Baltic Dry Index. 1160 +14
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"a company for carrying out an undertaking of great advantage, but nobody to know what it is".
The South Sea Bubble 1720
Is it irrational exuberance all over again? Will we
all really get rich using Facebook, acting as Twits and sending each other free
instant messages via WhatsApp? What added value product is created by what
looks to dinosaur me, as a massive mal-allocation of capital. The Fed’s final
bubble targeting a trickle down wealth effect from stocks, has gone seriously
awry, it seems to me. No product is created, no long term wealth is being built
for the future, no new drugs, no foodstuffs, no mines, no lifestyle changing
advance. The gullible Muppets are being fleeced once again by the Great Vampire
Squids. When the next Lehman hits all this mis-allocated capital is all too
likely to simply evaporate away.
Below, signs that the next Lehman may be waiting
just around the corner. They might not ring a bell at the top, but they
certainly wave a lot of red flags. And let’s not get started on the coming
Chinese Trust implosion.
“It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale."
J. K. Galbraith. The Great Crash: 1929.
WhatsApp’s Founder Goes From Food Stamps to Billionaire
Feb 20, 2014 5:10 AM GMT
The $19 billion deal to sell WhatsApp Inc. to Facebook Inc. (FB) started at
Yahoo! Inc. more than five years ago, when Jan Koum became disillusioned at the
way Internet companies were fixated on advertising. He left Yahoo in 2007 with one of the company’s other engineers, Brian Acton, and started a company by 2009 that shuns advertising altogether. The strategy allowed them to concentrate on creating an easy-to-use messaging product instead of developing new ways to glean customer information for their marketing pitches, Koum said in a 2012 blog post.
“No one wakes up excited to see more advertising, no one goes to sleep thinking about the ads they’ll see tomorrow,” Koum said in the post. A hand-written note on the his desk reads: “No Ads! No Games! No Gimmicks!”
Their approach paid off. WhatsApp amassed 450 million monthly users -- twice as many as Twitter Inc. -- who send billions of messages a day. Yesterday, Facebook Chief Executive Officer Mark Zuckerberg bought their five-year-old company in the largest Internet deal since Time Warner’s $124 billion merger with AOL in 2001, a deal that will almost certainly make Koum and Acton billionaires several times over.
For Koum, 38, the windfall would stand in stark contrast to his years as a teenager, when his family relied on food stamps after emigrating from Ukraine. The experience of living in a country where phone lines were often tapped, instilled the importance of privacy in him, said Jim Goetz, a partner with Sequoia Capital Ltd., WhatsApp’s lone venture capital investor.
More
Asian Stocks Drop With Aussie on China PMI; Copper Slides
Feb 20,
2014 6:25 AM GMT
Asian
stocks fell with commodities and Australia’s
dollar weakened as a private index on China’s
manufacturing dropped to a seven-month low. South
Korea’s won led emerging-market currencies lower and Japanese bonds
rallied. The MSCI Asia Pacific Index slid 1.2 percent by 3:15 p.m. in Tokyo. Standard & Poor’s 500 Index (SPX) futures lost 0.4 percent and FTSE 100 Index contracts slipped 0.7 percent. A measure of Chinese shares in Hong Kong decreased 0.9 percent and the S&P GSCI Index of 24 commodities declined 0.4 percent.
Treasuries rebounded from the biggest drop in a week and Japan’s five-year yield sank to a 10-month low.
The Aussie retreated 0.5 percent and the won weakened the most in three weeks.
A preliminary February purchasing managers’ gauge from HSBC Holdings Plc and Markit Economics fell to 48.3, signaling a second month of contraction for Chinese manufacturing and missing an economists’ estimate for 49.5. The yen gained after Japan’s trade deficit widened to a record in January, as surging import costs weigh on Prime Minister Shinzo Abe’s efforts to renew growth. The International Monetary Fund warned of risks to world growth before data today that may show U.S. jobless claims fell and a gauge of leading indicators rose.
“People
globally underestimate the downside risk to the Chinese economy,” Dariusz
Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, said in a
Bloomberg Television interview. “The economy is not just slowing but there’s a
lot of financial risks here. The chance of a crisis is rising and very real.”
More
Japan Trade Deficit Swells to Record as Import Costs Surge
Feb 20, 2014 1:10 AM GMT
Japan’s
trade deficit widened to a record in January as surging import costs weigh on
Prime Minister Shinzo Abe’s campaign to drive a sustained recovery. The 2.79 trillion yen ($27.3 billion) shortfall reported by the Ministry of Finance in Tokyo today exceeded the 2.49 trillion yen median estimate in a Bloomberg News survey of 28 economists. Imports rose 25 percent from a year earlier and outbound shipments gained 9.5 percent.
Declines in the yen are driving up import costs as the nation’s nuclear reactors remain shuttered, while exports have seen only limited gains from the currency’s slide of more than 20 percent against the dollar in the past two years. The trade deficit contributed to Japan’s economy growing a less-than-forecast 1 percent in the fourth quarter, underscoring the risk that Abenomics may falter after a sales-tax increase in April.
More
IMF Warns G-20 of Deflation Risk, Emerging-Market Turmoil
Feb 19, 2014 7:43 PM GMT
Risks of prolonged market turmoil in emerging
markets and of deflation in the euro area are threatening the
world’s improved economic prospects, according to the International
Monetary Fund. The IMF, in a staff report prepared for central bankers and finance ministers from the Group of 20, said the recovery is still weak and “significant downside risks remain.” A January global growth forecast of 3.7 percent for this year, from 3 percent in 2013, hinges on recent market volatility from Turkey to Brazil being short-lived, according to the report.
“Capital outflows, higher interest rates, and sharp currency depreciation in emerging economies remain a key concern,” according to the report prepared ahead of the G-20 Feb. 22-23 meeting in Sydney. “A new risk stems from very low inflation in the euro area, where long-term inflation expectations might drift down, raising deflation risks in the event of a serious adverse shock to activity.”
Rising
political tensions from Ukraine to Thailand, China’s slowdown and the Federal
Reserve’s tapering of its stimulus have resulted in falling stocks and
currencies in emerging markets. Less than two months into 2014, global
investors pulled more money out of emerging-market stock and bond funds than
the total amount they retracted last year.
More
Fed to Change Rate Guidance as Unemployment Falls, Minutes Show
Feb 19,
2014 10:43 PM GMT
Federal Reserve policy makers backed away from their year-old commitment to
consider raising interest rates when unemployment falls below 6.5 percent. With joblessness falling faster than expected even as other labor-market indicators show weakness, policy makers agreed it would “soon be appropriate” to revise their guidance about how long the era of record-low interest rates will remain, minutes of their January meeting showed.
Several policy makers also said that in “the absence of an appreciable change in the economic outlook, there should be a clear presumption in favor” of continuing to trim the Fed’s bond purchases by $10 billion at each meeting.
More
http://www.bloomberg.com/news/2014-02-19/yellen-says-recovery-in-labor-market-far-from-complete.html
Watch for companies to claim 'Jack Frost ate our profits'
CHICAGO(Reuters) - Sick of hearing Americans complain about the winter weather? Too bad. Because the corporate kvetching has only just begun.
While meteorologists say warmer temperatures finally are on the way, savvy investors know a cold front could still be looming when it comes to the profits of publicly traded U.S. companies.
Indeed, if history is any guide, CEOs will still be moaning about the recent cold snap well into spring, when they report first-quarter earnings. Why? Because the coldest winter in a quarter century provides them with a handy -- and reasonably plausible -- excuse for any results that fall short of expectations.
For some companies, such as those in transport-dependent businesses, the explanations may be valid. For others, it may well be a case of the (chilly) dog ate their homework.
After Hurricane Katrina slammed into the U.S. Gulf Coast in 2005, a host of companies with not especially big exposures to the affected region - including Avon Products Inc., Books-A-Million Inc and Tempur-Pedic International Inc, now a unit of Tempur Sealy International Inc - blamed the disaster for poorer-than-expected results. When their rivals did just fine despite the hurricane, analysts cried foul.
The latest weather-related claims have begun to come in. Recent U.S. economic indicators, including unexpected drops in retail sales and manufacturing output in January, showed the deep freeze is having an impact.
More
It’s morally wrong to let a sucker keep his money.
Ebenezer Squid, with apologies to W. C. Fields.
At the Comex silver depositories Wednesday final figures were: Registered 50.29
Moz, Eligible 130.37 Moz, Total 180.66 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No Great Vampire Squids or crooked banksters and
politicians today, just an emerging market gone bad. Today Turkey, in a four
horse race with Argentina, the Ukraine and Venezuela, to see who can totally
implode into wealth destroying anarchy first. My money’s on Argentina, but at
this stage of the race it’s neck and neck.
Turkey spoils emerging market story as politics go haywire
No country so rudely exposes the illusions behind the $8 trillion stampede into emerging markets more than Turkey
Turkey is the first big domino to
fall in emerging markets, a cautionary tale for investment tourists who came
late to the party and skipped the political fine print.
Its catch-up growth model reached
exhaustion in 2007. The consumption boom that followed has been driven by
inflows of hot money, all too like the earlier bubbles in Ireland and Spain.
Its showcase Muslim democracy
came off the rails when police opened fire last June on demonstrators in
Istanbul's Taksim Square and cities across the country, killing six and
injuring 8,000. Amnesty International accused the government of human rights
violations on a "huge scale”.
Matters have since gone from bad
to worse. European diplomats say premier Recep Tayyip Erdogan is in such clear
breach of the EU's Copenhagen Criteria on democracy and the rule of law that
Turkey's accession bid is in doubt, and with it the implicit assumption that
underpins foreign investment in the country.
No country so rudely exposes the
illusions behind the $8 trillion stampede into emerging markets, though Ukraine
must be ahead on points by now. Investors came to believe that all humanity is
moving in the same direction, that free markets and open societies are
ineluctable, that we really are seeing the "End of History" on
liberal terms. "The West should wake up," said Kemal Kilicdaroglu, Turkey's
opposition leader.
Muharrem Yılmaz, the head of
Turkey's industry lobby Tusiad, issued an astonishing cry of alarm three weeks
ago. “A country where the rule of law is ignored, where the independence of
regulatory institutions is tainted, where companies are pressured through tax
penalties and other punishments, where rules on tenders are changed regularly,
is not a fit country for foreign capital." For this he was accused of
"treason" by the prime minister.
The new twist - the "events
of December 17" - is the eruption of a bare-knuckled power-struggle within
Mr Erdogan's Islamist movement. It was triggered by corruption probes against
party elites, including four cabinet ministers, but nothing is what it seems in
Turkey.
Mr Erdogan retaliated with a
purge of judges, prosecutors and police, as well as banking and TV regulators.
Court orders were torn up. He claimed that a "parallel state" led by
the Gulenist brotherhood - a sort of Islamist Opus Dei that runs elite schools
and nurtures rising leaders - was trying to overturn democracy.
More
"We are in a world of irredeemable paper money - a state of affairs unprecedented in history."
John Exter
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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