Baltic Dry Index. 1543 -21
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
Antony C. Sutton
They came, they saw, then they wimped out. China’s
leaders blew it. Having hyped the Communist Party plenum meeting in advance as
heralding big reform, in reality the result was entirely underwhelming. China’s
leaders are apparently still not in complete control. In international
relations China also blew it. While America donated 20 million dollars to the
Philippines and sent an aircraft carrier to help out following the catastrophe
of the super typhoon last Friday, and Britain donated 10 million dollars and
sent a destroyer, and Australia, Germany and Japan donated 10 million dollars
in aid, the world’s number two economy, and regional super power China, donated
a miserly 100,000 dollars. China to the rest of the world: “Drop dead.” Even if
they are now shamed into doing more, the unmistakeable message has already been
sent, China is not ready or able to assume a leading role in the world.
Asia Stocks Drop on China Plenum Disappointment, Fed Bets
By Yoshiaki Nohara - Nov 13, 2013 6:31 AM GMT
Asian stocks fell after China’s leaders failed to outline steps to curb state
dominance of the economy and amid bets the Federal
Reserve may start reducing U.S. stimulus next month. Banks slumped in Hong Kong after a communique at the end of China’s four-day plenum made scant mention of financial reforms. Tencent Holdings Ltd., China’s biggest Internet company, fell 2.8 percent after a news report quoted its chairman saying the company’s valuation is “scarily” high. Noble Group Ltd. lost 4.6 percent in Singapore after Asia’s largest commodity trader by sales said profit slumped. Pioneer Corp. surged 22 percent after the Japanese maker of car stereos reported an unexpected first-half operating profit.
The MSCI Asia Pacific Index dropped 0.8 percent to 138.63 as of 3:10 p.m. in Tokyo, heading for its first decline in three days. All 10 industry groups on the measure fell.
“Quite a few people put on their positions ahead of the communique, expecting actionable moves to be made, but that’s not the case,” said Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong. “The market is just disappointed.”
Hong Kong’s Hang Seng Index plunged 1.5 percent, poised for the lowest close since Sept. 4, as financial shares led declines. China’s Shanghai Composite Index lost 1.3 percent. Japan’s Topix index lost 0.1 percent after a report showed the country’s machinery orders dropped in September
More
http://www.bloomberg.com/news/2013-11-13/asian-stocks-halt-two-day-gain-on-u-s-tapering-outlook.html
Granted 'decisive' role, Chinese markets decide to slide
By Pete Sweeney SHANGHAI
(Reuters) - Unimpressed by the promotion of markets
to a "decisive" role in China's reform agenda for the next decade,
investors sold off Chinese shares on Wednesday, disappointed by a lack of
details in the reform plan and apparent reluctance to overhaul the state-owned
sector.U.S. Treasury Secretary Jack Lew also bemoaned the lack of details and said he hoped to gather more information about specific policies in discussions with China.
"Frankly, there are a lot of questions still to be answered," he said on CNBC during a visit to Singapore.
"The communique coming out of the plenum was at a very general level."
The ruling Communist Party said at the end of a four-day conclave of its 205-member Central Committee on Tuesday that it aimed to achieve "decisive results" by 2020, and gave markets a more prominent role.
By setting an unusually explicit self-imposed deadline and establishing a special working group, the new administration of President Xi Jinping and Premier Li Keqiang suggested a more decisive reform push than under the previous leadership.
But while the communique mentioned several reform areas Beijing aimed to tackle, its language was even more general than some had expected and it explicitly underscored the importance of the state sector for the economy.
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China's meager aid to the Philippines could dent its image
By Megha Rajagopalan BEIJING
(Reuters) - China may have wasted the
chance to build goodwill in Southeast Asia with its relatively paltry donation
to the Philippines in the wake of a devastating typhoon, especially with the
United States sending an aircraft carrier and Japan
ramping up aid.The world's second-largest economy is a growing investor in Southeast Asia, where it is vying with the United States and Japan for influence. But China's assertiveness in pressing its claim to the disputed South China Sea has strained ties with several regional countries, most notably the Philippines.
China's government has promised $100,000 in aid to Manila, along with another $100,000 through the Chinese Red Cross - far less than pledged by other economic heavyweights.
Japan has offered $10 million in aid and is sending in an emergency relief team, for instance, while Australia has donated $9.6 million.
"The Chinese leadership has missed an opportunity to show its magnanimity," said Joseph Cheng, a political science professor at the City University of Hong Kong who focuses on China's ties with Southeast Asia.
"While still offering aid to the typhoon victims, it certainly reflects the unsatisfactory state of relations (with Manila)."
China's ties with the Philippines are already fragile as a decades-old territorial squabble over the South China Sea enters a more contentious chapter, with claimant nations spreading deeper into disputed waters in search of energy supplies, while building up their navies.
Vietnam, Malaysia, Brunei and Taiwan also claim parts of the South China Sea, making it one of the region's biggest flashpoints.
The Association of South East Asian Nations (ASEAN), a 10-nation grouping that includes the Philippines, has been talking to China about a binding code of conduct in South China Sea to ease the friction, but Beijing's frugal aid hints at a deeply entrenched rivalry that could make forging consensus difficult.
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China Sets Up National Security Council as Military Expands
By Bloomberg News - Nov 13, 2013 5:17 AM GMT
China’s Communist Party
said the country would set up a state committee to better coordinate security
issues as it expands its military reach and faces growing dissent at home. In a one-sentence statement toward the end of a 5,000 character communique yesterday, the party said it would establish the committee and improve the country’s national security system and strategy.
The context of the sentence was a section on China’s internal matters, and no details were given about what the committee would do or who would lead it. The body will help China better respond to international challenges as it rises in global stature, Qu Xing, head of the China Institute of International Studies, an official research group under the Foreign Ministry, said in an article on the website of the party’s official People’s Daily newspaper.
A panel modeled on the U.S. National Security Council, which brings together top officials from the White House, State Department, Defense Department and other actors to streamline decision making, may help China better respond to fast-moving crises
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In America, more of the same. QE Forever, forever. Let the currency wars go
on. Stay long fully paid up physical precious metals for the inevitable
outcome. The Great Nixonian Error of fiat currency is deep into its end game.
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.
Two Fed officials say aggressive policy action still needed
By Jonathan Spicer and David Bailey
MONTGOMERY, Ala./ST. PAUL, Minnesota Reuters) - The Federal Reserve should keep monetary policy ultra-easy given the economy's tepid growth and an uncertain outlook for jobs growth, two senior officials said on Tuesday, reinforcing views that the U.S. central bank will not taper bond buying before next year.
At the same time, last month's government shutdown may undermine the reliability of economic data through December, said Dennis Lockhart, president of the Federal Reserve Bank of Atlanta. That could provide another reason not to expect policy action when the Fed holds its next policy meeting, on December 17-18, though Lockhart would not rule it out.
"Monetary policy overall should remain very accommodative for quite some time," he told an economic forum in Montgomery, Alabama. "Even though the economy is growing, and we're making progress on unemployment, there are real concerns about whether the recent modest pace of GDP is enough to maintain employment momentum."
The economy picked up speed in the third quarter, but largely because businesses restocked their shelves. With growth in consumer spending the slowest in two years, the gain in business inventories may prove to have not been necessary, and the outlook for activity in the final three months of the year is dim.
Consumer and business confidence was also dented by a bitter budget battle in Washington that partially closed the government for 16 days last month.
Narayana Kocherlakota, president of the Minneapolis Fed, spoke even more strongly about the need for aggressive action to foster growth.
"Reducing the flow of (bond) purchases in the near term would be a drag on the already slow rate of progress of the economy toward the committee's goals," Kocherlakota told the Chamber of Commerce in
St. Paul, Minnesota.
"Inflation remains weak, or very low by historical standards, by the (Fed's) goal of 2 percent per year, so there is no reason to be afraid of monetary stimulus," he said.
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Another U.S. city mulls bankruptcy due to soaring wages and pensions
By Tim Reid
DESERT HOT SPRINGS, California (Reuters) - A resort town in California warned on Tuesday that it will run out of money by March due to burdensome salary and pension costs and could join other U.S. cities that have recently filed for bankruptcy protection.
A bankruptcy filing by Desert Hot Springs, a city of 26,000 about 110 miles east of Los Angeles, would make it the third California city along with San Bernardino and Stockton to seek court protection from creditors.
San Bernardino and Detroit - the biggest U.S. city to seek Chapter 9 protection - are likely to set precedent on whether retirees or Wall Street bondholders suffer the most when a city goes broke.
The problems in Desert Hot Springs came to light last week when a new finance director reviewed the city's records and discovered a $3 million shortfall in its budget of $13.5 million. Amy Aguer, the interim director of finance, did not have details on how the shortfall occurred but said it was the result of higher-than-expected pension and salary costs, especially in the police department, and overly optimistic estimates of revenue.
"It's obvious we can't continue with salaries and pensions that are in the stratosphere, no matter how much love there is for our police department," said Russell Betts, a council member.
Desert Hot Springs, which is near Palm Springs, filed for bankruptcy in 2001 after losing a multimillion dollar lawsuit and still servicing $9.7 million of bond debt issued to fund its exit from Chapter 9 bankruptcy.
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"When paper money systems begin to crack at the seams, the run to gold could be explosive."
Harry Browne
At the Comex silver depositories Tuesday final figures were: Registered 44.18 Moz,
Eligible 124.82 Moz, Total 169.00 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more on the rise and rise of uncertainty, as Euroland heads down
Japan’s path towards lost decades. Euros anyone? Our central banksters long ago
lost control and fell into heresy. Stay long physical precious metals for the
final collapse and bursting of the Fedster’s final bubble.
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
Analysis: Deflation threat in Europe may prompt investment rethink
By Natsuko Waki and Jamie McGeever LONDON
(Reuters) - The threat of deflation in the euro zone could reverse a
major investment trend of 2013, drawing funds out of stocks
and into government bonds
and cash.Europe is still some way from a negative inflation rate, let alone a Japanese-style deflationary spiral - the policymakers' nightmare in which falling prices weaken demand, leading to wage cuts and even lower prices.
But a warning light is already flashing, with euro zone inflation registering a shock drop last month that prompted an interest rate cut.
This year's "Great Rotation" flows away from bonds have propelled many stock markets to multi-year or record highs and fuelled a rally in property and other relatively high-yielding assets.
But it's a potential money loser in an environment of weak inflation or even outright price declines. With chronic price falls, investors become ultra-risk averse.
"Deflation would follow from lower growth than we currently have. It would increase the attraction of fixed income versus equities," said Jan Loeys, JPMorgan's head of asset allocation.
There is certainly scope for equities to pull back. The S&P 500 .SPX and Dow Jones Industrials .DJI have hit record highs in recent weeks. Germany's DAX .GDAXI has hit a five-year peak and Japan's Nikkei .N225 is up 37 percent this year.
According to Bank of America-Merrill Lynch, who coined the "Great Rotation" phrase, global equity funds have attracted $231 billion of inflows this year. Bond funds have pulled in just $16 billion, and have posted outflows in 12 of the past 14 weeks.
Now comes falling inflation. In the euro zone, it slowed to just 0.7 percent last month, well below the European Central Bank's target of below, but close to 2 percent. The ECB halved interest rates to a fresh low of just 0.25 percent as a result.
And if inflation falls further, the ECB could act again. This puts it on a potentially divergent path from the U.S. Federal Reserve, which most observers say will begin the process of removing its policy stimulus in the coming months.
More
Global Economy: Surprise tactics sweep central banking
By Andy Bruce LONDON
(Reuters) - After slashing interest
rates to almost nothing and printing trillions of dollars, central banks are becoming increasingly reliant on another
policy weapon: sucker punching markets.The European Central Bank shocked investors and forecasters last Thursday by cutting its main refinancing rate to a record low, reacting to a shock decline in inflation.
It was the second big central bank surprise in less than two months, after the U.S. Federal Reserve decided in September not to trim its monthly bond purchase stimulus.
And beyond the immediate impact on financial markets, central banks' shock therapy tactics have also had a lasting effect.
The yield on the U.S. 10-year Treasury bond -- one measure of government borrowing costs -- fell sharply in the aftermath of the Fed's decision, and it shows no signs of revisiting September's peaks for the year any time soon.
The ECB's rate cut helped weaken the euro more than 1 percent against the dollar, and most economists polled by Reuters reckon it will put the currency on a firmly lower path from here -- huge help for the fragile euro zone recovery.
With scant room left to cut interest rates again and appetite for more rounds of money printing waning, economists say surprising markets will increasingly feature in policymaking.
"It makes sense that with the artillery becoming depleted, central banks want more bang for their buck now. One way of doing that is to launch surprises in markets," said Philip Shaw, chief economist at Investec in London.
More
"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."
Elgin Groseclose.
The monthly Coppock Indicators finished October:
DJIA: +178 Up. NASDAQ: +238 Up. SP500: +217 Up. The
Fed’s final bubble continues to grow, until QE Forever isn’t forever.
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