- America’s Role as Consumer of Last Resort Goes Missing (BBG)
- Holiday sales sag despite blitz of deals (WSJ)
- Abe Support Falls Below 50% for First Time Amid Secrecy Drive (BBG)
- U.S. airlines give China flight plans for defense zone (Reuters), while Japan: no change to airlines' notification policy when flying in East China Sea zone (Reuters)
- Thai protesters seek to topple PM after clashes (Reuters)
- Hilton Seeks as Much as $2.4 Billion in Biggest Hotel IPO (BBG)
- Biden on delicate mission to defuse tensions in East Asia (Reuters)
- Fed eyes financial system weak link (WSJ)
- Pentagon in line of fire in US budget war (FT)
- China’s monetary squeeze collides with housing bubble (FT)
While today's big event is the October Non-farm payrolls print, which consensus has at 120K and unemployment rising from 7.2% to 7.3%, there was a spate of events overnight worth noting, starting with Chinese exports and imports both rising more than expected (5.6% and 7.6% vs expectations of 1.9% and 7.4% respectively), leading to an October trade surplus of $31.1 billion double the $15.2 billion reported in August. This led to a brief jump in Asian regional market which however was promptly faded. Germany also reported a greater trade surplus than expected at €20.4bn vs €15.4 bn expected, which begs the question just where are all these excess exports going to? Perhaps France, whose trade deficit rose from €5.1 billion to €5.8 billion, more than the €4.8 billion expected. Of note also was the French downgrade from AA+ to AA by S&P, citing weak economic prospects, with fiscal constraints throughout 2014. The agency added that the country has limited room to maneuver and sees an inability to significantly cut government spending. The downgrade, however, was largely a buy the EURUSD dip event as rating agencies' opinions fade into irrelevance.
“Recovery” has become the shibboleth constantly invoked by people running things after the crisis of 2008. Unfortunately, no such recovery was underway. It was papered over by the twin Federal Reserve policies of quantitative easing and financial repression – a combination of the nation’s central bank loaning vast new amounts of money into existence at ultra-low interest rates (hardly any interest to pay back) and creating steady monetary inflation to reduce the burden of existing debt by shrinking the dollar value of the debt. The program was a racket in the sense that it was fundamentally dishonest. The presumed purpose of these shenanigans from the point of view of the Federal Reserve and the White House was to keep the financial system stable and afloat, and therefore to keep “normal” American daily life going. Unfortunately, it was based on the unreal assumption that the financial norms of, say, 2006 could be ginned back up again, and this premise was just inconsistent with the reality of a post-Peak-Cheap-Oil world. Unfortunately, there was no organized counter-view to this wishful thinking anywhere within the boundaries of the political establishment.
A Potentially Nasty Snapshot Of Risk Resulting In Another Trillion Of Taxpayer Funded Bank Bailouts - A WalkthroughSubmitted by Reggie Middleton on 12/21/2012 12:55 -0400
Bigger Tax Payer Bank Bailouts Cometh? If You Think Taxes Are Gonna Be Higher You Ain't Seen Nothing Yet! I welcome one and all to show me how it will not be so.
- Israel Mobilizes Troops as Hostilities Escalate (WSJ)
- FHA Sets Stage for Taxpayer Subsidy With 2012 Deficit (Bloomberg)
- On eve of fiscal cliff talks, positions harden (Reuters)
- Japan PM Noda contradicts challenger Abe on BOJ (Reuters)
- Regulators cut JPMorgan's ability to trade power (Reuters)
- EU Should Reach Agreement on Greek Aid Next Week, Grilli Says (BBG)
- Moscovici rejects talk of French crisis (FT)
- Egypt Urges Push for Gaza Peace as Rockets Hit Israel (BBG)
- Leading Japan politicians draw election battle lines (Reuters)
- Fed Push to Tie Zero-Rate to Economic Goals Faces Doubts (BBG)
- China’s commerce minister voted out in rare congress snub (Reuters)
- China’s new leaders could have reform thrust upon them (Reuters)
- Both Sides of Gaza Border Brace for Further Conflict (WSJ)
- Fed Sees Hurdles in Housing Rebound (Hilsenrath)
- The Complete 2012 Business Schools Ranking (Bloomberg)
Gold’s seasonality is seen in the above charts which show how March, June and October are gold’s weakest months with actual losses being incurred on average in these months. Buying gold during the so-called summer doldrums has been a winning trade for most of the last 34 years. This is especially the case in the last eight years as gold averaged a gain of nearly 14% in just six months after the summer low. We tend to advise a buy and hold strategy for the majority of clients. For those who have a bit more of a risk appetite, an interesting strategy would be to buy at the start of September, sell at end of September and then buy back in on October 31st.
It’s Not Just The “London Whale”
There's a big, fat "I told you so" coming down the pike.
Well, my hat is off to the global central planners for averting the next stage of the unfolding financial crisis for as long as they have. I guess there’s some solace in having had a nice break between the events of 2008/09 and today, which afforded us all the opportunity to attend to our various preparations and enjoy our lives.
Alas, all good things come to an end, and a crisis rooted in ‘too much debt’ with a nice undercurrent of ‘persistently high and rising energy costs’ was never going to be solved by providing cheap liquidity to the largest and most reckless financial institutions. And it has not.
Each day then that passes, as the cash river runs dry, will change the dynamics of the investment world. The biggest change that I see forthcoming on the landscape, beyond those which I have noted, I believe will take place in Germany. China is heading towards some sort of landing and most of Europe is now officially in a recession. The bite of the austerity measures will deepen the process and between the two I think we will begin to see a decline in the finances of Germany which will bring all manner of howls and screams. Germany cannot keep heading in one direction while the rest of its partners founder all around them. The demands of Berlin are self-defeating eventually as demand falls off and I think we are just at the cusp of deterioration in Germany. The problem, all along, has been that Eurobonds or other measures representing a transfer union will cause the averaging of all of the economies in Europe so that the periphery countries benefit with a higher standard of living while the wealthier nations have standards of living that decline as the result of accumulated debts for the troubled nations. This will bring out nationalism again in force as the grand dream succumbs to the grim reality of the costs for nations that have lived beyond their means. The Pied Piper always gets paid and Hamelin still rests upon German soil.
- There is no Spanish siesta for the eurozone (FT)
- Greece over halfway to recovery, says PM (FT) - inspired comedy...
- Sarkozy Trims Gap With Rival, Polls Show (WSJ) - Diebold speaks again
- IMF’s Zhu Sees ‘Soft-Landing’ Even as Property Slides: Economy (Bloomberg)
- Obama Uses Lincoln to Needle Republicans Battling in Illinois (Bloomberg)
- Three shot dead outside Jewish school in France (Reuters)
- Osborne Seeks to End 50% Tax Spat With Pledge to Aid U.K. Poor (Bloomberg)
- Monti to Meet Labor Unions Amid Warning of Continued Euro Crisis (Bloomberg)
- Obama, Cameron discussed tapping oil reserves (Reuters)
- Greek Bonds Signal $2.6 Billion Payout on Credit-Default Swaps (Bloomberg)
- China leader's ouster roils succession plans (Reuters)
- China’s Foreign Direct Investment Falls for Fourth Month (Bloomberg)
- Greek Restructuring Delay Helps Banks as Risks Shift (Bloomberg)
- Concerns Rise Over Eurozone Fiscal Treaty (FT)
- Home default notices rise in February: RealtyTrac (Reuters)
- China PBOC Drains Net CNY57 Bln (WSJ)
- Euro-Region Debt Sales Top $29B This Week (Bloomberg)
- Greek Fury at Plan for EU Budget Control (FT)
- Greek "football players too poor to play", leagues running out of money, may file for bankruptcy (Spiegel)
- After insider trading scandal, Einhorn wins the battle: St. Joe Pares Back Its Florida Vision (WSJ)
- China Signals Limited Loosening as PBOC Bucks Forecast (Bloomberg)
- China's Wen: Govt Debt Risk "Controllable", Sets Reforms (Reuters)
- IMF Reviews China Currency's Value (WSJ)
- Watching, watching, watching: Japan PM Noda: To Respond To FX Moves "Appropriately" (WSJ)
- Cameron to Nod Through EU Treaty (FT)
- Gingrich Backer Sheldon Adelson Faces Questions About Chinese Business Affairs (Observer)