Baltic Dry Index. 747 +04
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."
F. A. von Hayek
Don’t fight the Fed, goes the old Wall Street
saying. Meaning the Fed can stay irrational longer than you can stay solvent,
to misquote J. M. Keynes. This morning
J. P. Morgan gives us its 21st century update. Meanwhile the US Navy
beats something of a Pacific retreat. Both something that says volumes about
the coming end of the Great Nixonian Error of fiat money and the dollar reserve
standard. Stay long fully paid up physical gold and silver for the transition.
JPMorgan Says Don’t Fight PBOC as Stimulus Lifts Stocks
Jul 30, 2014 3:55 AM GMT
Don’t fight the People’s Bank of China. That’s the advice to investors from Adrian Mowat, the Hong Kong-based chief Asia and emerging-market strategist at JPMorgan Chase & Co. who raised his rating on Chinese stocks to neutral from underweight in a report dated yesterday. He said shares will rally through October after the Hang Seng China Enterprises Index (HSCEI) entered a bull market on July 28.
China’s central bank presided over a bigger-than-estimated surge in new credit in June and has cut reserve requirements for some lenders, while local media reported the PBOC set up a 1 trillion yuan ($162 billion) lending facility with the China Development Bank to fund housing projects. The signs of monetary easing, along with accelerated government spending and gains in manufacturing industries, have spurred mutual fund managers to boost Chinese stock holdings to record highs, according to a July 28 report from HSBC Holdings Plc.
“The scale of monetary stimulus since June is a surprise,” Mowat wrote. “All these changes indicate a more aggressive approach to driving growth.”
Mowat is joining bulls, including Standard Chartered Plc’s Erwin Sanft and Templeton Emerging Markets Group’s Mark Mobius, who predict the rally will extend as low valuations lure investors and the government supports growth. Bears such as Bank of America Corp.’s David Cui say stimulus is delaying the economy’s shift toward a more sustainable model driven by consumption and services.
The Hang Seng China Enterprises index rose 0.5 percent to 11,180.24 at 10:41 a.m. in Hong Kong, climbing for a seventh day in the longest winning streak in four years. The measure is set to close at the highest level since Dec. 10. China’s Shanghai Composite Index (SHCOMP) of mainland shares slipped 0.1 percent.
Aggregate financing was 1.97 trillion yuan in June, the PBOC said on July 15, compared with the median estimate of analysts for 1.425 trillion yuan. New local-currency loans were 1.08 trillion yuan and M2 money supply grew 14.7 percent from a year earlier.
Premier Li Keqiang said in June that authorities will “ensure” a minimum annual economic growth rate of 7.5 percent. China’s manufacturing industries expanded at the fastest pace in 18 months in July, according to a preliminary purchasing managers’ index from HSBC Holdings Plc and Markit Economics. Industrial companies reported a 17.9 percent gain in earnings in June from a year earlier, the fastest pace since September.
Investors’ sentiment on Chinese stocks has improved over the past few days amid speculation the economy will stabilize in coming quarters, Jason Sun and Minggao Shen, analysts at Citigroup Inc., said in a report yesterday.
More
U.S. Says More Chinese Drills a ‘Natural Evolution’
Jul 30, 2014 1:58 AM GMT
An increase in Chinese maritime exercises in the Pacific is a “natural
evolution” and the drills will grow in complexity as the navy boosts its
capacity, commander of the U.S. 7th Fleet Vice Admiral Robert Thomas said. China is expected to keep up a “steady drumbeat” of exercises in the region, Thomas told reporters yesterday at the opening ceremony of a bilateral naval exercise with Singapore known as CARAT Singapore.
“This is a natural evolution for the PLAN as they improve their professionalism, as they improve both their capacity and capability,” he said, referring to the People’s Liberation Army Navy. “You should expect more exercises, and frankly more complex exercises.”
China is holding drills across the East and South China Seas that may add to tensions with neighbors over territory as President Xi Jinping expands the reach of the navy to position the country as a maritime power. President Barack Obama has said the U.S. isn’t seeking to contain China and that there’s room to accommodate China’s growing economic and military clout.
China has described the exercises, which include a live-firing drill in the South China Sea, as routine even as they are larger in scope. The nation is ratcheting up pressure on neighbors including Japan and the Philippines as the U.S. reassures its allies it remains committed to its policy for an economic and strategic rebalancing to the region.
More
But all is not well in Pandaland. We note with
rising concern increasing sign of social unrest in mainland China. Will/is
America’s War Party trying to stage another Kiev?
Clashes in China’s Xinjiang Leaves ‘Dozens’ Dead
Jul 30, 2014 5:37 AM GMT
Clashes between police and a knife-wielding gang killed dozens of people in China’s turbulent
Xinjiang region, marking a new escalation of violence after a series of bomb
attacks in recent months. The violence on July 28 was a premeditated terrorist act, the official Xinhua News Agency reported. The gang attacked a police station and government offices in Xinjiang’s Kashgar area, killing or wounding dozens of people. Police responded by shooting dead “dozens of members of the mob,” Xinhua said.
The violence may the deadliest since a series of explosions in Xinjiang in May killed 31 people. Authorities have tightened security and stepped up police patrols amid discord between ethnic Han Chinese and the minority Muslim Uighur population. China started a yearlong campaign against violence, and President Xi Jinping pledged to “spare no effort” to maintain stability in the region.
The latest attack “is being handled in a proper way,” Vice Public Security Minister Huang Ming said at a briefing in Beijing today.
Last month, Xinjiang law enforcement officers shot dead 13 people after a group rammed a truck into a police station and set off explosives, Xinhua reported on June 21. Shache, the site of this week’s violent clash, was previously assaulted on Dec. 30, when nine knife-wielding terrorists attacked a police station, throwing explosives and setting police cars on fire. Police shot and killed eight attackers.
Thirty-one cars were vandalized in the July 28 incident, six of which were set on fire, Xinhua said. The assailants attacked civilians and smashed vehicles, the agency said.
More
In other less bullish news, more own goals in the
west’s struggle to reach escape velocity from casino capitalism and the Great
Recession.
U.S. Stocks Fall as Russian Sanctions Overshadow Earnings
Jul 29,
2014 9:40 PM GMT
U.S.
stocks fell as President Barack Obama announced new sanctions against Russia and warned
its actions in Ukraine are “setting back decades of progress,” snuffing out
earlier gains led by telephone stocks. United Parcel Service Inc. slid 3.7 percent after cutting its full-year forecast. Windstream Holdings Inc. surged 12 percent on plans to spin off assets into a publicly traded real estate investment trust. Masco Corp. (MAS) and Merck & Co. gained after reporting earnings that topped analysts’ projections. Twitter Inc. soared 33 percent after the market’s close as second-quarter revenue beat estimates.
----The U.S. sanctioned three Russian banks and a state-owned shipbuilder that serves Russia’s navy and oil and gas industry, joining with the European Union in escalating the penalties for Russia over its actions in Ukraine.
The EU curbed Russia’s access to bank financing and advanced technology in its widest-ranging sanctions yet. EU governments agreed to bar Russian state-owned banks from selling shares or bonds in Europe and restricted the export of equipment to modernize the oil industry, a key prop for Russia’s economy, an EU official said.
More
http://www.bloomberg.com/news/2014-07-29/u-s-stock-index-futures-are-little-changed-before-fomc.html
How Argentina’s Default May Trigger $29 Billion in Claims
Jul 29, 2014 6:24 PM GMT
By defaulting tomorrow, Argentina
may trigger bondholder claims of as much as $29 billion -- equal to all its
foreign-currency reserves.
If the overdue interest on
Argentina’s dollar-denominated securities due 2033 isn’t paid by July 30,
provisions in bond indentures known as cross-default clauses would allow the
nation’s other debt holders to also demand their money back immediately. The
amount corresponds to Argentina’s debt issued in foreign currencies and
governed by international laws.
U.S. District Court Judge Thomas
Griesa blocked Argentina’s attempt last month to transfer the $539 million in
interest after the nation didn’t set aside money for holdout creditors, who won
a ruling that entitled them to full repayment of obligations that Argentina
repudiated in 2001. While Citigroup Inc. says there’s little chance investors
will invoke the pay-back clauses in coming weeks, potential claims are large
enough to exhaust the country’s reserves.
“It would mean
that Argentina is in default on most all of its debt and presumably everybody
would be in the same boat,” Anna Gelpern, a fellow at the Peterson Institute
for International Economics and a law professor at Georgetown University, said
in a telephone interview.
More
"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 Tuesday final figures were: Registered 58.03 Moz,
Eligible 117.53 Moz, Total 175.66 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Yesterday on America’s orders, the EUSSR played
Russian roulette and immediately lost in round one. If the latest sanctions are
actually implemented, and with the EUSSR watch what they do not what they say,
by this time next year Germany will be alongside snake bit France in the EUSSR’s
intensive care ward. Uncle Scam might not have knocked out Belarus and Russia
with his over reached botched coup in Kiev, but he gets the consolation prize
of knocking Germany out of a reviving EurAsia. John Bull, already embroiled in its own love-hate relationship with Russia is cheering for now, but what does this mean for English Premier League football, now heavily dependent on cash from Russian oligarchs? More importantly for the EUSSR, What will real sanctions do to France and dead in the water Club Med.
"The history of paper money is an account of abuse, mismanagement, and financial disaster."
Richard M. Ebeling
Siemens to BP Prepare for Downward Russia Business Spiral
Jul 29,
2014 11:01 PM GMT
BP Plc
(BP/), Siemens
AG (SIE) and Renault SA (RNO) are among European companies
preparing for a downward turn in their Russian business following the European
Union’s decision to impose its widest-ranging sanctions yet over President
Vladimir Putin’s involvement in eastern Ukraine. EU leaders announced plans yesterday to restrict the export to Russia of equipment to modernize the oil industry and forbid the sale of machinery, electronics and other civilian products with military uses. New arms contracts are also not allowed.
The sanctions will have a direct impact on companies like Siemens, which may no longer be able to sell oil equipment to Russia, and an indirect affect on many others like Renault, which expects the country’s auto market to contract more than 10 percent in 2014 as consumers hold back purchases. BP, owner of 20 percent of state-backed OAO Rosneft (ROSN), yesterday warned of risks to its profit and production due to the crisis.
“In Europe, for some companies this is becoming a major problem, and they can see it becoming an even bigger one,” said Andrew Kenningham, an economist at research firm Capital Economics. “The long-term impact of a standoff, if it continues, is clearly very bad for business confidence and future investment in Russia.”
----German exports to Russia could contract 10 percent to 20 percent as a result of the escalating crisis, said Martin Wansleben, head of the Association of German Chambers of Commerce and Industry. German trade with Russia was worth almost $88 billion last year, according to data compiled by Bloomberg. Germany is the EU’s largest exporter to Russia.
The new EU measures also bar Russian state-owned banks from selling shares or bonds in Europe. New U.S. sanctions announced yesterday target VTB Bank (VTBR), Bank of Moscow and the Russian Agricultural Bank. United Shipbuilding Corp., which has contracts with the Russian military, also was sanctioned.
The
pain from sanctions may be felt most sharply in the energy sector. Rosneft, led
by Putin ally Igor Sechin, is trying to tap deposits of hard-to-access oil
locked in shale formations and deep underwater, in order to compensate for
stagnant production from conventional fields. The company is Russia’s largest
oil producer.
----Siemens,
whose 3,100 employees in Russia helped generate 2.2 billion euros ($2.95
billion) in sales from the country last year, counts the likes of OAO Gazprom (OGZD) and pipeline operator OAO Transneft
among its customers. The Munich-based company is also providing electrical
equipment for OAO Lukoil (LKOD)’s Filanovskaya oil platform in the
Caspian Sea, while its train-making joint venture has signed a memorandum of
understanding with Russian Railways to supply 675 freight locomotives by 2020.
More
On Dominoes, WMDs And Putin’s “Aggression”: Imperial Washington Is Intoxicated By Another Big Lie
by David Stockman •
Imperial Washington is truly running amuck in its insensible confrontation
with Vladimir Putin. The pending round of new sanctions is a
counter-productive joke. Apparently, more of Vlad’s posse will be put
on double probation, thereby reducing demand for Harry Macklowe’s swell
new $60 million apartment units on Park Avenue. Likewise, American
exporters of high tech oilfield equipment will be shot in the foot with an
embargo; and debt-saturated Russian state companies will be denied
the opportunity to bury themselves even deeper in dollar debt by
borrowing on the New York bond market. Some real wet noodles, these!But it is the larger narrative that is so blatantly offensive—that is, the notion that a sovereign state is being wantonly violated by an aggressive neighbor arming “terrorists” inside its borders. Obama’s deputy national security advisor, Tony Blanken, stated that specious meme in stark form yesterday:
“Russia bears responsibility for everything that’s going on in Eastern Ukraine” and “has the ability to actually de-escalate this crisis,” Blinken said.
Puleese! The Kiev government is a dysfunctional, bankrupt usurper that is deploying western taxpayer money to wage a vicious war on several million Russian-speaking citizens in the Donbas—-the traditional center of greater Russia’s coal, steel and industrial infrastructure. It is geographically part of present day Ukraine by historical happenstance. For better or worse, it was Stalin who financed its forced draft industrialization during the 1930s; populated it with Russian speakers to insure political reliability; and expelled the Nazi occupiers at immeasurable cost in blood and treasure during WWII. Indeed, the Donbas and Russia have been Saimese twins economically and politically not merely for decades, but centuries.
On the other hand, Kiev’s marauding army and militias would come to an instant halt without access to the $35 billion of promised aid from the IMF, EU and US treasury. Obama just needs to say “stop”. That’s it.
The civil war would quickly end, permitting the US, Russia and the warring parties of the Ukraine to hold a peace conference and work out the details of a separation agreement.
More
Sir Humphrey: Minister, Britain
has had the same foreign policy objective for at least the last five hundred
years: to create a disunited Europe. In that cause we have fought with the
Dutch against the Spanish with the Germans against the French, with
the French and Italians against the German, and with the French against
the Germans and Italians. Divide and rule, you see. Why should we change
now, when it's worked so well?
Hacker: That's all
ancient history, surely?
Sir Humphrey: Yes, and current
policy. We 'had' to break the whole thing [the EEC] up, so we had to get
inside. We tried to break it up from the outside, but that wouldn't work. Now
that we're inside we can make a complete pig's breakfast of the whole thing:
set the Germans against the French, the French against the Italians, the
Italians against the Dutch. The Foreign Office is terribly pleased; it's just
like old times.
Hacker: But surely we're
all committed to the European ideal?
Sir Humphrey: [chuckles]
Really, Minister.
Hacker: If not, why are
we pushing for an increase in the membership?
Sir Humphrey: Well, for the
same reason. It's just like the United Nations, in fact; the more
members it has, the more arguments it can stir up, the more futile and impotent
it becomes.
Hacker: What appalling
cynicism.
Sir Humphrey: Yes... We call it
diplomacy, Minister.
Yes minister.
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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