Baltic Dry Index. 1170 -09
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
General Cornwallis did not attend the
surrender ceremony saying that he was not feeling well. His substitute, General
O'Hara, first tried to surrender to the Comte de Rochambeau who directed the
British officer to General Washington who in turn directed him to Washington's
subordinate General Lincoln. During the ceremony a British band played the song
"The World Turned Upside Down." Dr. James Thacher served with the
Continental Army and published his account of the surrender some years later:
There will be no LIR update tomorrow, as the
land of the spied on and not so free, (plus me,) take the day off to celebrate when the New
England Patriots trounced the mad tyrant King George’s European tag team army of
English, Scots, and Irish, plus Hanoverian mercenaries. With the Royal Navy
largely tied down watching the French and Dutch in Europe and the Dutch out in the
East Indies, the Royal Navy’s Caribbean Squadron was defeated by the French at the mouth of Chesapeake
Bay, allowing the French Caribbean fleet to trap the tyrant’s army in Yorktown.
Eton educated Lord Cornwallis promptly surrendered. Hmm, where have we seen that recently?
Probably the battle of Waterloo was won on the playing- fields
of Eton, but the
opening battles of all subsequent wars have been lost there. One of the
dominant facts in English life during the past three-quarters of a century has
been the decay of ability in the ruling class.
George Orwell.
Try not to look too worried, but the sky suddenly
seems to be falling. Loose lips sink ships, Dr. Bernake, loose lips.
"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
Nowhere to Hide in Worst Bond Losses Since 2008: Credit Markets
By
Victoria Stilwell - Jul 1, 2013 5:14 PM GMT
Investors
are finding no shelter from the worst corporate-bond losses in almost five
years as debt plunges for the most creditworthy to the riskiest borrowers in
every industry worldwide.
Company
debentures erased 2.2 percent the last three months, the worst quarterly
decline since a 5.2 percent plunge in the period ended September 2008, when the
collapse of Lehman Brothers Holdings Inc. ignited the worst credit crisis since
the Great Depression, Bank of America Merrill Lynch index data show. All 16
industries in the index lost during the period, from a 0.7 percent decline for
the debt of automakers to a 3.5 percent drop in energy-company bonds.
Speculation
that Federal Reserve Chairman Ben S. Bernanke may soon lead a pullback from
unprecedented stimulus efforts fueled a 1 percentage point jump in 10-year
Treasury yields the past two months. That sparked withdrawals from bond funds
and a slowdown in corporate debt issuance from a record pace. Royal Bank of
Scotland Group Plc strategists in the U.S. lowered their predictions for 2013
gains last week.
“There
has been no safe haven,” said Jeroen van den Broek, head of credit strategy for
ING Bank NV in Amsterdam, who recommends investors buy credit, with a
preference for investment-grade debt. “We’re seeing a complete focus on rates
and everything surrounding Bernanke
Even
junk-rated bonds, typically considered a buffer against rising interest rates because
they offer larger relative yields over Treasuries, lost 1.5 percent in the
second quarter, compared with a 2.4 percent decline for investment-grade notes.
By
comparison, when 10-year Treasury yields surged 1.45 percentage points during
two months in 2003, speculative-grade debt fell 2 percent, less than half the
4.3 percent drop in their higher-graded, lower-yielding counterparts.
More
'Unprecedented' $80 Billion Pulled From Bond Funds
Monday, 1 Jul 2013 | 2:55 AM ET
A record
amount of money poured out of exchange-traded and mutual bond funds in June,
according to a fresh report by TrimTabs, nearly double the amount pulled out of
bond funds at the height of the financial crisis in October 2008.
Investor
fears over the scaling back of the U.S. Federal Reserve's bond purchasing
program has seen the yield on 10-year Treasurys rise sharply to 2.5 percent as
$80 billion left bond funds in June, according to the research.
"The
herd is scrambling for the exit this month as bond yields back up across the
board and central bankers hint that they might provide less monetary stimulus
in the future," TrimTabs CEO David Santschi said in a research note on
Sunday. "We estimate that bond mutual funds have lost $70.8 billion in
June through Thursday, June 27, while bond exchange-traded funds have lost $9.0
billion."
More
In Club Med news, Greece is about to go bust yet
again. What happened to all those Great Leaders summits that “saved Greece, the
EU, the planet and the universe.”
Exclusive: Greece has three days to deliver or face consequences - EU officials
BRUSSELS/ATHENS |(Reuters) - Greece has three days to reassure Europe and the International Monetary Fund it can deliver on conditions attached to its international bailout in order to receive the next tranche of aid, four euro zone officials said on Tuesday.
The lenders are unhappy with progress Greece has made towards reforming its public sector, a senior euro zone official involved in the negotiations said, while another said they might suspend an inspection visit they resumed on Monday.
Athens, which has about 2.2 billion euros of bonds to redeem in August, needs the talks to conclude successfully. If they fail, the International Monetary Fund might have to withdraw from the 240-billion-euro bailout to avoid violating its own rules, which require a borrower to be financed a year ahead.
That would heighten the risk that concerted efforts by policymakers over the past nine months to keep a lid on the euro zone crisis could unravel, at a time when tensions are rising in other countries on the region's periphery.
Portugal's Finance Minister Vitor Gaspar, the architect of its austerity drive under an EU/IMF bailout, resigned on Monday in a potential blow to his country's planned exit from an EU-IMF rescue program.
Political tension has also increased in Italy, where Prime Minister Enrico Letta called a government meeting after a coalition partner threatened to withdraw.
----Representatives of the EU-IMF-ECB "troika" have been holding serial meetings with government ministers in Athens, struggling to agree on a host of outstanding issues.
If talks
are not concluded by the middle of month, Athens risked missing the
installment, the Greek official added.
Athens
has missed a June deadline to place 12,500 state workers into a "mobility
scheme", under which they are transferred or dismissed within a year.
A
shortfall of more than 1 billion euros has emerged at state-run health insurer
EOPYY, meaning automatic spending cuts may have to be agreed to bring it back
on an even keel.
Athens
and the troika are also at odds over an unpopular property tax and a sales tax
for restaurants.
More
There's no suffering too great if it's for the sake of the euro – and Ireland proves it
Last updated: July 2nd, 2013
Mohamed El-Erian, CEO of Pimco, has
a go on Project Syndicate at getting to the bottom of whether Ireland really is
a poster child for the merits of austerity – as the euro high command in
Berlin seems to think – or to the contrary, a warning to all on the dangers of
surrendering your economic destiny to a brutal currency union.On the plus side, Ireland has returned to stuttering growth (though it stalled again in the first quarter), financial risk premia have fallen sharply, raising the possibility of "graduation" from the troika programme, foreign investment is picking up, exports are rising strongly, returning the country to current account surplus, and almost alone in the eurozone, Ireland is on target to meet its fiscal goals. On the negative side, GDP is still way below pre-crisis levels, unemployment remains very high, and would be even higher but emigration, the deficit is still of awesome size, and public debt has risen off the scale. So who's right?
Unfortunately, El Erian comes to no particular conclusion, other than to point out that lack of solid counterfactuals make it virtually impossible to know whether the Irish "experiment" is working or failing. Thanks a lot Mohamed. Very helpful.
----The old saying is that when politics and economics collide, it's always the economics that end up winning. Yet in the euro's case, the politics have triumphed over the economics, thus far at least.
Amid all
the talk of economic recovery, even Europe is showing one or two green shoots,
so is the moment of crisis finally past, as Olli Rehn, Europe's economics
commissioner, keeps insisting? Personally I still don't believe it.
For some
small countries, such as Ireland, the euro seems to offer modernity, a place at
the high table of political influence, and final release from old enemies and
oppressors. Despite all that's occurred, there is still a queue of countries to
join the euro. All have the same blind faith in the single currency as plainly
still afflicts Ireland. These beliefs don't apply so much to larger
"core" economies, where disillusionment with the single currency is
strongly on the rise.
And even
some smaller economies seem close to breaking point. Earlier this week, Vitor
Gaspar, the architect of Portugal's bailout and austerity programme, resigned
as Portugal's finance minister, citing lack of support for the pain he's signed
the country up to.
----The disciplines of monetary union also demand that countries regain competitiveness by embarking on "internal devaluation" – that is by reducing prices and wages relative to the core.
One
consequence of this "honey, I shrunk the economy" approach to the
problem of closing current account imbalances is that it makes debt dynamics
even worse, further increasing debt to GDP ratios rather than decreasing them.
This makes countries even less likely to be able to service their debts.
Greece
has already had a massive write-off, yet still its debts are at unsustainable
levels. Others, including Spain, Portugal and Ireland, are close to the point
of no return. Eventually there will have to be further debt forgiveness, and
now that the precedent has been established in Cyprus, bail-ins for depositors
in the less solvent banks. Yet still they cling to the single currency, as if
to the cross itself. It's madness,
More
Never believe anything in politics until it has been officially denied.
Otto von Bismarck.
Tough Talks in Athens: Greece Expects a Second Debt Haircut
July 02, 2013 – 12:21 PM
Greece is expecting a second
debt haircut from its European creditors following the German election, the
country's economy minister said on Tuesday. First, though, Athens must prove
that it has done enough to receive the next tranche of badly needed bailout
money.
With German elections just three months away, Berlin is eager to avoid any talk about yet another debt haircut for ailing Greece. Indeed, German Finance Minister Wolfgang Schäuble ruled out such a possibility just last week. It is clear, he said, "that we aren't going to undertake such a debt reduction."
This
week, though, with Athens' international creditors once again in town to check
up on the country's reform progress prior to the release of the next €8.1
billion tranche of aid money, Greek Economy Minister Kostis Hatzidakis say he
believes that such a debt haircut is coming.
More
"It's
easier to fool people than to convince them that they have been fooled."
Mark
Twain
At the Comex silver depositories Tuesday final figures were: Registered 45.05 Moz,
Eligible 121.60 Moz, Total 166.74 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Still think you’re free? Not when the NSA can troll back through your
past and quietly offer you the carrot or a very big stick. What does the NSA
have on Putin’s private life that made him bend the knee to King Barry Hussein
the First? Although by way of touché, Putin’s
FSB, stung the American agencies into forcing down Bolivia’s President Morales
plane in Vienna under the hook line and sinker, that Snowy was on his plane.
Better give US President’s and Vice Presidents an air force escort from now on when they travel abroad, more
than one can play at the game of fake diplomatic immunity. What does the NSA have on you and I?
"Loyalty to country ALWAYS. Loyalty to government, when it deserves it.
Mark Twain
Snowden’s Asylum Bid Spurned From Switzerland to India
By Nicole Gaouette - Jul 3, 2013 4:49 AM GMT
Edward Snowden’s request for asylum was spurned by nations
from Switzerland
to India as the U.S. pressed internationally for the return of the fugitive
leaker of classified documents.
Three exceptions were Venezuela, Bolivia and Ecuador, countries critical of U.S. policies that said they would consider taking him in. Snowden at last report remained in limbo at an airport in Moscow after withdrawing his request for sanctuary in Russia. He sought asylum instead in 20 other countries, according to the anti-secrecy group WikiLeaks.
U.S. officials have been contacting countries Snowden might approach for asylum or pass through on the way to a third country to provide “reasons why Mr. Snowden should be returned to the United States and face charges here,” State Department spokeswoman Jen Psaki said yesterday.
“What we’ve been communicating is, of course, what we’ve been communicating publicly -- that Mr. Snowden has been accused of leaking classified information,” Psaki said at a briefing for reporters in Washington. “He is somebody that we would like to see returned to the United States, of course, and we are hopeful that, that will happen.”
The effort to repatriate Snowden is being led by Vice President Joseph Biden and the Federal Bureau of Investigation, as the situation is being treated as a law-enforcement issue.
In a call to Ecuadorean President Rafael Correa, Biden didn’t just communicate the reasons Snowden should be returned. He also let Correa know that relations would “strongly deteriorate” if Snowden were allowed to come to the country, the Ecuadorean leader said in a June 29 radio address.
Biden’s call to Correa, which was confirmed by U.S. Deputy National Security Adviser Ben Rhodes, sent a message to all countries that might consider granting asylum to Snowden. Psaki wouldn’t specify what other nations the U.S. had contacted or what exactly was said.
More
Spying Scandal: Obama Owes Us an Explanation
By Gregor Peter Schmitz in Washington
Americans tend to be more
open-minded than Germans about Big Data -- at least for now. The kind of mass
data collection being conducted around the world by the NSA could eventually
backfire for President Obama at home, however.
Mick
Jagger, 69, might be a father of seven and a grandfather of four, but he can
still pull off the role of the eternally youthful rebel. The Rolling Stones
recently gave a concert in Washington, just a few kilometers away from the
White House. "I don't think President Obama is here, but I'm sure he's
listening in," the Stones frontman quipped.
The audience laughed out loud because Barack Obama -- the man who carried so much hope and
was long believed to be a very European US president -- has become the butt of
jokes. Some view him as the embodiment of the very "Big Brother" once
sketched by George Orwell, the dictator who spies on, monitors and controls
every citizen without any scruples.
But how much of that is a cliché, and how much truth is there to it? Given the revelations published by SPIEGEL in recent days showing evidence of a US spying program that is directed at European Union institutions, and monitoring an almost inconceivable number of communications connections -- 500 million a month in Germany alone -- you can't blame a person for thinking the worst. Even if Obama has explicitly ensured that Americans needn't fear some kind of "Big Brother," the "3rd Party Partners," as Germany was categorized in top secret NSA documents, are now asking if the same applies to Europeans.
In no other country is this question being asked as loudly as in Germany, a country that, through its own painful history during the Nazi era and under communist East Germany, has learned just what an overly curious state and paternalism can lead to. The Germans cherish their privacy and fear absolute control. That's why Facebook's facial recognition software is uncomfortable for us, and the reason that many Germans have had a positively allergic reaction to Google Street View cameras. It's the reason Germans visiting the United States get annoyed when they call a hair salon for an appointment and are asked not only for a telephone number, but an email address and a credit card number too.
Americans have a far more casual attitude about this kind of thing. When it comes to "Big Data," people in the land of think tanks and modern communication tend to think first of the magic and opportunities it presents, rather than the pitfalls. This is particularly true of their president, whose savvy use of data greatly contributed to his re-election in 2012.
Obama recruited the smartest people from Google and Facebook to categorize American voters by up to 500 different personal proclivities. His IT foot soldiers were able to determine their age, gender, education and favorite beer or magazine -- they even data mined their online surfing habits. By hunting voters with algorithms, they were able to create profiles so complex that they could address them in a precisely targeted manner. Obama's election workers knew exactly which doors they needed to knock on in swing states and where canvassing would be pointless. After such a successful election campaign, it is clear that Obama has no qualms about using "Big Data," and that he doesn't perceive it as evil.
More
"It
is by the goodness of God that in our country we have those three unspeakably
precious things: freedom of speech, freedom of conscience, and the prudence
never to practice either."
Mark
Twain
Have a great holiday for those taking it. Try to remember
what the American insurgents threw off tyranny for. Suppose King George had had
a NSA and a Guantanamo? Prince Charles would probably be sitting in the White
House now, reading all those emails and listening in on the Royal family’s
perceived enemies.
The monthly Coppock Indicators finished June:
DJIA: +145 Up. NASDAQ: +146 Up. SP500: +177 Unch The Fed’s
Final Bubble continues, but is struggling. The S&P500 moved sideways. The Dow and
Nasdaq both barely eked out a gain. In current highly volatile conditions and
controversial uncertain policy indecision at the Fed, Speculators would stay
long, investors would exit stocks for now or get fully hedged.
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