4.1%... yield on 5Y state-owned Indian company bond rated near junk...
Central bankers have destroyed money and interest rates to the point that near-bankrupt companies in shaky jurisdictions can borrow money for practically nothing. It’s an utter farce.
While the majority of the demand is from Asia itself, there is a percentage of the flow that is of western investors seeking to own gold outside the banking system, in what they perceive to be safer jurisdictions, in allocated gold accounts in Hong Kong and Singapore.
"Gold will keep rising as long as US policy is exporting volatility—we see no imminent change in this situation under Janet Yellen’s Federal Reserve."
With a plethora of Fed speakers playing good cop, bad cop todasy, it is hardly surprising that the FOMC minutes (as adulterated as they are) still show disagreement...
- *SEVERAL FOMC PARTICIPANTS SAID TEMPORARY FACTORS SPURRED GROWTH
- *FED TO CHANGE RATE GUIDANCE AS UNEMPLOYMENT FALLS, MINUTES SHOW
- *SOME FOMC PARTICIPANTS FAVORED `QUALITATIVE GUIDANCE'
- *SEVERAL PARTICIPANTS FAVORED $10 BILLION QE TAPER PER MEETING
The bottom-line is that the Fed is very confused and while headlines will crow of communication and forward-guidance, it is clear they are winging it now as "qualitative" guidance is the new way forward.
The world has grown tired of the inexorable rise in radiation levels and propaganda-talk sourrounding nuclear issues in Japan from the government in the last few years since Fukushima changed the nation's future. However, there is another source of nuclear materials that is increasingly angering the Chinese. The tensions and rhetoric, from WWI analogs to Nazi comparisons, have risen recently; but this time, the Chinese are asking a legitimate question... "If a country claims that it sticks by the three non-nuclear principles but at same time hoards far more nuclear materials than it needs, including a massive amount of weapon-grade plutonium, the world has good reason to ask why.... After all, Abe and his cabinet have already caused too much trouble to regional peace and stability." Of course, this places "ally" President Obama in an awkward position given his anti-proliferation stance... though we suspect he will have an angle: "if you like your plutonium stockpile, you can keep it."
Annual global investment in bars and coins reached 1,654 tonnes, up from 1,289 tonnes in 2012, a rise of 28%. Check out GoldCore's webinar with Gerald Celente, this Thursday, February 20th.
Thailand's Government Savings Bank (GSB) president admitted that clients withdrew 30bn Baht (around $1bn) in a single-day last week and Bank for Agriculture and Agricultural Cooperatives (BAAC) and Krungthai Bank (KTB), although of a much smaller magnitude, have also seen withdrawal spikes of similar magnitude according to The Bangkok Post. The 'bank run' comes after speculation that cash at the state-run banks are being used by the government (which is in turmoil) to fund farmers (who have not received their 'promised' rice subsidies of over 130 bn Baht). Withdrawal requests are met with banks warning that there were insufficient funds at the time due to many depositors withdrawing cash. One depositor, rather ironically summed it up, "I started to feel concerned that my money may become only paper."
- Carl Icahn wins again: Actavis to Buy Forest Labs for $25 Billion (WSJ)
- ECB governing council member attacks German court ruling on OMT (FT)
- China Tackles $1 Trillion Data Gap as Xi Changes Metrics (BBG)
- FX Traders Facing Extinction as Computers Replace Humans (BBG)
- BOJ Boost to Loan Programs Signals Room for More Easing (BBG) - actually no it doesn't as it was "factored in"
- Four killed in Thai clashes; PM to face charges over rice scheme (Reuters)
- Goodbye unsterilized SMP: Bundesbank Backs Measure to Boost Funds in Banking System (WSJ)
- Iranian Hacking to Test NSA Nominee Michael Rogers (WSJ)
- Ukraine Clashes Leave Dozens Wounded as Putin Resumes Bailout (BBG)
Two weeks ago, gold jumped to a then-2014 high, following reports out of India that the head of India's Congress Party, Sonia Gandhi was pushing the government to cut its duty on gold and other restrictions. Today, now that the upward move in gold has finally resumed, it appears that the nation with the world's most draconian gold capital controls, is finally starting to crack under pressure from the people, as well as a surge in gold smuggling via illegal channels to unprecedented levels. Reuters reports that India "will look into relaxing gold imports curbs, but won't let its current account deficit (CAD) balloon, Finance Minister P. Chidambaram said on Monday."
If you have been waiting for the "global economic crisis" to begin, just open up your eyes and look around. I know that most Americans tend to ignore what happens in the rest of the world because they consider it to be "irrelevant" to their daily lives, but the truth is that the massive economic problems that are currently sweeping across Europe, Asia and South America are going to be affecting all of us here in the U.S. very soon. Sadly, most of the big news organizations in this country seem to be more concerned about the fate of Justin Bieber's wax statue in Times Square than about the horrible financial nightmare that is gripping emerging markets all over the planet. After a brief period of relative calm, we are beginning to see signs of global financial instability that are unlike anything that we have witnessed since the financial crisis of 2008. As you will see below, the problems are not just isolated to a few countries. This is truly a global phenomenon.
So far the overnight session has been a replica of yesterday, with the all important carry trade once again fizzling overnight during Japan trading hours, and dipping as low at 101.60 before staging a modest rebound to the 101.8 level. We expect the "invisible" 102.000 USDJPY tractor beam to be again engaged shortly and provide market support and/or levitate stocks higher as the now standard selling in Japan, buying in the US trade pattern repeats. On the other hand, US equity futures appear to have decoupled from the pure carry trade, and instead latched on to USD weakness and EUR strength following European Q4 GDP data, which came at 0.3% on expectations of 0.2%, up from 0.1%. Considering the constant adjustments to the European definition of GDP, at this point Mongolia would have been able to demonstrate growth if it was in Europe (but apparently not Greece which once again missed GDP expectations with Q4 GDP of -2.6% vs Exp. -2.0%). Expect ES and USDJPY to recouple shortly, as they always do - the only question if the recoupling will take place lower or higher.
- Comcast Agrees to Buy Time Warner Cable for $45.2 Billion (BBG)
- Italian leadership squabble weighs as shares halt hot run (Reuters)
- Russia says Syria aid draft could open door to military action (Reuters)
- China trust assets rise 46% in 2013 (WSJ), China Trust Assets Surge to $1.8 Trillion Amid Default Risks (BBG)
- Australian Unemployment Jumps to 10-Year High (BBG)
- Tea Party Scorns Republicans as House Lifts Debt Ceiling (BBG)
- Peso plunge forces Argentine soya hoarding (FT)
- BNP Paribas Net Falls After $1.1 Billion U.S. Legal Charge (BBG)
- Hacking Joins Curriculum as Businesses Seek Cyber Skills (BBG)
- Android's 'Open' System Has Limits (WSJ)
- Blackstone-Fueled Single-Family Home Boom Lifts Chicago (BBG)
On Tuesday, new Federal Reserve Chairman Janet Yellen went before Congress and confidently declared that "the economic recovery gained greater traction in the second half of last year" and that "substantial progress has been made in restoring the economy to health". This resulted in glowing headlines throughout the mainstream media such as this one from USA Today: "Yellen: Economy is improving at moderate pace". Sadly, tens of millions of Americans are going to believe what the mainstream media is telling them. But it isn't the truth. As you will see below, there are all sorts of signs that the economy is taking a turn for the worse.
Ironic perhaps on the heels of President Obama's minimum-wage-hike and our comparison of public and private wages, the following clip from CNBC of Nicole Miller’s CEO Bud Konheim is absolutely disgusting. Then again, this simply continues the recent trend of wealthy people coming on financial outlets and telling the poor how they are supposed to feel... equally disturbing are the results of the following poll...
"Take a long, hard look, Janet," warns Grant Williams, "the landscape over which you cast your eyes when you accepted the poisoned chalice prestigious role of Fed Chair changed last week." Just two days before you were confirmed in a rather lovely ceremony, in an interview in Mumbai, Raghuram Rajan (one-time Chief Economist at the IMF and current Governor of the Reserve Bank of India) rather UNceremoniously dropped something of a bombshell that went largely unreported (perish the thought, in this era of dogged journalism). The standout feature of central bank policy over the last five years has been the spirit of cooperation... then came the taper. It is every man for himself now, and the Fed will screw them all. The splintering of central bank policy is just the beginning. This is the end of the innocence.