Baltic Dry Index. 990 -32
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"There are two eurozones, a northern one and a
southern one."
Jean-Michel Six, S&P’s Europe economist.
In Europe, the ECB is now signalling a revived
currency war. Deliberate ECB action next year to weaken the euro to drive European
exports to the rest of the world. The race to the bottom is picking up. Stay
long physical gold and silver, fiat currency is a dangerous place to hold savings
and wealth. I suspect, however, that the
rest of the world, or much of it, would simply retaliate if the ECB tries it. Continental
Europe is getting ever more convoluted and uncompetitive, in this futile
attempt to keep The Disunited States of Europe on the euro. The euro simply isn’t
working for most Europeans.
Richard Wittington, an honest dreamer, travels to Frankfurt “where the streets are paved with gold”. Fairy Bow Bells realises his destiny, and supplies him with an introduction to leading derivatives gambler, Mario Draghi….
With apologies to Richard Gauntlett. Panto scripts.
ECB mulls negative rates as Europe's economic crisis deepens
The European Central Bank has slashed its eurozone growth forecasts and warned that recession will drag on into the middle of next year, sending the euro plunging below €1.30 to the dollar.
Mario
Draghi, the ECB’s president, said the governing council had discussed a cut in
overnight deposit rate to below zero for the first time, and was
"operationally ready" to do so if needed.
The
comment sent the euro into a nosedive, dropping from $1.3075 to $1.2950 in just
two hours. "A negative deposit rate is the mother of all sell signals for
a currency," said Hans Redeker, currency chief at Morgan Stanley.
"You
only do it if your purpose is to drive down the exchange rate to help exports.
We know from Japan’s experience that you lose control of monetary policy if you
go that route. We don’t think it will happen because the cost is too high, so
we expect the euro to rebound."
Mr Draghi
struggled to explain why the ECB held its main interest rate at 0.75pc, even
though it expects economic contraction of 0.3pc next year, with inflation
falling below its 2pc target. He said there had been a "wide
discussion", a code term implying that several members pushed for a cut.
"It’s
a dereliction of duty. If the outlook is so bad, get ahead of the situation and
cut now," said Stephen Pope from the consultants Spotlight.
The euro
came under further pressure from the escalating crisis in Italy, where
ex-premier Silvio Berlusconi withdrew support from the technocrat government of
Mario Monti, vowing to fight further austerity. "The country is on the
edge of the abyss: I can’t allow my country to plunge into an endless
recessionary spiral," he said.
Mr
Berlusconi hinted at a run for office early next year, despite a four-year
prison conviction for fraud - still under appeal.
"The
situation today is far worse than a year ago when I left the government. We
have an extra million unemployed, the debt is rising, firms are closing,
property is collapsing, and the car market is destroyed. We can’t keep going on
like this," he said.
The
rupture with Mr Monti is a stark reminder that Europe’s political crisis
continues to fester as the region slides deeper into slump.
----Mr
Berlusconi has come close to calling for a break-up of EMU, saying repeatedly
that Germany should leave the euro, and break the vicious cycle by allowing the
Latin bloc to regain competitiveness.
Record Greek jobless rate highest in euro zone in September
ATHENS |(Reuters) - Unemployment in Greece climbed to a new record of 26 percent in September, topping that of Spain to become the highest in the euro area, data by Greece's statistics service ELSTAT showed on Thursday.
Greece's jobless rate has almost tripled since it started climbing in September 2009, driven higher by the global financial crisis and then by severe austerity policies imposed by the bailed-out country's international lenders.
Unemployment is more than double the euro zone average of 11.6 percent, edging past the rate in struggling Spain, which was 25.8 percent in September, according to data from European statistics agency Eurostat. Greece's jobless rate climbed from a revised 25.3 percent in August.
The Greek economy is now in its fifth year of recession and is expected to have shrunk by almost a quarter before recovery begins in 2014, according to the country's central bank.
This has taken its toll on the labor market, especially for the young. Unemployment among those aged 15-24 stood at 56 percent in September, compared with 22 percent in the same month four years ago.
More
New car registrations jump in November
The car industry provided a much-needed boost to the British economy in November with a jump in registrations making the UK the second largest new car market in Europe.
New car
registrations jumped 11.3pc to 149,191 last month, driven by private demand
rather than business and putting the full-year market on track to be its best
since 2008 according to the Society of Motor Manufacturers and Traders which
produced the figures.
Strength
this year has put the market in Britain second in Europe behind Germany as
demand in other markets has dropped. Registrations by private buyers increased
by more than a fifth last month.
“The
ongoing strength of private car sales in November gives a lift to hopes that
consumers are prepared to spend as they are helped by recent decent employment
growth, a marked overall retreat in consumer price inflation and earnings
growth creeping up from the lows seen early in 2012,” said Howard Archer,
economist at IHS Global Insight.
The Ford
Focus was the best selling new car in November, but the Ford Fiesta has held
the top spot over the year-to-date.
The new
car market in Britain grew 5.4pc to 1.92m vehicles between January and the end
of November, not far behind the 2.13m registrations achieved in 2008 at the
onset of the financial crisis.
More
http://www.telegraph.co.uk/finance/good-news/9728129/New-car-registrations-jump-in-November.html
Weak trade renews triple dip fears
The chances of a triple-dip recession have risen after Britain’s trade deficit widened by more than expected in October, economists warned.
Imports of goods and services outstripped exports by £3.6bn at the start of the final quarter of the year, compared with a £2.5bn deficit in September. The decline was led by goods, where the deficit increased by £1bn to £9.5bn – higher than expected. That was partially offset by a £5.9bn services surplus, the Office for National Statistics said.The weak performance underlined the urgency of the Chancellor’s plan to help exporters with £1.5bn of finance guarantees, but also raised concerns that trade would fail to deliver the growth expected next year.
“There is a fighting chance that ‘triple dip’ headlines will be able to retake the front pages of the newspapers from Will and Kate,” Scotiabank’s Alan Clarke said.
For the first 10 months of the year, the goods deficit has been running at an average of £8.9bn a month, compared to £8.4bn last year, the ONS said. Mr Clarke said: “Looking through the volatility, the trend has been around £9bn – not good.”
Much hope has been placed on UK manufacturers’ exports to countries beyond Europe but the goods trade deficit with non-EU countries widened to £4.5bn pounds from £3.9bn in September, higher than forecasts for £4.2bn.
More
http://www.telegraph.co.uk/finance/economics/9726463/Weak-trade-renews-triple-dip-fears.html
In Asia, Japan’s claim of sovereignty over the Diaoyu Islands continues to hammer sales of Japanese cars in China. Still it’s good news for Europe’s auto sales, and probably would have been for America’s too, right up until the Senate voted this week to give Japan “a blank cheque” in its island dispute with China. When President Obama signs the measure into US law, I expect US autos will be right next to pariah Japan’s in appealing to Chinese buyers. At the ECB, it’s “long may Japan keep claiming China’s islands!”
Japanese Dealerships in China Retrench in Wake of Dispute
By Bloomberg News - Dec 6, 2012 10:10 PM GMT
Three months after a territorial dispute led rioters to vandalize Japanese
cars in China, automakers from Toyota Motor Corp. (7203) to Nissan Motor Co.
are luring back buyers with discounts and guarantees. Dealers like William Chen
may take more persuasion to invest in the brands. “Sales of Japanese brands plunged about a third at my outlets,” said Chen, whose family owns about 30 showrooms selling Nissan and nine other brands in the eastern city of Taizhou. “I would prefer safer brands over Japanese ones in the future.”
More distributors than ever are considering quitting Japanese car brands, even as showroom traffic and orders begin to rebound, according to the China Automobile Dealers Association. Failing to sign up enough new dealers will hurt Japanese automakers, benefiting General Motors Co. (GM), Volkswagen AG (VOW) and Hyundai Motor Co. (005380) as they compete to expand in smaller Chinese cities where the bulk of future demand lies.
“It’s definitely going to affect the Japanese automakers’ expansion,” said Ivo Naumann, Shanghai-based managing director at AlixPartners, which advises companies on strategy. “If dealers had to choose between, say Toyota and Volkswagen, why would they choose a Japanese brand if they have to deal with this every two or three years?”
More
We end for the week with a worrying sign from
China. China’s growth rebound may not be all it seems, according to some
analysts. Equally of concern, the Baltic Dry [shipping] Index is falling again,
dropping back below 1000 yesterday.
China State-Driven Rebound at Risk as Small Firms Suffer
By Bloomberg News - Dec 7, 2012 3:14 AM GMT
China’s growth rebound, forecast to have gathered pace in
November, is bypassing smaller businesses in a sign the government may need to
step up policy support to secure a more broad-based recovery.
----China’s rebound from a seven-quarter slowdown is being driven by state-funded transport projects, boosting the shares of railcar makers such as China CNR Corp. even as the benchmark stock index dropped. The focus on infrastructure and the lack of a more widespread pickup may threaten the sustainability of the economic recovery.
“The recovery is uneven as the recent rebound is mainly driven by government-sponsored investment projects,” said Ding Shuang, a Hong Kong-based economist with Citigroup Inc. “Since the policy easing this time is more measured than previous rounds, the rebound is likely to be mild and may not persist. More support is needed for smaller firms to sustain growth and jobs.”
More
"There are some gambling banksters upon this earth of yours," returned God, "who lay claim to know us, and who do their deeds of passion, pride, ill-will, hatred, envy, bigotry, and selfishness in “Gods” name, who are as strange to us and all our kith and kin, as if they had never lived.”
With Apologies to A Christmas Carol, Charles Dickens.
At the Comex silver depositories Thursday final figures were: Registered 39.83
Moz, Eligible 105.45 Moz, Total 145.29 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks or
scoundrels today, just a timely warning that today’s USA jobs report is very
likely to be even more useless than usual. No reason for “The Donald” to twit
that President Obama’s had it rigged.
Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.
Mark Twain.
The jobs report Friday is going to be a giant mess
The
November jobs report is scheduled to come out at 8:30 Friday morning, and will
surely be accompanied by the usual hyperactive analysis, rapid-fire tweeting,
and general sense of eager anticipation.
But the
numbers themselves are likely to be a muddy mess, offering little clarity on
the true state of the U.S. job market on the eve of the fiscal cliff. The
biggest reason is Hurricane Sandy, which struck the Northeast at the tail end
of October and has made most economic data in the last couple of weeks hard to
parse. But the confusion goes deeper.
Start with whatever any given jobs
report tells us about the underlying state of the economy, namely whether
hiring picked up or slowed down in the previous month. Adjust for the
statistical randomness that can give misleading signals. Now add in the fact
that around the holidays, the seasonal adjustment process looms particularly
large and can create distortions; for example, Thanksgiving fell early this
year, so retailers may have added temporary workers earlier than they usually
do. Add in a looming austerity crisis of tax hikes and spending cuts scheduled
to take effect Jan. 1; quite possibly, employers are holding back on hiring
until a resolution is found, though with all the other things going on, it will
be hard to separate that effect from everything else. And finally, account for
a superstorm that shut down commerce in some of the nation’s most populous
areas during the week of the jobs survey.
The
consensus of analysts surveyed by Bloomberg News was that 86,000 jobs were
added nationwide last month, down from 171,000 in October. The forecasters
expect the unemployment rate to be unchanged at 7.9 percent.
But with
all those layers of uncertainty, it’s hard to imagine any number that would
count as a total surprise.
More
Another
weekend, and for once there’s no useless summit meeting taking place in dreary over
bureaucratic Europe. But winter has broken out over much of the UK and north
western Europe. ‘Tis the season to be cold. During the week even southern
England got a dusting of snow. Will it
drive Christmas sales, hurt sales or merely drive internet sales? With austerity now striding boldly across
Europe, will Christmas 2012 be a cutback year?
Have a great weekend everyone.
"Thank God For Bank Bailouts"
Proper Charlie Munger. Berkshire Hathaway.
The monthly
Coppock Indicators finished November:
DJIA: +103 Up. NASDAQ: +123 Up. SP500: +125 Up. Time running out for
the Santa Clause rally?
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