Global Economic Conditions



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Watch : Janet Yellen Testifies Why The Fed Is Once Again “Uncertain”

Fed Chair Janet Yellen surprised markets again, when after weeks of a hawkish setup, she suggested that the Fed is not only uncertain “about when – and how much – inflation will respond to tightening resource utilization”, but warning that the federal funds rate may “not have to rise all that much further to get to a neutral policy stance.” And now it is her turn to explain why.

China’s Plan To Subvert The Global Dollar Standard

The instability brought into the geopolitical equation by the Trump presidency, and the early signs the US economy is grinding to a halt under the sheer weight of consumer and government debt, are increasingly likely to prompt China and Russia into firm financial action, if only to protect themselves in an unstable financial and monetary environment.

Fed’s Kaplan Warns Trump “US Too Levered To Use Debt For Growth”

Federal Reserve Bank of Dallas President Robert Kaplan had lots to say this morning that, for now, the market has chosen to ignore. He warned “we are highly leveraged” implicitly warning President Trump that the country’s ability to boost growth through debt is limited(thanks to President Obama’s doubling of the national debt as The Fed held rates at zero during his term?)

“The Singaporean banks have regional ambitions, and for them, increasing the size of their private bank is a good way to grow,” said Jan Bellens, EY Asia-Pacific banking and capital markets leader and global emerging markets leader.

“For the Swiss players, I think it is a case that Asia is where the growth is at a time when things are more challenging in their home market.”

Activity in the Asian private banking space in recent years has primarily been among mid-sized players which are either looking to gain size to compete, or withdraw from the market.

The top six places in the table were unchanged from 2015. UBS, with its US$286 billion of AUM, fended off Citi and Credit Suisse to maintain the No 1 spot.

Despite all the comings and goings, assets under management at the top 20 private banks in Asia grew by 6 per cent in 2016 to reach a record high. Collectively, they managed US$1.55 trillion of the region’s wealth in 2016, excluding mainland China, according to the magazine’s calculations.

The magazine noted, however, that AUM growth excluding onshore China was dwarfed by that of Chinese banks. China’s top five private banks have increased their AUM by an average annual growth rate of 27 per cent since 2012, while the top five Asian banks excluding onshore China achieved CAGR of just 6.4 per cent.

The attractions for international private banks of servicing this onshore Chinese wealth are significant, but doing so involves a number of challenges, most recently the strict controls on capital leaving China.

“A number of the international private banks have stated that their aim is to service onshore Chinese wealth, but it is not yet clear what a successful operating model might be,” Bellens said.

China dumping U.S. Treasury debt in record volume… is this a prelude to the globalist assault on Trump’s economy?

Image: China dumping U.S. Treasury debt in record volume… is this a prelude to the globalist assault on Trump’s economy?

China was recently the largest holder of US treasury securities, but has now lost that title to Japan after China started selling their securities rapidly. Chinese authorities are sacrificing their coveted position with significant financial and diplomatic value. They are preparing to engage in a bigger battle, to protect the Yuan’s value from plummeting. The battle is set to intensify this year, when President Donald Trump challenges the Yuan, along with China’s devaluation practices.

China’s holdings in US Treasury bonds recently fell by $66 billion. The US Treasury department said it was their 6th consecutive month of selloffs. But that’s only a fraction of their holdings, China now has their lowest amount of Treasury holdings since early 2010. Analysts predicted that trend would continue in November and December, and it did. The selloffs were a prudent move in which China needed in order to raise funds to protect the Yuan’s value, which is currently being pushed down by capital flight and the rising dollar.




Back in August 2015, I noted that Goldman Sachs and HSBC had taken delivery of a huge tonnage of physical gold, probably purchased near the lows. Physical bars of gold are, by definition, a very long term investment in the yellow metal. At the time, the two banks were telling clients and others not to buy gold, even as they were loading up on it, themselves.
Let’s fast forward…
Starting in December 2015, JP Morgan began buying tremendous quantities of physical gold, as opposed to paper/electronic gold futures, forwards, ETF certificates etc. From December 1, 2015 to December 29, 2016, the big bank purchased and took physical delivery of over 31 metric tonnes worth of bars of the yellow metal for its house account at COMEX alone.
In other words, it now has a physical gold pile which, at minimum, is worth over $1.1 billion at $1,140 per troy ounce, and it is an asset of the corporate bank. By May, 2016, unlike the actions of GS and HSBC in buying while advising clients to sell, analysts at JP Morgan were beginning to encourage customers to buy gold also.
Let me repeat that the enormous purchase of 31+ tonnes of traceable physical gold occurred at New York’s COMEX exchange. The so-called “OTC” gold market in London is five times larger than the gold market in New York City, and if they were buying at COMEX, they were probably buying in London also. The problem with London is that the “LBMA” is not a formal exchange with disclosure rules and regulatory oversight. It is simply an informal collection of banks who operate by agreeing to a common set of rules of engagement. Transactions are secret….



Might the globalists who’ve been working with impunity to bring down America to install their totalitarian, dictatorial ‘new world order’ use a collapse of the economy, their ever-present ‘shadow government’, an assassination attempt upon the life of Donald Trump or a Soros/Clinton funded ‘purple revolution’ to complete their long-held goals now that they realize that time may berunning out on them with Trump only 2 months away from taking office?

While we pray that the above mentioned possibilities never play out and Trump at least gets into office to show America what we’ll look like under his leadership, we should remember that Trump warned that the world faces possible economic collapse, and we should always be prepared for anything and everything that might come our way.

Saudis, China Dump Treasuries; Foreign Central Banks Liquidate A Record $375 Billion In US Paper

It is official: Trump or no Trump, foreign central banks, SWFs and virtually every other official institution in possession of US paper, and as of this month, private investors too, are liquidating their Treasury holdings at a record pace.


The backlash is imminent… prepare for real Americans to take their country back… the ‘revolt on Washington’ is just getting started

 The establishment is clueless. Hopelessly corrupt. Immeasurably incompetent. The media, the political elite, the criminal bankers, the idiotic academics… they have absolutely no clue about the size of the fervent backlash that’s headed their way.

“The Fed Failed ….” And that Changes Everything

By Jeffrey Snider, Alhambra Investment Partners

There is a growing body of public work that suggests Federal Reserve officials are prepared now for avery different sort of normalization than what had been envisioned up until this year. That comes, as noted earlier, with the realization that the economy is not just in rough shape but likely to remain that way for the foreseeable future.

ABOOK August 2016 Potential CBO Last

The important caveat left off that bleak pronouncement is actually ceteris paribus. So long as the current policy and monetary system remains firmly in place, there is little hope the global economy will just spontaneously ignite. Since economists and central bankers have made it clear they aren’t going anywhere despite being wrong about everything up to now, here we are.


Even Janet Yellen has been forced to concede that even if the Fed does manage to get on with further rate hikes, the ultimate destination for them in nominal terms is much less than prior “cycles.” Current thinking seems to be aiming for around 3% for the federal funds rate rather than 5% as had long been accepted. The way things are going, and as the Japanese showed, they will be lucky to get even half that far.

But in what can be only another sign of just how twisted, upside down, and easily receptive to pretzel logic the mainstream is now, that is supposed to be a good thing especially for stocks. Writing today for BloombergView, Mohamed El-Erian, chief economic advisor for Allianz, makes this exact argument.

Equity investors have also been reassured by the growing — and correct — recognition that this Fed hiking cycle will depart drastically from historical norms. Instead of following a relatively linear path of increases at regular intervals, it will have pronounced “stop-go” characteristics. Also, and perhaps more importantly, the endpoint — or what economists call the “neutral rate” — will be considerably lower than recent historical averages.

How in the world is that a good thing that would “reassure” equity investors? Truly rational investors make decisions based on discounted information about the future, and what El-Erian suggests here (and he hasn’t been alone) is that stock investors show more preference for “accommodative” monetary policy than actual growth. A lower rate ceiling implies without much ambiguity continued awful economic conditions here and elsewhere around the world. But to the screwed up nature of mainstream thought, so long as monetary policy is lower overall continued stagnation is forgiven, perhaps even to be mildly celebrated?

What does it mean by claiming “accommodation” that gives “investors” so much apparent comfort? It can’t mean that in economic terms for obvious reasons; instead we are led to believe that low (meaning desperately insufficient) growth isn’t all that bad so long as interest rates don’t rise too far. Investors are supposed to be paying for growth, not the failure of interest rate “stimulus” to seed it. If the Fed feels it can’t raise rates all that much, with a true “ceiling” yet to be determined, it is a much riskier, not less risky, environment.

The idea of a lower R* or r-star is truly a defining defeat, though it is, like El-Erian’s attempt here, being spun into what is nothing more than rationalization. As I wrote in September, the falling R-star can mean nothing else:

There is more complexity when we talk about inflation, of course, but by and large it is commodity prices that have thwarted John William’s (or Janet Yellen’s) “normalizing” narrative. Commodities have been falling more intensely since the middle of 2014 but really dating back to the middle of 2011. Both of those inflections recall and are related to obvious eurodollar or global wholesale money events. Thus, even subscribing to Wicksell’s theory, the current rate must now be, as it has been, above the natural rate, unambiguously indicating “tight” money. Whether it is via Friedman’s interest rate fallacy or Wicksell’s natural rate hypothesis, both arrive at the same conclusion due to seemingly intractable market prices.

Central banks assume that means they have to “stimulate” more when in fact it is just their math telling them they haven’t stimulated at all – at least not where it counts and has been needed. Translating depression into econometrics is a long and costly affair, but it is at least starting to be done, slowly and in discrete pieces. R* may yet be of some great value, insofar as further calculating just how little monetary authorities know about money.

Reception of and belief about QE have been very much cult-like and it was thus too thinly constructed to withstand being so thoroughly debunked. This is not even close to making the best of a bad situation; it is instead claiming positive attributes that just don’t exist, being downright offensive to common sense. How anyone, let alone El-Erian, wrote that paragraph (contained within an article further rationalizing the latest of the “rising dollar”) without awareness of its very basic flaw can at best be described as intentionally obtuse while still bordering upon nakedly deceiving. The world of the near future is going to be bad, worse than everything “we” have been expecting, but take heart, the Fed’s monetary policy will reflect just that. Translating it from the original mainstream thought-bubble language truly reveals its truly absurd premise… The Fed failed, and that changes everything; including and especially what is to be made of “accommodation” and what it is that might have “reassured” equity investors in the past and might do so (or not) going forward.


The Latest Deutsche Bank Scandal Reeks Of Enron: 103 “Enhanced Repo” Deals To Make Loans “Disappear”

Deutsche Bank arranged 103 deals similar to the infamous Santorini, with a total value of €10.5BN for 30 clients. It sold collateral the borrower had provided, such as government bonds, creating a new obligation for the bank to eventually return the bonds. The loan was offset by that obligation, “making it essentially disappear.

The Run Begins: Deutsche Bank Hedge Fund Clients Withdraw Excess Cash

Deutsche Bank concerns just went to ’11’ as Bloomberg reports a number of funds that clear derivatives trades with Deutsche Bank AG have withdrawn some excess cash and positions held at the lender, a sign of counterparties’ mounting concerns about doing business with Europe’s largest investment bank.

Deutsche Denial Tsunami Begins: Draghi “Not ECB Fault”, IMF “Solid Base”

It is becoming very clear that the Deutsche Bank debacle is getting very serious. How do we know? Simple – everyone is denying everything. Overnight DB CEO Cryandenied any need to raise capital or need a bailout; this morning ECB’s Draghi deniedlow rates were responsible, and denied The IMF’s statement the bank is systemically important; and now IMF’s Lagarde is denying any need for government intervention.


The Mainstream Media Bet The Farm On Hillary… And Lost

The MSM has forsaken its duty in a democracy and is a disgrace to investigative, unbiased journalism.


“Global Market Rout” – Bond Selloff Snowballs Into Stock Liquidations On “Stimulus Pullback” Fears

With traders in the US arriving at their desks, the global selling appears to be accelerating and as Bloomberg notes, “a selloff in fixed income is starting to snowball into a global market rout” driven by what Reuters dubbed “growing concerns that global central banks’ commitment to the post-crisis orthodoxy of super-low interest rates and asset purchase programs may be waning.”

Exclusive: ‘Flash Boys’ protagonists aiming new exchange at gold

By John McCrank | NEW YORK

IEX Group, which rose to prominence with its bid to shake up stock trading in the United States, now aims to do the same in the more than $5 trillion-a-year gold market with a new exchange being created by its spinoff TradeWind Markets, a board member of the new venture said on Tuesday.

The protagonists of Michael Lewis’s book, “Flash Boys: A Wall Street Revolt,” are planning a gold exchange that would use elements of blockchain technology to improve transparency and the clearing and settling of trades, said Matt Harris, a managing director at Bain Capital Ventures. Bain has an investment in IEX.

Blockchain is a tamper-proof shared ledger that can automatically process and settle transactions using computer algorithms.

TradeWind Markets began as an internal project of IEX and was spun off as a separate firm earlier this year. In June, the startup raised $9 million, according to a regulatory filing with the U.S. Securities and Exchange Commission. A person familiar with the operation who asked not to be identified because the plans are not public, said the funding came from IEX and Sprott Inc (SII.TO), a Canada-based investment firm that manages physical bullion funds……


Wall Street’s Latest Retail Fleecing Product Exposed – Structured CDs

Wall Street is an industry that should have been allowed to go down in flames back in 2008. Bailing out these career criminals and sociopaths was one of the gravest errors in American history. An error that we as a nation continue to suffer from to this day. As an example, yesterday’s Wall Street Journal reported on the industry’s latest scheme to pocket the hard earned savings of those dwindling Americans who still have a few pennies left — structured CDs.