Baltic Dry Index. 1264 -63
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"The principal cause of the crisis was the dismantling of the system of regulation and supervision in the financial sector which had for much of the post-war period kept the most dangerous elements of that sector in check. In the absence of an appropriate system of effective supervision and regulation, what happens is that the actors in the system, who are intent upon taking the greatest degree of risk — including actors who are intent upon using fraudulent methods to increase their returns — come to dominate parts of the system. As they do that, the general methods of assessing performance in the market, specifically stock-market valuations, become counter-productive. That is to say, they invariably reward the worst actors, while they force more traditional actors, who are still respecting the old norms of conduct, into a competitively disadvantaged position. Thus the bad actors, the fraudulent actors, and the speculative extremists quickly take over.
J. K. Galbraith. The Great Crash: 1929.
While stock markets soar, reality has set in in the oil sector. Stagnation
and deflation are the reality of Main Street with more to come say the “experts.”
With no sign of OPEC cutting production at the end of the month, and many
members cheating, plus America’s frackers say lower prices won’t stop
production, the world’s oil importers and energy consumers, look set to get a
late 2014 break. But will the extra cash
saved by consumers be enough to fuel a Santa Claus rally among retailers?
World Outlook Darkening as 89% in Poll See Europe Deflation Risk
Nov 14, 2014 12:00 AM GMT
The world economy is in its worst shape in two years, with the euro area and
emerging
markets deteriorating and the danger of deflation rising, according
to a Bloomberg Global Poll of international investors. A plurality of 38 percent of those surveyed this week described the global economy as worsening, more than double the number who said that in the last poll in July and the most since September 2012, when Europe was mired in a recession.
Much of the concern is again focused on the euro area: Almost two-thirds of those polled said its economy was weakening while 89 percent saw disinflation or deflation as a greater threat there than inflation over the next year. Respondents said the European Central Bank and the region’s governments are making the situation worse by pursuing too-tight policies, and fewer expressed confidence in ECB President Mario Draghi and German Chancellor Angela Merkel.
“The euro-zone economy has deteriorated and will get worse if there are no fiscal policy actions from core European countries, mainly Germany,” poll participant Sanwook Lee, a senior portfolio manager at Shinhan Bank in Seoul, said in an e-mail.
Europe isn’t the only source of concern in the global economy, according to the quarterly poll of 510 investors, traders and analysts who are Bloomberg subscribers. More than half of those contacted said conditions in the BRIC economies -- Brazil, Russia, India and China -- are getting worse, compared with 36 percent who said so in July.
China’s
slowdown deepened in October, as factory output rose 7.7 percent from a year earlier, the
second-weakest pace since 2009, a government report yesterday showed.
More
Eurozone malaise to linger as forecasters slash outlook
Professional forecasters have cut their forecasts for euro area growth and inflation, as the outlook for the currency bloc has worsened
Euro area inflation and growth
are expected to remain low in the coming years, as the weak economic conditions
facing the currency bloc look unlikely to improve.
A quarterly survey of analysts
released by the European Central Bank (ECB) showed that experts believed prices
would rise at just 0.5pc for 2014 as a whole - lower than the 0.7pc forecast in
the preceding quarter.
Respondents to the Survey of
Professional Forecasters (SPF) did not expect inflation to return to the ECB’s
target of close to 2pc in the following years.
Economists polled by the ECB reported
that several factors - including a fall in oil prices, a shortfall in demand
and the lagged impact of the euro’s past appreciation - had been responsible
for a decline in inflation.
They anticipate that the headline
rate will rise to just 1pc in 2015 and 1.4pc in 2016, lower than the 1.2pc and
1.5pc previously forecast.
More
Eastern European Recovery Falters as Euro Area Woes Sap Demand
Nov 13, 2014 11:00 PM GMT
A recovery in the European Union’s eastern nations faltered in the third
quarter, derailed by the euro region’s slowdown and deadly fighting in Ukraine.
Poland’s $518 billion economy, the largest in the EU’s east, grew 2.7 percent from a year earlier, down from 3.3 percent in the previous three months, according to the median estimate of 29 economists in a Bloomberg survey. Hungary’s expansion slowed to 2.9 percent from 3.9 percent, a separate survey showed. The two
countries, along with the Czech Republic, Slovakia, Romania and Bulgaria report growth figures today.
The former communist nations are suffering from growth stalling in the euro area, their most important source of investment and largest export market. Russia, their main energy supplier and another trade destination, banned a range of food imports in retaliation for sanctions over the crisis in Ukraine.
“Third-quarter data is going to be disappointing,” Neil Shearing, chief emerging-markets economist at Capital Economics Ltd. in London, said by phone. “The situation in Russia hasn’t helped and hit particular sectors of the economy especially hard, but it’s not the biggest driver. The euro zone and the stalling of the recovery there is the big issue.”
More
Eurozone inflation to remain low, ECB survey shows
Published: Nov 13, 2014 10:05 p.m. ET
Inflation in the eurozone is expected to remain super low for the remainder
of this year and accelerate only gradually in the next two years, according to
a survey of economic forecasters released on Thursday by the European Central
Bank.According to the quarterly survey, consumer prices are expected to grow just 0.5% this year, down from the August forecast of a 0.7% rise. Next year, the inflation rate is expected to come in at 1% followed by 1.4% in 2016. These rates are far below the ECB's inflation target of just below 2% over the medium term.
Over a longer five-year horizon, the inflation rate is expected to be closer to the ECB's objective, at 1.8%. That compares with a 1.9% rate forecast in the previous survey.
Survey participants cited lower oil prices, weak economic activity and weakening expectations of future inflation as the main downside risks for future inflation, although the recent weakness in the euro and ECB stimulus measures could provide a lift to prices.
The annual inflation rate was 0.4% in the eurozone last month, near five-year lows. On Wednesday, the head of Germany's central bank, Jens Weidmann, said that having inflation persist too low for too long was an "immense challenge" but that the chances of outright consumer price declines, known as deflation, were limited.
More
In oil news, it was good news all
round for oil consumers, and an oil patch bust for oil producers. As the oil
price collapse gathers speed, there is a tidal wave of bankruptcies to come in
the heavily indebted US oil and natural gas fracking sector. WTI is $73.80 this
morning. Brent $77.60. So why is UK petrol still priced at about £1.20 a litre,
approximately £5 an imperial gallon?
Brent crude oil price falls below $80 a barrel
13 November 2014 Last updated at 20:41
The price of Brent
crude oil has fallen $3.60 - 4.4% - to $77.52, its lowest level for
four years.
The benchmark US crude oil price is also at a four-year low, after losing $2.57 to close at $74.28.
The price has fallen sharply since the summer and is 30% below its June price.
The drop comes as traders believe members of the Opec oil exporting countries, which control about 40% of world oil exports. will not cut production.
Opec's 12 member countries will meet later this month to discuss the global oil market.
Lower oil prices typically prompt Opec nations, which include the biggest oil exporting nation in the world, Saudi Arabia, to rein back output in order to limit supply and boost prices and income.
Most need higher oil prices to fund rising government spending.
But recent comments by oil ministers from Saudi Arabia and Kuwait suggest the group is unlikely to agree to a cut.
The US energy department said this week that it expected low fuel prices to last into next year.
More
Oil dives below $75 US a barrel on supply worries
Stocks drop, Canadian dollar below 88 cents as oil
hammered
Nov 13, 2014 4:35 PM ET
Oil was plunging on world
markets Thursday, diving below $75 for the first time in three years, as
traders focused on rising production and lower global demand. The oil-sensitive
Canadian dollar dropped by half a cent to below 88 cents US.
Brent crude, used to price half
the world’s oil, fell below $80 US a barrel, the lowest it’s been since
September of 2010. On Thursday, it closed down $3.41 US a barrel at $77.71.
In New York, the December crude
contract also dropped steeply, down $2.97 cents at $74.21. The WTI contract
has dropped 24.5 per cent since the beginning of the year.
Western Canada Select, the price
received by many Canadian producers, was at $58.71, down by $3.41 at the close.
Now that oil has crossed below
the $75 barrier, some analysts say the rout will continue.
“Breaking $75 is not just a
market move in my view but a dislocation in world economies,” said Mark Grant,
an analyst with Southwest Securities.
“Many oil producing nations have
budgets based upon $100/barrel oil. A 25 per cent discount to those projections
will cause political turmoil and put tremendous political pressure on many
social programs.You could see upheavals in Russia, the Middle East,
Venezuela and a number of other oil producing countries,” he added.
----A surge in U.S. shale oil production has raised U.S. domestic production to a 30-year high, resulting in a surplus of oil on the market.
Figures out of the U.S. Energy
Information Administration on Thursday showed U.S. oil production rose
above 9 million barrels a day in the week ended Nov. 7, the highest it's been
since 1983.
The U.S. EIA said crude
oil inventories in the U.S. were down by 1.7 million barrels to 378.5 million
barrels last week, indicating the expanding economy is taking up supply.
But markets ignored that sign that lower fuel prices were helping the economy
and focused on the gush of production coming on stream.
More
U.S. pumped most oil since the 1980s
Published: Nov 13, 2014 3:31 p.m. ET
NEW YORK (MarketWatch) — Falling oil prices haven’t taken the wind out of
U.S. oil producers just yet. Weekly data from the Energy Information
Administration on Thursday showed U.S. production totaled 9.06 million barrels
a day in the week ended Nov. 7, the highest level since the 1980s.That appeared to overshadow an unexpected drawdown in weekly crude supplies, with traders sending Nymex WTI crude futures CLZ4, -0.57% briefly below $75 a barrel, the lowest trade for a most-active futures contract since September 2010, according to FactSet.
The
rise comes as advances in hydraulic fracturing, or “fracking”, and other
techniques made production in shale oil fields more attractive. The big
question is whether a rout in oil prices since mid-June, reflecting increased
U.S. and global production and lackluster demand growth, will eventually prompt
shale producers to curtail their activity.
"In
economics, hope and faith coexist with great scientific pretension."
J. K.
Galbraith.
At the Comex silver
depositories Thursday final figures were: Registered 65.60 Moz, Eligible 112.45
Moz, Total 178.05 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more on the coming winter war in the Ukraine.
With oil prices collapsing, it will be cheaper to fight for Russia than the US
puppets picked to rule in west Ukraine.
In the UK, the madness increases. John Bull plays poodle to America’s War
Party. Shows renewed willingness to “fight
to the last American.” Shame we are disgracefully on the side of murderers,
Nazis and anti-Semites.
If
all else fails, immortality can always be assured by spectacular error.
J. K.
Galbraith.
Ukraine crisis: Fragile 'ceasefire' gives way to an increased wave of military activity in the east
Wednesday 12 November 2014
It has been a year of permanent
stress for Georgy Tuka. What with raising enough money to provide Ukraine’s
“Maidan warriors” with basic body protection, and stepping into the
governmental void, the 50-year old entrepreneur-turned-activist has had no time
to rest.
“The work is relentless and we
all need a break, but I doubt I’ll see the seaside for another three to five
years,” he told The Independent. Mr Tuka currently devotes most of his
waking hours to organising supplies to the front line in the ongoing battles
against separatists in the east. His Army SOS volunteer organisation has been
providing soldiers with everything from underwear to specialist sniper rifles.
When Army SOS began its work,
flak jackets and food supplies were the real concern. Today, the issues are
inadequate communication systems – many Ukrainian forces are still using
30-year-old Soviet systems – and an acute shortage of Kevlar helmets, boots and
winter clothing. With temperatures rapidly approaching freezing in the east,
perhaps only half of the estimated 50,000 Ukrainians soldiers stationed in the
military zone have clothing suitable for cold weather.
----The region’s fragile “ceasefire”, which only existed where it did not matter militarily, now has given way to an increased wave of military activity. In recent days, several columns of armed vehicles have been observed in the regions controlled by Russian-backed fighters.
Fighting has become more frequent
around the region’s most strategically sensitive points: in Mariupol, a port
city, Donetsk airport, Debaltsevo, a major transport hub, and Schastya, the
location of a power station. There was panic in many districts in Donetsk over
the weekend due to increased shelling near the airport. Today, government
forces were redeploying in preparation for a possible new offensive by rebels.
“We are repositioning our armed forces to respond to the actions of the [rebel]
fighters,” the Defence Minister Stepan Poltorak said. “I see my main task is to
prepare for military action.” Nato said it had seen columns of Russian military
equipment entering Ukraine. “Russian tanks, Russian artillery, Russian air
defence systems and Russian combat troops” were sighted, said the US General
Philip Breedlove in Bulgaria.
Nevertheless, the military
appears keen to heighten concerns of a possible Russian invasion. Speaking on
Monday at his regular press conference, the military spokesman Colonel Andriy
Lysenko said the region had been “flooded with a large number of enemy
personnel and advanced weaponry”. As proof, he presented a video showing a
convoy supposedly moving from Russia to Snizhne in Donetsk region. The problem,
as military bloggers later pointed out, was that the video was shot in March in
an area now controlled by Ukrainians. Embarrassing, but by no means the worst
mistake the Ukrainian military has made – blunders that have been increasingly
infuriating activists.
“I can’t work with these guys”,
admitted Mr Tuka. “All I see are lies and deceit and dead Ukrainians.” The
activist said he avoided working directly with government departments, which
are “leaky”, preferring instead to operate through direct relationships with
forces in the east.
-----After going public with concerns about military command, Mr Zolutukhin says he found himself fighting powerful vested interests. Bureaucrats began blocking even simple things like registering the injured and dead so that their families could receive benefits. There were claims that the soldiers were not actually involved in frontline fighting. Visibly emotional, Mr Zolotukhin asked how he was supposed to explain this position to the families. “Some of us are fighting a war; for others it’s more an opportunity to get rich,” he said.
According to Mr Zolotukhin, part
of Aidar’s military command had taken up criminal practices – using the uniform
as a way of appropriating cars, property and weapons. He claims he saw how some
of the officers of this “other Aidar” carried “serious” sacks of cash around
with them, and used a white powder he assumed to be cocaine. He also said he
witnessed how they planted a grenade in someone’s car, as a pretext to steal
it.
More
David Cameron compares Russia to Nazi Germany on eve of Putin meeting
PM says that the world must 'learn the lessons of history' and be prepared to step up sanctions against Russia
By Steven Swinford, Senior
Political Correspondent, Canberra 5:09AM GMT 14 Nov 2014
David Cameron has compared Russia
to Nazi Germany because of its actions in the Ukraine on the eve of a tense
meeting with Vladimir Putin.
Mr Cameron will on Saturday night
challenge Mr Putin about Russia’s continued acts of aggression in the Ukraine
as it supplies heavy weapons and tanks to the separatists.
In a reference to World War II,
Mr Cameron said that the world must “learn the lessons of history” and
intervene to stop “a larger state bullying a smaller state”.
He said: "Russian action in
Ukraine is unacceptable. We have to be clear about what we are dealing with. It
is a large state bullying a smaller state in Europe.
"We have seen the
consequences of that in the past and we should learn the lessons of history and
make sure we don't let it happen again."
Mr Cameron is expected to meet Mr
Putin in an unscheduled “brush-by” on Saturday evening.
More
Another weekend, and a stormy one predicted for the UK. Globally the outlook
is dire, with the only relief in sight coming from falling oil prices. But a
mountain of global debt rides on $100 oil. It’s anyone’s guess how this plays
out. Have a great weekend everyone.
"Indeed the temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the [New York] Times happily reported the return to reality. And then the market took flight again. Only a durable sense of doom could survive such discouragement. The time was coming when the optimists would reap a rich harvest of discredit. But it has long since been forgotten that for many months those who resisted reassurance were similarly, if less permanently discredited.”
J. K. Galbraith. The Great Crash: 1929.
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