Baltic Dry Index. 1205 -30
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"What can we advise our American colleagues? They should get more fresh air, do yoga, eat healthily, maybe watch some sitcoms on television."
Russia's deputy foreign minister Sergei Ryabkov.
Which crisis
you may well ask. This Monday we are spoiled for choice. We open with the only
one that could lead to a nuclear war. Thankfully all the others are tame in
comparison.
Following
last month’s botched American Coup in Kiev, nothing has gone to Washington’s
expectations. This morning finds the unelected government in Kiev on “default
imminent” watch at Moody’s, while the Eastern Ukraine seems to be undergoing a
sort of “Kiev revolution” of its own in favour of Russia. This morning the BBC
reports on US politicians calling for NATO troops to be stationed in the
Ukraine. My guess is that Russian troops would move quickly to confront them,
and we would become a hairs width away from a deadly skirmish if not war. None
of this is priced in to our complacent disconnected stock markets.
But Mousie, thou art no thy lane,
In proving foresight may be vain:
The best-laid schemes o' mice an' men
Gang aft agley,
An' lea'e us nought but grief an' pain,
For promis'd joy!
In proving foresight may be vain:
The best-laid schemes o' mice an' men
Gang aft agley,
An' lea'e us nought but grief an' pain,
For promis'd joy!
Robert Burns.
Moody’s downgrades Ukraine to ‘default imminent’
Published time: April 05, 2014 10:53
Moody's Investors Service has
downgraded Ukraine's government bond rating one notch from Caa2 to Caa3, citing
the current political crisis and deepening economic instability as reasons for
its negative outlook.
The Caa rating is a credit risk
grading pertaining to investments that are both very poor quality and entail a
high credit risk. The current downgrade drops Ukraine from Moody's
"extremely speculative" rating to "default imminent with
little prospect for recovery."
Moody’s said the downgrade was
driven by three factors, which “exacerbate Ukraine's more longstanding
economic and fiscal fragility.”
The first factor is Ukraine’s
political crisis, citing the recent regime change in Kiev and subsequent events
in Crimea. The agency went on to cite Ukraine’s stressed external liquidity
position, which faces continued decline in foreign currency reserves, the
withdrawal of Russian financial support and a spike in gas import prices.
Moody’s further noted that this assessment accounts for the near-term liquidity
relief recently hammered out with the IMF. Finally, due to a “sizable fiscal
deficit,” the agency expects a significant contraction of GDP and a sharp
currency depreciation as the debt to GDP (Gross Domestic Product) ratio hits
between 55-60 percent by year’s end.
On Thursday, Gazprom CEO Aleksey
Miller announced Ukraine would begin paying $485 per thousand cubic meters of
natural gas starting from April. The price rise followed a cancelation of the
Black Sea hosting deal. On Wednesday President Vladimir Putin signed a federal
law ending Russia’s commitment to the Kharkov Agreement, as the Black Sea port
of Sevastopol is now under jurisdiction of the Russian Federation. This follows
another steep hike on April 1, when the price Ukraine paid for gas went up 44
percent to $385, after Kiev failed to meet its debt repayments.
Last December,
Russia offered Ukraine’s Yanukovich-led government a $15 billion loan and a 33
percent discount on natural gas: a lifeline to help its faltering economy.
Moscow went through with the purchase of a $3 billion Eurobond from Kiev,
though Russia later froze both the gas deal and the credit- line, due to events
on the ground.
More
Yatsenyuk rejects Russian gas price calling it ‘aggression against Ukraine’
By Jake Rudnitsky and Daryna Krasnolutska,
Bloomberg
Ukraine Prime Minister Arseniy
Yatsenyuk at a government meeting today said Russia’s plan to raise the natural
gas price by 80 percent to what he called the highest price in Europe is
“aggression against Ukraine.”
Yatsenyuk said Ukraine was ready
to pay off its debt to OAO Gazprom and that the first quarter gas price was
acceptable. Russia canceled discounts it offered to Kiev on April 1, raising
the price to $485 per 1,000 cubic meters from $268.50, and has threatened to
cut off supplies if Ukraine doesn’t pay its $2.2 billion debt.
Ukraine relies on Gazprom for
half its gas, while carrying about 15 percent of European supplies through its
pipelines from Russia, making it a linchpin in the continent’s energy security.
Ousted President Viktor Yanukovych won a lower price at the end of last year by
ditching an association agreement with the European Union, leading to protests that
resulted in his flight to Russia. The new government in Kiev has since signed
political parts of the EU deal.
More
Pro-Russian Activists Seize Buildings in Ukrainian Cities
Apr 6, 2014 10:39 PM GMT
Hundreds of pro-Kremlin demonstrators seized official buildings in Ukraine’s
eastern regions, where separatist unrest turned deadly last month, urging
referendums on joining Russia. Buildings in the cities of Donetsk, Kharkiv and Luhansk were occupied yesterday by protesters with Russian flags who also called for a boycott of May 25 presidential elections. Amid the unrest, acting President Oleksandr Turchynov canceled a trip to Lithuania and convened a special meeting of law enforcement officials, according to the website of the Ukrainian parliament.
“Putin and Yanukovych contracted and paid for another round of separatist unrest eastern Ukraine,” Interior Minister Arsen Avakov said on his Facebook Inc. page. Organizers of the rallies may face as long as eight years in prison, the ministry said on its website.
About 200 people seized the governor’s office in Donetsk, Alla Konyk, a spokeswoman for the regional prosecutor’s office, said in remarks televised by Ukraine’s privately held Channel 5. Three people, including a policeman, were injured in Luhansk during the storming of regional directorate of Ukraine’s security service, the channel reported
More
In Asia, is the Great Reconnect, just getting underway? From east to west, from China to Venezuela, the wheels seem to be flying off.
William F. Rickenbacker
Asian Stocks Snap 8-Day Winning Streak Led by Industrials
Apr 7,
2014 5:30 AM GMT
Asian stocks fell for the first time in nine days, snapping the
longest winning streak on the regional gauge this year, with telecommunication
and technology shares leading declines. Naver Corp. slumped 6.3 percent in Seoul, SoftBank Corp. lost 4.5 percent in Tokyo and Tencent Holdings Ltd. fell 4.4 percent in Hong Kong as telecom and technology shares slid. Fanuc Corp., a Japanese maker of factory equipment, sank 2 percent, leading industrial firms lower.
----The MSCI Asia Pacific Index
lost 0.5 percent to 138.63 as of 12:26 p.m. in Hong Kong, with seven of the 10
industry groups on the measure falling. Losses in Asian technology firms follow
the Nasdaq Composite Index’s biggest retreat in two months on April 4, as
investors pare holdings in Internet companies that have led gains in global
equities during the past 12 months.
----Japan’s Topix index slid 1.2 percent as the yen held gains from April 4, trading at 103.27 per dollar. The Bank of Japan, which begins a two-day policy meeting today, may double purchases of exchange-traded funds as part of a second round of monetary easing, analysts polled by Bloomberg say.
Hong Kong’s Hang Seng Index fell 0.6 percent and the Hang Seng China Enterprises Index of mainland Chinese stocks listed in the city gained 0.3 percent. Markets in mainland China and Thailand are closed for a holiday.
More
Asia Developing Economies to Grow at Slower Pace as China Cools
Apr 7, 2014 4:00 AM GMT
Developing East Asian economies will grow slower than forecast this year as China’s expansion
moderates and political upheaval weighs on Thailand’s outlook, the World Bank
said. China will expand 7.6 percent this year, down from 7.7 percent projected in October, while Thailand will grow 3 percent, 1.5 percentage points lower than seen six months ago, the World Bank said in its East Asia and Pacific Economic Update released today. Developing East Asia is forecast to grow 7.1 percent in 2014, down from 7.2 percent seen in October, it showed.
More
In China, signs
that the growing wobble has the old guard of the Chinese Communist Party in
fear of President Xi’s anti-corruption purges. Probably a sign that the reality
is far worse than the official figures portray.
China’s Former Leaders Tell Xi To Halt Anti-Corruption Campaign
Former Presidents Jiang Zemin and Hu Jintao are reportedly pushing for an end to Xi Jinping’s anti-graft campaign.
By Zachary
Keck April 04, 2014
Xi Jinping’s much vaulted anti-graft campaign appears to have hit a major
roadblock with China’s two living former presidents reportedly urging Xi to
halt it.According to a report in the Financial Times, both President Jiang Zemin and President Hu Jintao have sent word to Xi in recent weeks telling him to rein in the anti-corruption campaign he has made a cornerstone of his presidency.
Citing three sources with familiar with the matter, FT reported that President Jiang recently sent Xi a message warning him that “the footprint of this anti-corruption campaign cannot get too big.” The UK newspaper also cited a Chinese official implementing the anti-graft campaign as saying that former President Hu has expressed a similar sentiment to Xi.
The report comes as speculation is intensifying that former domestic security czar Zhou Yongkang will soon be arrested and formally charged with corruption. Throughout much of Xi’s tenure in office, Zhou’s loyalists and family members have been arrested, while Zhou himself is reportedly being held under informal house arrest.
According to Reuters, which cited two unnamed Chinese officials: “More than 300 of Zhou’s relatives, political allies, proteges and staff have also been taken into custody or questioned in the past four months.” The same report said that the Chinese government has also seized about 90 billion yuan ($14.5 billion) from Zhou’s associates and family members.
Zhou was a member of the Politburo Standing Committee (PBSC), China’s highest decision-making body, until stepping down at the 18th Party Congress. If formally charged, Zhou would be the highest-ranking official to be formally charged with a crime in the People Republic of China’s (PRC) entire history.
More
Huge probe set stage for 'gang' trial of mining tycoon Liu Han
Hundreds of police mobilised to collect evidence before hearing against former mining tycoon accused of running triad-like group in Sichuan
UPDATED : Friday, 04 April, 2014,
5:24am
Hundreds of police officers
gathered evidence from around the country for the trial of the mining tycoon
Liu Han who is accused of running a mafia-style gang, state media reported.
Some 424 officers collected
evidence from places as far-flung as Sichuan, Inner Mongolia, Shanghai, Macau
and Hong Kong, the Hubei Daily reported yesterday.
Liu, his brother Liu Wei and 34
other accused members of his gang are standing trial in Xianning city, in Hubei
province.
Liu Han faces 15 charges,
including murder, financial crimes, running casinos and illegally selling
firearms. He has denied the charges, according to more than three sources with
direct knowledge of the matter.
The more severe charges against
Liu include the murder of nine people over business disputes, the Hubei
Daily said.
Liu's case is thought to be
connected to the corruption investigation into the retired security tsar Zhou
Yongkong.
A person with knowledge of the
case previously said that the name of Zhou's eldest son, Zhou Bin has appeared
in case files and transcripts of interviews with police.
Police interviewed more than
1,000 people in their investigation into Liu Han, according to the Hubei
Daily. Liu, 48, was the former head of the mining company Sichuan Hanlong.
More
http://www.scmp.com/news/china/article/1463709/huge-probe-set-stage-gang-trial-mining-tycoon-liu-han
We end for
today, with unfortunate developments in Africa. The world as we knew it
1945-2000 has come to an end. What replaces it seems to be a world of rising
chaos and trouble.
Zambia electricity price hike threatens mining output - Chamber
4th April 2014
LUSAKA – Zambia's decision to
increase electricity prices by almost 29% for mining companies is likely to hit
operations in Africa's second largest copper producer, the Chamber of Mines of
Zambia said.
The bulk power supply agreement
tariffs between state power company Zesco and Copperbelt Energy Corporation
were increased this week to 6.84 c/KWh from 5.31 c/KWh.
"Mining companies will not
be able to absorb this cost, especially the high cost producing companies. The
tariff increase is not sustainable at all," said the Chamber of Mines of
Zambia, which represents the mining firms.
Copper exports account for more
than 70% of Zambia's foreign exchange earnings and mining is a major employer
in the southern African country of over 13-million people.
A nearly 10% decline in copper
prices this year have already hit mining companies operating in Zambia, which
include First Quantum Minerals, Vedanta Resources Plc, Glencore Xstrata and
Barick Gold Corp.
More
Fuel price increases set to continue, surpasses CPI
4th April 2014
The price of fuel in South Africa
has increased more than double the consumer price index (CPI) year-on-year and
has cumulatively surpassed the index by 247% over the past 15 years, a White
Paper by Eqstra Fleet Management has revealed.
The past decade-and-a-half had
seen fuel prices jump more than 560%, equating to an average increase of 13%
year on year, while the average CPI over the same period was 5.25%, said Eqstra
MD Murray Price on Friday.
While the past five years had
seen a “slight slowdown” to a 12% year-on-year increase, Eqstra, which
conducted more than 50 detailed fleet reviews over the past six months,
forecast a 15% rise in 2014/15.
The company expected a hike in
petrol and diesel prices of 48c/ℓ and 54c/ℓ, respectively, during the first two
quarters of 2014, bringing the fuel price closer to breaching the R15 mark
mid-year, reaching about R15.50 by the end of 2014.
----Further, fuel prices were significantly affected by petrol tax, which, since 2007, had been increasing steadily – a trend that was expected to continue.
“Finance Minister [Pravin
Gordhan], in the March 2014 Budget, announced a 12c/ℓ fuel and 8c/ℓ diesel
levy increase effective April 2, which will push the price of petrol closer to
the R14.50/ℓ mark,’” said Price.
Carbon tax, which currently
equated to 1c/km, was also expected to rise during 2014.
More
"The desire for gold is the most universal and deeply rooted commercial instinct of the human race."
Gerald M. Loeb
At the Comex
silver depositories Friday
final figures were: Registered 53.44 Moz, Eligible 124.45 Moz, Total 177.89 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
We are one month out from the European Parliament
elections, with yet another sign of the EU electorate swinging to the right and
far right. Europe is looking very ugly
again following the increasing failure of the top down imposed, EUSSR
Bilderberger project. If this trend continues into May, the next EU Parliament,
is going to have a very strong anti-EU alliance intent on exerting its
influence from day one.
The euro will be in for a rough ride for the
foreseeable future, though I doubt that the ECB will be unhappy. The EMU as we
know it will again come under threat. Stay long fully paid up physical gold and
silver. Next month’s elections might be the beginning of the end of the wealth
destroying euro. The euro isn’t working and more and more of the EU’s voters know
it. The trouble is, in desperation too many Europeans are flirting with the far
right. In comparison, the UK’s Independence Party (UKIP,) looks positively
liberal.
"Gold bears the confidence of the world's millions, who value it far above the promises of politicians, far above the unbacked paper issued by governments as money substitutes. It has been that way through all recorded history. There is no reason to believe it will lose the confidence of people in the future."
Oakley R. Bramble
Hungary re-elects maverick PM, far-right opposition gains
By Krisztina Than and Gergely Szakacs BUDAPEST
(Reuters) - Hungarians handed
their maverick Prime Minister Viktor Orban another four years in power,
election results showed on Monday, while one in every five voters backed a
far-right opposition party accused of anti-Semitism.
Orban has clashed repeatedly with
the European Union and foreign investors over his unorthodox policies, and
after Sunday's win, big businesses were bracing for another term of
unpredictable and, for some of them, hostile measures.
But many Hungarians see Orban, a
50-year-old former dissident against Communist rule, as a champion of national
interests. They also like the fact that under his government personal income
tax and household power bills have fallen.
After 96 percent of the ballots
were counted from Sunday's parliamentary vote, an official projection gave
Orban's Fidesz party 133 of the 199 seats, guaranteeing that it will form the
next government.
That tally also gave Orban's
party the two-thirds majority needed for it to change the constitution, but
only by one seat, and final results could still push Fidesz back below the
threshold.
The same projection gave the
Socialist-led leftist alliance 38 seats, while Jobbik was on 23 seats.
----Jobbik's performance is being watched closely for clues about how other nationalist right-wing parties, such as France's Front National and the Netherlands' Party for Freedom, will perform in European Parliament elections next month.
In terms of its share of the
national vote on party lists, Jobbik won 20.7 percent, up from 15.86 percent of
all votes four years ago.
Its showing based on the
incomplete results on Sunday was the strongest of any far-right party in the EU
in the past few years, according to Cas Mudde, Assistant Professor at the
School for Public and International Affairs at the University of Georgia in the
United States.
He said the previous strongest
result for a far-right group was the 20.5 percent won by Austria's Freedom
Party last year.
"There is no doubt that
Jobbik will be among the strongest far-right parties in Europe, which is
particularly striking because it is also one of the most extreme of Europe's
far-right parties," Mudde told Reuters.
----Jobbik has pledged to create jobs, be tough on crime, renegotiate state debt and hold a referendum on EU membership. While it denies being racist, it provides a lightning rod for suspicion among some Hungarians towards the Roma and Jews.
Its leader, Gabor Vona, often
works shifts in minimum wage jobs - a waiter, a construction worker - to show
he is in touch with ordinary peoples' concerns. A senior party figure in 2012
proposed drawing up lists of Jews in parliament, though he later apologized and
said he was misunderstood.
"Jobbik is continuously ...
increasing its popularity," Vona told party supporters late on Sunday.
"And ahead of the European Parliament elections it is important to make
clear that today in the EU Jobbik is the strongest national radical
party."
More
Pressure mounts on Austrian far-right EU candidate to quit
VIENNA
(Reuters) - Pressure mounted on
Austria's far-right Freedom Party to fire one of its two top candidates for
next month's EU parliament elections after he made racist comments and said the
bloc made Nazi Germany's Third Reich look liberal by comparison.
Andreas Moelzer has apologised
for saying the European Union was in danger of becoming a "conglomerate of
negroes" who lacked the work ethic of the Germans and the Austrians.
And he has denied being the
author of an article complaining that today's Viennese look like
"raven-black" Austrian soccer star David Alaba and that one has to
visit an old people's home to see what "real Austrians" used to be
like.
The Freedom Party (FPO) is
treading a fine line to position itself as a mainstream party electable by
voters fed up with creeping EU centralisation who would not identify themselves
as far-right.
The FPO is publicly standing
behind Moelzer but in private FPO officials say the party leadership is unhappy
with his behaviour and may take action.
Moelzer himself has rejected
calls from all of Austria's other political parties and the leader of its
Jewish community to resign, and faced down criticism from other European
right-wing parties.
"That would hurt the party
more than if I stayed," he told Austria's most popular tabloid
Kronen-Zeitung in an interview published on Friday. "Of course it's a
campaign against me because the FPO has very good chances in the EU
elections."
More
France sparks EU row by asking for more time to make budget cuts
France told it is “undermining trust” in Europe’s ability to reform after Michel Sapin, France’s new finance minister, suggests it should be granted more time to bring down its budget deficit
By Henry Samuel, in Paris and
Bruno Waterfield in Brussels 7:12PM BST 03 Apr 2014
France sparked a
row on Thursday by suggesting Paris renegotiate the “pace” at which it cuts its
budget deficit - leading to stark warnings that it was “undermining trust” in
the continent’s ability to reform. The European Commission last year granted Paris an extra two years - until 2015 - to reduce its deficit to three per cent of domestic output and said in return the EU expected serious reforms of labour markets, pensions and the welfare state.
But in his first day in office after a reshuffle, Michel Sapin, the new finance minister, said that the timetable should yet again be up for discussion.
He then took a clear swipe at
Germany, which is against France being given any more leeway on deficit
reduction, saying: “It is not up to one country to tell the others what to do.”
The French plea for fresh wiggle
room drew instant criticism from Mario Draghi, European Central Bank president,
who warned: “Undermining agreed rules undermines trust.”
His remarks followed tense and
bad-tempered talks between European finance ministers in Athens this week, in
which Germany blocked French pleas to be given more time to meet eurozone
spending rules.
In stinging exchanges, Wolfgang
Schauble, the German finance minister, attacked France for doing nothing to cut
public spending and borrowing in recent years.
“People are getting sick of
France getting more time to fix its economy and cut budget deficits. Patience
has run out, other eurozone countries have taken painful decisions while France
has prevaricated,” said an EU official. “The euro itself could be threatened.
Most of the eurozone is more worried about France than even Italy, Spain or
Greece because it’s economy is so important.”
More
"The paper standard is self-destructive."
Hans F. Sennholz
The monthly Coppock Indicators finished March
DJIA: +197 Down. NASDAQ: +357 Up. SP500: +254 Down.
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