en Disinformation Unmasked: The Alternative Media Exposed <p><span style="text-decoration: underline;"><em><strong><a href="">Jeff Nielson for Sprott Money</a></strong></em></span></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>For any/all readers who retain the capacity for independent thought; it is universally acknowledged that the mainstream, Corporate media is little more than a propaganda megaphone. It broadcasts a single message, 24/7, with which the Old World Order brainwashes the masses in our Zombie societies.</p> <p>&nbsp;</p> <p><img src="" alt="brainwashing" width="278" height="187" class="aligncenter size-full wp-image-10007" /></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>It is understood that with the overwhelming financial resources at its disposal; the One Bank has been able to (literally) buy each-and-every mainstream media outlet across the Western world, with all of these media outlets controlled within a mere handful of its 147 corporate fronts. We understand that because of this media oligopoly that, conservatively speaking, 99% of what is spewed by the mainstream media is irredeemably tainted – and thus cannot be relied upon.</p> <p>&nbsp;</p> <p>This is not to say, however, that 99% of the personnel in the mainstream media are (direct) “employees” of the One Bank. That would be both utterly impractical, and entirely unnecessary.</p> <p>&nbsp;</p> <p>Rather, the way in which this media oligopoly (and any propaganda machine) is operated is simple and efficient. Key, senior personnel of the largest and most-influential outlets are hired Stooges. The rest are mere zealots. They have listened to the propaganda of the Corporate media for so long that they have adopted it as “truth”. They willingly parrot any/all propaganda which is fed to them, oblivious to the fact that not only is most of it entirely wrong, but it is literally opposite to reality.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>The Stooges, on the other hand, knowingly fabricate and distribute these lies themselves, and they command underlings to echo their own biases and propaganda. But they do much more than that.</p> <p>&nbsp;</p> <p>They preach (and enforce) conformity, the proverbial “herd mentality”. Everyone can’t be wrong, they repeat to the zealots again and again and again. What gets lost in that pseudo-logic (and never enters the minds of the zealots) is that “everyone” is now a mere six or eight corporate fronts – all controlled by a single crime syndicate.</p> <p>&nbsp;</p> <p>Thus the zealots are made to believe (like all zealots) that all wisdom lies inside the Herd. They self-censor most ideas/opinions which are contrary to the Script which the One Bank distributes to its media tentacles on a daily basis. Any non-conformity which is not self-censored by the zealots themselves is either censored (or heavily edited) by the Stooges, since they exercise editorial control of the major media tentacles.</p> <p>None of this is “news” to most who are reading this. Part of our conviction here is a simple function of arithmetic. With the One Bank having roughly $100 trillion in new currency/leverage provided to it, for free, each year (via the money-printing process alone); buying-off all major media outlets (and maintaining control) requires nothing more than a trivial fraction of its overall financial resources.</p> <p>This brings us to the Alternative Media. Again as a simple function of arithmetic; it would be the utmost in naivety to believe that this same crime syndicate would simply ignore the Alternative Media, and allow it to distribute undiluted/uncontaminated Truth.</p> <p>&nbsp;</p> <p>Let’s attach some numbers to this proposition of arithmetic. With roughly 0.0001% of its annual financial resources; the One Bank could finance the entire Alternative Media. Pocket change.</p> <p>&nbsp;</p> <p>The fact that this crime syndicate did not instantly/immediately seek to monopolize the Alternative Media is a simple function of the arrogance of the oligarchs who control it. However, upon seeing the Alternative Media distributing (in their eyes) a disturbing amount of Truth to a large-and-growing audience; undoubtedly they would – and have — corrected this error.</p> <p>&nbsp;</p> <p>Here it’s important to understand that it’s not necessary for the One Bank to exercise either direct ownership or direct control of the various outlets of the Alternative Media. Through simply financing key Alternative Media outlets; it can use its financial clout to either “influence” editorial content at that site, or (when necessary) apply direct pressure to censor or heavily edit content which the One Bank finds particularly threatening.</p> <p>&nbsp;</p> <p>The other principal means of sabotaging the Alternative Media is simply by flooding it with enormous quantities of disinformation. Here the process is somewhat different than its method for corrupting the mainstream media. Most of its Stooges in the Alternative Media are independent actors, who gain access to the Alternative Media (and/or its audience) through one of two disguises. They pass themselves off as either:</p> <p>&nbsp;</p> <p>1) Possessors of Secrets</p> <p>&nbsp;</p> <p>2) Sages of great wisdom/foresight</p> <p>&nbsp;</p> <p>The irony here is that with many of these Stooges being recruited from within the various, corporate tentacles of the One Bank; the Stooges use their past connections with these enclaves of crime as credentials to convince us that they either have “secrets” which they are willing to share with us, or (being “insiders” themselves) they understand how the System operates better than lesser mortals.</p> <p><img src="" alt="birds-planes" width="429" height="337" class="aligncenter size-full wp-image-10011" /></p> <p>This does not mean that everyone in the Alternative Media who has previous affiliations with Wall Street (or other, obvious criminal enterprises) is a Stooge, any more than it implies that all those who do not have such “connections” can be trusted. Indeed, a recent commentary borrows heavily from the insights of a former “Wall Street insider”. However, as a simple function of logic/arithmetic (and money); obviously most of those individuals who have such previous affiliations and operate either wholly or partially in the Alternative Media are Stooges of the One Bank.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>The only subject open to rational debate here is percentages. Is 50% of everything which is distributed in the Alternative Media disinformation/propaganda of one form or another, or is it 90%?</p> <p>&nbsp;</p> <p>The other notation to make here is that it would be both unfair and impractical to assign all blame/responsibility to those (honest and sincere) individuals operating Alternative Media sites, whether it’s content they produce themselves, or collect-and-distribute from other sources/sites. This caveat is a function of two realities.</p> <p>&nbsp;</p> <p>First (and foremost), unlike the bankers; those in the Alternative Media rarely (if ever) attempt to portray themselves as being either omniscient or infallible. Being sincere/honest does not equate to always being correct. The second “reality” of relevance is that especially with sites which distribute a large volume of information, no one possesses a Perfect Filter.</p> <p>&nbsp;</p> <p>Particular “information” or “sources” which seemed plausible/reliable/legitimate even in the recent past can suddenly cast a much different aura when viewed through the prism of Hindsight. This means two things for those viewing/consuming material from sources in the Alternative Media.</p> <p><img src="" alt="buyer-beware" width="428" height="323" class="aligncenter size-full wp-image-10009" /></p> <p>Clearly, the ancient warning, caveat emptor applies: “let the buyer beware”. In turn; this implies that much of the responsibility for separating fact-from-fiction (disinformation from reality) rests with you.</p> <p>&nbsp;</p> <p>As consumers of information; we would never ‘swallow’ any article/editorial/interview from a mainstream media source without subjecting it to close analytical scrutiny – at least we never should be so intellectually passive. The key point to make in presenting this analysis to readers is that we must apply the same degree of logical/analytical scrutiny to all that we consume from the Alternative Media as well.</p> <p>&nbsp;</p> <p>It does us little good to shun the mainstream propaganda machine and embrace the Alternative Media if we then indiscriminately consume large quantities of lies and half-truths produced by the same crime syndicatewhich owns/operates the Corporate media. While it can be very difficult to spot/identify many of these disinformation Stooges; there are a couple of indicators which will almost always show up with such individuals.</p> <p>&nbsp;</p> <p>a) They defend some of the principal Actors of the corrupt, status quo, generally either politicians or central bankers. They do so by either suggesting that these corrupt traitors are “doing their best”, or they attempt to “explain” their actions – from the perspective of the Establishment itself.</p> <p>&nbsp;</p> <p>b) They treat one or more of the fantasy “statistics” manufactured by our puppet governments (and broadcast by the mainstream media) as being real numbers. The most-obvious giveaway is when these Stooges quote either the phony/ridiculous inflation or GDP numbers, and attempt to portray them as fact.</p> <p>&nbsp;</p> <p>It must be stressed that many of these wolves-in-sheep’s-clothing are very convincing. They should be. In recruiting these Stooges; the One Bank is able to choose from the best-of-the-best when it comes to convincing, serial liars: its own employees.</p> <p>&nbsp;</p> <p>They seduce us, by agreeing that economic conditions are “very bad”, and agreeing that the politicians and bankers have done “very bad” things. But almost never do they suggest or imply that our current, corrupt institutions should be dismantled. Simply elect a new government, or appoint a new central banker – but keep the current system in place.</p> <p>&nbsp;</p> <p>Just as the Old World Order makes it increasingly difficult for us to simply to live our lives (as our civil liberties and standard of living are steadily eroded), so too is it making it increasingly difficult for us to learn and decipher the Truth. “The Truth is out there”, but finding it (even from within the Alternative Media) becomes more and more like the proverbial hunt for a needle in a haystack.</p> <p><span style="text-decoration: underline;"><em><strong><a href="">Jeff Nielson for Sprott Money</a></strong></em></span></p> B+ None PrISM Reality Mon, 24 Nov 2014 14:55:57 +0000 Sprott Money 498203 at Service PMI Misses, Tumbles To 7-Month Lows, "Extreme Weather" Warning For GDP Issued <p><a href="">On the heels of the biggest miss on record for US Manufacturing PMI</a> (which corresponded un-decoupling-ly with disappointing European and Chinese Manufacturing PMIs), Markit's <strong>Services PMI printed 56.3, missing 57.3 expectations and notably down from October's 57.1 to 7 month lows</strong>. As Markit notes, the index has now pointed to <strong>softer growth of business activity in each of the past five months</strong>, to signal a sustained loss of momentum since the post-crisis peak seen in June. What is even more worrying...&nbsp; Markit points out that <span style="text-decoration: underline;">the economic upturn has lost considerable momentum, and with extreme weather hitting parts of the country, growth could slow even further</span>.</p> <p>&nbsp;</p> <p>Services PMI ugly...</p> <p><a href=""><img src="" width="600" height="316" /></a></p> <p>&nbsp;</p> <p>Which when added to the Manufacturing PMI suggests 2.5% GDP growth at best...</p> <p><a href=""><img src="" width="575" height="455" /></a></p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>The entire soft-survey-based pop in H1 2014 has now been undone!</strong></span></p> <p>*&nbsp; *&nbsp; *</p> <p><a href=";sa=D&amp;sntz=1&amp;usg=AFQjCNFARKDNfq_06GfIbJ3n5ul8kAOJgw">Commenting on the flash PMI data, Chris Williamson, chief economist at Markit said:</a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“A fifth-consecutive monthly slowing in growth in the service sector adds to signs that the economic upturn has lost considerable momentum,</strong> though it’s important to note that the pace of expansion remains robust by historical standards</p> <p>&nbsp;</p> <p>“After the manufacturing PMI showed factory output growth slowing in November to the lowest since January, the weaker pace of service sector expansion <strong>puts the economy on course to grow at a 2.5% annualised rate at best in the fourth quarter. </strong>With extreme weather hitting parts of the country, growth could slow even further.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p><strong>“The worry is that any hiring intentions could rapidly deteriorate if firms’ order book inflows fail to pick up again soon.”</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>We're gonna need a bigger QE</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="952" height="501" alt="" src="" /> </div> </div> </div> Fail Markit Mon, 24 Nov 2014 14:53:25 +0000 Tyler Durden 498202 at ISIS' First Administration Casualty: Chuck Hagel Resigns Under Pressure From Obama <p><em>It appears some folks might be scapegoated...</em> <a href=";_r=0">As NY Times reports,</a> <strong>Defense Secretary Chuck Hagel is stepping down, under presssure</strong>. President Obama made the decision to ask his defense secretary — the sole Republican on his national security team — to step down last Friday, as a recognition that the threat from the Islamic State would require a different kind of skills than those that Mr. Hagel has, and that <strong>his team has struggled to stay ahead of an onslaught of global crises</strong>.</p> <p><a href=";_r=0"><em>As NY Times reports,</em></a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Defense Secretary Chuck Hagel is stepping down under pressure,</strong> the first cabinet-level casualty of the collapse of President Obama’s Democratic majority in the Senate and a beleaguered national security team that has struggled to stay ahead of an onslaught of global crises.</p> <p>&nbsp;</p> <p>The president, who is expected to announce Mr. Hagel’s resignation in a Rose Garden appearance on Monday, made the decision to ask his defense secretary — the sole Republican on his national security team — to step down last Friday after a series of meetings over the past two weeks, senior administration officials said.</p> <p>&nbsp;</p> <p><strong>The officials described Mr. Obama’s decision to remove Mr. Hagel, 68, as a recognition that the threat from the Islamic State would require a different kind of skills than those that Mr. Hagel was brought on to employ.</strong></p> <p>&nbsp;</p> <p>In his less than two years on the job, Mr. Hagel’s detractors said he <strong>struggled to inspire confidence at the Pentagon in the manner of his predecessors, especially Robert Gates</strong>. But several of Mr. Obama’s top advisers have over the past months also acknowledged privately that the president did not want another high-profile defense secretary in the manner of Mr. Gates, who went on to write a memoir of his years with Mr. Obama in which he sharply criticized the president. Mr. Hagel, they said, in many ways, was exactly the kind of Defense Secretary which the president, after battling the military during his first term, wanted.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p><strong>He raised the ire of the White House in August as the administration was ramping up its strategy to fight the Islamic State, directly contradicting the president,</strong> who months before had likened the Sunni militant group to a junior varsity basketball squad. Mr. Hagel, facing reporters in his now-familiar role next to General Dempsey, called the Islamic State an “imminent threat to every interest we have,” adding, “This is beyond anything that we’ve seen.” <strong>White House officials later said they viewed those comments as unhelpful, although the administration still appears to be struggling to define just how large is the threat posed by the Islamic State.</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *</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="460" height="473" alt="" src="" /> </div> </div> </div> national security President Obama Robert Gates White House Mon, 24 Nov 2014 14:24:17 +0000 Tyler Durden 498201 at The Mystery Of America's "Schrodinger" Middle Class, Which Is Either Thriving Or About To Go Extinct <p>On one hand, the US middle class has rarely if ever had it worse. At least, if one actually dares to venture into this thing called the real world, and/or believes the NYT's report: "<a href="">Falling Wages at Factories Squeeze the Middle Class</a>." Some excerpts:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>For nearly 20 years, Darrell Eberhardt worked in an Ohio factory putting together wheelchairs, earning $18.50 an hour, enough to gain a toehold in the middle class and feel respected at work. <strong>He is still working with his hands, assembling seats for Chevrolet Cruze cars at the Camaco auto parts factory in Lorain, Ohio, but now he makes $10.50 an hour and is barely hanging on. “I’d like to earn more,” </strong>said Mr. Eberhardt, who is 49 and went back to school a few years ago to earn an associate’s degree. “<strong>But the chances of finding something like I used to have are slim to none.”</strong> </p> <p>&nbsp;</p> <p>Even as the White House and leaders on Capitol Hill and in Fortune 500 boardrooms all agree that expanding the country’s manufacturing base is a key to prosperity, evidence is growing that the pay of many blue-collar jobs is shrinking to the point where they can no longer support a middle-class life.</p> </blockquote> <p>In short: America's manufacturing sector is being obliterated: "A new study by the National Employment Law Project, to be released on Friday, <strong>reveals that many factory jobs nowadays pay far less than what workers in almost identical positions earned in the past.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Perhaps even more significant, while the typical production job in the manufacturing sector paid more than the private sector average in the 1980s, 1990s and early 2000s, that relationship flipped in 2007, and line work in factories now pays less than the typical private sector job. That gap has been widening — in 2013, production jobs paid an average of $19.29 an hour, compared with $20.13 for all private sector positions. </p> <p>&nbsp;</p> <p>Pressured by temporary hiring practices and a sharp decrease in salaries in the auto parts sector, <strong>real wages for manufacturing workers fell by 4.4 percent from 2003 to 2013, NELP researchers found, nearly three times the decline for workers as a whole.</strong></p> </blockquote> <p><a href=""><img src="" width="334" height="432" /></a></p> <p>How is this possible: aren't post-bankruptcy GM, and Ford, now widely touted as a symbol of the New Normal American manufacturing renaissance? Well yes. But there is a problem: recall what we wrote in December 2010: '<a href="">Charting America's Transformation To A Part-Time Worker Society</a>:"</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>one of the most important reasons for lower pay is the increased use of temporary workers. Some manufacturers have turned to staffing agencies for hiring rather than employing workers directly on their own payroll. For the first half of 2014, these agencies supplied one out of seven workers employed by auto parts manufacturers. </p> <p>&nbsp;</p> <p>The increased use of these lower-paid workers, particularly on the assembly line, not only eats into the number of industry jobs available, but also has a ripple effect on full-time, regular workers. <strong>Even veteran full-time auto parts workers who have managed to work their way up the assembly-line chain of command have eked out only modest gains.</strong></p> </blockquote> <p>All of this should come as no surprise: we have covered the gutting of America's middle-class, and certainly the manufacturing sector, in the past. </p> <p>What is however, quite amusing, if not shocking, is that just as the NYT was confirming what we have said for <strong>four</strong> years, <a href="">Bloomberg came </a>out with a piece extolling the renaissance that America's 99%-ers are supposedly enjoying. To wit:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Lower-wage workers saw bigger pay gains over the past year than the highest earners, reversing the trend from earlier stages of the recovery. While the improvement is nascent and minimal, the plunge in fuel prices is magnifying the effects. </strong></p> <p>&nbsp;</p> <p><strong>Fatter paychecks bode well for economic growth as families at the lower end of the wage scale are more likely to spend extra cash than their wealthier counterparts, who tend to squirrel some of it away</strong>. That means the luxury categories such as private jets that dominated sales last year are giving way to the more mundane, including televisions and restaurant meals.</p> </blockquote> <p>Really? America's middle class is earning more? Well, yes.... based on research by RBS and Goldman:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“For the first time, real paychecks of households in the middle class are not getting smaller anymore -- they’re getting incrementally bigger,” said Guy Berger, a U.S. economist at RBS Securities in Stamford, Connecticut. “This puts a little more strength behind consumer spending because you’re not very dependent on a small core of very wealthy households to power the recovery.”</p> <p>&nbsp;</p> <p>Total income for those making less than $12.50 an hour climbed 3.8 percent in the year through October based on a three-month average adjusted for inflation, according to a Nov. 13 report by Goldman Sachs economists. The gain, which takes into account hourly wages, the length of the workweek and employment, exceeded that by any other group and compared with a 2.5 percent increase for those making $45 an hour or more.</p> </blockquote> <p>Their bottom line: "The advance among the lowest earners was paced mainly by a pickup in hourly wages, while those at the upper end benefited more from a longer workweek, the report showed." See, on paper everyone is benefiting, just ignore the reality, <a href="">which is this</a>:</p> <p><a href=""><img src="" width="600" height="509" /></a></p> <p><a href=""><img src="" width="600" height="374" /></a></p> <p>&nbsp;</p> <p>And then there is of <a href="">course this</a>:</p> <p><a href=""><img src="" width="600" height="444" /></a></p> <p>What else does Bloomberg use to say the pain for the middle class if over:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Sentiment surveys are reflecting the improvement. Americans making from $15,000 to $25,000 a year have experienced <strong>the biggest jump in confidence in 2014 so far, according to data from the Conference Board, a New York-based research group. </strong>Those making more than $125,000 led the pack in 2013. </p> <p>&nbsp;</p> <p>More jobs and cheaper gasoline are probably playing a role in lifting the average worker’s spirit. The unemployment rate dropped to a six-year low of 5.8 percent in October and payrolls are on track for their biggest gain since 1999, according to Labor Department data. Carpenter is among those benefiting. With a 25 minute drive to work each way, she was spending about $40 every week at the service station, she said. The drop in fuel prices has cut that to about $25 or $30. Combined with the raises, that means “I’ll actually be able to buy a little something this year” for the holidays, Carpenter said. “Last year I couldn’t.”<br />...</p> <p>&nbsp;</p> <p>Stronger wage and salary growth is “essential to the macro outlook,” said Ellen Zentner, a senior economist at Morgan Stanley in New York. “You’ll get a more balanced consumer with spending across more income groups.”</p> </blockquote> <p>Of course, there isn't any <em><strong>actual </strong></em>wage growth. There is a drop in gasoline prices, an increase in low-paying temp workers, a surge in waiters... and of course the all-important aspect of the "recovery" - <em><strong><a href="">hope</a>,</strong></em> if only for what little is actually left of America's middle class.</p> <p><a href=""><img src="" width="600" height="409" /></a></p> <p>So for all those - not in the 1% - who find solace that a Goldman spreadsheet says that are now earning more. Great. For everyone else, we go back to the words of Darrell Eberhart: <strong>"I’d like to earn more,</strong>” said Mr. Eberhardt, who is 49 and went back to school a few years ago to earn an associate’s degree. “<strong>But the chances of finding something like I used to have are slim to none."</strong></p> <p>In retrospect, there really isn't much of a mystery behind America's "Schrodinger" middle class; there is however a mystery as to who pays to collapse the wave-function of reality, allowing such propaganda puff pieces, which in the vein of Obamacare, seem to rely on one thing and one thing only: the "stupidity" of the American voter.</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="865" height="923" alt="" src="" /> </div> </div> </div> Conference Board Ford Goldman Sachs goldman sachs Morgan Stanley New Normal None Obamacare Ohio RBS Reality recovery Renaissance Unemployment White House Mon, 24 Nov 2014 14:05:44 +0000 Tyler Durden 498200 at 122 Tonnes of Gold Secretly Repatriated to Netherlands <p><a href=""><strong>122 Tonnes of Gold Secretly Repatriated to Netherlands</strong></a></p> <p>The Dutch central bank said Friday it is repatriating some of its gold reserves from the U.S., making it the latest central bank in Europe to address public concerns about the safety of its gold in the wake of the eurozone debt crisis.</p> <p><a href=""><img src="" /></a><br /> As the debate regarding whether or not Switzerland should keep the bulk of its gold reserves at home on Swiss soil reaches it's climax - the referendum takes place on Sunday - it is telling that the Dutch announced on Friday that they have just secretly repatriated 122 tonnes of their sovereign gold reserves from New York back to Amsterdam.</p> <p>The gold, worth $5 billion at today's prices, represents 20% of the Netherlands total reserves. It now keeps 31% of its reserves in Amsterdam. Another 31% is believed to be in New York, with the remainder spread between Ottawa and London - the same locations where the bulk of Swiss gold is purported to be stored.&nbsp;</p> <p>The trend towards gold repatriation began with Hugo Chavez bringing Venezuelan gold back to Caracas in 2011. &nbsp;It has been followed by similar moves &nbsp;by other large gold owning nations and central banks, most notably, Germany.</p> <p>The repatriation movement has been driven by suspicion that the Federal Reserve and other central banks may have leased or sold gold it was holding on behalf of other countries to bullion banks and that this gold may have been used in order to suppress the price of gold in recent years.</p> <p>Bizarrely, the Federal Reserve’s gold holdings have not been audited in over 50 years.&nbsp;</p> <p>The last audit, and the last public visit, was in 1953, just after U.S. President Dwight Eisenhower took office. No outside experts were allowed during that audit, and the audit team tested only about 5% of gold there. So, there hasn’t been a comprehensive audit of Fort Knox in over 60 years.</p> <p><a href=""><img src="" /></a></p> <p>Demands for gold repatriation also accelerated after the Lehman collapse and during the global financial crisis due to concerns that if the U.S. and world suffered a systemic collapse or a dollar crisis , nations may find it hard to secure their gold reserves.&nbsp;</p> <p>The concern was that a desperate Fed could nationalise international gold reserves in order to prevent a dollar collapse or to rebuild confidence in the dollar after a currency crisis.</p> <p>It is interesting to note that while some western economists, such as Paul Krugman, continue to denigrate gold, western central banks, do not appear to view gold as a "barbarous relic." Nor do their eastern counterparts and their Chinese counterparts many of whom have been quietly reducing their dollar, euro and pound foreign exchange reserves and adding to their gold reserves in recent years.</p> <p>The Dutch Central Bank went so far as to state that the action was designed to install public confidence in the ability of the central bank to manage crises. The prospect of further shipments from the U.S. remains open as they are keeping the logistical details secret.&nbsp;</p> <p>Questions are already being asked about how the Dutch were able to repatriate such a sizeable volume of gold when Germany's request was brushed aside. It may be that by taking a discreet approach the Dutch allowed the Federal Reserve room to manoeuvre - allowing them to harvest the metal from the open market. Skeptical analysts have suggested that the fall in the ETF gold holdings may have come in handy for the New York Federal Reserve.</p> <p>Questions are also being asked about the faith of the Ukrainian gold reserves after the gold disappeared from the Ukraine’s central bank soon after the U.S. sponsored coup brought the new government to power.</p> <p>The Dutch clearly view gold favourably as an important monetary asset and they also have demonstrated their belief that owning gold in a secure manner is of utmost importance.&nbsp;</p> <p>Although the German Central Bank has stated that it trusts the Americans as custodians of it's gold reserves - despite being denied access to vaults in New York to view their own gold - the campaign for repatriation of Germany’s gold remains strong.</p> <p>Whether the Swiss gold initiative passes or fails this weekend it is still worth noting that a very large minority of Swiss are very conscious of the role that gold plays particularly in times of crisis.&nbsp;</p> <p> During the reformation in Europe it was in these three countries - Germany, Switzerland and the Netherlands - that independent thought flourished. Populations globally have been “dumbed down” in recent years but these nations still have a high level of public discourse and debate and the importance of prudence, saving, thrift and gold remains understood by many.</p> <p>We believe that other central banks may have already quietly sought or indeed will seek repatriation of their gold from &nbsp;New York, Ottawa and London. This has the potential to create a short squeeze as central banks may be forced to enter the market to acquire the physical bullion that they thought they already owned.</p> <p>If these custodians are not in possession of the gold they claim to hold they, too, will be forced to buy gold on the open market where supply is now extremely tight as seen in gold remaining in backwardation.</p> <p>We believe, like the Dutch, that only gold bullion in your possession or <a href=""><span style="text-decoration: underline;">allocated gold</span></a> stored in secure locations such as Singapore, Hong Kong and Zurich can be viewed as a safe-haven asset.</p> <p><strong>Get Breaking News and Updates On Gold Markets <em><a href=""><span style="text-decoration: underline;">Here</span></a></em></strong></p> <p>&nbsp;</p> <p><strong>MARKET UPDATE</strong><br /> Today’s AM fix was USD 1,196.00, EUR 964.67 and GBP 764.51 per ounce.<br /> Friday’s AM fix was USD 1,193.25, EUR 958.59 and GBP 761.54 &nbsp;per ounce.</p> <p><a href=""><span style="text-decoration: underline;">Gold prices</span></a> were 1% higher last week. Gold and silver rose to three week highs Friday after China cut benchmark interest rates to support economic growth, leading to demand for precious metals as a store of value.<br /> <a href=""><img src="" /></a></p> <p><em><strong>Gold in USD - 5 Days (Thomson Reuters)</strong></em></p> <p>China's rate cut on Friday aligns them with the European Central Bank and Bank of Japan in deploying fresh stimulus and QE as ultra loose monetary policies continue globally.<br /> Russia added to gold reserves in October, bringing holdings to the highest in at least two decades, IMF data showed last week and as announced by the Russian central bank governor (see <a href=""><span style="text-decoration: underline;">here</span></a>).</p> <p>Gold has climbed 6% after touching a four-year low on November 7 amid increased demand for coins and jewelry, combined with signs that nations are boosting reserves. Central banks may raise purchases by as much as 22 percent in 2014, the World Gold Council estimates.</p> <p><a href=""><img src="" /></a><br /> <em><strong>Gold in USD - 2 Years (Thomson Reuters)</strong></em></p> <p>The net-long position in gold rose by 21,634 contracts to 60,307 futures and options in the week ended November 18, according to U.S. Commodity Futures Trading Commission (CFTC) data published three days later. Short wagers fell to 65,405 contracts, the least since September 9.</p> <p>Gold rose 70% from December 2008 to June 2011 as central banks increased quantitative easing on a massive scale and currencies internationally were debased. The precious metal fell 28% in 2013, the most in three decades, after sharp and severe selling in the futures market, often during less liquid markets overnight in Asia, led to price falls.</p> <p>Switzerland holds its referendum on the Swiss Gold Initiative this Sunday (Nov. 30). If passed it would &nbsp;to require the Swiss National Bank to hold at least 20% of its assets in gold, up from about 8%.</p> <p>Opinion polls suggest the no side will win but many opinion polls have been badly wrong in recent years. Voter discontent with the political establishment is likely to make the referendum tighter than is expected. A yes vote would surprise the market and lead to fireworks in the gold market Sunday night, Monday and next week.</p> <p>See Essential Guide to &nbsp;Storing Gold and Silver In Switzerland&nbsp;<em><a href="">Here</a></em></p> <p><a href=""></a></p> Backwardation Bank of Japan Central Banks China Commodity Futures Trading Commission European Central Bank Eurozone Federal Reserve Futures market Germany Hong Kong Japan Krugman Lehman Netherlands Paul Krugman Precious Metals Quantitative Easing Reuters Swiss National Bank Switzerland World Gold Council Zurich Mon, 24 Nov 2014 13:53:02 +0000 GoldCore 498199 at Iran Nuclear Talks Extended 7 Months; $700 Million In Monthly Sanctions Lifted <p><a href="">In what is hardly a surprising outcome, </a>the parties involved in the Iran nuclear talks have decided it best for all to extend (and pretend) the discussion for another 7 months:</p> <ul> <li><strong>*IRAN NUCLEAR TALKS EXTENDED UNTIL JULY 1, OFFICIALS SAY</strong></li> </ul> <p>Diplomatic teams will reconvene in December and the US State Department is proclaiming <strong><em>"good progress"</em></strong> in a brief statement. 7 more months of sanctions, a call with Putin today, and OPEC later in the week... one wonders if any of this will be relevant in 7 months. Additionally, <strong>it seems beggars can be choosers as P5+1 says Iran can get $700 million per month in frozen assets back</strong>...</p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="397" /></a></p> <p>&nbsp;</p> <p><em><a href="">As CNN reports</a>,</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>One of the primary sticking points in this round of talks has been how to lift sanctions against Iran.</strong></p> <p>&nbsp;</p> <p>Hardliners in Iran have insisted that significant sanctions be lifted right away as a sign of good faith from the P5+1 countries. Such penalties, including banking and energy sanctions, would affect tens of billions of dollars.</p> <p>&nbsp;</p> <p><strong>Earlier this month, 200 Iranian members of parliament signed a statement demanding that Iranian negotiators "vigorously defend" the country's nuclear rights and ensure a "total lifting of sanctions."</strong></p> <p>&nbsp;</p> <p>But P5+1 members have said they'd prefer to lift the sanctions incrementally so they can have leverage on Iran and to make sure Tehran makes good on its commitments to whatever deal is reached.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p><strong>Reaching a deal by the deadline "would be impossible" based on the differences that remain between negotiators</strong>, the Iranian Students' News Agency reported Sunday, citing an unidentified Iranian official involved in the talks.</p> <p>&nbsp;</p> <p>Before Monday's extension of talks, a U.S. State Department official said negotiators had<strong> been "chipping away" at the issues.</strong></p> <p>&nbsp;</p> <p>"The focus of discussions remains on an agreement, but we are discussing both internally and with our partners a range of options for the best path forward," the official said.</p> <p>&nbsp;</p> <p><strong>This isn't the first time negotiations over Iran's nuclear program have been extended. The previous deadline had been pushed back four months, to this round of talks.</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>It seems, once again, beggars can be choosers and consequences are a thing of the past anyway...</p> <ul> <li><strong>*IRAN TO GET $700M IN FROZEN ASSETS PER MONTH, U.K. SAYS: AFP</strong></li> <li><strong>*IRAN SAYS TO RECEIVE $700 MLN/MONTH UNDER EXTENSION</strong>: Lavrov</li> </ul> <p>So deal extended, no benefits for West... but you can have some of your funds back... <em>*as long as you keep pressuring OPEC to keep oil prices low (but not too low)</em></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="680" height="450" alt="" src="" /> </div> </div> </div> Iran OPEC Mon, 24 Nov 2014 13:32:45 +0000 Tyler Durden 498198 at Central Banks: When We Succeed, We Fail <p><em>Submitted by <a href="">Charles Hugh-Smith of OfTwoMinds blog</a>,</em></p> <p><span><i>Goosing stocks ever higher will eventually push wealth inequality to the point that it unleashes social instability.</i></span></p> <div><b><span>Central banks around the world share a few simple goals:</span></b><br />&nbsp;</div> <div><span>1. Defeat deflation by sparking inflation--in the cost of goods and services, not wages.</span><br />&nbsp;</div> <div><span>2. Weaken the currency to boost exports and counter&nbsp;<i>beggar thy neighbor</i>&nbsp;devaluations by other exporting nations and trading blocs.</span><br />&nbsp;</div> <p><span>3. Boost the value of stocks to keep pension plans afloat and project a politically powerful message of &quot;growth&quot; and &quot;prosperity.&quot;</span></p> <p>&nbsp;</p> <div><b><span>What no central bank dares say is what happens should they manage to boost inflation, devalue their currency and continue pushing assets higher: when we succeed, we fail.</span></b><br />&nbsp;</div> <div><span>Consider the consequences of juicing inflation: every click up in inflation further reduces the purchasing power of wages, which do not keep up with inflation in a world of labor surplus.</span><br />&nbsp;</div> <div><span><b>When central banks succeed in jacking up inflation, they will fail the households and enterprises whose income is stagnating or declining:</b>Were European Central Bank head Mario Draghi honest, here is what he would say:</span><br />&nbsp;</div> <div><span><img align="middle" border="0" src="" /></span></div> <div><span><b>Devaluing one&#39;s currency is another way of pushing down the purchasing power of households&#39; income and savings.</b>&nbsp;Were Bank of Japan head Haruhiko Kuroda honest, here is what he would say:</span><br />&nbsp;</div> <div><span><img align="middle" border="0" src="" /></span></div> <div><span><b>Goosing stocks ever higher will eventually push wealth inequality to the point that it unleashes social instability.</b>&nbsp;Were Federal Reserve chair Janet Yellen honest, here is what she would say:</span><br />&nbsp;</div> <div><span><img align="middle" border="0" src="" /></span></div> <p><span><b>Should central banks succeed in jacking up inflation, devaluing the purchasing power of fiat currencies and pushing stocks to the moon, they will have failed their citizenry.</b>&nbsp;Should they succeed in reaching their goals, they will trigger catastrophic instability.</span></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="315" height="226" alt="" src="" /> </div> </div> </div> Bank of Japan Central Banks European Central Bank Fail Federal Reserve Janet Yellen Japan Purchasing Power Mon, 24 Nov 2014 13:15:20 +0000 Tyler Durden 498197 at Brent Plunge To $60 If OPEC Fails To Cut, Junk Bond Rout, Default Cycle, "Profit Recession" To Follow <p>While OPEC has been mostly irrelevant in the past 5 years as a result of Saudi Arabia's recurring cartel-busting moves, which have seen the oil exporter frequently align with the US instead of with its OPEC "peers", and thanks to central banks flooding the market with liquidity helping crude prices remain high regardless of where actual global spot or future demand was, this Thanksgiving traders will be periodically resurfacing from a Tryptophan coma and refreshing their favorite headline news service for updates from Vienna, <strong>where a failure by OPEC to implement a significant output cut could send oil prices could plunging to $60 a barrel </strong><a href="">according to Reuters citing </a>"market players" say. </p> <p>By way of background, the key reason OPEC is struggling to remain relevant is because, as the <a href="">FT reported </a>over the weekend, "US imports of crude oil from Opec nations are at their lowest level in almost 30 years, underlining the impact of the shale revolution on global trade flows. The lower dependence on imports from the cartel, which pumps a third of the world’s crude, comes amid advances in hydraulic fracturing that has propelled domestic US production to about 9m barrels a day – the highest level since the mid-1980s."</p> <p>The US "shale miracle" is best seen on the following chart showing the total output of the US compared to perennial crude powerhouse, Saudi Arabia:</p> <p><a href=""><img src="" width="500" height="948" /></a></p> <p>It is this shale threat that has become the dominant concern for OPEC, far beyond whatever current US national interest are vis-a-vis Ukraine, and Russia's sovereign oil revenues, and as <a href="">reported previously</a>, Brent has to drop below to $75 or lower for US shale player to one by one start going offline. </p> <p><a href=""><img src="" width="501" height="495" /></a></p> <p>&nbsp;</p> <p>Unfortunately, it may bee too little too late for the splintered cartel. As <a href="">Bloomberg reports</a>, "the days when OPEC members could all but guarantee consensus when deciding production levels for oil are long gone, according to a veteran of almost two decades of the group’s meetings."</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The global glut of crude, which has contributed to a 30 percent decline in prices since June 19, has left the Organization of Petroleum Exporting Countries disunited and dependent on non-members to shore up the market, said former Qatari Oil Minister Abdullah Bin Hamad Al Attiyah. The 12-member group is set to meet in Vienna on Nov. 27. </p> <p>&nbsp;</p> <p>“OPEC can’t balance the market alone,” Al Attiyah, who participated in the group’s policy meetings from 1992 to 2011, said in a Nov. 19 phone interview. “<strong>This time, Russia, Norway and Mexico must all come to the table. </strong>OPEC can make a cut, but what will happen is that non-OPEC supply will continue to grow. Then what will the market do?” </p> <p>... </p> <p>&nbsp;</p> <p>“OPEC had been enjoying easy meetings, and decisions were taken without a sweat,” Al Attiyah said. “Now the situation is different.” </p> <p>&nbsp;</p> <p>Oil markets are oversupplied by about 2 million barrels a day, and global economic growth is below expectations, he said. “<strong>The U.S., which was a major market for OPEC, is no longer welcoming imports. </strong>It’s now striving to become an oil exporter. It’s already exporting condensates.”</p> </blockquote> <p>So if OPEC is unable to reach an agreement, what is the worst case? <a href="">Back to Reuters</a>, which says that "The market would question the credibility of OPEC and its influence on global oil markets if there was no cut," said Daniel Bathe, of Lupus alpha Commodity Invest Fund. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>That could send Brent down to around $60, Bathe said. </strong></p> <p>&nbsp;</p> <p>"Herding behavior and a shift to net negative speculative positions should accelerate the price plunge," he added. </p> <p>&nbsp;</p> <p>Fund managers are divided over whether OPEC will reach an agreement on cutting output. Bathe put the likelihood at no more than 50 percent. </p> <p>&nbsp;</p> <p>The oil price has been falling since the summer due to abundant supply -- partly from U.S. shale oil -- and low demand growth, particularly in Europe and Asia. </p> <p>&nbsp;</p> <p>As a result, some investors believe a small cut -- of around 500,000 bpd -- would not be enough to calm the markets. </p> <p>&nbsp;</p> <p><strong>If OPEC fails to agree a cut, prices will drop "further and quite quickly", with U.S. crude possibly sliding to $60, he said. U.S. crude closed at $76.51 on Friday, with Brent just above $80.</strong></p> </blockquote> <p>It's not all downside: there is a chance that OPEC will agree on a 1 million barrel or more cut, which would actually send prices higher:</p> <p>"The market really wants to see that OPEC is still functioning ... if there is a small cut, with an accompanying statement of coherence from OPEC that presents&nbsp; a united front, and talks about seeing demand recovery, and some moderation of supply growth, then Brent could move up to $80-$90."&nbsp; "Prices below $80 are putting significant strain on the cartel's weakest members such as Venezuela," said Nicolas Robin, a commodities fund manager at Threadneedle. He said a bigger cut -- of 1 million bpd or more -- was an "outlier scenario", but such a move would rapidly push prices above $85.</p> <p>Then again, even thay may be insufficient if the market prices in an ongoing deterioration in global end-demand: <strong>"Doug King, chief investment officer of RCMA Capital, sees Brent falling to $70, even with a cut of 1 million bpd.</strong>"</p> <p>So in a worst case scenario, where Brent does indeed tumble to $60, what happens? We already know the answer, as it was presented in "<a href="">If WTI Drops To $60, It Will "Trigger A Broader HY Market Default Cycle", Says Deutsche</a>":</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>... it is not just the shale companies that are starting to look impaired. According to a Deutsche Bank analysis looking at what the "tipping point" for highly levered companies is in "oil price terms", things start to get really ugly should crude drop another $15 or so per barrell. Its conclusion: "<strong>we would expect to see 1/3rd of US energy Bs/CCCs to restructure, which would imply a 15% default rate for overall US HY energy, and a 2.5% contribution to the broad US HY default rate.... A shock of that magnitude could be sufficient to trigger a&nbsp; broader HY market default cycle, if materialized</strong>. "</p> </blockquote> <p>This explains why the HY space has been far less exuberant in recent weeks, and the correlation between HY and the S&amp;P 500 has completely broken down. </p> <p>&nbsp;</p> <p><img src="" width="509" height="480" /></p> <p>Finally it is not just the junk bond sector that is poised for a rout should there be no meaningful supply cuts later this week: recall that in another note over the weekend, DB said that should crude prices take another leg lower, then the most likely next outcome is a Profit recession, which while left unsaid, will almost certainly assure a full-blown, economic one as well.</p> <p><a href=""><img src="" width="501" height="408" /></a></p> <p>So keep an eye on Vienna this Thanksgiving: the black swan may just be coated with an layer of crude oil this year.</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="375" height="300" alt="" src="" /> </div> </div> </div> Black Swan Bond Central Banks Crude Crude Oil default Default Rate Deutsche Bank Mexico Norway OPEC Recession recovery Reuters Saudi Arabia Ukraine Mon, 24 Nov 2014 13:01:01 +0000 Tyler Durden 498196 at Frontrunning: November 24 <ul> <li>Grand jury expected to resume Ferguson police shooting deliberations (<a href="">Reuters</a>)</li> <li>PBOC Bounce Seen Short Lived as History Defies Bulls (<a href="">BBG</a>)</li> <li>Home prices dropped in September for the first time since January (<a href="">HousingWire</a>)</li> <li>UPS Teaches Holiday Recruits to Fend Off Dogs, Dodge NYC Taxis (<a href="">BBG</a>)</li> <li>US oil imports from Opec at 30-year low (<a href="">FT</a>)</li> <li>Hedge Funds Bet on Coal-Mining Failures (<a href="">WSJ</a>)</li> <li>Putin Woos Pakistan as Cold War Friend India Buys U.S. Arms (<a href="">BBG</a>)</li> <li>How the EU Plans to Turn $26 Billion Into $390 Billion (<a href="">BBG</a>)</li> <li>The $31 Billion Bet Against Brazil’s New Finance Minister (<a href="">BBG</a>)</li> <li>Flooding could follow heavy snow in western New York (<a href="">Reuters</a>)</li> <li>LendingClub’s IPO Looms Large Over Alternative-Lending Market (<a href="">BBG</a>)</li> <li>Year-Old Yik Yak Draws Hundred Millions of Dollars in Valuation (<a href="">WSJ</a>)</li> <li>Bad News Mounts for Chinese Banks. Funds Grow More Bullish (<a href="">BBG</a>)</li> <li>China building South China Sea island big enough for airstrip (<a href="">Reuters</a>)</li> <li>The $400 Billion Bond Mismatch Keeping Bears at Bay Endures (<a href="">BBG</a>)</li> <li>Swiss Museum to Accept Art Trove, Return Nazi-Looted Work (<a href="">BBG</a>)</li> <li>Obama to Republican critics on immigration: 'Pass a bill' (<a href="">Reuters</a>)</li> <li>AIG Case May Turn on Nonstar Witnesses (<a href="">WSJ</a>)</li> <li>Germany to drop probe into US spying on Merkel (<a href="">AFP</a>)</li> <li>Abe’s ‘risky’ election gambit may backfire, U.S. expert claims (<a href="">Japan Times</a>)</li> </ul> <p>&nbsp;</p> <p><strong>Overnight Media Digest</strong></p> <p><em><span style="text-decoration: underline;">WSJ</span></em></p> <p>* Hedge funds are betting that some of the largest U.S. coal companies are heading for the financial slag heap. Walter Energy is a particular favorite of distressed-debt investors, including Apollo Global Management LLC, Brigade Capital Management LP, Caspian Capital Management and Knighthead Capital Management LLC, people familiar with the matter said. (<a href="" title=""></a>)</p> <p>* Samsung Electronics Co is considering a major leadership shake-up, according to people familiar with the matter, part of an attempt to revive its fortunes after a difficult year that has hurt its profitability, market share and stock price. (<a href="" title=""></a>)</p> <p>* Yik Yak, the controversial anonymous-messaging app that has spread rapidly across college campuses, is proof that it can take as little as a year these days to go from zero to a valuation of hundreds of millions of dollars. Sequoia Capital has led a $62 million investment in Yik Yak in the Atlanta-based startup's third funding round this year, according to people familiar with the deal. (<a href="" title=""></a>)</p> <p>* A faith-based shareholder group is asking Bank of America Corp to separate the jobs of chairman and CEO, laying the groundwork for a potential showdown between the bank and some investors this spring. (<a href="" title=""></a>)</p> <p>* Highly anticipated federal rules on commercial drones are expected to require operators to have a license and limit flights to daylight hours, below 400 feet and within sight of the person at the controls, according to people familiar with the rule-making process. (<a href="" title=""></a>)</p> <p>* American Airlines Group Inc and the union that represents its 15,000 pilots said they would continue to negotiate terms of a combined labor agreement, putting off a plan to reach a deal through arbitration. The new goal is to resolve the impasse by mid-December, the two sides said. (<a href="" title=""></a>)</p> <p>* The headlines in the long-running trial over the bailout of American International Group Inc have been dominated by three heavy hitters who testified-and one who did not. But as testimony likely wraps up Monday after eight weeks, legal observers said two low-profile witnesses from early in the proceedings addressed what may be the key question: whether the government correctly interpreted a 1930s-era section of the Federal Reserve Act to allow it to acquire a sizable equity stake in AIG to help compensate taxpayers. (<a href="" title=""></a>)</p> <p>* A gusher of U.S. initial public offerings of energy-focused master limited partnerships has some money managers urging caution. Investors, drawn by the reputation of MLPs for stable, high payouts and a central role in the U.S. energy boom, have poured money into newly minted stocks from these companies, which mainly own and operate oil and natural-gas pipelines and storage facilities. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">FT</span></em></p> <p>Italy's retail bank Intesa SanPaolo is looking at a possible bid for Coutts International, the wealth management arm of Royal Bank of Scotland.</p> <p>London-based private equity firm Terra Firma has appointed Blackstone Group LP as an adviser for Four Seasons Health Care. Blackstone will look at various financial and strategic options for the health care firm.</p> <p>The British Bankers Association and French Banking Federation have sent a joint letter to Frans Timmermans, the first vice president of the European commission, arguing that Brussles' initiative to overhaul the structure of big banks is outdated, harmful to capital markets and complicates the implementation of existing national laws.</p> <p>DPD, the rival express delivery company of Royal Mail will increase its full time UK staff headcount from 9,000 to 11,000 by 2016, after winning the contracts for John Lewis and Marks and Spencer Group PLC</p> <p>Royal Bank of Scotland apologised for incorrect evidence given by its executives to MPs over allegations its restructuring group profited from distressed companies it was meant to help.</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">NYT</span></em></p> <p>* The cost of providing electricity from wind and solar power plants has plummeted over the last five years in the United States, so much so that in some markets renewable generation is now cheaper than coal or natural gas. (<a href="" title=""></a>)</p> <p>* In an effort to increase holiday sales, which have fallen for the last two seasons, Barnes &amp; Noble Inc is hoping to lure customers into stores this Black Friday with something book lovers cannot download: signed copies.(<a href="" title=""></a>)</p> <p>* "The Business of Being Born," the 2008 film by former talk show host Ricki Lake questioning the American medical system's approach to childbirth and presenting the benefits of home birth, will be rereleased digitally in late January, becoming available globally for the first time. (<a href="" title=""></a>)</p> <p>* Paul Taubman, Morgan Stanley's former global head of mergers and acquisitions and global head of investment banking, most recently hired Don Cornwell, a managing director who specializes in sports team deals, according to a person briefed on the matter. (<a href="" title=""></a>)</p> <p>* Mathew Martoma has started his nine-year prison term for insider trading at a "low security" federal prison in Miami at a time that most of the former hedge fund traders and analysts also convicted in the federal government's long-running investigation have paid their debt to society. (<a href="" title=""></a>)</p> <p>* Aviva Plc announced that it was in advanced talks to acquire the Friends Life Group Ltd for 5.6 billion pounds, or $8.8 billion, in stock, a deal that would create an insurance, savings and asset-management giant in Britain. (<a href="" title=""></a>)</p> <p>* Bain Capital raised a fresh fund for private equity buyouts in Europe. The private equity firm attracted the equivalent of $4.3 billion from investors for the fund, according to a regulatory filing on Thursday. (<a href="" title=""></a>)</p> <p>* The Royal Bank of Scotland Group Plc said it overstated its capital ratio in a recent European-wide stress test to examine its ability to survive a potential financial crisis or severe economic downturn. The bank said it did not properly recognize certain tax credits on theoretical losses. (<a href="" title=""></a>)</p> <p>* The Federal Reserve is preparing to unveil new restrictions aimed at making it harder for Wall Street banks to make big bets in the commodities markets, according to Fed governor Daniel Tarullo. (<a href="" title=""></a>)</p> <p>* Dow Chemical said it had reached a settlement with Loeb's firm, Third Point LLC, agreeing to add four new independent directors to its board. (<a href="" title=""></a>)</p> <p>* Streaming television start-up Aereo said it had filed for bankruptcy protection. Chet Kanojia, the company's chief executive, said in a blog post that Aereo's legal and regulatory challenges ultimately proved too difficult to overcome. (<a href="" title=""></a>)</p> <p>* Brazil's JBS Foods, the world's largest meatpacker and owner of Pilgrim's Pride in the United States, has agreed to pay A$1.45 billion, or $1.25 billion, to buy Primo Smallgoods, the largest ham, bacon, and sausage producer in Australia and New Zealand. (<a href="" title=""></a>)</p> <p>* The Swiss private banking arm of HSBC Holdings Plc is facing more potential trouble over wealthy clients and their taxes. The bank confirmed that the unit, HSBC Private Bank (Suisse), had been placed under formal investigation by French magistrates examining whether the bank assisted wealthy clients to avoid French tax reporting requirements from 2006 to 2007. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">Canada</span></em></p> <p>THE GLOBE AND MAIL</p> <p>** Quebec Premier Philippe Couillard says he will consider the recommendations of a report laying out C$2.3 billion ($2.05 billion) in spending cuts, but it will be up to his government to make the final call. Lucienne Robillard, a long-time Liberal politician leading the review, says the province is living beyond its means and needs to find a way to deliver services at a lower cost. (<a href="" title=""></a>)</p> <p>** It was one of a clutch of spending programs rolled out in the Conservative government's austerity budget of 2013 - C$200 million to spark innovation in Ontario's hard-hit manufacturing sector. But 18 months later Ottawa has yet to approve a single project from its Advanced Manufacturing Fund, even as the government continues to credit its investments in manufacturing for creating jobs and growth in Ontario. (<a href="" title=""></a>)</p> <p>** Canada's telecom regulator begins a hearing on Monday that is expected to shape the landscape of the country's Internet market and determine whether small players gain access to the latest generation of high-speed services. (<a href="" title=""></a>)</p> <p>NATIONAL POST</p> <p>** The number of recalls and alerts for defective prescription drugs in Canada has soared over the last nine years, often highlighting problems that could put patients in significant danger, a new, British-led study reports. The annual volume of faulty medicines disclosed by Health Canada more than tripled to 143 last year from 42 in 2005, according to the research, just published in the journal BMJ Open. (<a href="" title=""></a>)</p> <p>** Two more former NDP staffers who say they were unfairly dismissed have accused the party of trying to convince them not to file a complaint against the elected members who employed them. Bouchra Taibi, who was working for New Democrat MP Helene Leblanc, and Melanie Bellemare, who was working for MP Francois Choquette, both accuse the party of wrongful dismissal. Taibi filed a lawsuit in the summer while Bellemare is expected to do so by Dec. 31. (<a href="" title=""></a>)</p> <p>** At least a dozen protesters including an 11-year-old girl were taken into custody on Sunday on a mountain near Vancouver as demonstrations continued against a controversial pipeline project. RCMP began enforcing a court injunction on Thursday ordering protesters to clear a pair of work sites on Burnaby Mountain, where Kinder Morgan Energy Partners LP is conducting drilling and survey work related to the proposed expansion of its Trans Mountain pipeline. (<a href="" title=""></a>)</p> <p></p> <p><em><span style="text-decoration: underline;">China</span></em></p> <p>SOUTH CHINA MORNING POST</p> <p>- The mainland's surprise move to reduce interest rates for the first time in more than two years has fired up expectations of further cuts aimed at shoring up an economy that is on track to record its weakest annual growth since 1990. (<a href="" title=""></a>)</p> <p>- The three co-founders of Occupy Central plan to turn themselves into police next week but vowed to continue supporting protesters under a "two-stage" surrender plan. (<a href="" title=""></a>)</p> <p>- Bad debts in China are well underestimated because authorities persist in propping up weak companies and bailing out local investors, according to DAC Management. (<a href="" title=""></a>)</p> <p>THE STANDARD</p> <p>- The Occupy Central movement has set political development back by 10 years, an academic noted. Hong Kong University of Science and Technology economist Francis Lui Ting- ming said he believes some pan-democrats do not want to see the implementation of universal suffrage because it may affect their own interests. (<a href="" title=""></a>)</p> <p>- An employer who had three labour charges withdrawn against her has accused her former domestic helper of falsely claiming that she was assaulted and forced to work 21 hours a day for nine months. (<a href="" title=""></a>)</p> <p>- Hong Kong will experience infrastructure spending cuts of more than HK$20 billion annually starting in two years if the non-cooperation movement and filibusters continue at the Legislative Council, the development chief warned. (<a href="" title=""></a>)</p> <p></p> <p><em><span style="text-decoration: underline;">Britain</span></em></p> <p>The Times</p> <p>AVIVA'S BID FOR FRIENDS LIFE THREATENS 2,000 JOBS</p> <p>An estimated 2,000 insurance jobs are likely to be axed as Aviva PLC tries to placate scepticism about its bid for Friends Life. (<a href="" title=""></a>) RBS FACING £30M LAWSUIT OVER ITS ROLE IN LIBOR-RIGGING</p> <p>Royal Bank of Scotland is facing its first UK lawsuit over its role in the Libor-rigging scandal as part of a 30 million pound(46.95 million US dollar) claim from a Manchester-based property developer. (<a href="" title=""></a>)</p> <p>The Guardian</p> <p>BRITISH COMPANIES STRUGGLE TO FIND DOMESTIC WORKERS WITH RIGHT SKILLS - BCC</p> <p>British Chambers of Commerce says that businesses continue to rely on migrant workers 'because they can't find enough suitable talent locally'. (<a href="" title=""></a>)</p> <p>FINANCIAL CONDUCT AUTHORITY HOPES 1.5 BLN POUNDS IN FINES WILL CHANGE BEHAVIOUR</p> <p>The City watchdog has hit financial firms with nearly 1.5 billion stg of penalties so far this year - more than three times the record level of fines it levied in 2013. (<a href="" title=""></a>)</p> <p>The Telegraph</p> <p>GAIL'S BAKERY BREAKS OFF FLOTATION TALKS</p> <p>GAIL's Artisan Bakery, the London-based chain of upmarket cake and pastry shops, has put off plans for a stock market float until the New Year. (<a href="" title=""></a>)</p> <p>KERRY FOODS FREEZES OUT FROZEN FOODS</p> <p>Kerry Foods, the maker of ready-meals for supermarkets including Marks and Spencer, is looking to sell its frozen foods business as it gears towards the more profitable ingredients division. (<a href="" title=""></a>)</p> <p>Sky News</p> <p>TAXI APPS PRICE WAR SEES FARES SLASHED</p> <p>A price war has broken out among taxi booking apps, forcing firms to slash fares in half in the run-up to Christmas. (<a href="" title=""></a>)</p> <p>AVIVA AGREES 5 BILLION POUNDS DEAL TO BUY FRIENDS LIFE</p> <p>Aviva PLC has agreed to buy Friends Life Group in a 5 billion stg-plus deal that will create a pensions provider with 16 million UK customers. (<a href="" title=""></a>)</p> <p>The Independent</p> <p>SKY SHAREHOLDERS IN REVOLT OVER SECRETIVE AND 'EXCESSIVE' BONUSES</p> <p>The pay-TV giant Sky has been hit by a revolt over pay as 55 per cent of independent shareholders failed to back the remuneration report. (<a href="" title=""></a>)</p> <p>HSBC TAX FEARS DEEPEN WITH FRENCH INQUIRY</p> <p>HSBC's tax troubles have intensified after French magistrates formally placed its Swiss private banking arm under investigation amid allegations that it helped French citizens to dodge tax. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p>&nbsp;</p> <p><strong>Fly On The Wall Pre-market Buzz</strong></p> <p>ECONOMIC REPORTS</p> <p>Domestic economic reports scheduled for today include:<br />Chicago Fed national activity index for October at 8:30--consensus 0.5<br />Markit flash services PMI for November at 9:45--consensus 57.8</p> <p>ANALYST RESEARCH</p> <p>Upgrades</p> <p>Aruba Networks (ARUN) upgraded to Outperform from Market Perform at Raymond James<br />Berry Plastics (BERY) upgraded to Outperform from Market Perform at BMO Capital<br />Denny's (DENN) upgraded to Buy from Neutral at Janney Capital<br />Hess Corp. (HES) upgraded to Outperform from Market Perform at Raymond James<br />Infoblox (BLOX) upgraded to Buy from Hold at Needham<br />Kate Spade (KATE) upgraded to Buy from Neutral at BofA/Merrill<br />Lumber Liquidators (LL) upgraded to Overweight from Equal Weight at Morgan Stanley<br />Occidental Petroleum (OXY) upgraded to Strong Buy from Outperform at Raymond James<br />Toro Company (TTC) upgraded to Buy from Neutral at Longbow</p> <p>Downgrades</p> <p>Cash America (CSH) downgraded to Market Perform from Outperform at JMP Securities<br />Chevron (CVX) downgraded to Outperform from Strong Buy at Raymond James<br />Chicago Bridge &amp; Iron (CBI) downgraded to Sell from Neutral at Goldman<br />Costco (COST) downgraded to Buy from Conviction Buy at Goldman<br />Datawatch (DWCH) downgraded to Market Perform from Outperform at William Blair<br />EVERTEC (EVTC) downgraded to Hold from Buy at Stifel<br />Exxon Mobil (XOM) downgraded to Market Perform from Outperform at Raymond James<br />Jacobs Engineering (JEC) downgraded to Sell from Neutral at Goldman<br />Kennametal (KMT) downgraded to Sell from Neutral at Goldman<br />Ring Energy (REI) downgraded to Hold from Buy at Canaccord<br />Tyco (TYC) downgraded to Market Perform from Outperform at FBR Capital<br />Ulta Salon (ULTA) downgraded to Neutral from Buy at Goldman<br />Verizon (VZ) downgraded to Neutral from Buy at Citigroup<br />Wesco Aircraft (WAIR) downgraded to Underperform from Buy at BofA/Merrill</p> <p>Initiations</p> <p>AMC Entertainment (AMC) initiated with a Buy at Goldman<br />Alamo Group (ALG) initiated with an Overweight at Piper Jaffray<br />Boot Barn (BOOT) initiated with a Buy at Jefferies<br />Boot Barn (BOOT) initiated with an Outperform at RW Baird<br />Boot Barn (BOOT) initiated with an Outperform at Wells Fargo<br />Boot Barn (BOOT) initiated with an Overweight at JPMorgan<br />Boot Barn (BOOT) initiated with an Overweight at Piper Jaffray<br />Fifth Street Asset (FSAM) initiated with a Neutral at Goldman<br />Fifth Street Asset (FSAM) initiated with an Outperform at Credit Suisse<br />Fifth Street Asset (FSAM) initiated with an Overweight at JPMorgan<br />Hain Celestial (HAIN) initiated with a Buy at Longbow<br />Keurig Green Mountain (GMCR) initiated with a Neutral at Longbow<br />Monster Beverage (MNST) initiated with a Neutral at Longbow<br />Regulus Therapeutics (RGLS) initiated with a Buy at Deutsche Bank<br />Shell Midstream (SHLX) initiated with a Buy at Citigroup<br />Shell Midstream (SHLX) initiated with an Equal Weight at Morgan Stanley<br />Shell Midstream (SHLX) initiated with an Overweight at Barclays<br />Sientra (SIEN) initiated with a Buy at Stifel<br />Sientra (SIEN) initiated with an Outperform at Leerink<br />Sientra (SIEN) initiated with an Overweight at Piper Jaffray<br />Simmons First National (SFNC) initiated with a Buy at Sterne Agee<br />The Fresh Market (TFM) initiated with an Underperform at Longbow<br />Tsakos Energy (TNP) reinstated with a Neutral at Credit Suisse<br />Whole Foods (WFM) initiated with an Underperform at Longbow<br />Zayo Group (ZAYO) initiated with a Neutral at Macquarie</p> <p>COMPANY NEWS</p> <p>BioMarin (BMRN) agreed to purchase all shares of Prosensa (RNA) for $17.75 per share, for a total up front consideration of approximately $680M<br />RenaissanceRe (RNR) agreed to acquire Platinum Underwriters (PTP) for $76.00 per share in stock and cash, or approximately $1.9B<br />Jacobs Engineering (JEC) announced retirement of CEO Craig Martin, effective December 26, for health reasons. The board of directors has appointed Noel G. Watson to serve as Executive Chairman until a new CEO is appointed<br />BHP Billiton (BHP) said targeting $4B of annualized productivity gains by 2017 end, said on track to complete demerger in 1H15</p> <p>EARNINGS</p> <p>Companies that missed consensus earnings expectations include:<br />Trina Solar&nbsp; (TSL)</p> <p>NEWSPAPERS/WEBSITES</p> <p>BT Group (BT) in talks to buy Telefonica's (TEF) O2, Reuters reports<br />Google (GOOG) may plan to shut down Glass Basecamps, 9to5Google reports<br />Wireless carriers bid up prices at U.S. spectrum auction, WSJ reports (VZ, T, DISH)<br />Lionsgate's (LGF) "Hunger Games" sequel falls short of expectations, Bloomberg reports<br />Tetraphase (TTPH) said to explore sale, Bloomberg reports (RHHBY, ALIOF)<br />Faith-based investors ask BofA (BAC) to split chairman, CEO roles, WSJ reports<br />Samsung (SSNLF) may reshuffle its leadership organization next week, WSJ reports<br />Microsoft (MSFT) remains a Buy, Barron's says<br />Schlumberger (SLB) could be a good value, Barron's says<br />Intel (INTC), Qualcomm (QCOM) look like "excellent" investments, Barron's says</p> <p>SYNDICATE</p> <p>Adamis Pharmaceuticals (ADMP) files to sell 1.77M shares for holders<br />Buckeye Partners (BPL) files to sell $1B limited partnership unit shelf<br />CTI BioPharma (CTIC) files to sell 9M shares for holders<br />Franklin Covey (FC) files to sell 3.2M shares for holders<br /> (JD) files to sell $500M of American Depositary Shares for holders<br />Oculus (OCLS) files automatic common stock, warrant shelf<br />Paylocity (PCTY) files to sell 4M shares of common stock</p> AIG American International Group Australia BAC Bain Bank of America Bank of America Barclays Black Friday Bond Capital Markets China Citigroup Credit Suisse Daniel Tarullo Deutsche Bank Exxon Federal Reserve Four Seasons Germany GOOG Google headlines Hong Kong India Insider Trading Japan Market Share Markit Merrill Morgan Stanley Natural Gas New Zealand OPEC Private Equity Raymond James RBS Reuters Royal Bank of Scotland Stress Test Testimony Third Point Verizon Wells Fargo Mon, 24 Nov 2014 12:30:54 +0000 Tyler Durden 498195 at Futures Poised For New Record Highs On Weekend Central Bank Double Whammy <p>Another day, another case of central banks, not one but two this time, dictating "price" action. </p> <p>On Saturday, traders woke up to the following headlines from the ECB's Constancio, which the market promptly digested and spun as bullish from more ECB QE, leading to one after another bank pulling forward their estimates of first bond monetization by Mario Draghi (CSFB now believes it will take place in December from Q1 of 2015):</p> <ul> <li>ECB'S CONSTANCIO SAYS CURRENT SITUATION DIFFERENT FROM 2012</li> <li>CONSTANCIO SAYS INFLATION SHOULD BE IN HANDS OF MONETARY POLICY</li> <li>CONSTANCIO SAYS INFLATION VERY CLOSE TO ZERO IS `DANGEROUS'</li> <li>CONSTANCIO SAYS DEFLATION `VERY NASTY'</li> <li>CONSTANCIO SAYS ECB SHOWING WILLINGESS TO DO MORE IF NEED BE</li> </ul> <p>So the "deflation monster" is "very nasty", got it. </p> <p>Colorful rhetoric aimed at 5-year-olds aside, the Portuguese central banker said no decision has been made yet on buying sovereign bonds but if banks finding existing measures insufficient then the ECB will have to consider buying other assets including sovereign bonds. This follows last week's comments from Draghi when he said he would "do what we must to raise inflation and inflation expectations as fast as possible". As a result there has been a fresh round of calls for an ECB programme and as such has benefited peripheral fixed income products. This has led to the Spanish 10yr yield breaking below 2.0% and Italian 5yr below 1.0% for the first time. </p> <p>And then to further make the BTFATH case, Reuters reported citing an "unnamed official" that <a href="">China's Friday rate cut is just the first of many</a>, and as a result the entire fixed income curve across Chinese product has repriced substantially, even as the Chinese Yuan is starting to crack on what we hinted weeks ago will be a devaluation of the currency as China is now, in the words of BNP, "losing the currency war." This happens when in a delayed session (the Friday PBOC announcement took place after China close), Asia risk assets rallied higher across the board, led by a relative outperformance in Chinese assets. The CSI 300 Shanghai Composite and the Hang Seng are currently +3.24% and +2.04% respectively. China 5y CDS is also 2bp tighter. CNH has opened some 0.1% weaker versus the Dollar. Markets in Japan are closed but major bourses in Korea and Australia are also +0.72% and +1.08% stronger respectively.</p> <p>US equity futures are also poised for another session at record highs thanks to a German IFO business climate print which followed last week's ZEW rebound, and rose for the first time in 7 months, printing at 104.7, above the 103.0 expected, up from 103.2 in October. Expect more multiple expansion just that much more on their way to a 20x GAAP P/E on the S&amp;P 500. </p> <p>Finally, with volumes exceedingly thin headed into Thanksgiving, this week’s eco calendar relatively light, and Japan away from market overnight the mandated wealth effect levitation is set to continue: even crude has managed to bounce modestly from extremely oversold conditions, on hopes this week's OPEV meeting will result in a production cut. Perhaps the only place where central banks are so far failing to buoy prices is iron ore futures which fell below $70/tonne for the first time since 2009.</p> <p><strong>Overnight Bulletin Headlines</strong></p> <ul> <li>Peripheral banks lead the way higher for European equities as ECB’s Constancio provides yet more dovish rhetoric from the central bank regarding a potential sovereign QE programme. </li> <li>Sentiment for Europe has also been further bolstered by a strong German IFO release, in what has been a relatively quiet session. </li> <li>Looking ahead, the main data release will be the US services PMI figure in what is set to be a relatively quiet session.</li> <li>Treasuries fall before week’s $105b note auctions begin with $28b 2Y notes; WI yield 0.565% vs 0.425% in October.</li> <li>German business confidence unexpectedly rose for the first time in seven months, with the Ifo institute’s business climate index increasing to 104.7 in Nov. (est. 103) from 103.2 in Oct.</li> <li>Italy, France and Germany will face off over how to rebuild euro-area growth when the European Commission passes judgment this week on their draft budgets</li> <li>Greek government officials will meet in Paris tomorrow with troika representatives in a bid to break a deadlock over freeing up the last tranche of the country’s bailout</li> <li>China is poised to deliver deeper interest rate cuts after last week’s unexpected decision to reduce borrowing costs for the first time since 2012</li> <li>With the deadline for their nuclear talks just hours away, the U.S. and Iran took up the fall-back option of putting more time on the clock</li> <li>Iran may propose that OPEC cut its output target by as much as 1m barrels a day to halt the slide in crude prices when the country’s oil minister consults with his Saudi counterpart before the group gathers this week</li> <li>Nearly $41b IG priced last week, $10b high yield. BofAML Corporate Master Index OAS narrows 1bp to 134 from YTD wide 135; YTD low 106. High Yield Master II OAS narrows 7bps to 454. YTD range 508-335bps. CDX High Yield closed at 106.96 from 106.48; YTD range 104.52-109.15</li> <li>Sovereign yields mixed. Tokyo closed for holiday; Asian and European stocks, U.S. equity-index futures higher. Brent crude, copper gain; gold falls</li> </ul> <p><strong>US Event Calendar</strong></p> <ul> <li>8:30am: Chicago Fed Nat Activity Index, Oct., est. 0.40 (prior 0.47)</li> <li>9:45am: Markit US Services PMI, Nov. preliminary, est. 57.3 (prior 57.1); Markit US Composite PMI, Nov. preliminary, (prior 57.2)</li> <li>10:30am: Dallas Fed Manufacturing Activity, Nov., est. 9 (prior 10.5)</li> </ul> <p><strong>DB's Jim Reid concludes the overnight recap</strong></p> <p>With China cutting rates unexpectedly and with Draghi earlier expressing urgency about the need to return inflation back towards target ("without delay") it does feel that most countries still want to ease and with the BoJs recent move, it seems that if you stand still you might actually be at risk of effectively tightening policy. If anyone should doubt Draghi’s dovishness he also said they would "do what we must to raise inflation and inflation expectations as fast as possible". For us government QE in Q1 continues to be a near inevitability but we may still have enough conflict within the ECB that may mean December is still too early. Whatever the timing it was clear that the market was surprised by the explicitness of the speech. The Stoxx 600 closing 2.06% higher, Xover rallying 16bps and the euro selling off 1.2% versus the dollar. Yields in the periphery were also significantly lower with the 10 year benchmark yield in Italy, Portugal and Spain down 9bps, 13bps and 9bps to 2.21%, 2.98% and 2.01%, respectively.</p> <p>Turning our attention over to China, the PBOC certainly surprised the market with a 25bps cut in the benchmark deposit rate to 2.75% and 40bps cut in the lending rate to 5.60%. The Central Bank also lifted the ceiling on deposit rates to 1.2x of the benchmark deposit. DB’s Chief Chinese Economist, Zhiwei Zhang, wrote on Friday that he believes this marks the beginning of a policy easing cycle, given that the policy stance has clearly changed from marginally loose towards broad based easing. He also expects this easing cycle to last for the full year of 2015 and continues to expect two rate cuts in 2015 (first cut of 25bp in Q2 and second 25bp cut in Q3). So why act now given that China is still on track to meet the ‘around 7.5% growth target this year? Zhiwei believes that a plausible answer could be as a result of the cumulative fiscal pressure at the local government level that has built up this year. He points out that local governments revenues have suffered from the sharp slowdown in land sales in 2014 as well as a rising LGFV debt burden – given this, he argues that a rate cut is the most effective way for a central government to help lower their finance costs. With regards to the impact on FX, given that the government is now willing to use traditional monetary tools, our FX strategist believes that the use of RMB as a form of monetary policy will likely wane and as a result China will likely start to gradual weaken the currency given that on a REER basis, the RMB is already very expensive. </p> <p>Asia risk assets are rallying higher across the board this morning, led by a relative outperformance in Chinese assets. The CSI 300 Shanghai Composite and the Hang Seng are currently +3.24% and +2.04% respectively. China 5y CDS is also 2bp tighter. CNH has opened some 0.1% weaker versus the Dollar. Markets in Japan are closed but major bourses in Korea and Australia are also +0.72% and +1.08% stronger respectively.</p> <p>Some of these overnight moves could have been also been a continuation of what was a fairly positive US risk session last Friday. The S&amp;P 500 closed +0.52% to mark the fifth consecutive week of gains and further extend record highs. Most sectors were higher on the day but materials (+1.26%) and energy (+1.22%) were the main outperformers. The recent respite in crude was probably a driver for that as we’ve now seen Brent and WTI bounce around 4% off their recent lows to trade at around $81/bbl and $77/bbl as we type. Interestingly despite a stronger day for equities, Treasuries were mostly stronger across the curve last Friday. The 10y was 2bps lower to 2.325% with the only data release for the day being the Kansas City Fed’s manufacturing which came in a tad firmer than expected (7 vs. 6 expected).</p> <p>Staying on the theme of oil, Thursday’s OPEC meeting at Vienna will be a closely watched affair. There has been no shortage of news-flow around the event recently with prices declining sharply over the last couple months in anticipation that OPEC will not cut production. In recent weeks it appears that the camp has become split with the likes of Saudi Arabia and other low-cost producers with large FX reserves happy to run down the price to gain market share. On the other hand the likes of Venezuela and more recently Iran are reported (Bloomberg) as saying that they may propose a 1m a day cut in barrels produced. They are campaigning for higher prices to balance their budget and improve fiscal positions. We will no doubt hear further statements this week from producers in the run up to the meeting so it’s something to keep an eye on. </p> <p>Coming back to Europe quickly, over the weekend Bloomberg have reported that the EU is planning a new leveraged fund as part of EC president Juncker’s investment plan. The article suggests that the €21bn fund is designed to have a proposed leverage rate of 15x, with the idea that private investors will be able to share the risks of new projects and kick-start those currently under-resourced. </p> <p>Just staying in the region, there was news ( Financial Times) in Greece on Friday that the government has failed to come to an agreement with the Troika over bailout monitors around the reported fiscal gap. This is important given that the program legally expires at the end of this year and places greater importance of striking a deal ahead of the December 8th meeting of eurozone ministers that would set the terms of a bailout exit. It appears that the disagreement stems from Athens’ argument that accelerating economic growth next year, along with various fiscal measures, will close the perceived fiscal gap set at €2bn of the 2015 budget by the Troika. With no date set for the arrival of the Troika in Athens however, and further implications to consider down the road with regards to ECB support of Greek banks, it’ll be worth keeping an eye on how events progress as we run into the end of the year.</p> <p>In terms of the day ahead, this morning will likely be highlighted by the IFO print out of Germany with the market expecting the readings to be unchanged versus last month. Later on today and across the pond we get the Chicago Fed and November flash services and composite PMI’s with again the market expecting little change versus last month. </p> <p>Finally, with regards to the week ahead, it looks like that there will be no sign of a breather for markets with a packed macro calendar to look forward to. Starting in the US, things kick into gear tomorrow when we have the preliminary release of Q3 real GDP. DB's Joe Lavorgna notes that information released since the advance GDP release indicated modestly more consumption and inventories last quarter than what the bureau of economic analysis had assumed in its initial snapshot- Joe points out that this should offset most of the downward revisions to exports and construction and so he expects minimal revision. Elsewhere in the US tomorrow we get readings for consumer confidence, Case-Shiller and FHFA house price data. Closer to home in Europe tomorrow we start the day with Germany’s Q3 GDP release. The market is looking for a +0.1% qoq print and comes following the weak flash PMI reading last week. As we mentioned then our German economists are expecting GDP to stagnate through the next two quarters and haven’t ruled out the potential for a negative quarter so it’ll be interesting to see what we get. Elsewhere we get a host of further data out of Germany including government spending and private consumption along with Italian retail sales and Spanish PPI. Elsewhere we will get the OECD outlook with Japan's Kuroda speaking in the morning so it'll be interesting to see what comes of that. We start Wednesday closer to home with GDP in the UK. Later in the day we’ll see mortgage applications out of the US, closely followed by another raft of prints in the region including durable goods, claims, personal income, new home sales, Michigan confidence and the monthly and year-on-year PCE core and deflator readings are also out. Thursday will bring a break in proceedings with Thanksgiving in the US. However that’s not to say things slow down in Europe with eurozone consumer confidence due along with money supply. The market however will likely be more focused on the CPI, retail sales and unemployment prints for Germany. We round Thursday off with business confidence in Italy and Spanish GDP and CPI. The day after Thanksgiving of course brings the well known ‘Black Friday’ which also coincides with a relatively low data day in the US with just the Chicago PMI. Japan will likely hog the spotlight however with CPI, retail sales, industrial production and housing starts to print. Elsewhere in Asia we get leading indicators out of China. We round the week off in Europe with the all important CPI and unemployment readings for the Eurozone.</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="450" height="269" alt="" src="" /> </div> </div> </div> Across the Curve Australia Bond Borrowing Costs BTFATH Case-Shiller CDS Central Banks Chicago PMI China Consumer Confidence Copper CPI Crude Dallas Fed Eurozone fixed France GAAP Germany Greece headlines High Yield Housing Starts Iran Italy Japan Jim Reid Market Share Markit Michigan Monetary Policy Monetization Money Supply New Home Sales OPEC Personal Income Portugal Price Action Reuters Saudi Arabia Unemployment Yuan Mon, 24 Nov 2014 11:59:34 +0000 Tyler Durden 498194 at