International Monetary Fund

"The head of the International Monetary Fund warned on Friday that financial markets were "perhaps too upbeat" because high unemployment and high debt in Europe could drag down investment and hurt future growth prospects." To summarize: first the BIS, then the Fed and now the IMF are not only warning there is either a broad market bubble or a localized one, impacting primarily the momentum stocks (which is ironic in a new normal in which momentum ignition has replaced fundamentals as the main price discovery mechanism), they are doing so ever more frequently.

The sell off was greeted by Chinese buyers as Chinese premiums edged up to just over $1 an ounce on the Shanghai Gold Exchange (SGE).

Gold price drops this year have led to a marked increase in demand for gold as seen in very large increases in ETF holdings (See chart - Orange is Gold, Purple is absolute change in gold ETF holdings). The smart money in Asia, the West and globally continues to use price dips as an opportunity to allocate to gold.

"We are pleased to announce the signing of the Treaty for the establishment of the BRICS Contingent Reserve Arrangement (CRA) with an initial size of US$ 100 billion. This arrangement will have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements. We appreciate the work undertaken by our Finance Ministers and Central Bank Governors. The Agreement is a framework for the provision of liquidity through currency swaps in response to actual or potential short-term balance of payments pressures." - The BRICS

“A government that robs Peter to pay Paul can always depend on the support of Paul.” – George Bernard Shaw

Three months ago we discussed in detail the growing anti-dollar hegemony alliances that were building across the BRICS countries (Brazil, Russia, India, China and South Africa). Their efforts at the time, to create a structure that would serve as an alternative to the IMF and the World Bank (which are dominated by the U.S. and the EU), appear to be nearing completion. As AP reports, Brazil's President Dilma Rousseff and Russia's Vladimir Putin have discussed the creation of a development bank to promote growth across the BRICS and hope to produce an agreement on the proposed institution at this week's BRICS Summit. As Rousseff concluded (rather ominously), the five countries "are among the largest in the world and cannot content themselves in the middle of the 21st century with any kind of dependency."

To much trumpeting the IMF have kindly agreed to help out desperate and war torn Ukraine. How wonderful they are we are all meant to think, but the truth couldn’t be more opposite. but in reality the IMF has a very different purpose from that which is stated. If you look at the history of the IMF’s intervention in countries around the world you will see a trail of disaster and looting that repeats time and time again wherever they go.

Many seem to believe that if we worked our way out of debt problems in the past, we can do the same thing again. The same assets may have new owners, but everything will work together in the long run. Businesses will continue operating, and people will continue to have jobs. We may have to adjust monetary policy, or perhaps regulation of financial institutions, but that is about all. I think this is where the story goes wrong. The situation we have now is very different, and far worse, than what happened in the past. We live in a much more tightly networked economy. This time, our problems are tied to the need for cheap, high quality energy products. The comfort we get from everything eventually working out in the past is false comfort.

• Bond Anxiety in $1.6 Trillion Repo Market as Failures Soar (BBG), as reported first by Zero Hedge
• As Food Prices Rise, Fed Keeps a Watchful Eye (WSJ)
• Yellen’s Economy Echoes Arthur Burns More Than Greenspan (BBG)
• Draghi’s $1.4 Trillion Shot: Silver Bullet or Misfire? (BBG)
• Israel's Netanyahu phones father of murdered Palestinian teen (Reuters)
• Ukraine says forces will press forward after taking rebel stronghold (Reuters)
• Goldman Sachs Brings Forward Rate Forecast as Treasuries Drop (BBG)... you mean rise?
• Super typhoon takes aim at Japan (Reuters)
• Kidnapped Nigerian girls 'escape from Boko Haram abductors' (Independent)
• Merkel says U.S. spying allegations are serious (Reuters)

The most dangerous organization is the now French led IMF with Christine Lagarde at the helm, which has presented a concept report in which 'debt cuts for over-indebted states are uncompromising' and are to be performed more effectively in the future by defaulting on retirement accounts held in life insurance, mutual funds and other types of pension schemes, or arbitrarily extending debt perpetually so you cannot redeem. Yes you read correctly, The new IMF paper describes in great detail exactly how to now allow the private sector, which has invested in government bonds, will be expropriated to pay for the national debts of the socialist governments. This far-reaching plan for the expropriation of savers, investors and retirees clearly shows the reality of socialism.

"Sell economic ignorance; buy gold" as Tim Price once said, is the premise behind Incrementum's 94-page extravaganza as they explain how we are currently on a journey to the outer reaches of the monetary universe. Stoeferle and Valek believe that the monetary experiments currently underway will have numerous unintended consequences, the extent of which is difficult to gauge today. Gold, as the antagonist of unbacked paper currencies they note, remains an excellent hedge against rising price inflation and worst case scenarios. "Our 12-month price target is the USD 1,500 level. Longer-term, we expect that a parabolic trend acceleration phase still lies ahead. In the course of this event, our long-term target of USD 2,300 should be reached at the end of the cycle."

Christine Lagarde of the International Monetary Fund has told the European Central Bank that they need to consider Quantitative Easing if inflation continues to remain low, which it will. She stated: “If inflation was to remain stubbornly low, then we would certainly hope that the ECB would take quantitative easing measures by way of purchasing of sovereign bonds”.

The multitudes of people, especially Americans, who view U.S. government activity in a negative light often make the mistake of attributing all corruption to some covert battle for global oil fields. In fact, the average leftist seems to believe that everything the establishment does somehow revolves around oil. This is a very simplistic and naïve view. A very real danger within energy markets is the undeniable threat that the U.S. dollar may soon lose its petrodollar status and, thus, Americans may lose the advantage of relatively low gas prices they have come to expect.  That is to say, the coming market crisis will have far more to do with the health of the dollar than the readiness of oil supply.

• Obama to tout manufacturing gains, highlight economic progress (Reuters)
• Iraq Gunmen Attack North of Baghdad as Obama Weighs Plan (BBG)
• Chinese Regulators Block Shipping Alliance Abandoned Deal (WSJ)
• Russian $8.2 Trillion Oil Trove Locked Without U.S. Tech (BBG)
• Ukrainian forces, rebels clash near Russian border (Reuters)
• M&A talk lifts stocks, Iraq tensions ease slightly (Reuters)
• Wealthy Clintons Use Trusts to Limit Estate Tax They Back (BBG)
• Argentina vows to service debt despite new legal blow (Reuters)
• Allergan's Bitter Pill for Morgan Stanley (WSJ)
• Islamists kill 50 in Kenya, some during World Cup screening (Reuters)
• American Express Revs Up Pursuit of the Masses (WSJ)

Who could have seen that coming? The IMF has slashed US growth expectations for 2014 from 2.8% to 2.0% (with 2015 hockey-sticking back to 3.0%) due to weather. The IMF also warned the Fed should be "mindful of financial stability," but that is not the most surprising aspect of the IMF's mea culpa as they plunge head first into policy decisions...

*IMF RECOMMENDS RAISING U.S. MINIMUM WAGE, ADDITIONAL U.S. INVESTMENT IN INFRASTRUCTURE, & LIMITING OR ENDING ITEMIZED TAX DEDUCTIONS

One wonders, rhetorically of course, if the IMF also pulled a "Polish Central Bank" and suggested that the US fire all Republicans in return for this suggestion; and we wonder how El-Nino is "priced-in" to this forecast.

• Iraq Army Tries to Roll Back Sunni Militants’ Advance (BBG)
• Starbucks to Subsidize Workers' Online Degrees (WSJ)
• ‘Bitcoin Jesus’ Calls Rich to Tax-Free Tropical Paradise (BBG)
• Medtronic Is Biggest Firm Yet to Renounce U.S. Tax Status (BBG), Medtronic to buy Covidien for $42.9 billion, rebase in Ireland (Reuters)
• Oil Topping $116 Seen Possible as Iraq Conflict Widens (BBG)
• Putin Seeks Paris Landmark as Hollande’s Russia Ties Defy Obama (BBG)
• GM Says It Has a Shield From Some Liability (WSJ)
• BOJ’s Bond Paralysis Seen Spreading Across Markets (BBG)