• GoldCore
    08/04/2015 - 06:08
    The headlines are dramatic, ugly and depressing to anyone who holds gold right now. Broad market sentiment has shifted from disdain and dismissive to highly negative. Hedge funds are shorting gold...

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AAPL & Market Spike On iCahn "Buyback" Tweet

Carl iCahn - whose media presence outweighs his shareholder presence - has tweeted the results of his dinner with Apple's Tim Cook.

AAPL shares are surging and the market is following suit...

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GM Vehicle Sales Collapse 11%

Just a month ago, we were exuberantly told that the 14.7% rise in August sales for GM (against an expectation of an 11% rise) was not just great news but was entirely sustainable. Some suggested that this was merely demand dragged forward as rates rose, dealers channels were stuffed, and the vinegar strokes of an exuberant Fed were occurring. Today we have our answer...

  • Inventory up to 82 days from 64 days!! (Surge to 670,191 units from 628,644 prior)

We are sure that weather played a role; the calendar didn't help; government (Republicans) are probably at fault somehow; and it's a 'blip' but it seems like quite a miss for a "sustainable" new normal in auto sales.

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Manufacturing ISM Rejects Earlier PMI Data, Spikes To Highest Since April 2011

Since the entire world now follows in the footsteps of China, its data fudging example and its Schrodinger economy which is both growing and contracting at the same time, it was very much expected that in the aftermath of the MarkIt US PMI, which missed expectations earlier, that the ISM's own Manufacturing Report on business would smash expectations of a decline from 55.7 to 55.0, instead printing at 56.2 or the highest since April 2011. And since the data on construction spending is not available due to the whole government shutdown thing, the mood for the day will now be set as one of exuberant enthusiasm for manufacturing, yet one where the "other" PMI will be referenced when predicting how much longer the Fed will not taper for.

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This Is Rush Hour Traffic In DC On Government Shutdown Day

Spot the 'essential' government worker...

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Next "Subprime Crisis" Expands As Student Loan Defaults Hit $146 Billion, Highest Default Rate Level Since 1995

Almost exactly one year ago we wrote "The Next Subprime Crisis Is Here: Over $120 Billion In Federal Student Loans In Default" in which we took the latest (2009 three year cohort) loan default data on Federal Student Loans released by the Department of Education and applied it to the total amount of student loans outstanding, which back then was $914 billion. Yesterday, ED.gov provided its annual update - this time to the 2010 three year and 2011 two year cohorts - and to nobody's major surprise, learned that things just got even worse. To wit: "The national two-year cohort default rate rose from 9.1 percent for FY 2010 to 10 percent for FY 2011. The three-year cohort default rate rose from 13.4 percent for FY 2009 to 14.7 percent for FY 2010." Putting this in context, according to Bloomberg defaults have risen to the highest level since 1995. The irony that this is happening in the aftermath of Bernanke's disastrous ZIRP policy is not lost on anyone.

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What Will A Shutdown Look Like?

Unlike the unleashing of hell that so many politicians have bloviated on in the last few hours/days/weeks, Douglas Holtz-Eakin explains to Bloomberg TV's Trish Regan that in fact around 60% of the government will continue to tick along despite the "shutdown." As Regan summarizes, "shutdown is an elaborate way of saying the government will be partially downsized temporarily..." to which Holtz-Eakin adds, "...and then re-upsized later." Sadly, while this will cost a modest amount, this will do nothing to stop the big mandatory spending programs and is simply bad governance. This brief interview will allow one to sleep at night knowing that when you awake in the brave new world of a US government shutdown, the sun will still rise and the kids still need to go to school... perhaps that explains the rally in stocks?

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Furloughed Government Workers Selling Gold, Silver?

UPDATE: Deflationary impluse? Silver at 7-week lows; gold 2nd biggest drop in 3 months; Copper -2%, WTI -1%

While gold prices remain above their pre-Un-Taper levels, they have been monkey-hammered once again this morning as the world awakes to a US Government shutdown for the first time in 17 years. Silver has retraced all its post-Un-Taper gains and is holding at those lows. It seems the department of precious metals selling has been deemed essential... or are the furloughed government workers all selling their gold? Of course, for the conspiracy fact crowd, this makes perfect sense. On a day when the foundation of the USA is shown for its farcical reality, what better signal to the world is there than a US equity capital market rally and barbarous relic selloff to signal the status quo is as strong as ever?

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Wall Street Responds To The Government Shutdown

No, we are not talking the stock market reaction, which is driven purely by trillions in excess global, fungible liquidity sloshing around and as a result stocks are up on government shutdown day in a complete mockery of, well, everything. Instead, this is what Wall Street sellside strategists believe will be the impact of the shutdown (and how it ties in with the far more important debt ceiling negotiation). It should not be at all surprising that to virtually everyone, the shutdown (or any other negative development) is a "buying opportunity" which makes sense: after all the person who is truly in charge of the "wealth effect" will be up and running uninterrupted and there is no risk today's $2.75 - $3.50 billion POMO will be even modestly delayed.

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Frontrunning: October 1

  • Government Shuts Down as Congress Misses Deadline (WSJ); Shutdown starts, 1 million workers on unpaid leave (Reuters); Government Shutdown Begins as Deadlocked Congress Flails (BBG)
  • This is not The Onion: Stocks Rise on U.S. Government Shutdown (BBG)
  • Pentagon chief says shutdown hurts U.S. credibility with allies (Reuters)
  • In historic step, Japan PM hikes tax; will cushion blow to economy (Reuters)
  • Obama Says He Won’t Give Into ‘Ideological’ Budget Demand (BBG)
  • More part-time warehouse workers: Amazon to Hire 70,000 Workers for the Holidays (WSJ)
  • Less full-time legitimate workers: Merck to fire 8,500 workers  (BBG)
  • Education cuts hit America’s poor (FT)
  • Euro-Zone Factory Growth Slows (WSJ)
  • Watchdog Warns EU Not to Water Down Insurance Rules (Reuters)

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Government Workers Told Not To Work On "Any Projects, Tasks, Activities Or Respond To Emails Or Voicemails"

Dear government workers: welcome to the private sector. This is what it feels like to have job insecurity. For the past 7 hours, some 800,000 suddenly idle Federal workers received furlough notices but were told they will still have to report to work for about four hours Tuesday even though the government is shutting down. Or, rather "work." As AP reports, various federal agencies said employees would be limited to doing work related to the shutdown, including changing voicemail messages, posting an out-of-office message on email, securing work stations and documents and completing time cards. At the Environmental Protection Agency, for example, employees were told they cannot work on "any projects, tasks, activities or respond to emails." The more cynical ones out there may ask: just how is that any change?

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On The First Day Of Shutdown, The Futures Were... Giddy

If there is one day the Fed's trading desk actually did want futures lower, if only for purely optical purposes and to at least suggest that the government, and not the Fed, is still in charge of the US, it is the day when the US government - for the first time in 17 years - has shut down. They certainly did not want the S&P to be up nearly 0.5% mere hours after Congress and the presidency confirmed to the world that in a world in which "the Chairman gets to work", a functioning government is completely irrelevant. Yet this is precisely what is going on. What is making matters worse is that on the other side of the world, Japan also finally announced the well-telegraphed sales tax increase to8%, offset by a JPY5 trillion yen "stimulus" which however Japan said, much to the Chagrin of Mrs. Watanabe and a 100 pip overnight plunge in the USDJPY, would be funded not with more new bond issuance (and thus without new "wealth effect" generating monetization). It is unclear just how it will be funded but since increasingly more global fiscal and monetary policy is based on science fiction we know better than to ask.

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Shut Happens

It's 12:01am, do you know where your government is?



The last government shutdown lasted 21 days, from December 1996 to January 1997, and cost the administration of US President Bill Clinton cost an estimated $2 billion, according to the White House’s Office of Management and Budget.

S&P Futures are 1677, 10Y yield 2.65%, WTI $101.96, Gold $1329.00 - let's see where we open tomorrow...

Full White House Statement below... and 10 ways the government shutdown could hurt America

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With 20 Minutes To Shutdown - House Reconvenes - Live Feed

We presume it is to sing Auld Lang Syne but with 15 minutes left until the inevitable, it can really only be ensure they get the last soundbites in before the ball drops...

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T-Minus 60 Minutes: Harry Reid Says Will Not Go To Conference - Live Feed From Senate

Much confusion with just one hour left as Eric Cantor seeks to request a conference with the Senate. This is taking place even as the White House budget office will instruct agencies on a shutdown in under 30 minutes. And moments ago, Harry Reid said from the Senate that he would "not go to conference" until he gets a clean CR. So unless the House Republicans fold completely, as Democrats hope they will, the shutdown is assured. Live feed from Senate.

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