• Sprott Money
    02/28/2015 - 07:05
      In this exclusive interview, Hugo Salinas Price share his views on precious metals, provides some historical background on gold and silver money, the manipulation of the precious...

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Shorts Burned Following Strong 5 Year Treasury Auction

If yesterday's strong 2 Year bond auction confirmed that there was not a hawkish cloud on the bond market's horizon, then today's just concluded 5 Year bond auction doubled down on the strength of the short-end, when moments ago the Treasury sold $35 billion in 5 year paper at a yield of 1.480%, stopping 0.3 bps through the 1.483% when issued. The Bid to Cover of 2.54 also posted a modest increase to last month's 2.49, if a below the TTM average of 2.71. The internals were also in line, with Directs getting 7.5%, Indirects a far stronger than average 60.1%, and Dealers left holding 32.4% of the auction.



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The Magical Debt Disappearance

It is not entirely unusual for revisions to be made to the flow of funds data published by the Fed. Nothing about this time seemed remarkable, until one gets to corporate non-financial debt. Apparently, all that debt that has been taken on by companies in recent years has suddenly disappeared, as if by magic...



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US Espionage Blowback: China Drops Apple, Cisco From State Purchase Lists

Another quarter of leaks of ubiquitous US espionage in every corner of the world, and sure enough we get another quarter of China just saying no to spending any more money on companies which are, as far as Beijing is concerned, a natural extension of the NSA. According to Reuters, China has just dropped some of America's leading technology brands from its approved state purchase lists, chief among them Cisco (which already was hammered a year ago due to the Snowden revelations), and everyone's favorite $1 trillion market cap or bust cell phone maker, Apple. At the same time China shifted production focus away from foreign production approved thousands more locally made products. The reason according to Reuters, and pretty much anyone else: a response to revelations of widespread Western cybersurveillance.



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Name That Stock...

This well-known stock has seen its forward P/E valuation more than double in the last 18 months... and is now 70% "more expensive" than at its previous peak in 2012...



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The Biggest Problem For Greece Isn't Debt: It's This

"Greeks consider taxes as theft," which, among other things, explains, as WSJ reports, at the end of 2014, Greeks owed their government about €76 billion in unpaid taxes accrued over decades; the government says only €9 billion of that can be recovered, with most of the rest lost to insolvency. Syriza is now making tax collection a top priority among the measures promises the new Troika, but as one government official warned, "the Greek economy would collapse if the government were to force these people to pay taxes." The bottom line is that "normally taxes are considered the price you have to pay for a just state, but this is not accepted by the Greek mentality," and perhaps with this latest round of deference to the EU overlords, it is clear why...



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Ukraine Enters Hyperinflation: Currency Trading Halted, "Soon We Will Walk Around With Suitcases For Cash"

The Ukraine central bank tried to call a halt on Wednesday by banning banks from buying foreign currency on behalf of their clients for the rest of this week. Although banks could still trade with each other, by mid-morning there were no registered trades at any rate, leaving the currency in limbo.  A construction worker exchanging dollars at a kiosk in a grocery shop in return for a bag filled with thousands of hryvnia, laughed and told shoppers: "Soon we will have to walk around with suitcases for cash, like in the 1990s."



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A Most Curious Disconnect

While the actual number of new homes sold has barely budged during the so-called Recovery, the incentive for the builders, is right there, and as can been by median new home prices which continue to rise, and in fact hit an all time high as recently as December!



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Crude Oil Inventories Surge For 7th Week In A Row To Record Highs Amid Record Production

Oil prices dumped (last night's major 8.9 million barrel inventory build from API), pumped (the Saudi minister claiming "demand is growing" - which just seems like total fiction given economic backdrops and China's VLCC count plunge), and then this morning, dumped setting the scene for this morning's EIA inventory data. Against expectations of an 8 million barrel build, crude inventories saw a 8.43 million barrel build (5 times higher than the 5 year average). Record levels of production and record total inventrory sent WTI plunging out of the gate but it is stabilizing for now...



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New Home Sales & Prices Slip But Weather-Impacted Midwest Sales Surge

When existing home sales missed expectations, the fault was laid squarely at the foot of the meteorological conditions (despite a rise in NorthEast sales). New Home Sales beat expectations in January, printing 481k vs 470k expectations (though very modestly lower than December's revised 482k) and - destroying the meme that weather is to blame - sales soared in The Midwest. Median prices dropped MoM to the lowest since September but remain up an impressive 9% YoY. Lack of inventory continues to be blamed for weak sales - but, we ask rhetorically, doesn't price rise when supply drops?



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Grillin' Yellen: "Humphrey-Hawkins" Testimony Day 2 - Live Feed

While this morning's prepared remarks will be the same hodge podge of three-armed economist-speak, we suspect the Q&A will be a little aggressive as Fed Chair Janet Yellen faces The House Financial Services Committee. Having told the markets that "valuations are somewhat higher than normal," and "heightened leverage and weak underwriting terms are close to levels preceding the financial crisis," we are sure the Congressmen (and women) will focus attention on financial stability concerns - as opposed to back-patting celebrations of how well The Fed has done.



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How Far Is It From Kiev To Athens?

We don't get it, and we definitely don’t get why nobody is asking any questions. The IMF and EU make a lot of noise – through the Eurogroup – about all the conditions Greece has to address to get even a mild extension of support, while the same IMF and EU keep on handing out cash to Ukraine without as much as a whisper – at least publicly...



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HSBC CEO, Chairman Testify Over Tax Evasion, Facilitating Global Money Laundering - Live Webcast

It is time for another song and dance to appease the angry mob, if only for the next week or so until the popular attention span shifts over to the next scandal du jour. Which for today means that two top HSBC execs will appear briefly in UK parliament to testify before the Treasury committee, in a televized webcast set to start momentarily.



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After Cutting US Growth Due To Snow, Goldman Now Warns West Coast Port Congestion Will "Drag On GDP"

Last week, when with much amusement we observed that the first of many Q1 GDP cuts due to snow... in the winter... had taken place, we warned that next up on the GDP-trimming agenda would be "the West Coast port strike to take place in 2-4 weeks." We were wrong: it wasn't 2-4 weeks. It was 4 days, because overnight first Goldman (and soon all the other penguins) released a report titled "The Fallout from West Coast Port Disruptions" and sure enough, Goldman's conclusion is that "On balance, we think the net impact on Q1 GDP is probably a modest drag, although the estimated effect is highly uncertain at this point in the quarter."



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The Market Is A Red Herring... Distracting Us From The Reality Of The Economy

Janet Yellen once again repeats that the economy is “looking stronger” although still it has yet to manifest into actual strength.  In fact, it is still so weak that the Fed cannot even suggest that rates will raise anytime over the next several FOMC meetings.  In short, the economy is still very sick. The Pundits (Liesman) are suggesting Janet feels the economy is strong but that the “data just isn’t cooperating”.  What does that even mean?? The market is a red herring of sorts keeping our attention away from the reality of the economy.  And so, to give up the market strength would be synonymous to removing the one remaining support holding up that 100 storey building that is otherwise completely rotted.  Only when the economy is able to withstand a market repricing will the Fed allow the market to reprice.



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Frontrunning: February 25

  • Invade Syria already, we know you will: Islamic State in Syria abducts at least 150 Christians (Reuters)
  • Greece Struggles to Get Citizens to Pay Their Taxes (WSJ)
  • Doubts Shadow Deal to Extend Greek Bailout (WSJ)
  • In surprise result, Chicago's Mayor Emanuel faces election run-off (Reuters)
  • Obama vetoes Keystone pipeline bill (Reuters)
  • Another sign of the top: Cushman & Wakefield Going Up for Sale (WSJ)
  • Lure of Wall Street Cash Said to Skew Credit Ratings (BBG) ... and threat of DOJ lawsuits also
  • Oil rises to $59 as Saudis say demand growing (Reuters)


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