As Boston and U.S. security agencies congratulate themselves over the apparent neutralization of a pair of Chechens that bombed the Boston Marathon, troubling questions are beginning to arise. First and foremost is, why a pair of Chechens, born in the former Soviet republic of Kyrgyzstan, apparently committed the attack? For possible answers, one must looks beyond the present and delve into Russia’s and the USSR’s past policies towards Chechnya, and since 1991, U.S. policy in the Caucasus, which since the 1991 implosion of the USSR had a single focus – the exploitation of the Caspian’s massive energy reserves. It is a history that makes for deeply uncomfortable reading, but one that may eventually provide some answers to seemingly intractable questions. The history below, virtually unknown in the US, is deeply known to the Chechens; and while nothing excuses the terrible actions, the US is hardly blameless about the carnage visited on the Tsarnaev's ancestral homeland.
- Turn to Religion Split Bomb Suspects' Home (WSJ)
- The propaganda is back for the 4th year in a row: Spring Swoon Sequel No Reason for Economic Growth Scare in U.S. (BBG)
- Bernanke Jackson Hole Absence Contrasts With Greenspan Adulation (BBG)
- Large economies promise to boost growth (FT)
- Tata Faces Crisis as $20 Billion Spent on Water (BBG)
- U.S. Eyes Pushback On China Hacking (WSJ)
- Fed's Bernanke sees no U.S. inflation risks: Nowotny (Reuters)
- Austerity on Trial With U.S. Versus Europe Amid New Evidence (BBG)
- Eurozone anti-austerity camp on the rise (FT)
- Spain Aims to Soften Budget Cuts (WSJ)
- Japan's Aso Calls Recovery 'Few Years' Away (WSJ)
- BOJ Said to Consider Price Forecast Upgrade (WSJ)
Back in 2010, Goldman's Jan Hatzius, fresh on the heels of QE2, committed rookie Economist mistake 101, and mistook a centrally-planned market response to what then was a record liquidity infusion, for an improvement in the economy (a move we appropriately mocked at the time, as it was quite clear that the Fed's intervention meant the economy was getting worse not better). It took him about 4 months to realize the folly of his ways and realize no recovery for the US or anyone else was on the horizon. He then wised up for a couple of years until some time in December he did the very same mistake again, and once again jumped the shark, forecasting an improvement to the US economy in 2013, albeit in the second half (after all nobody want to predict an improvement in the immediate future: they will be proven wrong very soon) based on consumer strength when in reality the only "reaction function" was that of the market to the Fed's QE4 (or is it 5, and does it even matter any more?). Four months later we get this...
- Boston bomb probe looking at pressure cooker, backpacks (Reuters), Boston Bomb Clues Surface (WSJ) Forensic Investigators Discover Clues to Boston Bombing (BBG)
- China local authority debt ‘out of control’ (FT)
- Gold Wipes $560 Billion From Central Banks as Equities Rally (BBG)... or the same impact a 2% rise in rates would have on the Fed's balance sheet
- More Wall Street leakage: Stock Surge Linked to Lobbyist (WSJ)
- China's bird flu death toll rises to 16, government warns of spread (Reuters)
- Chinese official endorses monetary easing (FT)
- As global price slumps, "Abenomics" risks drive Japan gold bugs (Reuters)
- North Korea rejects US call for talks (FT)
- IMF Renews Push Against Austerity (WSJ)
- India Gains as Gold Plunge Boosts Scope for Rate Cuts (BBG)
- Germany set to approve Cyprus aid (FT)
- Easing Is an Issue as G-20 Meets (WSJ)
In what may be a first in at least 3-4 months, instead of the usual levitating grind higher on no news and merely ongoing USD carry, tonight for the first time in a long time, futures have drifted downward, pushed partially by declining funding carry pairs EURUSD and USDJPY without a clear catalyst. There was no explicit macro news to prompt the overnight weakness, although a German 10 year auction pricing at a record low yield of 1.28% about an hour ago did not help. Perhaps the catalyst was a statement by the Chinese sovereign wealth fund's Jin who said that the "CIC is worried about US, EU and Japan quantitative easing" - although despite this and despite the reported default of yet another corporate bond by LDK Solar, the second such default after Suntech Power which means the Chinese corporate bond bubble is set to burst, the SHCOMP was down only 1 point. The Nikkei rebounded after strong losses on Monday but that was only in sympathy with the US price action even as the USDJPY declined throughout the session.
Buy PHYSICAL Gold. NOW: The Discount of a Lifetime: Or Why You Must Abandon the Fake Paper Gold MarketSubmitted by Gordon_Gekko on 04/17/2013 07:00 -0400
It's time to go in for the kill. Buy as much physical Gold as you can.
The most recent gold bear raid has vastly enriched the bullion bankers, once again, at the expense of everyone trying to protect their wealth from global central bank money printing. The central plank of Bernanke's magic recovery plan has been to get everybody back borrowing, spending, and "investing" in stocks, bonds, and other financial assets. But not equally so - he has been instrumental in distorting the landscape towards risk assets and away from safe harbors. That's why a 2- year loan to the US government will only net you 0.22%, a rate that is far below even the official rate of inflation. After the two years is up, you are up $44k (interest) but out $260k (inflation) for net loss of $216,000. That wealth, or purchasing power, did not just vanish: it was taken by the process of inflation and transferred to someone else. This explains, almost completely, why the gap between the rich and everyone else is widening so rapidly, and why financiers now populate the top of every Forbes 400 list. There is no mystery, just a process of wealth transfer of magnificent and historic proportions; one that has been repeated dozens of times throughout history.
A Roundup of Opinions
There is blood running in the gold market this morning after vicious selling which began on Friday afternoon and continued in Asian trading and through into European trading. Gold has fallen another 4.4% today after a huge number of stop loss orders were triggered at $1,480/oz pushing gold lower. Reports suggest that a futures sell order worth $6 billion, equal to 4 million ounces or 124.4 tonnes of gold, by a large investment bank sent prices plummeting and spooked the markets contributing to the decline. The order was believed to have been placed through Merrill Lynch's brokerage team. Gold futures with a value of over 400 tonnes were sold in hours and this is equal to 15% of annual gold mine production. The scale of the selling was massive and again underlines how one or two large banks or hedge funds can completely distort the market by aggressive, concentrated leveraged short positions. It may again be the case that bullion banks with large concentrated short positions are manipulating the price lower as has long been alleged by GATA. Those with concentrated short positions may also have been concerned about the significant decline in COMEX gold inventories. The plunge in New York Comex’s gold inventories since February is a reflection of increased demand for the physical metal and concerns about counter party risk with some hedge funds and institutions choosing to own gold in less risky allocated accounts.
- Venezuela Says Chávez Successor Wins Vote (WSJ)
- China growth risks in focus as first quarter data falls short (Reuters)
- Japan Gets Calls From U.S. to Europe Not to Drive Down Yen (BBG)
- EU Set to Clash on Bank Deal as Germany Sees Treaty Limit (BBG)
- Dish Launches $25.5 Billion Bid for Sprint (WSJ)
- Commodities Tumble, Stocks Slide as China Growth Slows (BBG)
- Top fund managers take home $8bn less (FT)
- Obama Programs Derided by Republicans as Pejorative Entitlements (BBG)
- Gene swapping makes new China bird flu a moving target (Reuters)
- McDonald's Cranks Up The Volume on 'Value' (WSJ)
- UK pension deficits set to rise by £100bn (FT)
First there was Japan's 'capture' of the Senkakus and the looming troubles that small island will lead to with the Chinese. Then came the economic deflationary spiral, as the global devaluation of developed market currencies prompted Japan to start an aggressive currency war of their own. And now, with North Korea's sabre rattling growing ever louder, Fox News reports that following comments by Japan's Yoshihide Suga on "destroying any missile heading towards Japan," the North Koreans retorted with a threat that Tokyo would be the first target if they decide to play the nuclear card. Luckily, we have John Kerry on the spot, "if Kim Jong Un decides to launch a missile, whether it's across the Sea of Japan or some other direction, he will be choosing willfully to ignore the entire international community," as he weighed in on comments leaked yesterday that North Korea now had the know-how to arm a ballistic missile with a nuclear warhead - even if the weapons would lack reliability. Which is worse an unreliable nuclear missile or a reliable one? Though there is a silver lining, since if a broken window creates a Keynesian utopia, just think of the GDP-boosting greatness of a nuclear explosion in the heart of Roppongi.
- Korean Nuclear Worries Raised (WSJ)
- Och-Ziff, With Strategy from a 30-Year-Old Debt Specialist, Racks Up Big Score (WSJ)
- Japan's big "Abenomics" gamble: how to tell if it's paying off (Reuters)
- Kuroda walks a two-year tightrope (FT)
- China Rebound at Risk as Xi Curbs Officials’ Spending (BBG)
- BOJ Said to Consider Boosting Outlook for Inflation (BBG) - for energy prices? Absolutely: by double digits
- Cyprus May Loosen Bank Restrictions in Days (WSJ)
- Cyprus mulls early EU structural funds (Reuters)
- Russia slashes 2013 growth forecast (FT)
- Japan, U.S. Agree on Trade-Talks Entry (WSJ)
- IMF Trims U.S. Growth Outlook in Draft Report Citing Fiscal Cuts (BBG)
- Mexico Is Picking Up the Peso (WSJ)
There was little in terms of overnight newsflow to spook algos, but the tone is decidedly sour this morning following a lack of either the now traditional Japan or Europen-open buying ramps. The primary reason for this may well be the ongoing decline in the USDJPY which failed to breach the 100 barrier yesterday, coming as close as 99.95 before the Mrs. Watanabe onslaught had to be called off despite some more jawboning from Kuroda whose headlines are now summarily ignored, and which appears to have set a line in the sand for Japan, whose market naturally closed lower following this strengthening in its currency. Similarly troubling was the dip in the SHCOMP which closed down -0.58%, this despite the epic M2 and credit injection reported yesterday: if new liquidity can't send the market higher, what can?
The rattling of sabres grows louder as missile launchers are turned to the sky and launch-pads moved across North and South Korea. It appears the previous missile test-launch did not go so well...
- Germany: Europe's... poorest? ECB Survey Puts Southerners on Top in Household Wealth, Germans Near Bottom (WSJ)
- Obama Proposes $3.77 Trillion Budget to Revive Debt Talks (BBG)
- China trade data raise accuracy worries (FT) ... but generates so much laughter
- such as this... China Exports Miss Forecasts as ‘Absurd’ Data Probed (BBG)
- S. Korea Braces for ‘Very High’ Chance of North Missile Test (BBG)
- Slovenia, Spain Warned of ‘Excessive’ Economic Imbalances by EU (BBG)
- G8 foreign ministers meet in London to address Syria, North Korea (Reuters)
- N. Korea Threats Boost First South Korea Rate Cut Odds Since October (BBG)
- China Bird Flu Outbreak May Stem From Numerous Sources (BBG)
- Spain Bailout Less Likely on Lower Funding Costs: Moody’s (BBG)
- BOE’s Haldane: Simplify Bank Rules to Strengthen Them (WSJ)