Baltic Dry Index. 1084 -09
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.
John Kenneth Galbraith
It was the
best of times it was the worst of times. If you can keep your head when all
about you are, well you know the rest. Today we open with the case for
complacency. Ignore the Baltic Dry (shipping) Index (BDI) crash of January
2014, who cares what it means for emerging markets. Buy and hold, buy and hold, buy and hold. This
time it’s not different, to slightly alter CNBC’s motto. Will the Yellen Fed
add stocks to the mix of QE Forever? With the BDI halving in just about a
month, will it make any difference in the long run?
Market’s 19th Breakdown Leaves Bulls Unmoved as $3 Trillion Lost
Feb
5, 2014 12:28 AM GMT
Eighteen times Michael Shaoul has watched the U.S. stock market lose 5
percent or more since 2009. Eighteen times he’s been rewarded for holding on. The bulls are being tested anew by a retreat that started in emerging markets and has since spread to developed countries, erasing $2.9 trillion from global equity values. Again, Shaoul’s Marketfield Asset Management LLC isn’t selling.
“This is a real bull market,” Shaoul, whose assets under management have risen to $21 billion from $400 million in 2008, said in a phone interview. “What happens in real bull markets is they do fine, and then they are occasionally interrupted by an exogenous shock.”
---- “This episode will have a distinct
beginning, middle and end,” said Shaoul, chairman and chief executive officer
of New York-based Marketfield, whose MainStay Marketfield Fund has beaten 99
percent of its peers the last three years, Bloomberg data show. “The end of it
will be a significant buying opportunity in the U.S.”
----
“Every
time it goes down you always wonder, ‘What the heck? Is it going to stop?’”
said James Paulsen, the Minneapolis-based chief investment strategist at Wells
Capital Management, which oversees about $359 billion. “I like buying on this
fear of a crisis in the emerging world.”
More
And yet, there’s a very real feat
that this time it really is different, dead cat bounce or Fed manipulation, or
not.
Asia shares falter, unable to shake jitters
By Wayne
Cole SYDNEY
(Reuters) - Asian shares struggled to sustain the slimmest of rallies on
Wednesday as a hesitant performance by the Japanese market fuelled fresh demand
for safety in the yen and top-rated bonds.Dealers had cautioned that the mood remained brittle and it would only take a poor U.S. payrolls report on Friday to set the bears running again.
The ADP reading on private hiring is due later on Wednesday and any disappointment will be taken badly by investors.
The strain was clearly taking a toll with the Nikkei .N225 rising, falling, then rising again to be up 1.1 percent at 14,163. It never even got close to testing resistance at the 200-day moving average of 14,425, while there remains a large gap to fill between Monday's close and Tuesday's opening.
The index has shed 14 percent since the start of the year following last year's 50 percent boom.
More
Japan Real Wages Fall to Global Recession Low in Spending Risk
Feb 5, 2014 5:01 AM GM
Japan’s base wages adjusted for inflation last
year matched a record low in 2009 when the world was gripped by recession,
posing a risk to consumer spending as the nation girds for a
higher sales
tax. Pay excluding bonuses and overtime payments dropped to 98.9 in 2013 on a labor ministry index that takes price changes into account, equaling the level four years earlier. The gauge is based at 100 in 2010 in data dating back to at least 2002.
Prime Minister Shinzo Abe is calling on companies to boost wages to sustain a reflationary drive so far driven by stimulus and the yen’s 18 percent drop against the dollar last year. Business and union leaders met today to start this year’s pay talks amid a backdrop of turbulence in Japanese and global markets.
More
Abe's to Blame for Nikkei Boom and Bust
Feb 5, 2014 4:16 AM GMT
It's a remarkable attempt at
disassociation: Japan's chief cabinet secretary assuring markets that Shinzo Abe's
policies can't be blamed for a deepening stock slump. It's also a cynical one.
The only reason the Nikkei 225 Stock Average soared 57 percent last year was that Prime Minister Abe promised the world he would revitalize a no-longer-competitive economy, defeat deflation and figure out how to the keep the world's fastest-aging and most-indebted nation from becoming the next Greece. Then, Abe green-lighted the Bank of Japan to unleash history's greatest monetary bonanza to show that times were changing.
The result was completely predictable: booming equities, fresh life in the real estate markets and Abe's face on magazine covers, with headlines screaming Japan was back. Then around May 2013, five months into Abe's premiership, markets asked to see Abe's restructuring plan. Please be patient, he replied. Again, in September, markets asked for a peek. Please wait, Abe said. In January, when Abe gave the keynote at Davos, bulls figured this would be the moment the guts of Abenomics were unveiled. Nope.
Now, patience is running thin (as of Tuesday, the Nikkei was down 14 percent from its Dec. 30 peak). Abe's failure to flesh out even just one of the many epochal reforms he's promised has exposed last year's stock surge as a bubble. That's why the Nikkei is leading declines among developed markets. Abe promised everything and failed to deliver much of anything. So perhaps Chief Cabinet Secretary Yoshihide Suga deserves a pass: He's just doing his job, trying to erase Abe's fingerprints from a massive disappointment trade. But the world knows better.
More
Emerging markets more vulnerable than ever to Fed tightening, warns BIS
Bank for International Settlements says there had been a “massive expansion” in borrowing on global bond markets by banks and companies in developing countries
Emerging markets may be even more
vulnerable to an interest rate shock today than they were during the East Asia
crisis in 1998, the Bank for International Settlements (BIS) has warned.
The Swiss-based watchdog said
there had been a “massive expansion” in borrowing on global bond markets by
banks and companies in developing countries, leaving them exposed to “powerful
feedback” risks as borrowing costs rise in the West.
“The deeper integration of
emerging market economies into global debt markets has made emerging market
bond markets much more sensitive to bond market developments in the advanced
economies,” the BIS said in a working paper.
“The global long-term interest
rate now matters much more for the monetary policy choice facing emerging
market economies than a decade ago,” it said.
The findings are at odds with
widespread claims that these states are mostly insulated from monetary
tightening by the US Federal Reserve, purportedly because they have borrowed in
their own currencies over recent years and have huge foreign reserves.
The warning came as bourses in Asia and
Latin America fell to a seven-month low, testing levels seen in last June’s
"taper tantrum". Chinese computer giant Lenovo fell 16pc on rating
downgrades.
----Brazil’s industrial output slumped 3.5pc in December as the delayed effects of monetary tightening bite deeper, a foretaste of what lies in store for a string of countries that have raised rates to defend their currencies. “This was the biggest monthly contraction since December 2008,” said George Lei, from Nomura.
Brazil is facing pressure on
every front. Its budget deficit surged to $65bn in 2013. The current account
deficit widened to 3.7pc of GDP, hit by sliding iron ore prices.
Edmar Bacha, from the Casa das
Garças Institute, said Brazil is living beyond its means and will have to
accept a “contraction of internal demand” to right the ship.
Marcelo Ribeiro from the hedge
fund Pentagono said Brazil needs a 60pc to 70pc devaluation to restore
industrial competitiveness. “This will end badly,” he said.
More
My take, the
thirty plus year bear market in interest rates is over. We have entered the new
era of rising interest rates for years to come. What drove buy and hold in
stock markets, was very 20th century. As interest rates rise in the
months and years ahead, a whole lot of borrowers are going to default, only the
very biggest are going to be too big to fail. Most are just going to get
hammered and allowed to go bust. Complacency was so last century. Though
interest rates probably won’t increase dramatically at first in the west, we
have passed a turning point of immense significance. For the Argentina’s,
Brazil’s and India’s of the world, higher rates and capital controls look to be
their future.
There can be few
fields of human endeavour in which history counts for so little as in the world
of finance. Past experience, to the extent that it is part of memory at all, is
dismissed as the primitive refuge of those who do not have the insight to
appreciate the incredible wonders of the present.
J. K. Galbraith
At the Comex
silver depositories Tuesday
final figures were: Registered 51.23 Moz, Eligible 128.08 Moz, Total 179.31 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks today, just more tosh from the loony extreme leftist, anti-American, anti-Israel, anti-Christian, BBC Labour Party. Some things are too good not to share.
Chinese New Year: BBC subtitle blunder reads 'Welcome to the year of the whores'
Tuesday 04 February 2014
Friday saw the start of the Chinese new
year, with this being the year of the horse.
Unfortunately the BBC News
subtitle system didn’t understand the memo quite right, and instead declared
this the "year of the whores", much to the embarrassment of the
channel.
“Welcome to the year of the
whores. People around the globe celebrate,” read the subtitles.
Noticing the blunder, a number of
eagle eyed viewers were able to quickly grab a screenshot and post it on
Twitter.
@tirnaog09 wrote: “Happy Chinese
New Year, according to BBC Subtitles it should be an interesting one! :-)”
@Bobie_Bobzy added: “Happy New
year of the #whores from the #BBC. Bullé!”
This isn’t the first time the
BBC’s subtitles have had somewhat of a malfunction, the Archbishop of
Canterbury has been referred to as the “Arch bitch of Canterbury”, while during
coverage of the Queen Mother’s funeral there was a call for “a moment’s
violence”.
If
all else fails, immortality can always be assured by spectacular error.
J. K.
Galbraith.
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?
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