WORLD
China’s Households “Massively” Exposed To Housing Bubble “That Has To Burst”
The topic of China’s real estate bubble, its ghost cities, and its emerging middle class – who now have enough money to invest and have piled into houses not stocks – and have been dubbed “fang nu” or housing slaves (a reference to the lifetime of work needed to pay off their debts); is not a new one here but, as Bloomberg reports, the latest report from economist Gan Li shows China’s households are massively exposed to an oversupplied property market.
China’s Rescue of Troubled Trust May Stoke Risk-Taking
China’s eleventh-hour rescue of wealthy investors in a high-yield trust threatens to drive more money into the nation’s $6 trillion shadow-banking industry, undermining regulators’ efforts to deter excessive risk-taking.
China’s Foreign-Reserves Investment Chief Said to Depart
China’s official in charge ofinvesting the world’s largest foreign-exchange reserves left thegovernment agency that oversees the holdings, according to aperson with direct knowledge of the situation.
Ukraine Sliding Towards Civil War in Wake of Tough New Laws
Dressed in jeans and a down jacket, the parliamentarian who wants to overthrow Ukraine’s president by any means necessary is standing in Kiev’s Maidan Nezalezhnosti, or Independence Square, where a struggle for power has played out over the last two months. “What can our cobblestones, Molotov cocktails and burning tires do against water cannons, bullets and armored cars?” asks Igor Myroshnychenko. “Many people here are prepared to die.”
’Overwhelming majority’ of EU countries against Ukraine sanctions
Lithuania was the only one who said the EU foreign service should draft a list of potential sanctions at a meeting of the bloc’s Political and Security Committee in Brussels on Thursday (23 January).
Swiss Banks Seek Tax Amnesty as Third Accept U.S. Offer
The U.S. government gave more than 300 Swiss banks untilDec. 31 to seek non-prosecution agreements if they had “reasonto believe” they helped Americans violate tax laws, and 106submitted letters of intent, Assistant Attorney General Kathryn Keneally said today in a statement.
Spain’s Banco Popular Bad Loans Surge 20% QoQ (Most Ever) To Record High
As we draw ever closer to Europe’s date with disaster and the inevitable lifting of the kimono that Draghi’s supervision-driven stress tests appear to be, European banks are being forced to finally ‘fess up to the real state of their balance sheets. Confused at how bad macro data can be in Spain and yet banks have been ‘surviving’ or ‘thriving’ – simply put, they lied (and are now being forced to un-lie)
Italy is wasting away month by month
As you can see from the chart below (only available on ISTAT’s Italian site), the slide has been relentless. There is no sign of stabilisation. A further 25,000 dropped out of the work force in December alone.
Switzerland tops list of European exporters to Iran
According to official figures released by Islamic Republic of Iran Customs Administration, Switzerland exported as much as 2.6 tons of commodities to Iran during the ten-month time frame, topping the list of European exporters to Iran.
Its Great Lake Shriveled, Iran Confronts Crisis of Water Supply
LAKE URMIA, Iran — After driving for 15 minutes over the bottom of what was once Iran’s largest lake, a local environmental official stepped out of his truck, pushed his hands deep into his pockets and silently wandered into the great dry plain, as if searching for water he knew he would never find.
Danish PM Blindsided as Ministers Quit in Goldman Spat
As night turned to day on Jan. 30, Denmark’s biggest newspapers were predicting Prime Minister Helle Thorning-Schmidt’s coalition would survive a dispute over letting Goldman Sachs Group Inc. (GS) buy part of Dong Energy A/S.
Former top executive at Deutsche Bank found hanged at his Kensington home
The body of William ‘Bill’ Broeksmit, 58, was discovered at his home in South Kensington on Sunday shortly after midday by police, who had been called to reports of a man found hanging at a house.
Emerging Market Meltdown Resumes
As South Africa hiked rates this morning (whose effect on the Rand was promptly overwhelmed by the Lira collapsing back to weaker than pre-rate-hike) stock markets around the world are rapidly deteriorating and the safety of bonds and bullion is being sought aggressively. S&P futures are -10 from pre-Turkey; Dow -100; Nikkei -30; and EEM swung from up over 2% to down almost 1% in the pre-open. Treasuries are 6bps tighter than post-Turkey and gold (and silver) are rallying smartly back up to $1268 (+$20 from post-Turkey lows). It would seem EM turmoil is un-fixed. Turkish stocks are collapsing and the Hungarian Forint is collapsing.
Barclays’ Dearlove Accepts Role in Libor Rigging, Judge Says
Dearlove “accepts that he was involved in and aware ofmanipulation of Libor,” Judge Julian Flaux said in court at ahearing today. “He explained in his witness statement how itcame about.”
DOMESTIC
Amazon’s Bad Omen for the U.S. Economy
Amazon.com Inc.’s shares fell almost 10 percent a few minutes past 4 p.m., after the company dropped some disappointing earnings news. The title of the company’s news release is cheerily optimistic: “Amazon.com Announces Fourth Quarter Sales up 20% to $25.59 Billion.” And its operating income actually beat estimates — $510 million, compared with $489.9 million. But fourth-quarter sales of $25.6 billion were considerably below estimates of $26.08 billion, and earnings per share were 51 cents instead of the 69 cents that analysts had been expecting.
Suicide Among Bankers Appears To Be On The Rise Again As Pressures To Get Banks And Businesses Back In The Black Takes Its Toll
The full contents of the note are unknown, but as his family later revealed, it did contain an accusation that apparently forced the resignation of Wauthier’s boss, Josef Ackermann, and may cause waves across the entire Swiss corporate and banking sector.
Third Banker, Former Fed Member, “Found Dead” Inside A Week
If the stock market were already crashing then it would be simple to blame the dismally sad rash of dead bankers in the last week on that – certainly that was reflected in 1929. However, for the third time in the last week, a senior financial executive has died in what appears to be a suicide. As Bloomberg reports, following the deaths of a JPMorgan senior manager (Tuesday) and a Deutsche Bank executive (Sunday), Russell Investments’ Chief Economist (and former Fed economist) Mike Dueker was found dead at the side of a highway in Washington State. Police said the death appeared to be a suicide.
The new face of food stamps: working-age Americans
WASHINGTON (AP) — In a first, working-age people now make up the majority in U.S. households that rely on food stamps — a switch from a few years ago, when children and the elderly were the main recipients.
Gundlach Counting Rotting Homes Makes Subprime Bear
The founder of $49 billion investment firm DoubleLine Capital LP is largely avoiding the subprime-mortgage bonds that jumped about 17 percent last year after home prices surged by the most since 2006, deterred by the lengthy process to sell foreclosed houses and the destruction that’s creating.
Margin Debt Soars To Record High; Investor Net Worth Now Doubly Negative From 2007 Bubble Peak
That margin debt kept rising into the last month of last year is no surprise: after all, with a market that was destined to follow the Fed’s balance sheet through thick and thin, there was “no risk” – just remember what David Tepper said: no taper is bullish, a taper is even more bullish as it means the economy is recovering and 20x P/E multiples are just around the corner. Sure enough as reported earlier by the NYSE, margin debt rose by another $21 billion in December to an all time high of $445 billion, and up 29% from a year ago – incidentally almost identical to the increase in the S&P.
Third Banker, Former Fed Member, “Found Dead” Inside A Week
If the stock market were already crashing then it would be simple to blame the dismally sad rash of dead bankers in the last week on that – certainly that was reflected in 1929. However, for the third time in the last week, a senior financial executive has died in what appears to be a suicide. As Bloomberg reports, following the deaths of a JPMorgan senior manager (Tuesday) and a Deutsche Bank executive (Sunday), Russell Investments’ Chief Economist (and former Fed economist) Mike Dueker was found dead at the side of a highway in Washington State. Police said the death appeared to be a suicide.
INFLATION/CURRENCIES
As Argentina currency devalues, ‘We don’t know what prices to charge!’
On January 24, the peso underwent its greatest devaluation since 2002. The objective of lowering the peso’s value relative to the US dollar was to stop the decrease in Argentina’s foreign exchange reserves. In three years, foreign exchange reserves had plummeted from 50 billion to 30 billion dollars.
Bundesbank calls for capital levy to avert government bankruptcies
(Reuters) – Germany’s Bundesbank said on Monday that countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help.
Japan’s Inflation Accelerates as Abe Seeks Wage Gains
Japan’s inflation accelerated inDecember, industrial output gained and a measure of demand forworkers strengthened, signaling gains for Prime Minister Shinzo Abe’s campaign to end two decades of stagnation.
Furious Backlash Forces HSBC To Scrap Large Cash Withdrawal Limit
Following the quiet update that HSBC had decided to withhold large cash withdrawals from some if its clients – demanding to know the purpose of the withdrawal before handing over the customers’ money – it appears the anger among the over 60 thousand readers who found out about HSBC’s implied capital shortfall just on this website, has forced HSBC’s hands.
IMF warns Fed could worsen markets rout
Christine Lagarde, the IMF’s managing director, said spill-over effects from Fed bond tapering could destabilise vulnerable countries that have failed to rein in imbalances
The Macro View: Meet Janet Yellen, central planner
The U.S. dollar is the dominant global reserve currency. All markets, including stocks, bonds, commodities, and foreign exchange are affected by the value of the dollar. The value of the dollar, in effect, its “price” is determined by interest rates. When the Federal Reserve manipulates interest rates, it is manipulating, and therefore distorting, every market in the world. The Fed may have some legitimate role as an emergency lender of last resort and as a force to use liquidity to maintain price stability. But, the lender of last resort function has morphed into an all-purpose bailout facility, and the liquidity function has morphed into massive manipulation of interest rates.
Nothing Lasts Forever; World Bank Ex-Chief Economist Calls For End To Dollar As Reserve Currency
In the past we have discussed at length the inevitable demise of the USD as the world’s reserve currency noting that nothing lasts forever. However, when former World Bank chief economist Justin Yifu Lin warns that “the dominance of the greenback is the root cause of global financial and economic crises,” we suspect the world will begin to listen (especially the Chinese. Lin, now – notably – an adviser to the Chinese government, concludes that internationalizing the Chinese currency is not the answer (preferring a basket approach) but ominously concludes, “the solution to this is to replace the national currency with a global currency,” as it will create more stable global financial system.
Citing Growth, Fed Again Cuts Monthly Bond Purchases
WASHINGTON — In its final major decision under the leadership of Ben S. Bernanke, the Federal Reserve said on Wednesday that it would continue to slowly dismantle its stimulus campaign, citing “growing underlying strength in the broader economy.”
Record Cash Leaves Emerging Market ETFs on Lira Drop
Investors are pulling money from exchange-traded funds that track emerging markets at the fastest rate on record, as China’s slowing growth and cuts to central-bank stimulus sink currencies from Turkey to Brazil.
PRECIOUS METALS
Chinese a far more important factor in gold prices going forward than Fed QE tapering
US investors went cold on gold last year because the spectre of Fed QE tapering promised higher interest rates that make gold investments less attractive. But this narrow view point missed the bigger picture entirely as the Chinese used this opportunity to corner the gold market like the Hunt Brothers did with silver in 1980 (click here).
Turkey Crisis Puts Jailed Millionaire at Heart of Gold-Smuggling Ring
Here he is, as a fluttering tarpaulin reveals a $72 million villa on Istanbul’s waterfront, a present for his pop-star wife, Ebru Gundes. Here he is, sitting near Prime Minister Recep Tayyip Erdogan at a government-housing ceremony. On another day, he clutches an award on a stage with Erdogan’s wife.
New gold and diamond buyers emerge at Dubai Shopping festival
Gold jewellers in Dubai have reported the strongest gold sales in seven years, with over four million shoppers crowding the retail and jewellery outlets at the Dubai Shopping Festival. Though Indian expats and Indian tourists have taken the lead in the gold rush this year, diamond jewellery counters are also registering an increased presence of buyers from China and from European tourists.
Australian law provides for gold confiscation — and it’s not unique
Writing tonight for The Market Oracle, Paul Behan notes that a mechanism for government confiscation of privately held gold is already explicitly part of the law in Australia. Behan’s commentary is headlined “Gold and Silver Confiscation? It’s Written In the Law” and it’s posted at The Market Oracle here:
Gold stocks best performing market sector so far this year
Investors in gold equities have had little cheer in the past couple of years – indeed the period has seen a sell-off not experienced in the sector since the Bre-X fraud exposure of 1996, which had a huge downside impact on gold stocks, particularly in the junior gold sector. But so far this year – admittedly it is very early days yet – gold stocks have proven to be the sector to be in and while the major global stock indices have drifted downwards so far many gold stocks have risen by up to 30% or more. Is this the signal the market has been waiting for to get back into what has to have been the most oversold stock market sector of the past two years?
India Gold Import Curbs Review Seen in March on Deficit Control
“We can revisit curbs on gold imports by end of the yearbut let me hasten to add that it will happen only after we get afirm grip on the current-account deficit,” Chidambaram said inNew Delhi today. Shipments rose in December from a monthearlier, Revenue Secretary Sumit Bose said at the same event,and confirmed that the minister was referring to the financialyear ending March 31.
China’s Gold Imports From Hong Kong Climb to Record
Purchases that climbed by 51 percent in December before theLunar New Year holiday starting Jan. 31 took net imports for theyear to 1,108.8 metric tons, a 33 percent gain from 2012,according to calculations by Bloomberg News based on data fromthe Hong Kong Census and Statistics Department. The net figurededucts flows from China into Hong Kong.
Gold Flows East as Bars Recast for Chinese Defying Slump
Gold’s biggest slump in three decades has been a boon for MKS (Switzerland) SA’s PAMP refinery near the Italian border in Castel San Pietro, whose bullion sales to China surged to a record as demand rose for coins, bars and jewelry.
Golden horses gallop ahead in sales in Chinese stores
Golden horses have replaced golden snakes in China, in a run up to the New Year (the year of the horse) that is to be celebrated on January 31. Hong Kong based jewellers have reported massive sales of equine jewellery pieces across the counter, with sales picking up over the weekend.
China’s HK gold trade hits new annual record, but where’s it all coming from?
Blaring headlines earlier today from Bloomberg and Reuters announced that Chinese gold imports through Hong Kong reached a new record in 2014. Readers of Mineweb will hardly be surprised at that – indeed they will be aware that gold imports by this route had already achieved a record total a couple of months ago! But it’s nice, at least, to have the full year’s figures confirmed, even though the two agencies disagree a little on actual figures!
Chinese Gold Rush Heating Up
In the trading week from January 20 – 24 physical gold withdrawn from the SGE vaults accounted for 57 tons, this is the third week in a row SGE withdrawals have been more than weekly global mine production. In the first 24 days of 2014 withdrawals from the SGE accounted for 216 tons. With one trading week left this month it’s very likely January 2014 will break the all time record of monthly withdrawals, surpassing the 236 tons from April 2013. Is this the height of the Chinese gold rush?
The First Verified 1974-D Aluminum Cent Will Be Offered By Heritage at Central States Auction
Rumored to exist for years but not confirmed until now, the first verified 1974 Lincoln cent struck in aluminum at the Denver Mint will be displayed by Heritage Auctions at the upcoming Long Beach Coin, Currency, Stamp & Sports Collectible Expo, January 30 – February 1, 2014. It then will be offered as one of the highlights of the Heritage Signature Auction during the Central States Numismatic Society convention near Chicago, April 23 – 27, 2014.
Platinum producers table new wage offer
JOHANNESBURG (miningweekly.com) – Platinum producers Anglo American Platinum, Lonmin and Impala Platinum on Wednesday tabled a new offer, delivered to the Association of Mineworkers and Construction Union (AMCU) by the Commission for Conciliation, Mediation and Arbitration (CCMA) commissioners, in an attempt to resolve the ongoing strike for an entry-level salary of R12 500, which started on January 23.
Platinum miners bet on eight-week stockpile to beat strike
The world’s biggest platinum producers have built stockpiles to last as long as eight weeks, helping them weather a strike that’s begun crippling their mines in South Africa, source of about 70 percent of global supplies.
Tulving Complaints Update – 3-6 Month Delivery Delays, Warning, Complaints. Is he Reputable?
On January 31, 2014 we discovered 2 reports that The Tulving Company did not ship orders by the dates promised to the BBB. In other words, The Tulving Company delayed thes orders for 3-5 months, and the customers complained to the BBB — at which point, The Tulving Company promised to deliver them by a specific date, but failed to.
Palladium prices to go up for automakers
Categorised as a precious metal, palladium is part of what are popularly referred to as Platinum Group Metals (PGM) with increasing industrial application, mainly in auto-catalysts (for automobiles), electrical, dental and chemical industries.
Withdrawals From SGE Vaults 60 Tons, YTD 159 Tons
Again an astounding trading week on the SGE; from January 13 – 17, 2014 physical withdrawals from the SGE vaults accounted for 60 tons of gold, year to date 159 tons. Although withdrawals are down 25 % from the previous week, the amount is still well above weekly global mine production.
BC Regulators Choking Province’s Mining Exploration Industry
(January 30, 2014) BC Conservative Leadership candidate Rick Peterson today accused BC Liberal-appointed provincial securities regulators of choking off access to venture capital that is needed to support the province’s $4.7 billion mining industry.
Indian gold retailers miffed by sudden rush of pre-2005 notes,1
MUMBAI (Scrap Monster): The announcement to withdraw pre-2005 currency notes by end-March by the Reserve Bank of India (RBI) triggered jewellery sales in India. People resorted to bulk gold purchases in an attempt to make use of the older banknotes with them. The huge rush by customers to offload their stock of old currency, even led to some retail jewellers stop accepting pre-2005 currency notes.
In India, 2,500kg of gold is being flown in every month
NEW DELHI: High customs duty on gold has skewed the jewellery market in such a way that not only is the yellow metal being smuggled in huge quantities, a fact admitted by finance minister P Chidambaram, but there has been an unprecedented rise in legal import of gold through air passengers.
Gold flows and their huge potential market impact
Maybe we are building too much reliance on this, but it does seem that the rundown in stocks of physical gold in the West and the build-up, for the most part, into stronger hands in the East, has to lead to a severe supply imbalance in the availability of gold bullion. If this flow continues at anything like the current rate – and there’s no evidence yet that it is slowing significantly – then the ensuing short squeeze on physical gold could be devastating for that part of the gold trade which is heavily short gold.
Gold and Silver at ‘Historic Undervaluation’: John Embry
Well, I am really fascinated with the gold and silver markets for a simple reason: I believe that the fundamentals that should be driving the price couldn’t be better. At the same time, because the price of both gold and silver have been driven down relentlessly – going on two and a half years now for gold – the degree of undervaluation against any method that I look at is approaching historic records.
Ron Paul: Here’s why gold is a safe haven again
Gold investors are rejoicing at the yellow metal’s 3% gain so far in 2014. That comes after the worst year for gold since Bill Clinton was in the White House.
India Gold Smuggling Adds $1bn to CAD
GOLD smuggling to India – the world’s largest consumer nation – may have equaled $1.1 billion by value since legal imports were effectively banned last summer, analysis of Finance Ministry estimates by BullionVault shows.
Fresnillo reports 13.7% drop in 2013 silver production
Fresnillo reported annual attributable silver production of 42.7 million ounces in 2013, up 4.3% and ahead of the 41 million ounce guidance.
Gold de-hedging continues, but at reducing rate
So far the increasing siren songs from the investment bankers that gold miners should return to hedging a proportion of their gold output to protect future margins seems to have fallen on deaf ears. .
Why the recent lift in junior miners will likely continue
Junior venture companies in Canada are finally seeing a significant lift.
COMMENTARY
Marc Faber Warns “Insiders Are Selling Like Crazy… Short US Stocks, Buy Treasuries & Gold”
Beginning by disavowing Mario Gabelli of any belief that rising stock prices help ‘most’ people (“Fed data suggests half the US population has seen a 40% drop in wealth since 2007″), Marc Faber discusses his increasingly imminent fears of the markets in this recent Barron’s interview.
How Much Did Goldman Rip Libya Off?
The Libyan Investment Authority recently sued Goldman over some 2008-vintage derivatives trades gone wrong. I wrote about it last week but didn’t yet have Libya’s complaint. That came out today — here is the complaint, or in British the “Particulars of Claim” — and it’s fun reading.
The Prudent Bear: End of an Era
I hope to at some point offer a more complete review of Ben Bernanke’s tenure at the Federal Reserve. I will be fascinated to see how future historians view the Bernanke doctrine. From my perspective, the Bernanke Era has been an abject failure. He was the most outspoken proponent of post-tech Bubble reflation. The noted academic was keen to use the government printing press – not to mention mortgage Credit – to fatefully drive asset inflation and stimulate a particularly unbalanced U.S. economic boom. I will give him less than zero Credit for then inciting an even greater Bubble, again in the name of system reflation, after the 2008 crisis.
Emerging markets, interest rates and tapering
Thanks to the Fed’s tapering, a wider public is becoming aware of currency instability in diverse economies, from Turkey to Argentina, and India to Indonesia. Indeed, on Tuesday night Turkey raised overnight interest rates by a whopping 4.5% to 12% in an attempt to stop a run on the lira.
A central banker’s ‘license to lie’ | Anatole Kaletsky
Federal Reserve Chairman Ben Bernanke, who retires this week as the world’s most powerful central banker, cannot be trusted.
Why is the Fed tapering? – PaulCraigRoberts.org
As the supply of physical gold on hand diminished, increasingly recourse was taken to selling gold short in the paper futures market. We illustrated a recent episode in our article. Below we illustrate the uncovered short-selling that took the gold price down today
‘Huge amount of downside’ in S&P: Fleckenstein
Bill Fleckenstein is not ready to call the top for the market just yet. But pointing to the S&P 500′s valuation, he says that once stocks do start to fall, the decline could prove extremely painful.
The joke’s not on Nigel Farage and Ukip. It’s on the rest of us
It has been a bad few days for Ukip. First, one of the party’s councillors said that flooding was God’s revenge for gay marriage. Then one of Ukip’s best-known characters mocked a disabled student, and finally the party’s policies came under sustained attack from its own leader. Nigel Farage rightly dismissed Ukip’s 2010 election manifesto as total drivel, then tried to distance himself from such nonsense as bringing in uniforms for taxi drivers, until it emerged he’d written the foreword.
The REAL State of the Union in just 889 words…
This senseless, destructive war was started and championed by politicians who cared nothing for the 9 million people who lost their lives.
Why Japan is dreaming of 1914
The Masters of the Universe who have just been to their annual bash at Davos would never dare executing radical maneuvers such as those performed in parallel by young skiers and snowboarders at the X Games in Aspen, Colorado.
The lost Century – Egon von Greyerz
“In November 1910, some powerful US bankers joined by the influential Paul Warburg had a meeting on Jekyll Island that would determine the destiny of the world financial system and the world economy for over 100 years. This infamous meeting led to the creation of the Federal Reserve System in the US on December 23, 1913.
AUDIO/VISUAL
“Fed Has Fingers & Thumbs On The Scales Of Finance,” Grant Tells Santelli And It “Will End Badly”
In a mere 140 seconds, Jim Grant explains to an almost stunned into silence Rick Santelli how we all “live in a valuation hall of mirrors” as the Fed manipulates everything. Thanks to it’s “fingers and thumbs on the scales of finance,” Grant continues, the Fed “insists on saving us from ‘everyday low prices’” – what they call deflation – and by doing so it manufactures “redundant credit” which “does mischief” in and out of markets. Grant, ominously concludes, “there is no suspense as to how [this will] end… [it will] end badly.”