en The Big Picture For Gold And Silver <p>With precious metals back at 4-year lows against a backdrop of gold migration from west to east, paper vs physical divergences, 'disappearing' Comex positions, dark pools in London, collateral grabs, and massive monetary policy extremist actions; we thought the following two presentations worth considering. Tocqueville's John Hathaway delves into the <strong>darker corners of today's gold markets</strong> while Mike Maloney reminds us of the <strong>big picture behind gold and silver as wealth insurance</strong>. The failure of a monetary system is never a smooth road - it is rocky and undulating, with twists and turns that don't appear on any map. But the destination is always without question, despite suppression efforts: <em><strong>Gold will inevitably respond to an expanding fiat currency supply. That simple</strong>.</em></p> <p>&nbsp;</p> <p><strong>Tocqueville's John Hathaway asks (and answers) "Do You Know Where <span style="text-decoration: underline;">YOUR</span> Gold Is"</strong> as he explains how counterparty and systemic risk will converge and the various dark and murky corners of the precious metals markets in which manipulation grows unchecked...</p> <p>&nbsp;</p> <p style="margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; display: block;"> <a href="" title="View John Hathaway Tocqueville Keynote on Scribd" style="text-decoration: underline;">John Hathaway Tocqueville Keynote</a></p> <p><iframe src="//;view_mode=scroll&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> <p>&nbsp;</p> <p>*&nbsp; *&nbsp; *</p> <p>And <strong>Mike Maloney explains the big picture for gold and silver in the clip below</strong>...</p> <p><iframe src="//" width="560" height="315" frameborder="0"></iframe></p> <p>&nbsp;</p> <p>*&nbsp; *&nbsp; *</p> <p>Simply put,</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>We are living through unprecedented times, and if there is one lesson to keep in mind it is this: <strong>The failure of a monetary system is never a smooth road paved with gold.</strong> It is rocky and undulating, with twists and turns that don't appear on any map.</p> <p>&nbsp;</p> <p><strong>But the destination is always without question: Gold inevitably responds to an expanding fiat currency supply. That simple. </strong></p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="542" height="346" alt="" src="" /> </div> </div> </div> Dark Pools dark pools Monetary Policy Precious Metals Sun, 21 Sep 2014 02:32:30 +0000 Tyler Durden 494636 at Russia FinMin Calls For Shift Away From US Treasurys Into BRIC Bonds, Settlement In Non-Dollar Currencies <p>It is no secret that Russia has had enough of the Petrodollar, and in light of ongoing western sanctions - which many view not so much as a reaction to events in Ukraine bur merely as an attempt to halt the Russian revolution against the Petrodollar status quo, crushing its economy before the momentum grows and more countries join Moscow - is constantly thinking of ways it can ditch the dollar as a medium of exchange as fast as possible. The problem is that when it comes to retaliating against the West, Russia - short of declaring an embargo on USD payments for its commodities - has little control over what currency its western trading partners will pay in. So instead it is focusing on its net exporting peers, aka the BRICS, with whom as previously reported, <a href="">Russia had launched a "bank" alternative to the IMF </a>when it comes to backstop and bailout funding, one that avoids reliance on the SDR, the USD, and on Western empathy. </p> <p>It is the same BRICs that, Russia's Prime Minister Dmitry Medvedev, told Rossiya TV in an interview earlier today, <strong>should conduct transactions in national currencies, bypassing cross-rates with the US Dollar</strong>, adding that "we can easily make mutual settlements directly," and the mechanism should be beneficial to both sides of transactions. </p> <p>And if it wasn't clear by now, Russia pivot away from the west and toward China is pretty much complete. <a href="">Medvedev also said that </a>"our collaboration with China is of strategic importance. We have great, brilliant political contacts, we have excellent economic relations. [China] is our strategic partner, and we are interested in expanding the volume of cooperation. We are not afraid of collaborating because we are confident that this is equal, friendly and mutually beneficial collaboration in all areas." </p> <p>Meanwhile, regarding escalating Western tensions, the PM said that sanctions have created a bad situation for Russian banks on financial markets, all sources of liquidity are frozen. "We regard this as a senseless and ugly decision toward Russia, <strong>but we’ll manage without it</strong>." So does that mean that China will step in to provide the required FX reserves as Russia minimizes its USD exposure? Perhaps, but not entirely: Medvedev did add that "Asia, other markets “unlikely fully” to compensate for frozen European financing."</p> <p>The PM also said that Russia passed through similar squeeze in 2008-2009 and can manage with central bank resources, adding that Europe is still important market for Russia, if EU members "make no absurd decisions to squeeze us out of this market, we’ll stay there, it’s interesting for us."</p> <p>But while Medvedev was the good cop today, it was Russia's finance minister Anton Siluanov who was the designated "bad guy", and as the <a href="">WSJ reported</a>, <strong>Russia is considering diversifying its debt portfolio away from countries that have imposed sanctions on Moscow and into the papers of its BRICS partners.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Speaking on the sidelines of an annual investment forum in the Black Sea town of Sochi, Mr. Siluanov said the Finance Ministry wants to diversify its investment basket, and is looking for higher yields without too much risks. He said the ministry will consider buying papers issued by Brazil, India, China and South Africa, which along with Russia are known collectively as the Brics countries. </p> <p>&nbsp;</p> <p><strong>"[We would like to] walk away from investing in papers of the countries that impose sanctions against us,</strong>" Mr. Siluanov said, adding that the reshuffle would be carried out gradually. He didn't elaborate on when the first purchases of Brics debt may take place.</p> </blockquote> <p>The good news for the US, now that Russia appears set on either rapidly or slowly selling off its US Treasury exposure, is that Kremlin has possession of only $115 billion in US paper, which happens to be more than the $100 billion it reported in May when the first shock of a <a href="">Russian bond sell off hit the market</a>, and both of which happen to be amounts the Fed can easily monetize into its record big balance sheet (which, taper or no taper, <a href="">just grew by $28 billion in the past week alone</a>) in just over a month.</p> <p><a href=""><img src="" width="501" height="391" /></a></p> <p>But at the end of the day it is not what Russia does, but what its other BRIC peers and US Treasury holders do. Because while Moscow may be in possession of just over $114.5 billion in US paper, China, Brazil and India share among them <a href="">some $1.6 trillion in US Treasurys</a>, better known as "leverage" in every sense of the word, or an amount that not even the Fed could monetize on short notice without sending a massive shockwave through the global capital markets. </p> <p>In other words, while the US pushes Russia hard, it may be careful not to push it too hard, and in the process start an avalanche that leads to a BRIC bond avalanche, which may well be one possible endgame as the world is forced to transition from the US Dollar as a reserve currency in the coming years.</p> <p>Never gonna happen? </p> <p>Considering that <strong>none other than Obama's own former chief economic advisor, Jared Bernstein, <a href="">is advocating dropping the USD as the global reserve currency</a>, </strong>we would be careful with using the word "never" in this specific case...</p> <p><img src="" width="499" height="422" /></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="553" height="369" alt="" src="" /> </div> </div> </div> Bond Brazil BRICs Capital Markets China India None Reserve Currency Ukraine Sun, 21 Sep 2014 01:43:19 +0000 Tyler Durden 494635 at Saturday Humor: iPhone 6 Plus vs Samsung Galaxy S5 <p>As untold millions unwrap their shiny new iPhone 6's this weekend, we thought the following would be useful for some context...</p> <p><a href=""><img src="" width="600" height="983" /></a></p> <p>&nbsp;</p> <p><a href=",36969/"><em>Source: The Onion</em></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="649" height="586" alt="" src="" /> </div> </div> </div> The Onion Sun, 21 Sep 2014 00:44:08 +0000 Tyler Durden 494634 at Military Plant In East Ukraine Devastated By Massive Explosion; Kiev Accuses Russia Of Using Tactial Nuke <p>Last night&#39;s headlines crowed in bright red flashing text that Russia and Ukraine had (once again) agreed a cease-fire and terms over the borders between the two nations. Perhaps not surprisingly, mere hours later, <strong>Ukraine is claiming that Russia has broken the truce... with the use of a tactical nuclear weapon at Luhansk airport</strong>. This comes on the heels of claims by the pro-Russia separatists that Kiev forces destroyed a massive military plant in Donetsk. Russia&#39;s defense ministry flatly denies the &#39;nuclear strikes&#39; adding that <strong>&quot;no reasonable person will take them seriously.&quot;</strong> This truce-breaking action has once again raised calls among Ukrainians for the nation to get its nuclear status back; something Russia is clearly strongly against.</p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="width: 599px; height: 535px;" /></a></p> <p>Earlier in the day, <strong>a massive military facility in pro-Russian separatist-held Donetsk was destroyed</strong>. <a href="">As RT reports,</a> a neighborhood official told Ukrainian 112 television that a shell hit the plant.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;There was a direct hit at the No 47 industrial explosives shop, where some explosives were present. It detonated and caused another explosion. Luckily it didn&rsquo;t hit the main storage facility where we have some 2.5 tons of explosives,&rdquo; said Ivan Prikhod&rsquo;ko, deputy chair of the local community council.</p> <p>&nbsp;</p> <p><iframe frameborder="0" height="315" src="//" width="560"></iframe></p> <p><iframe frameborder="0" height="315" src="//" width="560"></iframe></p> <p>&nbsp;</p> <p>He added that while the incident caused considerable damage, nobody was hurt.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>There is no verified report about what kind of weapon hit the plant. But there are <strong>rumors of it being targeted by a Tochka-U tactical missile launched by Kiev&#39;s troops.</strong></p> <p>&nbsp;</p> <p><iframe frameborder="0" height="315" src="//" width="560"></iframe></p> <p>&nbsp;</p> <p>&ldquo;According to our information, three Tochka-U missiles were fired and there you have it,&rdquo; a militia member who identified himself as codename &lsquo;Scorpio&rsquo; told RT.</p> </blockquote> <p><a href="">Then, as ITAR-TASS reports,</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Ukrainian media earlier in the day quoted Geletei as telling one of the journalists that the Russian army had delivered two tactical nuclear strikes on the Lugansk airport from a self-propelled Tyulpan 2S4 mortar system, thus causing the Ukrainian troops to leave the area.</strong></p> <p>&nbsp;</p> <p>&ldquo;The strikes were so powerful that they demolished buildings completely from top to bottom,&rdquo; media reports quoted him as saying.</p> </blockquote> <p><a href=";sl=ru&amp;tl=en&amp;">Adn as Inforesist notes,</a> this was <strong>confirmed by the Minister of Defense of Ukraine Valery Geletey during the return of the Ukrainian delegation from Poland</strong>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>It is reported on your page in the Facebook Roman Bocskai.</p> <p>&nbsp;</p> <p>In particular,<strong> the forces of the Russian Federation made two impact of self-propelled mortar 2S4 &quot;Tulip&quot; in Lugansk airport</strong>. It is for this reason that our military had left him. Blows were so powerful that &quot;completely destroyed the building from the fifth floor to the basement&quot; - described the minister.</p> </blockquote> <p>The devastation at Luhansk Airport...</p> <p><a href=""><img height="399" src="" width="600" /></a></p> <p><a href=""><img height="383" src="" width="600" /></a></p> <p><em>h/t @L0ggol</em></p> <p>Which, <a href="">as ITAR-TASS reports,</a> the Russian Defense Ministry flatly denied...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Ukrainian media reports said that Defence Minister Geletei had made this statement upon return from talks in Poland.</p> <p>&nbsp;</p> <p>&ldquo;The leadership of <strong><u>Ukraine should consider sending Geletei through a basic military training course where rookies learn the main effects of a nuclear explosion and its consequences</u></strong>,&rdquo; the Russian Defence Ministry said in what meant to be a jock.</p> <p>&nbsp;</p> <p><strong>&ldquo;Speaking seriously, Geletei&rsquo;s regular attempts to justify the failures of the punitive operation in the south-east of Ukraine by alleged actions of Russian army units look like paranoia. But no reasonable person will take them seriously,&rdquo;</strong> the ministry said.</p> </blockquote> <p>*&nbsp; *&nbsp; *<br />What is somewhat comical is that <strong>these incidents comes just hours after Friday&rsquo;s signing of an extended ceasefire deal between Kiev and rebel forces, which hopes to put an end to hostilities in eastern Ukraine</strong>. The deal includes pulling back all heavy weapons from cities and frontlines.</p> <p><strong>The blast happened just as a Russian humanitarian aid convoy was unloading elsewhere in the city</strong>. Some 200 trucks carrying 2,000 tons of aid crossed the border earlier on Saturday.</p> <p>NATO chimed in...</p> <ul> <li><strong>*UKRAINE HAS CEASE-FIRE `IN NAME ONLY,&#39; TOP NATO GENERAL SAYS:AP</strong></li> </ul> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="583" height="439" alt="" src="" /> </div> </div> </div> headlines Poland Ukraine Sun, 21 Sep 2014 00:40:23 +0000 Tyler Durden 494620 at The Decline Of America's Economic Model In 1 Simple Chart <p><strong>&quot;You can&#39;t eat GDP, and you can&#39;t live in a rising stock market&quot;</strong> is the striking phrase from <a href=";abt=0002&amp;abg=0">NY Times&#39; Neil Irwin</a> as he offers the most damning chart of the decline of America&#39;s Economic Model (and dream). As <a href="">we have explained vociferously</a>, the most important thing to understand about today&rsquo;s economy is: <strong>Around 1999, growth in the United States economy stopped translating to growth in middle-class incomes</strong>.</p> <p><a href=""><img height="497" src="" width="597" /></a></p> <p>&nbsp;</p> <p>The choice, by Greenspan and carried on by his followers, was to <strong>enable the financialization of the US economy for the benefit of the few, at the cost of the many</strong>. As Irwin concludes, <a href="">and we explained previously</a>, Americans feel disappointed by the economy; the new data show that they have good reason.</p> <p><a href=";abt=0002&amp;abg=0"><em>Source: NY Times</em></a></p> <p>*&nbsp; *&nbsp; *</p> <p>Perhaps, <a href="">just perhaps, Rick Santelli was right after all</a>...</p> <p><strong>&quot;This is America! We don&#39;t follow consensus, we set it!&quot;</strong></p> <p><object data="" height="380" id="cnbcplayer" type="application/x-shockwave-flash" width="400"><param name="data" value="" /><param name="type" value="application/x-shockwave-flash" /><param name="allowfullscreen" value="true" /><param name="allowscriptaccess" value="always" /><param name="quality" value="best" /><param name="scale" value="noscale" /><param name="wmode" value="transparent" /><param name="bgcolor" value="#000000" /><param name="salign" value="lt" /><param name="src" value="" /><param name="name" value="cnbcplayer" /></object></p> <p><span style="text-decoration: underline;"><strong>This is what Santelli is upset about... <a href="">Who is the Fed working for? Main Street or Wall Street?</a></strong></span></p> <p><a href=""><img height="314" src="" width="600" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="597" height="497" alt="" src="" /> </div> </div> </div> Main Street Rick Santelli Sun, 21 Sep 2014 00:17:08 +0000 Tyler Durden 494633 at Summarizing Obama's ISIS Strategy Endgame (In 1 Cartoon) <p>Presented with liitle comment aside to ask <em>"who could have seen 'that' coming?"</em></p> <p>&nbsp;</p> <p><a href=""><img src="" width="598" height="444" /></a></p> <p>&nbsp;</p> <p><a href=""><em>Source: Cagle</em></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="598" height="444" alt="" src="" /> </div> </div> </div> Sat, 20 Sep 2014 23:28:13 +0000 Tyler Durden 494632 at Greenspan's "Irrational Exuberance" Warning In Context <p>As the marginal investing bot continues to invest his marginal leveraged dollar-on-the-sideline on an equity market that, as Janet Yellen has explained to the poor, will create a &quot;wealth effect&quot; to sustain everyone through rainy days and retirement, we thought <strong>some context worthwhile</strong>. On December 5th 1996, Alan Greenspan - upon the recognition that equity market capitalization has bubbled to over 100% of nominal GDP - opined that investors had succumbed to &quot;irrational exuberance.&quot; Since then, that <strong>&#39;exuberance&#39; has become increasingly <em>rational </em>as the Fed pulls all its monetary-base expanding, deficit-funding, asset-purchases to keep the American Dream alive for a select (and shrinking) few</strong>...</p> <p>&nbsp;</p> <p>Irational-er and Irrational-er...</p> <p><a href=""><img height="451" src="" width="600" /></a></p> <p>&nbsp;</p> <p>But adjusted for the reality of a fiat world, things look a little different since the dot-com collapse inspired The Fed...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 451px;" /></a></p> <p>&nbsp;</p> <p>As is clear - since the financial crisis, stocks have become completely dependent upon The Fed</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 487px;" /></a></p> <p>&nbsp;</p> <p>As The Monetary stock and flow indicate...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 487px;" /></a></p> <p><a href=""><img alt="" src="" style="width: 600px; height: 487px;" /></a></p> <p>&nbsp;</p> <p>And relative to debt... stocks have gone nowherefor 90 years...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 487px;" /></a></p> <p><a href=""><em>Charts: The Chart Store</em></a></p> <p>*&nbsp; *&nbsp; *</p> <p><em>&quot;Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past.<strong> But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade...</strong>&quot;</em></p> <p>&quot;How&quot; indeed, Alan, how indeed?</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="644" height="484" alt="" src="" /> </div> </div> </div> Alan Greenspan Irrational Exuberance Janet Yellen Japan Nominal GDP Reality Sat, 20 Sep 2014 22:33:42 +0000 Tyler Durden 494631 at Meanwhile, Here's What The "Super-Rich" Are Rushing To Buy <p>If you said shares of BABA, you'd be wrong. <a href="">According to the Telegraph, </a>the exodus out of paper wealth and into hard assets is reaching a fever pitch as the "super-rich are looking to protect their wealth through buying record numbers of "Italian job" style gold bars, according to bullion experts."</p> <p>The numbers cited by the paper are impressive: <em><strong>the number of 12.5kg gold bars being bought by wealthy customers has increased 243% so far this year</strong></em>, when compared to the same period last year, said Rob Halliday-Stein founder of BullionByPost. <strong>"These gold bars are usually stored in the vaults of central banks and are the same ones you see in the film 'The Italian Job'," </strong>added David Cousins, bullion executive from London based ATS Bullion. </p> <p><img src="" width="291" height="233" /></p> <p>The sales of 1kg gold bars, worth about £25,000 each, have doubled during the three months ended August, when compared to the same period last year, Telegraph reports according to ATS Bullion sales figures.</p> <p>As a reminder, these are not some dinky, 1 oz coins that are being bought hand over fist: the bars which are made from pure gold and are worth more than £300,000 each at today's prices of $1,223 (£760) an ounce. </p> <p>That said, sales of the more popular, and far cheaper gold coins such as the quarter ounce sovereign and one ounce Krugerrand have also doubled this year, according to figures from BullionByPost. </p> <p>Mr Halliday-Stein said that while most customers arrange for secure storage of the larger bars in secret vaults operated by Brinks, <strong>some customers have taken physical delivery of the 12.5kg bars. </strong></p> <p>Would they be... <em>Chinese customers?</em><strong><br /></strong></p> <p>But, how is it possible that as the "super rich" are supposedly rushing to buy gold that gold prices are at 2014 lows? </p> <p>Simple: as the chart below shows, there is no better way to continue masking the demand for <em><strong>physical </strong></em>gold than to keep selling <em><strong>paper </strong></em>gold, in this case via its most liquid manifestation, the GLD ETF. It is this ETF that just saw the notional value of gold "holdings" backing the paper manifestation of its "<em>goldness"</em>, <strong>drop to just 776 tons, the lowest since 2008 and nearly half the maximum "holdings" of 1,353 tons reached in December 2012. </strong></p> <p><a href=""><img src="" width="600" height="439" /></a></p> <p>In fact, as if to punctuate what we said early yesterday about the <a href="">liquidation of precious metals in order to fund BABA purchases</a>, here is the percentage change in GLD holdings on a daily basis: yesterday's 1% drop in which some 8 paper tons of gold were firesold was a 1% drop in GLD holdings, and the second biggest daily drop in all of 2014...&nbsp;&nbsp;&nbsp; </p> <p><a href=""><img src="" width="600" height="485" /></a></p> <p>... a drop which also pushed the price of paper gold to its lowest for 2014. And, a drop, which all those who are buying physical gold instead of paper, are thankful for.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="291" height="233" alt="" src="" /> </div> </div> </div> Central Banks notional value Precious Metals Sat, 20 Sep 2014 21:44:25 +0000 Tyler Durden 494630 at Technical Outlook for the Dollar <p>Technically, the dollar is finishing the quarter on strong footing. It has risen against all the major currencies. The New Zealand dollar has eclipsed the yen as the weakest of the major currencies. It is off 7% since end of June. The Canadian dollar is strongest of the majors, losing only 2.7%, and that is after this week's leading 1.2% advance.&nbsp;</p> <p>&nbsp;</p> <p>Neither the euro nor the yen have been able to sustain even modest upticks. &nbsp;Despite extended positioning, the bears do not appear to have had their fill. &nbsp; Into the weekend G20 meeting, there has been no official resistance to the euro and yen's depreciation. &nbsp; &nbsp;The poor participation in the ECB's new four-year lending facility (TLTRO) has boosted speculation that more aggressive measures will be needed to 1) revive lending and 2) bolster the ECB's balance sheet by the trillion euros Draghi mentioned.</p> <p>&nbsp;</p> <p>In Japan, BOJ Governor Kuroda welcomed the yen's decline, and pledged to provide more stimulus if needed. &nbsp;This is in the context in which the Federal Reserve's forecasts appear to have increased the risk of an earlier rate hike, and a US economy that is running a bit faster than appreciated. &nbsp; &nbsp;Q2 GDP will likely be revised (September 26) to something closer to 5% than 4% (from 4.2%) and estimates for Q3 GDP are creeping up as well.&nbsp;</p> <p>&nbsp;</p> <p>A note of caution may be in order for the euro. &nbsp;The multi-month lows set at the end last week were not confirmed by the RSI or MACD. &nbsp;This could be an early signal of a market losing momentum. &nbsp;However, the upside is not compelling, with new selling anticipated in the $1.3000-20 area. &nbsp;On the downside, the next key target is near $1.2750.&nbsp;</p> <p>&nbsp;</p> <p>The dollar reached almost JPY109.50 before the weekend. &nbsp;It has gone almost straight up since the JPY101-JPY103 four-month range was broken in late August. &nbsp;We had suggested potential toward JPY110. &nbsp; The market may grow cautious as this level is neared. &nbsp; A pullback would be seen as a new buying opportunity for dollar bulls. &nbsp;Downside support is near JPY107.80 to JPY108.00.</p> <p>&nbsp;</p> <p>The weakness in the yen will likely continue to help lift the Nikkei, which finally turned positive for the year just before the weekend. &nbsp; Since the dollar broke out of the range against the yen on August 20, the Nikkei has advanced by 6.2% to new multi-year highs. &nbsp;</p> <p>&nbsp;</p> <p>In an almost classic case of "buy the rumor, sell the fact", sterling fell two cents after initially rallying on new that Scotland will remain part of the Kingdom. &nbsp;It appears to have posted a shoot star pattern, a bearish candlestick formation. Recall sterling had rallied from the $1.6050 low on September 10 to $1.6525 shortly after it became clear that the unionists would win. &nbsp;It then proceeded to reverse lower. &nbsp;Initial support is seen a little below $1.6300, and there is a daily trend line that comes in just below $1.6250, in front of a retracement objective near $1.6235.&nbsp;</p> <p>&nbsp;</p> <p>The Canadian dollar looks interesting from a technical perspective. For those US dollar bulls looking for a currency to diversify into, the Canadian dollar may be attractive. The US dollar was turned back from CAD1.11 at the start of last week, and with the help of a stronger core inflation print, it dipped below CAD1.09 before the weekend. &nbsp;Trend line support, drawn off the mid-July and the early September lows comes in near CAD1.0875 at the start of the new week, which is just north of the 100-day moving average (~CAD1.0855). &nbsp; &nbsp;There are US dollar bearish divergences in the MACD, but that does not rule out some modest upticks toward CAD1.0980-CAD1.1020 &nbsp; &nbsp;The bottom of the range is CAD1.08.&nbsp;</p> <p>&nbsp;</p> <p>Since it tested the $0.9400 area on September 5, the Australian dollar has slumped 4.3% or nearly five cents. &nbsp; &nbsp;Immediate resistance is seen near $0.9000. &nbsp;Given Australia's interest rates it is expensive to be short when the downside momentum stalls. &nbsp;Weaker commodity prices and the China slowdown are often cited as factors that have sparked the dramatic drop in the Aussie. &nbsp; The Australian dollar appears to have carved out a large head and should pattern from April through early-September. &nbsp; The neckline was broken on September 9 near $0.9220. &nbsp;The minimum objective is just above $0.8900, and below there is $0.8850. &nbsp;Further a field, the 2014 low near $0.8660 from late-January beckons. &nbsp; &nbsp;</p> <p>&nbsp;</p> <p>Technical indicators are not generating strong signals in the Mexican peso. &nbsp;The US dollar appears in a new broader range of MXN13.00 to MXN13.30. &nbsp; We have a slight bias toward a stronger peso, and see that local stocks have performed better than the MSCI EM index recently, perhaps aided by strength of the US economy and somewhat better Mexican data. &nbsp;</p> <p>&nbsp;</p> <p>US 10-year yields edged single basis point higher last week. &nbsp;While the near-term risk extends toward 2.70%, many are talking about 2.65%, which corresponds to the 200-day moving average. &nbsp; Perhaps a sharp drop in the headline of August durable goods orders (September 25), as the July surge in Boeing orders is unwound, may encourage some backing off of the yield, but 2.55% may be the most that can reasonably be hoped for now.&nbsp;</p> <p>&nbsp;</p> <p>Observations based on the speculative positioning in the futures market:</p> <p>&nbsp;</p> <p>1. &nbsp;There was an unusually high number of significant position adjustments, which we have defined as a change of 10k of more contract in the gross position. &nbsp; This increase in activity has been observed in the spot market as well.</p> <p>&nbsp;</p> <p>2. &nbsp;The gross long euro position increased by 20.2k contracts to 79.6k. &nbsp;This seems to be a case of bottom picking. &nbsp;The net short position fell as a result of new longs entering the market rather than a bout of short covering. &nbsp;The gross short position fell by 200 contracts to 216.7k.</p> <p>&nbsp;</p> <p>3. &nbsp;The gross long yen position jumped by 20.3k contracts to 37.6k. &nbsp;This was the principle cause of the decline in the net short position to 83.2k contracts from 101k. &nbsp;The gross short position actually increased by 2.8k contracts to 120.8k.</p> <p>&nbsp;</p> <p>4. &nbsp;The gross long sterling position was cut by a 25.7k contracts to 55.6k. &nbsp;The gross short position grew by 7.6k contracts. &nbsp;This was sufficient to switch the net position to the short side (6.6k contracts) for the first time since last November.</p> <p>&nbsp;</p> <p>5. &nbsp;The gross long Australian dollar position was culled by 17.7k contracts to 55.6k. &nbsp;The gross short position increased by almost 1.5k contracts. &nbsp;The net long position was essentially halved to 22.1k contracts (from 41.2k).</p> <p>&nbsp;</p> <p>6. &nbsp;The gross short Mexican peso position rose by almost 15k contracts to 47.4k. &nbsp;The gross long position was trimmed by 1.6k to stand at 69.4k contracts.</p> <p>&nbsp;</p> <p>7. &nbsp;Speculators generally added to gross short currency futures positions, with the euro the main exception. &nbsp;The adjustment to the gross long position were more mixed.</p> <p>&nbsp;</p> <p>8. &nbsp;The net short US 10-year Treasury bond futures position fell to 6.8k contracts from 33.3k. &nbsp;This was mostly a product of 23.2k gross short positions being covered. &nbsp;The bulls added 3.3k contracts, which lifted the gross long position to 443.5k contracts.</p> <div class="field field-type-filefield field-field-image-blog"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_blog" width="320" height="226" alt="" src="" /> </div> </div> </div> Aussie Australian Dollar Boeing Bond Canadian Dollar China Futures market Japan MACD New Zealand Nikkei Technical Indicators Yen Sat, 20 Sep 2014 21:02:37 +0000 Marc To Market 494629 at GDP Watch: Summer 2014 Was World's Warmest Ever <p>Since weather has become the most crucial factor in forecasting economic growth, we thought it crucial to the future of central bank policy to note that <strong>Summer 2014 was officially the hottest one ever</strong>, <a href="">according to NOAA</a>. This of course means there is "pent-up" cold weather, which may explain the <strong>collapse in global growth expectations</strong>. However, this chatter about heat may surprise Americans (aside from those that live in the Western States) as the Mid-Atlantic and Northeast U.S. were running cooler than normal (thus concerns about growth). <a href="">According to NOAA’s records</a>, this is the <strong>38th consecutive August and 354th consecutive month with a global average temperature above the 20th century average</strong>.</p> <p>&nbsp;</p> <p><a href="">As The Washington Post reports</a>,</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>It was the warmest summer on Earth since records began in 1880, according to a monthly climate report by NOAA’s National Climatic Data Center.</strong></p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="381" /></a></p> <p>&nbsp;</p> <p>In addition, August 2014 was the warmest August on record for the globe, according to all three major organizations that track the earth’s temperature.</p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="463" /></a></p> <p>&nbsp;</p> <p>Over land and ocean, NOAA reports that August ended 0.75 degrees Celsius above the 20th century average, while the summer months, June through August, were 0.71 degrees warmer than normal.</p> </blockquote> <p><strong>Which explains this...</strong> (as meteoreconomists downgrade growth expectations on the basis that hot summer means cold winter in the Keynesian mean-reverting world of weather prognostication)</p> <p><a href=""><img src="" width="600" height="332" /></a></p> <p>&nbsp;</p> <p><strong>Global GDP growth plunged to cycle lows as the "hot" summer swept across the world.</strong></p> <p>But...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Over land, the high latitudes were incredibly warm compared to normal, in Siberia in particular. The sizzling heat in the western U.S. and Mexico drove up the temperature for the JMA analysis, while the eastern U.S. was cooler than average in all three analyses.</p> <p>&nbsp;</p> <p>The summer and August records may come as a surprise to the <strong>Mid-Atlantic and Northeast U.S., which were running cooler (and wetter) than normal according to both NASA and NOAA. </strong></p> <p><a href=""><img src="" width="600" height="464" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>According to NOAA’s records, <strong>this is the 38th consecutive August and 354th consecutive month with a global average temperature above the 20th century average.</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *<br /><span style="text-decoration: underline;"><strong>So prepare yourself for Q3 earnings excuses that it was not Goldilocks...</strong></span> in fact it was too hot to shop/spend/invest in capex in the West and too cold to buy iPhones in the East...</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="901" height="499" alt="" src="" /> </div> </div> </div> Goldilocks Mexico NOAA Sat, 20 Sep 2014 21:01:23 +0000 Tyler Durden 494628 at