From April to September of 2013, as Bloomberg reports, TEPCO admits that levels of radiation measured from water samples around the destroyed Fukushima nuclear reactor were "significantly undercounted." We assume it was mere coincidence that during this very time Shinzo Abe proclaimed the 2020 Olympics would be safe and used many of these readings as evidence. In addition to this debacle, The BBC reports, the likely scale of the radioactive plume of water from Fukushima due to hit the west coast of North America should be known in the next two months; and rather stunningly, The Japan Times reports a new study finds the lifetime risk of developing cancer has risen among 1-year-old girls in an area affected by the nuclear crisis at the Fukushima No. 1 power plant. But apart from that, everything's great.
It’s like 34 drunken sailors holding each other up. That’s the best way I can think of to describe the latest product from the good idea factory that is the OECD. Over the weekend in yet another cushy five-star hotel, representatives from this unelected supranational bureaucracy announced plans for world governments to exchange all their citizens’ tax and financial data with one another. It’s a pathetic display of exactly the sort of tactics that governments embrace when they go broke. And most of these OECD countries ARE broke – Italy, Japan, the US, Spain, Greece, etc.
The Fed Is Very Political … And Serves the Big Banks and the Powers-That-Be
- Ukraine Seeks $35 Billion as Yanukovych Warrant Is Issued (BBG)
- Ukraine's fugitive president wanted for mass murder (Reuters)
- Polar Vortex to Bring More Snow on Return to U.S. This Week (BBG)
- China property prices continue to rise (FT)
- Microsoft Said to Cut Windows Price 70% to Counter Rivals (BBG)
- Pentagon to propose shrinking Army, scrapping some jets (Reuters)
- Hedge Funds Turn Bearish on S&P 500 as VIX Advances (BBG)
- Draghi’s Data Jigsaw Takes Shape as ECB Readies Showdown (BBG)
- China, eyeing Japan, seeks WW2 focus for Xi during Germany visit (Reuters)
Asian equities are trading lower across the board on the back of some negative credit stories from China. Shanghai Securities News noted that ICBC and some other banks have curbed loans to developers in sectors such as steel and cement. Slower gains in home property prices in China’s tier 1 cities are also not helping sentiment. Beijing and Shenzhen prices rose 0.4% in January, which looks to be the slowest monthly gain since October 2012 according to Bloomberg. Elsewhere there are reports that a property developer in Hangzhou (Tier 2 city in China) is reducing its unit prices by 19%. Our property analysts noted that given the strong gains seen in Tier-1 and some bigger Tier-2 cities in 2013, a slowdown or negative trends in price growth should not be a surprise. Nevertheless, it has been a very weak day for Chinese and HK markets with the Shanghai Composite and the Hang Seng indices down -2.0% and -1.2% lower as we type. Across the region, bourses in Japan and Korea are down -1.0% and -0.6%, respectively.
In what appears yet another straw on the camel's back of Mt.Gox (following the re-freeze of account withdrawals), the Bitcoin Foundation this evening reported that:
"effective immediately, Mt. Gox has submitted their resignation from the board of directors."
Bitcoin prices on the dying exchange tumbled on the announcement after quite an extreme volatility day - which saw prices swing from $151 to $239 and then down to $190 on the news.
A Chinese military officer has said that establishing a South China Sea ADIZ is necessary to China’s national interest. Li Jie's comments come on the heels of remarks made by U.S. Captain James Fanell, director of intelligence and information operations at the US Pacific Fleet (full clip below) on China's preparation for war with Japan (and other regional nations) and sources saying that China’s Central Military Commission has directly given Chinese military the instruction: “Fight if it is appropriate to fight.”
As happens at the end of every year, sellside analysts and economists, all predicted that this year would be different, and the long overdue capex spending would finally be unleashed. Apparently they had far greater visibility on this matter, than on the topic of snowfall in the winter, and its disastrous impact on a $17 trillion economy, whose Q1 GDP growth forecast has cratered from 3% at the start of the year, to barely half that number currently. One of the firms that preached that the CapEx recovery is imminent is none other than Goldman Sachs, the same firm that also year after year predicts a new golden age for the US, only to see its forecast crash and burn some 4-6 months later, couched in the tried (or is that now trite) and true scapegoatings: snow, unrest in Europe, inflation or deflation in Japan, the usual. However, this time may indeed be different, and the same Goldman has just released a piece wondering "Why no capex recovery?" (despite the firm's own forecasts to the contrary -just recall David Mericle's "Capex: The Fundamentals Remain Strong" which now in retrospect is completely wrong).
The bad feelings concerning Russia run deep in the Western parts of Ukraine (as they topple statues of Lenin in growing numbers) while in the East they see themselves much more as Russians. These feelings run very deep in the region and memories do not fade so easily as the mayor and police chief of Kerch vigorously defend the Ukrainian flag in the clip below - deep in the eastern Crimea region (that Russia has already suggested it is willing to go to war over). Russian President Vladimir Putin has now been placed in a very difficult position, as Martin Armstrong notes, the entire set of circumstances creates the image of events in Ukraine that have diminished the power of Russia, which is a matter of pride and the only stable resolution remains a split along the language faultline. The critical question then is - will Putin let it go?
Current events are frequently viewed through the prism of analogies. Words become shorthand for a particular type of situation. “Munich” equals the danger of appeasing bloodthirsty dictators, “Vietnam,” and now “Iraq/Afghanistan” means the folly of getting involved in (or, in the case of Iraq, starting) civil wars in countries whose societies the outsiders neither understand nor can effectively influence. In some cases, acting on these parallels turns out to be wise. The analogy that is currently in vogue in Asia is “1914.”
We've seen first hand the tremendous opportunity that exists in the world, and the incredible way that human beings innovate to overcome challenges. But the reality is that the world is on fire right now. In some places, like Ukraine or Thailand, quite literally. In many others (like Japan, China, and much of southern Europe), there are heaps of smoldering embers beneath a continent-wide funeral pyre. And in the Land of the Free, it’s as if politicians and central bankers are smoking their back-room cigars at the foot of a mountain of napalm and thermite that grows ever-higher by the day. If you step back and look at the big picture, there is cause for concern.
Sometimes you just have to sit back, look at some charts, and say WTF...
Having thrown in his bearish towel in December, the self-proclaimed "last bear standing" has had a tough January. His plan, to "just be long pretty much anything" appears to have back-fired (for now) as Eclectica reports a 3.6% loss in January - the worst month since the Fund's inception. His largest loss was on a long Japan theme (leveraged) and that was somewhat offset by gains in his short emerging markets and short China themes. It appears nothing hs changed from Hendry's December perspective of the inexorable melt-up in developed markets thanks to central bank largesse (247% of NAV exposed to stocks) though he does note "renewed turmoil" which, we suppose, merely supports his thesis longer term.
"The Pig In The Python Is About To Be Expelled": A Walk Thru Of China's Hard Landing, And The Upcoming Global Harder ResetSubmitted by Tyler Durden on 02/21/2014 10:37 -0400
The die has been cast, and it appears that the world is finally on the path to the great "carry-trade unwind" endgame. If so, this is what it will look like...