Thursday, 24 March 2016

Here We Go Again.

Baltic Dry Index. 401 +03        Brent Crude 40.50

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

Brexit odds checker.

Brexit Quote of the Day.
Cameron: I would not want to put him in charge of snake control in Ireland.

With apologies to Eugene McCarthy.

Note: There won’t be an update tomorrow, Good Friday.

We start with a reminder to our readers in the UK and Ireland to be especially vigilant this Easter. The dissident IRA has threatened to turn this 100 year anniversary of the Easter rising in Dublin, into carnage. Whether they have that ability, is questionable, but there will probably be at least some attempt somewhere over Saturday through Easter Monday.

Below, oil slumps as supply soars, and although there’s no logical reason for an oil to stocks correlation, in our central bank fuelled, malinvestment bubble casinos, logic was tossed out long ago after the 1987 Black Monday crash, replaced by Old Bubbles Greenspan and his New York City team of stock market riggers and fix-its. But at peak debt, with a roaring commodity depression underway as China crashes, rigging the casino no longer has the same effect. In 2016, why shouldn’t oil lead stocks?

S&P 500 erases 2016 gains as oil slump weighs

Published: Mar 23, 2016 4:31 p.m. ET

Crude price drops as weekly supplies jump by 9.4 million barrels

U.S. stocks ended lower Wednesday as crude futures suffered their worst percentage decline in a month, which hammered energy and materials shares and dragged down the main stock indexes.
Crude-oil prices CLK6, -0.28%  slumped 4% to $39.79 a barrel, following a larger-than-expected jump in weekly crude stockpiles.

The S&P 500 SPX, -0.64%  closed 13.09 points, or 0.6%, at 2,036.71, with eight of the 10 main sectors finishing lower, led by a 2.1% slide in the energy sector. Wednesday’s slump erased the S&P 500’s modest year-to-date gains, leaving it 0.4% lower in 2016.

The Dow Jones Industrial Average DJIA, -0.45% fell 79.98 points, or 0.5% to 17,502.59, with a 3.8% drop in shares of Nike, Inc. NKE, -3.79%  headlining the blue-chip gauge’s decline. The Dow is clinging to a 0.5% year-to-date gain. Meanwhile, the Nasdaq Composite COMP, -1.10%  gave up 52.80 points, or 1.1%, to end at 4,768.86.

The main stock benchmarks have been unable to break a strong correlation with oil prices that has persisted for the past several months.

“Investors are questioning this explosive near-term rally off February lows, which left stocks in an overbought condition. And the main reason for the rally seems to be tied to oil,” said Channing Smith, portfolio manager at Capital Advisors, referring to a weekslong stock rally since Feb. 11, when stocks touched their 2016 nadir.

“It seems everyone is trying to find evidence to justify it, but economic data seem hollow, nothing to suggest acceleration,” Smith said.

Oil ends below $40 with U.S. crude supply up a 6th week

Published: Mar 23, 2016 3:14 p.m. ET
Oil futures settled below $40 a barrel on Wednesday after U.S. government data revealed a sixth straight weekly climb in crude supplies that was about three times higher than the market expected.

But gasoline supplies dropped and demand remained strong, hinting at the potential for a rise in appetite for crude to increase gas inventories.

May West Texas Intermediate crude CLK6, -0.40%  settled at $39.79 a barrel, down $1.66, or 4%, on the New York Mercantile Exchange. It was trading at $40.55 before the supply data. Prices saw a modest decline Tuesday in the wake of the terrorist attacks in Belgium.

May Brent crude LCOK6, -0.02%  on London’s ICE Futures exchange fell $1.32, or 3.2%, to $40.47 a barrel, pulling back Tuesday’s settlement, which was the highest since Dec. 4.

The U.S. Energy Information Administration on Wednesday reported a 9.4 million barrel jump in crude-oil supplies to 532.5 million for the week ended March 18. That was bigger than the 8.8 million-barrel increase reported by industry group the American Petroleum Institute, and more than triple the rise of 2.7 million barrels expected by analysts polled by Platts.

Crude supplies have now posted increases in each of the last six weeks, based on EIA figures.

Up next, a warning that aging demographics is about to alter our casinos forever. Well if not forever, for forever’s a long, long time, for the next decade, as the baby boom generation retire, and increasingly draw upon their savings.

‘Rich Dad’ author says the 2016 market collapse he foresaw in 2002 is coming

Published: Mar 23, 2016 10:38 a.m. ET
Fourteen years ago, the author of a series of popular personal-finance books predicted that 2016 would bring about the worst market crash in history, damaging the financial dreams of millions of baby boomers just as they started to depend on that money to fund retirement.

Broader U.S. stock markets are recovering from the worst 10-day start to a year on record. But Robert Kiyosaki — who made that 2016 forecast in the 2002 book “Rich Dad’s Prophecy” — says the meltdown is under way, and there’s little investors can do but buy gold or silverand hope the Federal Reserve slows the slide.

Kiyosaki is convinced: The pullback he predicted is happening.

“We’re right on schedule,” he said in a recent interview with MarketWatch.
A market destined to collapse
Investors are seven years into a bull market some fear is getting a bit long in the tooth, with the Dow industrials DJIA, -0.45%  and the S&P 500 SPX, -0.64% SPX, -0.64% up 0.9% and 0.3%, in 2016.
That’s after 2015 saw major U.S. indexes snap multiyear winning streaks amid falling commodity prices, concerns about economic growth, and the Federal Reserve’s December decision to raise interest rates.

In 2002, Kiyosaki wrote that the stock market would crash in 2016 as the first wave of baby boomers began to hit 70 1/2 in 2016 and started taking required-by-law distributions from traditional individual retirement accounts.

He still believes that: “Demography is destiny,” he said in the interview.
We end for Holy Week with those Swizz banksters again. It’s not really their fault. Like poor Oscar who died penniless in Paris, They can resist anything except temptation. Add Credit Swiss to the list of bad boy German, French and Italian banks in trouble, headed by Deutsche Bank, but too big to fail, bail, or jail.

Credit Suisse, the Jailed Banker and an Oligarch's Millions

March 23, 2016 — 9:20 AM GMT Updated on March 23, 2016 — 1:47 PM GMT
For years, he was a member of the elite of Swiss bankers. Now, the former Credit Suisse wealth manager is in a prison hospital in Geneva, charged with fraud, misappropriation, and criminal mismanagement, facing as many as 10 years behind bars.

The case reaches beyond the executive, who under Swiss law can’t be identified in public. Credit Suisse now faces criminal accusations from three clients, alleging it played a role in the fraud.

The timing is terrible for Switzerland’s No. 2 bank. Its new CEO, Tidjane Thiam, is betting its future on managing money for the rich. Wednesday, he announced plans for more cuts at its investment bank. He also told Bloomberg Television he was blindsided by risky debt and illiquid positions taken at the trading unit that he expects to contribute to a loss for the bank in the first quarter.

At least one client involved in the Geneva case -- one of Credit Suisse’s largest -- is pulling his accounts from the bank. In criminal complaints with prosecutors, his lawyers accuse the bank of money laundering and “churning” his accounts to boost its revenue with unnecessary trades. Wealthy men from the former Soviet Union, the clients said their losses reach into the hundreds of millions of dollars.

“The catastrophic situation in the accounts wasn’t caused by an unfortunate investment policy but by a chain of trades, the vast majority of them unauthorized, that created excessive concentrations of risks for clients in order to simultaneously procure important revenues for the bank,” lawyers for one said in a complaint filed with prosecutors in January.

Credit Suisse spokeswoman Anna Sexton said in an e-mail that the now-fired banker “violated internal rules and Swiss law and engaged in criminal acts to deceive the bank’s control system.” She added that the bank believes he “concealed his deceptions from colleagues and that this is to the best of its knowledge an individual case.” She declined to comment further.

In December, the bank filed its own criminal complaint against the banker, in which it said it was still trying to untangle the complex history of his transactions.

Liquidity Death Spiral Traps Credit Suisse

By Lisa Abramowicz Mar 23, 2016 2:46 PM GST
Credit Suisse just got caught up in the same liquidity death spiral that has claimed a growing number of debt funds.

Some of the bank's traders increased holdings of distressed and other infrequently traded assets in recent months without telling some senior leaders, Credit Suisse CEO Tidjane Thiam said on Wednesday in a Bloomberg Television interview. This is bad on several levels. For one, it highlights some pretty poor risk management on the part of senior officers at the Swiss bank.

But perhaps more important from a market standpoint, it exposes a trap in the current credit market: Traders are getting increasingly punished for trying to sell unpopular debt at the wrong time. The result has been a growing number of hedge-fund failures, increasing risk aversion by Wall Street traders and further cutbacks at big banks.

This all simply reinforces the lack of trading in less-common bonds and loans. At best, this spiral is inconvenient, especially for mutual funds and exchange-traded funds that rely on being able to sell assets to meet daily redemptions. At worst, it could set the stage for another credit seizure given the right catalyst -- perhaps a sudden, unexpected corporate default or two, or the implosion of a relatively big mutual fund.

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