Lifted by a continued surge in Asian gold sales, consumer demand for gold reached an all-time high in 2013 at 3,893 tonnes. Amazingly, 54% of this demand came from two places: India and China. However, it is only recently that the East has dominated global demand for the yellow metal. In this infographic, we look at India and China specifically to see why demand keeps expanding in the East.
Never in a million years did we think we’d ever use an article by Andrew Ross Sorkin as the basis of a blog post, but here we are. While probably entirely unintentional, his article serves to further solidify as accurate the prevailing notion across America that former head of the New York Federal Reserve and Obama’s first Treasury Secretary, Timothy Geithner, is nothing more than an addled, crony, bureaucratic banker cabin boy. Simply put, "Geithner is so bad, he actually makes Larry Summers look good."
"Stocks in the advanced economies are basically fully priced," Faber pronounces, and adds that, given their low yields, government bonds are also expensive. The true contrarian play is the "most under-appreciated asset - cash." Even though investors won't earn any money and will actually lose money in the long-term because of Federal Reserve-induced dollar depreciation, Faber suggests that "for the next six months, maybe cash is the most attractive," because the US economy is not recovering at all the way stocks are priced and what is more worrisome is the potential for a sudden eruption of inflation. As we have noted numerous times, Faber blasts that despite the prices of everything going up, government statistics "are distorted by the ministry of truth" in order to enable more money printing by the central banks. Crucially, while we may not be seeing wage inflation in the US, that excess liquidity is squirting up everywhere around the world's assets (and wages in China and India for instance), and the 2008 financial crisis could be just a precursor to a more severe economic fallout on the horizon.
It seems "market conditions" are right for the big one...
ALIBABA FILES IPO INITIAL REGISTRATION $1B; ALIBABA HOLDER YAHOO BENEFICIALLY OWNS 22.6%
2013 EBITDA: $2.7 billion, 2013 Free Cash Flow: $3.2 billion; Pro Forma cash $7.9 billion
Here are some of the key details, formerly non-public, from its IPO filing...
This week, markets are likely to focus on US ISM Nonmanufacturing, services and composite PMIs in the Euro area (expect increases), ECB’s Monetary Policy Decision (expect no change in policy until further ahead), and Congressional testimony by Fed’s Yellen.
India has long been an economic laggard to China but that may be about to change.
Over 300 years ago, the South Sea company was created (and successfully IPO'd) "for the purpose of rivaling the East India Company." It had no actual operations as of yet but the buying panic for shares was driven by greedy investors seeing the government's elite doing so well and wanting a part of the prospects of a company with no operations becoming a world leader (or just finding a greater fool). Today, the first IPO of shares on Dubai's main stock market for 5 years was 36 times over-subscribed for a company called Marka (which is a "cash shell" which does not have any current operations). Nope, no bubble here.
Speaking at The Brooking Institution on April 12, Reserve Bank Of India Governor Raghuram Rajan - no stranger to controversial truthiness (as we have noted here and here) - made clear his views on the rest of the world's central bankers as he concluded, "the first step to prescribing the right medicine is to recognize the cause of the illness. And, when it comes to what is ailing the global economy, extreme monetary easing has been more cause than cure. The sooner we recognize that, the stronger and more sustainable the global economic recovery will be."
The coming week will be busy in terms of data releases in the US; highlights include an improvement in consumer confidence, anemic 1Q GDP growth, and solid non-farm payrolls (consensus expects 215K). Wednesday brings advanced 1Q GDP - consensus expected a pathetic 1.1% qoq, on the back of what Goldman scapegoats as "weather distortions and an inventory investment drag", personal consumption (consensus 1.9%), and FOMC (the meeting is not associated with economic projections or a press conference). Thursday brings PCE Core (consensus 0.20%). Friday brings non-farm payrolls (consensus of 215K) and unemployment (6.6%). Other indicators for the week include pending home sales, S&P/Case Shiller home price index, Chicago PMI, ADP employment, personal income/spending, and hourly earnings.
The early session risk on trade, which materialized after the Pfizer confirmation it was seeking to buy AstraZeneca, and which sent the GBPUSD to its highest level since 2009, and also sent the EURUSD and EURJPY soaring in the process lifting US equity futures, has started to fizzle on the most recent news out of Ukraine, where the pro-Russian mayor of Ukraine's second largest city of Kharkiv was shot in the back in an apparent assassination attempt, which happened hours before the US is set to announce more sanctions against the Kremlin and its closest financial oligarchs. As a result, futures have pared gaisn modestly, especially since AstraZeneca made it clear with its initial reponse it has no interest in Pfizer's offer in its current format.
Bad Government and Central Bank Policy Are the MAIN CAUSE of Runaway Inequality
In a rhetorical self-QE released by its strategist Peter Oppenheimer, discussing recent changes to long-running market trends, among which the crash in momo stocks, and the EM to DM inversion, the punchline was the most important. To wit: "We see less scope for this peripheral index... Peripheral spreads may narrow further, but more now via higher bund yields. After all, 5-year Spanish and Italian bond yields have converged to the same levels as the US. We still like selected parts of the peripheral markets, particularly the banks, but would prefer to express this via single names than via index overweights... the drivers of returns may have shifted away from some areas such as US growth and European periphery towards more of a cyclical bias across markets, with a particular focus on exposure to a DM macro recovery." In other words, while the momentum bubble may have popped (if still has a loooooong way to go before it deflates) the European peripheral bubble is about to go pop as well. For all those who just bought Spanish 10 Years at a record low yield (yes, record low) yesterday, our condolences. Then again, it's only other people's money.
- Russia raises interest rates to 7.5% (FT)
- Shanghai to Allow Raw Material Exchanges in Trade Zone (BBG)
- US, Japan Fail to Clinch Trade Deal (WSJ)
- 'We don't have a magic wand', says ECB's Constancio (Reuters)
- Tokyo Inflation Quickens to Fastest Since 1992 (BBG)
- Demand for Home Loans Plunges (WSJ)
- EU banks urged to grasp chance to raise capital (FT)
The figures are out and it looks like the United States exported a record amount of gold to Hong Kong in January. Not only is this 3 times more gold exported than January 2013 (17 mt), it was 84% more gold than the record month set in August (31 mt). As we can see, gold bullion is fleeing the U.S. and heading to the East. Again... that 57 mt figure is just gold bullion. As the West continues to play games with Monopoly money and Derivatives manufacturing, the East accumulates as much gold as it possibly can. While Main Stream Media and its Banker cohorts release bearish $1,050 price targets for gold, the Asians and Indians smile as they build the largest amount of gold stocks in the world.
- Ukraine forces kill up to five rebels, Putin warns of consequences (Reuters)
- Obama to Russia: More sanctions are 'teed up' (AP)
- Vienna Banks Bemoan Russia Sanctions Testing Cold War Neutrality (BBG)
- GE’s $57 Billion Cash Overseas Said to Fuel Alstom Deal (BBG)
- GM posts lower first-quarter profit after recall costs (Reuters)
- Apple Stock Split Removes Obstacle to Inclusion in Dow (BBG)
- U.S. regulators to propose new net neutrality rules in May (Reuters)