- Earthquake Sends Kiwis Screaming From Wellington Buildings (BBG)
- China quake death toll more than doubles to 54, hundreds hurt (Reuters)
- In 2011, Michigan Gov. Snyder said bankruptcy wasn't an option for Detroit. Two years later, he changed his mind (WSJ)
- GlaxoSmithKline says Chinese laws might have been violated (FT)
- SEC Tries Last Ditch Move to Put SAC’s Cohen Out of Business (BBG)
- Detroit’s Bankruptcy Reveals Dysfunction Common in Cities (BBG)
- Obama to start new offensive on economy (FT)
- As WTI and Brent reunite, Gulf of Mexico faces squeeze, not glut (Reuters)
- Extended Stay Files for Public Offering (WSJ)
- Apple Developer Website Hacked: Developer Names, Addresses May Have Been Taken (MacRumors)
- Treasuries Not Safe Enough as Foreign Purchase Pace Slows (BBG)
In testimony yesterday on Capitol Hill before the Senate Banking Committee, Federal Reserve Chairman Bernanke remarked:
“Gold is an unusual asset. It's an asset that people hold as disaster insurance. A lot of people hold gold as an inflation hedge. But movements of gold prices don't predict inflation very well, actually. But anyway, the perception is that by holding gold you have a hard asset that will protect you in case of some kind of major problem.
With little going on today besides the just reported GE earnings, which beat consensus EPS expectations of $0.35 by the smallest possible increment but, as expected, missed consensus revenue of $35.56 printing at $35.12, and both the Japanese (which experienced a 500 point drop in minutes overnight) and Chinese (which closed below 2000 again) markets sliding, it is perhaps better to summarize the day that just was: Detroit City files for bankruptcy (send in Detroika!), Moody's take the US off negative outlook, Google and Microsoft miss on earnings and the S&P 500 hits a new record high. As DB says, the above certainly made for an eventful close to the US session after what was a fairly dull second day of testimony and Q&A for Bernanke. He has said all that can be said for now and we're left waiting for the data. And the earnings data so far has been abysmal if mostly on the top line, with corporate revenues now assured to double dip and decline for the second quarter in a row. And if the tech bellwethers all of which have been major disappointments to date and have guided down, are an indication of what is coming, Q3 may and will be even worse.
Recent dramatic declines in gold prices and strong redemptions from physical ETFs (such as the GLD) have been interpreted by the financial press as indicating the end of the gold bull market. Conversely, our analysis of the supply and demand dynamics underlying the gold market does not support this interpretation. As we have shown in previous articles, the past decade has seen a large discrepancy between the available gold supply and sales. Many recent events suggest that the Central Banks are getting close to the end of their supplies and that the physical market for gold is becoming increasingly tight. The recent sell-off was all orchestrated to increase supply and tame demand. We believe that central planners are now running out of options to suppress the gold price. After taking a pause, the secular gold bull market is set to continue.
While anti-depressant use is surging in Sweden (up 1000% since 1980), bursting in Britain (up 495% since 1991), and up an astounding 400% since 1994 in the USA (with 1 in 10 on some kind of 'prozac'), it is the poor-old Nigerians that should really be complaining. Based on seven variables, Bloomberg has scored 74 nations around the world for their "stressed-out" factor and finds the USA to be 54th (so stop whining and suck it up), Norway the least stressed-out of all and El Salvador and South Africa at the top with Nigeria (with the roiling Egyptians ranking 15th).
“There is no cure for high prices, like high prices.” This is why the Middle East can never truly have a prolonged supply shortage. They will price their customers out of the market!
"Perhaps the success that central bankers had in preventing the collapse of the financial system after the crisis secured them the public's trust to go further into the deeper waters of quantitative easing. Could success at rescuing the banks have also mislead some central bankers into thinking they had the Midas touch? So a combination of public confidence, tinged with central-banker hubris could explain the foray into quantitative easing. Yet this too seems only a partial explanation. For few amongst the lay public were happy that the bankers were rescued, and many on Main Street did not understand why the financial system had to be saved when their own employers were laying off workers or closing down." - Raghuram Rajan
"As Chairman of the Senate Intelligence Committee, I can tell you that I believe the oversight we have conducted is strong and effective and I am doing my level best to get more information declassified. Please know that it is equally frustrating to me, as it is to you, that I cannot provide more detail on the value these programs provide and the strict limitations placed on how this information is used. I take serious my responsibility to make sure intelligence programs are effective, but I work equally hard to ensure that intelligence activities strictly comply with the Constitution and our laws and protect Americans’ privacy rights."
Trading of spot bullion of 99.99 percent purity on the Shanghai exchange exceeded 20 tons every day between April 16 and May 6. That’s more than four times the daily average in 2012. Volume reached a record 43.27 metric tons on April 22.
China’s net gold imports from Hong Kong increased 40% in May from a month earlier as the metal’s deepening slump continued to attract bargain hunters to bullion shops in China and Asia.
- India Joins Brazil to China in Efforts to Tighten Liquidity (BBG)
- Seven dead as police and protesters clash in Egypt (Reuters)
- U.S. senators fail to cut deal, head for showdown on filibuster (Reuters)
- Gasoline Tankers Beating Crude for First Time on Record (BBG)
- Smithfield's China bidders plan Hong Kong IPO after deal (Reuters)
- Bitcoin ETF plan struggles to find support (FT)
- Big Home Builders Gobble Up Rivals Starved for Cash (WSJ)
- Putin wants Snowden to go, but asylum not ruled out (Reuters)
- Zimmerman's lawyer calls prosecutors 'disgrace' to profession (Reuters)
- McDonald’s to bring Big Mac to Vietnam (FT)
- Korean Pilots Avoided Manual Flying, Former Trainers Say (BBG)
It looks as if China’s days of double-digit economic growth are well and truly over (at least, for the moment). Data that will be released next week (second quarter figures) will show a quarter-on-quarter slowdown that is setting in now for China’s gross domestic product. The figures will be issued on Monda
When you get into too much debt, really bad things start to happen. Sadly, that is exactly what is happening to Italy right now. Harsh austerity measures are causing the Italian economy to slow down even more than it was previously. And yet even with all of the (supposed) austerity measures, the Italian government just continues to rack up even more debt. This is the exact same path that we watched Greece go down. But if Italy collapses economically, it is going to be a far bigger deal than what happened in Greece. Italy is the ninth largest economy on the entire planet.
Gold is little changed near a one-week high, and is marginally higher in dollars as the dollar has retreated from a three-year high, and higher in most currencies. The gold market continues to digest the ramifications of gold borrowing costs surging to the highest since the post-Lehman Brothers scramble for gold bullion. Gold Forward Offered Rates (GOFO) or the cost to borrow gold remains negative and overnight the 1 month GOFO has gone from -0.106% to -0.11167%. Other durations eased marginally. The lack of liquidity in the the interbank London Good Delivery gold market (400 ounce gold bars) has pushed gold forward rates, known as “gofo”, into negative territory, meaning that gold for future delivery is trading at a discount to physical market prices – a rare situation that has occurred only after the Lehman Brothers collapse and near the bottom of the gold market in 1999. The last time forwards were negative was in November 2008, when a scramble for physical gold led a sharp price rally of 46% from $682/oz to over $1,000/oz between October 2008 and February 2009.
Did Edward Snowden just accept a Venezuela asylum offer? He did for a few minutes following a tweet by Russian politician Alexey Pushkov, but subsequently did not after the tweet was deleted. Welcome to the New Normal age of twitter diplomacy...