Friday Night Tape Bomb: Spain Hikes Budget Deficit From 8.5% to 8.9%
Just when we though that nobody would take advantage of the cover
provided by the epic flame out of the FaceBomb IPO and the ongoing
market crash, here comes Spain. Because there is nothing quite like a
little Friday night action following a market drubbing and an "IPO for
the people" shock in which to sneak the news that, oops, sorry, we were
lying about all that austerity. Because while it came as a surprise to
the market back in December when Spain announced it would post a 2011
budget deficit of 8.5% instead of the previously promised 6%, the market
will hardly be impressed that Spain actually overspent by another €4.2
billion, to a brand new total of €95.5 billion of 8.9% of GDP. So
Monday now has two things to look forward to: the Spanish bond margin
hike on one hand courtesy of LCH.Clearnet earlier, and the fact that
despite spending even more than expected, GDP growth has disappointed
and the country is now officially in a double dip. Hardly what the
country with the record wide CDS needs right now.
This time is different?
PeakBook?
This time is different?"The Truth Gets Out Eventually"
Some look at today's FaceBook IPO flop, the ongoing market rout, and the situation in Europe with disenchantment and disappointment. We, on the other hand, view it with hope: because more than anything, the events of the past few days show that the truth is getting out - the truth that capital markets simply can not exist under the authoritarian rule of central planners, the truth that the stock market is a casino in which the best one can hope for a quick flip, and finally the truth that our entire socio-economic regime, whose existence has been predicated by borrowing from the uncreated wealth of the future, and where accumulated debt could be wiped out at the flip of a switch if things go wrong in the process obliterating the welfare of billions (of less than 1%ers), is one big lie.John Hathaway: "This Is The Bottom For Gold"
In an interview with Louis James, John Hathaway discusses the US's economic outlook and why he's delighted by the current bearish sentiment toward gold. "I think we're at the end of a correction that resulted from the peak last summer. It was overcooked, kind of hyperventilated hysteria over the debt-ceiling talks, the rating downgrade of the US sovereign debt, and I think basically the stocks and the metal had been working off that boiled down to what we now have is a simmer. I think we are at a position where there's not a lot of downside, and I would not be surprised by revisiting the previous highs of $1,900 and maybe even new highs over $2,000 this year."EUR Soars On No News, As Santander UK Says 30% Of Visiting Customers Pulled Their Deposits Today
Nothing
could be more appropriate than topping a week of surreal newsflow than
what just happened with the EURUSD, which soared by 80 pips on
absolutely non news, in what can be attributed to either some algo
going apeshit and lifting every offer, a fat finger, or just the tried
and true Bank of International Settlement stop hunt seeking to send
correlated risk assets higher courtesy of a spark in upward momentum.
Sadly today not even this glaring attempt to jump broad risk into the
stratosphere is working. And ahead of a weekend where it is rumored
Europe may reopen on Monday, we can't wait for the inevitable snapback.Biderman On Malinvestment And Diminishing Returns From Intervention
Instead
of his usual rant, Charles Biderman of TrimTabs discusses the reality
of the macro environment with Madeline Schnapp - though do not worry as
the sense of sarcasm and disbelief at the government's actions and
hopes is palpable. Noting that our economy is at best growing 'sluggishly' based off her real-time macro data, Biderman's right hand goes on to explain to him that inflation is running hotter than the government would like us to believe. More importantly, she hits the nail on the head with regard to what Biderman notes is the wasted stimulus money, saying that the
economy needs to clear the malinvestments, not sustain them through
stimulus transmission mechanisms, in order for growth to once again
re-appear. Historically QE2 did manage to create some inventory
restocking and pick up in wages/salaries in Q1 2011 but Operation
Twist appears to have little to no impact on the real economy (outside
of government statistical modelers) - which as we have said before
indicates the diminishing returns to government intervention. What is clear is that, as we have noted, that post the 1971 modified gold standard, over a long-period of time it has taken an 'unsustainably' increasing amount of government debt to create economic growth
- with the post-2008 insanity that we need $2.50 to create $1 of
economic growth. The two end with a discussion of the debt ceiling and
deficit potential for a black swan event. FadeBook
Forget
that S&P 500 e-mini futures plunged to four-month lows at 1290; or
Treasury yields crashed back to their record lows; or Gold and
Silver's surge today; or WTI's plummet to almost a $90 handle; or Citi
joining Morgan Stanley in the red year-to-date; or credit markets
continuing into the red for the year; or IG9 10Y soaring further to
160bps - widest in 6 months; or VIX closing above 25% for the first time
in 5 months (and decompressing to Europe's pain). Today was all about one thing - the disaster that was/is/and will be Facebook
- between late openings, overwhelmed systems, a dump to the syndicate
bid and almost 600mm shares traded with the syndicate just soaking it
all up at $38.00 early and into the close. Is it any wonder that every
other social media stock plunged and how do they expect to ever get
another internet IPO off again (at anything but a massive discount). No
matter what correlation trick was tried to juice markets today - for
the tenth day-in-a-row markets saw a BTFD turn into a STFR. Not a pretty end to the ugliest week in six month for the S&P 500 as it nears its 200DMA into the close.The Prusuit of Balance In and Unbalanced World
Eric De Groot at Eric De Groot - 45 minutes ago
How many investors, motivated largely by fear and highly motivated
misinformation campaign, dumped their gold and silver positions last week?
The oscillation between the extremes of greed and fear will repeat over and
over regardless of how many times Jim pleas for balance of mind, body, and
spirit. He's absolutely right. This is why he's a dangerous trader. Truth
is, only a select few...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]
Facebook's IPO
Dave in Denver at The Golden Truth - 2 hours ago
*There is a strong possibility that the Facebook IPO marks the beginning of
the next big leg down in this secular bear market in stocks, which began in
earnest in early 2000. While the business of model of Facebook has
validity, the value placed on it by investors is entirely absurd. The only
mechanism that will prevent a big flush in the stock market is the
commencement of a massive QE3 initiative by the Fed. If this should occur,
gold will do a moon shot and purchasing value of the dollar will futher
deteriorate.*
(Please note: technically this is not an IPO for Facebook. Fac... more »
Gold continues its bounce
Trader Dan at Trader Dan's Market Views - 2 hours ago
Gold continues to bounce higher in today's session as it moves further away
from the bottom of the BROAD 8 MONTH TRADING RANGE shown on the chart
below. The metal actually seems to be reverting to its safe haven function
as it is holding its gain in spite of continued weakness in the broader US
equity markets.
It does seem to have hit a band of resistance, as might be expected, near
the psychological round number of $1600. For gold to get a handle of "16"
in front of the price, we are going to need to see more hedge funds willing
to go long this market even as their algorithms are ... more »
Jim Rickards On JP Morgan's Trading (Gambling) Loss - The Hypocrisy of Plutocrats
I Just Got Back From the EU... and It's Worse Than You Imagined
05/18/2012 - 11:41
Unless Greece chooses to leave the Euro area, which JPMorgan doubts will happen, the rest of the region will have to push Greece out.
The mechanism for this will be the ECB excluding the Greek central
bank from Target2, the regional payments and settlement system.
Although this might look like a technical decision about monetary
plumbing, the ECB will elevate this to Euro area Heads of State. There
is understandably a lot of interest in the mechanics of how a possible
Greek exit from the Euro would play out in relation to the ECB. Reports
of significant deposit withdrawal from Greek banks also direct
attention toward the support for Greek banks coming from the Greek
Central Bank and the Eurosystem. And yesterday’s announcement by the ECB
of restricted access to regular repo Eurosystem financing for a number
of Greek banks adds some more complication. Though JPMorgan
would not place a lot of emphasis on what the ECB announced yesterday
as a signal of broader attitudes toward Greece, understanding the
mechanics matters more broadly.
LCH Hikes Margin Requirements On Spanish Bonds
A few days ago we suggested that
this action by LCH.Clearnet was only a matter of time. Sure enough, as
of minutes ago the bond clearer hiked margins on all Spanish bonds with
a duration of more than 1.25 years. Net result: the Spanish Banks
which by now are by far the largest single group holder of Spanish
bonds, has to post even moire collateral beginning May 25. Only problem
with that: it very well may not have the collateral.
Jamie Dimon’s worst fears for the scale of losses on the “London
Whale” derivatives disaster could be coming true in double-quick time.The JPMorgan Chase chief executive disclosed last week that the bank had lost $2bn (£1.2bn) on a complex bet in the credit markets and that the figure could escalate as it unwinds the disastrous trades.
The paper loss on the trade now sits at $3 Billion, according to reports yesterday, because rival speculators have taken opposing positions in an attempt to profit from JPMorgan’s distress. The reports sent the bank’s shares down another 3 per cent before lunch. They fell 9 per cent on a single day when the debacle first came to light.
Mr Dimon said the ultimate losses could be $3bn or more, but this will only be certain when the trade is fully unwound. In the meantime, the loss on paper will swing wildly depending on speculative activity in what is an obscure and thinly traded corner of the credit markets.
One of the biggest problems is an index called the Markit CDX NA IG Series 9 maturing in 2017, which reflects the value of a portfolio of credit default swaps, contracts tied to the credit quality of 121 North American investment-grade bond issuers including Kraft Foods and Wal-Mart Stores.
Read More @ Independent.co.uk
from RTAmerica:
Dear CIGAs,
There is a shift taking place whereby certain techs are being
shorted, and guess what, some golds are getting a better reception by
the hedge fund sector. Has the pendulum regarding gold swung too far to
the bearish side?
Yes, it certainly has.
Goldman upgraded African Barrick to Neutral from Sell yesterday.
Tanzania: Top Gold Miner Ups Royalty 17 May 2012
EFFORTS to make miners raise royalty have started to yield
positive results and African Barrick Gold (ABG) said on Wednesday that
it will pay the government an additional one per cent, citing the
current gold price environment.
ABG was earlier paying three per cent royalty and has for long been discussing with the government for review of the payments.
"ABG has concluded discussions with the Tanzanian government with
respect to the level of royalty payments made by its operations and, in
light of the current gold price environment, agreed to a voluntary
additional one per cent royalty going forward.
"This is in addition to the three per cent rate stipulated in our
Mineral Development Agreements, which remain unchanged," read the
statement released on Wednesday by ABG.The Deputy Minister for Energy
and Minerals, Mr Stephen Masele, was quoted last week as saying the
government’s discussions with the mining firm would soon conclude
positively.
Mr Masele said the government would like to see the mining sector
contributing more to the country’s economy, hence the need to review
royalties paid by mining firms.The mining sector currently contributes
about 2.3 per cent of the GDP, which is projected to account 10 per cent
in 2025 as stated in the Development Vision 2025.
More…
Dear Extended Family,
Time for blasphemy. I do not propose these as right, just as possible.
Could the world consensus on a significantly lower euro be totally wrong?
1. Assume the Greek situation is resolved however it happens to be.
Assume the euro does a great full body shake, throwing off some of its
weakest members.
At that point what happens?
Be careful about being bearish. That side is getting to be an
unwieldy crowd. You might be dead wrong. It could start a move of the
euro from $1.40 to $1.60 versus the dollar.
2. How about the election of Hollande in France? This is a "game
changer" because it is the beginning of a euro political and economic
union of the Left? The major problem with the euro is it is not a
political union and each member has their own economic agenda and cannot
stand all the other members. Remember the Left is dizzy, but on the
Right is our banksters who are downright mean.
What would the value of the euro be with number one done, and two number expected? I think $1.40 to $1.60.
You short of euro guys are a violent bunch. I heard enough of your
emails cursing at me because you refuse to consider the above as even a
possibility. Are you not making a political trade rather than an
economic trade?
The Super Bears on the euro I know are European by background; many are expats.
Respectfully,
Jim
Jim Sinclair’s Commentary
June 28th is the date to watch for the Chinese/Iran gold trade for
oil. If they proceed, Western sanctions from SWIFT will kick in.
Embargoes push Iran into remonetizing gold Submitted by cpowell on Fri, 2012-05-18 14:26
Turkish Gold Sales to Iran Soar as Sanctions Bite
By Behiye Taner
Reuters
Thursday, May 17, 2012
http://www.reuters.com/article/2012/05/17/gold-turkey-iran-idUSL5E8GGF3K…
ISTANBUL, Turkey — Turkish gold sales to Iran in March soared over
30 times and gold companies said Iranians were turning to gold for
savings and possibly trade as Western sanctions tighten.
Sanctions to force Iran to curb its nuclear programme have
targeted its energy and banking sectors and new measures from both the
United States and European Union take effect in July, aimed at
strangling Tehran’s foreign earnings.
The sanctions have made neighbouring Turkey an ever more important channel for the Islamic republic.
Data from Turkey’s Statistics Institute on Thursday showed gold
exports to Iran rose to nine tonnes, worth $480 million, in March, from
286 kg a year earlier and compared to just 30 kg in February this year.
They were the highest monthly exports to Iran since records started in 2010. Total gold exports were 11.1 tonnes in March.
… Dispatch continues below …
http://www.gata.org/node/11384
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Dear CIGAs,
There is a shift taking place whereby certain techs are being
shorted, and guess what, some golds are getting a better reception by
the hedge fund sector. Has the pendulum regarding gold swung too far to
the bearish side?
Yes, it certainly has.
Goldman upgraded African Barrick to Neutral from Sell yesterday.Tanzania: Top Gold Miner Ups Royalty 17 May 2012
EFFORTS to make miners raise royalty have started to yield positive results and African Barrick Gold (ABG) said on Wednesday that it will pay the government an additional one per cent, citing the current gold price environment.
ABG was earlier paying three per cent royalty and has for long been discussing with the government for review of the payments.
"ABG has concluded discussions with the Tanzanian government with respect to the level of royalty payments made by its operations and, in light of the current gold price environment, agreed to a voluntary additional one per cent royalty going forward.
"This is in addition to the three per cent rate stipulated in our Mineral Development Agreements, which remain unchanged," read the statement released on Wednesday by ABG.The Deputy Minister for Energy and Minerals, Mr Stephen Masele, was quoted last week as saying the government’s discussions with the mining firm would soon conclude positively.
Mr Masele said the government would like to see the mining sector contributing more to the country’s economy, hence the need to review royalties paid by mining firms.The mining sector currently contributes about 2.3 per cent of the GDP, which is projected to account 10 per cent in 2025 as stated in the Development Vision 2025.
More…
Dear Extended Family,
Time for blasphemy. I do not propose these as right, just as possible.
Could the world consensus on a significantly lower euro be totally wrong?
1. Assume the Greek situation is resolved however it happens to be.
Assume the euro does a great full body shake, throwing off some of its
weakest members.
At that point what happens?
Be careful about being bearish. That side is getting to be an
unwieldy crowd. You might be dead wrong. It could start a move of the
euro from $1.40 to $1.60 versus the dollar.
2. How about the election of Hollande in France? This is a "game
changer" because it is the beginning of a euro political and economic
union of the Left? The major problem with the euro is it is not a
political union and each member has their own economic agenda and cannot
stand all the other members. Remember the Left is dizzy, but on the
Right is our banksters who are downright mean.
What would the value of the euro be with number one done, and two number expected? I think $1.40 to $1.60.
You short of euro guys are a violent bunch. I heard enough of your
emails cursing at me because you refuse to consider the above as even a
possibility. Are you not making a political trade rather than an
economic trade?
The Super Bears on the euro I know are European by background; many are expats.
Respectfully,
Jim
Jim
Jim Sinclair’s Commentary
June 28th is the date to watch for the Chinese/Iran gold trade for
oil. If they proceed, Western sanctions from SWIFT will kick in.
Embargoes push Iran into remonetizing gold Submitted by cpowell on Fri, 2012-05-18 14:26
Turkish Gold Sales to Iran Soar as Sanctions Bite
By Behiye Taner
Reuters
Thursday, May 17, 2012
http://www.reuters.com/article/2012/05/17/gold-turkey-iran-idUSL5E8GGF3K…
ISTANBUL, Turkey — Turkish gold sales to Iran in March soared over 30 times and gold companies said Iranians were turning to gold for savings and possibly trade as Western sanctions tighten.
Sanctions to force Iran to curb its nuclear programme have targeted its energy and banking sectors and new measures from both the United States and European Union take effect in July, aimed at strangling Tehran’s foreign earnings.
The sanctions have made neighbouring Turkey an ever more important channel for the Islamic republic.
Data from Turkey’s Statistics Institute on Thursday showed gold exports to Iran rose to nine tonnes, worth $480 million, in March, from 286 kg a year earlier and compared to just 30 kg in February this year.
They were the highest monthly exports to Iran since records started in 2010. Total gold exports were 11.1 tonnes in March.
… Dispatch continues below …
http://www.gata.org/node/11384
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