Baltic Dry Index. 798 -16
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."
Bear Stearns CEO Alan Schwartz. March 12, 2008. Bust March 17, 2008.
For more on Europe’s top liar, scroll down to Crooks Corner. But when the EC’s Juncker speaks, will anyone other than Herman van Who and Baroness Whatsit be listening. Christmas comes early for UKIP as Brexit gets a whole lot closer.
Today, a better “expert/man/guru/forecaster” than
me picks a nearby stocktop. The Yellen put better be there, for if a newly US
commissioned European war breaks out in eastern Europe, global stock markets
are in for one hell of a crash. No one in the world may care much about the
trapped Moslem Gazans and their Jewish Israeli jailers scrapping again, but if
a real war breaks out in the Ukraine and floods of mostly Christian refugees
start flowing into Poland, and into Orthodox Russia proper, all hell is about
to descend on the “Bubbles” Greenspan/Bernanke/Yellen stock market “put”. Greenspan’s abject panic and rig of October
1987, and the casino capitalism that followed, will all come crashing down
around America’s War Party. The “Christians”
of Europe, like most Jews and Moslems may be largely irreligious in the 21st
century, but America’s War Party is playing with fire and petrol, in setting
off a new Christian War in Europe.
Western Europe’s banks, along with America’s are
mostly bust. China is a shadow banking implosion waiting to happen. The rest of
the BRICs are a corrupt house of cards waiting to fall. The one percent continue
to blow an ever bigger Fed bubble, ignorant of what capitalism achieved and how
it did it. If and when this Casino “Capitalism” all goes wrong we will be lucky
to emerge without a disastrous nuclear exchange. The Baltic Dry Index is already
signalling the return of late 2008. And Europe’s Mr Fixit warns, sort of.
Below, the Fed’s talking chair is set up to take
the fall for “Bubbles” Greenspan and old BS Bernocchio.
The Implosion Is Near: Signs Of The Bubble’s Last Days
by David Stockman • July 14, 2014
The central banks of the world
are massively and insouciantly pursuing financial instability. That’s the inherent
result of the 68 straight months of zero money market rates that have
been forced into the global financial system by the Fed and its
confederates at the BOJ, ECB and BOE. ZIRP fuels endless carry trades and
the harvesting of every manner of profit spread between negligible
“funding” costs and positive yields and returns on a wide spectrum of risk
assets.
Moreover, this central bank
sponsored regime of ZIRP and money market pegging contains a built-in
accelerator. As carry trade speculators drive asset prices steadily higher and
fixed income spreads steadily thinner—- fear and short interest is driven out
of the casino, making buying on the dips ever more profitable and less risky.
Indeed, the explicit promise by central banks that the money market rate will
remain frozen for the duration and that ample warning of any change in rate
policy will be “transparently” announced is the single worst policy imaginable
from the point of view of financial stability. It means that the speculator’s
worst nightmare—–suddenly going “upside down” due to a sharp spike in funding
costs—-is eliminated by central bank writ.
Stated differently, ZIRP
systematically dismantles the market’s natural stability mechanisms. One natural deterrent to
excessive financial gambling, for example, is the cost of hedging a
speculator’s portfolio of “risk assets” against a broad market plunge. In an
honest market environment, hedging costs consume a high share of profits,
thereby sharply limiting risk appetites and the amount of capital attracted
to speculative trading.
By contrast, an
extended regime of ZIRP, coupled with the central banks’ perceived “put”
under risk assets, drives the cost of “downside insurance” to negligible
levels because S&P 500 put writers are emboldened and subsidized to pick
up nickels (i.e. options premium) in front of a benign central
bank steamroller. This ultra-cheap downside insurance, in turn, attracts
ever larger inflows of speculative capital to the casino.
This corrosive game has been
underway ever since the Greenspan Fed panicked on Black Monday in October 1987
and flooded the stock market with liquidity. It is now such an endemic
feature of Wall Street that it is falsely assumed to be the normal order of
things. But, then, would anyone have been picking up nickels in front of the
Volcker steamroller?
This dynamic is evident in the
chart of the S&P 500 since the March 2009 bottom. The dips have gotten
shallower and shallower as ZIRP and other pro-risk central bank policies
have eroded the market natural defenses against excessive speculation. As
if mid-2014, therefore, it can be fairly said that fear and short
interest have been extinguished almost entirely. The
Wall Street casino has thus become a one-way market that coils
dangerously upward, divorced completely from the fundamentals of
earnings and cash flow and real world economic conditions and prospects.
More
Individuals Pile Into Stocks as Pros Say Bull Is Spent
Jul 14, 2014 9:45 PM GMT
Main Street and Wall Street are moving in opposite directions. Individual investors are plowing money back into the U.S. stock market just as professional strategists say gains for this year are over. About $100 billion has been added to equity mutual funds and exchange-traded funds in the past year, 10 times more than the previous 12 months, according to data compiled by Bloomberg and the Investment Company Institute.
The growing optimism contrasts with forecasters from UBS AG to HSBC Holdings Plc, who say the stock market will be stagnant with valuations at a four-year high. While the strategists have a mixed record of being right, history shows the bull market has already lasted longer than average and individuals tend to pile in at the end of the rally.
“If Wall Street, after poring over all known data, comes up with a target and we’re already there, and you still see individual investors buying and they’re typically the ones that are late to the party, it would seem there is limited upside,” Terry Morris, a senior equity manager who helps oversee about $2.8 billion at Wyomissing, Pennsylvania-based National Penn Investors Trust Co., said in a July 8 phone interview.
More
http://www.bloomberg.com/news/2014-07-13/individuals-pile-into-stocks-as-pros-say-bull-is-spent.html
Draghi Says Banks Shouldn’t Count on Another Carry Trade
Jul 15,
2014 12:00 AM GMT
Banks shouldn’t count on a fresh round of European Central Bank cash to trade
sovereign debt and reap big profits, Mario Draghi
said. “The convenience to use the ECB cheap money to buy government bonds is much less” than in a previous funding round which started in 2011, the ECB president said in testimony to the European Parliament in Strasbourg, France yesterday. “The general situation is such that these carry trades are going to be much less profitable.”
As spreads on government debt from Spain to Italy over similar German securities have fallen to record lows, a carry trade that was lucrative two years ago may now yield less, Draghi said. In a liquidity drive that pins cash to banks’ performance in extending loans to the economy, the Frankfurt-based ECB could extend as much as 1 trillion euros ($1.36 trillion) in its so-called TLTRO program starting in September.
A condition of that program is that banks have to meet a benchmark on lending to businesses and households, excluding mortgages, or else hand back the money in 2016.
“If banks don’t lend to the non-financial private sector, they’ll have to repay,” Draghi said.
More
In other news this morning, the War Party is driving EurAsia and the
rest of the BRICs together.
Putin Says Russia Working ‘Intensively’ With China at Xi Meeting
Jul 15, 2014 12:23 AM GMT
Russian
president makes remarks at meeting with his Chinese counterpart in Fortaleza, Brazil, as part
of BRICS summit. * Xi applauds Russia’s decision to host 2018 World Cup *
Decision is more “evidence of Russia’s strengthening power and increasing
authority in the world” * Putin said he enjoyed his visit to China in May,
“especially with such results” * Putin said he’d like to visit China again in
November * Putin says “our cooperation is growing. We are working very
intensively” *NOTE: Russia’s state-run natural gas exporter OAO Gazprom in May
signed a $400 bln deal to supply fuel to China for 30 years.
http://www.bloomberg.com/news/2014-07-14/putin-says-russia-working-intensively-with-china-at-xi-meeting.html
Meanwhile in China’s command economy, it’s all back to boom again as the economy continues to wobble. Will the next Lehman come from the east?China’s Local Governments Pile On Stimulus
Jul 15, 2014 5:21 AM GMT
China’s regional
governments are starting to pull out their own stimulus cards to shore up
growth as central authorities limit aid for the economy. Northern Hebei province, whose 4.2 percent first-quarter expansion pace was less than half that of a year earlier, will invest 1.2 trillion yuan ($193 billion) in areas including railways, energy and housing. Heilongjiang province in the northeast, with 2.9 percent growth that was China’s lowest in the first quarter, will spend more than 300 billion yuan over two years in areas including infrastructure and mining.
Any borrowing to fund the investment risks exacerbating financial dangers from local-government debt that swelled to about $3 trillion as of June 2013. While Premier Li Keqiang is trying to expedite spending from existing budgets and avoid broad stimulus, provinces such as Hebei are facing bigger shortfalls on their own growth goals than the national government, which has a target of about 7.5 percent.
“The motivation is there -- currently GDP is still the key performance indicator for local officials,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong, who previously worked at the European Central Bank.
Figures
today from the People’s Bank of China showed that the broadest measure of
financing, new yuan loans and money supply all topped
estimates in June, signaling policy makers’ shift toward supporting economic
growth over reining in shadow banking.
More
"We
take a decision, then put it on the table and wait to see what happens. If
there is no protest, because most people have no idea what we are doing, we
take step after step until we are beyond the point of no return."
Jean-Claude
Juncker.
At the Comex silver depositories Monday final figures were: Registered 55.12 Moz,
Eligible 118.02 Moz, Total 173.14 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more on the wealth destroying EUSSR. Not to
worry, Luxembourg’s liar Juncker, is apparently just the man to fix it. It’s
enough to make H. M’s G. order cognac for breakfast.Italy is not technically part of the Third World, but no one has told the Italians.
P. J. O’Rourke
Italian Ajani Emerges as Drug Billionaire in Switzerland
Jul 15,
2014 5:00 AM GMT
Mauro Ajani loves his native Italy. That’s why in 2006 he tried to list Cosmo Pharmaceuticals SpA (COPN), the
drugmaker he founded a decade earlier, in his hometown of Milan. After waiting
three months to meet the head of the stock exchange there and getting no
response, Ajani put sentimentality aside and called the SIX Swiss Exchange. “Italy is a wonderful country,” Ajani told investors on a conference call last week. It’s also one of the most difficult countries to do deals in, he said. “If you are not a friend of a friend, everything is difficult.”
Cosmo began trading in Switzerland in March 2007, and lately has been on a tear. The Lainate, Italy-based company is up 124 percent this year after jumping 174 percent in 2013. The increase has elevated Cosmo’s market capitalization to 2.85 billion Swiss francs ($3.2 billion) and made Ajani, who holds a 39.6 percent stake through Cosmo Holding SpA and Cassiopea SA, a billionaire. He’s never appeared on an international wealth ranking.
“This is a dream,” he said in a phone interview last week. “This is something that people work to achieve.”
Cosmo, which makes therapies for the treatment of gastrointestinal disease, got a boost last week when it struck a $2.7 billion deal with Salix Pharmaceuticals Ltd. (SLXP) to sell the Raleigh, North Carolina-based company three key U.S. patents. The transaction will allow Salix to incorporate in Ireland and cut its tax bill.
Ajani, 59, has spent his entire career in the pharmaceutical industry. He began as a 19-year-old selling pharmaceuticals door-to-door in Italy before taking jobs in Russia, Spain, France and California.
----American-style ambition is what Italy lacks, he said.
“One of the major problems we
have in Italy is people don’t dream,” he said. “I still have a lot of dreams.”
More
Jean-Claude Juncker could take his revenge by blocking Britain from key Brussels post
Fears the new president of the European Commission could seek revenge for David Cameron's attempt to block him from the role
By Peter Dominiczak and Bruno
Waterfield in Brussels 11:00PM BST 14 Jul 2014
JEAN-CLAUDE Juncker is to be
confirmed as president of the European Commission, amid fears that he will
punish David Cameron for trying to block his appointment.
Mr Juncker, the federalist former
prime minister of Luxembourg, is expected to get the senior Brussels job
following a vote by MEPs in Strasbourg.
However, diplomatic sources have
told The Telegraph that he intends to seek retribution in the coming weeks
following Mr Cameron’s failed attempt to prevent him getting the job.
The Prime Minister needs the new
European Commissioner to give Britain a key post so that the UK can reform its
relationship with the EU ahead of the in-out referendum Mr Cameron has pledged
to hold in 2017.
Mr Cameron believes the post of
internal market commissioner would allow him to repatriate powers from Brussels
in the coming years.
Officials have said that Mr
Juncker will deny Britain the post because of Mr Cameron’s repeated calls for
tougher restrictions on the free movement of migrants in the EU.
Mr Juncker regards free movement
as non-negotiable and has been irritated by Mr Cameron’s comments about the
need to stop “benefits tourism”
More
"When it becomes serious, you have to lie"
Jean-Claude Juncker. Ex-Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President later today.
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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