Stocks, Gold, Silver, and the printing press.

[smokingman]

Two mainstream articles.Neither was written to compliment each other or even be related,but read both and let me know if you see the link.
Exclusive: 4 in 5 in US face near-poverty, no work - Yahoo! Finance
The rise of the mooching millennial - The Term Sheet: Fortune's deals blogTerm Sheet

From the second article.Just let this sink in...
"Up until 2008, about 1.1 million new U.S. households were formed each year, mostly due to population growth. That has declined dramatically; between the first quarter of 2008 to the first quarter of 2011, only 450,000 new households a year were created. Even as the economy improves, household formation hasn't -- only 521,000 households were created between the first quarter of 2012 and the first quarter of 2013."

 

[smokingman]

Largest electricity market in the USA is? California.Just going to leave this bomb shell here.

"Government investigators have found that JPMorgan Chase devised “manipulative schemes” that transformed “money-losing power plants into powerful profit centers,” and that one of its most senior executives gave “false and misleading statements” under oath. The findings appear in a confidential government document, reviewed by The New York Times, that was sent to the bank in March, warning of a potential crackdown by the regulator of the nation’s energy markets."





The JPMorgan case arose, according to the document, after the bank’s 2008 takeover of Bear Stearns gave the bank the rights to sell electricity from power plants in California and Michigan. It was a losing business that relied on “inefficient” and outdated technology, or as JPMorgan called it, “an unprofitable asset."

Under “pressure to generate large profits,” the agency’s investigators said, traders in Houston devised a workaround. Adopting eight different “schemes” between September 2010 and June 2011, the traders offered the energy at prices “calculated to falsely appear attractive” to state energy authorities. The effort prompted authorities in California and Michigan to dole out about $83 million in “excessive” payments to JPMorgan, the investigators said. The behavior had “harmful effects” on the markets, according to the document.



In the energy market investigation, the enforcement staff of the Federal Energy Regulatory Commission, or FERC, intends to recommend that the agency pursue an action against JPMorgan over its trading in California and Michigan electric markets.

Blythe did a bad, bad thing. So bad she lied about it under oath.



The regulatory document cites her supposed “knowledge and approval of schemes” carried out by a group of energy traders in Houston. The agency’s investigators claimed that Ms. Masters had “falsely” denied under oath her awareness of the problems and said that JPMorgan had made “scores of false and misleading statements and material omissions” to authorities, the document shows.

For now, according to the document, the enforcement officials plan to recommend that the commission hold the traders and Ms. Masters “individually liable.” While Ms. Masters was “less involved in the day-to-day decisions,” investigators nonetheless noted that she received PowerPoint presentations and e-mails outlining the energy trading strategies.


More at the source.

​

Will JPMorgan's "Enron" Be The End Of Blythe Masters? | Zero Hedge

So that 42% in utilities...anyone remember how well ENRON worked out for those who committed the crime?
​

And JP Morgan agrees to a fine of 400 million,and why wouldn't they when they made billions.


JPMorgan Chase & Co. manipulated power markets in California and the Midwest from September 2010 and June 2011, according to allegations unveiled today by the Federal Energy Regulatory Commission.

The bank has agreed to sanctions that include a fine of about $400 million, to settle the investigation in a deal that may be announced as early tomorrow, according to a person familiar with the case who asked not to be identified because the terms aren’t yet public. Other claims may include forfeiting or forgoing excess profits, this person said.


JPMorgan Accused By FERC Of Manipulating Power Market, To Be Fined $400 Million | Zero Hedge

 

[smokingman]

The Government "Revises" 84 Years Of Economic History This Week | Zero Hedge


US economic history will be rewritten this week, as the most far-reaching methodological changes in years will add the equivalent of a country the size of Belgium to output in the world’s largest economy.

The most important change by the Bureau of Economic Analysis, to be announced on Wednesday, will be to start counting spending on research, development and copyrights as investment, and reflect pension deficits for the first time.

Combined they are expected to add 3 per cent to gross domestic product.

...

“We are carrying these major changes all the way back in time – which for us means to 1929 – so we are essentially rewriting economic history,” Brent Moulton, who manages the national accounts at the Bureau of Economic Analysis.

8/4/2013
Largest employer in the United States is Walmart.
Second largest employer in the United States Kelly Services,the temporary agency.

 

[smokingman]

New Federal Reserve study released today.Conclusion of the study is quite shocking.QE,Tarp,Zero interest policy,and currency swaps total effect on the market .13%.More shocking...it hit the mainstream media.Surprising New Fed Study - Is it Preparing Americans for a Market Crash? - Yahoo! Finance With a link in the article to the Fed Study.
Why admit this now(lie,the Fed is 100% responsible for the up market)?Because of another study released today saying markets are over valued by 50% since 2008.If the FED is not to blame for the rise they can not be blamed for the fall right? Link to that study.New York Fed Research Reveals That FOMC Drove S&P 55% Above Fair Value

And yes it is the New York Federal reserve not a lesser branch that released both studies.In the second they expect markets to correct in the near term,and estimate they are over valued 50%.

Get out of the markets if you are in them.Someone just started a fire in the corner,yelled fire, and bolted the door shut from the outside after hanging a sign "We told you,and it is not our fault you did not listen RIP."

 

[pudly]

Asian countries demanding their gold back? I'd like to see something corroborating this claim. If it is true, then the Fed is well and truly screwed. Get in line behind the Germans, folks.

Smokingman- George Soros is shorting the S&P 500. Goes along with your note.

 

[smokingman]

8/16/2013
I have warned to watch interest rates a few times in this thread.The US 10 year just crossed 2.825%,more than double what it was just a year ago at a 2 year high.I predicted 5% by year end.
Oil and precious metals are also up greatly today.
Gold:$1371.70
WTI Crude $107.80
Silver$23.23
Feeder Cattle is close to a new all time record at $157.68(cents)per pound.The record is $158.40,set a few months ago.
Selling Spurt Takes 10 Year Treasury Yield To Fresh Two Year High | Zero Hedge

We had POMO today of just over a billion(ie a billion pumped into stocks/primary dealers).The FED open market committee lent just over 10 billion this week at .03% interest for equity purchases,bringing the monthly total to 22 billion or on pace to have a new record month.The open market committee has lent an average of 21 billion per month to primary dealers for "equity purchases" for over two years,unlike QE you never hear about this bailout and massive influx of leverage being added into the system daily.It will end badly.

 

[smokingman]

US 10 year treasury just hit 2.89%.
"NEW YORK, Aug 19 (Reuters) - U.S. benchmark bond yields hit
a two-year high near 3 percent on Monday and emerging market
currencies from India to Indonesia tumbled as markets braced for
the Federal Reserve to start withdrawing support for the U.S.
economy."
GLOBAL MARKETS-U.S. bond yields hit 2-year high; emerging currencies slide | Reuters

 

[indyjs]

Get out of the market ? Is that bonds also ?

 

[zippy23]

Bonds are gonna get wrecked with rates going up, just when will the fed stop QE? how long can it go for? They should make a movie and call it the perfect storm, or just obama! holy crap its gonna get sooo ugly, and with obamacare right around the corner to add icing to the cake, holy crap, watching this will be horrendous.

 

[smokingman]

Get out of the market ? Is that bonds also ?

Here is a nice break down of what losses you can expect on bonds.In short on a 10 year bond,if rates rise 1% over when you purchased the bond you lose 10% on a 2 year you would lose 2%.I would not want to invest in bonds in a rising interest rate environment.
How Will Bonds Fare As Interest Rates Rise? - Forbes

 

[indyjs]

He seems to be suggesting short term bonds, cd's , and money market accounts are best. Thanks for the info

 

[smokingman]

He seems to be suggesting short term bonds, cd's , and money market accounts are best. Thanks for the info

If you want to invest in bonds(even short term) I can help.Just let me hold the money and I will only charge you 10%.It is most likely a better return than the bond market at the moment.
US 10 year 2.91% 8/21/20013
In June of 2013 the rate was 1.68% and any one who has purchased a bond in 2011-2013(10 year)is currently holding an asset worth 24% less than it was just 3 months ago.This includes retirement funds,401ks,hedge funds,companies,municipalities,and anyone who holds those bonds.

Which explains why bonds saw the largest monthly out flow ever in July,and last week was the largest outflow ever recorded for a single week.This week will probably beat last week in outflows by a good margin.Worst Bond Fund Outflows Ever This Week - Business Insider

Credit default derivatives are being triggered by the hundreds of billions daily now.Rates are going up.If we are lucky they will settle down around 5% by the end of the year(as I suggested earlier in this thread).If they do not then this is the start of hyper inflation.Banks that backed/created those derivatives are losing money at a very rapid rate(The largest being JPMorgan and UBS).

All world markets where down today.Most commodities where down in large part because of margin calls,many of the bets in commodities are leverage with tier one capitol as the security deposit so to speak...ie US treasuries.So when the treasuries lose value things must be sold to meet margin calls.That is what is going on all over the world right now.

 

[smokingman]

US equity markets trading volume has collapsed.As of August 26 US equity volume is at a 16 year low,and just over 1/4 of what it was in 2002.
This is with HFT programs accounting for over 70% of all trades vs less than 20% in 2002.To say the retail investor has left is an understatement.
I would not want to be a retail investor in this market.
August US Equity Trading Volume Plunges To Lowest In 16 Years | Zero Hedge

Back in Japan.The Nikkei average is down again trading at 13,338.Most commodities are up and the US dollar is down on threats of a Syrian strike.

 

[smokingman]

9/5/2013 2am eastern time.
The US 10 year just broke the 3% mark,for the first time since before QE2 started.3.09% We will see where it sits when the market opens(EU just opened).

JPY Tests 100.00 For First Time In 6 Weeks; US Treasury Curve Collapses To Flattest In 13 Months; Gold/Silver Slammed | Zero Hedge

The boom/bust sub prime in auto lending is coming to a head.Over 27% of all loans are now in the double digit interest rate zone(ie loans at over 10% interest)with terms as long as 97 months.That will not end well for anyone.
"
Bonds tied to auto loans spanning buyers from the weakest to the most creditworthy make up the largest part of the asset-backed bond market, accounting for about $56 billion of $164 billion in sales, Bloomberg data show.
Securities tied to subprime loans this year account for the highest proportion of auto deals since 2007, representing 27 percent of transactions in 2013, Barclays data show. That compares with 4 percent in 2009 and 30 percent in 2007."
Subprime Squeezed as Auto-Lender Costs Increase: Credit Markets - Bloomberg

 

[zippy23]

so is the answer to buy physical gold and silver? Coins?

 

[zippy23]

9/5/2013 2am eastern time.
The US 10 year just broke the 3% mark,for the first time since before QE2 started.3.09% We will see where it sits when the market opens(EU just opened).

JPY Tests 100.00 For First Time In 6 Weeks; US Treasury Curve Collapses To Flattest In 13 Months; Gold/Silver Slammed | Zero Hedge

The boom/bust sub prime in auto lending is coming to a head.Over 27% of all loans are now in the double digit interest rate zone(ie loans at over 10% interest)with terms as long as 97 months.That will not end well for anyone.
"
Bonds tied to auto loans spanning buyers from the weakest to the most creditworthy make up the largest part of the asset-backed bond market, accounting for about $56 billion of $164 billion in sales, Bloomberg data show.
Securities tied to subprime loans this year account for the highest proportion of auto deals since 2007, representing 27 percent of transactions in 2013, Barclays data show. That compares with 4 percent in 2009 and 30 percent in 2007."
Subprime Squeezed as Auto-Lender Costs Increase: Credit Markets - Bloomberg

Its scary you mentioned this, in 2007 i worked for Wells Fargo. We did auto loans in the double digit rates for old cars with long terms. People would come in looking for a loan, and they would get denied for an unsecured loan, and we would literally do loans on their cars for sometimes under $1,000 on a 4 or 5 year term with double digit rates. it was seriously horrible, being young and dumb i did it for a few months and realized how terrible it was and promptly quit. its amazing what is allowed, even more amazing what people will do to themselves. so sad this is where we are today.

 

[smokingman]

Those are a decent hedge against inflation,but I would concentrate on things you use and need first.Inflation is a given and the stated goal of the federal reserve is 2% which anyone who lived through the 80s can tell you is not always achieved.
Why not save money and stock up on things you use regularly,you know the cost of those items is going up and has been going up since 1913.

If you would like to make yourself ill go here... Federal Funds Rate Data - Federal Reserve Bank of New York Just a little snapshot of what banks are paying interest wise on the 20 BILLION a day the Federal open market committee lends for equity asset purchases.This is in addition to QE 1.5(still ongoing),QE3,currency swaps...and any of these programs(such as tarp still ongoing)...Follow the money: Bailout tracker - CNNMoney.com

 

[zippy23]

So you are saying better stock up on things like tooth paste, toilet paper, things like that? What should my investments be in right now? Been thinking of buying silver coins and putting them in the safe.

 

[pudly]

Looks like bail-ins are now being extended to government spending now. Remember how Cyprus took bank customer money to bail out failing banks earlier this year? Well, Poland is now confiscating privately held retirement accounts and pulling them into the state retirement fund. This will alter their books to make them look better and allow them to continue borrowing and spending. They aren't taking all private pension funds, yet. They are taking all bond investments and largely leaving stocks alone for now.

This would be roughly the equivalent of taking all 401K/IRA bond investments, pulling them into Social Security and saying that they would pay you in the future for both your normal SS benefits and for your additional "private" investments. All the while, using that additional cash to continue deficit spending. Several questions leap to mind:

• Anyone think this would benefit the savers?
• That they would actually get full payment for their transferred holdings?
• Why would anyone continue to contribute to those investments without being required by law after the confiscation? (Hint for those who didn't bother to read the article: The Polish govt currently requires people to contribute to both the public pension fund and these private pension funds).
• How about the security of private pension stock investors?

As this technique becomes more common, it is increasingly obvious that these governments are using their powers to steal from their citizens and protect the politically connected without calling it a tax. Good luck with your tax-advantaged retirement funds. I'm increasingly worried about mine.

 

[GodFearinGunTotin]

Good luck with your tax-advantaged retirement funds. I'm increasingly worried about mine.

Me too. I can hear the claims of ripping off the .gov of taxes while you were saving so they're entitled to it; or it's not fair you have scrimped and saved while others didn't/couldn't. If you read the school lunch thread, you'll see that all you have to do is mention starving children and many folks will some how rationalize the taking of money from those that have to make sure others won't starve.