Baltic Dry Index. 755 +01
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"There
is no reason whatever to fear a crash".
Charles
Mackay. 2 October 1845, Glasgow Argus, on Railway Mania.
With the Fed’s Yellen put nowhere in sight yesterday,
best not to bring up the Great Disconnect between Main Street and Wall Street,
nor the underwater Baltic Dry Index, nor the bearish Coppock Indexes, nor the
collapse in the Chicago PMI. With crash season rapidly approaching, Wall
Streeters’ can only hope the Mrs Yellen returns from shopping, or vacation, or
whatever, today, to order the New York Fed to start buying stocks again. With a
massive wobble like this, what happens when the Fed or the markets, or both,
decide the age of mal-investment is over, and with it the voodoo world of ZIRP.
Billions upon billions have been borrowed this year for stock buy-backs. Much
of those billions just went poof yesterday, unless the Fed’s talking chair
squeaks up today.
"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
July 31, 2014, 4:25 p.m. EDT
Dow industrials tumble 317 points in worst day since Feb. 3
S&P 500 has steepest percentage drop since April
NEW YORK (MarketWatch) — The Dow Jones Industrial Average skidded more than 300
points Thursday in its biggest one-day drop in six months, as a combination of
earnings, economic news and a default by Argentina triggered a broad selloff.
Investors weighed the implications of robust economic growth and signs of
rising wage inflation on Federal Reserve policy ahead of the key monthly jobs
report on Friday.
The day’s losses mean both the S&P 500 and Dow industrials suffered
their first monthly decline since January.
The S&P 500 SPX -2.00% fell
39.40 points, or 2%, to 1,930.67, its steepest one-day percentage drop since
April, and lost 1.5% over July. All 10 main sectors dropped more than 1.5% on
Thursday, as the energy and telecom sector stocks lead losses.
The Dow Jones Industrial Average DJIA -1.88% dropped
316.99 points, or 1.9%, to 16,563.37, its worst showing on both counts since
Feb. 3. It finished the month 1.6% lower and its performance for 2014 turned
negative.
The implied volatility on the S&P 500, as measured by the CBOE Vix
index and dubbed “Wall Street’s fear gauge”, jumped 27% to 17.
Kim Caughey Forrest, investment analyst at Fort Pitt Capital, said there
was no single reason that should warrant such a selloff, making the drop more
difficult to explain. “At the same time, we were surprised to see markets go up
in light of all of the uncertainty and geopolitical tensions. Perhaps,
investors finally caught up with some of the news,” Forrest added.
More
Dismal US data and poor corporate earnings fuel global sell-off
Britain's benchmark index loses almost £11bn as investor jitters hit global markets
Billions of pounds were lost by
stock markets on Thursday after a combination of weak corporate earnings,
dismal US economic data and ongoing tensions with Russia fuelled a global
sell-off.
The FTSE 100 in London closed
0.64pc down at 6,730.11 – a fall worth almost £11bn.
The Footsie was dragged down by a
sell-off in America, where a shock fall in the closely watched Chicago
purchasing managers’ index and disappointing production figures from Exxon
Mobil, the world’s largest energy company, triggered investor jitters.
The Dow Jones Industrial Average
erased all the gains it has made in 2014 to close down 317 points, or 1.9pc, at
16,563.30. The broader S&P 500 index fell 2pc and the tech-focused Nasdaq
dropped almost 2.1pc.
“With rate rises now becoming
ever more of a reality, even a very positive number could send the markets
south,” said William Nicholls, a dealer at Capital Spreads.
Disappointing corporate results
also hit stock markets in Europe. Germany’s DAX index slipped 1.9pc 9,407.48,
dragged down by an announcement by adidas that it was planning to scale back
plans to expand in Russia.
In Argentina, the Merval index
closed down 8.4pc after the South
American country defaulted on its debt for the second time in 12 years.
More
Asian Stocks Extend Global Rout Amid Earnings Concerns
Aug 1,
2014 5:40 AM GMT
Asian stocks dropped, extending the biggest global rout in six months
that saw the Dow Jones Industrial Average wipe out this year’s gains in
one session amid weaker earnings and credit-market concerns. Skymark Airlines Inc. sank 9.6 percent after Japan’s third-largest carrier said it may go out of business should it have to pay Airbus Group NV a penalty for canceling the purchase of six A380 superjumbos. Samsung Electronics Co. fell 3.4 percent in Seoul after UBS AG cut its rating on the stock. China Rongsheng Heavy Industries Group Holdings Ltd. lost 2.5 percent in Hong Kong as the shipbuilder predicted a wider first-half loss.
The MSCI Asia Pacific Index (MXAP) fell 0.8 percent to 147.63 as of 12:37 p.m. in Hong Kong as nine of its 10 industry groups declined. The gauge is heading for its first weekly loss in three weeks after climbing to the highest close since June 2008 earlier this week and yesterday capping a 2.1 percent gain for July. The MSCI All-Country World Index sank 1.5 percent yesterday, the most since February.
“The market looks fully valued and investors have been looking for an excuse to sell,” Angus Gluskie, who helps oversee more than $550 million at White Funds Management in Sydney, said by phone. “We’ve got a range of convenient reasons for investors to take some money off the table. The geopolitical risks have been rising and data flow in the U.S. is suggesting that the Fed may have to raise interest rates sooner rather than later. The Argentine issue is another piece of adverse news flow.”
More
http://www.bloomberg.com/news/2014-08-01/asian-stocks-extend-global-rout-amid-earnings-concerns.html
Chicago PMI Collapses To 13-Month Lows, Biggest Miss On Record
Submitted by Tyler Durden on
07/31/2014 09:55 -0400
We
warned last month that under the covers Chicago PMI looked a lot weaker
than the headlines and this morning's collapse confirms that. Against
expectations of a small rise to 63.0, Chicago PMI plunged from 62.6 to
52.6 (13-month lows) for the biggest miss on record. According to the
release itself, "A monthly fall of this magnitude has not been
seen since October 2008 ." The was an 8 standard-deviation
miss from analyst expectations (Joe Lavorgna was on the high side at 63.0). New
orders, inventory, production, order backlogs, and prices paid all dropped (but
employment rose?). This is the biggest 2-month drop since Lehman (and
2nd biggest since 1980). We await the seasonal adjustment
"correction" as MNI get the call from Yellen.----Of course, very quick damage control was needed and sure enough:
In spite of the sharp decline
this month, feedback from purchasing managers was that they saw the
downturn as a lull rather than the start of a new downward trend. This
was especially so given the recent strong performance and the fact that
Employment managed to increase further in July.
More
No-Exit Strategy May Be Fed Burden in Unwinding Stimulus
Aug 1,
2014 5:01 AM GMT
The Federal
Reserve is trying to change as little as possible as it crafts its strategy
to exit from record stimulus. The trouble is financial markets have changed so
much that the still-developing plan may prove costly and ultimately unworkable.
The approach, sketched out in the minutes of the Fed’s June 17-18 meeting and in officials’ comments since then, retains a focus on the federal funds rate as the central bank’s target. Policy would continue to be conducted mainly through banks rather than via dealings with money-market funds.
---- Banks no longer need to borrow in the once-vibrant fed funds market to meet reserve requirements, as they did before the crisis, because the Fed has pumped so much money into the financial system during the last six years. As a result, trading in that market has dwindled and now mainly comprises U.S. branches of foreign banks acting as arbitragers, according to research by economists at the Federal Reserve Bank of New York.
To help keep that market alive, the Fed will have to pay those banks a premium to continue trading in it, which will eat into the profits the central bank remits to the U.S. government each year. And even then, foreign banks may be unwilling to continue their trades as stricter regulations on leverage take effect.
“I don’t like the political or economic implications” of the plan, Joseph Gagnon, a former Fed and U.S. Treasury official who is now at the Peterson Institute of International Economics in Washington, said in an e-mail.
“It costs the taxpayers money, and it makes for a less efficient financial system,” he added, a view echoed by former Fed Governor Jeremy Stein in an interview.
More
Below, after US judge Tommie Griesa, le deluge?
While we presume the good judge reached his decision for sound valid reasons of
US law, there is a growing worldwide suspicion that US courts and more so financial
penalties, are increasingly biased against Johnny Foreigner and intended to
give advantage to American commercial interests. Talk about incentivising the rest
of the world to drop the dollar reserve standard. But what to put in its place?
“The Argentines [your nation here]
outside looked from America to Russia, and from Russia to America, and from
America to Russia again; but already it was impossible to say which was which.”
With apologies to George Orwell and
Animal Farm.
Argentina accuses US of judicial malpractice for triggering needless default
Country threatens to take US to The Hague after defaulting on its debts for the second time in 12 years
Argentina has threatened to take
the US to the International Court of Justice for judicial malpractice, accusing
the country of gross incompetence for allowing two small hedge funds to push
the Argentine state into default, regardless of the mayhem caused for other
creditors and the damage to ordinary people.
The bitter attack came after a
New York court prevented Argentina paying $539m to its creditors even though
the Peronist government of Cristina Kirchner wants to do so, in the latest
bizarre development in the country’s long struggle to regain access to global
capital markets.
Judge Thomas Griesa said Argentina
must first pay $1.5bn in arrears to “hold-out” investors who never accepted a
restructuring deal following Argentina’s last default 12 years ago, even though
many scooped up the bonds for a fraction of their face value during the crisis.
Standard & Poor’s immediately
declared the country to be in “selective default” after a last-minute
compromise collapsed and the deadline passed on Wednesday night. Fears of a
chain reaction set off panic in Buenos Aires, where the Merval index of stocks
fell 7pc and leading banks plunged 12pc
----“To say that Argentina is in technical
default is a ridiculous hoax,” said Jorge Capitanich, Argentina’s cabinet
chief, accusing Judge Griesa of acting as an “agent” of speculative funds.
“There’s been mala praxis here by the US justice system, for which all three
branches of the government are responsible. Argentina has tried to negotiate in
good faith,” he said,
Mr Capitanich said Argentina is
considering calling for a debate at the United Nations and launching an appeal
at the International Court of Justice in The Hague. “We can’t have a global
financial system that lets a miniscule group of funds undermine the process of
debt restructuring,” he said.
The default will almost certainly
push the country deeper into recession but is nothing like the traumatic events
of 2000-2002 when Argentina’s GDP contracted by 11pc. Police lost control of
the streets and president Fernando de la Rua had to be rescued from the roof of
his mansion, Casa Rosada, in an air force helicopter. The country then defied
the world, imposing a 70pc haircut on bondholders in the biggest debt
repudiation in history.
This time
Argentina is widely seen as the victim of sharp practice. “This has been forced
upon Argentina by predatory speculators. Paying the vulture funds would be
disastrous, making it harder for countries across the world to resolve future
debt crises,” said Sarah-Jayne Clifton, from the Jubilee Debt Campaign.
More
There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
J. K. Galbraith
At the Comex silver depositories Thursday final figures were: Registered 60.33
Moz, Eligible 116.31 Moz, Total 176.64 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
The bent, the seriously bent and the totally
doubled over US attempt to salvage something, other than nuclear war, from
Obama’s botched coup in Kiev.
"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.
Former US Intel Officers Warn President Obama on US Actions Against Russia
Veteran Intelligence
Professionals for Sanity, July 29, 2014
MEMORANDUM FOR: The President
FROM: Veteran Intelligence Professionals for Sanity (VIPS)
SUBJECT: Intelligence on Shoot-Down of Malaysian Plane
FROM: Veteran Intelligence Professionals for Sanity (VIPS)
SUBJECT: Intelligence on Shoot-Down of Malaysian Plane
U.S.-Russian intensions are
building in a precarious way over Ukraine, and we are far from certain that
your advisers fully appreciate the danger of escalation. The New York Times and
other media outlets are treating sensitive issues in dispute as flat-fact,
taking their cue from U.S. government sources. Twelve days after the shoot-down
of Malaysian Airlines Flight 17, your administration still has issued no
coordinated intelligence assessment summarizing what evidence exists to determine
who was responsible – much less to convincingly support repeated claims that
the plane was downed by a Russian-supplied missile in the hands of Ukrainian
separatists. Your administration has not showed any satellite imagery showing
that the separatists had such weaponry, and there are several other "dogs
that have not barked." Washington’s credibility, and your own, will
continue to erode, should you be unwilling – or unable – to present more
tangible evidence behind administration claims.
In what follows, we put this in
the perspective of former intelligence professionals with a cumulative total of
260 years in various parts of U.S. intelligence.
We, the undersigned former
intelligence officers want to share with you our concern about the evidence adduced
so far to blame Russia for the July 17 downing of Malaysian Airlines Flight 17.
We are retired from government service and none of us is on the payroll of CNN,
Fox News, or any other outlet. We intend this memorandum to provide a fresh,
different perspective.
As veteran intelligence analysts
accustomed to waiting, except in emergency circumstances, for conclusive
information before rushing to judgment, we believe that the charges against
Russia should be rooted in solid, far more convincing evidence. And that goes
in spades with respect to inflammatory incidents like the shoot-down of an
airliner. We are also troubled by the amateurish manner in which fuzzy and
flimsy evidence has been served up – some it via "social media."
As intelligence professionals we
are embarrassed by the unprofessional use of partial intelligence information.
As Americans, we find ourselves hoping that, if you indeed have more conclusive
evidence, you will find a way to make it public without further delay. In
charging Russia with being directly or indirectly responsible, Secretary Kerry
has been particularly definitive. Not so the evidence. His statements seem
premature and bear earmarks of an attempt to "poison the jury pool."
Painting Russia Black
We see an eerie resemblance to an
earlier exercise in U.S. "public diplomacy" from which valuable
lessons can be learned by those more interested in the truth than in exploiting
tragic incidents for propaganda advantage. We refer to the behavior of the
Reagan administration in the immediate aftermath of the shoot-down of Korean
Airlines Flight 007 over Siberia on August 30, 1983. We sketch out below a
short summary of that tragic affair, since we suspect you have not been
adequately briefed on it. The parallels will be obvious to you.
An advantage of our long tenure
as intelligence officers is that we remember what we have witnessed first hand;
seldom do we forget key events in which we played an analyst or other role. To
put it another way, most of us "know exactly where we were" when a
Soviet fighter aircraft shot down Korean Airlines passenger flight 007 over
Siberia on August 30, 1983 over 30 years ago. At the time, we were intelligence
officers on "active duty." You were 21; many of those around you
today were still younger.
Thus, it seems possible that you
may be learning how the KAL007 affair went down, so to speak, for the first
time; that you may now become more aware of the serious implications for
U.S.-Russian relations regarding how the downing of Flight 17 goes down; and that
you will come to see merit in preventing ties with Moscow from falling into a
state of complete disrepair. In our view, the strategic danger here dwarfs all
other considerations.
Hours after the tragic shoot-down
on Aug. 30, 1983, the Reagan administration used its very accomplished
propaganda machine to twist the available intelligence on Soviet culpability
for the killing of all 269 people aboard KAL007. The airliner was shot down
after it strayed hundreds of miles off course and penetrated Russia’s airspace
over sensitive military facilities in Kamchatka and Sakhalin Island. The Soviet
pilot tried to signal the plane to land, but the KAL pilots did not
respond to the repeated warnings. Amid confusion about the plane’s
identity – a U.S. spy plane had been in the vicinity hours earlier – Soviet
ground control ordered the pilot to fire.
Much more
Prepared by VIPS Steering Group
- William Binney, former Technical Director, World Geopolitical & Military Analysis, NSA; co-founder, SIGINT Automation Research Center (ret.)
- Larry Johnson, CIA & State Department (ret.)
- Edward Loomis, NSA, Cryptologic Computer Scientist (ret.)
- David MacMichael, National Intelligence Council (ret.)
- Ray McGovern, former US Army infantry/intelligence officer & CIA analyst (ret.)
- Elizabeth Murray, Deputy National Intelligence Officer for Middle East (ret.)
- Coleen Rowley, Division Counsel & Special Agent, FBI (ret.)
- Peter Van Buren, U.S. Department of State, Foreign Service Officer (ret)
- Ann Wright, Col., US Army (ret); Foreign Service Officer (ret.)
"The secret of life is honesty and fair dealing. If you can
fake that, you've got it made."
Groucho Marx
Groucho Marx
Another weekend, and trouble seems to approach from
all directions. American global leadership has never looked more impotent, and
that includes the Carter years. When America speaks, no one outside of suicidal
continental Europe is listening, not even America’s client state Israel. Only
the puppet state of Kiev is fully under US control for now. One hundred years
ago this month, most of Europe committed insane suicide, that eventually went
truly global, when a desperate Germany attempted to mobilise Mexico into
attacking the United States.
We seem to be approaching our current era’s moment
of insanity. Stay long fully paid up physical gold and silver. We can only hope
that the latest US EU Russian sanctions, don’t make President Putin feel he has
nothing left to lose by annexation in eastern and southern Ukraine. Have a good
weekend everyone.
If
all else fails, immortality can always be assured by spectacular error.
J. K.
Galbraith.
The monthly Coppock Indicators finished July.
DJIA: +157 Down. NASDAQ: +318 Down. SP500: +232 Down. The Fed’s final bubble has taken on a
very scary wobble, but this is nothing compared to the return of real interest
rates at some point ahead.
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