It is unclear what the catalyst is – aside from the bounce back from The FT’s rejection of Reuters rumor-spreading about ECB corporate bond buying but instead of the usual morning smackdown, precious metals are spiking higher. Gold hit $1255 – its highest in over 5 weeks). Oil is also spiking higher, WTI just broke above $83 (so much for that consumer tax cut?)
This post was published at Zero Hedge on 10/21/2014.
Economists at the Federal Reserve have devised a new indicator, which they hold will enable US central bank policymakers to get better information regarding the state of the labor market. The metric is labeled as the Labor Market Conditions Index (LMCI).
Note that one of the key data points Fed policymakers are paying attention to is the labor market. The state of this market dictates the type of monetary policy that is going to be implemented.
Fed policymakers are of the view that it is the task of the central bank to navigate the economy toward a path of stable self-sustaining economic growth.
One of the indicators that is believed could inform policymakers about how far the economy is from this path is the state of the labor market.
A strengthening of the labor market is seen as indicative that the economy may not be far from the desired growth path.
A weakening in the labor market is interpreted as indicating that the distance is widening and the economy’s ability to stand on its own feet is diminishing.
Once the labor market shows strengthening this also raises the likelihood that the Fed will reduce its support to the economy. After all, to provide support while the economy is on a path of stable self-sustained growth could push the economy away from this path toward a path of accelerating price inflation, so it is held.
This post was published at Ludwig von Mises Institute on Tuesday, October 21, 2014.
Moments ago, McDonalds not only released earnings and revenues, both of which missed – something which was largely expected since the backward looking data had been telegraphed by MCD’s recent global selling collapse – blanketed by atrocious commentary, but it disclosed its September global retail sales which were for lack of a better word, a disaster, after reporting global sales which dropped 3.8%, below the 3.2% expected, and the worst global month since at least 2003. The pain was everywhere, with Europe plunging 4.2% (est -0.9%), Asia down 7.5%, and the US down a whopping 4.1%, far below the 2.8% expected, and also the worst month in over a decade.
This post was published at Zero Hedge on 10/21/2014.
International Monetary Fund chief Christine Lagarde says the global economy is facing ‘the risk of a new mediocre, where growth is low and uneven.’… Lagarde said Europe’s 18-nation bloc that uses the euro currency – collectively the world’s biggest economy – is facing the “not insignificant” risk of falling back into a recession. (VOA News)
Since at least the beginning of 2006, the most asked question I get after a speech is ‘Do you think we will have inflation or deflation?’ In an attempt at humor, my answer has been ‘Yes.’ I go on to try to explain that we are in a deflationary environment, but eventually we will see inflation. When QE1 was announced, there were many pundits (none of the Keynesian variety) who immediately said the risk…
This post was published at Mauldin Economics on OCTOBER 20, 2014.
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 post was published at India Times
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 post was published at India Times
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.
This post was published at GATA
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 post was published at International Man
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 post was published at Business Insider
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 post was published at NY Times
The United States is doing better than it has in years. Jobs growth is up, unemployment is down, our manufacturing sector carries the rest of the world on its shoulders like a wounded soldier and the World Economic Forum named the U. S. the third-most competitive nation, our highest ranking since before the recession.
As heretical as it sounds, there’s a downside to America’s success, and that’s a stronger dollar. Although our currency has softened recently, it has put pressure on two commodities that we consider our lifeblood at U. S. Global Investors: gold and oil.
It’s worth noting that we’ve been here before. In October 2011, a similar correction occurred in energy, commodities and resources stocks based on European and Chinese growth fears. But international economic stimulus measures helped raise market confidence, and many of the companies we now own within these sectors benefited. Between October 2011 and January 2012, Anadarko Petroleum rose 58 percent; Canadian Natural Resources, 20 percent; Devon Energy, 15 percent; Cimarex Energy, 15 percent; Peyto Exploration & Development, 15 percent; and Suncor Energy, 10 percent.
Granted, we face new challenges this year that have caused market jitters – Ebola and ISIS, just to name a couple. But we’re confident that once the dollar begins to revert back to the mean, a rally in energy and resources stocks might soon follow. Brian Hicks, portfolio manager of our Global Resources Fund (PSPFX), notes that he’s been nibbling on cheap stocks ahead of a potential rally, one that, he hopes, mimics what we saw in late 2011 and early 2012.
A repeat of last year’s abnormally frigid winter, though unpleasant, might help heat up some of the sectors and companies that have underperformed lately.
This post was published at Gold-Eagle on October 20, 2014.
Another day, another central bank sticksave.
Moments after Europe’s open, when once again the equity futures complex was threatening to break the upward trendline, after USDJPY took out stops and sliding below 106.3, pushing bonds both in Europe and the US to intraday highs, and the ES to session lows just above 1890, and then… here comes the ECB rumor cavalry, this time in the face of Reuters which blasted the tape with:
ECB LOOKING TO BUY CORPORATE BONDS ON SECONDARY MARKET: REUTERS And because in this centrally-planned market no amount of GPIF or ECB doing what everyone knows they are doing headlines can not surprise the algos, ES has soared over 20 points from the overnight lows and is now solidly above the 200 DMA which was the clear intention of this latest sticksave.
Ironically, this happens even as the “pundits” interpret yesterday’s stronger than expected Chinese data as indicative of more China stimulus, not less! As Bloomberg summarized, “stronger-than-estimated economic data failed to convince analysts that China’s authorities will refrain from introducing more targeted measures.”
So first it was China reported better than expected goalseeked GDP “data” (if still the worst since 2009) which was evidence ofmore stimulus, not less, and then Reuters leaked today’s central bank “all green to buy stocks” headline.
To summarize: the S&P 500 is now almost 100 points higher from last Tuesday as the global central bank plunge protection team of first Williams and Bullard hinting at QE4, then ECB’s Coeure “ECB buying to start in a few days”, then China’s latest $30 billion “targeted stimulus”, then the Japanese GPIF hinting at a 25% stock rebalancing in the pension fund, and finally again the ECB, this time “buying of corporate bonds on secondary markets”, rolls on and manages to send stocks into overdrive. Even asabsolutely nothing has been fixed, as Europe is still tumbling into a triple-drip recession, as Emerging Markets are being slammed by a global growth slowdown and the US corporate earnings picture is as bleak as it gets.
This post was published at Zero Hedge on 10/21/2014.
As commented previously, the reason for today’s 30 point rip in emini futures from the lows hit just 4 hours ago, was a test of the ECB emergency BTFD service, today provided courtesy of Reuters which, just after the European close, gave what is ever more incorrectly called the “market” its dose of upward momentum ignition, when it reported that, in addition to the previously announced “private QE” which includes ABS and covered bond purchases, that Goldman’s head of the European central bank would also go ahead and monetize corporate bonds, taking a step even further than the Fed, which at least is confined to public securities, and directly influencing private asset prices.
The reason is well-known: in Europe there is a scarcity of unencumbered public debt, something we observed years ago…
This post was published at Zero Hedge on 10/21/2014.
Barack Obama and the Federal Reserve are lying to you. The “economic recovery” that we all keep hearing about is mostly just a mirage. The percentage of Americans that are employed has barely budged since the depths of the last recession, the labor force participation rate is at a 36 year low, the overall rate of homeownership is the lowest that it has been in nearly 20 years and approximately 49 percent of all Americans are financially dependent on the government at this point. In a recent article, I shared 12 charts that clearly demonstrate the permanent damage that has been done to our economy over the last decade. The response to that article was very strong. Many people were quite upset to learn that they were not being told the truth by our politicians and by the mainstream media. Sadly, the vast majority of Americans still have absolutely no idea what is being done to our economy. For those out there that still believe that we are doing “just fine”, here are 19 more facts about the messed up state of the U. S. economy…
#1 After accounting for inflation, median household income in the United States is 8 percent lower than it was when the last recession started in 2007.
#2 The number of part-time workers in America has increased by 54 percent since the last recession began in December 2007. Meanwhile, the number of full-time jobs has dropped by more than a million over that same time period.
#3 More than 7 million Americans that are currently working part-time jobs would actually like to have full-time jobs.
This post was published at The Economic Collapse Blog on October 20th, 201 4.
Yesterday it was IBM, today it is the turn of that other Buffett favorite and consumer-spending bellwether, Coke, to disappoint and push the stock lower, when not only did KO miss on the top line, reporting $11.98 billion in sales, below the Estimate $12.12 billion, but utter some unpleasant words about the future, guiding “below its long-term EPS growth target for 2014.” And because nothing says strong consumer like one of the biggest consumer staples blowing, we will merely wait for MCDs to come out next and complete the “recovery” picture.
And while elow we present some of the most amusing tidbits from the KO report, nothing beats “structural changes” as in:
Reported net revenues were even in the quarter and declined 2% year to date. Excluding the impact of structural changes, comparable currency neutral net revenues grew 1% in the quarter and 2% year to date. Reported operating income increased 10% in the quarter and 2% year to date. Excluding the impact of structural changes, comparable currency neutral operating income grew 5% in both the quarter and year to date, while the Company continued to invest for growth in its brands with its global system partners. After adjusting for structural changes, the Company delivered comparable currency neutral net revenue growth of 1% in the quarter, capturing global price/mix of 1%. On a year-to-date basis, comparable currency neutral net revenues grew 2% after adjusting for structural changes.
This post was published at Zero Hedge on 10/21/2014.
The following video was published by Peter Schiff on Oct 20, 2014
Longtime readers will recall that we’ve been covering the ongoing depletion of the GLD since early 2013. After today’s massive withdrawal, the total alleged “inventory” of the GLD now stands at a multi-year low of just 751.96 metric tonnes and down 5.8% on the year. This while the paper price of gold is actually up on the year by nearly 4%.
In case you’re new to this site and need a refresher, here are just a few of the articles we’ve posted in the past:
The alleged “inventory” of the GLD began 2013 at 1,349.92 metric tonnes of “gold”. Over the course of the year, while paper price declined from $1650 to $1200 or 27%, the “inventory” of the GLD declined to 798.22 mts or about 41%.
So far this year, even though paper price has recovered and, at times, has been up as much as 16%, the plundering of the GLD “inventory” has continued. Just today, the GLD registered a massive withdrawal of 8.97 metric tonnes or about 288,000 troy ounces of “gold”. Each pallet you see below holds 192 London Bars for a total of 76,800 ounces making today’s GLD withdrawal equivalent to:
This post was published at TF Metals Report on October 20, 2014.
Abrupt market losses typically reflect compressed risk premiums that are then joined by a shift toward increased risk aversion by investors. In market cycles across history, we find that the distinction between an overvalued market that continues to become more overvalued, and an overvalued market is vulnerable to a crash, often comes down to a subtle but measurable shift in the preference or aversion of investors toward risk – a shift that we infer from the quality of market action across a wide range of internals. Valuations give us information about the expected long-termcompensation that investors can expect in return for accepting market risk. But what creates an immediatedanger of air-pockets, free-falls and crashes is a shift toward risk aversion in an environment where risk premiums are inadequate. One of the best measures of investor risk preferences, in our view, is the uniformity or dispersion of market action across a wide variety of stocks, industries, and security types.
Once market internals begin breaking down in the face of prior overvalued, overbought, overbullish conditions, abrupt and severe market losses have often followed in short order. That’s the narrative of the overvalued 1929, 1973, and 1987 market peaks and the plunges that followed; it’s a dynamic that we warned about in real-time in 2000 and 2007; and it’s one that has emerged in recent weeks (see Ingredients of A Market Crash). Until we observe an improvement in market internals, I suspect that the present instance may be resolved in a similar way. As I’ve frequently noted, the worst market return/risk profiles we identify are associated with an early deterioration in market internals following severely overvalued, overbought, overbullish conditions.
With respect to Federal Reserve policy, keep in mind the central distinction between 2000-2002 and 2007-2009 (when the stock market lost half of its value despite persistent and aggressive Federal Reserve easing), and the half-cycle since 2009 (when Fed easing relentlessly pushed overvalued, overbought, overbullish conditions to increasingly severe and uncorrected extremes): creating a mountain of low- or zero-interest rate base money is supportive of risky assets primarily when low- or zero-interest rate risk-free money is considered an inferior holding compared with risky assets. When the risk preference of investors shifts to risk aversion, Fed easing has provided little support for prices (see Following the Fed to 50% Flops), which is why we believe it is essential to read those preferences out of the quality of market action.
This post was published at Zero Hedge on 10/20/2014.
The Fed bankers must be really upset: They haven’t even started to raise their base rate and markets are already in panic mode with the expected end to QE 3, just like junkies being told they might have to go into detox. The truth is that economic recovery is so fragile that it can’t go without monetary fixes.
The wind of speculation, brought about by much too low interest rates fixed by the Fed and the other central banks, is such that even turkeys have started to fly! In 2014, stock market euphoria and multi-billion dollar IPOs have reached new heights. Money has flown into all kinds of assets, including crypto-currencies. When the tide recedes we’ll be able to better see who was swimming naked.
This post was published at Gold Broker on Oct 20, 2014.
Amid two (notably female) resignations this weekend (Justice Minister Matushima and Trade Minister Obuchi for alleged misuse of political funds), Abenomics tilt towards women as a pillar of the Japanese recovery is taking yet another blow, removing “one of his ways of distracting people from his less popular policies.” However, it is Japan’s Economy Minister, Akira Amari, that went full economic retard this weekend – having learned well from his wise American central-planning brethren. Rather than face reality that Abenomics currency devaluation printfest has crushed the consumer beyond all expectations (as we noted since the start and Goldman just admitted), he blames the weather for economic weakness: “including the effects of large typhoons and heavy rains in July and August, Japan’s 3Q economic situation is probably not a strong recovery.”
This post was published at Zero Hedge on 10/20/2014.
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