The predictions of Blackstone's octogenarian Byron Wien (born in 1933) have been all over the place in the past 10 years, some correct, most wrong (with a recent hit rate of about 25%) - his 2013 year end S&P forecast was for 1300 - yet always entertaining. Which is the only value in the latest release of his 10 forecasts for 2014. Naturally, take all of these with a salt mine.
Bai Zhongren, the president of state-run China Railway Group - the state-owned engineering giant behind many of the country's largest railway projects - committed suicide over the weekend. As SCMP reports, Bai is among several senior railway officials and executives who have committed suicide since corruption scandals implicating the senior railway officials began to come to light three years ago. However, there have been no direct links between China Railway Group and the corruption cases (yet) but Chinese courts are about to hand down verdicts on several very senior executives.
- 'Life-threatening' cold bites Midwest, heads east (Reuters)
- Gold Analysts Get Most Bullish in a Year After Rout (BBG)
- Asian Stocks Fall Most in Three Weeks on China Services (BBG)
- Angela Merkel in skiing accident, cancels visits (Reuters)
- High-Speed Traders Form Trade Group to Press Case (WSJ)
- Toyota and Honda post record China sales (FT)
- China Shadow Banking Risks Exposed by Local Debt Audit (BBG)
- J.P. Morgan to Pay Over $2 Billion to U.S. in Penalties in Madoff Case (WSJ)
- Corruption trial of Trenton, N.J., mayor starts Monday (Reuters)
- Car Makers at Consumer Electronics Show Tout Ways to Plug Autos Into the Web (WSJ)
Since quantitative easing (QE) became the policy of the world's major central banks, capital is being herded into fewer and fewer asset classes. With such huge volumes of money at play, very crowded trades in assets like stocks and housing have resulted - bringing us back to familiar bubble territory in record time. The key for the individual, as Pretti emphasizes in this excellent interview, is risk management. The safety many investors believe they are buying in today's markets is not real... "this comes down to individual families making an assessment of how much risk they can afford to take. Below that line, they do not allow it to happen. It may sound trite but: You have every day of your life to get back into the market, but sometimes you do not have a second chance to get out."
As we enter 2014 mainstream economists relying on inaccurate statistics, many of which are not even relevant to a true understanding of our economic condition, seem convinced that the crises of recent years are now laid to rest. If we objectively assess the state of the labour markets in most welfare-driven economies the truth conforms to a continuing slump; and if we take a realistic view of price increases, including capital assets, price inflation may even be in double figures. The corruption of price inflation statistics in turn makes a mockery of GDP numbers, which realistically adjusted for price inflation are contracting. This gloomy conclusion should come as no surprise to thoughtful souls in any era. These conditions are the logical outcome of the corruption of currencies and the effect of unsound money... and two conclusions for 2014...
The Future of Money: The Dumb Dollar vs Smart, Programmable Currencies!
- Heavy snowstorm hammers northeastern U.S. (Reuters)
- Coins Remain a Bright Spot for Gold (WSJ)
- Gross’s Mistake on Fed Taper Echoes Across Pimco Funds (BBG)
- China December services PMI falls to four-month low (Reuters)
- General Mills Starts Making Some Cheerios Without GMOs (WSJ)
- U.S. considers flammability risk of Bakken crude after accidents (Reuters)
- China Mobile’s Costly iPhone Deal with Apple (WSJ)
- Hezbollah Upgrades Missile Threat to Israel (WSJ)
- UK House Prices Cap Best Year Since 2006 as Mortgages Surge (BBG)
- China tells police to be loyal to party amid graft crackdown (Reuters)
With tensions remaining high, the brouhaha over the 'probe' of government corruption daring to find actual corruption rolls on and now the military is complaining of bent judges in their own 'coup' trial:
*TURKISH ARMY SAYS EVIDENCE FABRICATED IN COUP TRIAL: HURRIYET
*TURKEY ARMED FORCES FILES CASE CITING PLOT AGAINST IT: HURRIYET
Add to this the hike in consumption taxes and fears over inflationary surges and the Lira has re-collapsed back to record lows against the USD and Istanbul stocks are re-tumbling.
Earlier this week, in "Why The Turkish Government May Be The Casualty Of A $119 Billion PetroDollar Loophole" we said "dare to mess with the Petrodollar and the wrath of the US government will hunt you down... sooner or later." Sure enough, after resulting in a Turkish government scandal, punishing its stock market and sending the Lira reeling, the blowback has reached Iran where billionaire Babak Zanjani was arrested yesterday on corruption charges, although in reality his chief transgression was allowing the Petrogold system to show that the Petrodollar is no longer irreplaceable.
Heading into the North American open, stocks in Europe are seen broadly lower, with consumer services seen as the worst performing sector, where the UK based retailers have underperformed amid fears that a combination of heavy discounting, along with bad weather, impacted heavily on overall performance. Of note, the SMI index in Switzerland underperformed throughout the session, with Swatch shares under pressure after officials were unable to say what caused the fire at the weekend at the co.'s ETA unit factory in Grenchen, which destroyed one workshop and damaged another. As expected, traded volume is far below the daily avg and this trend is expected to continue this week. The euro is stronger against the dollar. Japanese 10yr bond yields rise; Italian yields decline. Commodities little changed, with silver, gold underperforming and natural gas outperforming. U.S. pending home sales, Dallas Fed manufacturing data due later.
It was in October 2012 when we explained how Iran evades the Western blockade (ostensibly with the implicit nod of none other than the US), and when we first defined the concept of PetroGold in the context of the Turkey-Dubai-Iran crude-for-gold triangle. One year later, following Iran's unperturbed ability to exist in a world without US dollars, the blockade of Iran is a thing of the past, and the west has engaged in a full-blown detente with the country, much to the fury of both Israel and Saudi Arabia, lowering and in many cases outright eliminating Iran sanctions, which proved futile. So a happy ending for Iran (if only briefly). However, one country that has seen better days, whose government may be on the edge of collapse due to an unprecedented corruption scandal precisely for enabling said PetroGold scheme, and which has been in the news on a daily basis recently, is Turkey. As Turkey's Today's Zaman explains in "Iran's Turkish Gold Rush", the political crisis Turkey finds itself in may be nothing but a consequence of the PetroGold scheme conceived over a year ago, and in which Turkey played a crucial role. Here is how the Turkey-Dubai-Iran PetroGold triangle, or as the Zaman calls it, "gas for gold", may soon result in the toppling of yet another government, simply because it showed that existence outside of the clutches of the 'Petrodollar' is perfectly possible...
Muammer Akkas, the prosecutor who complained his government corruotion investigation efforts were being blocked by the government - has been removed from the investigation. Prime Minister Erdogan's efforts to rein in "the final attack" on "new Turkey" are failing even after his cabinet reshuffle but this morning's rhetoric has sent asset prices tumbling once more:
*'THE NEW TURKEY IS UNDER SERIOUS ATTACK': ERDOGAN
*IN NEW TURKEY, SOVEREIGNTY CAN'T LIE WITH JUDICIARY: ERDOGAN
*LAWMAKERS SHOULD AVOID REMARKS HURTING ERDOGAN: ARINC
*ERDOGAN SAYS HE'S ISSUING LEGAL COMPLAINT AGAINST MEDIA LEAKS
As one analyst noted, "Erdogan continues to present the developments as a conspiracy despite having to shuffle his cabinet, which indicates that there may be some serious findings behind the probe."
- Millions of Tons of Metals Stashed in Shadow Warehouses (WSJ)
- Moguls Rent South Dakota Addresses to Dodge Taxes Forever (BBG)
- Fastest Japan Inflation Since ’08 Stokes Wage Pressure (BBG)
- Thai crisis deepens as army chief hints at intervention (Reuters)
- Anti-Assad Lebanese ex-minister killed in Beirut bomb (Reuters)
- Foreigners Unload Turkey Bonds as Probe Tarnishes Erdogan Growth (BBG)
- Small ISS Change Shakes Up Boards: Tweak to Influential Shareholder Adviser's Recommendations Has Directors Rethinking Proposals (WSJ)
- Japan’s Nishimura Calls for Quick Corporate Tax Cut to Under 30% (BBG)
- Japan's Abe bets U.S. alliance, ratings can weather shrine visit (Reuters)
If political protests focused on the real culprits of economic instability within their countries, then they could be immensely successful in bringing about real change. However, as long as they focus on distractions and the players of the game rather than the real culprits, politicians will continue to sell all of us "hope" and "change we can believe in" and continue laughing behind our backs all the way to the bank.