The last time the WSJ’ Jon Hilsenrath was relevant was two weeks ago (in a flashback to those days before QEternity when infinite QE was not assured and Jon’s input was actually relevant), when following an article of his, and due to his “proximity” with the New York Fed, many assumed that the Tapering suggested by Hilsenrath was being telegraphed by Bernanke to the market. Turns out it was nothing but yet another baffle with bullshit headfake by a central planning regime that is now merely engaged in observing market responses to indirect stimuli: if reduce monthly flow by $20 billion then X (-1%); if cut QE off entirely then Y (-50%?), and so on. Moments ago the same Hilsenrath just released another piece, which effectively refuted everything his previous piece suggested, and in fact made his position as Fed mouthpiece absolutely irrelevant, courtesy of the following disclosure: “this time, when the Fed shuts off bond buying, it won’t be… predictable.” He goes so far as to say that the term “tapering” is no longer even applicable! Funny that, considering on May 11, none other than Hilsenrath said: “Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy.”
by Julian D. W. Phillips, Gold/Silver Forecaster Gold Seek
China has signaled it is going to propose plans this year to allow freer flows of the Yuan both in and out of the nation as part of measures to loosen control over the Yuan and interest rates. It was expected that full and free convertibility after 2022, but it’s clear that the program is moving at an accelerated pace. How far this next phase of convertibility will go has to be seen at the end of this year.
It’s understandable that the process will be gingerly handled so as to dovetail into the currency world without causing crises there. We have to always remember that China will do what suits China and not the outside world. But the inescapable conclusion we have to reach is that the Yuan is set to replace the U.S. Dollar to a greater or lesser extent as it arrives on the world stage. This will inevitably lead to more global uncertainty and instability as dollar hegemony is cracked and more currency volatility batters the currency world. Market reactions could well discount the future and cause premature reactions that, we believe, will benefit gold.
by Chuck Butler, President, Everbank World Markets Casey Research
And, Now, Today’s Pfennig For Your Thoughts!
Looking for direction from Chairman Bernanke.
Good day. We finally got a break from all of the storms last night, with most of the major storms passing just south of the St. Louis area. The break was certainly appreciated, as my two dogs have kept me up most of the last two nights. I have a yellow lab and a smaller lahtese who work each other up whenever a storm rolls through. My wife actually went to the vet to get some ‘doggie downers’ yesterday as nobody in our house was able to get any sleep with our two dogs all hyped up by the storms.
There are two kinds of people in the world: those who respect coercive authority and consider it legitimate, and those who do not. The former group is likewise split into two factions: a relatively small group that, for whatever reason, essentially worships power, and a much larger one whose members merely tolerate authoritarianism, either as a matter of expedience or habit. In the wake of the recent bombing at the Boston Marathon and subsequent military-style manhunt, it seems clear that the great majority of Americans may be categorized as either power-worshiping or power-tolerant.
Federal Reserve Chairman Ben S. Bernanke said the U.S. economy remains hampered by high unemployment and government spending cuts, and raising interest rates or reducing asset purchases too soon would endanger the recovery.
“A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further,” Bernanke said today in testimony to the Joint Economic Committee of Congress in Washington. Monetary policy is providing “significant benefits,” he said.
Bernanke is leading the most aggressive economic stimulus in the Fed’s 100-year history in an effort to spur growth and reduce an unemployment rate that stands at 7.5 percent almost four years into a recovery from the longest and deepest recession since the Great Depression.
Derivatives Reform on the Ropes … New rules to regulate derivatives, adopted last week by the Commodity Futures Trading Commission, are a victory for Wall Street and a setback for financial reform. They may also signal worse things to come … The regulations, required under the Dodd-Frank reform law, are intended to impose transparency and competition on the notoriously opaque multitrillion-dollar market for derivatives, which is dominated by five banks: JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley. – New York Times
Dominant Social Theme: We have this billion trillion market under control. Don’t worry.
Free-Market Analysis: Derivatives reform? We hardly think so …
First of all, nobody knows how big the derivatives market is and no one knows how many dollars are at risk. Those involved in making the regulations are also the largest players in the market. Whatever “reform” is being worked out will benefit those who are part of the industry.
Just a quick post as The Bernank is due before Congress at 10:00 a.m. EDT.
Five things…in no particular order…
First, the Yen is rolling over again. In case you missed it, here’s a reprint of a chart I posted as a comment back on Sunday. I went searching for something historical. One, to put the decline into context and, two, to look for a potential bottom level. Well, I think I found a bottom and it looks to still be a ways away. Maybe 85/115?
Employers are increasingly recognizing they may be able to avoid certain penalties under the federal health law by offering very limited plans that can lack key benefits such as hospital coverage.
Benefits advisers and insurance brokers—bucking a commonly held expectation that the law would broadly enrich benefits—are pitching these low-benefit plans around the country. They cover minimal requirements such as preventive services, but often little more. Some of the plans wouldn’t cover surgery, X-rays or prenatal care at all. Others will be paired with limited packages to cover additional services, for instance, $100 a day for a hospital visit.
After an exciting day on Monday, trading in the Far East was very quiet…and the attempt to break through the $1,400 spot mark around 1:30 p.m. Hong Kong time was the start of a long, slow sell-off that ended at the London p.m. gold fix. The low tick at that point was, according to Kitco…$1,359.00 spot.
The subsequent rally lasted until noon in New York…and that was it for the day.
Gold closed at $1,376.00 spot…down $24.10 from Monday. Net volume was very heavy…around 195,000 contracts.
Yes, yes, everyone knows hedge funds aren’t benchmarked to the S&P – after all they “hedge” for the broader market downside.
Here is the problem: having underperformed the S&P for five years in a row, many LPs are starting to get tired of not only underperforming stocks but paying out 2 and 20 on all the lost upside (and not only due to such leftfield surprises as RICO Stevie).
The bigger problem is that by the time the crash finally comes, there will be no hedges left as the Federal Reserve will have made sure all shorts get crushed as confirmed by the relentless outperformance of the most shorted stocks relative to the market (and why we continue to suggest quarter after quarter that going long the most shorted stocks is the most lucrative “alpha” strategy) as “hedge” funds abandon all hedging in droves and become “long-onlies”, a problem further compounded by the fact that when the real crash does come not one hedge fund will be positioned properly and able to generate any alpha.
With continued uncertainty in the gold and silver markets, today a 56-year market veteran told King World News that silver will advance 400% from current levels and gold will soar $1,500 in less than a year. He also added predictions regarding longer-term price objectives.
Here is what 56-year market veteran Ron Rosen had to say: “The HUI and gold have have had three major buying opportunities since the bull market started roughly 12 years ago. Each one has led to huge profits and we are now at the fourth bottom which will produce the greatest amount of profits since the bull market began.
With the Yen collapsing vs. all other currencies, inquiring minds may be wondering how prime minister Shinzo Abe’s inflation policy is working out in practice. Let’s start with a look at the Yen.
In the last year, the Yen has fallen from 124.79 to 97.56. That is a decline of 21.82%. Recall that Abe’s policy is an attempt to raise inflation and spur exports.
Yesterday, after I updated my economic and employment composites and discussed that they were pointing to weakening economic trends, a two mile wide tornado ripped through Oklahoma causing a massive amount of destruction. The video below is a 10x time-lapse video of what is potentially one of the worst tornadoes in modern history.
[...] What does this tornado have to do with the economic analysis from yesterday? That is a very interesting question.
Today’s AM fix was USD 1,385.25, EUR 1,071.43 and GBP 917.75 per ounce. Yesterday’s AM fix was USD 1,378.75, EUR 1,070.21 and GBP 908.39 per ounce.
Gold fell $6.50 or 0.47% yesterday to $1,377.80/oz and silver finished down 0.56%.
The fundamentals of the platinum and palladium markets are beginning to receive market attention and not before time. The positive supply demand dynamics are leading to increased investment demand as seen in the ETF data and Chinese demand rising again due to both industrial and jewellery demand.
“Exit strategy” is the current buzz phrase among market watchers, with the dollar rallying in recent days and weeks on expectations that all is well with the US economy again, and that the Fed can now start thinking about ways of selling assets and “exiting” from its current commitment to perpetual quantitative easing.
Given this growing narrative and the fact that US stocks continue to race higher, gold and silver remain under pressure – with a “sell the rallies” mentality continuing to predominate trading in these metals. This could change though, depending on what Fed chairman Bernanke says in congressional testimony later today (if he sounds more dovish on monetary policy and pessimistic about the economy than expected, this should support the metals; in the opposite case, the metals could go lower).
There has been an angry uproar recently because Apple has hardly paid any extortion fees in the last four years on its billions in profits. Why this warrants an angry uproar and not a giant cheer for them for not supporting criminal governments is beyond us. But the slave-on-slave action has been thick on this one.
One particular comment on a mainstream site caught my attention, “If our budget geniuses in Congress would hire enough IRS agents, this stuff would stop. But our beanies are cutting IRS budgets. Mitt’s servants along with Bill Gates’s are doing their job.”
A tax slave actually insisting on more IRS agents! To those of us who have not bought into this collectivist/statist tax farm nation-state concept it’s like watching the odd antics of people from another planet.
Professor William Black is an expert in white collar crime. When it comes to the IRS scandal, Dr. Black says, “This is everybody’s fear. This is a real fear and not made up. You can produce incredible abuses of democracy if you use the IRS as a weapon.” Dr. Black contends, “It was precisely First Amendment activities that the IRS targeted under the Obama Administration. At best, they were completely asleep at the wheel.” Dr. Black isn’t sure higher-ups are going to jail but says, “The clear unbelievable thing is they gave an absolute gift, Christmas came early, for not only the Republicans, but for all Tea Party groups.” Black goes on to say, “This administration, very early on, became an enemy of disclosure. It hates whistleblowers with a passion.” Join Greg Hunter as he goes One-on-One with Professor William Black from the University of Missouri Kansas City.
I have long found inspiration and insight in Rushkoff’s work, especially his keen understanding of the pathologies of consumerism. In my 2009 book Survival+, I wrote:
Rushkoff’s reply to an interview question on the consequences of ubiquitous marketing reveals how media/marketing has created an unquestioned politics of experience in which one’s identity and sense of self is constructed almost entirely by what one buys:
Today was supposed to be a fun one for liberals on the Investigations subcommittee for the U.S. Senate Homeland Security and Government Affairs Committee. They were going to haul in Apple’s CEO, CFO, and head of Tax Operations to browbeat them over their lack of — what, patriotism? Dumbness? — for having avoided tax liability last year.
This was supposed to provide a little diversion from a week of wall-to-wall Obama administration scandals. Instead, Sen. Rand Paul rained on everyone’s parade, providing an exemplary rebuttal of the brain-dead populism that politicians so often engage in when it comes to corporate America.
“Frankly, I’m offended by the tone and tenor of this hearing,” Paul began.
As the global equity and bond markets grind ever higher, abundant signs exist that we are once again living through an asset bubble – or rather a whole series of bubbles in a variety of markets. This makes this period quite interesting, but also quite dangerous.
With equity and bond markets at or near all-time record highs, with all financial assets consistently shrugging off bad – or worse – news as the riskiest of assets continue to find consistent upward bids, we find ourselves in familiar and bubbly territory.
I can summarize my thoughts in one sentence: How could this be happening again so soon?
In times past, it took one or more generations between bubbles for people to financially recover and forget the painful lessons before they would consider doing it all again. Yet here we are, working our way through our third set of bubbles in less than two decades, which must be some sort of world record.
Surging nominal imports and a miss for exports just about sums up perfectly just how the reality of Abenomics is crushing the real economy as the market goes from strength to strength on the hope that recovery is just around the corner. For the 28th month in a row Japan trade deficit has dropped YoY and its 12-month average is now at its worst ever. Energy costs are driving up imports (and adjusted for the devaluation in the JPY, the data is simply horrendous. Of course, there are green shoots – CPI is not deflating as fast as it was… and ‘some’ inflation expectations are rising (though as we noted here that is simply due to the tax expectations). Contrary to expectations held by some in the bond market, the BOJ did not comment on the sharp fluctuation in JGB yields since April as a result of monetary relaxation – on the basis, we assume, that if they don’t mention it, it never happened. The result post a nothing-burger of ‘more uncertainty’ from the BoJ, the Nikkei keeps screaming higher, JPY rallied then fell back, and JGBs are sliding higher in yield.
Euro – Quo Vadis? How much more punishment will Europeans take to defend the misconceived Euro currency? … The Eurozone is in crisis, and only bold reforms can tackle the root causes. In the following article, Wolfgang Kasper explains why we should be tuning the clock back to before the Maasstricht Treaty, and proposes that an understanding of institutional economics is crucial in order to comprehend the current politico- economic predicament. – Elgar Blog
Dominant Social Theme: Europe is doing fine and Brussels wouldn’t have it any other way.
Free-Market Analysis: Another economist who was an early commentator on the euro-treaty has abandoned the idea of a currency union. The article is written by Wolfgang Kasper, and here is a short bio:
A confluence of events last week has me reminiscing about the days gone by and apprehensive about the future. I’ve spent a substantial portion of my adulthood rushing to baseball fields, hockey rinks, gymnasiums, and school auditoriums after a long day at work. I’d be lying if I said I enjoyed every moment. Watching eight year olds trying to throw a strike for two hours can become excruciatingly mind-numbing. But, the years of baseball, hockey, basketball, and band taught my boys life lessons about teamwork, sportsmanship, winning, losing, hard work, and having fun. There were championship teams, awful teams and of course trophies for finishing in 7th place. As my boys have gotten older and no longer participate in organized sports, the time commitment has dropped considerably. Last week was one of those few occasions where I had to rush home from work, wolf down a slice of pizza and head out to a school function. It was the annual 8th grade Spring concert.
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The last time the WSJ’ Jon Hilsenrath was relevant was two weeks ago (in a flashback to those days before QEternity when infinite QE was not assured and Jon’s input was actually relevant), when following an article of his, and due to his “proximity” with the New York Fed, many assumed that the Tapering suggested by Hilsenrath was being telegraphed by Bernanke to the market. Turns out it was nothing but yet another baffle with bullshit headfake by a central planning regime that is now merely engaged in observing market responses to indirect stimuli: if reduce monthly flow by $20 billion then X (-1%); if cut QE off entirely then Y (-50%?), and so on. Moments ago the same Hilsenrath just released another piece, which effectively refuted everything his previous piece suggested, and in fact made his position as Fed mouthpiece absolutely irrelevant, courtesy of the following disclosure: “this time, when the Fed shuts off bond buying, it won’t be… predictable.” He goes so far as to say that the term “tapering” is no longer even applicable! Funny that, considering on May 11, none other than Hilsenrath said: “Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy.”
China has signaled it is going to propose plans this year to allow freer flows of the Yuan both in and out of the nation as part of measures to loosen control over the Yuan and interest rates. It was expected that full and free convertibility after 2022, but it’s clear that the program is moving at an accelerated pace. How far this next phase of convertibility will go has to be seen at the end of this year.
And, Now, Today’s Pfennig For Your Thoughts!
There are two kinds of people in the world: those who respect coercive authority and consider it legitimate, and those who do not. The former group is likewise split into two factions: a relatively small group that, for whatever reason, essentially worships power, and a much larger one whose members merely tolerate authoritarianism, either as a matter of expedience or habit. In the wake of the recent bombing at the Boston Marathon and subsequent military-style manhunt, it seems clear that the great majority of Americans may be categorized as either power-worshiping or power-tolerant.
Federal Reserve Chairman Ben S. Bernanke said the U.S. economy remains hampered by high unemployment and government spending cuts, and raising interest rates or reducing asset purchases too soon would endanger the recovery.
Derivatives Reform on the Ropes … New rules to regulate derivatives, adopted last week by the Commodity Futures Trading Commission, are a victory for Wall Street and a setback for financial reform. They may also signal worse things to come … The regulations, required under the Dodd-Frank reform law, are intended to impose transparency and competition on the notoriously opaque multitrillion-dollar market for derivatives, which is dominated by five banks: JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley. – New York Times
Just a quick post as The Bernank is due before Congress at 10:00 a.m. EDT.
Yesterday In Gold & Silver
With continued uncertainty in the gold and silver markets, today a 56-year market veteran told King World News that silver will advance 400% from current levels and gold will soar $1,500 in less than a year. He also added predictions regarding longer-term price objectives.
With the Yen collapsing vs. all other currencies, inquiring minds may be wondering how prime minister Shinzo Abe’s inflation policy is working out in practice. Let’s start with a look at the Yen.
Yesterday, after I updated my 
Today’s AM fix was USD 1,385.25, EUR 1,071.43 and GBP 917.75 per ounce. Yesterday’s AM fix was USD 1,378.75, EUR 1,070.21 and GBP 908.39 per ounce. 
“Exit strategy” is the current buzz phrase among market watchers, with the dollar rallying in recent days and weeks on expectations that all is well with the US economy again, and that the Fed can now start thinking about ways of selling assets and “exiting” from its current commitment to perpetual quantitative easing.
There has been an angry uproar recently because Apple has hardly paid any extortion fees in the last four years on its billions in profits. Why this warrants an angry uproar and not a giant cheer for them for not supporting criminal governments is beyond us. But the slave-on-slave action has been thick on this one.
In his new book, Douglas Rushkoff examines the telescoping of time and context wrought by ubiquitous digital technologies. 
Today was supposed to be a fun one for liberals on the Investigations subcommittee for the U.S. Senate Homeland Security and Government Affairs Committee. They were going to haul in Apple’s CEO, CFO, and head of Tax Operations to browbeat them over their lack of — what, patriotism? Dumbness? — for having avoided tax liability last year.
As the global equity and bond markets grind ever higher, abundant signs exist that we are once again living through an asset bubble – or rather a whole series of bubbles in a variety of markets. This makes this period quite interesting, but also quite dangerous.
Surging nominal imports and a miss for exports just about sums up perfectly just how the reality of Abenomics is crushing the real economy as the market goes from strength to strength on the hope that recovery is just around the corner. For the 28th month in a row Japan trade deficit has dropped YoY and its 12-month average is now at its worst ever. Energy costs are driving up imports (and adjusted for the devaluation in the JPY, the data is simply horrendous. Of course, there are green shoots – CPI is not deflating as fast as it was… and ‘some’ inflation expectations are rising (though as we noted here that is simply due to the tax expectations). Contrary to expectations held by some in the bond market, the BOJ did not comment on the sharp fluctuation in JGB yields since April as a result of monetary relaxation – on the basis, we assume, that if they don’t mention it, it never happened. The result post a nothing-burger of ‘more uncertainty’ from the BoJ, the Nikkei keeps screaming higher, JPY rallied then fell back, and JGBs are sliding higher in yield.
Euro – Quo Vadis? How much more punishment will Europeans take to defend the misconceived Euro currency? … The Eurozone is in crisis, and only bold reforms can tackle the root causes. In the following article, Wolfgang Kasper explains why we should be tuning the clock back to before the Maasstricht Treaty, and proposes that an understanding of institutional economics is crucial in order to comprehend the current politico- economic predicament. – Elgar Blog
A confluence of events last week has me reminiscing about the days gone by and apprehensive about the future. I’ve spent a substantial portion of my adulthood rushing to baseball fields, hockey rinks, gymnasiums, and school auditoriums after a long day at work. I’d be lying if I said I enjoyed every moment. Watching eight year olds trying to throw a strike for two hours can become excruciatingly mind-numbing. But, the years of baseball, hockey, basketball, and band taught my boys life lessons about teamwork, sportsmanship, winning, losing, hard work, and having fun. There were championship teams, awful teams and of course trophies for finishing in 7th place. As my boys have gotten older and no longer participate in organized sports, the time commitment has dropped considerably. Last week was one of those few occasions where I had to rush home from work, wolf down a slice of pizza and head out to a school function. It was the annual 8th grade Spring concert.
Every Friday 11:00am EST