The Phaserl



by Andy Hoffman, Miles Franklin:

Modigliani painting sold yesterday for $170.4 million; and it wasn’t even the top art auction ever – coming in second to last year’s $179.4 million Picasso sale.  I’m guessing that neither weighed more than ten pounds – compared to the 10,381 pounds that the 151,385 ounces of registered gold on the COMEX exchange, worth $164.8 million as I write early Tuesday morning, weigh.  In fact, said gold’s value fell by $833,000 in the first minute of COMEX trading this morning – whilst likely, not a single ounces of actual metal was sold.  And this, at a time when global demand forphysical gold and silver is at an all-time high, just as it for rare artwork.

Of course, rare artwork is only trading at an all-time high due to monetary inflation; which inevitably, will be undermined by the greatest deflationary wave in modern times.  Gold and silver demand, on the other hand, will be relentlessly buoyed by fear that the very currencies that are being inflated – and eventually, hyper-inflated – will become worthless, as every previous fiat currency has.  Now, more than ever – as we are unquestionably amidst the “worst global economy of our lifetimes” – coincident with the final,lunatic stage of history’s largest, most destructive fiat Ponzi scheme.

pictured: $170 million Modigliani painting, AP photo

To that end, yesterday’s “direst prediction of all revisited – more dire than ever” couldn’t have been more prescient – as this morning, the “attack of the sevens” is the day’s top story.  As in, a new seven-year lows for the world’s most broadly industrial commodity, “Dr. Copper” – or as I deemed it 18 months ago, when it was still $3.20 lb. (versus $2.24/lb. today), “Dr. Death”; as well as the stock of the world’s largest mining company, BHP Billiton.  More ominously still, the Euro currency has also plunged to a seven-year low – on the cusp of breaching the 12-year low set earlier this year – as the global commodity crash is exploding as we speak.  And oh yeah, the ECB is not only preparing to expand QE next month – when LOL, the Fed wants to “raise rates”; but in a big way, per yesterday’s viral quote from an “anonymous ECB board member,” saying “let’s go for a big rate cut.”  Which, considering the ECB’s benchmark rate is already negative, is quite a mouthful.  And geez, zinc is down a whopping 3% this morning, to its own seven-year low – putting both the metals Glencore relies on below the lows achieved at the height of the Glencore frenzy last month; which obviously, is just getting started.

To that end, things are getting so ugly in the global economy, yesterday’s 19% plunge in China’s October imports were trumped by this morning’s 25% collapse in Philippine exports.  Not to mention, the much-worse-than-expected 0.5% plunge in U.S. October import prices, as WTI crude prices imploded below $44/bbl.  But don’t worry, every FOMC statement for the past yearhas said the following, so everything will be fine.

“The Committee expects inflation to rise gradually toward 2% over the medium term as the labor market improves further, and the transitory effects of declines in energy and import prices dissipate.

By the way, here’s how energy and import prices have performed since this statement was first introduced by Whirlybird Janet on December 17, 2014.  That is, eleven months ago – which constitutes the “medium-term” in most people’s view, even if the Fed will never define it.  I mean, talk about a complete “credibility implosion.”  And regarding the former, last week’s news that Saudi Arabia increased its “discount” to global prices to its highest level since oil’s 2009 bottom; or OPEC’s Secretary, this morning, claiming non-OPEC members must share the burden of the oversupply; or British Petroleum espousing that oil won’t exceed $60/bbl until at least 2019, whilst the IEA, or International Agency, claimed 2020 as a more likely “recovery timing,” underscores just how massive the glut has become.  And don’t forget, all you “U.S. recovery” believers – the U.S. shale oil industry, which was by far the biggest incremental employer of the past five years, is not only the world’s high-cost oil producer, but financed by $500 billion of junk bonds and “leveraged loans.”  Let alone, hundreds of billions of collapsing equity, rammed down investors throats by ZIRP-abetted Wall Street and “private equity” funds.


As for the Fed’s hoped for “labor market improvements”;  aside from the complete farce Friday’s October NFP report was (according to Zero Hedge, “no one with an IQ greater than their shoe size – save corrupt, captured American economists – buys it”), check out these graphs of the likely path of U.S. employment, if you have any lingering doubts.  Which eerily compare to those in 2008; whilst corporate revenues, which for the first time since the first three quarters of…drum roll please…2009, have declined for three straight quarters.  Even the Fed’s own household survey depicts plunging income expectations; and with the gap between corporate inventory and sales at an all-time high, it’s hard to believe anyone could still believe retail employment has anywhere to go but down.  Heck, even Apple, the company that can do no wrong,announced today it is cutting orders for iPhone 6S components, due to weak demand!

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