Friday, 15 April 2011

Inflation Returns.

Baltic Dry Index. 1309 -15

LIR Gold Target by 2019: $30,000. Revised due to QE.

"The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."

Hans F. Sennholz

Inflation has returned, even though the official figures everywhere are manipulated to try to hide how bad it is. Officially, inflation in China is running at 5.4%, with food price inflation surging along in double digits. Unofficially, many economists think China’s CPI is also running in double digits. For now, inflation is mostly out of control in Asia, even on the official figures. Coming soon, a giant burst of inflation in America and Europe, even as their economies stagnate from high unemployment and austerity regimes. Stay long precious metals. High food price inflation usually ushers in social distress.

April 15, 2011, 1:36 a.m. EDT

China data signals further room to tighten policy

HONG KONG (MarketWatch) — China’s consumer inflation accelerated in March to its fastest rate in almost three years, slightly ahead of expectations, while other data showed the pace of economic growth little changed, signalling China has scope for further policy tightening to help curb price gains.

The consumer price index rose 5.4% in March from a year earlier, up from February’s 4.9% rise, compared to expectations of 5.3% and 5.2% in surveys by Dow Jones Newswires and Reuters, respectively. “Whispered” numbers reported by local news media had indicated CPI increase of between 5.3% and 5.4%.

The CPI rise was the fastest since July 2008.

Wholesale prices were up 7.4% for the month from a year earlier, matching analyst forecasts compiled by Dow Jones, and just ahead of a 7.2% projection from the Reuters survey.

More of a worry for Chinese policy makers, food prices were up 11.7% in March from a year earlier, while non-food prices were up a more modest 2.7%. The CPI figures and component data were released by the Bureau of Statistics.

China Says It Will Punish Those Behind Data Leaks

By Bloomberg News - Apr 15, 2011 6:05 AM GMT+0100

China’s statistics bureau said it “condemns” leaks of economic data and those responsible will be punished, after the office released economic indicators that matched rumors circulating in the market and online yesterday.

“We believe any illegal behavior will be punished by law,” Sheng Laiyun, a spokesman for the department, told a briefing in Beijing today. “Those spreading state secrets on the Internet or other public information networks should be held accountable.”

China’s first-quarter growth figure and other monthly economic data including the inflation rate were leaked yesterday ahead of the official release. Phoenix Satellite Television Holdings Ltd. reported 10 economic indicators on its website yesterday morning, citing an unidentified source. Figures released later yesterday by China’s central bank and today by the National Bureau of Statistics matched 9 of the numbers. Phoenix TV didn’t immediately respond to questions from Bloomberg News.

India Inflation Quickens to 8.98%, Increasing Pressure on Rates

By Unni Krishnan - Apr 15, 2011 7:25 AM GMT+0100

India’s inflation accelerated in March, beating the central bank’s estimate and increasing pressure for higher interest rates.

The benchmark wholesale-price index rose 8.98 percent from a year earlier after an 8.31 percent gain in February, the commerce ministry said in a statement in New Delhi today. The median forecast of 28 economists in a Bloomberg News survey was for an 8.36 percent increase.

Data including the purchasing managers’ index, car sales and credit expansion signal that consumer demand is stoking price risks in Asia’s third-largest economy. The Reserve Bank of India last month predicted inflation would be 8 percent by the end of March as it boosted rates for the eighth time in a year.

“Inflation is the big concern now,” Samiran Chakraborty, a Mumbai-based economist at Standard Chartered Plc, said before the report. “We are calling for two more rate increases this year.” The central bank’s next monetary policy announcement is scheduled for May 3.

Reserve Bank Governor Duvvuri Subbarao on March 17 increased the repurchase rate by a quarter point to 6.75 percent after raising the inflation forecast for the second time since late January, when he estimated it at 7 percent by March end.

Singapore’s Policy Tightening May Widen Asian Inflation Fight

By Shamim Adam - Apr 15, 2011 4:35 AM GMT+0100

Singapore’s third monetary policy tightening in a year may prompt Asian central banks to allow further interest-rate and currency gains to prevent surging prices from hurting their economies.

The island’s dollar, the best-performing Asian currency outside Japan in the past year and the nation’s main tool to manage inflation, will be allowed to rise further, the Monetary Authority of Singapore said yesterday. While South Korea and Indonesia refrained from raising rates this month, policy makers signaled they will take steps to curb price gains if needed.

“MAS remains well ahead of the curve after aggressive moves last year,” said Vishnu Varathan, an economist in Singapore at Capital Economics (Asia) Pte. “The other central banks have to ask themselves how much tightening they want to do and how soon they want to do it. There’s still some feet- dragging and they can’t be seen hesitating too much as it will send the wrong signals to the market.”

In the UK, a warning from the man at the Bank of England who probably gets to see the real figures. A summer of social discontent seems to lie ahead. The BOE’s guru seems to be signalling that the UK is about to devalue again, seeking competitive advantage against the euro and other currencies. Stay long precious metals. Europe’s PIIGS can only watch and wish they’d kept their national currencies.

Sentance Says U.K. Inflation Rate Set to Rise Above 5% on Pound Weakness

By Svenja O’Donnell and Jennifer Ryan - Apr 15, 2011 8:23 AM GMT+0100

Bank of England policy maker Andrew Sentance said a slowdown in inflation may prove short-lived as the pound’s weakness threatens to push it above 5 percent, bolstering the need for higher interest rates.

“There’s still quite a bit of evidence that there’s some further upward pressure on inflation to come,” Sentance, who has voted to increase interest rates every month since June, said in an interview yesterday in London. The U.K. is seeing “more imported inflation than we would have if the pound was a bit stronger and therefore that’s reinforcing the squeeze on consumer spending.”

Sentance, 52, said a boost to the pound from a rate increase wouldn’t be an “unwelcome development” in the fight against inflation. While consumer-price growth unexpectedly slowed to 4 percent in March, it’s still double the central bank’s target. The nine-member Monetary Policy Committee voted to keep its benchmark interest rate at a record low of 0.5 percent this month to aid the economic recovery.

Back in Europe, each day brings a Greek default nearer, and after one does it, the deluge. Those hard working, tax paying, fun avoiding Germans, will just have to work harder for longer and pay more taxes to Berlin, for Berlin to forward those taxes to support the Dolce Vita in Athens. Is the Euro great or what? Stay long precious metals, this euro currency union won’t see out this decade.

Fears grow over Greek debt default despite bail-out

Fears that Greece will default on its debts soared on Thursday as the German finance minister admitted that a restructuring may be needed, despite last year's €110bn (£97bn) bail-out
9:30PM BST 14 Apr 2011

Investors' flight from Greek government debt left 10-year bond yields at a new euro lifetime high of over 13pc and yields on two-year bonds at over 18pc, after Wolfgang Schaeuble said "additional steps" could be necessary if the European Central Bank concludes that the country's burden is unsustainable.

Greece is implementing spending cuts but concerns have mounted in recent days because tax revenues have disappointed as the austerity programme squeezes the economy.

Although it can tap the rescue package backed by Europe and the International Monetary Fund as the Mediterranean nation's debts come up for refinancing, traders reckon Greece will be unable to escape its vast borrowings. Market caution means it now costs €1.1m to insure €10m Greek debt for five years.

Although Greece is not expected to default officially on the principal amount, holders of its debt may agree to reduce the interest rate and lengthen the terms of the loans. The effect would be largely similar to a default, as the value of the debt would fall.

Any restructuring before 2013 would have to be on a voluntary basis, as new rules that would force private creditors to shoulder some of the burden do not come into effect until then.

----Mr Schaeuble sparked the latest market fears when he was asked in an interview how Greece, or other struggling countries like Portugal, would be able to eliminate their "mountains of debt".

He replied: "In June we will get a progress report. I'm expecting a detailed analysis on the debt sustainability of Greece, that will be done in consultation with the Commission and the ECB. If this report concludes that there are doubts about the debt sustainability of Greece, something must be done about it."

Pressed more, he said: "Further steps will have to be taken."


Anything Greece can do, Ireland can do too. Me too say Portugal and Spain.

Moody’s Cuts Ireland Rating Two Levels, Outlook Negative

By Finbarr Flynn - Apr 15, 2011 7:46 AM GMT+0100

Ireland’s credit rating was cut two levels by Moody’s Investors Service to the lowest investment grade rating as the government struggles to plug the budget deficit and restore economic growth.

Moody’s lowered the country’s rating to Baa3 from Baa1, leaving the country’s outlook on negative, according to an e- mailed statement today. That’s the same rating as Iceland, Tunisia, Romania and Brazil. Standard & Poor’s on April 1 cut Ireland’s rating one level to BBB+ with a stable outlook.

Europe’s worst banking crisis may end up costing Irish taxpayers as much as 100 billion euros ($145 billion) as the country draws down funds from last year’s bailout. Ireland is trying to convince investors at home and abroad it has finally plugged the hole in its lenders after four failed attempts following the collapse of the country’s property boom in 2007.

Ireland is now in the “most uncomfortable of places to be on the ratings scale, one false step from junk,” Gary Jenkins, head of credit strategy at Evolution Securities Ltd. in London, said in an e-mailed note.

Ending for the week back in China, the non G-7 summit continues, and doesn’t like our casino derivatives gambling, commodities economy. They’re not to happy with the dollar reserve standard either. Trouble ahead I suspect.

BRICS warn over commodity prices

The roller-coaster path of commodity prices threatens the global recovery, the BRICS group of new economic powers warned.

Emma Rowley 11:40PM BST 14 Apr 2011

The leaders of Brazil, Russia, India, China and – joining them for the first time, South Africa – issued the warning as they gathered in China for their third summit.

"Excessive volatility in commodity prices, particularly those for food and energy, poses new risks for the ongoing recovery of the world economy," they said in a joint statement.

Growing global demand and supply shocks have seen prices for commodities such as oil and corn soar in recent months, but some have also pointed the finger at speculative trading.

The BRICS leaders called for stronger regulation of the derivatives market in commodities to prevent activities which could "destabilise" markets.

They also pledged to co-operate more closely on food security, and said the international community should boost production capacity and improve the communication between producers and consumers

----The leaders also called for more attention to be paid to the risks around massive flows of capital across borders. A tide of money pouring into a developing country as investors seek yields can damage its economy if it leads to bubbles or drives up its currency too strongly.

BRICS Take Aim at Dollar

Published: Thursday, 14 Apr 2011

The five BRICS nations took another step towards cementing their global influence on Thursday, calling for a broad-based international reserve currency system "providing stability and certainty".

In a statement released at a summit on the southern island of Hainan, the leaders of Brazil, Russia, India, China and South Africa said the recent financial crisis had exposed the inadequacies and deficiencies of the current monetary order, which has the dollar as its linchpin.

The BRICS are worried about the long-term fate of the dollar because of America's large trade and budget deficits. They also begrudge the privileges that come with being the leading reserve currency - hence the call for a revamped system that is more stable.

In another dig at the dollar, the development banks of the five BRICS nations agreed in principle to establish mutual credit lines denominated in their local currencies, not the U.S. currency.

The leaders welcomed discussions about the global role of the Special Drawing Right, the International Monetary Fund's in-house accounting unit and reserve asset, which some experts believe could grow into a partial substitute for the dollar.

"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise."

Jerome F. Smith

At the Comex silver depositories Thursday, final figures were: Registered 41.03 Moz, Eligible 62.11 Moz, Total 103.14 Moz.


Crooks and Scoundrels Corner.

The bent, the seriously bent, and the totally doubled over.

Below, Swiss based Glencore heads to London. Why do I get the feeling that this signals the top is near.

Glencore sails straight into FTSE with £6.7bn flotation

World's largest commodity trader names Simon Murray as its new chairman

By Nikhil Kumar Friday, 15 April 2011

Glencore has unveiled plans for a mammoth listing next month that will make the Swiss commodities trader only the third company ever to warrant immediate inclusion into the FTSE 100 index of leading shares.

The dual London and Hong Kong float will give investors the chance to buy up to 20 per cent of the Barr-based firm, raising up to £6.7bn in one of London's biggest public offerings on record. With an expected market value of around £36bn, Glencore would account for more than 1 per cent of the entire FTSE All-Share index, thus winning it a coveted blue-chip berth, a feat only achieved twice before with the listing of BT in 1984 and BG in 1986.

The listing will mark the newest chapter in the evolution of the business founded in 1974 by Marc Rich, the oil trader indicted for tax evasion, charged with tax fraud and then pardoned by Bill Clinton at the end of his presidency.

Mr Rich has long since left – he sold his interest in 1994, when the business was renamed Glencore – and the trading house has grown into a key player on the commodity markets.

Today, Glencore boasts an addressable share of around 60 per cent of the zinc metal market, 50 per cent of the copper metal market and 45 per cent of the lead metal market.

In addition to other metals and minerals, the firm has interests in the oil, coal and agricultural products, and owns more ships that the Royal Navy. Going public will give the firm the firepower to compete in the global rush for resources and earn vast fortunes for the 500-odd shareholders in the business. Once listed, Glencore said it would look to maintain or raise its total ordinary dividend every year. Currently, it expects to declare an interim payout of £214m alongside its half-yearly results in August.

News of the float was accompanied by details of a revamped board, with the former BP boss Tony Hayward, who resigned from the oil giant amid controversy in the wake of the Gulf of Mexico oil spill last year, being named as the company's senior independent director.

Glencore in numbers

25 The number of years since a listing led to a company's immediate inclusion in the FTSE 100 index.

£5bn The estimated value of the stake held by its South African chief executive Ivan Glasenberg.

485 The number of employers who own shares in the company and who will net a windfall in the IPO.

35 per cent The stake Glencore holds in the mining giant Xstrata, which is also listed on the FTSE 100.

"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

Another weekend, and Easter is almost here. So far here in God’s Atlantic Islands offshore from bureaucratic, currency troubled Europe, March and April have been lacking in seasonal rain for much of England and part of Wales. A large part of Europe too. An edgy spring and summer grain trading season probably lies ahead. Here in the hills overlooking the River Thames and Pang valleys, farmers have planted grains on fields uncultivated in at least 5 years. If the rains come, the UK at least will be headed for an above average crop. Have a great weekend everyone.

"In the long run, the gold price has to go up in relation to paper money. There is no other way. To what price, that depends on the scale of the inflation - and we know that inflation will continue."

Nicholas L. Deak

The monthly Coppock Indicators finished March:

DJIA: +160 UP 06. NASDAQ: +216 Down 01. SP500: +163 UP 6.

The Dow and SP 500 have reversed albeit by tiny margins, while the NASDAQ barely moved down. The Fed’s rigging of the indicators seems to have worked. Note: like all indicators, they were devised for normal markets not markets where the central bank is flooding the economy with new cash. In current conditions where risk is suspended by too big to fail, I doubt any indicators are showing more that where the Fed’s new cash is flowing in our world of casino capitalism.

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