Bad Economic News Right On Cue

Wed, Jun 5, 2013 - 12:54pm

Just last week, we openly speculated that the "economic news" was about to turn decidedly sour, given that the yield on the 10-year note had moved significantly through 2%. So far, spot on.

Let's just take a look at today's headlines:

I first posited that this would be the case a week ago. You can go back and re-read the full post if you'd like: I haven't gotten the pre-BLSBS selloff I had anticipated...but...the fact that the economic news has turned out as expected makes the post increasingly relevant. At the risk of being BulletPointMan, here's a c&p of the main thesis:

"Once again, this move in rates can be traced to the BLSBS report of Friday, May 3. Since then, the note has fallen four points and now rests near support at 130, which corresponds to a rate of about 2.15%. This level may hold but I suspect that it will not. More likely is a drop to what appears to be critical support near 127-128.
But here's the deal. There is no way, no how that The Fed is going to allow support to fail, thereby letting 10-year rates back up to 3%+. Not happening. Besides the detrimental impact higher rates would have on the U.S. budget deficit and debt, higher rates would also crush any nascent economic recovery.
Already we are seeing things slow down in the U.S. (Even that statement is nonsense because "slow down" implies that previously things had been really cooking.) Check this headline from ZH just this morning. And, as discussed last week, if the economy was booming and housing growth was robust, demand for inputs such as lumber would be soaring and soaring demand would lead to higher prices. Right? Right?? Apparently not.

So here's what's likely to happen in the weeks ahead:

  • The 10-year note may fall a bit farther but then it will bounce and begin to rebound
  • Signs that the U.S. economy is weakening will get more mainstream press coverage
  • This will likely begin with a May NFP next Friday that comes in "weaker than expected"
  • A continuation or even increase of QE will shove stocks even higher
  • Gold and silver will finally stabilize and begin trending higher, the start of a summer rally"

OK, then. So what have we seen in the week since this was posted?

  • The 10-year note sold off, reaching a low on Friday of about 128 1/2. It has since bounced back to near 130.
  • The economic weakening is definitely getting more MSM coverage. (See above.)
  • Still waiting on the BLSBS but today's ADP sure raises questions.

Yes, the BLSBS data on Friday could still leave everyone at CNBS grinning ear-to-ear. We'll just have to wait and see. However, it should be clear to everyone that the U.S. economy is not booming or growing. If anything, it simply continues to bounce along the bottom, the illusion of current and future prosperity created by the daily purchase of S&P futures by The Fed's Primary Dealers. There will be no end to QE. Not now. Not later this summer. Not in 2014. Not ever. The only escape from under this mountain of endlessly leveraged debt is currency devaluation. Physical gold and silver will continue to be your only refuge. Buy some today. (And if you do so, please do it through one of our affiliates!)

I had expected hoped that price would recover today after yesterday's CoT-related selloff. So far, so good. Check this action in gold first. Note that price continues to be centered around the recovery trendline that began back on the overnight of the 18th. It also continues to battle a declining 20-day MA that is now near $1405 but stays resilient. This is a very good sign and, if it continues, foreshadows a jump through $1420 and a move back toward the late April recovery highs just below $1490.

And I've found something interesting on the silver chart. Maybe it's nothing. Worth no more than the paper it's printed upon. However, it is not and cannot be coincidence that all of these points on a chart are connected by this declining arc. And look at how the arc was right there to shove price lower on Sunday, the 18th. The Forces of Darkness tried to make it happen. They clipped price for over 10% in a matter of minutes. But a funny thing happened on the way to the beatdown. No additional sellers emerged. Instead of an accelerating drop into the $teens, price reversed and began to recover. We've been in a sideways, $1 range ever since. This has all the earmarkings of a bottom and a trend change. Will it? Can it? The BLSBS on Friday will likely hold the key.

Finally, today, we need to double back to a story that broke just as I was publishing yesterday's post. Our pal, DenverDave, sent me an email notifying me of a very peculiar change in the daily Comex data. It's a new disclaimer which The Comex apparently hopes will shield them from legal consequence should member vaults one day be shown to hold slightly less metal than is reported. The exact verbiage, which suddenly appeared on Monday is this:

"The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only."

With all ChurchLady sincerity: Well, isn't that special? So now The Comex (which is a futures market...and futures, being paper obligations, are entirely dependent upon trust and confidence) is telling us that the information provided to them by their members is not necessarily "accurate or complete"? What???

A very succinct analysis of this can be found at Jesse's place: :

"One can only wonder why the Exchange felt the need to add this statement now, after all these years. Especially when Comex eligible gold inventory levels are approaching record lows, and there is widespread mistrust of certain parties and their opaque market positions on this list.
And there are rumours of forced cash settlements in lieu of bullion delivery floating around. The Hong Kong Metals Exchange just folded, and forced cash settlements. And banks are cancelling physical delivery arrangements.
How can someone who is trading metals and storing them at the warehouse not be concerned about a declaration of force majeure without liability recourse? What is the purpose of a commodities exchange when there are no representations made that they even possess what one is trading?"

Look, the shils, disinfo agents and apologists for The Cartels can SPIN and deceive all they want. But use your eyes and your brain. There is now a mountain of individual dots just waiting for you to connect them. You can either blissfully sit and amidst the pile of shit that has been shoveled upon you for decades or you can prepare for the new paradigm. The choice is yours.

Have a great day.


About the Author

turd [at] tfmetalsreport [dot] com ()


Hunt brother
Jun 5, 2013 - 4:33pm

SP500 tight trailing stops...

The long SP500 position is a trade rather than an investment for many market players. This trade is "protected" with tight 5 to 8 percent trailing stops.

A sp500 below 1600 triggers the stops and the selling accelerates in a cascade.

Will the metals and miners tank along like 2008? No, the metals have already been hit and they may rise on short covering.

Jun 5, 2013 - 4:34pm


What goes around - comes around.

Here we go with those pesky fundamentals again! Nothing. Absolutely nothing has improved for the better.

The fundos don't even coast along, they become worse. The geo-politico maneuverings around the Syrian civil war just get stranger each day. One other moment such as this in history, is eerily similar. The period just before WW I from 1911 to the outbreak of war in 1914.

You had small countries at each other, backed by neighbors who had large armies, who in turn were backed by empires. Just as now we have Syria bickering with smaller countries, who in turn are backed by larger countries with some nuclear capability, backed by nuclear super powers.

See and here more;

GoldistheFuture beardeus
Jun 5, 2013 - 4:38pm


Yup. They did a reverse split and it has been hammered ever since the split. But I am now playing DUST and NUGT back and forth. Hold strong on each and you can play both all day and make money. These ETF's has been swinging $5-10 a day. Just when you think you should sell buy more and then right when you think it is going to break out to the upside, sell. It's like they know exactly where every Stop is set... Oh yea, they do...

Sad-descent Cry Me A River
Jun 5, 2013 - 4:45pm


"This is why I believe that monitoring the yield on ten year notes is critical to understanding the first signs of the next financial crisis."

Great post.

My bet is the spread between the ten and corporates or munis will be where we see the first cracks.

Jun 5, 2013 - 4:46pm

China's "debt"

I hear that phrase so often. China's debt, China's debt fueled bubble etc etc. Let's look at some data.

China has done their version of QE, and they have 2,4tn $ of public debt, which is 40% of GDP. However, if they ever decide they can sell off their 3,4tn $ worth of FX reserves and have 1 tn left to toy with.

The 2,4tn $ number is official public debt. Since the 90ies China has undergone drastic social reforms, so they have unfunded obligations as well. However they are funded differently and therefore aren't as much a drag on state finances as in the western world.

So China is still a creditor nation, a net lender. Their debt is currently not an issue.

The US could not as easily take its 17tn $ of official debt and its nobody knows how much really of unfunded liabilities and pay it off with its 140bn $ of currency reserves.

Katie Rose
Jun 5, 2013 - 4:58pm

Rainbow Coalition Church

I met some wonderful old Hippies yesterday. They had a sign on the front of their banged up pick-up truck that said RAW MILK FOR SALE. I flagged them down, as my Ma Ma goat is not producing enough milk for five hungry babies. They were new to the area, and I was delighted to purchase raw Jersey milk for my baby goats. It is legal to sell raw milk for animals, and I needed some.

They are living entirely off grid, so I began asking for advice on off grid water pumps that can pump enough water for the barn, orchard, house and garden all at the same time. He had some ideas that I had not heard of before, and they sounded like they could work. That was exciting!

Then I began to complain about the Planning Dept here. He had an answer for that. I need to become a Church. I could join their church. Better yet, I needed to become a "church camp." He knew the law, and apparently "church camps" have a lot more flexibility than single family dwellings/farms.

I went away with a smile, only to have it totally wiped off my face by a program from last week on Hagman and Hagman. On it the whistleblower "V" stated that WW III has begun. TPTB need this war to unwind their derivative holdings. All one has to do is witness what is happening around Syria. He stated that too many sophisticated arms are headed into that region and Russia is not backing down.

Then Steve Quayle continued with the statement, "I tell people that they need to secure food, water and then PM's. You need to get food and an independent supply of water before you start stacking metals." Since Steve sells PM's, I felt he was being honest with the listening audience.

So I gave a call to my new Hippie friend, and began dialoguing on an off grid water alternative. The official off grid solution around here is $10,000 +. I figured an old Hippie would know of something a bit cheaper, especially since he has been living off grid for the last thirty years. And being an old Hippie myself, I liked his explanation a lot better than the 10K solution offered up here to the rural ranchers and farmers.

The program I listened to is here:

"V" had a good explanation of the Mark of the Beast already created by the Banksters and ready to be rolled out. It is a system of total monetary servitude.

I hope he was wrong about WW III having begun. I suspect he is not.

Jun 5, 2013 - 5:06pm

@ Katie Rose re: WW III

I concur. It has started. The middle east is its epicenter.

Anyone who is a student of world history, will see an eerilly similar situation between what occurred from 1911 to 1914 and now. Good luck. Been mostly off grid and self sufficent since 2006. I'm out of it (the rat race) and just looking in observing. Hence 'OutLookingIn.'

The Watchman
Jun 5, 2013 - 5:11pm
Jun 5, 2013 - 5:29pm


I agree that watching the 10 year bond is the key, but like Turd said, the Fed will be watching the support line, and WILL NOT let it break.

What breaks down the bond market? Foreign sellers, something we have not really have seen yet? I really think no foreign nation wants to be the first to exist the US bond market, it will be considered an act of economic war against the US, no country wants that.

The other factor, heavy inflation, again something that we have not seen since QE started.

Cry Me A River
Jun 5, 2013 - 5:32pm

Sad Descent

Glad You Mentioned Corporates. I Was Thinking Of Posting A Recent Corporate Bond Chart To Show That Recent Market Reaction:

It Doesn't Look Too Healthy To Me.

High Yield Corporates Have Dropped Off Quite A Bit Recently.

Subscribe or login to read all comments.


Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits

Key Economic Events Week of 8/5

8/5 9:45 ET Markit services PMI
8/5 10:00 ET ISM services PMI
8/6 10:00 ET Job Openings
8/8 10:00 ET Wholesale Inventories
8/9 8:30 ET Producer Price Index

Key Economic Events Week of 7/29

7/30 8:30 ET Personal Inc/Spending & Core Inflation
7/30 10:00 ET Consumer Confidence
7/31 8:15 ET ADP employment
7/31 2:00 pm ET FOMC Fedlines
7/31 2:30 pm ET CGP presser
8/1 9:45 ET Markit Manu PMI
8/1 10:00 ET ISM Manu PMI
8/2 8:30 ET BLSBS
8/2 10:00 ET Factory Orders

Key Economic Events Week of 7/22

7/23 10:00 ET Existing home sales
7/23 10:00 ET Richmond Fed Manu Idx
7/24 9:45 ET flash Markit PMIs
7/25 8:00 ET Count Draghi/ECB policy meeting
7/25 8:30 ET Durable Goods
7/25 8:30 ET Wholesale Inventories
7/26 8:30 ET Q2 GDP first guess

Key Economic Events Week of 7/15

7/15 8:30 ET Empire State Fed Index
7/16 8:30 ET Retail Sales and Import Price Index
7/16 9:15 ET Cap Ute and Ind Prod
7/16 10:00 ET Business Inventories
7/17 8:30 ET Housing Starts and Building Permits
7/18 8:30 ET Philly Fed
7/19 10:00 ET Consumer Sentiment

Forum Discussion

by NW VIEW, Sep 19, 2019 - 11:07pm
by Boggs, Sep 19, 2019 - 10:35pm
by Boggs, Sep 19, 2019 - 10:21pm
by NW VIEW, Sep 19, 2019 - 9:29pm
by sierra skier, Sep 19, 2019 - 8:05pm
by Boggs, Sep 19, 2019 - 5:26pm