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Mike Mish Shedlock

Mike Mish Shedlock

Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Articles by Mike Mish Shedlock

India Fears Run on Banks

December 31, 2016

Indian banks are fearful of running out of cash as lines queue up to withdraw money.
Bankers say they cannot cope with any sudden increase in demand, and warn against lifting cash withdrawal limits.

A decision by New Delhi on November 8 to scrap all large-denomination banknotes overnight removed 86 per cent of India’s currency from circulation. In an effort to prevent banks running out of cash, the finance ministry then imposed strict limits on the amount of new notes that could be withdrawn. Customers can currently withdraw just Rs2,500 from an ATM per day — equivalent to $37 — or Rs24,000 over the counter per week.
Myths, Misunderstandings and Outright lies about owning Gold. Are you at risk?
“If the government lifts the limits on Friday and there is a sudden rush,

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German Media Aid Merkel

December 23, 2016

German media is solidly behind Angela Merkel as the US media was behind Hillary Clinton. German reporting of the recent terrorist truck incident was in a single word “pathetic”.
Thanks to chancellor Merkel, it’s politically incorrect to presume refugees are a problem. Worse yet, the media cooperates.
Culture of Denial
The following via email from Eurointelligence.
Why are the most advertised Gold and Silver coins NOT the best way to invest?
The discussion about the terror attack in Berlin has turned political very quickly, with some commentators now wondering openly whether this might cost Angela Merkel the elections.
This is at its most fundamental a story about denial. The German establishment, and their friends in the media, are in denial that Merkel’s

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Eurozone Showdown Coming

December 14, 2016

The eurozone cannot survive without Italy. The serious problem at the moment is the Eurozone also cannot survive with Italy.
Two of Italy’s three largest parties are anti-Euro. The only party in Italy that does support the euro is ex-prime minister Matteo Renzi’s Democratic Party. And with Renzi gone, there’s a huge risk the party splinters.
Regardless, there are no likely scenarios that can keep things from flying apart according to Wolfgang Münchau. I believe his analysis is solid.
Münchau makes a detailed case why the eurozone is doomed in Italy Poses a Huge Threat to the Euro and Union.
Myths, Misunderstandings and Outright lies about owning Gold. Are you at risk?
He lists five ways the Eurozone can stay intact. However, none of them stands up to close

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War on Cash Becomes War on Gold

December 9, 2016

Global financial repression picks up steam, led by India. After declaring large denomination notes illegal, India now targets gold.
It’s not just gold bars or bullion. The government has raided houses, no questions asked, confiscating jewelry.
For background to this article, please see my November 27 article Cash Chaos in India, 86% of Money in Circulation Withdrawn; Cash Still King in Japan.
Large denomination means 500-rupee ($7.30) and 1,000-rupee notes ($14.60), which account for more than 85 percent of the money supply. They are no longer legal tender, effective immediately.
As one might imagine, chaos ensued. And it continues.
Myths, Misunderstandings and Outright lies about owning Gold. Are you at risk?
India Confiscates Gold
Picking up where we left off, please

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They Shopped Until They Dropped—–August Consumer Spending Up 0.00%

September 30, 2016

Personal income rose 0.2% in August, as economists expected. However, consumer spending rose 0.0% vs. the Econoday Consensus estimate of 0.2%.
The personal consumption expenditures (PCE) price index came in at +0.1% vs. a consensus of +0.2%. Last month the PCE was flat. This certainly is not what the Fed expected or wanted.
Year-over-year, PCE is up 1.0%, with the core PCE (excluding food and energy) up 1.7%.

Highlights
August was a soft month for the consumer, both for income and especially for spending. Income rose only 0.2 percent in the month as wages & salaries, which had been on a 4-month surge, could inch only 1 tenth higher in August. Consumer spending, which had also been on a 4-month winning streak, came in unchanged as durable goods declined, largely reflecting monthly weakness

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Durables Goods Orders Less Transportation Negative Y/Y For 20th Straight Month

September 28, 2016

Factory orders did way better than the Econoday consensus estimate of -1.9% but that was against a revision that took July from +4.4% to +3.6%. The good news pretty much stops there.
Highlights
The headline, at a monthly zero percent, is flat and so are the indications from the bulk of the August durable goods report. Excluding transportation, orders slipped 0.4 percent. This reading excludes a 22 percent downswing in civilian aircraft orders that is offset in part, however, by a solid 0.7 percent gain for vehicle orders. Readings on core capital goods (nondefense excluding aircraft) are mixed with orders up 0.6 percent, which points to shipment strength ahead, but current shipments are down -0.4 to extend a long string of declines going back to May. The weakness here in shipments is a

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Deutsche Bank’s Monumental Mess—Merkel Says No State Aid, Depositor Bail-In Coming Up?

September 24, 2016

The €72 trillion (notional) derivatives mess known as Deutsche Bank remains under severe pressure. It’s market cap is $17.43 billion. It has no earnings and pays no dividend.
On April 23, Deutsche Bank was Fined $2.5 Billion over LIBOR rate rigging. Twenty-one people face criminal charges following a seven-year investigation.
On September 16, the US Department of Justice Fined Deutsche Bank $14B for mortgage securities fraud leading up to the 2007-2009 global meltdown.
Today, German Chancellor Angela Merkel Rules Out Assistance for Deutsche Bank.
No Comment
Chancellor Angela Merkel has ruled out any state assistance for Deutsche Bank AG in the year heading into the national election in September 2017, Focus magazine reported, citing unidentified government officials.
The German leader

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Can the Immigrant Crisis Be Solved?

September 20, 2016

UK prime minister Theresa May will address the UN General Assembly on Tuesday. She seeks UN Action to Control Mass Migration Flows.
In contrast, I propose a 10-point “common sense” solution, not UN action.
Let’s start with May’s proposal.
Theresa May will use her first appearance as British prime minister at a United Nations General Assembly meeting starting Monday to urge fellow leaders to do more to control mass migration, which she’ll argue hurts both refugees and the countries they enter.
May will say the migrants should be encouraged to claim asylum in the first safe country they reach.
Meanwhile the EU’s open internal borders have allowed large population flows, with many Eastern Europeans traveling to richer countries in search of a better life. It

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Thinking of a Dem Donation?

September 19, 2016

Things are not going well for the Hillary campaign these days.
She is without a doubt sick, but no one knows what. Anyone trusting the pneumonia diagnosis as the full truth has mush for brains.
Her “deplorables” comment backfired miserably.
And today we learned that the Clinton campaign has been dinging donors multiple times for “one-time” donations.
Recurring “One Time” Donations
Please consider Hillary Clinton Campaign Systematically Overcharging Poorest Donors.
Hillary Clinton’s campaign is stealing from her poorest supporters by purposefully and repeatedly overcharging them after they make what’s supposed to be a one-time small donation through her official campaign website, multiple sources tell the Observer.
The overcharges are occurring so often that

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Hillary Strangelove—-Flashback To 2008 And War You Can Believe In

September 17, 2016

A reader sent me an image of Hillary imposed with images of Peter Sellers from the movie Mysterious Doctor Strangelove.
I bit of digging turned up other interesting images and articles.
Hillary Strangelove

Origin is unknown, but a Boston Globe had an editorial back in 2008 with that same title: Hillary Strangelove
AMERICANS have learned to take with a grain of salt much of the rhetoric in a campaign like the current Democratic donnybrook between Hillary Clinton and Barack Obama. Still, there are some red lines that should never be crossed. Clinton did so Tuesday morning, the day of the Pennsylvania primary, when she told ABC’s “Good Morning America” that, if she were president, she would “totally obliterate” Iran if Iran attacked Israel.
This foolish and dangerous threat was muted in

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Late-Stage Lying

September 16, 2016

On Sunday, an “Overheated” Hillary Stumbled or Fainted at a 911 Ceremony.
Hours later, came news flash Hillary’s Doctor Discloses Pneumonia Diagnosis Made Last Friday: Questions Abound.
Since then, a video by Dr Ted Noel has made the rounds. Dr Noel makes a seemingly convincing case Hillary has Late Stage Parkinson’s disease.
Snopes says Noel’s claim is false. I question the analysis of Snopes.
Some Mish readers who are medical doctors have some interesting comments.
Physical Gold & Silver in your IRA. Get the Facts. 
Late Stage Parkinson’s?
[embedded content]
In the above video, Dr Ted Noel makes a seemingly convincing case Hillary has Late Stage Parkinson’s disease.
My first thought on watching the video was “Wow”. My second thought was “Wow, I wish Dr

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Auto Collision Ahead: Motor Vehicle Production +0.5%, Motor Vehicle Sales -4.4% Year-Over-Year

September 15, 2016

In the third poor economic report today, we learned industrial production declined 0.4% vs. an Econoday Consensus of -0.2%.
Diving into the Industrial Production and Capacity Utilization – G.17 Federal Reserve Report we also learned July was revised from +0.7 to +0.6 and manufacturing from +0.5 to +0.4%.
The standout pair of numbers is industrial production at -0.4% vs. motor vehicle production at +0.5%.
Highlights
There was some life in the factory sector during July but it proved brief, at least for production. Held down by a 0.4 percent decline in the manufacturing component, industrial production also fell 0.4 percent in data for August. But motor vehicles continue to be a plus in the report, rising 0.5 percent and offsetting a 0.5 percent decline in hi-tech production.
And mining is

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Book Review of David Stockman’s “Trumped! A Nation on the Brink Ruin”

September 13, 2016

David Stockman released his latest book “Trumped! A Nation on Brink of a Ruin” on Monday.
I read an advance copy last weekend.
I could not put the book down. It’s the book I wish I had written if only I had time.

Chapter 1 starts off with Stockman’s take on the revolt of Flyover America kindled by the Trump campaign. He mildly praises Trump with a bit of damnation thrown in, pretty much my position given the alternatives.
“Trumped!” is not really about Donald Trump, the man. Rather it’s about broken contracts and the conditions that led to the rise of Trump in the US, Brexit in the UK, and deteriorating economic conditions globally.
Politically speaking the book is anything but one-sided. Stockman goes after “feckless John Boehner” and his “equally spineless” replacement, Congressman Paul

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Groupthink Lunacy—-Negative 2% Rates, Cash Bans And Monetary Voodo

September 11, 2016

Looking for group think, extrapolation of extreme silliness, linear thinking, and belief in absurd models?
Then look no further than Fed presidents, their advisors, and academia loaded charlatan professors.
Today’s spotlight is on Marvin Goodfriend, a former economist and policy advisor at the Federal Reserve’s Bank of Richmond, and Ken Rogoff, a chaired Harvard economics professor, a one-time chief economist at the International Monetary Fund.
Case for Minus 2% Rates
Goodfriend says the Fed Might Need to Cut Rates to Minus 2 Percent.
The U.S. Federal Reserve might need to cut interest rates to as low as negative 2 percent, far lower than levels other global central banks have tested, a former Fed economist said.
That’s what would likely be needed to engineer a recovery if the U.S.

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Red Hot Junk and Massive Bond-Market Dislocations; Equity Smash Coming Up?

September 9, 2016

The economic data does not support a rate hike. Is the Fed is really worried about something else?
How about an overheating junk bond market? An equity bubble? Room to cut later? Or does the Fed really think the economy is strong?
Regardless, a massive selloff in bonds in Japan and a two-day five-sigma event in German bunds may be the start of a significant rout.
Let’s investigate this through the eyes of various bond market dislocations.
[embedded content]
Sizzling Hot
Bloomberg reports Red-Hot Market Spurs Risky Bonds That Allow Interest Delays.
The bond market is getting so hot that it’s fueling a surge in debt deals allowing companies to defer interest payments.
Just a week in, September is already on track to become the busiest month for so-called payment-in-kind toggle notes that

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Why The Eurozone Will Self-Destruct

September 9, 2016

Fireworks are going off in Germany again in yet another battle between Wolfgang Schaeuble, Germany’s finance minister, and the ECB.
Schaueble dismissed a suggestion this week by ECB head Mario Draghi that Germany should use fiscal room for manoeuvre to decrease its export surplus.

Reuters reports Germany’s Schaeuble blames ECB for German Export Surplus.
Germany has no plans to reduce its export surplus, Finance Minister Wolfgang Schaeuble said on Friday, as the European Central Bank (ECB) has not changed its monetary policy which has led to a weaker euro which in turn boosts German exports.
“Even before the European Central Bank decided its policies of unusual monetary policy, which also led to the euro exchange rate falling significantly, I said that we will increase German export

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Stanley Fischer’s Low Rate Humbuggery

September 3, 2016

Federal Reserve Vice-Chairman Stanley Fischer made a couple of controversial statements this week regarding negative interest rates.
Fisher stated negative rates “seem to work” while admitting they are bad for savers but they “typically they go along with quite decent equity prices.”
There are two problems in play. The first is an explicit admission that the Fed sponsors wealth inequality. The second problem is Fisher does not understand how markets even work.
Failed Transmission
John Hussman takes Fisher to task on how markets work Failed Transmission – Evidence on the Futility of Activist Fed Policy.
Any economist with even a vague understanding of how securities are priced should understand that elevating the price that investors pay for financial securities doesn’t increase aggregate

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Productivity Dives For 3rd Straight Quarter; Unit Labor Costs Soar 4.3%; Robust Hiring About To End

September 2, 2016

Janet Yellen and the Fed are concerned about Labor Productivity. It’s down for the third consecutive quarter, a rarity.

Nonfarm business sector labor productivity decreased at a 0.6-percent annual rate during the second quarter of 2016, the U.S. Bureau of Labor Statistics reported today, as output increased 1.1 percent and hours worked increased 1.7 percent. Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.
In the second quarter of 2016, nonfarm business productivity was revised down slightly to a decline of 0.6 percent. Output was revised down slightly to an increase of 1.1 percent, and hours were revised down slightly to an increase of 1.7

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Madness In Draghi Land——European Companies Issue Debt Simply Because the ECB will Buy That Debt

August 22, 2016

Things are so absurd in the Eurozone that the ECB is buying private placement debt with little regard for safety. In turn, private equity companies issue debt simply because they know in advance the ECB will buy it.
It’s a startling example of how the market is adapting to extremes of monetary policy, and it’s a safe conclusion the experiment will not end well.
For now, it’s a Seller’s Paradise as Companies Build Bonds for European Central Bank to Buy.
The European Central Bank’s corporate-bond-buying program has stirred so much action in credit markets that some investment banks and companies are creating new debt especially for the central bank to buy.
In two instances, the ECB has bought bonds directly from European companies through so-called private placements, in which debt is sold

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Mind The Shipping News—–Every Major Index Is Down

August 16, 2016

The Port of Long Beach Posts a  7.7% Drop in Container Volumes compared to July 2015. The port attributes the decline to high inventory levels and a slow start to the peak season. Container volumes at the Port of Long Beach fell 7.7 percent in July c…

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