Baltic Dry Index. 858 -22
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“The
moment you doubt whether you can fly, you cease for ever to be able to do it.”
“The talking
chair,” with apologies to J. M. Barrie and Peter Pan.
The Baltic Dry (shipping) Index has broken decisively below
1,000 again, but don’t tell the Fedsters meeting in day two of their final
bubble attempt to corner global stocks. “Capitalism’s
broken,” famously wailed disgraced fallen guru “Bubbles” Greenspan, all the way
back in the mid 90s. When the Fed’s final bubble implodes, as it might be
starting to do now, “broken” will turn out to be the understatement of the 21st
century.
Stay long fully paid up physical gold and silver. The
Great Nixonian Error of fiat money, started all the way back on August 15th,
1971. The benefits of fiat money were all front loaded, and long ago dissipated
by the feckless politicians and central banksters of the 1970s and 1980s. We
have been living like Bernie Madoff on borrowed time and central bankster fraud
ever since.
Like Bernie, “Bubbles,” “old B.S.” and the Fed’s talking “chair”
from the very left-wing London School of Economics, are about to find time runs
out for all, eventually. Scroll down to Crooks Corner for an update on time
running out. More QE forever, more QE forever, we seem to have hit an iceberg.
Below, will the Fed’s pixie dust, due to be released
later today, work one more time, or is this the Fed’s Bernie Madoff moment? Did
the Fed just run out of pixie dust and luck?
“Dreams
do come true, if only we wish hard enough. You can have anything in life if you
will sacrifice everything else for it.”
“The talking
chair,” with apologies to J. M. Barrie and Peter Pan.
Japan’s Exports Decline in May on Weak U.S., Asian Demand
Jun 18,
2014 4:05 AM GMT
Japan’s exports fell in May for the first time in 15 months on weak demand
from the U.S. and Asia,
adding to challenges for Prime Minister Shinzo Abe as he tries to steer the
economy through a forecast contraction this quarter. Outbound shipments decreased 2.7 percent from a year earlier, the finance ministry said in Tokyo today, steeper than a median forecast for a 1.3 percent decline in a Bloomberg News survey of 29 economists. Imports (JNTBIMPY) dropped 3.6 percent, with the trade deficit narrowing to 909 billion yen ($8.9 billion).
Slowing demand from the U.S. and China - Japan’s two biggest export destinations -- threatens to weigh on shipments, which are losing impetus as the yen’s slide against the dollar stalls. The shuttering of nuclear power plants after the 2011 Fukushima disaster has pushed up energy import costs, contributing to a record run of deficits -- now at 23 months.
More
China’s May Home-Price Growth Slows Signaling Weaker Demand
Jun 18, 2014 4:38 AM GMT
China’s new-home prices fell in half the cities tracked by the government
for the first time in two years as a slowing economy and excess supply deterred
buyers. Prices fell in 35 of the 70 cities last month from April, according to a statement by the National Bureau of Statistics today, the most since May 2012. In the financial center of Shanghai, prices decreased 0.3 percent from April, the first decline in two years, while they fell 0.2 percent in the southern business hub of Shenzhen.
“The property market obviously is worsening,” Yao Wei, a Hong Kong-based China economist at Societe Generale SA, said in a phone interview. “The tricky thing is that the further developers cut prices, the scarier buyers may feel. They are holding a wait-and-see position for further discounts.”
More
Citic Resources Can’t Locate All Materials at Qingdao Port
Jun 18, 2014 6:45 AM GMT
Citic
Resources Holdings Ltd. (1205), the commodities trader controlled by China’s largest
state-owned investment company, said it’s missing more than half its alumina
stored at Qingdao Port amid a probe into lending. A Qingdao court was unable to locate about 123,446 metric tons of its alumina held at the port, Citic Resources said in a statement to the Hong Kong stock exchange. The company had obtained sequestration orders for its assets at the port from a local court, Citic Resources said last week in a statement.
Qingdao Port is counting industrial metals held in some of its bonded warehouses to determine if they match the amount in documents pledged to banks as collateral for loans, three people with knowledge of the probe said on June 5. The port is concerned that there has been multiple counting of some batches of metals including copper and aluminum, said the people.
“Citic Resources’ loss is just the tip of the iceberg,” said Helen Lau, a Hong Kong-based analyst with UOB Kay Hian Ltd.. “There will be many more companies found to be victims as the investigation over multi-counting of metals evolves.”
More
China Blocks European Shipping Pact, Sending Maersk Down
Jun 18,
2014 4:28 AM GMT
China blocked formation of
a global alliance by the world’s three biggest shipping lines, ignoring Western
approval of the plan and sending A.P. Moeller-Maersk A/S (MAERSKB) shares
tumbling the most in two years. The Chinese Ministry of Commerce said late yesterday that the proposed P3 vessel-pooling accord, which also included Mediterranean Shipping Co. and CMA CGM SA, would “restrict competition” on the busiest Asia-Europe container routes.
Maersk and its two allies agreed
last June to establish an operational pact with the aim of reducing costs on
Asia-Europe, trans-Atlantic and trans-Pacific routes. Container lines have been
battling industry overcapacity after a boom in ship orders collided with the
global financial crisis, triggering the worst slump in prices for the carriage
of cargo since containerization became global in the 1970s.
“If there had been a Chinese
partner in this I do think it could have gone through,” said Susan K. Ross, who
heads up international trade at Mitchell Silberberg & Knupp in Los Angeles.
“China wants a global position in a shipping just as in every industry.”
More
China Auditor Says CIC Mismanagement Led to Investment Losses
Jun 18, 2014 5:46 AM GMT
Mismanagement at China Investment Corp., the nation’s $575 billion sovereign
wealth fund, led to overseas investment losses that could widen, according to
the National Audit Office. A dereliction of duty, inadequate due diligence and post-investment management were identified in 12 investments made abroad by the fund between 2008 and 2013, according to results of an audit conducted last year. Six of the deals were unprofitable, four of them had unrealized losses, and two may potentially lose money, according to the report released today on the auditor’s website, which didn’t name the investments or disclose their size.
---- Auditors also found irregularities at Beijing-based CIC’s domestic units. Among them, Central Huijin Investment Ltd. lost 1.26 billion yuan ($202 million) in potential investment gains in 2011 by selling a stake in a local securities company at the cost price and not conducting an asset appraisal as required, according to the report.
CIC’s Beijing-based press office didn’t immediately respond to an e-mail seeking comment.
Putin Talks Peace With Ukraine’s Leader After Gas Pipeline Blaze
Jun 18, 2014 2:18 AM GMT
The Russian and Ukrainian presidents discussed a possible cease-fire for
southeastern Ukraine
hours after a pipeline fire blamed by the government in Kiev on sabotage
threatened natural gas flows to Europe. Presidents Vladimir Putin of Russia and Petro Poroshenko of Ukraine talked last night about bilateral relations between the countries and about the death of Russian journalists working in Ukraine, according to a Kremlin statement.
“The issue of possible cease-fire in the area of a military operation in Ukraine’s southeast has been touched upon,” the Kremlin said after the leaders’ phone call.
Putin and Poroshenko spoke a day after Russia cut gas supplies to the Ukraine over unpaid bills and demanded advance payments from its former Soviet Union ally. The gas dispute has stoked tensions between the two governments as Ukraine battles pro-Russian insurgents in its eastern region.
Ukraine’s Interior Ministry blamed “terrorism” as the likely cause of the fire at the Urengoy-Pomary-Uzhgorod link in the central part of the country. It was the second pipeline fire in six weeks.
More
Gunmen Attack North of Baghdad as Obama Weighs Options for Iraq
Jun 17,
2014 10:41 PM GMT
Islamist militants in Iraq fought with the army in a town near Baghdad and with
Kurds in the oil-rich province of Kirkuk, as the U.S. weighed options to stem
an offensive that threatens to fracture the country. Gunmen from the Islamic State in Iraq and the Levant attacked Kurdish forces in Kirkuk yesterday, leaving two soldiers and a civilian dead and almost 50 people injured, al-Mada news agency said. An earlier attack left five police dead, while ISIL also regained control of the mostly Turkmen village of Bashir south of Kirkuk, al-Mada said.
There
was fighting around Baquba, about 55 kilometers (34 miles) north of Baghdad.
The Iraqi air force targeted a meeting of ISIL leaders with air strikes that
killed 15 militants, al-Mada said, citing a military commander. The previous
night, ISIL attacked a prison in Baquba, unleashing violence in which 43
inmates were killed, said Basem al-Samarraie, a spokesman for the eastern
Diyala province where the city is located. Security forces repulsed the attack,
he said.
More
Obama Holding Off on Airstrikes as Iraq Risks Breakup
Jun 18, 2014 5:18 AM GMT
The U.S. is struggling to help keep Iraq from coming
apart at the seams, as the Obama administration signaled that airstrikes aren’t
imminent. The war-torn country is dividing on sectarian lines less than three years after the departure of the last U.S. troops, and American diplomats are trying to pull together a political compromise to avert a full Syria-like civil war.
---- While the conflict threatens to draw the U.S. and regional powers, including Iran, deeper into Iraq’s sectarian and ethnic strife, the country’s breakup isn’t likely to give birth to new nations, as happened in the former Yugoslavia and Sudan, according to Stephen Biddle, who was an adviser to U.S. Army General David Petraeus in Baghdad in 2007.
“What you’re going to have is a long civil war in which some parts of the country are controlled by one of the sides, but significant parts of the country are disputed with no clear control,” Biddle, an international affairs professor at George Washington University in Washington, said in an interview.
National Security Council spokeswoman Bernadette Meehan and Pentagon spokesman Rear Admiral John Kirby each said last night that Obama hadn’t yet made a decision about military options.
More
“All
the world is made of faith, and trust, and pixie dust.”
“The talking
chair,” with apologies to J. M. Barrie and Peter Pan.
At the Comex silver depositories Tuesday final figures were: Registered 57.06 Moz,
Eligible 118.99 Moz, Total 176.05 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Don’t look now, and don’t tell the Fedsters, busy
cornering stocks in the Fed’s final bubble, but the USA suddenly seems to have
inflation again. What America does today
….. Still it’s only food and energy price inflation, so the huddled masses
yearning to be free, in the land of the brave and spied on, between the once
shining, but now glowing thanks to Japan, seas, will never notice right? What
(else) could possibly go wrong?
"Anytime you don't want anything,
you get it."
Calvin Coolidge, 30th United States
President.
David Rosenberg: Inflation — and interest rates — may be in a coma, but they are far from dead
David Rosenberg Tuesday, Jun. 17, 2014
Recent headlines have been
running with a new story that Ben Bernanke at a June 5 luncheon in Paris said
policy rates will remain low for now, but the 10-year U.S. Treasury note yield
will inevitably head into the 3.5%-to-4% range. This follows surprisingly
“hawkish” commentary from Mark Carney late last week that the first rate U.K.
hike “could happen sooner than markets currently expect.”
With that in mind, all this talk
of “New Normal” and “New Neutral” conjures up the “New Era” mantra surrounding
productivity due to the tech mania of the late 1990s; and the “New Paradigm” of
housing wealth and financial engineering that fostered the “Great Moderation”
beliefs of the mid-2000s.
The lesson here is to fade any
term that begins the word “new.” The Fed will be forced to raise rates, not now
or through 2014, but likely by the first half of next year as the unemployment
rate drops below 6%.
But when exactly in the past has
the central bank ever stopped at neutral? Fed funds futures, the front end of
the yield curve and anything priced off artificially depressed risk-free rates
will be in trouble when that fateful day comes, no matter how well telegraphed.
The Fed could not have been any
more transparent in the 2004-to-2006 cycle, but by taking the fed funds rate
from 1% to 5.25% (was that peak considered neutral back then?) and inverting
the yield curve, the excesses were exposed. As is the case with every
policy-tightening phase in modern history, the bubble burst, euphoria turned to
angst and the recession took hold.
The same held true in the
1999-to-2000 tightening, which again inverted the yield curve, exposed the tech
bubble and an unexpected recession followed. We can go back to the 1988-to-1990
cycle of rate hikes, which did the same in terms of curve inversion and
exposing the excesses in California, Texas and New England property bubbles.
The only reason we had a soft
landing in 1995 after a doubling of the funds rate to 6% was that the Fed
stopped short of inverting the yield curve. Mexico, Orange County and the
mortgage-backed securities market took it on the chin, but the overall economy
did not go into recession, which is why a flat stock market in 1994 did not
morph into a fundamental bear phase in 1995.
This may be a 2016 or 2017 story
(as in the next rate-rising era) — by then, the economic expansion will be long
in the tooth, celebrating its seventh or eighth birthday — but neither the
business cycle nor the investment cycle is dead, and that goes for inflation
and interest rates as well.
----Dig deep into the memory bank and recall that the last time the Fed raised rates was on June 29, 2006.
How many traders and investors since then have joined the ranks of the financial marketplace who know nothing except zero-interest-rate policies, deflation, falling bond yields and quantitative easing (QE)?
They have never seen a rate hike
in their professional lifetimes so it will be interesting to see how they
respond to the eventual volley when it comes. It’s the mirror image of the
greybeards that used to populate the trading desks in the second half of the
1980s, 1990s and early 2000s who only knew about inflation, tight money and
bond bear markets — they also missed the boat.
The young pups that have been
groomed this cycle that have also bought into the “New Neutral” mantra are at
risk of being tarred and feathered in the opposite direction.
The Fed has sedated investors to
such an extent that the VIX is at 12 even with the escalation of geopolitical
risks, and bond-market trading volumes so far this year have collapsed nearly
16% from comparable 2013 turnover levels.
Gold prices have climbed to a
three-week high and are beginning to look interesting, too. The yellow metal is
enjoying its longest stretch of daily gains since February, obviously also a
hedge against escalating global geopolitical tensions.
The price of copper is rallying
again, and the supportive factor here is the additional economic stimulus being
pursued by the Chinese government. News that LME copper stockpiles have been
run down some 56% over the past year to their lowest level since August 2008 is
providing an added underpinning for the red metal.
If you don’t see inflation, then
you have been focused on hedonically adjusted consumer price data: The markets
for assets and commodities tell a different tale.
This latest up-leg in oil,
industrial commodities and gold prices has helped propel the TSX to a new
6.5-year high above 15,000 and to little fanfare. It’s up more than 20% in the
past year and doing so not with QE, but with rising earnings assessments across
a wide swath of sectors, especially those hitched to a weaker loonie
(transports, auto parts) and those linked to the hard asset commodity groups.
Price Index for Meats, Poultry, Fish & Eggs Rockets to All-Time High
June 17, 2014 - 11:20 AM
(CNSNews.com) – The seasonally-adjusted price index for meats,
poultry, fish, and eggs hit an all-time high in May, according to data from the
Bureau of Labor
Statistics (BLS).In January 1967, when the BLS started tracking this measure, the index for meats, poultry, fish, and eggs was 38.1. As of last May, it was 234.572. By this January, it hit 240.006. By April, it hit 249.362. And, in May, it climbed to a record 252.832.
“The index for meats, poultry, fish and eggs has risen 7.7 percent over the span [last year],” says the BLS. “The index for food at home increased 0.7 percent, its largest increase since July 2011. Five of the six major grocery store food group indexes increased in May. The index for meats, poultry, fish, and eggs rose 1.4 percent in May after a 1.5 increase in April, with virtually all its major components increasing,” BLS states.
Gasoline at U.S. Pumps Set to Hit Six-Year Seasonal High
Jun 17,
2014 6:45 PM GMT
Gasoline in the U.S. climbed this week, boosted by a surge in oil, and is
expected to reach the highest level for this time of year since 2008. The pump price averaged $3.686 a gallon yesterday, up 1.2 cents from a week earlier, data posted on the Energy Information Administration’s website late yesterday show. Oil, which accounts for two-thirds of the retail price of gasoline, gained $2.49 a barrel on the New York Mercantile Exchange in the same period and $4.88 in the month ended yesterday.
The jump in crude, driven by concern that the crisis in Iraq will disrupt supplies, may boost pump prices by 10 cents a gallon at a time when they normally drop, according to forecasts including one from the EIA.
“If things deteriorate even more, the spike could be even bigger than that,” Phil Flynn, a senior market analyst at Price Futures Group in Chicago, said by telephone. “If it weren’t for the situation in Iraq, gasoline would be coming down by now. This will probably keep it elevated all summer. It’s really disappointing.”
More
“Oh,
the cleverness of me!”
“The talking
chair,” with apologies to J. M. Barrie and Peter Pan.
The monthly Coppock Indicators finished May
DJIA: +181 Down. NASDAQ: +340 Down. SP500: +246 Down. Crisis? What crisis?
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