Spain Sells First-Ever 50 Year Bonds At 4% Coupon

Perhaps in order to celebrate its manufacturing PMI dropping from 53.9 to a below expectations 52.8, refuting the “growth story” promoted by its definitionally re-revised GDP (where the long overdue boost from hookers and blow is finally leading the country to new and improved Keynesian growth curves), moments ago Spain joined the likes of Canada, Caterpillar and Goldman and just issued, for the first time in its history, 50 Year bonds in a private placement. From Bloomberg:

This post was published at Zero Hedge on 09/01/2014.

Eurozone Manufacturing PMI at 13-Month Low, with Germany Worse than Expected, Italy and France in Contraction

The Markit Eurozone Manufacturing final data shows Eurozone Manufacturing PMI at 13-month low in August.
The rate of expansion in eurozone manufacturing production eased to its lowest during the current 14-month growth sequence in August, as companies faced slower increases in both total new orders and new export business. The final seasonally adjusted Markit Eurozone Manufacturing PMI posted 50.7 in August, down from 51.8 in July, its lowest reading since July last year. The headline PMI was also below its earlier flash estimate of 50.8. National PMI data signalled a broad easing in the manufacturing recoveries underwa y across much of the currency union. Although Ireland was a noticeable exception, with its PMI at the highest level since the end of 1999, rates of expansion slowed in Spain, the Netherlands and Germany.

This post was published at Global Economic Analysis on September 01, 2014.

The Critical Mind, Inner Scripting, & The “Game” of Trading

As the prices of gold and silver flick up and down, moving towards the end of their first trading rangeI thought to myself “What should I write about today?” This is always a difficult question to answer, and I expect I begin four or five essays for each one that actually gets finished, and that’s not counting the several versions of the final blog contribution!
The range of possible subjects is indeed very wide, but I have special skills in some areas and I prefer to return to these in order to know I am presenting something which is of value and maybe not all that commonplace already. I like to pick topics which are somehow related to trading, timing the markets, and the pitfalls and obstructions which pop up either expected or unexpected to bar the route of progress and encourage diversion away from the best direction.
Cycles, politics, geopolitics, TA, the behaviour of markets through recorded history, weakness within the individual which must be overcome, interpretation of recent events, or clues so as to gain insight into the plans of larger movers and shakers, and the next expected stages of the western/global fiat money system all can pass within the orbit of these weekly articles.
Hmmm …. the passage of time and fiat (paper) vouchers for actual things? Did you ever see Peter Sellars and Spike Milligan’s best work on that?
Classic! And also the seeds of many great things which followed. Other great comedians stood upon the achievements of these giants to add their own achievements to the world of laughter.
So for today let’s look at another original giant in his field, an often overlooked giant – what he did for us that we can use. I will in the process reintroduce that subject of Zen and the art of trading, which good traders appreciate, but newcomers just have not yet got. That’s because balance always is a tough thing to describe and explain.

This post was published at TF Metals Report on August 31, 2014.

Europe’s Fantastic Bond Bubble: How Central Banks Have Unleashed Mindless Speculation

Capitalism gets into deep trouble when the price of financial assets becomes completely disconnected from economic reality and common sense. What ensues is rampant speculation in which financial gamblers careen from one hot money play to the next, leaving the financial system distorted and unstable – a proverbial train wreck waiting to happen.
That’s where we are now. And nowhere is this more evident than in the absurd run-up in the price of European sovereign debt since the Euro-crisis peaked in mid-2012. In that regard, perhaps Portugal is the poster-boy. It’s fiscal, financial and economic indicators are still deep in the soup, yet its government bond prices have soared in a triumphal arc skyward.
Unfortunately, the recent crashing landing of its largest conglomerate and financial group (Espirito Santo Group) is a stark remainder that its cartel-ridden, import-addicted, debt-besotted economy is not even close to being fixed. Notwithstanding the false claims of Brussels and Lisbon that it has successfully ‘graduated’ from its EC bailout, the truth is that the risk of default embedded in its sovereign debt has not been reduced by an iota.
At the time of the 2011-2012 crisis, its central government was already sliding rapidly into a debt trap with a ratio of just under 100%. Self-evidently, the nation’s so-called EC bailout has only made its public debt burden dramatically worse. Today Portugal’s debt to GDP ratio is 129% and there is no sign of a turnaround.
But that has not deterred the rambunctious speculators in peripheral sovereign debt. Since mid-2012 and Draghi’s ‘whatever it takes’ ukase, the price of Portugal’s public debt has soared. This means that leveraged speculators – -and they are all leveraged on repo or similar forms of hypothecated borrowings – -have made a killing, harvesting triple-digit gains on the thin slice of non-borrowed capital they actually have at risk in these carry trades.

This post was published at David Stockmans Contra Corner on September 1, 2014.

Inflation – Crash Course Chapter 11

Chapter 11 of the Crash Course is now publicly available and ready for watching below.
For close to 300 years, inflation in the US remained very subdued. Small spurts occurred around major wars (Revolutionary, Civil, WW1, etc), but after each, inflation quickly trended back down to its long-term baseline. If you lived during this stretch of time, your money had roughly the same purchasing power your great-grandfather’s did.
But something changed after inflation spiked yet again during World War 2. With the permanent mobilization of the military industrial complex and the start of the decades-long Cold War, combined with a related acceleration in government deficit spending, inflation did not come back down. It remained elevated, and in fact, rose further.
That is, until the “Nixon shock” in 1971, when the dollar’s remaining ties to gold were severed. Then inflation EXPLODED. And the inflationary moon-shot has continued since, up to present day.
So, we’ve become used to a system in which our money loses purchasing power over the years. For anyone aged 50 or younger, it’s pretty much all we’ve ever known.

This post was published at PeakProsperity on August 29, 2014,.

And The Best Performing Asset In August Was…

August is the month in which the third try for a global economic recovery officially snapped, with first China, then Europe and finally Latin America succumbing to pre-recession forces and/or outright contraction. Which, in the New Normal, is great news as it means more hopes for even greater imminent central bank easing and “stimulus” if only for the wealthiest (and also please ignore the fact that 6 years of more of the same has not worked, this time will be different). Which explains why August, otherwise the sleepiest month of the year, proved to be fairly strong with both equities and bonds moving higher in tandem.
In fact, the situation in Europe is so dire, that European government bonds yields reached/retested their record multi-century all time lows. As Deutsche Bank summarizes, the 10yr government bond yields for Germany, France, Italy, Spain, and Switzerland declined by 27bp, 28bp, 26bp, 28bp and 11bp in August to 0.89%, 1.25%, 2.44%, 2.23% and 0.44% respectively. From a total returns perspective, a 2% gain in August was the best monthly performance for Bunds and OATs since January which brings their YTD gains to around 8-9%. Not bad in the context of a 7% and 4% YTD gains in Stoxx 600 and the FTSE 100. Italian and Spanish government bonds are still ahead though on a YTD basis with total returns to date at around 12-13%. Staying in rates, US Treasuries were somewhat of a laggard relative to its European peers in August with a monthly return of around 1.2%. Nonetheless, it was still the biggest gain for Treasuries since January and the outperformance in long bonds has also driven the 10s/30s curve to its flattest since June 2009. The search for yield has also benefited Credit on both sides of the Atlantic. Total returns were positive across the main European, US and Sterling credit benchmarks although the highlight was a rebound in US HY. The asset class gained 1.8% in August after having lost 1.7% in July as outflows steadied and reversed as the month progressed.

This post was published at Zero Hedge on 09/01/2014.

Events Impacting The Gold And Silver Price In The Week Of September 1st

The primary focus of our website is to report on the different aspects of the gold market: fundamentals, economic and monetary analysis, basic technical analysis. Our view on the real price setting in the gold and silver market differs from the mainstream view. Price changes happen to coincide with events or announcements; mainstream media are used to report a relationship between both. However, we believe that the real price setting for the time being is taking place in the COMEX futures market. Market expert Ted Butler does an outstanding job analyzing the weekly evolution in the COMEX market and how it affects price setting.
In this article, we summarize the key events of the running week that could have an impact on the price of gold and silver price because of trading in COMEX futures.

This post was published at GoldSilverWorlds on September 1, 2014.

Pushback as US Expands Surveillance, Taxing Authority?

Several Swiss banks pull out of US tax programme … At least 10 Swiss banks have withdrawn from a U. S. programme aimed at settling a tax dispute between them and the United States, Swiss newspaper NZZ am Sonntag said on Sunday, quoting unnamed sources. Around 100 Swiss banks came forward at the end of last year to work with U. S. authorities in a programme brokered by the Swiss government to help the banks make amends for aiding tax evasion. “At least 10 banks that had decided at the end of 2013 to pay a fine have withdrawn their decision,” NZZ am Sonntag said, quoting unnamed lawyers and auditors. It did not name the banks concerned. – Reuters
Dominant Social Theme: Even though the US is seeking to spread its authority around the world, its functionaries are prepared to be reasonable.
Free-Market Analysis: This article can be seen two ways. One, the US tax regime that it is trying to install in Switzerland is being resisted, at least a little.
On two, the news can be seen as a message that once its tax regime is in place, US officials are prepared to be flexible, at least on the margins.
Got a gripe? Work within the system and you may find it’s resolved “fairly.”

This post was published at The Daily Bell on September 01, 2014.

The New Rand Gold Bond Ponzi & Western World Is Sleeping – The Daily Coin

We begin the conversation discussing the latest global ponzi scheme coming out of South Africa, the Rand Gold Bond. According to Eric Dubin this is similar to the GLD or SLV ponzi schemes but the target market are people on a fixed income with a promise of exposure to gold. While Dave Kranzler explains there is nothing in the sales brochure or terms of the agreement that says you the ‘bond’ is tied to allocated gold in your name. Oh yeah, you have to fly to the Rand Refinery to pick up your Krugerrands in the event the paper-ponzi scheme actually matures. Good luck with that plan.

This post was published at SRSrocco Report on August 31, 2014.

The Yield Curve and Our Weakened Economy

So far in August the differential between the yield on the 10-year Treasury note and the yield on the 3-month Treasury bill stands at 2.38 percent against 2.95 percent in December 2013.
Historically, the yield differential on average has led the yearly rate of growth of industrial production by fourteen months. This raises the likelihood that the growth momentum of industrial production will ease in the months ahead, all other things being equal.

This post was published at Ludwig von Mises Institute on Monday, September 01, 2014.

The case for $2000 gold today

The reality check is that gold today is not at 2000, rather ’tis at $1288 in closing out the week Friday with the ever-rising parabolic Long trend still intact, albeit homing in on price such that the yellow metal now has very little downside wiggle room with which to work: for to tap 1270 in the ensuing week would flip such trend to Short. Nonetheless for the second week in a row, Gold dipped its toe into the 1280-1240 support zone (between the purple lines) in the following chart of the weekly bars, and then popped back up:

This post was published at TruthinGold on September 1, 2014.

Gold And Silver Directionless, Palladium And Aluminium Bullish

The following is an excerpt from Yamada’s latest monthly update for premium subscribers, released today. We highly recommend subscribing to the monthly in-depth analysis of Louise Yamada on
Gold – Directionless Gold (GOLDS-1,287.81, see Figure 29) has weakened slightly since last month, slipping below both 50- and 200-day MAs, still confined in a year-plus symmetrical triangle. That formation rests midway between the wider trading range of 1,400 (1,420) and 1,300 as price has consolidated over a year.
There remains a series of lower highs all the way from the peak in price and continues within the past year’s trading. Now one might await a move through either resistance at 1,345 from July, or support at 1,242 from May to suggest which direction may provide a trade. The weekly momentum model is just turning negative (see lower arrow) suggesting there could be further weakness. The wider trading parameters above denote more structural intentions.
We reiterate that the support at 1,200 is also now the intersect with the very important level of the 2005 long-term uptrend, representing the bull market for Gold. A breach of this support / uptrend would bode ill for Gold and could suggest a further slip toward 1,150-1,000.

NOTE: The Market Vectors Gold Miners ETF (GDX) depicted herein last month has not been able to lift through resistance and has rolled over again despite the media excitement about gold stocks basing. Some have had good rallies and some of those may be rolling over again. Achieving 28-30 would be needed to lift through the consolidation and further through the 2011 downtrend.

This post was published at GoldSilverWorlds on September 1, 2014.

Markets Set To Surge On Global Manufacturing PMI Bloodbath

If last week’s disappointing global economic data, that saw Brazil added to the list of countries returning to outright recession as Europe Hamletically debates whether to be or not to be in a triple-dip, was enough to push the S&P solidly above 2000, even if on a few hundreds ES contracts (traded almost exclusively between central banks), then the overnight massacre of global manufacturing PMIs – when not one but both Chinese PMIs missed spurring calls for “more easing” and pushing the SHCOMP up 0.83% to 2,235.5 – should see the S&P cross Goldman’s revised year end target of 2050 (up from 1900) sometime by Thursday (on another few hundreds ES contracts).
Some of the highlights, or rather lowlights: Dutch PMI 51.7, down from 53.5, Hungarian PMI 51.0, last 56.7; Spain PMI 52.8, Exp. 53.3, Last 53.9; Czech PMI 54.3, Exp. 55.5, Last 56.5; Swiss PMI: 52.9, Exp. 53.7, Last 56.5; Sweden PMI 51.0, Exp. 54.8, Last 55.1; Italy PMI 49.8, Exp. 51.0, Last 51.9 (back into contraction mode to go along the GDP decline and the record low inflation), French PMI 46.9, Last 46.5, Germany 51.4, Exp. 52.0, and Last 52.0 and finally the UK at 52.5, exp. 55.1, and last 54.8, was the lowest reading since June 2013.
Some more observations from Goldman: on Europe’s absolute manufacturing disaster:
The Euro area final manufacturing PMI printed at 50.7 in August, 0.1pt below the Flash and the consensus estimate (Flash, Cons: 50.8). This implies a 1.1pt contraction from the July print. The French component was revised up relative to the flash ( 0.4pt), while the German component was revised down (-0.6pt). The August figure in both Italy and Spain showed continued loss of momentum, with the manufacturing PMI easing 2.0pt in Italy and 1.0pt in Spain relative to the July print (against a consensus expectation of a smaller decline).
The Euro area aggregate Final manufacturing PMI printed at 50.7, 0.1pt below the August Flash owing to a considerable 0.6pt downward revision in Germany, outweighing a 0.4pt upward revision in France. The breakdown of the manufacturing PMI reflected the weaker headline print: New orders fell 1.4pt to 50.7 while stocks remained stable, thus implying a 1.3pt contraction in the forward-looking order-to-stocks ratio. Employment edged 0.6pt lower and remains relatively weak at 49.3. Output also declined by 1.7pt, now standing at 51.0.

This post was published at Zero Hedge on 09/01/2014.

Bloomberg Primes the Pump of the Deflationary Dialectic

Germany to Europe: Help Isn’t on the Way … German Finance Minister Wolfgang Schaeuble has bad news for anyone hoping the European Central Bank will ride to the rescue of the ailing euro region: Monetary policy has come to the end of its instruments. I don’t think ECB monetary policy has the instruments to fight deflation, to be quite frank. What we urgently need is investments, regaining confidence by investors, by markets, by consumers. His comments, in an interview with Bloomberg Television today, coincide with figures showing annual inflation slowed to 0.3 percent in the euro zone this month. That was the weakest rate of growth since October 2009 and marks 11 consecutive months of prices growing by less than 1 percent. The deflationary danger policy makers have been denying for months may be upon them. – Bloomberg View
Dominant Social Theme: Everything is going to be okay, really …
Free-Market Analysis: Bloomberg offers two editorials on Europe that tell us economic growth is not going well. The one above speaks to the issue of Mario Draghi’s lack of courage in terms of implementing a program of aggressive money printing.
The other one, which we excerpt below, is a kind of call to arms by Bloomberg itself – via its editorial staff – demanding that Europe’s leaders scrap the fiscal pact negotiated in 2012 that mandates certain austerity measures.
Taken together, they seem to be indicating a certain level of distress, and yet there are other ways to regard this double-barreled explosion of concern over the EU’s still-eroding economic condition.

This post was published at The Daily Bell on September 01, 2014.

Palladium Breaks Multi-Year High Over $900; Russian SWIFT Payment Ban Proposed By UK

Palladium Breaks Multi-Year High Over $900; Russian SWIFT Payment Ban Proposed By UK
The palladium price made a new 13 year high today and reached $909/oz, its highest since February 2001. Markets fear that the global supply of palladium could be impacted by the threat of further sanctions against Russia.
Palladium in U. S. Dollars – 20 Years (Thomson Reuters) The Russian mining industry has not been the target of sanctions so far, but with the oil sector already affected and the gas sector possibly the target of upcoming sanctions by the EU, markets remain fearful.
Russia is the world’s largest palladium producer accounting for over 40% of global production. This is mainly through Norilsk Nickel, the world’s largest mining company which mines nickel, copper and palladium in the area of Norilsk in Siberia, the world’s most northerly city. Palladium is mined as a by-product of nickel and copper mining.

This post was published at Gold Core on 1 September 2014.

COMEX Commercial Traders Reduce Shorts on Gold Futures, but Steady on Silver

HOUSTON – (Got Gold Report) – Large reporting commercial traders on the COMEX bourse in New York reported a considerably smaller net short position in gold futures. Taking the Legacy COT report as a guide, since August 12, when gold closed at $1309.12, as gold drifted $28.49 or 2.2% lower, we can point to a reduction of a rather large 37,139 contracts or 23.1% of the combined large commercial net short positioning (LCNS). Gold off 2.2% over the last two reporting periods, LCNS down 23.1%.

(CFTC for COT, Cash Market for gold, GGR, all charts.)
Exactly 24,114 lots of the gold reduction was in this week’s showing. By comparison the commercials covered very little of their net short position in silver this week, only 64 contracts, but since July 8, when silver closed at $21.02 silver gave back $1.67 or 7.9%. The Silver LCNS peaked the next week, July 15, at a whopping 58,696 contracts (293.5 million ounces). As of this past Tuesday, August 26 it was 37,319 contracts, a reduction of 21,377 contracts or 36%. So, for the six reporting weeks, as silver gave up 7.9% the combined commercial traders in the Legacy COT report covered or offset 36% of their bets that silver would decline in price.

This post was published at GotGoldReport on Sunday, August 31, 2014.