Baltic Dry Index. 1428 +07
LIR Gold Target in 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
No, your
editor is not taking the rest of the week off, to head over to overpriced
Cuckoo clock land, to hobnob with the Rolex set of rich and infamous. I mean,
would you buy a used car for any of the one percenter’s attending any year’s
Davos? They never saw Bear Stearns or Lehman coming, except for the Goldmanite’s
of course, who created a whole class of securities for the Muppets, that they
could short and bet against, like shooting fish in a barrel. With friends like
these who needs enemies. For more on banksters as villains, scroll down to Crooks
Corner.
We open
today with boom-time forever. At least in the world of central bankster goosed
stock markets.
Investors Most Upbeat in 5 Years With Record 59% Bullish in Poll
Jan 20, 2014 11:00 PM GMT
International investors are the most upbeat about the global economy than at
any time in almost five years, buoyed by the U.S.-led revival of industrial
nations, according to the Bloomberg Global Poll. On the eve of the World Economic Forum’s annual meeting in Davos, Switzerland, 59 percent of Bloomberg subscribers surveyed last week said the economic outlook is improving. That’s up from 33 percent in November and marks the most optimistic result since the poll began in July 2009.
Strength in the richest economies was cited as the main reason for confidence by almost two-thirds of the 66 percent who said they were more positive than a year ago. While the Standard & Poor’s 500 Index has already risen about 24 percent in the past year, more than half of respondents identified stocks as the asset of choice for 2014 as concern about asset bubbles eased.
More
China Money Rate Drops as PBOC Cash Injections Spur Stocks Rally
Jan 21, 2014 3:57 AM GMT
China’s benchmark
money-market rate fell while stocks rebounded as the central bank added more
than 255 billion yuan ($42 billion) to the financial system and expanded a loan
facility to meet Lunar New Year demand for cash. The seven-day repurchase rate, a gauge of interbank funding availability, dropped 88 basis points to 5.44 percent in Shanghai, according to a daily fixing compiled by the National Interbank Funding Center. It surged 153 basis points yesterday, the most in seven months. The Shanghai Composite Index climbed 0.6 percent as of 11:28 a.m. local time, after closing below 2,000 yesterday for the first time since July.
The People’s Bank of China added funds to large commercial banks yesterday using its Standing Lending Facility and conducted 255 billion yuan of reverse-repurchase agreements today. The monetary authority is also allowing small- and medium-sized banks in 10 regions to tap its SLF on a trial basis before the week-long Lunar New Year holiday starts Jan. 31.
The measures are “significant steps” that will reduce risk in the interbank market and help restore confidence as concern mounts about potential defaults in wealth-management products, Nomura Holdings Inc. said.
More
Seven Chinese IPOs Halt Trading After More Than 44% Share Rally
Jan 21, 2014 5:07 AM GMT
Seven of the eight Chinese companies that started trading in Shenzhen today
were halted for a second time after gains exceeded limits set by the city’s
exchange. Shares of Zhejiang Wolwo Bio-Pharmaceutical Co. (300357), Chengdu Tianbao Heavy Industry Co., Guangdong Qtone Education Co. and four other companies were suspended from 10:30 a.m. until 2:57 p.m., three minutes before the close, after they jumped more than 44 percent from their initial public offering prices. Hangzhou Sunrise Technology Co. (300360) climbed 24 percent by the 11:30 a.m. break.
The Shenzhen Stock Exchange warned today of the risks in “blindly” speculating in IPOs. China, the world’s largest market for new share sales in 2010 with a record $71 billion raised, had the first IPO since October 2012 last week as policy makers drafted rules aimed at tightening supervision.
More
But, not all
insiders agree its boom-time forever. What happens to bonds and stocks when
interest rates rise at the end of the Fed’s QE Forever and ZIRP?
Pimco CEO: Why it’s too early to declare victory over economic problems
January 20, 2014, 10:19 AM
The new year may be bringing signs of fiscal promise worldwide, with markets
and the employment picture looking relatively strong. There’s also anticipation
that companies will begin to shift from stockpiling cash to investing in the
future.But the head of one of the world’s biggest investment firms warns that 2014 won’t see a complete reversal of the slide that has plagued the global economy in recent years.
PIMCO Chief Executive Mohamed A. El-Erian writes for CNBC that “it is still too early to declare victory over the West’s unusually prolonged period of sluggish growth, persistently high unemployment, excessive inequalities, and periodic debt and deficit concerns.”
El-Erian cites six key areas of concern:
More
Pimco Dropping Linkers Calls Time on Abenomics Inflation Target
Jan 21,
2014 2:37 AM GMT
Pacific Investment Management Co. stopped favoring Japanese government bonds
that benefit from consumer price gains as it predicts Abenomics won’t generate
2 percent inflation. Tomoya Masanao, head of portfolio management for Japan at the operator of the world’s biggest bond fund, said a year ago that linkers were a good play, citing Prime Minister Shinzo Abe’s plans for wide-ranging stimulus measures to stoke economic growth. Since then, Japan’s inflation-indexed government bonds returned 4.2 percent, almost fivefold the 0.9 percent gain on non-indexed JGBs on similar maturities, Bank of America Merrill Lynch data show.
“While we thought Japanese linkers were very attractive investments between late 2012 to 2013, they are not at current levels,” Masanao said in an interview in Tokyo on Jan. 17.
More
China Billionaire’s Steel Bond Fall Flags Industry’s Smog Woes
Jan 21, 2014 3:17 AM GM
Bonds of Nanjing Iron & Steel Co. (600282),
partly owned by Chinese billionaire Guo Guangchang, are set for their worst
month on record as concern mounts the government’s campaign to reduce smog and
overcapacity may exacerbate losses. The yield on the mill’s 2018 notes rated AA+ soared 315 basis points since Dec. 31 to 11.79 percent, on track for the sharpest jump since the securities were issued in May 2011, according to exchange data. That compares with the 6.99 percent average yield on similar-maturity corporate notes in China with the same credit grade. Guo, China’s 13th richest man with a net worth of $4.6 billion, controls Nanjing Steel as chairman of the conglomerate Fosun International Ltd. (656)
Nanjing Steel, which lost 561.3 million yuan ($92.7 million) in 2012, faces possible delisting of its 2018 bonds should it post a second straight loss for last year, according to Shanghai stock exchange rules. Notes by other makers of the metal including Anyang Iron & Steel Inc. (600569) and Xinyu Iron & Steel Co. have also tumbled as authorities this month told provinces and municipalities to cut air pollutants by as much as 25 percent.
More
Global unemployment on rise despite economic recovery
International Labour Organisation warns of 'jobless recovery' with unemployment on the increase even though economic conditions are improving
By Telegraph staff and news
agencies 2:27PM GMT 20 Jan 2014
Global unemployment rose by 5m in
2013 to 202m despite green shoots in the world economy, signalling a
"jobless recovery", according to the International Labour
Organisation (ILO).
Business activity is picking up
but the misery of unemployment continues to pile up.
Releasing the ILO's annual
employment report on Monday, Guy Ryder, the UN labour agency's director
general, said: "We continue to be on an upward trajectory in terms of
unemployment in the world.
"What is perhaps equally
concerning is that, on current trends, and notwithstanding the modest recovery
in growth that we are seeing, unemployment will continue to increase in coming
years."
By 2018, about 215m people
worldwide are expected to be unemployed, according to the ILO.
"At current rates of growth, we're
simply not able to produce any improvement in these figures. Indeed, they're
going to get worse," Mr Ryder said.
----North Africa remained the hardest-hit region of the globe in 2013, with an unemployment rate of 12.2pc, followed by the Middle East on 10.9pc.
Europe, North America and other developed economies followed on 8.6pc, ahead of ex-Yugoslavia and the former Soviet Union's 8.2pc, and Sub-Saharan Africa's 7.6pc. The rate in Latin America and the Caribbean was 6.5pc.
In East Asia - a label covering China - the level was 4.5pc, while the rates in Southeast Asia and the Pacific, and South Asia, were 4.2pc and 4.0pc respectively.
Youth unemployment - which the ILO counts as covering potential workers aged between 15 and 24 years - remained a major concern.
It stood at 13pc last year, far outstripping the 6.0pc average global rate of joblessness.
More
In UK news,
is the Old Lady of Threadneedle Street about to become the first of the majors
to abandon ZIRP? The banksters at the BOE seem to have successfully, if unnecessarily,
backed themselves into a corner. If john Bull’s rates start to rise, can Uncle
Scam’s be far behind?
Carney’s Puzzle on Labor Market Gains Urgency as BOE’s 7% Looms
Jan 21, 2014 12:01 AM GMT
Bank of England
officials’ quest to understand the strength of Britain’s labor market will take
on greater urgency this week if unemployment keeps falling as fast economists
predict. The jobless rate declined to 7.3 percent in the three months through November, economists said before a report tomorrow, bringing it even closer to the 7 percent threshold at which officials have said they will review borrowing costs. That may add pressure on the MPC to reassess its guidance policy, even as it seems no closer to understanding the reasons for the labor market’s health.
The puzzle of productivity and payrolls bedeviling U.K. economic analysis is a “perennial problem,” Monetary Policy Committee member Ben Broadbent said last week. An insight into the debate will be revealed tomorrow when minutes of the MPC’s January meeting are also published. Officials previously acknowledged a “range of views” on the matter.
“Rephrasing and redesigning guidance is going to be pretty challenging because the jobless threshold was a compromise across all of the committee,” said Neville Hill, an economist at Credit Suisse Group AG in London and a former Treasury official. “It will be much harder for them to compromise or agree on the right diagnosis for the U.K. economy in this environment. There will probably be some disagreement on how strongly productivity can recover.”
----Britain’s economy is heading for its strongest expansion since 2007, bolstered by consumer spending and a pickup in the housing market. While that’s helped push the jobless rate down, labor productivity, measured on an output per hour basis, slid in the third quarter.
More
We end for
today with news for Davos. Call it the Snowy effect.
"You have to choose between trusting to the natural stability of gold and the natural stability and intelligence of the members of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold."
George
Bernard Shaw. Old socialist.
Trust in U.S., other governments plummets after state missteps
By Ben Hirschler DAVOS, Switzerland
(Reuters) - Trust in governments worldwide took a dive last year with
Washington's reputation a notable casualty as President Barack Obama grappled with a budget showdown, the
Snowden spying crisis and the botched rollout of "Obamacare".Just 37 percent of college-educated adults told the Edelman Trust Barometer that they trusted the U.S. government - 16 points down on a year earlier and seven points below the global average.
The United States was not quite at the bottom of the heap as levels of trust in governments in some Western Europe countries including France, Spain and Italy were even lower, but the scale of the American decline was particularly dramatic.
The mood of disillusionment was amplified because it came off a brief phase of enthusiasm for the role of the state in preventing economic Armageddon, said Richard Edelman, head of U.S. public relations firm Edelman, which commissioned the study.
"In 2008 and 2009, it was a case of government to the rescue and everybody said government saved the day. That raised expectations - but then you get crushed," he told Reuters.
----The results of the annual trust survey were released on Monday before being presented at the January 22-25 World Economic Forum meeting in the Swiss ski resort of Davos.
As a result of the loss of faith in the state around the world, the gap in trust between government and business has widened to a record level, with corporations now enjoying a 14-point advantage.
That gap was especially large in India, as the country heads into elections amid a wave of corruption scandals, and in Brazil, where alleged corruption, bus fare hikes and high public spending for the 2014 soccer World Cup have fuelled anger.
More
“Those who don't know history are destined to repeat it.”
Edmund Burke
At the Comex
silver depositories Friday
final figures were: Registered 48.34 Moz, Eligible 128.77 Moz, Total 177.11 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today it’s the banksters again, with the Yankee
Morganite’s trying to play victim in a London court against the people who run
the Berlin transport system. One way or another the hapless Berlin commuters
and travellers will end up paying the cost I suspect. Derivatives gambling is a
zero sum game. If the Morganite CDO was so good, why wasn’t it being pitched to
the house account or the London Whale? When Wall Street calls, hang up.
"When it becomes serious, you have to lie"
Jean-Claude Juncker. Ex-Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar.
JP Morgan sues Berlin's public transport provider in London
US bank JP Morgan is suing Berliner Verkehrsbetriebe to recover the $204m it says it is owed over an "unfortunate" derivatives contract
7:57PM GMT 20 Jan 2014
JP Morgan is suing Berlin's
public transport provider in a British court to recover the $204m plus interest
it says it is owed over an "unfortunate" derivatives contract taken
out before the financial crisis.
The lawyer for the US bank said
Berliner Verkehrsbetriebe (BVG) was looking for anyone other than itself to
blame for the losses on the collateralised debt obligation (CDO).
"Rather than simply
accepting that it had been unfortunate in the events that happened in the
financial markets... BVG has decided to follow a course doing everything it
could to avoid paying its debts... casting around for someone to blame other
than itself," Laurence Rabinowitz told a London court on the first day of
the trial.
Problems arose simply because the
transaction occurred just when serious cracks in the world's financial system
were appearing, Mr Rabinowitz added.
BVG, which runs the German
capital's underground railway, tram, bus and ferry networks, argues that it was
misled by JP Morgan and the bank's law firm, Clifford Chance, and that it did
not fully understand the risks involved. BVG is due to begin its defence on
Tuesday.
Clifford Chance said in a
statement the "claims against us are misconceived and entirely without merit".
The transport authority maintains
that the employee most closely involved in the swap had no experience of the
complex financial derivative the bank had pitched to him and misunderstood it,
according to court documents.
CDOs are a series of assets,
often high-yield junk bonds, mortgage-backed securities, credit default swaps
and other products put together by a bank and sold in tranches according to
their level of risk. They were marketed to investors as investments with a
defined risk and reward.
Following the 2008 financial
crisis many investors who lost tens of millions of dollars through such
investments have questioned what banks knew when they modelled such products
and a number have brought legal action against the banks.
Industry experts have also argued
that some organisations may have lacked the sophistication to understand CDOs.
The case comes after JP Morgan
paid nearly $20bn last year to settle assorted legal claims, including the
"London Whale" derivatives trading scandal.
More
"God, no, we don't club baby seals. We club babies."
Goldmanite, quoted in The Times of London. November 8 2009
The monthly Coppock Indicators finished December and 2013.
DJIA: +204 Up. NASDAQ: +311 Up. SP500: +247 Up.
The new Fed bubble continues, but for how much longer?
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