The debate rages... Soros: "The euro crisis has already transformed the European Union from a voluntary association of equal states into a creditor-debtor relationship from which there is no easy escape. The creditors stand to lose large sums should a member state exit the monetary union, yet debtors are subjected to policies that deepen their depression, aggravate their debt burden, and perpetuate their subordinate position. As a result, the crisis is now threatening to destroy the EU itself. That would be a tragedy of historic proportions, which only German leadership can prevent." Sinn: "Soros is playing with fire... Many investors echo Soros. They want to cut and run – to unload their toxic paper onto intergovernmental rescuers, who should pay for it with the proceeds of Eurobond sales, and put their money in safer havens... Soros does not recognize the real nature of the eurozone’s problems. The ongoing financial crisis is merely a symptom of the monetary union’s underlying malady: its southern members’ loss of competitiveness... His accusation that Germany is imposing austerity is unfair. Austerity is imposed by the markets, not by those countries providing the funds to mitigate the crisis."
- Reinhart and Rogoff: Responding to Our Critics (NYT)
- Differences with centre-right delay Italy's Letta (Reuters)
- Italy's Letta moves forward to shape government (Reuters)
- China’s leaders warn on financial risks (FT)
- Norway oil fund makes big move from bonds to stocks (FT) - worked wonders for the Bank of Israel
- Smuggling milk is the new smuggling heroin in HK: Milk Smugglers Top Heroin Courier Arrests in Hong Kong (BBG)
- RenTec's mean reversion models fail on BOJ lunacy: Yen Bets Don't Add Up for a Fund Giant (WSJ)
- From 'Fabulous Fab' to Grad Student (WSJ)
- BOJ in credibility test as divisions emerge over inflation target (Reuters)
- Boston Bombing Suspect Moved from hospital to prison (WSJ)
- Provopoulos Says ECB May Never Need to Use Bond-Buying Program (BBG) which is good because, legally, it doesn't exist
The paper price of gold crashed to $1,325 in the wake of this huge trade. It is now hovering around $1,400. Our first reaction is to suggest that this is only an aberration, and that the fundamentals of the depreciating value of paper currencies will eventually take the price of gold much higher, making it a buying opportunity. But what we can't predict is whether big players might again deliver short-term downturns to the market. The momentum in the futures market can make swings surprisingly larger than the fundamentals of currency valuation would suggest; but the fundamentals will drive the long-term market more than these short-term events. The fight between pricing from the physical market for bullion and that from the "paper market" of futures is showing signs of discrimination and disagreement, as the physical market is booming, while prices set by futures are seemingly pressured to go nowhere. In short, we think this is a strong buying opportunity.
If the FBI can track down two homicidal Chechen nobodies inside of forty-eight hours from their Boston bombing caper, you kind of wonder how come the Bureau can’t detect the odor of racketeering, insider trading, and wire fraud in this month’s orchestrated smackdown of the gold futures markets, including the parts played by the Federal reserve, one or more too-big-to-fail banks, self-interested big money players such as George Soros, slumbering regulators at the Commodities Futures Trading Commission, and tractable editors at The Wall Street Journal and The New York Times... Because the smackdown organizers pulled off their operation in a panic, they probably ignored the potential further negative consequences of their stratagem, namely a worsening loss of confidence in banks generally and in the trade of abstract financial instruments in particular
Reuters Releases George Soros Obituary By Mistake: "Enigmatic Financier, Liberal Philanthropist Dies At XX"Submitted by Tyler Durden on 04/18/2013 18:04 -0400
First CNN, then AP, now Reuters: the entire media is increasingly starting to look like amateur hour. Unless, of course, Soros is like Osama, and had several "reincarnated" body doubles, with the original specimen long gone. Here is our suggestion for another prepared article: "Today after XX centuries of monetizing debt, the Emperor of the Galactic Central Bank, Gaius Maximus Printius Bernankius the DCLXVIth, ended QE in the year of the alien invasion, XXXXX. Bread costs XXXXXXXXXXX."
Q. What is your view on gold?
Soros: That’s a complicated question. It has disappointed the public, because it is meant to be the ultimate safe haven. But when the euro was close to collapsing in the last year, actually gold went down, because if people needed to sell something, they could sell gold. Therefore they sold gold. So gold went down together with everything else. Gold was destroyed as a safe haven, proved to be unsafe. Because of the disappointment, most people are reducing their holdings of gold. But the central banks will continue to buy them, so I don’t expect gold to go down. If you have the prospect of a crisis, you will have occasional flurries or jumps. So gold is very volatile on a day-to-day basis, no trend on a longer-term basis.
Uninsured Deposits Could Be Used In Future Bank Failures Says Influential CEO Of Italy's Largest BankSubmitted by GoldCore on 04/05/2013 10:02 -0400
The CEO of Unicredit Federico Ghizzoni said yesterday that uninsured deposits could be used In future bank failures. He said that the savings which are not guaranteed by any protection or insurance could be used in the future to contribute to the rescue of banks who fail and that uninsured deposits could be used in future bank failures provided global policy makers agree on a common approach.
While the crisis in Europe is first in Goerge Soros' mind because it is the "hottest" risk flare currently, his biggest concern in what he calls the "disarray in global cooperation," or what we would call 'dueling central banks'. "The almost universal adaptation of quantitative easing," worries him and he notes that "Europe is the last bastion of orthodoxy," in this regard as the aging hedgie warns, "Europe is entering a situation that Japan is desperate to escape from," as "Japan has just abandoned - after 25 years of stagnation - a process that Germany is just in the process of imposing on Europe." But perhaps his clearest concern in this brief clip is that no matter what we are told, the central banks' actions are 'creating' increasing financial instability because, "let's face it, quantitative easing is really and directly competitive devaluation." But it is his comments on the actions of the BoJ that should be most concerning as he stated to CNBC, "What Japan is doing is actually quite dangerous because they are doing it after 25 years of just simply accumulating deficits and not getting the economy going," as he fears, should they actually get something [inflation] started, "they may not be able to stop it." If the yen starts to fall, which it has done, and people in Japan realize that it is liable to continue, and want to put their money abroad, then "the fall may become like an avalanche."
- George Soros: 'What Japan is doing is actually quite dangerous because" (BBG)
- North Korea lacks means for nuclear strike on U.S., experts say (Reuters)
- Yellen latest to hint about slowing of QE3 (FT)
- Hollande approval rating hits new low (FT)
- Hollande Dismisses Reshuffle as Crisis Hits Popularity (BBG)
- Japan Upper house approves full 5 year term for BOJ gov. Kuroda (BBG)
- US: Plan to Cap Tax Breaks Is Gaining Steam (WSJ)
- BOE Says Investors May Be Taking ‘Too Rosy’ a View of Stress (BBG)
- Kiwis Say ‘Ni Hao’ as China Ties Trump Australia Sales (BBG)
- Obama Avoids Trading Threats With North Korea’s Kim (BBG)
Though a gold bull, I called for a correction late last year and believe more downside is likely from here.
- John Kerry just got happier: Berkshire Hathaway, 3G Buying Heinz for $72.50 a Share, or $28 Billion - ~20% premium to last price (CNBC)
- US Airways, AMR to Merge (WSJ) - can thousands of workers spell "synergies"?
- Draghi, Carney show ascent of "whatever it takes" central bankers (BBG) ... to preserve the Goldman way of life
- Euro zone economy falls deeper than expected into recession (Reuters)
- Soros has made $1 billion betting against the Japanese Yen (WSJ)
- Ex-Analyst at SAC Felt Pressured for Tips (WSJ)
- Desalination Seen Booming at 15% a Year as World Water Dries Up (BBG)
- China's 'Wall' Hits Business (WSJ)
- Israel publishes some details as Australian spy mystery deepens (Reuters)
- Tata Motors Profit Falls 52% (WSJ)
- AB InBev Will Sell Corona Unit to Salvage Modelo Takeover (BBG)
- "Blade Runner" Pistorius charged with murdering girlfriend (Reuters)
- In Ohio and beyond, Obama sees model for manufacturing revival (Reuters)
Janet Yellen Discovers Okun's Law Is Broken, Confused Record Russell 2000 Doesn't Lead To Plunging UnemploymentSubmitted by Tyler Durden on 02/11/2013 14:31 -0400
Moments ago Fed vice-chair Janet Yellen released a speech titled: "A Painfully Slow Recovery for America's Workers: Causes, Implications, and the Federal Reserve's Response." In it, Yellen finally revealed she is on the path to realizing the it is none other than the Fed's own actions that have broken the economic "virtuous cycle", and that Okun's Law - the bedrock behind the Fed's flawed philosophy of assuming more debt -> more GDP -> more jobs, is no longer relevant in the broken "New Normal." In other words, Yellen finally starts to grasp what Zero Hedge readers knew a year ago, when they read, "JP Morgan Finds Obama, And US Central Planning, Has Broken The Economic "Virtuous Cycle."
U.S. exports and imports last year totaled $3.82 trillion, the U.S. Commerce Department said last week. China’s customs administration reported last month that the country’s total trade in 2012 amounted to $3.87 trillion. China had a $231.1 billion annual trade surplus while the U.S. had a trade deficit of $727.9 billion. For those who are still not aware of why this is such a big deal, it is essentially a turning point moment in global trade. There is no doubt that China will now be inducted into the SDR, and that their importance as a trade and consumption center will quickly lead to a move away from the dollar. To put it simply, the dollar is going to lose its world reserve status VERY soon. Many will cheer this change as necessary progress towards a more “globally conscious” economic system. However, it’s not that simple. Total centralization is first and foremost the dream of idiots, and in any mutation (or amputation) there is always considerable pain involved. The proponents of this “New World Order” (their words, not mine) seem to have placed the U.S. squarely in their crosshairs as the primary recipient of this fiscal pain.
Big round numbers always encourage reflection. Turning 40 or 50, for example, or making (or losing) a million dollars. Or a billion. And so it is with “Dow 14,000.” ConvergEx's Nick Colas has three critical observations as we traverse this particular “Big round number.” First, it is clear that equity prices (and volatility, for that matter) are much more a direct tool of central bank policy than in prior economic cycles. Second, the rally off the bottom in March 2009 has left the investing world with very few money managers who can legitimately claim the title of “Smart money.” Lastly, you have to consider the way forward. The roadmap from Dow 6600 (March 2009) to Dow 14,000 was – in retrospect – clearly marked by signs labeled “Follow the central bank yellow brick road.” Good enough signage to get us here, clearly. But, as Nick notes, fundamentals – corporate earnings, interest rates, and economic growth – those are the metrics which will have to guide us as central banks inevitably reduce their liquidity programs. As he considers the way forward for U.S. stocks, he reflects on Spring 1994 - U.S. stock investors thought they had it all figured out as they exited 1993, just as they do now...
From a discussion of the Dutch political system being in the pocket of Big Oil to warning that German policy stipulations and the Euro itself could "potentially destroy the European Union," amid rebellion, George Soros has drastically reduced all Euro-related exposure from his portfolio - only a few weeks after his cautious optimism that Europe is 'revived' in Davos. As Open Europe blog notes, Soros fears that "there is a real danger that the [Euro] solution to the financial problem creates a really profound political problem." The interview below with Dutch TV shows Soros grave concerns that the Southern nations are "being pushed unwittingly... into a long lasting depression," as Germany's austerity program is "counter-productive - cannot actually succeed." Just as we recently noted the similarities between the European Union and the Soviet Union, so Soros believes the 'Euro' itself is "bound to break up the European Union." It may take generations, he notes, as a terrible tragedy of "lost political freedom and economic prosperity."