Goldman Explains What Draghi Really Said

Jon

Via Goldman Sachs’ Dirk Schumacher,
Bottom line: The ECB left its policy rates unchanged at today’s meeting and made no announcement of further non-conventional measures. The main innovation in today’s press conference was the shift in the language regarding the expansion of the ECB’s balance sheet: an increase towards the size of its balance sheet at the beginning of 2012 is now ‘intended’, rather than simply an ‘expectation’ of the Governing Council (as in the November statement). We read this as implying a higher degree of commitment to balance sheet expansion and thus as a further signal towards additional asset purchases. As made clear by ECB President Draghi, some members of the Governing Council remain sceptical about the introduction of further measures. An assessment of whether further stimulus is needed will be made ‘early next year’. Having emphasised that he does not need to achieve unanimity on the Governing Council to proceed with further easing (including purchases of sovereign debt), we expect Mr Draghi to announce and implement a sovereign debt QE programme during the first half of next year.
ECB to assess need for further measures ‘early next year’ The opening paragraph of the prepared statement included few – but noteworthy – changes. The Governing Council continues to expect the current measures to have a ‘sizeable’ impact on the ECB’s balance sheet. The statement, however, now expresses the ‘intention’ to increase the size of the ECB’s balance sheet back to the level seen at the ‘beginning of 2012′. This implies a higher degree of commitment than the language used in the November statement, which had referred to an ‘expectation’ that the balance sheet would achieve this dimension.

This post was published at Zero Hedge on 12/04/2014.

Draghi and Company Disappoint Euro Bears

Jon

Expectations were high heading into today’s ECB meeting that the Central Bank would issue some news detailing the start of another round of stimulus for the lagging Eurozone economy.
‘Twas not to be.
Draghi TALKED doing more stimulus at some point as he went through the same litany of things that he has been saying seemingly forever at this point: “Economic risks remain to the downside” “our projections suggest lower inflation” “we now see GDP growth at 1.0% versus 1.6% in September”
BLAH, BLAH, and more BLAH. The problem is, as far as the market is concerned, they did NOTHING! Just talk.
That is NOT what the market wanted to hear so guess what? Time to cover all those short Euro positions were loaded in this week in anticipation that they would do SOMETHING. Up went the Euro, now over 100 points and once again, the currency markets are roiled by another yapping Central Banker.

This post was published at Trader Dan Norcini on December 4, 2014.

Chinese Stocks Up 41% Since Unleashing QE As Margin-Trading Doubles

Jon

A funny thing happened in China in July. Ever so quietly, and with little aplomb, the PBOC unleashed CNY 1 trillion of ‘Pledged Supplementary Lending’ (PSL) to China Development Bank – later dubbed “QE-Lite.” Economic indicators temporarily blipped higher, a new recovery was proclaimed by the masses, and the world fell back into its stupor… despite the post-credit-impulse hangover which has seen Chinese data collapse in the last 2 months. But that did not stop speculators… tired of betting on Chinese real estate (which never goes down), the ‘signal’ of QE has sparked a stunning 41% surge in Chinese stocks since PSL (and boosted by the recent rate cut). However, this exuberant resurgence ( 4.3% last night alone) rests on shaky foundations as margin trading balances have more than doubled during this period…
Probably just coincidence, right?

This post was published at Zero Hedge on 12/04/2014.

Here Is The Reason Why The Average Lifespan Of US Corporations Has Never Been Shorter

Jon

In his latest letter (link), GMO’s James Montier destroys the concept of shareholder value maximization or SVM, which, as defined by Friedman in 1970 is roughly as follows: ‘There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits…” As an aside, Montier is anything but a fan of Milton: ‘It is quite staggering just how many bad ideas in economics appear to stem from Milton Friedman. Not only is he culpable in the development of SVM, but also for the promotion of that most facile theory of inflation known as the quantity theory of money. Most egregiously of all, he is the father of the doctrine of the ‘instrumentalist’ view of economics, which includes the belief that a model should not be judged by its assumptions but by its predictions.”
And while the full letter covers many topics, not the least of which is corporate obsession with buybacks, which as we warned back in 2012 would soon be the only game in town thanks precisely to the same failed Federal Reserve policies that were meant to boost the economy but merely ended up benefiting the 1% and is therefore directly leading to the record wealth disparity and middle-class destruction which everyone – even the Fed – has finally noticed, there is one point that bears emphasis: the plunge in S&P500 corporate lifespans to record lows.
From Montier:
From the collected evidence on the psychology of incentives, it appears that when incentives get too high people tend to obsess about them directly, rather than on the task in hand that leads to the payout. Effectively, high incentives divert attention away from where it should be.
One of the other features that stands out as having changed significantly between the era of managerialism and the era of SVM is the lifespan of a company and the tenure of the CEO. Both have shortened significantly.

This post was published at Zero Hedge on 12/04/2014.

Dealing Desk: GoldMoney sees silver in demand

Jon

Dealing Manager at the online bullion dealer, Kelly-Ann Kearsey said, ‘The last seven days have seen net selling of gold and net buying of silver, continuing the trends that we saw last week. Overall, we have seen buying and selling equaling each other out, and the long-term trend of selling out of the UK and Switzerland vaults whilst more purchasing in Singapore and Canada can be seen.
‘Our volumes are up from last week, and silver has been the favourite over gold.’

This post was published at GoldMoney on 04 December 2014.

A SILVER LINING IN SOLAR ENERGY DEMAND?

Jon

Solar energy is seen as an important step towards cleaning up human society. The process works by using radiant light and heat from the sun harnessed using a range of ever-evolving technologies like solar heating, solar photovoltaics, solar thermal energy, solar architecture and artificial photosynthesis.
The development of solar energy is so important that, in 2011, The International Energy Agency said that ‘the development of affordable, inexhaustible and clean solar energy technologies will have huge longer-term benefits. It will increase countries’ energy security through reliance on an indigenous, inexhaustible and mostly import-independent resource, enhance sustainability, reduce pollution, lower the costs of mitigating global warming, and keep fossil fuel prices lower than otherwise. These advantages are global. Hence the additional costs of the incentives for early deployment should be considered learning investments; they must be wisely spent and need to be widely shared.’
One aspect of silver, which many people do not know about, is the amount of silver needed in order to create solar panels. Silver has long been needed in industrial applications.
Back in the days of analogue photography, film was coated with a minute layer of silver chloride, silver bromide or silver iodide. Silver has also been important for the production of motion pictures, as movie screens were once covered in paint embedded with the most reflective metal – silver – thus resulting in the ‘silver screen.’

This post was published at GoldSilverBitcoin on 3 DEC , 2014.

Here Comes The Stick Save: ECB “QE Coming” Headline Sends Stocks To New Record High

Jon

Who could have seen that coming!!??? Apparently Draghi could not clarify exactly what he meant in 90 minutes, 3 hours ago!!!!
*ECB SAID TO PREPARE BROAD-BASED QE PACKAGE FOR JANUARY MEETING So, despite telling us earlier than not January and not ready, we get this spurious headline just as EURUSD crossed 1.2450… Fun-durr-mentals indeed.

This post was published at Zero Hedge on 12/04/2014.

Venezuela “Boosts” Reserves With Rocks, Other “Easily Converted To Cash” Stuff; Suffers Major Blackout

Jon

With its bonds trading at 50% of face value, CDS implying an 84% chance of default, a black-market FX rate that signals massive devaluation is likely, and a teetering-on-the-brink of social unrest population entirely dependent on President Maduro’s generosity (and the military junta), it is perhaps not entirely surprising that they are trying any trick in the book to bolster reserves. The Venezuelan Central Bank issued a statement today (akin to Europe’s hookers-and-blow GDP adjustment) that enables them tocount a whole new set of ‘assets’ as potential international reserves including “stones” and “precious metals held in their vaults on behalf of foreign financial institutions.” Hey presto… new reserves.
Risk is rising…

This post was published at Zero Hedge on 12/04/2014.

ECB Inflation Expectations Crash; Slashed By Half In Just 9 Months

Jon

Back in March the ECB predicted 2014 inflation would be 1.0%, with prices rising to 1.3% in 2015. Since then one can say that deflation has once again taken hold, and following two consecutive cuts to 2014 inflation expectations, moments ago Draghi just released the ECB’s latest set of inflation expectations. In a nutshell: in just 9 short months, the ECB’s current year inflation forecast has been cut in half, with 2015 inflation also down nearly 50%, from 1.3% to 0.7%.

Of course, now that deflation is apparently stimulative according to the global Keynesian think tank, because plunging oil prices are supposedly a “tax cut” equivalent and will “force consumers to spend more”, this is good news right?

This post was published at Zero Hedge on 12/04/2014.

DHS, FEMA & THE EPA HAVE TAKEN OVER YOUR CHURCH

Jon

The churches of America continue to fail in their primary duty to their members, namely, to preach the word of God for the purpose of saving souls. There are the continuing assaults upon our churches and there are new threats to the viability of the Christian churches in America as well. There is only one inescapable conclusion, the Christian spirit in America’s churches is largely dead on arrival. It is highly likely that your pastor is bought and paid for by DHS or the EPA or some other alphabet soup federal agency. The message of the Bible has been subverted to promote the message of the government.
Maryland County Pushes Churches to Preach Environmentalism In Exchange for Tax Credits Looking into he background of this tax revealed that the EPA demanded a tax at the state level to cover the cost of pollution ‘run off’ into Chesapeake Bay. The EPA leaned heavily on the States and the State began to lean on the Church. This led to a ‘storm management fee,’ passed by the state legislature in 2012, which will now go into effect following a decree from Democrat Governor Martin O’Malley.
Maryland has subsequently ordered its 10 largest counties to raise almost $15 billion dollars to pay for mitigating ‘run-offs’.
Churches in a Maryland county are being offered tax breaks for incorporating environmentalism into their sermons. According to the Washington Post, 30 pastors have started preaching ‘green’ ministries to avoid extra taxes. This is all EPA driven and controlling the message of the church has long the goal of the government.

This post was published at The Common Sense Show on December 4, 2014.

Gold 14.3%, 12.3%, 5.8% and 0.4% in JPY, EUR, GBP and USD 2014 YTD

Jon

Despite the worst sentiment towards gold we have seen since the brief 30% price fall in 2008, gold continues to eke out gains in all major currencies. So far in 2014, gold is 14.3%, 12.3%, 5.8% and 0.4% higher in japanese yen, euros, sterling and dollars respectively (see chart).

Gold is again acting as a hedge against currency weakness and the ongoing devaluation of currencies as stealth currency wars continue. Overnight, gold rose to over EUR 986/oz and looks set to challenge the significant and important level of resistance that is EUR 1,000/oz due to euro weakness and concerns that Draghi may launch the ECB money printing ‘Bazooka’ in 2015.
There is a perception that gold has performed badly recently and in 2014 due to the recent dip in gold prices in dollar terms and despite the fact that gold is actually higher even in dollar terms in 2014.

This post was published at Gold Core on 4 December 2014.

New From Paul Mylchreest

Jon

Longtime Turdites will recall that Paul Mylchreest is an excellent metals analyst. His latest report explores in great detail the ongoing link between the price of gold and the value of the Japanese yen which, as you know, is a theme we’ve already been following here for months.
This is a lengthy and detailed summary and it is chock full of terrific information about the gold–yen link, the global gold “market” and GOFO/backwardation. Please take the time to scroll through it and thank you to Paul for sharing it!
TF

This post was published at TF Metals Report on December 4, 2014.

It’s All Coming To An End, Bill Gross Warns

Jon

Say what you want about Bill Gross, but the legendary bond investor is absolutely spot on in the following paragraph from his latest, December, investment outlook:
How could they? How could policymakers have allowed so much debt to be created in the first place, and then failed to regulate their own system accordingly? How could they have thought that money printing and debt creation could create wealth instead of just more and more debt? How could fiscal authorities have stood by and attempted to balance budgets as opposed to borrowing cheaply and investing the proceeds in infrastructure and innovation? It has been a nursery rhyme experience for sure, but more than likely without a fairytale ending.

This post was published at Zero Hedge on 12/04/2014.

US’s Debt Not Such a Big Deal -Mr. Gold

Jon

[edit] Mr. Gold’s last paragraph is the tell on his bias, as he is unwilling or unable to conceal the contempt he has for people who were absolutely right for 10 years and are now suffering a bear market, both to their asset of choice and in sound monetary thinking.
‘The vastly improved fiscal situation may last only a few years, but it’s a big plus for U. S. markets and the U. S. dollar – and another nail in the coffin for the gold bugs and doom-and-gloomers who can add one more item to the long list of things they got really, really wrong.’
Why the US’s Debt is No Longer Such a Big Deal -Howard Gold writing at MarketWatch
Before we find out about Howard’s thoughts on the debt situation (I am only going by the headline right now) let’s divide the GDP by the Federal Debt. This is a view of a deluded nation going right down a sink hole in service to greed and denial.
Now let’s see what Mr. Gold (not the discredited and now strangely silent ‘gold bug’ Mr. Gold) has to say in regard to ‘the US debt is no longer such a big deal’.
Shhh! Don’t tell anyone, but over the past couple of years, the U. S.’s debt burden, the big issue that swept Tea Party-led Republicans into control of the House of Representatives in 2010, has quietly improved.
Obligatory political baiting opens the article. Politics and financial markets never mix. Major political parties argue over certain details as favors their constituencies, but they are the two heads on the same freakish animal.

This post was published at GoldSeek on 4 December 2014.

Draghi: We Have Nothing To Fear But Gold-Buying Itself

Jon

ECB head Mario Draghi made it clear where the real battle is taking place in the world this morning. When asked what form QE would take, his response was to the point… “On what sorts of assets should be included in QE… we discussed all assets BUT gold” and gold dropped, right on cue.
Not really sure which assets we discussed but definitley not gold!!

This post was published at Zero Hedge on 12/04/2014.

Oh, Portugal!!

Jon

Submitted by Erico Matia Tavares of Sinclar & Co.,
It has been centuries since the Portuguese last dominated the world’s seaways, but in glancing over recent headlines one would be forgiven for thinking that their pirates are still running around.
With the economy still reeling from the effects of the devastating financial crisis in 2010-11, Portugal has been rocked by a series of corruption scandals which go to the very core of the political and financial establishments.
None other than Jos Socrates, Prime Minister from 2005 to 2011, is being held in custody in connection with money laundering, tax evasion and corruption charges; the figures involved are rumored to be in the many millions. A number of top officials of the current government have also been detained on graft charges targeting wealthy foreigners – mostly Chinese – seeking Portuguese residency under the “golden visa” scheme.
Earlier in the year, Grupo Esprito Santo, a significant conglomerate that owned a large stake in BES, one of Portugal’s largest private banks, failed spectacularly, after dodgy accounting practices and money transfers supposedly intended to fool regulators and investors could no longer remain hidden. Here we have the blue blood of Portuguese finance, with close ties to major domestic and international corporations and governments. The resulting losses are in the many billions.
Over the years there have been recurring allegations of corruption and unsavory dealings in the press, but these have been largely inconsequential. For one, Portugal is still perceived as being ‘cleaner’ than its Southern European peers: according to Transparency International, in 2013 it ranked #33 “cleanest” country in the world, compared to Spain at #40, Italy at #69 and Greece at #80.
Which is why these latest scandals are particularly shocking. Judicial actions of this nature being taken against very high profile political and business figures are extremely rare, even unprecedented in Portugal’s contemporary history.

This post was published at Zero Hedge on 12/04/2014.

Ted Butler Quote of the Day 12-04-14

Jon

[Speculative] position limits were fought by JPMorgan over the past five years because such an enactment would have been a disaster for the bank, which held a massively concentrated short position in COMEX silver during this time.  If JPMorgan was forced to buy back its silver short positions in excess of proposed limits, or even if the bank were prevented from adding new shorts to cap the price, the price of silver would have soared. Now that JPMorgan no longer holds a massive concentrated short position in COMEX silver—as I hope I have conveyed—the enactment of position limits could very well benefit the bank (if I am anywhere near close on how much physical silver the bank has acquired).

A small excerpt from Ted Butler’s subscription letter on 12-03-14.

More precious metals news & information available at
Ed Steer’s Gold & Silver Daily.		  

India unlikely to cut gold duty soon

Jon

Any revision in gold import duty is unlikely to take place before the Budget and there is no proposal as of now to reduce the 10 per duty, a finance ministry official said.
‘On import duty (on gold) there is no decision at the moment. Import duty whatever has to be done will form part of the Budget. At the moment there is no proposal to reduce import duty on gold,’ the official said.
There has been widespread expectations of reduction in customs duty on gold due to the improved current account deficit situation. The Commerce Ministry has also been pitching for a cut in import duty on the precious metal.
General Budget for the coming fiscal year is generally announced on the last working day of February.
Earlier this week, RBI Governor Raghuram Rajan had also said that there were some requests to change the duty structure (on gold) and that government will view and take a decision on it.

This post was published at TruthinGold on December 4, 2014.

4 Million Homeowners Still Underwater, Total Negative Equity $157 Billion

Jon

In spite of a sustained rally in home prices, the October Black Knight Financial Services Mortgage Monitor shows Four million borrowers currently underwater.
Highlights
Black Knight found that even though underwater mortgages are now less than 8% of all mortgages, there are still roughly 4 million borrowers in negative equity positions, who are, on average, $39,000 underwater. Underwater borrowers, representing nearly $800 billion in unpaid balances and $157 billion in negative equity, are 10X more likely to be delinquent than those with positive equity. Underwater borrowers exhibit a 40% delinquency rate, as compared to just 4% for borrowers with equity For those with combined LTVs of 150% or greater, more than 3 out of every four (77%) are delinquent There are approximately 1.3 million underwater GSE-backed mortgages representing an aggregate $39 billion in negative equity; of these, 365K are delinquent Much-discussed principal reductions on delinquent underwater borrowers would require up to $89 billion in write-downs; the GSE share alone would require up to $18 billion Black Knight found some relaxation in credit requirements for refinance originations (though these are still high by historical standards) Weighted average credit scores for GSE refinances have come down to 742 from a high of 766 in late 2011, while credit requirements on GSE purchase mortgages have remained tight since 2009 GNMA backed originations have also seen some relaxation in refi credit requirements, with weighted average credit scores down from 727 at the end of 2012 to 701 (which is still significantly higher than 2005’s average of 628) Looking at the refi market as a whole, Black Knight found that borrowers with 740 credit scores make up 55% of 2014 refi market, as compared to just 29% in 2005 Sustained Improvement in Negative Equity

This post was published at Global Economic Analysis on Thursday, December 04, 2014.