Archive - Apr 2013

Following the dramatic change in tone from Washington regarding Syrian "Weapons of Chemical Destruction", the phrases "Middle East" and "geopolitical risk" are suddenly back in the same sentence on the lips of those sitting around trading desks, leading to a powerful jump in the oil complex where Brent is having its best day in four months, and WTI in give. Yet the feasibility of an armed conflict with Syria which Russia has made very clear in the past is a strategic ally in the region aside, is the probability of an incursion truly imminent? For that we go to Stratfor's latest weekly update of US naval assets, which shows that if indeed Obama is planning to do a flyover showing off his Nobel Peace prize above Damascus, there will be a waiting time of at least several weeks as there is nothing in the immediate Syrian offshore vicinity. It appears that the 5th Fleet only has CVN-69 Eisenhower in the vicinity of Bahrain, as well as one big deck amphibious ship, the Kearsarge keeping an eye on the Straits of Hormuz.

In all the excitement over gold, silver has been largely ignored or forgotten. Today, it was the "poor man's gold"'s turn to stae a dramatic comeback posting its biggest single-day jump in 15 months. Having now retraced the Fibonacci 38.2% level of the record plunge, it appears $25 is th enext target - which is around 50% retracement levels.

Yesterday’s quarterly bank lending survey capped off a series of indicators with a bleak message for the Eurozone economy. Almost all signs suggest that Europe continues to spiral downwards. The lending survey, compiled by the European Central Bank (ECB), is one of the best leading indicators of all because it tells us about the critical credit link in the economy. In the Eurozone today, tight credit is part of a vicious circle that includes business retrenchment, weakening demand, job cuts and falling incomes. And the scariest thing about the circle is that it feeds on itself – each part reinforces the other parts. It won’t go on forever, but we need to see some improvement in the leading edge of the economy before we can expect it to end. As far as the most telling leading indicators, those that can be directly manipulated through monetary policy are the only ones pointing to a possible end to the vicious circle.  In other words: interest rates and equity markets. Until we signs of strength in at least one or two of the leading indicators discussed below, bet on the recession to continue.

Forget Boston, 9/11 and Oklahoma City … Is False Flag Terror Even a REAL Historical Concept?

A bank losing billions of dollars in a recessionary environment, REDUCES regulatory capital, failing to report liabilities - in order to pay special investors a special dividend! Sounds about right doesn't it? Unless your a common shareholder!

It seems like such a simple question... but the reaction of Argentina's Economy minister to this straightforward inquiry has to been to be believed in this brief clip. And do not raise the question of the IMF's doubts about the Argentinian 'official' statistics... just remember, it's for your own good.

The tension to "liberate" Syria is palpable. It took just 24 hours for the US to do an about face on its position on Syria, where yesterday, as Bloomberg reported, "U.S. officials said they haven’t seen conclusive evidence supporting an assertion by Israel’s top military intelligence analyst that Syrian government forces have used chemical weapons against rebels. Secretary of State John Kerry and spokesmen from the White House and the Pentagon said investigations haven’t produced hard proof that Bashar al-Assad’s regime has used toxic chemicals -- a step that President Barack Obama has said would cross a “red line." Fast forward to today, and we get pretty much the opposite opposite: "The United States believes with varying degrees of confidence that Syria's regime has used chemical weapons on a small scale, the White House said on Thursday."

When tin-foil-hat wearing digital dickweed blogs first suggested that Central Banks were actively buying stocks, the mainstream media scoffed at the idiocy and un-independence of such an idea. However, it is clear the central banks themselves are now not only actively buying stocks but are activley encouraging it and propagandizing their efforts to lever this last policy tool left in the toolbox. As Bloomberg reports, 23% of central bankers surveyed said the bank owns shares and plans to buy more. From the Bank of Japan to the Bank of Israel and with the SNB and the Czech National Bank now at over 10% allocation of reserves to stocks, is it any wonder there is an inexorable bid under the 'free' markets. Rick Santelli is rightly concerned that, "there is a danger that everyone is loaded in the same direction," asking what happens if all the Central Bank pump-priming does not work, given these equity valuations, "who gets caught holding the bag? What chairs are left when the music stops?"

The EuroStoxx 600 - one of Europe's broadest equity index - is up almost 5% in the last 5 days, the best such run since July of last year and is trading close to levels not seen since June 2008. Of course it is we hear you scream, Spanish unemployment is worst and getting worster, the core economy (Germany) is fading rapidly, Italian growth forecasts are being slashed, Europe's growth forecasts are being significantly lowered; have no fear Draghi is here (with what? we implore?). While stocks in Europe were off to the races once again, for the second day in a row, Spanish and Italian bond spreads leaked wider (after their record-breaking run recently). EURUSD also took a big stumble today, from around 1.31 to below 1.30 on Goldman's note on ECB's albeit 'cosmetic' rate cut.

The uncomfortable effects of government actions are being felt everywhere. Obamacare concerns are, anecdotally, delaying hiring, causing firms to change benefits for the people, and increasing taxes on the great majority. On the other hand, in the context of the "sequester", which is merely a slowdown in the breakneck rate of government spending, anyone who has traveled by plane in the last month knows the full court press efforts under way to ensure the American public knows just how 'devastating' the sequester cuts are - with delays rising exponentially with every dollar removed from the FAA budget. But there is a group on 'Americans' who are not feeling the pain of Obamacare or Airport delays. This group of people remains comfortably unaware of the reality that is being passed on the rest of the US citizenry. As Politico reports, Congressional leaders in both parties are engaged in high-level, confidential talks about exempting lawmakers and Capitol Hill aides from the insurance exchanges they are mandated to join as part of Obamacare; and as the Washington Times reports, the chief of the FAA told Congress today that Washington-area airports will largely escape the effects of the air traffic controller furloughs.

Because AUDJPY is soaring, of course...

There are growing supply issues and a range of gold and silver coins and bars are in short supply internationally and premiums are rising globally. Many smaller dealers have been cleared out of their bullion inventories.

Gold prices are expected to recover in the coming weeks and months according to the Reuters Precious Metals Poll of analysts.

Most of the 29 banking and brokerage analysts and consultants polled expected prices to find support and stay above the $1,400 mark. The majority of analysts, 20 out of 29, expect gold to end 2013 above $1,450 per ounce and 6 analysts, including GoldCore, saw gold above $1,650/oz by the end of 2013.

Interestingly, the majority are bullish at these price levels with average price forecasts for the year of 2013 much higher than today's prices - at a mean of $1596/oz and a median of $1627/oz.  

The amateur detective sleuths on 4Chan, Reddit and other social sites were so eager to demonstrate their investigative prowess in the information vacuum days following the Boston Bombing, they managed to identify virtually everyone who appeared even slightly tanned and/or had a backpack as a potential suspect. Sadly, the game, as well-meaning as it may have been, just turned lethal for one of the people who were falsely identified, as NBC just confirmed that Sunil Tripathi, 22, a former student at Brown University has been found dead in the Providence River.

In a mere 3 seconds, Qualys, a $350mm market cap company providing IT security solutions, was rendered worthless by a rogue algorithm with an apparent sense of humor. The stock opened around $11 but at 0935ET, Johnny 5 decided it was time for the take-down and almost instantaneously the stock, QLYS, crashed to $0. Seven seconds later, all was well in the world of IT security solutions once again as $11 was recovered. Of course, in the meantime, every stop was triggered and any belief in the stability of the market was destroyed - but hey, the exchanges got their data fees.