Baltic Dry Index. 954 -09
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Janet, where’s the beef?
Another down day in the markets, and the Yellen put
is nowhere to be found. The Fed’s New York plunge protection team, of riggers
and fixits and Squid goffers has now gone AWOL too. A few hundred points here,
a few hundred points there, and pretty soon you’re talking serious damage in
Squidland. It’s starting to look like QE Forever really has to be forever, “to
infinity and beyond,” because without out QE Forever we end up with the crash
QE was originally brought in to prevent. Just from a much higher level, and a
much bigger bubble, with much more wealth destruction and pain.
Will Janet and the PPT show up later today and save
the Fedster’s favourite Squids? Don’t bet on it. From what I see out of dodgy China
this morning, there goes Germany’s Chinese auto exports. Forget blowback from
lunatic sanctions on Russia, the EUSSR is starting to implode. For more on the
EU’s road to splitsville, scroll down to Crooks Corner.
Below, a crony casino capitalism world turning
upside down. We’ll all get bailed out eventually by graphene and the next
generation of solar power, but that’s still about a decade away. The trick is
to get from here to there. Until then, more pixie dust ASAP! In the words of
the Greatest American President to ever ride out of Texas, “ If money isn’t
loosened up, this sucker could go down.” Captain Hook and Smee have shown up
and their crocodile is starting to eat the Squids.
“All the world is
made of faith, and trust, and pixie dust.”
Tinker Bell Yellen, with apologies to
J. M. Barrie.
China car sales gains slow in September
Published: Oct 14, 2014 12:39 a.m. ET
Chinese car sales gains fell to a
19-month low in September amid a weakened economy and rising inventories.
For foreign automobile makers,
which increasingly have counted on the world's largest car market to offset
weakness elsewhere, the slowdown in economic growth adds to pressures that
include increased regulatory scrutiny.
China's passenger-car sales last
month rose 6.4% from a year earlier to about 1.7 million vehicles, according to
data released Monday by the China Association of Automobile Manufacturers, a
government-backed industry group. Growth in total sales of automobiles
including passenger and commercial vehicles shrank to 2.5% from 20% a year
earlier.
September's passenger-car sales
performance was the weakest since sales fell in February 2013, a month when
China's weeklong Spring Festival holiday closed car lots. Industry analysts
said the latest results were below expectations for a traditionally strong
month. Car makers and dealers usually boost marketing efforts in September to
attract consumers ahead of the weeklong National Day holiday that started Oct.
1.
----But now the slowing gains are being felt by foreign auto makers as well. Volkswagen AG's China sales in September rose 6.7% from a year earlier, compared with an 11% year-over-year increase in August. One of Toyota Motor Corp.'s Chinese joint ventures, FAW Toyota Motor Co., slashed its sales target by 6% this year, citing a sluggish economy and high inventory at dealers.
On Monday, Credit Suisse cut its
price target for BMW AG shares in part because it said the German car maker's
China sales were weaker than expected. Sales of BMW and Mini brands in China
rose less than 4% in September to about 37,111 cars, the report said. BMW,
which said it doesn't comment on outside estimates, said it is confident it
will hit moderate sales growth by the end of the year.
"The economic situation has
had a spillover effect on the car industry, especially in midsize cities with a
population of about five million, where economies are facing greater downward
pressure," said Peng Bo, a consultant with Strategy&. He expects
China's passenger car sales to rise up to 10% this year, compared with a 16%
gain in 2013.
More
Fake Invoice Doubts Revived as China Trade Skyrockets
Oct 13, 2014 5:01 PM GMT
Hong Kong unexpectedly
overtook the U.S. in September as the top destination for Chinese shipments.
Not everyone is convinced those flows were genuine. Analysts at banks including Everbright Securities Co., Australia & New Zealand Banking Group Ltd. and Bank of Communications Co. said over-invoicing and over-reporting may explain the 34 percent surge in exports to Hong Kong from a year earlier.
A
discrepancy between Hong Kong data for imports from China and Chinese
figures for exports to the city in the past highlighted the practice of
over-invoicing that’s used to disguise capital inflows to bet on China’s rising
currency. China’s exports increased 15.3 percent from a year
earlier, the biggest increase since February 2013 and beating the 12 percent
median estimate in a Bloomberg survey of analysts, according to government data
released yesterday, prompting deja vu for some.
More
Asian Stock Index Retreats Amid Rout in Global Equities
Oct 14, 2014 1:10 AM GMT
Asian stocks fell, with the regional benchmark index heading for a
six-month low, extending a rout in global equities after the Standard &
Poor’s 500 Index capped its biggest three-day loss since 2011. The MSCI Asia Pacific Index (MXAP) fell 0.6 percent to 135.60 as of 9:04 a.m. in Tokyo before markets in China and Hong Kong open. The gauge dropped 8.8 percent from its year high in July through yesterday as the Federal Reserve contemplates when to raise interest rates and a faltering recovery in Europe sparked concern global economic growth will slow.
“Pessimism is coming back into the market amid the slump in U.S. equities,” said Nader Naeimi, who helps manage about $125 billion as head of dynamic asset allocation at Sydney-based AMP Capital Investors Ltd. “It’s been a while since we had a gut-shaking correction in the U.S. It will take a while before the market can build a firmer base. There are a lot of worries about global growth.”
More
U.S. stocks end Monday sharply lower on late selloff
Published: Oct 13, 2014 4:25 p.m. ET
NEW YORK (MarketWatch) — The U.S. stock market ended Monday’s volatile
session sharply lower as selling intensified at the last hour.Volatile trading came on the heels of last week’s deep losses that had been triggered by global economic growth concerns.
Monday’s trading marked the fifth consecutive day of 1% moves for the S&P 500 and triple-digit moves for the Dow Jones Industrial Average.
Key technical levels were in focus, especially as there was no data on the economic calendar and bond markets were closed for Columbus Day holiday.
The S&P 500 SPX, -1.65% closed down 31.39 points, or 1.6%, to 1,874.74. The benchmark index has pulled back more than 6% from its peak reached on Sept. 18.
All of the main benchmarks are trading below their 200-day moving averages. Falling below the 200-day moving average level, and in the case of the S&P 500, below the 1,900 level, is considered significant as many analysts see the breach as a sign of further declines
----The Dow Jones Industrial Average DJIA, -1.35% dropped 223 points, or 1.3%, to 16,321.07. The blue-chip index turned negative for the year on Friday and is now down 1.5% year-to-date.
The Nasdaq Composite COMP, -1.46% dropped 62.58 points, or 1.5%, to 4,213.66. The Russell 2000 RUT, -0.38% gave up solid gains of early morning and closed down 4.3 points, or 0.4%, at 1,049.17.
More
Stock market 'fear index' spikes as clouds gather over world economy
Vix measure of stock market volatility hits two-year high as US markets slide on oil and Ebola fears
Fear is spreading across stock
markets as weak economic growth, collapsing oil prices and the threat of Ebola
panics investors.
The Vix, the so-called "fear
index" that measures market volatility, spiked by 16pc on Monday to its highest
level for more than two years.
Markets have seen a widespread
sell-off in recent days as fears over economic growth around the world worry
investors.
The
FTSE 100 is trading at its lowest level for a year, while
the US S&P 500 has seen three days of heavy falls.
The price of Brent Crude oil, meanwhile, fell to a four-year low on Monday.
The Vix has been unusually quiet in the last few months, trading at pre-crisis levels amid an atmosphere of low interest rates.
However, growth fears stemming from continued weakness in the eurozone have caused a sell-off. The spread of the deadly Ebola virus has also panicked investors.
Other developments causing the sell-off are the end of money printing in the US and the conflict in the Middle East.
The Vix was last at its current level in June 2012.
More
While we await the arrival of the Fed’s pixie dust,
our friends in Basel Switzerland are getting just a little panicky. The next
Lehman is out there, and they seem to think about to show up.
"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
Too-Big-to-Fail Banks Face Up to $870 Billion Capital Gap
Oct 14,
2014 12:01 AM GMT
Too big to fail is likely to prove a costly epithet for the world’s biggest
banks as regulators demand they increase debt securities to cover losses should
they collapse. The shortfall facing lenders from JPMorgan Chase & Co. (JPM) to HSBC Holdings Plc could be as much as $870 billion, according to estimates from AllianceBernstein Ltd., or as little as $237 billion forecast by Barclays Plc.
The range is so wide because proposals from the Basel-based Financial Stability Board outline various possibilities for the amount lenders need to have available as a portion of risk-weighted assets. With those holdings in excess of $21 trillion at the lenders most directly affected, small changes to assumptions translate into big numbers.
“The direction is clear and it is clear that we are talking about huge amounts,” said Emil Petrov, who heads the capital solutions group at Nomura International Plc in London. “What is less clear is how we get there. Regulatory timelines will stretch far into the future but how quickly will the market demand full compliance?”
The FSB wants to limit the damage the collapse of a major bank would inflict on the world economy by forcing them to hold debt that can be written down to help recapitalize an insolvent lender. For senior bonds to suffer losses under present rules the institution has to enter bankruptcy, a move that would inflict huge damage on the financial system worldwide if it happened to a global bank.
That’s what happened when Lehman Brothers Holdings Inc. collapsed in 2008, prompting governments around the world to step in with taxpayers money to rescue lenders placed at risk in the turmoil that followed.
More
“To
die would be an awfully big adventure.”
Ebenezer
Squid, with apologies to J. M. Barrie.
At the Comex silver depositories Monday final figures were: Registered 66.63 Moz,
Eligible 117.47 Moz, Total 184.10 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more from the EUSSR. Which country will be
first to exit the wealth destroying euro and offer hope to the massively
unemployed youth generation? Which country will be first to exit the EU?
Italy is not technically part of the Third World, but no one has told the Italians.
P. J. O’Rourke
Italy's 'UKIP' launches drive for euro referendum as five-year depression drags on
Italy's Cinque Stelle throws down the gauntlet, warns Europe to come "well-armed" if it means to encroach any further on Italian sovereignty
Italy’s Five Star Movement has
launched a petition drive for withdrawal from the euro to lift the country out
of depression and protect Italian democracy, a dramatic turn for a country that
was passionately pro-European for sixty years. “We must leave the euro as soon
as possible,” said Beppe Grillo, the combative comedian-politician and founder
of the protest party that swept into Italy’s parliament last year with 26pc of
the vote.
“We will collect half a million
signatures in six months - a million signatures - and we will take our case to
parliament, and this time thanks to our 150 legislators, they will have to talk
to us.”
Gianroberto Casaleggio, party’s
economic strategist, said the movement had set out its minimum demands in May,
calling for Eurobonds and the abolition of the EU Fiscal Compact, a straitjacket
that will force Italy into decades of debt-deflation. “Five months have gone by
and we have had no reply. They have totally ignored us,” he said.
Any referendum would not be
binding but the party may be able to push through a “law of popular initiative”
if eurosceptics in other parties join forces. Italians have become bitterly
disenchanted with Europe after a 9pc fall in GDP over the last five and a half
years, and a 24pc fall in industrial output. Most voters think it was a mistake
to join the euro but are wary of withdrawal, fearing that a return to the lira
would risk a crippling crisis. Even so Datamedia Ricerche poll in March found
that 59pc would view a return to the lira as a good idea.
Italy’s GDP has fallen back to
levels first reached fourteen years ago, a catastrophic reversal unseen in any
major country in modern times, even during the 1930s. It has lost 40pc in
labour competitiveness against Germany since the mid-1990s, and is now trapped
inside EMU with an over-valued exchange. It cannot cut easily cut wages with an
“internal devalution” because this would cause havoc for debt dynamics.
The Five Star
Movement – or Cinque Stelle – won more votes than any other party in elections
last year with a Left-leaning, slightly anarchist, Green agenda, and blistering
attacks on entrenched elites. It is has 108 deputies in the lower house, and 54
senators.
----Cinque Stelle has been eclipsed this year by the dramatic rise of Italy young premier Matteo Renzi, the yet party has not faded away. It came second in the European elections in May, winning 21.5pc. Its 17 MEPs sit with UKIP in Strasbourg.
Mr Renzi is now having to grapple
with a triple-dip recession that has come as a profound shock, shattering
assumptions that the crisis is over and that the eurozone is on the cusp of a
fresh cycle of self-sustaining recovery. He is being forced to make yet more
austerity cuts to meet EU deficit rules, risking further economic contraction,
and perpetuating the same vicious cycle that engulfed his predecessors. Such a
scenario plays straight into the hands of Beppe Grillo
More
Money,
again, has often been a cause of the delusion of the multitudes. Sober nations
have all at once become desperate gamblers, and risked almost their existence
upon the turn of a piece of paper.
Charles
Mackay. Extraordinary Popular Delusions and the
Madness of Crowds
The monthly Coppock Indicators finished September.
DJIA: +141 Down. NASDAQ: +289 Down. SP500: +216 Down.
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