Baltic Dry Index. 1085 -06
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"Generally - but not always - a real sleuth
of an analyst who doesn't have to spend time answering his own phone, talking
to customers, selling stock to pension funds, and attending meetings, can crack
an income statement and balance sheet in a couple of days. This means
real donkey work, digging out notes, making comparisons, finding the tunnels,
and in general unpainting the carefully painted picture. But most
analysts do have to answer their own phones, sell stocks, attend meetings and
still cover all the developments in their areas. So there are not many
analysts who can do their job."
“Adam Smith” aka George Goodman. The Money Game.
As goes China so goes the world. Well at least those
countries that export heavily to China, whether raw commodities or high value
finished good or luxury goods. Today we take a look at 2014 China as it emerges
into the Chinese year of the horse. The Baltic Dry Index, which has halved
since the start of the year, suggests a big slowdown is underway in global
trade. To the extent that any slowdown involves China, it has big implications
for the emerging market commodities exporters. Big implications for Europe’s already
rickety exporters of high end luxury goods.
Below, two very different pictures of China. The glass is
half full, or the glass is half empty. Only one version will prove to be
correct. Our western stock markets are all in on the glass is half full
version. Another 2008 lies ahead if they bet wrong. Next Lehmans’ will come
pouring out of obscurity faster than central banksters ability to rescue them
via QE to infinity. Mathematically, there’s an infinite number of infinities,
but any central bankster thinking of going there has simply lost the plot. We
are already in the last stages of the Fedster’s final bubble, meant to keep the
Great Nixonian error of a fiat money dollar reserve standard operating to
infinity. The trouble is, infinity whichever version, is a very long time. As
BoE bigwig Mark Carney just found out events and targets operate in much
shorter timespans. In the leveraged world of zero sum derivatives betting, that
passes for modern capitalism, a trillion here a trillion there, and pretty soon
you’re talking real money.
China Said to Target 7.5% Export Growth in 2014
Feb 13, 2014 6:02 AM GMT
The Chinese government is targeting export growth of about 7.5 percent in 2014, three people
with direct knowledge of the matter said, setting sights lower than last year’s
pace. The goal, based on the U.S. dollar value of sales, has been distributed to economy-related ministries and local governments to serve as an internal guideline for planning, said the people, who asked not to be named as they aren’t authorized to speak to the media. Overseas shipments rose 7.9 percent in 2013, according to official data, as the government targeted 8 percent growth in exports and imports combined.
The target may reflect Ministry of Commerce concerns last month that trade growth won’t be faster than in 2013 amid an unstable global recovery. The strength of exports will help determine the pace of expansion in the world’s second biggest economy that analysts see slowing to a 24-year low of 7.4 percent this year.
China’s exports grew a faster-than-estimated 10.6 percent in January from a year earlier, customs administration data showed yesterday, a pace that may be distorted by false invoices and the Lunar New Year holiday.
More
China Trust Assets Surge to $1.8 Trillion Amid Default Risks
Feb 13, 2014 5:28 AM GMT
China’s trust assets surged
46 percent in 2013 to a record 10.9 trillion yuan ($1.8
trillion), underscoring investor interest in products that pay more than bank deposits
even as default risks mount. About 20 billion yuan of trust products had repayment difficulties in 2012, accounting for 0.27 percent of the industry’s assets at that time, the China Trustee Association said in a statement on its website today. Asset quality is “quite sound and systemic risks are impossible” with 9.06 billion yuan of reserves set aside, the association said.
China averted its first trust default in at least a decade last month as investors in a 3 billion-yuan high-yield product issued by China Credit Trust Co. were bailed out days before it matured. About 5.3 trillion yuan of trust products will be due this year, up from 3.5 trillion yuan in 2013, Haitong Securities Co. estimated last month, warning that firms can no longer shoulder all the risks tied to offering implicit guarantees.
“The rapid expansion of trust assets over the past few years is unlikely to be sustained because the government is stepping up oversight of the sector,” Wei Tao, a Beijing-based analyst at China Securities Co., said by phone. “Systemic risk is manageable because the economic situation will remain under control and regulators won’t let the situation get out of hand.”
More
Hong Kong-Singapore Builder Slump to Deepen: Chart of the Day
Feb 13,
2014 6:44 AM GMT
Property developers in Hong Kong and Singapore will extend the biggest declines
among global peers as government curbs deter buyers in Asia’s most expensive
housing markets, according to AMP Capital Investors. The CHART OF THE DAY tracks Hong Kong’s Hang Seng Property Index, Singapore’s FTSE Strait Times Real Estate Index and the Standard & Poor’s 500 Real Estate Index. The two Asian gauges sank to their lowest levels in at least 17 months last week. Home prices have dropped 4.3 percent from their high in Hong Kong, according to Centaline Property Agency Ltd.’s index. They fell 0.9 percent in Singapore last quarter, official data shows.
The two cities have imposed extra taxes and raised minimum down payments to restrain a surge in home prices after mortgage rates followed those in the U.S and Europe to near-record lows. Neither city sets their own interest rates because of managed currencies and open economies. Developer shares from Capitaland Ltd. (CAPL) to Sun Hung Kai Properties Ltd. (16) have fallen on concern slumping housing sales will spur price cuts and dent earnings.
“Authorities in both cities seemed to be quite determined to fight a housing bubble,” said Nader Naeimi, the Sydney-based head of dynamic asset allocation at AMP Capital, which manages $131 billion. “I wouldn’t buy developers at this stage as governments’ housing policies are working against them.” Naeimi predicted further stock declines of as much as 15 percent and said he prefers U.S. and German real estate companies.
Home builders in Hong Kong sold the
fewest residential units in almost two decades in 2013, and sales in Singapore
dropped to a four-year low.
More
World asleep as China tightens deflationary vice
We keep our fingers crossed as we glimpse the first foam of a deflationary Ch'ient'ang'kian coming our way from China. The world's central banks have no margin for error
China's Xi Jinping has cast the
die. After weighing up the unappetising choice before him for a year, he has
picked the lesser of two poisons.
The balance of evidence is that
most powerful Chinese leader since Mao Zedong aims to prick China's $24
trillion credit bubble early in his 10-year term, rather than putting off the
day of reckoning for yet another cycle.
This may be well-advised for
China, but the rest of the world seems remarkably nonchalant over the
implications. Brazil, Russia, South Africa, and the commodity bloc are already
in the cross-hairs.
"China is getting serious
about deleveraging," says Patrick Legland and Wei Yao from Societe
Generale. "It is difficult to gently deflate a bubble. There is a very
real possibility that this slow deflation may get out of control and lead to a
hard landing."
Zhang Yichen from CITIC Capital
said the denouement will be a ratchet effect since China has capital controls
and banks are an arm of the state, but that does not make it benign. "They
are trying to deleverage without blowing the whole thing up. The US couldn't
contain Lehman contagion, but in China all contracts can be renegotiated, so it
is very hard to have a domino effect. We'll see a slow deflating of the bubble
," he said.
What is clear is that we are dealing
with a credit expansion of unprecedented scale, equal in size to the US and
Japanese banking systems combined. The outcome may matter more for the world
than anything that the US Federal Reserve does over coming months under Janet
Yellen, well signalled in any case.
Societe Generale has defined its
hard landing as a fall in Chinese growth to a trough of 2pc, with two quarters
of contraction. This would cause a 30pc slide in Chinese equities, a 50pc crash
in copper prices, and a drop in Brent crude to $75. "Investors are still
underestimating the risk. Chinese credit and, to a lesser extent, equity
markets would be very vulnerable," said the bank.
We close for
the day with yet another red flag, this time in America. A one off blip to be
safely ignored, or the onset of another 2007-2009?
Analysis: U.S. car sales slowdown triggers discount war
By Paul Lienert DETROIT
(Reuters) - A one-two punch of bad weather and overproduction has ignited a
price war among U.S. car dealers and manufacturers.Frigid temperatures and winter storms in the past six weeks have slowed retail sales and showroom traffic, inflating inventories of unsold vehicles and triggering a new round of steep discounts by carmakers and their dealers.
While many analysts believe the spike in incentives is a short-term reaction, "the danger is that this could be the beginning of an escalating arms race for market share," said Eric Lyman, vice president for industry consultant ALG.
Some of the heftiest discounts are being offered by Ford Motor Co (F.N) and General Motors Co (GM.N) dealers on the 2014 Ford F-150 and Chevrolet Silverado full-size pickup trucks.
But Japanese automakers Toyota Motor Corp (7203.T) and Honda Motor Co (7267.T), two companies that historically have shied away from incentives, also are heavily discounting their popular mid-size family sedans, which like the big trucks have been hit hard by the weather-induced slowdown.
Honda Accord sales in January dropped 14 percent from the previous year, causing inventories to climb to 114 days, from 71 days at the end of December, according to research firm Autodata. Honda's U.S. arm has responded by maintaining an aggressive spending rate, with customer and dealer incentives up 300 percent from a year ago, according to auto analyst Joseph Spak of RBC Capital Markets.
More
"Markets are only a tiny facet of society,
but being made by mass psychology, they are a good litmus paper for what is
going on. Markets only work when they believe, and this confidence is
based on the idea that men can manage their affairs rationally. If that
belief fades, then so do the markets. They do not merely dive, they dive
and then they disappear. It happened here in the blight of the spirit
from 1930 - 1933, and it happened in other countries."
“Adam Smith” aka George Goodman. The Money Game.
At the Comex
silver depositories Wednesday
final figures were: Registered 50.73 Moz, Eligible 131.83 Moz, Total 182.56 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks today,
just a little light relief from the verbal comedy of Bob Newhart. Normal
service will resume tomorrow.
The monthly Coppock Indicators finished January.
DJIA: +202 Down. NASDAQ: +330 Up. SP500: +249 Up. The new Fed bubble continues, but seems to be running out
of momentum. Does the Final Fed Bubble end in an emerging market crash?
No comments:
Post a Comment