Baltic Dry Index. 1264 +08
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.
Yesterday we posited that a new global bust is getting underway. Today
we are spoiled for choice. Crude oil prices and Dr. Copper fell again. The Hong
Kong-Shanghai stock link failed to provide the much hyped boost. US industrial
production unexpectedly fell. Japan is back in its never ending recession
again. Europe continues being Europe.
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
Industrial Output in U.S. Unexpectedly Fell in October
Nov 17, 2014 2:37 PM GMT
Industrial production in the U.S. unexpectedly dropped in October, weighed
down by declines at utilities, mines and automakers that signal manufacturing
started the fourth quarter on soft footing. Output fell 0.1 percent after a 0.8 percent increase in September that was smaller than previously estimated, figures from the Federal Reserve in Washington showed today. The median forecast in a Bloomberg survey of 83 economists projected a 0.2 percent gain. Factory production rose 0.2 percent, matching the prior month’s advance that was also revised down.
A pickup in manufacturing is needed to help bolster the expansion, now is its sixth year, as global growth from Europe and Japan to emerging markets cools. Rising consumer confidence and the drop in gasoline prices are brightening the outlook for holiday sales, indicating factories will get a lift in the next few months.
----Estimates for total industrial production in the Bloomberg survey ranged from a drop of 0.2 percent to a 0.6 percent gain after a previously reported September advance of 1 percent.
Manufacturing, which makes up 75
percent of total production, was forecast to increase 0.2 percent, according to
the survey median.
The output of motor vehicles and
parts decreased 1.2 percent in October, a third consecutive decline, today’s
report showed. Excluding autos and parts, manufacturing rose 0.2 percent.
More
Lopsided Link Shows Chinese Rejection of Hong Kong Stocks
Nov 18, 2014 4:22 AM GMT
Chinese investors failed to show up for some of Hong Kong’s foremost
companies on the first day of the exchange link with the mainland, confounding
the predictions of Deutsche Bank AG, BNP Paribas SA and Goldman Sachs Group
Inc. Shares of Tencent Holdings Ltd. (700), HSBC Holdings Plc (HSBA) and Galaxy Entertainment Group Ltd. (27), identified by analysts as likely targets for mainland investors, declined as the cross-border trading program debuted yesterday, sending the Hang Seng Index down 1.2 percent, its biggest retreat in almost a month. Hong Kong stock purchases through the link totaled 1.77 billion yuan ($289 million), less than 14 percent of the amount bought by foreign investors in Shanghai.
One reason for the tepid response from Chinese investors is that share prices for industry leaders previously out of reach on the mainland had already run up in anticipation of the link, according to UBS AG. Tencent, operator of the WeChat messenger service, and Galaxy, which runs Macau casinos, both jumped more than 7 percent last week after the start date was announced.
“Investors from China are clearly trying to pick value,” Yang Xia, the Shanghai-based head of China equities at UBS, said in a phone interview yesterday. “They are not just buying shares that are not available domestically.”
Some mainland investors were also turned off cross-border investing by the poor track record of Chinese money managers who buy foreign shares through the Qualified Domestic Institutional Investor program, according to Shenyin & Wanguo Securities Co. Others just don’t want to go through the trouble of learning a new set of market rules when they already have access to domestic shares, said Dai Ming, a money manager at Hengsheng Asset Management Co. in Shanghai.
Galaxy, controlled by billionaire Lui Che Woo, dropped 2.7 percent in Hong Kong yesterday, the first decline in seven days. Tencent lost 2.1 percent, the biggest slide in almost two months. HSBC, Europe’s biggest bank by market value, slipped 0.4 percent to a four-week low.
Deutsche Bank, Goldman and BNP had all picked Tencent as a beneficiary of the link in research reports this month, while Deutsche Bank also recommended Galaxy. HSBC was mentioned by Goldman, BNP and Credit Suisse Group AG as likely to gain from the link.
More
China Stocks Drop for Fourth Day as Home Prices Extend Declines
Nov 18, 2014 5:41 AM GMT
Chinese
stocks dropped, with the benchmark index declining for a fourth day, as
falling home prices added to concerns that an economic slowdown will deepen and
enthusiasm toward an exchange link with Hong Kong faded. Poly Real Estate Group Co. (600048) and China State Construction Engineering Corp. slumped at least 2.3 percent. New-home prices decreased in all but one city monitored by the government last month as developers offered discounts to cut inventories. Hong Kong Exchanges and Clearing Ltd. slid 2.7 percent, extending yesterday’s 4.5 percent drop, as mainland investors used less than 4 percent of their 10.5 billion yuan ($1.7 billion) quota to buy Hong Kong stocks today.
----“The stock link has already been priced in,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “The weakness in the house market will be drawn out because prices are still at a high level. The drag on the economy could also be protracted.”
The CSI 300 Index dropped 1.2 percent, as gauges of energy and financial companies declined most. The Hang Seng Index retreated 1.1 percent.
----Home
prices declined in 69 of 70 cities in October from September, the National
Bureau of Statistics said today. That’s the same as in September, which was the
most since January 2011 when the government changed the way it compiles the
data. Home prices will continue to drop “modestly” next year as developers
offer promotions or discounts to reduce stock that will remain high, according
to Moody’s Investors Service.
More
Japan Seeks to Strengthen 2015 Growth After Recession Hit
Nov 18, 2014 5:36 AM GMT
With Japan’s slump into its
fourth recession since 2008 threatening the failure of the Abenomics reflation
program, Prime Minister Shinzo Abe’s administration is taking steps to shore up
growth for the coming year. Economy Minister Akira Amari told reporters yesterday in Tokyo there’s a high chance of a stimulus package. Etsuro Honda, an adviser to Abe, said a 3 trillion yen ($26 billion) program was appropriate and should go toward measures that directly help households, such as child care support.
Abe, who holds a news conference later today, is also considering a postponement of an October sales-tax increase until 2017 -- a move that would add 0.3 percentage point to growth in the coming fiscal year, according to the median estimate of economists surveyed by Bloomberg. At stake for the prime minister is assuring re-election in a likely snap vote next month that may serve as a referendum on his policies.
“Household sentiment should be relaxed thanks to the delay in another VAT hike, helping improve spending attitude and facilitate consumption recovery,” Kazuhiko Ogata, chief Japan economist at Credit Agricole SA in Tokyo, wrote in a note to clients yesterday, referring to the sales, or value-added, tax. “If Abe’s Liberal Democratic Party wins in the election, ‘Abenomics’ would be set” to be sustained until as long as until 2018, when he would run up against term limits as LDP head, according to Ogata.
Less than two years into Abenomics -- a three-pronged strategy to pull Japan out of two decades of stagnation through monetary stimulus, fiscal flexibility and structural deregulation -- the program has yet to spark sustained growth. An April sales-tax rise saw the economy sink into two straight quarters of contraction, a government report showed yesterday.
More
Oil Drops as Investors Weigh OPEC Policy Amid Slowing Demand
Nov 18, 2014 5:52 AM GMT
West Texas Intermediate and Brent crude fell for a second day as investors
weighed the likelihood that OPEC will reduce output when it meets next week
amid signs of weakening global demand. Futures dropped as much as 0.6 percent in New York and London. Venezuela, one of 12 members of the Organization of Petroleum Exporting Countries, met with Russia to discuss ways to support oil prices, said the foreign ministry in Caracas. A large production cut isn’t in OPEC’s interest because that will bolster an expansion in U.S. shale supply, according to Goldman Sachs Group Inc.
Oil has slumped into a bear market as the U.S. pumps at the fastest pace in more than three decades, fueling speculation that the market is oversupplied. Japan, the world’s third-biggest consumer, slid into a recession after its economy shrank in the third quarter. OPEC, responsible for about 40 percent of global supply, is scheduled to gather Nov. 27 in Vienna.
“More investors are now assuming that OPEC producers are unlikely to cut output,” Hong Sung Ki, an analyst at Samsung Futures Co. in Seoul, said by phone today. “There are still a lot of uncertainties. All eyes are on the OPEC meeting.”
WTI for December delivery declined as much as 47 cents to $75.17 a barrel in electronic trading on the New York Mercantile Exchange and was $75.18 at 1:51 p.m. Singapore time. The contract lost 18 cents to $75.64 yesterday. The more-active January future was down 37 cents at $75.29 today. Total volume traded was about 44 percent above the 100-day average. Prices have decreased 24 percent this year.
More
EU Skips Wider Russia Sanctions While Targeting Rebels
Nov 17, 2014 10:00 PM GMT
European Union governments held off on further economic sanctions against
the Kremlin for fomenting rebellion in eastern Ukraine, while agreeing to
blacklist more pro-Russia
separatists there. EU foreign ministers decided to impose additional travel bans and asset freezes in response to the Nov. 2 elections in the rebel-held regions of Donetsk and Luhansk. The names will be released by the end of the month.
More
http://www.bloomberg.com/news/2014-11-17/eu-skips-wider-russia-sanctions-while-targeting-rebels.html
Crowds Boo Czech Leader at Velvet Revolution Celebrations
Nov 17, 2014 11:01 PM GMT
Crowds threw eggs and booed Czech President Milos Zeman during his speech at
a ceremony to celebrate the 25th anniversary of the Velvet Revolution that led
to the collapse of the communist regime in 1989. Security guards held up umbrellas to shield Zeman from the eggs and other objects as he spoke in Prague yesterday in front of the presidents of Germany, Poland, Hungary and Slovakia, while the crowd chanted “shame” and demanded his resignation.
More
Catalonia’s Independence Push Risks Real Estate Revival
Nov 18, 2014 2:00 AM GMT
Catalonian independence, favored by 81 percent of those who voted in an
unofficial ballot this month, would put at risk a growing regional economy
lifted by one of Spain’s recovering property markets. An exit from the euro, debt downgrades and the flight of banks and other businesses are all possible consequences of separation from Spain. At the least, it would undermine a real estate revival that’s made Catalonia’s capital, Barcelona, the second-most popular city for commercial-property investment after Madrid, said Patricio Palomar, director of research and investment strategy at CBRE Group Inc. (CBG)’s Spanish unit. The housing market, emerging from a seven-year slump, would also suffer, he said.
“Independence would be a complete disaster for the residential market,” Palomar said in an interview in Madrid. “The region’s housing stock would have to be digested internally because foreign investors tend to avoid buying property with currency risk.”
More
Hungarians Demonstrate Against Orban as Tax Chief Fuels Protest
Nov 17, 2014 6:21 PM GMT
Thousands of Hungarians protested against corruption in demonstrations
fueled by Prime Minister Viktor
Orban’s refusal to dismiss the head of the tax authority after she was
barred by the U.S on suspicion of graft. Protesters gathered in front of Parliament a week after Orban spurned their ultimatum to fire National Tax Authority President Ildiko Vida. She this month confirmed being on the U.S. list of six Hungarian citizens and denied any wrongdoing. Orban on Nov. 14 said he had to “stabilize the operation” of the tax authority “with its current leadership.”
Hungarians have joined street protests organized on social media that hone in on perceived government corruption and a lack of accountability. Last month, Orban ignited two of the biggest demonstrations since he came to power in 2010, with a proposal to tax Internet use. He withdrew it after tens of thousands rallied across Hungary in opposition.
More
We end with “Booming Britain,” where
the public, banksters excepted, seem to have run out of money. The Great
Disconnect is about to reconnect it seems.
Goldman Sachs: Supermarket groups must close one in five stores
Store closures are 'only viable solution' for Tesco, Sainsbury's and Morrisons, say analysts
Britain’s biggest supermarket groups must close one in five shops in order to turn around their performance, analysts at Goldman Sachs have warned.In a damning report on the grocery industry, the Goldman analysts said closing stores is the “only viable solution” if the major food retailers are to grow profits again.
The comments came after Waitrose boss Mark Price told The Telegraph that the “Big Four” supermarkets could be forced to start closing shops as the industry faces its biggest transformation since the 1950s.
Shares in Tesco, Sainsbury’s and Morrisons, the listed supermarket groups, have already fallen by 50pc over the last year as their sales have slumped.
However, the Goldman analysts, led by Rob Joyce, warned: “We believe the major decisions that will shape the future of the UK grocery market are yet to be taken.”
Goldman said the retailers had to close stores in order to reduce their cost base. This would allow them to compete on price with discounters Aldi and Lidl, and grow profits.
“Our analysis of the UK grocery industry suggests capacity exit is the only viable solution for a return to profitable growth,” Goldman said, adding that store estates needed to be reduced by around 20pc.
The analysts said that if current trends continue then sales in large out-of-town supermarkets will fall by 3pc every year until 2020. This would mean that sales in larger stores fall by 18pc over the next six years.
More
"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."
Daniel Webster
At the Comex silver
depositories Monday final figures were: Registered 65.35 Moz, Eligible 112.36
Moz, Total 177.71 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, the relentless push in the west for World
War Three. Probably the shortest World War of the Three. We open with Germany
conditioning the public for war. Third time lucky?
A newspaper is a device for making the ignorant more ignorant and the crazy crazier.
H. L. Mencken.
Angela Merkel warns Russia could seek to destabilise 'whole of the European peaceful order'
German Chancellor warns that, if left unchecked, Vladimir Putin's Russia could seek to destabilise Moldova, Georgia and Serbia
By Roland Oliphant in
Dnepropetrovsk 5:41PM GMT 17 Nov 2014
Russia could seek to destabilise
vast areas of eastern Europe if it is not challenged in Ukraine, Angela Merkel
warned on Monday.
The strongly worded statement
came as Ukraine's president warned of a resumption of "total war" in
the strife-torn country's east.
In a speech to Sydney's Lowry
Institute for International Policy Studies, the German Chancellor said Russia's
annexation of Crimea and subsequent destabilisation of eastern Ukraine
"called the whole of the European peaceful order into question".
"This isn't just about
Ukraine," she said. "This is about Moldova, this is about Georgia,
and if this continues then one will have to ask about Serbia and one will have
to ask about the countries of the Western Balkans."
Mrs Merkel said she feared the
creation of a Cold War-style zone of influence in Europe where Moscow could
demand consultation on any major decision.
Ukraine and Western governments
accuse Russia of fomenting and sustaining a six-month old secessionist uprising
in eastern Ukraine, where more than 4,000 people have died in fighting since
April. Russia denies the accusations.
A ceasefire agreement in Minsk
brought a halt to most fighting in early September, but artillery battles have
continued around strategic flash points.
Hostilities have escalated
sharply in the past two weeks, fuelling concerns about a return to all-out
warfare.
Petro Poroshenko, Ukraine's
president, said Kiev is prepared for full-scale hostilities should diplomatic
solutions fail.
More
Putin Warns He Won’t Let Ukraine Defeat Eastern Rebels
Nov 17, 2014 12:51 PM GMT
Russian President Vladimir
Putin warned he won’t allow rebels in eastern Ukraine to be defeated by
government forces as European Union ministers met to consider imposing more
sanctions on the separatists. “You want the Ukrainian central authorities to annihilate everyone there, all of their political foes and opponents,” Putin said in an interview yesterday with Germany’s ARD television. “Is that what you want? We certainly don’t. And we won’t let it happen.”
German Chancellor Angela Merkel said yesterday the EU will keep its economic sanctions on Russia “for as long as they are needed.” EU foreign ministers convened today in Brussels to discuss adding to sanctions that have limited access to capital markets for some Russian banks and companies and blacklisted officials involved in the conflict. New measures will likely target pro-Russian separatist leaders, the EU said.
----“We are very concerned about any
possible ethnic cleansings and Ukraine ending up as a neo-Nazi state,” Putin
said according to an English translation of his remarks published by the
Kremlin.
German
Economy Minister Sigmar Gabriel, speaking today
in Belgrade, said NATO “saber-rattling” on Russia’s border isn’t smart.
More
http://www.bloomberg.com/news/2014-11-17/putin-warns-he-won-t-let-ukraine-defeat-eastern-rebels.html
Russia kicks out Polish 'spies' in tit-for-tat expulsion
Moscow says four diplomats were sent home in response to “unfriendly and completely unfounded" ejection of alleged spy by Warsaw
Russia said on Monday that it had expelled a number of alleged Polish spies in a tit-for-tat measure after Warsaw kicked out at least one Russian diplomat accused of espionage.A foreign ministry spokesperson in Moscow said the ejection was a direct response to Poland's "unfriendly and completely unfounded step".
"In connection with this, the Russian side has taken appropriate measures in response, and several Polish diplomats have already left the territory of our country for activity incompatible with their status," the ministry said.
Russia did not say how many diplomats were expelled but Polish media said it was four. They were reportedly three military attaches and one employee of the Moscow embassy's political section.
Poland and other central and eastern European states on the frontier of the EU and Nato have become the focus of rising Russian espionage activities in recent years.
Moscow claims it is also the
subject of frequent spying. On Saturday, Russian state television showed
footage of Aleksejs Holostovs, a former Latvian MP, confessing to spying for
the Latvian special services, which he said was under control of the CIA.
An Estonian counter-intelligence
officer is also in custody in Moscow after he was seized by Russian security
operatives at a border checkpoint in September, in what Tallinn said was a
cross-border raid.
Russia's federal security service
claimed he was captured on Russian territory while spying.
Over the weekend, it emerged that
a German diplomat working in Moscow had been expelled, shortly after a Russian
diplomat working in Bonn was sent home amid media reports he was a spy.
Relations between Moscow and
Warsaw have been tense since the end of the Soviet period, and Polish
politicians have been particularly critical of Russia's intervention in the
Ukraine crisis.
Poland appeared to draw a line
under the affair on Monday.
"The decision by Russia to
expel Polish diplomats was a symmetrical response, and for us the case is
closed," said Grzegorz Schetyna, Poland's foreign minister.
More"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
William F. Rickenbacker
The monthly Coppock Indicators finished October.
DJIA: +137 Down. NASDAQ: +275 Down. SP500: +210 Down.
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