Wednesday, October 12, 2011

Luxury Chinese Boat Launches, Sinks Immediately

The following video is just replete with floundering symbolism of the Chinese economic miracle. One explanation for the fiasco:  the boat's hold was filled with copper...



PBOC Launches Day Two Of Currency Cold War Offensive

The People's Bank of China set the yuan's central parity rate against the U.S. dollar at 6.3737 on Thursday, a second sequential major drop and down from Wednesday's 6.3598. This follows a weakened fixing of 6.3598 on Wednesday, down from the record high fixing of 6.3483 on Tuesday, just before the Senate decided to launch the first salvo in the Sino-US trade wars. Surely news of the collapse in Chinese exports will merely reinforce the theme that the USDCNY is in sudden need of devaluation and be a loud slap in the face of the Senate which will now come face to face with its utter worthlessness.  In Hong Kong, the offshore yuan spot rate was fixed at 6.4407 against the greenback on Thursday, compared with Wednesday's 6.4923. The fixing is based on an average of bids from 15 participating banks and is calculated by the Treasury Markets Association, a Hong Kong-based industry group. We are hardly the only ones who noticed the escalation in spot USDCNY wars by the PBOC, which now appears hell bent on showing the US its peg can go lower in addition to higher (inflationary consequences be damned) - from the WSJ: "The yuan fell sharply against the U.S. dollar in early Thursday trade, after the Chinese central bank surprised the market by guiding its currency weaker for the second consecutive day despite the dollar's global weakness." So even as the USD is plunging against the hope-driven Euro, which has soared 600 pips in the past week on nothing, the USD is now jumping against the CNY for no other reason than mere demagogic policy. And this environment in which central bank decisions are all that matter is the one in which traders hope to make a living based on rational market decisions (as otherwise one can flip a coin in Vegas)? Good luck.



The Math Behind The Greek Myth

  • The Greek January – September budget deficit was EUR 19.16bn versus 16.65bn same period last year (+15%). This only includes the central government.
  • The initial deficit target for 2011 was EUR 17bn. We blew past that after only 8 months. The revised target (July) is now 22bn (9.5% of GDP).
  • Latest estimate from the Greek government: 8.5% deficit (19.5bn) for 2011 (instead of 7.6% or 17bn).
  • While 2011 revenues are trending below 2010, expenses are trending higher.
  • Despite all the austerity measures, Greece is still spending 150% of its revenues.
  • Of course, the Ministry of Finance sees a reduction of the deficit to a miniscule 2.6% of GDP by 2014 as revenues rise and expenses come down.
  • How is that possible? Somehow, after spending four consecutive years in recession (2009-2012), the economy will rise like a phoenix and grow by 5.8% in 2014.



Guest Post: A New Boogeyman For America

Last month, now-retired Chairman of the Joint Chiefs of Staff Admiral Mike Mullen testified to a U.S. Senate panel that Pakistan’s Inter-services Intelligence Agency backed the terrorist group Haqqani in its attack on the U.S. embassy in Kabul, Afghanistan.  Never heard of Haqqani?  Don’t worry, you probably never heard of Al-Qaeda prior to 9/11 either.  According to Mullen, “the Haqqani network…acts as a veritable arm of Pakistan’s Inter-Services Intelligence Agency.” The Haqqani network was founded and is lead by the newly dubbed public enemy No. 1; Jalaluddin Haqqani.
America, meet your new boogeyman.



Van Hoisington Q3 Letter: GDP In Q4 And 2012 Will Be Negative

For the Van Hoisington fans out there, his latest quarterly letter is short and sweet, and as often happens, rather realistic. The long bond afficionado cuts to the chase: he says the economy “is worse off today than it was prior to the onset of the previous recession" and predicts that "negative economic growth will probably be registered in the U.S. during the fourth quarter of 2011, and in subsequent quarters in 2012." Incidentally this matches our call, and we expect that when Q4 GDP is re-revised some time in April it will have been found to be a decline. As for the reasons: "Though partially caused by monetary and fiscal actions and excessive indebtedness, this contraction has been further aggravated by three current cyclical  developments: a) declining productivity, b) elevated inventory investment, and c) contracting real wage income."



Slovakia passes new version of EFSF/gold and silver hold steady

Good evening Ladies and Gentlemen: Gold closed today at $1681.30 up a full $21.60 on the day.  Silver advanced another 80 cents closing at $32.75 The Euro rose with news that Slovakia had another meeting and they agreed to back the EFSF current bailout format in return for early elections: Slovakia Clears Road to Completing Euro Bailout Fund ApprovalOctober 12, 2011, 6:22 PM EDT By Radoslav

Money flows out of Bonds is fueling the current stock rally

Trader Dan at Trader Dan's Market Views - 3 hours ago
Modern markets are all about speculative money flows, and primarily money flows from hedge funds. That can be subdivided further into "RISK" trades versus "RISK AVERSION" trades. Take a look at the following composite chart of the US Treasury Bond and the S&P 500 index. Note the extremely close inverse relationship between the two lines. Basically you can see the RISK trade versus the RISK AVERSION trade portrayed here. When traders are running away from risk trades, they are running into Bonds pushing those prices higher in the process. When they are feeling aggressive towards ... more » 


Gold Bulls Pressing against the Bears' Line of Defense

Trader Dan at Trader Dan's Market Views - 4 hours ago
I have noted that $1680 is a key technical chart resistance level for the gold market to overcome if it is to have a shot at $1700 and a chance to begin a trending move higher. I say this because one can see from the short term price chart that since late September, all forays into this zone have been successfully repulsed by the shorts. Today the bulls pressed through this defense line but could not muster enough strength to hold their gains in a convincing fashion as the market retreated back below the $1680 level, although just barely. We have two days left in this week for trad... more » 

Guest Post: Another Similar 2008 Chart Pattern

Without a doubt one common similarity between the current market and the fall of 2008 is heightened investor emotions. There are plenty of other similarities from bank nationalizations, a deteriorating global economy and government intervention. There were wild swings and volatility that whipsawed traders out of positions and saw paper profits appear and disappear in very short order. Traders then as they are today were simply exhausted and decisions were more influenced by emotions than macro data, technical analysis or convictions. I strongly believe in Jesse Livermore's theory about human emotion forming patterns and since humans never change patterns will often repeat. I've been trying to find a pattern that compares to the current market. A roadmap if you will of how this emotional roller coaster finally plays out. I think I may have found it. Below are two charts. The first shows a rounded top pattern that appeared twice in the fall of 2008. The next chart shows the current markets (SPY 60 day 4 hour chart) versus the fall 2008 (SPY daily chart). There are six points of reference, five are tops Point A, B, C, D and E and one bottom Point F. In both cases the behavior of all six points are identical.

Looking For An Alternative To Gold And Silver? 

How Bankrupt Governments Will Confiscate Your Gold.
(Yes, it has happened before in the U.S.: See Executive Order 6102. And the potential repeat of that, BTW, is one reason why I prefer investing in silver rather than gold.) Have you got your nickels, yet?

Stock Up on Peanut Butter Now Before Prices Get Ridiculous.

Drugstore Markups Are Worse Than You Think

US Mint Sells Nearly 3/4 Million Silver Eagles First Day of October

Physical Silver Running Out Because its Spot Price Does Not Reflect True Investment Demand

Wall Street Flies On Euro-Fund Hope, S&P Up 2%

Gold Climbs as Dollar Falls to Three-week Lows

From Nanny State Europa: Children to be banned from blowing up balloons, under EU safety rules

Meanwhile, French multicultural do-gooders are re-writing history. 

Could they be getting ready to hunker down? Why Did a Secretive Filipino Church Buy a South Dakota Ghost Town?  

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