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The introduction of the “Mintchip” is really just another extension of the state’s effort to wield supremacy over private affairs.  It is creeping socialism under the guise of efficiency.  But, as anyone familiar with the nature of state understands, government efficiency is an illusion.  As anonymity in free transactions goes, so goes another barrier on further centralized planning. The trick here is that nothing government does is voluntary.  The forced usage of the Canadian dollar via legal tender laws renders the assertion of “voluntary” laughable.  The Mint claims the chip can be used anonymously but this assurance comes from the institution in cahoots with a central bank that can’t manage a simple metal standard for more than a few decades. 

Just because the imminent launch of a North Korean rocket along a trajectory which will likely force Japan to strike it down, something which Pyongyang said would be equivalent to an act of war, was not enough, it now appears that South Korea has commenced the hunt for Red Pyongyang or four, as it is now "searching for four North Korean submarines that disappeared after leaving their bases on the tense peninsula." ABC News reports that "A military source quoted in a South Korean newspaper says up to four North Korean submarines slipped out of port in recent days and have so far avoided detection. The source was also quoted as saying that Pyongyang has stepped up submarine infiltration drills as the weather has warmed." As a result, "Seoul is now on alert for a possible strike against a South Korean naval ship." This won't be the first time a North Korean sub is implicated in potential wrongdoing: "The South accuses the North of using a midget submarine to sink the corvette the Cheonan two years ago, which left 46 South Korean sailors dead."

Dr. Constantin Gurdgiev, a non Executive member of the GoldCore Investment Committee, has again analysed the data of US Mint coin sales in  Q1 2012 and has looked at the data in their important historical context going back to 1987.  He finds that the data regarding gold coin sales in Q1 2012 confirms that there is “no hysteria and no bubble here”.  Dr Gurdgiev finds that while volume of sales in Q1 2012 fell from the quite high levels seen Q1 2009, 2010 and 2011, demand was much stronger than “in the pre-crisis average for 2000-2007.” Also of note is the fact that despite the worst financial and economic crisis the modern world has ever seen being experienced since 2008 demand has remained below the record levels seen in the aftermath of the Asian debt crisis and unfounded Y2K concerns.  Interestingly, Dr Gurdgiev finds that the historic data (since 1987) shows that the "gold price has virtually nothing to do with demand for US Mint coins - in terms of volume of gold sold via coins." He finds that the demand for gold coins has little to do with the price in general and that “something other than price movements drives demand for coins”.

As the first day of the quarter brings new money and new hope for global asset allocators, Credit Suisse has shifted to a more negative 'underweight' stance to European equities. Laying out 10 reasons for their displeasure, they dig into the details a little with a positive view on domestic German equities and the broad DAX index (and USD earners) while notably negative on France and Spain in general (with Spain expected to underperform Italy). Varying from too much complacency on the resolution to the crisis, to political flash points, valuations, and relative economic momentum. This smorgasbord of anxiety-inducing 'facts' may well prove enough to topple the 'fiction' of a liquidity-levitated equity market - that credit seems to have already realized. Most notably the five factors that need to be 'fixed' before the Euro crisis is resolved, and the under-estimation of the de-leveraging required in the periphery, leaves mutualization of debt as the game-changer that still seems a long-way off. The complacency angle seems the most relevant to us - and we see equities once again pull away from any sense of reason indicated by the sovereign, financial, and corporate credit market, this complacency becomes more and more dangerous.

The main event of the past 48 hours: the Chinese "Schrodinger" PMI, which came much weaker or stronger, depending on whether one uses the HSBC or official data (which always has a seasonal jump from February into March) has been forgotten. Any bullish sentiment from a 'hard landing-refuting' PMI (which incidentally means less chance of easing), was erased following a very weak Japanese Tankan sentiment report, which saw exporters fret about a return to Yen strength. Naturally, the market response was to immediately shift hopes and dreams of more easing to the BOJ, if the PBOC is for the time being off the hook. Alas, since the BOJ's actions have traditionally had much less impact on global markets, stocks are not happy. This was followed by a bevy of Eurozone data, where unemployment rose to 10.8% from 10.7%. And while this deterioration was expected, the slide in French PMI was not, dropping from 47.6 to 46.7, on expectations of an unchanged print. The modest bounce in German PMI and especially in the UK from 51.5 to 52.7, where QE is raging, were not enough to offset fears that it is now "France's turn" and that global PMIs are once again showing that the recent $2 trillion in global liquidity equivalent injections have already peaked, in line with expectations: after all the half life of central planning interventions is getting progressively shorter.

Back in early February, the ECB's Margio Draghi told a naive world when discussing the implication of taking LTRO bailout aid, that “There is no stigma whatsoever on these facilities." We accused him of lying. Additionally, we also suggested to put one's money where Draghi's lies are, and to go long non-LTRO banks, while shorting LTRO recipients. In two short months the spread on that trade has doubled (see below), which intuitively is not surprising: after all, as a former Goldmanite (and according to some - current), Draghi is merely treating Europe's taxpayers like the muppets they are. As such, fading anything he says should come as naturally as Stolpering each and every FX trade. Yet what that little incident shows is that despite all their attempts otherwise, the central planners can not contain every single natural consequences of their artificial and destructive actions. Today, we see learn that the same Stigma we warned about, and that Draghi said does not exist, is starting to spread away from just the bailed out banks (becuase we now know that the LTRO was merely a QE-like bailout of several insolvent Italian and Spanish banks), and to sovereigns. From Bloomberg: "Germany’s Bundesbank is the first of the 17 euro-area central banks to refuse to accept as collateral bank bonds guaranteed by member states receiving aid from the European Union and the International Monetary Fund, Frankfurter Allgemeine Zeitung reported." And where Buba goes, everyone else is soon to follow. And what happens then? Since it is inevitable that Spain and Italy will be next on the bailout wagon, what happens when over $2 trillion in bonds suddenly become ineligible for cash collateral from the only solvent central bank in the world (aside for that modest, little TARGET2 issue of course). Will it force the ECB to be ever more lenient with collateral, and how long until the plebs finally realize that the ECB has been doing nothing but outright printing in the past 5 months? What happens to inflationary expectations then?

In the not quite 100 years since the founding of your institution, America has exchanged central banking for a kind of central planning and the gold standard for what I will call the Ph.D. standard. I regret the changes and will propose reforms, or, I suppose, re-reforms, as my program is very much in accord with that of the founders of this institution. Have you ever read the Federal Reserve Act? The authorizing legislation projected a body “to provide for the establishment of the Federal Reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper and to establish a more effective supervision of banking in the United States, and for other purposes.” By now can we identify the operative phrase? Of course: “for other purposes.” As you prepare to mark the Fed’s centenary, may I urge you to reflect on just how far you have wandered from the intentions of the founders? The institution they envisioned would operate passively, through the discount window. It would not create credit but rather liquefy the existing stock of credit by turning good-quality commercial bills into cash— temporarily. This it would do according to the demands of the seasons and the cycle. The Fed would respond to the community, not try to anticipate or lead it. It would not override the price mechanism— as today’s Fed seems to do at every available opportunity—but yield to it.

In a double-whammy of mounting geopolitical tension, Channel News Asia reports that North Korea has started fueling a rocket in preparation for a launch date set for April 12 or 13. The supposed 'satellite launch' is being considered a missile test by the West and in the meantime snubbing Nobel Peace Prize winner Obama for his 'confrontational mindset'. In retaliation Pyonyang will not be receiving food aid (according to a Pentagon official). Meanwhile, Israel National News highlights that the Israeli Defense Forces (IDF) have taken the unprecedented step of canceling the long-customary leave for Passover and will instead remain on full alert. Careful to point out that this action did not stem from any planned military action (though soldiers dismissed that as obfuscation), IDF chief of staff Benny Gantz said Wednesday he gave the order saying he "does not accept" the notion of an army-wide vacation during Passover. A growing cadre of senior security officials and former IDF chiefs have called for a major Gaza incursion to uproot the terror infrastructure there. Gantz himself has described such an operation as "increasingly inevitable."

• Greece's Fringe Parties Surge Amid Bailout Ire (WSJ)
• ECB fails to stem reduction in lending (FT)
• More Twists for Spanish Banks (WSJ)
• Banks use ECB cash to buy bonds, lend less to firms (IFR)
• UK still long way off pre-crisis growth – King (Reuters)
• Dublin confident of ECB deal to defer payment (FT)
• Goldman's European derivatives revenue soars (Reuters)
• Japan Faces Tax Battle as DPJ Finishes Plan on Sales Levy (Bloomberg)
• Insurance Mandate Splits US Court (FT)

Confirming once again that when it came to last year's LTRO desperation, the operation was nothing but the latest attempt at filling liquidity holes at insolvent banks, and nothing to do with facilitating lending, is the interview by Helsingin Sanomat with ECB council member Joerg Asmussen, according to which there would be no more LTROs until the ECB found out what it is the LTROs actually do. From Bloomberg: "The European Central Bank won’t provide more long-term loans until it has studied how the funds are distributed into the economy, council member Joerg Asmussen told newspaper Helsingin Sanomat. “We need to see how this liquidity feeds through over the next few months,” Asmussen said, according to a transcript of an interview with the Finnish newspaper on March 24 and published today." Well supposedly this means that with everyone now looking the ECB squarely in the eyes while also looking askance at $10/gallon European gas, there will be no more LTROs "for at least a few months" as the ECB actually figures out what it has done. Which also explains why the need to redirect from one bailout process, now topped out as the LTRO no longer is pushing the European economy higher, to another: the old narrative of EFSF+ESM expansion, so prudently picked up over the weekend by Angela Merkel.

The enigma that is eccentricity can be unravelled by grasping of this single statement; that which you perceive is both a matter of the object of your perception (in this case; the eccentric person) and your apparatus of perception. Eccentricity, then, is as much a quirk of the popular mind as it is of a particular person. So with the assumption that you seek creativeness and intrigue — here’s how to think eccentrically, find your edge and risk little for lots.

All you need to read and some more.

All you need to read.

European cash equity markets are making heavy losses as we head into the midpoint of the European session. Markets got off to a bad start as participants reacted to overnight Chinese HSBC manufacturing PMI recording a steeper contraction than the previous month. The manufacturing outlook has gotten even worse as the session has progressed, with France, Germany and the Eurozone as a collective recording contractions in their respective manufacturing PMI numbers for March. As such, commodity linked currencies are trading lower with AUD/USD down around 85 pips. WTI and Brent crude futures are moving in tandem with other markets as they also record losses going into the US open. In other news, there were reports that the ECB were looking to pull out their covered bond asset purchase program as less than a quarter of the fund has been used so far. A Bundesbank spokesman commented that it will not pressure the ECB into withdrawing the covered bond purchase program as it is the central bank’s decision to make. Looking ahead in the session, the market awaits the weekly US jobs data due at 1230GMT.

• Beijing on edge amid coup rumours (FT) - as predicted two days ago, do not expect any official media update on this critical matter, until after the outcome, whatever it is
• Goldman scours emails for use of word "muppets" (Reuters)
• Germany to Balance Budget Early (WSJ)
• Osborne Gives and Takes From Rich in U.K. Budget Balancing Act (Bloomberg)
• Big Spending at Fannie, Freddie Should End, Watchdog Says (Bloomberg)
• Volcker Says U.S. Needs Reforms in Finance, Government (Bloomberg)
• Chinese Firms, Regulators in Talks on Yuan-Fund Program (FT)
• Ireland Said to Ready Bank-Debt Proposal for ECB Review (Bloomberg)