Tuesday, 10 December 2013

Another Warning

Baltic Dry Index. 2183 +07

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

“As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality.”

Albert Einstein.

We open with yet another warning on the still growing disconnect from reality in our stock markets. As before, no one is listening. Everyone and their dog is playing the Bernanke put and the upcoming Yellen Years. Years of ZIRP and QE to infinity forever. But BlackRock is right about one thing. In this, the Fed’s final bubble, as in every bubble before it, getting out early trumps every other strategy in the game. All the more so in the final bubble of the Great Nixonian Error of fiat money. Stay long physical precious metals, for the day the Fed’s “yes we can” becomes “no we can’t.”

“It is not certain that everything is uncertain.”

Blaise Pascal.

World's biggest investor BlackRock says US rally nearing exhaustion

BlackRock has advised clients to be ready to pull out of global stock markets at any sign of serious trouble

BlackRock, the world’s biggest investor, has warned that central banks are poised to tighten monetary policy in the Anglo-Saxon countries and China, advising clients to be ready to pull out of global stock markets at any sign of serious trouble.

“2014 is the year to squeeze more juice out of risk assets. But investors should be ready to discard the fruit when it starts running dry,” said Ewen Cameron Watt, chief strategist for the BlackRock Investment Institute.

The group said in its 2014 Investment Outlook that investors have “jumped on the momentum train, effectively betting yesterday’s strategy will win again tomorrow”, but vanishing liquidity could leave them trapped if the mood changes. “Beware of traffic jams: easy to get into, hard to get out of,” it said.

BlackRock, which manages funds worth $4.1 trillion, said the global system is still in the doldrums and far from achieving sustainable recovery. “The eurozone, Japan and emerging markets are all trying to export their way out of trouble. Who is going to buy all this stuff? The maths does not work. Not everybody’s currency can fall at once,” it said.

The report said Wall Street is not in a bubble yet but BlackRock’s risk indicator - measuring “enterprise value” against earnings, adjusted for volatility - is almost as high as it was just before the dotcom bust. “The ratio of the two is the key. High valuations combined with low volatility can make for a lethal mix. This market gauge sounded the alarm well before the Great Financial Crisis,” it said.

----BlackRock said there is a 20pc risk that world events could go badly wrong, either because the eurozone acts too late to head off deflation or because of a chain reaction as the US Federal Reserve starts to wind down stimulus in earnest.

Fed’s Bullard Sees Higher QE Taper Odds as Labor Market Improves

By Steve Matthews and Aki Ito Dec 10, 2013 5:00 AM GMT
Federal Reserve Bank of St. Louis President James Bullard, a voter on policy this year, said an improving job market has increased the chances of a reduction in the Fed’s bond purchases, and any cut should be modest because of too-low inflation.

“A small taper might recognize labor-market improvement while still providing the committee the opportunity to carefully monitor inflation during the first half of 2014,” Bullard, a supporter of record stimulus, said yesterday in St. Louis. “Should inflation not return toward target, the committee could pause tapering at subsequent meetings.”

With the U.S. labor market showing signs of strengthening, the Federal Open Market Committee may start dialing down $85 billion in monthly bond buying at a Dec. 17-18 meeting rather than wait until January or March, according to 34 percent of economists in a Dec. 6 Bloomberg News survey. In a poll last month, 17 percent of economists predicted a December tapering.

Next up is rising China. While Uncle Sam readies for war alongside Japan against China, China seems to be readying the Yuan to replace the dying euro’s diminishing role in international trade. Already the world’s largest importer of most commodities including oil, how much longer before oil trades in yuan? Is this the real reason some in Washington seem to be pushing Japan into a war with China?

“So what do we do? Anything. Something. So long as we just don't sit there. If we screw it up, start over. Try something else. If we wait until we've satisfied all the uncertainties, it may be too late.”

Lee Iacocca”

China’s Industrial Production Slows as Retail Sales Pick Up

By Bloomberg News Dec 10, 2013 6:23 AM GMT
China’s industrial output rose less than estimated in November while retail sales unexpectedly accelerated, giving a mixed picture of growth as leaders gather in Beijing to set economic policies for the coming year.

Factory production rose 10 percent from a year earlier, the National Bureau of Statistics said in Beijing today, compared with analysts’ median projection of 10.1 percent in a Bloomberg survey. Retail sales advanced 13.7 percent.

Today’s data may complicate efforts by leaders of the world’s second-largest economy to implement reforms that pose short-term growth risks, including loosening control on interest rates.

Officials started an annual meeting today to decide economic policies for next year after last month agreeing on the broadest long-term reforms since the 1990s

“On balance, demand weakened due to the poor investment results,” with capital spending accounting for half of the economy, Dariusz Kowalczyk, Hong Kong-based strategist at Credit Agricole CIB, said in a note. Fixed-asset investment excluding rural households increased 19.9 percent in the first 11 months of the year, less than estimated, today’s data showed.

While retail sales suggest “improved consumption,” a broader look at the data points to a slowing economy, he said.

Yuan at 20-Year High Signals China Paring Intervention

By Ye Xie and Fion Li Dec 9, 2013 4:53 PM GM
The Chinese yuan’s surge to a 20-year high signals policy makers are becoming more willing to let investment and trade flows determine the exchange rate as the nation’s trade surplus swells to the biggest since 2009.

The yuan climbed 0.2 percent to close at 6.0723 per dollar in Shanghai, after touching 6.0713 earlier, the strongest level since 1993, China Foreign Exchange Trade System prices show. Twelve-month non-deliverable forwards rose 0.3 percent to an all-time high of 6.1195 per dollar at 11:10 a.m. in New York, according to data compiled by Bloomberg.

China’s trade surplus expanded to $33.8 billion, the largest since January 2009, as exports surged, the custom data showed yesterday. The People’s Bank of China will “basically” end intervention in the currency market and widen the trading band where the yuan is allowed to fluctuate in an “orderly way,” central bank Governor Zhou Xiaochuan said last month.

“The trade surplus will put pressure on the yuan to appreciate for some time,” Mark Williams, the London-based chief Asia economist at Capital Economics Ltd., said in a phone interview yesterday. “It’s likely that the next significant reform will be widening the trading band,” to increase the flexibility of the currency, he said.

China Adopts Board-Game Strategy to Blunt U.S. Rebalance in Asia

By Bloomberg News Dec 9, 2013 4:00 PM GMT
The foreign policy strategy emerging from China’s new leadership may include a series of incremental steps calibrated to blunt U.S. influence across Asia and sow doubt about America’s commitment to its allies in the region.

Potential next steps following last month’s imposition of an air defense zone over the East China Sea in the face of U.S. condemnation include more vigorously challenging aircraft that enter the area, imposing a similar zone over disputed territory in the South China Sea and asserting naval control over islands also claimed by other nations.

“Such actions, if they occur, will cause greater worries in the region and increase calls for the U.S. to strengthen its military, diplomatic and economic presence,” said Bonnie Glaser, a senior Asia adviser at the Center for Strategic and International Studies in Washington. “The risk is of greater U.S.-China strategic competition.”

A year into his term as head of the Communist Party, President Xi Jinping is taking measures to bolster his nation’s standing in the region and counter an increased U.S. military deployment to Asia. The strategy features such steps as the air-zone declaration that fall short of direct confrontation yet in time alter spheres of geographic influence, according to Douglas Paal, director of the Asia Program at the Carnegie Endowment for International Peace in Washington.

“China is playing the classic game of weiqi, wherein it slowly expands influence through steps that are not a threshold to violence and do not trigger a forcible response,” Paal said, referring to the strategic board game known as Go in English. “Next steps are likely in the South China Sea, but this will be delayed as China builds out its radar and intercept infrastructure.”

----The air defense zone that China announced Nov. 23 and which also drew criticism from Japan and South Korea as it covered islands they claim, gives it a strategic advantage, Li Jei, a senior captain at the China Ocean Research Center, wrote Dec. 6 in the state-run Global Times newspaper. The zone gives America and Japan “no option but to face the reality, negotiate with us, giving us favorable strategic circumstances,” Li wrote.

Next this fresh news on global warming, but don’t tell the UN’s discredited Intergovernmental Panel on Climate Change. They’re still expecting the Himalayas to melt in the next couple of decades.

“Although our intellect always longs for clarity and certainty, our nature often finds uncertainty fascinating.”


Cold dis-comfort: Antarctica set record of -135.8

By SETH BORENSTEINDec. 9, 2013 7:23 PM EST
WASHINGTON (AP) — Feeling chilly? Here's cold comfort: You could be in East Antarctica which new data says set a record for "soul-crushing" cold.

Try 135.8 degrees Fahrenheit below zero; that's 93.2 degrees below zero Celsius, which sounds only slightly toastier. Better yet, don't try it. That's so cold scientists say it hurts to breathe.

A new look at NASA satellite data revealed that Earth set a new record for coldest temperature recorded. It happened in August 2010 when it hit -135.8 degrees. Then on July 31 of this year, it came close again: -135.3 degrees.

The old record had been -128.6 degrees, which is -89.2 degrees Celsius.

Ice scientist Ted Scambos at the National Snow and Ice Data Center said the new record is "50 degrees colder than anything that has ever been seen in Alaska or Siberia or certainly North Dakota."

"It's more like you'd see on Mars on a nice summer day in the poles," Scambos said, from the American Geophysical Union scientific meeting in San Francisco Monday, where he announced the data. "I'm confident that these pockets are the coldest places on Earth."

----On Monday, the coldest U.S. temperature was a relatively balmy 27 degrees below zero Fahrenheit in Yellowstone, Wyo., said Jeff Masters, meteorology director of the private firm Weather Underground.

We end today’s shortened LIR updte with more on the unintended consequences of the Great Nixonian Error of fiat money. With the Fed able to easily and endlessly create new fiat money out of thin air, no one cares about value for money anymore and corruption flourishes. Still what’s a mere 486 billion when the Fed is creating a new 85 billion dollars each month forever. Shame about those hamburger flippers though, unable to buy the hamburgers they flip.

Planes Parked in Weeds in Kabul After $486 Million Spent

By Tony Capaccio Dec 10, 2013 4:00 AM GMT
Sixteen broken-down transport planes that cost U.S. taxpayers at least $486 million are languishing among the weeds, wooden cargo boxes and old tires at Kabul International Airport, waiting to be destroyed without ever being delivered to the Afghan Air Force.

The special inspector general for Afghanistan is investigating why the refurbished G222 turboprop aircraft from Finmeccanica SpA’s (FNC) Alenia Aermacchi North America unit no longer can be flown after logging only 200 of 4,500 hours of U.S.-led training flights and missions required from January to September 2012 under a U.S Air Force contract because of persistent maintenance issues.

The unused transport planes are in addition to the billions of dollars in wasted U.S. funds documented by the inspector general’s office since American troops entered Afghanistan after the Sept. 11 terrorist attacks.
They also compound the doubts about the Afghan Air Force’s capability to operate independently after U.S. forces withdraw by the end of next year.

“We need answers to this huge waste of U.S. taxpayer money,” John Sopko, the special inspector general for Afghanistan reconstruction, said in an e-mailed statement. “Who made the decision to purchase these planes, and why? We need to get to the bottom of this, and that’s why we’re opening this inquiry.”

----The G222 transports refurbished by the unit of Rome-based Finmeccanica were supposed to make up about 15 percent of the 105-aircraft Afghan Air Force, flying top Afghan civilian officials and combat troops and conducting medical evacuations.

Instead, six of the planes already have been cannibalized for spare parts, a separate audit by the Pentagon inspector general found. In addition to the 16 planes in Kabul, there are four in Germany.

----The U.S. Air Force views the G222 as a “lesson-learned” case, said Lieutenant General Charles Davis, the service’s top military acquisition official,

“Just about everything you can think of was wrong for it other than the airplane was built for the size of cargo and mission they needed,” Davis said in an interview. “Other than that, it didn’t really meet any of the requirements.”

Once the planes were in Afghanistan it became clear that they were flying in a “hotter, dustier” environment than they could handle, he said.

“I took a test in Existentialism. I left all the answers blank and got 100.”

Woody Allen.

At the Comex silver depositories Monday final figures were: Registered 52.84 Moz, Eligible 116.23 Moz, Total 169.07 Moz.   Someone seems to be expecting a massive December delivery.

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

Fukushima an update. With nothing changed, expect yet more chapters in this continuing nuclear disaster event.

A word to the wise ain't necessary - it's the stupid ones that need the advice.

Bill Cosby.

Fukushima Investigator Says Atomic Power Needs Global Black Box

By Matthew Winkler and Yuriy Humber Dec 10, 2013 2:27 AM GMT
The global atomic power industry needs to share cross-border information to prevent nuclear accidents, replicating the transparency of international air-traffic control, said the head of the investigation into Japan’s Fukushima disaster.

Nuclear plant operators and regulators need an international common language and standard for investigating and preventing disasters, Kiyoshi Kurokawa, who headed the Fukushima Nuclear Accident Independent Investigation Commission, said in an interview on Dec. 5 in Tokyo.

The airline industry offers a model in the use of flight and voice data recorders, known as black boxes, as a globally accepted means of recording and investigating accidents, he said. The transparency derived from intrusive international oversight in the nuclear industry is necessary to prevent the collusion that contributed to the Fukushima disaster, Kurokawa said. That isn’t happening yet with Japan’s regulator.

“Japan’s Nuclear Regulation Authority seems very isolated” not only from the domestic power industry but also from counterparts abroad, he said. “Isolation in one nation is a very dangerous thing.”

Kurokawa, 77, a professor at the National Graduate Institute for Policy in Tokyo, was special adviser to the cabinet and Japan’s representative at the World Health Organization. He is the former dean at Tokai University School of Medicine and professor at Tokyo University School of Medicine and the medical school at the University of California at Los Angeles.

He led the six-month investigation into the March 2011 earthquake and tsunami that caused reactor meltdowns at Tokyo Electric Power Co. (9501)’s Dai-Ichi atomic station 150 miles (240 kilometers) north of Tokyo.

----Kurokawa’s report released in July last year was scathing in its account of events leading up to March 11 and the response that followed, calling the disaster man-made and citing “collusion” between Tokyo Electric and its previous regulator, the Nuclear and Industrial Safety Agency, to avoid implementing new safety rules.

----While the report won acclaim abroad, including an award for Kurokawa from the American Association for the Advancement of Science in 2012, its findings were mostly ignored at home with bureaucrats unable or unwilling to grasp its call for more outside-the-box thinking, Kurokawa said.

Get your facts first, then you can distort them as you please.

Mark Twain

The monthly Coppock Indicators finished November:
DJIA: +190 Up. NASDAQ: +281 Up. SP500: +232 Up. The Fed’s final bubble continues to grow, until QE Forever isn’t forever. Up will remain up, until one fine day out of the blue the Fed finally loses control, or the next Lehman hits.

No comments:

Post a Comment