It’s Wednesday morning, and the commodity carnage is accelerating – to the
point that the CRB commodity index’s “dead cat bounce” from the 40-year
low of 185 it briefly touched in late August is on the verge of being
taken out. Undoubtedly aided by the newly formed, but clearly
overmatched, “oil, copper, and zinc PPT’s” – the latter of which was
blatantly deployed on October 9th to
“save” Glencore – the CRB peaked that very day, at 204, before plunging back
to 189 this morning, en route to points much, much lower. As discussed
in Tuesday’s “direst
prediction of all – revisited – far direr than ever,” the historic
commodity oversupply I warned of 14
months ago is accelerating, as global economic activity has nearly ground
to a halt. As are the horrifying political, economic, and social
ramifications – particularly regarding the decidedly not “transitory” plunge
in crude oil; i.e., the world’s top revenue producer.
Last week’s dramatic increase in Saudi Arabia’s “discount” to global oil
prices – following a downgrade in its credit rating, as rating agencies hone
in on Saudi’s massive, exploding budget deficits – should tell you all you
need to know about how destructive the upcoming “oil price wars” will be; in
many ways, just as destructive as the “final currency
war” has been, and will continue to be, as Central banks aggressively
destroy what’s left of their nations’ “money.” Which, by the way, is on
the verge of a massive “surge” – to quote America’s former Iraqi military
strategy – given the ECB’s promise of a “big cut” in its already negative
interest rates next month.
And oh yeah, the PBOC having just completed its seventh straight day of
Yuan devaluations (not un-coincidentally, amidst this weekend’s horrifying
Chinese trade data), as it expands what I deemed this summer, the “cataclysmic
financial big bang to end all big bangs”; in taking said “final currency
war” nuclear. And seeing China’s Containerized Freight Index hit
an all-time lowyesterday, I couldn’t be surer that
these horrifying trends are ready to go parabolic. Throw in last
night’s massive API crude inventory build – which not only was much
higher than anticipated, but represented the seventh straight weekly
increase, and you can see why late August’s WTI crude low of $37.80/bbl is in
eminent danger of being revisited – particularly now that as the aforementioned
“oil PPT’s” $44/bbl “line in the sand,” which has served as technical support
for the past two months, has been decidedly breached.
And now that essentially all the profitable “hedges” put on by
collapsing shale oil companies last year have expired – as said “transitory”
oil price increase is now more than a year old – “Economic
Mother Nature” is on the verge of taking her revenge on the manipulators
that sought to usurp her immutable laws with money printing, market
manipulation, and propaganda; as just in the U.S. alone, hundreds of shale
producers – financed by $500 billion of junk bonds and “leveraged loans,”
which are plunging as we speak – are likely to go bankrupt, taking countless
investors and “private equity” funds with them.
Yesterday alone, the OECD, or Organization for Economic Co-operation and
Development, warned of a “deeply concerning” slowdown in global trade and
economic growth; whilst credit rating agency Moody’s ominously warned that “global
economic growth will not support significant reductions in government debt or
increases in interest rates by major central banks. Consequently,
authorities lack the ample fiscal and monetary policy buffers usually created
at the top of the business cycle, leaving growth and global financial
stability particularly vulnerable to shocks for an extended period of time.”
Translation: “The global economy is crashing – and since Central banks
have already taken interest rates to zero (and in some cases, lower);
and already levered their balance sheets exponentially with QE; they
have no remaining ammunition to prevent the ‘unstoppable
tsunami of reality’ from washing over them.”
And by the way, for those that believe the Fed will actually “raise rates”
next month – despite having never promised such, whilst admitting it remains,
as always, “data dependent” – consider that yesterday’s U.S. 10-year Treasury
bond auction was a rousing success, as everyone from individual investors to
global Central banks came charging in to capitalize on the “jawboning gift”
the Fed delivered last month – as it inches ever closer to its QE4
destiny. And now that an incredible four of five of the
FOMC’s 2016 regional policy-making voters will be former Goldman Sachs
employees – following yesterday’s appointment of Neel Kashkari as head of the
Minneapolis Fed – the odds of such “accelerated monetary easing” have gone
equally parabolic.
Rounding out yesterday’s economic carnage, Gallup’s U.S. economic
confidence remained mired at multi-year lows, well below zero; whilst
bellwether retailer Macy’s dramatically missed its revenue estimates and
slashed forward guidance; as fast food workers in 270 cities struck against
unfairly low wages – recent, government-mandated “minimum wage increases”
notwithstanding. And this, whilst the world’s number one fast food
employer, McDonalds, saw its debt rating slashed to barely above junk – after
having announced that instead of paying its employees, it plans to compromise
its balance sheet with massive increases in its share buyback and dividend
program, by issuing $10 billion of debt! I mean seriously, you simply
can’t make this stuff up!
And by the way, given that essentially all the so-called “jobs”
created in October’s bogus NFP report – that is, those not created by the
fabricated “birth-death model” – were the very part-time, minimum wage paying
“gigs” at serial employee abusers like McDonalds, it shouldn’t surprise you
that, for that first time in the 43 years since the national “General Social
Survey” was published, older adults are more “miserable” than younger
ones. Oh, don’t worry. Those “young-uns” taking out trillions of
soon-to-be-defaulted, government sponsored student
loans because no jobs are available; who can’t even get jobs at
McDonald’s because savings-less senior citizens are taking them; causing
them to live at home at record rates; forego
home purchases; and stall family formation, will shortly be forced to
take the full brunt of coping with the economic morass – and demographic
nightmare – the U.S., and global, economy will be for years to come.
And then there’s the social and political nightmares said
economic collapse is catalyzing – per what I wrote in last year’s “crashing
oil prices portend unspeakable horrors.” To that end, the Greek
crisis – which given yesterday’s delay of a €2 billion “bailout” due
to Greece’s inability to complete the “reforms” the Troika demanded, is far
from over – has been the unwitting “poster child.” To that end, is
anyone even aware that on Monday, the Catalan government – fresh from
September’s “Catalan-astrophe,”
when a pro-secession government was elected – took the first Parliamentary
step towards seceding from Spain by the end of 2016? Which, I might
add, would take nearly a quarter of Spain’s GDP and tax revenues with
it. Which, putting such a blow into perspective, is nearly double
California’s 14% contribution to U.S. GDP, and triple New York’s 8%.
Moreover, is anyoneaware that just yesterday, the nation with the
second highest non-financial debt/GDP ratio on the planet, Portugal – which
just happens to be a “PIIG” as well – had its government overthrown by a
coalition of Communist and radical left socialists, just eleven days after
its President (Portugal has a President and a Prime Minister) warned
they were too dangerous for office? To that end, consider the chaos
that will ensue, as Prime Minister Pedro Coelho has been forced to resign a
mere six weeks after winning a national election, as a coalition of
“anti-austerity” socialists, led by incoming Prime Minister Antonia Costa,
have dramatically usurped his power. And while they initially claim
to not have an interest in a “Portu-gexit” – quite obviously, to ensure said
anti-Coelho coalition would get enough votes – if you believe that, I have a
bridge in Brooklyn to sell you.
Ah, and then there’s the “markets,” where maniacal, unprecedented,
relentless manipulation of “last
to go” markets like paper gold and silver and the “Dow
Jones Propaganda Average” – such as yesterday’s prototypical equity “dead
ringer” algorithm and comically redundant COMEX-opening and “cap of last
resort” attacks; as well as this morning’s 547th “2:15 AM” EST Precious
Metals paper raid of the past 624 trading days, “Cartel Herald”
algorithm et al – mask “Economic Mother Nature’s” dramatic advancement in
nearly all other arenas.
To that end, “high-yield” credit markets are notching new multi-year lows; commodities are in all-out freefall, and
the “surging dollar” – i.e., collapsing currency markets – portend not only
surging worldwide import inflation and heightened currency wars – but
social, political, and even military instability. Heck, the U.S. just
announced it is sending “boots on the ground” to Syria – to nary a peep from
the U.S. media. Or, for that matter, the dozen or so Republican
Presidential hopefuls in last night’s nationally-televised debate!
Emerging market capital flight is accelerating; “private equity” valuations
are plunging – portending massive write-offs and lay-offs in
the coming months and years; and Freddie Mac announced its first quarterly
loss since being nationalized, suggesting the next wave of printing press
financed “bailouts” are on the way.
Heck, even the PPT’s painfully obvious presence has become front and
center news – as believe it or not, amidst the past two months’ blatantly
orchestrated equity rally, taking the NASDAQ up an incredible 20% amidst a
veritable blizzard of “horrible headlines,” its “advance/decline line – i.e.,
advancing stocks minus declining stocks – is negative. In other
words, the PPT’s focus on equity futures in the market capitalization
weighted NASDAQ (and S&P 500) have made its manipulative impact that much
more transparent – as whilst most stocks are declining, a handful of
mega-large caps have been taken skyward by the PPT’s relentless equity
monetization. Which, in turn, is why “hedge bombs” – I mean,
hedge funds – continue to miserably underperform the market – for the seventh
straight year. And incredibly, people still give the
“geniuses” that run them 1%-2% annual “management fees,” and 20% of all the
funds’ profits!
As for Precious Metals, such incessant price suppression is “only making
it worse” for the soon-to-be-deposed “New York Gold
Pool”; whose unfathomably intense, unrelenting scheme has caused global physical
demand to surge to record levels; whilst above-ground inventories rapidly
vanish, as the outlook for the decimated mining industry – for both Precious
and base metals – has never been worse. And again, I
cannot emphasize enough that roughly half the world’s silver
production is the byproduct of copper, lead, and zinc mines; which, as their
prices inexorably decline amidst one of the worst oversupply situations in
memory, will be shutting down en masse. In other words, making the
estimated 25%-50% silver production decline discussed in last year’s “Miles
Franklin All-Star Silver Panel Webinar” appear eminently possible.
To that end, Steve St. Angelo’s latest article, “biggest silver supply losers of 2015,” highlights how not
only are the world’s five largest silver-producing countries’ production down
6% year-over-year for the first eight months of 2015, but nations not in
the top five are down substantially as well – such as Canada, whose
year-to-date silver production is down a whopping 32%! And now that
U.S. Mint silver sales are picking up anew, as paper prices have been
decimated back down to the mid-$14s level that sparked this summer’s dramatic
physical shortages, the “Achilles Heel” that is the tiny physical silver
market may well be poised for another Cartel-busting demand surge.
Which is why, as global “horrible headlines” go increasingly parabolic,
the time is NOW to protect yourself, with the only assets to have
proven immune to Central bank money printing throughout history.
And, to that end, if you do decide to act, we humbly ask you to
give Miles Franklin a call at 800-822-8080 – and give us a chance to earn your
business. And, as always, you can contact me via email, at ahoffman@milesfranklin.com.
