Tag: finance

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Are they Tuhao or just Dama?

The first is the Chinese word for filthy, stinking rich, the uncouth bling-blingy rich of the People’s Republic. The second is the name given to middle-aged women dripping in gold. I imagine that two middle-aged women with the yellow bars would lead to a much deserved ‘dispute’ (yes repeating the ideogram for ‘woman’ actually means there’s ‘trouble’, telling you a whole lot about what the Chinese actually think about women insociety).

It doesn’t quite go with the image of the country that we might have once had. But, things change, even the Chinese have the right to hang up their d?ulì conical hats and don something a bit more ostentatious. Showy, brassy, flash, call it what you will; although you might ask why it’s at all necessary for the filthy nouveau riche to go overboard and paint the inside of their houses with gaudy colors and make it look like they have no taste at all. They may have the money, but they don’t necessarily have the taste to go with it. Money buys just more money; it doesn’t buy you a savvy bit of know-how in the décor stakes. Although, you should be able to pay for someone that does have the knowledge to get you to that.

Whatever they do with their money, the Chinese nouveau riche are working their way up the Forbes rich list.

• China saw a 25% increase in the 2014 Forbes list with 1**52 billionaires**. 
• There were only 122 in 2013. Poor things!
• According to Forbes, the list had nearly zero people from China just two decades ago. Although, it’s debatable whether they were actually there or not. The party must have had a few even back then hidden away somewhere. 
• Admittedly, the Chinese economy might be slowing down, but it’s still doing a lot better than the rest of us, whether we like that or not. 
• Growth for 2013 stood at 7.7%.

It is interesting to note that statistics are always revealing of who actually does them. The Hurun Global Rich List states that there are 358 billionaires in China. Someone must be getting it wrong somewhere along the line. There are 457 ethnic Chinese that are resident outside of the PRC. But, it’s noteworthy that Hurun is sponsored by the Chinese luxury property sector and in particular Star River Property. The data seems just about as reliable as anything that gets published by the Chinese state, these days.

According to Forbes, the richest person in China is now Wang Jianlin, coming in only at 64th place in the ranking, with a net worth standing at $15.1 billion. That is worth a lot more in Purchasing Power Parity there in the People’s Republic of China than the rest of us combined ever get hold of in the west.

• Jianlin owns 85 shopping plazas across the country and 51 five-star hotels as well as dozens of department stores.

The second richest person in China is the $13.4 billion Ma Huatent, CEO of Tencent Holdings. The youngest billionaire that has just entered the rankings is 24-year-old Perenna Kei from Hong Kong.

But, before the USA starts worrying that the Chinese are overtaking them, it’s not going to happen just yet. There are 492 of them in the US today and they can either thank their lucky stars, or the hordes of workers that drudge into the offices and the factories every day or the fact that the financial market has been jacked up so much with bubble-inducing drugs that they have added more money to their coffers.

Europe came in a close second (as usual?) with 468 billionaires in 2014.

The world’s richest in ascending order from tenth to first place are:

• Jim Walton $34.7B USA
• Christie Walton $36.7B USA
• Sheldon Adelson $38B USA
• David Koch $40B USA
• Charles Koch $40B USA
• Larry Ellison $48B USA
• Warren Buffet $58.2B USA
• Amancio Ortega $64B Spain
• Carlos Slim Helu $72B Mexico
• Bill Gates $76B USA

Just a thought? I wonder how many of them actually pay tax? Or if they manage to get around all of that by some wicked web that has been woven. One thing tells me that if they are officially worth that much, then one they might not have that in the bank at their disposal. Secondly, they might well have double that amount. People never declare what they have or own down to the last dime, do they? The 11th person on that rich list is Liliane Bettencourt, heiress of L’Oreal. Back in 2011 she got around paying more than 4% in tax on her wealth. She now has $34.5 billion somewhere (officially), although she has got herself embroiled in a scandal with ex-President Nicolas Sarkozy about illegally financing his election campaign and in return (so the rumor goes) getting out of paying any tax altogether.

Is that the way the Chinese billionaires will be going? If they really want to be like the West, they’ll have to go down that road, if they haven’t done so already.

Originally posted: Chinese: Filthy Rich

 

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While Canada may have bitten the hand that feeds it real-estate bubble, one of London's biggest real-estate investors says that even if sanctions were imposed against the Russian oligarchs, London property prices will continue to soar. The average London "flat" could fetch GBP36 million by the middle of the century, and is therefore a bargain now, Hugh Best advises clients. His reasoning is impecable, "the average price in prime central London is now £1.5m, and has been growing at 9% a year, which we think is firmly sustainable. They have been growing at that level for 40 years and we see no reason for that to change." With two-thirds of new homes in London sold to investors, they are all driving up prices and "the Russians are only a part of it… and the Ukrainians might come with their money."

 

Via The Guardian,

You may think a shoebox-sized flat in central London costing more than £1m is an insane illustration of a property price bubble, but it could be the bargain of the century.

 

According to projections by one of the biggest investors in "prime" property in the capital, that average flat could fetch £36m by the middle of the century – if its predictions of 9%-a-year growth in prices become reality.

 

Casting aside concerns that Russian oligarchs will no longer be sheltering their billions in luxury mansions, London Central Portfolio has launched a £100m fund to buy one- and two-bed apartments in the capital's most exclusive districts.

 

…

 

Hugh Best, LCP's investment director, said: "The average price in prime central London is now £1.5m, and has been growing at 9% a year, which we think is firmly sustainable. They have been growing at that level for 40 years and we see no reason for that to change."

 

…

 

The Crimea crisis would not halt London property's inexorable rise, said Naomi Heaton, LCP's chief executive. "The Russians are only a part of the market and have been dwindling in number over the past few years … we could instead have the Ukrainians coming in with their money. London is the destination for the high net worth community of the world, and we are only just beginning to see the mainland Chinese. The loss of some Russian oligarchs is not a fundamental loss for the market."

So buy, buy, buy…

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Submitted by Lance Roberts of STA Wealth Management,

 

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Off the top, Universa’s Mark Spitznagel explains that “high-frequency traders are making markets more jumpy” and the idea of HFT as a liquidity provider is a fallacy since as he notes “that liquidity won’t be there when they most need it,” especially when there is one-way order flow such as in the flash crash.

Spitznagel then crushes the ‘cash on the sidelines’ meme but explaining that while corporate cash balances have soared, net debt has actually gone up beyond the highs of 2008. As we have previously discussed, “the idea that corporate balance sheets are so strong right now is entirely wrong,” as investors are conveniently focusing in one piece of the balance sheet (assets not liabilities).

Maria B just can’t fathom it but Spitznagel’s words are clear – scale the cash on the balance sheet against debt and we are as bad as we were in 2008.

The fallacy of cash piles on the balance sheet meaning strong balance sheets…

US companies are carrying far more net debt than in 2007

 

Another curiosity is this notion that US companies have substantially reduced their debt pile and are therefore cash rich. The latter is indeed true. Cash and equivalents are at historically high levels, but rarely do those who mention the mountains of corporate cash also discuss the massive increase in debt seen over the last couple of years.

 

In fact, debt levels have been growing to such an extent that net debt (i.e. excluding the massive cash pile) is 15% higher than it was prior to the financial crisis.

At 3:00 in the clip below, Spitzangel explains as succinctly as we have heard why the Fed’s actions are crushing the Capex growth hopes… when interest rates are so artificially low, “we get more impatient” and scramble “doing stupid things” to make what feels like a natural return (despite the Fed’s unnatural thumb on the scales).

Of course we have explained this won’t end well…

US corporates saw profit growth slow to almost zero last year and on an EBIT basis it has been flat for some time now. Earnings quality, rather than improving is actually deteriorating, as indicated by the increasing gap between official and pro-forma EPS numbers. As a consequence, following a long period of overspending and in the absence of a strong pick-up in demand, corporates will have to spend less and not more.

 

Finally, as a consequence of such anemic growth, corporates have been gearing up their balance sheets in an effort to sustain EPS momentum via the continuing use of share buybacks. With markets up substantially in 2013 executing those share buybacks has become increasingly expensive. Little wonder companies have to borrow so much to continue executing them.

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With Ukrainians living in the Crimea region voting to join Russia, the West calling for sanctions (well some of the West), boots still on the ground, and markets apparently of the belief that all is well in the world once again, we thought the Russian perspective on the next steps was useful…

Via Sergei Markov of The Moscow Times,

The current crisis is not about Crimea. It is about the rights of Russian-speakers throughout Ukraine whom the Kremlin wants to protect from violence and discrimination. Russia does not want a military intervention in Crimea and does not want to take Crimea from Ukraine.

There is a political solution to this crisis.

First, create a coalition government in Kiev composed of all parties, including those from the east and south of the country. The current government is dominated by anti-Russian extremists from western Ukraine.

 

Second, Ukraine needs to draft a democratic constitution that has guarantees for Ukraine's Russian-speaking population that would grant official status to the Russian language and establish the principle of federalism.

 

Third, presidential and parliamentary elections must be held soon. Independent election observers must play an active role in ensuring that the elections are free and fair. There is a real danger that they will be manipulated by the neo-Nazi militants who de facto seized power in a coup.

If these democratic and peaceful solutions to the crisis in Ukraine are rejected by the opposition forces that have seized power in Kiev, I am afraid that Russia will have no other choice but to revert to military means. If the junta leaders want to avoid war, they need to adopt Moscow's peaceful and democratic proposals and adhere to them.

Those currently in power in Kiev are carrying out a political strategy that is not so much pro-European as it is anti-Russian, as evidenced by the surprisingly heavy-handed tactics the U.S. and European Union  have employed in Ukraine. In the end, a minority executed a violent coup that removed the democratically elected and legitimate president of Ukraine.

The Kremlin believes that the current Ukrainian leadership will manipulate the elections planned for May 25 to install a single leader or coalition government functioning much as former Georgian President Mikheil Saakashvili did in Tbilisi. A "Ukrainian Saakashvili" will unleash an even more repressive campaign of intimidation against Russian-speakers, one that over several years would stoke anti-Russia hysteria among the general population.

After that, Kiev may evict Russia's Black Sea Fleet from Sevastopol and purge Crimea of any Russian influence. Ukraine could easily become a radicalized, anti-Russian state, at which point Kiev will fabricate a pretext to justify taking subversive action against Moscow. This looks especially likely considering that ruling coalition members from the neo-fascist Svoboda and Right Sector parties have already made territorial claims against Russia. They could easily send their army of activists to Russia to join local separatists and foment rebellion in the North Caucasus and other unstable regions in Russia. In addition, Russia's opposition movement will surely want to use the successful experience and technology of the Euromaidan protests and, with the help and financial support of the West, try to carry out their own revolution in Moscow. The goal: to remove President Vladimir Putin from power and install a puppet leadership that will sell Russia's strategic interests out to the West in the same way former President Boris Yeltsin did in the 1990s.

The official census puts the Russian minority in Ukraine at 16 percent of the total population, although that number was falsified. The actual number is closer to 25 percent. Surveys indicate that 45 percent of the country's population speak Russian at home, 45 percent speak Ukrainian and 10 percent speak both languages. In the most recent Gallup survey, when asked in which language they would like to be polled, 83 percent of respondents chose Russian. Taking into account the rural population in western and central Ukraine, about 75 percent of the people, probably speak Russian. Of that 75 percent, only about 10 percent are those in Kiev and a few other major cities who supported the protests. This means that only 35 percent of the population are attempting to impose its will on the remaining 65 percent, using a violent coup to achieve their goals.

Putin made the right decision: He did not to wait for that attack and took preventative measures. Many in the West say the Kremlin's reactions were paranoiac, but Germany's Jews also thought the same of leaving the country in 1934. Most of them chose to believe they were safe and remained in Germany even after Hitler came to power. The infamous Kristallnacht took place five years later, one of the first early chapters in the "Final Solution." Similarly, just four years remain until Russia's presidential election in 2018, and there is a strong risk that subversive forces within and outside Russia will try to overthrow Putin, in part using their new foothold in Ukraine.

Will there be war in Ukraine? I am afraid so. After all, the extremists who seized power in Kiev want to see a bloodbath. Only fear for their own lives might stop them from inciting such a conflict. Russia is prepared to move its forces into southern and eastern Ukraine if repressive measures are used against the Russian-speaking population or if a military intervention occurs. Russia will not annex Crimea. It has enough territory already. At the same time, however, it will also not stand by passively while Russophobic and neo-Nazi gangs hold the people of Crimea, Kharkiv and Donetsk at their mercy.

 

Or out another way:

If the extremists who seized power in Kiev do not accept Russia's democratic proposals, Russia will likely be forced to revert to military means to solve the crisis in Ukraine.

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Dow Transports surge almost 1% as Nasdaq and many of the momo names started to weaken. The S&P closed at new highs once again despite weakness in HY credit market and a rising VIX on the day. Started by Draghi, EUR strength implied USD weakness and the greenback gave back the week's gains and then some (as AUD is up 1.8% on the week). Treasury yields continue to push higher (with 30Y +10bps on the week). Gold and silver recovered their Putin losses as the formers ends above $1350. Oil prices tanked all day (testing $100) but reversed hard on chatter of escalation in Ukraine. It seems more than a few traders were hedging into tomorrow's payrolls number with VIX rising and stocks tumbling into the last few minutes (not helped by chatter of a Russian invasion overnight).

 

On the day, Trannies were top, Nasdaq bottom with the S&P pushing new highs once again…

 

MoMo names surged at the open then drifted…

 

The last few days have seen credit and vol disconnect from stocks…

 

Credit markets didn't buy it…

 

Treasuries were sold all day; 30Y now +10bps…

 

The US Dollar slid led by EUR and AUD strength…

 

Gold and silver surged back above pre-Putin levels and oil dropped auntil it spiked in the afternoon (on chatter of war escalation in Ukraine)…

 

Perhaps the most worrying thing about today is the "most shorted" stocks dumped (providing yet more free ammo for this idiot market to rally to new newer highs)…until it doesn't of course

 

Charts: Bloomberg

Bonus Chart: Deja Vu all over again…

via Zero Hedge http://ift.tt/1lCJ0ML Tyler Durden

By: Mark Wallace at

http://ift.tt/146186R

 

 

This is the question on the mind of many a gold share “bug.” I can say with relative certainty that the answer is YES. Why? I think the reason should be fairly obvious. Everything moves in cycles.

As we’ve discussed ad nausea within these pages, gold has had a dismal few years. In 2011 gold hit a high of around $1,900 USD per ounce, fueled by easy money and fears of a currency debasement. Money printing continues to this day, but the dollar is alive and well. As of December 2013 gold sat below $1,200 USD per ounce. Silver fared worse yet, declining from almost $50 USD per ounce, to under $20 USD per ounce.

When we look at the gold mining equities it’s really ugly. The NYSE Arca Gold Miners Index lost about 70% of its value in that time frame. Many junior companies lost 90% plus, and some just blew away like so much pixie dust in the wind.

Chris and I were casualties of this decimation ourselves. Most of our junior stocks, and almost all of our recommendations related to anything gold/silver were just taken out back and shot. Plain and simple.

In general though 2013 was a bit of an anomaly, in that gold declined while the broader equity indexes rose substantially. Over the past 13 years prior, gold had outperformed equities. With the decline in gold it’s no surprise that gold stocks got clobbered so badly, as the fundamentals were awful.

Bellwethers like Goldcorp and Barrick Gold had massive losses and reduced reserves in anticipation of lower gold prices. In the last quarter of 2013 Goldcorp lost a whopping $1 billion USD, while Barrick claimed a $2.83 billion USD loss. These “big guys” were forecasting gold could be as low as $1,100 going forward.

As they so often are, the “big guys” were wrong. Gold has risen to $1,335 USD per ounce as I write this, and the stocks of the senior miners have risen over 25% on average. The old axiom, “Buy when there’s blood in the streets” seems to have held once again. The time to buy a stock, whether its a resource stock or otherwise, is when they begin rising on negative news. This is precisely what has happened with the miners.

 

 

 

 

 

 

 

 

 

 

 

 

 

Our very own Brad Thomas put out a Trade Alert to subscribers on Barrick saying the following:

“I continue to hold the view that there will be an ultimate price to pay for all of the unprecedented monetary “stimulus” and money printing that we have observed over the last 5 years across most developed markets. This ultimate cost will be inflation, with a resulting dramatic rise in precious metals.

If ever there was a time to invest in gold stocks now is probably the best time due to a number of factors:

• Sentiment towards gold stocks is exceptionally bearish – how much more bearish can sentiment become
• Given the above it is highly likely that this is the most under-owned that gold stocks have been in a couple of decades, with the result that shares of mining companies are likely to be concentrated in the hands of a relative few – where is the marginal seller of gold stocks going to come from?
• Most gold producers are making losses, which suggests that the cost of producing gold is about $1200 an ounce – how much below the cost of production can gold go before material shutdown of capacity occurs?
• Fundamental valuations are exceptionally low with most of the big producers trading more or less @ book value – are we likely to see any further compression of price multiples?

Why ABX specifically? In essence while the price of gold has continued to fall over the last 8 months, Barrick’s share price hasn’t, which suggests that Barrick’s stock price has probably found a long-term bottom.”

Brad recommended the January 2016 $25/$35 spread. With this trade you would buy the $25 option and sell the $35 option. At expiration if ABX was to close:

• Below $26.50 – loss = 100%,
• @ $28.00 – profit of 100%,
• @ $30 – profit of 220%,
• @ $35 – profit of 567% (a maximum profit will be achieved if ABX closes @ 35 or higher).

Taking a look at the weekly chart of ABX, that price level being achieved within the next 2 years looks to be a good bet!

The moral of this story is that the bear market in the precious metals and the associated equities may be coming to an end. The bad news has been delivered, and now we are seeing prices rise. This is likely a new trend forming, with the classic higher lows patterns developing in the individual equities.

Insitutional and retail investors are starting to take notice. Reuters reported on February 27th that, “The world’s largest gold-backed exchange-traded fund, New York’s SPDR Gold Shares, is on track for its first monthly inflow of metal in more than a year after a run of weaker U.S. data boosted investment interest in gold. The SPDR fund added 10.5 tonnes to its reserves so far this month. That means that, barring a large outflow on Friday, February would be the first month to show an increase since December 2012.”

The chart above is courtesy of StockCharts.com and John Murphy, an EXCELLENT technical analyst that I’ve followed for the last 15 years. According to John, the chart, “Focuses on the two month advance in the Gold SPDR (GLD). With GLD trading near 130, it has retraced just over 62% of the prior decline. Even though the 62% area could mark a reversal zone, the trend since early January is clearly up.

The trend line zone and late February lows combine to mark support in the 126-127 area. The indicator window shows the Commodity Channel Index (CCI) moving into positive territory in early January and remaining largely positive during this advance.”

Everything seems to be lining up for gold at this point in time.

Brent Cook, former associate of Eric Sprott and one of the best mining analysts in the world believes that, “2014 should be a good year for investors to begin positioning themselves in the better metal deposits, mining companies, and the most competent explorers. The reason is quite simple: the industry is not finding enough economic deposits to replace mine production.

“

To further that, Grant Williams, the prolific editor of Things That Make You Go Hmmm, in regards to an impetus for a potential violent upwards move in the gold price has stated, “I fear that it will be a shortage in physical metal because that could be very, very extreme…”

For an excellent timeline of important developments in 2013 that will affect the gold price going forward, I recommend reading Alasdair Macleod’s (Gold Money) recent post, Gold in 2013: The Foundation For 2014.

If you want to skip to the conclusion, which by the way we agree with, Alasdair states:

“The events of 2013 persuaded investors in western capital markets that gold’s bull market had definitely been broken, and that gold would probably go lower or at best move sideways in 2014. The underlying reality is very different, with China in particular managing to corner the physical market with trend-following Western analysts caught unawares.

So far, instead of continuing to fall the gold price actually bottomed on 31 December at $1182, and since then has rallied over 13% to $1340. The position today is that some hedge funds which were short have closed their positions and there are more yet to do so. There is growing evidence for the trend-chasers that the price is entering a new bull phase, with the 50-day and the 200-day moving averages both rising and about to complete a golden cross.

Central banks appear to be facing a problem of their own making. The lesson from Germany’s attempt to repatriate her gold appears to have provided prima face evidence that central banks have little or no physical liquidity left. Minor central banks, such as Finland’s, must now be wondering if gold out on lease will ever be returned to them, so may be increasingly reluctant to make their gold available for further leasing. Instead they are likely to end current leasing agreements as they mature rather than extend them.

In 2014 there is likely to be a growing realisation that the vaults in the West are very low on stock.”

Turning once again to Grant Williams:

“Gold is a manipulated market. Period.

 

“2013 was the year that manipulation finally began to unravel.

“2014? Well now, THIS could be the year that true price discovery begins in the gold market. If that turns out to be the case, it will be driven by a scramble to perfect ownership of physical gold; and to do that you will be forced to pay a lot more than $1247/oz.”

Well, gold is now well on its way, having risen $100 since Grant penned those words last month. Don’t get left behind!

 

 

Next week we’ll be making a special offer to those who are receiving our FREE Trade Alerts. To get on that list and receive our offer just drop us your email HERE.

 

– Mark

 

“There’s going to be a bubble in gold stocks.” – Doug Casey

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On the heels of the Russian navy intentionally sinking a vessel blocking the Ukrainian navy from entering The Black Sea, Ukraine Pravda reports that it is “most probable that Russian troops will assault units in Ukrainian Crimea overnight continuing to the weekend.” Citing a source in the uniformed services, Ukraine Pravda warns that “despite reports that Russian troops ended in learning, active phase lasts. They did not return to the barracks,” and maintain “peak readiness.”

 

Via Ukraine Pravda (via Google Translate),

On the night of Thursday to Friday a great opportunity to assault Ukrainian part of the Russian special forces.

 

This “Ukrainian Pravda” reported a source in the uniformed services.

 

“Despite reports that Russian troops ended in learning, active phase lasts. They did not return to the barracks. Could maintain peak readiness by the end of the weekend,” – said the source.

 

“The most probable that the assault would take place that night, but the danger will persist to the end of the weekend” – source added.

 

“There are three scenarios. First – this air strike,” – said the source.

 

He said that if Russian troops will withdraw from parts of the Ukrainian, that would mean this version.

 

“Helicopters are already relocated, and it is possible that they will do exactly helicopters,” – said the UP.

 

“The second option – a special operations force for disarmament,” – he said.

 

The interviewee said that in the Crimea are Russian special forces “Alpha”, “Vympel” and “Zaslon.”

 

“The third option: they can come up with ryazhenymy Cossacks, as with a living shield. Example is happening” – he added.

 

He also reminded that the Russian troops flooded his ship to block the path of Ukrainian courts.

 

According to the source, impacts may not be in all parts, but only by those who are the most combat-ready, including Sevastopol and Feodosiya.

And this follows the sinking of a ship to block the Ukrainian Navy…

An anti-submarine boat may have been the first casualty of the Russian incursion into Crimea, but it was hardly an act of violence, much less war: The Russian navy sank one of its own, junked vessels to create an obstacle, a Ukrainian official said on Wednesday.

The sinking was the latest in a series of moves by Russian naval forces in the area that were jangling the nerves of Ukrainian officers… the mouth of the bay was blocked by 10 Russian vessels including the formidable guided missile cruiser Moskva.

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The oligarchs have taken over the asylum:

• *UKRAINE $1 BLN LOAN-GUARANTEE BILL PASSED BY U.S. HOUSE
• *HOUSE VOTES 385-23 TO PASS $1 BLN UKRAINE LOAN GUARANTEE

We are sure the auditors will be aggressively checking that this money does not flow directly from the US to Ukraine to Gazprom. But notably, we suspect, Jordan and Tunisia might be pissed as they just lst their funding. Not so much for Detroit or Puerto Rico also…

 

Measure, H.R. 4152, doesn’t entail any new funding because money remaining in a program for loans to Jordan and Tunisia would be transfered; exact amount of loan guarantees won’t be determined until Ukraine applies for assistance

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