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CRASHING CURRENCY CORNUCOPIA

by Andy Hoffman, Miles Franklin:

Quite the ugly start to 2016 – which, when all is said and done, may well yield the most tumultuous, and dangerous, political, economic, and social developments of our lifetimes.  Sure, the PPT “dead ringer’d” and “hail mary’d” yesterday’s Dow losses to a mere 276 points.  And yes, gold’s gains were held to just 1% – having been stopped at exactly the 10:00 AM “key attack time #1; by a patented “Cartel Herald” algorithm; at exactly the Cartel’s “ultimate upside limit of 2.0%.”  And of course, silver’s early 2%+ gains were erased by the same prototypical algorithm – at the exact same time.  However, stocks the world round were decimated – by 7% in China, 4% in Germany, and 2%+ nearly everywhere else, representing the worst year-opening trading day in 84 years.  Moreover, oil’s initial knee-jerk jump to exploding Middle Eastern tensions unceremoniously reversed; whilst commodity prices – led by non-monetary base metals like copper and aluminum – were bombed; Treasury yields – “rate hike” and all – plunged; junk bond yields surged; and, per the topic of today’s article, global fiat toilet paper currencies imploded – in many cases, to new all-time lows.

Regarding the former, oil is back down to $36.60/bbl, at nearly 2008’s spike bottom low, with nothing but massive supply swamping – atop crashing demand – as far as the eye can see.  Base metals plunged 1.5%-3.5%, whilst gold rose 1% and silver was unchanged.  The 10-year yield, at 2.23% as I write Tuesday morning, is barely above the year ago level of 2.17%, “recovery” notwithstanding – whilst the HYG junk bond ETF is on the verge of re-breaching the key 80 level.  And as for yesterday’s economic data, government fudging notwithstanding, it simply doesn’t get worse.

Actually, I take that back – as it’s about to get so bad, people will long for the “good old days” of 2008!  To wit, yesterday’s December PMI Manufacturing index fell from 52.8 to 51.2, whilst the ISM Manufacturing index plunged from 48.6 to 48.2.  And for the coup de grace, not only was November construction spending negative0.4% – versus the expectation of positive 0.7% – but October’s initially reported 1.0% gain was revised to just 0.3%.  Which, cumulatively, caused the Atlanta Fed’s “GDP now” tracking program to reduce its estimate of fourth quarter GDP “growth” from 1.3% to just 0.7%.  And this, with most of the December data yet to be reported, amidst a massive 13% CRB commodity index plunge and a horrific holiday spending season.

In other words, it’s quite possible that, “double seasonal adjusting” and all, fourth quarter GDP growth turns out to be negative – i.e.,recessionary – just as the moronic Fed, or as I facetiously deemed them last month, the “world’s smartest people,” deemed it wise to raise rates.  Let alone, amidst an exploding, earnings-destroying dollar index – whilst all other Central banks are aggressively easing.  Putting the “icing on the cake,” the career bureaucrat – and from watching him on CNBC yesterday morning, terrible actor – John Williams of the San Francisco Fed actually had the gall to claim the “U.S. economy is in great shape,” and “four to five rate hikes in 2016 sounds about right.”  I mean, just how egregiously, and blatantly, can one lie, before the entire world knows it!

Of course, all this carnage was, for all intents and purposes, a meresideshow compared to yesterday’s “main event” of crashing global currencies; ironically, excluding only the Japanese Yen – i.e., the currency the PPT has for years, arbitrarily utilized as a “tool” to manipulate stocks higher.  In other words, their algorithms have for some reason been set to push U.S. and European stocks higher whenever the Yen weakens.  Which, as you can imagine, has been a sure bet for three years, given Abenomics’ world-leading currency debauchery efforts.  Which, having miserably failed, clearly “needs” to be increased further – as Japan is now back in recession, with nothing but trillions of additional debt, and a 50% weaker currency to show for it.  Which, it most certainly will be.  Likely, in short order, as there’s NO WAY the leaders of the “final currency war” will allow themselves to “lose,” no matter how much Japan is destroyed in the process!

Read More @ MilesFranklin.com

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