Baltic Dry Index. 1192 +37
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
The
market is practically standing still now. They've dropped ropes out of the nose
of the market, and they've been taken a hold of down on Wall Street by a number
of Great Vampire Squids It's starting to rain again; it's—the rain has slacked
up a little bit. The back motors of ZIRP are just holding the market just, just
enough to keep it from — It burst into flames! It burst into flames, and it's
falling, it's crashing! Watch it, watch it! Get out of the way! Get this,
Yellen! Get this, Draghi! The market’s afire—and it's crashing! It's crashing
terrible!
The
Fed’s nightmare, with apologies to Herbert Morrison and the Hindenburg.
Will the Fedster’s really end QE this week, and if
they do, what will happen to “God’s work,” by the Great Vampire Squids? Fedster
Bullard is already on record asking for QE to be continued through year end,
but will the Fed’s taking chair listen? With QE and US stock market rallies
seemingly correlated 1:1 what will happen to those poor HFT thieves once their
supply of free limitless cash is cut-off? Will the Fedster’s really be heartless enough
to cut them adrift ahead of Christmas? Just imagine the distress down at the
Ferrari dealerships, Saks, Cartier and Tiffany’s. Oh the inhumanity of it!
Those poor Squids!!
"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."
Bear Stearns CEO Alan Schwartz. March 12, 2008. Bust March 17, 2008
S&P 500 Rising at Five Times GDP Shows Recovery Priced In
Oct
26, 2014 11:00 PM GMT
For almost six years, one of the most powerful bull markets
on record has coexisted with the weakest economic recovery since World War II.
This month’s selloff in stocks shows how much investors want that to change. In the latest fit of nerves, market volatility soared to a three-year high and the Standard & Poor’s 500 Index dropped as much as 9.8 percent in the 26 days ending Oct. 15. Everything from Ebola to Europe and the Federal Reserve were blamed for the retreat, the fourth to exceed 3 percent this year.
Another explanation is that investors are finding their patience taxed after waiting five years for economic growth to catch up with the market. From March 2009 through June 2014, the S&P 500 has increased 4.7 percent a quarter, about five times faster than gross domestic product, data compiled by Bloomberg show. That’s the biggest gap since at least 1947.
“I don’t think the dispersion can sustain at the level that it did, which is why the market is struggling,” Daniel Genter, who oversees about $4.5 billion as chief executive officer at Los Angeles-based RNC Genter Capital Management, said in a phone interview on Oct. 22. “The market wants to see growth going in the right direction or it’s going to be upset.”
More
We open next with poor Brazil, on the cusp of a new
recession, suffering from drought, falling commodity prices, a growing oil
scandal involving the last two presidents, and now this. In a deeply polarised,
crime ridden country, just over half the country has voted to continue on with the
free lunch.
The trouble with socialism is that eventually you run out of other people’s money.
Margaret Thatcher.
Rousseff Re-Elected on Call to Save Brazil’s Social Gains
Oct 27, 2014 1:37 AM GMT
Brazil’s President Dilma
Rousseff won re-election and stretched her Workers’ Party’s rule to a
record 16 years by convincing voters her opponent threatened social gains she
pledged to expand in her second term. Rousseff, who has maintained record-low unemployment even as the economy posted the slowest growth under any Brazilian president in more than two decades, had 52 percent of the vote with 99.99 percent of ballots counted by the electoral court in Brasilia. Senator Aecio Neves, a former governor of Minas Gerais state, had 48 percent. The result was the closest presidential election since the return of democracy in 1985.
----In the runup to
the election, more than two-thirds of Brazilians polled by Ibope said
they’re looking for change. Last year, 1 million took part in street protests,
as the growing middle class expressed demands for better education, health services, and public
transport.
More
Brazil Stock ETF Tumbles in Tokyo on Rousseff’s Victory
Oct 27, 2014 3:02 AM GMT
An exchange-traded fund investing in Brazilian equities plunged the most in
three years in Tokyo after
President Dilma Rousseff
won re-election, damping speculation for a change in policies that have wiped
out $553 billion of stock market value and left the economy in recession. The NEXT FUNDS Ibovespa Linked ETF (1325) dropped 7.9 percent at 11:46 a.m. in Tokyo, heading for the biggest loss since September 2011. The benchmark equity gauge for Latin America’s biggest economy, which has rallied 16 percent from this year’s low in March amid bets that Rousseff would be ousted by Senator Aecio Neves, may tumble as much as 10 percent when it opens today, according to Leme Investimentos.
Rousseff, who has maintained record-low unemployment even as the economy recorded the slowest growth under any Brazilian president in more than two decades, had 52 percent of the vote with 99.7 percent of ballots counted by the electoral court in Brasilia. The Ibovespa (IBOV) lost 25 percent since Rousseff took office in January 2011, while shares of state-owned oil producer Petroleo Brasileiro SA (PETR4) tumbled 40 percent and the real weakened 33 percent against the dollar.
“There’s going to be enormous disappointment in the markets that we have not had an opposition victory,” Geoffrey Dennis, the head of emerging-market strategy at UBS AG, said in a phone interview. The Ibovespa may drop as much as 7.6 percent, he said.
More
We close with the EUSSR, where unsurprisingly, the
ECB is giving the banksters a get out of
jail free card. So that’s all right then, on the time honoured principle that
deficits don’t matter until one day they do. According to the Goldmanite,
Italian run, ECB, that day is not now. But scroll down to Crooks Corner for the
latest sign of it getting closer.
"When it becomes serious, you have to lie"
Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President.
ECB List of Failing Banks Shrinks If You Read Small Print
Oct
27, 2014 12:01 AM GM
Most of the lenders that failed the European Central Bank’s balance-sheet
test have been let off for good behavior. Only eight lenders haven’t already plugged capital gaps or satisfied the ECB with plans to shrink, out of 25 found with a shortfall. That means just 6.35 billion euros ($8 billion) remains from a 25 billion-euro hole, and half of that is in Italy. The ECB, releasing results of its year-long bank audit yesterday, said investors should focus on the insight they’ve gained into lenders’ books instead.
Just
over a week before the central bank becomes the financial supervisor of the
euro area, officials are attempting to end half a decade of financial turmoil
with full disclosure on any bad loans and mispriced assets. The ECB is staking
its reputation on this exercise convincing investors that lenders are clean and
can again play a role in reviving a stalling economy.
More
Three reasons why the ECB bank stress tests are subpar
Although much work went into the tests, the results are by no means the whole story
For lovers of contingent capital,
asset quality reviews, and tier one capital ratio, it was like Christmas.
As the clock struck 11 in London,
the European Central Bank pushed out its modestly entitled “comprehensive
assessment” of the financial health of the biggest banks in the Eurozone, which
ran to 178 pages.
At the same hour, the European
Banking Authority did likewise, pushing out its 51-page report, not to mention
hundreds of pages of addendums, additional tables and charts.
For those who know their CRDs
from their CRRs – that’s capital requirements directive and capital
requirements regulation – the documents were a treasure trove of detailed
analysis of the state of the continent’s banks as at December 31 last year.
It is clear from poring through
the documents, and trying to pick out salient themes, that considerable work
has gone into producing both sets of overlapping reports.
----However, I have three problems with the tests, which lead me to the conclusion that they are sub-par.
Firstly, being historic in
nature, they do not really paint an accurate picture of the health of the
banks’ current states. In Dexia’s case, for example, the Belgian central bank
was quick to rush out a statement saying that it didn’t need to take any extra
actions to boost its capital. The ECB found that Dexia had a capital shortfall
of €339.4m (£267m) at the end of 2013.
But the Belgian regulator said
that given state guarantees mean it can hold sovereign bonds to maturity,
meaning unrealised losses on such bonds are irrelevant, its actual core tier 1
ratio was 7.6pc – above the 5.5pc threshold.
“Therefore, the stress test
exercise does not affect the current restructuring plan of Dexia approved by
the European Commission in 2012 and no additional action is required from the
group,” said the Belgian central bank.
It wasn’t alone. Portugal’s BCP
said that despite a core tier 1 ratio of 2.99pc under the most adverse of
scenarios tested, it was just fine, saying that measures already taken mean it
does not need to raise capital or sell assets.
Slovenia’s NLB and NKBM both
failed the tests too, but said that they would cover the shortfall from profits
following improved profitability.
So nothing to see here?
More
"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. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President.
At the Comex silver depositories Friday final figures were: Registered 66.97 Moz,
Eligible 114.15 Moz, Total 181.12 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today while we await the big news from the Fed later in the week, yet another red flag from communist China. With no one believing China’s official figures, least of all Chinese officials, it’s anyone’s guess just how bad the slowdown really is. The industrial commodity exporting countries, like Australia and Brazil, and South Africa, are about to slam into the wall right behind China.
China’s Fourth-Quarter Growth May Slow to 7.2%, PBOC’s Song Says
Oct 26, 2014 4:01 PM GMT
China’s economic growth
will slow to 7.2 percent in the current quarter, down from the previous three
months, as domestic demand weakens, said Song Guoqing, an academic member of
the People’s Bank of China monetary policy advisory committee. The nation’s economy will probably expand 7.3 percent next year, Song said at a forum in Beijing on Oct. 25. That view contrasts with a prediction by Fan Jianping, chief economist at a state research institute, who said he expects 7 percent growth in 2015 unless the central government imposes stronger-than-expected stimulus measures.
A decrease in exports and
property development, two “engines” that fueled China’s rise to become the
world’s second-largest economy, will be the main cause of a slowing of growth,
Fan, who works at the State Information Center under the National Development
and Reform Commission, told an industry conference Oct. 25.
Fan’s forecast is in line with a
median estimate of 51 analysts in a Bloomberg News survey as Chinese leaders
have signaled they will tolerate weaker expansion, leaving the economy heading
for the slowest full-year growth since 1990. The government will set a gross
domestic product growth target of about 7 percent for 2015, according to 13 of
22 analysts polled by Bloomberg.
“I
don’t rule out that we will see on-year expansion lower than 7 percent in some
single quarters next year,” Fan said. He said his forecast was based on his
agency’s research, which uses China’s industrial
production
as a key indicator to the economic growth.
More
"There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."
Ludwig von Mises
The monthly Coppock Indicators finished September.
DJIA: +141 Down. NASDAQ: +289 Down. SP500: +216 Down.
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