Fwd: Posts from Cliff Küle's Notes for 04/19/2016

---------- Forwarded message ----------
From: Cliff Küle <cliff.kule@cliffkule.com>
Date: Tue, Apr 19, 2016 at 4:01 PM
Subject: Posts from Cliff Küle's Notes for 04/19/2016
To: secureworksbuddy@gmail.com

View this email in your browser Cliff Küle's Notes Recent posts below in case you missed them ... simply click and read - enjoy! LINK HERE to our website www.cliffkule.com Excerpts: Richard Russell* Warned People To Prepare  For Something Worse Than 1929 – 1932  "My thinking is that the market is preparing for one of the worst bear markets in history, one that will out do the 1929-32 affair. My old friend, Robert Prechter, of Elliot Wave fame, believes the Dow will go below 400. If this happens I think there will be doubts about whether the U.S. can survive. It suddenly occurred to me that my job will be to insist that no matter where the Dow ends, the U.S. will survive, just as it did during the Great Depression. In reading the newspapers, I note that almost every article is negative. And at the same time, the state of the country is bearish. Even such stalwarts such as McDonalds and Wal-Mart are having a hard time. An article in the NY Times warns that Apple is fated to go the way of IBM. As for the U.S. economy, I think it will follow FDR's recipe of make-work programs sponsored by the government. In the 1930s, men working on government programs." - Richard Russell* (just before his passing away last year) link here to the article Read on » Permanently High Plateaus  Have Poor Precedents In his latest missive, John Hussman quotes Irving Fisher: "Stock prices have reached what looks like a permanently high plateau." .. & also Hyman Minsky: "Stability leads to instability. The more stable things become and the longer things are stable, the more unstable they will be when the crisis hits." .. Hussman continues to view the market distortion by the Federal Reserve to be a "reckless mistake" - "These policies have produced no benefit to the real economy (output, employment, industrial production) compared with what could have been predicted solely on the basis of non-monetary variables. But these policies have fueled the third financial bubble since 2000; they have elevated security valuations to the point where both stocks and bonds are now priced to produce negative expected real returns for investors on a 10-12 year horizon; they have facilitated heavy issuance of corporate debt with a preference for low-grade 'covenant lite' obligations; they have provoked speculative capital flows and 'carry trades' in international markets; and they have encouraged competing behavior by central banks across the globe - all from whence will emerge the next financial crisis. On its face, the Fed and other central banks are attempting to foster economic stability. But as the economist Hyman Minsky observed decades ago, attempts to produce such 'new eras' of economic stability tend instead to foster the escalation of speculation, debt issuance, and deteriorating loan quality. Those features, in turn, make the economy increasingly vulnerable to crisis." .. Hussman concludes: "Long periods of obscene overvaluation create an illusion of permanently high plateaus, but produce an inevitable harvest of poor long-term returns and wicked losses that complete those market cycles." LINK HERE to the essay Read on » A Modest Proposal To End  Federal Reserve Independence Dr. Joseph Salerno of the Mises Institute considers a proposed reform of the Federal Reserve to take their control of the money away from them (as unelected technocrats) & return the control to the U.S. Congress & the U.S. Treasury .. "There are a number of benefits of stripping the Fed of its quasi-independent status and transforming it into a handmaiden of the Treasury, as the American Monetary Institute (AMI) and early Friedmanite reform programs call for .. Money would be created in a transparent manner that is understandable to the public at large .. The Fed would no longer function as a discretionary lender (bailer-outer) of last resort, a role that infects the entire financial system with pandemic moral hazard. No longer would the Fed be able to surreptitiously, arbitrarily, and without democratic oversight or accountability bail out all kinds of financial institutions in the United States as well as foreign countries. First of all there would be no need to bail out pure depository institutions because all such institutions would hold 100 percent reserves. But, second, even if purely financial (non-money-issuing) institutions were in danger of failing, the decisions to bail them out would be made by an openly partisan Treasury under the watchful eye of the congressional opposition and in full view of the public. With the Fed neutered and unable to leap to their rescue at the first sign of distress and with their appeals for bailouts subject to full scrutiny by a skeptical congress and public, financial institutions would run their affairs much more prudently." LINK HERE to the essay Read on » A Bull Market Is Happening, You Need To Know Where To Look In his latest weekly market outlook, Tim Price emphasizes investors need to look in markets which are relatively free from central bank interventions & market overvaluation .. "There is investing in the markets as we would like them to be – free and untouched by the price controls advocated by misguided neo-Keynesians and socialist policy wonks – and there is investing in the markets as they are today. Bonds, for example, are now an uninvestable asset class – unexploded ordnance in the minefield. Cash in the bank represents a growing counterparty risk combined with a derisory or negative yield. That leaves listed equities as the primary investment choice for anybody seeking income or capital growth. But many equity markets have seen their valuations artificially manipulated higher by the price controls explicit in QE, ZIRP and NIRP. The only rational response is to seek out pockets of high quality value equity as yet unaffected by the malign distortions of the printing press. They may be few in number but they undoubtedly exist. You are unlikely to read about them, unsurprisingly, in articles from the mainstream financial media." LINK HERE to get the PDF Read on » Bill Murphy: GATA Vindicated  Wall St for Main St with Gold Anti-Tust Action Committee (GATA) President Bill Murphy .. discussion on gold & silver price suppression & intervention in the markets .. about 1 hour Read on » Emergency Fed Meetings Spooked Investors  Into Purchasing Record Gold Eagles LINK HERE to the article Read on » Helicopter Money Boom Bust .. discussion on the impeachment vote in Brazil, also on the big meeting of the world's top oil producers in Doha .. also a discussion with Economist Steve Keen on the Federal Reserve & debt .. 1/2 hour total program Read on » click to enlarge Read on » Gold To Protect From The Increasing Risk Of Cyberfinancial War "The threat of a cyberfinancial war is one more reason to own gold because it is not digital and cannot be hacked or erased." - Jim Rickards* Read on » The U.S. Economy  – Ongoing Distortions Acting Man essay looks at the slowing global & in particular U.S. economy .. through several charts, the essay identifies several distortions in the economy .. "We suspect that quite a bit of this credit growth has fueled financial engineering in the form of share buybacks, M&A activity and even dividend financing. This is helping to keep asset prices elevated for the time being. Small businesses are however no longer very enthusiastic .. The economy's capital structure remains imbalanced as a result of the enormous amount of monetary pumping since the financial crisis. There is a limit to this though, even if it cannot be quantified. What can be stated though is that the greater the boom, the greater the eventual bust usually is. There are now more and more indications that a decisive inflection point may be quite near." LINK HERE to the essay Read on » Assessing The Consequences  If Britain Leaves The EU Bond purchases, currency interventions, rate cuts or even rate increases: those are just some of the actions the Bank of England is seen taking if the U.K. votes to leave the European Union. Some 90% of economists in Bloomberg's monthly survey said Governor Mark Carney would have to step in with some form of support if the June 23 referendum leads to a so-called Brexit. What's less clear is the shape that response could take, with uncertainty about the scale &form of the fallout meaning any number of measures could be needed. Read on » Which Narrative Will Win Out:  Bulls Or Bears? Charles Hugh Smith* considers the battle as boiling down to between what controls the markets - central banks or fundamentals? .. "Bulls are confident that central banks have their back in 2016. After all, whatever it takes has successfully pushed equities higher for seven years. Why not an eighth? Many Bulls also believe the global downturn is over and higher growth is just ahead. Bears see equities in a multi-year topping process  .. Bears see sagging profits and stagnant sales as evidence that fundamentals no longer support historically high valuations." .. conclusion: "The battle boils down to what controls the market: central banks or fundamentals. Belly up to the roulette wheel and place your bets, but don't forget that rigged games can suddenly become unrigged at the most inconvenient moments." LINK HERE to the analysis Read on » Silver Prices Are Moving Higher link here to the article Read on » The Dangers To The Financial System From High Frequency Algo Trading  Eric Hunsader, founder of Nanex, has been at the vanguard of warning about the dangers of high-frequency trading (HFT) algorithims have let loose in today's financial markets .. 36 minutes Read on » click to enlarge Read on » Dr. Albert Friedberg*: How Does An Investor Invest In  This Strange Alice In Wonderland World? Friedberg Mercantile Group's fund manager Dr. Albert Friedberg* ponders the challenges of investing in this challenging environment characterized by continuous central bank pronouncements & interventions .. "This state of affairs is unprecedented in the brief 200-year history of central banking, and we have therefore no way to judge the ultimate consequences .. Monetary manipulation has succeeded in generating an explosion in debt, debt that has grown much faster than income and the value of assets. This debt will slow real incomes, much as dirt grinds the wheels of a moving vehicle. While debt service is still reasonably cheap, credit spreads will continue to widen and will make it increasingly difficult for debtors to service their debt." .. Friedberg sees central banks as taking on increasingly new & unprecedented measure to deepen & strengthen previous measures which are not working .. Friedberg emphasizes investing in value  .. he is shorting Indian, Korean & Singaporean banks in the belief that the epicentre of the coming debt crisis will be located in China & its surroundings .. on gold: "Gold is an asset that, history teaches us, will perform well in an environment of accelerating inflation. This condition existed in the '70s when the banking system was able to intermediate, growing bank reserves, causing money supply to grow at an accelerated pace. This is clearly not the case today and therefore we do not foresee accelerating inflation, although central banks, in their desperation, may experiment with more effective methods of growing money in the future. But gold also performs well when economic agents lose faith in the monetary authorities. The latter was probably the trigger to the Great Inflation of the '70s and the extraordinarily long and powerful bull market in gold: the U.S. closed the gold window, terminating the international convertibility of the U.S. dollar and marking the beginning of a new era for fiat currency. Similarly, the adoption of helicopter money may trigger just such a psychological reaction. Finally, it stands to reason that debt deflation enhances the value of gold since it is an asset that does not depend on the creditworthiness of debtors." LINK HERE to the report First Quarter 2016 - Quarterly Report Read on » GoldSwitzerland's Egon von Greyerz: All Hell Is About To Break Loose In The Global Economy & Financial Markets "What else did central planners expect? To print money that has no value or to lend money that doesn't exist can never create wealth or save anybody. The downturn will soon start to accelerate and eventually lead to a total failure of the financial system and sovereign defaults. But no one should believe that there will be a sudden implosion or a 'reset' that solves or changes everything. Instead, what we will experience is a process with things deteriorating at a fast pace but without one single event that changes everything overnight. It is actually happening all around us right now. Let's just look at some examples of the stresses within the system. The ECB is facing bank failures in almost every member country. An Austrian bank just had to be bailed-in and the whole Italian banking system is on the verge of collapse. The Greek banks are already bankrupt, although no one dares to declare it officially. The ECB knows that they only have one tool left to temporarily postpone a breakdown of the European banking system and that is to further increase its money printing program .. Most central banks and sovereign governments are virtually bankrupt but so are commercial banks. Their share prices are definitively telling us that. Most major banks' shares are down between 75% and 90% since 2007. Deutsche is down 87% and Citi 92% whilst Credit Suisse and Barclays are 'only' down 78%! The massive falls in all major banks' share prices are clearly telling us that these banks are unlikely to survive. If we look at global company profits, they are down 20% in mature markets and 25% in emerging markets since 2014. And so far we have seen global corporate defaults of $50 billion in 2016, which is the biggest since the financial crisis. It is all happening in front of our eyes right now. No one should wait for a major event because it will be a series of events as I have described and it has already started. It is time to take protective measures right now." - Egon von Greyerz link here to the article Read on » A Plan B Proposal In Case The U.S. Congress Remains Dysfunctional John Mauldin* presents the thoughts of Oklahoma Senator Dr. Tom Coburn who proposes a non-political solution for America - "It requires us to close the constitutional loopholes that allowed the feds to move beyond their proper, limited authority and initiate programs, engage in spending, and create agencies that are way outside federal jurisdiction under the original meaning of the Constitution. The way we can realistically do this is through an Article V convention for proposing amendments to the Constitution. This is a state-initiated, state-led, and state-controlled process for proposing amendments that don't sit well with the power-hungry elitists in D.C. It requires two-thirds of the state legislatures (34 states) to pass applications for a convention to propose amendments on a given topic. States then appoint and instruct delegates to represent them at the convention. Any proposals that garner support from the majority of the states (on a one-state, one-vote basis) are then submitted to the states. Proposed amendments must be ratified by three-fourths of the states (38 states) in order to become part of the Constitution." .. There is already a massive, nationwide effort underway to trigger an Article V convention for the states .. "Imagine what America would be like if Congress's taxing and spending power could only be used in relation to its specifically enumerated powers in Article I, as originally intended .. Imagine if businesses and industries weren't assaulted on every side by rules and regulations being crafted by unelected bureaucrats in ivory towers at a rate of over 80,000 new pages a year. America could be, again, what the Founders intended & designed: a constitutional republic suited for a free, industrious, self-governing people." LINK HERE to the essay Read on » Will Silver Outshine Gold?  The best performing precious metal for the week was silver, up 5.66%, says Frank Holmes, CEO of U.S. Global Investors. "Silver has overtaken gold as the year's best performing precious metal, extending its gains to 17% on the back of a stabilizing Chinese economy. The precious metal, which is used in a variety of industrial products, is now trading at a five-month high" .. 3 minutes Read on » Koos Jansen:  China Is Embracing Gold In Advance Of The Post U.S.$ Era BullionStar's Koos Jansen sees China as having a potent gold strategy in its effort to challenge U.S.$ hegemony & increase its power in global finance .. he quotes the Governor of the PBOC Zhou Xiaochuan - "The outbreak of the crisis and its spillover to the entire world reflect the inherent vulnerabilities and systemic risks in the existing international monetary system…. The desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run." .. Jansen sees a shift in the global monetary order, as the world becomes increasingly concerned about the U.S. & its finances .. in this regard, China is positioning itself strategically: "Being the second largest economy of the world but relatively in arrears regarding physical gold reserves, China has a strong motive to surreptitiously work on its gold program until completion. For, if it would be candid in its gold ambitions, the price would significantly run higher3, potentially disturbing financial markets and narrowing its window of opportunity to prepare for the next phase. We must conclude that the State Council views gold as part of the coming international monetary system. Why else does it quickly develop the domestic gold market to be embedded in financial markets, surreptitiously accumulate vast gold reserves and establish a framework to boost gold business on the Eurasian continent? In my view, China contributes significant value to its gold strategy in the shadow of the apparent failure of the current fiat monetary system. And if true, China's central bank having nearly 4,000 tonnes of gold is well on its way to introduce the next phase." LINK HERE to the essay Read on » Saudi 9/11 Blackmail:  'We'll Dump Dollar!' The Saudi foreign minister threatened to dump $750 billion in U.S. Treasuries if Congress passes a bill suspending sovereign immunity over state involvement in terrorist attacks on U.S. soil. The possible release of the secret 28 pages of the 9/11 report may implicate Saudi state organs in the attack. Who will blink? .. 16 minutes Read on » click to enlarge Read on » Copyright © 2016 www.cliffkule.com All rights reserved. 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