Money Flow Trading Method along with Risk Management

DOWNGRADE IN ITALY

http://www.zerohedge.com/news/2016-1...ops+to+zero%29

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Moody's changes outlook on Italian banking sector to negative from stable due to increasing capital needs and weakening confidence
Moody's Investors Service has changed its outlook on Italy's banking system to negative from stable, reflecting the rating agency's view that the recognition of losses will depress the banking sector's profitability and erode its capital over the next 12 to 18 months, as well as the adverse effect upon confidence following the country's rejection of constitutional reforms.

Moody's report, entitled "Banking System Outlook -- Italy: Negative outlook driven by capital needs and weakening confidence," is available on www.moodys.com. Moody's subscribers can access this report via the link provided at the end of this press release.

Italian banks currently have one of the highest problem loan ratios in Europe at 16.4% of total loans, more than three times the 5.4% European average, as data from the European Banking Authority as of June 2016 showed.

Although problem loan formation in Italy has slowed considerably, a reduction in the outstanding amount will be gradual, according to Moody's. This is because banks have limited resources in the form of excess capital over minimum requirements and private investors little appetite to finance the restructuring of Italian banks.

As a result, the rating agency expects higher loan-loss provisions, leading to depressed profitability or losses for the banking system in 2016 and 2017. Banks will need to recognize additional impairments and losses when selling problem loans, given the aforementioned limited market demand for bad loans at current book values.

The success of Italian banks' recapitalisation will also hinge on the viability of their business models and on market confidence, which could be undermined by increased political uncertainty following the "No" vote in the recent referendum. In addition, Moody's notes that a failure to restructure a weak bank such as Monte dei Paschi di Siena could further undermine confidence.

Operating conditions more generally will not be very favorable for Italy's banks over the outlook period. The country's economic growth will remain well below that of European Union peers, with Moody's estimating real GDP growth of 0.8% in 2016 and 2017 and 1% in 2018, after 0.7% in 2015, as noted earlier this month.

Demand for credit and banking services will remain subdued, offering only modest revenue growth opportunities for banks, while spreads are under pressure from low interest rates and high competition in a fragmented market.

http://www.jsmineset.com/

I WILL POST THIS ARTICLE IN THE FULL BECAUSE OF THE IMPORTANCE OF IT !! I will have my comments after the end of the article.

Posted December 13th, 2016 at 12:06 PM (CST) by Bill Holter & filed under Bill Holter.

Jim and I have received many panicked calls and e-mails regarding Martin Armstrong’s latest article. In it he again claims gold will collapse to below $1,000 per ounce and thus the fearful communications.

In this very short article, Armstrong questions whether India will begin gold confiscation suggesting door to door searches for “tax evaders”. He suggests if a gold confiscation is undertaken, the Indians will switch to purchasing silver …something the BIS has not thought about yet. The logic of a switch to silver is a good one, surprising considering some of what he has opined in the past…

We posted two articles late last year refuting his poor logic and efforts at rewriting history. In the first one, we refuted his claims that markets are not manipulated. Since then of course we have had many settlements by large banks for just that…MANIPULATING MARKETS. Last week saw Deutsche Bank admit to manipulating the gold market and agree to pay a $60 million fine (peanuts) and offer some seriously damaging evidence in the form of captured communications. As they have turned state’s evidence and squealed on others, this will become very interesting no doubt! we would simply ask, are banks in the business of handing out “free money” in the form of $billions if they’ve done nothing wrong? JP Morgan, Citi, DB and many others have coughed up large fines. Was this “largesse” or was it to head off the decapitating legal procedure called discovery?

Then a week or so after the first article, we were forced to pen another one,. Mr. Armstrong truly erred when he made the statement gold was “devalued” against the dollar in 1934. It was no slip of the pen or tongue, he actually tried to rationalize and “explain” how gold was devalued versus the dollar. The fact is, gold was REVALUED over 70% higher versus the dollar in 1934. The claim that “the dollar” was the best performing asset during the Great Depression is outright bogus and why we give zero credence to anything the man now says. We write this today because so many readers have again had the wits scared out of them.

The “timing” is peculiar. India’s (Modi’s) timing of their boondoggle by demonetizing 86% of their paper currency cannot be a coincidence. The action came right on top of India’s wedding season where their international gold purchases are seasonally strongest. It was our opinion right from the start, the action was directly taken to cut off and mute their physical demand and offtake from world markets. The only problem is that it backfired miserably as reports of physical gold changing hands internally within India at $3,000 per ounce and more.

Who couldn’t have seen this one coming? When you cut off supply …and autonomously tell people their “savings” in paper currency have been ostensibly wiped out, what would you expect to happen? Supply and demand still works, price rose as supply has been cut and true demand has had a fire lit under it. If you wanted proof that gold is still seen as a safe haven in the midst of turmoil, here it is! Meanwhile, India’s real economy has crashed unlike nearly anything seen in modern history. Giant Foxconn is eliminating 25% of their workforce due to the monetary insanity. Trucks are littering the sides of the road as the cash does not exist to purchase fuel. The disaster is just beginning, coming days and weeks will surely see “hunger riots”.

A similar question was raised about China over the weekend by Yra Harris regarding an article Kitco ran. What will happen if China decides to stop their importations of gold? Jim and I talked at length about this and then spoke with Yra to get his take on our conclusion should this happen. Wouldn’t the ban of imports cause a huge drop in paper gold prices but not necessarily cash price? The answer is yes, no, and we may well see the “mechanism” to reset global markets if we do.

Looking at China following India’s lead was an interesting thought process if you follow it through to the end. The fear of crashing price by “cutting off demand” is logical only if you stop the process before finishing the to the final answer. You see, were China to preclude gold imports, the immediate reactions by COMEX and LBMA would most probably be a crash …maybe even a $500 crash! Would that matter? Again, yes and no but stay with me to the end. “Price” in the West may crash, but “what” exactly is it the price “of”?

Paper prices may very well crash …while price for real gold within China goes to the moon. We are already seeing large spreads existing between Shanghai and COMEX, these would only get larger and expose one market as …not really a market. Will the Chinese look at COMEX prices and shun physical or in the ground gold? Or will they look at what real gold is changing hands at inside of China and decide to “arbitrage” it out of the ground (and from Western vaults) and into their own market?

This is the crux of what we theorized. Yes, it is certainly possible to see paper prices collapse from here and possibly sparked by China banning imports (temporarily). Set in motion would be paper prices dropping and physical markets rising (something I have written about since 2007 and spoke of since early 2000′s). China (official state) would then “purchase” and demand delivery of ridiculously cheap gold (while there is still inventory left to deliver). As Jim put it during our last weekend interview, “you could see COMEX gold at $10 offered and no bid with Chinese cash markets $5,000 bid and no offer”.

China (Russia and India) will ultimately “make price” as they are the physical markets and collectively have more gold than the West (please don’t reply with GFMS or World Gold Council numbers as they are laughable). A “reset” of global finance is certainly coming, the only questions are how, when and how much? We believe the event will be very rapid, probably over a weekend but China could force a reset via Mother Nature and arbitrage in a slower manner. Real gold will find its way into India (and China should they ban imports) simply due to the human characteristic of profit motive and black markets. Once Western vaults are emptied, who do think will “make price”? Those who don’t have it but suddenly want it, or those who have it and always wanted it? If we were running China, this is the exact mechanism we would use to remonetize gold and silver …and remonetizing metal is exactly what we believe they have wanted to do for many, many years!

To finish, Martin Armstrong was wrong about gold during the Great Depression even with the benefit of recorded history. Now, he could possibly be correct regarding the direction of his invention of derivative contracts … but we believe he is entirely wrong about the underlying physical product. He most likely has correct reasoning about a huge move into silver as he aligns with Mother Nature’ views the man made 70 to 1 g/s ratio as incompatible with her own at 10 to 1. One thing is certain, should the current paper versus physical pricing spread continue and expand, Netjets will become a great investment as a freight carrier for arbitrage!

Standing watch,
Bill Holter,
Holter-Sinclair collaboration

Comments from Benjaminis: I have the most respect in the world for Mr Sinclair. He has NEVER been wrong once when it comes to Gold and the markets. His new associate Bill Holter has great analytical skills and they make a great team together. I strongly recommend that every few days you visit their website to keep up to date on financial matters in the world. They have NO SPIN and are not selling anything.

On the other hand Martin Armstrong has amazing skills as well and most of the time I have learned much from him however this time I completely agree with JSmineset. We will not have long to wait and my call for Gold during 2017 is for a price over $1500 US.

http://www.caseyresearch.com/article...all-your-bonds

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Editor’s note: If you read the Dispatch often, you know we like to share insights from Casey Research founder Doug Casey as much as we can. Doug sees the world differently than most people, especially “trained” economists. He’s also a superb writer, highly entertaining, and not afraid to speak his mind.
In the past, we’ve shared essays where Doug discusses everything from the European migrant crisis…to why democracy is uncivilized…to recent corruptions of the English language. Today, we have something different to share with you.
In the essay below, Doug explains what President-elect Donald Trump could mean for your personal finances, specifically bonds, real estate, stocks, and commodities like gold.

In other words, we’re sharing advice from Doug that could make you a lot of money over the next four years. We hope you find this essay as useful as we did.
[The following essay originally appeared in this month’s issue of The Casey Report.]

So, Trump has won the election. Of course anything can happen between now and his presumed inauguration on January 20. Maybe the Swamp Creatures will succeed in causing a recount in so-called Purple States that could change the number of electors in Hillary’s favor. Maybe they’ll somehow influence Trump electors to vote for Hillary. None of this would have been an issue if Baby Bush II, Jeb, had been the Republican nominee, as was supposed to have happened. It all just shows what a transparent (a word these people love to use) fraud “democracy” has become.
Let the hoi polloi cast a meaningless vote, so they have the illusion of being in control. Instead of seeing themselves as subjects, they’ll think they’re “we the people,” who actually have some say in what happens. That way they’ll pay their taxes willingly, enthusiastically sign on to aggressive wars on the other side of the world against people they know nothing about, and generally do as they’re told. Because it’s supposed to be patriotic. “Democracy” is a much more effective scam for controlling the plebs than kingship or dictatorship.

That said, the Establishment, the Deep State, was genuinely shocked and appalled by Trump’s victory. As Baby Bush the First would have said, they misunderestimated how angry the average voter was. That’s because the Coastal Democratic Elite are totally out of touch with the common man. But they needn’t fret too much. They’ll be re-installed, with a vengeance, in four years.
That will likely be true for two reasons:

1. Simple demographics. The groups that vote Democrat (e.g., blacks, Hispanics, urban dwellers, immigrants, Millennials) are growing in numbers faster than those who vote Republican. Republicans are older people, and the Boomers (born 1946–1966) and the Silent Generation (1926–1946) are dying off. More people are moving to the cities, and that influences them to vote Democratic. More people (still, idiotically) are pursuing higher education, and that also influences them to vote Democrat.
2. The Greater Depression. One definition of a depression is a period of time when distortions and misallocations of capital are liquidated. A time when bubbles caused by monetary expansion are popped. A time when unsound businesses fail. I re-emphasize this because the party on whose watch it happens is automatically kicked out. So, the Democrats actually got quite lucky not to be in office when the time bomb goes off. Trump could easily go down as Herbert Hoover II.

What could change things? A serious war, much bigger than the sport wars the US is currently engaged in, is the biggest danger. That’s much less likely with Trump than Hillary, but these things have a life of their own. My guess for the next president is either a left-wing general (because Americans love and trust their military), or a left-wing populist, like Elizabeth Warren.

But that’s crystal balling at this point. Let’s proceed on the assumption Trump is actually going to be the president for at least the next four years. Although problematical, he’s a vast improvement over Hillary. What will it mean for the US and the world? More importantly, what will it mean for your personal finances and freedom? Let’s look at the possibilities.

Bonds—With bonds, we’re at the peak of the biggest financial bubble in world history. This is a very big deal.
Interest rates move in very long cycles. They went up from the mid-1940s to the early ’80s, when long-term government bonds peaked at close to 16%, and T-Bills at over 16%. I thought they hit bottom years ago, but the cycle overshot.
My guess is that they’re headed up in earnest now. And Trump, as someone who understands business (even though he doesn’t understand economics), will likely (I think…) do what he can to send them higher. Why? He understands the country needs to save, to rebuild capital. And higher rates will encourage saving and discourage debt.

The risk is that, with all the debt that’s been put on in the last decade, debtors will be hard-pressed to service it. That includes the USG with $20 trillion of on-balance-sheet debt, and a lot more in the way of off-balance-sheet debt, guarantees, and contingent liabilities. Much of it will be activated if higher rates cause a lot of defaults.

What should you do? Sell all your bonds.

Real Estate—Property, at least in the English-speaking world, floats on a sea of debt. Interest rates go up, real estate prices go down. The economy goes down, so do property prices. Add to that the aging US population, which isn’t good for property; as people age, they downsize. Add to that the fact we’re in another real estate bubble, similar to what we saw in the mid-oughts. After bonds, property is likely the worst place to be. In fact, I’ll go so far as to say the great post–World War II property boom is at an end—but that’s a subject for another time. There’s not much that Trump can do to fix this.
What should you do? Lighten up on property. Make sure any mortgages you keep are at fixed rates.

Stocks—If Trump only follows through with his promise to cut taxes, and eliminate two old regulations for every new one, it would be wonderful for the economy. But the economy and the stock market are two different things; they only correlate over the long run. I suppose he’ll follow through with his promise to build lots of new infrastructure. Government deficits will soar, and only the Fed will be on hand to buy all that new debt.

Infrastructure companies will get a fat slug of the newly printed money. But I find it hard to get enthusiastic for the stock market. In terms of dividends, P/E ratios, or book value, it’s already at one of the highest levels ever. Bear in mind that well-selected stocks can still go up, even if the market as a whole goes down.

That said, I feel more comfortable with shorts than longs at this point.

Gold and Commodities—Frankly, where do you put your money when almost everything is overpriced? Commodities are coming out of a five-year-long bear market. They’re about the only thing that’s cheap. That’s true relative to their cost of production (farmers, ranchers, and miners are breaking even, at best, all over the world). And it’s true relative to their history (they’re down 50% from the peak of 2011).

In other words, commodities are a much safer place for your capital than stocks, bonds, or real estate (excepting agricultural property) for the foreseeable future. The problem is that it’s hard to hold a carload of wheat or ten tonnes of sugar.

Remember that gold and other commodities aren’t “investments.” An investment is something that acts to create new wealth. They’re simply assets. Sometimes they can be excellent speculations. Gold, however, is money, and will remain so long after the US destroys its currency.
I recommend, therefore, that you accumulate gold and silver instead of plunging into conventional investments. Check with the dealers we list in The Gold Book to see who you prefer to work with. [Editor's note: The Gold Book is exclusive to readers of The Casey Report, which you can sign up for at the end of today's essay.] But if you don’t have a significant position in the metals already, please get going.

A final thought. It’s usually a mistake to count on any head of state to make things in a country better. It can certainly happen—as with Erhard in Germany after WW2, Pinochet in Chile, Thatcher in Britain, or even Reagan in the US. Maybe it will be true of Trump. He’s got a much stronger personality than Reagan, for openers. But the bigger and older a State gets, the harder it is to change. It’s comparable to trying to stop a fully loaded supertanker.

Excellent article and another point of view on the FED raising rates tomorrow and confirmation of my USD/JPY strategy on Risk Off.

http://www.321gold.com/editorials/th..._s_121316.html

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Dec 13, 2016

1. Gold stocks and silver continue to exhibit substantial strength in the face of the decline in the price of gold. Is that strength hinting that a substantial rally will follow a Fed rate hike?
2. For some further insight into the matter, please click here now. Double-click to enlarge this key dollar versus yen daily bars chart.
3. The dollar has arrived at the major resistance zone of 116 – 125. The yen is the fiat world’s top risk-off currency, and gold is the ultimate risk-off asset.
4. So, it’s very important for gold bugs to watch the price action of the dollar versus the yen. For a closer look at the action, please click here now. Double-click to enlarge this 10 minute bars chart.
5. At about 3:30AM on Monday morning, the dollar reached 116, and sold off from a small head and shoulders top formation.
6. To view the price action for gold in that same 3:30AM timeframe, please click here now. As the dollar recoiled against the yen, gold began to surge against the dollar.
7. Whether 116 marks some kind of final high for the dollar is unknown, but there’s no question that just as gold was vulnerable in the $1320 area going into the US election, the US dollar is now equally vulnerable, going into the Fed meeting tomorrow.
8. Please click here now. Double-click to enlarge this daily bars gold chart.
9. There’s a bull wedge pattern in play. Both technically and fundamentally, there are some great similarities between the current timeframe and last year, in terms of a potential rate hike and a gold price rally that follows.
10. Unfortunately, there are also some important differences. There are rumours that Chinese capital controls are coming, and the government is restricting gold imports.
11. That restriction is raising the gold price in China, but to raise the global price Chinese citizen demand must be allowed to be fulfilled.
12. Janet Yellen has clearly stated that she seeks a “high pressure economy”, which is an economy where inflation is allowed to run higher.
13. If she forcefully reiterates that view this week, the dollar could fall hard against the yen, and against gold.
14. Also, banks are incentivized by rate hikes to make more loans, and a rise in loan activity is needed to increase velocity of the money supply.
15. Regardless, my suggestion to gold bugs is to cheer for a post Fed meeting rally in gold, but be open to the idea that nothing too exciting happens until Trump gets inaugurated in January.
16. Trump’s protectionist agenda is highly inflationary, and his tax cuts would help move money away from government, where it has no real velocity.
17. In the private economy and fractional reserve banking system, it would get substantial velocity.
18. For more good news on inflation, please click here now. While the fiat call-in in India may be responsible for a lot of the latest surge in oil demand, there’s no question that oil demand in India is growing at a very rapid rate.
19. On the supply side, Iran and Russia appear to be ready to put a ceiling on supply. Against the background of inflationary rate hikes and “Trumpflation”, oil is extremely well-supported now, and poised to move higher.
20. Please click here now. Double-click to enlarge. Technically, oil also looks superb. There’s a bull flag in play. Oil appears set to burst upside from a sizable rectangle formation, with my target being the $63 area!
21. Please click here now. Double-click to enlarge this GDX chart. As noted, gold stocks are showing phenomenal resiliency over the past month, in the face of what is roughly an $80 an ounce decline in the price of bullion!
22. GDX is essentially unchanged in price, while gold gets hammered. In a deflationary environment centred on system risk, gold bullion dramatically outperforms gold stocks. In an inflationary setting, which appears to now be imminent, gold stocks absolutely destroy bullion, in terms of upside performance. GDX could trade as low as $18 before a major rally starts, but it’s starting to look like $20 is the floor.
23. It’s quite possible, even likely, that Janet Yellen does not want to upset her new boss, Donald Trump. Trump wants inflation, and he likely knows the only “solution” to US government debt is serious inflation that helps debtors and damages creditors.
24. Janet Yellen is likely to help Trump get that job done. Mainstream analysts are seriously underestimating the amount of inflationary pressure that Janet Yellen is willing to tolerate once Donald “The Golden Trumpster” Trump becomes America’s most powerful man, on inauguration day!

Thanks!

Cheers
st
Dec 13, 2016
Stewart Thomson
Graceland Updates
website: www.gracelandupdates.com
email for questions: [email protected]
email to request the free reports: [email protected]



Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am. The newsletter is attractively priced and the format is a unique numbered point form; giving clarity to each point and saving valuable reading time.

http://www.zerohedge.com/news/2016-1...ops+to+zero%29

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Update: Forty members (up from 29 earlier) of the Electoral College on Tuesday signed a letter demanding an intelligence briefing on Russian interference in the election ahead of their Dec. 19 vote.
As The Hill reports, ten electors originally signed the letter when it was published Monday, and 30 more have since added their names.
Original 10:

1. Christine Pelosi (CA)
2. Micheal Baca (CO)
3. Anita Bonds (DC)
4. Courtney Watson (MD)
5. Dudley Dudley (NH)
6. Bev Hollingworth (NH)
7. Terie Norelli (NH)
8. Carol Shea-Porter (NH)
9. Clay Pell (RI)
10. Chris Suprun (TX)

Newly Added Electors:

1. Edward Buck (CA)
2. Donna Ireland (CA)
3. Vinz Koller (CA)
4. Katherine Lyon (CA)
5. John P. MacMurray (CA)
6. Andres Ramos (CA)
7. Gail Teton-Landis (CA)
8. Olivia Reyes-Becerra (CA)
9. David Scott Warmuth (CA)
10. Gregory H. Willenborg (CA)
11. Jerad Sutton (CO)
12. Robert Nemenich (CO)
13. Nancy Shepherdson (IL)
14. Dori Dean (MA)
15. Jason Palitsch (MA)
16. Parwez Wahid (MA)
17. Paul G. Yorkis (MA)
18. Robert Leonard (MD)
19. Salome T. Peters (MD)
20. Melissa Mark-Viverito (NY)
21. Stuart Appelbaum (NY)
22. Stephanie Miner (NY)
23. Melissa Sklarz (NY)
24. Andrea Stewart-Cousins (NY)
25. Sam H.W. Sappington (OR)
26. Beth Caldwell (WA)
27. Bret Chiafalo (WA)
28. Deb Fitzgerald (VA)
29. Terry C. Frye (VA)
30. Jeanette Sarver (VA)

The open letter — led by Christine Pelosi, the daughter of House Democratic Leader Nancy Pelosi (Calif.) — urged Director of National Intelligence James Clapper to give a detailed briefing on President-elect Donald Trump's ties to Russia.

“We further require a briefing on all investigative findings, as these matters directly impact the core factors in our deliberations of whether Mr. Trump is fit to serve as President of the United States,” the letter read.

The Clinton campaign applauded the effort Monday, saying it had repeatedly warned about Russian interference aimed at swaying the election in Trump’s favor.
However, while 40 electors would be enough to turn the election in Hillary Clinton's favor, the so-called "Hamilton Electors" are almost uniformly Democratic voters anyway and so with Ashley-Madison fan Chris Suprun the only Trump turncoat, for now the 'soft coup' remains a long shot.

“I am not looking to be satisfied with just the vote on Dec. 19 or 20, but on January of 2030, when Mr. Trump has either served no time, one term or two terms,” Suprun told The Hill. “History is going to judge my actions on whether he turned out to be Ronald Reagan, Herbert Hoover or Richard Nixon.”
But, as The Hill adds, Republican electors are coming under intense pressure to change their votes:
Bob Muller, a GOP county chairman in North Carolina and a Trump elector, said he’s gotten correspondence from “everywhere from Maine to California” asking him to vote differently.

“I just ignore them,” Muller said.

So far, only a few Electoral College voters have publicly declared that they will not back the candidates that their states supported — including just one of the 37 Trump voters that the self-styled Hamilton Electors, a group of mostly Democrats, need to make any noise on Monday.

And even if the rogue electors achieve their aims, they would only succeed in sending the election to a Republican-majority House, which would almost certainly certify Trump’s victory.

Virtually all Republican electors reached by The Hill said they will vote enthusiastically for Trump.

“I’m voting how the people of Florida have told me to vote,” said Brian Ballard, a Florida elector who raised money for Jeb Bush and Marco Rubio during the GOP primary. “I don’t know anyone who isn’t. I appreciate people using First Amendment rights to reach out and try to convince me otherwise, but I’m obligated to support Trump because he won Florida.

“Also, I love the guy and want him to be president.”

Faithless electors are rare but not unheard of in American history.
At this point, the effort appears to be more about undermining Trump, complicating his ability to govern and following personal convictions — and less about actually winning the Electoral College for another candidate.

Comments from Benjaminis: Who really knows how the 538 will deal with this matter on December 19, 2016 , next Monday however this attempt will lead to a great uncertainty is his total goes below 290. Stay Tuned !!!

The Wrap Up - Nightly

Tonight another country is taking money out of circulation. This is not an emerging nation either. First the article then I will explain what this really is all about. It is not good and it cannot be allowed.

https://mishtalk.com/2016/12/13/war-...thin-10-years/

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Global financial repression has picked up steam. Australian citizens are likely the next victim.
https://mishgea.files.wordpress.com/...ng?w=529&h=320
AU News reports Government Floats $100 Note Removal.

SAY goodbye to the $100 note.
Australia looks set to follow in the footsteps of Venezuela and India by abolishing the country’s highest-denomination banknote in a bid to crack down on the “black economy”.

Speaking to ABC radio on Wednesday, Revenue and Financial Services Minister Kelly O’Dwyer flagged a review of the $100 note and cash payments over certain limits as the government looks to recoup billions in unpaid tax.

“The whole point of this crackdown on the black economy is to make sure we close down any potential loopholes,” she said. Despite the broad use of electronic forms of payment, Ms O’Dwyer warned there are three times as many $100 notes in circulation than $5 notes.
“It does beg the question, ‘Why?’” she said.

There are currently 300 million $100 notes in circulation, and 92 per cent of all currency by value is in $50 and $100 notes.
A report by UBS recommended Australia scrap the $100 note. According to UBS, benefits may include “reduced crime (difficult to monetise), increased tax revenue (fewer cash transactions) and reduced welfare fraud (claiming welfare while earning or hoarding cash)”.
“From the banks’ perspective there would likely be a spike in deposits — if all the $100 notes were deposited into banks (ignoring hoarded $50 notes), household deposits would rise around four per cent,” the report said.

Why?
Financial Services Minister Kelly O’Dwyer notes there are currently 300 million $100 notes in circulation, and 92 per cent of all currency by value is in $50 and $100 notes.

“It does beg the question, ‘Why?’” she asked.
It would behoove O’Dwyer to think. People can have 100 pennies in their pocket (each of which is nearly worthless) or they can hold a dollar.
Similarly, people can hold a stack of ten $10 notes in their wallet or they can hold a $100 note.
Mathematically it makes perfect sense that 92 per cent of all currency by value is in $50 and $100 notes.
What the hell does $1 buy these days? Is someone going to carry a wad of fifty $1 notes to go to a movie and buy popcorn?

No Cash Within 10 Years?
Rest assured this will not stop with $100 notes. There will no cash within ten years.
Related Articles

1. Cash Chaos in India, 86% of Money in Circulation Withdrawn; Cash Still King in Japan
2. India Confiscates Gold, Even Jewelry, in Raids on Hidden Money

Mike “Mish” Shedlock

Comments from Benjaminis: This has nothing to do with crime or money laundering. NOTHING AT ALL !!! It will backfire in a big way because it is having the opposite effect. There has been SO MUCH MONEY printed out of thin air by the entry of a computer since 2008 by most if not ALL of the Central Banks of the world of course led by the Federal Reserve. Then add to that fractional banking where One Million Dollars of deposits is lent out through credit at the rate of 10 to 1. What is happening is there is not enough cash in the banks to pay the depositors.


https://mises.org/library/war-cash-why-now

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Why Now?
Before we get to that, let’s distinguish between physical cash — currency and coins in your possession — and digital cash in the bank. The difference is self-evident: cash in hand cannot be confiscated by a “bail-in” (i.e., officially sanctioned theft) in which the government or bank expropriates a percentage of cash deposited in the bank. Cash in hand cannot be chipped away by negative interest rates or fees.
Cash in the bank cannot be withdrawn in a financial emergency that shutters the banks (i.e., a bank holiday).

When pundits suggest cash is “obsolete,” they mean physical paper money and coins, not cash in a bank. Cash in the bank is perfectly fine with the government and its well-paid yes-men (paging Mr. Rogoff and Mr. Buiter) because this cash can be expropriated by either “bail-ins” or by negative interest rates.

Inflation and Negative Interest Rates
Mr. Buiter, for example, recently opined that the spot of bother in 2008–09 (the Global Financial Meltdown) could have been avoided if banks had only charged a 6 percent negative interest rate on cash: in effect, taking 6 percent of the depositor’s cash to force everyone to spend what cash they might have.
Both cash in hand and cash in the bank are subject to one favored method of expropriation, inflation. Inflation — the single most cherished goal of every central bank — steals purchasing power from physical cash and digital cash alike. Inflation punishes holders of cash and benefits those with debt, as debt becomes cheaper to service.

The beneficial effect of inflation on debt has been in play for decades, so it can’t be the cause of governments’ recent interest in eliminating physical cash.
So now we return to the question: Why are governments suddenly declaring war on physical cash, the oldest officially issued form of money?
Why They Hate Cash in Hand

The first reason: physical cash has the potential to evade both taxes as well as officially sanctioned theft via bail-ins and negative interest rates. In short, physical cash is extremely difficult for governments to steal.

Some of you may find the word theft harsh or even offensive. But we must differentiate between taxes — which are levied to pay for the state’s programs that in principle benefit all citizens — and bail-ins, i.e., the taking of depositors’ cash to bail out banks that became insolvent through the actions of the banks’ management, not the actions of depositors.

Bail-ins are theft, pure and simple. Since the government enforces the taking, it is officially sanctioned theft, but theft nonetheless.
Negative interest rates are another form of officially sanctioned theft. In a world without the financial repression of zero-interest rates (ZIRP — central banks’ most beloved policy), lenders would charge borrowers enough interest to pay depositors for the use of their cash and earn the lender a profit.
If borrowers are paying interest, negative interest rates are theft, pure and simple.

Why are governments suddenly so keen to ban physical cash? The answer appears to be that the banks and government authorities are anticipating bail-ins, steeply negative interest rates and hefty fees on cash, and they want to close any opening regular depositors might have to escape these forms of officially sanctioned theft. The escape mechanism from bail-ins and fees on cash deposits is physical cash, and hence the sudden flurry of calls to eliminate cash as a relic of a bygone age — that is, an age when commoners had some way to safeguard their money from bail-ins and bankers’ control.

Forcing Those With Cash To Spend or Gamble Their Cash
Negative interest rates (and fees on cash, which are equivalently punitive to savers) raise another question: why are governments suddenly obsessed with forcing owners of cash to either spend it or gamble it in the financial-market casinos?

The conventional answer voiced by Mr. Buiter is that recession and credit contraction result from households and enterprises hoarding cash instead of spending it. The solution to recession is thus to force all those stingy cash hoarders to spend their money.
There are three enormous flaws in this thinking.

One is that households and businesses have cash to hoard. The reality is the bottom 90 percent of households have less income now than they did fifteen years ago, which means their spending has declined not from hoarding but from declining income.
https://mises.org/sites/default/file...?itok=-a1xCS6L

While corporate America has basked in the glory of sharply rising profits, small business has not prospered in the same fashion. Indeed, by some measures, small business has been in a six-year recession.
https://mises.org/sites/default/file...?itok=uVklHuqP

The bottom 90 percent has less income and faces higher living expenses, so only the top slice of households has any substantial cash. This top slice may see few safe opportunities to invest their savings, so they choose to keep their savings in cash rather than gamble it in a rigged casino (i.e., the stock market).
The second flaw is that hoarding cash is the only rational, prudent response in an era of financial repression and economic insecurity. What central banks are demanding — that we spend every penny of our earnings rather than save some for investments we control or emergencies — is counter to our best interests.

A War on Cash Is a War on Capital
This leads to the third flaw: capital — which begins its life as savings — is the foundation of capitalism. If you attack savings as a scourge, you are attacking capitalism and upward mobility, for only those who save capital can invest it to build wealth. By attacking cash, the central banks and governments are attacking capital and upward mobility.

Those who already own the majority of productive assets are able to borrow essentially unlimited sums at near-zero interest rates, which they can use to buy more productive assets. Everyone else — the bottom 99.5 percent — is reduced to consumer-serfdom: you are not supposed to accumulate productive capital, you are supposed to spend every penny you earn on interest payments, goods, and services.

This inversion of capitalism dooms an economy to all the ills we are experiencing in abundance: rising income inequality, reduced opportunities for entrepreneurship, rising debt burdens, and a short-term perspective that voids the longer-term planning required to build sustainable productivity and wealth.
Physical Cash: Only $1.36 Trillion


According to the Federal Reserve, total outstanding physical cash amounts to $1.36 trillion.

Given that a substantial amount of this cash is held overseas, physical cash is a tiny part of the domestic economy and the nation’s total assets. For context: the US economy is $17.5 trillion, total financial assets of households and nonprofit organizations total $68 trillion, base money is around $4 trillion, and total money (currency in circulation and demand deposits) is over $10 trillion (source).

Given the relatively modest quantity of physical cash, claims that eliminating it will boost the economy ring hollow.
Following the principle of cui bono — to whose benefit? — let’s ask: What are the benefits of eliminating physical cash to banks and the government?
Benefits To Banks and the Government of Eliminating Physical Cash
The benefits to banks and governments by eliminating cash are self-evident:

1. Every financial transaction can be taxed.
2. Every financial transaction can be charged a fee.
3. Bank runs are eliminated.

In fractional reserve systems such as ours, banks are only required to hold a fraction of their assets in cash. Thus a bank might only have 1 percent of its assets in cash. If customers fear the bank might be insolvent, they crowd the bank and demand their deposits in physical cash. The bank quickly runs out of physical cash and closes its doors, further fueling a panic.

The federal government began insuring deposits after the Great Depression triggered the collapse of hundreds of banks, and that guarantee limited bank runs, as depositors no longer needed to fear a bank closing would mean their money on deposit was lost.

But since people could conceivably sense a disturbance in the Financial Force and decide to turn digital cash into physical cash as a precaution, eliminating physical cash also eliminates the possibility of bank runs, as there will be no form of cash that isn’t controlled by banks.
Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

Morning Thoughts - Daily

DISCIPLINE

Ticket Account Symbol Usd Mr Amount S/B Open Close Stop Stop Move Limit P/L Gross P/L Open Comm Close Comm Roll Net P/L Time
114574411 02706903 US30 1,050.00 100 S 19,913.00 19,912.00 19,110.50 1 10.00 0.00 0.00 -6.00 4.00 12/13/2016 13:08
114425649 02706903 USD/JPY 1,000.00 100 S 115.228 114.926 113.708 30.2 262.78 4.00 4.00 -10.50 244.28 12/9/2016 10:38
114424080 02706903 USD/JPY 1,000.00 100 S 115.120 114.926 114.100 19.4 168.80 4.00 4.00 -10.50 150.30 12/9/2016 10:10
114408604 02706903 USD/JPY 1,000.00 100 S 115.166 114.926 114.078 24 208.83 4.00 4.00 -10.50 190.33 12/9/2016 07:54
114288255 02706903 USD/JPY 1,000.00 100 S 113.945 114.926 113.225 -98.1 -853.59 4.00 4.00 -14.00 -875.59 12/8/2016 08:07
113914969 02706903 USD/JPY 1,000.00 100 S 113.076 114.926 113.018 -185 -1,609.73 4.00 4.00 -31.50 -1,649.23 12/4/2016 18:23
113911851 02706903 USD/JPY 1,000.00 100 S 113.099 114.926 113.041 -182.7 -1,589.72 4.00 4.00 -31.50 -1,629.22 12/4/2016 17:16
Total -391.20 -3,402.63 24.00 24.00 -114.50 -3,565.13

Total:51,478.68


ACCOUNT SUMMARY

Beginning Balance0.00

CommTrading Commission-56.00

RolloverRollover Fee-95.20

PnLProfit/Loss of Trade1,629.88

DeposDeposit50,000.00

WithdWithdrawal0.00

OptionOptions Payout0.00

CommOptions Commission0.00

AdminFeeAdministrative Fee0.00

MngFeeManagement Fee0.00

PerfFeePerformance Fee0.00

VoidDeposit Rollback0.00

ASPCommASP Commission0.00

MargInterestInterest on Usable Margin0.00

SubscriptionFeeSubscription Fee0.00

RRebRollover Rebate0.00



Div_AdjDividend adjastment0.00

Ending Balance51,478.68

Floating P/L-3,736.51

Equity47,742.17

Necessary Margin7,050.00

Usable Margin40,692.17

You now see my posted position of 7 open Forex trades.

I started off my morning thoughts by using the word - DISCIPLINE. That is one of the keys to being a winning Forex Currency Trader.

You can be an expert in technical analysis and understand about supply and demand and even know about the fundamentals as everyone can see by reading all my information sources that I have. However the KEY to my success is DISCIPLINE. We all like to make trades however the whole point of trading Forex is to MAKE MONEY !!!

By trading a $50,000 US Funds Demo account which is what I did for 3 years before I ever made one real trade I was able to learn my trade without worrying about losing money and also by learning about using technical indicators and fundamentals. Once I knew that I was ready I went out and found 6 clients and they deposited with Trade Freedom my first currency house using the Saxo Platform that I use in my first three years of Demo Trading along with also using the platform from FXCM.

I only stayed with Trade Freedom for three months and switched over to Refco a much larger currency house. In all the time that I traded at Trade Freedom managing over $100,000 US for my 6 clients I actually NEVER had one trading loss. That of course was excellent and while I had NO Fear or Greed one thing that I did have for sure was EGO !!!

When I moved my Forex accounts over to Refco actually called Man Financial in Canada , I had over 6 clients then and under LPOA (Limited Power of Attorney) I had close to $200,000 under my management. One of my friends whose account I was managing asked me if I ever expected to lose a Forex Trade and I told him of course. Then I learned and had the DISCIPLINE to make the MOST IMPORTANT DECISION of my early Forex Currency Trading career.

I decided to close a position and I took an actual loss of $100 US. That was when my EGO high as it was at the time decided COMMON SENSE which is not so common needed to take the SMALL LOSS of $100 US.

I am sure many Forex Traders of any experience whether newbie or veteran understand this.

That is when I decided that the next part of my education needed to move over to Risk Management. I have developed a SUPERIOR RISK MANAGEMENT SYSTEM as my results show.

Now we turn to today. I already have profits in a number of my open positions and I must decide before 2 PM if I leave them open or close some of them. With that as my morning thought I wish everyone a good trading day and again ask for 3 more Forex Traders that would like to become WINNERS trading if you have the DISCIPLINE to trade properly controlling your FEAR , GREED and as I just explained your EGO.







Notes:
"THIS IS A DEMO ACCOUNT WHICH IS TRADED WITH VIRTUAL FUNDS. NO REAL MONEY IS USED IN TRADING THIS ACCOUNT. Demo accounts are used primarily for education purposes, testing of strategies, and familiarizing traders with market movement and the FX Trading Station. There are inherent risks associated with online trading that may arise due to downtime, currency fluctuation and other risks associated with currency speculation. Only risk capital should be used when trading a real account."

5 Minute Chart of USD/JPY

http://finviz.com/forex_charts.ashx?t=USDJPY&tf=m5

I am expecting to see the Dow open down and if so then USD/JPY should head towards 114.50 and I will probably close one or two of my positions. I will wait until Option Expiry at 10 AM or maybe wait until Europe Close at 11:30 AM as there might be movement there in closing of positions before FED announcement at 2 PM and maybe more important the Press Conference at 2:30 PM.

http://comexwehaveaproblem.blogspot....-whack-it.html

Snippet:
2008
The Deutsche Bank trader was informed by a HSBC trader: “i kick some out and take it back after the fix,” describing a tactic to sell gold high before the fix and buy it back after the fix at a lower price. Plaintiffs say the traders knew it would nearly always be cheaper after the fix. The Deutsche Bank trader replied ironically: “ yeah no one else is thinking that : - ǀ.”

2011
The Deutsche Bank trader this time to another HSBC trader: “everyone shrt into the fix i swear it’s the only time ppl trade,” to which the opposite party at HSBC replied “hahahhahahahahahahahha shocking absolutely shocking.”

2012
The Deutsche Bank trader said to his opposite number at Barclays, “im glad u are now interbank.” Barclays trader: "Why?" Deutsche Bank trader: “it’s a good alliance.”

That day the Deutsche Bank trader informed another trader at Barclays, “im a tiny buyer at the mom.” Barclays trader: “think im buyer too,” Deutsche Bank trader: “means we fix lower.”

An example of further statistical analysis from plaintiff's Third Amended Complaint, TAC is a chart showing UBS spot gold price quotes over the period 2004-2012. The complaint says the bank "used its transactions and substantial presence in the gold market to drive prices downward, thus playing a key role in the conspiracy."

https://3.bp.blogspot.com/-tBbyHYK6E...%2Baverage.png
How the Fix Party Played out for UBS. Image courtesy of Commodity Exchange, Inc., Gold Futures and Options Trading Litigation, Dkt No. 14-MD-2548 (VEC)

Deutsche Bank's proposed settlement of the London Gold Fix class action amounting to $60 million including the provision of cooperation materials was given the Court's preliminary approval on December 9th subject to a Fairness Hearing. This follows the non-UBS defendant banks of the London Gold Fix; Bank of Nova Scotia, Barclays, HSBC, and Société Générale being ordered in October to stand trial in the lawsuit along with London Gold Market Fixing Limited, LGMF a private company owned by the five banks. Deutsche Bank's settlement offer of $38 million including cooperation materials in a similar antitrust lawsuit involving the banks of the London Silver Fix was given the courts preliminary approval earlier.

Opinion
The new chat evidence in silver and gold described in this and other articles provides the missing narrative to the volumes of statistical analysis incorporated in the original and amended complaints closely scrutinized by court and counsel at the April hearings. It lifts the curtain for once and all on the dirty role of bank suppression in gold and silver markets, and its not just the London Fix. The Court has already acknowledged plaintiffs evidence of symbiosis between the London Fixes and the pricing of other silver and gold products. The Court's preliminary approval of the Deutsche Bank settlements may provide for class claims in bullion, coins, options, futures, spot and other markets including exchange traded funds, ETF's within the US.

The collective evidence also neatly deals with the courts October supposition that further amending the complaint would be "futile."

Given the damming nature of material against UBS particularly, it remains all the more mystifying why the 2014 Swiss Supervisory Market Authority FINMA report into foreign exchange and precious metals trading at UBS said so little comparatively about UBS' precious metals trading misconduct, and specifically nothing about gold trading misconduct. As discussed in an earlier article, the word “gold” is conspicuously absent from the 2014 report.

Were it not for the early moral cooperation of Deutsche Bank in providing the cooperation materials, and presumably giving them a settlement discount, UBS directors might be sleeping much easier this week. If the remaining non-UBS defendants agree to settle, which is an increasing likelihood, there will be no need for the court discovery scheduled for 2017 and civil trial beyond. In the meantime we wait to see how long UBS hangs in there.

The appearance of a precious metals producer among the class of plaintiffs will also see shareholders and directors reaching for the calculator. SCM is but one of thousands of producers who have sold precious metal in the US throughout the period and like any other plaintiff if the case is successful could be entitled to treble damages with interest if granted standing.

Plaintiffs analysis indicates that manipulation of the London Gold Fix led to average losses of up to four basis points or four hundredths of a percentage point in the gold price on the days affected. Therefore, a small gold producer similiar to SCM with say $500 million of gold sales over 8 years could tally treble claims of $600,000 plus interest.

Supposing as statute 28 U.S.C. 1961 directs, the present Treasury constant maturities nominal- 1-year interest rate currently at 0.83% is applied to this figure over an average sale date midway through the class period of say December 2008, and an optimistic successful conclusion of the lawsuit comes a year from now. Interest then of $54,793.64 could bring a theoretical claim of $654,793.64 for just one class member like this. All of a sudden Deutsche Bank's $60 million doesn't look so much.

https://www.bloomberg.com/news/artic...on-gold-market

Snippet:
Some of the biggest names in finance are fighting for control of the London gold market -- a $5 trillion, three-century-old trading hub that is being forced to adapt to a digital age.

As the London Bullion Market Association revamps over-the-counter trades that are the market’s major pricing benchmark, new ways of buying and selling precious metals are set to start next year from CME Group Inc., Intercontinental Exchange Inc. and the London Metal Exchange. Some big banks have stakes in the outcome, including Goldman Sachs Group Inc., HSBC Holdings Plc and JPMorgan Chase and Co.

“There are four weddings, and we have to dance at all of them, because we don’t know which marriage will last,” said Adrien Biondi, the global head of precious metals at Commerzbank AG in Luxembourg. “Only one will win.”
https://assets.bwbx.io/images/users/...Y/v2/-1x-1.png
Almost half the world’s known gold trading occurs in London. OTC transactions are sealed by virtual handshakes, leaving default risk with buyers and sellers rather than relying on clearinghouses, which use collateral to manage and offset risk. But since the financial crisis, all markets have been reevaluating how they do business and manage risk as regulators step up scrutiny. That’s particularly true for major price-setting exchanges, after it was discovered in 2012 that banks were manipulating a key benchmark for global interest rates.

A push for fewer risks and more disclosure has forced the LBMA to seek changes that would make it more transparent and secure for customers. The association, which counts HSBC and JPMorgan among its members, will introduce trade reporting for its members and a new trading platform in the first half of next year. That’s also when competitors plan to unveil new precious-metals derivatives built around the clearinghouse models.

PIVOT TIME !!!

http://news.goldseek.com/RickAckerman/1481728005.php

Snippet:
Published: Wednesday, 14 December 2016

http://www.rickackerman.com/wp-conte...on-Tuesday.jpg
The March contract on Tuesday exceeded a long-term target at 2270.00 by three points, a seemingly modest feat that could have very bullish implications going forward. Although the small overshoot was not sufficient for us to regard the 2270.00 Hidden Pivot resistance as conquered, the slight breakout should be regarded as a shot across the bow of bears who might be looking to get short at these levels or to hang onto existing short positions. They could breathe a little easier if the day’s record high at 2273.00 endures and the futures fall beneath 2259.50 on Wednesday. But if buyers instead push this vehicle still higher and close it above 2270.00, that would be warning shorts to dive for cover.

There is a corresponding target at 2299.00 for the December contract, in which we hold a single-contract tracking position that is showing a theoretical gain of about $8000 after adjusting for partial profits taken on the way up. But even if the December futures stall and reverse from 2299.00, the March contract would at that time be trading a decisive 25 points above its 2270.00 target. This would have quite bullish implications into year’s end, at least. Traders should use the pattern shown to exploit any further strength Tuesday night or Wednesday. It shows a minor rally target at 2283.75 that can be exploited with a ‘mechanical’ entry at either the red or green line. If you’re unsure about how this tactic works, stay tuned to the chat room, since quite a few subscribers have been actively trading the E-Minis. As always, an easy push past clear Hidden Pivot resistance should be taken as a sign that the trend will continue at least to the next — in this case to at least 2309.50 (30-minute chart, A= 2075.25 on 11/9; B= 2208.25 on 11/30; and C= 2174.25 on 12/4). That number too has the potential to mark an important top, but bears shouldn’t count on it too heavily, given that the bull market has been chugging along since 2009. If you do plan on shorting there, I’d suggest cushioning the stop-loss with profits made by being long on the way to it.






Previous Articles by Rick Ackerman

BIG PROBLEMS IN EUROZONE

http://www.zerohedge.com/news/2016-1...ops+to+zero%29

Snippet:
When the ECB announced last week that it would expand the universe of eligible collateral for use by Eurozone institutions to include up to €50 billion in cash cash, it - and the market - hoped that the severe collateral shortage manifesting itself in an unprecedented squeeze in the repo market would be alleviated. As a reminder, last Thursday the ECB Governing Council decided that Eurosystem central banks will have the possibility to also accept cash as collateral in their PSPP securities lending (SL) facilities without having to reinvest it in a cash-neutral manner.
The ECB added that "the introduction of cash as collateral in the context of PSPP securities lending is intended to enhance the effectiveness of the SL framework, thereby supporting the smooth implementation of the PSPP as well as the euro area repo market liquidity and functioning. "

Following the news, 2Year Bunds quickly sold off last Thursday, with the yield rising by 6 bps to start, as suddenly it makes more sense to park cash with the ECB than to be penalized by -0.7% to hold German short-term debt.

However, it was not meant to last, and less than a week later, even with overall Eurogroup liquidity hitting new all time highs earlier this week, German 2Y yields fell as much as 2.9bps to all time low of -0.773% as repo pressures continue to support the front-end, Bloomberg reported citing two traders.
http://www.zerohedge.com/sites/defau...4_2YBund_0.jpg
The traders added that the €50 billion in securities lending put forward by the ECB are seen as not enough, with structural issues remaining, exacerbated by year-end window dressing.

Additionally, a second trader added that some dealers prefer not to trade with the Bundesbank, due to higher failure fees.
Curiously, while Schatz futures rise to all time high of 112.275, downside continues to be bought in options, says a third trader based in London with a buyer again emerging in Feb. Schatz 112.00/111.90 put spread, 17k trades at 1 tick.

Should the collateral squeeze continue, the ECB may be forced to unveil further intervention mechanisms, as well as additional jawboning by Mario Draghi, potentially before the next scheduled ECB council meeting, especially if the year-end repo shortage drives 2Y yields meaningfully lower.

https://mishtalk.com/2016/12/14/fed-...at/#more-42809

Snippet:

CME Fedwatch says the Fed Fund Futures show a 95% chance of a hike today. I suggest it’s over 99%. Then what?
Looking ahead here are some charts for December 2016, March 2017, June 2017, and September 2017.
December 2016 Rate Hike Odds
https://mishgea.files.wordpress.com/...ng?w=529&h=258
March 2017 Rate Hike Odds
https://mishgea.files.wordpress.com/...ng?w=529&h=259
June 2017 Rate Hike Odds
https://mishgea.files.wordpress.com/...ng?w=529&h=260
September 2017 Rate Hike Odds
https://mishgea.files.wordpress.com/...ng?w=529&h=261
After the meeting we will take a clook to see how the odds changed.
Mike “Mish” Shedlock

http://www.marketwatch.com/story/gun...teid=rss&rss=1

Snippet:
The rally in yields has come on increased expectations that Trump’s pledge to go on a fiscal- spending spree will boost economic growth, the U.S. deficit and inflation. Those factors are seen as pushing the Federal Reserve to raise interest rates more aggressively than previously believed and, in turn, push up yields on U.S. Treasurys.

Read: Look for the Fed to hike interest rates this week and to ignore the elephant in the room
The Fed will release its latest policy decision on Wednesday at 2 p.m. Eastern Time, and is widely forecast to raise rates by 25 basis points. Fed Chairwoman Janet Yellen’s press conference at 2:30 p.m. will be closely watched for signs of the path for interest rates in coming years.
Mohamed El-Erian, chief economic adviser at Allianz ALV, -0.92% and the current chair of President Barack Obama’s Global Development Council, told CNBC on Wednesday he expects the Fed to signal at least two rate increases next year. Among other economists, Goldman Sachs GS, +0.26% forecasts three hikes next year, while Morgan Stanley MS, +0.86% predicts two increases in 2017.

The recent jump in bond yields have coincided with a rally in stock markets that has propelled the Dow Jones Industrial Average DJIA, -0.01% to an all-time high and close to the 20,000 level. This chart explains why stock investors are largely are ignoring the selloff in the bond market.

https://mishtalk.com/2016/12/14/saxo...le/#more-42819

Snippet:
Steen Jakobsen, Saxo Bank chief investment officer, changed his macro allocation model today. Here is the email from Steen describing his model changes.

Weaker US Dollar Ahead – Big Value in Fixed Income
I have been very bullish US dollar and short Fixed Income. I am now changing my view for the following reasons:
The main driver of US Dollar has been “cost of capital” driven mainly by “shortage” of funding dollar – this is best mirrored in basis swaps which is the price for non-US entities to access US dollar funding.

My New Allocation

1. Fixed Income: Overweight (50%) from Under-weight (0%) vs. Neutral being 25%
2. Commodity: Neutral (25%) vs. Neutral
3. Equity: Underweight (10%) vs. Underweight (10%)
4. Cash: Underweight (15%) vs. Overweight (65%)

Currency Overlay

1. From NET long US Dollar to SHORT US Dollar
2. Net longs vs. USD: AUD, GBP & Gold

Of course this is the aggressive Alpha version vs. the Beta allocation model from the Quant desk.

Macro Backdrop
Euphoria in equities: Last 24 hours I have been told: That WHATEVER Fed communicate tonight, it will be stock market positive, that FB, GOOG and AMZN are too cheap and The Economist front-page talks about US Dollar strength.

When pricing action goes “exponential” it indicates “blow out phase”… and bubble.
Our economic indicators for US is ALL dropping.
Correlation is upside down in most assets.
I have 100% conviction on the above, but I also FULLY understand that momentum can carry on for much longer than I need/want/can afford, but Fixed Income is cheapest on 26 weeks basis as long as we have data – Trump joy has reached naïve levels – and a strong US Dollar is the LAST thing the worlds needs!
Safe travels into XMAS,
Steen Jakobsen Chief Investment Officer

http://us8.campaign-archive2.com/?u=...d&e=d2196b0e48

Snippet:
Words Matter

December 14, 2016
Robert Eisenbeis, Ph.D
Vice Chairman and Chief Monetary Economist



The FOMC has both experimented and struggled with its communications policy since it first began announcing its decisions in 1994. It has established numerous subcommittees to review its communications and make recommended changes, beginning with the subcommittee chaired by then-Vice-Chair Roger Ferguson. During and in the aftermath of the financial crisis, communications became a central tool of policy making.


The Committee has sought to use both its statements and its press conferences to provide forward guidance to markets as a way to affect behavior and market expectations. The process has met with mixed success, in part because the message keeps changing. Witness the evolution of the FOMC’s statements in 2009. In January the Committee began to provide some forward guidance when it indicated that it expected to keep rates low “for some time.” In March the committee tweaked the wording to read “extended period.” That wording persisted until the Committee’s August 2011 statement, when it modified the language to provide a more specific time period, indicating that it expected rates to remain low “at least through mid-2013.” This wording didn’t remain in place for long: It was changed in January 2012 to read “at least through late 2014,” and was extended to “through mid-2015” in August 2012.

In its December 2012 statement the Committee abandoned its date-specific guidance and substituted specific unemployment and inflation objectives in its place. The Committee stated that it intended to keep rates low “as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.” However, unemployment promptly dropped below 6.5% in April 2014, though inflation remained well below the 2% objective for the PCE. So the Committee promptly dropped the unemployment objective in its April 2014 statement and tied the duration of its low-rate policy to the ending of its asset purchase program and inflation objective, stating that it would keep rates low “for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.” The Committee finally gave up on providing meaningful forward guidance in January 2015, resorting to a statement that could be distilled into two words, indicating that policy would be “data dependent.”

The Committee’s lack of success in crafting a durable forward-guidance communications policy that it was both willing and able to stand by and deliver on credibly gives credence to the argument that former Federal Reserve Bank of Philadelphia President Charles Plosser has made on numerous occasions. That is, the FOMC has repeatedly opted to retain its discretion to act rather than committing to a future path and credibly delivering on that commitment. The theoretical literature concerning the efficacy of forward guidance has established that it requires both commitment and delivery, but in reality policy makers are understandably reluctant to stay the course when underlying facts change and forecasts are not realized. This is a case where, when theory breaks down in the face of reality, something is wrong with the theory.

Not only has the FOMC had a problem with implementation of forward guidance, it has also compounded its communications problems by using code words that lack both well-understood definitions and consistency. Jeffrey Sparshott has addressed two critically important words, modest and moderate, typically used by the FOMC in one of its opening sentences to describe the performance of the economy1. He looked at the period from January 2011 to July 2013 and concluded that moderate suggested that the economy was expanding at about a 2% pace, while modest was meant to suggest a pace somewhat below that. Expanding the time period from 2010 through the FOMC’s last statement in November 2016 can help shed some light on how the use of the term moderateconveys almost no useful information about how the FOMC actually sees the economy progressing. The FOMC has used the word moderate to describe the pace of economic activity about 26 times from 2010 through the present. Using the real-time estimate of real GDP growth available to the FOMC at each of its meetings, the mean GDP annualized growth for the period was 2.03%, but the standard deviation was 1.12 percentage points, suggesting that there was no consistency in how the FOMC viewed the expansion. The time pattern of the use of the word is better viewed in the context of the time pattern of FOMC decisions, shown in the figure below. It plots real GDP growth at each meeting, with the times the word moderate was used to describe growth highlighted in red.
https://gallery.mailchimp.com/d6f020...fddc84d327.png

The Committee used the word for the first time in April 2011, when growth was 2.8%, and again in June 2011, when growth was 1.8% for Q1 2011. Interestingly, growth for Q2 2011, which again was 1.8%, was described in the Committee’s June statement as considerably slower than the Committee expected. In this message, the Committee shifted from describing the expansion to describing how it compared to what the Committee had expected. Oddly, in September 2011, when growth was 1.3%, the Committee stated that the pace had slowed, but when it looked at the identical number, 1.3%, for Q3 2011, the Committee stated that growth had strengthened somewhat. Even more contradictory was the Committee’s characterization of growth in its 2013 March and May statements. Growth of 0.1% for both Q4 2012 and Q1 2013 was described as moderate, followed by moderate characterizations of growth that was well in excess of 2.5% at each of its next four meetings. Following its December 2013 statement in which it characterized the 3.6% increase in real GDP as moderate, the Committee described the 4.1% increase in GDP it had before it in Jan 2014 as having “picked up.” Here the Committee switched from describing GDP growth to comparing it with the previous quarter (ie. the second derivative).

What we can observe is both lack of precision with how it describes the pace of economic activity in its statements and sometimes comparing growth to previous periods or to Committee expectations. The FOMC would help its readers if it sought to provide consistent and rather tight relationships between the statistics it describes and the words it uses. We can’t shed much light on what the wordmodest might mean, since it has been used only three times –in July 2013 when growth was 2.4% and in September and November of 2016 when GDP growth was 1.1% for Q2 2016 and 2.9% for Q3 2016.

The FOMC’s December statement will be carefully parsed, especially since it will likely announce a rate increase and feature words describing the future path of policy. Until the FOMC cleans up its rhetoric, however, its linguistic efforts are not likely to prove helpful.
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1. See Jeffrey Sparshott, “Fedspeak: What’s the Difference Between ‘Modest’ and ‘Moderate’?” Real Time Economics, Aug 1, 2013.

Ladies and Gentleman

Usually within 24 hours of a Rate Hike the markets reverse within 24 hours. I just put on 2 more positions of US30 Dow and I will copy and paste my positions shortly. I cannot see the FED raising 3 times in 2017 just like last year they said 4 and did 1. Be back after the Press Conference.

Ticket Account Symbol Usd Mr Amount S/B Open Close Stop Stop Move Limit P/L Gross P/L Open Comm Close Comm Roll Net P/L Time
114651089 02706903 US30 1,050.00 100 S 19,912.00 19,940.00 -28 -280.00 0.00 0.00 0.00 -280.00 12/14/2016 14:06
114651009 02706903 US30 1,050.00 100 S 19,930.00 19,940.00 -10 -100.00 0.00 0.00 0.00 -100.00 12/14/2016 14:06
114574411 02706903 US30 1,050.00 100 S 19,913.00 19,940.00 19,110.50 -27 -270.00 0.00 0.00 -6.00 -276.00 12/13/2016 13:08
114425649 02706903 USD/JPY 1,000.00 100 S 115.228 116.076 113.708 -84.8 -730.56 4.00 4.00 -10.50 -749.06 12/9/2016 10:38
114424080 02706903 USD/JPY 1,000.00 100 S 115.120 116.076 114.100 -95.6 -823.60 4.00 4.00 -10.50 -842.10 12/9/2016 10:10
114408604 02706903 USD/JPY 1,000.00 100 S 115.166 116.076 114.078 -91 -783.97 4.00 4.00 -10.50 -802.47 12/9/2016 07:54
114288255 02706903 USD/JPY 1,000.00 100 S 113.945 116.076 113.225 -213.1 -1,835.87 4.00 4.00 -14.00 -1,857.87 12/8/2016 08:07
113914969 02706903 USD/JPY 1,000.00 100 S 113.076 116.076 113.018 -300 -2,584.51 4.00 4.00 -31.50 -2,624.01 12/4/2016 18:23
113911851 02706903 USD/JPY 1,000.00 100 S 113.099 116.076 113.041 -297.7 -2,564.70 4.00 4.00 -31.50 -2,604.20 12/4/2016 17:16
Total -1,147.20 -9,973.21 24.00 24.00 -114.50 -10,135.71

Please wait until after the Press Conference at 2:30 PM as if the questions are hardball then there will be fireworks in the markets.

Benjaminis will ask the first question since I managed to get into the press conference.

Janet Yellen Good Afternoon.

I am with Forex Factory and my question is this. Last year in December when you raised 0.25% you suggested that during 2016 there would be 4 rate hikes. Today we see only one and now the FED is saying 3 for 2017. Why should you be right this time when you were not right last time ? What happens if the economy goes into recession ? Will there be rate cuts ? My last question if I may what happens to the budget if Interest Rates are 1.25% and what happens to the Fixed Income Bond market ? What will the HIGH US DOLLAR do to the rest of the Global Economy ? Thanks for taking my questions and I look forward to your reply. Thank You !!!

114574411US3010012/13/16 1:08 PM19,913.00 Mktd102717113001
12/14/16 2:28 PM 19,849.00640.000.000.00-6.000.00634.00Cd102717113001

114651009US3010012/14/16 2:06 PM19,930.00 Mktd102717113001
12/14/16 2:28 PM 19,849.00810.000.000.000.000.00810.00Cd102717113001

114651089US3010012/14/16 2:06 PM19,912.00 Mktd102717113001
12/14/16 2:28 PM 19,842.50695.000.000.000.000.00695.00Cd102717113001

Total:3,774.88-32.000.0013.300.003,756.18
Posted at statement period of time:3,774.88-32.000.0013.300.00

I just closed my 3 positions of US 30 for a nice profit. I am listening to Janet Yellen now.

My three positions made profits as follows: $634.00 Net for my one trade of yesterday.

$810 US and $695 US in just 22 minutes going in at 2:06 PM and getting out before the BS from Janet for Net Profit of $2139.00 US Dollars risking the amount of margin for each contract. It is EASY when you know what to do. I am still looking to teach 5 more people.

This has been a very interesting day. What most people do not realize is that a HIGH US Dollar is destructive for everyone because it causes major problems in the Global Economy and it cannot stay up there too long. I am now holding only short positions in USD/JPY and I just added 3 positions waiting to see the reaction in Asia and Europe. This is a fascinating business when you understand all the issues involved. Janet Yellen has even less credibility now. Donald J Trump President Elect will replace her.

Stay Tuned !!!