Baltic Dry Index. 1256 -08
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
Dr. Copper and the BDI are signalling trouble right here
and now in the global economy. At the weekend Brisbane G-20 summit, posturing, preening, and
“whack-a-mole called Putin” politics, plus two trillion dollars of “jam
tomorrow” for the world economy. Too
little, too late, for the bust is already here. If the answer is politicking from the likes of
Obama, Cameron, Harper and Abbott, we’re asking the wrong question. Two
trillion of relief by 2018, even if it were to happen which is unlikely, doesn’t
relieve “Stalingrad” today.
Below the new reality that never made it to Brisbane. The
next Lehman is fast arriving.
The Fedster’s final bubble approaches its pin.
“The boom can last only as long as the
credit expansion progresses at an ever-accelerated pace. The boom comes to an
end as soon as additional quantities of fiduciary media are no longer thrown
upon the loan market...”
“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
Global economy to suffer as Putin quits G20 early
Dispute between the West and Russia will act as a significant drag on growth for years
David Cameron may have hailed the
G20 meetings in Brisbane over the weekend as a success for the global economy.
But in reality, the gathering of the world’s most powerful leaders will be
remembered only for the abrupt departure of President Vladimir Putin.
The Russian leader had probably
already decided before even arriving in Australia to take an early flight home
and dispense with the pleasantries of the end-of-summit dinner. Mr Cameron’s
warning that the Kremlin was at a “crossroads” with the West over its alleged
intervention in Ukraine, along with Canadian prime minister Stephen Harper’s
blunt message for Russia to get out of its neighbouring former client state,
will more than likely have stiffened Mr Putin’s resolve to not back down an
inch.
In fact, his glib response to
these threats and warnings was to complain about a lack of sleep, suggesting
that he is preparing to dig in over his support for pro-Russian separatists
around Donetsk.
Certainly, if the objective is to
make Mr Putin appear isolated on the world stage in order to make him less
popular at home, it isn’t working and also shows a profound misunderstanding of
the Russian mind-set. A nation that endured the bloodbath of Stalingrad and
almost half a century of economic isolation following the end of the Second
World War is unlikely to blink first in its current standoff with the West.
Indeed, Mr Putin’s popularity ratings at home have never been higher.
The danger for the global economy
is that the dispute between the West and Russia, which is now being widely
described as a new Cold War, will act as a significant drag on growth for years
to come. It is certainly unlikely that the measures agreed on by the G20 to
boost global gross domestic product (GDP) by 2pc, or £1.25 trillion, by 2018
will be achievable for as long as a country the size of Russia - the world’s
eighth largest economy - is kept out in the cold.
Although a
cocktail of economic sanctions and falling oil prices has already started to
squeeze Russia’s economy hard, the West has also increasingly started to feel
the pain of isolating Moscow. The brunt of a prolonged economic war with Russia
is being felt by Europe and the UK, not the US. European trade with Russia has
almost quadrupled over the past decade to around $335bn and many companies now
view the country as one of their fastest growing and most important export
markets. Exports to Russia are thought to have accounted for 0.6pc of Europe’s
GDP before the current round of sanctions was imposed.
More
Japan Unexpectedly Enters Recession as Abe Weighs Tax Delay
Nov 17, 2014 1:08 AM GMT
Japan
unexpectedly sank into a recession last quarter as the world’s third-largest
economy struggled to shake off the impact of an April sales-tax
boost, raising the odds of a delay in a second bump in the levy. Gross domestic product shrank an annualized 1.6 percent in the three months through September, a second straight drop -- matching the textbook definition of a recession. Unadjusted for price changes, the economy contracted an annualized 3 percent, the Cabinet Office said. Japanese stocks slumped.
“April’s sales tax completely destroyed Japan’s economy -- no part of Japan’s economy looks encouraging,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute, who had the weakest forecast in a Bloomberg News survey, with a 0.8% growth estimate for real GDP. “Today’s data will leave another traumatic memory for Japanese politicians about sales tax hikes.”
For Prime Minister Shinzo Abe, the report probably guarantees he will put off the tax increase scheduled for October 2015, a move that people familiar with the matter have said will trigger a snap election next month. Japan also tipped into a recession after a 1997 consumption-levy rise, leading to the fall of the government of the day.
More
Warning Signs From Commodity Prices
For many consumers and businesses the recent drop in
commodity prices has provided a tidy windfall — one analyst
estimated that the typical American household would save $400 a year thanks
to lower gasoline prices. But the tumbling price of fuels, metals and other
commodities is also sending a warning about the global economy.
Over all, commodity prices have fallen nearly 15
percent since late June, according to a Bloomberg index. Last
week, the price of crude oil dropped to a four-year
low, about $74 a barrel, down from about $107 a barrel
in June. The prices of metals like copper, platinum and silver have also fallen
sharply since the summer.
The decline can partly be explained by economic
changes taking place in China. In the last two decades, the country has been
gobbling up the world’s coal, iron ore, copper, oil and other commodities to
build new cities and fuel its booming economy, which grew at an average pace of
nearly 10 percent a year for three decades. But that growth rate has now
slowed, and with it China’s demand for raw materials. This year, the country
will grow at 7.4 percent, according to the International
Monetary Fund.
The world had anticipated China’s economic transition,
but it was much less prepared for stagnation in Japan and in much of Europe.
In Japan, a sharp increase in a sales tax earlier this
year has hurt consumer spending. And Prime Minister Shinzo Abe has largely
failed to boost business investment and draw more women into the labor force,
two changes he had promised as part of a plan to revive his country’s weakened
economy. The Bank of Japan recently
expanded its bond-buying program, but bigger government policy changes will
be needed to revive Japan’s economy in 2015.
In Europe, government officials and central bankers in
the 18-country eurozone have been slow and timid in boosting their economies,
even though inflation
is less than 0.5 percent and the unemployment
rate is more than 11 percent. The European Central Bank should be buying
government bonds to pump more money into the economy, a policy known as
quantitative easing. But it has been reluctant to do so because German officials
are opposed to the policy, which they think would serve to transfer wealth from
strong euro nations to weaker ones. It should come as no surprise that the
eurozone grew at just 0.2 percent in the third quarter of this year, according
to data
released on Friday.
----The economic recovery from the financial crisis
was uneven and disappointing. Now, in many countries, it is stalling.
More
China Slowdown Deepens as Targeted Stimulus Fails
Nov 14, 2014 4:01 PM GMT
Credit growth in China weakened last month, adding to signs that the world’s
second-largest economy slowed further this quarter and testing policy makers’
determination to avoid broader stimulus measures. Aggregate financing in October was 662.7 billion yuan ($108 billion), the People’s Bank of China’s said in Beijing yesterday, down from 1.05 trillion yuan in September and lower than the 887.5 billion yuan median estimate in a Bloomberg survey of analysts. Earlier this week, reports showed deceleration in industrial output and fixed-asset investment.
The evidence underscores concern that, outside the U.S., the global economic outlook is deteriorating. For Premier Li Keqiang, the question is whether to stick with targeted liquidity injections or embrace nationwide monetary or fiscal easing that reignites the risk of a jump in debt.
----The central bank has added liquidity while refraining from broad-based interest rate or reserve requirement ratio cuts. China’s benchmark money-market rate fell for a second week on speculation it will conduct more targeted fund injections.
New local-currency loans were 548.3 billion yuan, and M2 (CNMS2YOY) money supply grew 12.6 percent from a year earlier. New yuan loans, which measure new lending minus loans repaid, compared with economists’ median estimate of 626.4 billion yuan, while the M2 figure compared with the median estimate of 12.9 percent.
“Sluggish domestic demand and risk-aversion among commercial banks dragged credit growth,” said Zhou Hao, a Shanghai-based economist at Australia & New Zealand Banking Group Ltd. “Disappointing monetary data suggest overall growth will remain soft in the last quarter.”
Historically, lending wanes through the year as companies’ need for capital slows and banks brush up against lending quotas.
More
China Bad Loans Jump Most Since 2005 as Economy Cools
Nov 17, 2014 2:42 AM GMT
China’s bad
loans jumped by the most since 2005 in the third quarter,
fueling concern that a cooling economy will be further weakened as banks limit
lending to avoid credit risks. Nonperforming loans rose by 72.5 billion yuan ($11.8 billion) from the previous quarter to 766.9 billion yuan, the China Banking Regulatory Commission said in a statement on Nov. 15. Soured credit accounted for 1.16 percent of lending, up from 1.08 percent three months earlier.
As China heads for the weakest economic expansion since 1990, Communist Party leaders have discussed lowering the nation’s growth target for 2015, according to a person with knowledge of their talks. Bankers’ low appetite for risk and their rising concerns about asset quality are leading to a “sluggish” expansion in credit, according to UBS AG.
More
Russia Braces for 'Catastrophic' Drop in Oil Prices
Nov 14, 2014 1:23 PM GMT
President Vladimir
Putin said Russia's economy, battered by sanctions and a collapsing
currency, faces a potential “catastrophic” slump in oil prices. Such a scenario is “entirely possible, and we admit it,” Putin told the state-run Tass news service before attending this weekend’s Group of 20 summit in Brisbane, Australia, according to a transcript e-mailed by the Kremlin today. Russia’s reserves, at more than $400 billion, would allow the country to weather such a turn of events, he said.
Crude prices have fallen by almost a third this year, undercutting the economy in Russia, the world’s largest energy exporter. Even the central bank’s forecast of zero growth next year may be in danger as the International Energy Agency forecasts a deepening rout in oil prices as the market enters a period of weaker demand.
----Brent is heading for its eighth weekly decline after sliding below $80 for the first time in four years. Futures were at $78.29 a barrel in London today, down 6.1 percent this week and 29 percent this year.
Oil consumption will slide by about 1 percent to 92.6 million barrels a day in the first quarter from the current three-month period, the IEA, a Paris-based adviser to 29 nations, said in a monthly market report today.
More
http://www.bloomberg.com/news/2014-11-14/putin-says-russia-preparing-for-catastrophic-oil-slump.html
Oil price rout to deepen amid supply glut, warns IEA
Brent crude tipped to fall to $75 per barrel as investors short the market and supply outstrips demand
The rout which has sent oil
prices to a four-year low is expected to deepen, the International Energy
Agency warned in its latest monthly market report.
The Paris-based watchdog said
Friday: "While there has been some speculation that the high cost of unconventional
oil production might set a new equilibrium for Brent prices in the $80 to $90
range, supply/demand balances suggest that the price rout has yet to run its
course.”
Against a backdrop of weakening
demand, oil supply in October increased adding further downward pressure on
prices, the IEA said in its monthly market report. According to the watchdog,
global oil supply inched up by 350,000 barrels per day (bpd) in October to
94.2m bpd.
However, in London Brent crude
bounced at the open up almost 1pc at around $78 per barrel after heavy losses
overnight in the US saw West Texas Intermediate blend crude fall to $74 per
barrel.
“Crude prices are enduring
another hefty move lower, with Brent shifting below $80 for the first time
since late 2010,” said Chris Beauchamp, Market Analyst, IG. “With this key
level out of the way a move towards $75 now looks likely as the hunt for a real
floor in oil prices goes on.”
More
In the wealth and job destroying EUSSR, be prepared for the return of the 1930s. Even the economic relief from the crashing oil price isn’t enough to to turn the EU Bilderberger Titanic around. Locked into high priced, heavily subsidised “green” energy, the relief to the EUSSR is marginal compared to the great other oil importing regions. Europe will sink under its homage to the false God of man-made global warming.
Q3 GDP Shows Europe Still Dead-In-The-Water——-And The Credit Markets Show It
by Jeffrey P. Snider •
With
Europe reporting GDP, reactions have been somewhat varied. In some places, it
was taken as not as bad as feared, while others were downright cheered by a
lack of total collapse, as if that is now the standard for economic progress. Since
GDP tends to be noisy in the short run, the major components, the economic
base, continues to show anything but more of the same. There was nothing, to my
mind, in the GDP report that indicated an inflection away from stagnation or
slight decline. That is perfectly in-line with the trend that has unfortunately
developed since midyear, pushing the ECB toward outward desperation.
The
most striking aspect of the European economy post-2007 has been lower cycle
peaks at every juncture.
In industrial production and trade, the “recovery”
after the initial blast of the Great Recession never came
close to matching
pre-crisis levels. Now after another “cycle”, the peak is yet again below this
time even 2011. What we see, then, is no recovery at all but rather an ebb and
flow in an otherwise downward direction toward full-scale depression.
More
Eurozone dodges triple-dip recession but submerges in 'lost decade'
Italian ex-minister warned that “Titanic Europe” is heading for a shipwreck, demanding an “orderly break-up” of the euro unless there is a radical change of course
The eurozone has averted a
triple-dip recession but remains stuck in a deep structural slump, with too
little momentum to create jobs or to stop a relentless rise in debt ratios.
The region eked out growth of
0.2pc in the third quarter, yet Italy’s economy shrank again and has now been
in contraction for over three years.
Stefano Fassina, the former
deputy Italian finance minister, said “Titanic Europe” is heading for a
shipwreck without a radical change of course.
He warned that contractionary
policies are destroying the Italian economy and called on the country’s leaders
to “bang their fists of the table”. He said they should threaten an “orderly
break-up” of the euro unless policies change. His comments have made waves in
Rome since he is a respected figure in the ruling Democratic Party of Matteo
Renzi.
While France rebounded by 0.3pc,
the jump was due to a rise in inventories and a 0.8pc spike in public spending,
mostly on health care. The previous quarter was revised down to minus 0.1pc.
“It flatters to deceive,” said
Marc Ostwald from Monument Securities. “France was basically horrible. How
anybody could celebrate this as a recovery story is beyond me.”
“A close reading of details is
sobering. Just about all the drivers of growth are near-dead,” said Denis
Ferrand, head of the French research institute Coe-Rexecode.
Michel Sapin, the French finance
minister, said the economy remains "too weak" to make a dent on
unemployment. France’s brief rebound in employment has already sputtered out.
The economy shed 34,000 jobs in the third quarter. This will not be easy to
reverse since Paris has pledged to push through a further €50bn of fiscal cuts
over three years to meet EU deficit targets.
----The risk is that the currency bloc will drift into another year in near deflationary conditions, without any catalyst for real recovery. The US Treasury Secretary, Jacob Lew, warned this week that Europe faces a “lost decade” unless surplus countries such as Germany do more to stimulate demand.
“The eurozone is the epicentre of
a global Keynes liquidity trap,” said Lena Komileva from G+Economics.
“For the
markets, the previous consensus of a periphery-led recovery has crumbled.”
Germany just scraped by without
falling into a technical recession, growing 0.1pc after contracting by 0.1pc in
the previous quarter. It is clearly suffering the brunt of Russia’s crisis and
wilting demand in China, Brazil, and much of the emerging market nexus.
More
Italy protests erupt across the country
Italy hit by strikes and violent demonstrations as anger towards soaring unemployment and economic crisis boils over onto the streets
Italy was hit by strikes, violent
demonstrations and protests against refugees on Friday as anger and frustration
towards soaring unemployment and the enduring economic crisis exploded onto the
streets.
Riot police clashed with
protesters, students and unionists in Milan and Padua, in the north of the
country, while in Rome a group of demonstrators scaled the Colosseum to protest
against the labour reforms proposed by the government of Matteo Renzi, the
39-year-old prime minister.
Eggs and fire crackers were
hurled at the economy ministry.
On the gritty, long-neglected
outskirts of Rome there was continuing tension outside a centre for refugees,
which was repeatedly attacked by local residents during the week.
A group of 36 teenage migrants
had to be evacuated from the centre in Tor Sapienza, a working-class suburb, on
Thursday night after the authorities said the area was no longer safe for them.
----The sense of chaos in the country was heightened by transport strikes, which disrupted buses, trams, trains and even flights at Rome's Fiumicino airport. Demonstrations also took place in Turin, Naples and Genoa.
Unemployment among young people
in Italy is around 42 per cent, prompting tens of thousands to emigrate in
search of better opportunities, with Britain the top destination. The overall
jobless rate is 12 per cent.
Mr Renzi's attempts to reform the
country's labour laws, making it easier for firms to dismiss lazy or
inefficient employees, are bitterly opposed by the unions.
The ongoing recession has also
exacerbated racial tensions, with some Italians blaming refugees and immigrants
for their economic woes.
More
“The world is a place that’s gone from being flat to round to crooked.”
Mad Magazine.
At the Comex silver
depositories Friday final figures were: Registered 65.60 Moz, Eligible 112.48
Moz, Total 178.09 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, “The Onion’s” take on the Great Nixonian Error of fiat money. Stay long fully paid up physical precious metals. Sooner or later, but probably sooner, the Great Nixonian Error ends in a global tragedy.
Chinese Citizens Gather In Beijing Square To Watch U.S. National Debt Clock Strike $18 Trillion
Nov
14, 2014
BEIJING—Celebrating
the milestone with hugs, jubilant cheers, and singing, over 600,000 Chinese
citizens assembled in Tiananmen Square today to watch the U.S. debt clock
mounted above the Forbidden City reach the landmark sum of $18 trillion
dollars. “You could stay home and watch it on TV, but it’s much more exciting
to be here with people from all over the country to celebrate this momentous
day,” said Beijing resident Xiao Bu, noting that he always arrives in the early
morning to stake out a good location in the square every time America’s debt
rises by another trillion.
“I
remember my father taking me to see the $5 trillion mark so long ago, and now
I’m bringing my own children here to take part in the festivities. It’s really
a special part of our nation’s culture.”
While
most revelers left shortly after the rollover, an estimated 100,000 reportedly
decided to just wait around in the square until the clock struck $19 trillion.
"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."
Henry Hazlitt
The monthly Coppock Indicators finished October.
DJIA: +137 Down. NASDAQ: +275 Down. SP500: +210 Down.
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