Baltic Dry Index. 1110 -17
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
In central banking as in diplomacy,
style, conservative tailoring, and an easy association with the affluent count
greatly and results far much less.
J. K. Galbraith
Last May the
world’s leading central bankster leaked the end of ZIRP and QE to a hack at the
Wall Street Journal. Interest rates convulsed and the Fed backed away
attempting a U-turn. Later in another U-turn the “taper” was back on in a baby
step of a mere 10 billion decline from 85 billion a month of new money from nothing
to 75 billion a month of new money from nothing. Stock markets roared to new highs. The Great
Disconnect merely widened. Then the Fedsters’ decided to cut another 10 billion
a month to “only” 65 billion a month in new money from nothing, and in the biggest
miscalculation since February 1994, emerging market panic set in, as much of
the QE hot money that rolled-in in mis-allocation, started to reverse and
roll-out.
The Fed gambled on not acting like managers of a global reserve
currency, in favour of acting as managers of a local parochial currency. Dodgy
emerging markets of dubious probity and socialist corruption, promptly blew up
as money flew out. Inflation, social unrest and capital controls come next. The
race to get capital out of emerging markets before it gets locked in, is just
getting underway. Getting out first beats all other strategies.
There can be few
fields of human endeavour in which history counts for so little as in the world
of finance. Past experience, to the extent that it is part of memory at all, is
dismissed as the primitive refuge of those who do not have the insight to
appreciate the incredible wonders of the present.
J. K. Galbraith
Asian Stocks Extend January Rout After China Factory Data
Feb 3, 2014 6:21 AM GMT
Asian stocks
fell, with Japan’s
Nikkei 225 Stock Average extending its slump from its close on the final day of
2013 to 10 percent, after a slowdown in Chinese manufacturing growth added to
concern the global economic recovery is faltering.
----The MSCI Asia Pacific Index lost 1.1 percent to 133.30 at 3:11 p.m. in Tokyo, heading for the lowest close since Sept. 5. More than three shares fell for each that rose. The measure dropped 4.6 percent in January for its third straight monthly decline. A global rout wiped about $1.9 trillion from the value of listed equities last month, spurred by weaker-than-expected economic data from China and a selloff in emerging-market currencies.
“We’re seeing the contagion coming through,” said Steve Brice, chief investment strategist at Standard Chartered Plc in Singapore. “There certainly isn’t going to be a crisis but the short-term weakness looks likely to continue for now.”
More
Currency crisis at Chinese banks 'could trigger global meltdown’
A rise in foreign funding at China's banks poses a threat for international lenders
The growing problems in the
Chinese banking system could spill over into a wider financial crisis, one of
the most respected analysts of China’s lenders has warned.
Charlene Chu, a former senior
analyst at Fitch in Beijing and now the head of Asian research at Autonomous
Research, said the rapid expansion of foreign-currency borrowing meant a crisis
in China’s financial system was becoming a bigger risk for international banks.
“One of the reasons why the
situation in China has been so stable up to this point is that, unlike many
emerging markets, there is very, very little reliance on foreign funding. As
that changes, it obviously increases their vulnerability to swings in foreign
investor appetite,” said Ms Chu in an interview with The Telegraph.
Ms Chu has been warning since
2009 about the growth of a shadow banking system in China that has helped fuel
the credit expansion seen in the country in the wake of the Western financial
crisis.
However, fears are growing that
the build-up of foreign borrowing by the Chinese, particularly in US dollars,
is creating an even greater build-up of risk than that seen before the crisis
of 2008.
Figures published by the Bank for
International Settlements (BIS) in October showed foreign currency loans booked
in China, as well as cross-border borrowing by Chinese companies, had reached
$880bn (£535bn) as of March 2013, from $270bn in 2009.
Analysts say this figure is now
likely to exceed $1 trillion and is continuing to grow, raising the prospect of
the potentially dangerous vulnerability of the Chinese financial system to a
rising dollar.
“It is very hard to work out the
exposures of individual banks to the Chinese financial system, but it seems to
us there are some very large numbers on some of the bank’s balance sheets,”
said the analyst.
more
Currency wars loom as capital flows expose the weak
Will the emerging market rout be different this time? The fear is it won't
Defending a currency is a tricky
business. Take Thailand in 1997, where massive overspending left it with a huge
current account deficit and high interest rate, inflated to protect a currency
pegged to the dollar.
But markets are never forgiving
and speculators soon attacked the baht, believing poor economic fundamentals
left the country vulnerable to shocks. Soon, much of Asia was knocking on the
International Monetary Fund’s door and the contagion quickly spread. Russia was
next, followed by perennial basket-case Argentina and even Brazil.
More than 15 years later, history
could be about to repeat itself. Turkey’s 4.25 percentage point interest-rate
hike last week highlighted its dire situation, and with a current account
deficit and inflation both running at 7pc, the country also has an
uncomfortable dependence on short-term funds.
So-called “hot money” underwrites
more than 80pc of its trade deficit, leaving the country painfully exposed to
the US Federal Reserve’s tapering of asset purchases.
More
U.S. Stocks Extend January Slide as Amazon, Mattel Tumble
Jan 31, 2014 9:27 PM GMT
U.S. stocks fell, sending the Standard
& Poor’s 500 Index to its worst January since 2010, as earnings reports at Amazon (AMZN).com Inc. and
Mattel Inc. disappointed investors and turmoil in emerging markets continued.
----The S&P 500 (SPX) retreated 0.7 percent to 1,782.43 at 4 p.m. in New York. The index fell 0.4 percent over the past five days for a third week of losses, the longest streak since May 2012. The Dow Jones Industrial Average dropped 149.76 points, or 0.9 percent, to 15,698.85, the lowest in almost three months. About 7.8 billion shares changed hands on U.S. exchanges today, 25 percent above the three-month average.
“It seems investors can expect increased volatility and more modest returns as the year unfolds,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said in a phone interview from Minneapolis. He helps oversee $112 billion. “We need earnings to drive the market to meaningfully higher levels and to do that you need an improving economy. We’ll get a better read on that over the next week.”
More
Emerging market stocks suffer worst sell-off since 2011
Billions of dollars were withdrawn from emerging market equity finds this week, as the latest round of central bank actions proved insufficient to offset concern
Investors resumed their flight
from emerging markets on Friday despite the latest round of central bank
interventions to allay concerns about rising economic and political risks in
developing countries.
Currencies, stocks and bonds fell
from Asia to Europe and Latin America, with the Russian rouble sliding to
five-year lows and central European countries such as Poland and Hungary also
engulfed in the turmoil.
Billions of dollars were
withdrawn from emerging market equity funds this week – the largest equity fund
outflow from emerging markets since August 2011, according to a Bank of America
Merrill Lynch Global Research report.
Emerging market debt and equity
funds have combined outflows of $9.1bn (£5.5bn), with around $6.4bn of equities
being withdrawn from emerging markets, while $2.7bn of debt made up the largest
debt fund outflow since June 2013.
“We are in a negative feedback
loop of weak currencies, higher interest rates, weak growth and capital outflows,” said David Hauner, head of Eastern Europe Middle
East and Africa fixed income strategy and economics at Bank of America Merrill
Lynch.
----“What’s driving this is the
fear of a Chinese slowdown and what I want to see is some kind of policy action
from the People’s Bank of China,” said Lars Christensen, chief emerging markets
analyst at Danske Bank.
There was no sign of stock
markets stablising, with January’s falls wiping out all of December’s gains.
Stocks had their worst January performance in five years.
More
Next, Fed to the rest of the world, drop dead, to misquote President Ford to New York City. Below. The “Triffin dilemma.” If you’re the world’s sole reserve fiat currency, policy can’t remain purely locally driven, or you soon won’t be the world’s sole reserve currency. Another unintended consequence of the Great Nixonian Error of fiat money. The chickens are coming home to roost fast and furious in 2014. Stay long fully paid up physical gold and silver. Thirty plus years of the Great Volker bull market in bond has come to its end. From twenty percent interest to zero percent interest has come to its end. Whatever “the natural rate of interest is,” it wasn’t the 20% of June 1981, or the 0% rate of 2008 to the present. With interest rates about to edge higher for years to come, it’s everyone for themselves in emerging markets.
"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."William F. Rickenbacker
Fed draws criticism from abroad as emerging markets still reeling
By Neha Dasgupta and Jonathan Spicer
MUMBAI/NEW YORK (Reuters) - The Federal Reserve's decision to keep trimming its economic stimulus drew fire on Friday as India's central bank chief said Americans should be more attuned to the global impact of their policies, and the IMF called for vigilance given strains in financial markets.
The push-back came on Fed Chairman Ben Bernanke's last day on the job and two days after the U.S. central bank reduced the pace of its huge asset purchase program. The Fed made the move on Wednesday despite a bruising selloff in emerging markets that was prompted in part by the prospect of less U.S. monetary support.
With the turmoil in currencies and stocks spreading into more emerging markets on Friday, Fed officials, addressing the rout for the first time, offered no hint the sell-off would influence their policy stance unless the U.S. economy were threatened.
But in Mumbai, Reserve Bank of India Governor Raghuram Rajan said the United States "should worry about the effects of its policies on the rest of the world."
"We would like to live in a world where countries take into account the effect of their policies on other countries and do what is right, rather than what is just right given the circumstances of their own country," he said at an event on organized by The Times of India newspaper.
----Rajan, a former chief economist at the International Monetary Fund, is well respected by central bankers globally as being among the few who spoke out about signs of trouble in markets well before the 2007-09 financial crisis set off the Great Recession.
His comments were echoed by the
IMF, which on Friday called on central banks to ensure that a financial market
rout in the developing world does not lead to an international funding crunch.
More
Jan. 31, 2014, 4:34 p.m. EST
Fed is not 'central bank of the world:' Fisher
WASHINGTON
(MarketWatch) -- Dallas Federal Reserve Bank President Richard Fisher defended
the U.S. central bank for charges from overseas that it was recklessly ignoring
the impact of tapering on other countries. The Fed's moves have been one factor
in a spike of turbulence in emerging markets. "Some believe we are the
central bank of the world and should conduct policy accordingly. We are the
central bank of America," Fisher said in a speech in Forth Worth, Texas,
according to Dow Jones. Fisher added that other nations have their own central
banks with their own responsibilities. On Thursday, Raghuram Rajan, the chief
of India's central bank, said
in a television interview that "international monetary cooperation has
broken down." He added that industrial countries "cannot wash their
hands off and say 'we will do what we need to and you do the adjustment you need
to.' "We will certainly do the adjustment we need to...but they may not
like the kind of adjustments we are forced to do down the line," Rajan
said.
We end with dying
Euroland and the failure of the Bilderberger United States of Europe project.
The USE turned into the wealth and job destroying EUSSR.
"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."
Elgin Groseclose
Foreign investment in France slips to 27-year low
Inward investment to France has plummeted 77pc, while the UK continues to top the EU league table
France has seen the steepest
decline of inward investment of any country in the European Union, plummeting
77pc to the lowest level in 27 years, while the UK has retained its place at
the top of the European league table.
Foreign investment in France fell
to $5.7bn (£3.5bn) in 2013, according to a report by the United Nations, in a
further blow to Francois Hollande, the French President, who is already
battling high unemployment and the prospect of the eurozone's second largest
economy slipping back in to a recession.
The UK was the leading economy
out of the 27 member states of the EU, with foreign investors spending $53bn in
Britain last year. That kept the UK in the top ten globally for foreign
investment, although it slipped from sixth position in 2012 last year.
Overall, the European Union saw
the greatest level of inflows of any of the developed regions.
The inflows were largely
accounted for by inflows in to four relatively small EU economies - Belgium,
Ireland, the Netherlands and Luxembourg. The report by the UN Conference on
Trade and Development said those countries saw large inflows as they
"offer a tax-friendly environment for investment, particularly for special
purpose entities".
More
Italy is wasting away month by month
Ambrose Evans-Pritchard Economics Last updated: January 31st, 2014
Today's headline from Italy is
that unemployment has at last begun to fall, dropping from 12.8pc to 12.7pc in
December.
Drill deeper and the recovery
story turns to dust. The number employed in Italy has fallen by 424,000 over
the last year. Piangi Italia mia.
As you can see from the chart
below (only available on ISTAT's Italian site), the slide has been relentless.
There is no sign of stabilisation. A further 25,000 dropped out of the work
force in December alone.
The overall employment rate has
fallen to 55.3, a staggeringly low level. The rate for men has fallen by 1.6
percentage points over the last year.
Youth unemployment was 41.6pc
despite a tide of emigration to Britain, Germany, and beyond. It is at Greek
and Spanish levels above 50pc in Naples and across much of the Mezzogiorno.
The brutal reality is that
Italy's human capital is still being destroyed by contractionary EMU policies.
Italian industry is still being hollowed out. The hysteresis effects of skills
erosion – and the failure to draw a large chunk of the next generation into the
economic system at a crucial stage in their lives when they are most open to
new technologies – will lower Italy's future growth rate and do lasting damage
to Italy's economic dynamism.
More
With an
unreformed EUSSR, Brexit looks better with each passing week.
"In the long run, the gold
price has to go up in relation to paper money. There is no other way.”
Nicholas L. Deak
At the Comex
silver depositories Friday
final figures were: Registered 50.23 Moz, Eligible 129.18 Moz, Total 179.41 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks or bent politicians this morning. Today we present a glimpse of the arriving Graphene Age, from IBM. My thanks to Ian in Toronto for the link. The graphene revolution like the industrial revolution before it, first in the UK and Germany, then in the USA and finally former communist EurAsia, will bring jobs, new wealth and prosperity. The problem is the transition between now and the end of the decade when GA starts to kick in.
I have not failed. I've just found 10,000
ways that won't work.
Thomas Edison.
So long silicon? IBM scientists build experimental graphene-based semiconductor chip
January 30, 2014 2:00 AM Dean Takahashi
The silicon chip has a new
challenger.
An IBM lab in New York has built
a rudimentary semiconductor chip with circuits made from graphene, a
crystalline version of carbon that takes on a honeycomb lattice shape on an
atomic scale. And if successful, this could have significant implications for
mobile devices.
The
advance is the latest application of nanotechnology, or physical materials that
are as small at a billionth of a meter, in semiconductor chips that are the
foundation of everything electronic. Nanotechnology solutions such as graphene
are like designer molecules that could make chips smaller, faster, and much
more power efficient than today’s silicon chips. But the technology is still in
its experimental stage because scientists still have a tough time getting
nanotech materials to behave properly on an atomic scale.
The
team at IBM Research in Yorktown Heights, N.Y., has built
the most advanced, fully functional graphene integrated circuit with possible
applications in wireless communications. If they work properly, graphene-based
chips could enable mobile devices such as smartphones, tablets, or wearable
electronics to transmit much faster data loads to each other and to their
surroundings.
----IBM
said the nanotechnology milestone opens up new carbon-based electronics device
and circuit applications beyond what is possible with today’s silicon chips.
Graphene’s unique properties make it suited for wireless or radio frequency
communications. It has admirable electrical, optical, mechanical, and thermal properties that could make
it less expensive and more energy efficient than silicon, which has been in use
for more than 50 years.
----Graphene is easily damaged in manufacturing, so making an integrated circuit from it is hard. But IBM first demoed a prototype in 2011 and have now improved it.
Using mainstream silicon
manufacturing techniques, a team of IBM researchers have solved one big problem
and tested the world’s first multistage graphene radio-frequency receiver, the
most sophisticated graphene integrated circuit to date. The performance is
10,000 times better than previous reported results for graphene chips.
More
Just because something doesn't do what
you planned it to do doesn't mean it's useless.
Thomas Edison.
The monthly Coppock Indicators finished January.
DJIA: +202 Down. NASDAQ: +330 Up. SP500: +249 Up. The new Fed bubble continues, but seems to be running out
of momentum. Does the Final Fed Bubble end in an emerging market crash?
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