A
permanent Governor of the Bank of England [your favourite central bank here] would
be one of the greatest men in England [your nation here.] He would be a little
'monarch' in the City; he would be far greater than the 'Lord Mayor.' He would
be the personal embodiment of the Bank of England; he would be constantly
clothed with an almost indefinite prestige. Everybody in business would
bow down before him and try to stand well with him, for he might in a panic be
able to save almost anyone he liked, and to ruin almost anyone he liked. [Lehman.]
A day might come when his favour might mean prosperity, and his distrust might
mean ruin.
Walter Bagehot. Lombard Street. 1873
Today, compare and contrast. One or other events below is wrong! Since all is a central bankster, financialised casino, on the Great Nixonian Error of fiat money, you can stick, twist, or double down on your bets. Just be too big to fail, if you get the deranged, up to 100:1 leveraged gambling wrong. If you don’t have a friend at the central bank, you just might be the next Amercan “Scapegoat of Hounslow.” Is 21st century gambling fun, or what? Anyone care to guess how this turns out? Anyone care to guess, when?
U.S. stocks post largest one-day gains since early May
Published: June 10, 2015 4:47 p.m. ET
Jump in oil price fuels rally in energy stocks
U.S. stocks rallied on Wednesday, with the S&P 500 and Dow industrials posting their biggest one-day gains in more than a month.Analysts attributed a rally on Wall Street to a one-two punch of a weaker dollar, which boosted commodities, and fresh hopes that Greece’s creditors will release more bailout cash.
The S&P 500 SPX, +1.20% which stood alone among the main indexes in eking out the smallest of gains Tuesday, gained 25.05 points, or 1.2%, to 2,105.20, with all of its 10 main sectors finishing higher. Technology and financial sectors led gains, rising 1.6% and 1.4% respectively. Energy-sector shares also rallied, up 1.2%, thanks to rally in oil prices.
The Dow Jones Industrial Average DJIA, +1.33% jumped 236.36 points, or 1.3%, to 18,000.40, turning positive for the year. The Nasdaq Composite COMP, +1.25% gained 62.82 points, or 1.3% to 5,076.69.
Peter Cardillo, chief market economist at Rockwell Global Capital, said the bounce is mostly technical, but news that Greece may be reaching a deal also added to optimism.
“The market rally is mostly due to a combination of three things: the S&P 500 held its support level on Tuesday, the dollar weakened and oil rallied as well as some positive news from Greece,” Cardillo said.
More
Bond crash across the world as deflation trade goes horribly wrong
Markets ignored clear warnings in Europe and America that the money supply is catching fire, signalling a surge of inflation later this year
The global deflation trade is
unwinding with a vengeance. Yields on 10-year Bunds blew through 1pc today,
spearheading a violent repricing of credit across the world.
The scale is starting to match
the 'taper tantrum' of mid-2013 when the US Federal Reserve issued its first
gentle warning that quantitative easing would not last forever, and that the
long-feared inflexion point was nearing in the international monetary cycle.
Paper losses over the last three
months have reached $1.2 trillion. Yields have jumped by 175 basis points in
Indonesia, 160 in South Africa, 150 in Turkey, 130 in Mexico, and 80 in
Australia.
The epicentre is in the eurozone
as the "QE" bet goes horribly wrong. Bund yields hit 1.05pc this
morning before falling back in wild trading, up 100 basis points since March.
French, Italian, and Spanish yields have moved in lockstep.
A parallel drama is unfolding in
America where the Pimco Total Return Fund has just revealed that it slashed its
holdings of US debt to 8.5pc of total assets in May, from 23.4pc a month
earlier. This sort of move in the staid fixed income markets is exceedingly
rare.
The 10-year US Treasury yield -
still the global benchmark price of money - has jumped 48 points to 2.47pc in
eight trading sessions. "It is capitulation out there, and a lot of
pain," said Marc Ostwald from ADM.
The bond crash has been an
accident waiting to happen for months. Money supply aggregates have been
surging all this year in Europe and the US, setting a trap for a small army of
hedge funds and 'prop desks' trying to squeeze a few last drops out of a spent
deflation trade. "We we're too dogmatic," confessed one bond trader
at RBS.
Data collected by Gabriel Stein
at Oxford Economics shows that 'narrow' M1 money in the eurozone has been
growing at a rate of 16.2pc (annualized) over the last six months. You do not
have to be monetarist expert to see the glaring anomaly.
Broader M3 money has been rising
at an 8.4pc rate on the same measure, a pace not seen since 2008
More
Get ready for a 4,000-point Dow drop
Published: June 10, 2015 6:01 a.m. ET
Slumping bond market is ominous for U.S. stocks
The stock market has an empirical rule: interest rates lead stocks. And the current interest rate environment is pointing to a massive decline for the U.S. market.Consider: The Federal Reserve has taken rates to the lowest level in more than a generation. This has energized stock prices. The Fed has persisted in its directive to “stay the course,” having made no raises in the discount rate for more than seven years. Such monetary policy has no precedent; this is the longest stretch of accommodation by the Fed in the post-World War II era.
But there’s Fed-induced rates, and “actual” rates. The most widely followed Treasury markets are the longer-term 10-year TMUBMUSD10Y, -0.35% and 30-year TMUBMUSD30Y, -0.31% markets. These two markets are highly sensitive to longer-term actual interest-rate pressures. For example, banks use longer-term Treasurys to make decisions on pegging personal loan rates to clients for mortgages, businesses, and other uses. The commercial and industrial areas of the economy also are susceptible to the actual cost of money.
Are there parallels to this current market environment? Yes — 1987.
The summer that year began with a slow, methodical rise in actual rates. Yet the Fed did not raise the discount rate, even though actual rates suggested otherwise. The fall of 1987 arrived with the stock market having hit an all-time high in late August, unfazed by this unsettled condition.
As it happened, the Federal Reserve was literally forced to raise interest rates. Policymakers were behind the curve severely, just as the Fed is now. The 1987 rising-rate action caused stock prices to tumble more than 30% within two months, including a sharp 20% selloff in October — still among the Dow Jones Industrial Average’s DJIA, +1.33% worst one-day percentage declines ever.
These warning signs are again visible. The first week of June recorded the highest interest rates since December. Bond prices are down about 12% since the end of January.
The stock market, meanwhile, follows the bond market’s direction — except by a much wider margin. A multiple of 2.0 is conservative. A 2x multiplier figured against the recent 12% plus loss in bonds prices would generate a 24% decline in stock prices.
At current levels, such a slide would equate to a loss of about 500 points on the S&P 500 SPX, +1.20% and a Dow pullback of close to 4,300 points.
More
Elsewhere in never ending Greek saga news, it was Germany’s turn to
blink again, at least according to Bloomberg. Who really knows? The closer we get
to Grexit, the closer Greece is to winning. But why would Greece want to stay
in the wealth and jobs destroying, German Monetary Union? It’s all moot anyway, once the next Lehman
turns up, Japan or China go poof, or oil gets disrupted by a real war across
the Persian Gulf.
Below, today’s news from the
EUSSR. “Where there’s a will, there’s a way,” Merkel told reporters as she
arrived in Brussels. “The goal is to keep Greece in the euro area.” The trouble
is, as of this morning, that “will” all seems to be on Greece’s side. As for
tomorrow, who knows?
Germany to Consider Offering Tsipras Staggered Deal on Aid
June 10, 2015 — 4:13 PM BST
Chancellor Angela Merkel’s
government may be satisfied with Greece committing to at least one economic
reform sought by creditors to open the door to bailout funds, according to two
people familiar with Germany’s position.
While the Germans still insist on
a package of steps that includes higher taxes, state asset sales and less
generous retirement benefits, they may settle for a clear commitment by the
Greek government to a measure up front to unlock aid, said the people, who
asked not to be identified discussing the government’s negotiating stance.
With Greece’s aid program set to
expire on June 30 and no deal in sight, the comments reflect more German
flexibility than the government’s public statements. Merkel and French
President Francois Hollande may hold talks with Greek Prime Minister Alexis
Tsipras on the sidelines of a European Union summit on Wednesday to try to break
the impasse.
“Where there’s a will, there’s a
way,” Merkel told reporters as she arrived in Brussels. “The goal is to keep
Greece in the euro area.”
At the Comex silver
depositories Wednesday final figures were: Registered 57.85 Moz, Eligible 121.25
Moz, Total 179.10 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
So China is growing its GDP by 7 percent? Presented
without need for comment. Better have a corrupt friend at the PBOC.
"Figures
often beguile me, particularly when I have the arranging of them myself; in
which case the remark attributed to Disraeli would often apply with justice and
force: 'There are three kinds of lies: lies, damned lies, and statistics.'"
President Xi, with apologies to Mark Twain.
Shanshui Cement new loans suspended when shareholder fails
Jun,
10 2015
China
Shanshui Cement Group said some banks have halted new loans and suppliers are
demanding immediate repayment after a court put one of the cement maker’s main
shareholders into receivership.
Some joint venture partners have also said they wanted to review their relationship with the company, Shanshui Cement said in a statement Wednesday in Hong Kong.
The firm’s finances are likely to be impacted by the actions amid lawsuits against China Shanshui Investment, which controls a quarter of the cement maker, said Shanshui Cement. The dispute, fueled by disgruntled ex-employee shareholders, led to Hong Kong’s High Court last month appointing receivers for more than 40 percent of China Shanshui Investment, in the nation’s latest corporate governance conflict.
“The development is very credit negative,” said Trung Nguyen, credit analyst at Lucror Analytics in Singapore. “Any dispute among shareholders is discomforting to creditors.”
Shanshui Cement’s $500 million 7.5 percent bonds due 2020 dropped 4.7 cents to 88.5 cents on the dollar as of 12 p.m. in Hong Kong, after paring earlier losses of as much as 10 cents. The stock has been suspended from trading since April.
Shandong-based Shanshui Cement said last month that more than 2,400 employees have filed lawsuits in Hong Kong since August against an ex-director and founder Zhang Caikui, who owns 38.5 percent of China Shanshui Investment. The claims include misappropriating of share interests owned by those employees.
The court subsequently appointed receivers over 43.3 percent of China Shanshui Investment’s shares not owned by the two individuals, Shanshui Cement said in a May 21 filing.
Henry Li, the cement maker’s head of finance, said that some employees involved in the lawsuit had told banks and suppliers that Zhang Caikui and Chairman Zhang Bin were leaving the firm. Li said both men are still with the company.
The cement industry is struggling to recover amid a slowing property market. Fitch Ratings Ltd. downgraded Shanshui Cement in April to BB-, three levels below investment grade, citing weak cement prices. The company’s average selling price for its products has fallen around 10 percent this year compared to the same period in 2014, according to Shirley Han, credit analyst at UBS AG in Hong Kong.
Some joint venture partners have also said they wanted to review their relationship with the company, Shanshui Cement said in a statement Wednesday in Hong Kong.
The firm’s finances are likely to be impacted by the actions amid lawsuits against China Shanshui Investment, which controls a quarter of the cement maker, said Shanshui Cement. The dispute, fueled by disgruntled ex-employee shareholders, led to Hong Kong’s High Court last month appointing receivers for more than 40 percent of China Shanshui Investment, in the nation’s latest corporate governance conflict.
“The development is very credit negative,” said Trung Nguyen, credit analyst at Lucror Analytics in Singapore. “Any dispute among shareholders is discomforting to creditors.”
Shanshui Cement’s $500 million 7.5 percent bonds due 2020 dropped 4.7 cents to 88.5 cents on the dollar as of 12 p.m. in Hong Kong, after paring earlier losses of as much as 10 cents. The stock has been suspended from trading since April.
Shandong-based Shanshui Cement said last month that more than 2,400 employees have filed lawsuits in Hong Kong since August against an ex-director and founder Zhang Caikui, who owns 38.5 percent of China Shanshui Investment. The claims include misappropriating of share interests owned by those employees.
The court subsequently appointed receivers over 43.3 percent of China Shanshui Investment’s shares not owned by the two individuals, Shanshui Cement said in a May 21 filing.
Henry Li, the cement maker’s head of finance, said that some employees involved in the lawsuit had told banks and suppliers that Zhang Caikui and Chairman Zhang Bin were leaving the firm. Li said both men are still with the company.
The cement industry is struggling to recover amid a slowing property market. Fitch Ratings Ltd. downgraded Shanshui Cement in April to BB-, three levels below investment grade, citing weak cement prices. The company’s average selling price for its products has fallen around 10 percent this year compared to the same period in 2014, according to Shirley Han, credit analyst at UBS AG in Hong Kong.
More Pressure
“The employee law suits will negatively impact the daily operations of Shanshui Cement and its future business development,” said Winnie Guo, an analyst at Fitch in Hong Kong. “The latest actions taken by lenders and suppliers/contractors due to the ongoing law suits would put further strain on the liquidity of the company.”
Shanshui Cement had 1.2 billion yuan of cash against short-term debt of 4.3 billion yuan at the end of 2014, according to Bloomberg-compiled data.
more
“The employee law suits will negatively impact the daily operations of Shanshui Cement and its future business development,” said Winnie Guo, an analyst at Fitch in Hong Kong. “The latest actions taken by lenders and suppliers/contractors due to the ongoing law suits would put further strain on the liquidity of the company.”
Shanshui Cement had 1.2 billion yuan of cash against short-term debt of 4.3 billion yuan at the end of 2014, according to Bloomberg-compiled data.
more
Is China knocking on deflation’s door?
Published: June 10, 2015 7:30 p.m. ET
Economists divided over whether falling prices are even a problem
BEIJING (Caixin Online) — China’s last war against deflation was waged in 1998, the year the nation’s consumer price index and producer price index suddenly plunged in tandem.
The central government responded
by launching economic and administrative reforms, hastening steps for joining
the World Trade Organization, and steering public funds into infrastructure
projects. The efforts paid off quickly: In a couple of years, the war was over,
and the economy was growing again.
Today, many economists think
China may be on the threshold of a fresh bout with deflation. For that reason,
policy makers are looking back at what happened in 1998, reviewing notes and
drafting plans for what could be another tough battle.
Deflation fears have been spreading
in recent months while the economic slowdown — the so-called “new normal” —
continues with no end in sight. The GDP growth rate has been falling since
2013, and according to various financial institutions could end 2015 at less
than 7%, the lowest in more than two decades.
April was the 38th straight month
for a decline in producer price index (PPI) and came two months after a 4.8%
decline year-on-year, its steepest plunge since 2009.
Morehttp://www.marketwatch.com/story/is-china-knocking-on-deflations-door-2015-06-10?dist=tcountdown
But,
in fact, in the South Sea Bubble, which has always been remembered, the form
was the same, only a little more extravagant; the companies in that mania were
for objects such as these:' "Wrecks to be fished for on the Irish
Coast—Insurance of Horses and other Cattle (two millions)—Insurance of Losses
by Servants—To make Salt Water Fresh—For building of Hospitals for Bastard
Children—For building of Ships against Pirates—For making of Oil from
Sun-flower Seeds—For improving of Malt Liquors—For recovery of Seamen's
Wages—For extracting of Silver from Lead—For the transmuting of Quicksilver
into a malleable and fine Metal—For making of Iron with Pit-coal—For importing
a Number of large Jack Asses from Spain For trading in Human Hair—For fatting
of Hogs—For a Wheel of Perpetual Motion." But the most strange of all,
perhaps, was "For an Undertaking which shall in due time be
revealed."
Walter Bagehot. Lombard Street. 1873.
Solar & Related Update.
With events
happening fast in the development of solar power, I’ve added this new section.
Updates as they get reported.
The monthly Coppock Indicators finished May
DJIA: +107 Down. NASDAQ: +195 Down. SP500: +139 Down.
No comments:
Post a Comment