Monday 28 January 2013

The Davos Spring.



Baltic Dry Index. 798  -10

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

“No one believes more firmly than Comrade Barroso that all Europeans are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?”

With apologies to George Orwell and Animal Farm.

The collective message coming out of last week’s Davos meetings, seems to be optimism that the worst of the Great Recession and sovereign debt crisis is over. “We have turned the corner. The only way is up from here.” The Lords of the Universe now have to sell the big lie.

“This lie was strictly voluntary, but any Davosian who absented himself from it would have his bonuses reduced by half.”

With apologies to George Orwell and Animal Farm.

Davos Money Men Say World Emerges From Doldrums Fretting Relapse

By Christine Harper & Simon Kennedy - Jan 28, 2013 12:00 AM GMT
The global financial elite don’t want to be fooled again.
Scarred by the worst banking crisis since the Great Depression (INDU) and the hubris that preceded it, bankers, investors and policy makers who gathered in Davos, Switzerland, last week gave a guarded welcome to signs of recovery in the world economy and the endurance of the euro region.

Optimism, but with a sober tone,” was how Bank of America Corp. (BAC) Chief Executive Officer Brian T. Moynihan characterized the mood pervading the World Economic Forum’s annual meeting, even as investors were lifting the Standard & Poor’s 500 Index above 1,500 for the first time since 2007.

The mood in Davos was “totally different” when stocks last reached that peak, said Harvard University economics professor Kenneth Rogoff, 59. This year, executives from Deutsche Bank AG (DBK) and Goldman Sachs Group Inc. (GS) were quick to couple upbeat assessments with warnings that economies remain fragile and prone to policy error.
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Davos 2013: The icy economic chill begins to thaw

New signs of optimism and confidence abound at the World Economic Forum, writes Louise Armitstead

'Another bubble, another crisis,” thundered Dr Doom. The revered US economist, also known as Nouriel Roubini, was giving his assessment of the work of global central banks and their money-printing exercises; his prognosis as frosty as the mountains outside Davos.

Delegates nodded in resignation: Dr Doom, or Permabear, as he is also dubbed, was once dismissed as outlandish for his apocalyptic forecasts; but in 2008 Forbes said he was a sage and he has been a grim highlight at the World Economic Forum ever since.

But last week, Davos delegates were shocked when Prof Roubini unexpectedly added: “I’m playing devil’s advocate.” Necks swivelled and backs straightened as he continued: although quantitative easing had unknown “long-term economic consequences”, he saw its merits.

“I’ve not heard Dr Doom being less pessimistic for a long time,” said Dominic Barton, head of McKinsey. “I’m taking that as a pretty good sign.”

----But his note of optimism chimed with others – politicians, central bankers, financiers and international business leaders – to produce an unexpected but unmistakably positive mood-music at Davos 2013.

Mario Draghi, the chairman of the European Central Bank, said 2012 was the “year of the relaunch of the euro”; Anshu Jain, boss of Deutsche Bank, said central banks were “heroes, they’ve saved the world”; Jin Liqun from China Investment Corporation (CIC) said he expected “2013 to have great results”; and Angela Merkel, the German Chancellor, praised David Cameron.

Oleg Deripaska, the Russian metals billionaire, told The Sunday Telegraph: “Everyone’s more optimistic, there are no pessimists any more. It’s a great surprise for me.”

----“Talk to people here, in the various sessions, they will tell you that they are more positive – that has a viral effect,” said Natarajan Chandrasekaran, boss of Tata Consulting Services, part of India’s $100bn Tata Group. “On Monday, back at work, they will say, 'things are looking up, what can I do to participate?’”

So is the end of the bitter winter of the mighty financial crisis finally here? Could this really be the start of the big thaw? Or just a desperate, but baseless, hope for change?
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Back in the real world, the currency wars continue. Plan B is that we will all devalue our way back to prosperity. Of course Japan isn’t really engaging in a competitive devaluation. It’s only a program aimed at ending deflation, so that’s alright then, I suppose until other nations exporters start screaming about Japanese firms eating their export lunch.

Europe Stock Futures Rise With Metals on China Data; Won Slumps

By Glenys Sim - Jan 28, 2013 7:27 AM GMT
European stock-index futures gained with metals as Chinese industrial companies’ profits rose for a fourth month. South Korea’s won and Taiwan’s dollar dropped the most since September 2011, and the yen rebounded.

Futures on the Euro Stoxx 50 Index climbed 0.2 percent as of 7:15 a.m. in London, and Standard & Poor’s 500 Index futures added 0.1 percent. The Shanghai Composite Index rose 2.4 percent to the highest level in seven months. Copper in London advanced 0.4 percent. The won slumped 1.7 percent to 1,092.63 per dollar and the Taiwanese dollar lost 1.3 percent to NT$29.524. The yen traded at 90.79 per dollar after touching 91.26, the weakest level since June 2010. Australia’s markets are closed.

Chinese industrial companies’ profits rose in December and South Korean consumer confidence climbed to the highest level in eight months this month. South Korea’s won slumped after foreign investors sold stocks, Finance Minister Bahk Jae Wan hinted at intervention and North Korea vowed to defend itself against U.S. hostilities. Taiwan’s central bank said it will maintain order in the currency market in the event of disorderly movements.
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Elsewhere, outside in the non-Davosian real world, optimism is much harder to find. Inventing a fiat euro to take on America’s fiat dollar, was supposed to be jobs and wealth positive, exactly the opposite of what’s happened in reality. Who needs a one size fits all euro, that really only fits paymaster Germany? Most of Europe is to be broken on the wheel of the euro. A permanent euro that will trap Euroland into a European USSR lite.

“Let's face it: our lives are miserable, laborious, and short.”

George Orwell.  EU Farm.

Euro Crisis Seen Reaping Social Toll With Record Jobless

By Scott Hamilton - Jan 28, 2013 12:00 AM GMT
Euro-area jobless data this week will expose the social cost of last year’s debt crisis and recession on southern European economies as unemployment across the region probably rose to a record in December.

Unemployment in the 17-nation bloc climbed for a fifth month to 11.9 percent, according to the median of 34 economists in a Bloomberg News survey. That result due on Feb. 1 would show the highest jobless rate since records began in 1995. By contrast, German unemployment data the day before may show the jobless rate there held steady for a fourth month at 6.9 percent in January, a separate economist survey found.

While measures to stem the region’s debt turmoil have helped curb sovereign bond yields from Spain to Greece, the recession and crisis has inflicted job cuts by companies and governments.

----“The worst may be over for financial markets, but definitely not for the real economy,” Marco Valli, chief euro- area economist at UniCredit Global Research in Milan, said in a telephone interview. “The unemployment situation is going to remain very poor at least for another year, if not longer.”

Spanish data last week showed a record 26 percent of the workforce without jobs in the fourth quarter, bringing to the total close to 6 million people. In Greece, the rate was even higher in October, at 26.8 percent, also a record.
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We end for the day with yet more banksters being banksters. Doing what banksters do best in the 21st century, breaking the law. Today it’s the bankster in Singapore, rigging the fixings of “non-deliverable foreign exchange forwards (NDFs), aiming to benefit their trading books.” Sadly our banks seem to have become institutionally criminal enterprises. Shameless thief’s in the pursuit of the filthy lucre.

“The creatures outside looked from criminal to bankster, and from bankster to criminal, and from criminal to bankster again; but already it was impossible to say which was which.”

With apologies to George Orwell and Animal Farm.

Exclusive: Bank probes find manipulation in Singapore's offshore FX market - source

SINGAPORE | Sun Jan 27, 2013 7:40pm EST
(Reuters) - Internal reviews by banks in Singapore have found evidence that traders colluded to manipulate rates in the offshore foreign exchange market, according to a source with knowledge of the inquiries.

The discovery widens a global lending rate scandal into new markets, as fallout from the Libor case puts banks under added scrutiny and spurs both regulators and institutions to reconsider how certain key interest and currency rates are set.

The probes found evidence showing that traders from several banks communicated with each other over electronic messaging about what rates they were going to submit for the local banking association's fixings for non-deliverable foreign exchange forwards (NDFs), aiming to benefit their trading books.

"Traders were talking to traders, saying: 'I need you to help me today, I need to fix low,'" said the bank source, who asked not to be identified due to the confidential nature of the reviews.

----The Singapore bank probes show that the focus is now turning to other benchmarks, amid concern that they too were manipulated.

The biggest banks in the Asian NDF markets include UBS, JPMorgan Chase & Co, DBS Group Holdings Ltd and HSBC Holdings Plc.

The source did not make specific comments about possible wrongdoing by individual banks or traders and Reuters has no independent evidence of such wrongdoing.
UBS, JPMorgan, DBS and HSBC declined to comment.

----Under the NDF rate-setting process, organized by the Association of Banks in Singapore (ABS), banks submit their reading of the spot price for the Indonesian rupiah, Malaysian ringgit and Vietnamese dong every working day at 11:00 a.m. (10 p.m. ET).

A settlement rate for NDF contracts due to expire is then calculated by taking the average of the submissions, excluding the highest and lowest quarters of contributions from the banks.

While the exclusion of the rates at the top and the bottom of the range is meant to ensure that one bank cannot try to improperly skew the rate, the concern is that collusion by traders at multiple banks could influence the result.

There are 18 banks on the panel for the rupiah, 15 for the ringgit and 12 for the dong.
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"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise. 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

At the Comex silver depositories Friday final figures were: Registered 38.04 Moz, Eligible 114.22 Moz, Total 152.26 Moz.  


Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over. 

Today, meet Canadian ex-Goldmanite Mark Carney. From this coming July, the next Governor of the Bank of England. Under new ownership, Mr Carney has indicated he intends to take on a more aggressive unorthodox monetary policy approach. Stay long physical precious metals. Some of his friends in Goldman might soon begin betting against the Bank of England.

“Surely, comrades, you don't want gold back?”

Mark Carney, with apologies to George Orwell and Animal Farm.

Mark Carney

Mark Joseph Carney (born March 16, 1965) is a Canadian central bank governor. He is the eighth and current Governor of the Bank of Canada and the current Chairman of the G20's Financial Stability Board. These appointments were on October 4, 2007 (for a seven-year term), and on November 4, 2011 (for a three-year term). Carney achieved these positions by working his way up the ranks of Goldman Sachs, the Canadian Department of Finance, and the Bank of Canada as Deputy Governor. Carney has been credited with shielding Canada from the worst effects of the late-2000s financial crisis, and has earned recognition by the Financial Times and TIME magazine as a top figure in the financial world.


On November 26, 2012, the British Chancellor of the Exchequer, George Osborne, announced the appointment of Carney as the next Governor of the Bank of England. Carney is expected to assume the position on July 1, 2013 for what is officially an eight-year term, though he has already indicated that he will step down after five.

----Carney spent thirteen years with Goldman Sachs in its London, Tokyo, New York and Toronto offices. His progressively more senior positions included co-head of sovereign risk; executive director, emerging debt capital markets; and managing director, investment banking. He worked on South Africa's post-apartheid venture into international bond markets, and was involved in Goldman's work with the 1998 Russian financial crisis.

Goldman's role in the Russian crisis was criticized at the time because while the company was advising Russia it was simultaneously betting against the country's ability to repay its debt.
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http://en.wikipedia.org/wiki/Mark_Carney

"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 December:
DJIA: +100 Down. NASDAQ: +123 Unch. SP500: +129 Up.  All three indexes are giving different signals. A time for caution.

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