2014 for Tim Geithner’s August 2010 “recovery” to finally flourish.




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Flight To Safety – Gold Rises As Stocks, European Bonds Again See Sharp Falls

Gold climbed $4.40 or 0.36% to $1,237.80 per ounce and silver slipped $0.03 or 0.17% to $17.43 per ounce yesterday. Gold s now nearly 5% above its recent lows and is again acting as a hedging instrument in investment portfolios after sharp falls in stock and many bond markets.


Gold in U.S. Dollars – 2 Years (Thomson Reuters)    

Gold retained sharp overnight gains today to trade near its highest in over a month as investors sought safety amid increasing concerns over a slump in the global economy. Gold rose to its highest since September 11 at $1,249.30 yesterday.

This morning gold for Swiss storage or for immediate delivery rose 0.2% to $1,244 an ounce by 12:00 in London, according to Bloomberg generic pricing. Futures trading volume was 64% above the average for the past 100 days for this time of day.

Global stocks plummeted yesterday and again today, on investor concern that U.S. and Chinese inflation data are signalling a global slowdown in economic activity.  U.S. retail sales fell in September and producer prices declined for the first time in a year.


S&P 500 Stock Index – 10 Years (Thomson Reuters)

The MSCI All-Country World Index of equities slumped to an eight month low yesterday and the Bloomberg Commodity Index has retreated to the lowest level since July 2009.

The risks of a stock market crash are quite high and the complacency of recent months has inevitably come to a shuddering halt. 

Weak U.S. data and global growth concerns will likely prompt the Federal Reserve to delay a hike in interest rates, a potential boost for non-interest-bearing gold – as we have warned of for some time.


Sharelynx.com 

Europe and the debt laden world risks falling into a downward spiral of falling wages, prices and deflation.

Investors fled into safe haven gold bullion, bonds and Japanese yen as the dollar and oil declined.

Yesterday’s, stampede into non risky assets resulted in a massive rally in U.S. Treasury bonds, moving the benchmark 10-year note’s yield as low as 1.865%, its lowest since May 2013.

Today, markets are in a panic.  Greek stocks, which collapsed yesterday, are down another 2% today.
Italian stocks are down 3.6% right now, on top of the 4% decline yesterday.

The FTSE and DAX are down nearly 2% and France is down nearly 3%.


Irish 10 Year Bonds  (Thomson Reuters)

There is huge volatility in stock markets and European bonds have seen sharp selling again, with Greek 10-year interest rates surging to nearly 9% and Irish bonds rising over 20 basis points to over 1.9%.

Spanish 10-year government bond yields rose 26 basis points to 2.37 percent, while equivalent Italian yields were 28 bps up at 2.68 percent. Portuguese yields rose 27 bps to 3.57 percent.

As we have warned for many months now, the Eurozone and indeed global financial crisis is far from over. We had a brief interlude after the starter but the main course is soon to commence.

Get Breaking News and Updates On Gold and Markets Here

See Essential Guide To Gold and Silver Storage In Switzerland

www.GoldCore.com




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WHO Shocked At 427 Ebola-Infected Healthcare Workers As Cases Top 9000, Deaths Exceed 4500

If trained professionals (in West Africa and the US) are becoming infected by the deadly Ebola virus, what hope is there for fellow passengers in a tightly-packed metal tube? The World Health Organization expects Ebola cases to top 9000 this week and deaths to exceed 4500 as they shockingly note 427 healthcare workers are now infected. The economic impact of Ebola continues to rise as Liberia slashes its GDP estimate and East African nations discuss strategies to stop the spread from the West. In Europe, Germany is sending aid, the Spanish nurse is stable but Madrid airport activated emergency measures due to a suspected Ebola passenger. US screening restrictions increase as Yale New Haven Hospital is dealing with a patient with Ebole-like symptoms. Politicians begin debating travel bans as Dallas is expected to approve a "state of disaster" today. Contained?

First the shocking news:

  • *EBOLA CASES TO EXCEED 9,000 IN W. AFRIA THIS WEEK, WHO SAYS
  • *EBOLA DEATHS TO EXCEED 4,500 IN W. AFRICA THIS WEEK, WHO SAYS
  • *427 HEALTH-CARE WORKERS INFECTED WITH EBOLA, WHO'S NUTTALL SAYS

Across Europe…

Officials claim the Spanish Ebola nurse is 'stable' and 68 low-risk people are being monitored (via Bloomberg)

Of 68 “low-risk” people being monitored for ebola infection in Spain, one developed low fever this morning, Fernando Simon, coordinator of the center of alerts and emergencies at Spain’s health ministry, says in news conference

  • Person has fever above 37.7 degrees: Simon
  • 15 “high-risk” contacts are still all asymptomatic: Simon
  • Ebola patient Teresa Romero is stable; viral levels are falling, still not negative: Simon

But Madrid airport activated emergency measures… (via Reuters)

Madrid's Barajas international airport activated emergency measures on Thursday after a passenger arriving on an Air France flight was suspected of possibly having Ebola, a spokeswoman for airports operator Aena said.

 

Spain's health ministry confirmed that an Ebola emergency protocol had been set in motion but declined to give details.

 

Aena and Air France said in separate statements that a passenger on Air France 1300 from Lagos via Paris had started shaking during the flight. Air France said the other passengers disembarked from the plane, which will now be disinfected. The return flight has been cancelled.

And Germany is sending aid… (via Bloomberg)

Funding boost to raise German emergency aid against Ebola to EU102m ($130m), Christian Democratic Union lawmaker Nobert Barthle says in e-mailed statement.

  • Funding approved by German lower-house budget committee yday
  • Germany also contributing EU700m in long-term aid for African health systems: Barthle

In Africa…

Liberia cuts its GDP estimate... (via FrontPageAfrica)

Economic “growth is expected to be zero percent in 2015,” due to Ebola, contraction in mining activity, agriculture, services, Finance Minister Amara Konneh says in interview with online edition of Monrovia-based newspaper.

 

Disease “seriously affected economic activities and livelihoods throughout the country with domestic food production, mining activities, hospitality industry, and transport services all declining.”

And East African nations are in full panic mode…

“We have already seen an impact on our economies, regarding reduced tourism flows, flight cancellations,” Kenyan President Uhuru Kenyatta says at conference in Rwandan capital, Kigali.

  • East African Community is being “proactive to avoid the spread of the virus to EAC countries”
  • 5-nation bloc also looking for ways to help affected countries
  • EAC includes Kenya, Uganda, Tanzania, Rwanda and Burundi

The US continues to see 'potential' cases arrive… (via WTNH)

A patient is being evaluated at Yale New Haven Hospital at this hour with Ebola-like symptoms, according to a statement from the hospital.

A physicians document obtained by News 8 says, “On Wednesday evening Yale-New Haven Hospital admitted a patient who met the threshold to be monitored for Ebola virus disease(DVD). The Hospital is working with the CDC and Prevention and the State Department of Public Heath to have the patient tested for EVD.”

 

News 8 Medical Reporter Jocelyn Maminta has talked to a credible source with the hospital who says the patient is one of the Yale Researchers who just returned from a trip to Liberia on Monday. This is one of the same researchers officials decided not to have quarantined after their trip to Africa.

And politicians are pushing for travel bans and visa restrictions…

And Dallas County commissioners are expected to announce a "State of Disaster" today

*  *  *

Some context…




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Industrial Production Beats, Rises At Fastest Rate In 4 Years On Air-Conditioning Demand

The last time Industrial production growth was higher than this was May 2010 as IP rose 1.0% against expectations of a 0.4% rise. Last month’s print was revised lower, so we swung from worst in 2014 to best in 4 years. Manufacturing rose at a modest 0.5% but it was Utilities that stole the show, surging 3.9% (due to unseasonably high demand for air conditioning). This is the biggest MoM surge in Utilities for a September in at least 10 years. Not exactly sustainable, unless we once again are at the mercy of the weather for US economic growth.

IP only been better in this recovery in May 2010…

 

… driven entirely by the biggest surge in Utilities since May 2012!

 

Here is what the Fed said: 

“The output of utilities jumped 3.9 percent, an increase that likely reflected unseasonably high demand for air conditioning as temperatures swung from below normal in August to above normal in September.”

Which, as the chart below shows, confirms the highest September jump in over 10 years.

So first, the “polar vortex” and now this: it looks as though indeed Global Warming is what the US economy desperately needs.




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A State Licensing Board Used Government Power for Self-Serving Private Gain? Justice Scalia Can’t Believe It

Federal law forbids private parties from engaging in
anticompetitive conduct. But what happens when a state regulatory
board is staffed by private market participants who use government
power to push anticompetitive measures that advance their own
economic interests? Does that also count as an antitrust
violation?

The U.S. Supreme Court grappled with those questions on Tuesday
when it heard
oral argument in North Carolina Board of Dental Examiners
v. Federal Trade Commission, a case arising from that board’s
efforts to prevent non-dentists from offering teeth-whitening
services. Because six of the board’s eight members are licensed
practicing dentists with a direct financial stake in restricting
entry to the teeth-whitening market, a lower court deemed the
board’s anticompetitive conduct to be illegal under federal
law.

Arguing against the dental board before the Supreme Court on
Tuesday was Deputy Solicitor General Malcolm Stewart, who began his
remarks by describing the board’s members as possessing “an evident
self­-interest in the manner in which the dental profession is
regulated and in regulations that might keep other people from
competing with dentists.”

Yet Justice Antonin Scalia dismissed the notion
of a self-interested licensing board out of hand. “Do you really
think that the financial interest of the individual members of the
board is going to be significantly affected? Of each individual
member of the board?” Scalia asked. “My goodness. I—I find that
hard to believe.”

Scalia should give the matter more thought. Better yet, he
should devote careful attention to a
friend of the court brief submitted in this case on behalf of
45 leading economists who urge the Supreme Court to take seriously
the threat posed by occupational licensing abuse. “In the real
world,” the brief details, “occupational licensing boards routinely
use government power to promote the private financial interests of
their own members and licensees, rather than to promote any
legitimate government interests.”

I would also urge Scalia to find himself a copy of economist
Walter E. Williams’ pioneering 1982 book
The State against Blacks, in which Williams reveals
the myriad ways that state licensing boards harmed
African-Americans who tried to break into such occupations as
plumber and electrician. Sometimes those boards were acting out of
pure racial animus—entrenched white workers who sat on the boards
wanted to keep black workers out. But other times the boards were
just seeing green. As Williams explains, once occupational
licensing has restricted competition, “incumbent
practitioners…can charge higher prices and hence have higher
incomes as a result of their monopolized market.”

One final point. In its March 2014 decision
against the North Carolina Board of Dental Examiners, the U.S.
Court of Appeals for the 4th Circuit observed, “this case is about
a state board run by private actors in the marketplace taking
action outside of the procedures mandated by state law to expel a
competitor from the market.” Scalia should study that one too.

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Jacob Sullum: Colorado’s Shadow Tourist Boom

Denver airportFor
cannabis consumers accustomed to the black market’s meager
selection and iffy quality, Colorado’s state-licensed dispensaries
are a revelation: dozens of strains, each with a distinctive
bouquet, fresh enough that you can smell the difference.
Denver-area budtenders, who say tourists account for most of their
recreational business, are used to amazed reactions, reminiscent of
the scene in Moscow on the Hudson where Robin Williams,
playing a Soviet defector, encounters an American supermarket for
the first time. But once a visitor settles on a gram of Budderface
or a quarter-ounce of Cinderella 99, he has a problem: Where can he
smoke it? It turns out there is no easy answer to that
question.

Colorado’s cannabis consumption conundrum illustrates a broader
pattern in the state’s approach to marijuana regulation. Amendment
64, the 2012 ballot initiative that legalized marijuana for
recreational use, declared that “marijuana should be regulated in a
manner similar to alcohol.” But in several important respects,
including rules for advertising, packaging, sales, and consumption,
the state’s treatment of marijuana is quite different from its
treatment of alcohol.

To some extent, this divergence reflects marijuana’s continued
federal illegality. But it also reflects the attitudes of
government officials, many of whom view the newly legal industry as
distasteful and embarrassing.

View this article.

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Sorry France, The Bond Market Has Spoken: You Are Not In The “Core” Anymore

What’s French for ‘sacre bleu’? While the fundamental reality of France’s record unemployment, plunging industrial production and economic growth, and treaty-busting deficits are all fact, for many months now, the ‘market’ has been convinced at Draghi’s omnipotence and enabled French bonds to trade as if they are ‘in the core’. But… on the heels of Sapin’s slap in the face of Schaeuble, shunning of Brussels, the market appears to be changing its mind about France’s credit worthiness (risk is up over 30% in the last week). Across Europe, we are witnessing a 2012 replay as re-denomination risk rises and risk spreads between the periphery (which means everything but Germany) and Germany surge…

 

The market says “non” to the French…

 

And re-rates all of Europe as it seeks German safe-haven…

 

These are the biggest re-ratings of risk since the European financial crisis… get back to work Mr.Draghi!

Charts: Bloomberg




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Fed’s Plosser Warns: When It Comes To Ebola, You Are On Your Own

When it comes to levitating the stock market, and allowing America’s worthless politicians to keep on doing nothing in hopes the Fed can fix everything by simply printing money, the Fed’s Chairmanwoman has no problem with getting to work. However when it comes to the latest deadly Pandemic to cross the Atlantic and hit US shores, the Fed has a dire message: America, you are on your own.

  • FED’S PLOSSER: MONETARY POLICY CANNOT DO MUCH ABOUT ECONOMIC THREAT FROM EBOLA

You mean, the Fed can’t print antibodies? And why is the Fed expected to do “much” or anything for that matter about the economic threat from Ebola – isn’t there a president and a Congress to actually deal with America’s problems… instead of just making them worse that is?

Plosser also said a bunch of other things…

  • PLOSSER SAYS FED POLICY CAN’T FIX ECONOMY’S SHORT-TERM ISSUES – just what are those?
  • FED’S PLOSSER SAYS NET EFFECT OF OIL PRICE DROP IS A POSITIVE – for the already broke consumer?
  • PLOSSER SAYS EUROPE WEAKNESS NOT ENOUGH TO DERAIL U.S. ECONOMY – and “whatever it takes” no longer enough to mask reality?

… but the take home message is simple: America is now exposed, and its enemies, should they want to hurt it where it really counts, now know how for in this one case, the Fed is truly helpless to print a happy ending.




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