Baltic Dry Index. 943 -06
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"I wish
I'd been omniscient and seen the crisis coming."
Dr. B. S. Bernanke. December 2010.
Game, set
and match, declared the Fed’s talking chair yesterday, the US recovery “has
picked up recently.” “Household spending
appears to be rising more quickly” said the best brains in the Temple of
Mammon. And with that cheery assessment of mission accomplished, the FOMC
reduced its monthly QE buying program to a “mere” 45 billion a month of new
money from heaven. I guess no one has shown them the latest housing and
mortgage figures, nor the scary build in dealer’s auto inventory. Mission
accomplished has something of a tarnished history.
Below,
the US economy is back to a boom.
"The
money supply is not changing in any significant way. What we’re doing is lowering interest rates
by buying Treasury securities."
Dr. B. S. Bernanke. December 2010.
Fed to Keep Trimming Stimulus as Economy Shakes Off Stall
May 1, 2014 5:00 AM GMT
The Federal
Reserve said it will keep reducing the pace of bond purchases as the
economy shakes off the winter doldrums, putting the central bank on a course to
end the unprecedented stimulus program by the close of 2014. Growth “has picked up recently,” the Federal Open Market Committee said yesterday in a statement in Washington, hours after a government report showed gross domestic product barely expanded in the first quarter. “Household spending appears to be rising more quickly.”
The committee pared monthly asset buying to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in “measured steps.” At that pace, the quantitative easing program intended to push down borrowing costs for companies and consumers would end in December.
More
Dow Hits Record as Fed Trims Stimulus as Economy Improves
Apr 30,
2014 10:11 PM GMT
U.S. stocks rose, sending the Dow (INDU) Jones Industrial Average to a
record, as the Federal Reserve said it would continue to trim the pace of
bond purchases as the economy gains momentum. Facebook Inc. jumped 2.8 percent as Internet stocks recovered from earlier losses. Pepco Holdings Inc. climbed 17 percent after Exelon Corp. agreed to buy it. Twitter Inc. dropped 8.6 percent after saying user growth slowed. EBay Inc. (EBAY) fell 5 percent after the biggest online marketplace forecast sales that trailed some analysts’ estimates.
The Standard & Poor’s 500 Index increased 0.3 percent to 1,883.95 at 4 p.m. in New York, ending April with a 0.6 percent gain, its third straight monthly advance. The Dow climbed 45.47 points, or 0.3 percent, to 16,580.84, topping the previous closing record reached Dec. 31. The Nasdaq Composite Index added 0.3 percent, after an earlier drop of 0.8 percent. About 6.9 billion shares changed hands on U.S. exchanges, in line with the three-month average.
“The Fed seems to be putting aside the
weakness in the first quarter that the market reacted to this morning,” Walter Todd,
who oversees about $975 million as chief investment officer at Greenwood
Capital Associates LLC, said in a phone interview. “The statement seems
business as usual, and perhaps if you’d seen the Fed react more dovish to a
weaker first quarter, that would’ve been more negative.”
More
Call me an
old fashioned dinosaur, but I think the wheels are about to come flying off
this massive debt induced boom. From horizon to horizon there is nothing but a
vast sea of red flags. From a housing boom that already seems to have gone
bust, to a collapsed Baltic Dry Index that suggests global trade is in trouble
again, to a rush by America to start World War Three, this doesn’t seem to me
to be the right time to be putting the taper on autopilot. The missing free
money from the Fed, has to go missing somewhere, and my guess is that that
somewhere is pretty soon about to show up. Despite all the Fed froth in US
stock markets, April’s closing Coppock Indicators are all in retreat.
Signalling the opposite of a great boom ahead.
Elsewhere in
the worker’s paradise of the Middle Kingdom, China’s Great Wobble continues on
relentlessly. I suspect that China’s shadow banking system is fast coming
apart. China has now joined in the currency trade war to the bottom. Everyone
is now going to steal everyone else’s exports lunch. My guess is that all are
pretty soon going to be hungry, with Japan probably hungriest of all. Not to
worry, the FT says that China is about to pass the USA this year.
China April Manufacturing Grows Less Than Analyst Forecasts
May 1, 2014 2:49 AM GMT
China’s manufacturing grew
less than economists estimated in April, underscoring weakness in the world’s
second-biggest economy from exports to construction. The Purchasing Managers’ Index (CPMINDX) was at 50.4, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. That was less than the 50.5 median estimate of 38 analysts in a Bloomberg News survey. March's reading was 50.3, with numbers above 50 signaling expansion.
Premier Li Keqiang is
trying to avoid a deeper slowdown after property construction plunged in the
first quarter and economic growth cooled. China’s gross domestic product is
projected to expand 7.3 percent this year, the weakest pace since 1990, as the
government reins in credit.
More
China Plans Measures to Boost Trade After Unexpected Drop
Apr 30, 2014 5:00 PM GMT
China will implement
measures to stabilize the country’s “severe and complicated” foreign-trade
situation, Premier Li Keqiang said. “Arduous efforts” are needed to ensure the government meets its full-year trade target, Li said during a State Council meeting yesterday, according to a statement posted on the central government’s website. March data showed exports and imports unexpectedly dropped.
The government will accelerate
the development of cross-border e-commerce, further streamline trade processes,
reduce the types of merchandise that require inspection, improve trade
financing and encourage trade in services to support growth, according to the
statement.
China’s government has rolled out
some economic support measures, such as reserve-ratio cuts for rural banks and
faster spending on railways, while pledging to avoid broader stimulus for now.
Li’s government is chasing a growth target of about 7.5 percent for the year,
compared with expansion in the first quarter of 7.4 percent.
More
China poised to pass US as world’s leading economic power this year
By Chris Giles, Economics Editor April 30,
2014 1:01 am
The US is on the brink of losing its status as the world’s
largest economy, and is likely to slip behind China
this year, sooner than widely anticipated, according to the world’s leading
statistical agencies.
The US has been the global leader since overtaking the UK in 1872. Most economists previously thought China would pull ahead in 2019.
More
Hungry that’s
a country?
In other
Asian news, sales of Gieger counters look set to soar. Officially the tuna is
still safe to eat. Still, has anyone tested the Pacific salmon?
Study finds Fukushima radioactivity in tuna off Oregon, Washington
By Shelby Sebens
PORTLAND Ore. (Reuters) - A sample of albacore tuna caught off the shores of Oregon and Washington state have small levels of radioactivity from the 2011 Fukushima nuclear disaster in Japan, researchers said on Tuesday.
But authors of the Oregon State University study say the levels are so small you would have to consume more than 700,000 pounds of the fish with the highest radioactive level to match the amount of radiation the average person is annually exposed to in everyday life through cosmic rays, the air, the ground, X-rays and other sources.
Still, the findings shed some light about the impact of the meltdown on the Pacific Ocean following the March 2011 tsunami and subsequent power plant disaster, said Delvan Neville, a graduate research assistant at OSU and lead author of the study.
More
In the race
to start World War Three, Uncle Sam, rattled his sabres, stamped his feet, and
huffed and puffed, yesterday, over some straw man threat to NATO. Kiev says its
Mayday goose is cooked in the east.
U.S. Signals Putin Not to Move Against New NATO Members
Apr 30, 2014 8:57 PM GMT
Unsure of Russian President Vladimir
Putin’s intentions, the Obama administration is attempting to warn the
Kremlin not to test the U.S. commitment to defend its allies in eastern and
central Europe. Jet fighters from the U.K., Denmark, France and Poland will begin flying air patrols over the Baltic states tomorrow “as part of collective defense measures,” the North Atlantic Treaty Organization said in a statement today. Canadian jets are deploying to Romania “as part of NATO efforts to reassure allies” in Central and Eastern Europe, the alliance said.
Those measures and others, including deployments of U.S. troops for military exercises, are part of an effort to discourage any thoughts Putin may have about extending Russia’s reach beyond Ukraine.
The U.S. will defend its NATO allies “no ifs, ands or buts,” U.S. Vice President Joe Biden said today at an Atlantic Council conference in Washington.
Secretary of State John Kerry said at the conference yesterday that unlike Ukraine, which isn’t a NATO member and where alliance nations have ruled out war, a move against a treaty ally would have grave consequences.
“We have to make it absolutely clear to the Kremlin that NATO territory is inviolable,” Kerry said. “We will defend every single piece of it.”
More
http://www.bloomberg.com/news/2014-04-30/u-s-signals-putin-not-to-move-against-new-nato-members.html
Kiev has lost control of eastern heartland, says Ukraine's acting leader
Police and security service units defect to pro-Russian rebels as more government buildings are taken over in Luhansk and Donetsk
By Roland Oliphant, Horlivka 6:36PM
BST 30 Apr 2014
Ukraine's government has lost
control of two regions in the country's east after police and security service
units defected to pro-Russian rebels, the acting president admitted on
Wednesday.
Oleksandr Turchynov spoke hours
after gunmen seized more police stations and administrative buildings in
Donetsk and Luhansk regions, the country's industrial heartland and now the
centre of a pro-Russian insurgency.
"I will be frank: today,
security forces are unable to quickly take the situation in the Donetsk and
Luhansk regions under control," said Mr Turchynov at a meeting with
regional governors in Kiev.
He described the Ukrainian
security services as "helpless" and "unable to carry out their
duties of protecting citizens". Mr Turchynov added: "Moreover, some
of those units are either helping or cooperating with terrorist organisations."
Earlier, pro-Russian gunmen had
seized the town hall and a police station in Horlivka, a town of 258,000 people
in Donetsk region. The men, who wore the green camouflage uniforms of the
self-styled "People's Militia", were already in the town hall when
staff arrived for work at 9am. By the afternoon, they could be seen building a
barricade of sandbags outside the building.
The takeover followed the seizure
of the regional administration building, prosecutors' office and police
headquarters in Luhansk, the capital of the neighbouring "oblast" or
region. Together, the regions of Donetsk and Luhansk account for 15 per cent of
Ukraine's entire population and 9 per cent of the country's surface area. They
also hold the nation's biggest industries and almost 80 per cent of its coal
reserves. Donetsk alone is the most populous region in Ukraine with 10 per cent
of the country's people. Dozens of police stations and local government
buildings across these areas have been seized since early April.
While daily life continues mostly
as normal around the occupied buildings, the failure of police to resist the
takeovers has left several towns - including Slavyansk, Kramatorsk, and
Horlivka - effectively in the hands of pro-Russian rebels.
As well as admitting the loss of
Donetsk and Luhansk, Mr Turchynov said that neighbouring regions, notably
Kharkiv and Odessa, were now threatened in the same way.
More
We end for
the day with the UK getting nearer to the EU door marked “Exit,” pushed there
by an incredibly ill-timed ruling from the inappropriately named European Court
of Justice. Yet more reason to vote UKIP in this month’s European elections.
Soon, it seems to me, it will be more than just Bonnie Scotland outside the
snake bit EU.
Britain should leave the EU if Europe's judges trample on our basic protections
The ECJ is a force to be reckoned with, or preferably kept at a very safe sovereign distance
The European Court of Justice
(ECJ) has come close to destroying the last good reason for Britain to stay in
the European Union. Judges in Luxembourg seem no longer willing to uphold the
integrity of the EU single market. Or rather, they seem complicit in subverting
it.
Stripping away a veneer of
technicalities, the ECJ has signalled in a test ruling on the Financial
Transaction Tax that it will not defend the City of London against assault by
eurozone states, who are determined to muscle through their economic ideology,
even when in breach of the "Four Freedoms" that have always
underpinned the European Project. One of them is free moment of capital within
the EU.
"They are playing with
fire," said Mats Persson, from Open Europe, a body that has been warning
for months that this case is a watershed moment for Britain's future in Europe.
The judges could hardly have
acted with more explosive effect in the insurrectional climate gripping the UK,
just three weeks before the electoral reckoning in late May. It is a gift for
UKIP's Nigel Farage, his party already leading both Labour and the Tories at
31pc - and soon to have far too many euro MPs to fit in its favourite little
dining room at la Tête de Lard in Strasbourg. How many times must Britain must
be "kicked in the teeth by the ECJ", he asked, before we all agree
that enough is enough?
The case is not about the rights
and wrongs of this so-called Tobin Tax, which levies a 0.1pc fee on sales of
stocks and 0.01pc on derivatives. "It is a matter of whether Britain can
still trust the ECJ to uphold the single market. There are other cases pending
that may be even more important," said Mr Persson.
The unspoken rule of the EU game
is that no state - or no large state, with my apologies to Ireland, Cyprus and
others looking bruised lately - should ever be steamrollered on a vital
national interest, or in a sector where it is the EU's leading player.
Germany must always be treated
with care on the auto industry, France on agriculture and Britain on the nexus
of banking, insurance, and finance that we call the City - unloved though it
is, though I fail to see the superior morality of selling big cars to Russian
oligarchs, or undercutting African farmers with subsidised EU grain.
That rule has been violated since
the Lehman crisis. There has been a systematic squeeze on the City, driven in
part by emotional spasms and by the urge to blame the rolling financial
cataclysms since 2008 on the immediately visible agents of crisis rather than
the deeper causes - excess world savings that must go into bubbles, the
structure of globalisation and the inherent failings of monetary union.
Three EU agencies have been
created with binding powers over banking, insurance and markets, able to override
a British veto in extremis. The Coalition signed these bodies into EU law
shortly after taking power, seemingly unaware of what they meant. This
triple-headed Hydra strips Westminster of final control over regulation of the
City for the first time in 300 years. The shift in power was masked at first by
assurances that Britain would retain "operational" control. The
edifice of single market law supposedly stood guard as guarantor.
----The stakes are
high. Roughly 40pc of global derivatives trades take place in London, and 75pc
of Europe's trades. The worldwide market is $668 trillion in notional
contracts, mostly interest rate and currency swaps. Bank of England data show
that turnover in Britain is almost $4 trillion a day. The head of derivatives
trading at one of the City's biggest banks said his team already has plans to
switch everything to Singapore within 48 hours if the Tobin Tax ever comes.
More
"The GSEs
are adequately capitalized. They are in no danger of failing."
Dr. B. S. Bernanke. July 2008.
At the Comex
silver depositories Wednesday
final figures were: Registered 54.83 Moz, Eligible 119.65 Moz, Total 174.48 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today it’s the crooks and scoundrels of London. If I didn’t know better, I’d say it was a deliberate policy to make London, UK global tax cheat roach motel number one. Warning, this is from the anti-capitalist, anti-American, pro-socialist, completely batty BBC.
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
UK 'a tax haven for multinationals'
28 April 2014 Last updated at 10:53
The boss of one of the world's
biggest banks last week described the UK to me as the world's "biggest,
most developed tax haven".
Which rather jars with the splash
in this morning's Telegraph, whose headline is "high taxes 'stifle UK
entrepreneurs'".
So what is going on?
Well my banker was talking about
the declining and low rate of UK corporation tax, which will be a uniform rate
of 20% for big and small companies from next year, and reforms by this
government which mean UK-based multinationals pay no UK tax on dividends they
receive from their overseas operations.
If this system was designed by
the Treasury to attract more huge global companies to take up residency here,
it seems to be working: this morning America's Pfizer said that if it succeeds
in buying the UK's AstraZeneca, the new pharmaceutical monster's holding
company would be incorporated in the UK.
Also if Omnicom of the US and
Publicis of France ever make it down the aisle to create the world's biggest
advertising company, it would be tax-resident in the UK (though apparently HMRC
is a bit embarrassed at being seen to be aiding and abetting what some would
described as tax avoidance, and is dragging its feet on approving the tax
status of the merged beast).
So the days when multinationals
feel the irresistible pull of Dublin's ultra low tax rates seem to be over -
and in spite of the regular spankings administered by Margaret Hodge and the
Public Accounts Committee to the digital multinationals, Google, Amazon et al,
for contributing little in the way of corporation tax to the UK Exchequer in
spite of apparently being rather successful here.
Which for George Osborne, David
Cameron and Treasury mandarins would be regarded as good news - because when
multinationals are resident here, certain numbers of highly paid jobs are also
located here, and they also tend to buy high-value services from the City.
This is how one Treasury official
put it to me the other day: "London is now the unchallenged capital of the
world; it is wonderful."
Which is all very well, if
London's status as the home of choice for the richest and most successful
generates work and prosperity for the UK as a whole - and some would say that
is moot - but not everyone is thrilled by the associated creation within London
of ghettos of properties affordable only by the super-rich.
But back to the apparent
contradiction between London as putative tax haven and the UK as alleged
high-tax strangler of entrepreneurs.
The high taxes in question,
according to a report by the Centre for Policy Studies quoted by the Telegraph,
are the 45 pence top rate of income tax and the 28 pence rate of capital gains
tax.
These are supposedly a reason why
the UK spawns fewer home grown billionaire entrepreneurs per million citizens
than Hong Kong, Israel and the US (in that order).
Did I hear you say "so
bleedin' what? What have billionaires ever done for us?"
Well there are billionaires who
make their dosh creating huge numbers of jobs and revolutionising industries
and even economies: Google, Microsoft, Facebook and Amazon spring to mind, as
do vast numbers of entrepreneurs in Korea, China, India, Africa and South
America, but not so many in Europe.
And then there are others who are
brilliant at borrowing cheaply to buy undervalued assets - the private equity
and hedge fund titans, inter alia - whose wealth creation typically benefits
rather few people.
More
"No man in the country is under the smallest
obligation, moral or other, so to arrange his legal relations to his business
or property as to enable the Inland Revenue to put the largest possible shovel
in his stores. The Inland Revenue is not slow, and quite rightly, to take every
advantage which is open to it under the Taxing Statutes for the purposes of
depleting the taxpayer's pocket. And the taxpayer is in like manner entitled to
be astute to prevent, so far as he honestly can, the depletion of his means by
the Inland Revenue"
Lord
Clyde, Lord President of the Court of Session. Ayrshire Pullman Motor Services
v Inland Revenue (1929)
The monthly Coppock Indicators finished April
DJIA: +189 Down. NASDAQ: +347 Down. SP500: +249 Down. Sell in May, go away.
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