Baltic Dry Index. 754 +07
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“There
are errors in this book. I do not know where they are. If I did they wouldn't
be there. But with close to two hundred thousand words my probabilistic mind
tells me some are wrong.”
Alan
Greenspan. The Age of Turbulence.
In the strongest bullish news for stock market investors in years, fallen former guru, “Bubbles” Greenspan came out of obscurity yesterday forecasting a “significant correction” in US stocks. Speaking on Bloomberg Television’s “In the Loop” with Betty Liu, the former heavyweight continued “Where that is, I do not know,” showing that as ever, “Bubbles” was never “in the loop.” While a stopped clock is right twice a day, and the law of averages suggests that the “Great Dissembler” has to get one call right eventually, my guess is that this might just be that call. The Fed’s final bubble, is the mania to end all stock market manias. With the Fedster’s turning off the spigot of QE Forever, ZIRP is about to turn into RIRP.
The
true measure of a career is to be able to be content, even proud, that you
succeeded through your own endeavors without leaving a trail of casualties in
your wake.
Alan
Greenspan.
Greenspan Says Stocks to See ‘Significant Correction’
Jul 30,
2014 4:05 PM GMT
Former Federal Reserve Chairman Alan
Greenspan said equity markets will see a decline at some point after
surging for the past several years. “The stock market has recovered so sharply for so long, you have to assume somewhere along the line we will get a significant correction,” Greenspan, 88, said today in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “Where that is, I do not know.”
While Greenspan said he didn’t think equities were “grossly overpriced,” his comments come amid growing concern that interest rates near record lows are creating asset-price bubbles. Fed Chair Janet Yellen said in July 16 congressional testimony that while she saw signs of high valuations in some markets, prices overall -- including for U.S. stocks -- weren’t out of line with historical norms.
More
But wait, is China about to rain on his forever wet
parade?
We
really can't forecast all that well, and yet we pretend that we can, but we
really can't.
Alan
Greenspan.
Global QE ends as China opens second front in bond tapering
China's central bank, and others, have become "major players on world equity markets", effectively fuelling stock bubbles in much the same way they previously fuelled credit bubbles
The spigot of global reserve stimulus is slowing to a trickle. The world's central banks have cut their purchases of foreign bonds by two-thirds since late last year. China has cut by three-quarters.These purchases have been a powerful form of global quantitative easing over the past 15 years, driven by the commodity bloc and the rising powers of Asia.
They have fed demand for US Treasuries, Bunds and Gilts, as well as French, Dutch, Japanese, Canadian and Australian bonds and parastatal debt, displacing the better part of $12 trillion into everything else in a universal search for yield. Any reversal would threaten to squeeze money back out again.
Jens Nordvig, from Nomura, said net foreign reserve accumulation by central banks fell to $63bn in the second quarter of this year, from $89bn in the first quarter, and $181bn in the fourth quarter of 2013. These data are adjusted for currency swings, and are fresher than the delayed figures published by the International Monetary Fund.
"There are major shifts going on global capital markets. People have been lulled into a false sense of security by low volatility and they haven't paid attention. We're not seeing any risk aversion in financial markets," he said
The world superpower in this game is China, with reserves just shy of $4 trillion. Mr Nordvig estimates that China's purchases dropped to $27bn in the last quarter, down from $106bn in the preceding quarter. This looks like a permanent shift in policy.
Premier Li Keqiang said in May that the reserves had become a "big burden" and were doing more harm than good, playing havoc with monetary policy, as global economists have been warning for a long time. China's policy of holding down the yuan for mercantilist trade advantage caused it to import excess stimulus from America at the wrong moment in its own cycle, causing China's credit boom to go parabolic as loans rose from $9 trillion to $25 trillion in five years.
More
Up next, today Argentina, tomorrow Uncle Scam the
day the world moves away from the fiat dollar reserve standard. Stay long fully
paid up physical gold and silver held outside of America and Great Britain
against that day arriving.
Finance
is wholly different from the rest the economy.
Alan
Greenspan.
Argentina Declared in Default by S&P as Talks Fail
Jul 31,
2014 3:10 AM GMT
Standard & Poor’s declared Argentina in
default after the government missed a deadline for paying interest on $13
billion of restructured bonds. The South American country failed to get the $539 million payment to bondholders after a U.S. judge ruled that the money couldn’t be distributed unless a group of hedge funds holding defaulted debt also got paid. Argentina, in default for the second time in 13 years, has about $200 billion in foreign-currency debt, including $30 billion of restructured bonds, according to S&P
Argentina and the hedge funds, led by billionaire Paul Singer’s Elliott Management Corp., failed to reach agreement in talks today in New York, according to the court-appointed mediator in the case, Daniel Pollack. In a press conference after the talks ended, Argentine Economy Minister Axel Kicillof described the group of creditors as “vulture funds” and said the country wouldn’t sign an accord under “extortion.”
“The full consequences of default are not predictable, but they certainly are not positive,” Pollack wrote in an e-mailed statement. “Default is not a mere ‘technical’ condition, but rather a real and painful event that will hurt real people.”
More
In European news, is Portugal the next Cyprus? The management of Portugal’s Holy Ghost bank
seems to have stopped doing God’s work according The Bank of Portugal. Anyone
feel a bank bail-in down the road?
History
has not dealt kindly with the aftermath of protracted periods of low risk
premiums.
Alan
Greenspan.
Espirito Santo to Raise Capital After 3.6 Billion-Euro Loss
Jul 31,
2014 1:56 AM GMT
Banco Espirito Santo SA said it needs to raise capital after posting a
first-half net loss of 3.6 billion euros ($4.8 billion) as it created
provisions for its exposure to companies of Grupo Espirito Santo, which
includes its biggest shareholder. Impairment and contingency costs were 4.25 billion euros, Lisbon-based Banco Espirito Santo said yesterday in a filing. The bank also said it wrote off “irrecoverable” interest on loans granted by its Angolan unit BESA. The lender’s common equity Tier 1 ratio was 5 percent as of June 30, below the Bank of Portugal’s minimum requirement of 7 percent.
“Over the course of the past few weeks, both shareholders and potential investors have shown interest in participating in a capitalization plan, some of them willing to take relevant stakes in the bank,” Chief Executive Officer Vitor Bento said in a separate statement. “A process to increase the bank’s capital will be initiated immediately.” He also said the bank will consider asset sales.
Banco Espirito Santo shares have slumped 42 percent this month as three parent companies linked to the Espirito Santo family requested protection from creditors. Bank of Portugal Governor Carlos Costa has tried to reassure depositors and investors that Banco Espirito Santo could withstand any losses resulting from loans to Espirito Santo Group companies after some of that group’s units missed commercial paper payments.
--- The central bank said it’s suspending Banco Espirito Santo officials in charge of audit, compliance and risk management. It’s also restricting the voting rights of Espirito Santo Financial Group SA, or ESFG, in Banco Espirito Santo, the Bank of Portugal said in its statement.
The Bank of Portugal said there are indications of “seriously harmful acts of management” at the lender and a failure to comply with the central bank’s directives. It said it’s reviewing the actions of various individuals, including Ricardo Salgado, who was replaced by Bento as CEO this month.
More
In other EUSSR news this morning, Uncle Scam is
busy incentivising one and all, but especially European banksters, to come up
with a way to do in the fiat dollar reserve standard. In the EUSSR, with
American friends like this who needs phony Russian enemies. Dryly the bank
noted “The lender took
charges of 5.75 billion euros for the fine and an additional 200 million euros
to pay for its plan to improve compliance procedures. Leaving aside one-time
items, the bank said it earned 1.92 billion euros in the quarter.” Other than
that, Mrs. Lincoln, what did you think of the play?
The
United States can pay any debt it has because we can always print money to do
that. So there is zero probability of default.
Alan
Greenspan.
BNP Paribas Posts Record Second-Quarter Loss on U.S. Fine
Jul 31,
2014 6:42 AM GMT
BNP
Paribas SA (BNP), France’s biggest bank, posted the largest loss in its
14-year history after paying a record fine for doing business with Sudan and
other countries blacklisted by the U.S. The net loss amounted to 4.32 billion euros ($5.8 billion), Paris-based BNP said in an e-mailed statement today. That’s the second quarterly loss since the bank was formed from a merger in 2000, and compares with the 4.27 billion-euro loss average of 11 analyst estimates compiled by Bloomberg.
BNP Paribas was fined $8.97 billion after pleading guilty to criminal charges in the U.S. on June 30, a record sum for a bank accused of violating U.S. sanctions. Prosecutors said the lender processed almost $9 billion in prohibited transactions from 2004 to 2012. The U.S. also barred the bank from certain dollar-clearing operations next year.
More
We end with yet more gloom in banksterland. God’s
work just doesn’t pay anymore. Coming soon to a Main Street street-corner near
you, a pah handling ex-member of the one percent?
Banks are an almost irresistible attraction for that element of our society which seeks unearned money.
J. Edgar Hoover
Investment Bank Job Cuts Loom as Cost Drop Trails Revenue
Jul 31, 2014 12:01 AM GMT
The largest global investment banks face further cost reductions, like the
job cuts JPMorgan Chase & Co. (JPM) began this
month, after a drop in first-half expenses failed to match a decline in
revenue. Pretax profit at the banking and trading units at seven of the nine largest firms fell in the first six months as costs for the group decreased less than 1 percent from the same period a year earlier, according to data compiled by Bloomberg. Revenue dropped 5 percent, driven by the worst first-half trading results since the financial crisis.
Banks have relied on cost-cutting in recent years as higher capital requirements and fixed-income trading revenue crimped by low interest rates eroded profit. JPMorgan, the biggest U.S. lender, is eliminating hundreds of technology-support employees at its corporate and investment bank, people with knowledge of the move said. Credit Suisse Group AG (CSGN) said last week it would cut expenses by exiting commodities trading and scaling back currency and rates businesses.
“You’re always overstaffed at the bottom and understaffed at the top,” said Jason Goldberg, a Barclays Plc analyst in New York who covers U.S. banks. “It’s a tough balance between cutting costs and wanting to have enough people around for when volatility and activity pick up.”
More
“I
know you think you understand what you thought I said , but I'm not sure you
realize that what you heard isn't what I meant”
Alan
Greenspan.
At the Comex silver depositories Wednesday final figures were: Registered 59.21
Moz, Eligible 117.55 Moz, Total 176.76 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks today, just an update on the real market in physical gold, which unlike “paper” gold, cannot be fabricated out of nothing.
“In
the absence of the gold standard, there is no way to protect savings from
confiscation through inflation. There is no safe store of value.”
Alan
Greenspan.
Gold ETPs Halt Outflows as Buyers Return Amid Price Slump
Jul 31, 2014 5:42 AM GMT
Gold investors who pulled money
out of U.S. exchange-traded products through the first half of 2014 rushed back
in July, just as prices resumed a decline that Barclays Plc and Goldman Sachs
Group Inc. say will get worse.
ETPs backed by precious metals
took in $536.81 million this month as of July 29, a 1 percent gain for funds
that saw a net outflow of $319 million in six months through June, data
compiled by Bloomberg show. This month’s 2 percent drop in futures left prices
down 7 percent from a 2014 peak in March.
The
appeal of gold as a haven increased since Russia backed a
rebellion in Ukraine and as violence escalated in the Middle East
and North Africa. While the metal has outperformed equities and bonds so far
this year -- gains that Citigroup Inc. says will hold -- analysts in a
Bloomberg survey predict prices will drop in the fourth quarter as economic
growth spurs a shift to U.S. equities already at all-time highs.
----The
July slump for gold was fueled partly by concern that the Federal
Reserve will raise U.S. interest
rates, after easing monetary stimulus the central bank created since 2008 to
spur economic growth. Yesterday, the central bank reduced monthly bond
purchases to $25 billion, capping six straight cuts of $10 billion each since
November.
More
“under the gold
standard, a free banking system stands as the protector of an economy's
stability and balanced growth... The abandonment of the gold standard made it
possible for the welfare statists to use the banking system as a means to an
unlimited expansion of credit... In the absence of the gold standard, there is
no way to protect savings from confiscation through inflation”
Alan Greenspan. 1966.
The monthly Coppock Indicators finished June
DJIA: +169 Down. NASDAQ: +332 Down. SP500: +241 Down. The Fed’s final bubble still grows,
but …..
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