Wednesday, 18 September 2013

The Coin Toss.

Baltic Dry Index. 1740 +89

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

"Rule No. 1: never lose money; rule No. 2: don't forget rule No. 1"

Warren Buffett.

While we wait for the tapering thoughts of Chairman Ben later today, Germany’s Der Spiegel has taken a dim view of events in next door France. On present policies, old socialist France is going to need its own bailout at some point ahead, with the bulk of that falling to the long suffering, hardworking, tax paying, German worker.  In the Bilderberger worker’s paradise of Jose Barroso and Mario Draghi, the unloved Euro is aggravating the problems generated by the policies of the return to the 1970s. Without change in France, France will drag down all the rest of the members of the European Monetary Union. There is absolutely no sign of change coming to France.  Euros anyone?

"I have tried to lift France out of the mud. But she will return to her errors and vomitings. I cannot prevent the French from being French."

Charles de Gaulle

Going Nowhere: France Opts for Meek Reforms and Hope

By Mathieu von Rohr September 17, 2013
French President François Hollande's announced reforms have either been delayed or watered down so much that they will do little to address his country's pressing problems. Fearing unrest, he prefers hope over hardship.

Only rarely in a Western democracy does the head of state call together the country's business leaders to charge them with tasks for the future and to jointly evoke their country's greatness.

Precisely this, though, is what happened last week at the Élysée Palace in Paris, where President François Hollande got a tour of what French technology currently has on offer. The president held a robot, cast an approving glance at 3-D printers and electric vehicles, and received a run-down on such innovations as fuel-efficient "two-liter" cars and electric airplanes.

The high point of the day was a film shown in the presence of the president and his industry minister, Arnaud Montebourg. The dramatic string strains of Vivaldi's "Summer" accompanied images of things France has invented and "given the world" in the past -- among them the steam locomotive, the automobile, radioactivity and, finally, the high-speed TGV train and the supersonic Concorde plane.

The fact that all these innovations lie in the past serves to highlight the country's real problem: Over the last decade, French industry has lost over 700,000 jobs. Now the government has unveiled a new plan to encourage growth in 34 selected industry sectors, with the aim of bringing about a "third industrial revolution."

However, since the French government doesn't have the money to fund these projects, it is relying primarily on private investment. The "new industrial France" of Hollande and Montebourg is not a governmental investment program of the type seen in the past, although France does want to take the lead on industrial policy-making once again. Last week's event also seemed driven by the hope that recollections of a glorious past will provide the country with the courage it needs to pursue a better future. And, since France is currently faring so poorly despite some tentative signs of recovery, a better future is certainly needed.

The weeks following the summer recess were widely expected to be a time for Hollande to set a new course. The announcement of a coming large-scale pension reform was meant to demonstrate that the president was capable of taking decisive action on a fundamental issue. But that reform, which has now been unveiled, has primarily demonstrated one thing: that Hollande doesn't believe in large-scale reform.

The pension reform didn't touch France's retirement age or the special rules that apply to government employees. Instead, both employees and employers are to pay more contributions, with the number of years of contributions required before qualifying for a full pension being raised to 43 by 2035.

Making more profound change would bring with it "the risk that many people would take to the streets, without the certainty that we would be able to see the reform through to the end," Hollande told Le Monde in justifying his decision.
Now back to today’s real action. The corner old “loose lips Benny” painted himself into back in May. Any false move today risks setting off the final up leg in the Fed’s final bubble, yet any hint of real tightening to come, risks a massive rush for the stock and bond market exit, by all the late stayers who bet heavily on greed. Somehow the Fed must spin the roulette wheel today and come up with “0”. Unfortunately on the Fed’s American wheel, there’s also a double zero slot. And so in our 21st century new lawless age, in the new game of central planning that replaced capitalism, it all comes down to a coin toss. 

Any chance that some of the Great Vampire Squids have been tipped off? Any chance that the spooks at the NSA, GCHQ are listening in?  Edward Snowden and Vladimir Putin?

Fed unemployment mystery holds key to global markets

Traders across the world are on tenterhooks, poised to launch a buying spree if the US Federal Reserve cuts its unemployment target below 6.5pc at its watershed meeting on Wednesday.

Little else matters. Equity, credit, and exchange markets have already priced in a $10bn (£6.3bn) cut in the Fed’s $85bn rate of bond purchases each month. They expect tapering of US Treasury bonds rather than mortgage bonds in order to keep the housing recovery alive.

The neuralgic issue is whether the Fed lowers its unemployment target or “threshold”. This would mean loose money for longer, shaping the trajectory of interests rates far into the future. “The real drama is if the Fed does more than taper,” said HSBC’s Daragh Maher.

The Fed has a two-phase trigger. It aims to wind down bond purchases to zero as the headline jobless rate nears 7pc, and then start to raise rates at 6.5pc. The problem is that unemployment has been dropping faster than expected. It is already 7.3pc and could hit 7pc soon. This would be fine if the economy was roaring back and creating jobs, but it is shedding jobs at a disturbing pace.

Headline unemployment is dropping only because people have stopped looking for work. America lost 347,000 jobs over the past two months, with the labour “participation rate” falling from 63.5pc to 63.2pc, the lowest since the late 1970s when fewer women worked.

----Economist Tim Duy from Fed Watch said the bank is “moving towards an epiphany” on the jobs debate, concluding rightly or wrongly that the problems are structural. This puts it on track for rapid tightening.

San Francisco Fed chief John Williams, previously seen as a dove, raised eyebrows earlier this month by suggesting the problem is structural, partly caused by ageing baby boomers drifting off the rolls. The message is that the jobs market with tighten soon, stoking wage pressures. The “non-accelerating inflation rate of unemployment” is higher than supposed.

Mr Williams said the Fed should stick to the headline jobless rate, and left no doubt he thinks quantitative easing is causing asset bubbles. If this is the majority view, the Fed now has a hawkish bias and may raise rates faster than the market expects. This would send tremors through the global financial system.

Wall Street Facing Drop in Trading Look to Fed for Relief

By Michael J. Moore - Sep 18, 2013 5:00 AM GMT
Wall Street banks, facing a drop in third-quarter trading revenue, are counting on today’s Federal Reserve announcement to spark a surge in volume.

Banks including JPMorgan Chase & Co. (JPM) and Barclays Plc (BARC) have indicated to investors that trading revenue for the period probably will be down from a year earlier. Jefferies Group LLC, whose third quarter ended in August, said yesterday fixed-income trading revenue plunged 88 percent while equity trading fell 28 percent.

Investors have been waiting to see whether the U.S. central bank will begin reducing its $85 billion in monthly bond purchases. Last year, traders speculated about whether the Fed would increase the stimulus, which it did in September. Today’s decision, whichever way it goes, could boost trading as investors make adjustments to their portfolios, according to Brad Hintz, a Sanford C. Bernstein & Co. analyst.

Traders bet on later Fed rate hike with Summers out of picture

Mon Sep 16, 2013 6:08pm EDT
(Reuters) - Traders are betting the Federal Reserve will keep policy easier for longer now that former Treasury Secretary Lawrence Summers is out of the running to succeed Ben Bernanke as chairman of the U.S. central bank.

Summers, a former top aide to President Barack Obama, was widely regarded as likely to be more "hawkish" than current Vice Chair Janet Yellen, who was also a candidate and is now deemed the new front-runner. Obama has also said he was considering former Fed vice chair Donald Kohn to succeed Bernanke, whose second term expires in January.

Traders now give a 55 percent probability of the first rate hike in December 2014, and 68 percent chance in January 2015, according to CME Group's Fed Watch, which generates probabilities based on the price of federal funds futures traded at the Chicago Board of Trade. On Friday, traders saw a better-than-even chance of the first increase in October 2014.

Thanks to disgraced, fallen former guru Greenspan and his sorcerer’s apprentice, “loose lips” Bernanke, investors have all become “traders” i.e. gamblers, and savers and Main Street interests have been replaced by short term casino gambling. Does anyone seriously think that this is an improvement on old fashioned capitalism, or that it doesn’t all end badly in the next crash?

"The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities ¾ that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future ¾ will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."

Warren Buffett.

At the Comex silver depositories Tuesday final figures were: Registered 42.85 Moz, Eligible 118.47 Moz, Total 161.32 Moz.  

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

Below, more on our new status as serfs. Just because you’re Brazilian, doesn’t mean we’re not out to get you. “President Vladimir Putin, a former KGB spy, referred this month to Snowden as "a strange guy" and said life in Russia would not be easy for him.

"In effect, he condemned himself to a rather difficult life," said Putin. "I do not have the faintest idea about what he will do next."

Well I believe President Putin, don’t you? Would he lie to us?

Yes we can and do!

President Milhous Obama.

Brazil's Rousseff calls off state visit to U.S. over spying

BRASILIA | Tue Sep 17, 2013 5:07pm EDT
(Reuters) - Brazilian President Dilma Rousseff has called off plans for a state visit to Washington in October because of revelations that the United States spied on her personal communications and those of other Brazilians.

Rousseff's decision, which came despite a 20-minute telephone call from President Barack Obama on Monday night in an attempt to salvage the trip, is a big blow to relations between the two biggest economies in the Americas.

Both the White House and Rousseff's office billed the decision as a mutually agreed postponement, and said a state visit could take place at an unspecified later date. However, two officials with knowledge of Rousseff's decision told Reuters that such a visit was unlikely to happen anytime soon.

White House spokesman Jay Carney said the presidents agreed on the phone the disclosures of alleged U.S. intelligence activities could overshadow their meeting so they decided it would be best to postpone. But U.S. moves to address the surveillance complaints may take months.

Edward Snowden Reveals 'Follow The Money' and 'Tracfin': Secret NSA Surveillance Program Monitors International Banking And Credit Card Companies

By Ryan W. Neal  on September 15 2013 2:33 PM
The latest leak from Edward Snowden, published Sunday by the German weekly news magazine Der Spiegel, revealed yet another secret NSA surveillance program called “Follow the Money” designed to monitor international payments, banking and credit transactions. Snowden also alleged that the NSA monitored transaction of major credit card companies.

According to the documents leaked by Snowden, the National Security Agency collected financial data in a database called “Tracfin.” He says the NSA had about 180 million records stored in Tracfin in 2011. The documents allege that 84 percent of the data was credit card transactions.

The NSA leak names the Society for Worldwide Interbank Financial Telecommunication, a Brussels-based network used by thousands of banks for secure transmissions, as a target for Follow the Money. The NSA collected data from SWIFT in Tracfin, and tapped into printer traffic of numerous banks.

Snowden also leaked slides from a presentation at a 2010 internal conference of NSA analysts on monitoring credit card companies like Visa Inc. (NYSE:V). Follow the Money aimed to access the transactions of Visa customers in Europe, the Middle East and Africa. The slides described in detail how the NSA has successfully tapped into Visa’s network to search through transactions in order to “collect, parse and ingest transactional data for priority cred card associations, focusing on priority geographic regions,” according to Der Spiegel.

Edward Snowden 'living incognito in Russia'

Whistleblower's lawyer says he has security protection but can travel freely and plays down prospect of US bid to capture him
Tuesday 17 September 2013 10.59 BST
Edward Snowden is living under guard at a secret location in Russia, but is able to travel around the country freely without being recognised, according to the Russian lawyer of the former National Security Agency (NSA) contractor.

"We believe the danger remains quite high and, as I see it, it is impossible at the moment to reveal where he's living or to talk openly about it," said Anatoly Kucherena in an interview with the Kremlin-funded television channel Russia Today, excerpts of which were released on Tuesdayyesterday.

Kucherena said Snowden had security protection, but was evasive about whether this was provided by the Russian state, noting that there were many private security firms in Russia.

Snowden is wanted by the US for leaking details of government surveillance programmes to the Guardian. He has not been seen in public since he landed in Moscow on a flight from Hong Kong in June. He spent several weeks in the transit zone of Moscow's Sheremetyevo airport, before he was granted asylum by Russia and left the airport on 1 August.

----Western diplomats and Russian government sources say they have no idea where he is staying or whether he has the protection of the Russian state or its security services.

“Even President Reagan couldn’t understand him. During an early briefing Casey delivered to the national security cabinet, Reagan slipped Vice President Bush a note: “Did you understand a word he said?” Reagan later told William F. Buckley, “My problem with Bill was that I didn’t understand him at meetings. Now, you can ask a person to repeat himself once. You can ask him twice. But you can’t ask him a third time. You start to sound rude. So I’d just nod my head, but I didn’t know what he was actually saying.”
Such was the dialogue for six years between the president and his intelligence chief in a nuclear-armed nation running secret wars on four continents.”

 Steve Coll, Ghost Wars: The Secret History of the CIA, Afghanistan, and bin Laden from the Soviet Invasion to September 10, 2001

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. But will Benny and the DC boys really cut the stock market’s throat?

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