Sunday, November 13, 2016

Gold World News Flash

Gold World News Flash


Dimon approach signals Trump is eager to reconnect Washington and Wall Street

Posted: 12 Nov 2016 07:30 PM PST

Since when haven't they been connected?

* * *

By Ben McLannahan
Financial Times, London
Friday, November 11, 2016

https://www.ft.com/content/00ff8f82-a835-11e6-8b69-02899e8bd9d1

After an election filled with rhetoric about big and brash bankers running amok on Wall Street, Donald Trump has turned to the biggest and the brashest of them all: Jamie Dimon, chairman and chief executive of JPMorgan Chase.

The transition team of the president-elect called Mr Dimon on Wednesday night to sound him out about serving as Treasury secretary, according to a Reuters report that the Financial Times has been unable to confirm.

... Dispatch continues below ...



ADVERTISEMENT

Sandspring Resources Commences 2016 Exploration Campaign

Company Announcement
August 17, 2016

Sandspring Resources Ltd. (TSX VENTURE:SSP, US OTC: SSPXF) is pleased to announce commencement of the 2016 exploration campaign at its Toroparu Gold Project in Guyana, South America.

In 2015 the company completed a 3,700-meter diamond drilling program on the promising Sona Hill Prospect, located 5 kilometers southeast of the main Toroparu deposit. Sona Hill is the easternmost gold anomaly in a cluster of 10 gold features located within a 20-by-7-kilometer hydrothermal alteration halo around Toroparu. Drilling at Sona Hill in 2012 and in 2015 intercepted high-grade mineralization in both saprolite and bedrock, and confirmed the continuity and grade potential of the Sona Hill mineralization.

For the remainder of the announcement and highlights of the 2015 drill program:

https://finance.yahoo.com/news/sandspring-resources-commences-2016-explo...



News of the approach prompted shock -- and some amusement -- on Wall Street. Why would Mr Dimon, a long-time donor to the Democrats, want to cap his career by joining the Trump administration?

"People are concerned about what a chaotic environment this may be," said one Washington lawyer. "Do you really want to put your career and family at risk to work with such a person?"

By Friday morning there was louder chatter around Jeb Hensarling, chairman of the House Financial Services Committee and a close ally of Mike Pence, Mr Trump's deputy.

But for now, said analysts, Mr Dimon's name may have an important signalling effect. It means that America's next president is unafraid of reconnecting Washington and Wall Street.

Over the past few months, as the Clinton camp limbered up for government, anyone with ties to the big banks was deemed to be off-limits as the next Treasury secretary. Elizabeth Warren, the senator from Massachusetts, has always been a critic of the "revolving door" that sees powerful bank executives shuffling into government and sometimes back again. In a speech in September Ms. Warren went so far as to name three firms -- Citigroup, Morgan Stanley and BlackRock -- as companies from which the government should not recruit.

That was an obvious shot at Larry Fink, the BlackRock chairman who appeared to be manoeuvring for the role, but also drew a line through names such as Gary Gensler, the ex-Goldman Sachs banker who ran the Commodity Futures Trading Commission. Roger Ferguson, the mild-mannered CEO of TIAA, the teachers' retirement fund, was seen as the best compromise candidate: close, but not too close.

Under Mr Trump, however, that could be changing. Consideration of the JPMorgan chief shows that, eight years on from the crisis, the period of bashing banks is drawing to a close.

Lobbyists welcomed the connection. "Folks with the relevant industry experience should not be excluded," said Rob Nichols, head of the American Bankers Association, which bills itself as the voice of the nation's $16tn banking industry. "In fact, those saying you shouldn't have experience, that is misguided public policy."

If Mr Dimon really is in the frame it marks a "seismic shift," said Isaac Boltansky, an analyst at Compass Point in Washington. "We've gone from former Wall Street employees having the scarlet letter on their lapel to a wide-open consideration of resetting the regulatory regime."

A spokesperson for JPMorgan declined to comment.

A move for Mr Dimon, a trim and fit 60-year-old, would certainly add glamour. Other names doing the rounds are distinctly low-wattage: Steve Mnuchin, Mr Trump's campaign finance chief; Tim Pawlenty, the former Minnesota governor turned bank lobbyist; John Paulson, the hedge fund chief who made his fortune shorting mortgage bonds.

And Mr Dimon has harboured political ambitions. After a recent speech in Washington he said in response to a question that he'd "love" to be president, saying he was frustrated with the state of political discourse and the inability of warring politicians to find common ground. "We need policy. We need thoughtful people," he said.

On Wednesday morning, hours after Mr Trump's victory, he put out a memo to JPMorgan's 240,000 staff about divisions and healing and coming together -- textbook language from any campaign trail.

A move into government could also be lucrative if Mr Dimon takes advantage of a tax break designed to ensure that the wealthy are not deterred from public service. These include avoiding capital-gains taxes on any assets he would have to sell to avoid a conflict of interest, as long as proceeds are reinvested in certain assets within 60 days. The same breaks applied to Hank Paulson, the former Goldman chief who became the 74th Treasury secretary in 2006, and Citigroup's Robert Rubin, the 70th.

Floating Mr Dimon's name is consistent with talk of easing the burden on bankers, said Mr Boltansky, noting that shares in JPMorgan and the rest have been rocketing all week.

"The market right now is pricing in the complete removal of the regulatory realities of the current system," he said.

* * *

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

ALERT ALERT MASSIVE BOND SELLOFF! BEWARE OF THIS STOCK MARKET By Gregory Mannarino

Posted: 12 Nov 2016 06:30 PM PST

 Economic collapse and financial crisis is rising any moment. Getting informed about collapse and crisis may earn you, or prevent to lose money. Do you want to be informed with Max Keiser, Alex Jones, Gerald Celente, Peter Schiff, Marc Faber, Ron Paul,Jim Willie, V Economist, and many...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

'Trumponomics': Putting America first

Posted: 12 Nov 2016 05:30 PM PST

 A special focus on Donald Trump's economic policy and what his presidency means for the US and the global economy. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers , Whistelblowers ,...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

As The Dust Settles: Goldman Q&A On Life In Trumplandia

Posted: 12 Nov 2016 05:15 PM PST

Expect the election result to increase policy uncertainty, warns Goldman Sachs, as a result of an increased pace of legislative action in 2017 without clarity, so far, regarding which issues the administration will prioritize. Over the near-term, much will depend on how financial conditions respond to the policy positions of the new administration. Despite today’s favorable market reaction, investors may take a dimmer view on proposals to raise tariffs or otherwise restrict international trade.

Via Goldman Sachs,

Q: Where do the final results stand?

A: Republican sweep. At this point, Mr. Trump is likely to finish with 309 electoral votes but is slightly behind Sec. Clinton in the popular vote (the margin is likely to grow as votes are still being counted). In the Senate, one race has not yet been decided but Republicans look likely to hold 52 seats in the next Congress, two less than the 54 they hold currently. Likewise, in the House, four races have yet to be called, but Republicans look likely to hold 241 seats, down six from the their current level (including one vacant Republican seat).

Q: What does this mean for policy in general?

A: Overall, we think the election result implies greater policy uncertainty, for two reasons. First, the likelihood of significant legislative activity has increased as a result of single-party control for the first time since 2010, and Republican single-party control since 2006. In some areas, like fiscal policy, the question is now less if legislation passes, but what legislation passes. Second, uncertainty also looks likely to rise, at least temporarily, because it is much less clear what the priorities—or, on some issues, even the general views—of a Trump Administration are likely to be compared to most incoming administrations. As a first pass in thinking about policy under the new administration and Congress, we would categorize issues along two dimensions: how much political support Mr. Trump would need from Congress, and which issues have been key to his political success, suggesting a need to follow through directionally though not necessarily on the specifics.

Q: What is likely to be on the Trump Administration’s agenda?

A: The issues on Mr. Trump’s agenda are fairly apparent but it is less clear how priorities will be ordered. The campaign focused on tax reform, trade and immigration restrictions, easing of regulation, repeal of the Affordable Care Act (ACA, or Obamacare) and increased spending on infrastructure and defense. Some of these issues appear more likely to become priorities for the Trump Administration than others. For example, it is clear that congressional Republicans hold tax reform as a top priority, along with ACA repeal. While both of these issues likely resonated with many of Mr. Trump’s supporters, these are issues that congressional Republicans—and the 2012 Republican presidential candidate—have highlighted in the past, with mixed electoral success.

By contrast, Mr. Trump focused new attention on trade policy and immigration, taking more restrictive stances in both areas than many Republican members of Congress support. While there were several factors behind Mr. Trump’s surprising victory, many of the states where he significantly outperformed were those with some of the highest shares of manufacturing-related employment (Exhibit 1). Given this, it would be surprising to see a Trump Administration distance itself entirely from commitments made on the campaign trail regarding trade. He also appears focused, as do many of his advisors, on reducing regulation, particularly in the energy and financial sectors. Some of these changes could require legislation, but many would be possible through executive action.

Exhibit 1: Trump outperformed in manufacturing-intensive swing states


Source: CNN, Department of Labor, Goldman Sachs Global Investment Research

Q: How much congressional support will President Trump need for his agenda?

A: It ranges from needing bipartisan support to unilateral executive authority, depending on the particular issue. He would need bipartisan support for regulatory-focused legislation, for example. Under current Senate rules, it usually takes 60 votes to pass major legislation dealing with most policy areas, such as regulatory changes affecting various sectors, legal changes (for instance, dealing with immigration or anti-trust laws) or labor laws like a minimum wage increase. In some cases, bipartisan support in the Senate might be possible in light of the fact that 10 Democratic senators representing states that Mr. Trump won will be up for reelection in 2018 (only one Republican senator representing a state that Sec. Clinton won will face reelection in 2018). Coalitions will differ based on the issue, but a deregulatory push in some areas, like energy, could receive sufficient support from these Democratic lawmakers to cross the 60-vote threshold. On many other issues, like comprehensive immigration reform, we expect that reaching a compromise would remain difficult.

Fiscal policies could be addressed with only a simple majority in the House and Senate. Under the budget “reconciliation” process, the majority party can pass legislation to cut or raise taxes with only 51 votes in the Senate, rather than the usual 60 votes needed for most legislation. The two issues most likely to be addressed using this process would be tax reform and changes to the ACA. It is possible that certain aspects of federal spending, like Mr. Trump’s infrastructure program, might be addressed through this process as well.

A third set of issues could be addressed without congressional involvement at all. The president has broad powers related to trade policy, as discussed below. Once in office, President-elect Trump could also reverse the “deferred action” policies for undocumented immigrants that President Obama put in place in 2012. Beyond this, there are a number of regulatory actions that the current administration has taken that could be modified or reversed, related to labor rules, energy exploration and production, carbon emissions and other aspects of environmental regulation, and financial regulation.

Q: What has President-elect Trump proposed on taxes?

A: Mr. Trump has proposed personal and business tax reform that would reduce tax revenues by an estimated $4.4 trillion over ten years, or roughly 1.9% of GDP over that period. Roughly half of this cost is estimated to come from his proposed corporate tax reform plan, which would reduce the corporate income tax rate to 15% and would impose a one-time 10% tax on all foreign earnings not yet taxed by the US. Companies would be free to repatriate earnings without additional tax once this tax has been paid. Like the House Republican proposal, this would involve a transition to a new corporate tax system for taxing foreign earnings. The two plans are similar in several other respects as well, including a top individual marginal tax rate of 33%. However, the House Republican plan is estimated to cost around half as much over the next ten years as Mr. Trump’s plan, at least in part because it proposes to go further in limiting or eliminating existing individual and corporate tax preferences (Exhibit 2).

Exhibit 2: Tax plans compared


Source: Office of Management and Budget, House Ways and Means Committee, Trump Campaign, Goldman Sachs Global Investment Research

Q: Will his tax proposal pass?

A: We expect that significant tax legislation has a good chance of passing in 2017, but we would not expect it to reduce revenues by as much as Mr. Trump has proposed. We note three potential obstacles to passing such a proposal:

First, the cost is likely to be prohibitive for some members of Congress. While the majority party is able to pass tax legislation with only a simple majority in the Senate using the budget reconciliation process described above, it would require near-unanimity among the 52 Republicans in the Senate next year to do so. Our expectation is that some Republican lawmakers would balk at the deficit impact of his proposal.

 

Second, while the House Republican proposal would increase the deficit less, it has also generally been proposed in the context of the broader Republican budget proposal, which would also reduce spending in several areas. Mr. Trump has not proposed a significant net spending reduction.

 

Third, tax reform is complicated, and even under a unified Republican government, it may be too complex to resolve in a matter of months.

Ultimately, the outlook for a tax cut depends on how willing marginal Republican lawmakers are to increase the deficit, and/or how willing they are to find offsetting savings elsewhere. Overall, our expectation is that there is a good chance that some type of tax legislation passes next year, but the obstacles to comprehensive tax reform go beyond partisan disputes, so we would expect tax legislation that is adopted in 2017 to be narrower in scope than the campaign proposal, and significantly smaller in its revenue effect.

Q: What has Mr. Trump proposed in terms of infrastructure spending?

A: His infrastructure plan calls for up to $1 trillion in additional spending over ten years, most of it privately financed. A memo released in late October by Mr. Trump’s economic advisors Wilbur Ross and Peter Navarro detailed a plan to finance up to $1 trillion in infrastructure spending over ten years, equal to $100bn per year or about 0.5% of GDP. We previously estimated that a spending boost of this size would reduce the unemployment rate by about 0.3pp and raise inflation a touch, leading the Fed to eventually hike one or two more times by 2019 relative to a baseline without the infrastructure package.

The plan described by Ross and Navarro would be largely privately financed, but encouraged by tax credits. The plan would seek to incentivize the private sector to increase investment in infrastructure projects that would be supported by future usage fees, such as road tolls. Ross and Navarro suggest that 17% of the initial investments could be financed with equity and the remainder with debt. The government would then provide a tax credit equal to 82% of the equity to reduce the cost of financing. The large role of debt-financed private investment in Mr. Trump’s infrastructure plan implies that a significant increase in interest rates could be a hurdle for the plan’s feasibility.

Ross and Navarro argue that the plan would be revenue neutral because the tax credit would be offset by revenue raised from taxes on income earned by workers employed by the infrastructure projects and on profits earned by contractors. However, their calculations both assume that the workers employed would not otherwise be earning taxable income and assume a tax rate that looks somewhat optimistic under the tax plan proposed by the Trump campaign. We expect that the Congressional Budget Office and Joint Tax Committee would find that the plan increased the deficit under their methodologies.

Q: Will it pass?

A: Mr. Trump appears to be more focused on infrastructure than many Republicans in Congress are. That said, his proposal, which relies on tax credits, might attract more Republican support than a spending plan of the same size. Moreover, there is significant Democratic support for additional infrastructure investment, which raises the possibility that it could be combined with the tax reform legislation discussed earlier to increase support for the overall package.

Q: What does this signal regarding overall fiscal policy?

A: We expect fiscal policy to loosen by about 0.75% of GDP, though there would be only a partial effect in 2017. Our very preliminary view is that fiscal policy might loosen by around 0.75% of GDP, with perhaps 0.5% coming through tax reductions and 0.25% through spending. Our expectation is that the effect in 2017 would probably be smaller, for two reasons. First, tax legislation would probably not pass until around mid-year, at earliest. Second, increases in infrastructure spending (or subsidies) and/or defense spending would likely take until 2018 to materially change spending levels.

Q: What has President-elect Trump proposed regarding trade and tariffs?

A: Mr. Trump has opposed existing trade agreements and suggested large tariff increases. He has proposed to renegotiate the North American Free Trade Agreement (NAFTA) and raised the possibility of withdrawing from the World Trade Organization (WTO). Mr. Trump also opposes the Trans-Pacific Partnership (TPP). In terms of explicit changes, Mr. Trump has suggested imposing a 35% tariff on imports from Mexico and a 45% tariff on imports from China. If tariffs on imports from Mexico and China only were raised to 35 and 45% respectively, the average effective tariff rate would rise by roughly 11-12 percentage points (pp) from 1.5% to roughly 13%, a level not seen since WWII (Exhibit 3).

Exhibit 3: Will tariffs stay low?


Source: International Trade Commission, Goldman Sachs Global Investment Research

Q: What authority does the President have over trade and tariffs?

A: Trade policy is an area of greater presidential discretion. The Constitution gives Congress the power to regulate commerce with foreign nations but as a practical matter Congress has ceded much of this power to the executive branch over the years. Congress approves trade agreements, but the actual legislation that Congress passes usually simply authorizes the president to enter into an agreement that has already been concluded. The consensus among legal scholars is that presidents generally have the authority to withdraw from bilateral and multilateral trade agreements approved this way.

Tariff levels are technically under the purview of Congress, though most levels are governed by commitments in bilateral and multilateral agreements. The executive branch lacks the authority to make broad permanent changes to tariffs on a unilateral basis, such as Mr. Trump’s suggestion that imports from China should face a 45% tariff. That said, the president does have authority to raise tariffs broadly on a temporary basis, or to raise tariffs narrowly on a longer term basis. Regarding the former, authority exists under the Trade Act of 1974 that grants the president power to impose quotas and/or an import surcharge of no more than 15%, though neither could be left in place for longer than 150 days. Regarding the latter, the Department of Commerce and the International Trade Commission oversee anti-dumping and countervailing duty complaints from various US industries seeking relief from import competition. The tariffs imposed in these cases are often substantial, but they are limited to certain narrowly defined products from certain countries, rarely affecting more than 1% of annual imports and averaging less than 0.2% of imports since 1980.

Q: What would be the effects of tariff hikes on the economy?

A: Tariff increases would likely boost inflation, and have mixed short-run but negative long-run growth effects. We estimate that a hypothetical 10pp hike in US import tariffs would 1) depress imports by about 5% and 2) boost the core PCE price level by roughly 0.6% cumulatively. The decline in exports would depend on the extent to which trading partners retaliate.

The growth effects of import tariff increases depend on the horizon. The short-term impact on GDP is uncertain and likely mixed. On the one hand, the shift from imports to domestic production contributes positively to short-term growth, and tariff revenues can finance fiscal stimulus. On the other hand, the real income loss from expensive imports lowers consumption and investment. Other important negative short-term effects include the decline in exports under retaliation, tighter monetary policy, and possibly broader FCI tightening. While trade raises important distributional questions, the long-term aggregate growth effects from trade restrictions are negative in our view. The academic trade literature has highlighted several channels through which trade fosters long-run welfare. Trade can boost output as countries specialize; raise the variety of available products; and increase productivity through larger and more competitive markets.

Q: What are the President-elect’s views on monetary policy and the Federal Reserve?

A: As a candidate Mr. Trump was sometimes critical of the Fed, but his views on the appropriate direction for policy are unclear. On the one hand, Mr. Trump has expressed support for low interest rates, given the current inflation backdrop: “If inflation starts coming in, and we don’t see any signs of that, inflation starts coming in, that’s a different story. You have to go up and you have to slow things down. But right now I am for low interest rates.” He has also expressed concern about excessive dollar appreciation, saying in the same interview: “If we raise interest rates, and if the dollar starts getting too strong, we’re going to have some very major problems.” He added: “While there are certain benefits, it sounds better to have a strong dollar than it actually is.” Mr. Trump has also often noted that, as a developer, he prefers low rates. For example, at the Economic Club of New York in September, he said: “As a real estate person, I always like low interest rates, of course.”

On the other hand, Mr. Trump has said he worries low interest rates are artificially supporting asset prices: “In terms of real estate, if I want to develop … from that standpoint I like low interest rates. From the country’s standpoint, I’m just not sure it’s a very good thing, because I really do believe we’re creating a bubble.” Similarly, he has said Fed policy has created a “false stock market”, that the “only reason the stock market is where it is, is because you get free money”, and that the FOMC “should have raised the rates” at its September 2016 meeting. Many conservative economists favor tighter monetary policy, but Mr. Trump’s views appear more nuanced, and we are therefore unsure whether he would favor a more hawkish Fed stance after taking office.

Similarly, Mr. Trump’s preferences for Fed Chair are still unclear. During the campaign he said clearly that he would want to replace Yellen: “She is not a Republican … When her time is up, I would most likely replace her because of the fact that I think it would be appropriate.” And earlier today, a campaign spokesperson said that Mr. Trump would prefer a Fed Chair “whose thinking is more in keeping with his own”. However, at other times during the last year Mr. Trump said that he has “great respect” for the Fed Chair, and that he is “not a person who thinks Janet Yellen is doing a bad job.” So while unlikely, we would not totally rule out a Yellen reappointment. Several past Fed chairmen have been reappointed after the White House changed parties, including Chairmen Martin, Volcker, Greenspan, and Bernanke (Exhibit 4).

Exhibit 4: Fed Chairs have been reappointed by presidents of the other party


Source: Federal Reserve Board, Goldman Sachs Global Investment Research

Q: What changes have you made to yo

Trump Won The Presidency By The Rules, Full Aftermath - What Really Happened (FULL SHOW)

Posted: 12 Nov 2016 04:30 PM PST

 Mike Rivero takes you through the aftermath of the 2016 presidential election and all the outrage that followed by the liberals against President-Elect Donald J. Trump. Hillary lost, get over it! The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists ,...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

OBAMA Warns CHINA with strong words about NEW WORLD ORDER event! (2016)

Posted: 12 Nov 2016 04:00 PM PST

 TRUMP Exposed! The truth! Real Evidence! Very important information!! Pls share!! If you love USA pls share this important video! NWO - MARTIAL LAW and FEMA CAMPS The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

What "The World's Most Bearish Hedge Fund" Thinks Of The Trump Presidency

Posted: 12 Nov 2016 03:28 PM PST

October was not a good month for the "world's most bearish hedge fund" Horseman Global Management, which suffered another steep drop, losing 5% in the month, and down 5.5% YTD. Absent a rebound in the last two months of the year, Horseman is set to have its worst year since 2009. Alas, with Horseman's net exposure a whopping -84% (if fractionally more bullish than the -100% recorded in early 2016) as a result of an equity short and a bond long, November does not appear overly promising for the fund's investors. Unless, of course, the market swoons as both yields and the dollar continue surging (as DB warned), and Horseman does have the final laugh.

That, however, would be surprising considering that some of the most prominent billionaire mega-bears, such as Carl Icahn and Stanley Druckenmiller, both quikcly flopped to bullish in the aftermath of Trump's election, on just one catalyst: more debt resulting in more stimulus, and (hope) for more growth.

Yet Horseman refuses to change its thesis. Why? Instead of guessing, here is the answer straight from the "Horse's mouth" - the following excerpt from the latest letter to investors by CIO Russell Clark lays out what the gloomy hedge fund believes will be the outcome from a Trump presidency.

Your fund fell 4.96% last month. Losses came from the bond book, the forex book and the short book. The long book made money.

 

First Brexit and now the Trump triumph has left many supporters of open liberal economies despairing. They feel that the world is turning in on itself and that perhaps a darker less safe world is emerging. And perhaps they are right.

 

But in many ways, the great western democracies of the world, the UK and the US are working as they should. It is plainly obvious that large parts of the population in both the UK and the US feel that the system has not worked for them, and they have voted for change. And those voters have had their voices heard and change is on the way.

 

Undemocratic regimes in the rest of the world look on in either horror or bemusement at the changes in the UK and US and congratulate themselves that their system is so safe and stable. And yet, the reality is that if the political system cannot provide the change that people seek, then eventually and inevitably, revolution becomes the only option for change. And revolution always extracts a very high price on those that have been in power.

 

When thinking about a possible Trump victory, I perceived that the USD could be very weak, and that this weakness would lead to treasuries also being weak as foreign investors dumped their holdings. What has happened is that domestic US investors have reappraised their views of US domestic growth upwards, and have dumped treasuries to buy equities, and the US dollar has been very strong.

 

While the stated aims of the Trump administration are very pro-growth, to me the actual effects seem likely to disappoint. Plans to allow more drilling will be dependent on a much higher oil and gas price. Scrapping car emission standards whilst good for SUV makers, will unlikely reverse the falling demand for cars due to high levels of auto debt. Lower taxes and more infrastructure spending may well be bullish for growth, but need to be balanced against the sell-off in the long end of bonds, which will have a negative effect on housing and with DR Horton reporting weak numbers makes, I feel growth will disappoint in the short term.

 

The more apparent of the negative aspects is that higher bond yields are starting to cause some financial pressure in Hong Kong and Chinese interest rates. If a trade war, becomes more likely, then a large Chinese devaluation also becomes more likely. Furthermore, the Trump win makes the break up of the Eurozone far more likely in my mind.

 

After Brexit, being short equities and long bonds was a fantastic trade for a week or two, but then reversed quickly after, causing severe pain for those that had reacted to the market quickly. I think the Trump win has seen many investors sell defensive positions and buy cyclical positions. I suspect they will come to regret that. Your fund remains long bonds and short equities.

* * *

Steepping away from Trump, here is Clark's asset allocation and sector breakdown, and what appears to be a wager that Trump is about to end the record wave of industry consolidation in a move straight out of Teddy Roosevelt's playbook:

This month losses in the short portfolio, in particular from the European and Japanese banks and the automobile sectors, were partially offset by gains in the banks and oil sectors in Brazil and the defence contractors in the long portfolio.

 

In the US the value of announced mergers and acquisitions (M&A) reached $337 billion in October, making it the biggest deal-making month ever. 2015 was the biggest M&A year ever globally with total deals of about $4.3 trillion dollars (source: Bloomberg). High M&A activity may give the impression that the economy is robust, but in our opinion it merely reflects a sluggish economic environment as companies struggling to grow their revenues and profit margins organically, and turn to mergers and acquisitions instead.

 

QE monetary policies have supported M&A activity by allowing ample availability of funding, as investors searching for yield are eager to buy corporate debt and drive credit margins lower.

 

M&A activity causes a decrease in the number of firms and an increase of their respective market shares. This can result in significantly reduced competition between firms. In economic theory, when a few large firms dominate a market there is the potential to engage in collusive behaviours such as deliberately joining together in cartels in order to increase prices. In extreme cases a company that becomes too dominant develops the power to influence market price, run competition out of business or not allow competitors to emerge. Once enough other companies are bankrupt or bought off, the remaining company can stop improving its product, lower the quality and raise prices as much as it wishes, because consumers have no choice.

 

It has been argued that some companies with large market shares can employ what game theorists call a "trigger strategy," whereby they signal to their competitors that if they lower their prices, they will start a vicious retail war. If a rogue player refuses to play the game, it becomes the target of an aquisition, not because it makes great products, but because owning it allows an oligopolist to raise prices.

 

Another detrimental effect of low competition to the consumer was illustrated by an article in The New York Times entitled 'Arbitration Everywhere, Stacking the Deck of Justice', about the rise of private arbitration clauses in consumer services contracts, which allow large companies to avoid the court system and prevent consumers from joining together in class-action lawsuits.

 

The Herfindahl-Hirschman index ("HHI") measures market concentration by industry and is used by regulators when reviewing mergers, values between 1,500 and 2,500 are defined as "moderately concentrated," while values above 2,500 are defined as "highly concentrated".

 

The US beer market has a high HHI of 2696, it is dominated by one large producer, whose current market share is 46%. The company recently made a large acquisition, but subsequently was forced by the Department of Justice to sell part of the acquired business as the combined market share of 70% would have resulted in almost monopolistic conditions.

 

At the turn of the 20th century, Teddy Roosevelt became president. He realised that for capitalism to maintain popular support, the monopolists and oligopolists of his time had to be taken on, and his presidency was driven by Trust busting. This set of policies looks set to re-appear.

 

The fund maintains short positions in airlines, banks, and certain consumer staples, primarily because we think that margins will remain under pressure due to the macro-economic environment and specific sectoral issues (please refer to Russell Clark's Market views). These are not monopolistic sectors, however they are concentrated, should competition increase at some point, stock prices could de-rate even further.

Finally, here are Horseman's Top 10 long positions as of this moment. Alas, the far more useful, top 10 shorts, are not public.

Donald Trump Supporters React to Enraged Protesters

Posted: 12 Nov 2016 02:30 PM PST

 Tensions remain high several days after the 2016 presidential election. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers , Whistelblowers , truthers and many more

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

Breaking -- MAJOR LAWSUIT FILED AGAINST GEORGE SOROS!

Posted: 12 Nov 2016 02:00 PM PST

George Soros  is evil and has caused so much to divide this country. He is the head of all the corruption and division in this country The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

BREAKING - Obama Signs Another "EXECUTIVE ORDER" Mandating Measles Vaccinations - DEPOPULATION PLAN

Posted: 12 Nov 2016 01:30 PM PST

This is an URGENT REPORT - Executive Order -- Advancing the Global Health Security Agenda to Achieve a World Safe and Secure from Infectious Disease Threats - Advancement of Agenda 21 and the Depopulation Agenda The Financial Armageddon Economic Collapse Blog tracks trends and...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

Krugman Gets His Alien Invasion – And Gold Bugs Get Paradise

Posted: 12 Nov 2016 01:19 PM PST

Nobel Prize winning economist and uber-liberal New York Times columnist Paul Krugman likes to illustrate his philosophy by noting that an alien invasion would help the economy by stimulating government spending.

The post Krugman Gets His Alien Invasion – And Gold Bugs Get Paradise appeared first on DollarCollapse.com.

ANONYMOUS - WAKE UP AMERICA they are COMING! - "Donald Trump"

Posted: 12 Nov 2016 01:00 PM PST

ANONYMOUS - WAKE UP AMERICA they are COMING! - "Donald Trump" The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers , Whistelblowers , truthers and many more

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

The Future Price Of Gold Will Drop Below $1000 In 2017

Posted: 12 Nov 2016 12:40 PM PST

As the price of gold and silver came down sharply, many investors are asking what the future price of gold will be. Although we do not pretend to have a crystal ball, we observe sufficient signals in the charts to make a make a call about the future price of gold into 2017. In general, the precious metals market has turned very sour. Gold registered it largest loss on a weekly basis since it crashed in 2013. Moreover, gold and silver miners, said to lead the precious metals complex, have truly crashed this week.

Michael Savage : We Won You Lost get over Yourselves

Posted: 12 Nov 2016 12:00 PM PST

Michael Savage on Trump Rioters , Meeting with Obama , Plan for Presidency - 11/10/16 Aired on November 10, 2016 - Michael Savage on Trump Rioters , Meeting with Obama , Plan for Presidency The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists ,...

[[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]

The Ice-Nine Plany

Posted: 12 Nov 2016 07:00 AM PST

This post The Ice-Nine Plany appeared first on Daily Reckoning.

The main metaphor I use in my newest book The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis (claim your free copy here) is something called "Ice-9."

Ice-9 may be familiar to some listeners and readers, maybe not to others, but this is something I borrowed from the novelist Kurt Vonnegut.

He wrote a short novel in the early 1960s called Cat's Cradle. Some readers may be familiar with it. If not, I recommend a copy. It's short and hilarious.

My book, on the other hand, is not funny at all. I discuss the end of the financial system and the very real possibility of people losing all their savings. Hopefully, it's engaging, entertaining and readable, but I can't honestly say it's funny. But Kurt Vonnegut's is, even though he talks about a doomsday machine.

It involves a variation of a water molecule a scientist invented. It was different, a variation of water different in one respect: It melted at 114 degrees Fahrenheit, and it was frozen at room temperature. If one molecule of this unusual water came in contact with a regular molecule of water, the regular molecule would turn to ice-9. This happened over and over again, in geometric progression.

Ice-9 was kept in a vial. But if the vial was opened and one molecule was poured into normal water, all that water would freeze. Then it would spread, and would sweep through the lakes and the rivers and the oceans. And all the water in the world would ultimately freeze.

Of course, everyone on the Planet Earth would die. It was a doomsday machine, a metaphor for nuclear annihilation. This book came out right around the time of the Cuban Missile Crisis, so it was quite topical.

In my book, I take that metaphor of ice-9 and apply it to the financial system. The point I make is that one part of the financial system cannot be shut down in isolation. A contagion beginning in one part spreads to the entire system. That's because the minute one part shuts down, everybody runs for a different part in a quest to get their money back.

It speaks to the best description I've ever heard of a financial panic: everybody wants their money back at once.

The process soon grows out of control. Everyone sells stocks, sells bonds, sells real estate, sells everything. They all want their money back at once. Of course, people think they can get their money back. But they can't. They'll discover that what they actually have are stocks, bonds, and real estate, and money markets, so called, and they can't get their money back.

Imagine the money market funds are shut down. No one can get their money out of them. Then everyone runs to the banks to get their money. But the banks are closed. Then, everyone tries to sell their stocks, but the stock market's shut down. And so on. In other words, the minute one part of the system shuts, all of the demand for liquidity moves to another part. But it dries up. And that part of the system has to be shut that down, too. Soon the entire system is shut down because it's all so deeply interconnected. That's where the ice-9 metaphor comes in because it's not just one water molecule turning to ice. All the water in the world turns to ice because it's all connected.

(I describe all the critical details in The Road to Ruin. Go here now to get your copy for free, instead of paying $23).

Again, you might want to pick up "Cat's Cradle," before "The Road to Ruin" comes out. It's a great novel. You'll find it amusing, and I think it'll make my metaphor a little more clear. Regardless, the serious point is that pressure just moves from one part of the system to another. You can't just shut down one part. You have to shut down the entire system. And that's what could happen.

For what it's worth, the safest place to put your money is in the bank, up to the insured limit. I believe the federal government will have to honor FDIC insurance, which guarantees money up to $250,000 per account.

If you have more than that amount, you can divide your money between two banks. If you're a lone individual with, say $500,000, you can put $250,000 in one bank and $250,000. Not in a different branch of the same bank, but a different bank altogether. Both accounts will be insured to the full amount. That is what happened in Cyprus. The government honored its insurance to the stated amount. But everything over the insured amount was confiscated and turned into bank equity.

I explain this process in my book. It's called a bail-in. A bail-in is different than a bailout. A bailout is when the government uses the printing press and taxpayer money to save a financial institution. All the people who have transactions with this financial institution, whether it's depositors, bondholders, etc., are preserved. They all keep their money. A bail-in is different…

In a bail-in, the government says, "No, we're not going to help you. We're not going to use government money. We're not going to use central bank money. We're going to take the money that's in the bank and convert it to equity in the bad bank, where if you're a bondholder, you're not going to get 100 cents on the dollar. You're going to get 80 cents on the dollar, etc., etc."

They'll use the money already in the bank, whether it's depositors, bondholders, or equity holders, and use that money to repair the balance sheet.

That is what's going to happen with Deutsche Bank and with the Italian banks that are in trouble. It'll also happen with any other banks that fail in the United States. As I said, you'd probably be insured up to the guaranteed amount, although the government could close the banks for several days.

That's why I recommend you keep some cash in a safe place outside the banking system. I'm talking paper money now. Having some cash is like having a battery and flashlights. I live in a place that occasionally gets hurricanes and nasty storms, so the power goes out on occasion. You want to keep some flashlight batteries around. And that means cash.

Remember, when the power's out, nothing works. The ATMs don't work. The gas stations don't work, etc. It's good to have some what we used to call in Philadelphia "walking around money." But you can't withdraw too much from your bank because the government won't let you.

Try withdrawing $20,000 in cash from your bank and you'll be reported to the government on a currency transaction report. That report will be put in a file right next to Al-Qaeda and the drug cartels, with the Financial Crimes Enforcement Network. That's not a lot of fun.

The point is, you might think you can get your cash, but you can't. When you go down to the bank and actually try to, you'll be treated like a criminal. This is of course part of the war on cash. And it's dangerous. The American people are being led like sheep to the slaughter. They're being herded into digital pens, which are the banks.

Most people think we have a cash system. But we really don't. How much cash do you carry in your purse and wallet? Probably not that much. You use your debit card. You use autopay. You use your online banking account. You use your iPhone if you have Apple Pay. You use your credit card. It's all digital. You don't actually have that much cash, and if you try to get it, you can't get it.

That's why I recommend you put some money into physical gold or silver, in a monster box. A monster box has 500 ounces of American silver eagles, one ounce each. They cost about $10,000 on the market. You should find a good dealer that doesn't charge too much commission.

But it'll preserve your wealth. In an emergency situation, people will take it. Many people will gladly give you some groceries for a solid ounce of silver because no one trusts any other money.

I also recommend real estate as part of your portfolio. It'll still be there if there's a storm or a power outage or your bank's shut down. These are some of the things I recommend before the next great crisis strikes. They are in the book, as are many other important ways to preserve your wealth in the years ahead.

I lay out the ideal "all-weather" portfolio in The Road to Ruin. It'll preserve your wealth in the coming collapse and mitigate an "ice-9" freeze of your assets.

You don't have to be helpless when the crisis arrives. You can see it coming a mile away if you know what to look for, and there are definitely steps you can take.

Regards,

Jim Rickards
for The Daily Reckoning

P.S. The Road to Ruin. might be my most important work to date. What will be the "ice-9" molecule that freezes the entire financial system? And how will global elites react? Most importantly, how can you protect yourself? Click here now for all the critical details.

The post The Ice-Nine Plany appeared first on Daily Reckoning.

Breaking News And Best Of The Web

Posted: 12 Nov 2016 01:37 AM PST

Longest, most brutal presidential campaign ends with decisive Trump victory. Stocks and dollar rise, bonds and gold fall. Anti-Trump protests erupt but are mostly non-violent. Political class doing some serious soul searching.   Best Of The Web President Trump: How America got it so wrong – Rolling Stone Panama Papers? Try UNITED STATES Papers? – […]

The post Breaking News And Best Of The Web appeared first on DollarCollapse.com.

No comments:

Post a Comment