Baltic Dry Index. 1082 -10
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
Things are seldom what they seem,
Skim milk masquerades as cream;
Skim milk masquerades as cream;
Ebenezer Squid. With apologies to Gilbert and Sullivan and
H.M.S. Pinafore.
We open today with the
usual suspects on Wall Street, loudly protesting their innocence. “What, we
rip-off America’s beer drinkers to the tune of $3 billion a year? Never. Not us
boss. We wouldn’t cross the road for less than $10 billion.” And so life in the
lawless era goes on. Who is right and who is wrong? Who is cream and who skim
milk? Only America’s NSA, the UK’s GCHQ, and possibly Moscow’s Snowy can say
for sure, but they’re not talking. Probably holding on to the goods for a
better use further down the road.
"When it becomes serious, you have to lie"
Jean-Claude Juncker. Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar.
Goldman Sachs denies aluminium price-rigging
The millions of tonnes of aluminium stockpiled by Goldman Sachs and Glencore have led to claims that the firms have used their dominance to control prices of the metal for their own gain.
Brewer Miller Coors last week told the US Senate that inflated aluminium prices were costing consumers $3bn (£2bn) a year, putting the focus on the stockpiles held by the Wall Street investment bank and the world’s largest commodity trading firm.Together, the two firms are estimated to control two-thirds of the world’s stockpiles of aluminium, with Goldman Sachs holding 1.5m tons, while Glencore has 2m tons in its warehouses.
Aluminium prices have more than doubled in the past three years. At the same time, the amount stored in warehouses has hit a record 5.5m tons.
The majority of the metal held in each of the firms’ warehouses is owned by their clients, which include hedge funds. But regulators have begun a crackdown on trading by big banks in commodity markets.
The move has been given added impetus by recent trading scandals, such as Libor-rigging and the “London whale” losses at JP Morgan, that have increased the scrutiny on the activities of investment banks. Last week, JP Morgan, which has one of the largest commodities trading businesses in the world, said it would be quitting the business.
“There are some bored foreigners, with full stomachs, who have nothing
better to do than point fingers at us [China]. First, China doesn’t export
revolution; second, China doesn’t export hunger and poverty; third, China
doesn’t come and cause you headaches, what more is there to be said?”
President Xi Jinping
China 3% Growth Risk Seen by Barclays Signals Likonomics Anxiety
A copper price collapse of more than 60 percent, zinc cut by up to a half and oil down to $70 a barrel. That’s the fate facing world commodity markets should China’s growth dip to 3 percent in the next three years -- a scenario economists at Barclays Plc (BARC) are now examining.They’re not the only ones building models based on a steep decline in growth in the world’s second-biggest economy. Nomura Holdings Inc. (8604) estimates a one-in-three chance of a sharp drop by the end of 2014, and Societe Generale SA sees a “non-negligible risk” of less than 6 percent growth this year and an outside chance of 3 percent average expansion for this half and next.
Premier Li Keqiang’s efforts to rein in a record credit boom, avert a property-price bubble and strengthen environmental protections risk deepening China’s slowdown and adding to drags on the global economic recovery. With growth already heading for a 23-year low, a hard landing would batter commodity markets, hurting mineral exporters like Australia, Brazil and South Africa, and miners such as BHP Billiton Ltd. (BHP) and Rio Tinto Group, that have begun to slow expansion.
“This is a very delicate thing they’re trying to do because to slow gradually is very difficult, partly because it’s a self-enforcing mechanism and it can become a vicious cycle,” said Andrew Polk, an economist in Beijing with the Conference Board, a New York-based research group, who sees average growth of 5.5 percent over the next five years. “There’s a distinct possibility that the slowdown could get out of control and the risk of a policy misstep cannot be discounted.”
July 25,
2013
China puts five-year construction ban of government buildings
BEIJING
China’s
leaders have banned the construction of government buildings for five years as
another step in a frugality drive that aims to address public anger at
corruption.
The
general offices of the Communist Party’s central committee and the State
Council, China’s Cabinet, jointly issued the directive according to the
official Xinhua News Agency. No directive was immediately available online.
Across
China, grand government buildings with oversized offices and fancy lighting
including chandeliers have mushroomed in many cities. They are often among the
most impressive buildings in their own towns, drawing disapproval from the
public.
President
Xi Jinping has spearheaded a campaign to cut through pomp, formality and waste
among senior officials that have alienated many ordinary citizens.
This
year, high-end restaurants have reported a downturn in business as government
departments and state-owned companies cancelled banquets.
Xinhua
reported that the directive orders an "across-the-board halt’’ to
construction of official buildings, and “glitzy” structures built as training
centres, hotels or government motels. Some government agencies have built such
buildings in seaside resorts and other scenic spots as a perk for their
officials and employees who can stay for free or at deeply discounted prices.
They sometimes open to the public as profit-making ventures.
Europe’s 'recovery’ is a conjuring trick
The eurozone has had a good year – on paper. But it is crippled by too much debt to survive intact, says Jeff Randall
----Share prices in particular have enjoyed a remarkable resurgence. Stock market indices in Portugal, France and Spain are up by about 30 per cent. That’s pretty impressive for economies running on empty but is completely outshone by Greece, where the main index is now 64 per cent higher than in June 2012. If that sounds too good to be true, remember that at its current level of 294, the Athex 20 is still 85 per cent lower than its high point of 2008. None the less, there’s a temptation to look at the direction of travel and conclude that, even for the eurozone’s weaklings, the point of maximum danger is history. This is what EU leaders and the European Central Bank would like us to believe, because it fits their broader narrative: the single currency works, is sustainable and benefits all in the long run.
At the
core of this “recovery” is a bluff that has yet to be called. In August last
year, the European Central Bank’s president, Mario Draghi, promised to do
“whatever it takes” to defend the euro through the unlimited purchase of bonds
issued by troubled EU states. It was high-quality legerdemain. Presented with
the perceived safety net of a one-way bet, private investors returned to buying
sovereign debt and company shares in the EU’s angst-ridden periphery.
Not since
the Wizard of Oz has an illusionist created so much fuss with so little
substance. Without spending a single cent, Draghi conjured up a fall in
borrowing costs and a rise in stock markets. What’s more, consumer confidence
improved in the EU’s more solvent regions, albeit from a woefully low base. The
killer question now is: how long can the magician keep the trick going? Or, as
Toto did in the movie with Judy Garland, will the curtain be pulled back to
reveal nothing more than bluster behind a screen of smoke and noise?
The
answer will not be known until after September 22, when the Germans go to the
polls. Angela Merkel has played a blinder in simultaneously helping to shore up
the eurozone’s balance sheet while persuading domestic supporters that
Germany’s chequebook is now closed to those seeking credit extensions on easier
terms. If, as seems likely, the German chancellor is re-elected, she will
return to a series of horror shows that have been masked but not mastered.
There are too many fundamental flaws inside the eurozone for crisis deferral to
be a permanent policy.
----The government in Lisbon staggers along with barely a mandate, trying desperately to keep the country’s 78 billion euro bail-out programme on track. Next door in Spain, the national mood, already grim, darkened further last week after the train disaster in Galicia. Unemployment fell from 27 per cent to 26 per cent, but only thanks to temporary tourism jobs. Come September, many of them will vanish.
In
Greece, where universal taxes remain an abstract concept, George
Papaconstantinou, the country’s former finance minister (2009-11), is to be put
on trial for abuse of office. He was part of a team that negotiated a 110
billion euro bailout from the EU and International Monetary Fund in 2010. That
vast sum already looks far too little. Greece’s financial position is terminal.
More
We end for today with Germany taking the moral high
ground in its growing spying dispute with America. A misstep by President Obama
on the issue of illegal spying in Europe, can easily derail Chancellor Merkel’s
coasting to an easy victory in September, and there’s still more to come from
Snowy according to the UK’s Guardian newspaper.
German president says whistleblowers like Snowden merit respect
BERLIN |(Reuters) - Germany's president, who helped expose the workings of East Germany's dreaded Stasi secret police, said whistleblowers like U.S. fugitive Edward Snowden deserved respect for defending freedom.
Weighing in on a debate that could influence September's federal election, President Joachim Gauck struck a very different tone from that of Chancellor Angela Merkel, who has assured Washington that Berlin would not shelter Snowden.
Gauck, who has little power but great moral authority, said people who work for the state were entitled to act according to their conscience, as institutions sometimes depart from the law.
"This will normally only be put right if information is made public. Whoever draws the public's attention to it and acts out of conscience deserves respect," he told Friday's Passauer Neue Presse newspaper.
After the fall of communism, Gauck, a dissident Lutheran pastor, headed a commission in charge of the Stasi's vast archive of files on people it had spied on, using them to root out former Stasi members and collaborators.
His unusual decision to speak out on a hot political issue comes as the fallout from the Snowden affair is dominating headlines in the run-up to the September 22 election where Merkel - who, like Gauck, comes from what was communist East Germany - hopes to win a third term.
"The fear that our telephones or mails are recorded and stored by foreign intelligence services is a constraint on the feeling of freedom and then the danger grows that freedom itself is damaged," he said.
"We are a democratic state with the rule of law with basic rights. Freedom is one of these basic rights."
I speak Spanish to God,
Italian to women, French to men, and German to my horse.
Holy Roman Emperor Charles V
At the Comex silver depositories Friday final figures were: Registered 46.95 Moz,
Eligible 116.30 Moz, Total 163.25 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Time to free up a stash of pictures of dead US
white Presidents. There may be an early 21st century, fire sale in
some serious artworks headed our way this decade. Who knew what and when? Only the
NSA knows for certain, and just maybe poor old Snowy in summery Moscow. So far
neither is saying.
SAC’S Cohen Risks Losing Fortune While Keeping His Freedom
By
Patricia Hurtado & David Voreacos - Jul 26, 2013 5:01 AM GMT
Steven A.
Cohen, founder of a $14 billion hedge fund indicted in what the U.S. calls an
unprecedented insider trading scheme, faces a future without a fund or a
multi-billion dollar fortune. On the other hand, he won’t be behind bars.
The U.S.
wants to recover hundreds of millions of dollars from Cohen’s fund, SAC Capital
Advisors LP, representing the money it made from its alleged illegal trading,
and may try to get billions more from Cohen and the company.
Cohen himself wasn’t charged, unlike at least eight former SAC fund managers and analysts who have faced or are facing fraud charges for their roles in a scheme which allegedly involved more than 20 companies and went back as far as 1999.
The government has also filed civil money-laundering charges against the firm, which call for fines and penalties to be determined at a trial, the date of which hasn’t been set. Those civil charges pose the greatest threat to Cohen’s fortune because prosecutors allege that if the fund reinvested the proceeds of illegal insider trading into its capital pool, then the entire pool is tainted and subject to forfeiture.
“Forfeiture, restitution and fines are the real worry for SAC,” said John J. Carney, a former federal securities fraud prosecutor and SEC attorney now at Baker Hostetler LLP. “If the government can establish the alleged fraudulent profits with precision, then they may have the ability to wipe out the firm’s net capital, making bankruptcy or a receivership a real threat.”
Comingling Profits
In its civil suit, the U.S. alleges that SAC engaged in money laundering, “comingling the illegal profits from insider trading with other assets, using the profits to promote additional insider trading.”The government also filed criminal charges against SAC, allowing it to seek forfeiture of ill-gotten gains obtained as a result of the crime, if the firm is convicted.
That might allow the government to make a sizable dent in Cohen’s own wealth: with $9 billion, he’s ranked 121st among the world’s billionaires, data compiled by Bloomberg show.
Citing laws that say it has the right to seek the forfeiture of any property involved in money laundering transactions, the government says it is seeking “any and all assets” of SAC Capital Advisors LP, SAC Capital Advisors LLC, CR Intrinsic Investors LLC, Sigma Capital Management LLC, and more than 20 other affiliated investment funds, according to the complaint.
Ruinous Restitution
Michael Shapiro, the co-chair of the white-collar defense practice at Carter Ledyard & Milburn in New York, said a conviction of SAC may lead to “enormous fines and potentially ruinous amounts of restitution” from the firm.Prosecutors may seek billions of dollars from Cohen’s personal fortune by claiming in the criminal case and their civil forfeiture lawsuit that he “co-mingled” illegal profits from insider trading with other assets he legitimately earned, Shapiro said.
“His house, his art -- they can go after that,” Shapiro said.
Cohen is one of the world’s biggest art collectors, with works by Van Gogh, Manet, de Kooning, Picasso, Cezanne, Warhol, Johns and Richter.
More
"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise. The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."
Hans F. Sennholz
The monthly Coppock Indicators finished June:
DJIA: +145 Up. NASDAQ: +146 Up. SP500: +177 Unch
