Steve Bull's Blog, page 1265
November 4, 2017
Weekly Commentary: End of an Era
Of the diverse strains of inflation, asset inflation is by far the most dangerous. A bout of consumer price inflation would be generally recognized as problematic and rectified through a tightening of monetary conditions. On the other hand, asset price inflation is both celebrated and venerated. There is simply no constituency calling for a tightening of conditions to ward off the deleterious effects of rising asset prices, Bubbles and attendant economic maladjustment. And as we’ve witnessed, the bigger the Bubble the more powerful the constituencies that rationalize, justify and promote Bubble excess.
About one year ago, I was expecting a securities markets sell-off in the event of an unexpected Donald Trump win. A Trump presidency would create disruption, upheaval and major uncertainties – political, geopolitical, economic and social. Instead of a fall, the markets experienced a short squeeze and unwind of hedges. Over-liquefied markets and a powerful inflationary bias throughout global securities markets won the day – and the winning runs unabated.
We’ve come a long way since 1992 and James Carville’s “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.” New age central banking has pacified bond markets and eradicated the vigilantes. These days it’s the great equities bull market as all-powerful intimidator.
The President admitted his surprise in winning the election. I suspect he and his team were astounded by the post-election market rally. I’ve always held the view that prolonged bull markets foster a portentous concentration of power – not only in the financial markets but within the financial system more generally.
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Former Prime Minister Howard assumes US shale oil will provide for China’s oil demand growth
Australia in Today’s World – some observations from former PM John Howard
https://aiiansw.tidyhq.com/public/schedule/events/16630-australia-in-today-s-world-some-observations-from-former-pm-john-howard
John Howard was happy to report that Chinese GDP growth is 6% and that a great future lies ahead for Australia.
In Q&A I asked him:
“Are you aware that Chinese oil production peaked in 2015? Therefore China is now where the US was in 1970 when US production peaked. That was followed by the Nixon shock in which the US cancelled the convertibility of the US$ to gold. In 2016, China’s oil demand growth was around half a million barrels per day. Multiply this by 10 years and where will 5 mb/d come from?”
Here are a couple of graphs which highlight the situation:
Fig 1: China’s oil production
Fig 2: China’s oil demand by fuel
Note that only 24% of fuels (and 18% of growth) is petrol which means electric cars won’t help much.
Fig 3: Asia Pacific oil production vs consumption
The above is my favorite graph to show that there cannot be perpetual growth in the “Asian Century”
Howard’s answer:
“I was never asked this question….from US shale oil I guess”
Let’s have a look at the US crude oil projections from the Energy Information Administration done in January 2017:
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Media Capture in the Digital Age
NEW YORK – The last couple of years have not been good for freedom of expression. The governments of Poland, Hungary, and Turkey have become increasingly authoritarian and – like leaders in the Balkans, China, and Russia – increasingly eager to control public discourse. In the United States, too, President Donald Trump relentlessly attempts to discredit the news media, and his administration is unprecedentedly inaccessible to the press.
The age of censors physically redacting newspapers, as I have seen in Vietnam and Myanmar, is mostly over. But, as recent developments show, press freedom remains highly vulnerable, as governments and “vested interests networked with politics,” in the words of the political scientist Alina Mungiu-Pippidi, engage in a kind of soft control that can be described as “media capture.”
Economists used the term “capture” after the financial crisis of 2008 to describe how regulators, who often came from (and returned to) the industry they were supposed to oversee, failed to police the sector properly. Media capture works in much the same way, with political leaders either owning media outlets outright (think of Italy’s Silvio Berlusconi) or ensuring that media leaders are loyal to them, whether through cronyism or punishment.
One of the first orders of business for Poland’s far-right government, led unofficially by Jarosław Kaczyński, was to adopt a new media law allowing it to hire and fire the heads of public broadcasting networks. In Turkey, President Recep Tayyip Erdoğan’s government has jailed critical journalists – such as the well-known columnist Ahmet Altan and his brother Mehmet, a professor – and closed down or seized control of media companies, using fear to shape reporting.
…click on the above link to read the rest of the article…
Gerald Celente Warns Of 2018 Recession: “We’ve Never Seen One Like This Before”
Trend forecaster Gerald Celente, who warned investors of the collapse of 2008 just weeks before the markets buckled, has issued a new recession warning for 2018 in his latest interview with Greg Hunter of USA Watchdog. But this time, says Celente, it’s going to be a different kind of scenario:
All the investment is at the top… and the top is the one that’s going to fall… and when they fall, the bottom will feel it but more psychologically than in their pocket… be cause it’s the “Bigs” that are going to fall…
You look at the tops in the condominium market, in the housing market with houses over $1.5 million… that market is slowing down dramatically… you go into the rich retail sectors around the country… Chicago, New York, San Francisco… you see a lot of For Rent signs… because the big multinationals that used to be there that are no longer making the money at the top that they were, are closing down… the rents are so high that they can’t fill them up with the average retailer… so we’re seeing the pressure from the top falling already…
We’re calling this a “Stage 1 Recession.”
That’s our top trend for 2018… we’ve never seen one like this before… so it’s going to start melting down from the top.
How far down will it go?
We’re looking for a 10% correction in the markets… we’re not looking for a crash at this point… it depends how far it melts.
Bombshell Revelation of US and Saudi Culpability in Creating ISIS Ignored by Mainstream Media – and by the Team Trump

Bombshell Revelation of US and Saudi Culpability in Creating ISIS Ignored by Mainstream Media – and by the Team Trump
Here it is, right from the horse’s mouth! Qatar’s former prime minister spills his guts about how his country worked with Saudi Arabia and Turkey under the direction of the United States – meaning then the Obama Administration – to funnel arms and money to jihad terrorists in Syria:
‘The explosive interview constitutes a high level “public admission to collusion and coordination between four countries to destabilize an independent state, [including] possible support for Nusra/al-Qaeda.” … Former Prime Minister Hamad bin Jassim bin Jaber al-Thani, who oversaw Syria operations on behalf of Qatar until 2013,… said while acknowledging Gulf nations were arming jihadists in Syria with the approval and support of US and Turkey: “I don’t want to go into details but we have full documents about us taking charge [in Syria].” He claimed that both Saudi Arabia’s King Abdullah (who reigned until his death in 2015) and the United States placed Qatar in a lead role concerning covert operations to execute the proxy war.
‘The former prime minister’s comments, while very revealing, were intended as a defense and excuse of Qatar’s support for terrorism, and as a critique of the US and Saudi Arabia for essentially leaving Qatar “holding the bag” in terms of the war against Assad. Al-Thani explained that Qatar continued its financing of armed insurgents in Syria while other countries eventually wound down large-scale support, which is why he lashed out at the US and the Saudis, who initially “were with us in the same trench.”’ [“In Shocking, Viral Interview, Qatar Confesses Secrets Behind Syrian War,” Zero Hedge, October 29]
…click on the above link to read the rest of the article…
Spain Just Lit a Fuse Under Catalonia — its Richest Region
Acute uncertainty is like sand in the gears of the local economy.
It’s amazing how fast the wheels of the Spanish justice system go round when the establishment wants them to, and how slowly they revolve when it doesn’t, which is usually when members of the same establishment — senior politicians and civil servants, bankers, business owners, or even royalty — are in the dock, which is happening with disturbing regularity these days.
On Thursday we saw Spanish justice at its fastest. In the dock was the recently sacked vice president of Catalonia’s separatist government, Oriol Junqueras, and seven other elected representatives of the breakaway region who stand accused of a litany of charges, including rebellion, which carries a maximum sentence of 30 years’ imprisonment.
The counsel for the defence had less than 24 hours to prepare the case. After just a few hours of hearing preliminary evidence, the National Court Judge sent half of Catalonia’s suspended government to jail without bail. On Friday,the same judge issued an international arrest warrant for Carles Puigdemont, the disputed Catalan president who fled to Brussels on Monday, as well as four other former ministers who did not show up to court on Thursday.
Catalonia’s separatist politicians are paying a very high price for overplaying their hand. As we warned months ago, many in the Catalan government had hoped that threatening to declare independence unilaterally, or even following through on the threats (which it kind of did on Friday), might be enough to push the Spanish government into having to compromise. It was a massive bluff, and it’s hugely backfired.
…click on the above link to read the rest of the article…
Preparing For EU Collapse

Claude Monet The house at Yerres 1876
If there is one thing the Spain vs Catalonia conflict reminds us of, it has got to be Turkey. And that is a much bigger problem for the EU than it realizes. First of all, Brussels can no longer insist that this is an internal, domestic, Spanish issue, since Catalan president Puidgemont is in…Brussels. So are 4 members of his government.
That moves decisions to be made about his situation from the Spanish legal system to its Belgian counterpart. And the two are not identical twins. Even if both countries are EU members. This may expose a very large European problem: the lack of equality among justice systems. Citizens of EU member countries are free to move and work across the Union, but they are subject to different laws and constitutions.
The way the Spanish government tries to go after Puidgemont is exactly the same as the way Turkish president Erdogan tries to get to his perceived archenemy, Fethullah Gülen, a longtime resident of Pennsylvania. But the US doesn’t want to extradite Gülen, not even now Turkey arrests US embassy personnel. The Americans have had enough of Erdogan.
Erdogan accuses Gülen of organizing a coup. Spanish PM Rajoy accuses the Catalan government of the same. But they are not the same kind of coup. The Turkish one saw violence and death. The Spanish one did not, at least not from the side of those who allegedly perpetrated the coup.
Brussels should have intervened in the Catalonia mess a long time ago, called a meeting, instead of claiming this had nothing to do with the EU, a claim as cowardly as it is cheap. You’re either a union or you’re not.
…click on the above link to read the rest of the article…
November 3, 2017
How US Debt Slaves Get Trapped by “Deferred Interest”
But over the next 2 months, they’ll try to prop up US retailers and the entire global economy.
Credit cards play a huge role in what the US retail industry hopes will be a $682-billion splurge by Americans over the holiday selling season. Already, total revolving consumer credit outstanding – mostly credit cards – has reached $1 trillion, up 5.4% from a year ago, and will surge over the next two months, as US consumers try to prop up the global economy by going deeper into debt.
So the consumer finance industry is proffering its services via store-branded credit cards to make this happen. It’s not doing this for the love of the US economy but to extract its pound of flesh from consumers who don’t make enough money to pay off their credit card balances every month – the very debt slaves that carry the $1 trillion on their backs – and who don’t read the fine print. For them, the finance industry has a special money extraction tool: “deferred interest.”
When consumers are at the cashier or online, they may get offers of 0%-financing and a discount on the first purchase if they sign up for a store-branded credit card on the spot. A study by WalletHub of the financing options offered online by 75 large US retailers found that all retailers that offer store-branded cards with 0% financing use “deferred interest” clauses:
Deferred-interest financing is like a wolf in a sheep’s clothing, pairing an enticing offer – something like “no interest if paid in full” or “special financing” – with a clause that allows the deal to turn ugly if you make the slightest mistake. Paying your bill a day late or owing even $1 when the promotional period ends would enable the issuer to retroactively apply finance charges to your entire original purchase amount, as if the intro rate never existed.
…click on the above link to read the rest of the article…
The Swiss National Bank Now Owns A Record $88 Billion In US Stocks
In the third quarter of 2017, one in which the global economy was supposedly undergoing a unprecedented “coordinated growth spurt”, and in which central banks were preparing to unveil their QE tapering intentions, in the case of the ECB, or raising rates outright, at the Fed, what was really taking place was another central bank buying spree meant to boost confidence that things are now back to normal, using “money” freshly printed out of thin air, and spent to prop up risk assets around the world by recklessly buying stocks with no regard for price or cost.
Nowhere was this more obvious than in the latest, just released 13F from the massive hedge fund known as the “Swiss National Bank.” What it showed is that, just like in the prior quarter, and the quarter before that, and on, and on, the Swiss central bank had gone on another aggressive buying spree and following its record purchases in the first quarter, the central bank boosted its total holdings of US stocks to an all time high $87.8 billion, up 4.2% or $3.5 billion from the $84.3 billion at the end of the second first quarter.
As reported earlier this week, as of Sept.30, the Swiss central bank had accumulated foreign exchange worth 760 billion francs (roughly the same in USD) due to its relentless open market interventions to depress the Swiss franc, and has “invested” those funds created out of thin air in both stocks and bonds. At the end of the second quarter, it held 20% in equities, of which the bulk was in US stocks.
…click on the above link to read the rest of the article…
US Boosts Special Operations Forces Presence at Russia’s Border

US Boosts Special Operations Forces Presence at Russia’s Border
The deployment of US Special Operations Forces in Europe is never in spotlight but it is rapidly increasing. There can be no other purpose than acquisition of capability to deliver strikes deep into Russia’s territory.
The Trump administration is relying heavily on Special Operations Forces (SOF). They are deployed to 137 countries or 70% of them in the world. At least 8,000 of SOF are operating in around 80 countries at any given moment. The numbers have ballooned from a few thousands in the 1980s to 70,000 at present. In 2016, the US deployed special operators to Taiwan, Mongolia, Kazakhstan, Tajikistan, Afghanistan, Nepal, India, Laos, the Philippines, South Korea, and Japan. In 2006, 3 percent of special operators deployed overseas were in Europe. In 2016, the number topped 12 percent.
Much has been said recently about SOF operations in Africa, which are going to expand and intensify. Formally, they are on train and assist missions to counter terrorist threats. But one can hardly imagine the need to deploy such special purpose forces from overseas to fight terrorists in the Old Continent.
The United States increased the presence of SOF in Europe four times last year. The forces are mainly deployed near Russia’s borders, including such countries as the Baltic States, Romania, Poland, Ukraine and Georgia. In 2017, SOF have deployed to more than 20 European countries.
In March, SOF (Army Green Berets) trained along local troops in Lapland, Finland, during exercise Northern Griffin 2017. In May, Navy SEALs were part of exercise Flaming Sword 17 in Lithuania. In June, members of the US 10th Special Forces Group trained near Lubliniec, Poland. In July, naval SOF took part in Sea Breeze annual military exercise in Ukraine.
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