Thursday, April 5, 2012

Look Out Below (make sure you watch the video below)

Just a quick one today.  Contrary to the public backscratching campaign over the supposed relative strength of the economy being conducted by the media, the real economy data continues to belie the lies being propagated by the financial journalists, Fed officials and politicians.

First, housing is tanking and now more proof to back up my thesis that foreclosures this year will swamp the market and push prices down even more.

Bloomberg:  Home Prices Seen Dropping 10% in U.S. on Foreclosures: Mortgages  LINK
Reuters:  Americans brace for next foreclosure wave  LINK

Zerohedge:  LINK

In a previous post, I linked the actual, unadjusted housing data from the Census Bureau and NAHB - the stuff that neither gets published by the media nor does makes any headlines - and it shows that the actual number of homes being started and sold, plus the actual number of existing home sales that actually close, is still probing historical lows.  Moreover, an increasingly large number of homes are being purchased by investors who aspire to turn around and rent out these properties.  This will put pressure on rental rates and we'll back into the downward spiral in prices again.

Second, Alcoa announced today that it was shuttering about 4% of its alumina production capacity.  This is on top of a sizable amount of smelting capacity that was shut down in January.  The reason given was that Alcoa wanted to avoid creating oversupply of alumina:  LINK

What this really means is that demand for alumina and aluminum products is starting to dry up.  If there is any commodity that is a good GDP indicator, it's alumina.  Alumina is used in some way in just about every durable good produced.  If demand for alumina is falling, it's indicative of a significant decline in production/economic activity. 

I'm sure when everyone opens up their local newspaper or turns on the nightly local news to catch the weather and sports, the newscasters will be crowing about the decline in jobless claims, which is statistically very suspect.  The public won't be treated to an analysis of Alcoa's alumina production cutbacks.

Tomorrow the stock markets are closed.  Banks and the bond market are open, but all intents and purposes, tomorrow is a holiday day.  Happy Easter/Passover to everyone observing those celebrations.  Have a great weekend!

This is my good friend Brad, aka "Bulldog" in his rendition of a scene from Dr. Strangelove:


  1. that issue with Alcoa must be a key indicator of the improving economy Bernanke and Fed members speak of

  2. Everybody is getting into the reeducation business..

    Blythe Masters On The Blogosphere, On Silver Manipulation, On Its Gold-Axed Clients And On Doing The "Wrong" Thing

    This brings us to the transcript of Blythe's interview on CNBC, in which a primary topic, ironically, was whether or not Jamie Dimon's firm manipulates the prices of precious metals, and particularly silver. What followed was the usual avalanche of platitudes that only a muppet can love:

    "JPM's commodities business is not about betting on commodity prices but about assisting clients"... "it's about assisting clients in executing, managing, their risks and ensuring access to capital so they can make the kind of large long-term investments that are needed in the long run to expand the supply of commodities"...
    "There's been a tremendous amount of speculation particularly in the blogosphere on this topic. I think the challenge is it represents a misunderstanding as the nature of our business. As i mentioned earlier, our business is a client-driven business where we execute on behalf of clients to achieve their financial and risk management objectives. The challenge is that commentators don't see that. So to give you a specific example, we store significant amount of commodities, for example, silver, on behalf of customers we operate vaults in New York City, Singapore and in London. And often when customers have that metal stored in our facilities, they hedge it on a forward basis through JPMorgan who in turn hedges itself in the commodity markets. If you see only the hedges and our activity in the futures market, but you aren't aware of the underlying client position that we're hedging, that would suggest inaccurately that we're running a large directional position. In fact that's not the case at all.
    "We have offsetting positions. We have no stake in whether prices rise or decline. Rather we're running a flat or relatively flat matched book.
    "What is commonly out there is that JPMorgan is manipulating the metals market. It's not part of our business model. it would be wrong and we don't do it."

    Ah yes, because JPMorgan never engages in "wrong" activites...

    And yet there is one simple explanation that would make Blythe's story 100% correct: would JPMorgan consider the Fed, whose interests in keeping the price of precious metals as low as possible, and are aligned with those of JPM for the reasons listed above, its client?

    Because if so, then absolutely everything falls into place, as JPMorgan is merely the overt conduit by which the Fed, and specifically the New York Fed, conducts monetary policy in the commodities space, just as Brian Sack would conduct open market operations in the bond arena, and as the FRBNY uses, on occasion, Citadel, and its HFT expertise, to execute its discretionary stock trades (yes, we know about those too).

  3. Her answers to the mentally diminutive Sharon Epperson were complete and unmitigated lies. JPM's commodities business is primarily proprietary-driven, not client driven as she stated. Hell just read thru any of the last several 10-Q's and see how much of their propriety (prop) trading profits is derived from commodities trading. And a large portion of that is from silver, specifically.

    And their massive silver short has nothing to do with hedging out physical silver being kept at their depositories on behalf of clients. Their outright net silver short position on the Comex alone is many multiples greater than the total amount of silver being held at JPM vaults.

    Total lies. Outright bullshit. Sharon Epperson is retarded.

    I'm trying to figure out who was behind JPM's connection to the University of Colorado at Denver because it makes no sense on the surface that JPM is funding the commodity education center there.

    1. I agree with everything you wrote. All week cnbs has brought in top guns to hammer the awakening public. It's hard to kill an idea!(especially when it's the truth)

      Mike Krieger Explains Central Planning for Dummies

      The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations.

      Each central bank... sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.
      - Carroll Quigley (Bill Clinton’s mentor at Georgetown) from his 1964 book Tragedy and Hope

      People have awoken to the Fed and how criminal and deceitful this organization is and the existential threat it poses to economic freedom and hence human liberty. The arguments against the Fed are blistering and the only rebuttal the Fed has is to spout the same old nonsense like “we saved the world” or some trite derivative of this fallacy. The only thing they saved are untalented speculators from their bad bets. What the Fed has systematically done is literally transfer all of the bad debts and bets from the banks to the taxpayer. We are living this reality to this day.

  4. Fed’s Global War Against Gold Escalating

    After ten days of the price being pummeled, after seeing these relentless sell orders come in, day after day, I can understand how smaller players can get demoralized. Many of these smaller players have been in the mining shares, and while gold has risen $1,000 to $1,500, many of the smaller companies are the same price.

    It’s the same bullion banks doing this to the mining shares. The same players that are manipulating the price of gold and silver. The bullion banks are naked short these mining shares in an effort to keep the prices capped.

    This is why when you look at the OTC Reports, in the latest quarterly report, there are $150 billion dollars worth of certain derivatives. These are not futures, options or even swaps. JP Morgan and HSBC control over 97% of all of the gold derivatives. When you think about it, this is a mind-blowing number.

    So this is a war. This is actual warfare where the central banks and their agents are targeting sentiment. You think the Fed and the bullion banks don’t monitor King World News? Of course they do. There is a war going on here. This is a war against gold and holders of gold and the gold shares. They are being targeted.

  5. Was thinking the same thing Dave...Only thing I can come up with is Rocky Mountain ski trip write offs. Fly to Denver visit the school and write off the trip. Those crooks could chew thru 5 million in a season of trips after that its all gravy.
    Of course they would need to host some of the top students at their Aspen and Vale condos' and then leverage up the write offs.


  6. JPMorgan Trader Accused Of "Breaking" CDS Index Market With Massive Prop Position

    Earlier today we listened with bemused fascination as Blythe Masters explained to CNBC how JPMorgan's trading business is "about assisting clients in executing, managing, their risks and ensuring access to capital so they can make the kind of large long-term investments that are needed in the long run to expand the supply of commodities." You know - provide liquidity. Like the High Freaks. We were even ready to believe it, especially when Blythe conveniently added that JPM has a "matched book" meaning no net prop exposure, since the opposite would indicate breach of the Volcker Rule. ...And then we read this: "A JPMorgan Chase & Co. trader of derivatives linked to the financial health of corporations has amassed positions so large that he’s driving price moves in the multi-trillion dollar market, according to traders outside the firm." Say what? A JPMorgan trader has a prop (not flow, not client, not non-discretionary) position so big it is moving the entire market? And we are talking hundreds of billions of CDS notional. But... that would mean everything Blythe said is one big lie...

  7. A Golden Idea

    What we need is Maximus, the financial gladiator, and gold would break $3000 on the upside 90 days from the start of the reverse strategy. The gold banks are far from omnipotent if you know how to play their game on them.

    Light the flame inherent in this market and the gold market will bullishly run over central banks, the IMF and anyone that opposes it. You will shift the gold banks to the long side as I did to get to over valuation.

    If you are out there and want to turn a billion into a few trillion do I have a golden idea for you. It is all timing and intimidation.

  8. This is NOT the case in the DC metro area, because 70% of all workers in the area work for federal govt. Hence everyone here is on the govt teet living the good life while those of us in the real world continue to get squeezed. DC is a socialist dream. Jobs for all, no matter how incompetent. I have several friends who work for the machine and they all say 15-25% of the the fed workers could not function in the private industry and would simply be on welfare if they didn't have a fed govt job.

  9. Beyond Currency Wars, the Coming Global Gold Standard w/John Butler

    So should we be worried about this, and how important is the health of America's economy to the future of its currency? To help walk us through these questions, is John Butler, founder of Amphora Capital and author of "The Golden Revolution: How to Prepare for the Coming Global Gold Standard." As his book suggests, he believes that a return to the gold standard is inevitable, and that America's economic health, its deficits (trade, budget, and confidence deficits) are a much larger issue than is the "money it has printed."

  10. Sy Hersh: US Funded and Trained Iranian Group on State Dept. Terror List

    Glenn Greenwald comments for Salon on the Hersh story:

    If this report is true, it means the U.S. Government actively trained a group that the U.S. Government itself legally categorizes as a “foreign terrorist organization,” a clear felony under U.S. law...

    That alone compels serious DOJ and Congressional investigations into these claims. Worse, this reportedly happened at the very same time that the U.S. aggressively prosecuted and imprisoned numerous Muslims for providing material support for groups on that list even though many of those prosecutedprovided support that was far, far less than what the U.S. Government itself was providing to MEK. Meanwhile, right at this moment, America’s closest ally — Israel — is clearly a state sponsor of this designated Terrorist organization, providing training, funding and arms to it, and the U.S. may very well be as well (independent of all else, given that Israel is the largest recipient of U.S. aid, the U.S., at the very least, is financing a state sponsor of Terror).

  11. I guess the new US nickels won't be made from aluminum. Maybe steel.

    1. You know, I used to stop and pick up any coin on the ground except pennies. Now the dollar has been so devalued that the other day I walked right by a dime on the ground. I will stop for a quarter, though lol.

  12. Full Show: Gambling With Your Money
    April 5, 2012

    Paul Volcker on why banks are wrong to undermine the Volcker Rule, Carne Ross on the power of ordinary people to effect change in government and commerce, and a Bill Moyers Essay.

  13. Hey Dave,
    great Easter!

    Il Folletto