Baltic Dry Index. 824 -22
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"Bullion doesn't pay interest or dividends, nor does it grow or expand by itself. That's the price you pay for tranquillity."
Pierre Lassonde
Last week the Fed’s talking chair said, “nothing to
see here, it’s all just noise. Move along be happy. ZIRP will be with us
forever.” Yesterday, the Fed’s talking sofa, said “ZIRP forever” ends next
March. Did the talking chair lie? Who knows, but how do you spell CRASH in
Chinese, if the sofa is right and not the chair? Ominously, the Baltic Dry
Index is collapsing again.
Below, what passes for adult financial policy in
our new lawless 21st century age. Like the English Court of Chancery
of old, the Fed’s new policy on ZIRP now seems to hang on the length of the furniture’s
foot.
"Equity
varies with the length of the Chancellor's foot".
U.S. Stocks Drop as Bullard Says Rates to Rise by March
Jun 26, 2014 9:27 PM GMT
U.S. stocks
slipped for the third time in four days after James Bullard, president of the
Federal Reserve Bank of St. Louis, suggested today that higher interest rates
may happen sooner than people though
----Bullard, speaking in an interview on Fox Business Network, predicted the central bank’s first interest-rate rise will happen in the first quarter of next year. Most investors are forecasting higher rates later in the year, according to Ryan Larson of RBC Global Asset Management (U.S.) Inc.
“Bullard’s comments are somewhat
contradictory to what Chair Yellen indicated last week,” Larson said in a phone
interview. “Contradictory language coming from Fed officials is putting
pressure on the market.”
More
http://www.bloomberg.com/news/2014-06-26/u-s-stock-index-futures-are-little-changed-before-data.html
Asian Stocks Fall as Fed Official Says Rates May Rise
Jun 27, 2014 5:06 AM GMT
Asian stocks fell with the regional
benchmark index paring its seventh straight weekly gain and slipping from a
six-year high, as a Federal Reserve official said the U.S. may raise interest
rates by March. Samsung Electronics Co., South Korea’s largest exporter of consumer electronics, was the biggest drag on the regional index, falling 1.1 percent. Oracle Corp. Japan fell 5.8 percent, leading losses among information technology shares, after its operating profit forecast missed estimates. Ono Pharmaceutical Co. jumped 4.8 percent in Tokyo, leading health-care shares higher, on a report its melanoma drug will be approved.
The MSCI Asia Pacific Index (MXAP) slid 0.5 percent to 144.78 as of 1:04 p.m. in Tokyo with nine of its 10 industry groups falling. The measure closed yesterday at its highest level since June 2008 and is heading for a 0.1 percent gain this week.
“It’s a timely warning that the time for the Fed to start raising interest rates is drawing nearer,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $160 billion. “I don’t think that risk is factored into the market sufficiently.”
Japan’s Topix (TPX) index slipped 1.4 percent as the yen surged 0.4 percent against the dollar. A report today showed inflation accelerated at the fastest pace in 32 years, swelled by a sales-tax increase and higher utility charges. Consumer prices excluding fresh food rose 3.4 percent in May from a year earlier, the statistics bureau said, matching the median forecast in a Bloomberg News survey of economists.
More
While ZIRP forever or ending in March 2014, may be
a fun way of gaming the US stock market for Wall Street’s Great Vampire Squids,
half a world away ending ZIRP threatens to end the Great Chinese Real Estate
bubble, already starting to collapse under the weight of its own excesses. The
one off, unprecedented China transformation, 1978 – 2014, is completely
unsustainable in a world without ZIRP and endless QE Forever. As the Fed’s
final and fatal bubble nears its pin, stay long fully paid up physical precious
metals. When the Fed’s final bubble blows, 2007-2009 will look like a teddy
bear’s picnic compared to what happens next. But don’t let on to the banksters
and squids high on the heroin of ZIRP and QE Forever.
China’s Manhattan Project Marred by Ghost Buildings
Jun 27, 2014 5:18 AM GMT
China’s
project to build a replica Manhattan is taking shape against a backdrop of
vacant office towers and unfinished hotels, underscoring the risks to a slowing
economy from the nation’s unprecedented investment boom. The skyscraper-filled skyline of the Conch Bay district in the northern port city of Tianjin has none of a metropolis’s bustle up close, with dirt-covered glass doors and construction on some edifices halted. The area’s failure to attract tenants since the first building was finished in 2010 bodes ill across the Hai River for the separate Yujiapu development, which is modeled on New York’s Manhattan and remains in progress.
“Investing here won’t be better than throwing money into the water,” Zhang Zhihe, 60, said during a visit to the area last week from neighboring Hebei province to look at potential commercial-property investments. “There will be no way out -- it will be very difficult to find the next buyer.”
The deserted area underscores the challenge facing China’s leaders in dealing with the fallout from a record credit-fueled investment spree while sustaining growth and jobs in the world’s second-biggest economy. A Tianjin local-government financing vehicle connected to the developments said revenue fell 68 percent in 2013 to an amount that’s less than one-third of debt due this year.
“There will have to be a reckoning,” said Stephen Green, head of Greater China research at Standard Chartered Plc in Hong Kong. Sales of bonds by local-government vehicles to repay bank loans are just “buying time,” he said. “The people will pay” for it through bank bailouts, recapitalization with public money or inflation.
----Tianjin, a city of 14.7 million people whose center is about 125 kilometers (78 miles) southeast of Beijing’s, saw its economic growth cool to 10.6 percent in the first quarter of 2014 from a year earlier, from 17.4 percent in full-year 2010, compared with a moderation in national expansion over the same period to 7.4 percent from 10.4 percent. An annual pace of 10.6 percent would be the weakest for Tianjin since 1999.
More
Shanghai Developer Said to Halt Project on Funding Shortage
Jun 27, 2014 5:09 AM GMT
A closely held Shanghai
developer has suspended construction at a property project due to a lack of
funds, according to two government officials familiar with the matter. Construction at Shanghai Yuehe Real Estate Co.’s mixed-use project, including residential, office and retail space, in the city was halted this month and the project was frozen by a court, according to the people, who asked not to be identified because they aren’t authorized to speak publicly about the matter. Shanghai Pudong Development Bank Co. (600000), a medium-sized Chinese bank, loaned about 240 million yuan ($39 million) to the 220,000 square meter (2.4 million square foot) development in suburban Jiading district, they said.
“There will be more developers having troubles as the property downturn prolongs,” said Duan Feiqin, a Shenzhen-based property analyst at China Merchants Securities Co., in a phone interview today. “Many Chinese cities face oversupply of those mixed-use property projects amid the e-commerce boom, while a lot of developers, especially those small ones, are not capable of doing such developments.”
Yuehe is the latest example of Chinese developers facing pressure as the nation’s slowing property market weighs on the growth of the world’s second-largest economy. Moody’s Investors Service in May revised its credit outlook for Chinese developers to negative from stable, citing a slowdown in home- sales growth as liquidity weakens and inventories rise.
----Pudong Bank loaned more than 200 million yuan to Yuehe and has taken steps to preserve assets, the lender said in an e-mail statement to Bloomberg News queries yesterday. Collateral for the loan is “adequate and valid,” the bank said. Two phone calls to Yuehe went unanswered.
In March, Zhejiang Xingrun Real Estate Co., a closely held developer in a city near Shanghai, became insolvent with 3.5 billion yuan of debt. Its residential projects have been halted and authorities have detained its largest shareholder and his son, according to the city’s government.
More
World’s Biggest Debt Load Lures Distressed Funds to China
Jun 27, 2014 4:53 AM GMT
Distressed debt funds are raising cash to seek greater opportunities in
China, where Standard & Poor’s says
corporate borrowing topped the U.S. last year. Planned commitments to funds investing in Chinese and other Asian troubled assets are set to surpass $2 billion this year, up from $303 million in 2013, data from researcher Preqin Ltd. show. Morningside Group Holdings Ltd. in Hong Kong plans a $103 million vehicle, Preqin said. Guangzhou-based Shoreline Capital Management Ltd. is seeking $500 million for its third distressed-debt fund, according to co-founder Ben Fanger.
China’s economic growth has slowed to the least in more than a decade even as companies increased debt to $14.2 trillion as of Dec. 31, surpassing the $13.1 trillion in the U.S., according to a June 15 S&P report. Non-performing loans jumped the most since 2005 in the first quarter and state-owned asset management companies are raising funds to help clean up lenders’ balance sheets.
“Now that China is facing slowing growth and the banks are selling bad loans, distressed opportunities have multiplied,” said Fanger at Shoreline, which manages about $650 million of assets. “We have begun investing in NPLs again, as well as rescue and bridge financings.”
More
In other news.
Iraq Buys Used Russian Fighter Jets Amid U.S. Delivery Delay
Jun 26,
2014 10:49 PM GMT
Iraq has
bought used fighter jets from Russia and Belarus to battle Islamist militants
after long delays in the delivery of F-16 planes from the U.S. left troops
without air support, Prime Minister Nouri al-Maliki said. Maliki, in an interview with BBC Arabic yesterday, blamed the U.S.’s “long, very slow way” for delaying the delivery of 36 aircraft. “We shouldn’t have just bought U.S. jets, we should have bought British, French and Russian jets to provide air support. If we had air support, none of this would have happened,” he said, according to excerpts e-mailed by the BBC.
The U.S is delivering the first F-16 aircraft “as quickly as possible” and has said all along that they’ll be handed over in the fall, Army Colonel Steve Warren, a Pentagon spokesman, told reporters in Washington yesterday. He also said that the remaining 200 of 500 Hellfire missiles approved for delivery to Iraq will be sent in the coming weeks.
---- ISIL’s rapid military advance has raised the specter of civil war in OPEC’s second-largest oil producer.
Militants have consolidated their
hold over parts of country’s north, with the contested town of Tal Afar
“controlled by gunmen,” according to Noureddin Qablan, deputy chief of Nineveh
provincial council in northern Iraq.
Iraq’s army shelled militant
positions around Diyala, Al Arabiya television said. In Tikrit, a town halfway
between Mosul and Baghdad that was seized by ISIL during its initial advance,
the Iraqi air force carried out aerial attacks against the group yesterday, Al
Arabiya television said.
Some ISIL fighters withdrew from
the Al Alam district south of Tikrit, local news agency Almada reported.
Reuters said that one of the army helicopters crashed after being fired on by
insurgents.
More
Dead Friend in River: Inside Ukraine’s Refugee Crisis
Jun 26, 2014 10:00 PM GMT
When Volodymyr Vesyolkin’s friend turned up dead in a river days after he
brazenly unfurled a Ukrainian flag in their separatist-controlled town, he knew
it was time to go. Vesyolkin left his home and business in Horlivka, a city of 260,000 in the Donetsk region that’s been ravaged as government troops battle pro-Russian insurgents. Seeking to start a new life, he salvaged as much of his bakery as he could, loading metal ovens into his truck and navigating military checkpoints on the 15-hour drive to Kiev. Now safe in the capital with his wife and three children, life starts anew.
“I understood this wouldn’t end in a month,” Vesyolkin, 35, said in a June 19 interview in a central Kiev restaurant. “Here, I’ve gone back to delivering the bread to shops myself.”
More than 400 people have died in the conflict, according to UN figures, many caught in the crossfire of a struggle for Ukraine’s future that erupted in the country’s easternmost regions after Russia’s takeover of Crimea in March. While far smaller than Syria’s refugee crisis, the United Nations estimates that about 35,000 have fled and Ukrainian officials warn of a “humanitarian disaster.”
The difficulty for President Petro Poroshenko to create lasting stability has been laid bare by a one-week truce that ends today with the government saying a peace deal isn’t close. The cease-fire was violated daily, including rebels shooting down a government helicopter, killing all nine people on board.
The
number of people fleeing their homes doubled in the past two weeks, Ivan
Simonovic, the UN official in charge of human rights, told the Security Council
on June 24. The total number of people displaced, including from Crimea, is
more than 46,000 as of a day earlier, he said.
More
In Europe news this morning, in yet another segment
of the curse of the EUSSR, Germany suffers an electric shock. And when the new super-efficient solar panels
arrive in the next five years with their 30+ percent efficiencies, the existing
electric power generation industry globally will become a dinosaur next decade.
Germany’s New Coal Plants Push Power Glut to 4-Year High
Jun 27,
2014 6:22 AM GM
Germany is
headed for its biggest electricity glut since 2011 as new coal-fired plants
start and generation of wind and solar energy increases, weighing on power
prices that have already dropped for three years. Utilities from RWE AG to EON SE are poised to bring units online from December that can supply 8.2 million homes, 20 percent of the nation’s total, according to data compiled by Bloomberg. That will increase spare capacity in Europe’s biggest power market to 17 percent of peak demand, say the four companies that operate the nation’s high-voltage grids. The benchmark German electricity contract has slumped 36 percent since the end of 2010.
The new coal plants are starting as Germany aims to almost double renewable-power generation over the next decade. Wind and solar output has priority grid access by law and floods the market on sunny and breezy days, curbing running hours for nuclear, coal and gas plants, and pushing power prices lower. The profit margin for eight utilities in Germany narrowed to 5.4 percent last year from 15 percent a decade ago.
“The new plants will run at current prices, but they won’t cover their costs,” Ricardo Klimaschka, a power trader at Energieunion GmbH who has bought and sold electricity for 14 years, said June 25 by e-mail from Schwerin, Germany. “The utilities will make much less money than originally thought with their new units because they counted on higher power prices.”
German power for delivery next
year, a European benchmark, slumped to a nine-year low of 33.65 euros ($45.82)
a megawatt-hour on April 3 on the European Energy Exchange AG in Leipzig,
Germany, and settled yesterday at 34.40 euros. The contract fell 5.8 percent
this year, more than respective drops of 1.7 percent and 4.6 percent for the
equivalent French and Nordic prices. German next-year electricity may reach
33.40 euros, according to Arendal, Norway-based energy-analysis firm
Markedskraft ASA.
Lower prices “leave a trail of
blood in our balance sheet,” Bernhard Guenther, chief financial officer at RWE,
Germany’s biggest power producer, said May 14 on a conference call after the
company lowered its goal for annual net income.
---- Wind and solar’s share of installed German power capacity will rise to 42 percent by next year from 30 percent in 2010, according to European Union data compiled by Citigroup Inc. The share of hard coal and lignite plant capacity will drop to 28 percent from 32 percent, the data show.
---- “We have a huge oversupply
of power and Germany wants to switch to renewable energy,” Claudia Kemfert, who
heads the energy unit at the DIW economic institute, a research group in
Berlin, said in an e-mail on June 20. “That’s why investments in new coal
plants are bad investments.”
More
Meanwhile Italy goes off reservation as the Draghi low
interest rescue plan causes debt levels to soar. What (more) could possibly go
wrong? Euros anyone? I just hope that the UK can exit the EUSSR before it all
implodes like its model Gorbachev’s Soviet Union. There’s simply no sign in
continental Europe of anyone wanting to reform the EUSSR.
The
bankster in his mansion,
The
taxpayer at his gate,
Draghi
made them High or lowly,
He disordered
their estate.
With
apologies to All things bright and beautiful.
Italian Debt Swells to Rival Germany as Bonds Rally: Euro Credit
Jun 27, 2014 12:01 AM GMT
As Italy’s
borrowing costs fall to new lows, its debt is rising to the most ever. The country owed 5 percent more in April compared with a year earlier, with debt reaching 2.15 trillion euros ($2.9 trillion), Bank of Italy figures show. That matches the outstanding borrowing of Germany, the largest economy in Europe and the most of any country on the continent, at the end of last year, according statistics office Eurostat.
While Germany is scheduled to grow 2 percent this year, Italy will expand 0.3 percent in 2014, according to a Bloomberg survey. To ensure its debt is sustainable, Prime Minister Matteo Renzi is under pressure to push through spending cuts and foster growth in an economy burdened by the threat of deflation and the highest number of people unemployed in modern history.
“In our forecasts Italian debt will overtake Germany by the end of the year,” said Raffaella Tenconi, an economist at Bank of America Merrill Lynch in London. “It is particularly important that the government moves ahead with the promised reforms to firm the sovereign credit rating and strengthen further investors’ appetite for Italian assets.”
With the European Central Bank backstopping the euro over the past two years, the yield on 10-year Italian bonds meanwhile fell to as low as 2.69 percent this month, narrowing the premium over equivalent German bunds to the least in three years.
In the first four months of this year, Italy’s debt rose by 77 billion euros, almost as much as the total 79.8 billion euros it grew in 2013, according to the central bank.
More
We close this morning with the revenge of the
Greeks, as 360,000 luckless Germans get stung in a bogus Greek lottery. No
matter that the scam lottery seems to have been run by bent Germans scamming
greedy, if luckless fellow Germans. Those tax and work shy, austerity
wracked Greeks seem to have allowed the
scam to run for three years. Welcome to
modern, down on its luck, 21st century continental Europe. Not to
worry, it was only unbacked fiat euros round tripping back to Germany probably.
And as ex-Goldmanite ECB Guru Mario Draghi is fond of saying, there’s plenty
more where they come from, and he’ll do whatever it takes to keep it that way,
and don’t you ever forget it!
It’s morally wrong to let a sucker keep his money.
W. C. Fields. EUSSR Ethicist.
Greece authorities break up €36m racket over non-existent lottery
More than 360,000 Germans tricked into buying fake online lottery cards for draw that does not exist
By Nick Squires, Rome 6:40AM BST
26 Jun 2014
Police in Greece have broken up a
racket which made €36 million (£29 million) by selling worthless, fake online
lottery cards to around 360,000 Germans.
Police in Athens arrested two
men, both German born, on suspicion of tricking their customers into paying to
take part in non-existent draws.
It was not immediately clear why
the men had based themselves in Greece for the scam.
The men were part of a suspected
gang which allegedly used illegally-obtained lists of betting company clients,
whom they then phoned, offering cash prizes or free holidays in return for a
monthly subscription of about 30 euros.
The fraud had been going on for
at least three years, police said.
The crackdown came after
authorities enlisted the help of the German federal police.
"Members of this racket had
tricked around 360,000 people in Germany into participating in non-existent
lottery draws for a monthly fee of 29.90 euros," the police said in a
statement.
"Their profit exceeded €36.5
million.”
Bogus companies had been set up
to funnel the proceeds into various bank accounts.
The two men, aged 44 and 36, were
arrested in Athens. They are suspected to have been ringleaders of the racket,
the police said.
Police raided their homes and
seized computers, hard drives and USB data storage devices.
The Greek police said the
investigation would continue with the aim of identifying other accomplices
At the Comex silver depositories Thursday final figures were: Registered 57.04
Moz, Eligible 119.17 Moz, Total 176.21 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
After the French dumped a pervert into the IMF as
Great Leader, which all ended sordidly in a New York hotel and an attempted
flight to France, and an arrest at Kennedy Airport, Europe’s “Great Leaders”
have become a little gun shy of appointing any more failed socialist leaders
recommended by France.
Below, the comedy of modern tragic wealth
destroying Europe. With youth unemployment reaching one in every two in parts
of Club Med, and capital and people flight out of old socialist France rapidly
turning London into a great French city, we could have hoped for more from Europe’s
Great Leaders assembled in conclave in Brussels, than a discussion over the EC
President in waiting’s drinks bill. And what is wrong with a little cognac for
breakfast, I might ask? Doesn’t everyone
on the continent have to drink drink, on account of the continent’s dodgy water
and sanitary habits.
This ailing continent needs newer and better politicians. But where could we find them? There is no sign of a European Obama or anything remotely like him.
Der Spiegel
Fears over Jean-Claude Juncker's drinking
Concerns about the lifestyle of European Commission's president in waiting raised by EU leaders ahead of key summit
Jean Claude-Juncker's drinking
habits have been discussed at the highest levels by European leaders who
privately have concerns over the lifestyle of the continent’s
president-in-waiting, it has emerged.
With David Cameron facing defeat
in his attempt to prevent Mr Juncker being confirmed as president of the
European Commission, it can be disclosed that a series of allegations about his
alcohol consumption have been the subject of top-level talks.
On Thursday, as Mr Cameron became
increasingly isolated in Europe, he declared himself “unapologetic” over his
attempt to block the former leader of Luxembourg.
The Prime Minister will use a
Brussels summit to force an unprecedented vote on the appointment because he
believes Mr Juncker will not deliver Britain’s desired European Union reforms.
Allegations have circulated
around Brussels in recent years about Mr Juncker’s drinking.
One senior diplomatic source has
said he “has cognac for breakfast”.
However, it can now be disclosed
that concerns about Mr Juncker’s lifestyle have been raised in recent meetings
of EU leaders.
A European diplomat in Brussels
said: “His alcohol consumption has been raised by a number of leaders since the
parliament election.”
A separate European Commission
source confirmed the report.
Sources also described how Mr
Juncker “chain-smoked” through a series of meetings on Thursday and disclosed
that he is attempting to get rules changed so that he can smoke in buildings in
Brussels.
A source close to Mr Juncker who
has been present at EU summits, said: “This is quite ridiculous and 100 per
cent untrue. There was absolutely no discussion of this.”
Mr Cameron attended a dinner with
fellow European leaders in Ypres on Thursday as part of First World War
commemorations. British officials said he used the dinner to push for EU
reform.
He directly warned European
leaders of the “consequences” of their decision to make Mr Juncker, an
arch-federalist, the president of the European Commission. British officials
indicated that giving Mr Juncker the job could push Britain towards an exit
from the EU.
There have also been suggestions
that Mr Cameron could campaign for Britain to leave the EU in a future
referendum if Mr Juncker prevents him reforming the UK’s relationship with
Brussels.
He said: “I am completely
unapologetic about standing up for an important principle in Europe, which is
that the elected heads of government should make these choices.”
Asked what the consequences of Mr
Juncker’s appointment could be, Mr Cameron added: “Well, everything has consequences
in life. And obviously, I think proceeding in the way that countries are
planning
to proceed in choosing this individual, I believe that this is the
wrong approach.”
Angela Merkel, the German
chancellor, attempted to offer Mr Cameron an olive branch in what was seen as
an attempt to stop him forcing a vote on the issue.
She pledged to “give something
back” to Mr Cameron in exchange for defying him over the appointment. Mr
Cameron is furious that Mrs Merkel initially promised to support his
increasingly acrimonious attempt to block Mr Juncker’s candidacy.
However, in recent weeks she gave
Mr Juncker her public backing following domestic political pressure.
---- Mr Juncker faced
more controversy yesterday after he refused to reveal his lucrative earnings
from private speaking engagements after Germany’s Süeddeutsche Zeitung
newspaper revealed that he is hired by at least four agencies for speaking
engagements.
More
Another weekend, and another weekend closer to (the death of the EUSSR, the
China hard landing, the disintegration of Iraq, the total economic collapse of
the Ukraine, the arrival of food and fuel inflation, the ending of ZIRP, all of
the above, your option here.) Still no
reason for any of this to weigh on stocks, thanks to free money still pouring
out from the Fed. Have a great weekend everyone.
"Gold will be around, gold will be money when the dollar and the euro and the yuan and the ringgit are mere memories."
Richard Russell
The monthly Coppock Indicators finished May
DJIA: +181 Down. NASDAQ: +340 Down. SP500: +246 Down. Crisis? What crisis?
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