Baltic Dry Index. 722 +25 Possible double bottom.
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
Some of the pain has to recede, and we have to roll up our
sleeves and get to work. If people see us working and engaging and doing the
right thing and sharing our views and it’s right and makes sense, and we
communicate more, that would represent a step in the right direction. If we do
that, in about 200 years people will start to trust us.”
Lloyd Blankfein, CEO Goldman Sachs Group Inc.
With the Baltic Dry
Index appearing to have double bottomed, albeit weakly and possibly for
technical or seasonal reasons, today we take a break from Europe’s never ending
crisis. I have every confidence in Europe’s ditherers and serial bunglers to
continue to make matters wealth destroyingly worse. Today we posit “is this the
bottom?” Is it thumbs up or down in our global coliseum?
According to our “hopium”
stock markets, it’s very definitely thumbs up. But they are just reacting to
all the new money created out of nothing this month, by the ECB, the Fed, China
and the BOJ. There are rumours that the Old Lady of Threadneedle Street will
join the party by the end of the month. Stay long physical precious metals. Crude oil was benefiting from QE speculation
too, until yet more “flash crash” futures incidents Monday and yesterday, have
raised yet more questions about the value of gambling futures markets in an age
of super-fast computers front running ordinary clients. If you think this
problem is bad now, just wait until the arrival of graphene based super-super-fast
quantum computers, somewhere probably around the turn of the decade. Ebenezer
Squid on steroids.
Below, our mixed bag
of conflicting evidence. China’s princelings seem to be back buying bling.
Japan’s exports to Europe fell off a cliff, and are about to do so to China.
China’s manufacturing might just have hit bottom. FedX says the global economy
is worsening and is about to start swinging the ax.
Sept. 20, 2012, 2:04 a.m. EDT Swiss watch exports up 5.2% in August; Asia strong
ZURICH--Swiss
watch exports climbed 5.2% on year in August driven by continuing robust demand
from Asia, data released Thursday by Switzerland's customs office showed.
The value
of watch exports reached 1.47 billion Swiss francs ($1.58 billion) in August,
up 5.2% in real terms from the same month a year earlier. In nominal terms, the
gain was 12.7%, the office said.
Swatch
Group AG , Compagnie Financiere Richemont SA and privately held Rolex are the
main producers.
More
Sept. 19, 2012, 8:05 p.m. EDT
Japan's exports fall, trade deficit widens
LOS ANGELES (MarketWatch) --
Japan's trade deficit widened in August from a month earlier as both exports
and imports fell, data released Thursday showed, but the results still managed
to beat expectations. Total exports for the month dropped 5.8% from a year
earlier, the Finance Ministry reported, though exceeding expectations in a Dow
Jones Newswires poll for a 6.2% decrease. August imports lost 5.4%. The trade
deficit reached 754.1 billion yen ($9.62 billion), below the year-earlier
¥777.5 billion deficit but wider than July's ¥517.4 billion trade gap and
undershooting expectations for a ¥797.9 billion deficit. Exports to top trading
partner China fell 9.9%, offset somewhat by a 10.3% rise in U.S.-bound
shipments. Exports to the European Union fell 22.9%.
More
Copper slips after China factory data
SINGAPORE |(Reuters) - London copper slipped on Thursday after data from top consumer China showed manufacturing activity steadying, but not improving, while enthusiasm waned over Japan's easing steps that pushed prices to a 4-1/2 month high in the prior session.
Manufacturing activity in China stabilised in September after hitting a nine-month low in August, even though output dipped to its lowest level in 10 months, a survey of factory managers showed on Thursday.
The HSBC Flash China manufacturing purchasing managers' index (PMI) ticked up to 47.8, from 47.6 in August. The PMI number, which provides the first glimpse of September's conditions for Chinese industry, seems to point to a month in which a slide was halted, but not reversed.
"We do see some things getting better from September as orders filter down into the market. The macro environment is improving and so are orders for cement, steel and copper," Singapore-based analyst Bonnie Liu of Macquarie said.
"The market has been too bearish on China over summer. Now they realize it's not that bad so you see some upside momentum. Still prices are not going to move up much because that demand is not that strong ... it's only a seasonal pick up for the fourth quarter."
----Copper prices were mired in a negative territory for most of the year until the European Central Bank said it would buy back bonds on September 6, which was followed by a round of easing by the United States and then by Japan on Wednesday.
LME copper prices have since rallied almost 10 percent.
More
FedEx says economy is worsening, cuts outlook
FedEx says global economy is worsening, cuts outlook for full year by about 10 percent
NEW YORK
(AP) -- FedEx Corp. says the global economy is worsening and it's cutting its
forecast for the fiscal year ending in May.
The
world's second largest package delivery company also said Tuesday that net
income for the current quarter ending in November should fall well below last
year's quarter. The stock lost about 2 percent in premarket trading.
----FedEx
is seeing a drop in demand for more expensive priority services. As the global
economy has slowed, FedEx customers have switched to cheaper deferred delivery
services. FedEx hasn't been able to cut costs fast enough to match the decline
in demand.
This
trend is most prominent in the Express unit, where FedEx has already made cuts
but plans to make more. It's reducing flights, taking planes out of service,
and last month it offered buyouts to employees. Operating income in that unit,
which is about double the size of any other, fell 28 percent in the first
quarter. Revenue rose 1 percent as higher rates countered lower volume.
FedEx
plans to announce a restructuring for that unit next month.
More
We close for today with South Africa. Lonmin’s 22% pay rise for its miners, has left all South Africa’s other miners saying “me too.” I suspect that this problem is not going to go away anytime soon. We may soon have to learn to live without Platinum.
Lonmin deal stirs more South Africa mine strife
19th September 2012
JOHANNESBURG
– South African police fired tear gas and rubber bullets on Wednesday to
disperse protesters near a mine run by the world's biggest platinum producer
Anglo American Platinum, as unrest spread after strikers at rival Lonmin won
big pay rises.
Within
hours of Lonmin agreeing pay rises of up to 22%, workers at nearby mines called
for similar raises, spelling more trouble after six weeks of industrial action
that claimed 45 lives and rocked South Africa's economy.
"We
want management to meet us as well now," an organiser for the militant
Association of Mineworkers and Construction Union (AMCU) at Impala Platinum,
the second biggest platinum producer, told Reuters.
"We
want R9 000 a month as a basic wage instead of the roughly R5 000 we are
getting," said the organiser, who declined to be named fearing
recriminations from the firm.
Jubilant
workers at Lonmin's Marikana mine, 100 km northwest of Johannesburg, painted
the deal as a victory for AMCU over the dominant National Union of Mineworkers
(NUM), an ally of the ruling African National Congress.
President
Jacob Zuma expressed relief at the pay deal after intense criticism from the
opposition and media of the government's handling of the crisis - not least in
the aftermath of the police killing of 34 Marikana miners on August 16.
The
shootings, the bloodiest security incident in democratic South Africa's 18-year
history, boosted an "Anyone but Zuma" campaign dividing the ANC,
although he remains favourite to win an internal leadership election in
December.
----Lonmin shares rose more than 9% in early trade on news of the pay deal, but gave up most of those gains as the reality of the extra costs to a company struggling with a shaky balance sheet and unprofitable mine shafts sunk in.
The wage
deal could add 13% to the group's recurrent costs, plus an additional
$10-million for a one-off back-to-work bonus, Nomura said in a note.
More
“Call
it the Goldman Sachs test. If this is something Goldman would do to its
clients, don't do it."
Felix
Salmon.
At the Comex silver depositories Wednesday final figures were: Registered 39.45
Moz, Eligible 100.96 Moz, Total 140.41 Moz.
Crooks and
Scoundrels Corner
The bent,
the seriously bent, and the totally doubled over.
Today, totally
doubled over America. If you think things are bad in America now, just wait for
what lies ahead say the WSJ.
"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
September 16, 2012, 7:03 p.m. ET
The Magnitude of the Mess We're In
The next Treasury secretary will confront problems so daunting that even Alexander Hamilton would have trouble preserving the full faith and credit of the United States.
Sometimes
a few facts tell important stories. The American economy now is full of facts
that tell stories that you really don't want, but need, to hear.
Where are we now?
Did you know that annual spending by the federal
government now exceeds the 2007 level by about $1 trillion? With a slow
economy, revenues are little changed. The result is an unprecedented string of
federal budget deficits, $1.4 trillion in 2009, $1.3 trillion in 2010, $1.3
trillion in 2011, and another $1.2 trillion on the way this year. The four-year
increase in borrowing amounts to $55,000 per U.S. household.
The amount of debt is one thing. The burden of
interest payments is another. The Treasury now has a preponderance of its debt
issued in very short-term durations, to take advantage of low short-term
interest rates. It must frequently refinance this debt which, when added to the
current deficit, means Treasury must raise $4 trillion this year alone. So the
debt burden will explode when interest rates go up.
The government has to get the money to finance its
spending by taxing or borrowing. While it might be tempting to conclude that we
can just tax upper-income people, did you know that the U.S. income tax system
is already very progressive? The top 1% pay 37% of all income taxes and 50% pay
none.
Did you know that, during the last fiscal year,
around three-quarters of the deficit was financed by the Federal Reserve?
Foreign governments accounted for most of the rest, as American citizens' and institutions'
purchases and sales netted to about zero. The Fed now owns one in six dollars
of the national debt, the largest percentage of GDP in history, larger than
even at the end of World War II.
The Fed has effectively replaced the entire
interbank money market and large segments of other markets with itself. It
determines the interest rate by declaring what it will pay on reserve balances
at the Fed without regard for the supply and demand of money. By replacing
large decentralized markets with centralized control by a few government
officials, the Fed is distorting incentives and interfering with price
discovery with unintended economic consequences.
Did you know that the Federal Reserve is now giving
money to banks, effectively circumventing the appropriations process? To pay
for quantitative easing—the purchase of government debt, mortgage-backed
securities, etc.—the Fed credits banks with electronic deposits that are
reserve balances at the Federal Reserve. These reserve balances have exploded to
$1.5 trillion from $8 billion in September 2008.
The Fed now pays 0.25% interest on reserves it
holds. So the Fed is paying the banks almost $4 billion a year. If interest
rates rise to 2%, and the Federal Reserve raises the rate it pays on reserves
correspondingly, the payment rises to $30 billion a year. Would Congress
appropriate that kind of money to give—not lend—to banks?
The Fed's policy of keeping interest rates so low
for so long means that the real rate (after accounting for inflation) is negative,
thereby cutting significantly the real income of those who have saved for
retirement over their lifetime.
The Consumer Financial Protection Bureau is also
being financed by the Federal Reserve rather than by appropriations, severing
the checks and balances needed for good government. And the Fed's Operation
Twist, buying long-term and selling short-term debt, is substituting for the
Treasury's traditional debt management.
This large expansion of reserves creates two-sided
risks. If it is not unwound, the reserves could pour into the economy, causing
inflation. In that event, the Fed will have effectively turned the government
debt and mortgage-backed securities it purchased into money that will have an
explosive impact. If reserves are unwound too quickly, banks may find it hard
to adjust and pull back on loans. Unwinding would be hard to manage now, but
will become ever harder the more the balance sheet rises.
----This
is all bad enough, but where we are headed is even worse.
President Obama's budget will raise the federal debt-to-GDP
ratio to 80.4% in two years, about double its level at the end of 2008, and a
larger percentage point increase than Greece from the end of 2008 to the
beginning of this year.
More
http://online.wsj.com/article/SB10001424052702303561504577497442109193610.html?mod=googlenews_wsj
"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 August:
DJIA: +76 Up. NASDAQ: +97 Up. SP500: +69 Up. All
three indicators have reversed from down to up.
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