Baltic Dry Index. 973 -31
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"My daughter called me from school one day, and said, 'Dad,
what's a financial crisis?' And, without trying to be funny, I said, 'This type
of thing happens every five to seven years.'"
Jamie Dimon. CEO JP Morgan. 2011.
So you really want to boycott Russian oil over a
botched American coup in the Ukraine, intended to slice and dice up Belarus and
Russia. Hold off on that slicing and dicing for now. The results of the inept
Bush-Blair regime change in Iraq continue on a decade later. A fine time for US
policy to suddenly dump the Saudis. A fine time for U-turn Dave and his one
term, weak coalition government to be reducing Her Majesty’s Army to a mere
82,000, and retiring most of the Royal Navy.
Below, the rolling disaster in the 21 century
Middle East. If America has no sensible policy regarding future oil supply, the
UK and Europe better come up with one fast. So far we’ve managed to knockout
oil supplies from Libya, Iraq and Iran, with Russia oil next on the Washington
wish list. With allies and “leadership”
like this, who needs enemies. Time to
fill up the car to the max once again.
Iraq at risk of civil war as al-Qaeda-led uprising pushes to within striking distance of Baghdad
Fears of collapse of Iraqi state reignites debate over sacrifices made by Britain to topple Saddam Hussein
By Colin Freeman, Peter
Dominiczak and Ben Farmer 9:27PM BST 11 Jun 2014
Iraq is facing a return to its
darkest days of civil war after al-Qaeda-linked militants seized a vast swathe
of the country’s northern region in a lightning advance which took them to
within striking distance of Baghdad.
A day after snatching control of
the northern city of Mosul, fighters were on Wednesday night within 60 miles of
the Iraqi capital, encountering little resistance from government troops.
En route they seized major towns,
oil refineries and military bases and embarked on an orgy of kidnappings and
executions, forcing an exodus of more than half a million people across the
north.
The extraordinary developments
reignited the political debate about the decision to invade Iraq in 2003
alongside America, a conflict which cost the lives of 179 British Service
personnel and cost at least £9 billion.
----By Wednesday
afternoon, the militants were reported to have reached the holy city of
Samarra, 60 miles north of Baghdad. It is feared they will try to reignite
Iraq’s sectarian civil war by destroying a revered Shia shrine. An al-Qaeda
bomb attack on the same shrine in 2006 sparked a two year sectarian conflict
that killed an estimated 30,000 Iraqis.
More
ISIL Extends Gains in Iraq, Takes Turk Diplomats Hostage
Jun 12, 2014 3:53 AM GMT
---- After
seizing Mosul, Iraq’s second-biggest city, fighters from the Islamic State in
Iraq and the Levant moved yesterday into Saddam’s hometown of Tikrit, about 80
miles (130 kilometers) north of Baghdad, Noureddin Qablan, vice chairman of the
Nineveh provincial council, said by phone. In Mosul, ISIL took dozens of people
hostage at the Turkish consulate, as hundreds of thousands of residents fled
the city. The U.S. has yet to respond to a request from Iraq made last month to mount air attacks against militant training camps in western Iraq, according to two American officials who asked not to be identified discussing internal deliberations. One of the officials said President Barack Obama is reluctant to revisit a war that he opposed and repeatedly has declared over.
The surge in violence across northern and central Iraq, three years after U.S. troops withdrew, has raised the prospect of a return to sectarian civil war in OPEC’s second-biggest oil producer. Prime Minister Nouri al-Maliki’s Shiite-led government is struggling to retain control of Sunni-majority regions, and his army collapsed in the face of the Islamist advance.
More
Iraq oil shock could kill world economic recovery, experts warn
As violence threatens Iraq's oil industry, experts fear crude at $130 per barrel would damage the global economy
Open warfare between the
government and rebels in Iraq would pose a threat to the global economic
recovery should oil production from the war-torn Middle East state suffer a
serious disruption, analysts have warned.
Brent oil prices climbed as high
as $110.25 (£65.59) on Wednesday amid concerns that 3.5m barrels per day of
Iraqi exports could be knocked out of the market by the violence that has seen
al-Qaeda forces seize control of Mosul, Tikrit and Samarra.
"The worst case scenario is
that we see production from Iraq slip down to levels in the last Gulf war, then
oil could spike $20 a barrel very quickly," Ole Hansen, vice-president and
head of commodity strategy at Saxo Bank told The Telegraph.
---- Iraq's oil minister, Abdul Kareem
Luaibi, who was attending a gathering of the 12-member Organisation of
Petroleum Exporting Countries (Opec) in Vienna on Wednesday, tried to ease
concerns by stressing that most of the country's crude was pumped from fields
in the Shia-Muslim dominated South, where export facilities are "very,
very safe".
Despite
the deteriorating political situation in Iraq, where government forces have
been seen fleeing from the Sunni-Muslim al-Qaeda insurgents, Opec decided to
leave its production quotas unchanged. The cartel limits the output of its
members to 30m barrels per day (bpd) of crude, roughly a third of the world's
supply.
---- In a note to Bloomberg, Helima Croft, Barclays' head of North American commodities research, said: “The shocking escalation in violence in Iraq raises the prospect of potential output losses. It comes as other key producers, like Libya, have also seen exports 'evaporate' amid rising unrest."
Helped by investment from
international oil companies such as Royal Dutch Shell, BP and Lukoil, Iraq has
increased its importance in the world oil market since recovering from the 2003
war.
The opening of the giant West
Qurna-2 oilfield near Basra in March would allow Iraq to pump 4m bpd by the end
of the year. Already the second-largest producer in Opec after Saudi Arabia,
according to Reuters, Iraq has pumped an average of 3.5m bpd since the
beginning of the year.
More
As for the Ukraine itself, the next Russian shoe seems about
ready to drop. Germany and continental Europe better have deep pockets.
America’s botched coup let Russia off the hook of propping up the Ukraine.
America just moved that burden onto the continental’s backs. In return the
Europeans get a minority interest in America’s Chocolate King, who now runs the
western part of Ukraine in partnership with neo-Nazis and anti-Semite parties.
Whoever thought up this policy in Washington, needs to be put back in the
asylum.
Ukraine Rejects Gas Offer as Talks End Without Deal
Jun 11, 2014 6:07 PM GMT
Ukraine rejected a Russian proposal for the price of future natural-gas
deliveries as European Union-brokered talks in Brussels ended without an
agreement. Russia offered to supply gas for about 20 percent below the current price, a level Ukraine said was still more than it’s willing to pay, EU Energy Commissioner Guenther Oettinger said at a press conference after the three-way meeting. Russia’s energy minister said the country also wants $1.95 billion for past fuel supplies before June 16 or it may cut shipments.
“In the next 48 hours we’ll try to make progress, not waste time,” Oettinger said. “Monday is quite a way off so there’s still a good opportunity.”
The EU, dependent on Russian gas piped through Ukraine for about 15 percent of its supplies, is trying to broker a deal to maintain shipments amid a dispute over payments for the fuel. In Ukraine, government forces and rebels claiming allegiance to Russia continue to clash in the east of the country.
Oettinger is optimistic an agreement can be reached to end the gas price dispute in the next few days, he said at the press conference.
---- Russia proposed a “compromise” package, supplying Ukraine with fuel for $385 per 1,000 cubic meters, $100 below the current price, Novak said. That discount is similar to what Russia granted Ukraine from 2010 until April this year, he said.
Russia may guarantee the discount from April through the next 12 months, if Ukraine is ready to settle its debts, according to Novak.
Ukraine should first pay $1.45 billion for the last two months of 2013 and an additional $500 million as part of the debt for gas received in April and May, Novak said. If there is no payment by the morning of June 16, Ukraine will only get fuel it pays for upfront, at the current price, he said.
More
Next, confirmation that the Fed’s balance sheet is never
going to be scaled down. Our new lawless age gets more lawless with each
passing month. Don’t worry, this time
it’s different with LBOs. Russia, China, India and Latin America,
re-incentivised to move to replace the fiat dollar reserve standard, hopefully
before the Fed’s final bubble spectacularly explodes.
“The term ‘too big to fail’ must be excised from our
vocabulary.”
Jamie Dimon.
Fed Prepares to Maintain Record Balance Sheet for Years
Jun 11, 2014 10:34 PM GMT
Federal Reserve officials, concerned that selling bonds from their $4.3
trillion portfolio could crush the U.S. recovery, are preparing to keep
their balance sheet close to record levels for years. Central bankers are stepping back from a three-year-old strategy for an exit from the unprecedented easing they deployed to battle the worst recession since the Great Depression. Minutes of their last meeting in April made no mention of asset sales.
Officials worry that such sales would spark an abrupt increase in long-term interest rates, making it more expensive for consumers to buy goods on credit and companies to invest, according to James Bullard, president of the Federal Reserve Bank of St. Louis.
----The Fed is testing new tools that would allow it to keep a large balance sheet even after it raises short-term interest rates, a step policy makers anticipate taking next year. They would use these tools to drain excess reserves temporarily from the banking system.
“It is pretty clear they are anticipating operating in a situation with a lot of reserves and a high balance sheet for a long time,” said former Fed governor Laurence Meyer, a co-founder of Macroeconomic Advisers LLC, a St. Louis-based forecasting firm.
---- “The whole situation has created a lot of uncertainty,” said Karl Haeling, head of strategic debt distribution at Landesbank Baden-Wuerttemberg in New York. “The Fed is increasingly stepping into what had been a private-sector function.”
The Fed’s asset purchases have expanded its balance sheet to 25 percent of gross domestic product from 6 percent at the start of 2007. Central banks from Japan to the U.K. also will have to develop strategies for operating with large portfolios. For example, the Bank of England’s is 24 percent of GDP, up from about 6 percent in 2007.
Fed officials led by Chair Janet Yellen, who meet June 17-18, anticipate raising their benchmark federal funds rate next year for the first time since 2006. They will release new forecasts for the economy and the outlook for the benchmark after next week’s meeting.
More
This $1 Trillion M&A Quarter Is “Different”: What Turnip Truck Did Bloomberg Reporter McCracken Ride To Wall Street!
by David Stockman • June 11, 2014
If Bloomberg weren’t shilling for
the Fed/Wall Street bubble economy— then Reuters, the WSJ and countless others
would pick up the slack. But the article below by Bloomberg’s Jeffrey
McCracken needs no pointers from Rupert Murdoch’s Cool-Aid drinkers.
Noting that we have at last
gotten back to a trillion dollar global M&A quarter and have thereby
reached the peak financial engineering insanity of Q3 2007, McCracken spends
the bulk of the article quoting a Wall Street M&A dealster explaining
why “this time is different”.
Exactly which turnip
truck did McCracken ride down to Wall Street? Of course, this time is
different. Its always different!
Here’s the line from McCracken’s
M&A peddler. It amounts to the proposition that last time it got out
of hand because the mountains of cheap debt were used to fund going private
transaction—that is, LBO’s.
This time, by contrast, corporate
America is not bothering to claim “hidden” value which can only be
unlocked under private ownership. They are going to do it directly by
investing in “compelling” growth plans that have a “strategic
foundation” in their own public enterprises.
More
In Asian news, with
Uncle Sam mired in the Ukraine and about to revisit the deserts of Mesopotamia,
China’s holding something of a Naval regatta in the South China Sea.
Vietnam Says China Sent Six Warships to Rig in Disputed Seas
Jun 11, 2014 9:32 AM GMT
Vietnam said China again
shifted an oil rig it has placed in disputed waters, with six warships guarding
the structure as the two communist countries continue their South China Sea
stand-off. The rig was moved for a third time and remains off Vietnam’s coast in an area claimed by both countries, the official Vietnam News reported, citing information from the Vietnam Fisheries Surveillance Department. There are now six Chinese warships, 38 coast guard vessels, 13 cargo ships and 19 tugboats protecting it, the paper said.
China called the claim “extremely wrong” and said it hasn’t sent military ships to the area. Government ships were dispatched to safeguard security in the face of disruption to its drilling work by armed Vietnamese vessels, Foreign Ministry spokeswoman Hua Chunying said at a briefing in Beijing
The
tit-for-tat accusations between China and Vietnam about the positioning of the
oil rig and of collisions between their vessels in the area comes at a time of
heightened territorial tensions across the South China Sea. China, which
claims a large part of the waters under a 1940s-era map, has stepped up its
assertions to both the Paracel Islands off Vietnam’s
coast and the more southerly Spratly Islands.
More
We end for the day with the land of the sinking sun. Not content with Tepco making a large part of Japan toxic for thousands of years to come, along with a large part of the Pacific Ocean, thanks to insane Keynesianism and beggar thye neighbour Abenomics, Japan’s fiat currency is going to be toxic for decades to come. Stay the war China, no need to attack, Japan’s doing a magnificent job of attacking itself. Stay long fully paid up gold and silver. Japan’s yen looks like being the first major fiat currency to fail.
Japan to keep printing money for years to come, so learn to enjoy it
The Bank of Japan will have to mop up the entire issuance of public debt for years to come, covering the budget deficit with printed money
There are no one-way bets in
global finance, but Japan's stock market comes close. The authorities are about
to funnel large sums into Japanese stocks openly and deliberately under the
next phase of Abenomics, both by regulatory fiat and by purchasing the Nikkei
index directly with printed money.
Prime minister Shinzo Abe is
unshackling the world's biggest stash of savings, the $1.3 trillion Government
Pension Investment Fund (GPIF). Officials say the ceiling on equity holdings
will rise from 12pc to around 20pc as soon as August, opening the way for a
$100bn buying blitz.
Fund managers are suddenly in a
race to get there first. Japan Post Bank - where Mrs Watanabe dutifully places
the family money, confiscated from her Salaryman each month before he can spend
it - is itching to rotate more of its $2 trillion holdings into equities before
inflation pummels the bond market. So is Japan Post Insurance, no minnow either
at $850bn.
Mr Abe's move comes sooner than
expected and amounts to a market shock, though nobody should be shocked anymore
as he keeps doubling down on the world's most radical economic experiment.
The Nikkei index stalled in
December after rising almost 100pc since September 2012, even though the Bank
of Japan (BoJ) is still showering the economy with money, buying $75bn of bonds
each month. The BoJ's balance sheet will reach 70pc of GDP by March 2015, three
times the US Federal Reserve's.
The index is down 7pc this year
to 15,000, chiefly because foreigners have taken profits and pulled out $140bn,
causing some to write off Abenomics as a flop. Japan's trust banks are picking
up the baton. They added a record $2.5bn last week, some of it on behalf of the
GPIF itself as it adapts to the new order. "We think the Nikkei will get
to 18,000 by October," said Genzo Kimura, from SuMi Trust Fund.
The Bank of Japan is helping it
along, buying exchange traded funds based on the Nikkei and Topix indices.
"They purchase whenever the market falls, usually by about $200m each
time," he said.
More
Japan Lodges ‘Strong’ Protest Over China Fighter Jet Encounter
Jun 12, 2014 6:05 AM GMT
The Japanese government lodged a “strong” protest with China after a pair of its fighter
jets flew within tens of meters of Japanese surveillance planes in the East
China Sea, the second incident in less than a month. Vice Foreign Minister Akitaka Saiki today summoned Chinese Ambassador Cheng Yonghua to lodge the protest in Tokyo, the ministry said in a statement on its website. Two Su-27 fighters came as near as 30 meters to one Japanese plane and 45 meters to another over international waters between 11 a.m. and midday yesterday, the Defense Ministry said on its website.
The close encounters follow a near miss on May 24 amid tensions between China and Japan over disputed territory. Ships and planes from the countries have tailed one another around the East China Sea islands known as Senkaku in Japanese and Diaoyu in Chinese since Japan bought three of them from a private owner in 2012. Prime Minister Shinzo Abe has not held a summit with China since taking office in 2012.
“Beijing sees that Japan’s China policy has seriously regressed and the ball is in Japan’s court,” said Liu Jiangyong, professor of international relations at Tsinghua University in Beijing. “The overall tension is likely to continue to linger and the two countries have reached a crossroads.”
More
We are living in interesting times, as the old
Chinese curse supposedly goes, just don’t let on to our central banksters
preoccupied with blowing stock market bubbles. The way things are going, crash
season may come early in 2014.
"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
Antony C. Sutton
At the Comex silver depositories Wednesday final figures were: Registered 57.06
Moz, Eligible 119.40 Moz, Total 176.46 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, it’s the
Russians. No not old Vlad the Crimea stealer v tag-team USA owned Ukraine.
Today it’s those other Russians, the tourists with plenty of cash, propping up
northern Italy. What part of “he who pays the piper calls the tune,” don’t
Italian beggars get? If you let in barbarians, be prepared for barbarian manners.
Just don’t behave like English teachers on the Costa del Sol.
Nobody
should pin their hopes on a miracle.
Vladimir
Putin.
Rude Russians told how to behave by long suffering Italians
Italians tell rich Russians how to avoid being boorish and rude when they descend on Tuscany's smart resorts for the summer
By Nick Squires, Rome 2:20PM BST
10 Jun 2014
As the summer tourist season approaches, Italians
have a message for their rich Russian visitors - you may be minted,
but you have no manners. Big-spending Russians have proved a lifeline for the Italian tourist sector during the last few years of economic recession but they are often perceived as brash, boorish and rude.
Now a hotel owner in Tuscany - the Russians' favourite destination - has produced a TV commercial which aims to educate wealthy Muscovites and other Russian visitors about the finer points of Italian etiquette.
Salvatore Madonna runs luxury hotels in Forte dei Marmi, an upmarket resort on the Tuscan coast which caters to Russians with menus written in Cyrillic and plentiful designer outlets, and has been nicknamed “Moscow-on-Sea”.
The three-minute advertisement advises Russians to “smile more”, to say thank you more often and to be more pleasant in their dealings with waiters and hotel staff.
They are told that ordering a
cappuccino after lunch is an unforgivable faux pas – in Italy the frothy coffee
is seen as an exclusively morning drink.
Italians instead would order an
espresso or a caffe macchiato - an espresso with a dash of milk.
Nor should red wine be ordered
with fish – for seafood, it has to be white wine every time. Cashed-up Russians
are also warned that it is vulgar to choose the most expensive wine on the
list.
The advert, which will be shown
on TV in Russia and on Russian social media networks, features Ljudmila
Radcenko, a Russian model who lives in Italy.
“The first rule when you enter a
hotel is to say hello, smile, and to look the person in the eye.
“In Russia we're maybe not really
used to doing that,” she says, speaking in Italian but with Russian sub-titles
on the screen.
Even showy Italians baulk at
Russian women wearing barely-there, sequinned bikinis and swim costumes.
“Russian women who love to wear
high heels and tiny bikinis should perhaps avoid those,” she says.
“When you leave the hotel, it's
nice to be communicative, to express your satisfaction for the service, to
smile and say thank you,” Ms Radcenko concludes in her advice to her compatriots.
Mr Madonna, the head of a luxury
hotel group called Soft Living Places, says he hopes the short film will help
“better integrate” Russian tourists to Italy.
Teaching uncouth Russians how to
behave in a more civil way should not be construed as Italian arrogance, he
said, but a way of gently shepherding tourists towards more culturally
acceptable behaviour.
“It
is mortifying for the people who dedicate so much time and attention to
preparing dishes when they are asked to serve them all at the same time, as the
Russians often do,” Mr Madonna said.
More
The
Russian people have their own cultural code, their own tradition.
Vladimir
Putin.
The monthly Coppock Indicators finished May
DJIA: +181 Down. NASDAQ: +340 Down. SP500: +246 Down. Crisis? What crisis?
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