Baltic Dry Index. 666 -22 Brent Crude 48.60
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Operator! Give me the number for 911!
The Washington talking chair, with apologies to
Homer Simpson.
As if it isn’t bad enough that the Baltic Dry Index just collapsed to
settle at 666, the sign of the devil,
the USA’s economy is showing signs that it is far from enjoying escape velocity
from the Greenspan-Bernanke Great Recession. All QE and ZIRP seems to have
accomplished is massive global malinvestment and bogus statistics from the bean
counters. “Birds fly, central banksters lie, and Apple soars,” goes the new
maxim of our dumbed down, wobbling 21st century age.
The big question of late January 2015 is, when does a wobble turn into
the Great Reconnect. When do the central banksters get called out for wearing
the Emperor’s new clothes? Keep in mind, this isn’t dying Euroland, or
crumbling China, nor the suicidal fiat currency fantasy land of aging Japan. We
are talking about the only “success” economy on the planet. Unless new
consumers from Mars show up PDQ, in the words of the world’s Greatest American
past or present, “this sucker could go down.” Forget about black swans, an
eight foot Grizzly is eyeing up Uncle Scam’s bull…. market.
"There
is no reason whatever to fear a crash".
Charles
Mackay. 2 October 1845, Glasgow Argus, on Railway Mania.
Opinion: What the oldest stock market index is telling us
Published: Jan 28, 2015 7:06 p.m. ET
CHAPEL HILL, N.C. (MarketWatch) — If you want to know whether lower oil
prices are benefitting the economy, take a look at the Dow Jones Transportation
Average DJT, -1.46% The picture isn’t pretty.
Consider what’s happened over the five weeks since I last devoted a column to the Dow Transports, the oldest stock market index in widespread use today. (The Dow Industrials DJIA, -1.13% are the second-oldest.)
Since then, oil prices have dropped 20%. If cheaper oil were a net positive for the economy, one of the first places you’d expect to see it show up is the transportation sector. Yet it hasn’t: Over this same five-week period, the Dow Transports have fallen nearly 2%.
The Transports’ surprisingly poor performance is worrisome for at least two reasons. The first is that the Transports are a leading indicator of economic downturns.
The transportation sector’s track record as a leading indicator was documented several years ago by the Bureau of Transportation Statistics in the U.S. Department of Transportation, titled “The Freight Transportation Services Index as a Leading Economic Indicator.” The study found that the department’s index over the past three decades “led slowdowns in the economy by an average of 4-5 months.”
Unfortunately, we don’t know where the Freight Transportation Services index currently stands, since it is reported with a significant time lag. The latest data, for example, are for November. But it is significantly correlated with the Dow Jones Transportation Average, so that average’s weakness is definitely worrying.
The other reason the Transports’ weakness is ominous: It is one of the two stock market averages that are the focus of the Dow Theory, the oldest stock market timing system in widespread use today. The other average, of course, is the Dow Industrials.
To be sure, not all Dow Theorists agree on the hurdles over which the two Dow averages must jump before the Dow Theory would issue a “sell” signal. But suffice it to say that the further they retreat from their highs, the further the market gets from confirming that the bull market is still alive — and the closer it gets to signaling that a bear market has begun.
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U.S. stocks sell off after Fed meeting
Published: Jan 28, 2015 4:30 p.m. ET
NEW YORK (MarketWatch) — U.S. stocks ended Wednesday’s choppy trading
session sharply lower after the Federal Reserve’s policy-making committee
reiterated it plans to remain patient and watch the data as it decides when to
raise interest rates. Sharp losses added to declines from Tuesday, when markets sold off after disappointing earnings and economic data. A renewed slide in oil prices Wednesday sent energy and materials stocks sharply lower.
The Fed gave no sign that it is wavering on hiking interest rates some time in the second half of 2015.
The U.S. central bank was upbeat about the economy, while the policy makers repeated that they think inflation will move back to the 2% target after being pushed down by temporary factors.
The statement was taken as hawkish and sent the dollar and Treasurys sharply higher, as investors sought the safety of havens.
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Opinion: Too late: We’re already in a bear market
Investor
sentiment hasn’t been so bad since the last time stocks lost big
By Mark D. Cook The recent bubble that burst in the oil market has been the talk around the world. What would people say if the stock market fell 40% in 2015?
The U.S. market’s foundation is crumbling, according to my calculations — just as it did in 2000 and in 2008.
My proprietary daily indicator, called The Cook Cumulative Tick indicator, or CCT, measures several internal market components, the strongest of which is the duration of buying versus the duration of selling. A healthy bull market sees mostly buying, indicated by the NYSE tick.
But when the duration of the plus-column NYSE tick is less than the duration of the minus tick, this suggests weakening buying volume for stocks.
A second component of the CCT focuses on the NYSE “big block” buying and selling. A bullish market has numerous big blocks of buying. A print on the NYSE tick in excess of plus-1000 signifies fund buying by numerous entities, which accompanies a healthy bull market. Nowadays the big institutional money has dried up.
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And in the wealth and job destroying, dying EUSSR, the Spartans set
about humbling Berlin and Brussels and the ECB. “If you’re going to take us
down, you’re going down with us too,” seems to be the early message from
Greece.
Markets tumble as Greek government begins to backtrack on austerity
Greek borrowing costs jump and markets tumble as Alexis Tsipras, Greece's new prime minister, vows never to blindly submit to European creditors and government blocks sale of state assets
Greek markets were thrown into
deeper chaos on Wednesday as investors feared that the new, anti-bailout
government would enact radical reforms that could jeopardise the country’s
future in the eurozone.
The Athens Stock Exchange tumbled
more than 9pc, led by a 27pc fall in bank stocks, amid concerns that the
Syriza-led coalition could take direct control of the country’s lenders and
write off billions of euros in household loans.
Prime minister Alexis Tsipras
vowed never to bow to European creditors as the government took steps to wind
back austerity by blocking plans to privatise state assets.
Mr Tsipras, who held his first
cabinet meeting after being elected over the weekend, said he wanted a “viable,
mutually beneficial solution” that would represent a fair deal with its
creditors. “Our people are suffering and demand respect... we must bleed to
defend their dignity,” he told MPs.
While Mr Tsipras said the
Syriza-led coalition would not engage in brinkmanship with European creditors,
he added: “We will not continue a policy of subjection either.”
Mr Tsipras’s comments helped to
push up Greek benchmark borrowing costs back above the psychologically
important 10pc mark, while European markets also fell. Spanish stocks finished
the day down 1.3pc, while France’s benchmark index fell 0.3pc. The FTSE 100 in
London closed up 0.2pc, buoyed by a rise in mining stocks.
The Greek government owns a
majority stake in three of the country’s four biggest lenders, and traders said
there was a risk that the coalition could parachute its own management teams
into the banks and take control of the day-to-day running of lenders.
Traders said this would
destabilise the banking system and throw the country into fresh chaos if the
government conducted a mass write-off.
“Initially there
was some hope that the new government would have been a fresh start, but there
has been a gradual realisation that this government is not as moderate as some
people in the market believed,” said one senior Greek banker. “There are now
concerns that the government could be more aggressive in terms of restructuring
loans and providing borrower relief.
----Greek banks
have lost almost 45pc of their value in the three days since Syriza ascended to
power in Sunday’s election as the dual threats of a bank run and the loss of
support from the European Central Bank threaten a liquidity squeeze.
More
"Sooner or later both the Greek population and international creditors will tire of fighting a losing battle, leading to a break-up of the currency union as Greece pulls out, probably followed by other countries"
Douglas McWilliams, chief executive of the Centre of Economics and Business Research.
At the Comex silver
depositories Wednesday final figures were: Registered 66.61 Moz, Eligible 111.04
Moz, Total 177.65 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Bear Stearns CEO Alan Schwartz. March 12, 2008. Bust March 17, 2008
Commodities collapse could wipe out entire year's profits at Standard Chartered
Macquarie analysis predicts that 1980s-style oil price slump and default spike will mean huge losses at under-pressure bank
Standard Chartered faces losing a
year's profits from the recent collapse in commodity prices as loan defaults
spike in a repeat of the 1980s crisis, according to the Australian bank
Macquarie.
The Asia-focused British bank is
believed to be one of the biggest losers from the slump in oil, iron ore and
copper prices, with $61bn (£40.2bn) of exposures to producers and traders.
The prices of many commodities
have halved or worse since last summer, due to fears about oversupply and a
lack of global demand. Many producers are unable to stay afloat at such levels,
meaning wide-scale defaults.
Thomas Stoegner, a
Singapore-based analyst at Macquarie, said that the current cycle bears several
resemblances to the oil glut of the 1980s, which sent crude prices falling and
led to a spike in corporate defaults.
According to Macquarie’s
analysis, Standard Chartered’s current loan book could lead to $3.9bn of
commodity-related losses. Meanwhile, the growing risk of default would force it
to retain $2bn of profits to protect against further losses.
The combined hit of $5.9bn is roughly equivalent to the bank’s entire expected profits for 2015. “Adding all negative together, one year of pre-tax profit would get wiped out by assuming front end loaded losses,” Mr Stoegner said.
He added that the recent slump in oil prices, from $110 a barrel in the summer to below $50, could see a repeat of the wave of defaults following 1980’s collapse. In 1986, 7pc of energy bonds defaulted, compared to around 1pc at the turn of the decade.
More
Global Headwinds Of Strong Dollars and Weak Commodities Bludgeon Big Cap Earnings
by Wolf Richter •
Consumers are feeling practically euphoric. The Conference Board index jumpedalmost
ten points to 102.9, the highest since August 2007, just before the whole
construct came apart. Not that reality has suddenly improved that much. But
hey, we’re born survivors. Sooner or later, we adjust to lower real
incomes and reduced standards of living and start feeling good again.This exuberance came just as our largest corporate citizens were hit by a tornado of problems that sank the stock market for the day: currency volatility, crashing commodities prices, disappearing XP computers, farmers switching from corn to wheat…. It was all there.
Freeport-McMoRan, one of the largest copper producers in the world, reported an 11% drop in revenues for the fourth quarter and a salty $2.85 billion loss, which included $3.4 billion in losses for its oil and gas business that it got into via two impeccably-timed acquisitions in 2013. The depressed price of copper isn’t helping. It cut its 2015 budget by $2 billion and might cut it some more. Shares dropped 6%.
Long-suffering Peabody Energy, the largest coal producer in the US, reported a net loss for the quarter of $566 million on revenues that declined 3.3%. It projected a much wider loss than expected for the first quarter and cut its dividends to nearly nothing. It’s all about preserving cash and hanging on in a desperately tough pricing environment for coal producers. Shares dropped 6.5% to $6.24, down from $72 during the glory days in early 2011.
The plunge in commodity prices is spreading far and wide. Caterpillar, the world’s largest maker of construction and mining equipment, saw net profits in the fourth quarter plunge nearly 25%, on a slight decline in revenue. It slashed its earnings-per-share outlook for 2015 to $4.60. Wall Street had been set on $6.67. The lower prices for copper, coal, and iron ore have been hitting orders for mining equipment. Now the plunge in oil prices! And to top it off, the strong dollar would eat into its overseas revenues and profits! CAT is “without a doubt, facing a tough year in 2015,” explainedCEO Doug Oberhelman.
DuPont, one of the largest chemical companies in the world, saw revenues in Q4 drop 4.8% from a year earlier. For 2015, it projected that revenues would be flat, instead of up. Since it’s doing 60% of its business outside the US, it blamed the strong dollar that would cut its full-year profit by $0.60 a share.
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"When it becomes serious, you have to lie"
Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President.
The monthly Coppock Indicators finished December.
DJIA: +138 Up. NASDAQ:
+247 Down. SP500: +198 Down.
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