Baltic Dry Index. 1088 Friday
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
William F. Rickenbacker
Bunker Time! As the S&P flirts with 2000 on the
back of the Jackson Hole junket promising free money and ZIRP forever, this
morning we look at the reality far from backing up the Fed’s final bubble. When
this one bursts as it will, much to the Fedster’s talking chair’s surprise, expect
global havoc of biblical proportions.
Up first, Europe enters the twilight zone. And the
blowback from Russian sanctions and adopting the bottomless pit of the Ukraine
have yet to really kick in. First up, payback time for the UK’s weak coalition
Prime Minister. “You won’t be around to hold an in-out referendum,” thinks “scotch
for breakfast” JCJ.
Britain denied key EU role for not picking a woman
Jean-Claude Juncker expresses frustration that 'despite my repeated requests', most governments, including Britain, have put forward men for the most important positions in Europe
Britain will be denied a key role in the European Commission this week unless David Cameron replaces his male candidate with a woman, the body’s new president has indicated.Jean-Claude Juncker on Monday expressed his frustration that “despite my repeated requests”, most governments, including Britain, have put forward men for the most important positions in Europe.
He warned that the European Commission would be “neither legitimate nor credible” without more women and said that female candidates would have “a very good chance” of getting one of the top jobs.
Sources close to Mr Juncker, whose appointment Mr Cameron attempted to block, said that the remarks were directed at, among others, the British Prime Minister.
Mr Juncker’s comments are likely to be seen as a blow for Mr Cameron, who earlier this year selected Lord Hill of Oareford, who is little-known in European circles, as the candidate to be Britain’s European Commissioner.
European
leaders will discuss which countries are given the leading positions in the
Commission at a dinner in Brussels this weekend.
More
German Business Climate Drops for Fourth Month on Risks
Aug 25, 2014 9:09 AM GMT
German business confidence declined for a fourth month, reflecting a
faltering euro-area economy that European Central Bank President Mario Draghi says might
need more stimulus. The Ifo institute’s business climate index, based on a survey of 7,000 executives, fell to 106.3 in August from 108 in July. Economists predicted a drop to 107, according to the median of 39 estimates in a Bloomberg News survey.
Germany has been the engine of the euro area’s revival since last year and its resilience could be critical now as growth stalls and political tension with Russia threatens trade flows. Draghi signaled last week that he could step in with broad-based asset purchases as the region’s inflation outlook worsens.
----Ifo’s assessment of current conditions
slipped to 111.1 in August from 112.9, while a gauge of business expectations
fell to 101.7 from from 103.4 in July. Both measures fell more than economists
anticipated.
----The outlook has been clouded by escalating international sanctions against Russia because of its support for separatists in Ukraine. Russia has retaliated with bans on some food imports.
German electrical and electronic
exports to Russia fell 19.8 percent in the first half of the year,
manufacturers’ association ZVEI said last week. Investor confidence slid this
month to the lowest level since 2012 and the ZEW Center for European Economic
Research said economic growth will probably be weaker in 2014 than previously
predicted.
More
Hollande Replaces Cabinet as EU Austerity Rebellion Stirs
Aug 25,
2014 11:00 PM GMT
French President Francois Hollande’s firing of malcontent minister Arnaud
Montebourg risks unleashing the ruling Socialist Party’s chief critic of
budget cuts, adding to an austerity backlash stirring across Europe. Montebourg, 51, industry minister for the past two years, will not be part of the new team Hollande names today after he publicly criticized the president for “slavish” and “dogmatic” deficit reduction that he said stokes unemployment.
The dismissal of a top minister underlines the political crisis confronting Hollande as he seeks to balance European Union pressure to reduce the deficit with domestic demands to revive a stalled economy. It also exposes a wider rift in Europe as Italy uses its six-month presidency of the 28-nation EU to make a stand against a German-led drive to clamp down on spending.
“The backlash against austerity has taken some time to arrive, but this is it,” Antonio Barroso, an analyst at Teneo Intelligence in London, said by phone. “Of course Montebourg has done this for his personal ambition, but his timing is good: The mood on this is shifting at the European level.”
With an approval rating of just 17 percent and faced with record-high French unemployment levels, Hollande’s room for maneuver is shrinking as he slips into the second half of his five-year mandate.
More
Draghi Pushes ECB Closer to QE as Deflation Risks Rise
Aug
25, 2014 3:46 PM GMT
With euro-area data this week likely to show the weakest inflation since
2009, the ECB president used a high-powered central-banking conference in
Jackson Hole, Wyoming, to warn that investor bets on prices have “exhibited
significant declines.” Stocks rose, the euro fell and bond yields dropped to record lows today as the comments fanned speculation the ECB is finally heading for a form of monetary stimulus it has long avoided. Draghi previously said that a worsening of the medium-term inflation outlook would provide a reason for broad-based asset purchases.
More
http://www.bloomberg.com/news/2014-08-24/draghi-pushes-ecb-closer-to-qe-as-deflation-risks-rise.html
In Asia, China’s wobble just keeps on getting more extreme.
China's Baosteel hit by weakening yuan
Published: Aug 25, 2014 7:04 p.m. ET
BEIJING--Already facing pressure
from slumping demand, China's largest listed steelmaker has a new challenge: A
weakened Chinese currency.
State-run Baoshan Iron &
Steel Ltd. said Monday that foreign-exchange losses and weakness in China's
economy led to a 15% decline in net profit growth in the first half of the year
compared with a year earlier.
The company, also known as Baosteel, and other
steelmakers have been hit by slowing growth in the world's No. 2 economy,
particularly in the slumping housing market, as well as by broad industry
overcapacity.
Its bottom line was also hit by
270 million yuan ($43 million) in foreign-exchange losses due to the company's
dollar-denominated debt holdings, General Manager Dai Zhihao said at an online
investor conference. The losses were largely due to a 0.9% fall in the value of
the yuan in the first six months this year relative to the U.S. dollar, as well
as changes in U.S. interest rates, Mr. Dai said.
The pressure could last into
coming months, Mr. Dai said. "We think that a weak yuan will persist
through the third quarter or to the end of the year, but in the medium term,
the yuan will maintain its stability relative to the dollar or rise a
little," he said.
More
Elsewhere, wherever we look we see nothing but a
decent into anarchy and war. Imagine, two sovereign countries bombing another, “without
the consent of the United States!” Not
only that, Britain, the USA, and EU say such actions are harmful to democracy.
Something about kettles and pots comes to mind.
Islamic State Now Resembles the Taliban With Oil Fields
Aug 25,
2014 8:29 PM GMT
With its reign of terror over a large population and ability to self-finance
on a staggering scale, the extremist group that beheaded American journalist
James Foley resembles the Taliban with oil wells. The Islamic State, which now controls an area of Iraq and Syria larger than the U.K., may be raising more than $2 million a day in revenue from oil sales, extortion, taxes and smuggling, according to U.S. intelligence officials and anti-terrorism finance experts.
Unlike other extremist groups’ reliance on foreign donations that can be squeezed by sanctions, diplomacy and law enforcement, the Islamic State’s predominantly local revenue stream poses a unique challenge to governments seeking to halt its advance and undermine its ability to launch terrorist attacks that in time might be aimed at the U.S. and Europe.
“The
Islamic State is probably the wealthiest terrorist group we’ve ever known,”
said Matthew
Levitt, a former U.S. Treasury terrorism and financial intelligence
official who now is director of the counterterrorism and intelligence program
at the Washington Institute for Near East Policy. “They’re not as integrated
with the international financial system, and therefore not as vulnerable” to
sanctions, anti-money laundering laws and banking regulations.
----
The money that the Islamic State group receives from outside donors pales in
comparison to its income from extortion, kidnapping, robbery, oil smuggling and
the like, said a U.S. intelligence official who spoke on the condition of
anonymity to discuss classified information.
More
U.S. Won’t Consult Syria on Militant Strikes: White House
Aug 25, 2014 9:59 PM GMT
The U.S. hasn’t decided whether to attack Islamic State targets inside Syria and won’t ask
President Bashar al-Assad for permission if it does, a White House spokesman
said. President Barack Obama, who has ordered airstrikes against the Islamist militants in Iraq, hasn’t reached a conclusion about similar actions in Syria, White House press secretary Josh Earnest said today. Earnest declined to say whether the U.S. military has given Obama specific options for such attacks.
After more than two months of territorial gains in Iraq, Islamic State made its latest breakthrough in Syria over the weekend, seizing an air base and dislodging Assad’s forces from their last stronghold in the northeastern Raqqa province. That prompted the Syrian government, which almost became the target of U.S. military action a year ago, to call for a joint effort against the Islamist threat.
Foreign Minister Walid al-Muallem said Syria is ready to cooperate with the U.S., the U.K. or other countries in the region against Islamic State, though he said any strike that wasn’t coordinated with the government would be an act of aggression.
More
Egypt and UAE ‘launched air strikes against Libyan Islamists’
Britain, US and European partners condemn outside interference as harmful to democracy
Egypt and the United Arab Emirates have been accused of launching air strikes against Islamist targets in Libya – a move which would prove to be a major regional escalation in what is fast becoming a battle between the Arab old guard and the rampant forces of political Islam.A day after Islamist militias captured Tripoli airport and set up a confrontation with the new secular-leaning parliament, reports emerged that fighter jets dispatched by Egypt and the UAE had launched at least two strikes in the Libyan capital over the past week.
Militiamen from the port city of Misurata, who now appear to be firmly in control of the Libyan capital, accused Cairo of launching the air strikes against their positions before they seized control of Tripoli airport.
At least 13 fighters were killed when jets pounded the airport on Friday, according to reports.
Meanwhile there were allegations that Egypt and the UAE carried out the strikes without the consent of the United States – despite both countries being firm allies of the White House.
According to the New York Times, the Obama administration was caught completely by surprise, with Egyptian officials explicitly denying the operation to American diplomats.
“We don’t see this as constructive at all,” said one senior American official, according to the newspaper.
The air strikes came as political developments in Libya appeared to push the country further towards the abyss.
More
Ukraine Says Tanks Enter From Russia Amid Plan for Convoy
Aug
25, 2014 9:15 PM GMT
Ukraine said an armored
column including 10 tanks entered from Russia early today
as the government in Moscow unveiled plans to send a second convoy with
humanitarian aid into its neighbor’s rebel-held territory. Government forces destroyed two tanks, captured crew members and seized other vehicles from the column that was flying separatist banners, Andriy Lysenko, a spokesman for Ukraine’s military, told reporters in Kiev today. Russian Foreign Minister Sergei Lavrov said he had no information about the incident and accused Ukraine of providing “a lot of disinformation.”
Talks
scheduled for tomorrow between the leaders of Russia and Ukraine are bringing
no respite to the conflict that the United Nations
says has left at least 2,000 dead since President Vladimir Putin
annexed Crimea in March. Lavrov called on the Red Cross and
Ukraine to help with the second delivery of assistance as the humanitarian
situation continues to deteriorate in the war-torn regions.
More
Ukraine Early Election Set for October
Aug 25,
2014 10:00 PM GMT
Ukrainians will vote in early parliamentary elections Oct. 26, called by
President Petro Poroshenko to replace the ruling coalition that collapsed last
month as the nation fights a pro-Russian insurgency. Poroshenko announced the decision on Twitter yesterday. The governing alliance fell July 24, when two parties pulled out to force a snap vote. Arseniy Yatsenyuk, who became prime minister in February after months of protests turned deadly and led to the ouster of ex-President Viktor Yanukovych, will remain in a caretaker role until his successor is installed.
Ukrainians will elect a legislature that will pick a government to run the country wracked by nine months of political turmoil, violence, military insurgency, and economic hardship.
---- Poroshenko’s Solidarity party had 17.5
percent backing, according to a June 28-July 10 poll by the sociology research
company Rating. A party led by Oleh Lyashko, a lawmaker who is a proponent of
military action against pro-Russian separatists, was at 9.8 percent and former
Prime Minister Yulia Tymoshenko’s Batkivshchyna party had 8.5 percent. The
survey of 4,000 eligible voters has a margin of error of 1.5 percentage points.
More
"Gold bears the confidence of the world's millions, who value it far above the promises of politicians, far above the unbacked paper issued by governments as money substitutes. It has been that way through all recorded history. There is no reason to believe it will lose the confidence of people in the future."
Oakley R. Bramble
At the Comex silver depositories Monday final figures were: Registered 59.99 Moz,
Eligible 118.91 Moz, Total 178.90 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, did China’s housing bubble finally pop? What
now for the west if it really did? How does this help support S&P 2,000?
China’s falling real-estate prices trigger protests, clashes
Published: Aug 26, 2014 1:13 a.m. ET
HONG KONG (MarketWatch) — The sharp drop in China’s housing prices has led
to an outburst of anger among property owners, leading to violent clashes in
some cases, according to local media reports Tuesday. In one case, scores of property owners surrounded a Shanghai sales office of Greentown China Holdings Ltd. 3900, +6.56% GTWCF, -33.19% to protest the developer’s 25% cut to prices within a five-day period, according to a report on the NetEase NTES, +2.06% news portal site 163.com.
Protesters held banners with slogans such as “You cheated us!” and “300,000 yuan [$48,750] worth of assets evaporate within five days — years of work in vain!” according to photographs of the demonstration posted on the site.
The report quoted a sales manager from Greentown as saying that the price-cut was aimed to boost sales and “cope with competition” from rival China Vanke Co. 2202, +0.94% the nation’s largest residential property developer.
In other Chinese cities, such confrontations between buyers and developers have turned violent.
In the eastern city of Jinan, banner-carrying owners blocked a street to protest another 25% price cut for a local housing development, this one conducted over the space of two weeks, according to the local-government-run Life Daily newspaper
More
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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