Baltic Dry Index. 792 +15
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise. The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."
Hans F. Sennholz
For more on fox hunting scroll down to news from China. Tally ho is not good news for western profits.
Mainstream media, is finally catching on that
Continental Europe has kicked the can down to the end of the road. Paymaster
Germany, the locomotive pulling all of continental western Europe along, seems
to have suddenly lost much of its steam. And it has nothing yet to do with
Russian retaliation for imposing American ordered sanctions on Russia for Mr
Putin taking advantage of America’s botched coup in Kiev. That hit comes later
in the year, sanctions and retaliation take some time to actually kick in.
But the Ukraine, the most corrupt nation in Europe
from the Urals to the Atlantic Ocean, seems determined to undermine continental
Europe faster. According to reports, America’s puppet regime in Kiev is
threatening to block Russian shipments of oil and gas to western Europe. With
friends in Kiev like this, Berlin doesn’t need enemies in Moscow. With trouble erupting
globally despite shrill words from Washington, the next shoe is about to fall
in the Ukraine.
Below, with Germany catching a cold, is Club Med
about to die of pneumonia?
Aug. 11, 2014, 10:00 p.m. EDT
German economy gets the flu but don’t expect dose of QE
Opinion: No end in sight to euro zone’s malaise
The
German economy is suffering a bout of summer influenza. A heated-up debate in
the fall on whether the European Central Bank should turn to quantitative
easing to kick-start the economy will be the result.
----Around three
weeks ago, the International Monetary Fund upgraded its forecast for
German economic growth this year to 1.9% from 1.7%, but since then the news
flow has been resolutely downhill.
Bearing
in mind the IMF’s reputation for heavily behind-the-curve economic forecasting,
reasonable observers should perhaps interpret any upgrading by the Fund as a
sell-signal for the economy concerned.
Mario
Draghi, the ECB president who has his own reasons for fending off the debate on
possible QE, did his best last week to play down suggestions that the European
economy is being blown off course, but it is clear that he has no weapons of
mass expansion up his sleeve.
The
most dynamic action Draghi could display at his regular press conference was
the announcement that the ECB is close to hiring an external consultant to help
it design a relaunch of securitization in Europe through an asset-backed
securities (ABS) program.
When
the ECB does eventually launch ABS, the issue is unlikely to raise much more
than a yawn from the capital markets. After all, it is a question over which
the ECB has been agonizing in public since the beginning of the year.
Draghi’s
other big idea is to engineer weakness of the euro EURUSD
-0.08% —
an option that is hardly likely to endear itself to traditionally hard
money-oriented German public opinion.
In
an extraordinary statement for a central bank governor, equivalent to an open
invitation for foreign-exchange markets to bet against his currency, Draghi
said last week: “The fundamentals for a weaker exchange rate are today much
better than they were two or three months ago….. There has been a decline in
short-term capital inflows. There has been a quite significant increase in the
short-term positions on the euro.”
Unusually,
Draghi gave some indications of official transactions: “Other central banks
have been reducing their exposure to the euro.” And he made clear that such
trends are expected to persist. “If you look at how markets are expecting real
rates to be for the foreseeable future, meaning until 2019, current expectations
are that real rates will remain negative in the euro area for a much longer
time than they will be in the U.S.”
Meanwhile,
a combination of worries over a potential Moscow-led attack on Ukraine,
stepped-up sanctions over the Russian imbroglio from both East and West,
worsening tensions in the Middle East ,and fresh bad news over the lackluster
European economy have all taken their toll on German business and consumer
sentiment.
----Official
figures for the euro-area economy second-quarter growth, to be released on
Thursday, are expected to show still very sluggish expansion across the
18-nation region, possibly even lower than the 0.2% GDP registered for the
first three months of the year. Harmonized inflation in the euro area remains
at 0.4%, less than a quarter of the ECB’s benchmark 2%.
More
Ukraine Threatens Oil and Gas Cut-Off in Russia Sanctions
Aug
8, 2014 7:08 PM GMT
Ukraine threatened to block Russian oil and gas supplies to Europe in new
sanctions against Vladimir Putin’s government, which it blames for a
separatist uprising that has ravaged the country’s east. Ukraine, which no longer receives any gas from Russia but acts as a conduit for its neighbor’s European customers, is considering a “complete or partial ban on the transit of all resources” across its territory, Prime Minister Arseniy Yatsenyuk told reporters today in Kiev. It may also ban Russian planes from its airspace and cut defense-industry cooperation.
More
Russia sending aid convoy to Ukraine despite Western warnings of 'invasion pretext'
By Adrian
Croft and Sergei
Karpukhin
BRUSSELS/DONETSK
(Reuters) - President Vladimir Putin said on Monday Russia is sending an aid convoy to eastern Ukraine despite urgent Western warnings against using humanitarian help as a pretext for an invasion.
With Ukraine reporting Russia has massed 45,000 troops on its border, NATO said there was a "high probability" that Moscow could intervene militarily in the country's east, where Kiev's forces are closing in on pro-Russian separatists.
Western countries believe that Putin - who has whipped up the passions of Russians with a nationalist campaign in state-controlled media since annexing Crimea from Ukraine in March - could now send his forces into the east to head off a humiliating rebel defeat.
Thousands of people are
believed to be short of water, electricity and medical aid due to the fighting,
but U.S. President Barack Obama told his Ukrainian counterpart that any Russian
intervention without Kiev's consent would be unacceptable and violate
international law.
European Commission President
Jose Manuel Barroso delivered a blunter message directly to Putin in a
telephone call on Monday. "President Barroso warned against any unilateral
military actions in Ukraine, under any pretext, including humanitarian,"
the Commission said in a statement.
The Kremlin, in its own account
of the conversation, made clear that Moscow would indeed send help to largely
Russian-speaking eastern Ukraine.
More
Russia sends 280 trucks with humanitarian aid to Ukraine
MOSCOW(Reuters) - A Russian convoy of 280 trucks carrying humanitarian aid for Ukraine set off on Tuesday amid Western warnings against using help as a pretext for an invasion.
With Ukraine reporting Russia has massed 45,000 troops on its border, NATO said there was a "high probability" that Moscow could intervene militarily in the country's east, where Kiev's forces are closing in on pro-Russian separatists.
----Itar Tass news agency said the convoy has departed from near Moscow which means it would take it a couple of days to arrive in east Ukraine, some 1,000 km (620 miles) to the southwest.
"It has all been agreed with
Ukraine," Business FM radio quoted President Vladimir Putin's spokesman,
Dmitry Peskov, as saying.
More
Elsewhere, China is already squeezing the Charmin.
The west’s Easy Street in China has come to its untimely end. A very bright
light is getting turned on the west’s China roach motel. From faraway London it
looks like give back time has arrived. Just don’t tell the Fed’s final bubble
that China’s called time and wants its pound of western flesh. In “Foxhunt
2014,” GM and Co are the fox.
China Probes Threaten to Squeeze Foreign Profits
Aug 12, 2014 4:03 AM GMT
China’s antitrust crackdown signals a new era of regulatory scrutiny in the
country and threatens to end the days when products from Audi sedans to
Starbucks lattes generate fatter profits in Beijing than in London or New York.
In the past month, Chinese antitrust authorities pressured at least seven carmakers to cut prices and raided the offices of software maker Microsoft Corp. (MSFT) The companies join Qualcomm Inc. (QCOM), Caterpillar Inc., Mead Johnson Nutrition Co. (MJN) and Danone among foreign-owned businesses that have fallen under anti-monopoly scrutiny in China since last year.
The probes, combined with signs the government is shunning some U.S. technology companies for security reasons, have left foreign businesses struggling to figure out the evolving laws and regulations in the world’s most populous country. Those seeking to adapt face the challenge of interpreting vague rules in an economy that’s no longer as reliant on foreign investment as in past decades.
“We may be seeing a paradigm shift where the rules of the game are changing,” said David Loevinger, former U.S. Treasury Department senior coordinator for China affairs and now an analyst at TCW Group Inc. in Los Angeles. “Until people figure out the new rules it will create a much more uncertain business climate.”
Volkswagen AG’s Audi, Bayerische Motoren Werke AG, Daimler AG’s Mercedes-Benz, Tata Motors Ltd. (TTMT)’s Jaguar Land Rover, Fiat SpA (F)’s Chrysler, Toyota Motor Corp. (7203) and Honda Motor Co. (7267) have announced price cuts of vehicles or spare parts since July in the wake of an investigation by China’s National Development and Reform Commission into more than a dozen automakers.
Audi said today its FAW-Volkswagen joint venture will be penalized for violation of the anti-monopoly law.
More
GM Says China Unit Contacted by Antitrust Regulator
Aug 12, 2014 4:26 AM GMT
General
Motors Co. (GM) said its passenger-vehicle joint venture in China was
contacted by the nation’s antitrust regulator amid an industry investigation
that has seen at least seven foreign carmakers cut prices. Shanghai GM, a venture between GM and SAIC Motor Corp. (600104), has “actively responded” since 2012 to requests from the National Development and Reform Commission’s price supervision and anti-monopoly bureau, and assisted with its investigation and research of the automotive industry, GM said in an e-mailed response to Bloomberg News yesterday.
“We have continuously strengthened the company’s operations and management,” the company said, declining to elaborate on the status of the investigation. “Shanghai GM will continue to provide high-quality products and services in accordance with national regulations and policies, and is committed to strengthening the value for money of its products."
----Shanghai GM’s major models are ‘‘priced at a reasonable level, with almost no markups in sales,” GM said in its statement.
For Buick, Chevrolet and Cadillac
vehicles, the average sum of replacing all the parts relative to the price of a
new vehicle is close to 300 percent, the average level in the U.S. and European
markets, GM said
More
China Has Over 150 Economic Fugitives in U.S., Daily Says
Aug 11, 2014 6:18 PM GMT
More than 150 people suspected of economic crimes from China remain at
large in the U.S., China Daily said yesterday, as officials pledge to step up
efforts to hunt down those who take their ill-gotten gains abroad. Most of those who fled to the U.S. are officials facing corruption charges at home, the China Daily reported, citing Liao Jinrong, director general of the International Cooperation Bureau of the Ministry of Public Security. The U.S. has become the top destination for so-called economic fugitives from China because the two countries don’t have an extradition treaty and lengthy legal procedures make it difficult to bring them back to China, the newspaper cited Liao as saying.
Chinese leaders have escalated a campaign against graft, announcing a probe into former security chief Zhou Yongkang last month. The anti-corruption campaign, begun after President Xi Jinping took over the Communist Party in 2012, won’t stop with Zhou, a commentary in the official People’s Daily newspaper said July 29.
In January, Wang Qishan, the head of China’s anti-graft watchdog, demanded new efforts to chase down officials suspected of economic crimes who flee abroad. A department was created for that purpose weeks after China’s Public Security Ministry began an operation named “Fox Hunt 2014” to track such fugitives.
We end with more on China’s growing wobble. The
Yellen Put is about to be called.
China Trust Asset Growth Slows Amid Shadow Banking Crackdown
Aug 12, 2014 2:53 AM GMT
China’s trust assets
expanded at the slowest pace in two years as the government cracks down on
shadow banking and investors reassess the risks of the high-yield investments. Trust companies’ assets under management climbed 6.4 percent to 12.5 trillion yuan ($2 trillion) as of June 30 from three months earlier, the China Trustee Association said in a statement yesterday. That’s the slowest growth since the first quarter of 2012 and compares with an average annual gain of 50 percent since 2008.
----Trust assets under management fell 240 billion yuan in June from May. That was the first monthly decline, the statement said, without specifying a time period. Trust products’ average yield rose to 6.87 percent in the second quarter from 6.44 percent three months earlier, the trustee association said.
China averted its first trust default in January as investors in a 3 billion-yuan high-yield product issued by China Credit Trust Co. were bailed out days before it matured. The company last month delayed payments on a second product.
More
"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."
Hans F. Sennholz
At the Comex silver depositories Monday final figures were: Registered 59.83 Moz,
Eligible 115.43 Moz, Total 175.26 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
EDF shuts down two UK nuclear plants amid safety fears
Reactors at Heysham 1 and Hartlepool shut down after discovery of "unexpected cracking" in boiler unit
EDF Energy has been forced to
shut down two of its eight UK nuclear power stations amid safety fears, after
discovering "unexpected cracking" in a boiler unit of one of its
reactors in Lancashire.
The French-owned energy giant
said it had shut down its Heysham 1 and Hartlepool plants, each of which
comprise two reactors, after confirming there was a “defect” in a boiler unit
at Heysham 1 Reactor 1.
More than 300 staff will now be
deployed to conduct safety tests across all four reactors, having been
specially trained for the task over recent months.
Signs of a possible fault were
first noticed in November 2013, leading to the “isolation” of one of the
reactor’s eight boiler units.
But it was only when the reactor
was shut down in June for detailed inspections that EDF confirmed the defect.
The Office for Nuclear Regulation
disclosed that EDF had found "unexpected cracking" in a “boiler
spine”, a forged metal tube which supports the weight of boiler tubes coiled
around it.
"The spine supports the
weight of an entire boiler and its failure could lead to water entering the
reactor vessel," the ONR said.
EDF refused to explain what would
happen if water entered the reactor vessel.
However, it said it had now taken
the “conservative” decision to shut down all the other reactors of the same
design “to carry out further inspections in order to satisfy itself and the
regulator that the reactors can be safely returned to service”.
The Office for Nuclear Regulation
said: "The shut downs will allow [the company] to undertake accelerated
inspections of all of the boilers in each of the reactors, which are a similar
design, and to fit equipment that will enable monitoring of the condition of
the boiler spines."
The reactors will be shut down
over the next few days and are expected to remain shut for about eight weeks.
They will only be allowed to reopen when EDF has convinced the ONR it has
"an acceptable safety case".
----Heysham 1 and Hartlepool, both of which started generating in 1983-4, have a combined capacity of more than 2.3 gigawatts - equivalent to about 4pc of the UK’s peak winter demand. However, National Grid said there was plenty of spare capacity to meet summer demand, which is much lower in the warm weather.
The shutdown highlights the
fragility of Britain’s ageing energy infrastructure at a time when spare power
capacity is forecast to fall to less than 2pc by winter 2015-16.
More"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."
Elgin Groseclose
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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