Baltic Dry Index. 826 - 02
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
“Our future begins on
January 1 1999. The euro is Europe’s key to the 21st century. The era of solo
national fiscal and economic policy is over.”
German Chancellor Gerhard Schröder, December 31, 1998
The 21st century was supposed to be the “American”
century. Then America ran into the
twin calamities of George W. Bush, and the
bursting of Alan Greenspan’s fraudulent, securitised real estate bubble. As the
Anglo-American casino economies did their version of Three Mile Island 2007-2009,
increasingly it became China as the locomotive pulling the rest of the world
along. While many of us are sceptical of China’s published economic figures,
including the Chinese leadership itself, if it wasn’t for China’s response to
the Lehman collapse in 2008, our world would now resemble Greece and Cyprus.
Even though latest figure show that China has started
to slow, the fate of the rest of us largely comes down to what happens this
year and next in China and Japan. While the west largely mires itself in ever
more unrepayable debt, promoting the Fed’s latest stock market bubble in the
process, Japan has embarked on 75 billion (US) of QE a month, destroying the
Yen as (deliberate) collateral damage, in its attempt to steal export markets
from all comers. China meanwhile is busy positioning the Yuan to replace the
dying Euro as the 21st century reserve currency to vie with the fiat
reserve dollar. Though Asia’s Tom and Jerry have little affection for each
other due to Japan’s actions in the 1930s and 1940s, and an arrogant stance to
China and South Korea since losing the war, what happens in the rest of this
decade largely comes down to how well Asia grows as the European Union dies,
and the USA’s Fed tries yet another financialised bubble attempt at reviving
their zombie economy. Stay long physical
precious metals against this latest high wire act going spectacularly wrong.
George H. W. Bush the Greater’s, “Voodoo
economics” forecast has truly come home to roost, to mangle metaphors.
“We must go back to
teach Europeans to love Europe.”
Jean Claude Juncker, Prime
Minister of Luxembourg, 2004.
Singapore Sees Dim Sum Bond Debut as HSBC Joins StanChart
By Benjamin Purvis & Kristine Aquino - May 27, 2013 4:33 AM GMT
HSBC
Holdings Plc (HSBA) and Standard Chartered (STAN) Plc are offering
yuan-denominated bonds in Singapore in the city state’s first sales of Dim Sum
debt. HSBC, Europe’s biggest bank, is marketing two-year fixed-rate notes through its local branch at a yield of about 2.25 percent, according to a person familiar with the matter, who asked not to be identified because the terms aren’t set. Standard Chartered is also offering bonds in the Chinese currency in Singapore, it said in a statement today. The bank, which generates most of its operating profit in Asia, is marketing three-year notes at a yield of about 3 percent, according to a separate person familiar with the matter.
----Singapore is set to be the third offshore hub for Dim Sum note sales after Hong Kong and Taiwan.
“We see
this as another milestone for Singapore in the development of its status as an
offshore RMB hub,” said Ray Ferguson, chief executive officer of Standard
Chartered Bank Singapore, in the bank’s statement.
Offshore
debt sales in the currency of Asia’s biggest economy may reach as much as 360
billion yuan ($59 billion) this year, according to estimates from HSBC. HSBC
and Standard Chartered will each manage their own sales, which could price as
soon as today, according to the people familiar with the transactions.
More
Fears over US stimulus highlight Japan’s fragility
The centrepiece of “Abenomics” – the policy creed of new prime minister Shinzo Abe – has been, and continues to be, the implementation of “quantitative easing” on a scale approaching that of the Bank of England and America’s Federal Reserve.
The
Japanese economy is supposed to be recovering. Just a couple of weeks ago,
official data indicated an expansion of 0.9pc during the first three months of
this year. That placed the third-largest economy on earth among the developed
world’s top-performers.
Here in
the UK, our GDP increased by just 0.3pc during the first quarter of 2013, while
the US registered 0.6pc growth. The eurozone, meanwhile, remained stuck in
reverse gear, its economy contracting 0.2pc over the same period.
For most
of 2012, Japan was caught in recession, its third spell in the economic
doldrums since the onset of the financial crisis in 2008. During the final
quarter of last year, though, growth returned, with Japan expanding by 0.3pc,
before the recovery accelerated into the first quarter of this year.
Japanese
industry has been leading the charge. Manufacturing, which still accounts for a
fifth of all output, surged by 2.2pc during the first quarter, a stunning
reversal from its 1.8pc contraction the quarter before.
The
sector has been helped, of course, by a falling currency. On a trade-weighted
basis, the yen has shed 10pc of its value so far during 2013, as the Bank of
Japan has cranked up its virtual printing press. That’s provided exports with a
one-off boost.
Yet for all this good news, on Thursday the Nikkei 225 plunged by 7.3pc. This stomach-churning lurch in Japan’s main share index, its biggest one-day fall since the ghastly earthquake and tsunami of March 2011, is a body blow to global investor sentiment.
By laying bare the fragility of one of the world’s major stock markets, this Nikkei nosedive directly challenges those who insist that the worst of the financial crisis is over and equity investors needn’t fear another systemic Lehman-style meltdown, with all the economic damage that would bring. It’s true that the Nikkei was “due a correction”. Over the six months prior to this drop, Japanese shares had soared by a dizzying 71pc.
The centrepiece of “Abenomics” – the policy creed of new prime minister Shinzo Abe – has been, and continues to be, the implementation of “quantitative easing” on a scale approaching that of the Bank of England and America’s Federal Reserve.
That’s seen massive domestic liquidity injections flow into Japanese stocks, with a torrent of international “hot money”, or short-term investment flows, piling in behind them.
In the
real world, of course, QE flows do little to raise productivity or enhance the
long-term corporate earnings that are supposed to drive share prices. If
anything, they promote the reverse. As such, Japan’s recent equity rally has
been built on hot air – so was always bound to reverse.
This
Nikkei’s pull-back coincided with survey data that suggest an imminent
manufacturing slowdown in China – now Japan’s biggest trading partner.
Merkel Vows to Avert China Trade Dispute as Li Rejects EU Duties
By Patrick Donahue & Stefan Nicola - May 26, 2013 11:00 PM GMT
German Chancellor Angela Merkel said that she’ll work to resolve a
European Union trade dispute with China over complaints that the Chinese solar industry is
flooding the global market with cheap products. Merkel, speaking at a joint press conference in Berlin with Chinese Premier Li Keqiang yesterday, said that she’ll strive to ensure no permanent tariffs are imposed by the EU on China over its solar products and will work over the next six months for a solution to the dispute. Li said that he “decisively” rejected the imposition of EU duties.
Germany will work hard so that “issues we currently have, for example in the areas of solar energy and telecommunications, will be addressed through as many talks as possible and won’t lead to conflict, leading to mutual tariffs,” Merkel told reporters. “We don’t believe that this will help us.”
Li, who chose Germany as the only European Union country on the agenda for his first overseas trip as premier, said that he wanted China-Germany relations to serve as a model for his country’s ties with the wider EU. He said that he “values” Merkel’s position on solar tariffs
Electric car maker runs out of juice after spending £560m
An electric car designed to end fears among drivers about running out of power has run out of energy itself.
Better
Place, the manufacturer, has filed a winding- up motion in an Israeli court
after powering its way through more than $850m (£560m) and selling only 1,300
cars in Israel and Denmark in less than two years.
Shai
Agassi, an Israeli entrepreneur, founded the company six years ago and
recruited Renault as a partner to develop a system combining terminals with battery
swap stations to extend the range of electric cars. Drivers could drop off used
batteries and pick up fresh ones to complete their journeys.
The
company raised more than $850m from leading investors and was valued at $2.25bn
two years ago. The list of investors was graced by General Electric, HSBC, the
European Investment Bank, Morgan Stanley and Idan Ofer, the Israeli billionaire
who ended up with a 30pc stake in the business.
Better
Place and Renault set their sights on producing 100,000 cars for Israel and
Denmark alone, in the belief that big fleet operators would sign up. Plans were
also developed to move into Australia, China and the US, but the vehicle and
the battery swap concept failed to impress the market, and only 900 were sold
in Israel and around 400 in Denmark.
Excessive
ambition and the decision to concentrate initially on small markets were blamed
for the collapse but carmakers insisted the setback was unlikely to slow down
the considerable investment in electric cars.
More
"With the exception only of the period of the gold
standard, practically all governments of history have used their exclusive
power to issue money to defraud and plunder the people."
F.A. von Hayek
At the Comex silver depositories Friday final figures were: Registered 43.72 Moz,
Eligible 121.62 Moz, Total 165.34 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more on the follies of 21st
century, seriously bent, Europe. Spain’s "most modern conventional submarine," threatens
to sink faster than the Spanish monarchy
and hopelessly underwater Spanish economy. Euros anyone, even those marked with
a German “X”?
"Some
ships are designed to sink… others require our assistance."
Anon.
£2 billion Spanish navy submarine will sink to bottom of sea
A new submarine commissioned by the Spanish navy at a cost of 2.2 billion euros (£1.9billion) has been discovered to contain a serious design flaw – it is too heavy and will sink like a stone.
Miscalculations
at the engineering stage have been blamed for a two-year delay in delivery of
the first of four submarines commissioned from Spain's
state-owned shipbuilder Navantia.
Last
month it emerged that the Isaac Peral sub – part of the new S-80 series and
named in honour of the Spanish man credited by some as the inventor of the
underwater vessel – was at least 75 tons overweight, an excess that could
compromise its ability to surface after submerging.
Navantia
admitted the existence of "deviations related to the balance of
weight" in the vessel and estimated it would take up to two years more to
correct the problem.
The 233ft
vessel may have to be lengthened to compensate for the excess weight, a
redesign that comes with an estimated cost of 7.5 million euros per extra
metre.
The
shipbuilders based in Cartagena, southern Spain, are now seeking
"technical experts from abroad" to advise in the redesign of what was
billed as the "most modern conventional submarine".
----The original date for delivery was scheduled for March 2015 but it is now expected to be delayed by up to two years.
The
Spanish navy commissioned four of the submarines at a cost of 2.2 billion, one
of the most expensive contracts in Spain's military history, but will now be
facing a much larger bill.
----Spain's Ministry of Defence has seen its budget cut by some 30 per cent since the start of the economic crisis in 2008 in an austerity drive aimed at reducing the nation's public deficit.
"As the motor vehicle has driven
the horse from the road, so will the submarine drive the battleships from the
sea."
June 5th 1914, Admiral
Sir Percy Scott, letter to "The Times".
The monthly Coppock Indicators finished April:
DJIA: +133 Up. NASDAQ: +139 Up. SP500: +170 Up. Another Fed bubble underway. But when to jump
off before it ends?
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