The Phaserl


Central Bankers With Itchy Trigger Fingers

by Andy Hoffman, Miles Franklin:

In Rocky’s fights with Apollo Creed (2), Clubber Lang, Ivan Drago, and even Tommy Gunn, he looked like he would lose in the early rounds. And yet, he came away victorious each time, to the chagrin of detractors, “experts,” and bettors alike. Ditto for Donald Trump and the BrExit – even if, in those cases, the betting lines were rigged, and the audience “over sampled.” Thus, don’t be surprised if Marine LePen – who for some reason, is considered a “longshot” despite having barely lost “Round One”; wins “Round Two” this weekend. Let alone, running against a pathetically lame candidate who, in boxing terms, doesn’t hold a candle to Creed, Lang, Drago, or Tommy Gunn. Frankly, even Hillary Clinton’s stature is Churchill-esque compared to Emmanuel Macron.

In yesterday’s “how will history’s largest bubble (and anti-bubble) end?”, I noted how outrageous it was that the stock markets of some of the world’s worst political and economic basket cases were rising – care of the most egregious market rigging in global history. Clearly, it will end badly – very badly; and whether the losses are entirely in real terms – or both real and nominal; is immaterial. The timing is the biggest wildcard, but when even Apple is missing earnings; and Amazon “smashing” earnings solely due to accounting gimmicks; as the economy is flat-lining at best; clearly; said timing is far more likely to be “sooner” rather than “later.” Perhaps much sooner, if Marine Le Pen – with the political tide at her back, and France on the verge of economic collapse – can pull off a “BrExit” this weekend. And if not France, a handful of other European nations hold similar catalytic potential, if this 18-34-year-old response to the below question is any indication.

Consider that since November’s Italian Constitutional Reform Referendum – in which, the political status quo was dramatically defeated, and the pro-EU Prime Minister decidedly overthrown; the Italian stock market has surged, whilst its unemployment rate has remained stubbornly near its highest post-War level; which I assure you, won’t be helped any by yesterday’s Alitalia bankruptcy filing. Sometime soon, elections will need to be held to replace Matteo Renzi as Prime Minister – and per this chart, despite the “surging” stock market, Italian political risk is surging far faster.

“Risk” of all kinds has never been higher; which is why Central bankers have NEVER worked harder to rig markets, knowing full well that “history’s most overdue financial crisis” is inevitable; and, if they take their foot off the gas pedal for a nanosecond, imminent. That said, NOTHING is riskier than going “pedal to the medal” with a Formula I race car; as if you don’t crash into something when going straight, you certainly will at the first curve – which is a mathematically certainty for both race cars and economies; particularly ones like the U.S., which according to the government’s comically rigged data, is amidst its second longest “expansion” of the 47 since the Declaration of Independence was signed. Not to mention, the weakest, per this “scariest chart ever,” of the relentless GDP decline over not just years, but decades.

2016’s (government-goosed) 1.6% GDP “growth” was the lowest since…drum roll please…2009, at the heart of the Financial Crisis; whilst 2017’s first quarter “growth” of just 0.7% (compared to the Fed’s initial forecast of 3.5%) was the worst since the first quarter of 2015 – when the reported 0.5% “growth” was deemed “wrong”; and thus, “double seasonally adjusted” to make it “right.” In other words, the first quarter of 2017 would have been significantly lower if said “double seasonal adjusting” wasn’t utilized to goose it higher.

That said, the past week’s horrific economic data may well push the final tally into negative territory irrespective, as all subsequent March data releases have been negative; particularly, construction spending (negative 0.2%) and personal consumption (zero). But don’t worry, the Fed has made its initial forecast for second quarter GDP growth; which, despite not a shred of logic behind it, or evidence to support it, is – I kid you not…wait for it…4.3%! And please don’t consider yesterday’s horrifying April automobile sales “bloodbath”; or collapsing oil prices, as OPEC’s fraudulent “production cut” implodes upon the world’s largest revenue-producing industry. Or, for that matter, Trump’s failure to “repeal and replace” Obamacare; propose a viable tax cut plan; or even outline the “yuugge” fiscal stimulus that’s supposed to “reflate” the rapidly dying economy. You know, the “reasons” why the stock market has been propelled since the election to dotcom-like valuations and sentiment.

Before I get to today’s principal topic – mere hours before the Fed issues its newest; and likely, far more dovish than anticipated policy statement – consider just how egregious the most recent Precious Metal attack has been; which, irrespective, leaves dollar-priced gold and silver 9% and 7% higher for the year, respectively. Not to mention, 20% and 25%, respectively, from their December 2015 lows.

On April 13th – one week after the U.S. attacked Syria, and three days before it sent a nuclear-powered warship to North Korea – gold and silver prices were roughly $1,290/oz and $18.50/oz, compared to their recently-upwardly-breached 200 week moving averages of $1,239/oz and $17.89/oz, respectively. “Coincidentally,” the Cartel, as of April 18th, had established its largest-ever (naked) silver short position. Which, as we learned on Friday, they’ve started to aggressively unwind. However, in the process, they’ve knocked paper silver down – in true “COMEX 101” manipulative fashion; amidst the most violently PiMBEEB news flow imaginable; by 9% since, whilst gold – still, well above its 200 week moving average – declined less than 3% (and the HUI, FYI, 13%).

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