If you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We're literally at most a few months, and very likely just a few weeks from Europe's banks imploding, potentially taking down the financial system with them. Think I'm joking? The Fed is pumping hundreds of BILLIONS of dollars into EU banks right now trying to stop this from happening.
The fight over plant closures, layoffs, and bailouts in the collapsing auto sector
Sacre Bleu! France Collapses Right as Spain, Italy and Greece Become Embroiled in Corruption ScandalsSubmitted by Phoenix Capital Research on 02/06/2013 21:14 -0400
Thus, we find that Europe’s primary political market props (EU leaders including ECB head Mario Draghi) are coming unraveled at the precise time that EU banks are showing warning signs and the most important EU economies are heading sharply south.
“Facts do not cease to exist because they are ignored.” – Aldous Huxley
The entire system is corrupt to its core. Both political parties, regulatory agencies, Wall Street, the Federal Reserve, and mainstream media are participants in this enormous fraud. They grow more desperate and bold by the day. The lies, misinformation and propaganda being spewed on a daily basis become more outrageous and audacious. They are using the Big Lie method on a grand scale. They frantically need to lure the muppets into the stock market and the housing market to keep the game going a little longer. You can sense we are reaching a tipping point. The system they have created is mathematically unsustainable. Therefore, it will not be sustained.
Gold bullion for delivery in December climbed as high as 1.2% to 5,000 yen per gram on the TOCOM. In ounce terms, the yen fell to 155,180/oz against gold, its highest level since 1980. According to the data on Bloomberg, the all-time record high for gold priced in yen was 204,850 yen on January 21, 1980. Thus, yen gold remains 33% below the record intraday nominal high from 1980. Given the Japanese determination to devalue the yen to escape deflation, the record nominal high will almost certainly be reached in the coming months. Platinum also climbed 2.7% to 5,130 yen per gram for the same month, the highest level for the most-active contract since May of 2010.
Here are eight considerations that will shape the captial markets in the week ahead.
All this talk about some Super Cycle turn in the economy is putting the proverbial cart ahead of the horse.
- CAT beats ex-Chinese fraud: $1.91, Exp. $1.70; Warns 2013 could be a "tough year"; sees 2013 EPS in $7.00-$9.00 range, Exp. $8.54, sees Q1 sales well below Q1, 2012
- Yi Warns on Currency Wars as Yuan Close to ‘Equilibrium’ (BBG)
- Monte Paschi seeks new investor as scandal deepens (Reuters)
- Assault Weapons Ban Lacks Democratic Votes to Pass Senate (BBG)
- Toyota Again World's Largest Auto Maker (WSJ)
- Curious why all those Geneva Libor manipulators moved to Singapore? Bank probes find manipulation in Singapore's offshore FX market (Reuters)
- Japan eased safety standards ahead of Boeing 787 rollout (Reuters) - so like Fukushima?
- Goldman is about to be un charge: Osborne cools on changing inflation target (Telegraph)
- Abe Predicts Bump in Revenue as Japan Emerges From Recession (BBG) - actually, "hopes" is the correct verb here
- Toxic Smog in Beijing Fueling Auto Sales for GM, VW (BBG)
- Fed waits for job market to perk up (Reuters) ... any minute now that S&P to BLS trickle down will hit, promise
- BofA shifts derivatives to UK (FT)
The platinum group of metals (PGMs) have received some perhaps unwarranted attention in recent weeks as the 'coin' idiocy came and went; but, it is noteworthy, as Eric Sprott points out that with demand rising and supply under pressure, the outlook for investment in physical platinum and palladium is increasingly compelling. The following infographic (and various supply and demand dynamics) provides a succinct picture of what these metals are used for, where they are produced, and the supply/demand imbalances.
Good news, bad news on the economic front this morning. The good news: December advance retail sales rising 0.5% on expectations of a 0.2% increase, up from a 0.4% revised November print. Excluding the volatile auto sales, the number was up 0.3% on expectations of a 0.2% increase, and up from a 0.1% decline. Excluding autos and gas, the print was 0.6%, on expectations of a 0.4% increase. The biggest increase in December retail sales by category was in food services and drinking places which rose 1.2% in December, the same as November. Strong numbers were posted at clothing and accesory stores (+1.0%) and health and personal care (+1.4%) - all very low margin sales. Yet where the report was undisputedly weak, and where many were hoping for a boost but did not get it, was in the higher margin electronics and appliance stores, which dropped -0.6% in December, down big from the 2.3% increase in November, and further weakness for those hoping that December saw a surge in spending over gadgets and gizmos.As for the bad news: it was all in the Empires State Manfuacturing Index which missed expectations big, and in fact posted a decline from the abysmal November miss, revised to -7.30, and now down to -7.78, the sixth negative print in a row, on expectations of an unchanged print. This was the 5th miss in the series in the last 6 reports, the worst miss in 4 months, and the lowest number in 4 months. Alas there was no hurricane in December to blame this major miss on. Oh yes, we remember, "the fiscal cliff."
- Just like last year: A Postholiday Letdown for Retailers (WSJ)
- Obama Fights Republicans on Debt as Investors Seek Growth (BBG)
- Housing a Sweet Spot for U.S. Economy as Recovery Expands (BBG)
- House chooses Boehner as speaker again despite dissent (Reuters)
- Backlash pushes Republicans to seek cuts (FT)
- Jobs Lost Hit 5 Million With Rigged Currencies (BBG)
- Chavez still has "severe" respiratory problem (Reuters)
- Paris promises flurry of economic reforms (FT)
- Investors Sour on Pro Stock Pickers (WSJ)
- Abe moves to ease South Korea tensions (FT)
- Wildfires Hit Australia Amid Worst Heatwave in Decade (BBG)
- Monti attacks ‘extremist’ rivals (FT)
US Vice President Biden and Senate Minority leader McConnell brokered an agreement that was approved by the Senate that seems to avoid the full fiscal cliff. It now is before the House of Representatives.
While the Jan 1 deadline is passed, the more significant one, we had argued was Jan 3, when a new Congress is sworn in. A failure by the 112th Congress to finalize the legislation would mean that process would have to begin anew with the 113th Congress.
After what is likely to be intense though short debate, the House of Representatives can either approve the same exact bill the Senate approved, which be the quickest resolution. It can seek to amend the bill, in which case it must return to the Senate for their approval. The process could be cumbersome and require reconciliation and would risk the Jan 3 deadline. Alternatively, a majority of the House could fail to ratify the Senate bill, in which case, it will be up the next Congress to claw back from the other side of the cliff.
The holiday week saw the dollar consolidate against most of the major currencies. The yen was the main exception as its losses were extended under the aggressive signals coming from the new Japanese government.
At the end of the week, the other key consideration, the US fiscal cliff made its presence felt. The recent pattern remained intact. News that gives the participants a sense that the cliff may be averted encourages risk taking, which means in the foreign exchange market, the sale of dollars and yen.
News that makes participants more fearful that the political dysfunction failed to avert the cliff and send the world's largest economy into recession, generally see the dollar and yen recover. This is what happened in very thin markets just ahead of the weekend as Obama's ling last ditch negotiating stance seemed to reflect a retreat from his earlier compromises.
- Two weeks ago here: The Latest Greek "Bailout" In A Nutshell: AAA-Rated Euro Countries To Fund Massive Hedge Fund Profits... and now on Bloomberg: "Hedge Funds Win as Europe Will Pay More for Greek Bonds" (BBG)
- Oracle sends shareholders cash as tax uncertainty looms (Reuters)
- GOP Makes Counteroffer In Cliff Talks (WSJ)
- Iran says captures U.S. drone in its airspace (Reuters)
- IMF drops opposition to capital controls (FT)
- Vogue Editor Wintour Said to Be Possible Appointee as U.K. Envoy (BBG)
- Juncker Stepping Down French Finance Minister to Head Euro Group? (Spiegel)
- Australia cuts rates to three-year low (FT)
- Europe’s banking union ambitions under strain (Reuters)
- EU Nations Eye New ECB Bank Supervisor Amid German Doubts (BBG)
- Frankfurt's Ambitions Get Cut Back (WSJ)
- House Republicans Propose $2.2 Trillion Fiscal-Cliff Plan (BBG)
The US dollar continues to trade heavily, with the euro and sterling edging to new multi-week highs and the yen consolidating its recent losses. The main consideration appears to be the looming fiscal cliff, weaker data and the prospects for additional QE to be announced next week by the Federal Reserve.
At the same time, tail risks emanating from euro area have diminished, even if the i's aren't dotted and the t's not crossed on Greece's new program, or if the negotiations over bank supervision in Europe at today's EU finance minister meeting, are more protracted.