You Know It’s Bad When…

President Obama is saying the economy is better, Bernanke is warning that real people don’t believe that; and while earning $250,000 per speaking engagement, Ye ‘Olde’ Fed head was unable to refinance his mortgage

 

The world has gone insane…


First, President Obama unleashes his ‘the economy is doing great so stick with the Democrats at the election’ strategy:

  • *OBAMA SAYS ECONOMIC PROGRESS HAS BEEN `STEADY’; `IT IS REAL’

Except it’s not…

 

 

and a majority don’t believe him:

 

Which  – secondly – none other than Ben Bernanke is also worried about… Former Federal Reserve Chairman Ben S. Bernanke said Americans’ perceptions of the economy are “not that encouraging,” even amid signs of improvement.

The “severity of this recession has been quite a shock. If you look at the polls about ‘Is America on the right track and those sorts of things?’, they’re generally not that encouraging” – quite a shock indeed!!??

 

“There may be some lag between the actual improvement and people’s perception” – 5 years!!??

 

“I do hope that we’re now moving back towards a period of greater normalcy and one that will transit into something that is sustainable over the medium and longer term” – hope is not a strategy!!??

And then – thirdly – even he cannot refinance his mortgage… (via Bloomberg)

Ben S. Bernanke said the mortgage market is still so tight that he’s having a hard time refinancing his own home loan.

 

The former Federal Reserve chairman, speaking at a conference in Chicago, told moderator Mark Zandi of Moody’s Analytics Inc. — “just between the two of us” — that “I recently tried to refinance my mortgage and I was unsuccessful in doing so.”

 

When the audience laughed, Bernanke said, “I’m not making that up.”

 

“I think it’s entirely possible” that lenders “may have gone a little bit too far on mortgage credit conditions,” he said.

*  *  *

So that’s that… nothing to see here, move along. Of course, Shinzo Abe will be alonmg shortly to really mess with our minds.




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JPMorgan Admits Massive Data Breach – 76 Million Households, 7 Million Businesses Compromised

JPMorgan Chase has issued a statement confirming that a cyber-attack against the bank’s Chase.com and JPMorganOnline.com websites on October 2nd breaches customer data:

  • *JPMORGAN: COMPROMISED DATA IMPACTS ABOUT 76M HOUSEHOLDS, 7M SMALL BUSINESSES
  • *JPMORGAN HASN’T SEEN UNUSUAL CUSTOMER FRAUD RELATED TO INCIDENT

The bank noted it is cooperating with government agencies on their investigations.

 

Full JPMorgan Statement:

On October 2, 2014, JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) updated information for its customers, on its Chase.com and JPMorganOnline websites and on the Chase and J.P. Morgan mobile applications, about the previously disclosed cyberattack against the Firm. The Firm disclosed that:

  • User contact information – name, address, phone number and email address – and internal JPMorgan Chase information relating to such users have been compromised. 
  • The compromised data impacts approximately 76 million households and 7 million small businesses. 
  • However, there is no evidence that account information for such affected customers – account numbers, passwords, user IDs, dates of birth or Social Security numbers – was compromised during this attack. 
  • As of such date, the Firm continues not to have seen any unusual customer fraud related to this incident. 
  • JPMorgan Chase customers are not liable for unauthorized transactions on their account that they promptly alert the Firm to. 

The Firm continues to vigilantly monitor the situation and is continuing to investigate the matter. In addition, the Firm is fully cooperating with government agencies in connection with their investigations.

*  *  *

76 million households and 7 million businesses sure sounds a whole lot like… everyone!




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“When Bad News Becomes Bad News” – Albert Edwards Presents His “Second Most Imporant Chart To Investors”

One of Albert Edwards’ trademark terms to define the New (and not so New) Normal, is the so-called Ice Age: a period of prolonged stagnation marked by pervasive deflation, deteriorating living conditions and a sliding stock market. It was to defeat the oncoming “Ice Age” that the global central banks embarked on a massive, coordinated (and largely failed) money printing monetary experiment some 6 years ago. Now, in what Albert Edwards dubs his “second most important chart for investors”, (as a reminder his “most important chart” is here), he warns that as a result of the central banks to offset broad deflationary headwinds, the Ice Age is once again just around the corner.

From his most recent note, here is what Albert Edwards believes is the chilly chart that is the “second most important for investors.”

Inflation expectations in the US have just followed the eurozone by plunging lower. Until very recently, the Fed and the ECB had been quite successful at keeping inflation expectations in their normal range – this despite their clear failure to control actual inflation itself, which has consistently undershot expectations. Investors are beginning to realise that contrary to their confident actions and assurances, the Fed and the ECB have failed to prevent a dreaded replay of Japan’s deflationary template a decade earlier in the West. The Ice Age is once again about to exert its frosty embrace on markets as investors wake up to a new and colder reality.

 

There were two key parts to our Ice Age thesis. First, that the West would drift ever closer to outright deflation, following Japan?s template a decade earlier. And second, financial markets would adjust in the same way as in Japan. Government bonds would re-rate in absolute and relative terms compared to equities, which would also de-rate in absolute terms. This would take many economic cycles to play out. Previous US equity valuation bear markets have taken 4-6 recessions to complete ? we?ve only had two thus far.

 

Another associated element of the Ice Age we also saw in Japan is that with each cyclical upturn, equity investors have assumed with child-like innocence, that central banks have somehow ?fixed? the problem and we were back in a self-sustaining recovery. Those hopes would only be crushed as the next cyclical downturn took inflation, bond yields and equity valuations to new destructive lows. In the Ice Age, hope is the biggest enemy.

 

Investors must pay close attention to the (second most important) chart below. Investors are beginning to see how impotent the Fed and ECB?s efforts are to prevent deflation. And as the scales lift from their eyes, equity, credit and other risk assets trading at extraordinary high valuations will take their next giant Ice Age stride towards the final denouement.

 

 

They may be impotent to prevent deflation, but they are quite omnipotent at printing money, either electronically or in paper format, and while so far they have focused on outside money, soon they will shift to “inside” money creation, also known as Bernanke’s helicopter paradrop. That will be the moment when the status quo finally uses the nuclear option at pervasive global deflation, leading to a collapse in sequential, or parallel, collapse in fiat.

But even before that, there is something, that to the current generation of traders may be even scarier: a return to normalcy, or as Edwards calls it: bad news being bad news again, something which traders haven’t experienced in nearly 6 years.

We believe that as long as inflation expectations remain ?well behaved? then the equity market can continue to interpret ?bad? economic news as good news. At this point we defer on this topic to the world renowned authority on equity bear markets, Russell Napier, author of the definitive book Anatomy of the Bear – Lessons from Wall Street’s four great bottoms.

 

Russell has recently explained that we should watch inflation expectations closely. His work suggests that once 5y US inflation expectations fall to ?excessively? low levels, bad news no longer is seen as good news by the equity market but becomes straight plain vanilla bad news. Russell?s work suggests that historically, once US 5y implied inflation expectations dive towards 1½%, the equity market typically starts to disintegrate (see chart below). US 5y implied inflation expectations.

 

 

Russell also warns that those investors who want to stay and party as long as possible in equities at the end of this cycle should keep an eye open for a falling copper price and widening credit spreads. Credit spreads are indeed now rising, especially in the high yield area; they are not yet at the levels at which  Russell believes we should man the barricades – but maybe we should begin polishing our bayonets.

Of course, everyone will ignore the above, as they have ignored all other warnings over the past 6 years, foolishly, because instead of fixing the global economy which is as broken now as it ever was with all the trillions in liquidity instead just making their way into the stock market, and so one has to hold their nose and buy, because at the end of the day there is just one thing that is more important that POMO, and that is FOMO, or Fear Of Missing Out, also known as career risk. In short: the music is still playing, or as Edwards summarizes it:… “amid the inevitable impending global economic and financial carnage, when people, like Queen Elizabeth ask, as she did in November 2008, why no-one saw this coming, tell them that many did. But just like in 2006, before the Great Recession, investors once again chose to tilt their ears towards the reassuring siren songs of the Central Bankers and away from the increasingly hysterical ramblings of the perma-bears and doomsayers.”




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And The Market Closes Unchanged… Literally

An ugly and very heavy volume flush into the European close was followed by the kind of miraculous v-shaped low volume recovery traders have become used to in US equity markets. Having broken below several key technical levels, high beta Russell and Trannies soared (fortgetful it seems that Europe will once again open for business in about 8 hours) to close comfortably in the green on the day. VIX was rammed lower (under 16) to support the exuberance along with EURJPY and AUDJPY. The USDollar faded to close unchanged on the week. Gold flatlined while silver slipped. Oil collapsed early on only to v-shape recover to close modestly higher on the day. Treasury yields bounced 3-5bps higher (after yesterday's huge plunge) but remain 7-10bps down on the week. By the close, The Russell 2000 had its best day in 6 weeks and the S&P's buying-panic scramble to perfectly unchanged – miraculously avoiding the 4-day losing streak not seen since Sept 2013.

UNCH!

 

V-shaped recovery… A post-European close buying-panic drags the S&P 500 to perfectly unchanged – to the penny!! and saves it from a 4-day losing streak not seen since Sept 2013.

 

With Homebuilders leading and Energy lagging…

 

as "most shorted" stocks were squeezed hard once again…

 

Helped by VIX

 

And AUDJPY and EURJPY…

 

Treasury yields bounced but remain well lower on the week…

 

The Dollar faded  (as EUR strengthened on Draghi's disappointing performance) back to unch on the week…

 

Gold flatlined despite the USD weakness but oil cratered early (again) along with silver (again) only to v-shape recover later on…

 

WTI Crude futures saw heavy volume selling in yesterday's dump but the early Europe session's collapse was marginal volume at best and by mid-day Europe, crude was resurging

 

Charts: Bloomberg




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Perth Mint’s Gold Coins and Bars Sales Highest In Year On Safe Haven Demand

Perth Mint’s Gold Coins and Bars Sales Highest In Year On Safe Haven Demand

The Perth Mint’s sales of
gold coins and bars hit their highest in nearly a year in September as a fall in U.S. dollar denominated gold led to some buyers to accumulate bullion on the dip and the risks of terrorism and war led to safe haven demand.



Perth Mint Gold Bar (1 Kilo)

Concerns about the global financial system and economy are also leading to safe haven demand.

The Perth Mint runs the only gold refinery in Australia, the world’s second-biggest gold producer after China.


Sales of gold coins and minted bars rose to 68,781 ounces in September, their highest since October 2013, data available on the mint’s website showed.


Gold prices fell 6% in September, despite strong seasonality and increasing financial risks and concerns that geopolitical tensions may impact the global economy.


Silver coin sales totalled 756,839 ounces last month,compared with 961,977.07 ounces in the same period last year.  Yet silver had a far greater price fall than gold.

This shows that the gold bullion buying was not solely people bargain hunting. Rather, gold demand was due to safe haven demand due to the increasing risk of terrorism and war in the Middle East and between the West and EU and Russia.

This risk remains and therefore the increased demand is not likely to be a mere blip on price weakness.

   

We strongly advise owning allocated and segregated individual bullion coins and bars stored in the safest vaults in the safest jurisdictions in the world.


MARKET UPDATE
Today’s AM fix was USD 1,214.50, EUR 960.99 and GBP 750.94 per ounce.
Yesterday’s AM fix was USD 1,208.50, EUR 958.75 and GBP 746.17 per ounce.

Gold in Euros – 2 Years (Thomson Reuters)

Gold in Singapore crept higher from  $1,215 per ounce to over $1,220 per ounce prior to weakness in early morning trade in London.

Gold climbed $5.60 or 0.46% to $1,214.60 per ounce and silver rose $0.13 or 0.76% to $17.18 per ounce yesterday.

It is important to note that gold’s falls continue to be primarily in dollar terms and that gold in euros and pounds has seen only minor falls.

Indeed, gold in euros remains nearly 10% higher for the year and has risen from €876 per ounce to over €960 per ounce today.


Gold rose on Wednesday, rebounding from the end of quarter nine-month low near $1,200 an ounce, as concerns about the emergence of Ebola in the U.S. and disappointing U.S. factory data sparked a selloff on Wall Street which led investors to move funds into safe haven gold.


Gold in US Dollars – 2 Years (Thomson Reuters)

Also underpinning bullion was a weaker U.S. dollar and sharp falls in global stocks on concerns of a new global financial crisis. Sharply lower airlines and transport-related shares after the first diagnosis of Ebola in the United States also helped send the S&P 500 index down more than 1%.

Nouriel Roubini warned that the world is vulnerable to a new global financial crisis and markets are very complacent again.

While geopolitical risks have multiplied, global markets have “remained buoyant, if not downright bubbly,” said economist Nouriel Roubini in a column published Tuesday.

The global economy could be stuck in a weak growth rut for a long time as countries struggle to pull free from high debt levels and unemployment, the head of the International Monetary Fund warned today.

The economic rebound is even weaker than the IMF predicted six months ago, and countries risk getting stuck in a prolonged period of sluggish growth, especially in the euro zone, Christine Lagarde, the IMF’s managing director, said.

The warning is belated and the IMF and manhy have ignored many signs that the economic recovery was tentative at best.

For undiversified investors who have piled into stocks and property, the belated warnings may be too late.

It remains a very good time to diversify with the price of gold near multi year lows and under valued & stocks, bonds & property looking very toppy. It is very reminiscent of 2005-2007 period.

Fail to diversify, prepare to fail …

See
7 Key Storage Must Haves

Breaking News and Updates Here
 




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Don’t Worry? 10 Quotes From Health Experts Promising That Ebola Will Not Be A Problem In America

Submitted by Michael Snyder of The End of The American Dream blog,

Health experts all over the United States are promising us that we do not need to be worried about Ebola whatsoever.  Even though one case has already been confirmed in Dallas, Texas and another potential case is being monitored, health authorities assure us that we have the greatest health system in the history of the planet and that we will be able to handle any isolated cases very easily.  And all over the mainstream media on Wednesday, there were headlines declaring that the arrival of Ebola in America is a non-event.  One example is this headline from Bloomberg: “Ebola in America? Don’t Worry About It”.  So are they right?  Should the rest of us just kick back and relax because a bunch of really smart guys are assuring us that our health system can easily deal with anything that Ebola can throw at us?  The following are 10 quotes from prominent experts promising us that Ebola will not be a problem in this country…

#1 Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases: “We feel confident that there won’t be an outbreak.”

#2 University of Chicago professor Michael Z. David: “While this all sounds very frightening, there’s no need to worry at this point about Ebola spreading widely here.”

#3 Gerardo Chowell-Puente, an associate professor of mathematical epidemiology at the School of Human Evolution and Social Change at Arizona State University: “Math and history show us that decisive efforts to isolate those who are infected with Ebola and to follow up quickly with the potential contacts of the infected can help to get an outbreak under control. We’re lucky that we have such capacities in the United States; even with the Ebola case in Dallas, the epidemic should not get much of a foothold here.”

#4 Texas Health Director David Lakey: “This is a very sophisticated city, a very sophisticated hospital, … and the chances of it being spread are very, very scarce.”

#5 Zachary Thompson, director of Dallas County Health & Human Services: “This is not Africa. We have a great infrastructure to deal with an outbreak.”

#6 Dr. William Shaffner, an infectious disease specialist at Vanderbilt University Medical Center: “We’re very prepared: Infection-control people in hospitals over the past two months have been reviewing all their infection- control procedures because we anticipated just this sort of thing happening—a person coming from West Africa, they were healthy at the time they traveled, but got sick here.”

#7 Thomas Frieden, the director of the CDC: “It is certainly possible that someone who has had contact with this patient could develop Ebola, but there is no doubt in my mind that we will stop it here.”

#8 Dr. William Shaffner: “Even Doctors Without Borders in West Africa are moving the fatality rate from 50 percent down to 30 percent—I bet we can do substantially better than that here.”

#9 Peter Hotez, dean of the National School of Tropical Medicine and professor at Baylor College of Medicine in Houston: “The Ebola virus is not easily transmitted from person to person, and we have an outstanding infrastructure in place both to contain the virus and trace contacts. There will not be an Ebola epidemic in the United States.”

#10 Thomas Frieden: “The bottom line here is that I have no doubt that we will control this importation or this case of Ebola so that it does not spread widely throughout this country.”

So are they right?

I don’t know.

I hope that they are.

But considering how out of control the Ebola pandemic in West Africa is, I wouldn’t be as dogmatic as those experts are being.

Meanwhile, Barack Obama continues to act as if nothing has changed either.  Even though a number of other nations have shut down all air traffic to Liberia, Guinea and Sierra Leone, Obama still refuses to restrict air travel to and from those countries

After U.S. officials disclosed another potential case of Ebola in Dallas, Texas, this morning, the question remains whether the Obama administration will finally stop flights from Ebola-stricken countries as multiple nations did over a month ago.

 

In mid-August, Korean Air and Kenya Airways announced they were halting flights to the West African countries ravaged by Ebola, and British Airways and Air France also decided to suspend service to the Ebola hot zone a few weeks later.

 

“France is recommending that its citizens leave Sierra Leone and Liberia, two of the countries hardest hit by the worst ever outbreak of the disease,” Jessica Plautz reported for Mashable. “The government said the increasing spread of the disease prompted its request that the airline to suspend flights.”

 

Yet the Obama administration made no such request to U.S. airlines and government flights, despite the Center of Disease Control advising Americans to avoid “non-essential travel” to Liberia, Sierra Leone and Guinea several weeks ago.

Obama says that he has a tremendous amount of confidence in the “extensive screening” at our airports.

Would that be the same “extensive screening” that some CNN employees recently experienced?

CNN Senior Medical Correspondent Elizabeth Cohen said when she and two colleagues recently returned from reporting in Liberia, they got a mixed bag of responses from Customs and Border Protection officers.

 

“We all said we were journalists who had just been in Liberia covering Ebola,” Cohen said. “One of my colleagues was told, ‘Oh, OK, welcome back home, sir’ — and (was) just let in — that was it.”

 

Cohen herself got a different response.

 

“I was told, ‘Wait a minute, I think I got an email about this,’ and the border patrol officer went and consulted with his colleagues,” Cohen said.

 

That officer later told her she should check her system for 21 days.

 

“I said, ‘What should I be checking?’ And he wasn’t sure,” Cohen said.

And even though it has already been demonstrated that someone from West Africa can bring Ebola over to the U.S. on an airplane, authorities all over the country seem content to proceed with business as usual.

For example, according to Fox News, college students from West Africa “may be subject to extra health checks“.

Or they might not.

No big deal, right?

After all, if a case or two of Ebola does pop up, our health authorities can easily take care of the situation like the experts are saying.

Right?

The truth is that we aren’t talking about measles or the flu here.  We are talking about one of the deadliest diseases ever known to mankind.

I think that John Little summarized what we are potentially facing very well…

When you look closely at this virus, it’s hard to see any reason for optimism. It really is one of the most horrifying viruses known to man. It is massively contagious. It has an extremely low survival rate. Those that survive will often die later on – from organ failure, because of the massive internal damage this virus causes to even those who survive.

So those experts better be right.

They better be able to stop this virus just like they are saying.

Because if not, they are going to have to deal with millions of Americans that are extremely angry that they got lied to.




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Another Possible Ebola Case Investigated In Utah

First Dallas, now Utah.

Moments ago Fox13 reported that Health officials confirmed they are investigating a possible case of Ebola at Primary Children’s Hospital. “Primary Children’s said it is unlikely the patient has Ebola however officials are taking this opportunity to use the emergency plan they have been working on to provide maximum protection to staff, patients, families and the greater community. Officials said they admitted a patient who has symptoms raising concerns about Ebola.”

The hospital plans to explain how it is caring for the patient, what it is doing to protect the community and answer questions about the virus itself, at a 1 p.m. news conference.

A live stream from Fox13 can be found at the following link.




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Gold is making a dramatic comeback in the financial system

Mansa Musa Gold Gold is making a dramatic comeback in the financial system

October 2, 2014
Santiago, Chile

In 1324, Mansa Musa, the tenth emperor of the Mali Empire, set off from Western Africa on his pilgrimage to Mecca.

This was no Spartan journey. He was accompanied on his way by a procession of 60,000 men and 12,000 slaves, each of whom carried up to four pounds in gold bars.

Musa is might just have been the richest person of all time, with an accumulated wealth estimated at $400 billion valued in today’s increasingly worthless dollars.

But it wasn’t just kings and emperors who held gold. Gold has been the most widely-used medium of exchange in world history… across all points of the globe.

Ibn Battuta was a 14th century traveler and explorer whose famous grand adventure spanned 75,000 miles over the course of 24 years, much like Marco Polo’s.

Everywhere he traveled– North Africa, Middle East, Central Asia, India, Southeast Asia, China – gold was either the dominant currency or an easily accepted medium of exchange.

This barbarous relic has stood the test of time across cultures around the world for millennia as a form of wealth.

Most people in the West have completely lost sight of this.

They view the value of gold through the lens of paper currency, i.e. an ounce of gold is ‘worth’ 1,215 US dollars.

This is a deeply flawed perspective.

Looking at the gold price moving up and down in US dollars is something like sitting in a rowboat on choppy waters believing that it’s the beach that’s moving up and down.

Einstein might say that it’s all relative, but only one has any real stability.

But perspectives can and do change.

There once was a time when most people believed that the entire universe revolved around the Earth.

This was a flawed (and arrogant) view, and it was eventually corrected.

Thinking that the global economy revolves around the US dollar is just as flawed and arrogant. And it will soon be discredited just the same.

History tells us that dominant monetary systems invariably have an expiration date.

From the Byzantine solidus to the British pound, this is especially true when a superpower enters into decline and plays destructive games with its currency.

Today’s system where an unelected central banking elite conjures trillions of dollars and euros out of thin air is no different. It has an expiration date too.

Change is never easy. People don’t like it, and will resist change even if their current situations are terrible. Inertia is the most powerful force in the universe after all.

Desirable or not, it’s happening. The US dollar’s days are numbered.

Now, gold, with its millennia-long history is making a comeback. We’re not just talking about it as a store of wealth or a speculation, but as a regular form of currency.

Moving us back in this direction, Singapore Exchange launched a new arrangement this week where institutional-sized gold contracts will settled not in cash, but in 1kg bars of gold.

This means that each of these contracts is intended to deliver and store gold in Singapore on behalf of large financial institutions, central banks, and even governments.

Sure, Singapore wants to advance itself as THE gold hub of Asia. We’ve been writing to our premium members about this for years

But more importantly, it’s quite telling that major insiders within the financial system itself are pursuing this contract.

They’re effectively setting up a new system, in Asia, to afford governments and central bankers the opportunity to trade in their US dollars for something real.

Just like yesterday’s post about the renminbi/euro convertibility, this is truly a canary in the coalmine moment for the future of the US dollar… as well as gold’s emerging role in the financial system of tomorrow.

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