Baltic Dry Index. 1222 +25
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“But
I don’t want to go among mad people," Yellen remarked.
"Oh, you can’t help that," said the Senate: "we’re all mad here. I’m mad. You’re mad."
"How do you know I’m mad?" said Yellen.
"You must be," said the Senate, or you wouldn’t have come here.”
"Oh, you can’t help that," said the Senate: "we’re all mad here. I’m mad. You’re mad."
"How do you know I’m mad?" said Yellen.
"You must be," said the Senate, or you wouldn’t have come here.”
With
apologies to Alice and Lewis Carroll.
Shane Oliver, “the
Sydney-based head of investment strategy at AMP Capital Investors Ltd. in Sydney,
which oversees $131 billion,” is a little nervous. Note the redundant use of
Sydney” in the Bloomberg quote. Since it
takes a lot to make an Aussie "nervous," we had better pay attention I think. Is
China’s recent near record spurt of iron ore and copper imports real, or merely
strategic stockpiling against a coming clash with Japan over the Diaoyu Islands?
Who outside of Beijing really knows? Uncle Sam having given Japan a blank
cheque last year to take on China, now seems to be back peddling from
automatically backing up Japan. US red lines don’t seem to be as red as in
yesteryear. Is the USA really willing to
write off NYC for Beijing, for three or four uninhabited East China Sea islands
that were promised to China in Cairo in 1943? I don’t think so either and neither
do the lads in Beijing.
Up first, more on
the rout underway in global fiat currencies, now spreading into commodities.
Little wonder the west’s gold is all draining out to the east.
“Why,
sometimes I've believed as many as six impossible things before breakfast.”
Bernocchio,
Yellen and the gang, with apologies…
Yuan Turns Worst Emerging Carry Trade as PBOC Stokes Volatility
Feb
27, 2014 5:29 AM GMT
The yuan
has gone from being the most attractive carry trade bet in emerging markets to
the worst in the space of two months as central bank efforts to weaken the
currency cause volatility to surge. The yuan’s Sharpe ratio, which measures returns adjusted for price swings, turned negative this year as three-month implied volatility in the currency rose in February by the most since September 2011. The exchange rate tumbled the most since 2010 on Feb. 25, losing money for investors who borrowed dollars to buy yuan, amid speculation the People’s Bank of China was intervening to deter one-way bets on currency gains.
“A lot of investors globally were invested in the yuan because of the interest-rate differential and the low volatility,” Rajeev De Mello, who manages $10 billion as Singapore-based head of Asian fixed income at Schroder Investment Management Ltd., said in a Feb. 25 phone interview. “All of a sudden, the low volatility part of the argument is no longer there.”
More
China's official PMI seen hitting 8-month low, barely showing expansion
By Adam Rose BEIJING
(Reuters) - China's factory activity likely expanded only slightly in
February, a Reuters poll showed, dropping to an eight-month low that would
indicate a modest slowdown is continuing.China's official manufacturing purchasing managers' index (PMI) may slip to 50.1, down from January's 50.5, according to the median forecast of 12 economists in the poll.
A reading above 50 indicates expanding activity while one below that level points to a contraction.
If February's reading is below 50.5, it will be the third straight month of decline since November's 51.4. The last time the index was below 50 was in September 2012, when it was 49.8.
More
Commodities Drop With Copper Before Yellen; Aussie Slides
Feb 27,
2014 6:16 AM GMT
Commodities
fell, with copper heading for a seventh day of losses, amid speculation the Federal
Reserve will continue stimulus cuts. Australia’s dollar weakened with
emerging-market currencies and precious metals.
The S&P GSCI Index of 24 commodities fell 0.2 percent by 3:14 p.m. in Tokyo, with copper slipping 0.2 percent and silver declining 0.6 percent. The Aussie weakened 0.3 percent versus the dollar after private investment fell the most since 2009. Turkey’s lira led a gauge of developing-economy currencies toward a second day of losses. Gains by Hong Kong shares helped the MSCI Asia Pacific Index pare today’s decline to 0.1 percent. Standard & Poor’s 500 Index futures rose 0.2 percent.
Fed Chair Janet Yellen testifies before the Senate today as the U.S. issues data on jobless claims and durable goods orders. China’s central bank drained cash in money-market operations today for the fourth time in two weeks after the benchmark rate for interbank loans dropped to a seven-month low. Australian (GACGB10) government bond yields declined after data showed business investment shrank more than economists estimated in the quarter through December.
“The markets are just churning around,” said Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors Ltd. in Sydney, which oversees $131 billion. “The global economy is on track to pick-up pace this year but we’re just going through one of those thin patches in markets at the moment.
There’s ongoing concern about China and there’s a bit of nervousness around.”
More
Feb. 26, 2014, 4:00 a.m. EST
Three warning signs from higher gold prices
Opinion: Trouble ahead: China crash? Deflation? New recession?
LONDON (MarketWatch) — It is not often the financial markets
reach a consensus. No one can agree whether the euro zone is now fixed or just
getting ready for another crisis. Nor on whether the end of quantitative easing
will crash the markets, or signal a return to normal growth. Or indeed on
whether China is about to implode messily, or will power forward to dominate
the coming century.
But at the start of this year there was one idea that everyone could sign
up to. Gold was toast. The price GCJ4 +0.02% had
been declining all through 2013, and was going to keep on going down.
But hold on. Gold had defied its doubters, and made a surprisingly strong
start to the year. The price has risen 10% since Christmas, and it is now back
above $1,300 an ounce. The metal has had its best start to the year since 1983.
And yet, traditionally, a rising gold price has been a
warning sign of trouble ahead.
----The financial markets have not run according to the
script so far this year. Equities were meant to power forward as the global
economy recovered, bonds would tank as central banks stopped printing money,
and gold would go back to being the “barbarous relic: that Keynes dismissed it
as. None of that has happened, and gold, in particularly, has gone wildly
off-message. After experiencing its worst slump in three decades in 2013, it is
now rising fast again.
More
Don’t look now but global interest rates are still
heading higher. What could possibly go wrong in Argentina, Australia, Brazil,
India, Indonesia, Italy, South Africa, Turkey or the Ukraine?
Feb. 26, 2014, 7:46 p.m. EST
Brazil central bank hikes interest rate to 10.75%
Brazil's
central bank raised its benchmark interest rate Wednesday to 10.75% from 10.5%,
and left the door open for more rate increases while slowing the pace of the
hikes.
The move continues the bank's yearlong fight against inflation even as
rising interest rates and the poor performance of the
country's exporters jeopardize already feeble growth in an election year.
The statement accompanying the announcement was little changed from the
previous statement, suggesting the bank is prepared to continue to raise the
rate, known as the Selic, as necessary.
----The
bank has now raised the rate at eight consecutive meetings, and by half a point
at the previous six meetings.
More
City of Rome Risks Bankruptcy After Aid Falls Through
Eternal City's Financial Crisis Deals Italy's Premier Renzi First Political Headache
ROME—The Eternal City, now teetering on the brink of a Detroit-style bankruptcy, has served Italy's new prime minister his first major political headache.On the first day of his premiership, Matteo Renzi had to withdraw a decree, promulgated by his predecessor, that would have helped the city of Rome fill an €816 million ($1.17 billion) budget gap, after filibustering by opposition lawmakers in the Parliament on Wednesday signaled the bill had little likelihood of passing.
Devising a new decree that provides aid to Rome will now cost Mr. Renzi time and political capital he intended to deploy in promoting sweeping electoral and labor overhauls during his first weeks in office.
For Rome's city fathers, though, the setback has more dire consequences. They must now face unpalatable choices—such as cutting public services, raising taxes or delaying payments to suppliers—to gain time as they search for ways to close a yawning budget gap. If it fails, the city could be placed under an administrator tasked with selling off city assets, such as its utilities.
"It's time to stop the accounting tricks and declare Rome's default," said Guido Guidesi, a parliamentarian from the Northern League, which opposed the measure.
Rome's mayor, Ignazio Marino, a U.S.-trained transplant surgeon, rode to electoral victory last year on promises to vanquish nepotism, improve basic services and bolster tourism in the city center with initiatives such as keeping the Imperial Fora illuminated and open all night. Instead, he has been battling to hold together the budget. On Wednesday, he signaled he had no intention of presiding over deep cuts, while the head of the city council warned of the broader impact of Rome's financial troubles.
"A default of Italy's capital city would trigger a chain reaction that could sweep across the national economy," said Mirko Coratti, head of Rome's city council said on Wednesday.
More
Elsewhere in Asia a bust is getting underway.
Thai Farmers Lose Pickup Trucks as Protests Raise Debt Risk
Feb 24, 2014 9:11 AM GMT
Koon Thaveepat is in danger of losing his pickup truck and his livelihood.
He’s behind on loan payments as Thailand’s anti-government
protests delay state rice-purchase payments, threatening to plunge thousands of
farmers deeper into debt. “I haven’t been paid for more than three months,” said Koon, 62, who lives in Ubon Ratchathani province, about 600 kilometers (373 miles) northeast of Bangkok. “I have about 200,000 baht ($6,150) due from the government. A number of my neighbors are also in the same situation. They are unable to pay for fertilizers and rent planting and harvesting machines.”
Thailand, once the world’s biggest rice exporter, is short of funds to pay 110 billion baht under Prime Minister Yingluck Shinawatra’s 2011 program to buy the crop at above-market rates. The premier faces allegations that she was negligent in overseeing the subsidy in a case that could lead to impeachment, even as borrowings by farmers such as Koon increase the nation’s household debt to gross domestic product ratio, the highest in Southeast Asia after Malaysia.
“Delays in payments to rice farmers have significantly worsened the household-debt situation,” said Voravan Tarapoom, chief executive officer at BBL Asset Management Co. in Bangkok, which oversees about $10 billion of assets. “While the amount of money that the government owes to farmers is not that much, it affects millions of low-income people who have to take on more debt to meet even their daily expenses. This will further worsen the already sluggish domestic consumption.”
----The Thai economy grew at the slowest pace in almost two years last quarter as political unrest hurt local demand and tourism. Private consumption fell 4.5 percent in the fourth quarter from a year earlier, a second straight decline.
More
Get Ready for a Bloody End Game in Thailand
Clashes in Thailand between
anti-government protestors and security forces have intensified. Over the past
weekend, unidentified gunmen sprayed bullets at anti-government protestors in
eastern Thailand, killing a five-year-old girl, and someone apparently launched
two grenade attacks in Bangkok. Since the current round of demonstrations
started last November, 21 people have been killed and hundreds injured in
Thailand. The country has basically functioned without an effective government
for months, the once-teflon economy is sputtering, and Thais are preparing for
the violence to get worse. The leader of the demonstrations has vowed to hunt
down Prime Minister Yingluck Shinawatra, the protestors have been electrified
by the turn of events in Ukraine, and all sides appear to be taking more
confrontational positions.
Although Thailand’s cycle of
political instability seems to have gone on forever—the genesis of the unrest
dates back roughly a decade—the chaos in Bangkok is likely to end soon. The
government has appointed hard-line ministers to the top security positions, the
powerful army chief has for the first time issued a warning to the
demonstrators, and the protestors have upped their violent rhetoric and
seemingly armed themselves with heavier weapons. The denouement in Bangkok,
coming shortly, is not likely to be pretty.
More
We end for today with yet another red flag, this
time from America.
Foreclosures Surging in New York-New Jersey Market
Feb 26, 2014 2:01 PM GMT
The epicenter of the U.S. foreclosure crisis is shifting to New
Jersey and New York, threatening a housing rebound in one of the country’s most densely
populated areas. New Jersey has surpassed Florida in having the highest share of residential mortgages that are seriously delinquent or in foreclosure, with New York third, a Mortgage Bankers Association report showed last week. By contrast, hard-hit areas such as Arizona and California have some of the lowest levels of soured loans after allowing banks to quickly foreclose after the 2007 property crash.
The number of New York and New Jersey homeowners losing their houses reached a three-year high in 2013. Banks in these states have been slowly working through a backlog of delinquent loans that enabled borrowers to skip mortgage payments for years. Now these properties are poised to empty onto a market where affluent Manhattan suburbs neighbor blighted towns that are struggling most with surging defaults.
More
“Mad
Bernank: “Why is a raven like a writing-desk?”
“Have you guessed the riddle yet?” the Bernank said, turning to Yellen again.
“No, I give it up,” Yellen replied: “What’s the answer?”
“I haven’t the slightest idea,” said the Bernank”
“Have you guessed the riddle yet?” the Bernank said, turning to Yellen again.
“No, I give it up,” Yellen replied: “What’s the answer?”
“I haven’t the slightest idea,” said the Bernank”
With
apologies.
At the Comex silver depositories Wednesday final figures were: Registered 50.29
Moz, Eligible 132.54 Moz, Total 182.83 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, Swiss banksters again. Is there any law a
Swiss bankster won’t break in pursuit of the filthy lucre?
'Would you prefer to do time in the US or Switzerland?' US asks Credit Suisse
Credit Suisse faces the wrath of a Senate hearing over alleged attempts to conceal up to $10bn from the taxman
The Swiss banker passed through
US customs, pretending he was visiting America to attend the wedding of one of
his client’s children. He did attend the marriage but not to toast the happy
couple, as he claimed. His primary mission was to brief the client about secret
funds he had stashed overseas, out of the way of the American government.
Separately, a banker named
Michele Bergantino invited one of his wealthy customers to breakfast at New
York’s plush Mandarin Oriental hotel. As the pair chatted, the banker slipped a
set of accounts across the table, hidden discreetly inside the pages of a
magazine, Sports Illustrated.
It was typical of the way Mr
Bergantino liked to conduct business. Later, when he hosted the client in
Switzerland, he eschewed his official office, and instead met the client in an
anonymous white room, accessed by a secret lift that did not have any buttons.
“These instances belong in a spy
novel, not at one of the world’s top banks,” Senator John McCain said on
Wednesday. He has a point. But however much they may feel like they belong to
the realm of fiction, these James Bond-style scenarios were part of a very real
tax avoidance scheme orchestrated by Credit Suisse.
Details of the operation, which
allegedly helped tens of thousands of wealthy Americans to conceal up to $10bn
from the taxman, were disclosed in a scathing report by the US Senate Permanent
Subcommittee on Investigations, and pored over on Wednesday as senators
pressured executives to hand over the names of as many as 22,000 Americans
embroiled in the scandal.
During a
three-hour Senate hearing, Mr McCain, the most senior Republican on the
subcommittee, was barely able to conceal his indignation at what he described
as “another foreign bank, succumbing to the charms of compensation over
compliance [and] willfully undermining US laws”.
More
“Take
some more tea," the March Senator said to Yellen, very earnestly.
"I've had nothing yet," Yellen replied in an offended tone, "so I can't take more."
"You mean you can't take less," said the Benank: "it's very easy to take more than nothing."
"Nobody asked your opinion," said Yellen.”
"I've had nothing yet," Yellen replied in an offended tone, "so I can't take more."
"You mean you can't take less," said the Benank: "it's very easy to take more than nothing."
"Nobody asked your opinion," said Yellen.”
With
apologies.
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.
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