This week was interesting to say the least and it is ending with a bang. We are covering a number of brief subjects this week. I hope you enjoy them.
Gold had strong chart resistance at $1,334/oz as this was the 61.8% retracement of the March to June retreat. Gold has now broken convincingly above resistance and the key 50, 100 and 200 day moving averages (see chart).
A nervous peace prevails in the financial markets as central banks sit on their throne, fingers at the ready on the liquidity switch. As UBS' Bhanu Baweja notes, most volatility buyers have been 'rolled' into their graves. As they have explicitly targeted risk premia in addition to rates, a lot more hangs on the monarchs of monetary policy today than it has in previous cycles. While growth and inflation are both low, they are not necessarily uncertain; and although every crisis is different, certain patterns tend to repeat and certain events have reliably driven volatility higher.
Gold Rigged “To Benefit Banks, At Expense Of Producers, Traders, Investors, Jewellers And Other Market Participants”?Submitted by GoldCore on 07/09/2014 04:40 -0400
We believe that a more transparent and reliable fixing could lead to higher gold prices as we suspect that prices are artificially low at this time and do not reflect the delicate supply demand balance in the physical gold market ... Nor do they capture the degree of systemic and geopolitical risk in the world today."
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.
Poor algos: after they got no love on Monday from the overnight USDJPY selling team which took the all important pair back to the 200 DMA, today, inexplicably (it is a Tuesday after all, and if one can't frontrun a rigged market surging higher on Turbo Tuesday may as well throw in the towel on free money and learn about fundamental analysis) the same overnight USDJPY selling team has pushed the key carry pair to below the 200 DMA, and has dragged US equity futures lower with it for the second day in a row.
Back in April, we warned of the consequences of Saudi King Abdullah has clamped down on all forms of political dissent and protests that could “harm public order”. Concerns that this law would be used to silence dissent and crackdown on basic human rights were apparently well justified, as the Wall Street Journal reported today that a Saudi court has sentenced human rights lawyer and activist Waleed Abu Alkhair to 15 years in prison for “inciting public opinion,” i.e., effectively utilizing free speech. We are currently living in one of the most interesting times in human history as we witness the transformation of society away from centralized, bureaucratic structures, into decentralized, networked organization. It’s imperative that each and every one of us does everything he or she can to make this revolutionary transition as painless as possible.
Did the U.S. and Its Allies Use ISIS to Balkanize Syria Into Smaller Regions?
Same stuff... different country. Once again someone (former opposition leader Musallam al-Barrak) exposed the corruption among the elites (revealed documents that allegedly prove billions of illicit financial transfers were made to senior officials, including judges) and the leaders (Kuwait officials) decided he should be arrested and charged with slander. This has caused uproar among the people as hundreds of protesters rallied overnight in support of al-Barrack, marching from his house to the jail chanting: "The people want to cleanse the judiciary!" The police in the oil-rich nation of Kuwait used tear gas and stun grenades early Thursday to disperse the protesters. As we have noted previously, uprising against government corruption is a global trend and in the case of Kuwait (which is oil-rich, the last friendly place to US in the Middle East, and has the highest per capita Twitter usage on the planet), we suspect this 'spring' is far from over.
- Obama Decries Big Bonuses at Bank Trading Desks as Risky (BBG)
- India central bank seeks to swap gold to improve reserves quality (Reuters)
- There goes Q3 GDP: Arthur Strengthens to Become First Atlantic Hurricane (BBG)
- Airports Serving U.S. Tighten Checks on Stealth-Bomb Threat (BBG)
- Fear, cash shortages hinder fight against Ebola outbreak (Reuters)
- Brent Declines as Libya Rebels Say Ports Are Open (BBG)
- Shiites Train for Battle in Iraqi Holy City (WSJ)
- Dimon’s Cancer Has 90% Cure Rate With Demanding Therapy (BBG)
- Goldman says client data leaked, wants Google to delete email (Reuters)
- ECB Watchers in the Dark Look to Draghi for Illumination (BBG)
Vladimir Putin commented at a German-Russian official function: “We value the accumulated potential of Russian-German relations and the high level of trade and economic cooperation. Germany, one of the European Union leaders, is our most important partner in enhancing peace, global and regional security.” We would contend that we are seeing a decisive shift in the political character of Eurasia as 'continental empires' are starting to challenge the monopoly of 'legal' international violence that the US has exercised for the last 25 years. Such struggles have the potential to become major regional problems, but what is intriguing is the emerging continental alliance between Russia and Germany - a combination of German industrial might and Russian raw materials and military strength would instantly create a colossus.
In Reality, War Will Bring An End to the Petrodollar, and Impose Hardship on the Average American ...
We live in a world that is becoming increasingly unstable, and people need to understand that the period of relative stability that we are enjoying right now is extremely vulnerable and will not last long. The following are 18 signs that the global economic crisis is accelerating as we enter the last half of 2014...
Having declared a caliphate, the terrorist group formerly known as ISIS (or ISIL) has decided a rebranding is in order. Since the group no longer recognizes the political distinction between Iraq and Syria, it has dropped the "Iraq" and "Levant" from its name, making it only the "Islamic State". The leader of the extremist group is looking to build his presence, as AP reports, Abu Bakr al-Baghdadi released a 19-minute tape demanding, "Muslims, rush to your state. Yes, it is your state."
The Great Depression did not represent the failure of capitalism or some inherent suicidal tendency of the free market to plunge into cyclical depression - absent the constant ministrations of the state through monetary, fiscal, tax and regulatory interventions. Instead, the Great Depression was a unique historical occurrence - the delayed consequence of the monumental folly of the Great War, abetted by the financial deformations spawned by modern central banking. But ironically, the “failure of capitalism” explanation of the Great Depression is exactly what enabled the Warfare State to thrive and dominate the rest of the 20th century because it gave birth to what have become its twin handmaidens - Keynesian economics and monetary central planning. Together, these two doctrines eroded and eventually destroyed the great policy barrier - that is, the old-time religion of balanced budgets - that had kept America a relatively peaceful Republic until 1914. The good Ben (Franklin that is) said,” Sir you have a Republic if you can keep it”. We apparently haven’t.