Baltic Dry Index. 1147 +05
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.
John Kenneth Galbraith
Will it be peace or war? Will continental Europe be
forced to sacrifice its economy and labour to bailout President Obama’s wantonly
reckless misadventure in the Ukraine? Judging by the all the sabre rattling
coming out of the NATO meeting in Wales, the answer looks to me like yes and a continued
war, and coming depression in much of Europe. Will war save us from the next
Lehman and crash? I think we all know the answer to that.
Ukraine Cease-Fire Talks Set as East’s Fate Teeters
Sep 5, 2014 3:54 AM GMT
Ukraine’s President Petro Poroshenko voiced “careful optimism” that talks
today with pro-Russian rebels in Minsk, Belarus, will set the course for a
cease-fire after more than five months of fighting. After Poroshenko met yesterday with leaders of the North Atlantic Treaty Organization, the alliance’s Secretary General Anders Fogh Rasmussen said it’s too early to tell whether peace overtures by Russian President Vladimir Putin are genuine.
“We have seen similar statements and initiatives, and they have actually just been a smokescreen for continued Russian destabilization of the situation in Ukraine,” Rasmussen told reporters at the summit in Newport, Wales. “Based on experience, we have to be cautious.”
NATO’s summit and European Union moves toward imposing more sanctions on Russia formed the backdrop for the diplomacy to stop the conflict, which has cost at least 2,600 lives and torn up the security arrangements that have governed Europe since the end of the Cold War.
In Brussels today, representatives of the 28 EU governments will consider tightening the economic sanctions that were imposed on Russia in July. Proposals include barring some Russian state-owned defense and energy companies from raising capital in the EU, a U.K. official said.
Putin, who denies that Russia is promoting the rebellion,
unveiled a seven-point plan on Sept. 3. It calls for an end to the rebel
offensive in eastern Ukraine and the withdrawal of the Ukrainian military from
residential areas.
The self-declared people’s republics of Ukraine’s
easternmost Donetsk and Luhansk regions, the scene of most of the fighting,
released statements saying they’ll agree to a cease-fire if the Kiev government
accepts their plan for a political settlement.
More
In other news, the ECB orders the world’s greatest
bond bubble to keep inflating. Move over “Bubbles Greenspan,” you ain’t seen
nuthin yet. Of course, while the ECB’s music is playing etc. We all know how
this ends just not when.
“When the music stops, in terms of liquidity, things
will be complicated. But as long as the music is playing, you've got to get up and dance. We’re still dancing,”
Chuck
Prince, CEO Citigroup, 2007.
Credit Raters Rally as ECB Moves Indicate More Bond Sales
Sep 4, 2014 10:48 PM GMT
Moody’s
Corp. (MCO) and Standard & Poor’s parent McGraw Hill Financial Inc. (MHFI) rallied
after the European Central Bank said it would purchase securities and cut
interest rates, which may increase bond sales worldwide. Moody’s, the second-largest credit rater, climbed 1.1 percent to a record $94.11 in New York. McGraw Hill, whose S&P ratings unit is the world’s largest, increased 1.7 percent to $83.86, near its all-time closing high of $84.70 reached in June.
The top ratings companies have enjoyed increasing revenue since the credit crisis as borrowers take advantage of historically low interest costs, boosting demand for debt opinions. The ECB took the unprecedented step of setting negative borrowing rates to spur the region’s economy.
Corporate bond sales in the U.S. have surged this month after the slowest August since 2008. Companies raised about $24.3 billion yesterday in the busiest day for issuance this year. Sales are running ahead of last year, when annual volume was a record $1.5 trillion.
Citigroup’s Chuck Prince wants to keep dancing, and can you really blame him?
July 10, 2007
Citigroup bossman Chuck Prince had something
interesting to say in the FT today:The Citigroup chief executive told the Financial Times that the party would end at some point but there was so much liquidity it would not be disrupted by the turmoil in the US subprime mortgage market.
He denied that Citigroup, one of the biggest providers of finance to private equity deals, was pulling back.
“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,” he said in an interview with the FT in Japan.
Now the prospect of Chuck Prince dancing is in itself unsettling. But his account amounts to quite an elegant explanation of why financial bubbles persist. Even if Citigroup’s executives were worried that private equity valuations have gotten too frothy and loan terms too loose, it would make little sense for them to pull back.
Because they can never know for sure when the music’s going to stop, and they’d be crazy to forego all those underwriting fees for the year or two or three before it does. So they keep dancing.
Then again, maybe some of us are just too eager to call this boom a bubble. Yesterday Moody’s reported that global defaults of speculative-grade debt (a.k.a. junk) in the second quarter were at their lowest level since 1995.
More
Billionaires bracing for a crash, but it’s still time to buy Apple
September 4, 2014, 6:47 AM ET
Already, it looks like the ”September stinks for stocks” plot line is
holding true. Benchmarks are lower for the month. And Apple has cast a dark
shadow over the Nasdaq
Composite.Yes, it was an awful day for Apple yesterday and, yes, it did shave off some $26 billion of its market cap in just one trading session. But there’s a sweet side to the iPhone maker’s rotten day, says one investment strategist: Read more on that below, in our call of the day.
And it’s not like the markets haven’t put in some decent attempts to move higher — reports of permanent cease-fire in eastern Ukraine got everyone excited yesterday, but then it turned out Kiev had got a bit trigger-happy in putting out its news. Bottom line: There’s a cease-fire plan in place, but it’s still business as has become usual. Don’t think for a second you won’t hear about Ukraine jitters again.
That aside, some people — as in badass billionaires, that’s who — think we’ll soon say farewell to the run of “record closing highs”. Billionaire investor Sam Zell told CNBC that a stock-market correction could be coming, joining the choir of other asset kings bracing for a market breakdown.
“The stock market is at an all-time, but economic activity is not at an all-time,” the chairman of Equity Group Investments said in a “Squawk Box” interview Wednesday.
As Zerohedge points out, we shouldn’t be shocked by Zell’s bearishness, given the chorus of similar calls from other money-masterminds. George Soros looked to some to be betting on a market crash, after he increased his S&P 500 ETF, aka SPY, put exposure to a record high. Carl Icahn also revealed he’s “very nervous” about the U.S. stock market. And Stan Drunckenmiller said he’s “fearful” that today’s market obsession is blocking our view of the “greater long-term risks to our economy”. Read more on what Zerohedge has to say.
More
We end for the week with yet another US court
ruling that again calls into question whether US courts are biased against non-domestic
companies. Is the USA fast becoming a no go area for foreign investment? Argentina
and France think US courts are biased. But this ruling from New Orleans is
truly bizarre. US judge Barbier managed to find wanton recklessness in BP, and
assigned Solomonaic percentages of blame. Needless to say, the US companies
involved were merely negligent. My guess is that an appeal will be launched by
BP. If so, the next outcome should settle the issue.
'Worst Case' BP Ruling on Gulf Spill Means Billions More in Penalties
Sep 5, 2014 1:18 AM GMT
BP Plc acted with gross negligence in setting off the biggest offshore oil
spill in U.S. history, a federal judge ruled, handing down a long-awaited
decision that may force the energy company to pay billions of dollars more for
the 2010 Gulf of Mexico disaster. U.S. District Judge Carl Barbier held a trial without a jury over who was at fault for the catastrophe, which killed 11 people and spewed oil for almost three months into waters that touch the shores of five states.
“BP has long maintained that it was merely negligent,” said David Uhlmann, former head of the Justice Department’s environmental crimes division. He said Barbier “soundly rejected” BP’s arguments that others were equally responsible, holding “that its employees took risks that led to the largest environmental disaster in U.S. history.”
The case also included Transocean Ltd. (RIG) and Halliburton Co. (HAL), though the judge didn’t find them as responsible for the spill as BP. Barbier wrote in his decision today in New Orleans federal court that BP was “reckless,” while Transocean and Halliburton were negligent. He apportioned fault at 67 percent for BP, 30 percent for Transocean and 3 percent for Halliburton.
In this handout image provided be the U.S. Coast Guard, fire boat response crews battle... Read More
U.K.-based BP, which may face fines of as much as $18 billion, closed down 5.9% to 455 pence in London trading.
“The court’s findings will ensure that the company is held fully accountable for its recklessness,” U.S. Attorney General Eric Holder said. “This decision will serve as a strong deterrent to anyone tempted to sacrifice safety and the environment in the pursuit of profit.”
More
"Finance
is the art of passing customer segregated funds from hypothecation to hypothecation
until it finally disappears."
At the Comex silver depositories Thursday final figures were: Registered 63.39
Moz, Eligible 115.85 Moz, Total 179.24 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Below, more on our new lawless age. When is a Vice
President merely yet another Goldmanite Muppet? Below, “God’s work,” Goldman
style.
“Call
it the Goldman Sachs test. If this is something Goldman would do to its Vice
Presidents, don't do it."
With
apologies to Felix Salmon.
Goldman Sachs Just Says 'Vice President' to Be Polite
16
My basic view of Sergey Aleynikov -- the former Goldman Sachs programmer who
left for a high-frequency trading firm, took some code on his way out the door,
was arrested by the FBI at Goldman's instigation, was convicted of theft and
sentenced to eight years in prison, was released after about a year when an
appeals court ruled that he hadn't committed a crime, and was then charged with
the theft again in state court just out of prosecutorial spite1 -- is that Goldman has
been unnecessarily mean to him and that the very least it can do would be to
pay his (more than $2.3 million!) legal bills for the absurd criminal cases it
put him through. Goldman's view differs. So Aleynikov sued the firm for the money, on the theory that Goldman's bylaws require it to indemnify its officers for their legal expenses, and that he was an officer of Goldman Sachs. After all, he was a vice president, and "vice president" sure sounds like it means "officer." No one would argue that Joe Biden is not an officer of the U.S. government. Goldman's theory, on the other hand, is that "vice president" is a "courtesy title" handed out to roughly one-third of its employees, and of course they're not all officers. Aleynikov persuaded a trial court that he was right, but yesterday a federal appeals court overturned that ruling and, amazingly, sent the case back for a jury trial on whether Goldman Sachs's vice presidents are officers.
Some disclosure: On the one hand, I used to work at Goldman, and still own a bit of restricted stock, so I have theoretical incentives to root for Goldman, and I suppose it's better for them to save $2.3 million than not. On the other hand, I used to be a vice president at Goldman, and I feel like I still own some stock in the Worldwide Confraternity of Investment Bank Vice Presidents. So, both to enhance the prestige of the title and to help keep my brother and sister VPs out of jail, I root for VPs to be officers.2
Are they though? What a silly question. They are vice presidents. They are not, you know, the vice president. There are thousands of them, and they are called that mainly to reassure clients that the awfully young-looking person running their merger is a senior executive and global head of something or other,3 and can therefore be trusted to make important decisions with no adult supervision.
But it's not a metaphysical question; it's a question of, should banks be responsible for and to their vice presidents? Obviously the banks get some benefits from calling VPs VPs, mainly inflating titles to impress clients without actually devoting senior resources to those clients. The banks certainly want clients to think that vice presidents are senior people, acting for the firm. And the VPs probably suffer the burden of responsibility for their inflated titles: It seems to me that poor schmoes like Fab Tourre and Julien Grout were attractive scapegoats for the government because of their overly fancy titles. "See, we went after important executives at banks! Vice presidents, even!"
Similarly, Goldman gets the benefit of the implication that Vice President Fabrice Tourre was in a powerful enough position to commit securities fraud without any culpability by anyone else at the bank, but also can argue that Vice President Greg Smith was a nobody who did nothing and whose complaints about the bank are invalid because he was so junior. And it gets to argue that Vice President Sergey Aleynikov was powerful enough to steal code that, if it "fell into the wrong hands," "could be used to 'manipulate markets in unfair ways,'" but was also just a schlub in possession of a mere courtesy title and not an officer of the firm.4
The appeals court sort of threw up its hands at this duality. Here's the opinion, which concludes that the word "officer" in Goldman's bylaws is ambiguous, and the whole thing should be handed to a jury to figure out. Here is an actual sentence in the opinion:
A jury must determine the interpretive value of Goldman’s
extrinsic evidence in resolving the ambiguity in the By-Laws.
Because that is what 12 randomly selected laypeople are particularly good at: determining the interpretive value of extrinsic evidence in resolving ambiguity in corporate documents.
Actually you can read Goldman's bylaws here and ... I don't know, doesn't it sound like a VP is an officer? It kind of sounds like that to me, but I'm biased. I'll put the parsing in a footnote,5 because it is not really fit for human consumption, though I guess a jury will have to consume it.
More
http://www.bloombergview.com/articles/2014-09-04/goldman-sachs-just-says-vice-president-to-be-polite
Another weekend, and what does the American War
Party have planned to advance World War Three? I don’t know either, but I
notice that the Kiev puppet’s air force seems to have stopped flying. Is the
fall of the port of Mariupol next? Have a great weekend everyone.
"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
The monthly Coppock Indicators finished Aug.
DJIA: +152 Down. NASDAQ: +312 Down. SP500: +231 Down.
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