Baltic Dry Index. 743 +04
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Money,
again, has often been a cause of the delusion of the multitudes. Sober nations
have all at once become desperate gamblers, and risked almost their existence
upon the turn of a piece of paper.
Charles
Mackay. Extraordinary Popular Delusions and the Madness of
Crowds
In our ever more dumbed down world, we have no one to
blame but ourselves. We elected these cold warrior morons that want to commit economic suicide
before the global economy as reached escape velocity from the Great Recession.
Russia didn’t stage the insane botched coup in the Ukraine that led to the current
situation, the USA did. If any sanctions ought to be imposed they should be
against Uncle Scam’s reckless America.
Instead, the EUSSR and America are about to play Russian
roulette with the global economy. When this goes wrong as it will, don’t blame
Russia for a sudden surge in unemployment later in the year, just vote out the
bums who set out to slice and dice up Belarus and Russia for the one percenter’s
for mineral wealth they control. After them was supposed to come a take down of
Red China. If a full scale civil war breaks out in the Ukraine, a much wider
eastern European war is the likely result.
New Sanctions Readied by U.S., EU as Russia Prepares
Jul 29, 2014 1:54 AM GMT
The U.S. and European Union may move as soon as today to impose tougher
sanctions against Russia
as Vladimir Putin’s government sought replacements for defense imports and
considered restrictions on some agriculture products from America and its
allies. The new sanctions are aimed at “key sectors” of Russia’s economy -- finance, defense and energy -- and are being imposed in the face of Putin “doubling down” in support of separatists battling the government of Ukraine, U.S. Deputy National Security Adviser Tony Blinken said yesterday.
“The longer this goes on, there is the risk of further outrageous actions by the separatists or by Russia that deepen the international crisis,” Blinken said. “So there’s a need to take further action now to convince Russia to change course.”
The escalation of sanctions was agreed to during a rare video and telephone conference yesterday involving President Barack Obama, German Chancellor Angela Merkel, French President Francois Hollande, U.K. Prime Minister David Cameron and Italian Premier Matteo Renzi. Up until now, European governments, dependent on Russia for trade and about one-third of their energy supplies, haven’t gone as far as the U.S. in hitting Russia’s $2 trillion economy.
Blinken, who declined to provide details on the sanctions, said the U.S. expected the EU to act by the end of the week. Merkel’s chief of staff, Peter Altmaier, said Germany wants the EU to agree to new sanctions today.
Hollande, in a statement, said “Russia has not effectively put pressure on the separatists to force them to negotiate, and has not taken the concrete steps asked of it to control the Ukraine-Russia border.”
While sanctions already in place are putting pressure on the Russian economy, they have yet to force a political change by Russia, which extended its support for the separatists in eastern Ukraine since the downing of a Malaysian airliner on July 17, according to Blinken.
Russia has moved more troops to Ukraine’s border and continued supplying the separatists in an effort to destabilize Ukraine’s government, he said. The U.S. State Department released photos it said were evidence of Russian forces firing artillery and rockets across the border at Ukraine’s army.
Putin “has to make a strategic decision,” Blinken said. “We’ve seen him on a regular basis pull back tactically, say the right things in public while he’s doing the wrong things behind the scenes.”
Russian Foreign Minister Sergei Lavrov said yesterday in Moscow that sanctions against his country won’t achieve their goal and that Russia will become self-sufficient.
Putin held a meeting yesterday on replacing imports in the defense industry, according to a statement posted on the Kremlin’s website.
More
In Asian news, it’s yet more red flags from China as
Abenomics gets totally screwed up in Japan. Just wait until the tsunami hits
from a collapse in European orders as their economy starts disintegrating later
in the year from lunatic sanctions against Russia. Not to worry, our forward
looking global stock markets don’t care. All news is bullish news on QE Forever
and ZIRP.
China Trade Numbers Still Don’t Add Up Post-Fake Exports
Jul 29, 2014 4:10 AM GMT
China’s trade numbers still don’t add up. A discrepancy between Hong Kong and Chinese figures for bilateral trade remains even after a crackdown last year on Chinese companies’ use of fake export-invoicing to evade limits on importing foreign currency. China recorded $1.31 of exports to Hong Kong in June for every $1 in imports Hong Kong tallied from China, for a $6.4 billion difference, based on government data compiled by Bloomberg News.
Analysts offered at least three possible explanations for the gap, including differences in how China and Hong Kong record trade in goods that pass through the city, as well as a persistence in fraud at a lower level. Any discrepancies make it tougher to gauge the impact of global demand on a Chinese economy that’s projected for the slowest growth in 24 years.
“Sporadic fake exports certainly still exist,” said Hu Yifan, chief economist at Haitong International Securities Co. in Hong Kong. The longer the data gap remains at this level, the more likely it’s a permanent fixture: “If the ratio stays at 1.3 throughout the year, I think that’s consistent,” Hu said.
Distortions in China’s trade data have abated since the State Administration of Foreign Exchange started a campaign in May 2013 to curb money flows disguised as trade payments.
More
China Said to Allow Five Regions to Create Bad-Loan Firms
Jul 29, 2014 3:31 AM GMT
China’s banking regulator is allowing governments in five places including Shanghai to set
up asset-management companies to buy bad loans from financial institutions,
three people with knowledge of the matter said. The trial program also covers the provinces of Guangdong, Zhejiang, Jiangsu and Anhui, said the people, who declined to be identified as they aren’t authorized to speak to the media. The firms can buy local soured loans from banks, trust and finance companies and leasing firms, the people said.
Premier Li Keqiang is grappling with reining in credit risks following an unprecedented surge in lending since the global financial crisis. The local companies would be in addition to four national bad-loan managers, including China Cinda Asset Management Co. (1359), set up in 1999 to help clean up the banking industry.
“Just four AMCs are not enough to absorb all the nonperforming loans in the system,” Edmond Law, a Hong Kong-based analyst at UOB-Kay Hian Ltd., said by phone. He said bad credit is still yet to peak.
China’s economic slowdown is adding to pressure on the nation’s lenders. A 7.4 percent expansion this year, forecast in a Bloomberg News survey of analysts, would be the slowest pace since 1990.
Banks’ nonperforming loans jumped by 54 billion yuan ($8.7 billion) in the three months through March, the biggest quarterly increase since 2005, according to China Banking Regulatory Commission data. Bad loans accounted for 1.04 percent of total lending, up from 1 percent three months earlier.
The CBRC didn’t immediately reply to a faxed query seeking comment on the trial program. Anhui Daily, controlled by the Anhui provincial government, reported the news yesterday.
Japan’s Retail Sales Drop in Challenge to Abe Reflation: Economy
Jul 29, 2014 5:31 AM GMT
Japan’s retail sales fell
more than forecast in June, capping a weak quarter that challenges Prime
Minister Shinzo Abe’s bid to reflate the economy while heaping a heavier tax
burden on consumers. Sales dropped 0.6 percent from a year earlier, the trade ministry said in Tokyo today, steeper than a median forecast for a 0.5 percent decline in a Bloomberg News survey. In the second quarter, sales slumped 7 percent from the previous three months.
Prime Minister Shinzo Abe is counting on consumers to bear a higher sales levy even as the Bank of Japan drives the cost of living upward with record monetary easing. The risk is that spending fails to regain vigor, sapping strength from an economy lacking support from exports.
“The government and the BOJ say the economy is recovering from the slowdown after the sales-tax increase, but it’s too early to tell,” said Koya Miyamae, senior economist at SMBC Nikko Securities Inc. in Tokyo. “There’s a chance consumption will remain below year-earlier levels in the July-September quarter.”
Abe’s effort to stoke a sustained recovery in domestic demand is running up against a failure of companies to pass along record cash holdings in the form of higher wages that could help households cope with rising prices and the heavier tax burden.
Base pay was unchanged in May from a year earlier, even as overall consumer prices climbed 3.6 percent in June, boosted by the 3 percentage point increase in the sales levy and higher food and energy costs
More
Asia stocks reach three-year peak, China on the rise
By Wayne
Cole SYDNEY
(Reuters) - Asian shares touched fresh three-year highs on Tuesday as
investors in the region drew encouragement from a rally in Chinese markets,
though caution was warranted given the torrent of U.S. economic news still to
come this week.Hong Kong's key stock index rose 0.5 percent to its loftiest level in over 3-1/2 years on optimism that the economy has turned a corner and as investors wagered on more growth-friendly policies from Beijing.
The charge had been led by Chinese banks after a Reuters report said the country's fifth-biggest bank by assets planned to seek more private investors.
The CSI300 of the leading Shanghai and Shenzhen A-shares added 0.5 percent, bringing its gains to almost 8 percent in seven sessions.
"The recent rally of Hong Kong and China stock markets is pretty much liquidity-driven due to favourable fund flow. And fund flow is maybe because the two markets remain relatively lagging behind in terms of the valuation and performance," said Ben Kwong, director at KGI Asia in Hong Kong.
MSCI's broadest index of
Asia-Pacific shares outside Japan added 0.33 percent to be just a whisker from
a peak last touched in April 2011. Likewise, South Korea's index gained 0.7
percent to its highest since mid-2011.
Japan's Nikkei rose 0.4 percent
to a six-month high as investors focused on the positive in mixed economic
news.
More
Here’s What Wall Street Bulls Were Saying In December 2007: Read And Take Cover!
by David Stockman •
The attached Barron’s article
appeared in December 2007 as an outlook for the year ahead, and Wall
Street strategists were waxing bullish. Notwithstanding the advanced state of
disarray in the housing and mortgage markets, soaring global oil prices and a
domestic economic expansion cycle that was faltering and getting long in the
tooth, Wall Street strategists were still hitting the “buy”
key. In fact, the Great Recession had already started but they didn’t have
a clue:
Against this troubling backdrop,
it’s no wonder investors are worried that the bull market might end in 2008.
But Wall Street’s top equity strategists are quick to dismiss such fears.
Indeed, with the S&P 500 at
1460 and just off its all-time high in October, the dozen top Wall Street
prognosticators surveyed by Barron’s anticipated still more index gains
during 2008:
….. the dozen seers we’ve
surveyed all have penciled in higher stock prices in 2008, although their
estimated gains vary widely, from 3% to 18%. On average, the group sees the
Standard & Poor’s 500 at 1,640 by the end of next year….
More
The 2008 crisis
didn’t. It may take another crisis to elevate a generation of leaders with the
right medicine for nation states to fit into the world of globalization. Until
then, people must survive stagflation as best they can.
The real interest
rate is probably minus 2% in the world today. It should be in line with the per
capita income growth rate or 1%. The difference is 3%.
This environment
redistributes wealth from savers to debtors on a scale of over $2 trillion per
annum or $55 billion per day. This must be the biggest legal robbery ever in
human history. But it is always coded in arcane academic lingos spoken by
respected central bankers with impeccable CVs. All that is just packaging; it
is robbery nevertheless.
Andy Xie
At the Comex silver depositories Monday final figures were: Registered 58.07 Moz,
Eligible 116.89 Moz, Total 174.96 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more on the Fed’s final bubble. When this QE
Forever and ZIRP bubble ends, as all bubbles eventually do, I expect that the
end of the Great Nixonian Error of fiat money and the dollar reserve standard
will be the least of our problems. Something like the French or Russian
revolution will get underway, although this time for the first time globally.
"There
is no reason whatever to fear a crash".
Charles
Mackay. 2 October 1845, Glasgow Argus, on Railway Mania.
This stock bubble is ‘beyond 1929 and 2007,’ says John Hussman
July 27, 2014, 3:58 PM ET
John Hussman can generally be counted on for a bearish take on the
stock market. But his latest
weekly commentary letter is a doozy, with some particularly pointed remarks
aimed at investors who continue to believe valuations are fair in stocks.The economist runs Hussman Funds, and since the financial crisis he’s been a prominent critic of Federal Reserve policy. His investment choices are concentrated in “defensive” positions in stocks and U.S. Treasurys. And if you take a look at his writing, it’s no secret why. Here’s the money quote from the latest commentary:
“Make no mistake – this is an equity bubble, and a highly advanced one. On the most historically reliable measures, it is easily beyond 1972 and 1987, beyond 1929 and 2007, and is now within about 15% of the 2000 extreme. The main difference between the current episode and that of 2000 is that the 2000 bubble was strikingly obvious in technology, whereas the present one is diffused across all sectors in a way that makes valuations for most stocks actually worse than in 2000. “
Hussman couches his bubble call in references to the cyclically-adjusted price to equity ratio pioneered by economist Robert Shiller, as well as the ratio of nonfinancial market capitalization to GDP (below). MarketWatch’s Brett Arends has some more on his investing methodology.
Given what Hussman sees to be
such stretched valuations in stocks, he writes, “My sense is that investors
have indeed abandoned basic arithmetic here.”
And here’s where the Fed comes
in. Investors are willing to abandon what some simple math might otherwise make
obvious due to the role of the central bank in the markets. He writes:
“The simple fact is that the
primary driver of the market here is not valuation, or even fundamentals, but
perception. The perception is that somehow the Federal Reserve has the power to
keep the stock market in suspended and even diagonally advancing animation, and
that zero interest rates offer “no choice” but to hold equities. Be careful
here. What’s actually true is that the Fed has now created $4 trillion of idle
currency and bank reserves that must be held by someone, and because
investors perceive risky assets as having no risk, they have
been willing to hold them in search of any near-term return greater than zero.
What is actually true is that even an additional year of zero
interest rates beyond present expectations would only be worth a roughly 4%
bump to market valuations. Given the current perceptions of investors, the
Federal Reserve can certainly postpone the collapse of this bubble,
but only by making the eventual outcome that much worse.”
http://blogs.marketwatch.com/thetell/2014/07/27/this-stock-bubble-is-beyond-1929-and-2007-says-john-hussman/
It’s morally wrong to let a sucker keep his money.Ebenezer Squid, doing God’s work, with apologies to W. C. Fields.
The monthly Coppock Indicators finished June
DJIA: +169 Down. NASDAQ: +332 Down. SP500: +241 Down. The Fed’s final bubble still grows,
but …..
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