Mar 20

- Chinese Stocks Enter Bear Market Following 2 More Defaults Overnight (ZeroHedge, March 20, 2014):

Following the default of 2 more corporations last night, Hang Seng’s index of China Enterprises plunged to 8-month lows and officially entered bear market territory. Overnight angst in the Chinese currency markets (which saw the Yuan trade back to 1-year lows) has sparked broad commodity weakness (as CCFD unwinds en masse) with copper giving back most of yesterday’s major short squeeze gains back. Chinese corporate bond prices also tumbled to one-month lows.

Hang Seng’s China Enterprise Index (the most liquid vehicle for trading Chinese stocks for foreigners) has entered a bear market

20140320_china1

as cash-for-commodity financing deals continue the unwind, Continue reading »

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Mar 13

See also:

- RECOVERY: Baltic Dry Plunges 8%, Near Most In 6 Years As Iron Ore At Chinese Ports Hits All Time High


- Is “Dr. Copper” Foreshadowing A Stock Market Crash Just Like It Did In 2008? (Economic Collapse, March 12, 2014):

Is the price of copper trying to tell us something?  Traditionally, “Dr. Copper” has been a very accurate indicator of where the global economy is heading next.  For example, back in 2008 the price of copper dropped from nearly $4.00 to under $1.50 in just a matter of months.  And now it appears that another big decline in the price of copper is starting to happen.  So far this year, the price of copper has dropped from a high of $3.40 back in January to a price of $2.95 as I write this article, and many analysts are warning that this is just the beginning.  By itself, this should be quite alarming to investors, but as you will see below there are a whole host of other signs that a stock market crash may be rapidly approaching. Continue reading »

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Mar 10

- Celebrating China’s First Bond Default: Copper Limit Down, Yuan Crashes Most In Six Years (ZeroHedge, March 9, 2014):

It would appear the fecal matter is starting to come into contact with the rotating object in China. Worrying headlines are beginning to mount on the back of real economic events (an actual default and a collapse in exports):

  • *COPPER IN SHANGHAI FALLS BY 5% DAILY LIMIT TO 46,670 YUAN A TON
  • *CHINA YUAN WEAKENS 0.46% TO 6.1564 VS U.S. DOLLAR
  • *YUAN DROPS MOST SINCE 2008

Aside from that Iron ore prices are crumbling, Asian stocks are dropping, Chinese corporate bond prices aee falling at their fastest pace in almost 4 months, and all this as 7-day repo drops to one-year lows (as banks hoard liquidity).

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Jan 16

- Precious Metals Manipulation Worse Than Libor Scandal, German Regulator Says (ZeroHedge, Jan 16, 2014):

Remember when banks were exposed manipulating virtually everything except precious metals, because obviously nobody ever manipulates the price of gold and silver? After all, the biggest “conspiracy theory” of all is that crazy gold bugs blame every move against them on some vile manipulator. It may be time to shift yet another conspiracy “theory” into the “fact” bin, thanks to Elke Koenig, the president of Germany’s top financial regulator, Bafin, which apparently is not as corrupt, complicit and clueless as its US equivalent, and who said that in addition to currency rates, manipulation of precious metals “is worse than the Libor-rigging scandal.” Hear that Bart Chilton and friends from the CFTC?

More on what Elke Koenig said from Bloomberg: Continue reading »

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Dec 05

- Jim Rogers Cautions “Be Prepared, Be Worried, And Be Careful… This Is Going To End Badly” (ZeroHedge, Dec 4, 2013):

“Eventually, the whole world is going to collapse,” Jim Rogers chides a disquieted CBC anchor as he explains the reality that, “we in the West have staggering debts. The United States is the largest debtor nation in the history of the world,” adding that “this is going to end badly.

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Sep 11

Flashback:

- Will JPMorgan’s ‘Enron’ Be The End Of Blythe Masters?

- JPMorgan Employee Who Invented Credit Default Swaps is One of the Key Architects of Carbon Derivatives, Which Would Be at the Very CENTER of Cap and Trade


- JPM May Be Parting Ways With Blythe Masters (ZeroHedge, Sep 10, 2013):

It is somewhat ironic that none other than CNBC is reporting the news (which was suggested here months ago in “Will JPMorgan’s “Enron” Be The End Of Blythe Masters?”) that as part of its divestment of its physical commodities unit announced previously, JPMorgan may also seek to cover up any trace of market manipulation in the division recently embroiled in the aluminum cartel scandal (which we reported on in June 2011 and which story recently rose to prominence as a result of follow up reporting by the NYT) by getting rid of none other than Blythe Masters.

To wit: “JPMorgan’s initial round of conversations over the sale of its physical commodities unit has involved at least 50 potential suitors, according to someone familiar with the matter, as the bank attempts to ink a deal by the end of the year. In addition to energy supply contracts and metal-storage facilities, people close to the deal say the transaction could include a significant human asset: JPMorgan’s longtime commodities head, Blythe Masters.  In addition to the physical assets it is selling—including the Liverpool, England-based metal-storage business Henry Bath & Son, U.S. power plants, and crude-oil and power supply agreements—any deal to sell JPMorgan’s commodities business could involve Masters, the division’s current leader, as well. Masters, 44, has found her future at JPMorgan in question as regulators crack down on both its power-supply business over alleged manipulations and the whole notion of banks owning commodities assets more generally.

Ironic, because it was an extended CNBC interview-cum-PR campaign with Blythe Masters in April of 2012, just before the London Whale scandal broke, and one of her very rare media appearances, in which she made the following quite amusing, and factually wrong, in retrospect, statements: Continue reading »

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Sep 09


JPMorgan certainly wants to slaughter some more muppets


- JPMorgan Closes Precious Metals Sell Recommendation, Goes “Tactically Overweight” Commodities (ZeroHedge, Sep 8,  2013):

One of the most underreported sentiment shifts of the past week was JPM’s announcement late on Friday, that the firm quietly went long commodities – specifically base metals and copper (in addition to energy) – and the firm also closed it “sell” (i.e., underweight) in precious metals. This is not surprising: we had noted the ongoing purchasing of gold by JPM over the past two month (in part to restore its depleted gold vault inventory) when the yellow metal not only stabilized but promptly entered a bull market, returning 20% in a short period of time. And as gold was rising, JPM was advising its clients to sell. It seems JPM now has more than enough gold stashed away, and as the September shock is set to unwind, even JPM may be seeking the safety of gold, and the usual other hard asset suspects, if and when events escalate out of control, resulting in another “risk off” phase.

From JPM:

Commodities: We have turned tactically long commodities and OW vs. cash and fixed income.

Continue reading »

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Aug 18

- JPMorgan Puzzled By Record Gold Backwardation (ZeroHedge, Aug 18, 2013):

Curious where all the demand for (immediate) physical gold (delivery) is coming from (as detailed here first in April)? As it turns out, so is JPMorgan.From this week’s Flows & Liquidity

SEC filings showed that the largest hedge fund holders of the gold ETFs liquidated most of their positions in Q2, although the single largest holder commented that they had simply switched their exposure from ETFs to the OTC derivative market as the current downward sloping forward curve makes it cheaper to be long gold through futures than via the ETF. Figure 7 shows the annualized % difference between the 1st and 2nd COMEX gold futures contracts going back over the past 30 years on a weekly basis. As the figure shows, a backwardated (downward sloping) gold forward curve is very unusual. This is an indicator of how strong physical demand is, i.e. spot is bid up relative to forward prices due to strong demand for immediate delivery of gold.

Ostensibly, this means that until the Bundesbank and/or PBOC finally issue a relevant 8-K, the “confusion” will continue.

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Aug 18

- JPMorgan Is Selling The Building That Houses Its Gold Vault (ZeroHedge, Aug 18, 2013):

On the surface, there is nothing spectacular about the weekend news that JPMorgan is seeking to sell its 1 Chase Manhattan Plaza office building. After all, the former headquarters of Chase Manhattan Bank, located deep in the heart of the financial district and which was built by its then chairman David Rockefeller, is a remnant to another time – a time when banking was about providing loans, not about managing and trading assets which has become the realm of Midtown New York, and since JPM already has extensive Midtown exposure with its offices at 270, 270 and 245 Park, the 1 CMP building always stood out as a bit of a sore thumb. Of course, as Zero Hedge readers first learned, the big surprise is literally below the surface, some 90 feet below street level to be exact, where the formerly secret JPM gold vault is located, which also happens to be the biggest commercial gold vault in the world.

Continue reading »

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Aug 02

- Beef Supply at 21-Year Low: Get Ready to Pay Up (Liberty Blitzkrieg, Aug 2, 2013):

I don’t follow the commodity markets as closely as I used to, but the following article related to beef prices really caught my eye. Last year’s drought and consequent spike in grain prices led to negative margins for cattle producers, who subsequently culled their herds. As expected, this has resulted in tighter supply today. We see this evidenced in the fact that retail ground beef prices were up 13% year-over-year in June, and the CEO of Ruth’s Chris mentioned during a recent presentation that they were forced to raise prices in February. While grain prices are much lower today, which should encourage expansion in cattle supply, this process will actually cause even more tightness in the near-term as more animals are set aside for breeding rather than slaughtered.

Don’t worry, you can always just eat the S&P 500.

From Bloomberg:

U.S. beef production is plunging to a 21-year low after surging feed costs spurred ranchers to cut herds, signaling record prices for consumers and higher costs for buyers from McDonald’s Corp. to Ruth’s Chris Steak House.

Production in the U.S. will decline 4.9 percent to 10.93 million metric tons in 2014, retreating for a fourth year, the government says. The herd on July 1 was the smallest for that date since at least 1973, according to the average of four analyst estimates compiled by Bloomberg.

Retail ground-beef prices in June were up 13 percent from a year earlier and near a record set in January.

Continue reading »

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Jul 27

- JPMorgan To Exit Physical Commodity Business (ZeroHedge, July 26, 2013):

After weeks of emptying of their Gold vaults and making headlines in recent days over their oligolopolization of commodity warehousing, it seems the threat of a probe has excited Blythe and her colleagues to dump while the dumping is good:

  • JP. MORGAN TO EXPLORE STRATEGIC ALTERNATIVES FOR ITS PHYSICAL COMMODITIES BUSINESS

Options include sale, spin-off, or strategic partnership as they re-confirm that they are “fully committed to traditional banking activities,” as they look to drop the holdings of commodities assets and the physical trading business. We can only assume that “physical commodities” include the company’s extensive inventories of tungsten (as well as the vault housing it), and not so extensive stores of gold and silver. That said, we are confident that the collapse in represented (but not warranted) JPM Comex gold vault holdings to a record low, and this news is completely unrelated.

From JPM:

J.P. Morgan to Explore Strategic Alternatives for its Physical Commodities Business

Continue reading »

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May 20

- Gold And Silver Inverse Baumgartner’d (ZeroHedge, May 20, 2013):

UPDATE 1: Chatter of a potential US downgrade from Moody’s is being blamed (but that news out hours ago)UPDATE 2: Silver futures trading volume 82% higher than 100-day average

While the mainstream media will likely be loathed to mention it, gold and silver are surging higher. Gold has retested $1400 and Silver $23 on no news… so it seems the demand for ‘cheaper’ precious metals was enough to warrant a 4.6% rally off overnight lows in gold and 12.5% in silver amid heavy volume in futures markets…

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Apr 24

- Physical Gold vs. Paper Gold: The Ultimate Disconnect (Casey Research, April 23, 2013):

How can we explain gold dropping into the $1,300 level in less than a week?

Here are some of the factors:

  • George Soros cut his fund holdings in the biggest gold ETF by 55% in the fourth quarter of 2012.
  • He was not alone: the gold holdings of GLD have contracted all year, down about 12.2% at present.
  • On April 9, the FOMC minutes were leaked a day early and revealed that some members were discussing slowing the Fed $85 billion per month buying of Treasuries and MBS. If the money stimulus might not last as long as thought before, the “printing” may not cause as much dollar debasement.
  • On April 10, Goldman Sachs warned that gold could go lower and lowered its target price. It even recommended getting out of gold.
  • COT Reports showed a decrease in the bullishness of large speculators this year (much more on this technical point below).
  • The lackluster price movement since September 2011 fatigued some speculators and trend followers.
  • Cyprus was rumored to need to sell some 400 million euros’ worth of its gold to cover its bank bailouts. While small at only about 350,000 ounces, there was a fear that other weak European countries with too much debt and sizable gold holdings could be forced into the same action. Cyprus officials have denied the sale, so the question is still in debate, even though the market has already moved. Doug Casey believes that if weak European countries were forced to sell, the gold would mostly be absorbed by China and other sovereign Asian buyers, rather than flood the physical markets.

My opinion, looking at the list of items above, is that they are not big enough by themselves to have created such a large disruption in the gold market.

The Paper Gold Market

Continue reading »

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Apr 18

Compare Ambrose Evans-Pritchard’s article to …

- Former Assistant Secretary of the Treasury Dr. Paul Craig Roberts: The Assault On Gold – Assault On Gold UPDATE


- Fed and Bank of Japan caused gold crash (Telegraph, Ambrose Evans-Pritchard April 17, 2013):

Commodity prices have been falling since September, culminating in a rout over the past two weeks. That is a classic warning for the global economy.

It is becoming ever clearer that the roaring boom in global equities since last summer has priced in an economic recovery that does not in fact exist. The International Monetary Fund has had to nurse down its global growth forecasts yet again. We are still stuck in an old-fashioned trade depression, with pervasive over-capacity in manufacturing plant and a record global savings rate of 25pc of GDP.

German car sales fell 17pc in March. That should puncture the last illusions that Germany is about to pull Europe out of a self-inflicted slump.

As you can see from the chart below, the divergence between stock markets and the Deutsche Bank index of raw materials is astonishing to behold, so like the pattern in early 1929. Continue reading »

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Mar 10

FYI.


- Jim Rogers: We’re Wiping Out The Savings Class Globally, To Terrible Consequence (Peak Prosperity, March 9, 2013):

Jim Rogers decries the growing uncertainty and recklessness of global central planners as the world enters unchartered financial markets:

For the first time in recorded history, we have nearly every central bank printing money and trying to debase their currency. This has never happened before. How it’s going to work out, I don’t know. It just depends on which one goes down the most and first, and they take turns. When one says a currency is going down, the question is against what? because they are all trying to debase themselves. It’s a peculiar time in world history.

Continue reading »

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Mar 08

- Governments Worldwide are Implementing Orwellian Gold Confiscation Today. You Just Haven’t Realized it Yet. (ZeroHedge, March 7, 2013):

Bankers Have Flipped Monetary Truth Upside Down

Bankers have flipped the paradigm of monetary truth upside down today. People believe in fiat digital money that is, by definition of the term, counterfeit and have zero belief in money that is real, and thus lasted over 5000 years of global history. In fact so few people today have an understanding of monetary history and truth that when I tell them that all money in wide use and circulation today is the equivalent of counterfeit money, even though this is true, they look at me like my beliefs, not their beliefs, are crazy. Hopefully this article will finally open some eyes and answer the question, “What is money and what is not?”

Executive Order 6102 Was Passed to Force Americans to Use Counterfeit Instead of REAL Money

Continue reading »

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Feb 21

- In The Strange Case Of Gold’s Regular Morning Mugging (ZeroHedge, Feb 20, 2013)

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Feb 16


Next time you try to sell gold, silver or other precious metals in Houston you can expect to be fingerprinted and photographed.

- City council passes ordinance to fingerprint, photograph precious metal sellers (ABC13/KTRK, Feb 6, 2013):

HOUSTON (KTRK) — Next time you try to sell gold, silver or other precious metals you can expect to be fingerprinted and photographed.

The Houston City Council passed an ordinance meant to help track down criminals who try to resell stolen valuables. Gold-buying businesses will now be required to photograph and fingerprint sellers as well as photograph the items that are being sold to the dealer.

“It’s going to allow us the tools necessary to combat a lot of the high-end jewelry thefts that’s going on in the city, whether it’s robberies or burglaries,” said Houston Police Officer Rick Barajas.

A similar ordinance is already in place for scrap metal sellers and dealers.

- Brown calls new rules on jewelry dealers ‘safety theater’ (Houston Chronicle, Feb 6, 2013):

Houston City Council on Wednesday passed new rules on precious metals dealers despite a lengthy attempt to water down the ordinance by Councilwoman Helena Brown, who called it “safety theater” that would burden businesses and invade jewelry sellers’ privacy.

Officers in the Houston Police Department’s precious metals unit said reputable dealers already implement many of the new rules but said the ordinance – which requires a photograph and thumbprint of each seller and mandates dealers enter transactions into an online database – will help them catch crooks and recover stolen goods.

Brown sought to remove criminal penalties for violating the ordinance, to allow dealers more flexibility in when and how to report transactions and to scrap the rule requiring sellers to have a photo and thumbprint taken. Each amendment was easily defeated.

“Why even ask the legal, law-abiding people to submit to this? It’s not going to prevent crime and it’s not going to solve any crimes,” Brown said. “It’s ludicrous. We’ve gone way beyond what our Founding Fathers envisioned for this nation.”

Continue reading »

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Jan 30

- Silver Eagle Sales Surge To All-Time Record In January (ZeroHedge, Jan 29, 2013):

A massive 7.4 million Silver Eagles were purchased from the U.S. Mint in January, considerably higher than the previous record from early 2011. After halting Silver coin production/sales for over a week, the Mint re-opened yesterday and demand once again surged. Having almost doubled from the first week in January, there remains two more days before the book is closed on January’s sales. At 140,000 ounces, the Mint has also sold the most ounces of gold in January in almost three years, suggesting the rising ‘currency wars’ are stoking people’s ongoing rotation from paper-to-physical assets as their ‘wealth’ slowing loses its value.

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Jan 20

- Visualizing Silver As An Investment (ZeroHedge, Jan 19, 2013)

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Jan 17

- China Mysteriously Quadruples Rice Imports, Continues to Stockpile Commodities (Restoring Liberty, Jan 9, 2013):

Yesterday, it was reported that China – not currently suffering from any food shortages – is amassing rice stockpiles. This past year, the country mysteriously imported four times the rice over 2011 purchases:

United Nations agricultural experts are reporting confusion, after figures show that China imported 2.6 million tons of rice in 2012, substantially more than a four-fold increase over the 575,000 tons imported in 2011. The confusion stems from the fact that there is no obvious reason for vastly increased imports, since there has been no rice shortage in China. The speculation is that Chinese importers are taking advantage of low international prices, but all that means is that China’s own vast supplies of domestically grown rice are being stockpiled. Why would China suddenly be stockpiling millions of tons of rice for no apparent reason? Perhaps it’s related to China’s aggressive military buildup and war preparations in the Pacific and in central Asia.

Yesterday’s revelation follows reports over the past several years of the Chinese amassing commodities in warehouses through out the nation. Continue reading »

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Nov 22

- Food Banks in the U.S. Running Low on Supplies… Ominous Sign for 2013 (ZeroHedge, Nov 22, 2012):

This is a very interesting yet ominous article from Reuters about the current food bank situation in these United States.  As a result of the drought this summer the Federal government ended up buying less food than normal, and because this excess food is used to provide assistance to the poor in many cases, there simply may not be enough to go around.  This sets up a potentially tragic situation as we head into 2013, and is likely to bring heightened social unrest to our shores as I outlined in my recent article The Global Spring.

From Reuters:

The worst U.S. drought in more than half a century has weakened the safety net for the 50 million Americans who struggle to get enough to eat, and the nation’s food banks are raising the alarm as the holiday season gets into full swing.

Executives at major food banks across the United States worry they will not be able to keep pace with demand, which they don’t expect to ease until more Americans find better paying jobs. In a sign of how stressed the budgets of many Americans are, a record 47.1 million people used food stamps in August 2012, up from 45.8 million the year earlier.

With such pressures at work,on-hand supplies at the Los Angeles Regional Food Bank have fallen from a peak of about 3.3 weeks in 2010 to less than two weeks – the lowest in recent history, according to its president and CEO, Michael Flood.

Tightening food supplies last summer forced the food bank to start a waiting list because it does not have enough inventory to expand beyond the 640 agencies it already supplies with food. There are now 565 nonprofits on the waiting list, Flood said.

Continue reading »

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Oct 05

- Marc Faber & Jim Rogers On Our “Clueless, Ignorant, Dangerous” Leaders (ZeroHedge, Oct 4, 2012):

While the discussions between these two legends varied from Phat Phong nightlife to Dow 30,000, and from China bullishness to AAPL bearishness, it was the conversation about the actions of Bernanke, and more importantly our political leaders that summed up perfectly the dreadful reality in which we find ourselves. The punchline: “It is very dangerous to have ignorant people believing that they know something.”

Rogers is bullish China long-term but buying Chinese stocks only selectively

Faber sees under-the-surface weakness in US equities and while central banks could print us to Dow 30,000; gold and other commodities will be astronomical by then…

Faber is bearish AAPL, believes its a bubble – but too dangerous to short…

Both are uber-bearish central-bankers and politicians…

Marc Faber: “Both candidates are clueless and completely artificial…”

Jimmy Rogers: “It’s worse than clueless, because they think they know what they’re doing.. and so they are dangerous! If they were just clueless and looked out the window, we wouldn’t have a problem, but they think they have the solution – but their solutions are what’s making the situation worse…”

Marc Faber: “That is precisely the point. It is very dangerous to have ignorant people believing that they know something!”

Summed up perfectly, we believe.


Must watch
– especially to hear the CNBC anchor squirming…


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Sep 16


YouTube Added: 15.09.2012

- Janet Tavakoli: Understanding Derivatives and Their Risks (ZeroHEdge, Sep 15, 2012):

Global financial markets are awash in hundreds of trillions of dollars worth of derivatives. By some estimates, the total amount exceeds one quadrillion.

Derivatives played a central role in the 2008 credit crisis, as they had a brutal multiplying effect on the magnitude of the carnage. As a bad asset was written down, oftentimes there were derivative contracts written against it that resulted in total losses 10x greater than the initial write-down.

But what exactly are derivatives? How do they work?

Continue reading »

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Sep 16

Related info:

- New Bankster Bailout Disguised As QE3

- QE3: Helicopter Ben Bernanke Unleashes An All-Out Attack On The U.S. Dollar

- Marc Faber: ‘Fed Will Destroy The World’ (Video)

- Ron Paul On QE3: ‘Country Should Panic Over Fed’s Decision’ – ‘We Are Creating Money Out Of Thin Air’ – ‘We’ve Lost Control!’ (Video)

“When a country embarks on deficit financing and inflationism (= QE 3) you wipe out the middle class and wealth is transferred from the middle class and the poor to the rich.”
- Ron Paul

“The Federal Reserve System is nothing more than legalized counterfeit.”
- Ron Paul


- How QE3 Will Make The Wealthy Even Wealthier While Causing Living Standards To Fall For The Rest Of Us (Economic Collapse, Sep 16, 2012):

The mainstream media is hailing QE3 as a great victory for the U.S. economy.  On nearly every news broadcast, the “talking heads” are declaring that Ben Bernanke’s decision to pump 40 billion dollars a month into our financial system is definitely going to help solve our economic problems.  The money for QE3 is being created out of thin air and this round of quantitative easing is going to be “open-ended” which means that the Federal Reserve is going to keep doing it for as long as they feel like it.  But is this really good for the average American on the street?  No way.  Despite two previous rounds of quantitative easing, median household income has still fallen for four years in a row, the employment rate has not bounced back since the end of the last recession, and new home sales have remained near record lows.  So what have the previous rounds of quantitative easing accomplished?  Well, they have driven up the prices of financial assets.  Those that own stocks have done very well the past couple of years.  So who owns stocks?  The wealthy do.  In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.  Those that have invested in commodities have also done very nicely in recent years.  We have seen gold, silver, oil and agricultural commodities all do very well.  But that also means that average Americans are paying more for basic necessities such as food and gasoline.  So the first two rounds of quantitative easing made the wealthy even wealthier while causing living standards to fall for all the rest of us.  Is there any reason to believe that QE3 will be any different? Continue reading »

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Sep 15

And for some (idiots) this is not enough …

- Paul Krugman: QE3 Should Have Been ‘More Stronger’ (Quote Of The Day)

… versus those who can clearly see what is coming:

- Marc Faber: ‘Fed Will Destroy The World’ (Video)

- Ron Paul On QE3: ‘Country Should Panic Over Fed’s Decision’ – ‘We Are Creating Money Out Of Thin Air’ – ‘We’ve Lost Control!’ (Video)

From the article:

“Even when unwinding its balance sheet would mean sacrificing 30% of US GDP and, let’s be honest about it, civil war.”


- BofA Sees Fed Assets Surpassing $5 Trillion By End Of 2014… Leading To $3350 Gold And $190 Crude (ZeroHedge, Sep 14, 2012):

Yesterday, when we first presented our calculation of what the Fed’s balance sheet would look like through the end of 2013, some were confused why we assumed that the Fed would continue monetizing the long-end beyond the end of 2012. Simple: in its statement, the FOMC said that “If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.” Therefore, the only question is by what point the labor market would have improved sufficiently to satisfy the Fed with its “improvement” (all else equal, which however – and here’s looking at you inflation – will not be). Conservatively, we assumed that it would take at the lest until December 2014 for unemployment to cross the Fed’s “all clear threshold.” As it turns out we were optimistic. Bank of America’s Priya Misra has just released an analysis which is identical to ours in all other respects, except for when the latest QE version would end. BofA’s take: “We do not believe there will be “substantial” improvement in the labor market for the next 1.5-2 years and foresee the Fed buying Treasuries after the end of Operation Twist.” What does this mean for total Fed purchases? Again, simple. Add $1 trillion to the Zero Hedge total of $4TRN. In other words, Bank of America just predicted at least 2 years and change of constant monetization, which would send the Fed’s balance sheet to grand total of just over $5,000,000,000,000 as the Fed adds another $2.2 trillion MBS and Treasury notional to the current total of $2.8 trillion.

In other words, for once we actually were shockingly optimistic on the US economy. Assuming BofA is correct, and it probably is, this is how the Fed’s balance sheet will look like for the next 2 years:

Or, in terms of US GDP, the Fed’s balance sheet will have “LBOed” just shy of 30% of all US goods and services.

It gets worse: Continue reading »

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Sep 13


YouTube Added: 03.09.2012

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Aug 23

- Pimco Increases Gold Allocation From 10.5% To 11.5% In Commodity Fund (ZeroHedge, Aug 22, 2012)

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Aug 18

- The Only ‘Un-Manipulated’ Chart Of The Real Un-Recovery You’ll Ever Need (ZeroHedge, Aug 17, 2012):

Probably no other commodity is tied to global growth, especially EM and China growth, than the key steel-making ingredient – Iron Ore. The iron ore price continues to plunge and it would appear that very few are focused on it. Critically, this is the one commodity that is not a futures contract, cannot be manipulated by trading desks or by levered hedge funds. Despite all the euphoria about risk assets and commodities – and the central bank front-running – Iron Ore prices continue to sink lower and lower…

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Aug 09


World’s biggest gold coin

- Gold, Silver, Corn, And Brent Are Best Performers On The 5-Year Anniversary Of The Great Financial Crisis (ZeroHedge, Aug 9, 2012):

Five years ago today BNP Paribas stopped withdrawals from three of their investment funds – because they couldn’t value their holdings following the subprime fallout – and arguably marked the start of the Great Financial Crisis as money markets seized up and the ECB did its first emergency liquidity pump. In the five years hence, as Deutsche’s Jim Reid notes, its been a pretty good run for commodities and most fixed income assets. Given all that’s gone on over this period it’s fair to say that returns have been pretty good if you’ve been in the right areas. The authorities have played a big part in ensuring the period wasn’t a disaster even if there have been frightening periods and very poor returns in some areas. Given that there are still numerous unresolved issues, the authorities need to continue to be on full alert for the next 5 years to ensure that when we do the 10 year anniversary there haven’t been set-backs in many of these assets.

Source: Deutsche Bank

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