Baltic Dry Index. 891 -15 Brent Crude 50.18
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
Ludwig
von Mises.
Will the US Fedster’s raise their key interest rate later this month? Today’s US employment report likely holds the answer. A strong jobs reports heading in to the USA’s long weekend, and the Fedster’s are forced by their earlier rhetoric into a tiny meaningless raise. A flat or weak jobs report gets them off the hook and Armageddon is put off till at least year end. Such is what passes for adult monetary policy in the second decade of the 21st century, as the Great Nixonian Error of fiat money nears its end.
Not that it probably matters. The global economy is rapidly slowing as China’s Ponzi economy has run out of greater fools. A global malinvestment bubble now needs to deflate. Several years of global correction now lie ahead. Meanwhile yesterday, the ECB took advantage of a weaker global economy to weaken the Euro. A sneaky way of matching China in the currency wars.
Below, today’s update as we head into the Fed’s version of Russian roulette.
U.S. Stock Rally Fades on Jobs Anxiety as ECB Move Boosts Bonds
September 2, 2015 — 11:43 PM BST Updated on September 3, 2015 — 10:16 PM
BST
An almost 200-point rally in the Dow Jones Industrial Average faded in
afternoon trading as optimism over European stimulus, which provided a boost to
government bonds, gave way to anxiety ahead of Friday’s U.S. jobs report.
U.S. equities ended the day little changed, with attention focused on
Friday’s payrolls data, which is expected to provide the last major clue on the
state of the economy before the Federal Reserve next meets. Stocks rallied
earlier in the session, while the euro tumbled and sovereign debt rose, after
Mario Draghi said the European Central Bank is expanding the scope of monetary
stimulus amid signs of a slowdown in the region.
----The nonfarm payrolls data Friday represents the last major data point before the Fed meets on Sept. 16-17 to discuss the timing of its first increase in interest rates in nearly a decade. U.S. reports Thursday showed jobless claims rose more than forecast last week, while a measure of the services industry hovered just below a 10-year high.
Futures
traders are betting the Fed will push back raising its fed funds rate. The
probability of an increase in September has fallen to 28 percent, from 38
percent at the end of last week, according to data compiled by Bloomberg. The
figures are based on the assumption that the benchmark will average 0.375
percent after the first hike.
More
Draghi Unveils Revamped QE Program as ECB Downgrades Outlook
September 3, 2015 — 1:55 PM BST Updated on September 3, 2015 — 4:28 PM
BST
Mario Draghi unveiled a revamp of quantitative easing and signaled
officials might expand stimulus if the rout in financial markets continues to
weigh on growth and inflation.The European Central Bank president said in Frankfurt on Thursday that the Governing Council raised the share of bonds the ECB can buy to 33 percent of each issue from 25 percent, and that policy makers are ready to make more adjustments to ensure the full implementation of the 1.1 trillion-euro ($1.2 trillion) program. A weaker global outlook prompted an across-the-board reduction of the institution’s growth and consumer-price forecasts through 2017. The euro slid to a two-week low.
The reset of the ECB’s stimulus program after a six-month review gives officials more flexibility as they prepare to continue bond purchases until at least September 2016. Weaker commodity prices, slowing trade and volatility in global equities have fueled speculation that more stimulus is on the way.
“The issue limit by itself isn’t particularly significant, but the signal it sends is,” said James Nixon, head of forecasting for EMEA at Oxford Economics Ltd. in London. “It’s a clear signal to the market that they’re ready to do more. If the economy weakens further and inflation doesn’t come back as expected they’ll definitely extend the QE.”
Stimulus will continue until the end of September 2016 “or beyond, if necessary,” Draghi told reporters, in a tweak to language that hints more strongly than before at a readiness to prolong purchases.
“The information available indicates a continued, though somewhat weaker, economic recovery and a slower increase in inflation rates compared with earlier expectations,” he said. “Taking into account the most recent developments in oil prices and recent exchange rates, there are downside risks” to the latest inflation forecasts.
The euro dropped 1.1 percent to $1.1101 at 4:18 p.m. London time
and touched $1.1087, its weakest level since Aug. 19.
More
Alibaba Is the Canary in China's Coal Mine
It turns out investors were right about Alibaba: No company is more on the front lines of China's economic shifts than Jack Ma's juggernaut. And that's just where the problems begin.Alibaba's shares slide with each new report of middle-class Chinese who are dumping apartments to raise cash, delaying weddings, canceling vacations, terminating automobile orders and cutting up credit cards. A social media app called "Guide on Safe Passage Through the Economic Crisis" is all the rage as hundreds of millions of mainlanders encounter their first bear market. All that most Chinese younger than 50 know is annual growth of more than 10 percent. Crashing stocks and recession are Western maladies, not China's.
Ma has hitched the fortunes of his e-commerce behemoth to these people, and the value of his company is falling in sync with them. After surging as much as 75 percent from their initial offering price of $68 each last September, the company's American depositary receipts plunged 16 percent in August, to $66.12, the third consecutive monthly decline in New York. Anyone who doubts that China won't experience a negative wealth effect as Shanghai cracks hasn't looked at Alibaba's numbers. Skeptical investors have shaved $65 billion from its market value since last year's euphoric initial public offering.
Things are about to get worse -- both for the economy and Ma's investors. Five interest-rate cuts since November aren't boosting factory activity, which is the weakest in at least three years. The 49.7 reading on the August Purchasing Managers' Index confirmed the worst fears of China bulls: Domestic and external demand is sliding with the Shanghai Composite Index.
The conventional wisdom is that, for all the angst over stocks, few mainlanders own them. But this view assumes rationality in a wholly irrational setting. Pundits said the same about Americans in the late 1990s. But the so-called wealth effect from a surging Dow Jones industrial average significantly buttressed household sentiment. Confidence plummeted when the tech-stock bubble burst.
This
dynamic could be doubly true of China. After months of putting the entire
weight of the government behind saving
the market, Beijing appears to have given up. The fallout from that realization
will have unpredictable effects on 1.3 billion people indoctrinated to believe
Beijing can control any crisis or narrative. As markets swoon and gross
domestic product slides, consumers are delaying nonessential purchases. Baby
diapers and groceries, yes; a new smartphone, handbag or movie tickets, no.
Mass austerity has only just begun.
More
U.S. sanctions against Chinese firms could be next week: FT
The United States is preparing to sanction Chinese companies connected
to the cyber theft of U.S. intellectual property as early as next week, the
Financial Times reported on Thursday.
The FT cited three U.S. officials as saying the sanctions probably would
come next week in advance of Chinese President Xi Jinping's visit later in the
month.
Suspicions that Chinese hackers were behind a series of data breaches in
the United States have been an irritant in relations between the United States
and China.
The United States is also considering sanctions against Russian
individuals and companies for cyber attacks, U.S. officials have told Reuters.
The officials, who spoke on condition of anonymity, had said any move
against Chinese entities or individuals before Xi's trip was possible but
unlikely because of the strain it could put on the visit. It will include a
state dinner at the White House hosted by President Barack Obama.
“The Chinese government staunchly upholds cyber security, firmly opposes
and combats all forms of cyber attacks in accordance with law,” Chinese Embassy
spokesman Zhu Haiquan said in a statement earlier this week.
Asked about the possibility of sanctions coming next week, State
Department spokesman Mark Toner told reporters, "When it comes to economic
sanctions, we don't preview any kind of sanctions beforehand for obvious
reasons. We don't want to give a heads-up to those who may be potential targets
of economic sanctions to begin to take steps to evade sanctions activity."
More
http://www.reuters.com/article/2015/09/03/us-usa-cybersecurity-china-sanctions-idUSKCN0R323E20150903
True, governments can reduce the rate of interest in the short run, issue additional paper currency, open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.
Omnipotent
Government. Ludwig von Mises.
At the Comex silver depositories Thursday
final figures were: Registered 52.76 Moz, Eligible 115.48 Moz, Total 168.24
Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, this time it’s different from MarketWatch.
Maybe it is, but not to the chief investment officer at Cambria Investments.
I’m in both camps. I think that there’s a coming crash ahead, and yes, this
time it’s different. We have the world’s biggest bubble to unwind and the
central banksters are all out of ammo at the start.
Opinion: Market timing model: Go 100% cash
Published: Sept 3, 2015 5:01 a.m. ET
When Mebane Faber talks, people listen.
The chief investment officer of Cambria Investments is a highly regarded
independent thinker. He’s among the few people in the investment business smart
enough and bold enough to call out the baloney that passes for wisdom on Wall
Street. His research papers are essential reading for anyone in finance.
But when his model says there’s a crash ahead, and that we should get
out of the market completely, should we follow suit?
That’s the remarkable situation now — as first reported by Julie
Verhage at Bloomberg.Faber tweeted that the model recommended by his “old market-timing paper ends month 100% in cash & bonds.” This has happened less than 7% of the time in the past, he said. “Last time? 2008/2009.”
It’s alarming news. The Faber model appears in his celebrated research paper A Quantitative Approach to Tactical Asset Allocation. It is based simply on comparing current stock prices to their moving average for the past 10 months. Back-testing it to 1901 suggests it would have spared you the worst of Wall Street’s biggest meltdowns, and that over time it would have made you much more money than buy-and-hold.
You can make up your own mind.
Personally, I think Faber is a terrific analyst and strategist. His research in general is fascinating. And he may well be right about a coming crash: Who knows?
But after 20 years of being in this business and listening to many of its most brilliant minds, I’m not going to follow his model and dump all my stocks.
Why? Here are my five reasons.
More
Solar & Related Update.
With events
happening fast in the development of solar power and graphene, I’ve added this
new section. Updates as they get reported. Is converting sunlight to usable
cheap AC energy mankind’s future from the 21st century onwards? DC?
A quantum computer next?
Solar power supplies 10 percent of Japan peak summer power: Asahi
Though solar power accounts for about 2 percent of annual generation of all power sources, summer's favorable sunlight conditions increased power output, generating up to about 15 gigawatts of power in total in early August, the paper said.
Japan has been pouring billions of dollars in clean-energy investment after introducing a feed-in tariff (FIT) program in 2012, aiming to help the world's third-biggest economy shift away from its reliance on nuclear power after the March 2011 Fukushima disaster.
Asahi's survey showed that the ratio of solar power at peak hours was as low as Hokuriku Electric Power's (9505.T) 5.9 percent and as high as Kyushu Electric Power's (9508.T) 24.6 percent, depending on access to ample land with favorable sunlight conditions.
The installed capacity of solar power taking advantage of FIT scheme has reached more than 24 gigawatts at the end of April, government data showed, up from about 5 GW before the scheme started.
http://www.reuters.com/article/2015/09/03/us-japan-power-solar-idUSKCN0R306L20150903
Have a great weekend everyone. An early fore taste of winter expected
here.
“The
U.S. government has a technology, called a printing press (or, today, its
electronic equivalent), that allows it to produce as many U.S. dollars as it
wishes at essentially no cost…We conclude that under a paper-money system, a
determined government can always generate higher spending and hence positive
inflation.”
Dr.
Ben Bernanke. 2002
The monthly Coppock Indicators finished August
DJIA: +65 Down. NASDAQ:
+168 Down. SP500: +92 Down.
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