Four vehicles reported net outflows. The SPDR Gold Trust (GLD) said holdings on behalf of investors slipped 2.43 tonnes or 0.19 pct. Three by ETF Securities marketed gold ETF’s/ETC’s also reported outflows, namely the ETFS Metal Securities Physical Gold (PHAU) trust (-0.65 tonnes), the Gold Bullion Securities ETC (GBS) (-0.04 tonnes) and the ETFS Metal Securities Physical Gold Australia trust (-0.01 tonnes). Total holdings - thereby excluding the infrequently updated ZKB Physical Gold trust and Credit Suisse’s ETF II on gold - stood at 1,911.88 tonnes.
With just 48 hours left until the rumored rate hike by the PBoC either this Friday or over the weekend, the verbal war in China is second only to the hacker war currently gripping the internet. First, the China Securities Journal, the same publication that warned that a rate hike was imminent earlier in the week, quoted Ba Shuson, a researcher with the State Council's Development Research center, who said that China's inflation in November may have peaked at a stunning 4.8%. He also added that "it will take time for the government’s measures to fight price gains to take effect." Of course the government would actually have to institute measures to fight price gains: if the just released Australia payrolls number is accurate, Chinese inventory stockpiling hit an all time high this month, and in exchange the country will likely see a huge influx of capital, making its inflationary problems even worse, although we won't know for sure until the trade surplus data is released later this week.
In a slightly unorthodox note to his readers, "Sovereign Man" Simon Black looks at the next potential escalation in the Julian Assange trainwreck, which may soon become a diplomatic fiasco all on its own, and without the need for leaked cables: it turns out that Australia is now seeking to strip Assange of his passport. However, there courtesy of a recent loophole, Assange has applied for UK citizenship (British mother). Will the UK - America's staunchest supporter, follow through with its laws, and grant the Australian a passport now that even his own nation seeks to betray him? As Black points out: "There are two important lessons in here for all of us: 1. Like Julian Assange, you never know when your own government will stand ready to "sell you out." Prepare accordingly. 2. Though you may have looked at all avenues for obtaining a second citizenship based on your family background and place of birth, it pays to constantly review the laws. Governments are always tinkering with them. Usually this is a bad thing... but as Tim's shining example shows, sometimes it works to your advantage." Lastly, one never knows when the proverbial TSHTF, and as such one should always be aware of all options should living in the US become, shall we say, problematic.
Indeed, the US, like all crumbling empires, is so caught up in its self-centered notions of superiority and “bread and circus” entertainment (in today’s world McDonald’s hamburgers and garbage TV like Jersey Shore) that it is TOTALLY “change blind” to the fact that China has not only ascended from a communist backwater to THE key player in the world’s global economic balance (more on this in a moment)… but is now holding MOST if not ALL of the trump cards from a global monetary/ economic standpoint.
After Morgan Stanley's call for the 10 Year hitting 4.5% in 2010 ended up being one of the worst calls of the year (together with each FX call by the Goldman team), the firm's head rates strategist Jim Caron is back on the scene with his latest set of Top Trades for 2011, as well as some views on where the fixed income market is headed next year. In summary: just fast forward the firm's bearish 2009 view on yields one year forward. After all if the firm was so wrong one year, it can't possibly be wrong two years in a row...
"WikiLeaks coined a new type of journalism: scientific journalism. We work with other media outlets to bring people the news, but also to prove it is true. Scientific journalism allows you to read a news story, then to click online to see the original document it is based on. That way you can judge for yourself: Is the story true? Did the journalist report it accurately? Democratic societies need a strong media and WikiLeaks is part of that media. The media helps keep government honest. WikiLeaks has revealed some hard truths about the Iraq and Afghan wars, and broken stories about corporate corruption." Julian Assange, The Australian Op-Ed
- Draconian Budget Set to Pass After Lowry Gives His Backing (Irish Times)
- Euro Collapse 'Possible' Amid Deepening Divisions Over Bail-out (Telegraph)
- China Outstrips Fed With Liquidity Risking 2011 Inflation Spike (Bloomberg)
- Deal Struck on Tax Package (WSJ)
- Dublin Woos MPs Ahead of Budget Vote (FT)
- China Buys Most Korean Bonds in 6 Months as Won Falls (Bloomberg)
- EU Rules Out Immediate Aid Boost, Banks on ECB to Fight Crisis (Bloomberg)
- The theatrical farce continues: Obama Summons CEOs to White House for Talks Amid Change (Bloomberg)
Hearing The Bernanke fiction that he is 100 percent certain he can stop hyperinflation was as reassuring as hearing his continued commitment to continue Quantitative Easing. I know hyperinflation is ugly. I know stopping this train wreck years ago would have been the correct thing to do. The fact is – we are beyond any fix. Things like cutting government spending will only increase unemployment. We are bankrupt when: What we take in with taxes doesn’t pay the bills. When we borrow and that and the taxes still don’t pay the bills. Now we counterfeit so we don’t default. Game over! I know re-valuing the dollar would have been faster and less painful. But the facts are that we have a professor who studied the Great Depression and if he doesn’t know that housing prices declined, or that there is massive inflation now, or that unemployment is at “depressionary” levels - then we have to realize that correcting what he messed up isn’t going to happen. The guy is either working for an elite few – or, more likely – he’s an economic imbecile.
- Reuters 2011 Investment Outlook Summit LIVE (Link) John Taylor speaking now.
- Irish Vote Likely To Pressure Euro (WSJ)
- Bernanke Says Fed May Take More Action to Curb Joblessness (Bloomberg)
- Jobless Report Is Death of Keynesianism (IBD)
- European Officials Split Over Bailout Fund Increase, EU Bond (Bloomberg)
- WikiLeaks' Swedish servers may be under attack (AP)
Folker Hellmeyer, the chief analyst with the Bremer Landesbank, gives an exclusive interview to chaostheorien.de on his take on the global currency wars and China's role in the global economy moving forward.
The European / IMF bail-out package for Ireland – announced one week ago – was somewhat smaller than expected at €85 bn and failed to calm market jitters spreading to other Euro zone periphery countries early in the week, most alarmingly to Spain and Italy. It was only with the ECB’s announcement that full allotment liquidity operations would continue through Q1 2011 and with a jump in ECB purchases of Portuguese government bonds on Thursday that stress in the Euro zone periphery abated somewhat...Following last week’s turbulence on the periphery, this week’s key event will be the Irish parliament vote on the 2011 budget, which is scheduled for Dec 7. A failure to pass the budget could quickly exacerbate tensions across the Euro zone periphery, by highlighting the political costs of needed budget cuts.
Technically it a joke to call what we are seeing day in and day out, at least in equities, a market, but for old time's sake, here is a recap of what happened today in stocks, rates, corporates, FX, and a focus on the two key events from late in the day: the bombs from Bernanke and Merkel.
There's an enduring myth that the U.S. has never defaulted on its debt, but that's merely a function of how default is defined. When Treasury abrogated the gold clause in 1933, holders of U.S. debt suffered serious losses, and as evidenced by the dollar's decline versus gold since 1971, Treasury has been a serial defaulter ever since. Assuming a default of the haircut variety, this has been the global norm for at least two centuries, and if the U.S. were to default in this way, it's not something we should fear. Post WWII the largest economic powers were regularly in default of the haircut kind, and the global economy boomed.
Two words describe the market action today: risk on. A few more words: indiscriminate buying of equities coupled with indiscriminate selling of fixed income. For all this and much more, see inside.
- API: Crude inventories down 1.14 mln barrels.
- Australia’s GDP expanded 0.2% in Q3 - half the pace economists estimated.
- Bernanke: US growth too slow to dent unemployment.
- China's official manufacturing PMI rose to 55.2 in November from 54.7 in October.
- Consumer Confidence in US rises more than estimated to a five-month high.
- Euro trades near 11-week low as Europe debt crisis prompts risk aversion.
- Real-estate prices in 20 US cities rose in Sept at the slowest pace in 8 months.