Precious Metals Plunge And India's Industrial Production Crashes

The metals space has had a rather disconcerting start to the week this evening with Silver and Copper dropping almost 2% from their opening levels and then Gold following suit. All this as the USD inches very gradually up tracking almost perfectly with Crude for now. These moves seem very liquidation-like in their velocity but have for now stabilized at the lows. The last few minutes saw some of the ugliest macro data we have seen in a while come out of India as it's Industrial Production growth missed expectations by a mile falling to levels only seen in the middle of the global economic shutdown in Q1 2009. So another leg in the EM-will-save-us-all stool just got kicked out and still we are to believe the US will decouple and 'muddle-through'?

A Reminder Of The EURUSD's Response To The Historic Announcement At 2:00 PM On March 18, 2009

Zero Hedge has been lucky to have reported from the front lines on that historic day, March 18, 2009, when at precisely 2 pm the Fed formally expanded its LSAP program to include Treasuries, and more MBS, in what become formally known as Quantitative Easing (Episode 1). On that day, nearly three years ago (when gold was trading at $925) our commentary was the following: "Maybe one should really start buying stocks ahead of the uber-hyperinflation that will imminently ensue. We recommend wheelbarrow stocks.This is textbook back against the wall. But at least the stock market takes another crutch up." and of course: "Print, print, print... God help us." Needless to say it has been downhill ever since, and even though the global economy now is in the worst situation it has ever been precisely due to this unbridled printing, it is somehow conventional wisdom that all in Europe will be well... if the ECB does what the Fed did on that Wednesday in March nearly three years ago. The sheer idiocy of the logic is dumbfounding. Yet what we wanted to demonstrate is the intraday kneejerk response in the EURUSD which we caught just as it happened: the European currency moved by 400 pips from 1.31 to almost 1.35 in minutes. Which begs the question: in order to prevent a dollar spike, much as the situation of pre-QE March dictated, is the low 1.30s level the magical threshold where if the ECB does not, then the Fed will print? We make no forecast, and merely want to show that should the Euro proceed to tumble, the Fed has more than enough weapons, well, weapon, in its arsenal to reset the global devaluation game all over again. Because a soaring dollar will be the next inevitable step in the global liquidity collapse, which can and will be delayed (if only briefly) in only possible way: the "way" which will see gold doubling yet again over the next three years (if not far shorter).

"The Inmates Don’t Know It’s An Asylum"

Today, the “movers and shakers” of the financial world abound in such useful idiots. It has been a long road from the 1930s Keynesian mantra that “we owe it to ourselves” to today’s masters of the universe with their incomprehensible computer “algorithms” fuelled by the ability of modern  computers to crunch almost unlimited sequences of “1s” and “0s”. The entire road has been paved with one goal in mind. To convince the “people” that the only road to financial “safety” is to give up their thinking processes and “delegate” them to those who claim to know what they are doing. The problem today is that the results of this delegation are so obvious that the methods of those who produced them are beginning to be questioned. It has been a long time coming. When we reach a market situation where nobody wants to play unless the game is terminally rigged,  then the whole idea of “markets” has gone by the boards. Nobody wants to “punt” unless their bets are guaranteed in advance. That’s no way to run a horse race - or a global financial system.

Forget Copper: Steel Is The True Indicator Of The Chinese Hard Landing

Last week we pointed out some curious observations from Fortress on commodities and the state of the Chinese market courtesy of secondary industrial metals, notably steel: "The investment landscape for industrial metals is becoming increasingly more difficult to navigate. As highlighted in last month’s letter, we are continuing to see a rapid deceleration of growth in China, specifically within the cyclical industries. A recent trip to visit steel companies outside Beijing underlined the impact of extremely tight liquidity and continued restrictive policy in the Chinese housing market. Steel capacity cuts – through idling or accelerated maintenance outages – are now commonplace and the speed of these cuts has certainly surprised the market. Construction is the principal end-market blamed for this weakness; given the very large inventory overhang and the continued lack of liquidity, this is not surprising. In our equity universe, we have also seen numerous companies expressing concerns regarding China construction demand. Zoomlion, China’s second largest construction machinery company, recently said, "Demand for construction  machinery has shrunken drastically and growth will no doubt continue to slow next year." Within the context of declining housing starts, plummeting transaction volumes and the beginning of a meaningful move down in housing prices, these shifts in the steel market have been an interesting harbinger of more substantial problems in the Chinese economy. Our principal concern is the extension of housing weakness into the banking system through the mechanism of both failing developers as well as the opaque and informal lending. We are concerned that the recent strength in iron ore, steel and copper has been misinterpreted by the market. In our view, any suggestion that the Chinese market is undergoing a substantial restock is misplaced." Today, we get a confirmation of just this warning courtesy of Citigroup which has charted weekly Iron Ore China port inventories and of broad steel inventories. Needless to say, domestic steelmakers, who better than anyone know the state of domestic end product demand, have seen the writing on the wall, and have one message for the world: short Brazil and Australia.

Guest Post: Risk Ratio Turns Up - We've Seen This Before

The market rallied this past week, albeit in a very volatile manner, to end the week on a positive note as the hopes of a final resolution to the Euro crisis has been reached.   In reality, today's announcement of the EU treaty is only the first step and there are many legal challenges that will still have to be resolved.  While the reality is that there is still a very long road ahead before anything will actually be accomplished the implication that the with the ECB willing to buy bonds, at least for the moment, and the coordination of two bailout funds the Eurozone can play "kick the can" for a while longer.  Those headlines, even without much substance were enough to drive return starved managers into the market for the year end rush.

Clive Hale On "Rule Britannia"

The markets, expecting something approaching a frisson of decisiveness, spent Friday like stunned mullets. And with Christmas rapidly approaching may well take to the mulled wine and other festive “remedies” and call it a day until the New Year. At which time they will all realise that nothing, absolutely nothing has been done to address the solvency of the European banking system. Which anthem will they play at the Last Night of the Euro I wonder? How about the Doobie Brothers and “What a fool believes”? “But what a fool believes ... (s)he sees” - a lastingly stable euro?

Rumor Of Swedbank Failure Results In Second Latvian Bank Run In One Month

Two weeks ago we presented pictures of a bank run in Latvia after one local bank had been found to do just what MF Global is alleged of doing - gross cominningling. To wit: "If anyone is wondering why the collapse of MF Global after the discovery of its commingling and theft of client funds was the single worst thing that could happen to market confidence, then look no further than the small Baltic country of Latvia where precisely what Jon Corzine's firm did to its clients, has happened at the bank level. Businessweek reports: "Lithuanian prosecutors issued an arrest warrant for Vladimir Antonov and Raimondas Baranauskas who are former shareholders of Bankas Snoras AB. Both men are suspected of embezzlement and document forgery, the Prosecutor General said in a statement on its website today. Baranauskas is also suspected of accounting fraud and abuse of authority, it said." Kinda like Jon Corzine, if not by the actual authorities, then by everybody else....Depositors can withdraw 50 lati a day beginning today for the rest of the week, said Krumane at a pressconference." At today's rate this is about $95. Which is why what happened next, as shown in the pictures below, was to be completely expected, and is a perfect indicator of the collapse in liquidity and credibility of our own system where commingling, unlike in Latvia, goes unpunished." Sure enough, as nothing has changed, either in Latvia or the US, things just got worse. Following a rumor in Latvia that the large Swedish bank Swedbank is about to collapse, Latvia has just experienced its second bank run in under a month.




The latest gimmick to fund the payroll tax cut - stupidity

Posted by: Bruce Krasting

Post date: 12/11/2011 - 11:46

D.C. can't figure out how to fund a lousy $115B stimulus. The problem is 20Xs as big.

Jim Rogers: “MF Global to Help Push Commodities Business Away from Chicago and Towards Asia.”

from Tekoa Da Silva’s Bull Market Thinking:

I was lucky enough to catch Jim Rogers on the phone again for a few minutes to discuss MF Global’s affect on the commodity markets, the direction of the U.S., plus an emerging southeast Asian country which presents an “enormous opportunity”.
In regards to the recent MF Global collapse and it’s impact on commodity markets Jim said,“MF Global is causing forced liquidation right now, but longer term people will forget about it. People still need to trade wheat, they need to trade oil. In the longer term it will be like many other disasters in markets, it will be a blip–an unfortunate blip.” Jim added that, ‘This event will be another push to move commodities business away from Chicago and towards Asia.”
In terms of where the U.S. is going fiscally, Jim said, “The U.S. is the largest debtor nation in the history of the world, and we’re setting ourselves up for terrible, terrible, problems. No country which has gotten itself in this bad of shape has gotten out without a crisis.”
Read More (and Listen to the Interview) @ BullMarketThinking.com

UPDATE: Oathkeepers Retracts Cannery Story; Original Source Denies Federal Agents Claim

by Mac Slavo, SHTFPlan.com:

Well followed and trusted news resource Oathkeepers.org, which first reported that federal agents had requested member and customer purchase information from a cannery operator in Tennessee, has responded directly to contradicting information that suggests no such event took place.
Republished in Full Via Oathkeepers.org:

THIS STORY HAS BEEN PULLED.

We have pulled this story about the Mormon cannery being visited by federal agents because the source of the information at the cannery is now denying that he ever told us that event occurred.

From now on, we will NOT post any such story based on what we are told by other people unless, and until, they are willing to go on video or at least on an audio recording with their info.  That way, in case someone starts to crumble under the public attention or other pressures, and wants to deny what they told us, we have video or audio proof.

Read More @ SHTFPlan.com

The Tim Tebow Comeback Story Continues But There Will Be No Miracle Comebacks For The U.S. Economy

from The Economic Collapse Blog:

Never in the history of the NFL has there ever been anything like this.  Today, Tim Tebow engineered yet another miraculous 4th quarter comeback.  Almost everyone has been expecting this unprecedented string of comebacks to come to an end, yet Tebow just keeps pulling off miracle after miracle.  It seems like nearly every week now we are talking about another unbelievable Tim Tebow comeback.  It is truly a great story, and what is wonderful about Tebow is that he is not out to glorify himself.  He is very humble, he always recognizes his teammates and he is a terrific role model for a generation of American youth that is in desperate need of one.  Unfortunately, there is not going to be a similar comeback story for the U.S. economy.  It is late in the 4th quarter, we have accumulated over 50 trillion dollars of total debt as a nation, and our economic guts are being ripped out at a rate that is almost impossible to believe.  The game is essentially over and we are headed for an incredible amount of economic pain as a nation.
We desperately need a “political Tim Tebow” to come along to dismantle our current debt-based economic system.  But instead, the corrupt politicians in Washington D.C. just keep patching up our current system and hope that somehow it will recover.
Read More @ TheEconomicCollapseBlog.com

Please consider making a small donation, to help cover some of the labor and cost for this blog.

Thank You

I'm PayPal Verified