Archive - Sep 23, 2014

China is slowly moving to dominate the global gold market and it is important to join the dots regarding a few key recent developments in China relating to gold. When the International Board of the Shanghai Gold Exchange (SGE) was launched last Thursday September 18 during an evening trading session, it was notable that the first transactions were put through by a diverse group comprising HSBC, MKS (Switzerland), and the Chinese banks,  ICBC, Bank of China and Bank of Communications.  One encouraging factor about the SGE and the SGE international platform is that there is a lot of physical gold flowing through the Exchange. Therefore, price discovery is not just based on an inverted pyramid of mostly unallocated gold as in London or mostly cash-traded futures paper gold as in New York.

Is the Great Republic been on the verge of fragmenting as classic political philosphy said was the fate of all large republics?   

Update: Birmingham Police Chief A.C. Roper said that the shooter appears to be dead.

What until recently was a surge in tragic and deadly "active shooter" cases mostly affecting various US army bases, shools and shopping malls, has now spread to more commercial structures, such as in this case a UPS Customer Center in Birmingham, Alabama. MyFoxAl reports that three people are confirmed dead in a shooting at the UPS Customer Center in the Inglenook community in north Birmingham.

Some of you were no doubt aware that the latest round of Nobel Laureate ballistic mayhem commenced on the day after September 21: The International Day of Peace!

Why are corporate insiders selling the farm when it comes to their own money… but spending corporate cash like drunken sailors?

While WHO Director Thomas Frieden's "gut" says the worst-case scenario won't come to pass (thanks to the actions that are being taken), the CDC is about to release its Ebola-epidemic scenario tool that suggests up to 1.4 million infections by mid-January. As The NY Times reports, these figures take into account the fact that many cases go undetected, and estimate that there are actually 2.5 times as many as reported. In the best-case model, the epidemic in both countries would be "almost ended" by Jan. 20, the report said. Perhaps more worrying is the WHO report also, for the first time, raised the possibility that the disease would not be stopped but would become endemic in West Africa, meaning that it could become a constant presence there. Aid group Samaritan’s Purse is gravely concerned at the spread of the disease, fearing "it's too late. Nobody's going to build 100,000 beds."

UPDATE: Stocks have roundtripped from their voyage into fantasy...

As we predicted an hour ago when the USDJPY was 50 pips lower, today's aggression against stocks would not stand. So, lo and behold, one or more central banks decided to aggressively collect 6J (USDJPY) liquidity rebates from the CME and have bought the pair in a straight line since this morning. And sure enough, after it dropped notably just a few hours ago, the NASDAQ and S&P is now back in the green, where it belongs in a "market" as rigged as this one.

Futures and commodities markets reaction to the US Air strikes on Syria. Flight to safety with the yield in the 10 year yield lower to 2.551 in pre-US equity open.

Last night's airstrikes on ISIS in Syria came as a surprise to some (though apparently not ISIS who local reporters note had time to move weapons and personnel) as President Obama - and his local arab nation allies (acting in support), though notably no Western nations - unleashed hell on Assad's sovereign territory. The first stirrings of responses from Russia have been creeping out and now Israel is involved in the anti-ISIS coalition. The State Department has just confirmed that they did not give advance warning to the Syrian regime. If you are playing along at home, key words include "broad coalition", "Assad still a bad guy", "Vladimir who?", and "not Muslim."

"Silicon Valley as a whole... is taking on an excessive amount of risk right now. Unprecedented since '99." The widely accepted model is that it's acceptable for companies to be "[b]urning cash and losing money.. with the emphasis on the losing." "It reminds me of 2000, when investment capital was flooding into startups and flooded a lot of marginal companies. If 2000 was a bubble factor of 10, we are at an 8 to 9 in my opinion right now."

French vegetable farmer have set a tax office and a building on fire destroying the government facility which was the symbol of the increasing administrative burden and sanctions that is killing farming. The background is that for years the bureaucracy for farmers have magnified the economic decline and their plight with constant new regulation of everything. The economic situation of farming in Europe has been seriously pushed too far with the US sanctions against Russia. The agricultural crisis caused by Obama is increasingly deteriorating with far too many farmers throughout Europe losing everything. The economic numbers in France are simply devastating, and we only see more regulation and raising taxes to support bloated government especially in France. The French government has not the faintest idea how to fix the economy because Hollande will not admit socialism does not work.

Gold prices are up around 1.5% from last night's close. Here's why...

Whether as a result of recent icy to quite icy diplomatic relations between the two nations, or just because it has other motives, Israel had clearly abstained from joining the US effort to contain the CIA-created ISIS terrorist juggernaut. However, overnight, with the US finally doing what Israel has hoped it would do for so long, namely being engaged in a bombing campaign of Syria (recall that it was Israel which was one of the biggest supporters of a US-led military intervention in Syria in the summer of 2013), it decided "hell, why not" and joined the fray, when shortly before 3 am Eastern time, this hit:

• ISRAELI SAYS IT DOWNED SYRIAN AIRCRAFT IN ISRAELI AIRSPACE
• ISRAELI ARMY SAYS DOWNED SYRIAN AIRCRAFT WAS FIGHTER JET

Quite notable because it was the first time in three decades that Israel had downed a Syrian warplane, so Israel needed a strong pretext for such aggression. An aggression, incidentally, not against ISIS, but Assad's regime itself, which clearly is what Obama's latest operation is all about - to take down a sovereign while doing the bidding of Qatar and Saudi Arabia, just like in 2013.

• U.S., backed by Arabs, launches first strikes on fighters in Syria (Reuters, BBG)
• But not all all back: Turkey Bars Kurds From Entering Syria to Fight Islamic State (BBG)
• Dollar Weakens on Airstrikes; Europe Stocks Drop (BBG)
• Ready for Rate Riot? Emerging Markets Set to Follow Fed (BBG)
• White House fence jumper had ammunition, machete in car, prosecutors say (WaPo)
• El-Erian "would have done things differently" (Reuters)
• Eurozone business growth slows in September, PMI survey finds (BBC)
• Shrinking Bond Desks Taken by Journeymen as Masters Fade (BBG)
• Manufacturing Rebound Relieves Growth Concerns in China (BBG)
• Former Trader Quits Playboy Club to Open Own Restaurant (BBG)

European stocks, U.S. equity index futures fall after Euro area PMI for Aug. missed ests., while bond yields for German, Spanish, U.K. debt fall. Copper rises with positive Chinese PMI data, while oil gains as OPEC discusses output cut. European health care stocks among largest underperformers as U.S. plans tighter rules on tax inversion M&A.