Baltic Dry Index. 1246 -25
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"Liquidation
sometimes is orderly, but more frequently degenerates into panic as the
realization spreads that there is only so much money, not enough to enable
everyone to sell out at the top."
Charles
P. Kindleberger. Manias, Panics and Crashes.
The Chinese
economy is suddenly contracting. In 5 days time, supposedly China is about to
allow the first trust default since 1998, tightening interest rates in China’s
shadow banking system. With strikes in South Africa, turmoil in Thailand, a growing
political corruption scandal roiling Turkey and Spain, devaluations in
Argentina and Venezuela last week, a collapsing Baltic Dry (shipping) Index
pressuring the great commodity export nations of Australia, Brazil and
Indonesia, and with America’s Federal Reserve (central bank) starting a two day
meeting tomorrow, at which it’s widely believed will announce another 10
billion tapering of its QE program down to 65 billion a month, our world this
last Monday in January 2014, is looking far less rosy that it looked on the
last Monday of 2013. I suspect that the great reconnect in our stock and bond
markets is just getting underway.
Getting out
early trumps every other strategy in stocks and bonds. “Bulls make money, bears
make money, but pigs get slaughtered”, goes the old Wall Street saying, which went out of fashion in the era of old “Bubbles”
Greenspan and his replacement “BS” Bernocchio. If the Fed really does use this
week to tighten its QE program by another 10 billion a month, I suspect that we
will see another bond market bloodbath similar to Greenspan’s error of February
1994.
Below,
Monday morning Jan 27, 2014.
"Never in the history of the mankind, have so many owed so
much too so few."
With apologies to Sir Winston Churchill.
Asian Stocks Head for Biggest Decline in Seven Months
Jan 27,
2014 6:16 AM GMT
Asian stocks
declined, with the region’s benchmark index heading for its steepest loss since
June, as concern that the global economic recovery is faltering spurred
investors to sell riskier assets.
----The MSCI Asia Pacific Index dropped 2.1 percent to 134.79 as of 3:07 p.m. in Tokyo, extending four straight weekly declines and headed for its lowest close since Sept. 6. Japan’s Topix index sank 2.8 percent as the yen touched a seven-week high versus the greenback. Global stocks tumbled the most since June on Jan. 24 as a sell-off in emerging-market currencies prompted investors to seek havens.
“Optimism among global stock investors is waning,” said Tetsuo Seshimo, a Tokyo-based portfolio manager at Saison Asset Management Co., which oversees about $791 million. “Markets are losing momentum after rising a lot toward the end of last year.”
The Asia-Pacific equity gauge is set for its biggest monthly decline since May after a private gauge of China’s manufacturing dropped to a six-month low in January, adding to signs growth in the world’s second-largest economy is slowing. Shares on the measure traded at 13 times estimated earnings Jan. 24, compared with a multiple of 15 for the Standard & Poor’s 500 Index and 14 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
“There are real reasons to be cautious
since market valuation is still relatively elevated,” Chris Weston,
chief strategist at IG Ltd. in Melbourne, said by phone. “We’ve got numerous issues out of
China, with manufacturing beginning to contract.”
More
Emerging-Market VIX Surges Most in Two Years on Selloff
Jan 26, 2014 5:06 PM GMT
Equity volatility from India to Brazil and Turkey jumped the most in two years as turmoil
spread across global markets amid a selloff in developing-country currencies
and growing concern over China’s
economy. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index rose 40 percent to 28.26 last week, the biggest increase since September 2011, according to data compiled by Bloomberg. Bearish bets outnumber bullish ones on the underlying exchange-traded fund by the most since July with about 60 percent more puts than calls.
The devaluation of Argentina’s peso, data signaling a possible contraction in China’s factory output and declines from the Turkish lira to the South African rand shook investor confidence. Emerging-market equities have tumbled since the Federal Reserve signaled in May that it could start scaling back bond purchases that boosted demand for higher-yielding assets.
More
Yen Snaps 2-Day Gain on Japan’s Trade Deficit; Aussie Rebounds
Jan 27,
2014 6:37 AM GMT
The yen snapped a two-day advance versus the dollar and euro after a
government report showed Japan’s trade deficit widened to a record last year. Japan’s currency fell from a seven-week high against the greenback as Treasury yields rose ahead of the Federal Reserve’s two-day policy meeting starting tomorrow. The Korean won fell for a sixth day as emerging-market equities extended their biggest decline since November. Australia’s dollar rose from a 3 1/2-year low. The euro was supported before a report today forecast to show German business confidence climbed.
----Japan’s trade shortfall widened in 2013
to a record 11.5 trillion yen ($112.2 billion), the Ministry of Finance said
today. That’s almost double the previous year’s as energy shipments and
weakness in the currency pumped up the import bill.
----The Federal Open Market Committee
will reduce monthly asset purchases, now at $75 billion, by $10 billion at each
meeting to end the program this year, according to the median forecasts in a
Jan. 10 Bloomberg News survey.
In Germany, the Ifo
Institute’s business climate index, based on a survey of
7,000 executives, probably advanced for a third month to 110 in January,
according to a Bloomberg poll. That would be the highest level since
July 2011.
More
Gold Advances to Two-Month High as Demand for Haven Increases
Jan 27, 2014 3:13 AM GMT
Gold rallied to a two-month high, extending the longest run of weekly gains
since September 2012, as a rout in emerging-market assets fueled demand for a
haven. Bullion for immediate delivery rose as much as 0.8 percent to $1,279.61 an ounce, the highest level since Nov. 18, and traded at $1,273.04 at 11:12 a.m. in Singapore. The metal is up for a third day after advancing for the fifth week last week as stocks and currencies from Turkey to India slumped.
Argentina’s devaluation of the peso last week stoked investor concern over emerging markets and followed data that signaled a slowdown in manufacturing in China. Gold has rebounded from a six-month low on Dec. 31 as signs of increased physical demand in Asia countered expectations that the U.S. Federal Reserve will continue paring its bond-buying program.
In China, which probably overtook India as the biggest consumer last year, volumes for the benchmark contract on the Shanghai Gold Exchange exceeded the fourth quarter’s daily average of about 11,525 kilograms every day since Jan. 6.
Austria’s Muenze Oesterreich AG mint is running 24 hours a day to keep up with demand for gold coins. Purchases of bullion coins at Australia’s Perth Mint rose 20 percent this year through Jan. 20 from a year earlier, while sales by the U.S. Mint this month are set to be the highest since April.
More
We end for
today with the sinner repentant. But I think that Sir Chris has it the wrong
way round. Far from “France could destroy the euro”, I think it’s more of a
case that the euro will destroy France. Europe’s banks have a big black hole,
says the OECD. Anyone remember Cyprus?
France could destroy the euro, says Christopher Pissarides
Nobel laureate believes the ability of France to reform will decide the eurozone's fate
By Szu Ping Chan, in Davos 11:35AM
GMT 25 Jan 2014
France could destroy the euro if
the government's gamble on supply side reforms fails to pull the economy out of
its chronic malaise, Nobel laureate Sir Christopher Pissarides has warned.
Sir Christopher, who won the the
2010 Nobel Prize for economics, said the ability of Europe's second largest
economy to implement sweeping changes would decide the fate of the single
currency.
He warned French president
Francois Hollande's special blend of “supply-side socialism” would leave the
fragile economy vulnerable to shocks for several years.
“France’s fundamentals are not
very good and they cannot implement policy now to reform quickly, he told the
Telegraph. “Supply side reforms take time to have an effect, and I don’t know
what will happen in the mean time.
"Twelve years ago, Germany
was the sick man of Europe, and now France is looking like it's letting itself
go in that direction. If the reforms [don’t succeed] then I would be very
worried about what would happen to the euro."
----Sir Christopher, who backed the euro when it was created but has since called for a break-up, said he feared more optimistic sentiment around the bloc was premature.
"I don’t think we're safe
yet," he said. "European leaders such as [German finance minister
Wolfgang] Schaeuble are saying we're coming over the crisis [and] the euro is
safe. I’m not confident yet."
Mr Pissarides also warned the
single currency bloc could be sucked into a deflationary spiral that could
exacerbate already high debt levels and drag down Britain's economy.
More
European banks have 84 billion euro capital shortfall, OECD estimates: report
FRANKFURT/PARIS(Reuters) - European banks have a combined capital shortfall of about 84 billion euros ($115 billion), German weekly WirtschaftsWoche reported, citing a new study by the Organisation for Economic Cooperation and Development (OECD).
French bank Credit Agricole (CAGR.PA) has the deepest capital shortfall at 31.5 billion euros, while Deutsche Bank (DBKGn.DE) and Commerzbank (CBKG.DE) have gaps of 19 billion and 7.7 billion respectively, the magazine reported in a pre-release of its Monday publication.
Financial regulators have been pushing banks to hold more capital to weather potential financial headwinds.
It was not clear whether the OECD had looked at the listed entity Credit Agricole S.A., which is less well-capitalized than its parent, Credit Agricole Group, an unlisted network of cooperative retail banks, which the Bank of France will regulate in terms of solvency ratios.
Although it used a different method of calculating the shortfalls, the OECD said it expected the European Central Bank would come to the same conclusion later this year in its audit and bank stress tests, the magazine quoted the study as saying.
More
"When paper money systems begin to crack at the seams, the run to gold could be explosive."
Harry Browne
At the Comex
silver depositories Friday
final figures were: Registered 50.08 Moz, Eligible 128.42 Moz, Total 178.50 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Below, yet another example of when a fiat currency
blows up. Another unintended consequence of the Great Nixonian Error of fiat
currency. Stay long fully paid up physical gold and silver. Before the GNE ends
later this decade, we will all undergo Argentina’s fate.
“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.
Argentine Stores Mark Up Fridges to Wine After Peso Devaluation
Jan 24, 2014 11:36 PM GMT
At a Falabella store in downtown Buenos Aires, the price of
a Whirlpool 80X1 model refrigerator has risen to 27,499 pesos ($3,437) from
21,199 on Jan. 22. In a Winery shop two blocks away, a bottle of Marcus Malbec
now costs 226 pesos, 26 percent more than two days ago. Retailers in Argentina marked up prices as this week’s 15 percent devaluation of the peso against the dollar increased the cost of imports and sparked expectations that inflation in South America’s second-biggest economy will accelerate.
“The fridge is assembled in Argentina, but all the components are imported,” Andre Viera, who sells appliances at the Falabella outlet on Florida Street, said in an interview. “The lady who came in on Wednesday and said she would be back to buy it on Saturday must be be suicidal.”
Argentina’s government devalued the peso and said it would lift a ban on the purchase of dollars for savings as President Cristina Fernandez de Kirchner seeks to win back investors, regain access to international debt markets, shore up a faltering economy and curb inflation that soared to 28 percent last year.
----Lorenzo Sigaut, head economist at the Ecolatina research company in Buenos Aires, said the peso’s devaluation will lead to price mark-ups as Argentines anticipate cost increases and a further weakening of the peso.
‘Generate Uncertainty’
“Devaluations generate uncertainty,” said Sigaut. “January was already a month of high inflation before they devalued. Transport, fuel, food and beverages all rose a lot. We estimate a minimum 3 percent rise in consumer prices this month.”Ecolatina forecasts inflation this year will be 30 percent or more compared with 28 percent in 2014. The government, which has been censured by the International Monetary Fund for inaccurate reporting of economic data, said prices rose 10.9 percent last year.
Pedro, a salesman at the Winery store on Reconquista Street who wouldn’t give his surname, said the vineyard that produces the Marcus brand increased all its prices today.
While other Argentine wine producers hadn’t yet raised prices, the cost of imported drinks increased, including Veuve Clicquot champagne, which rose 18 percent to 654 pesos, he said in an interview.
More
Gold Mint Runs Overtime in Race to Meet World Coin Demand
Jan 25, 2014 1:00 AM GMT
Austria’s mint is running
24 hours a day to meet orders for gold coins, joining counterparts from the
U.S. to the U.K. to Australia
in reporting accelerating demand boosted by the bear market in bullion. Austria’s Muenze Oesterreich AG mint hired extra employees and added a third eight-hour shift to the day in a bid to keep up with demand. Purchases of bullion coins at Australia’s Perth Mint rose 20 percent this year through Jan. 20 from a year earlier. Sales by the U.S. Mint are set for the best month since April, when the metal plunged into a bear market
Global mints are manufacturing as
fast as they can after a 28 percent drop in gold prices last year, the biggest
slump since 1981, attracted buyers of physical metal. The demand gains helped
bullion rally for five straight weeks, the longest streak since September 2012.
That won’t be enough to stem the metal’s slump according to Morgan Stanley,
while Goldman Sachs Group Inc. predicts bullion will “grind lower” over 2014.
“The long-term physical buyers
see these price drops as opportunities to accumulate more assets,” said Michael
Haynes, the chief executive officer of American Precious Metals Exchange, an
online bullion dealer. “We have witnessed some top selling days in the past few
weeks.”
----The U.K.’s Royal
Mint, which traces its history back more than 1,000 years, ran out of 2014
Sovereign gold coins because of “exceptional demand,” it said in a statement on
Jan. 8. Coins weren’t available to customers until six days later when
inventories were replenished. Sales by the Perth Mint, which also has workers
producing coins in three shifts a day, will probably beat last year’s record,
Ron Currie, the marketing director, said Jan. 20.
More
"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise. The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."
Hans F. Sennholz
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?
No comments:
Post a Comment