Iran and War Drums Beating /Gold blasts off/More on Greece/Expect a raid in gold/silver tomorrow
When it comes to labor-wage parity, nowhere has this topic been more debated than in the context of China and the US. Specifically, with US wages declining consistently for the past 3 years despite commodity price inflation spiking with a 2-3 month lag following every coordinated central bank printing episode (such as the one we are experiencing now), many have proffered their predictions as to when Chinese secular inflation would make wage pay equivalent on both sides of the Pacific, and stop the exporting of jobs from the US to China (a good discussion on the topic can be found in "With China Forecast To Reach Wage Parity With The US In Five Years, Is A New Manufacturing Golden Age Coming To The US?"). And while labor equivalency between China and the US likely still has a ways to go, we have now crossed a critical Rubicon, as Chinese and European wages, at least in one part of European Union, have caught up. Net result, as Spiegel reports, carmaker "Great Wall this week became the first Chinese automobile manufacturer to open an automobile assembly plant inside the European Union in the latest move suggesting the country's carmakers are seeking to establish a beachhead into the European market." Yes, that's right: it is now cheaper for China to make cars in the European Union: "It used to be that European carmakers opened plants to assemble their cars in China. Now the Chinese have turned the tables with the opening of their first factory in Bulgaria, an EU country with low labor costs and taxes. Increasingly, Chinese carmakers are setting their sights on the European and American automobile markets." The ramifications of this landmark development are massive for virtually every aspect of the economy: for domestic labor migration, for inflation, for the trade balance, and certainly for US workers.
NYSE volume was the 3rd lowest of the year so far (while ES was just below average) as stocks leaked lower all day to small net losses by the close. Financials led the drop
in stocks as they start to catch up the credit market weakness we have
been pointing to for over a week but while HY (the high yield credit
spread index) continues to underperform (and stocks following at a lower
beta), IG (investment grade credit spread index) modestly outperforms
(the up-in-quality rotation) but HYG (the high-yield bond ETF) surged
today into a world of its own once again. We suspect this is driven by
'arbitrage' flows between HY's recent richness and HYG's cheapness (as
well as potential HY new issue impacts). Gold (and to a lesser extent Silver) was the story of the day as it exploded (perhaps on the Greek gold-collateral news) over $1780 intraday (now up over $55 in the last 3 days) although the USD did nothing (FX was
quiet with JPY inching lower and EUR small higher as DXY leaked higher
on the day to -0.25% on the week). The rest of the commodity complex
jumped also (with WTI losing ground into the close even as Brent kept going - suggesting the spread decompression was in play). Treasuries rallied
from early in the European day with yields dropping 6-8bps from the
peaks and shifting the entire curve into the green for the week now (10y
and 30Y around 1bps lower in yield). ES couldn't get significantly
above VWAP today and CSFB's fear index (which tracks equity option skews) is at record highs
which both suggest a preference to sell/cover is appearing (even as VIX
diverged modestly from stocks today with implied correlation rising).
The
S&P 500 has had the best start to the year since 1997, and Gas
Prices are accelerating rapidly. Two interesting analogs may be useful
to think about the next moves in these markets and whether we see
divergence.
While the record corporate profit bonanza (if now declining) is still the fallback argument for any bearish allegation that the only reason why the market is up 20% in 3 months is due to $2 trillion in liquidity dumped into markets by central banks, this may be about to end quite abruptly, especially if Europe is a harbinger of things to come. As the following chart from Credit Suisse shows, the number of large companies (>500bn market cap) that lose money on an LTM basis (so not just in the quarter, and thus with a much longer lasting effect) has risen in Q4 for the first time since Q3 2009. And while in nominal terms the change is still relatively modest, the actual change in "losing companies" is a doubling from under 5% to 10%, as for the first time in years the percentage of European money losing companies matches that of the US.
'All is not resolved'
is how Morgan Stanley's Arnaud Mares begins his latest diatribe on the
debacle that is occurring in Europe. While a disorderly default seems
to have been avoided (for now), the Greek problem (as we have discussed
extensively) remains unsolved as debt sustainability seems
questionable at best, economic recovery a remote hope, and the growing
political tensions across Europe (and its people) grow wider.
Critically, Mares addresses the seeming complacency towards a Greek exit
from the euro area noting that it is no small matter and has dramatic
consequences (specifically a la Lehman, the unintended consequences could be catastrophic).
Greece (or another nation) leaving the Euro invites concerns over the
fungibility of bank deposits across weak and strong nations and with
doubt over the Euro, the EU could collapse as free-trade broke down. The
key is that, just as in the US downgrade case last year, a Euro-exit implies the impossible is possible and the impact of such an event is much, much higher than most seem to realize.
While the likelihood of a Greek euro-exit may remain low (for now),
the scale of the impact makes this highly material and suggests the EU
will do whatever it takes (print?) within their mandates to hold the status quo. For all practical purposes, it would be the end of the euro as a genuine single currency and to preserve the euro if Greece left would require total federalism in the rest of the area.
Coming to an area near you sooner then you think...
Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 1 hour ago
2
Good evening Ladies and Gentlemen:
I was able to write this report at work so I could release this
commentary at my normal time slot.
The price of gold rose by $12.20 to finish the trading session at
$1770 (comex closing time l:30). Silver finished the day down by 17
cents to $34.24 as the boys were trying their utmost trying to contain
gold's poor cousin from skyrocketing. The
Warning: Not for the faint of heart.
Nancy Pelosi Issues Statement On Soaring Gas Prices
Warning: Not for the faint of heart.Jim Willie: Herding Greek Cats from Bondage
The Doc at SilverDoctors - 2 hours ago
*Jim Willie's latest public Hat Trick Letter: Herding Greek Cats from
Bondage*
Read more »
Sterling Gold surging Higher
Trader Dan at Trader Dan's Market Views - 3 hours ago
Gold priced in terms of the British Pound is surging higher being
reinforced in its upward trajectory by news that the Bank of England was
further expanding its bond purchase program (Read this as its version of
QE). This is more evidence that nearly the entirety of the Western World
Major Central Banks are completely engaged in the process of adulterating
their currencies.
They BOE has now set a program target near the 325 billion pound mark or
$513 billion dollars. That is not exactly chump change.
This is also the reason that bears at the Comex are increasingly having
difficult... more »
Gold Mining CEO Tells CNBC of 'Fantastic Opportunity', 'Lack of Supply' in Silver!
The Doc at SilverDoctors - 4 hours ago
Someone at CNBC is about to be in the dog-house big time for not properly
researching the views of Gavin Thomas, CEO of Australian Gold gold miner,
Kingsgate Consolidated, who today told CNBC that *silver is a fantastic
opportunity*, there is *a lack of supply of silver*, and he *expects silver
to rise to $50 over the next 24 months*.
Read more »
Gold Spikes $20
The Doc at SilverDoctors - 4 hours ago
[image: Live New York Gold Chart [Kitco Inc.]]*Somewhere, The Bernank must
be making public statements we aren't aware of yet...*
*Gold has just spiked $20 from $1755 to nearly $1775, and silver has spiked
as well...on No news!*
Read more »
Gold Reaches Resistance at $1780
Trader Dan at Trader Dan's Market Views - 4 hours ago
Gold is surging higher later in the session today having caught a gust of
wind that took it all the way to major overhead resistance at $1780. The
ability of the market to REMAIN ABOVE $1750 caught the attention of
momentum based traders and that was all she wrote. Up it went taking the
weak-handed shorts out of their positions until the bullion banks could
regroup and start their selling again at $1780.
Bulls have their sights set on putting a handle of "18" in front of the
gold price. The Central Bank pals - the bullion banks - are going to try to
prevent that. If the bulls can ke... more »
Europe Is Now China's Sweatshop As Great Wall Starts Building Cars In Bulgaria
When it comes to labor-wage parity, nowhere has this topic been more debated than in the context of China and the US. Specifically, with US wages declining consistently for the past 3 years despite commodity price inflation spiking with a 2-3 month lag following every coordinated central bank printing episode (such as the one we are experiencing now), many have proffered their predictions as to when Chinese secular inflation would make wage pay equivalent on both sides of the Pacific, and stop the exporting of jobs from the US to China (a good discussion on the topic can be found in "With China Forecast To Reach Wage Parity With The US In Five Years, Is A New Manufacturing Golden Age Coming To The US?"). And while labor equivalency between China and the US likely still has a ways to go, we have now crossed a critical Rubicon, as Chinese and European wages, at least in one part of European Union, have caught up. Net result, as Spiegel reports, carmaker "Great Wall this week became the first Chinese automobile manufacturer to open an automobile assembly plant inside the European Union in the latest move suggesting the country's carmakers are seeking to establish a beachhead into the European market." Yes, that's right: it is now cheaper for China to make cars in the European Union: "It used to be that European carmakers opened plants to assemble their cars in China. Now the Chinese have turned the tables with the opening of their first factory in Bulgaria, an EU country with low labor costs and taxes. Increasingly, Chinese carmakers are setting their sights on the European and American automobile markets." The ramifications of this landmark development are massive for virtually every aspect of the economy: for domestic labor migration, for inflation, for the trade balance, and certainly for US workers.
Negative Salaries, Negative Bailout And Now Negative Gold - Greece Just Became The Bankster's Paradise
While Iceland is now known as the country that is the closest earthly approximation to banker hell, it is safe to say that Greece is the terrestrial equivalent of banker heaven. Because as explained earlier today, the country's population is about to get a worse deal than your average run of the mill slave - they may get whipped, but at least never have to pay for the privilege, unlike the Greeks. Hence negative salaries. As also explained, the European bailout of Greece, is now formally a Greek bailout of Europe, funded by the country's already negative primary surplus, or better said - deficit (don't try to make mathematical sense of that - a scene out of Scanners is guaranteed). Hence, negative bailout. But the piece de resistance, and the reason why Greece is the in situ version of bankster heaven is the news from the NYT that Greece is also about to have negative gold.Gold Explodes As NYSE Volume Re-Implodes
NYSE volume was the 3rd lowest of the year so far (while ES was just below average) as stocks leaked lower all day to small net losses by the close. Financials led the drop
in stocks as they start to catch up the credit market weakness we have
been pointing to for over a week but while HY (the high yield credit
spread index) continues to underperform (and stocks following at a lower
beta), IG (investment grade credit spread index) modestly outperforms
(the up-in-quality rotation) but HYG (the high-yield bond ETF) surged
today into a world of its own once again. We suspect this is driven by
'arbitrage' flows between HY's recent richness and HYG's cheapness (as
well as potential HY new issue impacts). Gold (and to a lesser extent Silver) was the story of the day as it exploded (perhaps on the Greek gold-collateral news) over $1780 intraday (now up over $55 in the last 3 days) although the USD did nothing (FX was
quiet with JPY inching lower and EUR small higher as DXY leaked higher
on the day to -0.25% on the week). The rest of the commodity complex
jumped also (with WTI losing ground into the close even as Brent kept going - suggesting the spread decompression was in play). Treasuries rallied
from early in the European day with yields dropping 6-8bps from the
peaks and shifting the entire curve into the green for the week now (10y
and 30Y around 1bps lower in yield). ES couldn't get significantly
above VWAP today and CSFB's fear index (which tracks equity option skews) is at record highs
which both suggest a preference to sell/cover is appearing (even as VIX
diverged modestly from stocks today with implied correlation rising).Deja Vu 2011...Or 1997
The
S&P 500 has had the best start to the year since 1997, and Gas
Prices are accelerating rapidly. Two interesting analogs may be useful
to think about the next moves in these markets and whether we see
divergence.Number Of European Money Losing Companies Rises For First Time In 2 Years, Doubles
While the record corporate profit bonanza (if now declining) is still the fallback argument for any bearish allegation that the only reason why the market is up 20% in 3 months is due to $2 trillion in liquidity dumped into markets by central banks, this may be about to end quite abruptly, especially if Europe is a harbinger of things to come. As the following chart from Credit Suisse shows, the number of large companies (>500bn market cap) that lose money on an LTM basis (so not just in the quarter, and thus with a much longer lasting effect) has risen in Q4 for the first time since Q3 2009. And while in nominal terms the change is still relatively modest, the actual change in "losing companies" is a doubling from under 5% to 10%, as for the first time in years the percentage of European money losing companies matches that of the US.
'Til Debt Did Europe Part
'All is not resolved'
is how Morgan Stanley's Arnaud Mares begins his latest diatribe on the
debacle that is occurring in Europe. While a disorderly default seems
to have been avoided (for now), the Greek problem (as we have discussed
extensively) remains unsolved as debt sustainability seems
questionable at best, economic recovery a remote hope, and the growing
political tensions across Europe (and its people) grow wider.
Critically, Mares addresses the seeming complacency towards a Greek exit
from the euro area noting that it is no small matter and has dramatic
consequences (specifically a la Lehman, the unintended consequences could be catastrophic).
Greece (or another nation) leaving the Euro invites concerns over the
fungibility of bank deposits across weak and strong nations and with
doubt over the Euro, the EU could collapse as free-trade broke down. The
key is that, just as in the US downgrade case last year, a Euro-exit implies the impossible is possible and the impact of such an event is much, much higher than most seem to realize.
While the likelihood of a Greek euro-exit may remain low (for now),
the scale of the impact makes this highly material and suggests the EU
will do whatever it takes (print?) within their mandates to hold the status quo. For all practical purposes, it would be the end of the euro as a genuine single currency and to preserve the euro if Greece left would require total federalism in the rest of the area.
from End of The American Dream:
In American politics, it takes an enormous amount of money to win campaigns, and the rise of the “Super PACs” is allowing the wealthy to exert even more influence over the political process than they did before. When you examine the results of federal elections over the past several decades, you quickly discover that the candidate that raises the most money almost always wins. Wealthy individuals are limited by law as to how much money they can give directly to a political campaign, but there are no limits on how much money they can give to Super PACs. During the 2012 election season, some of these Super PACs actually have more money than the campaigns of the candidates that they support do. Buying the vote is not illegal in America, and these Super PACs are buying huge amounts of advertising in key states. Unfortunately, most Americans have never learned to think for themselves. Instead, they let the television do much of their thinking for them. If their trusted friend, the television, tells them to vote a certain way, then that is what they are likely to do. Super PACs are much more likely to run negative ads than the actual candidates are, and we have already seen very negative ads dramatically move the poll numbers in some of the states. Sadly, as long as very negative ads keep working people are going to keep using them.
Read More @ EndOfTheAmericanDream.com
In American politics, it takes an enormous amount of money to win campaigns, and the rise of the “Super PACs” is allowing the wealthy to exert even more influence over the political process than they did before. When you examine the results of federal elections over the past several decades, you quickly discover that the candidate that raises the most money almost always wins. Wealthy individuals are limited by law as to how much money they can give directly to a political campaign, but there are no limits on how much money they can give to Super PACs. During the 2012 election season, some of these Super PACs actually have more money than the campaigns of the candidates that they support do. Buying the vote is not illegal in America, and these Super PACs are buying huge amounts of advertising in key states. Unfortunately, most Americans have never learned to think for themselves. Instead, they let the television do much of their thinking for them. If their trusted friend, the television, tells them to vote a certain way, then that is what they are likely to do. Super PACs are much more likely to run negative ads than the actual candidates are, and we have already seen very negative ads dramatically move the poll numbers in some of the states. Sadly, as long as very negative ads keep working people are going to keep using them.
Read More @ EndOfTheAmericanDream.com
by Andrew Hoffman, MilesFranklin.com:
Few
charts stand out more than the one below. Since interpretations can be
vast and diverse, I invite you to administer a “self-Rorshach test” and
forward me your thoughts. As for me, I see the death of America’s Middle Class, tiering of society into “castes,” and permanent, multi-generational debt enslavement.
In 1984, the speed of the proverbial “treadmill” increased dramatically, when the first of 25 million U.S. manufacturing jobs left for good, and the first of $20 trillion of government borrowings emerged from the Fed’s printing press. Times were considered prosperous, with a healthy economy, low debt, and generational peace as the Cold War concluded. The global economy was becoming more competitive, but the U.S. was more than equipped to defend its financial and manufacturing strongholds.
Unfortunately, it was around this time that America contracted financial cancer, eventually proving terminal to the entire global financial system.
Read More @ MilesFranklin.com
Few
charts stand out more than the one below. Since interpretations can be
vast and diverse, I invite you to administer a “self-Rorshach test” and
forward me your thoughts. As for me, I see the death of America’s Middle Class, tiering of society into “castes,” and permanent, multi-generational debt enslavement.In 1984, the speed of the proverbial “treadmill” increased dramatically, when the first of 25 million U.S. manufacturing jobs left for good, and the first of $20 trillion of government borrowings emerged from the Fed’s printing press. Times were considered prosperous, with a healthy economy, low debt, and generational peace as the Cold War concluded. The global economy was becoming more competitive, but the U.S. was more than equipped to defend its financial and manufacturing strongholds.
Unfortunately, it was around this time that America contracted financial cancer, eventually proving terminal to the entire global financial system.
Read More @ MilesFranklin.com
from King World News:
With gold already trading over $50 higher this week, today King World News interviewed 25 year veteran Caesar Bryan, manager of the Gabelli Gold Fund. Gabelli & Company has over $31 billion under management and Caesar Bryan has managed the gold fund since its inception in 1994. Caesar said the Japanese public has not yet entered the gold market, but will in the future. He also believes gold and silver are ready for major moves. Here is what Bryan had to say: “We’ve had a $50 move in gold so far this week. We had the Japanese central bank go to an inflation target last week. We also had the UK embark on another round of asset purchases. So we have the background of more money printing and we may be seeing a bit of a delayed reaction in terms of gold taking off here.”
Caesar Bryan continues: Read More @ KingWorldNews.com
With gold already trading over $50 higher this week, today King World News interviewed 25 year veteran Caesar Bryan, manager of the Gabelli Gold Fund. Gabelli & Company has over $31 billion under management and Caesar Bryan has managed the gold fund since its inception in 1994. Caesar said the Japanese public has not yet entered the gold market, but will in the future. He also believes gold and silver are ready for major moves. Here is what Bryan had to say: “We’ve had a $50 move in gold so far this week. We had the Japanese central bank go to an inflation target last week. We also had the UK embark on another round of asset purchases. So we have the background of more money printing and we may be seeing a bit of a delayed reaction in terms of gold taking off here.”
Caesar Bryan continues: Read More @ KingWorldNews.com
Coming to an area near you sooner then you think...
For ordinary Greeks, the effects of austerity are becoming intolerable
[Ed. Note: We wonder what it will take for the people of Europe, and of the United States for that matter, to call for the arrests of these criminal, murderous Banksters. What... will... it... take?]
by Patrick Cockburn, Independent.co.uk:
Maria Svoronou has three jobs and was finishing a 12-hour day as eurozone leaders were finalising Greece’s rescue package in Brussels. For all her hard work, she earns only €870 (£730) a month and says that “if the situation gets any worse, I won’t be able to survive”.
Ms Svoronou, aged 33 and with a degree from Edinburgh University, has a job teaching film at a private college in Athens, for which she is paid €10 an hour. Her second job is teaching primary school children road safety; the third is translating the dialogue in Bugs Bunny cartoons from English into Greek for €1.60 a page. She likes all three jobs, adding: “I am better off than all those Greeks who are unemployed.” But she is thinking about emigrating. Greece is full of well-educated but poorly paid people who expect their pay to drop further or to lose their jobs entirely.
In central Athens, mental health workers have occupied the Ministry of Health building, protesting that swingeing cuts are having a catastrophic effect on their patients’ care.
Read More @ Independent.co.uk
[Ed. Note: We wonder what it will take for the people of Europe, and of the United States for that matter, to call for the arrests of these criminal, murderous Banksters. What... will... it... take?]
by Patrick Cockburn, Independent.co.uk:
Maria Svoronou has three jobs and was finishing a 12-hour day as eurozone leaders were finalising Greece’s rescue package in Brussels. For all her hard work, she earns only €870 (£730) a month and says that “if the situation gets any worse, I won’t be able to survive”.
Ms Svoronou, aged 33 and with a degree from Edinburgh University, has a job teaching film at a private college in Athens, for which she is paid €10 an hour. Her second job is teaching primary school children road safety; the third is translating the dialogue in Bugs Bunny cartoons from English into Greek for €1.60 a page. She likes all three jobs, adding: “I am better off than all those Greeks who are unemployed.” But she is thinking about emigrating. Greece is full of well-educated but poorly paid people who expect their pay to drop further or to lose their jobs entirely.
In central Athens, mental health workers have occupied the Ministry of Health building, protesting that swingeing cuts are having a catastrophic effect on their patients’ care.
Read More @ Independent.co.uk
by Ashvin Pandurangi, BusinessInsider.com:
Despite
weakening economic growth and industrial production in recent months,
Germany continues to look much better than the rest of Europe on the
surface.
It boasts a very low unemployment rate (although über-low-wage work has grown tremendously) and relatively small public deficits.
However, none of that is stopping Merkel and her administration from betting their re-election on the fact that they can implement significant austerity in the next 2 years, while also containing the Euro crisis, and “lead by example”.
Read More @ BusinessInsider.com
Despite
weakening economic growth and industrial production in recent months,
Germany continues to look much better than the rest of Europe on the
surface.It boasts a very low unemployment rate (although über-low-wage work has grown tremendously) and relatively small public deficits.
However, none of that is stopping Merkel and her administration from betting their re-election on the fact that they can implement significant austerity in the next 2 years, while also containing the Euro crisis, and “lead by example”.
Read More @ BusinessInsider.com
Refusing to be irradiated treated as suspicious behaviour
by Steve Watson, InfoWars.com
Instances of TSA agents demanding to know why travelers are “opting out” of walking through x-ray firing body scanners, and treating the action as suspicious, continue to be reported.
Traveler Ryan Alford told Lew Rockwell.com
“I travel weekly for work and always choose to opt out of the naked body scanners. (I don’t know what’s worse, the pat down or radiation exposure, but there’s something liberating about saying “opt out.”)”
“Anyway, this week I was asked by an agent, ‘Why did you opt out?’ to which I replied, ‘Am I required to answer?’ He mumbled a bit and continued groping and poking. He then asked, ‘Where are you traveling to?’ and again I replied, ‘Am I required to answer?’” Mr Alford explained.
“It wasn’t long before a supervisor appeared, accompanied by a man in a suit (who was sporting a cross-shaped lapel pin clad in the American flag…sigh). He repeated the minion’s same question and my answer again remained unchanged.” Mr Alford added.
Read More @ InfoWars.com
by Steve Watson, InfoWars.com
Instances of TSA agents demanding to know why travelers are “opting out” of walking through x-ray firing body scanners, and treating the action as suspicious, continue to be reported.
Traveler Ryan Alford told Lew Rockwell.com
“I travel weekly for work and always choose to opt out of the naked body scanners. (I don’t know what’s worse, the pat down or radiation exposure, but there’s something liberating about saying “opt out.”)”
“Anyway, this week I was asked by an agent, ‘Why did you opt out?’ to which I replied, ‘Am I required to answer?’ He mumbled a bit and continued groping and poking. He then asked, ‘Where are you traveling to?’ and again I replied, ‘Am I required to answer?’” Mr Alford explained.
“It wasn’t long before a supervisor appeared, accompanied by a man in a suit (who was sporting a cross-shaped lapel pin clad in the American flag…sigh). He repeated the minion’s same question and my answer again remained unchanged.” Mr Alford added.
Read More @ InfoWars.com
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