Tuesday 3 September 2013

My Favourite Day.



Baltic Dry Index. 1139 +07

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

There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

J. K. Galbraith

First the good news. On a five or ten year outlook, things have never looked better for emerging markets, says Sunny Steve Ashley, head of global markets at Nomura Holdings in London. Of course the trick is to get from the frigid icy Alps of today, to the sunlit plains of milk and honey and Easy Street, of five or ten years hence. Still if London’s Milky Bar Kid is right, it’s “to taper or not to taper” time. The “can” as the so over used pithy expression says, will have finally reached the end of the road.

“What day is it?"
It's today," squeaked Carney.
My favorite day," said Ashley.”

With apologies to A.A. Milne and Pooh. 

Worst of Crisis Over for Asian Emerging Markets, Nomura Says

By Jonathan Burgos & Joyce Koh - Sep 3, 2013 5:06 AM GMT
The worst is over for Asian emerging markets after investors pulled billions of dollars last month on concern the U.S. Federal Reserve will start cutting back bond purchases, according to Nomura Holdings Inc. (8604)

“We’re through the worst of the crisis but it doesn’t mean individual countries won’t continue to suffer significant challenges,” Steve Ashley, London-based head of global markets at Nomura, said in an interview.

“We remain relatively positive on the longer term performance of risk assets in Asian emerging markets.”

The outlook for Asian emerging markets remains “very positive” over the next five to 10 years as the amount of investments by funds in these countries will likely have to catch up with the growing size of their economies, Ashley said in Singapore on Aug. 30.
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Below, todays reality in pre-Fed tapering Asia. With the Fed sure to taper long before we reach Nomura’s sunlit plains of Easy Street, concerned investors and investment money managers might want to consider a temporary safer haven for their money than Nomura London. At least until Presidents Obama and Hollande get their on again, off again, Syrian bombing campaign out of their system. If it gets rid of the hated Assad regime all well and good, but if it doesn’t, turn out so well, getting to those sunlit plains some five or ten years away, might be a whole lot easier said in complacent London,  than done by investors and money managers on the ground.

“It's snowing still," said Graeme gloomily.
"So it is."
"And freezing."
"Is it?"
"Yes," said Graeme. "However," he said, brightening up a little, "we haven't had an earthquake lately.”

With apologies to A. A. Milne and Eeyore.

Rupiah Weakens Beyond 11,000 a Dollar for First Time Since 2009

By Yudith Ho - Sep 3, 2013 5:45 AM GMT
The rupiah weakened beyond 11,000 per dollar for the first time since April 2009 on concern Indonesia will struggle to rein in a record current-account gap.

The nation’s trade shortfall was $2.3 billion in July, compared with the $393 million median estimate in a Bloomberg survey of economists. The current-account deficit will be about 4 percent of gross domestic product or more this quarter, from 4.4 percent in the previous period, Bank of America Merrill Lynch economist Hak Bin Chua wrote in a note yesterday. This is higher than the government’s target of 3 percent this quarter.

The rupiah slid 0.5 percent to 11,035 per dollar at 11:31 a.m. in Jakarta, the weakest level since April 23, 2009, prices from local banks compiled by Bloomberg show
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India Slump Pressures Singh to Boost Lowest BRIC Reserves

By Unni Krishnan - Sep 3, 2013 2:52 AM GMT
India’s weakest economic growth since 2009 escalates pressure on the government to increase the smallest foreign-exchange reserves among BRIC nations, as policy makers struggle to contain a sliding rupee.

The reserves have dropped 13 percent to $278 billion since a peak in 2011 and are equivalent to less than seven months of imports. Bank of America Merrill Lynch estimates India needs as much as 10 months of import cover for currency stability, a figure still about half the average in Brazil, Russia and China.

----“India needs to explore all possible funding options,” said Sonal Varma, an economist at Nomura Holdings Inc. in Mumbai. Rate increases may deter some capital inflows by worsening India’s slowdown, she said.

The rupee has slumped 17 percent versus the dollar in 2013 as India’s record current-account deficit made it vulnerable to an outflow of capital from emerging markets, spurred by the prospect of reduced U.S. monetary stimulus.
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RBA Running Out of Room to Cut Rates, Australia’s Robb Says

By Jason Scott & Susan Li - Sep 3, 2013 5:47 AM GMT
Australia’s central bank is running out of room to implement emergency stimulus measures should they be needed with interest rates at historical lows, Shadow Finance Minister Andrew Robb said.

The central bank doesn’t have “a lot of room left if there was some other unforeseen event in the world economy to make a difference,” Robb, whose Liberal-National coalition is on track to win government at the Sept. 7 election, said in an interview with Bloomberg Television today. “The Reserve Bank has been relied upon, or pressured, to do the heavy lifting in the economy for the last few years.”

Robb’s Liberal-National coalition, helmed by Tony Abbott, and Kevin Rudd’s governing Labor Party are vying for stewardship of the world’s 12th-biggest economy amid slowing growth and rising joblessness. RBA Governor Glenn Stevens has cut rates by 2.25 percentage points since November 2011 and left the benchmark at a record-low 2.5 percent today.

The Treasury said Aug. 13 the budget deficit will widen as growth slows and unemployment rises to 6.25 percent by mid next year, from 5.7 percent in July. Government debt will peak at A$370 billion in April 2016, the Treasury projected. The opposition is vowing to cut red tape, reduce company taxes by 1.5 percentage points to 28.5 percent and abolish levies on mining profits and carbon emissions should it win power.
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Tankers Worst Since 1997 as Africa Oil to China Slows: Freight

By Isaac Arnsdorf & Rob Sheridan - Sep 3, 2013 12:01 AM GMT
China’s smallest oil imports from West Africa in at least two years are curbing demand for tankers on the second-longest trade route, prolonging the worst rates in more than a decade for Frontline Ltd. and other owners.

Chinese refiners will buy 28 percent less West African crude this month than a year earlier, the least in data starting in August 2011, according to loading plans and a Bloomberg News survey of eight traders. Shares of Frontline, which operates 32 very large crude carriers, will drop 35 percent in 12 months, the average of 13 analyst estimates compiled by Bloomberg shows. Those of Euronav SA, with 13 supertankers in its fleet, will retreat 24 percent, the forecasts show.

Tanker owners are enduring a fifth year of declining rates as fleet growth outpaces demand.
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Meanwhile, elsewhere in Asia the Japanese stock market was surging. The recent bout of better economic figures from America and parts of Europe, and a selloff in the yen, have speculators back once again betting that Japan’s beggar thy neighbour currency war will work out in spades for Japanese exporters. In our new lawless and dumbed down age, black is the new white.

If and it’s still a very big if, a new self-sustainable global recovery is now getting underway and we are leaving the frigid icy Alps for the plains of prosperity, the Fedster’s  back in Washington, District of Crooks face an impossible dilemma. Start tapering fast before the Great 21st century Inflation breaks out from all of the global fiat money printing, or leave QE forever running to infinity, and use the Great Inflation to inflate away the unrepayable debt. In the coming months ahead, we will soon see the true colours of the central banksters. My money’s on QE forever and letting inflation loose.

In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.

J. K. Galbraith

Asia markets lifted by upbeat data; yen eases

TOKYO/SYDNEY | Mon Sep 2, 2013 11:34pm EDT
(Reuters) - Upbeat factory data from around the globe powered Asian markets on Tuesday, while gold and the yen lost some of their safe-haven appeal as the U.S. delayed a possible strike on Syria.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.7 percent, building on Monday's 1.2 percent rise and on track for a fourth day of gains.

Japan's Nikkei stock average .N225 surged 2.5 percent, and the Korea Composite Stock Price Index (KOSPI) .KS11 rose 0.6 percent.

Gold eased about 0.2 percent to $1,392.26 an ounce as investors rediscovered an appetite for risk, while the dollar hit a one-month high against a basket of currencies as well as the yen. The greenback bought as much as 99.705 yen, and the dollar index .DXY rose as high as 82.331, also underpinned by expectations for U.S. monetary policy.

"I expect the dollar to be supported amid expectations that the Federal Reserve will start tapering its quantitative easing," said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.

Traders expect the Fed to start reducing its stimulus at its policy meeting on September 17-18, unless U.S. payroll numbers due on Friday fall short of forecasts.

---- Factory activity in the euro zone rose at its fastest pace in more than two years, and even manufacturing in struggling Spain grew for the first time since April 2011.

The UK's version of the survey far outstripped expectations and sent sterling up 0.1 percent to $1.5551 as the market brought forward the likely timing of the first rate hike there in years.

All of this reinforced the impact of China's PMI, which showed activity in the country's vast manufacturing sector was at its highest in more than a year.

A reading on China's non-manufacturing purchasing managers' index (PMI) released on Tuesday dipped slightly to 53.9 last month from July's 54.1 to stand at the same level as in June, but remained solidly above the threshold indicating expansion.
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We end for the day with rising trouble in South Africa. South Africa’s gold miners are due to start striking from tonight.

Mine unions, bosses in war of words before S.Africa gold strike

Mon Sep 2, 2013 7:16am EDT
* AMCU union says mines lockout would provoke violence
* Anglo American CEO warns of "economic devastation"
* Industry still recovering from deadly 2012 strikes
* South African gold industry is in steep decline

By Sherilee Lakmidas and Ed Stoddard
JOHANNESBURG, Sept 2 (Reuters) - South African union leaders warned on Monday, a day before a strike in the gold sector, that mine owners' handling of pay talks could provoke violence, and bosses said wage hikes would force mine closures and cost thousands of jobs.

The National Union of Mineworkers (NUM), which represents about two-thirds of more than 120,000 unionised gold miners in Africa's biggest economy, is set to strike from Tuesday.

With stoppages in the auto industry and the construction sector already sapping the struggling economy, shutting gold mines could cripple an industry that has produced a third of the world's bullion but is now in rapid decline.

Labour and management are poles apart on the issue of wages, with the NUM seeking 60 percent pay hikes for entry-level miners and its more hardline rival, the Association of Mineworkers and Construction Union (AMCU), pushing for 150 percent raises.

---- Business Day said gold producers were considering a pre-emptive lockout at the mines. The Chamber of Mines, which negotiates on behalf of firms, told Reuters a lockout was an option but it would be taken as a "last resort".

AMCU President Joseph Mathunjwa, whose union has not yet called a strike, said a mines lockout would provoke trouble.
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“The optimist proclaims that we live in the best of all possible worlds; and the pessimist fears this is true.”

James Branch Cabell.

At the Comex silver depositories Friday final figures were: Registered 42.67 Moz, Eligible 122.10 Moz, Total 163.77 Moz.  


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

No crooks today either. Today after an unusually warm Alaskan summer, deep winter has come early it seems. What this means for our coming northern hemisphere winter, if anything, is hard to say, but this is one terrible time to set off an energy price spike.

Below, some of the odder effect of global warming.

Deep Cold: Interior and Northern Alaska Weather & Climate

An Alaskan Weather and Climate Blog: All Science, No Politics
Saturday, August 31, 2013
Update: Brian has a helpful post on the very warm summer at Anchorage and Fairbanks.

A cold airmass and clear skies allowed for temperatures to plunge to record low levels in the northern Interior.

Most notably,  Bettles recorded a low of 15ºF Saturday morning. This is by far the lowest temperature of record at Bettles in August. The previous record at the Bettles in August was 22ºF on August 30, 1969. At old Bettles, about four miles downriver from the current townsite, a low of 20ºF was measured on August 24, 1948.

Other low temperatures included 17ºF at both Chandalar DOT and Coldfoot DOT and a chilly 13F at the Norutak Lake RAWS west of Bettles. These are close to, but not at the record low temperature for the month of August in the state.  

1 September 2013Last updated at 01:16

Peru snow state of emergency extended to more regions

The Peruvian government has extended to nine more regions a state of emergency called to cope with unusually cold weather and heavy snowfall.

At least two people have died and 33,000 others have been affected by the cold spell, local officials say.
Tens of thousands of animals have frozen to death over the past week.

President Ollanta Humala has travelled to Apurimac, one of the worst-hit areas, to oversee the distribution of emergency aid.

The state of emergency would be in place for 20 days, an official statement said.

The heaviest snow fall to hit Peru in a decade has killed tens of thousands of llamas, alpacas, cattle and sheep, and left farmers destitute.

----The cold front has also hit Peru's south-eastern neighbour, Bolivia, and Paraguay. A total of five people have died in the two countries.

30 August 2013Last updated at 22:35

South American countries gripped by snow

Unusually cold weather and snow in parts of South America have affected thousands of people in several countries.

The cold spell has killed at least seven people in Peru, four in Bolivia and two in Paraguay.

In the latter, the authorities blamed the weather for the death of more than 5,000 cattle too.

Weather forecasters say a cold front from Antarctica entered the region almost a week ago.
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“Optimism," said Cacambo, "What is that?" "Alas!" replied Candide, "It is the obstinacy of maintaining that everything is best when it is worst.”

Voltaire.

The monthly Coppock Indicators finished August:
DJIA: +162 Down. NASDAQ: +189 Up. SP500: +194 Down. Two red flags. Only the “stock market for the next hundred years,” remains optimistic.

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