Middle East

Hawks Desperate to Drum Up an Excuse for War

The Government – Which Has Taken Away Our Liberties and Destroyed Our Prosperity to Fight An Endless War On Terror – Has Been Arming, Funding and Otherwise Backing the Very Terrorists Who Are Carrying Out Most of the Attacks

Australia’s Perth Mint, the largest refinery in Australia and one of the largest in the world, said that demand has jumped to the highest level since the Lehman crisis in 2008. Demand has been robust due to currency devaluation concerns and then the 15% price fall led to a massive surge in demand as store of wealth buyers leapt at the chance to acquire physical bullion at much cheaper prices. This led to the Perth Mint which refines nearly all of the nation’s bullion, having to stay open over the weekend to meet orders. There’s been strong interest, including from the U.S., with buyers confident that the metal will rebound from the decline, Ron Currie, sales and marketing director, told Bloomberg in a phone interview from Perth.  “We haven’t seen levels like this since the 2008 global financial crisis,” Currie said yesterday. “Compared to March sales, April sales have doubled or tripled,” he said. “We worked all weekend to keep the factory running to make more stock and that was only to fill orders,” Currie said from the facility founded in 1899. “We’re being inundated with people buying products.”

Over the years, Jim O'Neill, former Chairman of GSAM, rose to fame for pegging the BRIC acronym (no such luck for the guy who came up with the far more applicable and accurate PIIGS, or STUPIDS, monikers, but that's neither here nor there). O'Neill was correct in suggesting, about a decade ago, that the rise of the middle class in these countries and their purchasing power would prove to be a major driving force in the world economy. O'Neill was wrong in his conclusion as to what the ultimate driver of said purchasing power would be: as it has become all too clear with the entire world drowning in debt (and recently China), it was pure and simply debt. O'Neill was horribly wrong after the Great Financial Crisis when he suggested that it would be the BRIC nation that would push the world out of depression. To the contrary, not only is the world not out of depression as the fourth consecutive year of deteriorating economic data confirms (long since disconnected with the actual capital markets), but it is the wanton money (and bad debt) creation by the central banks of the developed world (as every instance of easing by China has led to an immediate surge of inflation in the domestic market) that has so far allowed the day of reckoning, and waterfall debt liquidations, to take place (and certainly don't look at the stock index performance of China, Brazil, India or Russia). Despite his errors, he has been a good chap having taken much of the abuse piled upon him here at Zero Hedge somewhat stoically, as well as a fervent ManU supporter, certainly at least somewhat of a redeeming quality. Attached please find his final, farewell letter as Chairman of the Goldman Asset Management division, as he moves on to less tentacular pastures.

The recent slide in the gold price has generated substantial demand for bullion that will likely bring forward a financial and systemic disaster for both central and bullion banks that has been brewing for a long time. To understand why, we must examine their role and motivations in precious metals markets and assess current ownership of physical gold, while putting investor emotion into its proper context. The time when central banks will be unable to continue to manage bullion markets by intervention has probably been brought closer. They will face having to rescue the bullion banks from the crisis of rising gold and silver prices by other means, if only to maintain confidence in paper currencies. This will likely develop into another financial crisis at the worst possible moment, when central banks are already being forced to flood markets with paper currency to keep interest rates down, banks solvent, and to finance governments’ day-to-day spending. History might judge April 2013 as the month when through precipitate action in bullion markets Western central banks and the banking community finally began to lose control over all financial markets.

Gold has surged 4.9% in dollar terms so far this week and is headed for its biggest weekly gain in one-and-a-half years. Gold has recovered in all currencies and is up by 4.8% in euro terms and 3.7% in sterling terms. 

Therefore, gold has recovered nearly half of its recent sharp decline and is now just 7% below its price ($1,560/oz) prior to the futures induced sell off on April 12th and 15th.

Following the dramatic change in tone from Washington regarding Syrian "Weapons of Chemical Destruction", the phrases "Middle East" and "geopolitical risk" are suddenly back in the same sentence on the lips of those sitting around trading desks, leading to a powerful jump in the oil complex where Brent is having its best day in four months, and WTI in give. Yet the feasibility of an armed conflict with Syria which Russia has made very clear in the past is a strategic ally in the region aside, is the probability of an incursion truly imminent? For that we go to Stratfor's latest weekly update of US naval assets, which shows that if indeed Obama is planning to do a flyover showing off his Nobel Peace prize above Damascus, there will be a waiting time of at least several weeks as there is nothing in the immediate Syrian offshore vicinity. It appears that the 5th Fleet only has CVN-69 Eisenhower in the vicinity of Bahrain, as well as one big deck amphibious ship, the Kearsarge keeping an eye on the Straits of Hormuz.

The tension to "liberate" Syria is palpable. It took just 24 hours for the US to do an about face on its position on Syria, where yesterday, as Bloomberg reported, "U.S. officials said they haven’t seen conclusive evidence supporting an assertion by Israel’s top military intelligence analyst that Syrian government forces have used chemical weapons against rebels. Secretary of State John Kerry and spokesmen from the White House and the Pentagon said investigations haven’t produced hard proof that Bashar al-Assad’s regime has used toxic chemicals -- a step that President Barack Obama has said would cross a “red line." Fast forward to today, and we get pretty much the opposite opposite: "The United States believes with varying degrees of confidence that Syria's regime has used chemical weapons on a small scale, the White House said on Thursday."

The political class set in motion the eventual obliteration of our economic system with the creation of the Federal Reserve in 1913. Placing the fate of the American people in the hands of a powerful cabal of unaccountable greedy wealthy elitist bankers was destined to lead to poverty for the many, riches for the connected crony capitalists, debasement of the currency, endless war, and ultimately the decline and fall of an empire. The 100 year downward spiral began gradually but has picked up steam in the last sixteen years, as the exponential growth model, built upon ever increasing levels of debt and an ever increasing supply of cheap oil, has proven to be unsustainable and unstable. Those in power are frantically using every tool at their disposal to convince Boobus Americanus they have everything under control and the system is operating normally. Nothing could be further from the truth.

The United States is a deeply unhappy place.  We are a nation that is absolutely consumed by fear, stress, anger and depression.  It isn't just our economy that is falling apart - the very fabric of society is starting to come apart at the seams and it is because of what is happening to us on the inside. We are overwhelmed by anxiety, and much of the time the ways that we choose to deal with those emotions lead to some very self-destructive behaviors.  Americans have experienced a standard of living far beyond the wildest dreams of most societies throughout human history, and yet we are an absolutely miserable people.  Why is this?  Why is America #1 in so many negative categories? There is vast material wealth all around us.  So why can't we be happy?

When sales reps, Easter, and the sequester get blamed for worldwide sales declines

• Turn to Religion Split Bomb Suspects' Home (WSJ)
• The propaganda is back for the 4th year in a row: Spring Swoon Sequel No Reason for Economic Growth Scare in U.S. (BBG)
• Bernanke Jackson Hole Absence Contrasts With Greenspan Adulation (BBG)
• Large economies promise to boost growth (FT)
• Tata Faces Crisis as $20 Billion Spent on Water (BBG)
• U.S. Eyes Pushback On China Hacking (WSJ)
• Fed's Bernanke sees no U.S. inflation risks: Nowotny (Reuters)
• Austerity on Trial With U.S. Versus Europe Amid New Evidence (BBG)
• Eurozone anti-austerity camp on the rise (FT)
• Spain Aims to Soften Budget Cuts (WSJ)
• Japan's Aso Calls Recovery 'Few Years' Away (WSJ)
• BOJ Said to Consider Price Forecast Upgrade (WSJ)

Caterpillar just can't catch a break. First, in January the firm was punk'd by a Chinese acquisition fraud, forcing the company to write off half of its Q4 earnings. This, of course, in the aftermath of the miss in both Q3 and Q4 earnings. And now we get the latest disappointing news from the firm as Q1 numbers are reported lower across the board.

• Q1 EPS $1.31, Exp $1.38; this includes a tax benefit of $87 million
• Q1 revenue: $13.2 billion, Exp. $13.8 billion
• Guides much lower, with revenue now seen at $57-61 billion, compared to $60-68 billion previously
• CAT forecasts profit per share of $7.00, compared to $7.00-9.00 previously.
• Operating cash flow of $900MM, but all of it generated from net working capital, i.e., inventory liquidation
• And when you can't spend on capex, you spend on buybacks: CAT to extend buyback through 2015

So much for that.

With no macro data on the docket (the NAR's self promotional "existing home sales" advertising brochure is anything but data), the market will be chasing the usual carry currency pair suspects for hints how to trade. Alas, with even more ominous economics news out of Europe, and an apparently inability of Mrs Watanabe to breach 100 on the USDJPY (hitting 99.98 for the second time in two weeks before rolling over once more), we may be rangebound, or downward boung if CAT shocks everyone with just how bad the Chinese (and global) heavy construction (and thus growth) reality truly is. One asset, however, that has outperformed and is up by well over 2% is gold, trading at $1435 at last check, over $100 from the lows posted a week ago, and rising rapidly on no particular news as the sell off appears to be over and now the snapback comes and the realization that Goldman was happily buying everything its clients were selling all along.

Having been denied the ability to control guns by the democratically-controlled Senate last Wednesday in the biggest slap to the administration's face in a long time, Obama decided promptly to put as many guns as he possibly can in the hands of US soldiers and various non-Americans. First, it was the announcement that Obama would send more troops to Jordan to prepare for "stability operations" which is a euphemism for Syrian rebel support (much of it controlled by the otherwise dreaded Al Qaeda), and now we learn that Obama is set to announce the sale of $10 billion worth of weapons to Israel, Saudi Arabia and the United Arab Emirates. It appears that Obama, like a true expert of Sun Tzu, is well aware that the only way forward to a Nobel prize winning global peace, is under the barrel of a gun, or on the receiving end of a hot AGM-65 Maverick missile.