Nomi Prins: 'Dark Money' Runs The World

Few people know financial markets’ biggest secret...

For the last 40 years, most people believed the stock market always goes up. Simply buy and hold long enough, the theory went, and you could sit back and watch the money accumulate in your account. No thought or hard work needed.

It was a nifty strategy — until the idea burned most investors in 2008. Almost a decade later, the scar tissue is still fresh for many investors.

Even today, after the U.S. stock market has rallied by 271% since the bottom on March 6, 2009 — nearly tripling investors’ money — only about half of Americans are invested in the stock market, according to NPR. That’s down from two-thirds compared to a decade ago.

The rest are in cash on the sidelines. Maybe that’s been you.

And who can blame you? “Fool me once, shame on you,” the saying goes. “Fool me twice, shame on me.”

Last June, Fortune surveyed readers. 71% of respondents said “the economic system in the U.S. is rigged in favor of certain groups.”

A few years earlier, the Los Angeles Times reported “Poll finds 64% of voters believe stock market is rigged against them…”

They’re not wrong.

Somebody’s made gains from all of those sectors in the stock market. It just hasn’t been Main Street.

Since I’ve left the world of big banking, I’ve made it my mission to change that. That leads me to the catalyst for my new project…

Dark money.

Dark money is the #1 secret life force of today’s rigged financial markets. It drives whole markets up and down. It’s the reason for today’s financial bubbles.

On Wall Street, knowledge of and access to dark money means trillions of dollars per year flowing in and around global stock, bond and derivatives markets.

I learned this firsthand from my career on Wall Street. My first full year working on Wall Street was in 1987.

I wasn’t talking about “dark money” or central bank collusion back then. I was just starting out.

Eventually, I would uncover how the dark money system works… how it has corrupted our financial system… and encouraged greed to the point of crisis like in 2008.

When I moved abroad to create and run the analytics department at Bear Stearns London as senior managing director, I got my first look at how dark money flows and its effects cross borders.

The “dark money” comes from central banks. In essence, central banks “print” money or electronically fabricate money by buying bonds or stocks. They use other tools like adjusting interest rate policy and currency agreements with other central banks to pump liquidity into the financial system.

That dark money goes to the biggest private banks and financial institutions first. From there, it spreads out in seemingly infinite directions affecting different financial assets in different ways.

Yet these dark money flows stretch around the world according to a pattern of power, influence and, of course, wealth for select groups. To be a part of the dark money elite means to have control over many. How elite is a matter of degree.

These is not built upon conspiracy theories. To the contrary, alliances make perfect sense and operate publicly. Even better, their exclusive dealings and the consequences that follow are foreseeable — but only if you understand how the system works and follow the dark money flows.

It’s easy to see how this dark money affects the stock market at a high level, because we can monitor its constant movement.

Here’s the smoking gun:

The red line shows you how much “dark money” the Federal Reserve has printed since 2008.

The blue line shows you the S&P 500.

They move together — more dark money drives the market higher. Much higher.

There are dark money charts from around the world, just like the one I showed you for the Federal Reserve and U.S. stock market.

Look at this “dark money” chart from Japan, for example:

The blue line shows the dark money created by their central bank, The Bank of Japan. The red line shows Japan’s major stock index, the Nikkei 225, going up as well. The dark money drove the market much higher over the past eight years.

Or, look at this “dark money” chart from the U.K.:

Again, the blue line shows the “dark money” created since 2009 by the U.K.’s central bank, The Bank of England. The red line shows how the FTSE 100, their stock index, has followed higher in lock-step.

To invest profitably in financial markets, you need to understand the hidden power relationships that drive financial and political events. Ideologies and personal associations among elites are oblivious to political party lines and international boundaries. So is dark money.

Authored by Nomi Prins via The Daily Reckoning

Bill Blain: "I Have Never Seen So Many Extraordinary Events In One Year, And I’ve Been In Markets Since 1985!"

We don’t think 2018 is going to be the End of the World. There will be opportunities and mistakes. Winners and grinners, and more than a few losers. Sure, we’re looking forward to the new MiFID regime – isn’t everyone? (US Readers…..)

Our broad brush picture is a continuation and acceleration of the Global Macro Alignment theme – a stronger global economy, cautious normalisation, continued upside for risk assets (stocks and alternatives), but a negative outlook for the bond markets with rates set to rise as Central Banks pull back from distortion. They will remain nervous about financial market instability.

If things wobble, them my personal view is the High Yield market is where we will see the most dramatic losses start in bonds. We still see a strong chance of equity market correction – and will buy into it because the global economy is expanding. Our big Macro Threat for the coming year is resurgent inflation – how quickly will it mount and will it take out market sentiment.

The devil is in the detail. We’re positive across all the developed economies and expect to see growth expectations raise. Although the US, UK and Europe will be moving into Normalisation with tightening, while inflation remains sub 2% Japan will continue its ZIRP (zero interest rate policy) which is massive yen negative and therefore stock positive – my Japan-watching macro man Martin Malone is calling for further massive gains in Japan Stocks.

A number of clients are also positive Europe. Despite my scepticism, I can see why. Finally it looks like the European employment crisis is being addressed – unemployment is set to fall below 8% in 2018. That is still intolerably high in social terms, but it’s a massive improvement on where we were. All the other growth drivers for Europe are now positive – strongly suggesting the ECB will ease back on QE and tighten policy. Rates will probably not rise immediately – but the hints will be there.

The US remains problematical – where is tax-reform, protectionism, Trump and all that going to lead us? In the UK it’s a balancing act on Brexit uncertainties, and inflation driven by the week currency. In both case I doubt the authorities will risk market instability though rash action.

Through the coming year, I’ll be providing free and open commentary on these themes on daily basis through the Morning Porridge. We’ve checked and it’s going to be MiFID 2 compliant. The aim of the legislation is to make markets transparent – that’s what I’ve always looked to do! 

I opened a Christmas card this morning from an old market mate in Switzerland this morning who wrote: “2018 might be quite an exciting year!”

If it’s anything like 2017, then he’s going to be right – but the past is not necessarily a guide to the future. I don’t think I’ve ever seen so many extraordinary events in a single year – and remember I’ve been in markets since 1985!

I guess on theme for 2017 has been: New disruptive technology + massive global central bank liquidity + global interconnected markets.

That’s glib enough to explain some of it.. But much of the stuff that happened is completely off the wall, but how markets react tell us lots about market phycology and what drives investors in times of ongoing yield repression (QE & ZIRP), too much money chasing too few assets, and massive FOMO (Fear of missing out):

Markets remain distorted: 10 years after the crisis begain, Global Bank QE has added some $2 trillion to markets, causing severe distortion effects to leap from countries and across asset classes.

Common Sense is an uncommon commodity: Theresa May chucking away her political majority and plunging the already difficult Brexit talks into a mire with the Northern Irish Taliban.

The markets have no memory: Argentina – a country we reckon goes bust every 18-years, successfully issuing a 100 year Century Bond.

Equity and Debt are not aligned: Junk bond issuers selling massively oversubscribed $1 bln deals, the sole purpose of which is to pay a dividend to the private equity owners!

Never mind what it is – Just Buy: Greed and avarice is alive and well as speculators pile into the BitCoin Ponzi – convinced they know what it is. They don’t. Never buy stuff you don’t understand.

An illustration of real value: Earlier this year I was asked to find buyer for some bonds guaranteed by the Scottish Government. The lack of interest demonstrates clearly the significance of confidence in government.

What is it worth?: Salvator Mundi, a painting that may be tangentially by Leonardo sells for $450mm, funded by a Saudi Prince – who is desperately trying to reform his country while shaking down its business classes to pay for it..

I suppose I could add lots more to that list… but lets just think about a few threats for the coming year:

In Europe we’ve got downside from German Politics, the Italian Elections, Separatism in Spain (and maybe Italy), and Brexit, upside from renewed Federalism from France and the German SDP, plus a recovering economy taking some of the pressure off. I guess we will crawl our way around these.

In the States is a question of where Trump is headed. Tax reform? And what will the new Fed do. And what about China?

Sell Bonds and buy Risk Assets – Stocks and Alternatives.. Can it really be that simple?

Elsewhere? Who knows, who can tell..  Anyone for last mince pie?

So nothing left for 2017, except to say Have yourselves a Merry Christmas and a Guid and Prosperous New Year!

It’s certainly going to be “interesting”

Via Bill Blain of Mint Partner

Satellite Photos Show North Korea Preparing Another Missile Launch

North Korea carried out its first missile test in more than two months earlier this week, ending the longest stretch of calm since President Trump took office. But according to satellite images exclusively obtained by Fox News, the North Korean military is already constructing another launch pad at the Panghyon Airbase in North Pyongyang - the same site where it carried out its July 4 launch of an ICBM.

This suggests that the North is already preparing for its next missile test.

Analysts at Image Sat International spotted the construction just days after the rogue nation launched an ICBM that North Korea claimed was powerful enough to carry a “super-heavy nuclear warhead” that could strike the “mainland of the U.S."

According to the ImageSat analysts, who are closely following North Korean military activity, this is “the first time that they have decided to rebuild a site that they have used before."

The photos, dated Nov. 23 and 24, appear to show the development of another launch pad just a few yards away from the one used during the July 4 Hwasong-14 ICBM launch, as well as a newly renovated access road.

Constructed in the 1980s, the Panghyon site is North Korea's primary aircraft production, repair, and research facility.

The satellite images also show the construction of an aircraft hangar, as well as airplanes being moved and stored in hangers on the tarmac.

With the recent launch of another ICBM and the construction of additional launching pads, North Korea continues to defy the US-led world outrage over its nuclear program and is determined to bring it to completion.

The Hwasong-15 rocket tested by the North Tuesday was themost powerful of the three ICBMs tested by the Kim regime so far. Furthermore, the mobile night launch appeared aimed at testing new capabilities and demonstrating that Pyongyang would be able to strike back to any attempt at a preventative strike against the regime. The missile's peak height and record flight time also helped confirm the Pentagon's worst fears: The North now possesses the capability to strike nearly any target on the continental US.

Fonte: Z.H.

North Korea Releases Photos Of ICBM Capable Of Striking The US

North Korea alarmed the international community on Tuesday when, after a two-month lull, it fired a Hwasong-15 ICBM into the waters west of Japan. State media touted the launch as its most powerful missile yet. Judging by the missile’s peak height reached during its flight, experts say the North now has the capacity to strike nearly any location in the Continental US. Now, the North's state media released dozens of photos and a video after Wednesday’s launch of the new Hwasong-15 missile, which North Korean leader Kim Jong Un declared had “finally realized the great historic cause of completing the state nuclear force”.  The photos show Kim Jong-un personally overseeing the launch of the missile, an obvious source of national pride.

Pyongyang claimed the Hwasong-15 reached an altitude of around 4,475 kilometers and flew 950 kilometers during its flight, which lasted 53 minutes.

Kim Jong-un was shown in delight as the newly developed intercontinental ballistic rocket Hwasong-15's test was successfully launched, in these photo released by North Korea's Korean Central News Agency (KCNA) in Pyongyang November 30, 2017.

Pyongyang announced in a statement read on North Korean state TV that the missile was a Hwasong-15. “Tipped with super-large heavy warhead,” the missile is “capable of striking the whole mainland of the US.”.

“After watching the successful launch of the new type ICBM Hwasong-15, Kim declared with pride that now we have finally realized the great historic cause of completing the state nuclear force, the cause of building a rocket power,” it added.

The aim of the missile is solely “to defend the sovereignty and territorial integrity of the country from the US imperialists’ nuclear blackmail policy and nuclear threat,” according to Pyongyang.

If the missile was indeed a Hwasong-15, it would mean a new development for North Korea. The other launches that took place in 2017 were either claimed to be the older Hwasong-14 ICBM, or the intermediate range (IRBM) Hwasong-12.

Russia condemned Wednesday’s launch of the Hwasong-15, calling it “a provocative act that triggers further escalation and moves us further away from crisis settlement,” Kremlin spokesman Dmitry Peskov told reporters on Wednesday. “We do condemn the launch and hope all the parties will exercise restraint which is so much needed to prevent the situation in the Korean peninsula from going the worst way.”

In a press conference organized to respond to the launch, President Donald Trump described it as “a situation that we will handle,” saying that it won’t change his approach to the crisis on the Korean Peninsula. “I will only tell you that we will take care of it,” Trump told reporters on Wednesday.

Russian ambassador Vassily Nebenzia repeated his pleas for North Korea to stop the tests and called on the US and South Korea to cancel large-scale military maneuvers scheduled for December.

* * *

According to Reuters, the images of the rockets showed stronger engines and a larger design that likely puts Kim Jong Un closer to his goal of being able to deliver a nuclear warhead to a target anywhere in the world, though the missiles still lack accuracy.

“North Korea is continuing to pursue its ICBM in a methodical and pragmatic manner, making progress in incremental steps,” said Joseph Bermudez from 38 North, a Washington-based North Korea monitoring project. U.S. officials noted, however, that North Korea has not proved it has an accurate guidance system for an ICBM or a capable re-entry vehicle.

The missile’s large size was immediately apparent in the photos, which analysts said could provide for a more powerful propulsion system.

“This is a very big missile,” Michael Duitsman, a research associate at the Centre for Nonproliferation Studies, said in an analysis posted to Twitter. “And I don’t mean ‘Big for North Korea.’ Only a few countries can produce missiles of this size, and North Korea just joined the club.”

One US intelligence official said the Hwasong-15 appears to have a more powerful North Korean solid-fuel propulsion system, especially in its second-stage rocket. A solid-fuel system for an ICBM would be a significant development and could allow the North Koreans to transport and launch a missile more quickly, compared to a liquid-fuel system that requires lengthy preparation. The photos appeared to show the missile with at least two large nozzles on its first stage, instead of the one large and several smaller nozzles on the Hwasong-14.

Fonte: Z.H.

Central Banks Finally Hit Their Targets... Just In Time For Another Crisis

They finally did it.

Since 2008, Central Banks have been desperately trying to generate inflation.

They know they cannot produce growth (hence why both the Fed and the ECB abandoned this as a goal in their statements back in 2013)… so they have chosen to “target” inflation.

To that end, Central Banks have maintained Zero Interest Rate Policy (ZIRP) as well as Negative Interest Rate Policy (NIRP) for the better part of eight years. They’ve also printed over $14 TRILLION in new capital and funneled it into the financial system.

These two policies failed to create inflation for the simple reason that the money never made it into the economy. Banks simply were not lending. So all this cheap money just sat on bank balance sheets (earning interest for the banks) and the velocity of money continued to drop in a deflationary spiral.

This all changed in August 2016.

That’s when the Bank of Japan began a policy of targeting a 0% yield on the 10-Year Japanese Government Bond or JGB.

And this was a game-changer.

Instead of periodically buying bonds from banks (which would then park this cash on their balance sheets) this policy opened the door to endless money printing.

Put simply, if the yield on the 10-Year JGB rose above 0%, the Bank of Japan would simply print Yen to buy bonds, thereby driving the yield down.

And unlike QE, which is usually limited in both scope and time period, this policy is open-ended and can occur as frequently and for as long as the financial system can take it.

Put simply, the Bank of Japan began a campaign of abject intervention in the bond markets. And it has unleashed a tsunami of liquidity into the system.

Indeed, between this, and the ECB’s decision to maintain “emergency” levels of QE despite the fact that the EU’s economy is not only well out of crisis-mode but is in fact now in danger of heating up too rapidly, inflation has finally arrived in the financial system.

Why does this matter?

Because the Bond Bubble trades based on inflation.

When inflation rises, so do bond yields to compensate.

When bond yields rise, bond prices FALL..

And when bond prices fall, the Everything Bubble bursts.

With that in mind, take a look at global bond yields and you will see them breaking out to the upside across the board. Indeed, Japan’s 10-year JGBs (bottom box in the chart) are the only bonds to remain below their long-term downward trendlines and that’s because of the aforementioned ABJECT intervention!

Put simply, BIG INFLATION is THE BIG MONEY trend today. And smart investors will use it to generate literal fortunes.

Imagine if you'd prepared your portfolio for a collapse in Tech Stocks in 2000... or a collapse in banks in 2008? Imagine just how much money you could have made with the right investments.

THAT is the kind of potential we have today. And if you're not already taking steps to prepare for this, it's time to get a move on.

We just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU via smart investment strategies.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist