Baltic Dry Index. 1015 -14
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.
Was yesterday the start of the Great Reconnect in global
stock markets, as the Fed readies to end QE Forever while attempting to keep in
place ZIRP? We’ll know later today or by Friday’s close if the missing
Greenspan/Bernanke/Yellen put fails to appear. If in fact the put has gone
missing due to geo-politics and a faltering global economy, the Great Reconnect
may be better known in future history as the Great Rout that ended the Great Nixonian
Error of fiat money. Over a trillion dollars’ worth of derivatives gambling
contracts will come crashing down, with massive counter party risk of rolling
defaults. M F Globals will become commonplace. Bank bail-ins the rule for those
wretched depositors with deposits over the state guaranteed limits.
Asian Stocks Extend Selloff as Oil Sinks; Dollar Rebounds
Oct 8,
2014 4:49 AM GMT
Asian
stocks dropped, extending a global selloff, and oil dropped amid concern
that the global economic outlook is worsening. Treasuries fell and Standard
& Poor’s 500 Index futures rose with the dollar before the Federal
Reserve releases minutes of its last meeting. The MSCI Asia Pacific Index fell 1.1 percent by 12:49 p.m. in Tokyo, as Japan’s Topix (TPX) index dropped toward a seven-week low. The Shanghai Composite Index added 0.3 percent and China’s yuan was little changed after a week-long holiday. S&P 500 futures rose 0.2 percent after the U.S. gauge’s lowest close in almost two months. Ten-year Treasury yields rose two basis points after tumbling yesterday and the dollar gained against most peers. Gold rose 0.3 percent while Brent crude was near a two-year low.
The Federal Reserve releases minutes of its last meeting as Alcoa Inc. will report earnings amid reduced estimates for profit growth at U.S. companies. A gauge of China’s services industries fell as markets there reopened after being closed for a holiday since Oct. 1. European Union leaders meet in Milan today to discuss fiscal policies after the IMF cut its global growth forecast yesterday and warned about risks posed by geopolitical tensions and “frothy” stock markets.
“The global economic recovery has proved yet again to be fragile and uneven,” Shane Oliver, a global strategist at AMP Capital Investors Ltd., which oversees about $131 billion, said by e-mail in Sydney. “The rough patch we have seen in shares lately could go a bit further.”
More
S&P 500 Plunges to August Low on Global Growth Concern
Oct 7, 2014 9:52 PM GMT
U.S. stocks declined, with the Standard & Poor’s 500 Index
slumping to an eight-week low, as the International
Monetary Fund cut it growth forecast and warned of “frothy” equities amid
signs of slowing growth in Europe. The Russell 2000 Index of small companies retreated 1.7 percent, the most since July 31, to bring its loss since a March record to 11 percent. The Dow Jones Transportation Index plunged 2.5 percent today, capping a 3.6 percent drop in the past two days, the most since January. Auto stocks in the S&P 500 (SPX) sank 3.4 percent to lead losses among all 24 industries
The S&P 500 sank 1.5 percent to 1,935.09 at 4 p.m. in New York, the lowest level since Aug. 12. Today’s slide was the biggest in almost three weeks. Selling accelerated in afternoon trading as index futures contracts expiring in December slipped below 1,940, a level where two previous declines had ended earlier today.
“It’s definitely a risk-off day with ugly European data and growth concerns and I think we’re seeing some of that negative sentiment just getting ahead of itself here,” Mark Kepner, an equity trader at Chatham, New Jersey-based Themis Trading LLC, said by phone.
More
IMF Cuts Global Outlook as Risk of ‘Frothy’ Stocks Raised
Oct 7, 2014 6:23 PM GMT
The International Monetary Fund cut its outlook for global growth in 2015
and warned about the risks of rising geopolitical tensions and a
financial-market correction as stocks reach “frothy” levels. The world economy will grow 3.8 percent next year, compared with a July forecast for 4 percent, after a 3.3 percent expansion this year, the Washington-based IMF said. U.S. growth is helping lead a worldwide acceleration that’s weaker than the fund predicted 2 1/2 months ago as the outlooks for the euro area, Brazil, Russia and Japan deteriorate.
“In advanced economies, the legacies of the precrisis boom and the subsequent crisis, including high private and public debt, still cast a shadow on the recovery,” the IMF said in its latest World Economic Outlook.
----The outlook buttressed the case made by
IMF Managing Director Christine Lagarde, who warned last week that officials
need to act to prevent a prolonged period of sluggish growth, a trend she
called the “New Mediocre.” Raising growth in emerging and advanced economies
“must remain a priority,” the IMF report stated.
More
Back in Ivory Tower land, everything
is just fine and dandy, says one of the keepers of the talking chairs crystal
ball. “Move along now, nothing to see here. Buy more until the middle of 2015.”
My two cents worth, we won’t make it to mid 2015 without a crash without the
Fed reversing itself on QE Forever. But that might not make much difference to
dying Europe, Argentina and the BRICs.
Dudley Calls Forecast for Mid-2015 Rate Rise ‘Reasonable’
Oct 7, 2014 10:11 PM GMT
Forecasts for the Federal Reserve to raise interest rates in mid-2015 are
“reasonable” as policy makers wait for unemployment to fall further and
inflation to rise, New York Fed President William C. Dudley said. “It still is premature to begin to raise interest rates,” Dudley said today in a speech in Troy, New York. “The labor market still has too much slack and the inflation rate is too low.”
Dudley said a strengthening dollar, weak foreign demand and strong domestic energy production are all holding down inflation, which remains below the Fed’s 2 percent target. “There still is a significant underutilization of labor market resources,” he said.
Dudley’s comments were his first since a report last week showed the unemployment rate unexpectedly fell to 5.9 percent and the economy added more jobs than forecast in September. The FOMC last month retained its pledge to keep rates low for a “considerable time” after it concludes its two-year asset purchase program this month.
“The consensus view is that lift-off will take place around the middle of next year. That seems like a reasonable view to me,” Dudley said.
More
And talking of dying Euroland, it’s put up or shut up time in Rome. In typical EUSSR fashion, “Neither house of Parliament has set a date for a vote on the substance of Renzi’s proposed labor-market overhaul.” Sounds to me like it’s all just a dog and pony show for Berlin and Brussels.
Meanwhile in Berlin they’re desperately trying to head off a suicidal death from Russian sanctions, and still trying to locate a German military plane that can actually fly. When Germany sneezes, all of Euroland slams into the wall. I wonder what happens in what’s left of Greece?
"We
take a decision, then put it on the table and wait to see what happens. If
there is no protest, because most people have no idea what we are doing, we
take step after step until we are beyond the point of no return."
Jean-Claude
Juncker.
Italy’s Renzi Faces Key Vote on Making Firings Easier
Oct 7, 2014 11:00 PM GMT
Italian Prime Minister Matteo Renzi faces a confidence vote today on his
labor-market proposal that includes rules making it easier to fire workers and
more difficult to challenge dismissals in court. Italy’s biggest labor union, CGIL, said it would send tens of thousands of workers into the streets of Rome on Oct. 25 to demonstrate against the plan. Some members of Renzi’s Democratic Party have criticized the vote, a tool used to end debate and bring dissenting allies into line by staking the government survival on its outcome.
“All the senators will of course vote yes in the confidence vote,” Renzi said yesterday, referring to legislators from his own party and their allies. “We don’t expect to be ambushed. Should that happen, we’ll deal with that.”
With an economy mired in its third recession since 2008 and the International Monetary Fund estimating Italy’s jobless rate to reach 12.6 percent this year, Renzi said the country’s rigid labor laws unfairly favor those who already have a permanent job and discourage investment.
The Democratic Party’s top body voted on Sept. 29 in favor of Renzi’s proposals, which maintain the right to reinstatement for newly hired workers only in case of discriminatory firings and some disciplinary dismissals. Renzi has made the labor-law overhaul a key part of his government’s agenda
----Neither house of Parliament has set a date for a vote on the substance of Renzi’s proposed labor-market overhaul.
More
Merkel Eyes Measures to Ward Off Looming German Recession
Oct 7,
2014 11:01 PM GMT
Chancellor Angela Merkel’s government is flirting with measures to
stimulate growth, reviewing its options amid evidence that Europe’s largest
economy risks plunging into recession. Among plans being discussed is lowering the mandatory pension contribution by 0.6 percentage point, which would funnel 6 billion euros ($7.6 billion) into the economy, said Michael Fuchs, deputy parliamentary leader of Merkel’s Christian Democratic Union in the lower house.
“There is some leeway for measures to help growth,” Fuchs said in a telephone interview.
Germany’s economy is losing steam as sluggish growth in the euro area and political tension with Russia weigh on demand. With next year’s target to balance the budget looming, Merkel’s coalition has resisted calls to boost spending to foster growth.
---- German industrial production fell more than economists forecast in August, down a seasonally adjusted 4 percent from July, when it expanded 1.6 percent, the Economy Ministry said yesterday. That was the steepest decline since January 2009, when the euro area was sliding into its debt crisis.
The drop adds to a broader picture of Germany’s $3.6 trillion economy grinding to a halt. Factory orders slid 5.7 percent in August -- also the most since 2009 -- as manufacturing shrank in September. New orders fell at the fastest pace since 2012, a purchasing managers survey showed.
Business
confidence has also taken a hit, with the Ifo research institute showing it
plummeting to the lowest level in almost a year and a half. Unemployment rose
for a second month in September. The downward trend in economic data follows a
0.2 percent decline in gross domestic product in the second quarter
More
October 7, 2014, 2:07 P.M. ET
Idiosyncratic Risk Looms For Greek Assets, Citi Says
The likelihood of early national elections in Greece could make the next six months tricky for investors.Citi Research said in a note today that:
“Possible deadlock in the early-2015 vote among MPs to choose the next Greek President could trigger early national parliamentary elections in Greece in spring 2015, in our view, with a distinct possibility that the next government will be led by the opposition, anti-bailout party Syriza.”
The GlobalX FTSE Greek 20 ETF (GREK) is down 1.73% today, and is down 11.5% this year. The biggest holding in the fund, the National Bank of Greece (NBG), fell 5.7% Tuesday. The iShares MSCI Emerging Markets ETF (EEM) is off by 0.3% today.
The Greek government now has a 154-seat majority in parliament, but needs 180 seats to elect a new president. With the left-of-center Syriza party (“Coalition of the Radical Left”) pushing for a reversal of outside austerity funding, Citibank is expecting a significant confrontation between Greece and its lenders. Citi’s Giada Giani and team wrote Tuesday:
“Possible deadlock in the early-2015 vote among MPs to choose the next Greek president could trigger early national parliamentary elections in Greece in spring 2015, in our view, with a distinct possibility that the next government will be led by the opposition, anti-bailout, party SYRIZA. This is likely to take the degree of confrontation with Greece’s official lenders much higher than in the past, possibly jeopardising still-fragile foreign investor sentiment on Greece. An early exit from the bailout programme, as the government is pledging, risks yielding a similar result.
We believe Greece needs foreign capital inflows to support the economic recovery, given the still-tight domestic liquidity situation and recent signs of weakening economic momentum. Greece will likely accept some form of external monitoring by
official creditors continuing beyond 2014, possibly agreeing on a precautionary credit line after the EFSF programme expires in Dec-14. While contagion from Greece to the rest of Europe is likely to remain limited (barring the unlikely scenario
of renewed Grexit worries), we reckon idiosyncratic risks around Greek assets will remain elevated in coming months.”
Syriza has gained seats in the European Parliament, with one more than the ruling New Democracy party of Prime Minister Antonis Samaras. Syriza’s leader, Alexis Tsipras, has campaigned against budget cuts tied to Greece’s 240 billion euro ($303 billion) bailout from the International Monetary fund and Euro area. Tsipras and Syriza have been calling for immediate national elections since May.
More
We end for the day with the IMF, who predict that there’s only a one percent chance of a global recession. “Party on!”
The ten biggest threats to the global economy
Is the IMF right to think there is only a 1pc chance of a global recession over the next year?
In its latest World Economic
Outlook, the International Monetary Fund (IMF) puts the chances of growth in
global output falling below the recession threshold of 2pc next year at just
one in a hundred. Is this too sanguine a view?
Global recessions are quite rare
events, so if you had to put money on it, you’d go with the IMF. Even when one
part of the world is in recession, it is more than likely that others will be
growing quite strongly, leading to aggregate growth overall.
Yet right now, the world economy
is all over the place. Some advanced economies - notably the US and the UK -
are rebounding quite strongly, others are sinking yet further into the mire,
and almost everywhere, estimates of potential future growth are being revised
down.
A year ago, the IMF confidently
predicted that by now, a mild recovery would have taken hold in the eurozone.
These hopes have been dashed, many would say predictably so. In Japan too,
Abenomics is already disappointing the high expectations vested in them.
It is also a very mixed picture
in emerging markets; some are still going up, others - such as Brazil - have
ground to a halt. The overarching story, however, is one of slowdown.
----The IMF is nearly always wrong to some degree in its forecasting, sometimes spectacularly so, as occurred with the financial crisis. Even a becalmed global economy is better than a shipwrecked one, so it is worth asking what could come along to disrupt the IMF prognosis of ongoing mediocrity?
With help from the latest WEO,
which details some of these risks, here are what I think of as the top ten
threats.
Morehttp://www.telegraph.co.uk/finance/economics/11146273/The-ten-biggest-threats-to-the-global-economy.html
"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.
At the Comex silver depositories Tuesday final figures were: Registered 65.98 Moz,
Eligible 117.50 Moz, Total 183.48 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more on Italy and the EUSSR. Today, Italy’s
shoddy and dangerous pizza, not that anyone in Italy will do anything about it,
other than feed it to the tourists. Italy is not technically part of the Third World, but no one has told the Italians.
P. J. O’Rourke
Italy in uproar as investigation reveals pizza's toxic side
An Italian TV investigation has claimed carcinogens, poor hygiene and substandard ingredients are rampant in the country's famous pizza industry
By Keith Miller 2:03PM BST 07 Oct
2014
There’s trouble in paradise. By
“trouble,” I mean a hard-hitting exposé of poor hygiene, substandard
ingredients, toxic fumes and carcinogenic chemicals; and by “paradise” I mean
the pizzerias of Italy.
A piece by Bernardo Iovene on the
Italian current affairs show Report has stirred a furious controversy in Italy,
especially in the home of pizza, and the epicentre of his investigations,
Naples. Iovene interviewed staff at various pizzerias there and elsewhere, and
took samples for scientific analysis.
“Eco-toxicologist” Guido Perin of
Venice University told Iovene that “the product of combustion of wood… contains
carcinogens”, and that these could be absorbed into pizzas through smoky ovens,
or traces of burnt flour remaining on an oven floor. Iovene then discovered
that, in Naples at least, pizza ovens are traditionally considered
“self-cleaning”, or at best only cleaned out in the morning, so these residues
tend to accumulate. “It’s the same as [the air] you breathe behind a lorry on
the motorway,” Perin explained.
A raft of other potential health
issues was identified: the use of recycled packaging for take-away and
supermarket pizza; substandard ingredients including palm, soya and sunflower
oil (and the adulteration of olive oil with the latter); Chinese tomatoes
instead of the traditional San Marzano, a majority of which are now exported to
Japan; the bussing in of prefabricated pizza bases to supposedly “artisanal”
pizzerias; inadequate “proving” times for pizza dough and the widespread use of
extra-fine OO flour which has had all the nutrients ground out of it, sends our
blood sugar levels through the roof and puts us all at risk of pancreatitis,
diabetes, morbid obesity, Alzheimer’s and heart disease.
Iovene found various pizzaioli
who were committed to the best ingredients: slow-raised sourdough made from
slightly coarser “1” grade flour; fiordilatte or cow’s milk mozzarella from
Campania; olive oil you’d be happy to have on the table. But he failed to find
any of them in Naples.
More
“The world is a place that’s gone from being flat to round to crooked.”
Mad Magazine.
The monthly Coppock Indicators finished September.
DJIA: +141 Down. NASDAQ: +289 Down. SP500: +216 Down.
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