"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


Thursday, December 4, 2014

Draghi and Company Disappoint Euro Bears

Expectations were high heading into today's ECB meeting that the Central Bank would issue some news detailing the start of another round of stimulus for the lagging Eurozone economy.

'Twas not to be.

Draghi TALKED doing more stimulus at some point as he went through the same litany of things that he has been saying seemingly forever at this point:
"Economic risks remain to the downside"
"our projections suggest lower inflation"
"we now see GDP growth at 1.0% versus 1.6% in September"

BLAH, BLAH, and more BLAH. The problem is, as far as the market is concerned, they did NOTHING! Just talk.

That is NOT what the market wanted to hear so guess what? Time to cover all those short Euro positions were loaded in this week in anticipation that they would do SOMETHING. Up went the Euro, now over 100 points and once again, the currency markets are roiled by another yapping Central Banker.

Ah yes, another moment in the "CALMING" affect of Central Bankers on the financial markets. Thank heaven for these people - without them, chaos, instability and turmoil would be the norm in our lives!

Note the words dripping with sarcasm.

This is an example of how these monetary lords mislead markets. Draghi has been sounding like the uber dove for quite some time now and hinting about further measures, then - This - a big, fat egg.
It was amusing to see his excuse for the ECB's inaction - OIL PRICE CHANGES!  Personally I think the ECB is scared to death to follow in the footsteps of the US Fed and the Bank of Japan/ Abe government and get aggressive on the QE type front. I wonder what the Eurozone exporting related industries are going to think of their latest "plan" seeing that the Euro is going the other way than from what they were hoping?

Perhaps, some time during his current press conference, Mr. Draghi will look at this cell phone to check and see how the Euro is responding to all this, and then make some statement promising more definitive action next time around. Who knows?

I wonder what it must be like to have financial markets responding to every syllable that proceeds forth from one's mouth?

By the way, while this circus show was going on, Saudi Arabia cut all January oil prices to the US and to Asia! Crude oil went "thump" as a result.


  1. IMO The ECB cant do any easing because the Germans won't let them....


    1. Agreed. Weidmann and the Bundesbank are strong opposition to ECB's monetary easing. I'm not sure germans will agree at some point to pay for the rest of Europe by weakening their currency. But then, maybe the euro will implode anyway. If germans won't agree with easing, italians are already considering to leave the euro (just as Berlusconi did, and they kicked him out). What a mess...

  2. Thanks Dan.
    I agree, the ECB is being super hesitant before dipping their toe in the QE pool.
    They want QE...they just don't want to disperse those funds to the chronically economically underacheiving southern zone members.

    I do think the EU/ECB should cut some weaker EU members loose before they implement any type of QE or they could go to a two-tier euro that takes into account the differences between some member economies that are far more needy then others.
    Personally, if I were king, I'd let the weaker members stand on their own former sovereign currency footing. It makes no sense to keep pumping money into Greece for example.
    It's a slippery slope once they go that route but it'll eventually happen anyway and sooner then later would be better imho.

  3. So, I was away from screens for a while, and get back to see stocks rallying back to green. I thought "let me count the minutes until ZH has a post up to complain about it." And lo and behold, it was already up! Too funny. Somewhere, another permabear just jumped out of a window.

  4. And we wonder why HFT has become so prevalent. The Hedge funds love this stuff!

  5. this is so hilarious! So Dan said the following:

    "Perhaps, some time during his current press conference, Mr. Draghi will look at this cell phone to check and see how the Euro is responding to all this, and then make some statement promising more definitive action next time around."

    They did exactly that! LOL Now the headlines say this:

    "ECB considering broad QE package for next meeting"

  6. One thing I am not seeing is the forecast on balance of trade numbers out tomorrow. That could get interesting in a "New York Minute" I am expecting numbers worse than consensus so $45billion+ and with it a reversal in current US dollar strength.

  7. non farm payrolls as well which will probably drive dollar strength. Bit odd that gold never moved at all with the big drop in the dollar this morning.

  8. Desperate times call for desperate measures.

    Take Russia and Putin for instance and the turmoil in the ruble.
    Just imagine Obama during a State of the Union address on TV asking Americans to repatriate over $150 billion offshore dollars back into the US banking system and you'll be offered a full amnesty/no questions asked no matter how you made the money.
    Just think about that. That's what Putin offered on TV.
    That's desperate.
    At this rate it's only a matter of time before Russia nationalizes their precious metals mining industry and keeps it all.
    Eventual onfiscation or forced redemption by the BOR seems possible. If war enters into the equation and the ruble is still under tremendous pressure redemption of citizens gold seems probable.

    We live in extreme times.

    "Venezuela puts diamonds in international reserves"

    By Kejal Vyas
    Published: Dec 4, 2014 9:14 p.m. ET

    CARACAS--Venezuela, facing default fears amid an economic crisis and falling oil prices, will use diamonds as well as other precious stones and metals stored in its central-bank vaults to boost international reserves, the central bank said Thursday.

    It will also incorporate easy-to-convert foreign currencies into its reserves, the bank said in a statement explaining changes to a law regulating its activities. Venezuela's international reserves have dropped 28% in the last three years to $21.7 billion.

    The country is likely to start holding some reserves in Chinese Yuan,...(cont.)


  9. China's markets just continue to melt-up.
    Just imagine when they fully open them up to foreign investment. :-o
    Don’t Blink as China Stocks Swing Most Since 2010 on Volume Jump

    By Bloomberg News
    December 04, 2014 10:08 PM EST

    Don’t blink. You’ll miss the move in Chinese stocks.

    The Shanghai Composite Index surged as much as 2.7 percent before tumbling to a 3 percent drop today: all within the first 90 minutes of trading.
    The 165-point swing in the benchmark index is the biggest since November 2010 and comes at the end of a week where volumes surged to all-time highs.
    The gauge rose 0.3 percent to 2,908.43 as of 10:59 a.m.
    Volatility in China’s $4.8 trillion stock market is surging as share prices rally from near the cheapest levels on record...(cont.)


  10. Darkpurple, I doubt your below reason for the ECB not doing QE is the reason.

    "They want QE...they just don't want to disperse those funds to the chronically economically underacheiving southern zone members."

    Its more like Germany knows exactly what happened to their currency the last time they went down the road of money printing to solve their problems

    Around 100 years ago the German currency eventually got vaporized to worthlessness as they could not stop QE once they started. Its impossible to stop once you start.

    They know money printing is the beginning of the end of a currency.

  11. Can't disagree with that historical aspect of it at all.

    I'm sure there's an element of what I alluded to as well.

  12. And BOOM goes the jobs report. Clearly good news for Main St. Metals down, bonds down, stocks unch, dollar up. And Santelli is yelling again. Mute the douche.

    1. The jobs report only matter when it's lousy and the metals pop and the "pig" drops otherwise it's an irrelevant data point. ;-)

      The silence and stunned disbelief from the "USD collapse" crowd is deafening at this point. The crowing "experts" were completely wrong and blinded by their doomer outlook.

      I said it over two years ago when it was unpopular and frowned upon as some type of cult blasphemy...the USD will hit 100.
      I'm still sticking with JPY 160 by 2016. One look at a long term JPY chart indicates why it's possible and imho likely.

    2. Dow 18000 coming into view. Wasn't it supposed to be Dow 5000 by now? Or was it Dow 1000?

      They are all busy basking in the glow of the Mylchreest article. It gets them all nodding their heads and doubling down on their will to fight the tape. Confirmation bias at it's finest.

    3. It doesn't take a brainiac to realize that if you long the soaring Nikkei that shorting gold might be the way to go.
      The ROI dictates everything.
      You could easily say the same thing about the S&P long and gold short in USD or even the Shanghai Composite Index.

      The conjecture about how silver is an integral part of the overall equation is laughable. Silvers dead in the water.
      The fact that it's still being obsessed about is more like a traumatic denial reaction where any shred of a correlation to ANYTHING is looked upon as a savior for silver at this point.

      Here's reality....silver is STRUGGLING to maintain a 16 handle just like gold is struggling to keep $1200.
      Here's the real kick in the ass no one wants to consider or call others out on...equities have melted up considerably while the metals have melted down as the USD has soared.
      The foolish advice of some to not trust the markets but instead to BTFD all the up until $1900 or $48 and all the way down from there was possibly the worst financial advice ever given.
      Listening too closely or taking the advice of a shortsighted, short term doomer is why so many loyal followers are bummed out about their deeply underwater stacks and why they're still so entrenched in their views or loyalty to those who were completely wrong.

      All the correlations in the world that some are searching for are complex desperate stretches at this point when the aimple fact is...equities were the place to be the last several years, not metal.
      The vaults are not empty and there is no nefarious CB market plan that revolves around silver returning to monetary status. Period.

      You were misled...and badly so.

  13. I'm long financials now. They are breaking out. IYG, plus some extra Visa and Mastercard for a kicker.

    Top holdings of IYG are a rogues gallery to the goldbugs. Pure kryptonite.

    Wells Fargo
    JP Morgan
    B of A
    American Express
    US Bancorp
    Goldman Sachs
    Morgan Stanley

    I AM the evil empire now. Don't Fight The Tape.

  14. Eur Usd down once more...nearly hitting the support of the blue line forming a descending wedge again (1.2260 area).
    We are very close from this support, and I chose to get out of 50% of my short position on Eur Usd now, because you can also :
    - link last lows on the weekly candle chart, and then the support line goes through 1.2230 just below = another support.
    - on the daily candle chart, we are having a 123 MACD right now. If the MACD turns up, this is usually quite bullish for a while. Of course, I wrote IF :)
    I prefer to wait and see if Eur Usd breaks through the 1.2250 area like butter or bounces strongly from it, by taking a reasonable profit right now.
    Have a nice weekend,

    1. EUR not yet embraces to a new downward leg but GBP already does. If you want to go short, short GBP, Be careful with shorting EUR

  15. And then there is reality for those that don't drink the Kool-aid

    Here are the real headlines on jobs.

    92,447,000 Americans Not Working...
    Labor Force Participation Remains at 36-Year Low...
    11,918,000 Have Dropped Out Of Labor force.

    1. Everyone realizes that I think.
      Is that reality a positive? No, of course not.
      But the numbers that are compiled and skewed (and later readjusted) are the data points the market uses and works off of. It's as simple as that.
      Just about everyone realizes that of course except for those who've only just begun to realize that's how it's always been.
      But those who chose to remain chronically outraged or upset by it day after day...week by week...year after year...are living in a self-inflicted deja vu that will never allow them to "just get over it" and stop whining about how unfair it is. Lifes unfair.

      That doesn't mean I agree with or condone how or why things are like they are...such as skewed, delayed or inaccurate govt data.
      But I do realize there's nothing I can do about because it's been this way for decades upon decades. Every generation has their bones of contention about the govt or markets etc and NO ONE has been able to do anything about it. You can't fight the Fed.
      Our fathers couldn't, their fathers couldn't and maybe even their fathers couldn't even from the very beginning in 1913.
      There's no fighting the machine unless you desire to get steamrolled by it while others play alongside it and pick up the loose change or big bucks that can be made from it by merely standing aside.

      The constant bellyaching by some metals promoters borders on idiocy and just plain old marketing to a group of newbie or seasoned malcontents who are outraged or shocked by the same old shit that just about everyone realizes to some degree....for decades.

      BTFD and ignoring blue chip equities because of naive trust issue's was horrible advice that cost some folks considerable income potential and the chance at a golden retirement they were somewhat misled into thinking gold or silver would provide.

      I don't fall into that category but I've seen enough sincere distraught comments from real people that it's disturbing to realize some of these promoters don 't care or they're simply idiots for clinging onto an idealogy and not adjusting to the market reality we live in.

      Everytime I hear the same people complain about the same things over and over...for years....I think just about the same thing almost everytime...."Duh, no shit!"

      The chronically outraged promoters have been recognized for what they are at this point.
      Their malcontent doomers who'll be saying the same thing all the way down to $1000/gold or $10 silver. At some point they'll be right and the metals will go up.

      But a strategy that includes the preposterous notion that the metals might need to go to zero or extremely low in price before some type of blast off (aka a Comex collapse) are beyond Kool-Aid drinkers.

      They're the Kool-Aid man himself...."Oh yeah!"

  16. The latest gold COT O/I doesn't look bullish unless I'm interpretting it incorrectly.
    I could be wrong but it looks like the short position in gold grew substantially by almost 20k new positions.
    Same thing with silver except less so.


  17. Today is proof positive that the future outlook for the U.S, Consumer has never ever been stronger.

    We have seen unparalleled action in the financial markets where the initial leading sectors of this bull market (retail, NDX, biotech, etc.) are still leading and showing no signs of backing off.

    Which means this bull market has a long way to go, as it is usual and customary to see some rotation as the bull market progresses into materials, steel, construction, energy, etc.

    But so far we haven't seen that. Eventually these sectors will pick up and continue to carry the S & P 500 new new world record highs, and the doom and gloom crowd will still be wailing.

    As for the U.S. Dollar......

    If you are a seasoned FX trader and have been shorting the Yen or Ruble and long DX, using a reasonable amount of margin, YOU HAVE JUST MADE A LIFETIME WORTH OF GAINS IN JUST A FEW MONTHS, beating out the world record gains made in U.S. stocks by a huge margin.

    Imagine how big Peter Schiff would be as a Wall St. Rock Star if he would have recommended going long the dollar instead of short.

    Oh well, maybe those guys will learn their lesson.

    1. GDP growing 2.4% for 2014

      Total Public Debt Outstanding up 4.5%

      And this is using their deflators.

  18. Thinking about adding some transports (IYT) as well. They've already been strong, but they are the ultimate anti-oil trade. Frackers pain is UPS' gain. If you think oil could hit $50, and stay weak for a year or two like I do, then it makes sense.

    None of this (IYT or IYG) makes sense if you are snarky and bearish and always looking for the downside on the economy. I happen to think the oil crash is the game changer that will finally get the US economy to escape velocity. And with the rest of the world weak, there is zero chance of a Fed tightening for the foreseeable future, since that would only strengthen the dollar even more. The long feared and demagogued stock bubble is still quite a ways in the future, and I want to grab every penny of it.

    1. "I happen to think the oil crash is the game changer that will finally get the US economy to escape velocity."

      Well said EO, were on the brink of something dynamic that wasn't considered possible by many...energy indepedance and becoming a net energy exporter.

      Despite the protestations of the anti US/ peak oil types the US energy market transformation is underway and evolving.
      It'll only accelerate once OPEC eventually becomes a historical footnote and the impact of the Mexican energy markets potential contribution to the overall US /N. America energy complex comes into clearer focus.

      Zerohedge (aka Doomer Central) on the other hand can't see the forest through the tree's most of the time.
      The incessant sarcasm, ridicule, and twisted thinking they continually spin their stories with is a distortion of the markets and theme's we've seen play out before us.
      Yet no matter what the topic is they usually find some thread of a gold angle to sew into whatever contrived negative point they're attempting to make.
      Just imagine how much wealthier and happier their viewers would be (instead of chronically miserable) if they had given them a 180° change in attitude from the negative, paranoid musings they gush out and instead they recognized the dynamics that were unfolding they never adjusted to but instead went into full denial/ridicule mode.

      BTFD 24/7/365 is not an investing strategy. It's a simplistic, philisophical investment fetal position.

      Tyler's "the" Kool-Aid Man who has spawned a prodigy of similar doomer clones who all have the same basic outlook...The End Is Near....but if it isn't let's milk it for what it's worth while we can.

      Have a great weekend and "Go Packers!"

    2. Hey, right now it's "Go Badgers!". We intend to put the big hurt on the Buckeyes here in a little while. All this talk about whether OSU belongs in the playoff will be a waste of hot air.

  19. Rawdoggie gets it.


    1. Hi Grumps, I did like this guy's rant. My only question is...is this guy related to Uncle Fester?...LOL!

  20. The same retards (I'm talking to you, Chris Martenson of Peak Retarded Prosperity) that are always saying that high oil prices will be the dark, freezing death of us all, are now pivoting to the story that low oil prices will also be the dark, freezing death of us all. Amazing how every possible outcome means we are all absolutely screwed! (and ta da!!, only physical gold and silver can save you, becuz...um...government must die...or something)

    Or is that just the story that the website's business model demands? Or the story that the site's sponsors demand? I'd like to see who is really providing the cash flow over there. It's just like buying advertising. You pay your money, and your clients push your message out across the web.

    But back to the point: Let's pretend for a moment that the high oil price doomsday scenario is correct (unlikely), AND let's pretend for a moment that the low oil price doomsday scenario is also correct (even more unlikely), they still don't understand that we are still in an amazing sweet spot right now where great profits can be made across the board in stocks. The US oil industry is a battleship that will take some time to turn around. Even if all the frackers lock up their checkbooks right now, production will still grow for a year or two before topping out. Supply will continue to swamp demand for some time. They literally don't have enough storage space to put it all right now, and it's going to get worse.

    Low energy costs, easy money, party like it's 1999 dudes, for a good year or two yet, and the paymasters over at places like Chris Martenson's Peak Retarded Prosperity can save their money for some other sucker. It ain't me, babe. No, no, no, it ain't me babe. It ain't me you're looking for, babe.


    1. "Doom-and-gloom investors led astray by politics"
      Opinion: Those who think the world is going to collapse better get a reality check....(cont.)


    2. That's a great article, and better yet it has a link to the author's writeup about Marty Zweig. A big part of it is about "Don't Fight The Fed" and "Don't Fight The Tape". Simple genius that would have kept anyone on the right side of the markets.

    3. The wrong side of the market...from Fall/2011...


      "....If you're going to get all upset because the fiat price of gold went down a couple hundred dollars in September, well, why are you holding it in the first place? Because I can ASSURE you by next year at this time, or two years at this time, it's going to be higher than it is today."

  21. OK, never mind about the Badger game... :(

  22. Top Russian Banker and Putin Confidante Threatens US with ‘War’

    Russia’s red line: If Russian access to SWIFT is cut off, 'the US ambassador to Moscow should leave the same day'

    By Mikhail Klikushin | 12/04/14 5:58pm

    A top Russian banker and close personal confidante to President Vladimir Putin has sent a strong message to the West.

    Vladimir Putin does not buy the notion that tough economic sanctions, imposed on Russia by US and its European allies, are merely a punishment for Russia’s policies toward Ukraine, its annexation of Crimea, and its support of separatist fighters in the East Ukraine. Earlier today, speaking to the representatives of the Federal Assembly in Kremlin, he claimed that “the crisis in Ukraine was just a formal pretext for sanctions.” He was confident that “If all this had never happened, any other excuse would have been created” as a result of the “policy of containment [of Russia] which was invented not yesterday, but has been held against our country for decades, if not centuries.”

    Mr. Putin’s tough rhetoric reflects the fact that economic sanctions on Russia—and counter-sanctions by Russia toward the countries of the European Union—are from his perspective nothing more than a substitute for the old-fashioned wars. Indeed, they damage the economies of all sides without firing a single shot.

    The speed of this new warfare has been breathtaking. Russia suspects that the US and Saudi Arabia are behind the fall of the oil prices, which have plummeted from $100 per barrel to less than $70. To round out its budget, Russia has had to drop the ruble more than 40%.

    But there is one looming threat that Russia seems to have no answer for so far. And it is the possibility of kicking Russia out of SWIFT—the electronic bloodstream of the international bank transaction system.

    Yesterday, the German newspaper Handelsblatt published an interview that has yet to be printed in any English-language newspaper with the head of Russia’s second largest VTB-Bank (Foreign Trade Bank), Andrei Kostin. Mr. Kostin stated: “Of course, there is a plan B [in the case of shutting Russia off from the SWIFT bank system], but in my personal opinion it would mean war—if this type of sanction will be introduced. America and Europe did that against Iran but with Iran at that time there were no diplomatic relations, only military containment… If Russian banks’ access to SWIFT will be prohibited, the US ambassador to Moscow should leave the same day. Diplomatic relations must be finished. Banking is the most vulnerable part of the Russian economy because the system is based so strongly on the dollar and the euro.”

    Experienced Russia watchers will find it hard to believe that these words reflect only Mr. Kostin’s personal opinion. Forbes points out that “not only is VTB controlled by the state, but 51-year-old Kostin is a close friend of President Vladimir Putin, and a member of the board of Rosneft, Gazprom’s smaller but powerful rival.” According to the influential Russian newspaper Vedomosti, Mr. Kostin is holding 2nd place among all Russian politicians on the frequency of the tête-à-tête meetings with Mr. Putin.

    Russia is running against time—in May 2015 the country’s Central Bank is planning to introduce its national analogue to SWIFT. Until then, Russia wants the entire world to know where the new war of economic sanctions stops and old-fashioned war begins.

    Read more at http://observer.com/2014/12/top-russian-banker-and-putin-confidante-threatens-us-with-war/#ixzz3LDpp1m8K
    Follow us: @newyorkobserver on Twitter | newyorkobserver on Facebook

    1. Putins much better at the PR game than anyone in the west.

  23. Vlad's feeling the squeeze...

    "Putin Grasps at Straws as Economic Cures Fail to Impress"

    By Anna Andrianova, Aaron Eglitis and Milda Seputyte
    December 05, 2014 6:00 AM EST

    Russian President Vladimir Putin’s recipe for riding out an economic storm has a whiff of panic, say analysts from Moscow to London.

    The measures, announced yesterday in a 70-minute Kremlin speech to lawmakers and top officials, ranged from a proposed tax and legal amnesty for those repatriating capital to a four-year moratorium on tax increases. That’s too little, too late, say analysts...(cont.)


  24. Putin's economy is getting destroyed. He will soon be ousted from power and replaced. When that happens, we will probably see a searing rally in Russian stocks which could last for decades.

    Because his successor is likely to be more friendly to Europe and will peg the Ruble to the mighty U.S. Dollar.

    On another note, China is booming despite the naysayers like Jim Chanos. The Shanghai and Shenzen exchanges are now experiencing huge volumes across the board and coming out of one of the longest basing patterns I've ever seen.

    On top of that, FXI and Hang Seng is about to breakout of a 5-year base.

    Stocks are going to be the place to be for the next couple of years at least.

    The upside potential in some of these emerging markets is mind-boggling, especially when global growth really starts to pick up steam.

    The perma-gloomers are going to wish that they had never been born, having missed the greatest global equity rally in world history.

    1. "Putin's economy is getting destroyed. He will soon be ousted from power and replaced."
      You are sometimes extremely funny.

    2. He'll lash out before he gets kicked out.
      Dangerous game of chicken underway.

  25. Mark

    I think China runs well for a while but watch the Russell 2000 its not making new highs as S&P500 does. That's a bad divergence IMO. Russian equities will rally soon too IMO with their currency getting sliced and diced the corporations are making outsized profits via exporting their products to "Harder" currency countries. . I am not sure the US Dollar stay strong forever. It appears parabolic to me. Yet I am biased to the downside on that idea.

    Good luck to you..

  26. Dan is right. Oil looks like its heading to 60$. And Putin using 100$ oil to balance the budget LOL

  27. Terrible negative GDP numbers...
    "Japan’s economy worse than initially reported"

    By Mitsuru Obe
    Published: Dec 7, 2014 8:57 p.m. ET

    TOKYO — Japan’s economy contracted for the second straight quarter in the July-to-September period, revised data released Monday showed, serving as a bitter reminder to Prime Minister Shinzo Abe that the nation’s economy remains in the woods two years after he came into office.

    Gross domestic product shrank an annualized 1.9% in the third quarter from the previous three-month period. The government last month estimated that the economy shrank 1.6% in the third quarter after a 6.7% plunge in the second quarter, indicating that the economy had entered a recession.

    The key economic figures come just six days before general elections, which Mr. Abe is framing as a referendum on his economic policy program known as Abenomics.

    Recession or not, Japan’s economy is in a funk. Private consumption, the most important pillar of the economy, has shown little sign of life after a one-two punch of a sales tax increase in April and inflation caused by the yen’s 30% fall against the dollar.


  28. "The Man Who Made 57% on Convertibles Stays Bullish: China Credit"

    December 07, 2014 11:00 AM EST

    China’s convertible bonds gained the most in more than four years last week and the co-manager of a fund that returned 57 percent in 2014 says he’s still bullish after a world-beating equity rally.

    The S&P China Convertible Bond Index jumped 7.3 percent in five days, as a similar corporate debt benchmark was little changed, and is up 14 percent since the People’s Bank of China cut interest rates for the first time in two years Nov. 21. This year’s best-performing bond funds in China are focused on exchangeable debt.

    “We’re relatively bullish,” said Li Xiaoyu, the head of fixed income at Changxin Asset Management Co., which oversees 16 billion yuan ($2.6 billion) of assets including a convertible fund that topped the rankings and beat the Shanghai Composite Index (SHCOMP)’s 38.8 percent gain. “China’s economic growth may stabilize at the current pace which will support convertible bonds’ good performance for some time in the future.”

    Optimism a slowdown will be averted next year is drawing money into China’s equity markets, driving a 21 percent gain in the Shanghai Composite Index over the past month, the most among 93 global indexes tracked by Bloomberg....(cont.)


  29. http://www.pretivm.com/news/news-details/2014/Zijin-Mining-Group-C81-Million-Strategic-Investment-in-Pretivm/default.aspx

    This is something I said would happen. You can stick a fork in Freegold.

    1. Please explain what Freegold has to do with it. I'm not being snarky, just not that well-read on the whole Freegold thing.

    2. Interesting link Grumps, thanks.

  30. A sea of change and discontent underway...

    "Putin’s New Deal Spells End to 15 Years of Wage Gains"

    By Henry Meyer, Agnes Lovasz and Evgenia Pismennaya
    December 08, 2014 4:22 AM EST

    Vladimir Putin’s confrontation with the U.S. and Europe augurs a new deal for his 144 million subjects.

    Instead of the rising living standards he’s delivered the past 15 years in exchange for the public’s acquiescence, the Russian president now holds out declining wages and more austere lifestyles as the price of swollen national pride.

    The first signs of discontent are appearing. Doctors protested Nov. 30 over job cuts and Putin ordered a freeze in inflation-linked pay raises for some government employees. Keeping dissatisfaction at bay will be costly too: Putin may exhaust more than half of the nation’s $420 billion of reserves -- down from almost $600 billion in 2008 -- within two years.

    “There’s been a social contract in place in Russia whereby the population understood that its living standards will continue to improve even if political freedoms are limited, but now living standards are taking a hit,” said John Lough, an associate fellow at Chatham House’s Russia and Eurasia program in London. “This is going to affect public attitudes and it’s going to put pressure on the system and on Putin personally.”

    It’s a watershed moment for Putin,....(cont.)


  31. No appetite for new debt to pay off old debt...
    "ECB Loans Seen as Underwhelming in Acid Test for Draghi"

    By Paul Gordon and Alessandro Speciale
    December 08, 2014 7:42 AM EST

    Mario Draghi is about to get an idea of how far reality falls short of his intentions.

    A round of long-term loans by the European Central Bank to lenders this week won’t even cover the repayments they owe from a previous program, according to a Bloomberg News survey of analysts.
    The operation could show that stimulus measures the ECB president says are “intended” to add as much as 1 trillion euros ($1.23 trillion) to the financial system won’t suffice without large-scale buying of assets such as government bonds.

    Draghi has promised the ECB will act should current stimulus prove insufficient when it is reassessed early next year, and the central bank is said to be preparing a QE package to be discussed at the next monetary policy meeting on Jan. 22...(cont.)


  32. So far, Gld is positive again on this Monday. Hasn't been too hard to predict this ahead of time lately.

    Has anyone else noticed this pattern on Monday's Gld. It’s almost always positive, slightly down or perhaps ends with a “Pop” like it did on last Monday's holiday ending "Pop" that Martin Armstrong so well predicted in advance?

    The metals are not manipulated and yes I believe charts show market sentiment.

    But the longer this Monday “somewhat” trend continues, the more interesting it becomes...at least until an actual price move occurs.

  33. The Fed for now has just about everyone where they want them...vulnerable to a rate hike when almost everyone else can't.
    "Strong dollar may have ‘profound impact’ on world economy"

    By Sara Sjolin
    Published: Dec 8, 2014 8:03 a.m. ET

    ~BIS warns strong dollar could add to countries’ debt burdens~

    Is the dollar too strong?

    LONDON (MarketWatch) — With the dollar marching closer to an eight-year high, the impact of a solid greenback has started to worry traders and economists.

    The Bank for International Settlements, referred to as the central bankers’ bank, warned in its quarterly review that the strengthening dollar could “have a profound impact on the global economy,” and particularly on emerging markets...(cont.)


  34. I respect amstrong. But he retracted his "pop" call after that friday's action. So he was wrong.

    1. Yes, he retracted it as soon as he realized conditions had changed. This is what successful traders do. If the market is telling you your direction is "wrong", you close the position. YOU MOVE ON. There is no moral value involved whatsoever.

      This obsession with the necessity of being "right", and the evils of being "wrong" has no place in successful trading. This is not a moral or intellectual contest--it is about making money.

      The belief in working crystal balls is a dangerous fantasy that has destroyed more wealth than anything else I can think of--including wars, famines, and pestilence (to name just a few...). It is not analogous to playing the lottery--it IS playing the lottery. That is what the PM shills are requiring their followers to do.

      Oh, well--you can lead a loser to trading, but you can't make him think.

    2. Agree. But maybe he went short and got annihilated. The point is NO one knows whats going to happen in the short term, especially in todays markets. And yes, when gold entered its bear market, the pm sector crowd became conspiracy theorists, not investors/traders.

    3. I read his "pop" call and thought it was crazy...I didn't read him retract it though. I tend not to miss his posts. And if he didn't retract it, and looking at today's action, one might almost go as far as suggesting his "pop call" was right.

  35. Every time the jobs report comes out, ZH and other permadoom lap dogs rant about declines in the labor participation rate. Facts are it's a long term trend, in place for over 30 years, through all cycles, boom or bust, with no correllation to politics. Complainers are going to complain. That's the bottom line. Haters gonna hate, fakers gonna fake. So Shake It Off.



  36. Oil getting hammered again today...
    "WTI oil slides to five-year low; Brent crude falls 3%"

    By Carla Mozee and Eric Yep
    Published: Dec 8, 2014 7:59 a.m. ET

    ~Analysts still bearish on prices~

    LONDON (MarketWatch) — Crude-oil futures slid to five-year lows Monday, pressured by a strong U.S. dollar and generally bearish market sentiment....(cont.)


  37. Regarding my Friday comments about going long financials (see up thread), looks like Josh Brown is chiming in now, with charts.


  38. The saying..."Words are cheaper than action"...fits Draghi's modus operandi so far.


    Opinion: Someday, Draghi will thank Weidmann for blocking QE

    By David Marsh
    Published: Dec 8, 2014 8:46 a.m. ET

    ~If ECB can hang in there another year, growth and inflation will return~

    As Oscar Wilde might have written had he been a follower of the European Central Bank, for Mario Draghi, the ECB president, to lose one board member’s support over quantitative easing may be regarded as a misfortune; to lose two looks like carelessness; to lose three might be downright embarrassing.

    On the key question of whether the ECB will embark on hefty government-bond purchases, Draghi and the financial markets have been blowing smoke signals at each other for several months, playing with words, intentions, expectations, and political and economic sensitivities. (cont.)


  39. What's going to happen when trillions look for a safe harbor, a real safe harbor.

    1. I hear ya' Grumps.
      I wonder what's going to happen when Japan crashes in some manner at some point.

      Countries default and recover to some degree all the time but you'd think the 3rd largest economy (at this point) will leave a nasty bruise on others.

      It doesn't seem like such a stretch of the imagination that several countries over the course of the next decade could default softly if a major linchpin country starts the dominoes moving.

      By "softly", I mean an IMF brokered type of situation that "manages" how these defaults occur and the rules by which many affected countries overall debts are washed or legislated away.
      A structured debt jubilee of sorts that takes the pressure off many of the countries that are currently saddled with debt.
      If I were them( IMF/indebted countries) I'd go that route if the "opportunity" (Japan tanking) presented itself.

  40. Gold up significantly, shooting last resistance at $1220 as predicted again. Gold shares benefit. Expect more of the same, and for gold to hurdle $1250 like an Olympic gold medalist. Huge opportunity here for depressed gold shares. This baby will run.

    1. PD, I do recall you mentioning a short lived significant run up for gold in early December.
      We'll have to watch and see if it has any legs under it.
      The market ripples seem larger than (ab)normal today. Tomorrow or by weeks end might see it all reverse.

      Just like the US, China is moving markets with every hiccup that comes out of it.

    2. DPH, I hope you have been tucking into some RUSS for the festive season. It has done exceptionally well. Be careful for a while because Putin is making conciliatory noises about Ukraine, but it won't last long, as he has to keep up the pressure so that he comes away with some sort of agreement about East Ukrainian limited autonomy, as well as annexing Crimea. If that was achieved then RUSL, which is the bullish Etf for the RSX at 3x, would go bananas.

  41. Has Santa gone on vacation this year, or is he just thoroughly pissed off with all the hype and nonsense about the so-called recovering economy? He says he is sorry for the children but lessons must be learned. He did give us a warning with that Hindenburg omen, and soon a sharply correcting dollar. He is a bit grumpy today, and is not available for comments, so all I can do is tell you what he says.

    1. Santa is busy taking loans to ensure he can pay himself and the board a few more months salaries.

      What a total fraud. What a complete lack of ethics.

  42. Off topic...

    The CIA/torture report being released on TV right now sounds like a significant detonation that'll reverberate for awhile. Tip of the iceberg stuff with some type of blockbuster revealed I think.

    Bush, Cheney and Rumsfield mostly exonerated from any culpability thus far....naturally. It'll be interesting to see who falls on the sword for this.
    Wasn't Robert Mueller in charge back then?

    Given the WikiLeaks/ Snowden/ NSA and now CIA revelations it seems a large shake-up or consolidation of the US Intelligence community will occur.
    Will future intelligence gathering be placed under the umbrella of the cabinet-level Dept. of Homeland Security?

    1. It is indeed very shameful but I am impressed the report came out at all. There are few countries in the world that would submit themselves to this sort of analysis. Perhaps all is not lost.

    2. This seems like a political hit job from the Dem's while they can do so.
      I don't condone what was done but I do question the necessity for it to be public in this manner at this time.
      Seems like they could've made drastic overhauls behind the scene and accomplished the same changes without the political parade.
      This whole soul-bearing politically correct exercise seems contrived on some level. I'm probably cynical to some extent but this seems like it's meant to exploit and weaken some faction (either political, intelligence or military) to benefit another.

      Eventhough the subject matter of torture itself is important the timing of this seems out of place given the hot embers of social unrest and war already smoldering out there.

      The implications of this and why it's being paraded out there won't be apparent for some time.
      But if I'm America's enemies I see this as weakness if not turmoil.

      My opinion is...why this, and why now?

    3. ...and it was George Tenet/CIA and not Robert Mueller/FBI.

    4. @DPH, I agree that there are likely political motives here but I think this is a good move regardless. It is time the American people understand the nasty underbelly of this endless "war on terror". I think the release of this information is a sign of strength. Maybe we can once again practice what we preach.

    5. Nice thoughts Gene, lets hope so.

  43. PollyAnna says everything is fine. soon the USA will be entering its 7th year of recovery. not one you Keynes haters ever mentions that. (sarc)

    and thanks for keeping the lights on over here.

    1. Peckerwood, do you mean Keynes lovers rather than Keynes haters?Lord Keynes used to joke about his own theories, and over the long-term he never really believed them. He was the Greenspan of his time, and spent a good deal of time laughing up his sleeve, at us lesser beings.

    2. the problem with Keynes' ideas is that a small group of men, whether public or private, have to be trusted with the power to create money. (or credit if you want to get picky)

      can't say i blame Keynes based policies though for the lack of recovery. giving money to reckless bastards that already had all the money never stimulated anything but more greed and more corruption.

      sorry for the cynicism folks. i will believe that this time the economy is recovering when we get some backward looking numbers, and not tweaked to the point of insult, or later revised.

      pretty crazy stuff going on in the markets. some commenters over here try to pretend all is normal. that was the reason for the Pollyanna crack.

      Hi DPH. as always, good stuff. this stuff matters in a way perhaps even greater than one's 401K/IRA doesn't it. especially if you've already been lucky enough to be relieved of such concerns. :-)

      good luck all. have a good X-mas (or insert your seasonal holiday here!) if i go dark for a while.

  44. What would change the situation and make the RSX an extraordinarily wonderful investment? Some sort of agreement, token or otherwise, that the West will stop interfering in stirring up trouble in former Russian satellites; possibly very limited concessions to autonomy in eastern Ukraine; and a slightly rising oil price. Not so much to ask. As for the last, a falling oil price is not good for the U.S., as its fracking industry will be badly affected, and ME countries could be destabilized again. Saudi Arabia did not reduce oil output in the last OpEC meeting, not so much because it wanted to harm the U.S. oil industry, but as a way to show its disapproval of negotiations with Iran. Iran, which is Shiite, is anathema to Saudi Arabia. It reminds me of The Voyages of Gulliver, when the Lilliputians go to war with their neighbors, the Brobdignagnians, over whether one should open a boiled egg by cracking open the fat end of the egg or the thin end - so it is between the Sunnis and the Shiites. After this warning by its US ally, I think the Saudis will agree to a reduction in output and prices will go up.

  45. The Iran angle is interesting and will become so even more when that nuclear treaty doesn't happen.
    The only thing seperating Iran and Saudi Arabia is Iraq. Or is it?

  46. Dan

    As a side note my most favorite Capuchin is Padre Pio.

    Its interesting your posting on the oil patch and how the hedge funds are all getting long the oil futures, which seems counter intuitive from your point of view? I do also want to go back to the question of after bouncing $90.00 off the bottom, how far / how fast does gold need to rally to get you to change tack and become a believer in actual inflation?

    My position I hope is not a that of a raving gold bug, but that inflation is deliberately under reported. This under-reporting is giving cause for alarm, and so the smart money is buying in now (I think). I suspect that a big run which will take out the old highs of $1900+/oz is underway. I know this idea isn't fashionable but its the view I hold. Everyone thinks deflation is the fear, more like inflation is going to be roaring back very very soon.

    1. The only problem with your theory is that gold is not useful as an inflation hedge--look it up.

    2. Rico

      I suppose the price of gold moving from $35/oz to $800 from 1971 through 1980 was not what you were alluding to? I do believe that Dr Paul Volcker had to raise interest rates at the time to 19% to quell that inflation spat? Or is there some other time frame you wish to point out to me?

  47. Oil continues to slide towards $60...amazing!

    How low will it go before a change in rhetoric starts a reversal?

    1. Its flapping gums that is driving it lower more than anything along with over reaction to flapping gums.

    2. Pretty incredible to see crude oil drop in large price chunks day after day it seems.
      Meanwhile, in Vlad's world...

      "Medvedev To Russians: Please Don't 'Panic' Over The Ruble"

      "Russia Set to Raise Main Lending Rate"

      By Anna Andrianova and Olga Tanas
      December 10, 2014 10:53 AM EST

      Russia’s central bank will probably raise borrowing costs to avert threats to financial stability as oil prices near the lowest in more than five years and sanctions over Ukraine risk the collapse of the ruble.

      The Bank of Russia will increase its key rate to 10.5 percent from 9.5 percent, according to the median estimate of 34 economists surveyed by Bloomberg. Nine analysts predict a bigger increase.

      Fifty of 77 traders polled by brokerage Tradition project a rate increase of between 100 and 400 basis points. The regulator will announce the decision at about 1:30 p.m. tomorrow in Moscow, followed by a news conference.

      The ruble’s 40 percent slide this year has left policy makers with dwindling options after they shifted to a free-floating exchange rate ahead of schedule last month and spent about $80 billion on defending the currency....(cont.)

  48. Achtung baby!

    "The 10-year German bund yield just hit another all-time low"

    By Joseph Adinolfi
    Published: Dec 10, 2014 9:49 a.m. ET

    ~How low can Germany’s 10-year bund yield go?~

    NEW YORK (MarketWatch) — Achtung, European Central Bank!

    The German 10-year bund yield fell to a record low Wednesday, its fifth consecutive session of declines, as European investors sell Greek, Spanish, Italian and Portuguese debt in favor of the perceived safety of German sovereign bonds...(cont.)


  49. On my charts, gold's downwards resistance is at 1240 $ (top of the downtrend channel drawn before) on the weekly time scale. So I'll watch this level carefully.
    Especially when Eur Usd managed to bump once again on the blue support line of its descending wedge, confirming the support. Maybe a nasty rallye will surprise many long dollar / short euro and then we could see eur usd rallye back up to the downwards resistance which is way above near 1.28.

    Regarding my positions, as I wrote, I bought back 50% of my short positions on the Eur Usd at 1.2280 near the blue support line, and then an additional 25% at 1.24. So, I've made 75% of my profits on this line.
    Same on gold, my remaining short position is symbolic since we re-captured 1200, but I took a small short position near 1240 because of the red resistance. I'm not sure this level will hold anyway.

  50. Greece needs to be cut loose sooner than later.

    "Opinion: Five years later, here are 2 ways for Greece to get out of debt"

    By Matthew Lynn
    Published: Dec 10, 2014 4:00 a.m. ET

    ~Austerity insures a permanent depression~


  51. "Tanking oil weighs on krone, ruble, Canadian dollar"

    By Joseph Adinolfi
    Published: Dec 10, 2014 12:32 p.m. ET

    ~Dollar hits another record high against ruble; seven-year high against krone~

    NEW YORK (MarketWatch) — The dollar surged against rival currencies backed by oil-heavy economies as oil plunged to new lows Wednesday.

    The buck traded higher against the Norwegian krone, Canadian dollar and the Russian ruble Wednesday as the U.S. Energy Information Administration and OPEC offered indications that oil supplies will likely continue to outstrip demand for the foreseeable future.

    Falling oil prices picked up momentum, with crude futures down nearly 5% on the day, after the U.S. EIA reported a surprise increase in U.S. crude-oil supplies.

    Earlier, OPEC lowered its forecast for oil demand in 2015, a sign that production levels will continue to outpace demand during the coming year.

    The dollar USDNOK, +0.70% rose to 7.18 krone, its highest level against the Norwegian currency in six years. It traded at 7.11 krone Tuesday afternoon. It USDRUB, +1.41% hit another record high against the ruble, rising to 54.90, compared to 54.18 Tuesday afternoon...(cont.)


  52. UST supply glut...lack of demand or something else entirely?

    "Treasury Bill Rate Climbs Amid Supply Glut as Fed Tests Program"

    By Liz Capo McCormick
    December 10, 2014 1:50 PM EST

    Rates on Treasury bills due in 12 months reached the highest since 2011 in a break of a historic year-end trend, with a glut of securities available to investors as the Federal Reserve tests tools to tighten monetary policy.

    The rate on the 52-week Treasury bills sold at auction yesterday climbed as high as 0.229 percent, the most since June 2011. Prior to the start of the Fed’s reverse-repurchase agreement program, yields typically fell at year-end amid high demand...(cont.)



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