Friday, 6 December 2013

Boom or Bust?

Baltic Dry Index. 2145 +151

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

"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."

Bear Stearns CEO Alan Schwartz. March 12, 2008. Bust March 17, 2008

The big news story this morning is the death overnight of South Africa’s Nelson Mandela. Well covered in mainstream media it’s too early to assess what if any impact in might have on investment into South Africa. But big trouble is festering there if only from the west’s suppression of the gold price, leading towards mine closures, and the slowdown in Chinese raw material import demand.

We open with “better news” from America spurred largely by rising inventories. The devil is in the detail of why inventories are rising. Is it a mere temporary blip, or a sign that US consumers have over extended? Is the Christmas retailing season turning into a bust?

"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."

F. A. von Hayek

US revises up third quarter GDP growth to 3.6pc

World's largest economy grows at the fastest pace since the first quarter of 2012 and jobless claims fall for third week

The US economy grew much faster than previously thought in the third quarter, spurred by strong manufacturing growth, according to the latest government figures.

The world’s largest economy expanded at a rate of 3.6pc a year in the most recent three-month period – its fastest pace since the first months of 2012, and considerably higher than initial estimates of 2.8pc.

Economists had expected the figure to be revised upwards to around 3pc, according to a poll by Reuters.
Rising inventories were behind the improving economic figures, with the value of stockpiled goods climbing to $116.5bn (£71.3bn) in the quarter, the biggest jump in 15 years.

“The $116.5 bn build-up [on manufactured goods] is more than what one would expect at this time given the economy’s underlying strength,” said Doug Handler, chief US economist at IHS Insight. “Typically, large build-ups such as this one are followed by much smaller build-ups in the next one or two quarters as manufacturers, wholesalers and retailers readjust their inventories to match sales.”

To taper or not to taper, that is the question. The better news from America quickly set off US “tapering” fears in our vastly disconnected global stock markets. I don’t think that the Fed will ever willingly dare to taper, busting the very deliberate final bubble that the Fedster’s have created. But global marketeers and speculators have much to lose gambling wrong. Better out early than late was never more apt than now. We have travelled a very long way from capitalism.

"We are in a world of irredeemable paper money - a state of affairs unprecedented in history."

John Exter

Asian Stock Swing From Gains to Losses on Fed Stimulus

By Jonathan Burgos - Dec 6, 2013 6:04 AM GMT
Asian stocks swung between gains and losses, with the regional benchmark index set for its biggest weekly drop since August, as improving U.S. economic data fueled speculation the Federal Reserve may bring forward stimulus cuts.

Qantas Airways Ltd. sank 3.7 percent, adding to yesterday’s 11 percent drop, after Standard & Poor’s cut its credit rating on Australia’s largest carrier to junk status.

----The MSCI Asia Pacific Index added 0.2 percent to 139.76 as of 2:01 p.m. in Hong Kong, after falling 0.1 percent. The gauge is heading for a 1.6 percent decline this week, the most since the five days ended Aug. 23. Fed policy makers meet Dec. 17-18 after minutes of their October gathering showed they may reduce $85 billion of monthly bond buying should the U.S. economy improve as anticipated.

“We’ve seen a very good string of economic data from the U.S. in recent weeks and that suggests we’re getting closer to a Fed tapering,” Mark Lister, head of private wealth research at Craigs Investment Partners Ltd. in Wellington, said by phone. “Although the general consensus is for tapering to happen in 2014, the chance of a December tapering have gone up. That will drag equity markets weaker and push bond yields higher.”

Next, more is less from China. The “C” in the BRIC will underperform in this decade compared to the last. If the 14 of the 19 economists surveyed are correct, Europe’s current monetary union is doomed.

China Reforms Seen Adding Less Than Half Point to Growth

By Bloomberg News - Dec 6, 2013 2:34 AM GMT
China’s broadest economic reforms since the 1990s will add less than half a percentage point to annual growth this decade, a survey showed, underscoring the likelihood of a cut in the nation’s expansion target.

Fourteen of 19 economists see policies from a Communist Party summit last month boosting gross domestic product either by a negligible amount or less than 0.5 percent a year compared with their previous outlook, according to the Bloomberg News survey. Ten analysts say China will need at least a small amount of monetary, fiscal and credit stimulus to meet the government’s “bottom line” of 7 percent growth in the next five years.

The forecasts dovetail with increasing speculation that policy makers will set the lowest annual growth target since 2004 at a gathering this month, after leaders pledged to give markets a bigger role in setting prices for capital and resources such as energy. President Xi Jinping is trying to sustain long-term expansion while overcoming risks from rising debt and pressures on government-backed companies

Below. Europe’s Mario dei Pasche puts his foot in his mouth and drives the snake bit euro higher. With everyone else in a beggar-thy-neighbour currency race to the bottom, the ECB’s ex-Goldmanite Mr. Draghi is in a one horse race to the top. Sadly even more of Club Med’s youth generation will have to go. Even more capital flight to London looks likely to resume. More bank bail-ins ahead in 2014.

The bankster in his mansion,
The taxpayer at his gate,
Draghi made them High or lowly,
He disordered their estate.

With apologies to All things bright and beautiful.

ECB's Mario Draghi denies Japanese-style deflation risk, drives euro even higher

Mario Draghi said the ECB is studying what happened in Japan at the onset of its Lost Decade in the 1990s, insisting that Europe is unlikely to go the same way

The European Central Bank has cut its inflation forecast for the next two years and promised “powerful artillery” to boost the eurozone economy if necessary, but offered no concrete measures to halt the drift towards deflation.

The euro punched to a five-week high of nearly $1.37 against the dollar and £0.84 against the pound as traders bet that the ECB’s governing council is too divided to take decisive action. Yields on 10-year Italian and Spanish bonds jumped seven basis points as credit tightened across the board.

The ECB’s staff forecast inflation of just 1.1pc in 2014 and 1.3pc in 2015, undershooting the bank’s target of 2pc target by a wide margin and making it harder for southern European countries to manage their debt burdens. “We are fully aware of downside risks of protracted low inflation,” said Mario Draghi, the ECB’s president.

The concern is that any external shock could tip the eurozone’s weakest regions into a deflation trap. Mr Draghi said the ECB is ready to act on “all policy options” but the bank held the main interest rate at 0.25pc. It postponed any decision to cut the deposit rate below zero, a move that would weaken the euro but create a host of technical problems. Any such move is stongly opposed by a German-led bloc of hawks.

Jens Nordvig from Nomura said the lack of urgency is likely to rattle markets. “The tone was disappointing,” he said.

Steen Jakobsen from Saxo Bank said Mr Draghi’s comments were mostly bluff intended to disguise rifts within the ECB council. He warned that failure to deliver any concrete measures is an invitation for speculators to drive the euro to $1.40. “The line in the sand for deflation is $1.40. That’s when the ECB will have to tell investors what it is going to do,” he said.

Ken Wattret from BNP Paribas said the ECB’s safety buffer against deflation is already “wearing perilously thin”. The bank may have to take further steps, including asset purchases along the lines of the US Federal Reserve

We end for the day, and week, with China set to recycle even more of their unwanted and decidedly dodgy dollars. Gaining friends and influence along the way. Who needs the doddering European Union, with friends around like China. Will the new port and canal take yuan?

Chinese Billionaire Plans $10 Billion to Develop Ukrainian Port

By Bloomberg News - Dec 6, 2013 4:29 AM GMT
Wang Jing, the Chinese billionaire behind a $40 billion plan to cut a canal through Nicaragua, wants to invest $10 billion in a deepwater port in Ukraine.

Wang will team up with Ukrainian partner Kievgidroinvest LLC to work on a port and economic development zone on the Crimean peninsula, Wang’s Beijing Interoceanic Canal Investment Management Co. said.

The project’s first phase, estimated at $3 billion, includes building a new deepwater port, reconstructing Sevastopol port and developing an economic zone that will house technology-focused companies, the company said in a statement.

The second phase will include an airport, a liquefied natural gas terminal and a shipyard, and will cost about $7 billion, according to the statement.

Funding for phase one has been secured and includes Wang’s own money, bank loans and investments from partners, the company said. Construction will start at the end of 2014.

Wang is the chairman of closely held mobile phone technology provider Beijing Xinwei Telecom Technology Co. and owns Hong Kong-based HKND Group, an infrastructure developer. He has a net worth of about $1.1 billion, according to the Bloomberg Billionaires Index. He unveiled the investment plan as Ukrainian President Viktor Yanukovych was visiting China’s capital.

Wang, a Beijing native, said in June he will spend $40 billion to build 286-kilometer (178-mile) canal in Nicaragua. Work on the waterway should start by the end of 2014 and be completed within six years, he said.

“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”

“Adam Smith” aka George Goodman.

At the Comex silver depositories Thursday final figures were: Registered 51.45 Moz, Eligible 118.33 Moz, Total 169.79 Moz.   Someone seems to be expecting a massive December delivery.

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

Today, more on unrepentant Japan’s path to war. Stay long physical gold and silver.

No matter what political reasons are given for war, the underlying reason is always economic.

A. J. P. Taylor

Japan’s Abe Seeks to Pass Secrecy Bill That Sapped Support

By Isabel Reynolds & Takashi Hirokawa - Dec 6, 2013 5:37 AM GMT
Japan’s government will move today to pass a bill granting it sweeping powers to declare state secrets, a measure pushed by Prime Minister Shinzo Abe to boost ties with the U.S. even as it sapped his public support at home.

Abe’s Liberal Democratic Party and its partner New Komeito are seeking to pass the measure in the upper house of the Diet before the end of the current session that may be extended two days from a scheduled end today, Kyodo News said. The vote was delayed from last night after the opposition, which seeks to stall the bill, said it would submit a censure motion against a cabinet minister, it said.

The bill, which is backed by the U.S. and forms part of Abe’s broader push to strengthen Japan’s defense policy in the face of China’s military assertiveness, would stiffen penalties for bureaucrats who leak secrets and journalists who publish them. It would give government officials, rather than the courts, the power to define what constitutes a state secret under categories from defense to diplomacy, terrorism and safety threats.

----The measure, criticized by much of Japanese media, has prompted rare public protests. Demonstrators gathered outside parliament last night and organizers called for more protests today, while the ending of debate on the law sparked an outcry from opposition lawmakers.

Hideaki Igarashi, 40, who works for a trading company and was among the protesters outside parliament last night, said he opposed the law because too much information could be classed as secret without external checks. “It looks odd that they’re rushing it,” he said. “If it was a good thing they could take time over it.”

The approval rating of Abe’s government fell 4 percentage points from a month ago to 49 percent, the first time it dropped below 50 percent since Abe’s election almost a year ago, according to a recent poll by the Asahi newspaper.

Half of those surveyed opposed the bill that punishes leaks of government information with jail terms of as much as 10 years. The newspaper polled 1,001 people by phone Nov. 30 to Dec. 1 and didn’t give a margin of error.

Public criticism heightened after Shigeru Ishiba, secretary general of the LDP, wrote a blog post Nov. 29 likening those who demonstrate against the bill to terrorists.

And finally:

We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable.

Alexander Solzhenitsyn.

Global-warming ‘proof’ is evaporating

By Michael Fumento December 5, 2013 | 12:14am
The 2013 hurricane season just ended as one of the five quietest years since 1960. But don’t expect anyone who pointed to last year’s hurricanes as “proof” of the need to act against global warming to apologize; the warmists don’t work that way.

Warmist claims of a severe increase in hurricane activity go back to 2005 and Hurricane Katrina. The cover of Al Gore’s 2009 book, “Our Choice: A Plan to Solve the Climate Crisis,” even features a satellite image of the globe with four major hurricanes superimposed.

Yet the evidence to the contrary was there all along. Back in 2005 I and others reviewed the entire hurricane record, which goes back over a century, and found no increase of any kind. Yes, we sometimes get bad storms — but no more frequently now than in the past. The advocates simply ignored that evidence — then repeated their false claims after Hurricane Sandy last year.

And the media play along. For example, it somehow wasn’t front-page news that committed believers in man-made global warming recently admitted there’s been no surface global warming for well over a decade and maybe none for decades more. Nor did we see warmists conceding that their explanation is essentially a confession that the previous warming may not have been man-made at all.

That admission came in a new paper by prominent warmists in the peer-reviewed journal Climate Dynamics. They not only conceded that average global surface temperatures stopped warming a full 15 years ago, but that this “pause” could extend into the 2030s.

----Remarkably, that stoppage has practically been a state secret. Just five years ago, the head of the International Panel on Climate Change, the group most associated with “proving” that global warming is man-made and has horrific potential consequences, told Congress that Earth is running a “fever” that’s “apt to get much worse.” Yet he and IPCC knew the warming had stopped a decade earlier.

Those who pointed this out, including yours truly, were labeled “denialists.” Yet the IPCC itself finally admitted the “pause” in its latest report.

The single most damning aspect of the “pause” is that, because it has occurred when “greenhouse gases” have been pouring into the atmosphere at record levels, it shows at the very least that something natural is at play here. The warmists suggest that natural factors have “suppressed” the warming temporarily, but that’s just a guess: The fact is, they have nothing like the understanding of the climate that they claimed (and their many models that all showed future warming mean nothing, since they all used essentially the same false information).


Another weekend and the Great Retailing War in the west is underway. In the name of celebrating the birth of Christ, millions of slave wage workers toil away all year producing unneeded tat, for the millions of fat cat western workers paid in unbacked dodgy depreciating fiat currency, pyramided off of a dying fiat dollar reserve currency system. We no longer have money or capitalism. Just unbacked currency expanding by the trillions each year, in an ever more desperate attempt to keep western banksterism running. Apparently both Washington and Tokyo seem to think a new Asian war is the solution. Is Christmas 2013 a repeat of Christmas 1913?  Have a great weekend everyone.

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.

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