Remember when three short months ago we revealed what was "the scariest chart in IBM's history", namely the one, showing IBM's total debt to equity ratio, which has exploded and surpassed Lehman highs, as the company scrambled to issue more and more debt and use it to repurchase more and more stock?
With this chart, incidentally, we also explained why IBM's ridiculous stock repurchasing strategy, which had seen $37.7 billion in stock buybacks since 2012, or more than the total debt issuance of $33.6 billion during the same period could not continue and why, inevitable, IBM would have a massively disappointing quarter.
Well, that quarter just hit, when moments ago in an early press release, IBM reported abysmal adjusted EPS of only $3.68, a huge miss to the $4.32 Wall Street expected, mostly a function of one simple thing: the buyback "strategy" finally hit a brick wall.
This very interesting Zero Hedge article appeared on their website at 7:42 a.m. EDT yesterday morning---and I thank reader Dan Lazicki for today's first story.
"Markets are slowly coming to grips with reality is not going to be as easy as everybody thought," Peter Schiff tells CNBC's Rick Santelli, noting the pick up in volatility across asset classes recently.
What The Fed clearly does not understand, Schiff blasts, is that "you cannot end quantitative easing without plunging the U.S. into a severe recession." Because of the Fed's extreme monetary policy and the mal-investment that flows from it, Schiff says, "The US economy is more screwed up now than it's ever been in history."
Most prophetically, we suspect, Santelli agrees that "a messy exit is a given," and Schiff believes they know that and that is why QE4 is coming simply "because it hasn't worked and they can't admit it's been a dismal failure."
This 2:40 minute CNBC video clip showed up on the Zero Hedge website yesterday at 5:49 p.m. EDT---and I thank Manitoba reader U.M. for her first contribution of the day.
When it comes to high-risk bonds, the asset management giant Pimco has pretty much cornered the global market.
Be it bonds issued by the automotive financier Ally Financial or the student loan financier SLM in the United States, or government bonds in Spain and Italy, Pimco holds a commanding position in these high-yielding securities.
But as Pimco’s portfolio managers double down on their bet that high-risk bonds will thrive in a world of low interest rates, a growing number of global regulators are warning that the positions being taken on by the big asset management firms pose a broad danger to the financial system.
These concerns were amplified this week as stock markets gyrated, the yields of high-risk corporate and European bonds spiked upward and, crucially, trading volumes evaporated.
This longish article showed up on The New York Times website last Thursday---and is worth reading, at least until your eyes begin to glaze over. I found it in yesterday's edition of the King Report.
Everyone is stoked that the latest versions of iOS and Android will (finally) encrypt all the information on your smartphone by default. Except, of course, the FBI: Today, its director spent an hour attacking the companies and the very idea of encryption, even suggesting that Congress should pass a law banning the practice of default encryption.
It's of course no secret that James Comey and the FBI hate the prospect of "going dark," the idea that law enforcement simply doesn't have the technical capability to track criminals (and the average person) because of all those goddamn apps, encryption, wi-fi network switching, and different carriers.
It's a problem that the FBI has been dealing with for too long (in Comey’s eyes, at least). Today, Comey went ballistic on Apple and Google's recent decision to make everything just a little more private.
This very interesting news item showed up on the motherboard.vice.com Internet site early afternoon last Thursday---and my thanks go out to Roy Stephens for his first offering of the day.
The voters who put Barack Obama in office expected some big changes. From the NSA’s warrantless wiretapping to Guantanamo Bay to the Patriot Act, candidate Obama was a defender of civil liberties and privacy, promising a dramatically different approach from his predecessor.
But six years into his administration, the Obama version of national security looks almost indistinguishable from the one he inherited. Guantanamo Bay remains open. The NSA has, if anything, become more aggressive in monitoring Americans. Drone strikes have escalated. Most recently it was reported that the same president who won a Nobel Prize in part for promoting nuclear disarmament is spending up to $1 trillion modernizing and revitalizing America’s nuclear weapons.
Why did the face in the Oval Office change but the policies remain the same? Critics tend to focus on Obama himself, a leader who perhaps has shifted with politics to take a harder line. But Tufts University political scientist Michael J. Glennon has a more pessimistic answer: Obama couldn’t have changed policies much even if he tried.
Though it’s a bedrock American principle that citizens can steer their own government by electing new officials, Glennon suggests that in practice, much of our government no longer works that way. In a new book, “National Security and Double Government,” he catalogs the ways that the defense and national security apparatus is effectively self-governing, with virtually no accountability, transparency, or checks and balances of any kind. He uses the term “double government”: There’s the one we elect, and then there’s the one behind it, steering huge swaths of policy almost unchecked. Elected officials end up serving as mere cover for the real decisions made by the bureaucracy.
No surprises here. This author has just stumbled on the "powers that be" but doesn't give them a name. G. Edward Griffin spells it out exactly in his book "The Creature From Jekyll Island"---or James Perloff's "The Shadows of Power: The Council on Foreign Relations and the American Decline". This article appeared on the bostonglobe.com Internet site on Sunday---and I thank reader M.A. for sending it along.
A breathtaking video filmed by an Icelandic helicopter pilot has documented the continuous eruption of the Bardarbunga volcano in northeast Iceland. Enormous fiery bubbles of lava and steam can be seen bursting from the ridges in the ground.
Helicopter pilot Gísli Gíslason captured the wondrous images while on several trips over the volcano – some of which were taken on Friday, and others a few days previously.
“Almost seven weeks have now passed since the Holuhraun lava eruption began. The eruption is continuing with few changes. The eruption is showing no signs of slowing down,” he wrote in the video’s description.
The Bardarbunga (Bárðarbunga) volcano is part of the second-tallest mountain in Iceland and located in the country’s Holuhraun lava fields - a volcanic system that spans some 200 kilometers by 25 kilometers.
This very interesting article, with lots of photos to along with the video clip, appeared on the Russia Today website at 8:48 p.m. Moscow time on their Thursday evening, which was 12:48 p.m. in New York. It's courtesy of reader M.A.
It is no mystery why global liquidity is evaporating. Central banks have turned off the tap. They have reduced net stimulus by roughly $125 billion a month since the end of last year, or $1.5 trillion annualized.
That is a shock for the financial system. The ratchet effect has been incremental, but relentless. We are finally seeing the consequences, with the usual monetary policy lag.
The Fed and People‘s Bank of China (PBOC) have stopped their two variants of global QE altogether (for now). Others have chopped their purchases of bonds by half or more. The Brazilians are net sellers, and in a sense they carrying out reverse QE. The Russians have just joined them again.
Fed tapering has taken out $85bn a month. The markets are having to go it alone as of this month, without their drip feed. Less understood is the effect of global reserve accumulation by the BRICS, emerging Asia, and the Petro-states. This has collapsed.
Here's Ambrose Evans-Pritchard, on behalf of his handlers, wringing his hands that the money printing is coming to a halt. At the end, he echoes Jim Rickards when he states "...until the blinking starts at the Fed and the People‘s Bank. QE4 is creeping onto the table already." It's the second offering of the day from Roy Stephens.
Mark Carney has launched an investigation into how one of the central pillars of the UK’s payments infrastructure collapsed for 10 hours, delaying hundreds of billions worth of deals.
The Bank of England Governor pledged to discover what had gone wrong and whether officials had responded properly after the enforced closure of the £277bn-a-day CHAPS payment system, which affected thousands of house purchases and major interbank money transfers.
The Bank said it would be carrying out “a thorough, independent review of the causes of today’s disruption”. “The review will cover the causes of the incident, the effectiveness of the Bank’s response and the lessons learned for future contingency plans. Its findings will be presented to Court which will then publish the full report and the response,” it added.
MPs had earlier in the day called on the Bank to explain the fault, attributed to a “technical issue related to some routine maintenance”.
This news item put in an appearance on the telegraph.co.uk Internet site at 9:30 p.m. BST on their Monday evening---and I thank West Virginia reader Elliot Simon for sending it our way.
Draghi, we have a problem. Just as Coeure 'promised' the ECB, according to he FT, began its bond-buying program this morning. However, peripheral sovereign bond-buying front-runners banking on the ECB greater fool to offload to are disappointed as they are go no easy money love. The initial program is covered-bond-buying (similar to U.S. MBS, but a considerably smaller market) and the ECB will reveal how much it has bought each Monday afternoon (starting next week). Greek bonds are suffering the most with 5Y yields at cycle highs once again and prices at lows (vanquishing all of Friday's gains).
As the Financial Times reports:
The European Central Bank has started to buy covered bonds, launching its latest attempt to stave off a vicious bout of economic stagnation in the eurozone.
The purchases are the first in a bond-buying programme that is expected to see the ECB place billions of euros of covered bonds and asset-backed securities on its balance sheet over the next two years in an attempt to revive lending and growth across the region.
The ECB confirmed that the central bank had begun purchasing the assets on Monday. The purchases of asset-backed securities are expected to start later this year.
The central bank will reveal how much it has bought every Monday afternoon, starting next week.
This story appeared on the Zero Hedge website at 8:40 a.m. EDT on Monday morning---and it's worth reading. It's the second contribution of the day from reader U.M.
When Europe announced its latest health check of top banks early last year it promised a "comprehensive assessment" of how well prepared they were to withstand another financial crisis.
In practice, a spirit of comprehensive compromise has been just as important.
A series of Reuters interviews with officials, bankers and others involved in the European Central Bank's financial inspection of the euro zone's biggest banks shows that in the seven months since it began, the ECB has had to shoot down countless pleas from banks and national supervisors for special treatment.
At the same time, according to sources who spoke on condition of anonymity, supervisors have revised the way they value assets and banks have failed to provide all the data demanded - multiple compromises that could cumulatively threaten the tests' reputation as tough and consistent.
This Reuters article, filed from London, was posted on their website at 7:12 a.m. EDT yesterday---and I thank Harry Grant for sharing it with us.
IN 2008 Bradley Birkenfeld, an American working for UBS, blew the whistle on the giant Swiss bank's offshore operations, which had helped thousands of rich Americans to dodge their taxes.
Among the lurid details that he revealed was the use of encrypted laptops, the smuggling of diamonds in toothpaste tubes for clients, and evidence of bankers travelling to America on tourist visas to avoid arousing suspicion.
UBS was sent reeling by the revelations. In recompense, in 2009 it paid a $780m fine to the American government and turned over data to the authorities on more than 4,000 clients.
The biggest fish to be caught in the net is now about to have his day in court. On October 14th jury selection started in a federal court in Florida for the trial of Raoul Weil, who as head of UBS's global private-banking business was responsible for the division that had fallen foul of the authorities. In 2009 America issued an international arrest warrant for Mr Weil. He was nabbed last year at an Italian hotel, while on holiday with his wife, and was extradited to the United States, where he has been under house arrest.
This news story showed up on the businessinsider.com Internet site at 4:40 p.m. EDT on Sunday afternoon---and it's the second article in a row from Harry Grant.
After completing a detailed analysis, Germany's foreign intelligence service, the Bundesnachrichtendienst (BND), has concluded that pro-Russian rebels were responsible for the crash of Malaysian Airlines Flight MH17 on July 19 in eastern Ukraine while on route from Amsterdam to Kuala Lumpur.
In an Oct. 8 presentation given to members of the parliamentary control committee, the Bundestag body responsible for monitoring the work of German intelligence, BND President Gerhard Schindler provided ample evidence to back up his case, including satellite images and diverse photo evidence. The BND has intelligence indicating that pro-Russian separatists captured a BUK air defense missile system at a Ukrainian military base and fired a missile on July 17 that exploded in direct proximity to the Malaysian aircraft, which had been carrying 298 people.
Evidence obtained shortly after the accident suggested the aircraft had been shot down by pro-Russian militants. Both the governments of Russia and Ukraine had mutually accused each other of responsibility for the crash. After a Dutch investigative commission reviewed the flight recorder, it avoided placing any blame for the crash. Some 189 residents of the Netherlands perished in the downing of Flight MH17.
The news item appeared on the German website spiegel.de at 8:08 a.m. Europe time on their Sunday---and I thank Jim Skinner for finding it for us. A companion story appeared on the RIA Novosti website on Sunday evening Moscow time. It's headlined "German Intelligence Agency Chief Says Kiev Falsified Data on MH17 Crash" and it's courtesy of reader M.A.
Decreasing oil prices are “inevitable” and the chance they will exceed $100 per barrel is “unlikely” the Russia’s Finance Ministry said. However, the Russian budget can withstand lower prices.
“The market is biased in favor of excess supplies. That is why price reduction is inevitable; it will have a structural character. We are unlikely to see prices higher than $100 per barrel in the near future,” Maksim Oreshkin, the head of the Russian Finance Ministry's strategic planning department told RBC TV in an interview.
“In general, the current downward price movement is structural. Investments in oil production have increased dramatically in the past ten years,” Oreshkin said.
Russian officials have stressed there will be no sharp rise in Russia’s budget deficit, but the country's largest bank, Sberbank, says an oil price of $104 is required to balance the 2015 budget. A drop of prices to $80 per barrel could cost Russia 2 percent of GDP.
The Russians have to look no further than the Comex to discover why oil prices are where they're at. This Russia Today article showed up on their Internet site at 11:19 a.m. Moscow time on their Monday morning, which was 3:19 a.m. in New York. I thank reader 'h c' for digging it up on our behalf.
Egypt signed contracts with six international firms on Saturday to carry out dredging of the new Suez Canal, the flagship project in President Abdel Fattah al-Sisi's program to revive an economy battered by years of political turmoil.
The companies are National Marine Dredging Company of the United Arab Emirates; Royal Boskalis Westminster and Van Oord, both based in the Netherlands; Jan de Nul Group and Deme Group, both of Belgium; and U.S.-based Great Lakes Dredge and Dock Company.
Lieutenant General Mohab Memish, head of the Suez Canal Authority, announced the consortium at a news conference in Cairo alongside Prime Minister Ibrahim Mehleb.
Egypt hopes the new canal will more than double revenues from the waterway by 2023 to $13.5 billion from $5 billion. It also plans to develop 76,000 sq km (29,000 sq miles) in the area into an international industrial and logistics hub to attract more ships and generate income.
This Reuters news story, filed from Cairo, showed up on their Internet site at 2:30 p.m. EDT on Saturday afternoon---and I thank South African reader B.V. for bringing it to our attention.
U.S. military aircraft dropped weapons, ammunition and medical supplies late on Sunday to Kurdish forces battling the Islamic State (IS) group, also known as ISIS or ISIL, in the Syrian border city of Kobane.
U.S. Central Command said C-130 cargo aircraft had made "multiple" drops of supplies provided by the authorities in Iraq’s autonomous region of Kurdistan that were "intended to enable continued resistance against ISIL's attempts to overtake Kobane".
Early on Monday, a spokesman for Kurdish forces in Kobane confirmed they had received a large quantity of weapons and ammunition.
The airdrops Sunday were the first of their kind and followed weeks of U.S. and coalition airstrikes in and near Kobane, which is located on Syria’s northern border with Turkey.
This news item put in an appearance on the france24.com Internet site yesterday sometime---and it's courtesy of Roy Stephens.
In a bloody ISIS attack on an Iraqi Army base just north of Fallujah on September 21, upwards of 500 government soldiers perished or disappeared, fleeing into the marshlands, the woods, or to the next base camp four miles away. Few were left behind alive, surrounded by militant fighters who by all accounts were supposed to be less equipped, less trained, and less organized than Iraq’s professional fighting force.
But the Iraqi security forces, into which American taxpayers poured some $25 billion over the course of a decade, had in the span of a summer, crumbled.
While pro-war critics blame the Iraqi military’s failures on the current administration for leaving the country too soon, American veterans and journalists who spoke with TAC say the army was corrupt, incompetent, and unmotivated from the beginning, and that top U.S. officials papered over this inconvenient fact for years in order to protect their commands and maintain public support for the U.S. intervention.
No surprises here. This longish, but very interesting article appeared on theamericanconservative.com website back on Thursday, October 9---and is definitely worth the read if you have the time and/or the interest. It's the second offering of the day from reader Dan Lazicki.
Iran is taking further action to comply with an interim nuclear agreement with six world powers, a monthly U.N. atomic agency report showed, a finding the West may see as positive ahead of a November deadline for clinching a long-term deal.
The report by the International Atomic Energy Agency (IAEA), seen by Reuters, made clear that Iran is meeting its commitments under the temporary deal, as it and major powers seek to negotiate a final settlement of a decade-old nuclear dispute.
It said Iran had diluted more than 4,100 kg of uranium enriched to a fissile concentration of up to 2 percent down to the level of natural uranium. This was one of the additional steps Iran agreed to undertake when the six-month accord that took effect early this year was extended by four months in July.
Refined uranium can be used to fuel nuclear power plants, Iran's declared goal, but can also provide the fissile core of a nuclear bomb if processed to a much higher degree, which Western states fear may be the country's ultimate aim.
This Reuters article, filed from Vienna, appeared on their Internet site at 1:36 p.m. EDT on Monday---and it's another contribution from reader U.M.
Saudi Arabia and Kuwait halted production at a jointly run oil field late this week, a move that could help ease a supply glut that has pushed global prices down 25 percent.
The 300,000-barrel-a-day Khafji field, located in the neutral zone between the two countries, was being shut because of environmental concerns, a person familiar with Saudi Arabian oil policy said yesterday, who asked not to be identified because the information isn’t public.
The shutdown comes as Saudi Arabia and other OPEC members face increasing pressure to scale back production while supply expands from the U.S. and other countries and demand growth slows. Asia’s oil market has become particularly flooded as the U.S. imports fewer cargoes.
This oil-related Bloomberg news item was co-filed from San Francisco, Manama, Bahrain---and Houston. It appeared on their Internet site at 7:20 p.m. Denver time last Friday evening---and it's the second article I borrowed from yesterday's edition of the King Report.
China is stepping up efforts to restrict illegal mining and exporting of rare earths with a five-month campaign that ultimately aims mainly to avoid a further plunge in prices.
Launched earlier this month and until March 31, five official bodies will work together to investigate and punish illegal miners and smugglers of the highly coveted elements.
Provincial and city governments will supervise the effort, Investor Intel reports.
This is not the first time China attempts to streamline the rare earth industry by giving control to state-owned miners and setting production quotas on a small number of authorized companies.
This article appeared on the mining.com website on Monday---and it's another offering from reader M.A.
In what pretends to be a history looking back from the future ‘Currency Wars’ author and fund manager Jim Rickards argues that by 2020 all the gold of the G-20 nations will be confiscated and buried in a former nuclear bunker under a mountain in Switzerland to take it out of the global financial system.
This is the conclusion to the astonishing tour de force article that kicks off his new monthly newsletter ‘Rickards’ Strategic Intelligence’ for Agora Financial, publisher of highly successful financial newsletters like Chris Mayers’ ‘Capital & Crisis’. Has the normally sober and thoughtful Mr. Rickards lost his marbles?
I must confess to having my doubts on reading his first issue with one absurd conclusion leading to another and then to a totally unrealistic world gold confiscation scenario. How would that happen? The G-20 meetings struggle to agree on a final communique. How could they agree something like that?
Mr. Rickards doesn't stop there. In his world not only does money die and cease to exist but there is a sort of death of capitalism that Marx prescribed and Stalin tried to implement without notable success. There are no markets, bonds nor money by 2024 and equality rules.
WTF! Whatever Jim is smoking, I don't want any of it. And don't look to me for answers on this one, dear reader, as I'm just as much in shock as you are. This amazing commentary appeared on the arabianmoney.com Internet site on Sunday evening---and it is certainly a must read. I thank Dr. Dave Janda for sending it along.
But returning to the subject of a crash in the paper-gold market, this suggests that the spin that allows the banks of the world to simply steal all deposits over €100,000 could easily be applied to a similar, ongoing banking scam in the paper-gold market.
Let’s say that, rather than wait for the Emperor’s new clothes to be seen to be an illusion, the banks of the world decide to preempt this embarrassment in a proactive manner. Let’s say that, with the support of their friends in the governments, an announcement is made to the public that a decision has been reached that will aid tremendously in saving the “essential” banks. And—here’s the best part—it would not impact the “little man” who has already had to bear so much abnegation as a result of the greed of the rich.
The announcement states that the banks have been given the go-ahead to simply cancel the paper-gold certificates that they have sold. This will enrich the banks by billions of dollars, and the only losers will be the greedy rich who have so much money to burn that they have purchased gold certificates.
Were the banks to do this, they would, instead of being vilified for selling assets that they did not possess, be praised for taking affirmative action for “The Greater Good.”
This commentary appeared on the internationalman.com Internet site on Monday.
Interviewed for about a half hour last week by Silver Doctors, your secretary/treasurer discussed recent developments in market manipulation, speculated that gold will be revalued overnight by major central banks as part of a general world currency revaluation, and cautioned that China's drive to obtain gold isn't intended to establish a free market in gold but to wrest control of the gold market from the United States.
The interview was conducted last Wednesday---and the audio interview, which runs for 32:17 minutes, appeared in a GATA release on Saturday. It's worth your time.
We worship it, buy it for investment, wear it as jewellery, weave it into cloth and even eat it. India's love affair with gold crosses the boundaries of religion and also class — and reaches its zenith in the run-up to Diwali.
"We buy at least a small gold coin in our family every Dhanteras and get the house repainted after Dussehra to welcome Goddess Lakshmi home," says Kandivali resident Ravindra Dave.
Dave is not alone, of course. Most Hindu families work towards purchasing gold at this time. "The ritual is akin to inviting Lakshmi, the goddess of wealth and prosperity," explains Anant Joshi, a priest from Bhuleshwar. "While some prefer jewellery, most buy gold coins with Lakshmi embossed on the front and her symbol, the Shri Yantra, embossed on the other side. Some have both Lakshmi and Lord Ganesha, the remover of obstacles, embossed on the coins."
This gold-related news article, filed from Mumbai, showed up on the dnaindia.com Internet site at 9:09 a.m. IST on their Sunday morning. It's another offering from reader U.M.
Barely months after gold import rules were eased, the government is looking to re-impose curbs as the country's insatiable appetite has led to a surge in the yellow metal coming into India, threatening to undermine the improvement in external balances.
The finance ministry's revenue department has flagged the issue and asked the Department of Economic Affairs and the Reserve Bank of India to review the May 21 relaxation in the import rules issued by the latter.
The so-called 80-20 rule was relaxed in May by the RBI at the behest of the finance ministry after jewellers, bullion dealers, authorised dealer banks, and trade bodies sought easier rules. Under the 80-20 scheme, nominated agencies were allowed to import gold on the condition that 20 percent of the import would be exported. The easing of rules meant more entities were allowed to import gold.
The trade deficit worsened to an 18-month high of $14 billion in September following a 450 percent rise in gold imports as importers rushed to take advantage of lower prices. "Gold imports have risen since the norms were relaxed....There is a concern," a finance ministry official said. "We have written to the DEA and the RBI."
This article, filed from New Delhi, put in an appearance on The Economic Times of India website at 4:02 a.m. India Standard Time on their Monday morning---and I found it posted on the gata.org Internet site.
Reserve bank of India will not change its gold import rules, sources with knowledge of the matter said, responding to a report that the world's second-largest consumer of the precious metal was keen to limit imports.
The central bank has already eased some import controls by allowing seven trading houses to import the metal, driving a sharp jump in overseas buying despite a record import duty of 10 percent.
A surge rise in gold imports widened the trade deficit to an 18-month high of $14.25 billion in September, creating concerns for the new government of Prime Minister Narendra Modi, an unidentified Finance Ministry official told the Economic Times newspaper.
The ministry also sent a letter to the central bank seeking a review of the May relaxations, according to the report. But two officials familiar with the central bank's policies told on Monday it was not considering any change.
This article, also from the Economic Times of India appeared on their website at 7:47 p.m. EST on their Monday evening---17 hours before the previous Times of India article posted above. It's the final offering of the day from Manitoba reader U.M.---for which I thank her.
China's gold demand, as signified by off take from the Shanghai Gold Exchange, has reached "extraordinary" levels in recent days, while silver is growing shorter in supply as well, according to gold researcher and GATA consultant Koos Jansen.
Jansen's analysis is headlined "The Chinese Precious Metals Market is on Fire" and it was posted on the Singapore Internet site bullionstar.com at 11:07 p.m. local time on their Sunday evening. It's worth reading---and it's another gold-related item I found in a GATA release yesterday.
In his latest video update, Mike Maloney shows one of the most concerning data points for today's stock markets: decreasing volume. This is happening even while markets are levitated by Federal Reserve stimulus and negative interest rates.
After showing the volume action of the DOW, Maloney adds his thoughts: "This is not a healthy market. This means that less and less of the real investors are in there, and more and more of this is black box trading. The problem with that is that when the markets change every black box is going to be selling at once, so what is being set up here is probably the biggest market crash in history."
This 4:19 minute video clip by Mike was posted on the hiddensecretsofmoney.com Internet site on Tuesday---and I've been just too busy to get to it. It's definitely worth watching---and there's a transcript [with charts] as well.
Considering the global backdrop, I actually see a curious lack of extreme views (at least from the bear side). Instead, we’re at the stage of the cycle where even “bearish” pundits go out of their way to distance themselves from “the world is ending” prognosis. I guess I would be considered an extremist, though I don’t see the world ending anytime soon. But this week did offer further evidence that history’s greatest financial Bubble is at significant risk.
Friday’s rally did a lot to paper over what was a disturbing week for global markets. The mini-melt-up successfully took a great deal of value out of index and stock put options that expired Friday. Those wanting market protection will now have to pay up for expensive puts that expire in November, December or later.
But don’t let the S&P 500’s modest 1.0% decline fool you. It was an extraordinary week. Japan’s Nikkei index was hammered for 5.0%, increasing 2014 losses to 10.8%. Japanese two-year yields traded to a record low 0.005%. After beginning the week at 6.60%, Greek 10-year bond yields traded to 9% on Thursday (before closing the week at 8.07%). Wild instability returned to European debt (and equities) markets. Portugal’s 10-year yields were up 75 basis points by Thursday, before a rally cut the week’s increase to 35 bps. Germany’s DAX equities index dropped 2.87% on Wednesday then rallied 3.12% on Friday. Italian stocks sank 4.44% and then rallied 3.42%.
If only Bubbles lasted forever. And, unfortunately, the longer they persist and the bigger they inflate, the more problematic the unavoidable collapse. This important reality is ignored at everyone’s peril. Determination to avoid collapse only ensures greater and more precarious Bubble distortions and maladjustment. “World Braces as Deflation Tremors Hit Eurozone Bond Markets,” read another U.K. Telegraph headline. And Bullard and the global central bank community fret a “collapse in inflation expectations.” It is important to recognize that disinflation and collapsing “inflation expectations” are symptomatic of a bursting global financial Bubble. They provide early evidence of what will be a spectacular failure in experimental “activist” central banking.
Doug doesn't miss a thing in this week's edition of his Credit Bubble Bulletin, posted at the prudentbear.com Internet site yesterday evening. It certainly falls into the absolute must read category.
The first part of this interview runs for 3:33 minute---and is linked here. The second part of the video interview runs for 1:24 minutes---and it's linked here. You've heard some of this before, but some of it has been modified---and there's new material as well. I thank reader Harold Jacobsen for sending it our way.
Listen to Eric Sprott Share his Views on Ebola, the Economic Slump Around the World and the Disingenuousness in the Precious Metals Markets.
Jeff Rutherford interviews Eric for 15:17 minutes---and the audio commentary was posted on the sprottmoney.com Internet site yesterday. It's a must listen, especially the first part where discusses the current Ebola situation.
As a former member of the major media prior to its concentration in few hands by the Clinton regime, I have reported on many occasions that the Western media is a Ministry of Propaganda for Washington. In the article below one of the propagandists confesses. -Paul Craig Roberts
Published on Russia Insider News
“The CIA owns everyone of any significance in the major media.” — former CIA Director William Colby
Our Exclusive Interview with German Editor Turned CIA Whistleblower
Fascinating details emerge. Leading U.S.-funded think-tanks and German secret service are accessories. Attempted suppression by legal threats. Blackout in German media.
Repenting for collaborating with various agencies and organisations to manipulate the news, Ulkotte laments, “I’m ashamed I was part of it. Unfortunately I cannot reverse this.”
This absolute must read commentary showed up on the Paul Craig Roberts website on Thursday sometime---and my thanks go out to Roy Stephens for his first contribution of the day.
Newspapers were the first vehicle that mainstream media (MSM) used to manipulate Americans into war. The Spanish-American War (1898) was fought over Cuba, which had been a colony of Spain since 1511. By the 19th century, Cuba had become the world’s wealthiest colony and largest sugar producer, and its assets were coveted by the Illuminist cabal, which also wanted Spain neutered as a world power. National City Bank, then America’s preeminent bank, controlled the McKinley White House, loaned the government $200 million to fight the war, and took control of Cuba’s sugar industry afterwards (see Ferdinand Lundberg’s classic 1937 book, America’s Sixty Families).
To get young men to fight and die in Cuba for the banksters, it was necessary to persuade Americans – for the first time – that the U.S. military’s duty was not only self-defense, but “righting wrongs” overseas. It was before and during this war that the media honed a skill that would prove perennially useful: manufacturing fake atrocity stories.
The “Yellow Press,” as it was then appropriately called, was spearheaded by William Randolph Hearst’s New York Journal and Joseph Pulitzer’s New York World. Together they fabricated outlandish atrocity tales about Cuba, such as Spaniards roasting Catholic priests. On October 6, 1896, Hearst’s Journal carried this headline: “CUBANS FED TO SHARKS. Cries Heard at Night – They are Taken Outside the Harbor, and the Silent Ferryman Comes Back Alone.” Pulitzer’s World raved: “RAIDED A HOSPITAL– More than Forty Sick and Wounded Cubans Butchered.” But no hospital even existed in the region the World described.
Hearst’s reporters rarely ventured outside Havana’s bars. Some never even traveled beyond Florida, where they forwarded tales spun by Cuban émigrés. And some stories Hearst invented himself in New York.
I've read James Perloff's classic tome "The Shadows of Power: The Council on Foreign Relations and the American Decline." It's right up there with G. Edward Griffin's "The Creature From Jekyll Island: A Second Look at the Federal Reserve"---and if you haven't read these two books, it's not too late to correct that oversight. And, like the Paul Craig Roberts piece posted above, this falls into the absolute must read category as well. I thank South African reader B.V. for sending it our way last Sunday, but for content reasons, it had to wait for today.
Once in a blue moon officials commit truth in public, but the intrepid leader of Germany’s central bank has delivered a speech which let’s loose of three of them in a single go. Speaking at a conference in Riga, Latvia, Jens Weidmann put the kibosh on QE, low-flation and central bank interference in pricing of risky assets.
These days the Keynesian chorus in favor of policy activism is so boisterous that a succinct statement to the contrary rarely gets through—-especially at Rupert Murdoch’s Wall Street yarn factory. But here’s what penetrated even Brian Blackstone’s filters:
“The biggest bottleneck for growth in the euro area is not monetary policy, nor is it the lack of fiscal stimulus: it is the structural barriers that impede competition, innovation and productivity,” he said.
This commentary appeared on David Stockman's website on Wednesday---and I thank Mark Hancock for sharing it with us.
Several days ago we were confused why, out of the blue, a €1 billion loan BWIC appeared that was dumping German non-performing loans. After all, the whole point of the European "recovery" fable to date has been to deflect all the attention from the "pristine" German banks, up to an including world-record derivatives juggernaut Deutsche Bank, and to focus on Greece and other insolvent peripheral European nation. Earlier today, German Handelsblatt provided an answer, when it reported that "four German banks are on the brink", i.e., four banks of which three are known, HSH Nordbank, IKB and MunchenerHyp, will likely fail the ECB's stress test whose results are due to be announced next Friday.
Keep in mind that this is a significant fraction of the 24 German banks that are undergoing the ECB's Stress
farce test. So one wonders: if one in six German banks is so unsafe even the ECB (which kept Cypriot banks going well past their insolvency) will give them a black stamp (because in Europe failing a bank stress test is first of all impossible since both Bankia and Dexia passed theirs with flying colours, but more importantly a death sentence), what does that leave for the rest of Europe's banks, all of which are in far more dire shape than sleepy Germany?
This very interesting news item appeared on the Zero Hedge website at 11:05 a.m. EDT on Thursday morning---and it's the first offering of the day from Manitoba reader U.M.
Schwan recorded more than 600 hours of interviews with Kohl in a total of 105 conversations between March 12, 2001 and October 27, 2002. Even during his tenure in office, Kohl had ruminated over his place in history. He sees himself on a level with former German Chancellors Otto von Bismarck, Konrad Adenauer and Willy Brandt. He is probably justified in doing so.
In the Schwan conversations, Kohl's objective was to document his own view of the Kohl era -- they are an extremely valuable treasure for historians. And the tapes served as the basis for Kohl's three-volume memoirs, which were ghost-written by Schwan. The relationship between the two, however, has soured of late, with Kohl having sued Schwan for possession of the tapes, a spat which is likely to worsen with the release this week of Schwan's book about the interviews.
The interviews contain, at least in part, Kohl's "historic legacy," according to the December 2013 ruling of a Cologne court on the ownership of the tapes. And they add new facets to Kohl's image. They reveal him to be a man who views both his rivals and the world at large through the lens of a calculating machtpolitiker (power politician).
This long 4-part exposé appeared on the German website spiegel.de late Tuesday afternoon Europe time---and for content and length reasons, had to wait for today's column. It is, of course, courtesy of Roy Stephens.
After months of escalating tensions over Ukraine and talk of a new cold war, Russia and the West could soon reach a surprising rapprochement. The eurozone economy is suffering badly and sanctions against Russia are partly to blame. Winter is also upon us, and that reminds every-one Vladimir Putin still holds the cards when it comes to supplying gas.
The clincher, though, is that Ukraine is heading towards financial meltdown. Unless an extremely large bailout is delivered soon, there will be a default, sending shock waves through the global economy. That’s a risk nobody wants to take — least of all Washington, London or Berlin.
Sanctions against Russia were always going to hit western Europe hard. The eurozone did 12 times as much trade with Russia as the United States did last year — that’s one reason Washington’s attitude towards corralling Russia’s economy has been somewhat more gung-ho.
This article appeared on the spectator.co.uk Internet site on Friday---and it's another contribution from reader B.V.
Kiev and Moscow have failed to resolve their gas supplies dispute, Ukrainian President Petro Poroshenko said after meeting Russia’s leader. According to Putin, only an agreement for winter supplies has been reached, but details are still to be worked out.
“We agreed on the basic parameters of the gas contract,” Poroshenko told reporters in Milan where leaders from Europe and Asia gathered for the ASEM Summit. According to the Ukrainian president, the Ukrainian side is looking for sources of funding to pay off the arrears.
The optimistic statement came after Poroshenko met with Russian Energy Minister Aleksandr Novak and the head of Gazprom Aleksey Miller.
But emerging from a meeting Russia’s President Vladimir Putin later in the day, the Ukrainian leader said that no agreement had been reached. New talks have been scheduled for October 21; the E.U. is once again set to mediate the process.
This story showed up on the Russia Today website at 1:19 p.m. Moscow time on their Friday afternoon, which was 5:19 a.m. in New York. It's the second offering of the day from Roy Stephens.
The new law giving special status to troubled regions in eastern Ukraine is 'not perfect,' but might be used to finally stabilize the situation in the area, Russian President Vladimir Putin said after a meeting with his Ukrainian counterpart in Milan.
"Perhaps it's not a perfect document, but it's a step in the right direction, and we hope it will be used in complete resolution of security problems," Putin said after closed-door talks with Ukrainian President Petro Poroshenko on Friday.
The two presidents met in Milan privately on the sidelines of the Asia-Europe Meeting (ASEM), a summit of Asian and European leaders.
The document on special status for the Donetsk and Lugansk regions was signed by Poroshenko on Thursday.
This Russia Today news item was posted on their Internet site at 5:51 p.m. Moscow time yesterday afternoon---and it's another contribution from Roy Stephens.
Russian President Vladimir Putin said that the warring sides in Ukraine are not implementing the Minsk accords to the full extent.
“The landmark for Ukraine’s settlement must be the Minsk agreements,” Putin told reporters after the Asia-Europe Meeting summit. “Unfortunately, these agreements are not being implemented by the both sides, either by Novorossiya’s militias or by Ukraine’s representatives.”
The Russian president said that “the Minsk agreements are not being implemented to the full extent due to a number of reasons - objective and subjective.”
“I proceed from the fact that all the sides should work for putting these agreements into practice,” he said.
This news item, filed from Milan, appeared on the itar-tass.com Internet site at 10:15 p.m. Moscow time yesterday evening---and I thank Roy Stephens for sending it.
The current turmoil in Ukraine and the military conflicts in Georgia and the Caucasus are a direct result of the anti-Russian policy of the US administration, claims the former head of Russia’s Federal Security Service.
Nikolai Patrushev who headed the FSB from 1999 until 2008 said in an interview with the Russian government daily Rossiiskaya Gazeta that intelligence analysts established a current anti-Russian program being executed by American special services dates back to the 1970s, and is based on Zbigniew Brzezinski’s “strategy of weak spots”, the policy of turning the opponent’s potential problems into full scale crises.
“The CIA decided that the most vulnerable spot in our country was its economy. After making a detailed model US specialists established that the Soviet economy suffered from excessive dependency from energy exports. Then, they developed a strategy to provoke the financial and economic insolvency of the Soviet state through both a sharp fall in budget income and significant hike in expenditures due to problems organized from outside,” Patrushev told reporters.
The result was the fall in oil prices together with the arms race, the war in Afghanistan, and anti-government movements in Poland, all of which eventually led to the breakup of the Soviet Union, said the former Russian security chief. He stressed that each of these factors bore hallmarks of US influence.
The Russians have long memories for those who transgress against them---and they certainly haven't forgotten what happened to them under Ronald Reagan back in the 1980s. The piece I posted in yesterday's column headlined "How the Soviet Empire's Fall Was Engineered" is precisely what he's talking about in this Russia Today story. It was posted on their website at 1:06 p.m. Moscow time on their Thursday afternoon---and this article is courtesy of reader B.V.
Dear Readers, I now have for you the complete English transcript of Russian Foreign Minister Sergey Lavrov’s speech to the United Nations. Lavrov’s speech, together with President Putin’s remarks in his Serbian press conference (excerpts posted on this site) clearly indicate that the moral leader of the world is Russia, not Washington.
The Russians have come out of tyranny as America descends into tyranny. Washington’s barbarity in the world is unprecedented. For 13 years Americans have permitted their government to bomb women, children and village elders in seven countries based entirely on lies and the selfish interests of the ruling elite. Washington has spewed depleted uranium everywhere, causing massive birth defects and health problems. We must remember that Washington is the only government that dropped nuclear weapons on helpless civilian populations. The victims were Japanese when the Japanese government was trying to surrender.
Putin’s warning to the White House Fool that humanity’s existence requires that Obama “remember what consequences discord between major nuclear powers could bring for strategic stability” is a pointed demand that the White House Fool halt Washington’s aggression toward Russia. We have had enough, Putin said. We are a patient people, but we are running out of patience with your idiocy.
This is long, but definitely worth reading if you have the time. It was posted on Paul's Internet site yesterday---and once again it's Roy Stephens bringing this story to our attention.
U.S. officials have held direct talks for the first time with a Kurdish political party in Syria linked to Turkey’s PKK, seen by the U.S. and others as a terrorist organisation, the U.S. State Department said Thursday.
The talks with Syria’s Kurdish Democratic Union Party, known as the PYD, took place in Paris over the weekend and come as the U.S. seeks to build a wider coalition against the Islamic State group (IS).
“We have for some time had conversations through intermediaries with the PYD (Kurdish Democratic Union Party). We have engaged over the course of just last weekend with the PYD,” State Department spokeswoman Jen Psaki told a briefing.
The PYD has close ties to the PKK, a Turkish Kurdish party that waged a militant campaign for Kurdish rights and has threatened to abandon a peace process with Turkey in response to the current attack on the Syrian town of Kobane by IS militants.
This news story put in an appearance on the france24.com Internet site on Thursday sometime---and I thank Roy Stephens for another contribution to today's column.
Islamic State fighters have been driven out of Kobani, the Kurdish town that straddles the Syrian-Turkish border, after weeks of heavy fighting, according to Kurdish sources speaking to RT.
A Kurdish commander said that ISIS retreated overnight – withdrawing by 2 km east and 9 km west.
The Kurds are now clearing the city. The Islamists have left behind suicide bombers hiding in the ruins of the various buildings in the city.
"We can still hear sporadic gunfire and explosions coming from Kobani," RT's Murad Gazdiev reports from the Turkish-Syrian border.
However, a victory announcement from the Kurdish fighters is yet to be made because the whole of the city has not been secured.
This news item showed up on the Russia Today Internet site at 12:15 p.m. Moscow time on their Friday afternoon, which was 4:15 a.m. EDT. My thanks go out to Roy Stephens once again.
The influx of investment and people from China has become one of the defining narratives of Africa over the past two decades.
China, by all accounts, has identified Africa as the source of much-needed raw materials for its phenomenal growth, and Chinese business entrepreneurs see its sparsely populated interiors as a potential new frontier for manufactured goods.
This story of China in Africa has, however, largely been couched in government rhetoric and clouded by stereotypes.
Former New York Times Shanghai bureau chief Howard French attempts to lift the veil of secrecy that clouds many of the Chinese business dealings and give readers a glimpse of who the Chinese living and working in Africa really are.
This extremely interesting story is worth reading in my opinion. It was posted on the South African website Mail & Guardian on Friday, October 10---and I thank South African reader B.V. for sending it our way last Saturday.
The country's central bank will inject $32 billion into the country's banking system, according to The Wall Street Journal. The capital will go to 2o major and regional banks.
This is what the government refers to as "targeted easing," but many analysts say that these small jolts of stimulus will simply worsen China's mounting debt problems without solving the root of the issue.
"China’s debt problem lies with the corporate sector," wrote Societe Generale analyst Wei Yao in a recent note. "The cure should be capacity consolidation and debt restructuring, rather than another stimulus package targeted to boost investment demand."
This article showed up on the businessinsider.com website at 11:47 a.m. EDT on Friday morning---and it's the second-last contribution from Roy Stephens.
China and Russia are considering building a high-speed rail line thousands of kilometres from Moscow to Beijing that would cut the journey time from six days on the celebrated Trans-Siberian to two, Chinese media reported Friday.
The project would cost more than $230 billion and be over 7,000 kilometres (4,350 miles) long, the Beijing Times reported -- more than three times the world's current longest high-speed line, from the Chinese capital to the southern city of Guangzhou.
The railway would be a powerful physical symbol of the ties that bind Moscow and Beijing, whose political relationship has roots dating from the Soviet era and who often vote together on the U.N. Security Council.
I had a companion story to this in yesterday's column headlined "China to put Russia on fast track to high-speed rail"---and that dealt with the new rail line from Moscow to Kazan, with a comment about the Beijing/Moscow system. The above story is only about this huge project---and the Moscow/Kazan high-speed rail line is not even mentioned.
This AFP article appeared on the france24.com Internet site at 9:25 a.m. yesterday morning Europe time---and it's the final offering of the day from South African reader B.V., for which I thank him.
North Korean leader Kim Jong-eun's extended absence from public view opened a flood gate of rumors. It went from a military coup to broken ankles, with gout, diabetes and obesity also mentioned. International concern with Kim's absence was justified, given the immense power this 31-year-old leader inherited from his father, Kim Jong-il, who passed away in December 2011.
An objective assessment of Kim's dismal performance during the past two-and-one-half years is compelling: North Korea has become a more isolated and despised nation. The missile launches, nuclear test, threats of a pre-emptive nuclear attack, the brutal execution of his uncle, Jang Song-thaek, and the routine vitriol coming out of Pyongyang all contributed to North Korea's pariah status.
Thus the initial hope that this young leader would move North Korea in a more positive direction gave way to despair, when North Korea assumed a more strident and belligerent attitude; an attitude that alienated its leadership from all countries, including China. It would not have been unreasonable to assess that this period of failed leadership was the catalyst for a military coup by those seniors in North Korea who wanted to reverse this negative trajectory; who wanted North Korea to engage economically with the international community and have United Nations sanctions lifted. Indeed, it could have been those in North Korea who wanted to re-establish North Korea's special relationship with a China that provides North Korea with the crude oil, aviation fuel and food aid necessary for the well-being of the country.
This commentary showed up on the Hong Kong website Asia Times site on Friday---and it's the final offering of the day from Roy Stephens, for which I thank him on your behalf.
Intercontinental Exchange Inc., the London Metal Exchange, and CME Group Inc. and Thomson Reuters Corp. are among firms shortlisted to develop and run a replacement for the century-old London gold fixing benchmark.
Autilla Ltd. (Sapient) and EBS are also on the short list, the London Bullion Market Association said in a statement today. Ten companies submitted eight proposals, some of them joint.
The LBMA, which said last week firms will present at a seminar on Oct. 24, expects a market consensus to emerge next month and the chosen method adopted by year-end or early 2015.
The 'fix' will still be in no matter who runs it---and it certainly won't be any more transparent than it already is. This Bloomberg story, filed from London, appeared on their website at 10:13 a.m. Denver time yesterday morning---and I found it embedded in a GATA release.
The London Bullion Market Association (LBMA) said on Thursday it appointed Morgan Stanley as a market maker, underscoring the ambitions of some banks to expand into precious metals trading while others exit due to stringent regulations.
LBMA said it named Morgan Stanley & Co International Plc, a unit of U.S. investment bank Morgan Stanley, as a spot and options market-making member effective Thursday.
Currently, LBMA has 13 market makers which serve in either one, two or all three of the spot, options and forwards markets. They make markets by quoting two-way prices in both gold and silver products to other market makers.
Just three weeks ago, LBMA named Citigroup as a spot market-making member.
It's a very safe bet that Morgan Stanley and Citigroup are two of the big gold and silver shorts on the Comex---and handily fall into the 'Big 4' or 'Big 8' Commercial trader category. They've always been there, but not as market makers. I found this Reuters story, which was filed from New York yesterday, on the mineweb.com Internet site in the wee hours of this morning.
Fresh from a court win in Britain, the London Metal Exchange now faces one of its biggest hurdles yet in its years-long crisis over its warehousing policy that consumers say has inflated prices: convincing U.S. lawmakers its reforms are enough.
When Britain's Court of Appeal handed a victory to the LME last week, knocking out a challenge to the reforms by Russian aluminum giant Rusal last week, the LME's head of business development, Matt Chamberlain, was in Washington, a source familiar with the matter said.
Chamberlain was there to plead the exchange's case with lawmakers who have been pushing for even greater change to the LME's warehouse policy.
Senator Sherrod Brown was among the people the LME visited, a spokeswoman for the Senator said. The Ohio Democrat has been a fierce critic of the LME, urging U.S. regulators to crack down on the 137-year old exchange, and threatening to write rules that would compel regulators to intensify oversight of the exchange on U.S. turf.
This Reuters news item, filed from New York, showed up on the mineweb.com Internet site on Friday sometime---and it's courtesy of Manitoba reader U.M.
Investors are unlikely to rush back into platinum any time soon after a minimal price reaction to its biggest-ever supply shock highlighted a major problem: no-one knows how much metal exists above ground or more importantly who holds it.
Analysts predicted a surging market as a record five-month labour stoppage in top producer South Africa wiped out more than one million ounces of output worth $1.28 billion.
Yet platinum, used mostly in automotive catalytic converters which clean up exhaust emissions, also failed to react to a 2.4 million ounce accumulation of metal into exchange-traded funds since 2010. The metal has lost seven percent this year and now sits close to 2009 levels around $1,200 an ounce.
Well, dear reader, I'd like to remind you of the two earlier stories in today's column about 'media lies and fabrications'---and I'd just like you to keep that it mind when you read this Reuters piece, filed from London yesterday---and posted on the mineweb.com Internet site. It's the second offering in a row from reader U.M.
We believe that the “Save Our Swiss Gold” campaign has the potential to be a game changer in the gold market - both in terms of the ramifications for the current global monetary system and in terms of higher gold prices.
There has been a lack of coverage of this important story and there is therefore a lack of awareness about the possible implications for the gold market. Thus, in the weeks prior to the referendum on November 30th, we are going to analyse the referendum, the important context to the referendum and the ramifications of a yes or a no vote. - Mark O’Byrne, Head of Research, GoldCore
Here's another longish commentary on what the ramifications of a 'yes' vote in Switzerland will have on the gold market. It's certainly worth reading if you have the time---and it was posted on the goldcore.com Internet site yesterday. I thank reader M.A. for sending it along.
This 40:15 minute interview conducted by John Ward appeared on the physicalgoldfund.com Internet site---and I thank Harold Jacobsen for sharing it with us. But if you go through the list of topics being discussed, you'll see a lot of familiar themes, which I'm sure he's updated based on current events.
I haven't listened to it yet, but it will be on my "to do" list for today or tomorrow.
Growth in gold mine output from number one producer China is set to slow significantly in coming years in the face of declining ore grades and waning profitability, analysts Business Monitor International said on Friday.
Lower mine production will pave the way for rising imports to meet persistent strength in demand from Chinese consumers, BMI analyst Xinying Chia said, while domestic mining companies will also look overseas to boost production.
In an interview with the Reuters Global Gold Forum, Hong Kong-based Chia said Chinese mine output growth was expected to slide to 0.9 percent in 2018, from around 6 percent this year.
"Many domestic miners are grappling with the problems of depleting reserves, falling ore grades and rising cash costs," Chia said.
This Reuters article, filed from London, appeared on their Internet site at 8:28 a.m. EDT on Friday---and it's another article I found posted on the gata.org Internet site.
Fear is stalking the global stock markets. Stock indices have been falling back sharply seeing a move to what might be seemed safer assets like bonds and gold. The falls have been precipitated by some poor economic data suggesting that most major economies are not out of the recessionary mire yet and, in the U.S. in particular, the realisation that the Fed is getting down to near eliminating its latest Quantitative Easing programme in total, although there may be some succour in that it tends to be putting back the day that it may allow interest rates to rise. And what happens in the U.S. markets tends to have a strong follow-through impact on markets in other parts of the world.
A number of pundits have been predicting a stock market crash for some time now. The investing public though, just as it has in the past ahead of previous stock price crashes, has ignored this, seeing the market as an ever-increasing money-making mechanism. Thus the world’s major stock indices have been on a tear moving higher and higher without there being anything serious in the way of increasing corporate profits to support this. Suddenly it could all come crashing down – that’s what has happened in the past. While the Dow, S&P, TSX, FTSE, DAX etc. are not yet in free fall they are beginning to look like they could be heading that way.
So, should one buy gold as the safe haven it has proven to be in the past. Inflation – which is generally assumed to be gold-positive – just has not happened despite the vast amounts of liquidity the U.S. Fed and other central banks have pumped into the markets. Indeed much of the talk now is about the increasing possibility of deflation. What most don’t realise is that gold performs just as well, if not better, in a deflationary environment vis-a-vis the stock markets than it does in an inflationary scenario.
This commentary by Lawrence Williams showed up on the mineweb.com Internet site on Friday---and my thanks go out to Manitoba reader U.M. for her final offering in today's column.
As yet another fed speaker takes the jawboning lectern yesterday, it is becomingly increasingly clear that The Fed truly has only one mandate - to keep stocks up. While claiming to be "data-dependent", which judging by the general trend of government-supplied data (and President Obama), things are going great; Jim Bullard joins his intervention-prone colleague Williams.
This short commentary appeared on the Zero Hedge website at 10:29 a.m. EDT yesterday---and it's courtesy of Manitoba reader U.M. A more in-depth story on this appeared on the newsmax.com Internet site at 12:39 p.m. EDT yesterday afternoon. It's headlined "Bullard: Fed Should Consider Delay in Ending Q.E."---and I thank West Virginia reader Elliot Simon for sending it.
Adam Parker, chief equity strategist at Morgan Stanley, doesn't see the stock market correction going much further, if at all.
The reason: third-quarter profits.
"I'm focused on the corporate earnings," he tells CNBC. "I think that generally you're going see earnings grow year over year, and I don't think the S&P 500 really ever goes down 10 percent unless people are afraid of that."
The index has slid 7.8 percent from its Sept. 19 record high, closing Wednesday at 1,862.49.
"I'm trying to keep my eye on the ball here and say, 'Guys, calm down,'" Parker notes. "Earnings are growing. There are buybacks. There is a dividend. We have a good set of companies here."
Well, it's only the bottom if the Plunge Protection Team has decided that Wednesday's low print at 1:30 p.m. EDT was indeed it. This article showed up on the moneynews.com Internet site at 8:46 a.m. EDT on Thursday---and it's the second story of the day from Elliot Simon.
It’s anecdotal evidence, but it’s everywhere in San Francisco and Silicon Valley. A neighbor was cooling her heels by the curb, suitcase next to her. She’s going to Europe on a “vacation-thing,” organized and paid for by her company, she told me. A team-building perk. She’s a coder at a startup, her first job out of college. When she moved in less than two years ago, trucks kept pulling up to deliver her latest acquisitions. One day, she gingerly parked a new BMW in the garage. As we were chatting about her trip to Europe, a limo pulled up for her ride to the airport. That too was part of the perk. No expenses will be spared.
This startup occupies super-expensive San Francisco office space that’s way too big for the number of employees. It’s embellished with designer furniture. Free lunches are de rigueur. All paid for with the boundless money it is getting from investors.
But who cares, except for a few wayward souls in the venture capital [VC] community who lament those sizzling burn rates. Bill Gurley, partner at Benchmark, had stepped to the forefront a few weeks ago to warn that “the average burn rate at the average venture-backed company” is at an “all-time high since ‘99 and maybe in many industries higher than in ‘99”.
Marc Andreessen, founder of long-forgotten Netscape, then warned in a series of tweets: “When the market turns, and it will turn, we will find out who has been swimming without trunks on. Many high burn rate companies will VAPORIZE.” His final and most eloquent tweet: “Worry.”
Some other VCs chimed in when they had a minute, in between throwing even more cash at these companies to drive their valuations ever deeper into the stratosphere: in the first half, they’d thrown $15.6 billion at them in later-stage financing rounds, The Wall Street Journal reported, on track to break the record of $28.4 billion set in 2000, the year of peak craziness as the whole scheme was already collapsing.
This essay is definitely worth reading---and the embedded chart is not to be missed. It was posted on the wolfstreet.com Internet site back on Thursday, October 9---and my thanks go out to Mark Hancock for bringing it to our attention.
And to think it was only yesterday when The Wall Street Journal unleashed this epic puff piece about HFT shop Hudson Trading with the following bulls hit:
In their minds, they are making the markets more efficient through their trading... Critics of high-frequency trading are not likely to be easily won over, however. It’s going to take a lot of frank discussions between firms like Hudson River Trading and the market commentators who see them as parasites.
Sadly, what makes it complicated is that they are parasites, the only question if they are law-abiding parasites or criminal parasites. Enter the daily exhibit of yet another HFT firm busted for rigging everything it touches.
Today's culprit: Athena Capital, which did what every other algorithmic, HFT firm does - rig the market of course, but at least it had a sense of humor about it: Athena called the market-rigging algorithm that "manipulated the closing prices of tens of thousands of stocks during the final seconds of almost every trading day during the Relevant Period" by the very amusing name "Gravy." But remember: HFTs are really your friend - they just provide liquidity and stuff.
Why should anything surprise us anymore? This longish article appeared on the Zero Hedge website at 2:12 p.m. EDT yesterday---and I thank Elliot Simon for his third offering of the day.
The Fed claims that signs of economic stress are very low, but savvy investors feel otherwise. With geopolitical unrest expanding and central banks doing the opposite of the right things, is a currency crisis barreling toward us? See what Mish Shedlock had to say about the state of world finance at the 2014 Casey Research Summit.
Mish's 31:27 minute presentation at the Summit was posted in the clear over at the caseyresearch.com Internet site yesterday---and it's worth watching if you have the time.
Is it just my imagination or is there a global oil war underway pitting the United States and Saudi Arabia on one side against Russia and Iran on the other? One can’t say for sure whether the American-Saudi oil alliance is deliberate or a coincidence of interests, but, if it is explicit, then clearly we’re trying to do to President Vladimir Putin of Russia and Iran’s supreme leader, Ayatollah Ali Khamenei, exactly what the Americans and Saudis did to the last leaders of the Soviet Union: pump them to death — bankrupt them by bringing down the price of oil to levels below what both Moscow and Tehran need to finance their budgets.
Think about this: four oil producers — Libya, Iraq, Nigeria and Syria — are in turmoil today, and Iran is hobbled by sanctions. Ten years ago, such news would have sent oil prices soaring. But today, the opposite is happening. Global crude oil prices have been falling for weeks, now resting around $88 — after a long stretch at $105 to $110 a barrel.
The price drop is the result of economic slowdowns in Europe and China, combined with the United States becoming one of the world’s biggest oil producers — thanks to new technologies enabling the extraction of large amounts of “tight oil” from shale — combined with America starting to make exceptions and allowing some of its newfound oil products to be exported, combined with Saudi Arabia refusing to cut back its production to keep prices higher, but choosing instead to maintain its market share against other OPEC producers. The net result has been to make life difficult for Russia and Iran, at a time when Saudi Arabia and America are confronting both of them in a proxy war in Syria. This is business, but it also has the feel of war by other means: oil.
The Russians have noticed. How could they not? They’ve seen this play before. The Russian newspaper Pravda published an article on April 3 with the headline, “Obama Wants Saudi Arabia to Destroy Russian Economy.” It said: “There is a precedent [for] such joint action that caused the collapse of the U.S.S.R. In 1985, the Kingdom dramatically increased oil production from 2 million to 10 million barrels per day, dropping the price from $32 to $10 per barrel. [The] U.S.S.R. began selling some batches at an even lower price, about $6 per barrel. Saudi Arabia [did not lose] anything, because when prices fell by 3.5 times [Saudi] production increased fivefold. The planned economy of the Soviet Union was not able to cope with falling export revenues, and this was one of the reasons for the collapse of the U.S.S.R.”
Like Ted Butler mentioned in yesterday's column, oil prices are being engineered lower by JPMorgan et al, just like what's happening in the four precious metals, plus copper. But having said that, this absolute must read op-ed commentary appeared on The New York Times website on Tuesday sometime---and I thank reader Jim Skinner for sending it our way.
Some 19 British firms are at the center of an investigation into in a mammoth global money-laundering operation. The scheme was allegedly contrived to make $20bn (£12.5bn) worth of ill-gotten gains appear legitimate.
The illicit funds are thought to have originated from criminal gangs and corrupt officials across the globe, attempting to make their dirty money appear 'clean' so it can be spent free of suspicion.
An investigation carried out by The Independent and UK NGO the Organised Crime and Corruption Reporting Project (OCCRP) uncovered a complex international web of companies, which are implicated in the scheme. As part of the probe, a minimum of 19 UK firms are currently under investigation, it emerged on Thursday.
The criminal operation highlights how Britain’s lax regulatory architecture has made the UK a particularly alluring destination for global organized crime syndicates looking to launder ill-gotten gains. Because directors of British firms are afforded a high degree of financial secrecy under UK law, the identities of the scam's primary architects are extremely difficult to determine.
This news item was posted on the Russia Today website at 3:48 p.m. Moscow time yesterday---and I thank Harry Grant for his first offering in today's column.
A few years ago, Belgium famously went 589 days without a government. Its new ruling coalition, which includes Flemish separatists and alleged far-right sympathizers, will do well to last that long.
On Tuesday, Belgium's new prime minister faced a turbulent first day in parliament as opposition lawmakers hijacked his policy speech, demanding that he explain the attitude of two ministers towards wartime collaboration with Nazi occupiers.
Chaos erupted as Charles Michel, the 38-year-old French-speaking PM, dodged repeated questions about the behaviour of the two Flemish nationalist ministers in his new centre-right coalition, which was sworn in last Saturday.
One of them, the country’s new interior minister, Jan Jambon, had appeared to justify collaboration with Nazi occupiers during World War II in an interview published on Monday by French-speaking daily La Libre Belgique.
“Collaboration was a mistake, but those who collaborated with Germany had their reasons,” Jambon was quoted as saying.
This very interesting article showed up on the france24.com Internet site on Wednesday---and I thank Roy Stephens for sharing it with us.
Switzerland has reduced its economic growth forecasts on the back of the declining performance of its main trading partners in Europe, most notably Germany. Gross domestic product (GDP) is now tipped to expand 1.8% this year, rather than 2%.
The State Secretariat for Economic Affairs (SECO) has also cut GDP growth predictions to 2.4% for 2015, down from the 2.6% it forecast earlier this year. But SECO warned that changes to the way it calculates growth make a direct comparison between these figures difficult.
“In light of the dampened short-term economic outlook for the euro region, including Germany, the conditions deteriorated compared with the last forecasts in June,” SECO said in a statement.
“Even six years after the outbreak of the global financial crisis, the global economic recovery remains fragile and prone to many risks. A sweeping, broadly based improvement in the international economic situation is still not in sight. As uneven global recovery continues, there is no uniform picture in terms of country and region.”
This news item appeared on the swissinfo.ch Internet site at 2:21 p.m. Europe time yesterday afternoon---and I thank South African reader B.V. for his first contribution of the day.
Moscow will reduce gas supplies if Kiev starts siphoning deliveries destined for Europe, said Russia’s President Vladimir Putin during a visit to Serbia.
“There are large transit risks. If we see that our Ukrainian partners start illegally taking our gas from the export pipeline as it was in 2008, we will equally reduce the amount of supply as happened in 2008,” warned Putin on Thursday at a news conference in Belgrade, stressing he was "hopeful" it would not come to that.
However, the Russian president pledged that Moscow will supply enough gas to Europe this winter.
"I can tell you for sure, and I am saying with absolute responsibility, there will be no crisis in Europe due to the fault of Russian participants in energy cooperation," Putin stressed. "Russia has always been a reliable supplier, we have enough resources."
This news story appeared on the Russia Today website at 2:15 p.m. Moscow time on their Thursday afternoon, which was 6:15 a.m. EDT in New York---and it's the second contribution in a row from Roy Stephens.
Russian Defense Minister Sergei Shoigu expressed concern on Thursday about a recent statement by U.S. Defense Secretary Chuck Hagel outlining the need to prepare U.S. troops for the fight against the Russian army "on the NATO's doorstep."
Hagel said in his keynote address to the Association of the U.S. Army that the U.S. troops must be prepared to deal with Russia "with its modern and capable army on NATO's doorstep".
"This statement leads us to believe that Pentagon is working on scenarios of military action near the borders of our country," Shoigu told reporters in Moscow.
"Instead of fueling tensions, we need to encourage a candid dialogue on all issues on the agenda of our relations with Western partners," Shoigu noted, adding that "this is the only way to find mutually acceptable solutions aimed at keeping the existing balance of forces and strengthening strategic stability".
This news item was posted on the RIA Novosti website at 7:30 p.m. EDT Moscow time yesterday---and it's the first contribution of the day from Roy Stephens.
In March 1999 I was privileged to hear from John Browne, Margaret Thatcher's Foreign Policy Advisor the story of how a plan was developed to end the Soviet Empire.
Browne said the key individuals in this were President Reagan, Bill Casey of the CIA, Thatcher, Browne and the Pope. Reagan thought differently than previous presidents and the State Department, who thought just containing and living with the Soviets was the best policy. Reagan wanted to actively topple them.
Remember the 2nd prong in bankrupting the Soviets, reducing their Foreign Exchange income? The first step on that was to determine where the Soviets income mostly came from. It turned out to be Oil and Gold. Then Browne said that this is where the CIA came in, they in a very sophisticated manner went around the world and manipulated markets to drive down the price of both Oil and Gold. Remember where Oil and Gold were when Reagan took over? They were in the neighborhood of $30 a barrel and $500 an ounce. Both fell dramatically under Reagan. As Browne made this and other points I would look across the patio and look at Mrs. Casey and Al Haig and both would be nodding in agreement with Browne's points.
The conclusion of the speech was that it worked, and the Soviets ran out of money and fell.
There are people who believe that the American government is today manipulating the price of gold downward for their own purposes. I do not know if this is true, however I do know they have the capability to do so as they did it in the 1980s to bankrupt the Soviets.
One of the incredible things about this story is that it was written on August 17, 2001---that's 13 years ago. It was this essay that sent me in search of what happened to Canada's gold---and my rather lengthy tome: "When Irish Eyes are Smiling: The Story of Canada's Gold?" was the result. This story by Dana Allen is one I posted in The Wrap section of last Saturday's column, but I though it important enough to drag it out and stick it in today's Critical Reads section. If you haven't read it, it's probably the most important article in today's column---and falls into the absolute must read category. It's posted on GATA Chairman Bill Murphy's website lemetropolecafe.com.
The European Commission says it's standing ready to give Greece whatever support it needs and that it doesn't want a hasty end to the bailout program, according to Reuters.
"Europe will continue to assist Greece in whatever way is necessary," a spokesman for the Commission said.
The Financial Times also reports that the European Central Bank will extend another €10 billion in liquidity to Greece's banks, which have been hit hard as the Athens Stock Exchange crashes — it's down 1.74% Thursday and more than 25% since the start of the year.
Just days ago, the Greek government planned to exit its bailout a year early. Not only does that now seem completely impossible, but it looks as if the existing level of support might not even be enough.
This article appeared on the businessinsider.com Internet site at 7:08 a.m. EDT on Thursday morning---and if the story doesn't interest you, then you should at least look at the embedded chart. I thank reader Harry Grant for finding it for us.
Istanbul’s Crystal Tower is a 35- story symbol of diverging fortunes.
Due for completion next year, the 303 million-euro ($383 million) glass diamond-shaped skyscraper will be the headquarters of Finansbank AS in the biggest city of a country whose economy has more than doubled in the past decade. For the Turkish bank’s Greek owner, National Bank of Greece SA, it reflects what might have been.
The purchase of Finansbank eight years ago was a rare success in Greece’s drive to make its banks supreme in southeast Europe, while also forging ties between two traditional enemies. Now, National Bank faces the prospect of selling almost half the lender on the cheap to satisfy European banking rules after receiving state aid during a debt crisis triggered in Athens.
“The acquisition paved the way, at least on paper, for the creation of a major banking group in southeastern Europe,” said Wolfango Piccoli, managing director at Teneo Intelligence in London. “It was the first major Greek-Turkish deal at a time when the improvement in the relationship between Athens and Ankara was still not an easy sell in Turkey.”
This very interesting article put in an appearance on the Greek website ekathimerini.com at 12:01 p.m. Europe time on Wednesday---and it's the third contribution of the day from Harry Grant, for which I thank him.
A planned $10 billion Russian high-speed rail system is a key project covered under the strengthened cooperation that Russia and China agreed to Monday.
The China Railway Construction Corp., rail car manufacturer CSR and other government-owned Chinese companies will help link Moscow to Kazan, about 770 km east of the capital. With a maximum speed of 400 kph, this would be Russia's first high-speed rail system. The plan is to begin operations in 2018 before the World Cup soccer tournament.
The Chinese side will not only help build tracks and stations as well as provide cutting-edge tech in rail cars and related systems, but also offer low-interest loans to finance the construction.
"We will work to build a high-speed transportation network to connect Beijing and Moscow," Chinese Premier Li Keqiang said.
This interesting story appeared on the asia.nikkei.com Internet site at 3:49 p.m. Japan Standard Time [JST] on their Wednesday afternoon---and it's the final offering of the day from Roy Stephens.
Canada’s diamond output could more than double in the next four years, underpinned by De Beers Canada and Mountain Province Diamonds’ Gahcho Kué project, in Canada’s Northwest Territories, and Stornoway Diamond Corp’s Renard project, in Quebec – with both projects now in the construction phase – an independent industry analyst and consultant has said.
Paul Zimnisky on Tuesday said Canada currently accounted for about 14.2% of global diamond production in value, and 8.7% in carat volume. The two new mines, set to start production in 2016/17, would probably boost Canada's global market share to 25.2% in value, and 15.1% in volume by 2018.
This would give Canada the highest compound annual production growth rate – 20.2% in value and 17.4% in volume – among the world's top eight largest diamond-producing nations over the next four years.
This interesting article appeared on the miningweekly.com Internet site on Wednesday---and even if you're not interested in the story itself, the headline photo is worth the trip. It's another offering from reader B.V.
The London Metal Exchange, owned by Hong Kong Exchanges and Clearing Ltd, will take charge of London's platinum and palladium pricing, also known as "fixes", from Dec. 1, replacing a teleconference with an electronic platform.
The unexpected move marks a stunning comeback for the LME, which failed to secure administration of the century-old London silver price benchmark - the first to go electronic in a wave of reform for precious metals pricing procedures.
It also puts the world's biggest metals marketplace back in contention to take over the much larger gold benchmark.
"We built (our electronic platform) primarily to participate platinum and palladium but the gold fixing process is very similar, so what we said is that if the market would like to use (it) for gold as well then we are very happy to discuss that," the LME Head of Business Development Matthew Chamberlain said in a phone interview with Reuters.
Needless to say, I'm underwhelmed by this news, dear reader. The Reuters article, co-filed from Singapore and London, showed up on the mineweb.com Internet site yesterday---and it's another contribution to today's column from reader U.M.
It’s been 3,279 days since a hurricane hit Florida. As hurricane season comes to a close next month, only Mother Nature knows how long the streak will last.
Like many Floridians, we stayed home and rode out a hurricane—once! We’d built a home on Perdido Key, a barrier island west of Pensacola. It was engineered to withstand 150-plus mph winds, and it was a beautiful home with a master bedroom spanning the entire third floor, looking out across the Gulf of Mexico.
Hurricane Danny hit the Gulf shortly after we moved in. It was a fast-moving Category I with winds gusting in the 75-80 mph range. Full of confidence and a bit curious, we decided to hunker down and ride it out. At the speed it was traveling, it should have been over in a matter of hours. Then, Danny caught everyone by surprise and stalled in Mobile Bay, pounding us for three days.
We tried to get some sleep in our bedroom, but we could feel the house move with each gust of wind. We moved downstairs to the guest room, but sleep was impossible as the wind howled, making sounds we’d never heard before. We watched bits and pieces of our neighbor’s tile roof fly off and smash a few feet from our house. We were trapped and terrified for three days. Never again! It took months for our island recover.
This very interesting commentary from Dennis Miller, was posted on the millersmoney.com Internet site yesterday. It's certainly worth reading if you have the time.
Gold jewellery sales doubled on the occasion of the Gurupushya Nakshatra, one of the most auspicious occasions celebrated largely in the western Indian states. Jewellery retailers attracted customers through massive discount on making charges. While the occasion is celebrated every year on Thursday ahead of Diwali, this year the significance was unique as the day coincided with the stars coming together making thereby, the most sacred day for owning a piece of gold.
"We marketed today's occasion differently this year. In all our advertisements, we mentioned that all lucky stars are coming together on Thursday after 95 years. Such occasion will come next only after 70 years in 2085 and hence, giving the rarest of the rare lifetime opportunity for consumers to own a piece of gold. Therefore, all our 14 retail stores are witnessing a bumper sale with an estimate to achieve at least 100% growth on Thursday," said R K Sharma, chief executive officer of Delhi based P C Jewellers (PCJ).
In a complete shift of perennial mode of business through usual means of advertisements and event sponsorships, jewellery retailers have identified celebrations of different geographies to boost sales. Jewellery retailers have picked up dozens of region specific celebrations with religious connection to focus on marketing accordingly. Similar to Akshaya Tritiya celebrated in the South, jewellers have picked up Gurupushya Nakshatra in the west which is largely celebrated in Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh etc.
This gold-related story appeared on the bullionbulletin.in website yesterday sometime---and I thank reader U.M. for sharing it with us.
THE big news of the week, which went unnoticed by the mainstream media, was the launch of the new gold kilogram bar contract by the Singapore Exchange. The new Singapore Kilobar Gold contract is for 25kg of 99.99% pure gold and began trading on the Singapore Exchange on Monday, introducing centralised trading and clearing of a physically delivered gold contract in Singapore.
The contract is the result of collaboration between International Enterprise Singapore, the Singapore Bullion Market Association, the Singapore Exchange and the World Gold Council.
Asia’s incessant demand for physical gold is the biggest driver for the implementation of a new gold contract trade on the Singapore Exchange. The move comes after the Singapore government in 2012 exempted investment in precious metals from a 7% goods and services levy.
Meanwhile, the Shanghai Gold Exchange was launched in September inside the city’s free-trade zone, offering yuan-denominated contracts backed by gold held in Shanghai. Furthermore, the recent rally in the dollar is unjustified by the economic fundamentals and will not be sustainable in the long term. Gold, therefore, remains a crucial portfolio diversifier for the potential dangers ahead.
Here's another gold-related story from the bullionbulletin.com Internet site yesterday---and it's another offering from Manitoba reader M.A.
Gold smuggling into India, the world's second-biggest consumer of the precious metal, is becoming more risky for couriers following a surge in seizures and less profitable for the gangs behind the practice.
After being caught off guard by a jump in smuggling on the back of a hike in import duty last year, government agencies have stepped up seizures to the extent that couriers are demanding more money to carry in gold, according to customs intelligence officials and an industry analyst.
At the same time, a drop in the gap between local and global prices also means there is less profit to be made by smuggling in gold, giving banks more business and higher revenue for a government struggling to rein in a fiscal deficit.
"Gold smuggling was highly profitable ... but now with the drop in premiums and tight security, legal imports are increasing," said Milind Lanjewar, additional commissioner of customs intelligence at Mumbai international airport.
This Reuters article, filed from Mumbai, showed up on their website at 5:16 a.m. IST on their Friday morning---and I thank Manitoba reader U.M. for her final contribution to today's column.
It wasn’t very long ago that the dread hovering over global financial markets was that things were getting too calm. Just this summer, Federal Reserve officials were fretting over markets being so stable that it might create complacency, and we were writing about a global boom in asset prices.
Even if many Americans don’t fully realize it yet—though an unnerving drop in a wide range of global markets Wednesday may have gotten our collective attention—the autumn has brought a rather darker set of worries with a series of dives in financial markets across the globe.
On Wednesday alone, the Standard & Poor's 500 briefly fell into negative territory for the year and the interest rate investors were willing to accept on 10 year U.S. Treasury bonds edged below 2 percent for the first time since June 2013. (As of late morning, the S&P was down 1.4 percent for the day and narrowly up for the year, and the 10 year Treasury bond was back up to 2.05 percent).
But those moves underlie a bigger story: Many crucial indicators in markets for international bonds, currency and commodities are pointing toward a heightened risk of a worldwide economic slowdown that may be beyond the ability of policy makers to halt. It would inevitably have ripple effects even on the relatively strong American economy.
This commentary/opinion piece was posted on The New York Times website yesterday sometime---and I thank Phil Barlett for today's first news item.
The global financial markets are dangerously stretched and may unwind with shock force as liquidity dries up, the Bank of International Settlements has warned.
Guy Debelle, head of the BIS’s market committee, said investors have become far too complacent, wrongly believing that central banks can protect them, many staking bets that are bound to “blow up” as the first sign of stress.
In a speech in Sydney, Mr Debelle said: “The sell-off, particularly in fixed income, could be relatively violent when it comes. There are a number of investors buying assets on the presumption of a level of liquidity which is not there. This is not evident when positions are being put on, but will become readily apparent when investors attempt to exit their positions.
“The exits tend to get jammed unexpectedly and rapidly.”
This commentary by Ambrose Evans-Pritchard appeared on the telegraph.co.uk Internet site at 9:00 p.m. BST on their Tuesday evening---and I thank Roy Stephens for his first contribution of the day.
Combined tightening by the United States and China has done its worst. Global liquidity is evaporating.
What looked liked a gentle tap on the brakes by the two monetary superpowers has proved too much for a fragile world economy, still locked in "secular stagnation". The latest investor survey by Bank of America shows that fund managers no longer believe the European Central Bank will step into the breach with quantitative easing of its own, at least on a worthwhile scale.
Markets are suddenly prey to the disturbing thought that the five-and-a-half year expansion since the Lehman crisis may already be over, before Europe has regained its prior level of output. That is the chief reason why the price of Brent crude has crashed by 25pc since June. It is why yields on 10-year US Treasuries have fallen to 1.96pc, and why German Bunds are pricing in perma-slump at historic lows of 0.81pc this week.
We will find out soon whether or not this a replay of 1937 when the authorities drained stimulus too early, and set off the second leg of the Great Depression.
This is the second commentary in a row from Ambrose, but this one showed up on The Telegraph's website at 9:36 p.m. BST yesterday evening---and I found it embedded in a GATA release. It's definitely worth reading.
Bank of America Corp said on Wednesday that it has moved past the worst of its legal settlements linked to the financial crisis, after its latest big legal charge brought the bank's common shareholders a net loss for the third quarter.
Since 2010, the second-largest U.S. bank has agreed to pay at least $70 billion to resolve disputes linked to home loans, mortgage bonds and other problems stemming from before and during the crisis.
In the most recent settlement, the bank paid $16.65 billion to resolve Department of Justice charges that it misled investors in its mortgage bonds. Money was already set aside to cover most of that, but the bank took a $5.6 billion charge in the third quarter to cover the rest.
"The DoJ settlement from everything we can see was the most significant matter that’s out there," Chief Financial Officer Bruce Thompson told reporters, signaling that investors can stop fearing outsized legal settlements every quarter.
This Reuters story appeared on their website at 2:40 p.m. EDT on Wednesday afternoon---and I thank West Virginia reader Elliot Simon for sharing it with us.
Once upon a time banks made money in one of two ways: either by borrowing short and lending long, aka the conventional banking way, or through investment banking, which includes advisory, underwriting and trading with the backstop of billions in deposits, aka the proto-hedge fund way.
Then things changed.
How does this nearly $30 billion in legal "add-backs" over the past three years compared to the so-called Net Income Bank of America generated over the same time period?
Between Q4 2011 and Q3 2014 Bank of America produced "Net Income" of $15.9 billion. However, the amount of added back "one-time, non-recurring" legal expenses is a stunning $28.9 billion: two of every three dollars, non-GAAP as they may be, comes from Bank of America engaging in criminal activity... and that's just the stuff it got caught for.
So perhaps an even more relevant question than how long will the EPS "add-back" bulls hit continue, is how long will the regulators and enforcers allow Bank of America to exist as an organization for which two-thirds of its "ordinary course business" is, for lack of a better word, crime?
Ditto for JPMorgan. This must read article appeared on the Zero Hedge Internet site at 7:11 p.m. EDT yesterday evening---and I thank reader Harry Grant for sliding it into my in-box just before midnight last night MDT.
Propelled by surging shale output, the United States is fighting for supremacy in the global oil market even as a pullback in crude prices threatens to challenge the boom.
The U.S., which only a few years ago seemed to be in the midst of an inexorable decline in domestic petroleum production, may have already overtaken other petroleum giants.
In terms of crude alone, the US pumped 8.8 million barrels a day in September, still a distance from Russia's 10.6 million barrels and Saudi Arabia's 9.7 million, according to official sources.
But when natural gas liquids are included, the U.S. extracted 11.5 million barrels in August, essentially level with OPEC kingpin Saudi Arabia, according to data from the International Energy Agency.
As you already know, dear reader, current crude oil prices are 100 percent caused by game-playing between the technical funds and Commercial traders on the Comex---just like the precious metals. This AFP story showed up on the france24.com Internet site at 5:05 p.m. Europe time yesterday---and I thank South African reader B.V. for sending it our way. It's worth reading.
One of the great things about Casey Summits is that you get to meet some truly fascinating people among the attendees. The opportunity to network with successful, like-minded people is one that should not be missed.
And this year’s Summit was no different. I had the pleasure of meeting many interesting people. Among them was Tjerk Veenstra. Tjerk spent nearly 30 years with SWIFT (Society for Worldwide Interbank Financial Telecommunication) as one of its most senior managers.
SWIFT is truly integral to the international financial system, specifically in transferring money from a bank in country A to a bank in country B. More than 10,500 financial institutions and corporations in 215 countries use SWIFT millions of times every day. We’ll get into more detail below.
Suffice to say, it behooves you to appreciate how SWIFT works to better understand some of the big-picture trends in the world today—like the decline of the dollar as the world’s premier currency, financial warfare, geopolitics, and the emergence of game-changing technologies like Bitcoin and cryptocurrencies. Tjerk and I will discuss all of these things.
This interview by Nick Giambruno, Senior Editor of the International Man, appeared on his website yesterday---and it's definitely worth reading.
Ireland will scrap a controversial tax instrument which allows companies to legally shift huge profits from Ireland to countries with low taxes, the country's budget minister has announced.
Speaking in the Irish parliament on Tuesday (14 October), Michael Noonan told deputies that the scheme, known as "double Irish" would be closed to new entrants in 2015 and gradually phased out between now and 2020.
He added that in the future all companies registered in Ireland would have to pay tax there.
The double Irish enables companies to make royalty payments to separate Irish-registered subsidiaries whose parent company is based in another country, allowing them to avoid paying corporate tax.
This story, filed from Brussels, showed up on the euobserver.com Internet site at 9:26 a.m. Europe time on their Wednesday morning---and it's courtesy of Roy Stephens.
The French grape harvest has produced a bumper crop for 2014 after two years of adverse weather conditions.
But the smiles could be wiped off winegrowers’ faces if wood decay disease, which now affects 12 per cent of vines in all of France’s wine-growing regions, continues its relentless march across the country.
The spread of the disease by three types of fungi which attack the vines has so alarmed experts that it is being compared to phylloxera, the deadly disease which decimated French vineyards at the end of the 19th century.
“There’s no miracle solution in sight,” said specialist Olivier Yobregat from the south-western branch of the French Wine Institute, located in Lisle-sur-Tarn. “Winegrowers want answers, but this disease is very complex. A lot of the research being done will only bring results in the long term,” he said.
This is a grape vine disease I've not heard of before, although I've very familiar with phylloxera.
This very interesting story, filed from Paris, appeared on the independent.co.uk Internet site sometime on Tuesday---and it's the second offering of the day from reader B.V.
From an empty flat overlooking the shattered remains of eastern Ukraine's biggest airport, Givi is leading an all-out assault against the last government outpost in the main pro-Russian stronghold.
The camouflage-clad guerrilla, a Russian tricolour on his arm, heads one of two units tasked with flushing out government soldiers from a site at the heart of the six-month war, which has already claimed 3,400 lives.
Despite a five-week truce, his "Somali battalion" has been aiming tanks and rockets at Prokofiev International Airport, inflicting daily losses and reducing the futuristic structure to piles of rubble and twisted steel.
Ukrainian soldiers have been confined to the grounds' vast bunkers and other underground areas, giving the rebels de facto control, Givi boasts.
This AFP story put in an appearance on the france24.com Internet site at 9:45 a.m. Europe time on their Tuesday morning---and I thank reader B.V. for bringing it to our attention, which is also his third contribution of the day.
Vladimir Putin will seek to use a military parade in Belgrade on Thursday to portray Russia and its allies as a bulwark against the rise of neo-Nazism across Europe.
The cold war-style parade involving tanks, phalanxes of soldiers and a flyover by military jets will be the first of its kind that Serbia has held for nearly three decades. The last time, the country was still part of socialist Yugoslavia.
The event is to commemorate the liberation of Belgrade from Nazi occupation by Yugoslav Partisans and the Red Army 70 years ago. The date of the ceremony was moved forward four days to fit in with Putin’s timetable.
At a time of deep rifts between Russia and the European Union over Ukraine, Putin’s one-day visit will be an opportunity to show he has friends and influence close to the heart of Europe. For the Serbian government it is a chance to curry favour with an important friend and energy supplier at a time of chronic economic crisis with winter approaching, and to counter right-wing criticism that it is leaning too far towards the west in the hope of eventual EU membership.
This news item was posted on theguardian.com Internet site at 6:42 p.m. EDT yesterday evening---and I thank Roy Stephens for sending it along. Then there's this story from the euobserver.com---"Serbia refuses to join E.U. sanctions on eve of Putin parade" that Roy sent last night as well.
The Russian PM has suggested that Obama’s charges against Russia were caused by a “brain aberration” and added that such rhetoric saddened him.
“I am very upset by the fact that President Obama, while speaking from the United Nations’ podium and listing the threats and challenges humanity is currently facing, put Ebola in first place, the Russian Federation second and the Islamic State organization was only in the third place. I don’t even want to comment on this, this is some sort of aberration in the brain,” Dmitry Medvedev said in an interview with CNBC television.
The top Russian official stressed that his country was not isolating itself from the rest of the world, but sought mutually beneficial cooperation with foreign nations. “We want to communicate with all civilized peoples on friendly grounds. Of course, this includes our partners from the United States of America, but for this the situation must be leveled,” Medvedev said.
However, the Russian PM also noted that the Western sanctions have inflicted considerable damage to Russia’s cooperation with the US, and without cancellation of this policy there can be no return to partnership.
This news item appeared on the Russia Today website at 10:58 a.m. Moscow time on their Wednesday morning---and I thank Roy Stephens for sending it.
President Putin’s average approval marks from the Russian public have approached the record level of early 2008, independent research has shown.
The poll conducted in late September by the Levada sociology center shows that the average mark given by Russians to their leader is now 7.33 out of 10. This figure has been higher only once before – a mark of 7.49 reached in January 2008 at the very end of Putin’s first two terms as president.
17 percent of all respondents think Putin deserved the top mark – 10 out of 10 – for his work.
In the same poll, 38 percent of Russians said the head of state was worthy of their trust because his current performance was strong and successful.
This article appeared on the Russia Today website at 2:37 p.m. Moscow time on their Wednesday afternoon---and one again I thank Roy Stephens for sending it.
Ex-Soviet president Mikhail Gorbachev called on Russia and its western partners to give up the logic of reciprocal accusations and sanctions in their relations.
Western partners’ refusal to take account of Russia’s views and interests is one of the main causes behind the current crisis in global politics, Gorbachev told Rossiyskaya Gazeta daily in an interview on Wednesday.
"Today we need to acknowledge that the European and world politics is in crisis. The unwillingness of our western partners to take account of Russia’s views and lawful security interests is one of its causes though not the only one,” the ex-Soviet leader said.
Western politicians used to applaud Russia, especially under the rule of Boris Yeltsin, but in fact paid no regard to it and its interests, Gorbachev went on to say.
This worthwhile commentary by Gorbachev appeared on the itar-tass.com Internet site at 9:50 p.m. Moscow time on their Wednesday evening---and I thank Roy Stephens for sending it our way.
Greece’s government held a cabinet meeting on Wednesday as Prime Minister Antonis Samaras sought to restore calm after a terrible day for the Athens Stock Exchange and Greek bonds.
Although the gathering of ministers had been planned on Monday, it came at an opportune moment. After seeing the stock market fall 6.25 percent and the yield on 10-year bonds rise to as high as 7.85 percent, Samaras used his opening address to ministers as an attempt to counter the apparent panic over Greece’s prospects.
This news item appeared on the Greek website ekathimerini.com at 8:12 p.m. Europe time on their Wednesday evening---and it's the second offering of the day from Harry Grant. It's definitely worth reading.
In the face of increasing international pressure, Turkey took decisive military action on Monday — not against the Islamic State militants that Turkey’s Western allies have urged it to fight, but rather against the Kurdish militant group that has been battling the Islamic State.
Turkish warplanes struck positions of the Kurdistan Workers’ Party, known as the P.K.K., in southeastern Turkey late Monday. The group, long an enemy of the Turkish state, had put down its weapons last year to talk peace. But on Tuesday, Turkish officials said the Kurdish militants had attacked a military outpost, leading to the government’s first airstrikes against the group in nearly two years.
The action immediately reverberated well beyond Turkey’s borders, because it is an offshoot of the P.K.K. that is struggling to defend the Syrian Kurdish city of Kobani, which has been besieged by Islamic State for weeks.
You couldn't make this stuff up! This news item, filed from Istanbul, was posted on The New York Times website on Tuesday sometime---and it's the second contribution of the day from Roy Stephens.
The escalation of the war against the Islamic State was triggered by widespread revulsion at the gruesome beheading of two American journalists, relayed on YouTube. Since then, two British aid workers have met a similar grisly fate. And another American has been named as next in line by his terrorist captors.
Yet, for all the outrage these executions have engendered the world over, decapitations are routine in Saudi Arabia, America’s closest Arab ally, for crimes including political dissent—and the international press hardly seems to notice. In fact, since January, 59 people have had their heads lopped off in the kingdom, where “punishment by the sword” has been practiced for centuries.
The Saudi legal system is based on Islam’s Sharia law. Some countries that use Sharia possess a penal code, but Saudi Arabia does not, although some activists have been calling for reform.
If you're on the squeamish side, this Newsweek story may not be for you. But, now that I've warned you, it's worth reading anyway. It was posted on their website at 12:56 p.m. EDT on Tuesday---and I thank reader A.V. for bringing it to my attention---and now to yours.
The U.S. Treasury said Wednesday that China does not manipulate its currency, but pushed Beijing to do more to focus on domestic demand, not exports, to drive economic growth.
In a twice-yearly report to Congress, which would set sanctions on any country officially branded a "manipulator," the Treasury said the yuan, or renminbi (RMB), had "partially recovered" from a sharp plunge earlier in the year and appreciated by 1.9 percent since late April.
I almost believe that---and I'm sure you're convinced as well. The above two paragraphs are all there is to this AFP news item that appeared on the france24.com Internet site yesterday---and it's the final offering of the day from Roy Stephens.
The International Monetary Fund was launched in 1944 with the world's new superpower, the United States, in position as the key force and shareholder in the global crisis bank.
Today, China is on the verge of becoming the world's largest economy.
But its voice at the IMF -- wrapping up its annual meeting this weekend in Washington -- remains that of a minor country, and some worry this could undermine the crucial, 70-year-old institution.
The IMF estimates that by the end of this year, China's economy will surpass the US in size: $17.63 trillion versus $17.42 trillion, based on the purchasing power parity standard.
This AFP story, filed from Washington, was posted on the businessinsider.com Internet site early Sunday afternoon EDT---and it's certainly worth reading. I thank reader Mark Hancock for sending it our way.
Mexican miner Fresnillo Plc reported a small drop in quarterly silver production and said it could hedge a part of its gold output to protect its recent investment in the Herradura corridor in northern Mexico.
Shares in the miner fell as much as 3.4 percent on Wednesday morning, making the stock one of the top percentage losers on the FTSE 100 index.
An increasing numbers of precious metals miners, battered by last year's steep drop in prices, are selling planned output forward to better control their cash flow.
"This is going to be discretionary to the management ... This is going to be done very slowly. So we are not going to immediately hedge all the production," Gabriela Mayor, head of investor relations, said on a media call.
The media can make news out of any rumour these days---and this is a case in point. It will be a real news story if/when it happens. The Reuters article was posted on their website at 11:45 a.m. BST on Wednesday morning---and it's another story that I found posted on the gata.org Internet site.
Jeff Deist, the president of the Mises Institute, and Claudio Grass discuss the uniquely Swiss mindset behind the upcoming Swiss gold referendum, and how decentralization of political power is part of Swiss DNA; the tremendous geopolitical aftershocks that would occur if the referendum passes — including the physical repatriation of gold to Switzerland; and how the Swiss people may be waking up to the sellout of their country by the Swiss National Bank and the IMF.
This 17:42 minute audio interview showed up on the mountainvision.com Internet site yesterday---and I thank Casey Research's own Dennis Miller for finding it for us.
Gold imports by India, the largest user after China, probably surged more than fourfold last month on expectations declining prices would boost festival demand.
Purchases are estimated at about 95 metric tons compared with 15 tons to 20 tons in September last year, said Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation. The government raised import taxes for a third time in August last year after a month earlier obliging importers to set aside 20 percent of purchases for re-export as jewelry.
India represented 25 percent of global demand in 2013. Imports of gold were valued at $3.75 billion in September, 450 percent more than a year earlier, the Commerce Ministry estimates. Buying and gifting of gold is considered auspicious and the most favorable time is the festival of Dhanteras, two days before Diwali which occurs on Oct. 23. Festivals run through November and the wedding season follows to early May.
“These are normal imports before Diwali,” Bamalwa said in a phone interview from Kolkata today. “There is no abnormal feature. Prices have fallen in the international market and this is good for Indian consumers.”
This gold-related news item, filed from New Delhi, appeared on the Bloomberg Internet site at 3:53 a.m. Denver time on Wednesday morning---and I found it embedded in a GATA release. Reader U.M. sent us another story on this. This one is headlined "Country's gold imports rising on price slide & festive demand"---and it showed up on Economic Times of India website at 7:02 p.m. IST on their Wednesday evening.
The Indian government has been proved right once again in not lifting its curbs on gold. Trade deficit has widened the most in 18 months, as imports of the precious metal have surged.
Gold imports jumped about 450% to a new high of $3.75 billion in September (versus $682.5 million y/y). In August 2014, gold imports stood at $2.04 billion.
This as the trade deficit widened to $14.25 billion in September, from $10.84 billion a month before.
Falling inflation might just not be enough, say trade experts. With a muted export performance in September, the trade figures have raised concerns of worsening external account, especially if the global economy continues to remain sluggish.
I know that the headline is similar, as is part of the story, but this article goes into far more depth. It was filed from Mumbai yesterday as well---and showed up on the mineweb.com Internet site. It's the final offering of the day from Manitoba reader U.M., for which I thank her. It's worth reading.