And Keystone will only drive prices HIGHER
Two big events down, many, many others more left to go. Below is a full European event calendar for the rest of May and June. Just like in 2011, Europe got unhinged around this time and things peaked by November when only a coordinated global intervention saved the world courtesy of $1.3 trillion from the ECB, expanded FX swaps from the Fed and a PBOC rate cut. Only unlike in 2011, with Silvio and Sarko both now gone, the roster of political scapegoats is getting very, very thin. Whose head wil the vigilantes demand next? We will find out over the summer and fall, which promise to be even more exciting than last year.
While most will be following what appears to be an almost certain Hollande victory in the French presidential runoff elections tomorrow (InTrade odds around 10%), it is very likely that the Greek election will have a greater acute impact on the political and financial facade of Europe, especially in the short term. As we noted in what we dubbed our first (of many) Greek election previews, the biggest problem facing the new political regime will be its near certain inability to form a coalition government (with just 32.6% of the vote going to PASOK and New Democracy) that does not undo most of what has been achieved through popular sweat and tears over the past 2 years to assist Europe's bankers in transferring what little Greek wealth remains to fund the insolvent European bank balance sheets. This in turn could begin the latest cascading contagion waterfall, which coupled with an anti-austerity drive emanating from a newly socialist France will threaten to topple Angela Merkel's carefully constructed European hegemony.
One month later the purge is over: "Norway’s sovereign wealth fund sold all its Irish and Portuguese government bonds after rejecting the Greek debt swap and warned that Europe faces considerable challenges." Wait, what's that? The Eurozone's political strongarming (think Steve Rattner and GM) was unable to force the world's most powerful sovereign wealth fund into agreeing to what was essentially extortion when bank after bank noted how delighted they are to be bent over and take an 80% writedown on their Greek holdings. Stunning. But at least we now know who will be suing Greece shortly in an attempt to recoup par value of their strong law bonds: grab the popcorn - Norway vs Greece will be quite a spectacle. As for their dump of Irish and Portuguese bonds, no surprise there: fool me once (in perpetuity) shame on me, fool me twice, shame on Dan Loeb... who was buying everything Norway was selling. We wonder who ends up right.
- Chinese dissident seeks exile, strains U.S.-China ties (Reuters)
- Sarkozy and Hollande lock horns on TV (FT)
- UK in furious rejection of EU bank plan (FT)
- EU Fails to Reach Deal on Capital (WSJ)
- China energy use may be capped for 2015 (China Daily)
- Buffett Trails S&P 500 for Third Straight Year (Bloomberg)
- King admits failing to ‘shout’ about risk (FT)
- Obama promises 110,000 new summer jobs for youth (Reuters)
- China sturdy enough for reforms: Geithner (Reuters)
- Geithner repeats call for stronger yuan (Reuters)
The phrase “New World Order” is so loaded with explosive assumptions and perceptions that its very usage has become a kind of journalistic landmine. Many analysts (some in the mainstream) have attempted to write about and discuss this very real sociopolitical ideology in a plain and exploratory manner, using a fair hand and supporting data, only to be attacked, ridiculed, or completely ignored before they get a chance to put forward their work. The reason is quite simple; much of the general public has been mentally inoculated against the very whisper of the terminology. That is to say, they have been conditioned to exhibit a negative reaction to such discussion instinctively without even knowing why.... The Liberty Movement has always defined the NWO as a concerted effort by elitist organizations using political manipulation, economic subversion, and even war, to centralize global power into the hands of an unelected and unaccountable governing body. The goal; to one day completely dismantle individual, state, and national sovereignty. However, what I and many others hold as fact on the New World Order is not enough. We must examine the original source and how we came to our mutual conclusions.
- Only the cattle cars are missing: Greece opens detention camp for immigrants as election looms (Reuters)
- China really wants that Iran oil - China mulls guarantees for ships carrying Iran oil (Reuters)
- U.S. eyes testy China talks, Chen backer expects Chinese decision (Reuters, FT)
- Possible arsenic poisoning probed in death of coroner's official (LA Times)
- Europe’s Anti-Austerity Calls Mount as Elections Near (Bloomberg)
- Law firm Dewey dumps executive; talks with rival end (Reuters)
- Greek bank appeals for fresh equity (FT)
- Banks seek to put pressure on small rivals (FT)
- Obama falls short of meteoric expectations abroad (Reuters)
It must be difficult for the BRICS countries today. On one hand, they continue to jockey for respect among the Western powers, insisting on participating in quasi-European bailout funds like the IMF. On the other hand, they are also clearly aware of the Western nations' continuing efforts to surreptitiously devalue their domestic currencies, and the pernicious effect that has had on them as exporters and as lenders of capital. In that vein, it was interesting to note that during the latest BRICS Summit held this past March in New Delhi, the main topic of discussion centered on the creation of the group's first official institution, a so-called "BRICS Bank" that would fund development projects and infrastructure in developing nations. Although not openly discussed, reports suggest what they were really talking about was creating a type of BRICS central bank - an institution that could facilitate their ability to "do more business with each other in their local currencies, to help insulate from U.S. dollar fluctuations…" Given the incredible scale of western central bank intervention over the past six months, the BRICS' increasing frustration with their printing efforts should be a given by now. The real question is what they're doing about it, and what assets they're accumulating to protect themselves from the inevitable, which brings us to gold.
Better late than never. All you need to read.
The Fed’s promise to use more QE should the economy falter is supporting gold.
The global economic picture remains grim, with euro zone economic sentiment falling more than
expected in April and the US job market recovery showing signs of a slowdown.
Apple earnings and the tech boom and indeed possible tech bubble remains one of the primary
drivers of continuing irrational exuberance and risk appetite.
The poor and deteriorating economic backdrop is gold supportive.
- Merkel Pushes Back Against Hollande Call to End Austerity Drive (Bloomberg)
- ECB's Draghi throws crisis ball back to governments (Reuters)
- Greek Bank Chief Warns of a Possible Euro Exit (WSJ)
- China’s Wen Says Economy Will Maintain Robust Expansion (Bloomberg)
- North Korea's nuclear test ready "soon" (Reuters)
- Hong Kong Peg Architect Says Convertible Yuan `Long Way Off’ (Bloomberg)
- Hollande seeks wider EU fiscal pact (FT)
- Gavyn Davies: Why UK GDP continues to lag the G7 (FT)
- U.S. Lost AAA on Danger of Liquidity Crisis, S&P’s Kraemer Says (Bloomberg)
A multi-decade trend reversed.
You know its bad when...the net flow of Mexicans into the US has fallen so much that there is a high probability that it is now in reverse ending around forty years of inward migration. The Pew Hispanic Center notes that the standstill - after more than 12 million current immigrants have entered the US - more than half of whom are illegal - appears to be the result of many factors including a weakened US job and construction market, tougher border enforcement, a rise in deportations, growing dangers associated with border crossing, a long-term decline in Mexico's birth rate, and changing (read perhaps more opportunistic) economic conditions in Mexico (especially if you work at WalMex). This sharp downward trend in net migration has led to the first significant decrease in at least two decades in the number of unauthorized Mexican immigrants living in the U.S. - to 6.1 million in 2011, down from a peak of nearly 7 million in 2007. In the five years from 2005 to 2010, about 1.4m Mexicans immigrated to the US – exactly the same number of Mexican immigrants and their US-born children who quit the US and moved back or were deported to Mexico. By contrast, in the previous five years to 2000 some 3m Mexicans came to the US and fewer than 700,000 left it. It will be interesting to see the spin that the Obama and Romney camps put on this hot-button topic as the 'Dream Act' turns into a nightmare and hardline anti-illegal immigration stances become, well, less relevant as Mexicans become Mexican'ts.
While gold demand from the western investors and store of wealth buyers has fallen in recent months, central bank demand continues to be very robust and this is providing strong support to gold above the $1,600/oz level. IMF data released overnight shows that Mexico added 16.8 metric tons of gold valued at about $906.4 million to its reserves in March. Russia continued to diversify its foreign exchange reserves and increased its gold reserves by about 16.5 tons according to a statement by its central bank on April 20. Other creditor nations with large foreign exchange reserves and exposure to the dollar and the euro including Turkey and Kazakhstan also increased their holdings of gold according to the International Monetary Fund data.Mexico raised its reserves to 122.6 tons last month when gold averaged $1,676.67 an ounce.Turkey added 11.5 tons, Kazakhstan 4.3 tons, Ukraine 1.2 tons, Tajikistan 0.4 ton, and Belarus 0.1 tonnes, according to the IMF. Ukraine, Czech Republic and Belarus also had modest increases in their gold reserves. Central banks are expanding reserves due to concerns about the dollar, euro, sterling and all fiat currencies.