Baltic Dry Index. 982 -05
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“The boom can last only as long as the
credit expansion progresses at an ever-accelerated pace. The boom comes to an
end as soon as additional quantities of fiduciary media are no longer thrown
upon the loan market...”
Ludwig Von Mises
Our stock
markets long ago left the reality of what’s happening on planet earth, and now
trade off events on Mars. China, Europe and emerging markets are all headed
towards different versions of hard landings, even before continental Europe
slits its own throat to appease Washington by imposing real sanctions on
Russia. In America itself, the famed “recovery” is mostly smoke and mirrors,
pretend accounting, dependent on QE Forever and ZIRP. When ZIRP ends, for
whatever reason, the smoke and mirrors all disappear, and with it the Great Disconnect
and life on Mars. America returns to earth with a crash, and the gigantic folly
of QE Forever and the Great Nixonian Error of fiat currency, will lie exposed
as the greatest period of mal-investment planet earth has ever known
We open with
china’s continuing and growing wobble.
“But it (the boom) could not last forever
even if inflation and credit expansion were to go on endlessly. It would then
encounter the barriers which prevent the boundless expansion of circulation
credit. It would lead to the crack-up boom and the breakdown of the whole monetary
system.”
Ludwig
Von Mises
China Slowdown Deepens
May 13, 2014 10:00 AM GMT
China’s economic slowdown
deepened with unexpected decelerations in industrial-output and investment
growth and a decline in home sales, testing policy makers’ reluctance to step
up monetary stimulus. Factory production rose 8.7 percent in April from a year earlier, the National Bureau of Statistics said in Beijing, compared with the 8.9 percent median estimate of analysts surveyed by Bloomberg News. Fixed-asset investment increased 17.3 percent in the first four months of the year, the slowest for the period since 2001, and home sales fell 9.9 percent.
The figures signal risks are increasing that China will miss the year’s expansion goal of about 7.5 percent, as the government’s efforts to counter the slowdown, including tax breaks and spending on railways and housing, have yet to gain traction. The central bank said today it told banks to approve home mortgages in a timely manner, amid a cooling in the property market.
More
China’s New Credit Declines
May 12, 2014 5:00 PM GMT
China’s broadest measure of
new credit fell last month as authorities extended their campaign to tame
financial dangers even as construction and manufacturing data point to risks
that the economy’s slowdown will worsen. Aggregate financing was 1.55 trillion yuan ($249 billion) in April, the People’s Bank of China said yesterday in Beijing, compared with 2.07 trillion yuan in March. New local-currency bank loans were 774.7 billion yuan, down from 1.05 trillion yuan the previous month.
The figures add to signs that officials are reluctant to heed calls for monetary stimulus, with President Xi Jinping saying in remarks published May 10 that the nation needs to stay “cool-minded” amid what analysts forecast will be the weakest annual growth since 1990. PBOC Deputy Governor Liu Shiyu said the same day that shadow banking threatens to undermine the financial system, as policy makers try to rein in credit.
“In the face of calls for stimulus, China’s government appears comfortable with a continued slowdown in credit growth,” Mark Williams, chief Asia economist at Capital Economics Ltd. in London, said in a note.
More
Goldman to Citigroup Miss World’s Worst Selloff in China
May 14, 2014 5:23 AM GMT
The China
reform trade is backfiring in the stock market. After soaring the most in two years on Nov. 18 as the Communist Party unveiled its biggest policy changes since the 1990s, the Hang Seng China Enterprises Index has since posted the world’s worst drop. An index of stocks JPMorgan Chase & Co. says benefit most from reform sank 10 percent this year through yesterday. A plan to link bourses in Hong Kong and Shanghai, which fueled a two-month rally when the idea was first floated in 2007, lifted shares for just one day when it was reintroduced in April.
While the November policy package led Goldman Sachs Group Inc. to raise its recommendation on Chinese shares to overweight and spurred Citigroup Inc. to predict returns of at least 20 percent in 2014, investors have shifted their focus to the depth of China’s economic slowdown. Instead of boosting stocks, the government’s emphasis on reform may impede gains as policy makers downplay the importance of short-term growth, according to CLSA Asia-Pacific Markets.
“Pessimism is running high on whatever China does or announces,” said David Gaud, who helps oversee about $120 billion at Edmond de Rothschild Asset Management in Hong Kong. Measures such as the exchange link would create a more sustained rally “in any other part of the world,” he said.
More
May 14, 2014, 12:32 a.m. EDT
China property crash: Economists debate outlook
LOS ANGELES (MarketWatch) — After
a spell of jitters over shadow banking, the property sector is back in the
forefront for those worried about a Chinese economic collapse.
The People’s Bank of China
highlighted the seriousness of the situation by calling in the chief executives
of the nation’s top banks earlier this week and asking them to lower mortgage
rates, process their housing loans at a faster rate, and take other measures to
help the market.
Is the central bank right to be
so worried?
London-based Capital Economics
thinks so. In a new note, their analysts write that while concerns about
industrial overcapacity, shadow banking and other Chinese economic bogeymen may
be overblown, real estate is the “one area where the risks are high and
growing, and which, at the very least, is likely to lead to slower growth over
the next couple of years.”
For CapEcon, it’s not so much the
price bubble, but rather the construction boom that threatens the sector.
“On average, property starts have
increased at a real rate of 16% each year since the turn of the century,” the
note says. “Residential investment simply cannot continue at this pace.”
This, CapEcon says, is more
serious than overcapacity seen in other sectors, simply because real estate is
such a large part of the economy, accounting for just under 10% of China’s
gross domestic product in 2013.
----Taking a view somewhere
between CapEcon’s pessimism and Barclays’s optimism is Bank of America-Merrill
Lynch economist Ting Lu, who sees problems but no serious catastrophe.
Lu says that housing data should
continue to weaken “for another few months,” in part because of high
comparisons to earlier periods, but also for fundamental reasons such as
oversupply in some regions and a further drop in prices.
But, he adds, “we do not believe
there will be a big crash, and we don’t expect a financial meltdown or a hard
landing in GDP growth.”
More
Up next, Europe.
Abandon hope all ye who enter here.
Capital flight to the UK has the
UK Pound soaring, but not to worry, a Scottish exit from the UK in September
will soon drop it to the foot of the competitive devaluations tables. Germany
continues on as the Pied Piper of continental suicidal folly on Russian sanctions.
In the Ukraine, after the Odessa massacre, the Mariupol murders of unarmed “terrorists,” or demonstrators as they’re know in the
civilised west, the unarmed demonstrators have quickly armed themselves.
America’s botched coup is fast heading towards a civil war. But why would
anyone in the Ukrainian Army be willing to die for an imposed puppet regime in
Kiev?
Below,
Europe headed to economic suicide if not war.
“The Germans outside looked from America to
Russia, and from Russia to America, and from America to Russia again; but
already it was impossible to say which was which.”
With apologies to George Orwell and
Animal Farm.
Euro Weakness Sustained as Slowdown Spurs ECB Easing Bets
May 14,
2014 5:02 AM GMT
The euro traded near a five-week low as signs of sustained economic weakness
in the region boosted speculation the European
Central Bank will step up measures to lift growth and spur inflation. The euro was little changed after a five-day drop before a report today that may confirm a decline in Germany’s consumer price index and data that may show industrial production in the region declined in March. The pound traded near a 16-month high against the euro before employment data and the central
bank’s inflation report today.
----“The euro is
being sold against the dollar on the prospect of ECB easing, and the market
will be paying attention to central bank officials,” said Yuki Sakasai, a
currency strategist in New York at Barclays Plc. “A gradual recovery in the U.S. economy
is firmly in place, and that will cause the dollar to rise against the yen in
the medium to long term.”
----Economists surveyed by Bloomberg News say a final reading for German inflation, will probably show consumer prices fell 0.3 percent last month, calculated using a harmonized European Union method, after gaining by as much in the previous period. The forecast matches preliminary data released April 29.
Factory output in the 18-nation euro region may have fallen 0.3 percent in March from a month earlier, when it rose 0.2 percent, a separate report may show today.
More
German Investor Confidence Drops for Fifth Straight Month
May 13, 2014 10:34 AM GMT
German investor
confidence fell for a fifth month in May in a sign of growing concern that
threats from low inflation (ECCPEST) to a strong euro may undermine the
recovery. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, slid to 33.1 from 43.2 in April. The gauge is at the lowest level since January 2013. Economists forecast a decline to 40, according to the median of 33 estimates in a Bloomberg News survey. The index has dropped every month since reaching a seven-year high of 62 in December.
Investor caution in Europe’s largest economy reflects concern that the slow recovery in the 18-nation euro area leaves it vulnerable to shocks.
----“For a few months there has been negative news like problems in the emerging markets or the strong euro,” said Andreas Scheuerle, an economist at Dekabank in Frankfurt. “ZEW expectations can hint at turning points in the GDP growth rate, so we should expect lower growth in the coming quarters.”
More
Seven Ukrainian soldiers killed in ambush
Eight injured as pro-Russian rebels stage attack near Slavyansk
Ukraine's army suffered its
bloodiest defeat since the onset of the crisis in the country’s east on Tuesday
when seven soldiers were killed in an ambush.
Pro-Russian insurgents launched
the attack on a road linking the towns of Slavyansk and Kramatorsk, both of
which they control.
The Ukrainian army had
established a checkpoint on the highway, apparently designed to drive a wedge
between the two rebel strongholds.
The ambush appears to have been a
counter-strike by the pro-Russians, who declared on Monday independence in two
eastern regions after a controversial referendum in favour of self-rule.
The defence ministry in Kiev said
a military convoy came under fire from about 30 insurgents as it passed under a
bridge. The assailants used rocket-propelled grenades as well as machine guns;
another eight soldiers were wounded.
This was the army’s heaviest blow
since the government launched an “anti-terrorist” operation to restore control
over Donetsk region last month. The battle highlighted the failure of the
offensive to make any headway.
But it coincided with an
announcement by Sergei Taruta, the official governor of the region, that
Donetsk would still vote in Ukraine’s presidential election on May 25, despite
the area’s supposed transformation into an independent “People’s Republic”.
Mr Taruta, a steel billionaire,
was appointed governor by the Kiev authorities in March. He remains in the
city, although rebels who denounce him as an agent of a “fascist junta” now
occupy his old office.
----Elsewhere, Kiev may actually have less control than before the operation began. Last Friday, the security forces killed between five and 20 people in Mariupol, the second biggest city in Donetsk with a population of 500,000. Local people believe that innocent civilians were the main victims.
Afterwards, popular fury
compelled the security forces to abandon Mariupol and turn over the city to the
pro-Russian movement.
In some areas of Donetsk, the
police have defected, leaving the offensive in the hands of the army and the
National Guard. Many of the soldiers in the latter force are local men who live
in fear of reprisals. While on duty, they often resort to wearing masks to
conceal their identities.
More
We end for
the day with big trouble brewing in commodities, specifically iron ore. Is this
why the BDI shipping index has collapsed from 1600 in January to below 1000
now?
“The world is a place that’s gone from being flat to round to crooked.”
Mad Magazine.
Canary In The Iron Pit: Price Destruction From Massive Iron Ore Glut Gains Momentum
by David Stockman •
The worldwide money printing
spree by central banks since the mid-1990s has produced a profound deformation
of the commodity space. In the initial round, credit-fueled excess
consumer demand in the DM world caused an enormous increase in consumption
of industrial materials, leading to sharply rising prices.
As shown below, copper broke out
of its $0.80/lbs. channel and eventually soared to $5. Similarly, iron
ore had long been priced at around $20-25 per ton, but owing to the global
consumption and industrial production boom of the last two decades
it quickly climbed through $100 per ton and never looked back. By the 2012
peak it reached nearly $200 per ton—or a level 10X its historic norm.
----Needless to say, these policies did produce a temporary worldwide boom that has faltered twice since the mid-1990s, but both times has been re-ignited by resort to even more extreme bouts of money printing and state interventions and bailouts. As a result, the cumulative distortions, malinvesments, and unsustainable excesses have reached mind-boggling proportions.
At the heart of the global
boom of the last two decades, of course, was a fantastic leap in credit
expansion that has no historical antecedents. Around 1994 the combined
credit market debt—public and private—of the US, EU, Japan and China amounted
to about $35 trillion or 200% of GDP. By the turn of the century debt
outstanding among these four major economies had doubled to $70 trillion,
and then the central bank printing presses turned white hot.
Combined debt outstanding at
present is in the order of $175 trillion, meaning that it towers 4X above
levels of only 20 years ago, and weighs in a nearly 400% of GDP among the big
four economies. And what happened to this $140 trillion of tsunami of new debt
since 1994?
In the DM world it ended up on
the balance sheets of households and governments which have now reached “peak
debt” ratios, meaning that the credit fueled consumption party is over.
Accordingly, what had been double digit growth for EM exports of manufactured
goods to consumers in the DM markets has hit the flat line since the 2008
peak.
And in the EM world it ended up
funding the most spectacular increase in mining, manufacturing, shipping, real
estate and public infrastructure assets ever imagined by any economic scribbler
prior to the turn of the century. Moreover, the artificial consumption boom in
the DM world fueled the fixed asset boom in the EM based on the kind of
mathematically impossible bullish extrapolations which always accompany a credit-fueled
crack-up boom.
More
In 1914 no
one saw war coming, let alone a world-wide war that would slaughter millions.
One hundred years on, unless there’s a change of policy in Washington, it’s
hard to see how a war can be avoided, and given the modern toys of war, we can
slaughter millions without taking four years. For now though, no one sees a
nuclear war coming.
"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.
At the Comex
silver depositories Tuesday
final figures were: Registered 55.96 Moz, Eligible 120.08 Moz, Total 176.04 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Presented with little need for comment. We’re all supposed serfs to the
American War Party aristocracy Barons now. Welcome to the elite revolving door,
limited access world, of the Bushes’, Biden’s, Clinton’s, et al. The lesser
classes needn’t apply. The Ukraine isn’t even yet secured by the US puppet
government in Kiev, yet the spoils are being divvied up among America’s 40 thieves.
The Farce Is Complete: Joe Biden's Son Joins Board Of Largest Ukraine Gas Producer
The farce is complete...
R. Hunter Biden will be in charge
of the Holdings’ legal unit and will provide support for the Company among international
organizations. On his
new appointment, he commented: “Burisma’s track record of innovations and
industry leadership in the field of natural gas means that it can be a strong
driver of a strong economy in Ukraine. As a new member of the Board, I believe
that my assistance in consulting the Company on matters of transparency,
corporate governance and responsibility, international expansion and other
priorities will contribute to the economy and benefit the people of Ukraine.”
The Chairman of the Board of
Directors of Burisma Holdings, Mr. Alan Apter, noted: “The company’s strategy
is aimed at the strongest concentration of professional staff and the
introduction of best corporate practices, and we’re delighted that Mr. Biden is
joining us to help us achieve these goals.”
R. Hunter Biden is a counsel to
Boies, Schiller & Flexner LLP, a national law firm based in New York, USA,
which served in cases including “Bush vs. Gore”, and “U.S. vs. Microsoft”. He is one of the co-founders and
a managing partner of the investment advisory company Rosemont Seneca Partners,
as well as chairman of the board of Rosemont Seneca Advisors. He is an Adjunct
Professor at Georgetown University’s Masters Program in the School of Foreign
Service.
Mr. Biden has experience in public
service and foreign policy. He is a director for the U.S. Global Leadership
Coalition, The Center for National Policy, and the Chairman’s Advisory Board
for the National Democratic Institute. Having served as a Senior Vice President
at MBNA bank, former U.S. President Bill Clinton appointed him an Executive
Director of E-Commerce Policy Coordination under Secretary of Commerce William
Daley. Mr. Biden served as Honorary Co-Chair of the 2008 Obama-Biden Inaugural
Committee.
Mr. Biden is a member of the bar
in the State of Connecticut, and the District of Columbia, the U.S. Supreme
Court, and the Court of Federal Claims. He received a Bachelor’s degree from
Georgetown University, and a J.D. from Yale Law School.
R. Hunter Biden is also a
well-known public figure. He is chairman of the Board of the World Food Programme U.S.A.,
together with the world’s largest humanitarian organization, the United Nations
World Food Programme. In this capacity he offers assistance to the poor in
developing countries, fighting hunger and poverty, and helping to provide food
and education to 300 million malnourished children around the world.
Company Background:
Burisma Holdings is a privately owned oil and gas company with assets in Ukraine and operating in the energy market since 2002. To date, the company holds a portfolio with permits to develop fields in the Dnieper-Donets, the Carpathian and the Azov-Kuban basins. In 2013, the daily gas production grew steadily and at year-end amounted to 11.6 thousand BOE (barrels of oil equivalent – incl. gas, condensate and crude oil), or 1.8 million m3 of natural gas. The company sells these volumes in the domestic market through traders, as well as directly to final consumers.
Burisma Holdings is a privately owned oil and gas company with assets in Ukraine and operating in the energy market since 2002. To date, the company holds a portfolio with permits to develop fields in the Dnieper-Donets, the Carpathian and the Azov-Kuban basins. In 2013, the daily gas production grew steadily and at year-end amounted to 11.6 thousand BOE (barrels of oil equivalent – incl. gas, condensate and crude oil), or 1.8 million m3 of natural gas. The company sells these volumes in the domestic market through traders, as well as directly to final consumers.
"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.
The monthly Coppock Indicators finished April
DJIA: +189 Down. NASDAQ: +347 Down. SP500: +249 Down. Sell in May, go away.
No comments:
Post a Comment