Baltic Dry Index. 1428 +04
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
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
We have entered disconnect overdrive. I suspect
that what comes next is the big bang. For whatever cause, an unexpected event
catches the central bankster, central planning, fiat money world, blindsided,
and the whole rotten system collapses into meltdown. Stock markets may be at
all-time highs fuelled by QE Forever and ZIRP, everything else is starting to move
from wobble to crumble.
Up first, just how bad is the great disconnect in
China?
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
China Services Gauge Joins Manufacturing in Showing Slowdown
Nov 3, 2014 2:43 AM GMT
A gauge of China’s
services industry fell to a nine-month low in October, joining manufacturing in
signaling a broadening economic slowdown. The government’s non-manufacturing Purchasing Managers’ Index (CPMINMAN) fell to 53.8 last month from 54 in September. The official manufacturing PMI released Nov. 1 was at 50.8 in October compared with September’s 51.1. Readings above 50 for both measures indicate expansion.
The pullback in services and manufacturing will test the government’s determination to refrain from increased stimulus as the world’s second-largest economy heads toward the slowest full-year growth since 1990. The economy expanded 7.3 percent in the third quarter, the weakest pace in more than five years.
More
China October Manufacturing Slows as Growth Pressure Deepens
Nov 1, 2014 3:13 AM GMT
China’s manufacturing
slowed further last month, as a property slump and slowdown in investment
growth put the world’s second-largest economy on course for the slowest
full-year growth since 1990. The government’s Purchasing Managers’ Index (CPMINDX) was at 50.8 in October, trailing the 51.2 median estimate of analysts in a Bloomberg News survey and compared with September’s 51.1. Readings above 50 indicate expansion.
A pullback in manufacturing will test the government’s determination to refrain from broad stimulus. The economy expanded 7.3 percent in the third quarter from a year earlier, the weakest pace in more than five years.
“The biggest drivers of growth such as fixed-asset investment are still slowing,” Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd., said by phone from Hong Kong after the data. “Heavy industries like steel and coal are contracting on lower prices, and the negative impact of the weak property market is becoming more pronounced.”
Growth slowed from September for output, new orders, new export orders, stockpiles and expectations, according to the statement.
More
Falling Chinese Bank Deposits Add to Warning Signs on Economy
Oct 31, 2014 7:20 AM GMT
Chinese bank deposits
dropped following a crackdown on lenders manipulating their numbers and
“illicit” means of attracting money, threatening to weigh on credit growth and
hinder efforts to reignite the economy. Four of the five biggest banks, led by Industrial & Commercial Bank of China Ltd. (601398), posted a drop in deposits as they reported third-quarter earnings this week. Central bank data showed it was the first quarterly decline for the nation’s banking industry since at least 1999.
The lower deposit levels are likely to curtail credit as banks are prohibited from lending more than 75 percent of their quarter-end holdings, while a sustained drop could hamper government efforts to rejuvenate an economy forecast to expand this year at the weakest pace since 1990. The lenders may also come under pressure to tap more expensive financing.
“With banks now less able to window-dress their deposit figures, some will be forced to scale back lending to meet loan-to-deposit requirements,” Julian Evans-Pritchard, a Singapore-based China economist for Capital Economics Ltd., said by phone today. “Regulatory controls are getting harder for banks and that’s weighing on credit growth.”
More
Man Running World’s Biggest Wealth Fund Takes On Riddle of China
Nov 2,
2014 11:01 PM GMT
Once a year, the man running the world’s biggest sovereign wealth fund
travels around China
for a week. Though assets from that country only make up about 1.5 percent of the $860 billion Norwegian wealth fund’s portfolio, Yngve Slyngstad, its chief executive officer, says almost all investment decisions are affected by what happens in China.
Understanding what’s poised to become the world’s largest economy is crucial for Slyngstad as he manages a fund that Norway predicts will reach $1 trillion in less than three years. He’ll be in China this month, visiting Beijing and other cities.
“Every time I come back, my perception of China has changed,” Slyngstad, who turned 52 today, said in an Oct. 29 interview in his fifth-floor office in Oslo. “There has been more and more of a question mark over what’s the next step for that economy. The uncertainty among investors is partially due to the very simple fact that it’s more difficult to know what’s happening in that large economy than in any other.”
More
Up next, the reality of the dying EUSSR, where now
Germany is trying to force the Brexit of the UK from the dysfunctional wealth
destroying Bilderberger project. A good time to leave, it seems to me. Best to
get out before it collapses in acrimony. Best to leave Germany to pick up the
bill for continental Europe and the Ukraine. If the lesser continentals are
happy with German hegemony, so be it. Two wars saving continental Europe is
enough.
Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats.
H. L. Mencken.
Merkel Fears U.K. EU Exit on Free Movement, Spiegel Says
Nov 2, 2014 12:36 PM GMT
German Chancellor Angela Merkel has
expressed concerns for the first time that Britain might quit the European
Union amid Prime Minister David Cameron’s bid to curb free movement within the
bloc, Der Spiegel magazine reported.
Merkel is concerned by Cameron’s efforts to reduce the free flow of workers from the other 27 EU member states into Britain, Spiegel said today, citing unnamed officials in Merkel’s office and Germany’s Foreign Ministry. Cameron is seeking to woo back voters from the anti-EU, anti-immigration U.K. Independence Party in the run-up to the May 2015 general election.
The German chancellor told Cameron in a private conversation at an EU summit in Brussels last month that the premier would reach a point of no return if he continued with his efforts to introduce quotas on migration to the U.K. by fellow EU citizens, Spiegel said. At that point, she’d halt her attempts to keep Britain in the bloc.
More
http://www.bloomberg.com/news/2014-11-02/merkel-fears-u-k-eu-exit-on-free-movement-spiegel-says.html
Eurozone inflation remains in 'danger zone'
Price rises edge up in October, though data provide little relief that the 18-nation bloc will avoid slipping into a deflationary trap.
Eurozone inflation edged up in
October, providing some relief for the European Central Bank as it fights to
prevent the single currency bloc from sliding into a Japanese-style
deflationary trap.
Prices rose by 0.4pc this month,
compared with an increase of 0.3pc in September, according to Eurostat.
The rise was driven by stronger
price rises in the services sector, higher food prices and a shallower fall in
energy costs. October's inflation rate was also in line with economists'
expectations.
---- Economists took little comfort from Friday's data. "Despite the increase in the headline rate of inflation, today’s numbers do not suggest price pressures in the Eurozone are starting to recover. The rise in the headline rate was due to weaker energy price deflation, a trend set to go into reverse in the coming months," said Tom Rogers, senior economic adviser to EY.
Data on Thursday showed Germany's
inflation rate unexpectedly fell to 0.7pc in October, from 0.8pc in September.
More
http://www.telegraph.co.uk/finance/economics/11200615/Eurozone-inflation-remains-in-danger-zone.html
Finland’s food export to Russia in August down by 60% due to sanctions
The export of meat has reduced
insignificantly, a customs official told
HELSINKI, November 1. /TASS/.
Finland’s food export to Russia last August slumped by 58% against the
same month of 2013, the Finnish Customs said on Friday.
“The nearly 60% slump reflects
the fall in the export of dairy products. The export of meat has reduced
insignificantly,” a customs official told TASS.
In contrast to July 24, 2014 the
export of foods from Finland to Russia in August was down by 63% Eighty eight
percent of the decline occurred due to the reduction of dairy products export
following Russia’s food embargo.
The concern Valio is Finland’s
largest supplier of dairy products to Russia. In 2013 its export to Russia
exceeded 242 million euros, more than 85% of Finland’s overall export to which
Russian sanctions apply.
Rajoy Assailed as Spain’s Podemos Surges, Catalans Vote
Nov 2, 2014 11:00 PM GMT
Nov. 3 (Bloomberg) –- Spanish Prime Minister Mariano Rajoy
is being challenged on a second front as support for the anti-establishment
Podemos party surges before an informal ballot on Catalonian independence. Podemos was formed less than a year ago to channel Spaniards’ disaffection with Rajoy’s People’s Party and the opposition Socialists, who between them have run the country for the past 32 years.
With corruption allegations again swirling around the PP, that discontent may be reaching tipping point: a poll for El Pais newspaper yesterday showed Podemos doubled its support in a month to a record 28 percent. In doing so, it’s overtaken both main parties, while challenging European attempts to restore political stability after years of debt crisis.
More
http://www.bloomberg.com/news/2014-11-02/rajoy-assailed-as-spain-s-podemos-surges-catalans-vote.html
We end for today with another Black Swan, this time
in Syria. You really couldn’t make this sort of Bush-Obama calamity up.
Syrian rebels armed and trained by US surrender to al-Qaeda
Moderate rebels in Syria that the US have armed and trained to fight jihadists have surrendered to al-Qaeda
Two of the main rebel groups receiving weapons from the United States to fight both the regime and jihadist groups in Syria have surrendered to al-Qaeda.The US and its allies were relying on Harakat Hazm and the Syrian Revolutionary Front to become part of a ground force that would attack the Islamic State of Iraq and the Levant (Isil).
For the last six months the Hazm movement, and the SRF through them, had been receiving heavy weapons from the US-led coalition, including GRAD rockets and TOW anti-tank missiles.
But on Saturday night Harakat Hazm surrendered military bases and weapons supplies to Jabhat al-Nusra, when the al-Qaeda affiliate in Syria stormed villages they controlled in northern Idlib province.
The development came a day after Jabhat al-Nusra dealt a final blow to the SRF, storming and capturing Deir Sinbal, home town of the group's leader Jamal Marouf.
The attack caused the group, which had already lost its territory in Hama to al-Qaeda, to surrender.
"As a movement, the SRF is effectively finished," said Aymen al-Tammimi, a Syria analyst. "Nusra has driven them out of their strongholds of Idlib and Hama."
The collapse of the SRF and attacks on Harakat Hazm have dramatically weakened the presence of moderate rebel fighting groups in Syria, which, after almost four years of conflict is increasingly becoming a battle ground between the Syrian regime and jihadist organisations.
For the United States, the weapons they supplied falling into the hands of al-Qaeda is a realisation of a nightmare.
It was not immediately clear if American TOW missiles were among the stockpile surrendered to Jabhat al-Nusra on Saturday. However several Jabhat al-Nusra members on Twitter announced triumphantly that they were.
Also the loss of a group that had been held up to the international media as being exemplary of Western efforts in Syria is a humiliating blow at the time that the US is increasing its military involvement in the country, with both air strikes and training of local rebels.
More
"No man in the country is under the smallest
obligation, moral or other, so to arrange his legal relations to his business
or property as to enable the EUSSR to put the largest possible shovel in his
stores. The EUSSR is not slow, and quite rightly, to take every advantage which
is open to it under the Taxing Statutes for the purposes of depleting the
taxpayer's pocket. And the taxpayer is in like manner entitled to be astute to
prevent, so far as he honestly can, the depletion of his means by the EUSSR."
With
apologies to Lord Clyde, Lord President of the Court of Session. Ayrshire
Pullman Motor Services v Inland Revenue (1929)
At the Comex silver
depositories Friday final figures were: Registered 66.18 Moz, Eligible 114.32
Moz, Total 180.50 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, Japan, and not just any Japan. This is an
aging Japan, with nuclear time bombs ticking, now intent on monetary folly that
will collapse the Great Nixonian Error of fiat money, and not too far off.
Despite falling prices on precious metals which is actually good for Main
Street buyers, stay long fully paid up physical precious metals. The “Monetary
Shamanism” has only one ending, and that ending brings down the Greenspan-Bernanke-Yellen
world of casino derivatives gambling “capitalism.”
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 BOJ Resorts To “Monetary Shamanism”……Financial Calamity Now Guaranteed
by Wolf Richter •
With impeccable timing – on Halloween, which is increasingly
popular in Japan among adults who are trying to escape their reality – Bank of
Japan Governor Haruhiko Kuroda formally announced that he’d cure Japan’s
economic and fiscal ills by resorting entirely, and not just partially, to
“monetary shamanism.”That’s what Izuru Kato, an economist and president of Totan Research, calls Kuroda’s dubious strategy. Japan practiced QE before it ever become a term in English. With predictable results: it did nothing for the economy but triggered unbridled government profligacy that generated ever larger budget deficits and an insurmountable mountain of debt.
But the QE that the BOJ has unleashed since April 2013 isn’t just QE anymore. It’s QQE: quantitative and qualitative easing. No-holds-barred QE. So in the true spirit of Halloween, Kuroda promised that the BOJ would:
- Increase the monetary base by ¥80 trillion annually (over 16% of GDP!), up from the previous commitment of ¥60-70 trillion. In a few years, its balance sheet will exceed Japan’s GDP.
- Increase its JGB holdings by ¥80 trillion annually, up 60% from the prior insanity.
- Lengthen the average remaining maturity of its JGB holdings to 7-10 years, up from the current goal of 6-8 years. Before Kuroda arrived at the BOJ, the average maturity was under 3 years.
- Triple the annual purchases of ETFs and J-REITs.
- And keep doing all of this until hell freezes over.
More
The BOJ Jumps The Monetary Shark—–Now The Machines, Madmen And Morons Are Raging
by David Stockman • October 31, 2014
This is just plain sick. Hardly a
day after the greatest central bank fraudster of all time, Maestro
Greenspan, confessed that QE has not helped the main street economy and
jobs, the lunatics at the BOJ flat-out jumped the monetary shark. Even
then, the madman Kuroda pulled off his incendiary maneuver by a bare 5-4
vote. Apparently the dissenters——Messrs. Morimoto, Ishida, Sato and
Kiuchi—-are only semi-mad.
Never mind that the BOJ will
now escalate its bond purchase rate to $750 billion per year—-a figure so
astonishingly large that it would amount to nearly $3 trillion per year if
applied to a US scale GDP. And that comes on top of a central bank balance
sheet which had previously exploded to nearly 50% of Japan’s national
income or more than double the already mind-boggling US ratio of 25%.
In fact, this was just the
beginning of a Ponzi scheme so vast that in a matter of seconds its
ignited the Japanese stock averages by 5%. And here’s the reason: Japan
Inc. is fixing to inject a massive bid into the stock market based on
a monumental emission of central bank credit created out of thin air. So
doing, it has generated the greatest front-running frenzy ever recorded.
The scheme is so insane
that the surge of markets around the world in response to the BOJ’s announcement
is proof positive that the mother of all central bank bubbles now
envelopes the entire globe. Specifically, in order to go on a stock buying
spree, Japan’s state pension fund (the GPIF) intends to dump massive
amounts of Japanese government bonds (JCB’s). This will enable it
to reduce its government bond holdings—built up over
decades—– from about 60% to only 35% of its portfolio.
Needless to say, in an even
quasi-honest capital market, the GPIF’s announced plan would unleash
a relentless wave of selling and price decline. Yet, instead, the
Japanese bond market soared on this dumping announcement because the JCBs
are intended to tumble right into the maws of the BOJ’s endless bid. Charles
Ponzi would have been truly envious!
More
Japan risks Asian currency war with fresh QE blitz
The Bank of Japan is mopping up the country's vast debt and driving down the yen in a radical experiment in modern global finance
The Bank of Japan has stunned the
world with fresh blitz of stimulus, pushing quantitative easing to
unprecedented levels in a bid to drive down the yen and avert a relapse into
deflation.
The move set off a euphoric rally
on global equity markets but the economic consequences may be less benign.
Critics say it threatens a trade shock across Asia in what amounts to currency
warfare, risking serious tensions with China and Korea, and tightening the
deflationary noose on Europe.
The Bank of Japan (BoJ) voted by
5:4 in a hotly-contested decision to boost its asset purchases by a quarter to
roughly $700bn a year, covering the fiscal deficit and the lion’s share of
Japan’s annual budget. “They are monetizing the national debt even if they
don’t want to admit it,” said Marc Ostwald, from Monument Securities.
In
a telling move, the bank will concentrate fresh firepower on Japanese
government bonds (JGBs), pushing the average maturity out to seven to 10 years.
It also pledged to triple the amount that will be injected directly into the
Tokyo stock market through exchange-traded funds, triggering a 4.3pc surge in
the Topix index.
----The unstated purpose of Mr Kuroda’s reflation drive is to lift nominal GDP growth to 5pc a year. The finance ministry deems this the minimum level needed to stop a public debt of 245pc of GDP from spinning out of control. The intention is to erode the debt burden through a mix of higher growth and negative real interest rates, a de facto tax on savings.
Mr Kuroda’s own credibility is at
stake since he said in July that there was “no chance” of core inflation
falling below 1pc. It now threatens to do exactly that as the economy struggles
to overcome a sharp rise in the sales tax from 5pc to 8pc in April.
Marcel Thieliant, from Capital Economics,
said the BoJ already owns a quarter of all Japanese state bonds, and a third of
short-term notes. Its balance sheet will henceforth rise by 1.4pc of GDP each
month, three times the previous pace of QE by the US Federal Reserve.
----The latest move - already dubbed QE9 –
sent the yen plummeting 2.6pc to ¥112 against the dollar, the weakest in seven
years. The currency has fallen 40pc against the dollar, euro and Korean won
since mid-2012, and 50pc against the Chinese yuan. This is a dramatic shift for
a country that remains a global industrial powerhouse, with machinery and car
producers that compete toe-to-toe with German and Korean rivals in global
markets. “They are going to be screaming across Asia if the yen gets near ¥120
to the dollar,” said Mr Ostwald.
----Hans Redeker, from Morgan Stanley, said Japan is exporting its deflationary pressures to the rest of Asia. “It is not clear whether other countries can cope with this. There have been a lot of profit warnings in Korea. The entire region is already in difficulties with overcapacity and a serious debt overhang. Dollar-denominated debt has risen exponentially to $2.5 trillion from $300bn in 2005, and credit efficiency is declining,” he said.
Albert Edwards, from Societe
Generale, said Japan is at the epicentre of a currency maelstrom, a replay of
the Asian financial crisis from 1997-1998, though this time the region is a
much bigger part of the global economy. “China cannot tolerate this kind of
shock when it already faces a credit crunch and has suffered a massive loss in
competitiveness. Foreign direct investment into China has already turned
negative,” he said.
---- As each country resorts to a beggar-thy-neighbour policy in moves akin to the 1930s, deflation is dumped in the lap of any region that is slow to respond - currently the eurozone.
Stephen Lewis, from Monument,
said the BoJ’s new stimulus is a disguised way to soak up some $250bn of
government bonds that will be coming onto the market as Japan’s $1.2 trillion
state pension fund (GPIF) slashes its weighting for domestic bonds to 35pc.
This avoids a spike in yields, the nightmare scenario for Japanese officials.
The GPIF will have buy $90bn of
Japanese equities and $110bn of foreign stocks to lift its weighting to 25pc
for each category. This will be a shot in the arm for global bourses, but also
a clever way for Japan to intervene in the currency markets to hold down the
yen.
The BoJ has in effect outsourced
its devaluation policy, shielding it against accusations of currency
manipulation. Any retaliation by China is likely to be conducted by the same
arms-length mechanism.
More
“But it (the boom) could not last forever
even if inflation and credit expansion were to go on endlessly. It would then
encounter the barriers which prevent the boundless expansion of circulation
credit. It would lead to the crack-up boom and the breakdown of the whole
monetary system.”
Ludwig Von Mises
The monthly Coppock Indicators finished October.
DJIA: +137 Down. NASDAQ: +275 Down. SP500: +210 Down.
No comments:
Post a Comment