Baltic Dry Index. 989 -13
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
(At 2-05 a.m. [April 15, 1912] the
Captain visits the wireless room for the last time and says:
"Men, you have done your full duty. You can do no more. Abandon
your cabin. Now it's every man for himself"
Phillips looks up for a second, and then bends over the equipment once
more. Captain Smith tries again "You look out for yourselves. I release
you." A pause, then he adds softly "That's the way of it at this kind
of time....every man for himself" He then leaves the wireless room.
Phillips continues sending)
The
Titanic Radio Page. http://hf.ro/
Today as the
BDI slumps below 1000 again, we open with Fortune suggesting that in the slump
in global trade, that we haven’t seen anything yet. And this is before America and
the dim witted UK, force Germany and much of continental Europe into economic
suicide, by imposing real rather than token sanctions against Russia. Mutual
Assured Destruction (for Euroland) is now at hand, which seems to me to be
America’s plan B policy, even if it’s not yet understood in London. Stay long
fully paid up precious metals held outside of banks, brokerages, and the larcenous
reach of John Bull and Uncle Scam. It’s
everyman for himself. It doesn’t look good for Germany getting back any off its
gold.
Graeme: But I don't want to go among mad people.
The CIA: Oh, you can't help that. We're all mad here. I'm mad. You're mad.
Graeme: How do you know I'm mad?
The CIA: You must be. Or you wouldn't have come here.
The CIA: Oh, you can't help that. We're all mad here. I'm mad. You're mad.
Graeme: How do you know I'm mad?
The CIA: You must be. Or you wouldn't have come here.
With apologies to Alice.
The worrying collapse in global trade
April 11, 2014: 5:00 AM ET
Poor export data out of China is the latest in a series of figures on trade that casts doubt on the health of the global economy.
FORTUNE -- Chinese imports and exports fell off a cliff in March, and the Chinese economy isn't the only one dealing with lagging trade figures.Chinese exports plunged by 6.6% over the last 12 months ending in March, and they were flat in the year ended in December. This was well below the 4% increase in exports many economists had expected. True, data from China can be volatile and difficult to interpret. Some are attributing the drop to a crackdown on Chinese companies using exports as a means to evade capital controls. Andrew Tilton, an economist at Goldman Sachs in Asia, called this the "main reason" for the plunge, according to the Wall Street Journal.
Markets in Asia did seem to shrug off the report initially, perhaps buying the explanation that the dip was due to bad Chinese data, but Carl Weinberg, chief economist at High Frequency Economics, isn't so optimistic.
He argues that the data out of
China is just the latest in a series of worrying signs that global trade is
slumping. Weinberg points to an anomaly in trade data, pictured in the chart
below, which shows "an obvious historic correlation between global
industrial output and the volume of world trade."
The problem is, while export
growth hasn't really recovered to pre-crisis levels, industrial production has
somehow stayed strong. This doesn't make a lot of sense, as producers need
to sell their products somewhere in order to keep up economic activity.
"That means we have to expect the anomaly to reverse, and we are worried
that it will happen through a retracement of the pace of production,"
Weinberg writes.
In other words, the above chart
could be a sign that industrial production is about to fall off a cliff, and
the data out of China on Thursday is just another warning sign that this
will happen soon.
More
China GDP Gauge Seen Showing More Drop Than Main Measure
Apr 15, 2014 4:36 AM GMT
China’s loss of economic
momentum in the first quarter was deeper than the most widely-cited data will
show, according to analyst forecasts for a gauge that’s gaining increasing
recognition. Gross domestic product grew 1.5 percent from the previous three months, according to the median estimate in a Bloomberg News survey ahead of data released tomorrow, down from 1.8 percent in the fourth quarter. That indicates a sharper deceleration than the median projection for 7.3 percent growth from a year earlier, down from 7.7 percent
---- Data today from the People’s Bank of China showed the nation’s broadest measure of new credit fell 19 percent from a year earlier and money supply grew at the slowest pace since 2001, underscoring risks of a deeper slowdown as the government tries to curb financial dangers.
While yuan forwards declined yesterday to the lowest level in eight months on concern growth is faltering, economists are picking a rebound this quarter, forecasting quarter-on-quarter expansion of 1.8 percent, according to a separate Bloomberg monthly survey in March. The State Council on April 2 outlined spending on railways and housing, along with tax relief, with annual expansion at risk of missing the 7.5 percent goal.
More
Sadly it may already be too late to undo the unintended consequences of America’s botched Coup in Kiev. With the Ukraine in NATO an existential threat to the rest of Russia, Russia will do whatever it takes to prevent that happening. Sanctions or not, Russia’s economy is already retrenching which will only get worse under real sanctions. Mutual Assured Destruction is about to sweep across Russia and the EUSSR. Global trade is about to get a nasty 2008 type of shock. Before this all ends badly, I suspect even the US economy will suffer a shock from the blowback of a collapsing Europe. Nothing good is about to come our way from MAD.
Russia's bond market is Achilles Heel as showdown with West escalates
Country's private companies shut out of global bond markets, raising prospect that they may need state support
By Ambrose Evans Pritchard 8:15PM
BST 14 Apr 2014
Russia is at increasing risk of a
full-blown financial crisis as the West tightens sanctions and Russian meddling
in Ukraine pushes the region towards conflagration.
The country’s private companies
have been shut out of global capital markets almost entirely since the crisis
erupted, causing a serious credit crunch and raising concerns that firms may
not be able to refinace debt without Russian state support.
“No Eurobonds have been rolled
over for six weeks. This cannot continue for long and is becoming a massive
issue,” said an official from a major Russian bank. “Companies have to roll
over $10bn a month and nothing is moving. The markets have been remarkably
relaxed about this, given how dangerous it is. Russia’s greatest vulnerability
is the bond market,” he said.
Lars Christensen from Danske Bank
said Russia’s economy is already in recession and may contract by as much as
4pc if there are fresh sanctions, risking a repeat of events in 2008 when
capital flight set off serial defaults and a banking crisis. “There is a credit
squeeze under way and a significant shock to the cost of capital. This could
prove to be as bad as the Lehman crisis for Russia. Capital outflows have
already been $65bn so far this year, compared to $135bn in late 2008,” he said.
“Markets seem to be betting that
the Kremlin can’t let things get worse in Ukraine because it would be insane,
yet it is happening it anyway. We think there will be a much more serious
correction in the Russian markets,” he said.
Bank of America said the dramatic
showdown in Eastern Ukraine over the last three days “sharply increases risks
of an all-out civil war” and raises fears of tougher measures by the EU, the
US, Japan, and Canada.
The warnings came as EU foreign
ministers agreed to draft plans for “ Stage III” sanctions - this time hitting
economic and financial targets - if Russian president Vladimir Putin sends
troops into East Ukraine or tries to sieze territory.
---- However, the EU is sending mixed signals. It is pushing through fast-track plans to cut reliance on imported oil and gas from Russia, and has quietly frozen Gazprom’s South Stream pipeline. It has also defied the Kremlin by signing an association deal with Ukraine, including a defence clause that locks the country into Western security.
Yet the EU’s sanctions policy has
so far been largely symbolic, kept to a minimum by Bulgaria, Cyprus,
Luxembourg, and other EU states that have special dealings with Russia. This
may harden as Germany takes the political lead with a tougher stand.
Vice-Chancellor Sigmar Gabriel said Europe is being dragged into “a long
smouldering and incendiary conflict” but warned that the West must bear the
burden even if this means paying a price with a further sanctions.
Washington is forcing the pace in
any case as is tightens the noose by other means, using regulatory “stealth”
power to force banks across the world to pull back from Russia.
More
Below, what’s
left of the Ukraine heads off into destitution. In yet another unintended
consequence of Uncle Sam’s over reaching incompetence in Kiev, President Putin
has freed Russia from propping up the most corrupt nation in Europe and passed
that burden over to US and EUSSR taxpayers. If the west doesn’t rush in capital
fast, the western Ukraine risks missing its planting window for grains. A food
price inflation shock will then be another unintended consequence of the great
CIA Kiev bungle.
Worst Currency Rout Seen Immune to Ukraine Rate Increase
Apr 14,
2014 11:19 PM GMT
Ukraine’s biggest interest-rate increase since 1998 is unlikely to stem the
world’s worst currency selloff, according to Rareview Macro LLC and JHS Capital
Advisors Inc. While the hryvnia erased losses yesterday after the central bank raised its benchmark rate by 3 percentage points to 9.5 percent, the move will have a muted impact in coming weeks because investors are more focused on the country’s ability to refinance foreign debt than on the returns they can get in the local market, said Neil Azous, founder of Stamford, Connecticut-based research firm Rareview Macro.
Policy makers in Kiev said the rate increase, which is their first in six years and the biggest since Russia’s debt default in 1998, is aimed at stemming currency declines that threaten to boost inflation and disrupt money markets. Investors are pulling their money from Ukraine, eroding foreign reserves, as concern mounts that Russia will try to seize more of its territory after annexing the Crimea region last month.
---- The hryvnia rose 0.1 percent yesterday to 12.7 per dollar, after falling more than 4 percent earlier, according to data compiled by Bloomberg. It has lost more than a third of its value this year, the most among 169 currencies tracked by Bloomberg. The central bank has refrained from selling dollars to prop up its currency since February as reserves plunged to a nine-year low of $15.1 billion from $31.7 billion in April 2012.
Policy makers also raised the overnight rate on refinancing loans secured with Ukrainian state securities to 14.5 percent from 7.5 percent and its rate on overnight certificates of deposit to 4.5 percent from 1.5 percent.
More
It’s the
full moon, and the inmates everywhere have run amok. Washington seems to be
trying to merge 1914 into 1987. Soon. I suspect, we will get to find out just how much of the
LBMA and Comex’s gold and silver inventory is real.
"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
Antony C. Sutton
At the Comex
silver depositories Monday
final figures were: Registered 53.43 Moz, Eligible 123.73 Moz, Total 177.16 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, the truth behind “Greece is back.” Nothing
is fixed, anarchy rules nearly everywhere, and trapped in an over priced rising
German euro, Greece is still an expensive destination for Europe’s tourists,
who get far better spending value for their euros in next door Turkey or nearby
Croatia.
"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
William F. Rickenbacker.
Greece's economy is still a huge mess
April 11, 2014: 2:15 PM ET By
Cyrus Sanati
Enthusiasm surrounding Thursday's Greek debt offering illustrates just how desperate investors have become in their futile search for yield.
FORTUNE -- The wildly successful
sale this week of billions of euros of newly minted Greek bonds has politicians
and pundits proclaiming the end of the long-running European sovereign debt
crisis. That private investors would be clamoring over each other to buy
medium-term Greek notes at a measly 4.75% yield must mean that both Greece and
Europe are back in fighting form and that most, if not all, of their major
economic troubles are behind them.
Nothing could be further from the
truth.
Thursday's debt offering
only illustrates the severity at which the global junk debt
bubble has grown and how desperate investors have become in their futile
search for yield. Investors have no real confidence in Greece or Europe. Either
they have lost their minds or they view Greece as some sort of momentum play in
which they will try to cash out right before the bottom falls out of the
market. Europe remains an economic basket case, and Greece continues to be the
weakest link in a brittle chain.
The Greek economy is in shambles,
and the only reason it hasn't defaulted on its debt for a third time is the
European Central Bank's low interest rate policy and the 240 billion euros in
aid that have flowed into the nation's coffers from the International Monetary
Fund and the European Union over the last four years.
So no, the European sovereign debt crisis isn't over. It is just
taking time off from its hectic government-mandated 30-hour workweek to go on
holiday.
Thursday morning in Athens started off with a real bang at the
Greek Central Bank -- no, literally, a bomb exploded. Thankfully, no one was hurt
(the bombers called ahead and the area was evacuated by police), but the
explosion did cause damage to the columned façade of the ornate building,
where, up until a few years ago, monetary policy was decided by Greek
officials. That role has since shifted to Frankfurt after Greece joined the
euro. Now an Italian, Mario Draghi, the head of the ECB, makes
those decisions for them.
---- But no
little bomb was going to scare off investors from throwing money at
Greece, all for the chance to earn around 5% a year in interest. Many had been
waiting for months for the Greek Central Bank to take the plunge and offer some
longer-term notes. Up until Thursday, the central bank only offered investors
very short-term 13-week and 26-week notes. Rates on that short-term paper
offered investors, mostly hedge funds hopped up on risk and 5-Hour Energy
shots, a chance to make a fat double-digit return on their money.
But as the global debt bubble has expanded, yields on everything
from risky leveraged loans to junk bonds have fallen as fixed-income investors
dial up the risk in a collective race to the bottom. They have been encouraged
by the massive drop in defaults and bankruptcies across the public and private
debt markets to justify their investments as sound.
Of course, bankruptcies are at an all-time low -- anyone who needs
funding can get it at a low rate. It is the same ridiculous justification that
investors used when explaining why they bought up subprime mortgages before
2008 -- foreclosures were at a near all-time low so therefore the market was
safe. But as we know now, the absence of defaults and foreclosures didn't mean
that at all; it just meant that the bottom had yet to fall out of the
market.
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 March
DJIA: +197 Down. NASDAQ: +357 Up. SP500: +254 Down.
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