Archive - 2014

A few days ago it was revealed that numerous European users of Yahoo, as many as two million, had gotten infected with malware from virus-laden ads served by Yahoo's homepage during the period from December 31 to January 3. The company admitted as much when it revealed that "From December 31 to January 3 on our European sites, we served some advertisements that did not meet our editorial guidelines – specifically, they spread malware." Users in North America, Asia Pacific and Latin America weren't affected, Yahoo said. Nor were users of Apple Macs or mobile devices. "We will continue to monitor and block any advertisements being used for this activity," the company added. "We will post more information for our users shortly." What was not clear is just what function the ad virus served. According to the Guardian, the purpose of the most prevalent virus spread by the website was to convert the infected computers into Bitcoin mining slaves.

As I step ever closer to the advent of a new monetary system...

Today's 6.5bps surge in 10Y Treasury yields is the largest since November 20th as the Dow slides and USD rises on the back of better-than-expected ADP jobs data implying moar taper. With 10Y back to 3.00% (2.9987% to be accurate), mortgage rates are once again on the rise (despite the recent drop in yields); though for now, Treasury yields remain lower in yield on the year.

Just 2 day safter their release, The U.K.’s Royal Mint said it ran out of 2014 Sovereign gold coins “due to exceptional demand.”

*U.K. ROYAL MINT SAYS RUNS OUT OF 2014 SOVEREIGN GOLD COINS
*ROYAL MINT SAYS EXPECTS TO HAVE COIN STOCK AGAIN BY END OF JAN.

The mint added "Since the dip in the price of gold we have seen increased demand for our gold bullion coins from the major coin markets, and this presently shows no sign of abating."

"It's the weather's fault."

Prepare to hear this excuse a lot more in the coming days as one after another expectation of the "any minute now" economic rebound is missed. In today's instance we find that holiday retail sales, on which the punditry placed so much hope to finally show a recovering consumer, rose 2.7%, however offset by a plunge in store foot traffic, which tumbled by a whopping 14.6% according to ShopperTrak and wildly missing expectations of a 1.4% decline, a far cry from 2012's 2.5% increase.

If Americans in particular want to pursue any solution to the threat of globalism or dollar collapse, they are going to have to start with themselves, and the community around them. Online trade is the last thing they should be worried about. Only when neighborhoods, towns, and counties become producers and self suppliers will they be safe from financial instability. Only when those same communities band together for mutual aid and self defense will they be safe from tyrannical political entities. Bitcoin accomplishes nothing in either of these categories, making it possibly the most popular non-solution for liberty to date. Bitcoin is consistently touted as a superior option to precious metals as a way to decouple from central bank fiat. Under examination, though, it appears to me that bitcoin is instead a deliberate distraction away from gold and silver, and other tangible solutions; in other words, we believe it to be a form of controlled opposition.

Retail sales are not currently indicating that the consumer is about to "drop kick" a game winning field goal in the coming year.  While the consumer is definitely "not dead," as evidenced by increased leverage in the recent credit reports, they are also not currently in the position to substantially increase demand five years into an economic recovery. Our perception is that the "struggle through" economy is likely to remain in 2014 which will disappoint the economic bulls.

No surprises here: hours after we reported that youth unemployment in Spain soared to fresh record highs (surpassing the already nosebleeding number of jobless people under 25 in Greece), here comes Gallup with a poll showing the approval rating of the (unelected) EU Leadership across the peripheral countries. And while there was a slight uptick in approval among respondents in Italy - the country that has so far benefited the most from the Italian central banker at the helm of the ECB - the EU's lack of approval just rose to all time highs in the two countries that continue to see their youth employment hopes crushed by the European experiment, with approval in Spain sliding to 27% (from 55% in 2010), while Greece, plunged to only 19%, which makes one wonder: just who has an interest in keeping Greece in Europe?

The minutes of the December FOMC meeting will be released at 2 PM ET on Wednesday, January 8. As BofAML notes, the minutes give a platform to those outside the voting majority on the FOMC to express their disagreements with the current policy stance. Typically, that has meant that the minutes sound more hawkish than the FOMC statement or speeches by the voters. Also remember that much of the discussion in the minutes is based on old news: the US economy has shown mostly stronger data since the December 18th FOMC decision to taper by $10 bn as of January 1.

With 10Y Treasury yields pressing up agaist 3.00% once again (and equities shrugging off the taper-confirming news from ADP), precious metals are under pressure. Despite a few positive days, the last two have seen silver give back all 2014 gains and push back into the red for the year. Gold remains modestly green (still outperforming stocks for now).

The war of words (and deeds) is once again escalating between China and Japan. As we detailed last night, this has been a long time coming and as Reuters reports today took a further turn for the worse. In an op-ed in Britain's Daily Telegraph, the Chinese ambassador to Britain, Liu Xiaoming, wrote last week: "If militarism is like the haunting Voldemort of Japan, the Yasukuni shrine in Tokyo is a kind of horcrux, representing the darkest parts of that nation's soul." Liu's commentary was followed by another published on Sunday by his Japanese counterpart, Keiichi Hayashi, in the same newspaper, headlined: "China risks becoming Asia's Voldemort". As was noted, "Five thousand years of traditional virtues have been turned into this?"

Equity markets appear wholly dissatisfied with this morning's 'good' news and are unsure whether this taper-on data is confidence-inspiring or liquidty-sapping. The ADP print appears to confirm a hgher probability of another $10 billion taper. Bond yields jumped higher, the USD jumped higher, gold dropped, and stocks are limping to the day's lows...

Unless ADP is forced to revise its December print following the BLS report on Friday (which in keeping with the baffle with BS tradition should be a major disappointment), the Fed will have no choice but to taper by another $10 billion at the next opportunity, because moments ago ADP, which for all intents and purposes is merely noise until it has revised its data to comply with Nonfarm Payroll reports, announced that in December, some 238K jobs were added in the US, well above the 200K expected, and the highest monthly print since November 2012.

There are a number of reasons that silver should revert to the long term historical mean but the two primary ones are the fact that geologically in the earths crust there are fifteen parts of silver to every one part of gold. The other reason is that silver is used in many industrial, technological and medical devices and applications today and since the Industrial Revolution a huge amount of silver has been used up. Silver is like oil in that respect, and unlike gold, a lot of silver has been consumed and is gone forever.