Baltic Dry Index. 1090 +112
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
The
bankster in his mansion,
The
taxpayer at his gate,
Draghi
[your central bankster here]
made them High or lowly,
He disordered
their estate.
With
apologies to All things bright and beautiful.
“Crisis? What Crisis?” Allegedly said “Sunny” Jim Callaghan,
old socialist UK Prime Minister in 1979, as he returned from his Caribbean holiday
to find Britain strike bound, facing a 4 day working week, and suffering from
mountains of uncollected rubbish. Situation normal in socialist lands. The same
is pretty much true now of our global stock markets, secure in the knowledge that
the Yellen put is in place in America, Europe and Japan, and that yet more QE
Forever is surely coming to back up ZIRP, which is failing to do the job on its
own. What could possibly go wrong?
Is anyone else following the sudden surge in the
BDI?
In central banking as in diplomacy,
style, conservative tailoring, and an easy association with the affluent count
greatly and results far much less.
J. K. Galbraith.
All the Markets Need Is $200 Billion a Quarter From the Central Bankers
Oct 21, 2014 12:18 PM GMT
The central-bank put lives on. Policy makers deny its existence, yet investors still reckon that whenever stocks and other risk assets take a tumble, the authorities will be there with calming words or economic stimulus to ensure the losses are limited.
A put option gives investors the right to sell their asset at a set price so the theory goes that central banks will ultimately provide a floor for falling asset markets to ensure they don’t take economies down with them.
Last week as markets swooned again, it was St. Louis Federal Reserve President James Bullard and Bank of England Chief Economist Andrew Haldane who did the trick. Bullard said the Fed should consider delaying the end of its bond-purchase program to halt a decline in inflation expectations, while Haldane said he’s less likely to vote for a U.K. rate increase than three months ago.
“These comments left markets with the impression that the ‘central-bank put’ is still in place,” Morgan Stanley currency strategists led by London-based Hans Redeker told clients in a report yesterday.
Matt King, global head of credit strategy at Citigroup Inc., and colleagues have put a price on how much liquidity central banks need to provide each quarter to stop markets from sliding.
By estimating that zero stimulus would be consistent with a 10 percent quarterly drop in equities, they calculate it takes around $200 billion from central banks each quarter to keep markets from selling off.
With the Fed and counterparts peeling back their net liquidity injections from almost $1 trillion in 2012 toward that magic marker, King’s team said “a negative reaction in markets was long overdue.”
“We think the markets’ weakness owes more to an almost belated reaction to a temporary lull in central bank stimulus than it does to any reduction in the effect of that stimulus in propping up asset prices,” they said in an Oct. 17 report to clients.
Bank of America Merrill Lynch strategists said in a report today that another 10 percent decline in U.S. stocks might spark speculation of a fourth round of quantitative easing from the Fed. That would mimic how the Fed acted following equity declines of 11 percent in 2010 and 16 percent in 2011.
More
In Japan, the currency race to beggar-thy-neighbour
rolls on with some small success. Japan is locked in an export trade war with,
Germany and China to export its way back to economic health. And so the madness
of the Great Nixonian Error of fiat currency, 21st century style
accelerates. That system blew up in 2007-2009. We have been in denial ever
since. With each passing year trying ever more desperate voodoo policies to
return the world to the false “prosperity” of the “Bubbles”
Greenspan-Bernocchio era. With the ECB now finally joining in the currency race
to the bottom, we are all somehow going to export our way to economic “success.”
Japan’s Exports Rise Most in Seven Months in Boost to Abe
Oct 22, 2014 2:09 AM GMT
Japan’s exports climbed the
most in seven months in September, supporting a rebound in the economy as Prime
Minister Shinzo Abe weighs another sales-tax increase. Overseas shipments rose 6.9 percent from a year earlier, the finance ministry said in Tokyo today, compared with the median estimate for a 6.5 percent increase in a Bloomberg News survey of 27 economists. Imports grew 6.2 percent, leaving a trade deficit of 958.3 billion yen ($9 billion).
Stronger exports would support an economy that shrank the most in more than five years after Abe raised the sales tax in April for the first time since 1997.
Bank of Japan Governor
Haruhiko Kuroda has signaled support for yen declines, saying a weak currency
that’s in line with the economy is a plus overall.
----The
yen has fallen 8.3 percent against the dollar over the past year and had its
biggest monthly drop in September since January 2013. The currency was at
107.02 per dollar at 9:33 a.m. in Tokyo. The Topix index of shares gained 2
percent.
----Cars, steel and ships were the largest contributors to the rise in exports, with the value of motor vehicle shipments up 7 percent on year, iron and steel products up 14 percent, and ships jumping almost 40 percent.
A 21 percent increase in liquid
natural gas imports was the largest factor in the rising inbound shipments,
followed by an almost 12 percent increase in telecommunications equipment.
China accounted for 85 percent of these imports, with Apple Inc.’s new iPhones,
which are produced there, going on sale in Japan in mid-September.
More
Eurozone starts QE-lite as currency bloc faces fresh crisis
The European Central Bank has begun snapping up covered bonds, one part of a three-pronged trident of measures aimed at reviving the flagging eurozone economy
The European Central Bank (ECB) has begun purchases of some French assets, in an attempt to revive a flagging eurozone.Monday’s purchases marked the start of the covered bond purchase programme (CBPP3), and is one of three new tools intended to stimulate the euro area economy.
By buying covered bonds - bonds backed by underlying loans - the ECB intends to expand its balance sheet, and boost demand in the region.
More
http://www.telegraph.co.uk/finance/economics/11174118/Eurozone-starts-QE-lite-as-currency-bloc-faces-fresh-crisis.html
Below, another dose of reality, EUSSR style. And
this is before the aftermath of suicidal Russian sanctions have really kicked
in. Other than some European milk and cheese producers, and a few producers of
apples and fruit, hardly anyone in the EUSSR has yet been affected by the
madness of Berlin and Brussels. But just wait for the coming winter I suspect.
Missing Russian oligarchs in France, Spain and Italy. Missing Russian export
orders in Germany and Italy. France to pay for not fulfilling Russian naval
contracts. Continental Europe sweating on the delivery of Russian gas shipped
through pipelines across America’s puppet regime in the Ukraine. From London, EUSSR
winter 2014-2015 looks to be interesting.
"Too bad ninety percent of the politicians give the other
ten percent a bad reputation."
Henry Kissinger
Henry Kissinger
The EU is already dying on its feet. Why help it along?
The way things are going, Europe will fracture long before its vision of a 'United States' is ever realised
“Thank goodness that one’s out of
the way”, a leading UK banker told me recently, referring to the decisive “no”
vote in the Scottish independence referendum. “Now it’s Europe we’ve got to
convince people of, but we can win that one too, and then perhaps all this
uncertainty will be behind us”. With regard to the uncertainty, somehow I doubt
it.
Big business and finance have
always been a good deal keener on political and economic union than the
populations they answer to, if for no other reason than it is supposed to be
good for business.
Right now, however, it is quite
hard to argue that being “good for business” is something the European Union
can boast about. Paralysed by political division, racked by high levels of unemployment
and economically floored by dysfunctional monetary union, not since the Second
World War has Europe seemed in such a perilous condition.
The only thing that holds the
whole endeavour together seems to be fear of the consequences if it blows apart.
This is hardly a stable foundation for a lasting union, or indeed a thriving
economy.
Even so, many in the City cling
to the idea that to leave would be a disaster. This belief is fed both by the
fact that Europe is still far and away the City’s biggest market, and the fear
that loss of influence in Brussels would leave finance wide open to vindictive
attack by those who are both suspicious of its purpose and jealous of London
dominance in its commanding heights.
---- Be that as it may, the EU once again seems to be approaching some kind of political denouement which may render many of these arguments irrelevant. In Britain, David Cameron is backing himself into a corner by seeming to promise something he cannot possibly deliver – caps on EU immigration. A snowball in Hades would stand a better chance than Brussels ever agreeing to surrender one of the four founding freedoms of the European Union – in this case, free movement of labour.
It is, unfortunately, part of the
sophistry of political life that Mr Cameron has in fact made no such
commitment. In fact, he’s merely suggested the idea that some kind of points
system might be up for negotiation, even though he knows it will never be
agreed. It’s just a way of getting him through to the other side of the election.
---- The British problem, is, however, the least of the existential challenges facing the European Union. While Britain obsesses with border controls, the rest of Europe is steadily crucifying itself on the cross of budgetary austerity. The French budget, which as proposed breaches debt targets, is the next testing ground for these policies.
No doubt some kind of fudge will
be cobbled together that will enable France to avoid a “systemic deviation”
ruling by the high command in Brussels next week. This in turn would allow
President Francois Hollande to save face back home. Further budgetary cuts in
exchange for Germany reflation is one suggested way through the standoff.
If France is denied, it will be a
huge boost for those who would take the country out of the euro. If allowed, it
will encourage others to scramble for similar dispensation, further alienating
support for the union in Germany and beyond.
The euro was meant to speed the
path to a United States of Europe, bulldozing all sovereign sensitivities
before it; yet the way things are going, Europe will fracture long before the
vision is ever realised.
More
We end for the day with the Big Miss. How
mainstream media, Bubbles and Bernocchio, Ebenezer Squid, et al, missed the
arrival of the Great Systemic Crash of 2007-2009. What’s happening now.
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.
How we all missed the current global growth crisis
Each year analysts predict the return of growth, and every time they have been disappointed. Now economists suggest that this weak growth pre-dates the financial crisis.
Since the 2008 financial crisis,
economists around the world have been saying that stronger economic growth is
just around the corner. As of yet, however, it has failed to materialise.
In August, Stanley Fischer, vice
chair of the US Federal Reserve, laid out the predicament that forecasters have
faced: “The global recovery has been disappointing".
Around half way through each
year, economists have had to explain why their global growth forecasts were too
optimistic, Mr Fischer said, and this has happened "year after year".
Global growth - both in advanced
economies and the Asian Giants of China and India - may now be significantly
lower than policymakers had been hoping for.
In their new paper - “Following
the Trend” - Juan Antolin-Diaz, Thomas Drechsel, and Ivan Petrella find “a
significant decline in long-run growth for the US and some (but not all) of the
other industrialised economies”.
---- Strikingly, “for the US, about half of this slowdown predates the Great Recession”, the paper's authors note. Lower growth - and its implications - has become a focus of the professionals who deal with economic data.
Many pundits have blamed a series
of independent shocks for poor performance. “In a sense faster growth is indeed
around the corner, but we have been unlucky five times in a row”, said Mr
Antolin-Diaz, a macroeconomist at Fulcrum Asset Management.
But such an explanation seems
improbable, Mr Antolin-Diaz suggests. “An honest forecaster should think about
how likely it is - statistically - to observe such a string of shocks, relative
to the likelihood of a decline in trend.”
Traditionally, growth forecasting has relied heavily on extrapolating previous performance. It now seems that the long-term economic trend has moved down - and economists have failed to notice it.
The paper’s authors say that “failure to account for the decline in trend growth may be behind the persistent disappointments in forecasting economic activity in advanced economies.”
Economists Larry Summers and Lant Pritchett have rung similar alarm bells. In a new academic paper, they state that “forecasts for the global economy over the medium and long term predict the world’s economic gravity will substantially shift towards Asia and especially towards the Asian giants”.
But there are reasons to be pessimistic about the potential of both China and India. “History teaches that abnormally rapid growth is rarely persistent, even though economic forecasts invariably extrapolate recent growth”.
More
Wall Street Is One Sick Puppy—–Thanks To Even Sicker Central Banks
by David Stockman •
Last Wednesday the markets
plunged on a vague recognition that the central bank
promoted recovery story might not be on the level. But that tremor
didn’t last long.
Right on cue the next
day, one of the very dimmest Fed heads—James Dullard of St
Louis—-mumbled incoherently about a possible QE extension, causing
the robo-traders to erupt with buy orders. By the end of the day Friday, with
the market off just 5% from its all-time highs, the buy-the-dips crowd was
back, proclaiming that the “bottom is in”. This week the market has been
energetically retracing what remains of the October correction.
And its no different anywhere
else in the central bank besotted financial markets around the world.
Everywhere state action, not business enterprise, is believed to
be the source of wealth creation—at least the stock market’s paper wealth
version and even if for just a few more hours or days.
Thus, several nights ago
Japan’s stock market ripped 4% higher in the blink of an eye after the
robo-traders scanned a headline suggesting that Japan’s already bankrupt
government would start buying even more equities for its pension plan. And
that comes on top of the massive ETF and equity purchases already being
made by the BOJ.
Likewise, this morning the
European bourses soared on a self-evident trial balloon enabled by Reuters that
the ECB might start buying corporate bonds—in addition to asset-backed
commercial paper, covered mortgage bonds and targeted loan advances
to commercial banks. Moreover, all this prospective asset buying with
freshly minted ECB credit was supposedly a prelude to outright QE—-that is,
adding sovereign debt to the ECB’s already bloated balance sheet.
The thing is, however, the
last injection is never enough in today’s stimulus addicted casinos.
More
This environment
redistributes wealth from savers to debtors on a scale of over $2 trillion per
annum or $55 billion per day. This must be the biggest legal robbery ever in
human history. But it is always coded in arcane academic lingos spoken by
respected central bankers with impeccable CVs. All that is just packaging; it
is robbery nevertheless.
Andy Xie
At the Comex silver depositories Tuesday final figures were: Registered 66.85 Moz,
Eligible 112.60 Moz, Total 179.45 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Water Crisis Seen Worsening as Sao Paulo Nears ‘Collapse’
Oct 21, 2014 6:46 PM GMT
Sao Paulo residents were warned by a top government regulator today to brace
for more severe water shortages as President Dilma
Rousseff makes the crisis a key campaign issue ahead of this weekend’s
runoff vote. “If the drought continues, residents will face more dramatic water shortages in the short term,” Vicente Andreu, president of Brazil’s National Water Agency and a member of Rousseff’s Workers’ Party, told reporters in Sao Paulo. “If it doesn’t rain, we run the risk that the region will have a collapse like we’ve never seen before,” he later told state lawmakers.
The worst drought in eight decades is threatening drinking supplies in South America’s biggest metropolis, with 60 percent of respondents in a Datafolha poll published yesterday saying their water supplies were restricted at least once in the past 30 days. Three-quarters of those people said the cut lasted at least six hours.
Rousseff, who is seeking re-election in the Oct. 26 election against opposition candidate Aecio Neves, is stepping up her attacks of Sao Paulo state’s handling of the water crisis, saying in a radio campaign ad yesterday that Governor Geraldo Alckmin was offered federal support and refused. Neves, who polls show is statistically tied with Rousseff, and Alckmin are both members of the Social Democracy Party, known as PSDB.
----With more than 40 million people and
over 96,000 square miles (250,000 square kilometers), Sao Paulo state is
geographically bigger than the U.K. It’s responsible for almost a third of Brazil’s gross
domestic product.
----Sabesp is struggling to find new ways to supply greater Sao Paulo after the drought turned its Cantareira reservoir, which serves half of Sao Paulo, into a dried-up bed of cracked earth. What’s left of the four-lake complex are sediment-filled pools in the center -- so-called dead reserves -- that were previously untappable until Sabesp built 3 kilometers (1.9 miles) of pipes to drain the water.
Water levels fell to 3.3 percent
of capacity at Cantareira and 8.5 percent at Sabesp’s Alto Tiete reservoir,
according to the company’s website.
More
We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable.
Alexander Solzhenitsyn
The monthly Coppock Indicators finished September.
DJIA: +141 Down. NASDAQ: +289 Down. SP500: +216 Down.
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