Baltic Dry Index. 1029 -32
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Price is what you pay. Value is what you
get.
Warren Buffett.
Suddenly all the High Frequency Traders are
front running sellers. The one way market created by the Fed following the
Great Recession, isn’t working like clockwork anymore. The Great Disconnect between
global stock markets and the lacklustre reality in the metal bashing and retail
world the rest of us inhabit, finally seems to have caught out the Great
Vampire Squids.
The solution, more QE, less taper. But will
the Squids get their way with the Fed’s talking Chair? If the talking Chair
doesn’t squeak up the right words today and over the weekend, prepare for a 21st
century Black Monday ahead.
In the business world, the rearview
mirror is always clearer than the windshield.
Warren Buffett.
Nasdaq Falls Most Since 2011 as Tech Selloff Resumes
Apr 10,
2014 9:46 PM GMT
U.S. stocks fell, with the Nasdaq Composite Index sinking the most since
2011, as technology shares resumed a selloff on concern valuations are too high
as earnings season begins. Treasury rates sank to a three-week low on
speculation interest-rate increases won’t be accelerated. The Nasdaq Composite Index sank 3.1 percent at 4 p.m. in New York to a two-month low that erased its gain this year. The Standard & Poor’s 500 Index lost 2.1 percent to the lowest since Feb. 19. The 10-year Treasury note fell five basis points to 2.64 percent. The Bloomberg Dollar Spot Index declined to a five-month low and the yen strengthened on a surprise drop in China’s trade figures. Gold jumped 1 percent to $1,318.30.
Investors returned today to selling the biggest winners in the five-year U.S. bull market, with Internet and biotechnology shares plunging. Bed Bath & Beyond Inc. tumbled the most in three months after warning first-quarter profit will fall short of analysts’ estimates. China’s exports slid 6.6 percent and imports declined in March, adding to concern that expansion in the world’s second-largest economy will deteriorate further.
----The Dow Jones Internet Composite Index sank 4.2 percent and the Nasdaq Biotechnology Index plunged 5.6 percent, the most since 2011.
----The Nasdaq Composite trades at 35 times reported earnings of the companies in the index. That’s twice the ratio for the S&P 500, which trades at 17 times earnings. Bed Bath & Beyond, a Nasdaq component, lost 6.2 percent.
More
Nasdaq suffers biggest fall since 2011
Facebook slumps more than 4pc as fears rise of another dotcom bubble
America’s Nasdaq stock exchange
suffered its biggest fall in nearly two and a half years on Thursday, fuelling
fears of another dotcom crash.
High-profile companies such as
Facebook, Tesla and Netflix led the fall, slumping more than 4pc as worried
shareholders cashed out the technology sector. Biotech companies also fell
sharply, as investors moved their money to safe-harbour stocks.
The exchange, which is favoured
by technology companies, had dropped more than 113 points, or 2.7pc, to 4071 by
mid-afternoon in New York – its biggest one-day decline since November 9 2011,
when it dropped 3.6pc.
Dotcom businesses listed on the
New York stock exchange also suffered a tumble, with Twitter, the San Francisco
social network, dropping 2.8pc in afternoon trading.
The same set of companies have
seen their values rocket over the past several months, as funds scrambled to
invest in the technology sector, despite the fact that some of the firms do not
even make any money.
More
With China taking the blame for catching out the Squids and their HFT friends, Bloomberg suggest that we haven’t seen anything yet.
Risk comes from not knowing what you're
doing.
Warren Buffett.
China Fake Data to Skew More Export Numbers
Apr 11, 2014 3:47 AM GMT
China’s data distortions
will muddy analysis of the nation’s trade until at least June, making it harder
to assess the strength of the world’s biggest exporter and second-largest
economy. That’s when China will provide figures that compare with what Royal Bank of Scotland Group Plc economist
Louis Kuijs says are “pretty clean” numbers from May 2013 that followed a crackdown on inflated invoices used to disguise capital inflows. Government data yesterday that showed March exports unexpectedly fell 6.6 percent from a year earlier marked the peak of distortions, RBS said.
China’s reluctance to revise figures it’s acknowledged were inflated has left the job of explaining why the trade numbers are better than they appear to analysts like Kuijs, as the nation endures its worst economic slowdown since the global financial crisis. The distortions add to investor and analyst concerns that the quality of data from jobs to gross domestic product isn’t good enough for a country that’s driving commodity prices and Asian growth.
More
Property Trust Sales Drop 49% as Vicious Loop Seen: China Credit
Apr 11, 2014 4:17 AM GMT
Chinese developers raised 49 percent less through trusts in the first
quarter as the collapse of Zhejiang Xingrun Real Estate Co. highlighted default
risks. Issuance of property-related trusts, which target wealthy investors, slid to 50.7 billion yuan ($8.16 billion) from 99.7 billion yuan in the fourth quarter, data compiled by Use Trust show. The yield on AA rated five-year bonds has climbed 175 basis points in the past year to 7.23 percent, according to Chinabond. That compares with 2.74 percent on corporate securities globally, Bank of America Merrill Lynch indexes show.
“The banking system and the shadow banking system are becoming concerned about exposure,” David Cui, China strategist at Bank of America said in an interview yesterday. “Once people refuse to provide credit to developers, their balance sheets will be under pressure, forcing them to cut prices. Once enough of them cut prices, fewer people would buy because most people buy property only when they think the price is going up. If this persists, it will turn into a vicious loop.”
The collapse of Xingrun, a builder in a
city south of Shanghai,
with 3.5 billion yuan in liabilities last month is adding to concerns as
developers grapple with trust repayments equivalent to the size of Puerto
Rico’s economy this year. Agricultural Bank of China Ltd., the
nation’s third-largest lender, last week alerted its branches about risks from
property lending, according to two people familiar with the matter.
----The value of homes in China sold in January and February fell 5 percent to 598.5 billion yuan from the same two months a year earlier, the statistics bureau said last month. It will become more difficult for builders to obtain financing in 2014, according to 26 economists and analysts surveyed by Bloomberg from March 24 to 31.
This year will probably be the most challenging for Chinese property companies since the short-term shock between 2008 and 2009 after the global financial crisis, according to Bank of America’s Cui. “There is high probability that some property trust products will default this year.”
More
We end for
the week, with the latest on the USA v Russia spat over the Ukraine. Uncle Sam
still hasn’t come to terms with the consequences of his botched Coup in Kiev.
Now he seems determined to collapse Germany. It’s a funny old world as the
Great Nixonian Error of fiat money starts to fail. In Washington this weekend,
the G-7 must come up with some cash for the most corrupt nation in Europe, now
that Russia has stopped paying. Club Med must be wondering what on earth they
did wrong.
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
U.S. Warns Russia of More Sanctions as G-7 Studies Ukraine Aid
Apr 11, 2014 12:17 AM GMT
The U.S. threatened Russia with more sanctions for its incursion into Ukraine as
global finance chiefs debated how best to deliver aid to the beleaguered former
Soviet republic. With Group of Seven finance ministers and central bankers meeting yesterday in Washington, U.S. Treasury Secretary Jacob J. Lew delivered the warning in talks with his Russian counterpart, Anton Siluanov. It was made just hours after Russian President Vladimir Putin threatened to halt natural gas shipments to Ukraine.
“Secretary Lew emphasized that Russia’s ongoing occupation and purported annexation of Crimea is illegal and illegitimate,” the Treasury said in a statement after the officials met. “The United States is prepared to impose additional significant sanctions on Russia if it continues to escalate the situation in Ukraine.”
The standoff between Russia and the U.S. and its European allies is dominating talks of finance chiefs gathering for the spring meetings of the International Monetary Fund and World Bank, which start today. World Bank President Jim Yong Kim said yesterday that a prolonged crisis could cause the Russian economy to shrink as much as 1.8 percent this year.
The G-7 finance ministers and central bankers had a “discussion of the situation in Ukraine, its financing needs and the international response,” they said in a statement after their talks in Washington yesterday. The G-7 comprises the U.S., U.K., Canada, France, Germany, Italy and Japan. The broader Group of 20, which also includes major emerging markets, will convene today with Russia among the participants.
The IMF is looking to provide Ukraine between $14 billion and $18 billion of financial aid. Managing Director Christine Lagarde told Bloomberg Television’s Tom Keene yesterday that she has “overwhelming support” from her membership for the steps the lender is taking.
Ukraine’s economy, which has endured two contractions since 2008, is already facing a recession the government says will wipe out 3 percent of gross domestic product this year.
The hryvnia has lost 35 percent against the dollar in 2014, the world’s worst performance among currencies tracked by Bloomberg.
More
"The first requisite of a sound monetary system is that it put the least possible power over the quantity or quality of money in the hands of the politicians."
Henry Hazlitt
At the Comex
silver depositories Thursday
final figures were: Registered 53.43 Moz, Eligible 124.91 Moz, Total 179.34 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
In German run Euroland, it’s more of the same old story.
The one size fits all Bilderberger euro, fits Germany like a glove. As for the
rest of the EMU, it fits like a shabby Soviet era mass produced suit. Next
month’s Euro elections will probably be the straw that breaks the euro’s back. Germany
also seems to be in Uncle Sam’s sights too.
Still, last time Uncle Sam picked a fight with the then
West Germany, US Treasury Secretary James Baker triggered the 1987 stock market
crash. And great fun it was in New York living through it too. In Hong Kong,
the head of their stock market was so panicked that he threatened to lock up some
hapless reporter for asking the wrong sort of question. Only a delayed NY stock
market opening the next day, and Uncle Al Greenspan rigging the Major Market
Index in Chicago saved the next day from a Lehman like disaster. Does history
repeat?
Below, The Telegraph on Europe’s worm threatening to turn
on Euroland’s paymaster.
"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."
F. A. von Hayek
Germany risks EU fines with record current account surplus
Wise Men say country's external surplus will keep rising to a modern-era high of 7.9pc of GDP this year, far above the 6pc limit set by Brussels
Germany's current account surplus
will smash all records this year, risking a serious political showdown with
Brussels and the ultimate sanction of EU fines.
A joint report by the leading
German institutes, or "Wise Men", said the country's external surplus
would keep rising to a modern-era high of 7.9pc of GDP this year, far above the
6pc limit set by Brussels under the new Macroeconomic Imbalance Procedure.
The Commission warned Germany
late last year that it faced possible sanctions if failed to do its
"homework", either by boosting consumption at home or by weaning its
economy off excess reliance on foreign markets. The threat caused consternation
in Germany's press and a vitriolic exchange with Brussels.
The rest of the eurozone can
order Germany to present an "action plan" to bring down its surplus.
If Germany is relegated to the "corrective" phase of the mechanism,
and if it then fails to deliver on demands, the EU Council of Ministers can
then demand that Germany pay a deposit of up to 0.1pc of GDP. This money is
seized if Berlin still fails to remedy the imbalance.
"We are looking under the
bonnet at the German economy and monitoring this closely. If there is
systematic abuse, and they don't respond, sanctions are available," said
an EU official. The fines are imposed by a "reverse qualified majority
vote", making it hard to block.
Such a procedure would amount to
a court of judgment on Germany by EU peers, with explosive political
consequences. The German public already think they are the cash cow for the EU,
convinced they are bearing the cost for bailing out southern Europe and holding
the euro together. Berlin says Germany's export success helps all Europe and
should be prized, not denigrated.
Germany first agreed to the new
procedure thinking it would be used to punish deficit countries living beyond
their means, or to prevent credit booms, deemed to have been the causes of the
EMU crisis. German officials seem taken aback that Brussels would also look at
the other side of the North-South trade gap.
The US Treasury is also stepping
up pressure. It singled out Germany as a greater sinner than China in its
latest report on trade and currency manipulation, criticising the country for
failing to do more to lift the eurozone out of a protracted slump. Washington said
Germany was creating a “deflationary bias” for the world economy, taking more
than its fair share of scarce global demand.
Last year
Germany exported twice as much to the US as it imported, a gap that has widened
sharply over the past four years and is causing trade frictions.
More
"The history of paper money is an account of abuse, mismanagement, and financial disaster."
Richard M. Ebeling
Another fine Spring weekend, with many thousands of
people about to waste it running through London’s highways and byways. Time
instead to head into the country to walk Rosie, through a growing colourful
array of bright blossoms, brightly greening trees, and growing carpets of
flowering bluebells. In the fields, gambolling lambs. It is hard not to see God’s hand practically
everywhere in Spring. Have a great weekend everyone.
The monthly Coppock Indicators finished March
DJIA: +197 Down. NASDAQ: +357 Up. SP500: +254 Down.
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