“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


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Tuesday, September 16, 2014

Copper Short Squeeze Pulls Metals Higher

If you ever want to know why we commodity traders are occasionally prone to be heard muttering meaningless, seemingly disconnected sentences, rambling incoherent utterances and other assorted bewildering, strange words, it is because life in the commodity futures pits can produce some of the most inexplicable and bizarre moments that the vast majority of sane, otherwise blissfully ignorant folks will never quite comprehend.

Take copper for example. Around 10:00 CDT, the red metal began to lift sharply higher on big volume. Something began to rattle the shorts in the market. Then at the start of the next hour, it really took off. Look at the extent of the price spike. It ran from 3.10 to near 3.21, a HUGE 11 cent per pound jump on no discernible news whatsoever. By the way, for enquiring minds, that is a near $2500.00 move per contract! Do any of you remember that recent COT chart I posted of the copper market noting the hedge funds had begun positioning on the short side of the market in anticipation of slowing global economic growth? Well guess what? They all must have run at the same time!



I am still trying to discover what the catalyst was to shove copper prices this higher in such a short period of time. I did note however that the move higher in the copper also coincided with a strong burst of buying in the crude oil and related energy markets. Also, in trading the soybean market, I also noted a surge of buying interest coming in at the same time. This all occurred against a backdrop of a push higher in the major currencies against the US Dollar.

What this tells me, and I still do not know the reason behind the move, was that this was the same old MACRO TRADE that we have seen in the past wherein INDEX FUNDS come in and buy a basket of commodities, across the board, regardless of fundamentals, because of the lower dollar trade. That will explain some of this but a large part of the move across the sector was also due to hedge fund short covering.

What makes this even more strange is that expectations are that the press release coming from the FOMC tomorrow is expected to provide some more definitive data on any upcoming rate hike. That has been expected to provide another upside boost to the US Dollar. Maybe the market is changing its views on that? Who knows? Whatever the reason the initial burst of buying has seemed to abate somewhat as the panicked shorts in the red metal apparently have been flushed out but now what?

Also, this big buying binge has been accompanied by another surge in the equity markets with the S&P climbing back above 1990.

I can tell you this - anyone who dismisses the Dollar's significance when it comes to asset prices is making a huge mistake. That big macro trade is always ready to come piling on or come piling off.

By the way, at the risk of having some fun with the "Gold is Always Manipulated All the Time" crowd, ( GIAMATT), is a big short squeeze higher considered upside manipulation or it is "Normal"? Those of us who have borne the brunt of the attacks from this group already know the answer to that. I merely point this out to show their complete silence by way of their condoning sharp spikes higher in price while constantly complaining and bemoaning all sharp moves lower in price. "oh Ye Hypocrites - why art thou so silent at such sinister conduct"? Enough fun for now however!

Remember, copper prices have been taking their cue mainly from disappointing Chinese economic data news with traders fearing a slowdown in the expected growth rate would crimp demand for the metal. Combine that with Dollar strength due to expectations, whether perceived rightly or wrongly is immaterial, of higher interest rates here in the US, and commodities have distinctly fallen out of favor with would be buyers, not to mention been the target of aggressive hedge fund related selling. Any sort of news therefore that sends the Dollar lower (such as dovish talk on interest rates ), for whatever reason, can easily spark a big wave of short covering across the commodity complex.

That is exactly what we got across the vast majority of the complex this AM.

Keep in mind that there are many who believe that the economy is in no shape to handle higher interest rates as it is not growing near fast enough nor has enough inherent strength to overcome the drag that would come from higher loan rates.

We'll see whether this is a one-day blip ( although it is terrifying if one is short in some of those markets that experienced a squeeze of this nature) and it all is for naught tomorrow when we get the actual FOMC decision to taper another $10 billion in QE plus news on the interest rate front or it is might be the start of more prolonged move.

I tend to think it is the former and will fade out fairly quickly but with these goofy markets and computers running the show, anything is possible. All one can do is to stay nimble and either learn to get the hell out of the way or trade very small at times. Be careful out there folks! If the FOMC release tomorrow is considered dovish, there could very well be more selling pressure seen in the Dollar, even though the Euro zone is a mess and going nowhere anytime soon. Ditto that for Japan.


71 comments:

  1. Reminder to all. Sep 16 to Oct 31 the worst performing part of the year for U.S. Stocks over the past 30 years. Stay nimble, step lively...

    ReplyDelete
  2. it's due to the Evil Chinese and their "stealth" QE - they can't do nice honest QE like the free countries in the West, they have to hide it all up in shadowy shadow banks in the shadows, because of what Zerohedge refers to as "China's inevitable financial crisis

    Boy, the laundry bill for these kids' bedsheets must be absolutely colossal!

    Meanwhile, back in the real world, the People's Bank of China is performing fairly normal money market operations via 21 day liquidity facilities - doesn't sound nearly as good as "stealth QE", does it. ponzi.

    ReplyDelete
  3. the news was PBOC liquidity:
    Sina.com reports that the PBOC will use their Standard Lending Facility to add 500bn in liquidity. Sina.com is citing a banking analyst Qui Guanhua who says they will be providing 100bn yuan to each of 5 banks today and tomorrow with a 3 month duration.

    all commodity currencies popped, the 1.30 round number wasn't easy for the eur/usd.

    commodity short covering ahead of yellen weds. and euro litro and scotland in the next days, as the shorts had tons of profits!

    CL next target is 50-day MA... a little ambitious citing the 200-day, haha!

    cheerio!

    ReplyDelete
  4. This comment has been removed by the author.

    ReplyDelete
  5. The Bank of England had, until January 2014, been running a liquidity pump for the UK Banking Sector, known as the Funding for Lending Scheme (FLS), which provided (net) £41.8 bio of 3 year term funding to UK banks at near-zero interest rates. That is almost exactly the same amount of money as CNY 500 billion, whereas China's GDP is 4x as large as the UK

    Of this £41.8 bio of cheap funding, only £10.29 bio ever got loaned out to businesses and consumers - the other £31 bio just went straight into the Bank's coffers to replace more expensive commercial funding and retail deposits. Look for instance at Lloyds Banking Group - still has £10 billion drawn down on the facility, has made net new loans to customers of only £2 billion

    But that didn't work, so they opened an "extension" which has so far procided a further £5 billion to the Banks: net result? - Lending has contracted by almost £4 billion, again with Lloyds the biggest beneficiary http://www.bankofengland.co.uk/markets/Pages/FLS/extensiondata.aspx

    At least they're not shadowy Chinese shadow banks pulling off stealth QE in the shadows


    Yes, OK, so I have got a chip on my shoulder: THIS IS WHY!

    Here are the details: http://www.bankofengland.co.uk/markets/Pages/FLS/data.aspx

    Does anyone remember that being called "Stealth QE"?

    ReplyDelete
    Replies
    1. Zhang Lan;

      Thanks for sharing that. It is excellent information.

      Dan

      Delete
    2. the reporting of economic affairs is so lopsided, it's absurd

      Like any country - especially one emerging from widespread poverty - China faces a raft of problems, and is far from perfect in the manner in which it handles them. But despite the wet dreams of 99% of commentators in the West, it isn't about to collapse, and nor is it any more centrally controlled than any other economy

      The way the FLS works (and during 2013 I provided maternity cover as Head of ALM for one of the Banks on that list) is that a Bank deposits collateral (loans already advanced) with the Bank of England, which then lends the depositing Bank shiny new UK T Bills (which can either be sold in the open market, or used as collateral for commercial interbank operations and liquidity). The facility was launched in 2012 and initially offered sub-market term funding for 3 years up to 2015; its remit was narrowed at the end of 2013 to cut out residential mortgages, and is now nominally directed at lending to small businesses

      Net-net the efficiency of this scheme is no more than 20% - particularly as most of the collateral is not "new" lending, but comprised on loan portfolios already on the Banks' balance sheets. These are not necessarily impaired assets or low-quality, but what it does mean is that, for each tranche of Assets pledged to the Bank of England, the remaining "unencumbered" assets left to repay retail Depositors decreases, to the point where some Banks such as e.g. Virgin Money have up to 80% of their loan book pledged to the Bank of England, rather than backing customer deposits

      For a better understanding of the consequences of collateralisation and asset encimbrance, take a look at what happened to Detroit, when a US Court upheld the collateralised claims of the City's derivatives counterparties (I recall it was primarily UBS) to rank senior to all other creditors, including Pension entitlements

      The way these central banks are propping up commercial banks is scandalous and totally unseen to 99.9% of the population; except when China turns on the liquidity spigot, and then we all cry "foul" and accuse the PBOC of panic: take a look at the florid and emotional language in this article, for instance: http://www.zerohedge.com/news/2014-09-16/china-launches-cny500-billion-stealth-qe

      "China’s central bank is operating behind the scenes to prevent a wide-scale financial panic."

      Where were the headlines braying about that when the FLS failed to deliver? http://www.theguardian.com/business/2014/aug/28/business-lending-falls-for-second-quarter-smes

      Delete
    3. Detroit:

      yes, it was UBS that got priority in the Chapter 9 proceedings -

      http://dealbook.nytimes.com/2013/12/23/safe-harbor-in-bankruptcy-is-upended-in-detroit-case/?_php=true&_type=blogs&_r=0

      http://www.nakedcapitalism.com/2013/09/ilargi-promises-promises-detroit-pensions-bondholders-and-super-priority-derivatives.html

      Delete
    4. Very enlightening. Still working on understanding the import of this all.

      And I fully agree, there is a huge dose of xenophobia in financial reporting.

      Delete
    5. Much faith in communism, Zhang has. Monetary policy is not the issue with China; rather it is the lack of individual freedom. We will all get to witness China's down fall over the coming decades. Communism has never worked, and never will.

      Delete
    6. I am sure you are right, Eric, just as I am sure you know what you are talking about. Orwellian capitalism isn't doing so well either these days - maybe something else will emerge which combines the worst of both systems?

      To be frank, as I think we can see from events surrounding Ukraine, this has nothing to do with communism; the Soviet Union collapsed more than 20 years ago, and yet the same "Dr Strangelove" mentality persists because its Russia, and we all need a good bugbear to keep the proles in line

      I have lived in the USA, the UK, Singapore, the UAE and in the EU, and I can assure you that street-level individual freedoms are every bit as present in China as in any of those countries; I am not going to abuse Dan's blog with a eulogy of my homeland, but I think we all know that personal freedoms are being eroded around the World, and you dont need a Communist government for that kind of thing

      However, your comment does confirm one thing - my remarks above were largely about monetary policy and the way it is reported in the media: clearly, the notion that "4 legs good, 2 legs better" is alive and well in your household, where anything a "Communist" does is inevitably doomed to failure, and anything the Goold Old Boys do will ultimately win out in the end. Personally, I am not fully signed up to the Caucasian Exceptionalism thing, but, as you note, time will tell.

      Delete
    7. This link offered without comment:

      http://www.prageruniversity.com/Political-Science/The-American-Trinity-2nd-Edition.html#.VBj_4d50w5s

      Delete
    8. "Promoted Liberty around the World more than any other Country"

      Well, that's one way of putting it.

      Dan's blog is not an appropriate forum to discuss the competing merits of alternative political and value systems; my point was to highlight the absurdity of selective bias, and I am sure you will be in general agreement with me that instinctively polarizing a discussion on the basis of race, politics or nationality is not rational. In that sense, it is of no interest to me whether the USA is or is not a better place/country/system than any other nation - my only concern is that it is misleading to systematically apply a negative filter to newsworthy events solely on the basis of whether they are "communist" or not.

      Personally, I have no political affiliations, and from a religious and philosophical perspective I am a committed Zhangist. That's it.

      Delete
    9. Zhang- Would agree that ones values and character are more important than race or nationality for sure. And in a free society (no matter which one it is), one's values/character would be a more accurate predictor of success than anything else. Thanks for your contributions and good trading.

      Delete
    10. best regards Trinity. Unfortunately text is such an imperfect medium of communication, especially in the one-dimensional context of a blog (added to which I have the language and cultural barriers to grapple with when trying to express a viewpoint which is alien to many people reading Dan's website)

      thankyou for your patience

      Delete
  6. Japanese, Euro, Chinese, American policy wizards are all in uncharted waters. Only conclusion to be drawn is that if you put all their heads together you would indeed get a rockpile.

    ReplyDelete
    Replies
    1. Steve

      Are you familiar with Ben Hunt's work over at www.epsilontheory.com ?

      I do not agree with all if his conclusions, but his analysis of the myth of Central Bank omnipotence makes interesting reading

      Although I forget the precise dates, there are a number of G20, SCO and IMF meetings coming up later this year, which might prove to be turning points in market sentiment

      Delete
    2. http://www.salientpartners.com/epsilontheory/pdf/5.25.14%20Note%20-%20When%20Does%20the%20Story%20Break.pdf

      Delete
    3. PCB, no, but I will check out during the day. Thank you.

      Delete
  7. Dan, your last bit is the best advise. sometimes I need to pop a beer and just watch for a while. by the way maybe GIAMATT is true but I say don't whine deal with it.

    ReplyDelete
  8. This is all over the media now.

    Jon Hilsenrath a Fed insider type reporter said today the Fed's "Considerable time before raising interest rates" statement will not change in tomorrows statement he believes.

    More easy money longer, stock markets rocket higher and the US dollar sells off on the news.

    Guess the Fed saw the stock markets starting to falter on the raising interest rates trial balloon they floated out there, so are looking to reverse that talk with Hilsenrath's comments.

    The Fed obviously even after 6 years still will not let the markets stand alone on fundamentals to find true market prices.

    Of course the Fed knows the stock market is the recovery so they will say anything to keep propping it up.

    ReplyDelete
    Replies
    1. Do you have any FOGGY clue that earnings have been rising over time? Valuations are not historically out of line with earnings. YIKES! Time to step outside for a while.

      Delete
    2. Well Eric if you consider corporations borrowing trillions of dollars of the cheap Fed money near 0% to buy back their own shares to create earnings then guess those earnings are great after all.

      And yup thats why the stock markets rocketed higher today because great earnings were announced. Nothing to do with central banks.

      Think you need to get a clue and pay attention what happened today.

      Perhaps you were outside all day and missed it.

      Delete
    3. Every time I hear a guy complain that the markets are disconnected from the fundamentals, I see someone who has been losing money.

      Delete
    4. Its been a great ride in the stock markets, its not being created from an economic boom is all.

      Delete
    5. One might argue the bullmarket in equities since 1980 was caused by lowering interest rates.

      Manipulation in the dow all the way from dow 1000.

      I say its a Ponzi!

      Delete
  9. or maybe it's Fonzie!

    https://www.youtube.com/watch?v=MpraJYnbVtE

    ReplyDelete
  10. Once again, Trader Dan nailed it.

    Just 2 days ago he mentioned the lopsided sentiment in copper, too many bears.

    ReplyDelete
  11. You see, the bullsh1t never ceases; over on Everyone's Favourite Website we now have Mr Embry stating

    "China now being the largest sovereign holder of gold"

    whereas neither he nor anyone else has any idea whether that is the case; heck, why not just state it as fact and move on with the GIMAATT meme - who gives a tuppeny damn about the truth of the matter?

    "This means that the governments in the West haven’t been able to get leverage going through the banking system, the leverage we have seen in all past post-recession expansions, and it’s reflected in the lower money velocity."

    whereas Monetary Velocity has been collapsing for nigh on 20 years now http://research.stlouisfed.org/fred2/series/M2V and is clearly not dependent upon either QE, manipulating the Gold price or ZIRP.

    "as the Western central banks try to get rid of their paper money, velocity is going to explode." . Personally, I'm not holding my breath on that one, and neither am I signed up to the absurd notion that ""Last week on one of the several sharp down days the open interest on Comex rose by more than 6,000 contracts, or more than 30 million ounces, to nearly a record. This is contrary to the general action in silver". . Here is a chart of OI in Silver - http://monetary-metals.com/wp-content/uploads/2014/04/GoldSilver-OI.png and I believe that we are all familiar with Silver's price perfomance over the same period. Once again these people are just making "facts" up to suit their purpose, truth be damned

    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/16_War_In_Silver_Rages_As_Peoples_Confidence_In_The_West_Fades.html

    and so finally to my now-obligatory moan about how unfair it all is and how China is a wonderful country, really - http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/16_China,_Russia,_Gold_%26_A_New_World_Order_Rising_From_The_East.html

    "China has had a persistent focus on gold...."

    No it doesn't: the Chinese do - whether they are in Singapore, China, Hong Kong or San Francisco - it's a cultural thing, not political, and whilst it is possible to indirectly monitor Chinese retail and commercial demand via the Shanghai Gold Exchange (settlement volume down 17% this year), absolutely no-one has any idea what those evil Dr No characters in Zhongnanhai are up to.

    The reason the USD became a global reserve currency was the glut of dollars held overseas following WW2 as a consequence of the Marshall Plan; there are nowhere near as many Renminbi in circulation internationally - just as the JPY was never a serious contender as a trade settlement currency. Gold backing or no gold backing, that isn't going to change any time soon - and, even if it does, it is by no means clear to me that this will lead to skyrocketing Gold & Silver prices. Recall how the London Pool collapsed - it was due to the French sending their USD back to the USA and asking for Gold at $35/oz. If the CNY (Renminbi) was Gold-backed, you can bet your bottom dollar (sic) that the Gold reserves that the Peoples Bank of China has supposedly secretly amassed wouldn't stay in China for very long

    Personally - whilst I don't have any significant position in Silver - my view is that Silver in particular has some very considerable way to fall from here; I acknowledge that there are macroeconomic factors which might change, I accept that we are all exposed to potential "Black Swan" extreme geopolitical events which might occur, but I am at a loss to see why that should favour Silver any more than it should influence Gold. As for the latter - well, we are still net up on the year so far, and 1180 hasn't been threatened so far, and I am therefore for the time being still in "range trading" mode, interpreting this as noise rather than the establishment of any persistent new trend

    ReplyDelete
    Replies
    1. Silver will do better than gold according to Nenner

      Delete
    2. Hi Lan,

      On my charts, silver is held only by one thing, the inf bollinger band of the weekly time unit, corresponding to last year's lows near 18.50.
      Contrary to other times, the perspective seems uglier and I didn't try to buy the dips (especially with gold breaking through 1240 at the same time).
      If we break 18.50, I have a target at 16.50 for starters.
      18.50 had better hold for silver bulls.

      As for Nenner, maybe what he is saying is that silver's volatility is higher than gold's, and as he thinks that gold can only go up from here (I disagree, of course), silver will do better.

      Copper...the thing with CFD platforms is that they are thieves :)
      I put a long order at 306.10 a few days ago (remember the area 305-306 I mentionned for support area) but with a spread of 60 pips!!! , yes 60 pips (305.50 / 306.10 for example), I missed it while copper did hit the sub 306 area.
      That's the problem with CFDs vs Futures.
      You can trade much smaller contracts.
      But it's not made for short term trading or you'll easily be eaten by spread + commissions.
      Well, one can't have everything :)

      Delete
    3. Yes, Anon - lots of people say that. Many of them sell Silver bullion to retail investors, and the Bid-Offer spreads tend to be slightly over double the equivalent cost of buying Gold. Please take a look at this thread: http://hiddensecretsofmoney.com/blog/silver-the-opportunity-is-now

      I am not a big fan of Nenner. Here's why - http://www.youtube.com/watch?v=ME9TikqlKR4

      Delete
    4. Sorry, target would be 16.80, not 16.50.
      Contrary to Copper which bounced precisely while MACD 9 20 7 met its propagation axis, Silver's MACD alrready broke through its axis.
      ema15 and ma20 are heading down and are effective resistances.
      Meanwhile inf bol band weekly is slightly giving way and is already closer to 18 than 18,50. I will be closely monitoring who wins between bollinger band support and daily ema15/ma20. If prices don't bounce strongly soon, the perspective looks more bearish to me. That being said, it's my personal opinion only.

      Delete
    5. Great piece as usual Lan, but I am afraid WAY over the heads of Egon, Embry, etc, and of course the sheeples that blindly follow them over the cliff ultimately. Silver 15-1 in your dreams, Denver Dave.

      Delete
  12. Steve,

    I picked GB, not TB, thank goodness. But I ALMOST picked SF... So glad I didn't!!! I live on. Thinking about Atlanta this week? Pats are the obvious pick, however Tom Brady looks more like Scott Sisson than Tom Brady.

    ReplyDelete
  13. ATTEN MIKE EHLERT

    further to my commentary on the Bank of England FLS scheme, please note the following:

    - Overall some £45 billion has now been drawn down; in the context of the UK economy, that is a very significant sum of money indeed, equivalent to around $1,300 per head of UK population

    - As a consequence, overall Bank lending has increased by 0.7% since July 2012 (see cell J3 in the Lending Data tab of this Bank of England spreadsheet http://www.bankofengland.co.uk/markets/Documents/flsdatadoc.xls )

    - Given that the UK economy (GDP) has grown by almost 4% over that period, the obvious conclusion is that FLS has failed in its in aspiration to spark commercial and retail lending

    - This is not only a failure of epic proportions, it is in my opinion a scandal; however, it has not been reported as such. In contrast, when China offers an equivalent amount of Liquidity to its banking sector, this is seen as not only a panic move, but as somehow "stealthy". I consider this mode of reporting to be imbalanced and reflective of prejudices which have no basis in economic reality. (In passing, CNY 500,000,000 equates to about $63 per head of Chinese population)

    - Just as the price of commodities, metals and anything else is not affected by how we feel about those prices (one of the core tenets of Dan's market philosopy), so the relative merits of one or other political or monetary system are not really influenced by whether I believe my dog is bigger than yours, or whether I am more exceptional than you. Things are as they are, and will evolve over time in ways we may perhaps anticipate but certainly not predict

    - However, where information is given either with the intention of influencing an investment decision and/or which is wilfully misleading or factually unsound, I consider it both entirely appropriate and necessary to call it out. My earnest recommendation is that, whatever your patriotic affiliations, religious beliefs, moral values and personal circumstances are, making decisions on the basis of what you wish were true will lead to inferior outcomes compared to a sober acceptance of the objective facts.

    I had intended this particular thread (about "stealth QE") to be limited to a review of monetary policy, but it has unfortunately strayed well beyond those bounds. At this point, therefore, I think its high time for me to be quiet for a while and wait for the next piece of material news before commenting further

    ReplyDelete
    Replies
    1. Part of the preduce is political while part is just home team. We all see news about local markets first followed by less and less about other markets the farther they are away.

      Causes me to look at other news sources than USA MSM. BBC, Reuters and etc.

      Thanks for the addition info.

      Delete
    2. +1 Mike

      I am having problems with the "pink & fluffy" filter today and am coming over a bit brash and arrogant. Sorry for that. Normal service will be resumed later in the month

      Delete
  14. Ah! We all knew the communist were up to something...

    http://armstrongeconomics.com/2014/09/16/china-prepares-for-war-with-japan/

    ReplyDelete
    Replies
    1. I think that one is probably true - I will let Queenie speak for herself about the respective merits of the situation, but I can confirm that the blood is well and truly up about that one

      The problem of course predates the Commies - as indeed does the infamous "Nine Dashed Line" which maps out the South China Sea. These people have long memories

      Delete
    2. Sigh. I hope the long memories can be resolved more civily there than that are in the Mideast.

      Delete
    3. I do not wish to sound either jingoistic or triumphant in this, but my honest opinion is that a conflict between China and Japan will happen before 2017, and that the Chinese will go "all in" including nuclear weapons.

      This will not be a limited punitive war such as those with India in 1962 and Vietnam in 1978, it will be a determined attempt to eliminate Japan as a cohesive society and a iable economy

      Western powers will react to this in two ways: firstly, they will be distracted by something else, as China will choose its timing carefully. Secondly, their bluff will be called - with Japan already in ashes, will the USA really want to risk LA and San Diego for a lost cause? China built Shenzhen and Chengdu in a decade - it can rebuild them in half that time, and if the US is fool enough to get involved, then its a price that was going to have to be paid anyhow sooner or later

      This is deadly serious stuff we are talking about - and it may turn out that the USA has written cheques it can't cash

      Delete
    4. Hi Lan,

      China is oftentimes presented as a peaceful country which practically never in its history tried to extend its borders militarily.
      Is it dead wrong and do you think China became actively aggressive towards its neighbours, to the point that it would take the initiative to invade / nuke Japan?
      I didn't post the link towards Armstrong article by chance, of course, as I'm nervous about the tensions in the region, but your forecasts go beyond my most pessimistic scenarios... gasp!

      Delete
    5. At least, maybe they'll soon release some new versions of the good old games of my childhood!
      http://www.youtube.com/watch?v=4xu_Ldvn1GA

      Delete
    6. I am seriously concerned about this - I really believe it could happen; who would spark the incident, how, I have no idea, but once it goes off, China is likely to treat this as an existential defining moment, and an opportunity to pay back some of the favours of the early 20th century

      I really believe that this will happen, and I believe that 2016 - 18 will be an extremely dangerous period in Asian history

      Delete
    7. If Japan is in ashes the USA is unlikely to uphold the mutual defense treaty. Unless of course the forward deployed forces respond. If I was planning the attack those forces wouldbe targeted first as they are unlikely to get an okay to shoot in time. Have to wake up Hillary first.

      For you and PCN is a relocation of about 12 time zones indicated?

      Delete
    8. This comment has been removed by the author.

      Delete
    9. Probably Northern Europe from 2015 - 17 (if WWIII hasn't kicked off their too)

      Delete
  15. This comment has been removed by the author.

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  16. This Australian guy (who also has the sense to be named Andrew) writes quite a balanced and well informed blog on Sino-Japanese affairs

    http://southseaconversations.wordpress.com/2012/08/19/the-whole-worlds-chinese-people-are-going-decisive-moments-and-the-perils-of-diaoyu-nationalism/

    http://southseaconversations.wordpress.com/2013/02/25/abes-southeast-asian-diplomacy-intersection-of-the-south-and-east-china-sea-disputes/

    http://southseaconversations.wordpress.com/2014/06/19/chinas-not-so-new-spratly-islands/

    ReplyDelete
  17. Oh, what might have been !

    http://www.zerohedge.com/news/2014-09-16/what-might-have-been

    ReplyDelete
  18. Lan, Nenner last had an original thought maybe 5 years ago, and as for interviewer Hunter, I can only say one thing, and that is that he is the perfect definition of childlike.

    ReplyDelete
  19. Nate, it is either the Pats or Saints this week for you to come back next week and fight another battle. These look easy.

    ReplyDelete
  20. Zhang, I have newfound respect for you. Your assessment above is to the point and I do know what I am talking about, as I also lived in several countries (communist and non-communist). I am tired of so many neo-con ideological supporters who constantly repeat paroles and witticisms of their beloved criminal minds. They study the world by looking into their own little backyard and then projecting it on the entire planet. The thing that gets me is that they are not even paid to do so.

    ReplyDelete
  21. http://www.zerohedge.com/news/2014-09-17/wall-street-responds-chinas-qe-beijing-finds-la ck-faith-disturbing

    I couldn't have put it better than this

    ReplyDelete
  22. Steve,

    Would you mind shooting me an email at nathanaelwills@gmail.com? We can talk sports without filling the board?

    Thanks

    ReplyDelete
  23. TIPS took a big hit on the lack of inflation from the CPI Aug -0.2% print.

    other interesting item is the 6 year high print in usd/jpy... everybody loves a low currency!

    euroland gives the results of QE the 'litro' thurs. and scotland isn't til friday, so a long way to go to get this week booked.

    any dips by SPX on fomc decision said to be a buy on the op-ex week pattern and BABA ipo.

    cheers!

    ReplyDelete
  24. SPX dip buyers were there ES did +15 of the post fomc low.. some new trends in various items can start the day after fomc as well.

    Quiet day in the grains, with little movement; corn dn 2 on harvest; beans up 2 waiting for harvest; CH wheat up 3, KC dn 1, MN dn 2.

    notice yesterday in the ags the 'round number sellers' were there in spades at nov beans 10.00 and dec corn 3.50.

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  26. GLD and GDX blowing out to new lows.

    I was wrong about the imminet short squeeze, sorry.

    Looks like gold is dead for now.

    ReplyDelete
    Replies
    1. Lets see if Sinclair says sorry again 200 dollar lower like he did in 2013 and blame it on the irresponsible bankers again.

      LOL

      Delete
  27. I just wrote one of my verbose rants, and when I went to publish it Google decided I didnt have a Profile; I was logged in ok, but without warning the blog editor just dumped my text and threw me back to the Captcha. Which was annoying

    Basically, two things: a nonsensical Zerohedge article about how India imported triple the amount of Gold in August 2014 compared to August 2014 http://www.zerohedge.com/news/2014-09-17/gold-demand-india-triples-china-launches-global-gold-bourse-thursday

    I pointed out that Gold rose from 1295 to 1400 during August 2013, but has fallen from 1299 to around 1250 during August 2013, indicating that there is no direct correlation between supposed Asian retail demand and price dynamics. This is entirely consistent with the Gold price collapsing during Q2-2013 (when the Chinese stacked up), and rising during Q1-2014 (when Chinese imports were down 17%)

    I then went on to ridicule the latest masterpiece on KWN, which (as usual) appears to be written in a parallel Universe: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/17_Rule_Rule_-_Massive_Fund_Flows_Pouring_Into_Gold_%26_Silver.html

    "We continue to see a recovering market, albeit a shallow recovering market with higher highs and higher lows. ..... So the market is slowly moving higher, consolidating gains and then moving higher".

    Here is the corresponding chart from Planet Earth http://www.kitco.com/charts/popup/au0030lnb.html , and frankly, I don't see the recovery "one of the wealthiest people in the financial world" refers to

    ReplyDelete
  28. Zhang Lan;

    Mr. Rule would fail an ink blot test.

    He is seeing what he wants to see and not what the chart shows. The fact that anyone is paying any attention to his sort of perverted comment on a price chart is tragic.

    ReplyDelete
  29. RR is likely helping to market Sprott's new gold miners etf....as a "contrarian" investment.

    ReplyDelete

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