January 8, 2015
Andy Hoffman ~
It's incredible to believe, but next month marks
ten years since I left my last "desk job" - as an equity oilfield service, equipment, and drilling analyst at Salomon Smith Barney in New York. Nearly every day since, I've started my day at the gym, on the Stair-climbing machine for one to two hours. Typically, my workouts start at 4:30 - 5:00 AM MST, or just as New York's algorithms start manipulating markets - and unwaveringly, any gym I patronize has a TV screen showing CNBC.
These days, no one watches but me - if only for quotes and headlines; and frankly, when gyms finally stop showing CNBC, which in the late 1990s enjoyed enormous ratings when people actually owned stocks, its ratings would dry up entirely. Unquestionably, no media outlet is responsible for more retail financial losses; and thus, despite "record" stock prices (not inflation-adjusted, of course), CNBC's ratings are not just at all-time lows, but levels last witnessed when it first when it first poisoned airwaves in 1992. In fact, things have gotten so bad for Cramer and Company, that LOL, just as I finished this paragraph, Zero Hedge reported that CNBC will no longer utilized Nielson to gauge its "ratings." In other words, they'd rather the public didn't see just how abysmal they are.
And how much better can CNBC's "perma-bullishness" be encapsulated than this morning; when, with oil plunging below $49/bbl, the ten year Treasury yield slicing below 2.0% like it wasn't there, and currencies from the Euro to the Rupee to the Ruble crashing, the three headlines that appeared when I randomly glanced up from War and Peace were "NYC real estate rising" (hooray for the "1%" receiving free ZIRP money); "Twitter Delay Fixed"; and last but not least, "the Bullish Case for 2015." And by the way, whilst this drivel was broadcast to the handful of hedge funds still in business, the ever-present "positive fair value" of stock futures was flashed every two seconds. In other words, just as in "sixth sigma manipulation proof" we demonstrated how the Cartel attacks PM futures in the ultra-thin paper trading platform after the NYSE close nearly every day, the PPT similarly gooses stock futures to "set the tone" for the following day's trading." Perhaps a bit off topic, I know. However, this "fair value" thing has been bugging me for so long, I had to mention it!
Back to reality, on yesterday's podcast with Kerry Lutz, I emphatically warned that the global economy will not collapse "in the future," or even shortly. To the contrary, it is occurring NOW; and now that PPT stock market control is waning, the "one temporary exception" separating us from 2008 could be permanently eliminated - any day now, via "black swan" event, or the sheer weight of a collapsing four-decade Ponzi scheme.
Yesterday's horrible Motor Vehicle Sales figures disclaim how the government's last-gasp subprime lending schemes are failing; not to mention, data depicting 30% of all the $1+ trillion of (taxpayer-funded) student loans delinquent. Another horrifying plunge in the Baker Hughes Rig Count - it's second largest monthly decline, in percentage terms, since 2001 - demonstrates that job losses are exploding; and heck, I didn't even mention an article I read last week - when oil was $8/bbl higher - noting how one-third of all North Sea oil companies were on the verge of bankruptcy. Throw in the all-out freefall of the Baltic Dry Index; this morning's PMI Service Index, ISM Non-Manufacturing Index, and Factory Order plunges; and this horrifying article about the dire state of the U.S. retail industry - dovetailing perfectly with my 2015 prediction of "Retail Armageddon"; and it couldn't be clearer how rapidly the global economy is unraveling, with utterly no Central Bank "safety net" to "save the day" as in 2008. And oh yeah, before the "Ides of March" even arrive, Greece may default on hundreds of billions of Euros of debt, catalyzing a cataclysmic PIIGS crisis that may well end the European monetary union.
And yet, amidst all the carnage, "Wall Street analysts" still anticipate "strong jobs growth" fromFriday's NFP report! Oh well, it won't be long before Wall Street is forever ignored - and hopefully, vilified and jailed; with the most damning, and hope-destroying loss of credit reserved for the Federal Reserve itself - per Whirlybird Janet's "famous last words" from last month's FOMC statement; you know, the one that catalyzed a ridiculous 1,000+ point "Dow Jones Propaganda Average" rally.
"The FOMC sees the risks to the outlook for economic activity and the labor market as nearly balanced - and expects inflation to rise gradually toward 2% as the labor market improves further, and the transitory effects of lower energy prices and other factors dissipate."
Alas, the "transitory" drop in oil prices; yet another Federal Reserve lie based on not a shred of evidence, from a group of staid paper pushers with not an ounce of real-world experience, whose mandate is to cheerlead the economy no matter how stupid they sound. Only when the stock market they work hand and hand with the PPT to goose falters, do they admit something could be wrong; to which, the response is always to print more money. So is the nature of a fiat currency Ponzi scheme - which must grow larger to survive, but most do so whilst maintainingconfidence. And of course, the larger it gets, the more detrimental it becomes to economic activity, purchasing power, and geopolitical stability. Which is where we stand today, with the plunging oil price merely symptomatic of the horrific, irreversible damage a 44-year fiat pyramid has created; and plunging interest rates, of the "great deformation" of monetary policy that causes money managers to front-run the inevitable, global "QE to Infinity" that catalyzes hyperinflation.
Yes, oil. By far, the most utilized industrial commodity on the planet; and by far, the most difficult to manipulate. Even OPEC's impact on prices has in the last decade been mitigated by the sheer size and diversity of the global crude oil market, notwithstanding propaganda that "OPEC's decision" to maintain production levels six weeks ago catalyzed the oil price plunge. No, that was Saudi Arabia alone; i.e., OPEC's only low-cost producer with significant productive capacity. To wit, the U.S. government's various manipulative tentacles hubristically believe they can actually alter the laws of "Economic Mother Nature" by goosing stock prices, suppressing Precious Metals, and "managing" interest rates, currencies, and economic data. However, just as they can't manufacture physical gold and silver, their paper algorithms can't mask the fact that millions of barrels per day of oil demand are vanishing, whilst millions more are washing ashore in tankers desperately seeking buyers. The U.S. government may be able to temporarily reduceoil prices by selling oil from its Strategic Petroleum Reserve - in doing so, selling out American citizens relying on the SPR in case of emergency. However, NOTHING the U.S. government can do - particularly "hail mary" goosing of Crude futures or the USO ETF - can make oil prices rise; other than, of course, instigating WAR, which may well be their final, suicidal stratagem.
Plunging oil prices, as we noted three months ago, "portend unspeakable horrors." Not a single country, other than perhaps third world nations in the South Pacific, will not be negatively impacted; and NO ONE more than the United States. With $500 billion of high yield bonds and leveraged loans funding the gargantuan, massively hemorrhaging shale industry, we have ZERO doubt that "shale oil 2015 = subprime mortgage 2008." Only this time, the impact will be farmore global. Not to mention, for all the government lies about job creation, even the BLS admits shale oil is the only industry to have reported positive net job growth over the past eight years. In other words, the plunging oil price, is a massive "Achilles Heel" to the U.S. government's ability to maintain the hegemony it financially, politically, and militarily abuses the world with. Oil may not be the "Achilles Heels of the Financial World" that gold and silver represent, but can singlehandedly destroy America's ability to defend itself from an increasingly hostile world.
At this point, it's no longer a question of if the oil (and broad commodity) crash catalyzes the next 2008-style market and calamity - and then some - but how bad it will be. Of course, as noted earlier, this is not a "future" event, but one occurring as we write. Frankly, I don't believe the month of January will pass before the first major, catastrophic oil plunge related news hits the wires - be it economic, political, or geopolitical. And just wait until NFP and GDP reports start going negative, with no ready-made excuses like "polar vortices" to explain them. Or how about U.S. budget and trade deficits parabolically surging? Or the literal explosion of defaults, bail-out requests, and entitlement demands? Do you really think the PPT, Fed, ESF, and Cartel can survive the "unstoppable tsunami of reality" under such circumstances? Let alone, with U.S. financial markets at record valuations, and gold breaking out in nearly all currencies?
And by the way, at what point do the massive derivatives underlying global stock, bond, commodity, and sovereign debt markets implode upon "TBTF" banks - which this time around, even "FDIC support" won't be able to cover? It's only a matter of time until the cumulative "weapons of mass destruction" tethered to each other over the past 15 years violently explode; and when they do, if you haven't already protected yourself with Precious Metals - hopefully, purchased from and/or stored with Miles Franklin - it may be too late to ever save yourselves and your kin.
Oh, they'll fight this inevitability to the bitter end - on all fronts, politically, economically, and militarily. However, as you can see by the past two days' charts (let alone, today's horrifying equity reversal to the downside), trying to stem the onrushing tide of reality is getting more difficult with each passing day.