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8.27.15 - CHINA SELLS DOLLARS TO BOOST YUAN

Gold last traded at $1,122 an ounce. Silver at $14.41 an ounce.

NEWS SUMMARY: After upbeat 2nd quarter growth revisions, U.S. stocks rallied Thursday as China led a global stock and commodity price rebound. Precious metal prices were steady despite a stronger dollar.

China Sells U.S. Treasuries to Support Yuan -Bloomberg
"China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter....The People’s Bank of China has been offloading dollars and buying yuan to support the exchange rate, a policy that’s contributed to a $315 billion drop in its foreign-exchange reserves over the last 12 months....The $3.65 trillion stockpile will fall by some $40 billion a month in the remainder of 2015 because of the intervention. The PBOC has sold at least $106 billion of reserve assets in the last two weeks, including Treasuries, according to an estimate from Societe Generale SA."

Fox Business China Struggles To Boost Stocks & Currency -Fox Business
Author and Swiss America Chairman Craig Smith joined Deke Digitial CEO Dave Maney to discuss the impact of the reported Chinese selling of $106 billion in U.S. Treasuries over the last two weeks. Will this action send U.S. interest rates higher? According to Mr. Smith, "No, not initially. The Fed is so confused they don't know what to do now." Craig reminds viewers that amid all of the China-bashing going on by Donald Trump and others, we must keep in mind the Chinese are simply following a path blazed by former Fed Chairman Ben Bernanke back in 2010 when he said the purpose of launching quantitative easing was to boost stock market confidence. "The only difference is China is using their reserves and the U.S. printed the money," said Smith. Mr. Maney likens China to an inexperienced. free market motorcyclist which is good at fast acceleration, but not sure how to slow down safely. Smith says the U.S. needs to be careful because out of control spending in Washington D.C. has created $18 trillion in debt. What will China's intervention mean for the dollar, read Mr. Smith's latest Special Report What's Next For The Dollar?

Q2 GDP Soars To 3.7% Driven By Record Inventory Build -Zero Hedge
"Well, if the Fed is truly data-dependent, September is now squarely back on the table following the first revision of Q2 GDP data which soared from 2.3% to a whopping 3.7%, blowing out the Wall Street consensus estimate of 3.2%, and printing above the highest Wall Street forecast....But the real reason for the surge is an inventory build of $124 in the first GDP estimate, the BEA now sees a total of $136.2 billion in inventory build in Q2. This is an all time record, and a number which suggests the upcoming inventory liquidation will be truly epic, not to mention recessionary."

The Fed Turned the Stock Market Into a 'Hall of Mirrors' -Reason
"'Confoundingly to me, people have come to be quite accepting of the value attached by fiat to these pieces of paper we call currency,' says Jim Grant, who’s the editor of Grant’s Interest Rate Observer and the author of The Forgotten Depression: The Crash That Cured Itself. 'Are prices meant to be imposed from on high, or discovered by individuals acting spontaneously in markets? The readers and viewers of Reason known the answer to that but they’re regrettably in the minority.' Grant sat down with Reason magazine editor-in-chief Matt Welch to discuss the underlying causes of the recent market turbulence, why we don’t really 'have interest rates anymore,' and how the classic jazz song 'It’s Only a Paper Moon' provides a fitting metaphor for the equities market." Discover why the Fed has now trapped the financial markets and economy with its own bad policy decisions in The Biggest Bank Heist in History.

Central bankers gather seeking to boost inflation -Marketwatch
"Why is inflation so low? Is it a sign that the U.S. economy hasn’t recovered? These are the questions Federal Reserve officials and global central bankers will grapple with at the U.S. central bank’s annual Jackson Hole policy summit....If inflation is low because of a tepid recovery, then any Fed rate hike could damage the economy....The Fed’s favorite measure of inflation, the personal consumption expenditure index, has been below the central bank’s 2% annual rate target since 2012. It was up at an 0.3% annual rate in June."

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8.26.15 - MARKETS CALL FED'S BLUFF

Gold last traded at $1,124 an ounce. Silver at $14.04 an ounce

NEWS SUMMARY: U.S. stocks rebounded from their 6-day slide Wednesday amid upbeat Fed-speak and durable goods data. Meanwhile, the dollar traded sharply higher as gold prices consolidated recent gains to trade near $1,125 an ounce.

NY Fed Head Sends Rate-Hike Odds Plunging -CNBC
"A September rate hike is looking less compelling, according to William Dudley, president of the New York Federal Reserve. A voting member of the Federal Open Market Committee, Dudley addressed the Fed's potential tightening - especially considering the recent collapse in U.S. equities and international financial turmoil - in a Wednesday press briefing. 'From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago,' he said."

domino The Fed’s Stock-Price Correction -Wall Street Journal
"The unfolding stock-market collapse - the Dow Jones Industrial Average plummeted more than 1,000 points on Monday morning, rebounding later to nearly 600 points down, following several days of decline last week - is the inevitable result of the Federal Reserve’s policies, namely quantitative easing that produced abnormally low interest rates....The excess price of equities was not the only mispricing caused by the Fed’s unconventional monetary policy. Much of this mispricing will likely unwind in the months ahead....Postponing a 25-basis-point rise from September to December or even March would not have any significant effect on aggregate demand and employment." This excellent op-ed by economist Martin Feldstein comes to the same conclusion Mr. Smith and Ponte arrive at in The Biggest Bank Heist in History

Stock market calls the Fed's bluff -CNBC
"The Fed is aware there wouldn't be a solvent entitlement program or pension plan without stock-price increases of around 8 percent each year. A tightening cycle when markets and economies are on life support would put that target very far out of reach. Therefore, look for the Fed to back away from rate hikes in the next few weeks as the Federal Open Market Committee finally realizes it will be stuck at near zero for many years to come....This should cause the highly overcrowded long dollar trade to roll over sharply very soon and provide investors to profit in anti-dollar investments such as precious metals." Ding-ding! Excellent analysis. Learn more about the world's ultimate "anti-dollar" in The Timeless Truth About Gold & Silver.

Should Obama Cancel September Meeting With China? -Fox News
Presidential Candidate Gov. Scott Walker (R-WI) thinks the U.S. should cancel the visit by Chinese President Xi planned in September due to China's currency manipulation, cyber attacks and militarization of the South China Sea. GOP strategist Mercedes Schlapp agrees with Walker saying, "The U.S. government must be more aggressive in dealing with China." Author and Swiss America Chairman Craig Smith disagrees saying, "It is just rude to cancel a meeting planned last February....it's called diplomacy." Fox News guest host Stuart Varney asked Smith if he thought Obama would get tough at such a meeting. Smith doesn't believe so, but he also doesn't believe a weak president is reason enough to cancel. Mr. Smith thinks it's time we stop blaming the Chinese exclusively for this global slowdown; as Donald Trump did earlier this week. Our leaders in government and at the Federal Reserve need to take responsibility for growing stock market volatility caused by their anti-growth, anti-free market policies. Read Mr. Smith's newest special report, What's Next For The Dollar?

The Deeper Dread Lurking Behind the Stock Market Sell-Off -New York Magazine
"When it comes to saving the economy, does Janet Yellen have an empty tool kit? Over the past week, stock markets around the world have had something of a temper tantrum, ginning up trillions of dollars of paper losses and any number of panicked cable-news chyrons.....Let's say that this is not just a market gyration, even if we have no reason to believe it is anything other than that. Economic growth grinds to a halt. Silicon Valley’s bubble bursts. Unemployment rises. Financial institutions falter. The stock market plunges into the red....Analysts have long been worried about diminishing returns and increasing risks from policies like quantitative easing, and the Fed has long signaled that there is only so much it can do."

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8.25.15 - THE SAVAGE TRUTH ABOUT STOCKS & GOLD

Gold last traded at $1,138 an ounce. Silver at $14.61 an ounce.

NEWS SUMMARY: U.S. stocks rebounded Tuesday then fell sharply at the close amid ongoing global-growth concerns; despite China's interest rate cut and upbeat home sales data. Meanwhile, the dollar bounced off 7-month lows as precious metal prices eased back on speculative profit-taking.

China Eases but Stench of Crisis Remains -Wall Street Journal
"At least Beijing isn’t wasting its crisis. China fired a double-barreled easing shot after its stock market plunged yet again Tuesday. This included an interest-rate cut and a reduction of bank reserve-requirement ratios, both aimed at both cushioning the stock-market fall and spurring the real economy....The problem for China at this point is that so many policy moves, so quickly, have rattled investors. Until the stock market finds its bottom, and the real economy shows convincing signs of health, the stench of crisis will remain. "

What's Going On With Stocks & Gold? - Michael Savage Interviews Craig Smith (8:26 mp3)
National talk show host Michael Savage said there's only one person to tell us what's really going on in the financial and stock markets today: Craig Smith. The DJIA fell 1,000 points at Monday's open, then ended down 589 points. "Will the stock market stay down?" Savage asks Craig. "The worst is not over yet," says Mr. Smith, who then explained why the trillions in easy money created by the Federal Reserve since 2009 has pumped up stock values to bubble levels. "Why is gold down?" asks Savage. Smith replies that prices fluctuate, but the trend is toward tangible, safe havens like; cash, land and gold. "I have never sold my gold," admits Savage. Mr. Smith agrees with Savage's 'buy-and-hold' gold strategy. Craig says it is vital to have a core holding of physical gold coins (between 5-15%) given that gold is the world's ultimate currency. Mr. Smith also reminds listeners the threat of losing the dollar's reserve currency status is growing daily and could soon become a reality. (Listen to 8.24.15 interview)

Advisers Work to Calm Fearful Investors -New York Times
"Even a pep talk from the chief executive of Apple, the single biggest American company by market value, did little to soothe investors on Monday....It worked - for a time. But by the end of the day, Apple and the rest of the market had yielded to the gravitational pull of investor fear.....Investors are now trying to separate the fact from the fear, as they digest how China’s problems will affect the rest of the world. And the process could make for some messiness in the markets, particularly in the United States, where investors have been lulled into a sense of security by a long bull run in stocks." China is taking dramatic action to prolong their economic boom, but it is primarily the Fed's zero interest rate policy which has fueled the present stock market bubble, as Mr. Smith and Ponte cover in The Biggest Bank Heist in History.

Dimmer outlook for US economy, wages and hiring -Associated Press
"The latest Associated Press survey of leading economists shows that most now foresee a weaker expansion than they had earlier. A majority of the nearly three dozen who responded to the survey predict tepid economic growth, weak pay gains and modest hiring for the next two years at least....Nearly 70 percent said they thought the economy's growth would remain below its long-run average of 3 percent annually through 2017. The economy hasn't attained that pace since 2005." In DON'T BANK ON IT!, (page 162) Craig Smith and Lowell Ponte write, "By flooding banks with money conjured out of thin air, the Fed has put banks in a liquidity trap. And by keeping interest rates near zero, the Fed has given near-zero incentive to lenders, including savers who have lent their deposits to banks; this has impaired genuine investment capital formation, hiring and economic growth."

Will the Fed come to the market's rescue? -Fortune
"The global stock rout has many questioning whether the central bank should avoid raising rates or even add stimulus....But if we take the Federal Reserve at its word - that its actions will be dependent on economic data - there’s no reason to believe that the Fed will take the latest market rout as a reason to step in and launch another bond buying program or even implement a program of negative interest rates."

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8.24.15 - FED-INDUCED BEAR MARKET UNLEASHED

Gold last traded at $1,153 an ounce. Silver at $14.76 an ounce.

NEWS SUMMARY: Global equities saw their sharpest fall since the 2008 financial crisis on what's being referred to as "Black Monday" - as an 8% rout in Chinese shares sparked worldwide panic. The Dow plunged over 6% (over 1,000 points) at the start of Monday trading but recovered from its steepest losses later. Meanwhile, the U.S. dollar fell 1.5% as precious metal prices steadied amid liquidity selling and safe haven buying.

Plunge Fed-Rigged Stock Sell-Off Foretold - Swiss America
Today's sudden market volatility comes as no surprise to those who have read Craig Smith and Lowell Ponte's latest book, DON'T BANK ON IT!, or any of their previous five books or ten white papers on the subject in recent years. The U.S. stock market has been "levitated" and "rigged" by the Fed's zero interest rate policy (ZIRP) as "easy money enriched many stock market speculators in the casino of Wall Street, which has gone up while the real business economy wallowed or declined," write Smith and Ponte in DON'T BANK ON IT! (page 90). "The Fed has been a pusher, willing and able to give the stock market its needed fix of easy money." Smith and Ponte warned to watch out once the Fed's quantitative easing ended, "After four years of relentless Fed stimulus, the asset-inflated stock market bubble is four thousand points higher, despite a lackluster economic recovery that is slower even than that following the Great Depression...At some point gravity wins out." Mr. Smith's financial advice for confused investors is to never buy or sell in a panic; instead wait for the dust to settle to make needed portfolio adjustments.

Households just saw $1.8 trillion in wealth vanish -Marketwatch
"As of March 31, households and nonprofits held $24.1 trillion in stocks. That's both directly, and through mutual funds, pension funds and the like. That also includes the holdings of U.S.-based hedge funds, though you'd have to think that most hedge funds are held by households. Using the Dow Jones Total Stock Market index DWCF, through midmorning trade, that number had dropped to $22.32 trillion. In other words, a cool $1.8 trillion has been lost between now and the first quarter - and overwhelmingly, those losses occurred in the last few days. This will probably be the worst quarter for stock-market destruction since the third quarter of 2011, when $2.8 trillion was wiped away."

NYSE To Suspend Stock Trading If S&P 500 Index Plunges 7% -Bloomberg
"The New York Stock Exchange said it will halt trading for 15 minutes if the Standard & Poor's 500 Index drops 7 percent. The stock exchange will pause trading if the benchmark for U.S. equities slumps to 1,832.92 before 3:25 p.m. New York time, Sara Rich, a NYSE spokeswoman said in an e-mail....Trading will stop for a second time if the gauge extends its losses to 13 percent before 3:25 p.m. If the plunge reaches 20 percent at any point during today's session, NYSE will shut the market for the rest of the day."

Stock up on canned food for stock market crash -Independent
"A former advisor to [Former British Prime Minister] Gordon Brown has urged people to stock up on canned goods and bottled water as stock markets around the world slide. Damian McBride appeared to suggest that the stock market dip could lead to civil disorder or other situations where it would be unreasonable for someone to leave the house."

The U.S. Dollar Flirts With A Breakdown -SeekingAlpha
"The U.S. dollar index has confirmed its downtrend from the March 12-year highs as it now flirts with a complete breakdown from past momentum. The low in May was 7% lower than the March high. Looking past potential support at the 200-day moving average, the U.S. dollar could very easily retest those May lows given current developments." Read Mr. Smith's newest special report, What's Next For The Dollar?

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