China will overtake America to become world’s biggest economy within a decade

China will overtake America to become the world's biggest economy in just 10 years, according to a report.  The U.S. has been the world's economic leader for more than a century, but now, a huge rise in consumer spending in China is expected to see it passed in 2024.
Chinese consumer spending is predicted to triple over the next decade, according to an IHS report – increasing from $3.5 trillion to $10.5 trillion.  This would boost their GDP to $28.3trillion, surpassing the USA's expected $27.4trillion – using today's prices.
U.S. GDP is currently still significantly higher than China's – $17.4 trillion compared with $10 trillion.
But with experts predicting China's consumer spending to grow at an average rate of 7.7 per cent per year, things look set to change.

This post was published at Daily Mail

US Equity Futures Levitate As Yen Fireworks Continue; All Attention Still On Scotland

While overnight US equity futures have done nothing notable, what everyone’s attention has been fixed on, in addition to the GBP and the read-through to all things UK-ish ahead of the Scotland independence referendum, is the sudden flare up in USDJPY trading and volatility, which exploded by some 100 pips in the past 24 hours hitting fresh post-2008 highs, on what appears to be a major capital reallocation move (it surely is not driven by any news) and/or forced squeeze. What is more perplexing is the change in correlations signals, because while until recently the USDJPY was synonymous with the E-Mini, and thus the S&P, as of late the USDJPY pair has moved tick for tick with the 10Year yield: almost as if the NY Fed’s favorite HFT trading shop was instructed to change its vast array of signal inputs away from the S&P and to force a gentle levitation in the 10Y.
That said, with little material news on today’s radar, and with barely any newsflow even registering when it comes to discounting prices in centrally-planned markets, perhaps it is fitting that today’s biggest event is the “prop” breaking news update of the iPhone 6 release. Supposedly a clip of the phone has been leaked and can be seen below. If this is indeed the end product, there may be disappointment for some.

This post was published at Zero Hedge on 09/09/2014.

A Secret Only a Tiny Number of Investors Understand

Gummed Up by Taxes, Debt and Regulation At 7 a.m. on Saturday morning we were in our room at the China World Hotel, looking down on eight lanes of traffic that had come to a dead stop in the Beijing traffic.
‘The last century was America’s century,’ says our Chinese colleague. ‘This is China’s century.’
‘You know why America was such a success,’ he continued. ‘Because it was a fairly free market with massive domestic demand. Companies could scale up in the highly competitive US market. That would make them larger and more advanced than their foreign competitors. They could then enter foreign markets and easily beat the locals.
‘Now, the US is gummed up by taxes, debt and regulation. Outside of Silicon Valley most of the companies are old. There are few new businesses and not much new technology.
‘I think you wrote something about the declining number of start-ups in the US. It’s a big deal that few people recognize. I think you said it was a result of crony capitalism. The feds subsidize and protect the big boys… and bail them out when they get into trouble. That’s why GM and Fannie Mae are still in business. But the little guys can’t even get credit.
‘China, meanwhile, is full of new companies. Everything is new. And the internal market is fairly free compared to America. Talk about scale. These companies have massive domestic growth and learning capacity before they have to compete on the world markets.’

US company births and deaths, via a (slightly dated) Brookings report (pdf)

This post was published at Acting-Man on September 9, 2014.

Currencies

We have been bullish the USD and bearish the Euro, Canada dollar and Aussie dollar for quite some time now, most often using this simple weekly chart of various currencies. Months ago we noted USD creeping out of its downtrend (green dotted line) and the Euro falling out of its wedge (red dotted line). Back then, sentiment toward the USD was far different than it is today. So this week the Currency segment included some thoughts (and data) on USD and Euro sentiment as well.
Also of note, while the excerpt speculates that a USD reversal could trigger bounces in commodities and precious metals, these items generally remain bearish until proven otherwise. Not the other way around.

This post was published at Gold-Eagle on September 8, 2014.

Silver still ready to fire

For some time, we have been bullish on the prospects of precious metals including gold, with growing market volatility, geopolitical crises, and economic uncertainty making safe-haven investments increasingly popular. Though gold may be the most recognized safe-haven investment, I am more bullish on silver, as I believe it offers better long-term potential. Let’s take a closer look at why silver is a better opportunity than gold.
1. The gold-to-silver ratio continues to widen
The gold-to-silver-ratio represents the correlation between gold and silver prices by expressing how many ounces of silver are required to buy one ounce of gold. Over recent years, this ratio has widened, now requiring 66 ounces of silver to purchase one ounce of gold, indicating silver remains undervalued in comparison to gold.
But the key questions are: What is the correct ratio, and how far can the ratio close?
There are those analysts and market pundits who claim the historical ratio is 16-to-1 and it will eventually revert to this level. If it did, with gold trading at $1,268 per ounce, it would require the silver price to spike more than threefold to $79 per ounce. While this thesis is supported by the amount of recoverable silver reserves in the Earth’s crust being only around 11 times those of gold, I believe it appears a far too optimistic assessment, particularly when the volatility of silver prices is considered.

This post was published at TruthinGold on September 9, 2014.

Platinum Fixing Under the Microscope

Is it honest or is there fraudulent manipulation? First fines have been imposed for manipulation of the gold fixing, the silver fixing is even discontinued entirely. But is everything in order with the platinum fixing? Have there been manipulations – and are they part of a larger manipulation campaign?
The precious metals fixings have the purpose of enabling large volume trades. However, they also provide reference prices, which are used by merchants and have an effect on subsequent trades. They are therefore an especially suitable target for price manipulations. There have already been statistical hints as far back as 2002 that systematic manipulation of the gold fixing was taking place; in 2011 similar hints emerged in the silver fixing.
We now want to examine the platinum fixing. It takes place twice daily, at 09:45am (AM fixing) and at 2:00pm (PM fixing) London time, which is equivalent to 4:45am and 9:00am EST. It takes a not precisely predetermined amount of time lasting several minutes until the fixing price is established.
There are reliable methods to trace price manipulations taking place at specific times of the day. Calculation of an average intra-day price trend over many days often provides clear evidence. Similar to gold and silver, this method can also be employed to uncover systematic manipulation in the platinum market. We use one-minute prices of futures contracts from December 1997 to April 2014. From these we calculate the average of intra-day price movements.
Fig.1 is therefore no normal intra-day price chart. It rather shows how the platinum price has behaved in the course of the average trading day over approximately the past 16 years. It shows the typical movements – calculated from millions of prices. The horizontal axis shows the time of the day (EST), the vertical axis the average price level (indexed to 100). Since it is an average over a great many days – 4189 all in all – the size of the moves is relatively small.

This post was published at Acting-Man on September 9, 2014.

Could the Alibaba Model Undo the Wal-Mart Model?

These are questions that arise as a consequence of the digitization of the global/local supply chain in the peer-to-peer model.
Longtime correspondent Bill M. reckoned I missed the longer-term story in my piece on the Alibaba IPO: namely, that the Alibaba Model of makers selling directly to buyers could undo the Wal-Mart Model of super-stores dependent on massive inventory. My essay The China Boom Story: Alibaba and the 40 Thieves addressed the China Boom rather than the Alibaba model, so let’s compare and contrast the Alibaba model and the Wal-Mart model. We all know the Wal-Mart Model: squeeze suppliers until they’re gasping for air (“sure, you’re losing money on every unit you sell us, but you’ll make it up on volume”) and then transport all this stuff across the Pacific to a vast warehousing and shipping operation that must keep hundreds of sprawling (and costly) superstores stocked with hundreds of different items.
This model gained supremacy because it lowered costs to consumers by outsourcing the production of most of the inventory. Generally built outside of towns, the superstores thrived in an era of low gasoline costs and cheap credit, i.e. the past few decades.

This post was published at Charles Hugh Smith on MONDAY, SEPTEMBER 08, 2014.

Central Banks: Divergence of Rhetoric and Reality

U. S. Economy Still Missing: 3.9 Million Prime-Age Jobs … Today’s U. S. jobs report, which showed nonfarm payrolls increasing by a meager 142,000 jobs and the unemployment rate falling 0.1 percentage point to 6.1 percent in August, will undoubtedly rekindle a familiar debate: How much more should the Federal Reserve do to put people back to work? – Bloomberg
Dominant Social Theme: The Federal Reserve needs to step up and build as many jobs as necessary.
Free-Market Analysis: Imagine taking bits of colored paper, making more of them and then waiting for jobs to appear. One has little to do with the other, but according to a steady stream of articles in Bloomberg and the rest of the mainstream media, such an act leads to an inevitable result: additional employment.
This is a kind of mass delusion, isn’t it? The printing of fiat currency does not of itself stimulate the entrepreneur, create opportunities that can be leveraged or generate companies that have the wherewithal to do so. One is a mechanical function of the printing presses. The other is the result of considerable human action and the application of ingenuity, courage and concentration.
The printed money is not provided to entrepreneurs in any case. It is funneled to a distribution channel of commercial banks. It is these banks, often with distressed balance sheets, that are to provide the mechanisms for economic growth.

This post was published at The Daily Bell on September 09, 2014.

Investors Now Paying Germany Premiums to Hold their Cash

Anyone who questions when I began warning that interest rates would go negative, well that day has arrived. Investors are now paying Germany to park their money. At the first auction of six-month German Treasury bills after the recent ECB rate cut, investors had to make do with a negative yield of 0.0934 percent on Monday. That’s a new record. Investors may therefore not as usual money from the federal government, but have to pay more themselves
SOURCE

This post was published at Armstrong Economics on September 8, 2014.

On A Clear Fund Raising Evening, Gov. Christie’s Pension Managers Can See Wall Street From Trenton

New Jersey investment officials have directed increasingly large slices of state pension money into riskier investments, such as hedge funds, touting their strategy as a means of limiting exposure to a volatile stock market. They’ve argued that their approach would maximize overall returns and justify the higher fees paid to Wall Street money managers.
But in seven of the eight years since the state began shifting pension funds into so-called alternative investments, returns have fallen well short of the broader stock market, an analysis of state financial records shows. In those seven years, New Jersey’s alternative investment portfolio has produced gains of just more than half of the S&P 500, the widely watched index seen as a proxy for shares of large corporations.
Since Gov. Chris Christie took office, he has nearly tripled the amount of retiree cash invested in alternative investment firms – many of whose employees have made financial contributions to political groups backing Christie’s election campaigns. In that time, the gap between New Jersey’s alternative portfolio and the broader market has rapidly expanded, costing taxpayers billions in unrealized returns and threatening the financial stability of the $78 billion pension system. The state’s pension funding shortfalls – which have been exacerbated by Christie’s market-trailing investment strategy – were one of the factors cited by Fitch Ratings in its decision last week to downgrade the state’s bond rating for the second time.

This post was published at David Stockmans Contra Corner on September 8, 2014.

More Lost IRS E-Mails. The IRS Tells Congress: ‘Go Fish.

Congress is impotent.
The IRS knows Congress is impotent.
The IRS can safely thumb its nose at Congress in full public view.
Everyone knows the IRS did illegal things when it refused to grant the privilege of tax exemption to conservative groups. ‘Go fish.’ Everyone knows the IRS destroyed the incriminating e-mails. ‘Go fish.’ Everyone knows the IRS is lying when it blames a hard disk crash. ‘Go fish.’ Everyone knows Boehner & Co. has only one response with teeth: to cut the IRS’s budget next year in retaliation. Everyone knows that Congress dares not cut one agency’s budget, above all government agencies: the IRS’s. ‘Go fish.’
I suppose I should be outraged. ‘The arrogance of these people!’ But why get upset this late in the history of the American welfare-warfare state? This is nothing new. It goes back to – in round numbers – 1789. Executive agencies have done their best to thwart Congress since the beginning. It just gets worse over time.
Congress has two meaningful powers over the other branches of the federal government. It refuses to use either of them. First, it has the power of the purse. It can refuse to fund any agency at any time for any reason. It can, in short, shrink the power of the President. It never doers this. To do this would mean shrinking the federal government. It absolutely will not tolerate such a suggestion.
The other power is to lock the Supreme Court in a box. It can withdraw the Court’s jurisdiction on any judicial issue except those enumerated by the Constitution. The Constitution is clear.

This post was published at Tea Party Economist on September 6, 2014.

Small Business Ownership In America Is At An All-Time Low

According to the Federal Reserve, the percentage of American families that own a small business is at the lowest level that has ever been recorded. In a report that was just released entitled “Changes in U. S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances“, the Federal Reserve revealed that small business ownership in America “fell substantially” between 2010 and 2013. Even in the midst of this so-called “economic recovery”, small business ownership in America has now fallen to an all-time low. If the economy truly was healthy, this would not be happening. And it isn’t as if Americans are flooding the labor market either. As I detailed yesterday, the labor force participation rate in this country is at a 36 year low. That would not be happening if the economy was actually healthy either. The truth is that the middle class in America is dying, and this new report from the Federal Reserve is more evidence of this very harsh reality.
In order to build wealth, middle class Americans either need to have their own businesses or they need good jobs. Sadly, the percentage of Americans that own a business continues to decline steadily. In the report that I mentioned above, the Federal Reserve says that the proportion of U. S. families that have an ownership interest in a small business fell from 13.3 percent in 2010 to a brand new all-time low of11.7 percent in 2013.
This is one of the factors that is increasing the gap between the extremely wealthy and the rest of us in this country. And of course another of the major factors is the steady decline in good paying jobs.
The U. S. Competitiveness Project at Harvard Business School is chaired by professors Michael E. Porter and Jan W. Rivkin. It just released a new report entitled “An Economy Doing Half Its Job”, and it addressed the fact that the middle class is deeply struggling even though many large U. S. corporations have been thriving. The following is an excerpt from an article in the Boston Globe about this report…

This post was published at The Economic Collapse Blog on September 8th, 2014.

China Hits ‘Inflow’ Panic Button- Strengthens Yuan Fixing By Most In 4 Years

The PBOC strengthened the CNY fixing by over 0.3% today – its biggest fixing move since June 2010 as the Yuan strengthens to 6-month highs against the USD. This seeming ‘panic’ move comes on the heels of last night’s record trade surplus – which as Goldman notes – was likely dominated by FX inflows thanks to over-invoicing. It is unclear the reasoning for the move in the CNY fixing but one wonders if, with industrial commodities continuing to plunge (CCFD collateral value dropping) and now PMIs rolling over, if further over-invoicing is being anticipated as cover for a notable slowdown in growth. One thing is clear – after today’s surge in the USD and decoupling with US stocks, something is changing.

This post was published at Zero Hedge on 09/08/2014.

These Kinds Of Market-Rigging “Practices” Will No Longer Be Allowed On The CME

It has been an interesting week for the CME: first it was revealed a week ago that in order to “stimulate” the market, the CME is willing to pay central banks a liquidity rebate in order for the world’s monetary authorities to “make markets” in the most important S&P 500 future, the E-Mini, confirming not only that central banks directly trade the S&P 500, but are incentivized to nudge it along the preferred central bank direction: up. Then last week, none other than the CME’s own 10-K proved that something changed in 2013, when for the first time central banks officially became counted as clients of the biggest US derivative exchange.
Today, the CME’s fall from efficient market grace accelerate when it advised the CFTC that the derivative market would be adopting a new Rule 575 to eliminate “Disruptive Practices Prohibited.”
The good news: starting September 15, 2014 the CME will no longer tolerate what is affectionately calls “Disruptive market practices.”
The bad news: the CME was not only tolerating and turning a blind eye toward such disruptive market practices until this point, in many cases it was compensating the “liquidity providing” perpetrators!

This post was published at Zero Hedge on 09/08/2014.

sept 8/ No change in Gold inventory at the GLD/No change in silver inventory at SLV/gold and silver whacked/Silver OI remains very high at 164,501/

Gold closed down $13.10 at $1252.70 (comex to comex closing time ). Silver was down 19 cents at $18.89
In the access market tonight at 5:15 pm
gold: $1255.50
silver: $19.05
GLD : no change in gold (inventory now at 785.72 tonnes)
SLV no change in silver inventory:/now 333.207 million oz.
As far as gold and silver is concerned, we had another raid today. It seems they are relentless in their attacks.
Today we have commentaries concerning the Ukraine, Russia, England/Scotland, and Argentina
We will discuss these and other stories
So without further ado………………
Let’s head immediately to see the data has in store for us today.
First: GOFO rates/
All months basically moved towards the positive needle (except one year out) as they must have found a few bars to lease
London good delivery bars are still quite scarce.
Sept 8 2014
1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate
.094000% .1040000% .11600% .13800% .230000%
Sept 5 .2014:
1 Month Rate 2 Month Rate 3 Month Rate 6 month Rate 1 yr rate
0800% .09000% .104000% .13400% .234000%
end
Let us now head over to the comex and assess trading over there today,

This post was published at Harvey Organ on September 8, 2014.

No! The US Is Not ‘Decoupling’

It’s that time of year again… when sell-side strategists and status-quo narrative defenders aggregate en masse around the ‘outperformance’ of the US economy compared the rest of the world (which – they note – explains why US stocks are outperforming as the US is the cleanest shirt) and declare – unequivocally – the US has decoupled.

This post was published at Zero Hedge on 09/08/2014.

US has Lost 1.4 Million Full Time Jobs Since 2008, Thanks To The Fed

Let’s cut to the chase: There were 1,446,000 fewer people working full time in August 2014 than in August 2008, according to the Bureau of Labor Statistics household survey (CPS).

That’s after an increase of 210,000 full-time jobs in August. That’s the actual count, not the seasonally adjusted abstraction. So we have to compare that with past Augusts to get an idea if its any good or not. August is a swing month, sometimes up, sometimes down. The average change over the prior 10 years, which included a couple of ugly years in the recession, was -63,000. So this number wasn’t bad. It was slightly better than August of last year and 2012, but come on….

This post was published at Wolf Street on September 8, 2014.

Interview with Ronald-Peter Stferle: Monetary Tectonics and Gold

My exclusive interview with Ronald-Peter Stferle, Incrementum Liechtenstein AG, co-author of the In Gold we Trust 2014 report.
‘We are currently on a journey to the outer reaches of the monetary universe. We believe that the monetary experiments currently underway will have numerous unintended consequences, the extent of which is difficult to gauge today. Gold, as the antagonist of unbacked paper currencies, remains an excellent hedge against rising price inflation and worst-case scenarios.
The tug-of-war between a deflationary debt liquidation and politically induced price inflation is well and alive. Last year we coined the term ‘monetary tectonics’ which describes the battle between these powerful forces. An excellent indicator for the interaction between inflation and deflation is the gold/silver ratio. One could therefore also refer to the gold-silver ratio as the ‘deflation/reflation’ ratio.’
We will be discussing these topics and much more with Mr. Stferle.


This post was published at Gold Broker on Sep 8, 2014.