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.

Mario Draghi’s “Just One More Month, I Promise” ECB Press Conference – Live Feed

Jon

With a disappointingly slow asset accumulation in the ABS and Covered Bond purchase schemes, Draghi better “get back to work” soon or the market (EURUSD down 17 handles on nothing but promises) will lose its patience. As we noted earlier, Weidmann’s hints suggest the oil-price-slowdown is providing cover for monetary policy and obscuring the ‘bad’ deflation. Crucially Draghi will need to stress the ‘need’ for action and the ‘unanimity’ of that decision to keep the algos buying…

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

The Dollar And Gold: The New Normal?

Jon

I am not sure what to make of the U. S. Dollar (DXY) vs Spot GOLD relationship recently, because it has certainly been counter-intuitive, not to mention counter-historical.
It is unusual to have such a strong Dollar concurrent with such a resilient Gold price.
That said, the relationship is not counter-seasonal, however.
When the Dollar has a pronounced direction heading into Dec, it usually continues into year end, while Dec usually resides within the seasonally-strong Nov-Mar time period for GOLD.

This post was published at Gold-Eagle on December 3, 2014.

Initial Jobless Claims Miss For 4th Week In Row

Jon

After last week’s jerk higher (now revised even higher to 314k), this week saw a modest 17k drop to 297k (magically back below the 300k Maginot Line) but still missed expectations. Obviously, initial claims still linger near 14 year lows but the smoother 4 week average rose around 5k to 299k. Continuing claims rose 39k and has hovered at these decade-long lows for 6 weeks now – though unadjusted Regular State (ex) employees claiming UI benefits jumped 125K from 2.065 million to 2.190 million.. It appears the trend of improvement has ended/stabilized.

Charts: Bloomberg

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

Markets Slide As Draghi Kicks The Can

Jon

But, but, but all the clever talking heads said he had to do it now…
*DRAGHI SAYS ECB TO REASSESS CURRENT STIMULUS NEXT QUARTER Though the decision was unanimous, this is not what the market wanted to hear – Draghi kicking the can with no indication they are any closer to getting Zee Germans on board with direct monetization of European fiscal irresponsibility.

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

Secret platinum stocks declining – World Platinum Investment Council

Jon

The volume of vaulted platinum holdings held confidentially is declining, the recently launched World Platinum Investment Council said on Wednesday.
The council, which has just published its first quarterly analysis of global platinum supply and demand fundamentals, said the platinum shortfalls of the last two years had reduced above-ground stocks from a level of 4.14-million ounces at the end of 2012.
The bringing to the market of these secret stocks has been a key factor in holding down the platinum price during the prolonged five-month strike on South Africa’s platinum belt when supply was significantly cut.
The council’s maiden publication put these above-ground stocks – on which information is traditionally hard to come by – at 2.56-million ounces, 1.58-million ounces down on the 2012 position, which adds a new transparency.

This post was published at Mining Weekly

Platinum market deficit seen at 885,000 oz in 2014 – WPIC

Jon

The platinum market is expected to see a shortfall of 885,000 ounces this year, a report by the World Platinum Investment Council (WPIC) estimated on Wednesday, as a strike in major producer South Africa reduced supply.
The above-ground stocks of the metal that have helped cushion prices from the impact of the tightening market are expected to have declined significantly. Platinum prices are down 11 percent this year despite a third straight yearly deficit.
The WPIC, which commissioned the report from consultancy SFA (Oxford), said it sees above-ground platinum inventories, excluding exchange-traded funds, metal held by exchanges, and industry working inventories, at 2.56 million ounces at year-end.  That is down from 3.445 million ounces at the end of last year, it said.

This post was published at Mineweb

Harsh words on Swiss gold referendum from von Greyerz

Jon

Maybe he would be classified as a sore loser but Egon von Greyerz, of Matterhorn Asset Management, and one of the leading lights behind the unsuccessful Yes campaign in the recent Swiss Gold Referendum, may have a point regarding the tactics used by the Swiss establishment to secure victory.
“We were beaten squarely, but not fairly,” he commented at Mines & Money London on Tuesday.
He pointed to examples of the unprecedented campaign by the Swiss National Bank (the country’s central bank) to derail the Yes campaign. How the leader of the Swiss Gold initiative was prevented from appearing in a debate on the referendum on Swiss TV and that the Yes campaign was blocked from receiving donations via PayPal. This was quite apart from appearances by the head of the Swiss National Bank in the Swiss media almost daily to generate opposition to the proposal by someone who normally shuns any kind of publicity.

This post was published at Mineweb

The New York Sun: Beyond Bernard von NotHaus

Jon

Congratulations are in order to U.S. District Judge Richard Voorhees of North Carolina for the judiciousness of his decision in the case of Bernard von NotHaus. We weren’t present at the courthouse at Stateville, where von NotHaus had been ordered to appear Tuesday for sentencing on his conviction of uttering — introducing into circulation — his Liberty Dollars. But we were on tenterhooks because von NotHaus, 70, was looking at the possibility of spending the rest of his life in prison.
The reason we’ve been watching the case is that von NotHaus’ demarche is one of the few direct challenges to what the Foundation for the Advancement of Monetary Education likes to call "legal tender irredeemable electronic paper ticket money." That refers to the scrip being issued by the Federal Reserve. Von NotHaus had designed and circulated a medallion made of pure silver, the same specie that was fixed on by the Founders of America as the basis of the constitutional dollar.

This post was published at New York Sun

Judge in Liberty Dollar case orders some metal forfeited and some returned

Jon

The judge in the Liberty Dollar case in U.S. District Court for the Western District of North Carolina, Richard Voorhees, on Tuesday ordered some of the Liberty Dollar's coinage and metal forfeited to the U.S. government and some silver deposited by Liberty Dollar founder Bernard von NotHaus' mother, to be returned to her.
The judge also recommended that the U.S. Treasury Department consider applications from Liberty Dollar customers for return of their metal if the customers claim not to have been participating in a counterfeiting scheme.

This post was published at GATA

France lowers deficit forecast, vows no new taxes

Jon

France's finance minister cut the country's deficit forecast for 2015 on Wednesday (3 December) adding that Paris will be well within the E.U.'s 3 percent limit by 2017.
Michel Sapin told a press conference that he had revised France's expected deficit down to 4.1 percent from the 4.3 percent previously forecast, as a consequence of extra savings worth €3.6 billion announced by Sapin in October.
The extra money does not come from additional spending cuts but instead from lower interest expenses from servicing France's debts, a reduction in its contributions to the E.U. budget, and extra tax revenues from a clampdown on tax evasion and a new tax on second homes.
"We have revised the 2015 deficit … without touching the fundamentals of French economic policy," Sapin told reporters.

This post was published at EU Observer

Don’t Bet on $70 Oil Lasting Long

Jon

Oil Tanks You puttin’ the hurtin’ on ‘em now.
– Tommy Wilkerson
Refinancing? Get Quotes from Top Lenders. LendingTree.com/Refinancing
Again, we quote our old friend. Mr. Market has been puttin’ the hurtin’ on gold bulls. On Monday, he went after the gold shorts. Gold rose $42.60 – or 3.6%. That’s proportionally equal to a move of 640 points on the Dow. But today our sympathies go to poor Vladimir Putin and Nicols Maduro. In Russia, the ruble is falling and growth is grinding to a halt. In Venezuela, the whole economy is falling apart. The proximate cause of this hurtin’ is a fall in the price of oil.
Yesterday, US crude oil rose $2.85 – or 4.3% – to $69 a barrel, its largest daily gain since August 2012. But it’s still down 32% from its 52-week high, set in June. Outside of the big oil exporting countries and the US shale-oil business this big drop in prices is widely seen as good news.
Consumers fill their tanks at lower gas prices and have a few bucks left over – money that can be used to buy things. According to the current and conventional delusions of the economic profession, this leads to sustained higher economic growth, more jobs and a cure for impotence.
But dear reader, was there ever in the history of the world a hurtin’ that stayed put? That’s the trouble with hurtin’: It moves around. In today’s Diary we look more closely at the subject of hurtin’ generally… and the effect of lower oil prices, specifically.
In passing, we observe that the secret to investing success is to buy what is hurtin’ when it is hurtin’ most … and to sell what ain’t.

Photo credit: Robert Garvey / Corbis

This post was published at Acting-Man on December 3, 2014.

Algo Eyes On Draghi Ahead Of ECB Announcement

Jon

Today we’ll learn more about whether Mr Draghi becomes Super Mario in the near future as the widely anticipated ECB meeting is now only a few hours away. We will do another summary preview of market expectations shortly, but in a nutshell, nobody really expects Draghi to announce anything today although the jawboning is expected to reach unseen levels. The reason is that Germany is still staunchly against outright public QE, and Draghi probably wants to avoid and outright legal confrontation. As DB notes, assuming no new policy moves, the success of today’s meeting will probably depend on the degree to which Draghi indicates the need for more action soon and the degree to which that feeling is unanimous within the council. Over the past weekend Weidmann’s comment about falling oil prices representing a form of stimulus highlights that this consensus is still proving difficult to build. It might need a couple more months of low growth and inflation, revised staff forecasts and a stubbornly slow balance sheet accumulation to cement action.
As if hypnotized by Draghi’s perpetual inability to actually do anything (as opposed to say), a massive barrier of selling has emerged at the 120 level in the USDJPY. It will surely be taken out later today in a major stop hunt, which will in turn push US futures, whether bought by central banks or not, to new record highs, while the Japanese currency ploughs on to SocGen’s point of no return, first at 123 then at 145, and then at #Div/0. Another question has emreged on European bonds: if and when Draghi does finally implement sovereign QE, will that be the signal to sell everything? Judging by the reaction in the US fixed income market, bonds have sold the news in each of the previous 3 QE episodes. Why should Europe be any different?
European equities have lacked direction and remain marginally higher ahead of today’s ECB & BoE rate decision with both central banks expected not to take any action. On a sector basis, consumer discretionary is the best performer, however energy stocks have been lagging as the FTSE 100 marginally underperforms given its large gearing toward resource based firms. In stock specific news, Ryanair opened the session significantly higher trading as high as 8.5% after raising their FY profit forecast with easyJet higher by 2.4% in sympathy with the move.

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

What Wall Street Expects From Mario Draghi Today

Jon

While the ECB’s announcement is due out in minutes, the only thing the market is looking forward to is Draghi’s actual press conference due to take place in exactly one hour. It is here that the former Italian and Goldman banker is expected to take jawboning to new levels, even if – as is customary – he actually does nothing and considering the ECB’s balance sheet, which after all its private covered bond and ABS QE is growing at the “torrid” pace of some 4 billion per week, not even enough to offset the natural decline in the ECB’s balance sheet, his actions so far have achieved absolutely nothing the algos are starting to get impatient.
That said, in also keeping with traditiona, no analyst is actually willing to step out of line and forecast anything market-moving.
Here, courtesy of RanSquawk, is a summary of what Wall Street’s individual banks expect from Draghi in a few minutes.
Host of tier 1 investment banks have recently revised their base case scenarios for an ECB QE programme from a ‘No/unlikely’ to a 1H 2015 timeframe Despite the likelihood of an ECB sovereign bond purchase programme in the near-term it is highly unlikely that this week’s meeting will see the unveiling of such stimulus Q&A session may garner particular focus given the recent slide in oil prices

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

Getting Interest Rates Right (Is a Job For Markets)

Jon

When the central bank meets to decide on the level of interest rates, most people care about only one thing: are my home loan, car, and credit card repayments going up, down, or staying the same? Although this is no trivial concern given the importance of managing a household budget, such a limited view does scant justice to the broad, critical, and complex role interest rates play in an economy.
What Soda Prices Tell Us About Interest Rates The usual narrative is that low rates are good and high rates are bad. But the real problem is not ‘high’ interest rates, but wrong interest rates. You see, interest rates are like prices. Like the price of a soda drink is agreed between seller and buyer, so interest rates are the price of loans agreed between lender and borrower.
Suppose the government forced the price of sodas to half their market level, jailing anyone caught selling them at any price above this new level. What happens? Soda lovers flock to the stores to buy soda. Soda makers, by contrast, take heavy losses and either close down or find some way to make cheap and less tasty soda for half the original cost. The supply of soda plummets, while the quality of good soda free falls.
Paradoxically, setting a price artificially low makes a product easy to buy for a while, but eventually leads to shortages. Interest rates in most modern economies work in a similar way. The central bank forces this price (the interest rate) to a desired level through extensive regulatory control over the banking system, relying on the fact that the money it creates is the only legally permissible money used in trade. When the central bank forces interest rates too low, borrowers think life is great. Houses, cars, and furniture seem cheap and starting a business with a loan is easy. Except that discerning lenders don’t see much point in lending anymore, because they are no longer adequately compensated for their costs and risk. Not only do loans from these lenders dry up, but the quality of remaining loans falls.

This post was published at Ludwig von Mises Institute on DECEMBER 4, 2014.

ECB Keeps Rates Unchanged, As Expected

Jon

No surprises in the official ECB statement…
At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.05%, 0.30% and -0.20% respectively.

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

Oil And The Global Slowdown

Jon

The world economy is slowing down and the authorities are fretting.
Japan, Italy, and Greece are all in recession. China is slowing down according to official statistics, and even more according to whispered accounts.
Germany, France and the Netherlands are all at stall speed.
According to the BLS, the United States is doing just great at nearly 4% growth for two straight quarters, but you wouldn’t know that either from the quality of the few jobs being created (which is low) or from consumer spending (also low).
The worry, as always, has nothing to do with the central banks’ concern for you, your job, your children, the actual prices you pay, wealth equality, or the future, and everything to do with the simple fact that the stability of the banking system absolutely depends on a steady stream of new loans.
The problem, as always, is that we have a monetary system that is either expanding or collapsing. It has no steady state.
Either money and credit are expanding and the banks are relatively happy or the banks are collapsing and demanding taxpayer bailouts. It’s really that stark. We are being driven by our system of money, we serve it not the other way around, which is a tragedy of both epic and comic proportions.
I guess with the binary choices of growth or collapse before them it only makes sense for the current crop of central bankers to do whatever it takes to keep that system limping along, er growing, for as long as possible.
In 2008 and 2009, net credit creation was only slightly negative, but that was enough to very nearly cause the entire system of money and banking in the developed world to collapse.
Now after the most heroic period of interest rates forced to zero (ZIRP) and below (NIRP in Europe) and the grandest experiment with money printing in global history, credit growth is somewhat back on track but not enough to ease the banker worries or to justify their actions.
So the bankers continue to pump, jawbone, and panic at every slight downturn in financial market prices because that’s all they have left in the world upon which they can hang their reputations.

This post was published at PeakProsperity on December 3, 2014.