Baltic Dry Index. 923 -27
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"Markets are only
a tiny facet of society, but being made by mass psychology, they are a good
litmus paper for what is going on. Markets only work when they believe,
and this confidence is based on the idea that men can manage their affairs
rationally. If that belief fades, then so do the markets. They do
not merely dive, they dive and then they disappear. It happened here in
the blight of the spirit from 1930 - 1933, and it happened in other countries."
“Adam Smith” aka George Goodman.
We have reached June 1, and the official start of
the Atlantic hurricane season. Normally Atlantic hurricanes only affect North
America and the Caribbean. This year hurricane season came early and took its
aim at Europe’s sinking Club Med.
But more on that later first this. Asia’s economy
is undergoing a great wobble. A wobble strong enough to push Europe over the
edge if Germany’s export boom ends.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.
John Kenneth Galbraith
June 1,
2012, 12:59 a.m. EDT
China manufacturing slows sharply, data show
Analysts urge more government spending
HONG KONG
(MarketWatch) — Rival surveys of China’s manufacturing activity for May
released Friday pointed to deteriorating conditions, prompting analysts’ calls
for Beijing to speed up fiscal support to cushion against a serious slowdown.
China’s
official manufacturing Purchasing Managers’ Index (PMI) showed manufacturing
came in weaker than expected, showing activity barely expanded in May, while a
closely watched private survey indicated conditions had now shrunk for a
seventh straight month.
The
official PMI, released jointly by the China Federation of Logistics & Purchasing
(CFLP) and the National Bureau of Statistics, fell to 50.4 on a 100-point
scale, sharply lower than April’s 53.3 print.
The
result disappointed, as a poll of economists by Dow Jones Newswires had
expected a 51.5 reading, while a Reuters survey had projected the index to slip
to 51.1.
Meanwhile,
HSBC’s separate China PMI dropped to 48.4 in May, down from April’s 49.3, and
weaker than an initial “flash” reading of 48.7.
A PMI
figure above 50 suggests an improvement in activity, while one below 50 shows a
deterioration.
----HS Global Insight said the drop in
the official PMI was “aggressive” and showed China was now suffering its
sharpest deterioration since mid-2010.
----They said the results, while not as bad as the crisis
that followed the 2008 collapse of Lehman Brothers, “confirmed that the economy
is close to stalling.”
More
May 31, 2012, 10:18 p.m. EDT
Australia manufacturing gauge hits nine-month low
SYDNEY
(MarketWatch) -- Activity in Australia's manufacturing sector fell to its
lowest level in nine months in May, which may stoke concerns that the
non-mining sector of the economy is in trouble and further interest rate cuts
are needed.
The
seasonally adjusted Performance of Manufacturing Index fell 1.5 points to 42.4
in May, well below 50 which indicates a contraction in activity.
More
May 31, 2012, 10:24 p.m. ET
Asia Strains Under Euro Crisis
Declining European Demand for Region's Exports Compounds Sputtering Growth
The economies of Asia, both the emerging markets and the
more developed countries, are being hit by a double whammy of slowing domestic
growth and the impact of the European debt crisis on Asian exports and finance.
Signs of
distress are proliferating.
In India,
the government reported Thursday growth in the first three months of the year
at the slowest pace in the past nine years—up 5.3% from the year-earlier
quarter, well below the 8% pace of recent years. "A gasping
elephant," said Leif Lybecker Eskesen, HSBC's chief India economist, in a
note to investors.
In China
Friday, an official gauge of manufacturing activity fell to a lower than
expected level, which is likely to add to market concerns about China's
slowdown. China's official Purchasing Managers Index fell to 50.4 in May,
compared with 53.3 in April and lower than the median forecast of 51.5. A
reading below 50 indicates contraction. The Ministry of Commerce, meanwhile, is
blaming "worse-than-expected" economic performance in Europe for
disappointing export data.
Early
Friday, South Korea said its exports unexpectedly contracted for a third
consecutive month in May compared with a year earlier. South Korea is the first
country in Asia to release trade data for the month and is often a harbinger of
regional trends.
----In Taiwan, manufacturers of electronic devices report order cuts from brand-names like Dell, Lenovo and Nokia.
Across
Asia, stock markets have effectively erased the gains of rallies earlier this
year, making it harder for
firms to launch initial public offerings.
Motor-sport
franchise Formula One Group is delaying its $2.5 billion initial public
offering in Singapore as choppy markets continue to hit equity fundraising
efforts of companies globally, people familiar with the situation said early
Friday. On Thursday, Graff Diamonds withdrew its heavily marketed $1 billion
IPO in Hong Kong.
More
Now back to the Costa Europa, capsized on the shore
of Club Mad. Back in Euroland, more of the same. Another day, another
continuing set of rising problems. Now crisis fatigue and desperation is
setting in. Slowly the fear is dawning among Europe’s inadequate gaggle of “leaders,”
they’re not up to the job of saving the Costa Europa, which isn’t worth saving
anyway in its present wrecked form. As with the Costa Concordia, the wreck of
the Costa Europa threatens to be gone by this time next year. Seen from
relatively safe London, both wrecks look set to costa lota. Stay long physical
gold and silver for the now inevitable grand finale. Europe’s Keystone Kops
will dither and bungle until the EMU croaks.
"If
money isn't loosened up, this sucker could
go down"
ECB President
Mario Draghi, with apologies to George
W. Bush.
May 31, 2012, 9:54 p.m. ET
Debt Strains Hit Big Greek Lenders
ATHENS—Greece's deepening crisis has dealt a further blow to the country's four largest lenders, as bad debts ballooned and they struggled to hold onto nervous savers worried over the country's future inside the euro zone.On Thursday, EFG Eurobank Ergasias SA, Greece's second-largest lender by assets, and Alpha Bank SA both reported losses, a day after Greece's two other big banks—National Bank of Greece SA NBG -16.67% and Piraeus Bank SA—did the same.
Greece's banks have been hit by successive blows to their earnings stemming from the country's two-year-long debt crisis. A deepening recession forced those biggest four to set aside more than €1.5 billion ($1.9 billion) to cover bad loans in the first quarter. And Greece's recent €200 billion debt restructuring has wiped out their capital base, forcing them to seek state aid to survive.
----Greece is now in a fifth year of an ever-deepening recession that has led to record unemployment and soaring business bankruptcies. This week, Greece's bank rescue fund injected about €18 billion into the four big banks, including €4 billion for Eurobank and €1.9 billion for Alpha, boosting both lender's average capital adequacy ratio to 9% and 9.6%, respectively.
More
Eurozone is 'unsustainable' warns Mario Draghi
The head of the European Central Bank hit out at the political paralysis gripping the region as he warned the eurozone's set-up was "unsustainable".
Mario
Draghi said the central bank could not "fill the vacuum" left by
member states' lack of action as it was claimed the zone is on the point of
"disintegration".
Amid
escalating talk of a potential bail-out for Spain, the president of the ECB
said the central bank was powerless to stop the debt tornado. "It's not
our duty, it's not in our mandate" to "fill the vacuum left by the
lack of action by national governments on the fiscal front," he said.
Christine
Lagarde, the head of the International Monetary Fund, last night denied that an
IMF bail-out of Spain was being prepared.
“There is
no such plan. We have not received any request to that effect and we are not
doing any work in relation to any financial support,” she said, following a
meeting with Spain’s deputy prime minister, Soraya Saenz de Santamaria.
Olli
Rehn, the EU's top economic official, called for urgent action to "avoid a
disintegration of the eurozone." The economic affairs commissioner said
that politicians had made progress but it had been "uneven and seemingly
inefficient."
----A raft of poor economic data in America compounded fears for the eurozone and the global economy. US GDP expanded by just 1.9pc in the first quarter, rather than the 2.2pc first estimate, while jobless claims climbed.
The
crisis raging in the Spanish regions and the country's banks kept the country's
borrowing costs in the danger zone. The price of oil fell again although
stockmarkets were calmer after Wednesday's rout.
Italy's
prime minister Mario Monti warned of the "huge possibilities of
contagion". Ireland looked set to approve the Fiscal Pact in its
referendum but in Greece the anti-austerity Syriza party took the lead in some
polls.
In a
thinly disguised demand for action from Germany, Mr Draghi said leaders had to
decide whether to stand by the current eurozone. "The sooner the vision is
clarified the better for the European Union," he told the European
Parliament.
Pointing
at the chaotic and ongoing rescue attempts of Bankia in Spain, Mr Draghi said
the handling of the raging bank crises was the "worst possible way of
doing things."
Euro is facing disintegration, Commission warns
The euro faces 'disintegration' unless European governments do much more to work together, the European Commission has warned.
----Investors in Spanish banks are withdrawing money at a record rate, figures showed yesterday. More than £55 billion was withdrawn and moved out of the country last month.
Yesterday’s figures are for the month before the Spanish banking crisis entered its latest phase with the nationalisation of Bankia, one of the country’s biggest banks.
Even more money is thought to have left the country since then, raising fears that Spain is locked in an unbreakable cycle of market panic.
The flow of money out of Spain has raised fears that its banking system could collapse, requiring a bail-out that its government cannot afford.
Those fears are pushing up Spanish borrowing costs, which intensifies pressure on Spanish banks.
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
At the Comex silver depositories Thursday final figures were: Registered 35.71
Moz, Eligible 106.21 Moz, Total 141.92 Moz.
Crooks and
Scoundrels Corner.
The bent,
the seriously bent, and the totally doubled over.
Today,
thanks to the excellent website Zerohedge and their informative writers, where our European led, world fiat money
crisis is taking us. The end of casino banking as we know it, and all too
likely the revulsion of fiat money as we know it. Stay long physical gold and
silver. Central banksters and great vampire squids have killed the golden goose
and have nothing to replace it with.
"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
Antony C. Sutton.
"The End Game: 2012 And 2013 Will Usher In The End" - The Scariest Presentation Ever?
Submitted by Tyler
Durden on 05/31/2012 20:02 -0400
If Raoul Pal was some doomsday spouting windbag, writing in all caps,
arbitrarily pasting together disparate charts to create 200 page slideshows, it
would be easy to ignore him. He isn't. The founder of Global Macro Investor "previously
co-managed the GLG Global Macro Fund in London for GLG Partners, one of the
largest hedge fund groups in the world. Raoul came to GLG from Goldman Sachs
where he co-managed the hedge fund sales business in Equities and Equity
Derivatives in Europe... Raoul Pal retired from managing client money in 2004
at the age of 36 and now lives on the Valencian coast of Spain, from where he
writes." It is his writing we are concerned about, and specifically his
latest presentation, which is, for lack of a better word, the most disturbing
and scary forecast of the future of the world we have ever seen.... And we see a lot of those.
Consider this:
- We are here...
- We don’t know exactly what is to come, but we can all join the very few dots from where we are now, to the collapse of the first major bank…
- With very limited room for government bailouts, we can very easily join the next dots from the first bank closure to the collapse of the whole European banking system, and then to the bankruptcy of the governments themselves.
- There are almost no brakes in the system to stop this, and almost no one realises the seriousness of the situation.
- The problem is not Government debt per se. The real problem is that the $70 trillion in G10 debt is the collateral for $700 trillion in derivatives…
- Yes, that equates to 1200% of Global GDP and it rests on very, very weak foundations
- From an EU crisis, we only have to join one dot for a UK crisis of equal magnitude.
- And then do you think Japan and China would not be next?
- And then do you think the US would survive unscathed?
- That is the end of the fractional reserve banking system and of fiat money.
- It is the big RESET.
More
Another
weekend, and here in the UK it’s the
double bank holiday Diamond Jubilee celebration of Her Majesty’s 60 year reign
over the decline of great Britain and the end of the former British Empire. In
fairness, none of that was her fault. She didn’t bankrupt Britain by prolonging
the futility of World War One, nor dissipate what little was left of Great Britain’s
wealth by giving Poland a guarantee in 1939, that no British force was capable
of standing behind, arguably helping lead to World War Two with all its inhuman
horrors.
But in history
hindsight is always perfect. This weekend we celebrate the largely benign reign
of a respected Queen, in a monarchic system that seems out of place in our
modern democracies, until one sees how modern powerful presidencies behave. Compared
to American Presidents, the EU’s plethora of Presidencies, any European President
you care to name, or even the faux democratic government of the People’s
Republic of China, the UK’s muddled Constitutional Monarchy and democratic Parliament
with its supremacy of the Commons, looks good. But nothing in life is forever,
as our short lived Great Nixonian Error of
fiat money is about to prove out in the next few years. Have a great weekend everyone, especially to
all those celebrating 60 mostly benign and happy years. God Save the Queen.
"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."
Hans F. Sennholz
The monthly
Coppock Indicators finished May:
DJIA: +71 Down. NASDAQ: +79 Down. SP500: +46 Down. All
three indicators remain down but downward momentum is accelerating again after stalling
earlier in the year.
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