Today (Monday), let’s start with the “horrible headline periphery”; i.e,
topics ugly enough to single-handedly take the economy down – and markets,
rigged or otherwise – but not “sexy” enough for the sensationalism seeking
MSM to report on. Such as, for example, the dramatically worsening droughts
in California and Brazil – which, as we discussed a year ago – are major exporters of some of
the world’s most important, widely used agricultural commodities. It
shouldn’t surprise anyone that Brazil’s economy and currency have collapsed –
or conversely, that Real-priced gold has surged to within 1% of its all-time
high. Heck, Brazil’s largest company, the massively corrupt, state-owned
Petrobras oil company, was bailed out by the Chinese last month.
As for California, it was one of the most financially challenged states before
the drought began – currently, holding $425 billion of debt, excluding
more than $200 billion of “unfunded liabilities.” And that’s just at the state
level; as countless cities, counties, and lesser municipalities are
heavily indebted as well. Consequently, the potential economic ramifications
on its 39 million citizens – let alone, the other 280 million Americans that
must bail it out – could be catastrophic. And no, it’s not just
California in terrible financial condition, but nearly all U.S.
states. To wit, despite 70 months of economic “recovery” – one of the longest
in U.S. history – the States, on average, have barely half the cash reserve
levels held at the “end” of the 2008-09 recession. Yes, a “recovery” in which
the Labor Participation Rate has plunged to 38-year lows; government
entitlement participation has risen above 50%; home ownership and small
business formation have collapsed to multi-decade lows; real household income
continued its secular decline; government deficits have surged; and debt on
all levels – from Federal, to state, municipal, corporate, and individual –
have continued to rocket higher. Even massively “upwardly biased” GDP has
barely budged higher – and this, incorporating an historically understated
inflation deflator. And yet, care of history’s most maniacal market
manipulation scheme, stocks relentlessly surge higher – bereft of not only
material downticks, but volatility as well; as the largest financial bubble
in history is inflated inexorably higher; not just here, but everywhere.
In Europe, the ECB’s psychotic, hyper-inflationary QE policy has, in just one
month of operation caused the Euro to collapse to a 12-year low of 1.05/dollar
– which as I write, is on the verge of being breached. Over the
weekend, the only material news was the rapidly worsening “negotiations”
between bankrupt Greece and its Eurozone masters – to the point that
vulgarities were spewed across the bargaining table. I mean geez, just
how hard do people need to be pounded over the head that “Grexit” is guaranteed –
likely, within months? And that if German banks are expecting massive
losses due to the collapse of a single
Austrian bank; that they – and those of France, Italy, and the rest of
the Eurozone – will be utterly devastated when Greece and its insolvent banks
default on hundreds of billions of Euro-denominated debt? Let alone,
the likely political, economic, and financial chain reaction it will cause; likely,
destroying the Euro itself
And geez, to say the European economy is “fragile” is perhaps the
understatement of the century; particularly in the UK, who most people assume
is doing fine because of its ability to print its own money – and of course,
its role as America’s lapdog. Well guess what? Not only does the UK have the
world’s largest debt burden – at more than 500% of GDP, when combining
government, corporate, and household finances with the world’s most indebted
banking sector; but one of its biggest businesses is North Sea oil and gas
exportation, whose outlook could not be worse. Like the U.S., the UK’s
post-2008 housing “echo-bubble” has been focused principally in high end
markets fraternized by the “1%” privy to Central bank largesse; like the
U.S., amidst a rapidly weakening economic outlook that has prompted the BOE
to maintain zero interest rates for the past six years – whilst, like the
U.S., suspending its massive QE program – at least overtly – until further
notice.
Here in the States, contrary to the relentless propaganda, it couldn’t be
more obvious that said bubble peaked nearly two years ago (just look at lumber prices, if you need more evidence).
However, at least the top end of the market has thus far maintained most of
its gains. Conversely, the UK has seen a devastating 80% plunge – yes, 80%
- in the sale of “1% homes” priced above £2 million in the past year.
This, my friends, is what a Central bank printing press bubble implosion
looks like; and thus, why the Bank of England – like its criminal counterpart
in the States – will likely need to ramp up QE in the near future. Likely, no
less, as the pound is crashing through the 1.40/dollar level that represents
the lowest level it’s ever traded at – with the brief exception of a few
months 30 years ago.
On most days, that horrifying statistic – representing what happens when
QE is stopped for a second – would qualify as “the ugliest economic
data I’ve ever seen.” However, today it doesn’t hold a candle to
what’s going on in other parts of the word; specifically, China, where the
only thing capable of matching its historic credit, construction, and real
estate bubble collapse is its stock market bubble inflation, which has
exploded higher with maximum retail participation – and leverage – since the
PBOC started easing monetary policy last summer; promising much more of the
same.
Which brings me to the namesake of today’s article, directly from the
People’s Republic of Communist Economic Destruction itself; i.e., the most
hideous trade data since 2009, amidst the worst financial crisis of our
lifetimes.
- China March imports -12.3% year-over-year, versus
estimate of -11.3%
- China March exports -14.6% year-over-year, versus
estimate of +8.2%
- China March trade surplus RMB 18 billion, versus
estimate of RMB 250 billion
Yes, whilst the Chinese, Japanese, and Hong Kong stock exchanges rise
parabolically, Chinese imports are plunging, and exports utterly imploding.
Frankly, it is difficult to find a better measure of global trade activity
than Chinese exports; and when combined with ugly Chinese import data, the
picture is one of worldwide recession, if not depression. This is why global
ZIRP, NIRP, and QE programs are all but guaranteed to accelerate; likely, right
now. Moreover, the expanding economic carnage is why the Miles
Franklin Blog has loudly predicted a dramatic – perhaps imminent – Yuan
devaluation; i.e., the political, economic, and social “big bang to end all
big bangs.” To a man, it is difficult to conceive how the most blatant
currency manipulators on the planet are not actively planning to de-peg the
Yuan from the “helium balloon” the dollar has become; as not only is China’s
manufacturing market share being stolen by Japan and other currency
immolating nations, but competition is becoming fiercer due to inexorably
weakening economic conditions.
In its wake, the dollar index surged back to nearly 100 this morning – NOT
due to U.S. economic strength, but a “flight to liquidity” as the global
economy implodes; as not only was the Euro challenging 1.05/dollar for the
second time in a month, but the Yen was nearing its recent Central bank “line
in the sand” at roughly 121/dollar. A Japanese official was trotted out to
jawbone the Yen marginally higher; but clearly, both currencies are heading
to dramatically lower levels, putting increasing pressure on the Fed to
respond to the White House’s recent warning that a “surging dollar is causing
headwinds to U.S. economic growth” – naturally, by stepping up the “final currency war” with “additional easing
measures.”
This is why TPTB are so maniacally manipulating markets, attempting to buy
as much time as possible until “Economic Mother Nature” attacks with the full
strength of her invincible forces; like taking the “Dow Jones Propaganda Average” nearly 100
points higher at the NYSE opening, after being down all night – or attacking
paper PMs for the 93rd time in the past 95 Sunday nights; the 416th “2:15 AM” open of the London paper market in
the past 476 trading days; and the 8:20 AM EST COMEX opening, via
prototypical “Cartel Herald” algorithm, when all else fails.
That said, “Economic Mother Nature” has a few tricks up her sleeve, too –
like the dissemination of truth, which always wins out in the long
run. For one, the mining industry implosion, that all but assures “peak
gold” has arrived, per the horrific
outlook of the industry’s largest producer; which was further validated
by this morning’s merger by junior producers Alamos and Aurico (stocks down
70% and 80%, respectively, in the past three years) – enroute to the
inevitable, massive cost-cutting driven mergers of Barrick,
Newmont, and countless other PM producers and explorers.
Not to mention, the fact that – propaganda aside – Precious Metals have
had no discernible correlation to the “dollar index” in more than a decade;
or, for that matter, “rising interest rates” in any significant
time frame – particularly when rate increases are due to hyperinflationary
monetary policy. And last but not least, kudos to my good friend Steve St.
Angelo, whose latest article uses the lost art of mathematics
to prove the ridiculous conspiracies about “Yamashita’s Gold” and other
supposed “hidden gold hordes.” Not that, if they indeed existed, they would
they even come close to matching the amount of dollars, Yen, Euros, and other
fiat toilet paper supposedly supporting them. However, the fact of the matter
is that it’s financially and logistically impossible for such excess amounts
to have been produced undetected in the first place.
In other words, the inexorable explosion of Precious Metal demand will
only be matched in intensity by the relentless decline of gold and silver
production for years to come; as not only is it becoming exponentially harder
to find, permit, and produce gold and silver; but care of the Cartel’s
relentless price suppression of the past two decades, the financing of
such activities has all but collapsed. This, my friends, is why Precious
Metals are the greatest value in the entire scope of global financial markets;
more so, in our view, than at any time in history.