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The tense situation over North Korea’s nuclear program has one top Russian diplomat sounding the alarm. Russian Deputy Foreign Minister Igor Morgulov said that the world can no longer turn a “blind eye” to alarming speed with which North Korea is advancing their weapons of mass destruction.

North Korea’s nuclear program could evolve into an “apocalyptic” scenario, Morgulov said. He was speaking at the opening of the eighth annual Asian Conference of the Valdai Discussion Club, which is being held in Seoul, South Korea, CNBC reports. “I hope that a common sense, pragmatism, and an instinct of self-preservation would prevail among our partners,” Morgulov added.

The Russian diplomat’s remarks come amid global concerns over North Korean leader Kim Jong Un’s refusal to abandon his nuclear ambitions despite mounting international pressure. North Korea has conducted a record number of long-range missile tests this year, and in early September it carried out its sixth and most powerful nuclear test.

Tensions continue to heighten as Kim and President Donald Trump trade numerous threats and insults. Over the summer, Trump warned Pyongyang it would be met with “fire and fury” if it didn’t stop threatening the U.S. In late September while addressing the United Nations for the first time, he threatened to “totally destroy” North Korea if it forced the U.S. to defend itself or its allies. In a speech to South Korea’s National Assembly, president Trump denounced Kim’s regime but also offered the erratic leader a path to peace if he agreed to cease long-range missile tests and move toward denuclearization. North Korea rejected his offer and said the president had “begged” for nuclear war during his Asia trip.

…click on the above link to read the rest of the article…

“Deeply-Flawed Western Economic Models” Are Undermining The Worst Global Recovery In History

July 25, 2017

“Deeply-Flawed Western Economic Models” Are Undermining The Worst Global Recovery In History

With stocks at record highs, seemingly proving that everything must be awesome in the world, Chris Watling, chief executive of Longview Economics, shocked CNBC on Friday by reminding them that “this is undoubtedly the lowest quality economic recovery we have seen globally… full stop.”

The reason is simple, Watling continued,

“the economic model is deeply flawed and the system in the west is deeply flawed, particularly in the English speaking part of the world and it needs to change.”

The Longview Economics CEO explained that a debt-laden global economy could be vulnerable to looming interest rate hikes because,

“This is a world that is more indebted than it was before the global financial crisis in 2007, there’s no productivity growth, asset prices are very elevated, a lot of debt that corporates have built up has gone to share buy backs (and) the number of ‘zombie companies’ has doubled since 2007.”

Watling’s warnings confirm bond-king Bill Gross’ recent warning that the course of global central banks toward tightening policy could be detrimental for the economic recovery. He argued that raising interest rates would increase the cost of short-term debt that corporations and individuals currently hold.

When asked whether an imperfect system constituted a clear and present danger for the financial markets, Watling replied:

“Whatever you want to call it doesn’t really matter but these sorts of things always unwind when you tighten money. The problem is judging what is tight? And that is sort of the million dollar question.”

Will that pain begin in October?

Beware Central Banks’ “Illusion Of Control”; Spitznagel Warns “If The Fed Hikes, Markets Will Go Down Very, Very Hard”

September 17, 2016

Beware Central Banks’ “Illusion Of Control”; Spitznagel Warns “If The Fed Hikes, Markets Will Go Down Very, Very Hard”

Central banks have created a bubble in the stock market, which will come down “very, very hard” when it finally prices in a series of Fed rate hikes, said Universa’s Mark Spitznagel, warning that “the markets are absolutely not positioned for this.”

CNBC anchors were stunned into relative silence as Spitznagel unleashed truth-bomb after truth-bomb. Those ‘facts’ are just hard to argue with…

Key Excerpts…

CNBC: Well what’s the precipitating factor?

Spitznagel: Well, the ultimate cause of that would be the fact that the central banks got us here in the first place. Ultimately, my view is that central banks are the cause of bubbles.

CNBC: So you’re betting essentially that the central banks, whether it be the Fed or the ECB, they can’t unwind the trade that they put on years ago. It’s going to be a messy unwind for their trade.

Spitznagel: There’s no doubt about that.

CNBC: But is that really a black swan? Because you’ve got all these people at Delivering Alpha talking about it, isn’t a black swan supposed to be something that nobody is talking about? Godzilla attack on Tokyo, out of the blue, or something like that?

Spitznagel: So it’s great that everyone’s talking about this now. I had a little less company a few years ago when this was sort of building and now it’s so obvious, you know, the casual user has become an addict, and now we’re concerned about this. And that’s great. But you’re right it’s not a black swan. The reason I’m going to still call it a black swan is because the markets still price it as a black swan.

...

…click on the above link to read the rest of the article…

Greenspan: “This Is The Worst Period I Recall; There’s Nothing Like It”

June 25, 2016

Greenspan: “This Is The Worst Period I Recall; There’s Nothing Like It”

During a CNBC inteview today, when discussing the historic Brexit vote outcome, Alan Greenspan unleashed a fiery sermon that could have been prepared just by reading a random selection of posts from this website, the former Fed chairman told his shocked hosts that the current period, far from the raging “Obama recovery” spun every day by adaministration propaganda appratchicks and one that prompted the Fed to unleash a ridiculous rate hike cycle in December just as the US is sliding into a recession, and is instead the “worst period” he has seen, surpassing even the infamous Black Monday in severity.

“This is the worst period, I recall since I’ve been in public service. There’s nothing like it, including the crisis — remember October 19th, 1987, when the Dow went down by a record amount 23 percent? That I thought was the bottom of all potential problems. This has a corrosive effect that will not go away. I’d love to find something positive to say.”

Of course, what he is referring to was a market shock which was the result of a massive capital account imbalance resulting from the aftermath of the Louvre Accord coupled with the then trendy Portfolio Insurance (in which everyone was on the same side of the boat, much like now) and not so much an all out economic malaise. Which, however, does beg the question when a Black Monday-like market crash is coming?

Rhetorical questions aside, Greenspan was referring to the unprecedented combination of economic stagnation, deteriorating demographics, insolvent entitlement programs, social inequity and wealth division, and of course, a historic debt overhang which could and should have been cleared out in the crash of 2008 but instead was preserved to avoid wiping out the same “equityholders” who also happen to be the Fed’s direct and indirect stakeowners.

…click on the above link to read the rest of the article…

Jeff Gundlach: “Things Are Going To Get Pretty Scary”

June 18, 2016

Jeff Gundlach: “Things Are Going To Get Pretty Scary”

One day before the Fed’s June statement, Jeff Gundlach once again accurately predicted the somber mood that would ensue as a result of Yellen’s Wednesday decision and press conference when he correctly said that “Central Banks Are Losing Control.” Today, in the aftermath of James Bullard stunning U-turn where he cast aside years of fake hawkishness and emerged as the market manipulating dove he had been all along, Gundlach appeared on CNBC, to discuss many things, among which his latest take on central banks.

Specifically, he said that central banks are “out of control” because they don’t understand the consequences of their own policies. On CNBC’s “Halftime Report“, the DoubleLine bond guru projected that markets are likely to see another round of negative interest rates before central bankers realize they aren’t working and that fiscal stimulus may be the better option. “The policies that they’re implementing don’t have the consequences that they’re looking for,” he said.

Gundlach pointed out the chart which we said back in 2010 is the only one that matters: the S&P’s liquidity “flow” manifested by the Fed’s balance sheet overlaid on top of the Fed’s balance sheet:

He said that “it’s really uncanny how the S&P500 rallied when they were doing QE and expanding their balance sheet, and how the S&P never goes anywhere when they stopped expanding their balance sheet. They stopped QE3 back in December of 2014 and the S&P500, the DJIA, the Nasdaq are all exactly the same when they stopped expanding their balance sheet. The S&P has been dead money for 18 months.”

That – once again – resolves the whole “flow vs stock” debate.

So what went wrong? According to Gundlach, chief among central bank mistakes was negative rates.

…click on the above link to read the rest of the article…

Swiss Bank Whistleblower Claims Panama Papers Was a CIA Operation

April 12, 2016

Swiss Bank Whistleblower Claims Panama Papers Was a CIA Operation

Screen Shot 2016-04-12 at 11.05.13 AM

Bradley Birkenfeld is the most significant financial whistleblower of all time, so you might think he’d be cheering on the disclosures in the new Panama Papers leaks. But today, Birkenfeld is raising questions about the source of the information that is shaking political regimes around the world.

“The CIA I’m sure is behind this, in my opinion,” Birkenfeld said.

– From the CNBC article: Swiss Banker Whistleblower: CIA Behind Panama Papers

Last Friday, I published a post titled, Was the Panama Papers “Leak” a Russian Intelligence Operation? Here’s some of what I wrote:

Initially, this seemed to be a theory worth exploring, but in the following days I’ve come to a far different conclusion. The primary divergence between what I currently believe and what Mr. Murray proposed is that I do not think the leaker was a genuine whistleblower motived by the public interest. I think the leaker was working on behalf of a sophisticated intelligence agency.

The fact that we seem to know nothing about “John Doe” concerns me. Say what you will about Edward Snowden, but he came out publicly shortly after his whistleblowing and offered himself up for the world to judge. His life, career and personality have been put on full display, and each and every one of us has had the opportunity to decide for ourselves whether his motivations were noble and pure or not.

With the Panama Papers’ “John Doe” we are given no such opportunity, and in fact, the whole thing reads very much like a script concocted by some big budget intelligence agency. Once I started coming around to this conclusion, the obvious choice was U.S. intelligence; given the lack of implications to powerful Americans, the clownishly desperate attempts to smear Putin, and the appearance of Soros, USAID, Ford Foundation, etc, linked organizations to the reporting.

…click on the above link to read the rest of the article…

The Boomer Retirement Meme Is A Big Lie

April 4, 2016

THE BOOMER RETIREMENT MEME IS A BIG LIE

As the labor participation rate and employment to population ratio linger near three decade lows, the mouthpieces for the establishment continue to perpetuate the Big Lie this is solely due to the retirement of Boomers. It’s their storyline and they’ll stick to it, no matter what the facts show to be the truth. Even CNBC lackeys, government apparatchiks, and Ivy League educated Keynesian economists should be able to admit that people between the ages of 25 and 54 should be working, unless they are home raising children.

In the year 2000, at the height of the first Federal Reserve induced bubble, there were 120 million Americans between the ages of 25 and 54, with 78 million of them employed full-time. That equated to a 65% full-time employment rate. By the height of the second Federal Reserve induced bubble, there were 80 million full-time employed 25 to 54 year olds out of 126 million, a 63.5% employment rate. The full-time employment rate bottomed at 57% in 2010, and still lingers below 62% as we are at the height of a third Federal Reserve induced bubble.

Over the last 16 years the percentage of 25 to 54 full-time employed Americans has fallen from 65% to 62%. I guess people are retiring much younger, if you believe the MSM storyline. Over this same time period the total full-time employment to population ratio has fallen from 53% to 48.8%. The overall labor participation rate peaked in 2000 at 67.1% and stayed steady between 66% and 67% for the next eight years. But this disguised the ongoing decline in the participation rate of men.

In 1970, the labor participation rate of all men was 80%, while the participation rate of women was just below 43%.

…click on the above link to read the rest of the article…

Worst Case Scenario = 73% Down From Here

March 31, 2016

WORST CASE SCENARIO = 73% DOWN FROM HERE

As the stock market gyrates higher and lower in a fairly narrow range, the spokesmodels and talking heads on CNBC breathlessly regurgitate the standard bullish mantra designed to keep the muppets in the market. They are employees of a massive corporation whose bottom line and stock price depend upon advertising revenues reaped from Wall Street and K Street. They aren’t journalists. They are propagandists disguised as journalists. Their job is to keep you confused, misinformed, and ignorant of the true facts.

Based on the never ending happy talk and buy now gibberish spouted by the pundit lackeys, you would think we are experiencing a bull market of epic proportions and anyone who hasn’t been in the market has missed out on tremendous gains. There’s one little problem with that bit of propaganda. It’s completely false. The Fed turned off the QE spigot at the end of October 2014 and the market has gone nowhere ever since.

QE1 began in September 2008, taking the Fed balance sheet from $900 billion to $2.3 trillion by June 2010. This helped halt the stock market crash and drove the S&P 500 up by 50% from its March 2009 lows. QE2 was implemented in November 2010 and increased the Fed balance sheet to $2.9 trillion by the end of 2011. This resulted in an unacceptable 10% increase in the S&P 500, so the Fed cranked up their printing presses to hyper-speed and launched the mother of all quantitative easings, with QE3 pushing their balance sheet to $4.5 trillion by October 2014, when they ceased their “Save a Wall Street Banker” campaign.

As Main Street dies, Wall Street has been paved in gold. The S&P 500 soared to all-time highs, with 40% gains from the September 2012 QE3 launch until its cessation in October 2014. Like a heroine addict, Wall Street has experienced withdrawal symptoms ever since, and begs for more monetary easing injections.

…click on the above link to read the rest of the article…

This Chart Shows the First Big Crash Is Likely Just Ahead

March 15, 2016

This Chart Shows the First Big Crash Is Likely Just Ahead

The story on Wall Street and CNBC continues to be that we’re in a correction and this is a buying opportunity. Even Warren Buffett joins the chorus of stock market cheerleaders for the skeptical public. Well, I agree with the skeptical public, not the experts here!

The bull market from early 2009 into May 2015 looks just like every bubble in history, and I’m getting one sign after the next that we did indeed peak last May. The dominant pattern in the stock market is the “rounded top” pattern:

S&P 500 rounded top

After trading in a steep, bubble-like channel from late 2011 into late 2014, with only 10% maximum volatility top to bottom, the market finally lost its momentum… just as the Fed finished tapering its QE. That’s because the Fed was the primary driver in this stock bubble in the first place!

But the first sign that the bubble had indeed peaked was the break of that upward channel last August. Surprise, surprise! Without the Fed’s stimulus, stocks started to sputter out!

With that sign we can point to what now looks like a series of major tops, in one major index after the next, since late 2014:

Dow Transports, November 2014.
Dow Utilities, January 2015.
The DAX in Germany and the FTSE in the UK: April, 2015.
The Dow and S&P 500: May 2015.
The Shanghai Composite: June 2015.
The Nasdaq, Biotech and the Russell 2000: July 2015.
And finally, the Nikkei in Japan: August 2015.

The Shanghai Index crashed 45% in 2.5 months, similar to the Dow in late 1929 on its first 2.5-month wave down. That one was so obvious that when I said it was about to burst, it peaked that day and rolled over the next!

…click on the above link to read the rest of the article…

David Stockman CNBC Interview: “I don’t Know What The Bulls Are Smoking”

February 22, 2016

David Stockman CNBC Interview: “I don’t Know What The Bulls Are Smoking”

Anyone who believes that the global economy isn’t crashing must be delirious, according to David Stockman.

The former director of the Office of Management and Budget argues that a rapidly deteriorating economic environment is going to send stocks and oil prices spiraling even lower than they already have.

“I think your traders are smoking something stronger than what I can legally buy here in Colorado,” Stockman said Thursday on CNBC’s “Futures Now.”

The S&P 500 has fallen 6 percent year to date, and crude oil has plunged more than 17 percent. However, Stockman still sees a long way to go. He expects the S&P 500 to drop to 1,300 before making any new highs, and sees oil falling below $20.

Investors have been too optimistic about the U.S. economy because they are not factoring in global risk, said Stockman, who expects to see a recession by the end of the year.

“Everywhere trade is drying up, shipping rates are at all-time lows,” he said. “There is a recession that’s going to engulf the entire world economy, including the United States.”

Contributing to the turmoil is the ineptitude of central banks, he said. While Stockman doesn’t expect the Federal Reserve to adopt a negative interest rate policy, he said monetary policymakers have exhausted all other options.

“They should have the good graces to resign. They are lost. None of this is helping the economy,” he said.

Add in the 2016 presidential election, and Stockman said the markets will find themselves in a situation similar to that of the global financial crisis.

“The out-of-control election process will feed into and create an environment that we haven’t seen since the fall of 2008,” he said.

Of course, this isn’t the first time Stockman has been bearish. For years, he has been predicting a crash worse than 2008.

OPEC’s Trillion Dollar Mistake

January 26, 2016

OPEC’s Trillion Dollar Mistake

A few days after Christmas I appeared on CNBC Asia’s Squawk Box to discuss the volatility in the oil market. Bernie Lo asked a question about OPEC’s strategy, and I characterized their decision to defend market share as “a big, costly mistake” that had already cost the group over $500 billion in 2015 and would likely cost them that much again in 2016.

I followed that appearance up with an article for Forbes called OPEC’s Trillion-Dollar Miscalculation (which went viral and received more than 100 times the traffic of their typical energy article). In that article I detailed the numbers behind my assertion.

Two weeks later, Continental Resources CEO and shale drilling pioneer Harold Hamm went on CNBC and reiterated my argument. He called OPEC’s strategy “a monumental mistake for them, I might add, a trillion-dollar mistake.” While there were a number of responses to Hamm’s comments that displayed varying degrees of schadenfreude over the huge decline in his net worth, I didn’t see much acknowledgement that the point is correct. So let’s review.

By the time of the 1973 OPEC oil embargo, OPEC’s share of global oil production had been rising for years. In 1973 OPEC was producing more than 50 percent of the world’s oil. But in response to the embargo, countries all over the world implemented a number of changes to gain back some degree of energy security (addressing both supply and demand side), and OPEC’s market share went on a decade-long decline. By 1985, OPEC’s share of global oil production had fallen to 27.6 percent, but by 1995 it had once again risen to above 40 percent. In 2008, just as the shale oil boom in the U.S. was beginning, OPEC’s share reached 43.8 percent.

…click on the above link to read the rest of the article…

Saudi Arabia is Buying Up American Farmland to Export Agricultural Products Back Home

January 17, 2016

Saudi Arabia is Buying Up American Farmland to Export Agricultural Products Back Home

Just what we need, cornfield crucifixions.

Seriously though, this is very troubling. The Saudis are explicitly conserving their own resources at home, while exploiting land and water supplies here in America.

CNBC reports:

Saudi Arabia and other Persian Gulf countries are scooping up farmland in drought-afflicted regions of the U.S. Southwest, and that has some people in California and Arizona seeing red.

Saudi Arabia grows alfalfa hay in both states for shipment back to its domestic dairy herds. In another real-life example of the world’s interconnected economy, the Saudis increasingly look to produce animal feed overseas in order to save water in their own territory, most of which is desert.

Privately held Fondomonte California on Sunday announced that it bought 1,790 acres of farmland in Blythe, California — an agricultural town along the Colorado River — for nearly $32 million. Two years ago, Fondomont’s parent company, Saudi food giant Almarai, purchased another 10,000 acres of farmland about 50 miles away in Vicksburg, Arizona, for around $48 million.

But not everyone likes the trend. The alfalfa exports are tantamount to “exporting water,” because in Saudi Arabia, “they have decided that it’s better to bring feed in rather than to empty their water reserves,”said Keith Murfield, CEO of United Dairymen of Arizona, a Tempe-based dairy cooperative whose members also buy alfalfa. “This will continue unless there’s regulations put on it.”

Recall, this is precisely the type of investment Michael Burry of “Big Short” fame recently said he was involved in.

In a statement announcing the California farmland purchase, the Saudi company said the deal “forms part of Almarai’s continuous efforts to improve and secure its supply of the highest quality alfalfa hay from outside the (Kingdom of Saudi Arabia) to support its dairy business. It is also in line with the Saudi government direction toward conserving local resources.”

Sure, conserve local, exploit American. Just brilliant.

…click on the above link to read the rest of the article…

The Financial Crisis Of 2016 Rolls On – China, Oil, Copper And Junk Bonds All Continue To Crash

January 12, 2016

The Financial Crisis Of 2016 Rolls On – China, Oil, Copper And Junk Bonds All Continue To Crash

Never before have we seen a year start like this. On Monday, Chinese stocks crashed once again. The Shanghai Composite Index plummeted another 5.29 percent, and this comes on the heels of two historic single day crashes last week. All of this chaos over in China is one of the factors that continues to push commodity prices even lower. Today the price of copper fell another 2.40 percent to $1.97, and the price of oil continued to implode. At one point the price of U.S. oil plunged all the way down to $30.99 a barrel before rebounding just a little bit. As I write this article, oil is down a total of 6.12 percent for the day and is currently sitting at $31.13. U.S. stocks were mixed on Monday, but it is important to note that the Russell 2000 did officially enter bear market territory. This is yet another confirmation of what I was talking about yesterday. And junk bonds continue to plummet. As I write this, JNK is down to 33.42. All of these numbers are huge red flags that are screaming that big trouble is ahead. Unfortunately, the mainstream media continues to insist that there is absolutely nothing to be concerned about.

A little over a year ago, I wrote an article that explained that anyone that believed that low oil prices were good for the economy was “crazy“. At the time, many people really didn’t understand what I was trying to communicate, but now it is becoming exceedingly clear. On Monday, one veteran oil and gas analyst told CNBC that “half of U.S. shale oil producers could go bankrupt” over the next couple of years…

…click on the above link to read the rest of the article…

Stock Market Suffers Worst Start to the Year Ever – What Does it Mean?

January 12, 2016

Stock Market Suffers Worst Start to the Year Ever – What Does it Mean?

From December 30 to the end of the first week trading week of January, the DJIA has declined by roughly 7.7% (approx. 1,370 points) and the SPX by roughly 7.6% (approx. 160 points). This was nothing compared to the mini-crash suffered by China’s stock market early this year, which continued this morning with the Shanghai Composite (SSEC) declining by another 5.33%. The SSEC has put in an interim peak at approx. 3684 on December 23 and has since then fallen by slightly less than 670 points, or about 18%. Most of the decline occurred in the first week of January.

S&P 500 Index, daily. The year has begun with a big sell-off in stock markets around the world – click to enlarge.

Although the sell-off in the US stock market was comparatively mild, it still ended up as the worst first trading week of January in history. Had January started out on a positive note, the mainstream financial media would have been full of reminders of how bullish a strong showing in the first week of January was, and what a good omen it represented for the rest of the year. Instead they felt compelled to tell us why a weak start to the year should be ignored.

The contortions went as far as one analyst informing us last week that the sell-off was actually happening “in a parallel universe”. As our friend Michael Pollaro has pointed out to us, central planning worshiper Steve Liesman told CNBC viewers last week that the terrible trade numbers (both imports and exports kept declining) were actually a positive, because they would “subtract less from GDP” – as imports have declined at an even faster pace than exports. Such unvarnished nonsense can only spring from the fevered minds of Keynesians and Mercantilists.

2-US exports and imports …click on the above link to read the rest of the article…

This Time Isn’t Different

January 4, 2016

THIS TIME ISN’T DIFFERENT

Last year ended with a whimper on Wall Street. The S&P 500 was down 1% for the year, down 4% from its all-time high in May, and no higher than it was 13 months ago at the end of QE3. The Wall Street shysters and their mainstream media mouthpieces declare 2016 to be a rebound year, with stocks again delivering double digit returns. When haven’t they touted great future returns. They touted them in 2000 and 2007 too. No one earning their paycheck on Wall Street or on CNBC will point out the most obvious speculative bubble in history. John Hussman has been pointing it out for the last two years as the Fed created bubble has grown ever larger. Those still embracing the bubble will sit down to a banquet of consequences in 2016.

At the peak of every speculative bubble, there are always those who have persistently embraced the story that gave the bubble its impetus in the first place. As a result, the recent past always belongs to them, if only temporarily. Still, the future inevitably belongs to somebody else. By the completion of the market cycle, no less than half (and often all) of the preceding speculative advance is typically wiped out.

Hussman referenced the work of Reinhart & Rogoff when they produced their classic This Time is Different. Every boom and bust have the same qualities. The hubris and arrogance of financial “experts” and government apparatchiks makes them think they are smarter than those before them. They always declare this time to be different due to some new technology or reason why valuations don’t matter. The issuance of speculative debt and seeking of yield due to Federal Reserve suppression of interest rates always fuels the boom and acts as the fuse for the inevitable explosive bust.

…click on the above link to read the rest of the article…

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